I CAN'T BELIEVE someone like Bruce Bartlett could manage to write such a stupid thing:
In 1944, the Austrian economist F.A. Hayek published an extraordinarily influential book, The Road to Serfdom. In it, he argued that liberalism eventually leads to totalitarianism; that is, once a nation has embarked on the creation of a welfare state, there is no natural limit to the size of government until it controls everything, socialism becomes pervasive and political freedom evaporates.Well, if you turn someone else's argument into a cartoon it's very easy to say it's wrong, isn't it. Or if you see the world in black and white with no shades of grey then you can't see there's the possibility that Europe is further down the road, although not so much that it's already there. Yet.
It is an argument that made sense at the time Hayek made it. Liberals were indeed soft on communism in those days and engaged in a massive expansion of government throughout Europe. In England, where Hayek was living when he wrote his book, much private industry was being nationalized, cradle-to-grave welfare programs were being instituted and many of those advocating such measures were not shy about pointing to the Soviet Union as a model to follow.
Since Hayek's book appeared, it has been an article of faith among American conservatives and libertarians that every expansion of government is a step on the slippery slope to totalitarianism. National health insurance today, the gulag tomorrow, many of those on the right genuinely believe, often citing Hayek in support.
Consequently, it is axiomatic that Europe, which is much further along the road to a welfare state than the U.S., is also further along the road to socialism and totalitarianism. Thus it is a grave insult among conservatives for one to be accused of wanting to Europeanize the American economy. It is only a small step removed from being called a communist or Marxist. The difference is only one of degree.
I am often accused of wanting to Europeanize America these days--my friend Larry Kudlow always says so--because I think the magnitude of our fiscal problem is so large that a significant tax increase is inevitable, and that the magnitude of that tax increase is so great that we will eventually need a value-added tax because it will be impossible to get enough revenue through the income tax. Raising income tax rates enough to plug our fiscal hole would be much too debilitating, economically.
In the conservative mind, the VAT, which is embedded in the prices of goods, is the foundation upon which the European welfare state rests. Without its enormous revenue-raising capacity the Europeans never could have financed their welfare states. In short, without the VAT there would be no welfare state in Europe, government would be smaller and the threat of totalitarianism would be much less, conservatives reckon.
By advocating a VAT, I am, in effect, advocating totalitarianism, many of my friends believe. If we institute a VAT it will be like pouring gasoline on the fire of big government. It will get bigger overnight. The only thing holding this country back from having a welfare state as large as Europe's, conservatives argue, is the low level of taxation that most Americans are loath to abandon. Thus in their own minds, conservatives believe that holding the line on taxes, no matter how large the deficit, is the essential prerequisite for the preservation of liberty.
The only problem with this analysis is that it has no factual basis whatsoever. If Hayek were even remotely correct, all of Europe would be one huge gulag by this time. At the very least, Europe would be mired in poverty, growth nonexistent and freedom hanging on by the thinnest of threads.