“No statist lies are safe from his scrutiny,” Lew Rockwell wroteabout economist Thomas J. DiLorenzo’s latest book. What follows ismy conversation with professor DiLorenzo about ‘Organized Crime:The Unvarnished Truth About Government,’ and the timeless economictruths to which it speaks.Ilana Mercer: A microscopic decrease in the increase ingovernment spending has sent our overlords in DC into apoplexy. Acut in oink-sector spending, they’re claiming, will destroy thechances of an economic recovery. It is the exact opposite. Youpoint this out in the chapter on ‘The Myth of Government JobCreation’: “Government spending increases unemployment because itcrowds out so much private sector job creation” (page 202). Explainwith reference to the zero-sum nature of government spending thecost of a government job, and Bastiat’s‘What-is-seen-and-what-is-not-seen’ principle.Thomas DiLorenzo: Every dollar that the government spends isa dollar that is not spent, or saved, by individuals, families,businesses and entrepreneurs. Therefore, whenever governmentgrows, private enterprise – the sole source of real job creation –shrinks, and unemployment there rises. Each government jobdestroys several genuine, private-sector jobs because of all thebureaucracy and red tape. For example, government may spend$200,000 to give one person a $30,000-a-year job. Andgovernment ‘jobs’ are usually involved in doing something that noone but a few politicians ever voiced a preference for.Private sector jobs, by contrast, cannot survive unless they arepart of an enterprise that succeeds in satisfying genuine consumerwants. By contrast, Keynesians like Paul Krugman would haveus believe that prosperity is created whenever government takesmoney out of our bank accounts – with the threat of forcing us tolive in a cage for years if we do not pay – and letting governmentbureaucrats squander the money instead.Part of the Keynesian mantra is that such spending could and shouldbe on anything – it doesn’t matter, as long as it is governmentthat is doing the spending. The biggest year ofprivate-sector economic growth in American economic history was1946, when the nation was in the middle of a two-thirds reductionin federal government spending as the military was demobilized fromWorld War II. This proves that the Keyensians were alwaysdead wrong, but of course they and their political patrons ignorethis reality.IM:You quip: “In Washingtonese, if one proposes a $100billion spending increase, and actual spending increases by ‘only’$90 billion, they call it a $10 billion budget cut.” We’re in thegrip of exactly this kind of a paradox. How is the ‘WashingtonMonument Syndrome’ playing out in its ‘sequesteria’version? TD:The ‘Washington Monument Syndrome’ is an oldbureaucratic trick that is so named because the head of theNational Park Service closed down the Washington Monument – themost popular tourist attraction in Washington, DC – in the 1960safter Congress refused to fully fund his pie-in-the-sky spendingwish list. Tourists from every state on their annual vacationscalled their congressmen to complain, forcing them to give the ParkService bureaucrat all the money he wanted. State and local governments routinely use this sleazy gimmick byimmediately threatening to shut down police protection, garbagecollection, ambulance service, school buses and whatever else wouldimpose maximum pain on the public whenever there is talk of fiscalresponsibility. The Obama administration has taken this tobuffoonish extremes by threatening to close down airports, etcetera, were government spending to increase by about onepercentage point less than they wish over the next 10 years.No one in Washington has proposed cutting a single cent out of thefederal budget, despite the fact that the surest route to economicrecovery would be to chop federal spending in half, and then inhalf again next year.IM:Like tax havens, tax loopholes are ethical andefficient. Your point about efficiencies is especially good: “Thetime spent by citizens trying to legally avoid taxes is in fact agood investment of their time.” Decode the Orwellian Doublespeak ofphrases like ‘simplifying the tax laws and revenueneutrality.’ TD:Politicians and statist economists intentionally confusethe public when they refer to proposed tax increases as ‘taxreform,’ and to tax cuts as ‘wasteful’ or ‘unnecessarilycomplicated.’ I have long agreed with Milton Friedman’s dictum thatthe cause of freedom and prosperity is always served by any taxcut, of any kind, at any time. One has to realize that thepurpose of government is for those who run it to plunder those whodo not.Depriving political parasites of revenue is always and everywhere agood idea. The rhetoric of ‘revenue neutrality’ really meansthat under no circumstances should government – unlike everyoneelse in society – ever, ever spend a penny less next year than thisyear. Any tax reform should therefore never, ever end up puttingmore money in the pockets of the public at the expense of thepolitical parasite class. IM:Expect the “compassion of the IRS and the efficiencyof the post office” from Obama’s healthcare plan, you forewarn. Butas Obama’s army of harpies at CNN would argue, his politburo ofproctologists has involved itself in the insurance industry merelyto enhance markets. Or, to ‘bring down costs.’ Dispense with thisidiotic notion. TD:Government intervention always causes costs to rise andquality to decline. This has always been true; it hasespecially been true in the field of health care in places likeCanada and Great Britain where healthcare was nationalized longago. There is no reason to believe that the socialists in the Obamaadministration are better at socialism than were the Soviets, theEastern Europeans, the Chinese, the Cuban government or anyoneelse.The absence of a market feedback mechanism based on profits andlosses guarantees government failure. Public choice economistsrefer to a ‘bureaucratic rule of two’ with regard to governmentalprovision of any type of service, based on hundreds of empiricalarticles that show that, on average, a government takeover of anyfunction will double the per-unit cost of providing the product orservice. More on GDP, Obamacare and the elusive economic recovery atBarely a Blog, where the conversation withprofessor DiLorenzo continues.