Governments Exist to Further the Interests of “Favored Groups”
“We the People” are Never the Favored Group
by Prof. John Kozy
July 13, 2012
“Liquidate labor, liquidate stocks, liquidate the farmer, liquidate real estate. It will purge the rottenness out of the system.”—Herbert Hoover’s treasury secretary Andrew Mellon
Governments have never existed to solve problems domestic or international. Governments and their institutions exist merely to further and secure the interests of favored groups, but We the People are never the favored group.
Paul Krugman recently wrote that
the fact is that the Fed, like the European Central Bank, like the U.S. Congress, like the government of Germany, has decided that avoiding economic disaster is somebody else’s responsibility.
None of this should be happening. As in 1931, Western nations have the resources they need to avoid catastrophe, and indeed to restore prosperity — and we have the added advantage of knowing much more than our great-grandparents did about how depressions happen and how to end them. But knowledge and resources do no good if those who possess them refuse to use them.
And that’s what seems to be happening. The fundamentals of the world economy aren’t, in themselves, all that scary; it’s the almost universal abdication of responsibility that fills me, and many other economists, with a growing sense of dread.
Krugman and most other Americans are fond of blaming social problems on the personal failings of individuals rather than on the systemic failings of institutions. It is people borrowing more than they can afford rather than banks lending too loosely or consumers saving too little rather than businesses paying too little to enable consumers to save that causes all of the problems. But borrowing and lending and saving and income are not independent variables. People are persons with personal failures but banks are institutions with systemic failures, and the systemic failures can entice people to engage in activities that may look like personal failures but are not. Krugman and many others assume that governments and their institutions exist to solve the problems peoples face. When the problems persist, these people again assume that it is because those in government just aren’t doing their jobs. But there is very little historical evidence to support this view.
The government of Louis XVI made scanty attempts to solve the problems of the French people which ultimately led to the French Revolution. The various governments in the United States in the early 1800 made few attempts to resolve the problems raised by slavery in American society and the Supreme Court made any resolution of them impossible which led to the Civil War. Emperor Franz Joseph of Austro-Hungary made no effort to resolve the ethnic problems his empire faced in the Balkans which ultimately led to the First World War. Great Britain and France made no attempts to ameliorate the problems Germany faced as a result of the conditions imposed on it by the Treaty of Versailles which then resulted in the Second World War. No government has made much of an attempt to resolve the problems created in the Levant by the creation of Israel, and instability, slaughter, and war have prevailed ever since. Now a third world war, an atomic conflagration, may be in the offing.
Domestic and international conflicts are being exacerbated world-wide by similar failures at problem resolution. The Western nations and Israel are not making any serious attempts to resolve their problems with Iran. The only possibility of resolving the problems in Western minds is for Iran to merely conform to what the Western world wants. Western European nations are treating the debt crisis similarly. There is only one resolution: the Southern European states must merely do what the Northern ones say regardless of how it affects the peoples of Southern Europe. And the American Congress is paralyzed by each party’s insistence that its way is the only way.
So what is really going on? What are Krugman and others missing? The answer is as plain as sunlight on a cloudless day.