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  • Quote of the Day

    Posted by Jonathan on June 11th, 2008 (All posts by )

    Americans have had it so good, for so long, that they seem to have forgotten what government’s heavy hand does to living standards and economic growth. But the same technological innovation that is causing all this dislocation and anxiety has also created an information network that is as near to real-time as the world has ever experienced.
     
    For example, President Bush put steel tariffs in place in March 2002. Less than two years later, in December 2003, he rescinded them. This is something most politicians don’t do. But because the tariffs caused such a sharp rise in the price of steel, small and mid-size businesses complained loudly. The unintended consequences became visible to most Americans very quickly.
     
    Decades ago the feedback mechanism was slow. The unintended consequences of the New Deal took too long to show up in the economy. As a result, by the time the pain was publicized, the connection to misguided government policy could not be made. Today, in the midst of Internet Time, this is no longer a problem. So, despite protestations from staff at the White House, most people understand that food riots in foreign lands and higher prices at U.S. grocery stores are linked to ethanol subsidies in the U.S., which have sent shock waves through the global system.
     
    This is the good news. Policy mistakes will be ferreted out very quickly. As a result, any politician who attempts to change things will be blamed for the unintended consequences right away.
     
    Both Mr. McCain and Mr. Obama view the world from a legislative perspective. Like the populists before them, they seem to believe that government can fix problems in the economy. They seem to believe that what the world needs is a change in the way government attacks problems and fixes the anxiety of voters. This command-and-control approach, however, forces a misallocation of resources. And in Internet Time this will become visible in almost real-time, creating real political pain for the new president.
     
    In contrast to what some people seem to believe, having the government take over the health-care system is not change. It’s just a culmination of previous moves by government. And the areas with the worst problems today are areas that have the most government interference – education, health care and energy.
     
    The best course of action is to allow a free-market economy to reallocate resources to the place of highest returns. In the midst of all the natural change, the last thing the U.S. economy needs is more government involvement, whether it’s called change or not.

    Brian Wesbury

     

    5 Responses to “Quote of the Day”

    1. Lexington Green Says:

      “…the areas with the worst problems today are areas that have the most government interference – education, health care and energy.”

      Also the places with the strongest incumbents who benefit from the status quo and will fight to the death to maintain or expand it.

      “The best course of action is to allow a free-market economy to reallocate resources to the place of highest returns. In the midst of all the natural change, the last thing the U.S. economy needs is more government involvement, whether it’s called change or not.”

      The total number of people who are aware of this and believe it at any time seems to be limited, and low. It may have peaked in the early 80s. The level of education, and the content of the education, of the American public since then has pretty much taken this view of things out of serious circulation.

      You need to create coalitions of interested parties on a case by case basis to make any progress.

    2. Jonathan Says:

      (I’ve deleted the last several comments. I don’t like doing this, because it tends to discourage commenting, but I want to make several points:

      1) if you want to use some statement in one of my posts as a jumping-off place for your essay on American government or whatever, it’s probably better if you do it on your own blog (but feel free to post a comment here linking to your blog post),

      2) if another commenter is going off on an idiosyncratic tangent, or trolling, you probably aren’t going to improve the discussion by responding to him, and

      3) I would appreciate if commenters could avoid making personal attacks.

      Thanks.)

    3. Lexington Green Says:

      Jonathan, good call.

    4. Shannon Love Says:

      I agree that internet time will make government damage to the economy apparent quicker than in the past but I don’t think that will discourage the government from such attempts.

      The basic problem here is that the interest of individuals politicians eventually always lays with making the government more powerful and invasive. The more people depend on the state the more they depend on the politicians who control that state.

    5. Ginny Says:

      The graph is interesting.

      It seems to me the move to greater productivity and fewer manufacturing jobs is often to move from less interesting & engaging jobs to more engaging ones. But I’ll admit a twinge: I’m a little nervous by a decline in jobs that end with an obvious product. I think that is kind of a superstition, but I felt a certain satisfaction sellilng a product or at least a physical, obvious service. Now I’m not always sure if I deserve my pay and if my “customers” are really getting something for their money – if, indeed, they’ve learned anything. We fear a bubble.

      Is there a chance that this superstition adds to the candidate’s lack of ease with this change? Or does the fact that neither has run a business, taken their chances in that big marketplace of products and services lead them to feel less optimism about the process?