Politicians need to stop managing the economy

As the presidential campaign season gets into full swing, be prepared to hear the standard arguments about which candidate and which party is better at managing the economy. The debate surfaces every four years.

Republicans will cry, “President Obama and the Democrats have made a mess of the economy. Elect us because we’re able to do a better job at managing the economy.”

It was the same thing four years ago, only then it was the Democrats exclaiming, “President Bush and the Republicans have made a mess of the economy. Elect us because we’re able to do a better job at managing the economy.”

From the standpoint of libertarians, the debate is a silly one. Why? Because neither the president nor the government should be managing the economy. A system in which government officials are managing the economy is inevitably going to be one big messed-up system.

It really goes to show that when it comes to economic principles, there isn’t any difference between Republicans and Democrats. They both believe that the president and the federal government should be managing the economy. Their differences arise with respect to which party should be doing the managing and which reform plan for managing it is going to be adopted.

Operating within this statist paradigm, Republicans and Democrats are unable to recognize that the nation’s economic woes are rooted in the fact that the government is managing the economy. For them, the economic woes are always rooted in the areas of the economy that are still relatively free of government control. That’s why they inevitably call for more government intervention to solve the nation’s economic woes.

Why does managing the economy cause economic woes? When the president, with the support of his myriad departments and agencies, manages the economy, he is engaging in central planning, the same type of central planning that makes big economic messes in socialist countries.

As the Nobel Prize-winning libertarian economist Friedrich Hayek pointed out, central planning is an inherently defective paradigm because government officials lack the knowledge and ability to plan the economic activity of hundreds of millions of people.

So what is the libertarian approach to the managing-the-economy debate? Contrary to what statists might think, we don’t say that the solution is to get a libertarian into power in order to be a better manager of the economy. Instead, we propose a completely different paradigm to replace the current one — a paradigm that prohibits the president and the federal government from managing the economy.

Under the libertarian paradigm, there would be a total separation of economy and state, in the way our American ancestors separated church and state. Rather than having the president and the government managing the economy, people would be free to manage their own individual lives.

Under the libertarian paradigm, people would be free to keep everything they earn (that is, no income taxation or IRS) and manage their own lives with their own money, including retirement (no Social Security), health care (no Medicare), education (no government schooling) and charity (no welfare).

Libertarianism is the key not only to restoring prosperity, education, health care and a spirit of voluntary charity to our land, it’s also the key to restoring economic freedom to the American people.

Jacob Hornberger is founder and president of The Future of Freedom Foundation (www.fff.org).