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The 1948 editorial that could be the GOP response to every Obama State of the Union Address


Henry Hazlitt skewers Barack Obama's agenda.

US Republican Senator Ted Cruz (R) and Republican Senator from South Carolina Lindsey Graham listen to President Barack Obama deliver the State of the Union address before a joint session of Congress on January 28, 2014 at the US Capitol in Washington. AFP PHOTO/Saul LOEB (Credit: SAUL LOEB/AFP/Getty Images)

The below article entitled "Blueprint for Disruption" was published in Newsweek on January 19, 1948, in response to President Harry Truman's State of the Union Address from that year. It was written by free-market journalist Henry Hazlitt, best known for his classic "Economics in One Lesson," and excerpted from a collection of his Newsweek articles from 1946 to 1966 entitled "Business Tides."

"President Truman’s annual message to Congress was primarily a campaign document. It seems to have been written chiefly in fear of losing extreme leftist votes to Henry Wallace. The basic philosophy it embodies is unmistakable. It is the philosophy of the welfare state, the doctrine of salvation through bureaucracy. Free enterprise, free markets, and free prices are no longer to be trusted to stimulate and guide production and consumption. Everything is to be in charge of omniscient and omnipotent bureaucrats.

Everyone is promised economic security, regardless of what he contributes to production. We are to have bigger job insurance, bigger old-age benefits, bigger survivors’ benefits, bigger education. The government is to subsidize our medical care and our housing. It is also to reclaim land, replant forests, build more TVA’s. On top of this, it is to spend in fifteen months on European aid alone as much as it used to spend in the same period before the war for all its purposes combined.

[sharequote align="center"]If we can raise wages just by passing a law...without...harmful consequences...Why stop anywhere?[/sharequote]

[instory-book ISBN="9781610162036"]

Mr. Truman, by some miracle, is at the same time for “economy.” “Government expenditures have been and must continue to be held to the lowest safe levels.” But the proposals he makes would immeasurably increase even present expenditures. And the Federal government is already spending in one year as much as it took it five years to spend just before the war. Of course all this money is to be taken in taxes only from “the rich.”

What Mr. Truman forgets is that the entire wealth and welfare of the country depends upon production.

The total amount of the national product is far more important to the average family than any possible redistribution of it. Yet Mr. Truman’s schemes and taxes would undermine, discourage, and disrupt production. It would destroy incentives. The producers would not be permitted to enjoy the fruits of their production, and others would be handed the fruits whether they produced anything or not.

Mr. Truman’s speech is a tissue of self-contradictions. He is for “free enterprise” and “free competition,” but demands price fixing. He wants to “continue price supports for major farm commodities.” But he declares that the price of food is too high and that it must be reduced by government edict. While prices are to be held down, costs of production are to be forced up.

The minimum wage is to be increased from 40 to 75 cents an hour. This would be a wage boost of 871⁄2 percent. All workers above the minimum would of course insist on the maintenance of their existing differentials. Production costs and prices would be forced up enormously, and this might cause heavy unemployment even in spite of monetary inflation. If we can raise wages just by passing a law, and do it without such harmful consequences, why not $1 an hour or $2 an hour? Why stop anywhere?

We must enlarge our industrial capacity, continues Mr. Truman: “At least $50,000,000,000 should be invested by industry to improve and expand our productive facilities over the next few years.”

[sharequote align="center"]What Mr. Truman forgets is that the entire wealth and welfare of the country depends upon production[/sharequote]

But such funds could only be provided out of past profits and would only be invested if there were an inviting prospect of future profits.

Yet Mr. Truman is shocked by existing profits, even though, as a percentage of the national income (especially when proper allowance is made for depreciation and inventory replacement) corporate profits today are not at all abnormally high. Mr. Truman wishes to increase taxes precisely where the increase would do most damage to production—on the corporations that are the very means of the workers’ livelihood. He would do this in order to free some 10,000,000 voters in an election year from all income taxes, and to create the short-lived illusion that present enormous government expenditures can be paid for only by a minority, by “the rich,” by “somebody else.”

Candidate Truman’s program is demagogy run riot. It is a blueprint for disruption. He asks this country to imitate slavishly all the disastrous economic policies that have brought Europe to its present critical state, and he wants us to call this process American 'leadership.'"

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