Interventionism

Steve Horwitz chimes in on the discussions on poverty and inequality

Government officials talk about more entrepreneurship, but they pick particular firms, industries, or technologies, and give them subsidies and benefits. What entrepreneurs need is secure property rights, the rule of law, and sound money. The best government can do for entrepreneurs is get out of their way.

Interviewed by host Al Korelin, Mark Thornton discusses how Austrian Economic principles can lead the U. S. on the path back to prosperity.

The state’s creation of patent and copyright interests doesn’t prevent innovations, but it does erect hurdles that discourage research. The “traditional enemies of innovation [are] inertia and vested interest,” factors contributed to by the government practice of giving inventors protection from competitors.

A low wage constitutes a competitive advantage for less-skilled workers that serves to protect them from competition from more-skilled workers. In other words, a wage of $7.25 per hour for fast-food workers serves to protect those workers from competition from workers able to earn $8 to $15 per hour in other lines of work.

The legal incentives created by prohibition lead to artificially restricted production, decreasing the supply, and causing the price to skyrocket. Prohibition transforms users into criminals by making their drug use a large financial burden, enticing many to commit real crimes. All of this is a disaster for the addicts.

Government intervention causes iatrogenics — unintended negative consequences that hurt the very people they’re intended to help. Nowhere is this better exemplified than with Obamacare, a policy intended to bring insurance to all that has in effect taken it away from many. This paradox can be applied to other policy arenas as well.

Sweden, once the crown jewel of the welfare state, took the road less traveled, and emerged as a financially sound economy, and an example of the economic growth possible with free markets. The country’s financial strength and its ability to resist a global recession are due to the long-term rolling back of the expansive welfare that Keynesians so often praise.

The prospects for an unwinding of the Fed’s bloated balance sheet without even more damage to the economy and a return to a more reasonable rules-based monetary policy, are significantly diminished under a Yellen-led Fed. It is time, not to restore a rules-based policy, but to denationalize money.

The singular brilliance of the debt ceiling is that it keeps reminding everyone that there is a growing national debt that never seems to shrink. That is a tremendous service to American citizens who live in the dark regarding the borrowing machinations of their political overlords.