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Economic Policy Treats Symptoms, Not Underlying Causes

Submitted by Logan Albright via Mises Canada,

Take a look at the breathtaking array of government policies designed to fix every conceivable problem citizens might encounter. Look at the laws governing labor unions, minimum wage laws, occupational licensure, unemployment insurance, stimulus spending; look at the endless efforts to improve education through government standards, mandatory testing, earlier and earlier induction of children in schools against the will of their parents, student loan refinancing; look at health care policy. No, wait. Don’t look at health care policy. It’s too depressing. The point is, all of these rules and regulations and programs go on and on for thousands and thousands of pages, each of which tries to slap a band-aid on a particular, identified problem that the workers in government believe can be fixed by printing some ink onto some paper.

Does any of it work? One could argue that some of it does, but even when the results are not a complete disaster, there is always a great deal of expense, of inefficiency, of waste, of corruption, and always, always of violations of liberty.

The sad thing is that the multitude of problems that government programs are so desperately trying to fix are not actually real problems at all: they are symptoms. Unemployment is a symptom; lack of educational success is a symptom; low wages are a symptom; unaffordable health care is a symptom. And as any doctor who is not a complete fraud (which rules out a fair few of them, I’m sad to say) will tell you, it is foolish and counterproductive to treat a symptom while ignoring the underlying disease.

The disease, in this case, is a stagnant economy. Lack of growth, of entrepreneurship, of saving, of production, of general vibrancy is to blame for practically every problem that government, in the depths of its ignorance, tries ineffectually to solve. With strong economic growth there is nearly full employment, there are higher wages, the workers have greater equality with their employers, so labor regulations are not needed. Everyone has more money in their pockets, and more money in their bank accounts – real value, mind you, not simply the empty promise offered by a central bank’s inflationary tactics.

Since everyone has a good job, employers are less able to be picky about their employees. They will need all hands on deck to supply the increasing demand. This limits their ability to screen  out people without advanced degrees, causing the demand for higher education to drop, resulting in lower prices and better quality. Conversely, workers will have the ability for more leisure time due to their increased wages, and that means a chance to improve their education either through lessons or private intellectual pursuits. Parents become more educated, which results in children becoming more educated, to say nothing of the higher income’s ability to purchase better schooling for children.

With better education, lighter workload, and more money comes better health. Higher quality food can be purchased, more leisure time is available for exercise, more precautions can be taken against disease. The reduced demand on physicians will result in lower prices, and the fact that more people will have the time and money to study medicine means that competition will be rigorous.

It sounds Utopian, but economic growth really is a panacea that improves standards of living for everyone in nearly every way. But instead of pursuing economic growth, the government wastes its time with piecemeal patches, trying to plug a hole whose cause remains unabated.

But what can government do, you ask, to achieve strong economic growth? It’s simple, really. As John Galt once said: Get out of the way. Let business be free to make profits, and they will hire all the workers they can get their hands on. Stop erecting roadblocks that prevent individuals from making money, and make money they will. Leave people alone, and they will come together to do great things.

The economy we have now is like a mental patient, drugged up with so many antidepressants, antipsychotics, and mood stabilizers that the root of his problems has become undetectable. Get the young man out in the sunlight, get him some exercise, provide some meaning and purpose for him. In short, teach him how to live, and the amount of improvement will be remarkable.