Ludwig von Mises wrote that once the science of economics emerged in the late Eighteenth Century, people began to realize "there is something operative which power and force are unable to alter and to which they must adjust themselves if they hope to achieve success, in precisely the same way as they must take into account the laws of nature. This realization ... led to the program and policies of [classical] liberalism and thus unleashed human powers that, under capitalism, have transformed the world."
The resulting abundance, which so many people take for granted without understanding its source, allows them to believe that a new president can "stimulate" us out of recession.
But we cannot raise wages or create jobs or eliminate poverty by executive order. We can do so by freeing people to save and invest and accumulate capital. We can't make medical care universal and inexpensive by legislative fiat. But we can approach that goal by permitting a free market in medicine to work.
Government is force, not eloquence. And force is an attempt to defy economic logic. The consequences are often opposite of those intended. "A subsidy for medical insurance increases the demand for services and raises prices. A price ceiling makes those services less available. A floor under wages makes jobs for unskilled workers more scarce, as employers find it a losing proposition to hire them. A subsidy to production means too much produced relative to something else consumers want. A trade restriction lowers living standards at home and abroad," writes Sheldon Richman on the Foundation for Economic Education website.
What will happen when the unintended consequences hit? F.A. Hayek warned that a government serious about enacting its economic plan must be prepared to use heavy-handed measures. Is that what we want?
I fear that today's "forceful actions" will not only be a painful assault on our freedom, they will exacerbate whatever economic troubles we face.
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