Sunday, December 23, 2012

Wonder Why Our Economy is a Mess?

Have you been wondering why our economy is a mess?  Have you wondered about 0% interest rates? Have you wondered why kids these days can't get a job?

Well, wonder no more:

Dumb Ways (for an Economy) to Die by Jeffery Tucker and Douglas French

Stimulate Failing Sectors. The crash of 2008 exposed gigantic investment errors goaded on by previous bad Fed policy. The market tried so hard to make things right. But the Fed, the Treasury, and every living government official fought the entire way, with TARP, QE, ZIRP, Operation Twist, bankruptcy protections, debt creation, and many trillions of dollars in squandered wealth. And for what? To save the housing, banking, and financial sectors from the consequences of their errors. But the errors haven’t gone away. The sectors haven’t been stimulated. The net effect has been to ratchet down wealth creation, and so it will be until the stimulators stop diverting wealth and start facing up to reality.

Protect Against Imports and Exports. “Economic patriotism” is one of the most dangerous phrases in the English language. It means using the taxes called tariffs and quotas to prop up economically inefficient industries in our borders and failing to allow consumers to get the best deal whenever they can find it. Obama brags: “We’ve brought twice as many cases against unfair trading practices than the previous administration and we’ve won every single one that’s been decided.” The archetype case concerns China. You are paying more for lower-quality tires due to this intervention, at an estimated cost to consumers of $1.1 billion. The goal of energy independence is a bad one because it diverts production from efficient to inefficient technologies. Protectionism (and we have it for thousands of goods such as sugar, cheese, and ball bearings) is for losers. The belligerence against China is harmful. The sanctions against Iran and a dozen other countries are stupid. The U.S. economy needs to embrace the global economy, or else it will die alone.

Regulate Everything. In the name of health, safety, the environment, and intellectual property enforcement, nothing that exists has been left outside regulatory management. Each day, an average of 68 new regulations appear, giving bureaucrats the opportunity for endless meddling and harassment, and shutting down entrepreneurial ideas. Every machine in your home has been forcibly degraded, from your toilets to your washing machines to your soap. We can’t kill bugs in or out of our homes. Lawn equipment is wonky now, thanks to the regulatory tsunami. IP enforcement through patents and copyrights has slowed the pace of development of media, software, and industrial machinery. Enterprise lives in a cage and still somehow manages to stay alive. But what are we missing as a result? That’s the great unknown.
There are many ways that the government has interfered with our lives read about some more of them here.
Look at this list of dumb ways to kill an economy. It is a stunning tribute to the private sector and the power of enterprise that we manage to grow and still somewhat prosperous, regardless of this relentless beating.

And we wonder what’s happened. We wonder why capital is fleeing, why people are leaving, why wealth is not being created, why growth is anemic. This is not a reality built into some kind of civilizational way or some inexplicable great stagnation. It is all a direct result of a conscious decision to wreck the machinery of freedom. It’s dumb.

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