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Issue Analysis

    Hayek vs. Boxer

    F.A. Hayek in his famous work titled The Road to Serfdom warns us about the dangers of collectivism and central planning.  Inherently when any central planner attempts to reallocate resources they are simply misplacing those resources, because they cannot keep up with the fast paced movement of the market.  When this occurs central planners fall victim to what Hayek calls the information problem.  This misallocation of resources only hurts the economy rather than stimulate it as those who support these central planned policies believe they are doing. 

    This week the Senate will be working on S.782, Senator Barbara Boxer’s Economic Development Revitalization Act of 2011.  This bill would authorize the Economic Development Administration to operate from 2011 through 1015 at $500 million per year.  The EDA redistributes taxpayer money to infrastructure and public works projects in an effort to stimulate economically distressed communities.  Despite their noble intentions, the question must be asked will this bill actually help create jobs or will it make people further dependent on the state for their survival?

    The handy thing about public works projects is that they do create jobs; however, the jobs are in existence only for a short time.  Yet these projects are celebrated as great successes.  They are touted as such because the creation of these jobs is what is seen.  However what is not seen is the money taken away from the public in order to fund these jobs.  Instead of paying less taxes and having more money to spend the public is in essence weakened because they are being taxed in order to pay for these projects.  Some could argue that taxes haven’t been increased and the tax payers aren’t paying higher taxes for these jobs.  If this is true then the government is either using money created by the Federal Reserve or it is using borrowed money, which future generations will have to pay back.  Either way the citizenry is still paying for these projects whether they it is in the form of taxes, inflation, or debt. 

    No matter which way one splits it in the end result is that the citizenry suffers and the economy is worse off than it was before.  Had these resources not been taken away from the citizenry they would have been able to use the money in a way that would truly help stimulate the economy.  It is for these reasons that I urge you to contact your Senators and tell them to vote in opposition to S.782.