Leitmotif

Reason as the Leading Motive

Government Stimulus During a Recession

Posted by Jerry on May 22, 2008

Question:

While you’re waiting for the free market to correct itself in the event of a depression or a recession, there are real people facing dire situations–going hungry, losing their jobs, struggling to make ends meet, and so on. In such situations of widespread economic crises, shouldn’t we allow at least for a temporary stimulation by the government in the form of investments, bail-outs, jobs, infrastructure projects, etc.? It would only be for the short-term, till the recession or depression is over, and then we can revert to free market normalcy. The problem with the free market is, while it is self-correcting, we can never guess how long or how quickly it might take to rectify a situation; in the meantime, we cannot leave people helpless, jobless, and starving. Can we?

My response:

From all appearances, the above question seems to be focusing on a pragmatic situation–specifically, a concrete economic scenario of nationwide economic depression or recession. The question seems to be about politics and economics and about the role of government. The question implies that it is in agreement with free market capitalism, but wants to allow for some government concessions in times of emergencies.

However, if you carefully consider this question, you will realize that it is actually a question about ethics–philosophy. It is asking about the proper ethical response that society must provide in times of economic crises. This is not primarily a discussion on the concretes of an economic crises but a discussion on the merits of rational egoism.

The question has already conceded the grounds to altruism; it mounts a challenge to rational egoism from the platform of altruism and the terrace of politics. The only proper response to this kind of a question is to offer an ethical alternative to choose from: does one man’s dire suffering morally justify the enslavement or sacrifice of another man? The answer to this will inexorably lead to an answer to the above question.

No amount of need in this world justifies human sacrifice. The only consistently logical foundation for laissez-faire capitalism is the ethics of rational self-interest; no other ethical system can logically justify capitalism without inherent contradictions. Thus, if capitalism is your goal in politics and economics, then rational self-interest in your means to get there. You cannot shortcircuit the ethical means and replace it with altruism and still hope to achieve the goal of capitalism. It just won’t work.

Now, specifically, with regard to those suffering the most during an economic crises, if you discard the hidden assumption that only the government can provide the best aid in such times of need–if you discard the altruistic premise that one man’s need becomes a moral obligation on another man–then you will be open to innovatively imagining how the free market can mobilize enterprising individuals and corporations to voluntarily, generously, perhaps even profitably, help those in dire need until normal conditions are restored.

My friend Dexter once pointed out to me how the Catholic Church–the richest Church in the history of human civilization and the one with the largest membership–is fully funded on a voluntary basis. Every church-goer is a voluntary contributor to the functioning of the mega-monumental church that the Universal Catholic Church is. Think about it: the Catholic Church owns its own country, even! And it manages to control, mobilize, and deploy funds to practically any corner of the globe; and all of that money comes from regular, faithful, individuals who enjoy the value of their religion and their membership in the Church.

4 Responses to “Government Stimulus During a Recession”

  1. evanescent said

    Great to read a new article on here, Ergo! Hope it’s the first in a resurgence of new articles!🙂

  2. Nice to see an explanation which is rooted in logic and reason after tearing apart the question to identify the fundamental assumptions.
    The only counterpoint I have here is concerning the example provided at the end. The church is definitely not a corporation and is built on certain fundamental assumptions which are essentially different in terms of ethics-philosophy as compared to those of a free market. I hope you can clarify this.

  3. Ergo said

    Hi Kailash,

    The reason I brought up the example of the Church is to show how a group of people can voluntarily mobilize great amounts of money and resources in the aid of whatever they consider is valuable to them (of course, most of their values are rooted in anti-life premises and are positively detrimental, but that’s not the point here).

    Basically, I want to drive the point that it is mostly our lack of imagination–rather than some inherent property of the government–that psychologically keeps us bound to the idea of needing a government.

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