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Tuesday, March 07, 2006

Some Ideas Are So Idiotic Only A Genius Can Conjure Them

I stumbled an interview of John Kenneth Galbraith in an October issue of The Progressive. Note this exchange:

Q: Another observation you're famous for is juxtaposing "public squalor" with "private affluence."

Galbraith: There's no question that in my lifetime, the contrast between what I called private affluence and public squalor has become very much greater. What do we worry about? We worry about our schools. We worry about our public recreational facilities. We worry about our law enforcement and our public housing. All of the things that bear upon our standard of living are in the public sector. We don't worry about the supply of automobiles. We don't even worry about the supply of foods. Things that come from the private sector are in abundant supply; things that depend on the public sector are widely a problem. We're a world, as I said in The Affluent Society, of filthy streets and clean houses, poor schools and expensive television. I consider that contrast to be one of my most successful arguments.

The obvious conclusion is that the private sector creates wealth, whereas the public sector does not - or does so inefficiently in the case of nationalized commercial ventures such as Amtrak. But Galbraith does not see this, as anyone familiar with his philosophy knows. Harrison Drake's review of The Affluent Society (PDF file) explains Galbraith's prescription:

Next, Galbraith informs the reader about the effects of the Dependence Effect. He says that "the line which divides our area of wealth from our area of poverty is roughly that which divides privately produced and marketed goods and services from publicly rendered services ..." In fact, "our wealth in privately produced goods is, to a marked degree, the cause of crisis in the supply of public services. For we have failed to see the importance of maintaining a balance between the two." [quoting The Affluent Society, p. 251]

In short, to Galbraith the gap exists because government has failed to balance the public and private sectors. Such "balance" can be achieved only by taking from the private sector, which reduces not only its produced wealth but also its capacity for future wealth creation. Since government doesn't create anything, such attempts at "balance" reduce overall national wealth. Government budget projections fail, and lawmakers are at a loss to understand why.

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