Government Creates Wealth?

E.J. Dionne’s column touts Joe Biden’s newfound verve in defending American competitiveness. As Dionne puts it, at least Biden is done for now with defending the indefensible stimulus plan. He assures us that Biden is “more self-aware than people give him credit for.” Whatever. But Dionne then goes off the rails in a revealing bit of liberal demagoguery:

Beneath the predictable back-and-forth between Obama and his Republican adversaries over government spending lies a substantively important difference over how the United States can maintain its global leadership.

For Republicans, American power is rooted largely in military might and showing a tough and resolute face to the world. They would rely on tax cuts as the one and only spur to economic growth.

Republicans don’t care about economic growth? Just military might? Hard to see where he gets that, considering that the post-Reagan conservative movement and the Republican party have been devoted to market capitalism. Indeed, the slur on Republicans has been that all they cared about was wealth creation. Oh, but they are just interested in “tax cuts.” Well, that and free trade, modest regulation, legal reform, and other conditions that spur economic growth, investment, and wealth creation.

Dionne considers this all trivial or dim because he and liberals are convinced that government creates wealth, that public spending creates jobs, and that expansion of the public sector is the way to a brighter future. In fact, he congratulates the president for cheering on the competition in statism with other powers. In the State of the Union, Dionne recalls, the president vowed that no nation would get the jump on us when it comes to government programs. (“Meanwhile, China is not waiting to revamp its economy. Germany is not waiting. India is not waiting. These nations aren’t standing still. These nations aren’t playing for second place. They’re putting more emphasis on math and science. They’re rebuilding their infrastructure. They’re making serious investments in clean energy because they want those jobs.”)

Dionne gets one thing right, however: there is, indeed, a healthy debate to be had. The Obama budget, which presumably represents his economic vision, sees an ever-rising level of taxes and government spending (also debt because the taxes can’t keep pace with the spending). It includes many expensive programs liberals tell us will increase our competitiveness and spur growth — green jobs, federal education money, and the like.

Conservatives say this is a recipe for continuous high unemployment and low growth, and the experience of high-tax and high-spending countries is not one we want to replicate. Looking around the world and at our own recent past, there’s plenty of evidence that the liberal formula simply doesn’t work. We can become more like our Western European allies, but then we can expect employment, growth, and wealth creation to approximate those countries.

In addition to its economic shortcomings, Democrats might want to think twice about whether touting the wonders of lots of government is a winning economic message. As Michael Barone explains in his tour through the history of American populism:

[Americans] tend to believe that there is a connection between effort and reward and that people can work their way up economically. If people do something to earn their benefits, like paying Social Security taxes, that’s fine. But giving money to those who have not in some way earned it is a no-no. Moreover, like Andrew Jackson, most Americans suspect that some of the income that is redistributed will end up in the hands not of the worthy but of the well-connected. Last year Mr. Obama and his policy strategists seem to have assumed that the financial crisis and deep recession would make Americans look more favorably on big government programs. But it turns out that economic distress did not make us Western Europeans.

So if Biden now wants to become the official spokesman for the premise that “big government creates wealth,” I’m sure the Republicans would be delighted. They’d be even happier if every Democratic incumbent ran on that platform. But somehow I think they won’t get that lucky. Lawmakers are generally more “self-aware” than that.