President Obama recently disparaged free-market economics as “you’re-on-your-own economics.” It’s a catchy phrase—rhythmic, alliterative, clever. I like the sound of it. Too bad it’s bunk.
It’s politically clever (read: it’s misleading).
The only genuine “you’re on your own economics”—let’s call it “yo-yo economics,” for short—is known as “Robinson Crusoe economics.” It applies only to those who really are on their own, like sole inhabitants of islands or hermits. Apart from those oddities, human beings don’t live in solitude, but are interdependently connected in a social division of labor.
In a free-market economy, individuals prosper to the extent that they contribute economic value to others. Those who earn high incomes are producing more of what people value than those earning lower incomes. To Obama and his ideological kindred, social justice consists of government overseeing a compulsory redistribution of property from the productive to the unproductive. Disdaining free markets as “yo-yo economics,” Obama advocates a radically different agenda—what we might call “we’ll always take care of you” economics, or, to use another child’s toy as an acronym, “BB economics” (as in “Big Brother economics”).
We may concede to the president that, in a free market, some people will be in need. These include children, the sick and disabled, and even some healthy, involuntarily unemployed adults. It is a non sequitur, though, to conclude that the federal government must provide economic support to those people. Relatives, friends, neighbors, churches, voluntary community organizations, etc., can address those needs at far less cost and with a much more personal touch than can federal bureaucracies. Even if one believes that government must be involved, local, county, and state governments are closer to the situation than Uncle Sam.
The declaration that federal programs are not essential (not to mention, extra-constitutional) is anathema to the president’s belief in BB economics. According to him, yo-yo economics “has been tried in history and it hasn’t worked. It didn’t work when we tried it in the decade before the Great Depression. It didn’t work when we tried it in the last decade.” Wrong, wrong, and wrong—three Obama assertions, three spectacularly erroneous statements. Let’s correct those errors with facts.
1) What the president belittles as “yo-yo economics”—that is, a system characterized by voluntary economic transactions—predominated for the first 125 years of our history. The glaring and regrettable exception, of course, was slavery—an institution that Obama presumably abhors, which makes it strange that he strives so energetically to institutionalize a system in which some citizens are entitled to have some of the income for which other citizens have worked. The salient historical fact here is that during the period of yo-yo economics, the United States developed into the richest country in the world. Contrary to the president’s counterfactual statement, “yo-yo economics” did work.
2) Later in our history, in the 1920s and 1930s, the superiority of the free-market/yo-yo over the government-intervention/BB model was clearly demonstrated. The depression of 1920-21 was as severe and rapid an economic contraction as any in U.S. history. Unlike the contraction in 1929-30 that eventually persisted for 12 years, the severe depression in the early ‘20s ended in 1922. By 1923, the economy was firing on all cylinders. Why?
The policy response of the Harding-Coolidge administration was to cut tax rates, slash government spending in half—basically to get government out of the way to let free markets make the necessary price adjustments. In the 1920s, yo-yo economics was an indisputable success. Obama’s insistence that “it didn’t work when we tried it in the decade before the Great Depression” is patently untrue. Obama finds the Roaring ‘20s as inconvenient for his agenda of BB economics as some global warming fanatics find the Medieval Warm Period for their agenda.
In stark contrast to the successful policy response in the early ‘20s, a decade later, Presidents Hoover and Roosevelt opted for BB economics—massive increases of taxes, government spending and debt, new regulations, restrictions; in short, one policy error after another. The result was the 12 years of made-in-Washington misery that became known as the Great Depression. Ignoring that grim historical lesson, Obama has persisted in pushing 1930s-style, debt-financed, “stimulus” spending and a huge expansion of government power over economic activity; none of that (historically successful) yo-yo economics on his watch.
3) Obama’s third mutilation of history was that “we tried [yo-yo economics] in the last decade” under George W. Bush and “it didn’t work.” Here, the president is half-right. It’s true that the last decade’s overall economic performance was inferior. The problem with the president’s statement is that George W. Bush’s policies were the antithesis of yo-yo economics—everything from the addition of a new federal entitlement (Medicare Part D) to Wall Street bailouts to expanding the annual federal budget from $2 to $3 trillion per year in only eight years
The president’s aggressive historical revisionism, replacing fact with fiction about which economic policies have worked and which have failed, is no mere academic debate. We’re not dealing here with inconsequential trivia like his 2008 gaffe about having visited 57 states. The stakes are much greater here. Obama has contrived a historical narrative that justifies the kinds of economic policies that retard rather than promote prosperity.
As the Good Book teaches, the truth will make us free (John 8:32). A corollary of that axiom is that falsehood will make us less free. It’s no secret that the president is ideologically opposed to free markets. That he would so brazenly mutilate historical facts in pursuit of his illiberal agenda is alarming. When a leader is more interested in power than in truth, freedom is under assault. Be prepared for more Orwellian rhetoric as the presidential race heats up. The choice that American voters will make this year will be momentous.
A version of this article first appeared at Forbes.com.