Dartmouth economics professor Meir Kohn railed against government economic intervention in a lecture sponsored by the College Libertarians on Thursday, arguing that the historical record indicates that such policies have been damaging for the United States and other nations.
"Congress wants to do something before the election," Kohn said, referring to speculation of further federal intervention in the current financial crisis. "God help us. It will only make things worse."
Progressivism, the belief that people can create heaven on Earth through the power of the state, uses economics to understand how society works, Kohn said. Progressivism, however, is naive and unrealistic about the motives behind governmental action, he said.
"It doesn't consider government as a bunch of people with power and their own interests, but as this magical benign thing that acts in our interest," Kohn said.
Government social and economic intervention tends to produce unfavorable results since there is no scientific basis to understand how society works, he said. Human society is incredibly complex, and as a result, it is difficult to predict the effects of any government action, he explained.
"When government policy has terrible effects that no one expected, people tend to say, 'If only we had been smarter, maybe we could have known what would happen,'" Kohn said. "This kind of process is not predictable. It's not that we're dumb, we'll just never get the hang of it."
During the question and answer session that followed Kohn's lecture, one student said the American health care system is an example of a sector with relatively little governmental intervention, or progressivism. The student said health care is private, but not particularly effective. Kohn argued that the American health care system is actually the product of earlier governmental intervention into the economy. During World War II, the government placed a cap on employee wages in certain private sector industries, he said. When the economy boomed during the war, companies could not compete with one another by offering higher wages, so they offered additional benefits, including pensions and health care plans.
Kohn noted that this was a typical example of government intervention.
"You are relying on the government to [intervene], and the government does it badly," he said.
When government intervention is not widespread, citizens are far more generous in supporting social welfare, Kohn said, noting that Americans give far more to charity than Europeans. He added that when governments begin the redistribution of resources, the redistribution is subject to political manipulation.
"The whole of system of redistribution is subject to political manipulation," Kohn said. "Under the guise of helping needy groups, instead I will help groups that will help support my party."
When the government does intervene, Kohn said it must first aim to "do no harm." Government intervention should then proceed much like drug testing, he added.
"First do little experiments and see how they work," Kohn said. "Be careful and see that the intervention is safe and effective, and then still be very careful."
In response to a question from the audience, Kohn said the historical record indicates that intervention has often been detrimental in the long run. Revisionist theories that blame the Roosevelt administration for prolonging the Great Depression "make a lot of sense," he said. He noted that Roosevelt did not conduct policies in a predictable manner and acted as a "loose cannon," which in turn scared investors. It was the resulting lack of investment that prolonged the Depression, he said. The Depression lasted far longer in the United States than it did in Europe, Kohn explained.
Kohn spoke at the College Libertarians first faculty lecture, held in Haldeman Hall. The group formed in the fall of 2007 to offer an alternative to the main stream party organizations for students who are fiscally conservative and socially liberal, Harsh Gupta '10, the group's co-president, said.
