No thanks, Mr. Jones, I prefer not to drink the Kool-Aid

On Nov. 18, 1978 mem­bers of the People’s Tem­ple in Guyana, led by Jim Jones, com­mit­ted mass sui­cide by drink­ing cyanide-laced Kool-Aid. This unfor­tu­nate episode rep­re­sented a vivid dis­play of what can hap­pen when peo­ple are lulled into a false sense of security/dependence and give up their indi­vid­ual decision-making capa­bil­i­ties to some­one who dic­tates to them what is in their best inter­ests. Sadly, had these 900-plus peo­ple not suc­cumbed to the destruc­tive, siren-like call of Jim Jones, their lives and fam­ily his­to­ries would not have ended so tragically.

Over the past sev­eral years, it seems as though the lessons of Jon­estown were not learned by many, as these self-destructive ten­den­cies seem very much alive today. Who/what are the modern-day Jim Jones types that lull many into that false sense of security/dependence? Gov­ern­ment and its policy-making offi­cials who tell peo­ple that if they sim­ply set aside their indi­vid­u­al­ism, they and all of soci­ety can be bet­ter served. All-in-all, it sounds like a lovely notion, but in the long-run it is likely to be just as deadly as drink­ing some cyanide-laced brew.

What are some exam­ples of this unhealthy obses­sion with sub­mit­ting to the “greater good” and set­ting aside self-reliance and sen­si­ble eco­nomic rea­son­ing? Most notably, since the last year of the Bush admin­is­tra­tion and through­out the Obama admin­is­tra­tion, U.S. cit­i­zens have seen a seem­ingly never-ending series of “fis­cal stim­uli” which were sup­posed to juice up the econ­omy and elim­i­nate an approach­ing reces­sion (accord­ing to the Bush admin­is­tra­tion) or lessen the impact of an eco­nomic down­turn (dur­ing the Obama administration).

Time and time again, the opti­mistic fore­casts pro­duced by politi­cians to jus­tify ever-increasing deficits were proven wrong, and the coun­try wadded fur­ther into eco­nomic quick­sand. And much like the unfor­tu­nate fol­low­ers of Jim Jones, the cyanide-laced eco­nomic Kool-Aid served up by the past two admin­is­tra­tions have killed much of our nation’s eco­nomic vital­ity, as pay­back from deficit spend­ing comes due. What seems par­tic­u­larly obnox­ious about this expe­ri­ence is that future citizens/taxpayers will be the unfor­tu­nate ones forced by past deci­sions to drink a deadly fis­cal concoction.

Not con­tent to rely only upon fis­cal pol­icy mad­ness, mon­e­tary pol­i­cy­mak­ers also got into the game and laced the mon­e­tary punch­bowl with another deadly drink. As dis­cussed a num­ber of times in past columns, Alan Greenspan and Ben Bernanke engaged in highly unsound mon­e­tary pol­icy prac­tices, first (under Greenspan) by keep­ing mon­e­tary pol­icy too loose for too long; thereby allow­ing the hous­ing cri­sis to develop and ruin the lives of mil­lions of Amer­i­cans. Not con­tent to allow the excesses of the past to end, cur­rent Fed­eral Reserve Chair­man Bernanke has kept the mon­e­tary pol­icy spig­ots fully open for the past few years. While this may have had a ben­e­fi­cial impact as finan­cial mar­kets began implod­ing in 2008 — under the influ­ence of the Greenspan excesses of ear­lier years —those favor­able effects have long since been elim­i­nated and have been replaced by an eco­nomic sword of Damo­cles swing­ing over the col­lec­tive neck of Amer­i­cans. In time, with­out an end to the mon­e­tary stim­u­lus, some new finan­cial bub­ble may well develop and liv­ing stan­dards will again be in dan­ger of collapse.

And just to be clear, this is not just a fed­eral prob­lem. Real­ize the incli­na­tion to elect self-declared eco­nomic prophets also occurs at a more local­ized level. Con­sider a cou­ple of local exam­ples. Just last week Coda Auto­mo­tives announced they were giv­ing up their quest for $500 mil­lion in fed­eral loan guar­an­tees to con­struct an electric-battery plant in Colum­bus. But state and local offi­cials were also going to toss in incen­tives worth more than another $50 mil­lion. In the end, growth in the elec­tric car mar­ket has proven insuf­fi­cient and kept decision-makers from cre­at­ing a local Solyndra-like disaster.

Or con­sider the episode of Sky­Bus. The dis­count fare air­line was sup­posed to be a home-grown suc­cess, with ini­tial state and local incen­tives esti­mated to be over $50 mil­lion. Not only did the com­pany fail after less than one year in oper­a­tion, but the gov­ern­ment sup­port given to Sky­Bus caused a then-existing air­line, Jet­Blue, to exit the mar­ket and pro­duce unnec­es­sary job losses.

In short, despite the sup­posed wis­dom of pol­i­cy­mak­ers, the toxic eco­nomic Kool-Aid offer by politi­cians should be refused, with peo­ple being bet­ter served by rely­ing upon their own thoughts and tal­ents. While mar­ket mech­a­nisms and self-dependence may not pro­duce per­fect results, they should cer­tainly out­per­form the Jon­estown solu­tion that awaits those who sheep­ishly fol­low a self-proclaimed savior.

Dr. James New­ton serves as Chief Eco­nomic Advi­sor to Com­merce National Bank and is an aux­il­iary fac­ulty mem­ber in eco­nom­ics and sta­tis­tics at OSU-Marion and OSU-Newark. Dr. Newton’s views do not nec­es­sar­ily reflect those of Com­merce National Bank or OSU-Marion/Newark.

Posted by Jim Newton on Apr 3 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.