The Truth About Sacred Lies

(Editor's note: The following commentary is an edited version of a book review written by Joseph G. Lehman, president of the Mackinac Center, that appears in the January/February issue of The Freeman, the journal of the Foundation for Economic Education.)

"Unmasking the Sacred Lies" is an excellent introduction to the major economic policies of the United States. Author and Freeman contributor Paul A. Cleveland traces the history of those policies up to 2008, explains their effects, and explores their alignment with the nation's founding principles. The book aims to "shed light on the underlying lies which threaten the foundations upon which the nation's achievements are based." Cleveland succeeds with an ideal primer for college and many high school students interested in economics, political science, American history and current events.

Think of "Sacred Lies" as an economic history survey of American public policy. The book does not stand alone as a text on economics, history, political science, or American government, but Cleveland connects all of them. It's easy to imagine that Cleveland wrote it to give his students at Birmingham-Southern College not just a grasp of key economic policies but also the means to evaluate them.

He devotes each of his nine chapters to one major policy area — fiscal, monetary, transportation, agriculture, education, labor, welfare, business and environment. Two special sections bookend those topics. The first describes the role of property, trade and human action in the exercise of freedom. The last section addresses the limitations of the law and the state as ways to solve human problems.

This last section alone, titled "The Lawlessness of Too Many Laws," makes the book a standout. Most textbooks that cover economics and policy seem to treat law as a force that lacks inherent limitations. Authors may acknowledge that new laws or programs involve tradeoffs, but they seem to say, "If you can get the money and if you can get the votes, then what's the problem?"

The problem is that the cumulative weight of multitudinous laws, regulations and administrative diktats eventually undermines the workings of the law itself. Cleveland explains the burden of too many laws as a vicious circle that creates moral and practical problems. Excess law leads to ignorance of the law, which breeds disrespect for the law, which then leads to lawlessness, which must bring about ever more laws. As civilization becomes increasingly politicized, it declines.

Hidden political bias is a problem in many books aimed at students. But Cleveland shows respect for readers by forthrightly stating his perspective. The lens through which he analyzes public policy characterizes government as force. He builds his arguments from the ground up, making them accessible to those unfamiliar with the Austrian school or Public Choice.

Cleveland leads readers to understand that the common conception of government has changed. Once viewed as the institution of last resort that protected rights and punished wrongdoers, government is now widely seen as an expedient means of acquiring things for oneself.

The book shows up at just the right time. Political energy and interest in government spending have surged since the enactment of trillion-dollar "stimulus packages," government bailouts and takeovers of major corporations, and renewed efforts to nationalize health care. A federal sprint toward Keynesian policies has reintroduced the term "paradox of thrift" to the news lexicon. Public awareness of the "housing bubble" is high. Cleveland describes Keynes's "paradox," as well as the history of government interference in housing markets, as if he knew what economic disasters were about to happen.

The chapter on business policy is especially good, debunking common myths. The chapter devoted to labor policy takes a complicated subject too often portrayed as merely a refereed contest between workers and owners, and shows how current law tilts the playing field decisively in favor of unions.

A strength of the book — its concise treatment of complex policies — may sometimes leave readers wishing for more thorough discussion. A more extended analysis of federalism, for example, would have fit especially well in the education chapter. And sometimes Cleveland weakens his work by departing from strict scholarly exposition. For instance, in the environmental chapter, he describes a statement by biologist David Graber as "the ravings of a morally reprehensible mad man." Similarly, regarding fiscal policy, calling Franklin Roosevelt "either delusional, a liar, or some combination of the two" will be agreeable to FDR's critics, but it won't help convince students who were taught to revere Roosevelt and his New Deal.

"Sacred Lies" is a welcome counterweight to the bias and misinformation soaked up by students who have never been exposed to a fair treatment of free-market ideas. The book will work even better for individuals predisposed to those ideas by challenging them to sharpen arguments and increase understanding of convictions they already hold. Most important, all readers will better appreciate that we have gone far beyond the proper functions of government and suffer from many laws that are destructive.

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Joseph G. Lehman is president of the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.

Permission to reprint this blog post in whole or in part is hereby granted, provided that the author (or authors) and the Mackinac Center for Public Policy are properly cited.