How Big Government Destroys and Economic Freedom Revives


In the wake of Detroit’s unprecedented Chapter 9 bankruptcy protection filing, some on the left (especially those infamously dull MSNBC talking heads) are blaming the urban blight on some sort of vaguely pervasive strand of libertarianism. Running amok throughout the city and leaving in its path nothing but abandoned homes, burnt-out streetlamps, and a whole lot of destitution, Detroit’s maelstrom of supposedly laissez-faire policies spawned an ungodly amount of economic strife and civil decay.

Scant numbers of police, a widely unreliable 911 system, crumbling housing projects, pothole infested streets, an unemployment rate of 16% and close to 40% of its population living below the poverty line, the devastating effects of a government so limited that “[it’s] small enough to drown in your bathtub” have lain ruin to one of America’s formerly great cities.

Whether motivated by a willful ignorance regarding the basic tenants of libertarianism or by a blatant attempt to misinform the intellectually lazy, progressives who contend that Detroit’s current plight is anything but a culmination of 40+ years of big government rule are just flat out untruthful. Moreover, the simplistic admonitions that Detroit is the invariable consequence of limited government policies or the perverse assertion that libertarians aspire to remake America in Detroit’s image is equally idiotic.

However, if one were to flip on MSNBC, you might get a different impression.

Enter Melissa Harris-Perry. When she is not menstruating from her earlobes, or advocating for increased spending on public education by asserting that children are property of the whole community (never mind that per-pupil spending has about tripled over the past 50 years), she is spouting falsehoods about the current predicament of Detroit.

She bizarrely contends that, “[Detroit] is what it looks like when government is small enough to drown in your bathtub and it is not a pretty picture.” Unbelievably, Harris-Perry had the brazenness to utter such a statement. What she and her cohorts on the left fail to acknowledge is the fact that Detroit is not some libertarian Mecca, but it is the ultimate product of a government so bloated with cronyism, corruption, barriers to entry, and special-interests that it inevitably collapses on itself.

Detroit’s situation is indicative of what happens when legitimate purposes of government, such as fire protection, police officers, road maintenance, and certain public utilities, are put on the back burner by corrupt and incompetent politicians to finance parasitic public-sector union pensions and to pick winners and losers in the market.

A $18 billion debt, city income and utility taxes, archaic zoning regulations, 47 unions, and millions in giveaways to big businesses-including a $284 million taxpayer subsidy to build a new hockey arena; a limited-government paradise does not make.

Sadly, folks on the left, like Harris-Perry, who perpetuate the increasingly, suspect Keynesian gospel that government “investments” drive prosperity are deluding themselves and their (dwindling) audience. The last thing that Detroit’s dilapidated status quo needs is another injection of the poisonous policies that damned the city my first place.

Echoing his coworker’s buffoonery, Ari Melber, a panelist on MSNBC’s The Cycle (basically the snooze-fest version of FNC’s The Five) believes that the city’s breakdown in virtually all public services is somehow indicative of being “the most libertarian city in America.” Unsurprisingly, Ari fails to recognize the difference between near anarchy caused by big-government malfeasance and a libertarian-esque form of government, ideally comprised of low taxes, minimal regulations, firefighter and police forces, a court system, and the myriad of other city-provided services likely privatized. Such nuances usually escape the left’s idea of limited government.

So, instead of addressing the root of the problem (a city so beholden to corrupt special-interests and public-sector union pensions that all other spending is crowded out) and declaring bankruptcy as a means to start over, Ari’s prescription is for Washington to bailout yet another financially woeful entity. After all, they did bailout over 700 banks and investment firms in response to the 2008 financial meltdown. Also, Washington back in 2009 did manage to obtain funds (illegally) from the much reviled Troubled Asset Relief Program to bailout the languishing automakers General Motors and Chrysler- to the tune of $60 billion.

Considering the trillions of dollars spent every year by Washington, $18 billion is really just a drop in the bucket. However, Detroit would be way better off in the long run if it just bit the bullet now and learned to live within its means in a low tax and low regulation environment.

For example, people all over the country are flocking to the states that embrace a culture of economic freedom; one which is characterized by low taxation and low regulation.

According to the Mercatus Center’s survey, Freedom in the 50 States, states that scored highly in economic freedom not only saw an influx of residents, but they also experienced an increase in personal incomes (on average). While states that are notorious for taxing and regulating their residents to death, like California, New York, New Jersey, Illinois, and Michigan saw an across-the-board departure of residents and either stagnant or downward income growth, their relatively freer counterparts saw growth in both (on average).

Furthermore, if one were to compare apples to apples in annual city budgets; Detroit and Dallas (a fairly vibrant city with the third largest concentration of Fortune 500 companies in the US) both have a yearly budget of roughly $2.6 billion. However, that’s just about where the similarities end. While Dallas (and Texas in general) continue to attract residents through a business friendly regime of low taxes and low regulations, Detroit, for the most part, is hell-bent on scaring current residents and newcomers away, sending them fleeing. Dallas boasts an ever-growing population- now standing at 1.24 million people. Over the past 50 years Detroit has experienced about a 60% decline in theirs- once a thriving city now reduced to a mere 700,000 people. Surely, Detroit, a city that is quickly approaching half the size of an exponentially, more-prosperous counterpart, can make do with less government employees.

Granted, Detroit’s dwindling numbers have seriously eroded the tax base, but that reality is just a symptom of their stifling and anticompetitive economic policies.

Despite the hogwash that some on the left insist on peddling, Detroit is not a test case in limited-government gone awry- nor is it an accurate portrayal of libertarianism’s aspirations. It is merely the ultimate result of decades of big, bloated government policies, as well as, their dire, unintended consequences.

Bankruptcy, accompanied by pro-growth and pro-freedom policies, is the only sensible refuge for Detroit. Bailouts or any other backdoor-style, government infusion of money are simply just perpetuating the failure and misery of the city, keeping Detroit on life-support while it agonizes under excruciating pain.

About Author