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President Clinton continued his building-a-legacy campaign this week
with what Time magazine called his “tour of the poor,” a quick swing by
Mr. Feel-your-pain through the few stubborn pockets of poverty that
persist in the midst of America’s general prosperity at the end of what
few in the media will be calling the second decade of greed. But as he
offered publicity, encouragement and federal goodies to those the boom
has missed, few paused to note that the most stubborn pockets of
economic laggardness are precisely those in which the federal government
has been the most active and “compassionate.”

The federal government has been saving Appalachia at least since the
middle 1960s, with dozens of programs, an active regional commission and
billions of taxpayer dollars. How can it be that after all this lavish,
loving attention — all this fussy micromanagement — that Appalachia is
still trailing the rest of the country in economic achievement? If
federal programs were the key to economic prosperity, you would expect
Appalachian to be way ahead of the rest of the country.

You don’t suppose the micromanagement and the encouragement of the
“let your kindly Uncle Sam handle things for you” attitude has anything
to do with it, do you?

In inner-city areas like East St. Louis and Watts, federal programs
and mandates abound. The Community Reinvestment Act, supposedly designed
to prevent discrimination in housing and business loans, has
accomplished the opposite in practice. As author and journalist James
Bovard put it in his wonderful little book, “Shakedown,” under the CRA,
“‘fair lending’ means losing sufficient money to satisfy politicians and
political activists. The essence of fair lending has
become a political shakedown in the name of social justice.” That
sounds like a wonderful way to encourage businesses to get involved.

Government schools in inner cities are almost all terrible; welfare
programs help to break up families; government drug cops prey on the
hopeless; affirmative action helps few and wounds many. Sounds like more
government is really the solution, eh?

The Pine Ridge Indian Reservation is essentially a federal government
plantation. While tribal authorities have some discretion, federal
agents make all the most important decisions. The government discourages
enterprise and individual ownership while encouraging dependency and a
sense of victimization. It provides a pitiful system of health care. Not
surprisingly, unemployment at Pine Ridge is in the 75 percent
neighborhood.

To be sure, the president, who has one of the finest ears in the land
for thoughtful-sounding but essentially empty rhetoric, made a lot of
the right sounds. He wasn’t there to promise the moon and the stars from
the federal till, but to encourage private companies to take a second
look at these areas filled with eager workers. While he did double the
number of subsidized mortgages on Native American reservations, he
talked mostly about the promise of “empowerment zones.”

Therein lies a tale. The original concept was “enterprise zones,” and
it came first, in the late 1970s and early 1980s from British scholars
like Madsen Pirie and Stuart Butler. The idea was to relieve
economically depressed neighborhoods of practically all regulations,
taxes and licensing schemes, at least for a few years — to remove
government-imposed barriers to forming new businesses, to encourage
people to put “sweat equity” into their entrepreneurial dreams. Butler
and Pirie sold the idea to Margaret Thatcher, then sold it to American
politicians like Jack Kemp.

But by the middle 1980s, these same scholars were complaining that
the British government hadn’t gotten it right in practice. They never
did lift burdensome regulations — probably the main impediment to
starting a business when you’re not already rich — even temporarily.

What had been envisioned as oases of healthy enterprise turned out to
be havens where existing businesses with political connections could get
tax breaks by locating a token office or two. The idea of reducing or
eliminating government barriers was transformed into a way of granting
government preferences and favorable treatment.

Most enterprise zone experiments in the United States resembled the
way the British government had done it rather than the way the British
scholars had envisioned it, and the results were tepid at best. Then
“third way” Democrats latched onto the idea and changed it even further
with the concept of “empowerment zones.”

Note the shift in meaning. An “enterprise zone” rhetorically
encourages one to move by one’s own efforts toward economic independence
and self-reliance. An “empowerment zone” encourages one
to think in terms of political clout. Political clout can take money
from one pocket and put it into another, but it has never been able to
create wealth where no wealth existed before.

The real lesson of President Clinton’s “tour of the poor” — the
places he chose to visit to highlight the fact that the rising tide of
the 1990s hasn’t yet lifted all boats — is that excessive government
attention is more likely to hold areas, regions and neighborhoods back
than to push them forward. More government attention is hardly likely to
be the key to progress and prosperity.

As Pierre Proudhon understood back in the 19th century, “To be
governed is to be watched, inspected, spied upon, directed, law-driven,
numbered, regulated, enrolled, indoctrinated, preached at, controlled,
checked, estimated, valued, censured, commanded, by creatures who have
neither the right nor the wisdom nor the virtue to do so. To be governed
is to be at every operation, at every transaction, noted, registered,
counted, taxed, stamped, measured, numbered, assessed, licensed,
authorized, admonished, prevented, forbidden, reformed, corrected,
punished.”

If expanding such horrors in areas already punished by a surfeit of
government attention is the key to prosperity for all, then play on,
Brother Bill!

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