Tuesday, November 13, 2012

Big government doesn't happen without our cooperation... (and two white board lessons)

John votes yes on California Proposition 30—he's the superintendent of his local school district.

Jane lobbied for the Affordable Care Act—she's the CEO of a major generic drug producer.

Jack votes for the candidate who promised to buy up a few million pounds of Midwestern-grown beef—he's a drought-stricken Midwestern meat producer.

Jill votes for the candidate who she believes will push hardest for yet tighter nutrition standards for the nation's schools—her company produces boxed juices.

Josh votes for the candidate most likely to raise the minimum wage—he's the CEO of a major big-box retailer that pays an entry-level wage substantially higher than the minimum. He knows that a higher minimum wage could do real damage to his smaller rivals.

Joan votes for the candidate who she figured would play toughest with China—she belongs to the United Steel Workers Union.

Jason votes for the candidate most likely to extend the Renewable Fuel Standard (blending ethanol into the gasoline pool)—he farms corn.

Julie votes for the candidate most likely to promote the strictest regs for the financial services industry—she's a compliance consultant to registered investment advisors.

John, Jane, Jack, Jill, Josh, Joan, Jason and Julie are all simply looking out for their own separate interests. The problem being, when the achieving of our own objectives results in the taking from others (through higher taxes, higher cost items and fewer freedoms), we, ourselves, are not spared the adverse consequences. Every resource extracted [from the private sector] by government is a resource allocated under compromised incentives. Not that every government function is a terrible thing, it's just that the incentives that arise from the politician (in pursuit of his own objectives) spending other people's money on other people are vastly different than they are in the private sector—where, while spending our own money on ourselves, prudence and productivity are paramount.

As for markets; in a world where 85% of the population resides in developing nations, it's hard not to be optimistic over the long-term. The only 'long-term' scenario that I can conceive of that would lead to a perpetually sluggish global economy is one where growing governments entirely crowd out private sectors. Thankfully, the U.S. (and a few others) notwithstanding, that would not be the present dominating global narrative.

Here are two recent white board lessons illustrating the importance of free trade: Linked to The Aging of America, The Stock Market and Free Trade, and, Whom Should We Protect:


No comments:

Post a Comment