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The Economic Ignorance of Liberals
by Jacob G. Hornberger

In a recent article entitled Gunning for Health Care,” New York Times columnist Gail Collins made a catty remark about libertarians. Referring to William Kostric, the New Hampshire libertarian who was openly carrying a pistol during a protest, Collins wrote: “Beyond an air of mild surprise, he seemed like your average hard-core Ron Paul voter — male, smug and obsessed with the money supply.”

That smart remark reflects one of the big problems that afflict American liberals: their dismal understanding of economics. I’d be willing to bet that Collins, who was a journalist major in college and has a M.A in government, has never read one page of Mises, Hayek, Hazlitt, Rothbard, or Bastiat. My hunch is that her understanding of economics is primarily based on the Keynesian nonsense that was taught to her in her undergraduate and graduate programs.

Ms. Collins, it’s not just that libertarians are obsessed with the money supply, it’s that we don’t like what the federal government has done to people’s money, i.e., debase it decade after decade in order to fund the ever-increasing programs of the welfare-warfare state.

An interesting aspect of this is that liberals purport to love the poor. That’s what they based their support of the socialistic welfare state on. Yet, the Federal Reserve’s debasement of the currency has oftentimes hurt the poor the most, especially those on fixed incomes or those who naively invested their savings in government savings bonds.

Another interesting aspect to this is that many liberals have no idea that government is responsible for inflation. They think that inflation is some type of illness, like the flu, that periodically hits different nations.

Why are libertarians concerned about inflation? Not only because it’s so destructive but also because it’s a severely dishonest, even fraudulent, way for government to be funding its operations.

After all, if the government needs more money, then why not simply raise taxes? The reason they don’t do that is that they fear an angry and outraged citizenry, much like they fear those angry and outraged Town Hall participants.

So, instead of raising taxes they simply go out and print the money to pay for their projects, knowing that people like Ms. Collins won’t have any idea that the government is the cause of the inflation.

How is this increase in money supply ultimately manifested? Through a general increase in prices of everything that is priced in dollars. There’s no other way to reflect this decrease in the value of the dollar, a decrease that is brought about as a result of a tremendous increase in the number of dollars in circulation.

What will happen when down the road prices soar as a consequence of the Federal Reserve’s expansionary policies? I predict that Gail Collins, like most other liberals, is going to exclaim, “This inflation is the fault of the speculator, the businessman, the greedy people, and OPEC.”

You see, Collins and other liberals are not going to be able to recognize that it’s not actually the prices rising but rather the value of the dollar falling, which is manifested by rising prices. And the reason they won’t be able to recognize this is, alas, because liberals just don’t have a good understanding of economics.

Indeed, when prices begin soaring my prediction is that Collins and most other liberals will begin calling for price controls and even wearing buttons on their lapels exhorting people to “Whip Inflation Now” and perhaps even displaying bumper stickers on their cars saying “Support the Fed.”

Through it all, of course, they’ll be scratching their heads in befuddlement over why libertarians were “obsessed with the money supply.”

Jacob Hornberger is founder and president of The Future of Freedom Foundation, publisher of Your Money or Your Life: Why We Must Abolish the Income Tax by Sheldon Richman. Send him email.