Saturday, 2 January 2010

Not at any point.

"Laissez-nous faire"

Interventionist politics have played a growing role in all our economic lives. Each bailout is a step that is seldom regained and as the government steps in, we do less. We expect to be able to fail and be saved. This only makes more failures.There is a single economic principle that has resulted the the phenomenal growth that we have experienced in the last 200 years. This is the free market.

Laissez faire, telle devrait ĂȘtre la devise de toute puissance publique, depuis que le monde est civilisĂ©.

In contradiction to common mis-comprehensions, market cycles are induced by a lag effect from intervention and not a market principle (as is generally taught).

The oft overlooked truth is that business cycles are a function of intervention and not free markets. The common counter example to this is the Great Depression. The fallacy is that this was neither an expression of free markets nor of a failure due to capitalism. Rather, the depression is a response to restricted trade and monetary policy. The US both introduced restrictive trade tariffs resulting in the collapse of international markets as well as restricting the money supply.

The introduction of regulations restricting and controlling the banking industry resulted in a tightened fiscal policy fewer loans being available. This was heightened with the crowding out effect as the US fed. used funds for the "new deal" policy creating an environment where no money was available to business. With the increased enforcement of anti-trust legislation, business withered. The consequence, a larger federal government in the US and the spread of socialist policies that drove the burgeoning free markets into the grave.

Why should we treat businessmen and women differently. We allow sports people to earn exorbitant sums. We have rock stars earn as much as they can. We need to come into a world where a process of rewards attract the best people to business. This means treating the business people as the rock stars. This means not interfering and rewarding those at the top.

When will people wake up and see that the inefficiencies of the world are associated with group think and governments? It is about time that people decided to become free and think for themselves!

1 comment:

Andrew said...

So I've noticed a lot of people I know who own their own businesses have been taking advantage of the rebates on buying new cars (and PCs). I found this old article here:
http://www.smh.com.au/business/tax-rebate-props-up-car-sales-20090603-bv3y.html

This bit confuses me:
"The figures are an encouraging sign that consumer confidence may be rebounding from the global economic crisis."

Exactly what drop was their in consumer confidence towards buying cars? Are they referring to confidence in being able to afford loans for cars or confidence in the value of cars as an investment or what?

That aside, I don't quite understand the rush into buying cars that people really don't need. Are they planning on re-selling them further down the track? I don't get it. :S