Saturday, December 29, 2012

Clear and Present Dangers 6: Government Makes Matters Worse

In my latest reading of Clear and Present Dangers: A Conservative View of American Government (copyright 1975), M. Stanton Evans argues essentially that government intervention makes problems worse.  According to Evans, increasing the minimum wage discourages businesses from hiring African-American teenagers, thereby depriving them of opportunities to develop job skills.  Government mortgage insurance, super-highways, and zoning have encouraged the construction of homes in the suburbs rather than the inner-cities.  Government subsidies for part of the mortgages of lower-income people have inhibited the lower-income from being able to negotiate a lower price for their home.  Urban renewal, an attempt by the government to refurbish cities, has resulted in the demolition of poor people's homes, as people with higher incomes move into the area.  Labor and other regulations have resulted in railroads that sit idle, and regulations have encouraged higher prices for airlines while inhibiting potential competitors from entering the airline and taxi market.

Is Evans, therefore, for no government intervention?  There are times when he seems to lean in that direction, as when he says that the marketplace can handle the housing issue and questions Congress setting wages.  At other times, however, he appears to be open to some government intervention.  For example, he says that the Civil Aeronautics Board (CAB) should be eliminated and safety functions should be transmitted to the Federal Aviation Authority (FAA), which indicates that he is for safety regulation, on some level.  And Evans also seems open to the idea of exempting teenagers from the minimum wage, while still allowing others to receive it.  This idea may have its strengths, but my concern is that such a policy would encourage businesses to hire teenagers rather than people offering to work a minimum-wage job to support their families, since teenagers would be cheaper to employ.

I don't know a great deal about housing and transportation, but I wouldn't be surprised if there were legitimacy to many of Evans' arguments, for government becoming involved in the economy can easily privilege businesses that are able to work the system.  I'd be hesitant to go the laissez-faire route, though, for I doubt that the private marketplace would solve all problems.  In my opinion, even if government intervention made some problems worse in certain respects, the problems were around before the government interfered, which was why the government interfered in the first place.

But I am open to the government reforming how it intervenes.  I once had an economics teacher who was a moderate rather than right-wing, and he said in class that deregulation of the airline industry worked (and this particular deregulation occurred during the Presidency of Jimmy Carter), whereas it did not work in a number of other fields.  Actually, according to this article, under the 1978 Airline Deregulation Act, "The Civil Aeronautics Board's powers of regulation were phased out, eventually allowing passengers to be exposed to market forces in the airline industry", but "The Act...did not remove or diminish the regulatory powers of the Federal Aviation Administration (FAA) over all aspects of air safety."  That's what M. Stanton Evans proposed in 1975!

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