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.