Stabilize This, Stabilize That

Consider the word stabilize. It has a comforting ring, does it not? It calls up as a mental background, however, images of something that is currently unstable. Airplanes may become unstable shortly before they crash; teenage boys are said to have become unstable shortly before they gunned down their teacher and fellow students; unstable economies give rise to depressions, with rampant business failures and mass unemployment of workers; unstable regions harbor countries that often go to war with one another. Instability would appear to be a bad thing, so government actions to “restore stability” to X, Y, or Z would appear to be prima facie good things.

Things are not, however, always what they appear to be, as government stabilization policies illustrate when we consider them carefully. Anyone who has studied economic policy over a long period has encountered one stabilization policy after another that aside from failing to stabilize anything, was never actually intended to stabilize anything in the first place.

Instead, like most government policies, those purportedly aimed at stabilization are actually intended to transfer wealth, doing so under cover of the seemingly admirable announced goal of restoring order to something currently askew.

Thus, for example, government stabilization policies ostensibly aimed at taming the business cycle by means of fiscal actions are actually aimed at enriching the recipients of government payments at taxpayer expense (current or delayed). Government policies to stabilize the Middle East are aimed not so much at the establishment of peace in that region as at the enrichment of the military-industrial-congressional complex and at the gratification of the egos of the president and leading members of his entourage who take pleasure in moving rooks, knights, and queens about on the global chess board.

Lately, we have heard endless claims that the government is seeking to stabilize the financial markets. One might wonder, however, how propping up enterprises that, absent a large, permanent stream of subsidies, are doomed to ultimate failure qualifies as stabilization. (Not that we can expect government decision makers to worry about the long run, of course; if these men and women suffer any disability at all, they suffer extreme myopia, never seeing beyond the next election.)

The whole song-and-dance is a fraud. The government isn’t stabilizing the financial markets. It is robbing taxpayers for the benefit of privileged beneficiaries with the political clout and connections to put themselves at the head of the line when the Treasury hands out the loot. Because people have been led to fear that another Great Depression will occur unless the government “does something,” the circumstances are ideal for pulling off this sort of heist.  Previous crises have operated in similar circumstances to similar effect: each has become a carnival of opportunism. Ever was it thus.

When Jesse James or John Dillinger wanted to transfer wealth to themselves and their gang, they walked into a bank, pointed a gun at the teller, and threatened to kill him unless he handed over the money. When Goldman, Sachs and Morgan Stanley want to rob the Treasury, they don’t have to act so obviously, because they already have their man on the inside—in fact, giving them the money is openly admitted to be his idea. Why do people sit still for this daylight robbery? Because the whole rotten undertaking is advertised as a necessary means of preventing complete disaster and disorder—because, in short, it is essential that the government stabilize the markets.

The next time you hear this stabilization claim, look around. See if you can identify who’s making off with the loot.

Robert Higgs is Senior Fellow in Political Economy at the Independent Institute, author or editor of over fourteen Independent books, and Editor at Large of Independent’s quarterly journal The Independent Review.
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