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October 3, 2011

The Economist Cover

The Economist Cover

The Economist got it exactly backwards on their most recent cover. We should be very afraid until politicians stop trying to manipulate our economies. Austrian economics, as well as centuries of empirical evidence, suggest that politicians are only keen on quick fixes which tend to exacerbate problems in the long run.

The role of government in an economy should be limited to ensuring a level playing field via limited regulation and use of the justice system. Attempts to manage markets directly, by manipulating interest rates or passing laws that favor special interests, only serve to distort pricing mechanisms, resulting in misuse of resources and a reduction in national wealth.

The current economic malaise can be cured by non-interference. The process will, no doubt, be a painful one, but the market will clear much more quickly, allowing for a more rapid return to production and prosperity. Under the current course, government interference... and even the threat of goverment interference... only creates uncertainty, thereby preventing action. Before we lose a full generation of output, our politicians need to get the point and get out of the way.

 

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