Wednesday, November 12, 2008

Economics Doesn't Start in DC

John Stossel points out the fallacy that economic improvement comes from policies initiated in Washington. The New Deal extended the Great Depression instead of solving it, and wishing it weren't so doesn't change the fact. A Soviet style centralized economy is not the answer to our economic issues and government politicians taking our money and giving it to someone else is no way to create wealth.

"But we cannot raise wages or create jobs or eliminate poverty by executive order. We can do so by freeing people to save and invest and accumulate capital. We can't make medical care universal and inexpensive by legislative fiat. But we can approach that goal by permitting a free market in medicine to work.

Government is force, not eloquence. And force is an attempt to defy economic logic. The consequences are often opposite of those intended. "A subsidy for medical insurance increases the demand for services and raises prices. A price ceiling makes those services less available. A floor under wages makes jobs for unskilled workers more scarce, as employers find it a losing proposition to hire them. A subsidy to production means too much produced relative to something else consumers want. A trade restriction lowers living standards at home and abroad," writes Sheldon Richman on the Foundation for Economic Education website."


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