One big lie says the U.S. is riding a reckless wave of capitalism

Don’t tell The Times, but America has long had a mixed economy with substantial regulations

The theory of the big (but good) lie goes back to a certain reading of Plato’s most famous dialogue, the Republic. There are more or less crude versions of it, but the gist of the theory is that for reasons of state — that is, so as to secure the chances of the ruler to rule smoothly — telling lies can be justified and may even be necessary. Indeed, the big lie could well have been the very idea of the perfect political system itself, one that really amounts to a utopia, an impossible blueprint for a human community and its basic principles.

Some have concluded from this that Plato never meant to advocate what the dialogue depicts as the perfect regime but merely presented it as a kind of model, the way that the gorgeous women on the covers of Vogue or other fashion magazines function, just reminders of what to pay attention to. But ever since Plato appeared to make the big lie respectable in politics, quite a few regimes have made use of it.

And in our era no less seems to be the tactic, at least for the cheerleaders of more government planning who routinely appear on the op-ed pages of The New York Times. As a case in point, check out the March 6 article by Alan Tonelson and Kevin L. Kearns “Trading Away Productivity.”

The gist of the piece is nothing less than the defense of international economic protectionism, a policy thoroughly discredited by now except among diehards desperate to keep their establishment and industry intact at the expense of domestic consumers and foreign competitors. Nothing new here — every politician is tempted to offer to square the circle; just watch how in Washington nearly everyone believes that one can indeed get blood out of a turnip and pay for goodies with, well, nothing.

What is far more egregious than the advocacy of defunct theories, defunct at least since the time of Adam Smith, is the premise with which these authors begin their discussion. What they say is, well, a big lie — although for The Times it is routine by now, what with the leadership of Paul Krugman on their pages when it comes to political economy. They state clearly, without any hesitation, that “For a quarter-century, American economic policy has assumed that the keys to durable national prosperity are deregulation, free trade and a swift transition to a post-industrial, services-dominated future.”

There is no truth to this claim at all.

American economic policy — and it pains me to even refer to such a thing, since a government isn’t supposed to mess with its citizen’s economic lives any more than their religious lives — has been protectionist in nearly every age. Indeed, such protectionism is often held to explain some of the anger of the Japanese that precipitated the attack at Pearl Harbor and the ensuing bloody war in the Pacific. Administration after administration has tried to boost the fortunes of American businesses and labor by way of imposing duties on foreign imports, be it steel, cars, shoes, textiles or innumerable other goods. The means by which obstacles to honest trade were implemented are various — sometimes outright tariffs or duties, sometimes phony requirements that manufacturers needed to meet before their product would qualify for importation, thus making it very expensive to import and to buy the products.

As to government regulations, the increase of these rules for American businesses over the years has been stupendous. This and many of the claims of these authors can be seen as big lies in a very informative essay written a while back by David Boaz of the Cato Institute, titled “The Truth of Milton Friedman.” The essay exposes many of the lies circulating these days about how America has been in the grips of market fundamentalism, of an economic policy of laissez-faire and free trade, successfully promoted by the late Dr. Friedman. What bunk.

America has always, from its beginning, been a mixed economy and the mixture is now markedly lopsided toward government interference, including thousands and thousands of pages of government regulations that keep increasing year by year. (And, no, Ronald Reagan didn’t reverse this trend!)

But the big lie and the big liars will not hear of any of this and keep cheering on as the American government moves further and further away from even a semblance of a free market system.

Tibor Machan is a professor of business ethics and free enterprise at Chapman University in Orange, Calif., and a research fellow at the Pacific Research Institute and the Hoover Institution at Stanford University. He is also the author of “The Morality of Business: A Profession for Human Wealth-Care.” E-mail him at: [email protected]

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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