A Teachable Moment

This is a speech that, in some form, a future president of the United States will have to give if our freedoms are to be restored.

My fellow Americans,

I come to you tonight not just as your President but as a teacher and a fellow learner. All teachers need to learn too. How can I lead, how can I teach, if the principles that guide my behavior are not renewed in me every day? Over the coming months, I hope we will join together as a nation in conversation. A conversation, not just with empty promises—such as “unleash prosperity for everybody” that one of my predecessors gave in 2009—but  a conversation with great ideas. And the point of this conversation will be not just to study what somebody else had said, but to learn that, as a free people, we must understand these ideas for ourselves.

Our nation is bankrupt, and it is time to rebuild. But we can only rebuild upon the principles that promote freedom and prosperity. So tonight, I come to you to begin a national dialogue on these principles. This educational process will take many years.

How can we learn anew the value of something that we have deliberately thrown away?  Many of us learn by stories. A story can give rich meaning to a principle, and tonight, I start with one. One would’ve thought that a basic principle such as you can’t destroy your way to prosperity would have been obvious. Unfortunately, back in 2009, it wasn’t obvious to even some trained economists.

You may recall the so-called “cash for clunkers” program. That program paid a person $4500 to trade in an old car for a new car. The government then required the dealer to destroy the old car. Not even the engine or the tires could be salvaged.

Famous economists, such as Alan Blinder, supported the bill as a good stimulus for the economy. Many politicians claimed the bill was good for the environment. Many in the public, their powers to reason having atrophied, based their opinions on the thirty-second bites they heard on the news.

But what could we have been thinking? The idea that we can create prosperity through destruction was proven to be a fallacy in 1850 by the French economist Frederic Bastiat in his essay “What is Seen and What is Not Seen.”

What is seen is that there is a new car sale that may not have occurred otherwise. What is unseen is the effect that the money would have had had it been saved or spent on something else. What is unseen is that there are fewer used cars for poor families. What is unseen is that the supply of used engines is reduced. What is unseen is that the environment is damaged by all of these cars that have been destroyed.

At one time in our history, logic was part of the curriculum in our schools. Reductio ad absurdum means to refute an argument by showing the logically absurd consequences of the argument. If cash for clunkers was a good idea, would it not have been even better to bulldoze old houses and give those families cash to buy a new house? Any school boy who had studied the logic of Bastiat’s essay could have pointed out that we would have been poorer, not richer, had we done so.

Didn’t Congress and the President know better?  A fair assessment is that most Congressmen and the President were illiterate about economics. But their ignorance was an effect, not a cause of the terrible policies that were passed early in the 21st Century. The real cause was that the public was ignorant and content to be so.

And so we begin this national journey to learn anew our lost heritage. The role of these national conversations, which I will lead, will be not only to teach, but to inspire. But your inspiration will come not by cheering at platitudes but by your earnest study. This is the price that must be paid to once again be a free people. Only a people who understand the principles of liberty will elect politicians who support these principles. Thomas Jefferson understood the power of education:  “I know no safe depositary of the ultimate powers of the society but the people themselves; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform their discretion by education. This is the true correction of abuses of constitutional power.”

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11 Responses to A Teachable Moment

  1. replicasjewelry says:

    Only $1billon out of $4billon is set aside for the project and now the program, along with car dealers, suffer a lot. And there are so much trouble for the car dealers to be refunded, this cash flow problem may slow them down in implementing the program.
    Any further discussion is welcomed

  2. RJ,

    Actually it is the taxpayer and the economy who “suffer a lot”. One of the recipients of the cash said this:

    It worked out for me. But this is really just a loan against the future — the money will have to be accounted for someday, so I’d like to thank all the other people in the country who helped my daughter get a new car.

  3. James D says:

    Not only the issue of taxpayer funds being used for this loony piece of legislation, but they overlook the simple things, like that fact that it takes far more energy and resource to build and sell another car (no matter how efficient) than to keep the “clunkers” running for a few extra years. The gas we’re saving destroying all these relatively late model year Ford Explorers is sucked up and wasted in producing yet 1 more car; another 4000 pounds of steel, aluminum, glass, rubber and plastic to consume gas with.

  4. Jim,

    Exactly on the environmental costs and the adjective “loony.” I found myself moved with sadness as I watched videos of perfectly usable cars being destroyed in the name of helping the economy and the environment. What madness!

  5. Bob G says:

    Sadly, the “cash for clunkers” program is held up as a model of progress by our policians! Their goal is to create short term policies that appear to create some help for an identifiable constituency. This goal is more important than the goal of actually identifying and then addressing the root causes and then solutions. And to your point, people should be able to identify this as economic madness if they would only drill down and THINK about what should be obvious to any Economics 101 student.

    WHY? If leaders chose the latter, it threatens THEIR status quo. There are signs that people are waking up to the non-sense being spouted as solutions by the very ones who have largely created the current mess.

  6. Bob,

    I hope you are right, about people waking up, but I think we may be just in the initial stages of that process.

    For example, someone maybe opposed to government health care but then for government subsidization of nuclear power. Principled opposition (and the responsibility to understand why) to both is rare.

  7. James D says:

    The only people I can see being “helped” by this mess are the dealership owners and the car companies. As one service manager put it, he doesn’t see much sense in destroying a car that’s nicer than the one he’s driving. Nor do I. Nor do I see the sense in destroying a perfectly serviceable vehicle that could be in the hands of someone less wealthy with the know how to keep her running. Nor in the sense of filling more scrapyards with these things. They’re draining the oil and then pouring silicates into the engines and running them until they fail, which means that the engine can’t be used for inexpensive used parts, and probably makes it nearly impossible to either rebuild the engine (not as a plug, but Jasper remanufactured engines are a lot cheaper than new cars), or to recycle that 500 pound block of steel. What a bunch of pure malarkey. Whoever thought up this scheme deserves an award for being able to get it through, and the politicians who pushed it ought to be put out of our collective misery!

  8. Jim,

    You’re correct, the engine must be rendered unusable. Madness.

    How far has this country sunk? Larry Kudlow who postures as a free-market supporter thinks the program is a great idea.

  9. igli1969 says:

    “Most people would rather die than think; in fact, they do so”: Bertrand Russell. And when they attempt to think, they seldom go beyond first effects. Nearly every conversation I have ever had that touched upon the effects, economic or otherwise, of any government program illustrates this observation. (Unless I’m talking to another libertarian. 😉 )

    Far too many economists, or scientists of all stripes for that matter, have sold their objectivity for government pieces of silver. And it’s not even silver any more, just base metals. But that’s another argument entirely, other than the eventual (beyond the first) effects of that substitution, such as inflation.

  10. Chris,

    Great Russell quote! Yes, sadly collectively we have lost our interest and ability to reason.

  11. Tesh says:

    Planned Obsolescence is iffy in the first place; it’s profitable, but morally bankrupt. When it’s enforced by law, it’s one more step into Orwellian insanity.

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