Government, Get Out Of My Way!

Oscar B. Johannsen

[Reprinted from Fragments, a special issue of articles
previously published between 1968 and 1975]

THE WORLD WIDE SHORTAGES, not only of petroleum but of other commodities are being blamed on the niggardliness of nature, the avarice of domestic and multi-national corporations, on almost every one except the real culprit -- government.

A communist nation operates on the army principle. This means continual shortages, for people have no more motivation to produce goods other than sufficient to maintain life, than do soldiers to expend more effort than their rank demands in the Army Table of Organization. Since a communist government controls the nation's economy, just as a General Staff controls an army, it is responsible for the shortages.

But why are shortages plaguing the non-communist world inasmuch as in countries where private enterprise exists the problem usually is one of too much rather than too little? Here, too, government is responsible, but the reasons are not so obvious.

Fundamentally, the system of land tenure practiced is at fault. Treating land as though it were private property causes economic distortions in the form of poverty, unemployment, boons, and busts, as Henry George amply proved in his magnum opus, Progress and Poverty. To alleviate the distortions, instead of a just system of land tenure, a non-communist government will inflate its money-supply. Since most of a nation's commerce is financed through debt, this increase in the money-supply eases the problem of paying interest and amortizing debt. The inflation is inflicted on a people through the nation's central bank, but in a way so complex that only a monetary student understands it. The effect, however, is the same as though that nation printed paper currency at a constantly increasing rate. This can be likened to a river of paper-money flowing into a pond containing the country's money supply, causing the pond's level to rise. This rise constitutes rising prices.

But while rising prices initially aid debtors, they hurt others, especially those on fixed incomes. Eventually, all are hurt, for not only must those on fixed incomes pay more but the debtors must also, and, in addition, eventually interest rates rise, so new debts cost more. Discontent rises.

Price control is analogous to putting a ceiling on the money pond, while at the same time continuing to pour this river of paper money into the pond. Something must give. Either the government stops the river, i.e., stops printing the paper money, or the ceiling erupts.

To placate the people, the government imposes a ceiling on prices. What it should do is to stop printing the paper money which is flowing into the money pond. But if it does that, a depression will almost undoubtedly ensue. To a government, this is anathema, so the price ceiling is imposed. This has the distinct advantage of diverting attention from the government as the villain, and, in fact, gives it the appearance of being Sir Galahad, on his white charger fighting to protect the people from avaricious businessmen and labor barons.

Before this happens, however, the money pond might be considered to be in the state of a storm with waves dashing up against the ceiling, as prices tend to rise. Because prices legally cannot breach this ceiling, shortages develop. Those goods with price ceilings which permit little profit are in short supply, while if the ceilings permit no profit, the goods simply stop being produced. So, it is obvious that government in the non-communist countries is responsible for the shortages just as in the case of the communist nations.

Civilization simply has reached a point of development where it is much too sophisticated to be able to tolerate the blundering interference of government. Just as the first airplanes could be controlled consciously, by the pilot, so a primitive economy might possibly exist tolerably well with its government directing it. But, today, just as a modern airliner is so complex that it requires automatic controls (because no pilot could possibly perform the necessary sensitive adjustments), similarly, modern nations are so complex that it ?s beyond the competency of any man, or coterie of men, to direct them. Instead, their direction must be that of the unconscious control by the people through the medium of the marketplace.

The more one analyzes the shortages, and for that matter, most, if not all, of the great economic problems of the world, the more one recognizes that the real cause of these problems is the very institution to which most people look to solve them -- government.

If people wish to live their lives so as to use the capacities with which they have been born to the full, they will have to rethink their veneration of government. Instead of looking to it to solve their problems, they should say to it, "Get the hell out of my way!"