2005/07/03 - Jorge Valín - Libertad Digital

Production Dictator

If the Prime Minister’s “priority objectives” actually corresponded with Spaniards’ priorities, he would have made a successful businessman. He would be offering exactly what people most urgently need at the most affordable price without having to confiscate astronomic amounts of money from the community via extortion, ummm… I mean, taxes.

According to the Royal Academy of the Spanish Language, a dictator is a “person who takes or receives all extraordinary political powers and exercises them without legal restraint.” That is, he is free to impose his slightest whim on the rest of the community. In the field of Economics, a dictator is a person with the political capacity to unilaterally force his production plans on everyone else.   

This past week, Prime Minister Zapatero gave us two examples of what it means to be a production dictator. First, he declared tourism one of his “priority objectives”. So, he has decided to build nine new Parador Hotels. Budget? 181 million euros. Second, through Housing Minister Trujillo, he decided to finance 180,000 “mini-apartments” (about 300 square feet each unit) a year. They will cost taxpayers 6.8 billion euros.

If the Prime Minister’s “priority objectives” actually corresponded with Spaniards’ priorities, he would have made a successful businessman. He would be offering exactly what people most urgently need at the most affordable price without having to confiscate astronomic amounts of money from the community via extortion, ummm… I mean, taxes.  

All the money Zapatero plans on using for his “priority objectives” is not extra wealth just lying around, but money taken from the community. Our production dictator believes we are not up to controlling our savings, investments or spending. He, with enlightened foresight, has the moral authority to rob our money and use it, not to lower apartment prices or create quality tourism (something he will never achieve because the problem is elsewhere), but to plan and manage, according to his own tastes, a specific type of society, totally forgetting the individual, his private property and his freedom to choose. 

Why not let individual de-centralized and voluntary action determine priority sectors? No, that isn’t why. The sharp increase in the price of housing is not due to the dark arts of the free market like its detractors claim, but to manipulation of the money supply, or what is the same thing, promotion of “cheap money”. The free market does not produce cheap money, that is the fault of governments and central banks following expansive monetary policies, establishing price controls (which end up producing the exact opposite), engaging in fiscal policy dirigisme, etc…  

Intervention cannot be fixed with more intervention. Economic history show us how political planning of the economy always fails: mercantilism, bullionism, Marxism, Keynesianism and the like all caused serious crises. The free market is the only alternative to crisis and production dictators.

No visionary should force us to channel our money toward his interests, “priority objectives” or personal fancies. If we want to dispense with economic dictators for our good and to save our hard, honestly earn money, there is only one real path: that the government governs as little as possible. Therefore, the best government will always be that which governs not at all.