Over the years, I’ve had many arguments about economic policy with my statist friends. I put them into three categories.
- The completely unreasonable statists blindly assert, notwithstanding all the evidence around the world, that bigger government and more intervention are actually good for growth.
- The somewhat unreasonable statists acknowledge that bigger government and more intervention might have some minor “efficiency” costs, but those costs are acceptable and affordable in the pursuit of more “equity.”
- The semi-reasonable statists admit that bigger government and more intervention hurt growth, but they argue that “libertarian types” must somehow be wrong because our predictions of economic chaos never materialize.
The folks in the last category have a point. For decades, advocates of limited government and free markets have warned about the economic cost of bad policy, yet where’s the collapse?
Why hasn’t Atlas shrugged, as libertarians have warned? Why have predictions of economic dystopia (examples here and here) been wrong?
I have two responses to these questions.
First, the economic damage caused by an expanding welfare state has been offset by improvements in other types of economic policy.
Second, maybe dour libertarians have been right, but got the timing wrong because it takes a long time and a lot of bad policy to destroy an economy.
And that’s today’s topic, because it certainly looks like both Greece and Venezuela have finally reached the end of the road. Let’s call it the Thatcher Inflection Point.
Dan Mitchell, “Atlas Is Shrugging in Greece and Venezuela: Two Case Studies of Statist Failure”, International Liberty, 2015-05-27.
June 19, 2015
QotD: There is a lot of ruin in a nation … but not an infinite amount
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