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.
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Atlas Shrugged and the Wisdom of Bailouts
I caught an interesting article today over at the Wall Street Journal reflecting on the prophetic wisdom of Ayn Rand's epic novel, Atlas Shrugged. I haven't actually read the novel, although I've wanted to read it for some time - I just haven't had the chance quite yet. I've enjoyed many of Ayn Rand's non-fiction books, including The Return of the Primitive: the Anti-Industrial Revolution and Capitalism: the Unknown Ideal. The Wall Street Journal sure makes me want to go out and get a copy:
For the uninitiated, the moral of the story is simply this: Politicians invariably respond to crises -- that in most cases they themselves created -- by spawning new government programs, laws and regulations. These, in turn, generate more havoc and poverty, which inspires the politicians to create more programs . . . and the downward spiral repeats itself until the productive sectors of the economy collapse under the collective weight of taxes and other burdens imposed in the name of fairness, equality and do-goodism.
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Politicians and the Promise of Free Healthcare
Thomas Sowell, the brilliant economist, has some important things to say in his latest article. He especially well-explained something I've tried to get advocates of socialized medicine to understand for quite some time now, stating that:
[t]he big political crusade today is for "affordable" medical care through the government. No one believes that government is just going to be more efficient, and thereby have lower costs that will be reflected in lower prices for medications and medical treatment.
It might seem as if adding the costs of government bureaucracies to the costs of medications and medical treatment would make it impossible for the total costs to go down. But again, the impossible is no problem in politics.
Many countries around the world already have government-run medical care. People who get sick in these countries usually wait much longer to get treatment, including months on waiting lists for surgery, often paying in pain or debilitation, rather than money.
High-tech medical devices like MRIs are also far less common in these countries than in the United States. With medical care as with anything else, you can always get poorer quality at a lower price, though that is no bargain, especially when you are sick.
What you may have in mind are lower prices with no reduction in quality. While that may be impossible, don't expect that fact to stop politicians from offering it, even if they can't deliver.
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Let’s Fix Spending First
This nation has a multitude of problems. Chief among them is spending. As much as the incoming government wants you to believe (and the old government seemed to believe) that government spending can revitalize an economy, we have to recognize the truth. Government is a non-productive entity that relies on taxation of the productive segment of society in order to fund its operations. That's not to suggest that there is no need for government, but government lives under the same realities as you and me, and it cannot wish that away through coercive action. If the government spends more than it takes in, then it runs at a deficit, and the only way to handle that shortfall is for the government to (a) borrow money or (b) print money. If the government borrows money it must pay interest, and if it continues to run at a deficit for many years then it continues to accrue more and more ever compounding interest. If, on the other hand, the government prints more money, then it subtly "taxes" individual savings by increasing the money supply, thereby deflating the value of savings, and in turn decreasing the number and quality of things people can buy. Either way results in disaster. And yet, President-Elect Obama warns us that more of this profligate deficit spending is on its way:
Obama said Tuesday the deficit appears on track to hit $1 trillion soon. Speaking to reporters after meeting with top economic aides, Obama said: "Potentially we've got trillion-dollar deficits for years to come, even with the economic recovery that we are working on."
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