Opinion
The sun shines on the U.S. Capitol dome on the first day the federal government has re-opened following a 16-day shutdown at the U.S. Capitol in Washington, October 17, 2013. REUTERS/Jonathan Ernst The sun shines on the U.S. Capitol dome on the first day the federal government has re-opened following a 16-day shutdown at the U.S. Capitol in Washington, October 17, 2013. REUTERS/Jonathan Ernst  

Government spending and regime uncertainty

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Robert Higgs
Senior Fellow, Independent Institute
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      Robert Higgs

      Senior Fellow in Political Economy and Editor at Large, The Independent Review

      Robert Higgs is Senior Fellow in Political Economy for The Independent Institute and Editor at Large of the Institute’s quarterly journal The Independent Review. He received his Ph.D. in economics from Johns Hopkins University, and he has taught at the University of Washington, Lafayette College, Seattle University, and the University of Economics, Prague. He has been a visiting scholar at Oxford University and Stanford University, and a fellow for the Hoover Institution and the National Science Foundation.

      He is the recipient of numerous awards, including the Gary Schlarbaum Award for Lifetime Defense of Liberty, Thomas Szasz Award for Outstanding Contributions to the Cause of Civil Liberties, Lysander Spooner Award for Advancing the Literature of Liberty, Friedrich von Wieser Memorial Prize for Excellence in Economic Education, and Templeton Honor Rolls Award on Education in a Free Society.

      Dr. Higgs is the editor of The Independent Institute books Opposing the Crusader State, The Challenge of Liberty, Re-Thinking Green, Hazardous to Our Health? and Arms, Politics, and the Economy, plus the volume Emergence of the Modern Political Economy.

      He is also the author of Delusions of Power, Depression, War, and Cold War, Neither Liberty Nor Safety, Politická ekonomie strachu (The Political Economy of Fear, in Czech), Resurgence of the Warfare State, Against Leviathan, The Transformation of the American Economy 1865-1914, Competition and Coercion: Blacks in the American Economy, 1985-1914, and Crisis and Leviathan. A contributor to numerous scholarly volumes, he is the author of more than 100 articles and reviews in academic journals.

Shifting resources from the government to private individuals and free-market firms is always a beneficial development, given that the government not only wastes many resources, but actually employs resources in destructive ways that harm the welfare of the general public.

Mainstream commentators seem to get their knickers in a twist especially when government employees are furloughed or some sort of government handout is temporarily suspended. In anything but the shortest-term perspective, however, these developments are positive, not negative. It is good to get people off the dole, and if budgetary mismanagement brings about this result, so much the better for the mismanagement.

Above all, people need to learn to assess such incidents without falling back into the misleading framework of Keynesian analysis. In particular, the inclusion of government purchases of newly produced goods and services in the calculation of GDP has worked much mischief over the years. The current wailing and gnashing of teeth over the government’s inability to produce its budgets responsibly and on schedule is only the latest occasion for such misinterpretation of the government’s role in the economy.

If only people could bring themselves to see the government for what, all in all, it is — a force for plunder, waste, and destruction — they might then have the wit to worry less about government spending cutbacks and to worry more about the manifold ways in which the government generates what I call regime uncertainty and thereby impedes real economic recovery and sustained long-term progress.

Robert Higgs is Senior Fellow in Political Economy for The Independent Institute, Founding Editor of The Independent Review, and the author of Crisis and LeviathanDelusions of Power, and other books.