Several weeks ago, I made a small mistake in a column on the trade deficit. My colleague John Tamny noticed it. I characterized those former mill towns of this country that are now in a ghostly, unoccupied state as having taken on the look of the “pathetic.”
How clumsy of me. There is only one place in this country that has taken on the look of the pathetic, besides the Empire State Plaza: greater Washington, DC. As the economy of the United States sort of stagnated in the 2000s through the Great Recession, and then ticked up a bit, the place took on gobs of new people and became one of the most income-rich places in the land.
How sad this was. All sorts of people who could have helped the economy break into ever-new frontiers bailed out and moved to DC and found a way to rake in the bucks there. Lobbying and liaisoning with the governmental power structure, if not working for it directly, is the only game in town in DC. When people are deep into that, they have forsaken the real economy.
Charts show us how pervasive opioid use is in the heartland. Movies (if box-office bombs) brand rust-belt holdouts as losers. Hillbilly Elegy sits on the bestseller list. Yet there remains something fiercely honorable about that person who is sticking in place after the factory jobs left, even if not seeking or holding a job or if breaking bad. That person may not be weathering the crisis, or seeing the opportunity, in an ideal way. But there is no fakery either. None of this going to DC to work for the Department of fill-in-the-blank, or its satellites in the crony world, along with the pretense of doing the public good.
As I have had occasion to discuss in the past, the big trade deficits this country has run for three or four decades now have been a golden opportunity for the government to reduce or eliminate the domestic taxation system. If countries like China really want to send us material things in exchange for our cash, we can costlessly print that cash for stuff and have no need for taxes. Yes, the government can use its own procurement system for monetary policy and relinquish taxation altogether. If this occurred, there would come an economic boom of such magnitude that it would make the very concept of recession a challenge to our memory.
But no, we get to have the trade deficit and taxes and regulations. Consequently, enormous resources flow to DC. In come the federal employees and the still more remunerated hangers-on, whose salaries, benefit packages, and experiences in the halls of influence all create the illusion of productivity and a life well-lived.
Who is more of a deadweight on the economy, the jobless opioid abuser or the governmental associate (including the heat/legal-eagle team getting to the bottom of that case)? If all economic productivity comes from human capital, which it does, we can identify that occupation that drags our economy down. The marginal DC worker, of which we have had zillions over the era of the trade deficit, each represents economic talent departed from the real economy of ideas, innovation, and providing to humanity what it very much could use—into a sump where that talent morphs into an economic cost.
Government has a narrow reason to envy the market economy. If the market economy really succeeds, government, by definition, will have little use, or support. From the evolutionary perspective of the government, markets have to fail, at least to the point where the taxation cash flow starts to fall off. What made America uncompetitive all these years of the trade deficit? The major rise of government-associated employment did. It would take a big person to walk away from a nice gig in DC these days, but honor, if not patriotism, is starting to require it.