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Government: Let’s ‘Stimulate’ the Economy by Producing Less

Government encourages inefficient economic behavior that actually goes against its purported objectives. Just look at this nonsense:

A stimulus package may be a lifeline for the nation's economy, but it could be a death sentence for a lot of cows.

Lawmakers are looking for ways to use the forthcoming stimulus bill to help dairy farmers, and the number one priority is to dampen milk supplies and prop up prices. Translation: reduce the nation's dairy herd.

Let's think about this logically. The economy is 'hurting,' which means that the country as a whole has less products and services to go around. In the latest crisis, this has come about primarily because banks loaned capital to bad credit risks, and when the bill came due, they didn't pay up. In the normal cycle of things, banks would loan money to good credit risks, and while some would not pay up because they failed to produce, invariably others would add real tangible assets to the economy, which in turn would result in a net gain to lenders and a net gain to the economy as a whole. Instead, banks made many bad loans to people not deserving of the amount of credit they received, and rather than gain new wealth we have lost capital. That is the problem.

So what does the government propose as a solution? Less production.

Producing less by government mandate is absurd, and it actually corrupts the free market action required for economic improvement. To achieve this decrease in production, government invariably resorts to payments to producers to cease producing, as it has tried here with dairy farmers:

An initial effort to use stimulus money to pay farmers to retire cows failed when House Appropriations Committee Chairman Rep. David R. Obey, D-Wis., objected on the grounds that it violated a promise not to include earmarks in the bill, said Rep. Collin C. Peterson, D-Minn., chairman of the House Agriculture Committee.

Think about that. We are going to use the production of others, convert it to dollars, and in turn use those dollars to pay people to stop producing. That's perverse! If the free market controlled, we could very well see lower production of certain items that see a drop in price. Obviously, a drop in price serves as a disincentive to stay in the market. Further, it creates pressure on those companies that don't produce efficiently enough by hitting them where it hurts: in their wallets. This suggests invariably that those least disposed to best produce the particular good or service will actually leave the marketplace and use their time to create some other good or service which they can more efficiently produce. Yet here, the government proposes to arbitrarily define a number of people to pay to do nothing. Under this scheme, those people will not do anything instead, as they have no need to pursue other productive endeavors as the free market would otherwise demand.

And this passes as economic stimulus? What a country.

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