Friday, August 21, 2015
What liberty could realize
A key feature of a recession is a lack of growth across the economy as a whole, or more specifically focused in capital good industries, as malinvestments born of artificially low interest rates are liquidated. A struggling sector, poisoned by the one two punch of falling prices and higher taxes, does not a general economic downturn make. Moreover the question of whether or not we are in a recession is an academic one, since the prescription for either boom or bust is to cut taxes and spending. But in a broader sense we have become accustomed to permanent recessions, to growth that is anemic even at the best of times. To understand why we must examine the role of the state in the economy.
The state functions as a parasite. Resources are siphoned from the productive private sector, where they are engaged in the positive creation of wealth and the satisfaction of consumer demand to the public sector, where they are consumed by net tax recipients and spent on the various activities of government. Some of these activities, such as policing or the provision of health care are productive. Others, such as the nefarious regulatory state or the bombing of Iraq and Syria are counter productive to the creation of wealth or actively engaged in spreading destruction and death, respectively. But even where money is spent on health care or education, perhaps the most benign examples of state activities, this money is wasted in large part on bureaucracy and other inefficiencies that attend state monopoly. It is axiomatic that a government monopoly will not perform as effectively as market competition can. Nor is there any basis for rational allocation of scarce resources without a price system derived from the activities of interested entrepreneurs and consumers. There is no way to accurately ape market processes.
Monetary policy, ostensibly the work of benevolent overlords to save our economy from ruin actively creates the boom-bust business cycle and the permanent dislocations it entails. The lifestyles of bureaucrats, politicians and interest groups are financed directly from the wealth extorted from those engaged in it's creation. The total effect of this system when viewed from the bird's eye is a permanent economic malaise. Were the host (society) cure of it's parasite (the state), were the entire apparatus of taxation, regulation, and inflation miraculously and gloriously smashed then we would see a radically different economic ecosystem. Double digit growth rates and steady prosperity would be the norm. What could be accomplished within this new (and old) paradigm is truly incredible to consider.
And imagine for a moment, in a Canada without the state and it's economic bungling, what could happen were the flood gates of immigration to be lifted and the curse of conservation to be lifted. If the prosperity from laissez-faire were directed towards taming our wilds and developing the mass of what is presently crown land into factories and cities and industrial projects. If hundreds of millions of immigrants and refugees were allowed to flea the oppressive dictators, brutal conflicts and grinding poverty of their homelands and make a new life settling here, helping us conquer the untamed wilds that occupy so much of our country. If we could save the world, one immigrant or refugee at a time.