Vail Daily column: Economics and the 2016 election
The other day, a liberal TV talk show host was commenting about the economic policies of the various presidential hopefuls and said, “The best economic policy is one that creates jobs.” While I seldom agree with this particular pundit, his statement was spot on.
Creating sound economic policy requires a philosophy that supports our free market system. But how can we trust someone to run an economy that’s never had a real job, met a payroll or created and adhered to a budget, which is the case with many of today’s presidential hopefuls?
We may not need a former CEO to run the economy, but it’s hoped our next president will grasp the most basic of concepts, i.e., that economic policy isn’t about the financial fate of individuals, rather, it’s about the well being of society as a whole.
And within that context, how a given economic system allocates its resources will determine that society’s degree of poverty or wealth. Informed people understand it’s the cause and effect relationships of prices, work and pay, along with the allocation of resources, that dictate the standard of living of a society — not government mandates.
Noted British economist Lionel Robbins once said, “Economics is the study of the use of scarce resources, which have alternative uses.” By that definition, without scarcity, there would be no need to economize.
Thomas Sowell illustrated this point very well when he wrote, “On a battlefield ‘economic’ choices are made even when no money changes hands. If for example 10 soldiers are wounded and there are limited resources (medics, medicine, bandages, etc.) choices of allocation of scarce resources have to be made. If one soldier is near death but five others have a higher probability of living if they are administered to first, a choice as to the allocation of scarce resources (time and medicine) must be made—and that is economics.”
Several current presidential hopefuls would have us believe that if elected they would harness the power of government, the mystique of science and the consensus of “experts” to shape society and bring us to a higher state of being.
And for those who look for government to bring us to that “higher state of being,” they do not understand how government solutions focus on political goals and fail to view economic policies in terms that make sense in the real world.
In the real world of mortgages, electric bills, college costs, insurance premiums, etc., economic policies must be viewed in terms of the incentives they create, rather than the goals they proclaim. Said differently, the consequences of our economic policies matter more than their intentions.
Voters must also remember that long-term economic repercussions are critical in any economic model, and too many elected officials never look beyond the next election when making economic decisions that will affect society for years to come.
If we’re to believe the CBO’s statistics regarding government assistance programs, then one could draw the conclusion that as a whole Americans are becoming less self-reliant, and instead, increasingly look to government to take care of them.
Unfortunately, in too many cases, taking personal responsibility for one’s actions and making wise choices has given way to the vote pandering mantra of income inequality — as if being successful due to diligent effort and choosing wisely is a vice. And rather than working to create economic policies that empower people, many politicians have chosen to hasten the culture of dependence and entitlement with their rhetoric.
I once read there are two kinds of governmental assistance. And while they may appear similar they are in reality diametrically opposed to each other. The first occurs when 90 percent of us agree to impose taxes on ourselves in order to help the bottom 10 percent. The second occurs when 80 percent vote to impose taxes on the top 10 percent to help the bottom 10 percent.
The former may or may not be an effective way to help the disadvantaged; but regardless of whether that path proves effective or not, it’s consistent with the belief in equal opportunity and liberty. The latter however, seeks equality of outcome and is entirely antithetical to liberty and the intent of the founders.
Government solutions to economic problems are inherently inefficient and wasteful. It’s been said if we put the federal government in charge of the Sahara Desert, then in five years there’d be a shortage of sand.
Quote of the day: “Underlying most arguments against the free market is a lack of belief in freedom itself”—Milton Friedman
Butch Mazzuca, of Edwards, writes regularly for the Vail Daily. He can be reached at email@example.com.
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