In a recent column Daily Wire editor Ben Shapiro lamented a central conflict that he contends defines democratic politics: “the conflict between truth and desire.” Shapiro’s view is that “conservatives aren’t wrong when they say they can’t compete with Santa Claus – it’s far harder to draw voters to your side by telling them they won’t get something than by telling them they’ll get real estate on the moon.”
Though he may have mis-written, Shapiro’s analysis explains why conservatives haven’t consistently controlled the House, Senate, White House, and everything else in Washington. They haven’t simply because they don’t understand why their small government rhetoric is not only appealing, but also why it’s very enriching materially.
While Shapiro is correct in saying conservatives need to stop promising the proverbial plot on the moon since voters hate “being lied to,” he misses that a small government message means they don’t need to lie. Getting right to the point, for politicians to promise spending cuts is for politicians to BE Santa Claus.
Shapiro surely knows that governments can only spend insofar as we in the private sector have less to spend. The money showered on voters by politicians comes from somewhere; as in us. Shapiro’s problem with all the government spending and spending promises is that they’re “bound to come up empty.” Shapiro’s half-way correct point is that conservatives or Republicans “can lie to the people by promising them free things, but those things won’t materialize.” Ok, that’s true, government can’t deliver good things almost as a rule, but Shapiro misses the bigger point that government spending is instant and cruel austerity.
Again, government can only spend what it’s taxed or borrowed from us first. Deficits and surpluses don’t matter as much how much government spends. The more politicians spend the less we earn. And that’s true not just because we the taxpayers pay for the waste of the prodigals in Washington.
When governments spend that means there’s quite a bit less private sector saving, and by extension, quite a bit less investment. Investment – whether it be in tractors, computers, faster WiFi, better hammers, saws, and everything else – is what boosts our productivity each day on the way to greater pay. Government spending not only reduces our pay in year one, it reduces it to an exponentially greater degree in years three, ten and fifteen thanks to productivity enhancements that are never invested in or tried in the first place.
And what about the productivity enhancers we haven’t contemplated? In this case it’s worth asking how many individuals reading this piece were “demanding” smartphones, Uber, or internet in 1993? Odds are none of you were, but thanks to investment we all enjoy all three to the betterment of our productivity. What’s not asked enough is the productivity enhancements we’re not enjoying right now precisely because excessive taxation and spending twenty years ago shrank the pool of available capital chasing as yet unproven entrepreneurial ideas.
Some on the right of the ‘reform conservative’ variety might reply that tax cuts are spent, that they only go to the rich as is. To which a wise conservative would respond, exactly. Tax cuts for the rich are the major Santa gifts that keep on getting better as the years go by. That’s the case because the rich, by virtue of being rich, have lots of money. When their wealth isn’t being taxed away that means more of it is being saved and invested. Precisely because the rich “can’t spend it all in one place,” they have the means to put their wealth to work. That they do means that our income rises in year one, but also down the line as their wealth is invested in the productivity enhancements that render our work hours exponentially more productive.
But what if they spend it? If so, that doesn’t hurt either. And not for reasons that economists tell us. Economists worship at the altar of consumption at the expense of saving. Economists miss that savings are again the biggest drivers of income increases in the present and future. But assuming rampant consumerism on the part of the rich, we all eventually gain since the rich serve as guinea pigs, or “venture buyers,” for all manner of goods and services that regular consumers may or may not like. Figure that the first GPS cost thousands of dollars, but now it’s a standard smartphone input. Thanks to the willingness of the rich to be first adapters, markets are established that entrepreneurs enter on the way to falling prices meant that cater to smaller budgets. Much as we might ask what we’ve lost in income terms thanks to government spending, we should also ask what exciting living standard enhancements we’re not enjoying in the here and now thanks to the desire of politicians to promise us things with money taken from the rich. Notable about this also are the employment implications of the relative lack of venture buyers. Figure that the GPS’s proliferation has driven a surge of work options that didn’t exist before it.
Applied to our health, consider Harvard professor Thomas Stossel’s Wall Street Journal op-ed from September of 2015 about drugs meant to cure cancer. As Stossel noted, “Of the 78 potential treatments for brain cancer that underwent clinical trials from 1998-2014, [only] three proved safe and effective enough to win Food and Drug Administration approval.” All this matters simply because experiments are costly, most fail, but they’re how we get to the fun part that is success. The actual cures. Thinking about cancer, how much experimentation has never taken place over the last 80 years thanks to government spending having greatly reduced the total availability of resources necessary for it? Was a cure (or many cures) lost as politicians falsely promised growth through spending on the proverbial bridges, grants, and yes, medical studies to nowhere?
When the 20th century dawned, it was accepted wisdom among the smart set that man would never fly. Notable here is that while the Wright Brothers proved the naysayers wrong about flight, Orville was sure automobile ownership would never be broad simply because cars were too unreliable. But thanks to feverish investment in both, driving and flying are a common good that we all presently enjoy. Still, we need to always consider the unseen. What advances in travel by plane or car haven’t reached us yet because once again, government spending has massively shrunken the amount of capital being directed to the odd-seeming entrepreneurs eager to achieve what seems impossible?
Thinking about all of this, it’s not unreasonable to say that since the progressive movement took flight in the early 20th century (as Shapiro alludes), and with it government spending, the American people (and by extension, the rest of the world) missed out on trillions in spending that would have cured cancer and heart disease, that would have rendered the internet and smartphones dated by now, and that would have us riding around the country and world in self-flying private jets. Readers can laugh about the latter, but it’s much more realistic today than travel by air was over 100 years ago.
Would we have achieved all that’s mentioned, and perhaps more, without government spending? We’ll never know. Sadly. But what this will hopefully remind conservatives is that when politicians spend, they’re not being nice or Santa like. They’re taking from us now, and robbing us of a much more abundant future in the process.
So if conservatives really feel they can’t compete with Washington’s version of Santa Claus, then conservativism doesn’t deserve to survive as an ideology. This debate with Washington’s big spenders should be easy. They’re the takers who make our Christmases much less festive. Shapiro should understand this, as should all who support limited government, but perhaps don’t know why.
Originally published on Realclear Markets.