December 2, 2014

What Government Should Do

    There are still quite a few people wondering why democrats lost the election. One person, Brad Bannon, believes that Democrats failed to speak to the Middle-Class issues; these issues were mostly about unemployment. His suggestion is that,"Americans deserve a lot more than [service jobs] from their government. Americans deserve a lot more than that from the Democratic Party. Americans need more than jobs. America needs a raise". However, we have already discussed minimum wage and why it will do more harm than good; however, when he states that Americans "deserve more from their government", one should feel suspicious about that statement because it sounds as though Mr. Bannon is pushing for interventionism.

     Now it is difficult to say exactly what one "deserves" from government because government does not give anything to people (or at least it should not); instead government is suppose to provide specific services to its citizens because its citizens give government power to do so. The only thing that government should really be providing to people is protection of private property, providing national defense and correcting market failure. 
     A recession is not a market failure; it is the market taking its medicine so that it can be healthy again. Admittedly, recessions are tough and the recovery afterward can take awhile too, but medicine tastes nasty and recovering from an illness takes longer than anybody would like it too. So if many Americans are moving to service jobs while the medicine is taking its effect, and we are recovering from our recession, then that is what the market will do to heal itself. 

     Believing that government should regulate the market to help the market is will help no one. What Mr. Bannon is doing is encouraging government to abuse its power and ultimately make mistakes about how to help people. Interventionism can help some people with one problem, however it has some terrible side effects on the rest of us that he may not have taken into consideration. Side effects of "Government Intervention" include but are not limited to:
-Higher Unemployment;
-Higher Taxes;
-Misuse of taxpayer money;
-Arbitrary Laws;
-Disgusting "healthy-food" in public school cafeterias;
-More aggressive police forces about minor traffic offenses;
-Distorting a market for one good by applying a price floor, which will incentivize consumers to use a substitute good;
-Distorting a market for one good by applying a price ceiling which can cause many business to lose profits, possibly leading to layoffs or less goods for consumers;
-"Affordable" Health care; 
-Raising Barriers to entry making it more difficult for entrepreneurs to enter certain markets;
- and Bailouts.
Please see your Primary Austrian Economist before using Government Intervention.

     With all of this in mind, there are two things that either party could that would help the country, 1. they could begin to deregulate some of the laws in the country so that the market can take its proper medicine and 2. They should not use arbitrary intervention as a method to  "help" the economy otherwise we will stay sick.

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