Roger’s Rules

Wealth creation vs. spending: Boris Johnson lodges a "small, sheep-like cough of protest."

Boris Johnson, the redoubtable Mayor of London, cuts through the bickering fog of self-righteous protestation that characterizes so much political discourse today. The real debate, the Right Honorable Lord [see correction in comment #4 below] Mayor observes, is not between Labour spending versus Tory cuts — the “progressive” (Yanks read “Democratic”) versus the “hard-hearted” (read: “Republican”) approach to public expenditure. No, the real debate is between those who focus on disbursing and those who concentrate on creating wealth. What Mr. Johnson describes as a “small, sheep-like cough of protest” in his article in the London Telegraph actually contains more economic wisdom than 87 white papers issued by Washington or Whitehall, 789 columns emitted by Paul Krugman, or 7896 columns by Joseph Stiglitz. “This whole debate is back to front,” Mr Johnson observes.

We are putting the cart before the horse. Every time you hear a politician stand forth and invite your good opinion by offering to “cut” this or “invest in” that, ask yourself the prior question: just how did the politicians come by this money? Who created it? And what are we doing to help them create more?

This is taxpayers’ money, amigos. It was produced by the sweat upon the brow of the 23.6 million private-sector employees, and by the hundreds of thousands of British businesses — 80 per cent of them with five employees or fewer — that are struggling on in spite of the recession.

A breath of fresh air, what? There’s more:

Instead of more delectable disputations about the exact size of the state, we need to change the focus of the argument. Of course there are important choices to be made and it is vital, in my view, that we spend on infrastructure investment (notably in London) rather than on consumption. But we are not dedicating anything like enough political energy and interest to the real issue: who the hell is now speaking up for the wealth creators of this country?

The Obama administration should prick up its ears. The Democrats in Congress are trying to figure out exactly whom and what they can tax in order to come up with $600 billion to pay for the Presidents efforts to transform all of American health care into wholly-owned government programs like Medicare and Medicaid. (Pause, please, to ponder that.) What they should be worried about, as Mr. Johnson notes, are strategies that make it easier to create wealth.

Instead of this arid debate about “cuts versus spending”, we should be having a grown-up national conversation about the cost of regulation to business, and the growing burden of public-sector pensions. Instead of a moribund Labour Government, reeling from disaster to disaster, we need a new government that will resist the appalling laws that are being generated by Brussels. Whatever you think of the hedge-fund industry, it creates 40,000 jobs in this country, and we have 80 per cent of the world’s hedge funds. In a bid to reduce the dominance of London, the EU has come up with a new directive full of stuff cut and pasted from French law. Where is the full-throated roar of defiance? Certainly not from Labour.

Mr. Johnson has tailored his comments to the situation in London. But they apply equally to the United States. One of the many blighting effects of socialism is the distorted view of economics it disseminates. Economics is not primarily about the distribution of wealth. Rather, it is about the creation of wealth. That is the conditio sine qua non of the whole game. That is why capitalism is superior to every other economic arrangement yet contrived: given its head, it is a far more efficient engine for the creation of wealth than all its competitors. Remember this the next time you hear “politicians swanking about what they are going to do with public funds”: the money they are planning to distribute “was ultimately created by private enterprise; and, if they don’t help the wealth creators, they won’t have any money to spend.”

A final bonus in Boris Johnson’s column: the word “necrarchy,” government by zombies, the living dead. Mr. Johnson is talking about poor Gordon Brown, but I reckon that word will come in handy for a political situation coming to a neighborhood near you.