. . . all players in the game have revealed themselves to be interventionists. (Okay, we knew this already but confirmation is nice.) Regardless of party, they see the economy as something to fix by turning a knob here, pulling a lever there, and stepping on a pedal over yonder in order to get the desired performance: higher consumer spending, lower unemployment, increased investment, and so on. It’s as though the economy were a machine in need of adjustments and a few quarts of oil. But an economy is not a machine. It’s a network of people engaged in myriad exchanges of goods and services — pursuing end-oriented activities informed by subjective values and expectations. Such information is largely unavailable to politicians, bureaucrats, and their economic advisers.
With unemployment officially at 9.8 percent, the economy indeed remains in the doldrums. None of the palliatives that George W. Bush or Obama tried has worked, but instead of realizing that government and its corporate-state policies are the obstacles to a flourishing economy, the ruling elite remains committed to the managed economy. So it’s decided not to raise taxes — for two years — and to reduce the employee payroll tax — for one year. These expiration dates are signs of political management. Understanding the necessity of a freed market would lead one to call for permanent — not temporary — government retrenchment.
Some questions were apparently overlooked. If tax rates may go up in two years, why make tax-sensitive long-term plans? If the payroll tax is to be two points lower in 2011, that implies it will most likely be two points higher in 2012. Will people spend the extra money next year or save it in anticipation of the tax increase to come? At any rate, they will need to make an unpleasant adjustment in their household economies on January 1, 2012. People do think long term, even if politicians don’t.
Something worth noting about the debate is that there was scarcely an acknowledgment that money subject to taxation belongs to someone and not the State. You’d think it magically appears in a common pot and the government’s job is to ladle it out effectively and fairly. I can recall hearing only one member of Congress say, “It’s their money,” during a television interview about why tax rates shouldn’t go up on high-income people.
Sheldon Richman, “A Boost for the Managed Economy: What did you expect?”, The Freeman, 2010-12-17
December 17, 2010
QotD: “all players in the game have revealed themselves to be interventionists”
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