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Thread: Government interference in economy does more harm than good?

  1. #1
    Salam Shalom Salom
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    11,529

    Government interference in economy does more harm than good?

    Government interfering in the economy, does it do more harm than good? This is more to discuss the practical effects of gov't interference instead of the morals or ethics of it.

    Specifically, when people propose more regulation and more taxing in order to "protect" the little guy. The more I think about it, the more it becomes apparant that this is probably the worst thing you can do if that's your goal. The best thing you can do is have a free market - not a corporatism like we have now (don't even think that what we have now is a free market)

    Let's start with a few things:

    Corporate tax
    The corporate tax should be abolished. You might think it punishes corporations or keeps them from becoming too powerful, but in fact it does the opposite: it helps them by effectively creating a barrier to entry and stifling competition.

    You see, the largest corporations can afford the tax and remain competitive; however, smaller corporations or corporations just entering the market will not be able to, or will be very hindered by a high corporate tax. This is also a disincentive to enter the market. By having a high corporate tax you're just helping the largest corporations by protecting them from competition. This is what helps monopolies, not what hurts them. Competition is what protects us from monopolies. Having a low or no corporate tax means yes, more money for the corporations, but it also means newer corporations can enter the market and remain competitive. It also provides more incentive for companies overseas to bring their business here. It also means more money for the corps to pay their employees, although I won't delude myself into thinking they'll do this out of the goodness of their hearts. That will just be up to the union reps to get their interests across.

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    There's also a number of other ways the government does more harm than good. First, barriers to entry.

    When the government creates all kinds of absurd or burdening obligations and regulations and requirements for people or companies, it makes it, obviously, more difficult or more time consuming to get into business. This means less people will get into business, which means they are functioning as effective barriers to entry or at least, deterring people, and large fatcat corporations love this.

    Mandatory insurance from the employer
    This is not a good thing, if you want less monopolies. Like the corporate tax, smaller businesses are really hurt by being obligated to provide insurance because they can't afford it. All you're doing is helping stifle competition.

    Minimum wage
    Small businesses are also hurt by minimum wage; but even the poor are hurt by the minimum wage, and especially inflation that might be caused by it. People that are not productive won't find employment - congrats, you've just kept someone from getting a job because the employer has to pay them more than what their production is worth, so they're better off not hiring them. Combine this with the stifling of competition, bailouts, and protectionism and this is what means corps can exploit people and get away with it.

    Subsidies and "redistribution"
    The beauty of a free market is that progress is made from demand; capital flows to the most productive, most efficient areas and the areas with the most demands. By subsidizing an industry, you not only stifle competition, but you also distort the market and this will cause capital to flow to the wrong places and malinvestment; "redistribution" by the government also creates this problem. You're throwing off the market, and you're creating artificial bubbles that will eventually pop because of the malinvestment and misallocation that is sure to occur. Ron Paul even predicted this, but anyway...

    Contracting to corps
    This is one of the worst things the government does, and the government does it all the time. This is not free market, it's corporatism. It's favoritism. It's what creates monopolies and huge, protected corporations. Government contracting to corps can cause malinvestment and misallocation and mismanagement, also, and although it "creates jobs", it also creates monopolies and exploitation. Ultimately if there is demand for the services of a corporation, then let private, free people invest or hire the corporation. The government uses taxpayer dollars, and by contracting corps they cause capital to flow to the wrong places.

    Special privileges
    Do I really need to explain this? Giving special privelages to corporations and to other areas of production is what creates monopolies and corruption. And it's not free market.

    Bailouts
    How ironic that the same people, like the dems, that supposedly stand for the little guy support bailouts. Bailouts are also one of the worst things a government can do. If there is malinvestment and inefficiency and the company suffers, why in the world would you prop it back up? It's favoritism and it's the stuff of monopolies. Not to mention it completely throws the market off, and causes capital allocation issues.

    It might save jobs short-term, but in the long term it's not a good idea. If a major company goes under there will no doubt be alot of unemployment and hard times, but at least you haven't distorted the market to the point where the ensuing malinvestment and bubbles will hurt even more in the long term. Bailouts are a bad idea, always. Let the free market work........there will be new companies, more competition, and more opportunities.

    Resource privileges
    The way it works most everywhere is that a corp will be granted permission by a government to mine a certain area or chop a certain area. This means the corp doesn't own the land, it just has usage rights. For environmentalism this is not good............real private property is better. There would be established rules for what constitutes private property, primarily the homesteading principle.

    A corp has more incentive to keep land clean and replenish resources if it is their land that they work. Also if a corp does, say, dump waste into a river, even if they own it people who are affected will be able to take legal action.

    ---------------------------------------

    This post mainly addressed government interference in terms of corps and business, but in alot of other areas like welfare, legal monopolies, etc, I think there's more harm done than good. I think everyone would be better off if we had a true free market....not contracting and corporatism and bailouts, but a true free market, with the gov't doing only the basics.

    Everything arises from the ground up in a free market, from demand; if a certain regulation or rule does good, the market will figure that out. People who oppose the free market think every investor or every person is a fucking idiot that needs to be babysat and can't figure out what is good on their own, but that's absurd and I wonder how much the politicans know about economics.

    In a true free market, there would be no victimless crimes. In a true free market, most importantly, people would have to be responsible. Individuals and communities still can have group efforts; these efforts, like charity, will arise from demand and from desire, and as people are less and less dependent on gov't, they can work out their problems on their own. I think there would be alot more community involvement in a free market, like community watches, and communities getting together to build a park or school.

    Private charity is better than welfare, and is much more ethical.

    Also there is ethical business. There's plenty of agencies and organizations like the BBB and the IFA that promote ethical business. More free market means more responsibility.........on investors, on parents, on individuals, and on communities.

  2. #2
    Be kind to yourself always. cosmictraveler's Avatar
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    30,259
    If the governments own watchdog regulators were doing their jobs none of this crap would have happened. They ALL just turned a blind eye to what the banks and other financial institutions were doing wrong.

  3. #3
    Registered Senior Member
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    23,053
    "We, the people, in order to form a more perfect union, shall hereby control all of the things that the people do, think, feel, say, read or write. And to keep all of that running smoothly, we're going to tax the livin' fuck outta' only some the people so that we can give that money to only a few of the people. ............"

    Baron Max

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