So then, under whose command of resources should we expect the greatest likelihood of producing the right assortment of goods and services; self-serving producers of goods and services, or self-serving politicians? Certainly the market, all on its own, can produce the wrong assortment of goods or services. However, left to its own devices, and to natural consequences, the market will—painfully for some—adjust accordingly. Politicians, on the other hand, have a professional interest in circumventing the suffering of their supporters, and are therefore adept at neutralizing the natural consequences for the producers of the wrong goods by spreading the loss among the entire population. And, alas, they in effect compromise the redeployment of capital from areas where there is too little demand into areas where there will be demand for the goods produced: hence, a very slow recovery.
Tuesday, July 9, 2013
What causes recessions - Or - Goods buy goods...
Here's a link to my contribution to last Saturday's edition of the US Daily Review. And here's a snippet: