A Conservative Argument for Limited Government

I established my liberal credentials yesterday defending taxation of the wealthy to pay for government provided public goods and basic welfare.

I also criticized the practice of arguing from imaginary reasons for action to conclusions that effectively direct resources away from where they would fulfill many and strong desires and towards where they fulfill fewer and weaker desires.

However, conservatives have some valid objections to government spending. These valid objections depend on real, existing reasons for action - not the imaginary reasons for action referenced above.

These are arguments about the threat of reducing the total value of goods and services available by reducing incentives to produce goods and services.

There are arguments about the utility of freedom given that each individual is the best informed and least corruptible agent when it comes to fulfilling his own desires.

There is the political economy if laws and regulations that fly through a government bureaucracy under the public radar that take $5.00 in a year out of the picket of each citizen and deposits $1.5 billion in the accounts of the special interest groups that lobbied for the change.

There is the unproductive waste generated by making it the case that economic success goes, not to the company with the best product at the lowest cost, but the company with the best lobbyists and lawyers. Making it the case where corporate investment funds are best spent researching candidates and influencing elections, rather than hiring scientists and technicians and designing new products.

There are problems of perverse incentives, whereby those who manage their money and health well are punished with additional costs so the money can go to bail out those who manage their money poorly, or to provide health care for those who do not take care of their health.

These are not arguments grounded on imaginary reasons for action. The reasons for action behind these arguments are very real.

One particular set of facts I want to draw attention to in this post arise from having too much confidence in the government's ability to redistribute wealth from the rich to the poor.

In fact, governments are far more efficient at redistributing wealth from the poor to the rich.

Look at the events of the past 12 years.

The rich obtained trillions of dollars in benefits from the Bush tax cuts.

Then they harvested over a trillion dollars in benefits from no-bid contracts handed out by the Bush administration for the Iraq war - much of which went to benefit campaign contributors.

The deregulation of the financial industry allowed them to harvest additional trillions from financial transactions that not only failed to produce any benefit for the society, it gummed up the economy so badly that it was nearly brought to a standstill.

After this, they got trillions of dollars in bailout funds and stimulus funds that kept them in their million dollar jobs and million dollar houses, while middle class people lost their jobs and houses at near record numbers.

Given these considerations, at this point taxing the rich is far from asking them to give up money they earned through free trade for the benefit of the poor and middle class. It is more like wanting them to give some of the trillions of federal dollars they have been given over the past 12 years back to the government.

The message we hear is, "You have no right to this money. It is our hard earned income that we earned through our brilliant entrepreneurship providing goods and services for the people on the private market."

However, the fact of the matter is, a substantial portion of this wealth was government hand outs, some in payment for government services needed only through their lobbying, and some simply handed to "too big to fail" companies to keep them in business.

Now, these same people who took these trillions of dollars in government money are seeking yet another benefit - that of being free of the burdens of government programs that benefit the poor and middle class. The real message is, “Now that we have robbed the government vaults of all of its wealth, we can’t afford to continue to provide you with the benefits you have become accustomed to.”

The remedy for these ills, according to the conservative argument, is to simply deny the government the power to redistribute wealth from the poor and middle class to the rich. A lot of the problems of the last 12 years could have been avoided if not for the power that the rich have to manipulate the government into providing these multi-trillion dollar benefits.