Questions Answered: Part 3
Recently I was asked a series of questions by a journalist wishing to write an article about the nation’s current economic situation. What follows in this article and others following over the next week is one of those questions and my answer to it.
It makes sense that policymakers should be considering a range of policy options to stimulate the economy. What are some of the best options (most value for the dollar) out there?
I beg to differ. It does not make sense that policymakers are considering a range of policy options. There is really only one thing that should be done – ensure that the return on private sector investment exceeds the cost of capital. This can only be done by ensuring that taxes are reduced, uncertainty about rules and regulations and future taxes is reduced, and prices are allowed to adjust so that the market can begin functioning. Propping up house prices or other prices such as wages, does nothing but prolong the pain.
Why would government bureaucrats and policymakers know what creates value better than private individuals who risk losses, who labor and innovate and create the income? Economist F. A. Hayek described this as the fatal conceit of policymakers.
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Quote: “ensure that the return on private sector investment exceeds the cost of capital.”
This implys government intervention to make sure of ones gain. If one does not want gains then what?
Your following statements does not back this up though.
Man is created with different levels of greed or motivation and desires. Some want maximum returns. Others just want enough for a Friday night beer or party.
When a state interferes. The business man will seek an easier way. Usually circumventing the rules or getting rules changed to favor them. For they see the rules as immoral or cumbersome.
The beer drinker will go to the safe haven of welfare juice. Going from a low productive employee to a drain on society production.
So let society individual make the rules between themselves. If you do not work, live in the stable. If you want little work, clean out the stable for food. If you really want to work, buy the stable.
How can government ever make rules, based on knowing what every individual in society wants? Only society can determine that. It requires no leadership.
I seen a quote of Rosalyn Carter. “Leaders lead people where they want to go, great leaders lead where one ought to go” I ask, who determines what “ought to go” is?
Leaders are arrogant in that they think they know best, what I want.