Two Destructive Government Interventionism Myths – Marketplace Annihilation

You can hear the cries of panic and despair. Government must do something to avert an economic collapse. It must rescue Wall Street. It can’t let the banking system go belly-up. It must save capitalism from itself—even if it takes an injection of trillion of dollars. Oh beloved representatives of government—great masters of finance—have mercy on our pocketbooks and standard of living.

All their cries for relief are in vain. Believing in myths is not an efficient means for creating abundance and prosperity. False beliefs can only impoverish the holders of these illusions.

Myth #1—Government Interventionism can improve the workings of the marketplace

Here is the chain of events in the life of a government intervention. Altruists, world-improvers and do-gooders spot something on the marketplace that isn’t working to their definition of morality or justice. They claim this is another instance of the failure of capitalism. They decide they must interfere to improve the situation. In their role as politician or bureaucrat they pass a law or create another regulation. This is the beginning of their efforts to turn mole holes into unscalable mountains.

Sometime in the future they discover the situation has worsened. They never consider that their original intervention is the cause of the new undesirable situation. So they pass another law or create another regulation.

Of course, things only deteriorate. Instead of checking their premises and discovering where they went wrong, they embark on saddling the economy with another law or regulation—not realizing that they are hammering another nail in the coffin of economic progress.

Now imagine thousands upon thousand of laws and regulations foisted on the marketplace. Is it any wonder that our economy is collapsing? Eventually the cost of all this interference on the marketplace becomes prohibitive. The monkey wrenches they placed in the marketplace practically bring it to a halt.

How do the interveners respond? They have the gall to blame Laissez faire capitalism for our economic problems—the problems they created. Are these people just plain stupid? Or are they downright blatantly dishonest?

Who are the true originators of conflict in a society? The altruists, do-gooders, world-improvers, politicians and bureaucrats create disharmony and chaos in our society through their heavy-handed use of government interventionism. If left to its own devices the marketplace under a social system of Laissez faire (unhampered) capitalism creates mutual harmony—at least as much that is possible in the sphere of human action.

It is time we accept a timeless truth. Governments possess absolutely no means to help the marketplace—however they do possess the weapons to cause market annihilation.

Government has only one legitimate function—to protect an individual’s life, liberty and property. Any government interference with voluntary exchanges is in violation of this—and is therefore criminal.

Myth #2 Bailouts help the economy

Welcome to the age of the bailout. Bailout city here we come. No self-responsibility exists here. Live at the expense of your fellow citizens. Enjoy the bliss of gang warfare. Receive immense financial benefits should your gang reign supreme. Forget about property rights or the sanctity of an individual’s life, liberty and freedom. No violation of these is too gross for our pleasure. Once again we live high off the hog—someone else’s hog. Yes, we don’t even have to supply the hog. Happy days are here again!

As I mentioned in Myth #1 all government intervention on the marketplace is doomed to failure. And that includes financial bailouts. Has it occurred to you that there are valid reasons that we are experiencing a financial collapse? Could it be that government with a gigantic assist from the Federal Reserve System created the rotten mess in the first place?

Let’s assume a team of arsonists is destroying residential and commercial buildings by burning them to the ground. Would you seek the assistance of the same team of arsonists to prevent and stop arson? Obviously, not. Then why does everyone believe that government and Federal Reserve assistance in the form of bailouts will cure or alleviate our financial crisis—when they are the ones who created it in the first place?

Prime Minister Vladimir Putin, following the lead of our governmental masters of finance, said Russia would not allow the global financial crisis to capsize its economy. He announced a $20 billion stimulus package and “help” for people who lose out in the downturn.

I can certainly understand his concern and his desire to take purposeful action. However, when he states that Russia won’t allow this to happen does he mean all of its citizens will stop it from happening or is he stating the government will prevent it? Who is going to pay for this $20 billion stimulus package?

This is a first class tragedy. Russia shed the evil anti-life social system of communism. Unfortunately it appears that is has adopted our system of massive government interventionism—which ultimately leads to total governmental control of the economic system. They are on the verge of going full circle—right back to socialism. After all, communism is a form of socialism.

The reason some banks, financial institutions and businesses are failing is that their “prosperity” was created through the means of the Federal Reserve System increasing the money supply by artificially lowering interest rates. This created an artificial boom (false prosperity) which was wholeheartedly supported by government and the vast majority of investors and businesses. Of course, the masses believe whatever the establishment press force-feeds them.

All artificial booms must end in busts. There is no other way. The recession or depression is a cleansing process that restores wealth to its rightful owners—actual wealth producers. It diverts production from uneconomic projects to ventures satisfying the consumers’ most urgent desires.

Conclusion

Government intervention on the marketplace is doomed to failure. It cannot achieve the desired ends. It can only worsen the situation. Individuals acting in their own interest are quite capable of making their decisions without any “help” from the government. I’m sure you realize that as an individual you are closer to the events of your life than anyone is.

Does another person know what you need and desire more than you know what you need and desire? It is ridiculous to believe that a politician or a bureaucrat has the knowledge to decide what you require for your existence. From all the political scandals we hear about we can assume that they can barely take care of their own needs honestly and efficiently. It is the height of absurdity to think that politicians and bureaucrats can make decisions for hundreds of million of individuals.

It is time we adopt the social system of Laissez faire capitalism and stop government interventionism from annihilating the marketplace.