Is it time we started to have a look at exactly how our economic model works? How our government’s position within that model works? And how we can extricate government from economy in general?
I theorise that if your government is the driving engine for economic growth your economy has failed, simply government spending has become life-support. Even more so, if your economy has become reliant on government spending for growth isn’t the economy then by default held captive by government? Which of-course leaves government free to interfere, dictate or other-wise manipulate the economy with no guarantee of any successful out-come. These out-comes can be disastrous, one only has to look at the current state of affairs in Europe to see what happens when governments in some respects become the economy.
Frighteningly what can also happen is governments can become just as captive to economies, this means the effect of economy becomes the driving engine of government decision making. The largely illusionary benefits of a growing economy aside, and how that growth is achieved also, we should ask if no-one really understands how economics work, and how its relationship with governments work, are we being conned? Are we being forced to live our lives based on some imaginary set of numbers fed to us by over-eager governments seeking rent or votes?
Is “for the good of the economy” just more of “for the good of the party” type nonsense we should have already grown out of as societies?
Should we be questioning the growing power governments have in economies? Should we question how that power is obtained and manifested? Should we question what are some of the unintended consequences of that? Of-course we should, we should question anything and everything, and above all we should never stop questioning authority and government.
How does government become entangled in an economy to the point where it becomes a driving engine? Revenue in and spending out is primarily how government influences the economy, this re-direction of money, from one part of the economy to another creates in truth an artificial economic activity. It is artificial largely because much of that monetary flow could well be achieved without it going throw government, also it is artificial because without government that monetary flow may not have occurred nor needed to. We need government, and as a society we need certain functions of government to be funded, but what happens when society or even the economy never stops wanting or needing?
We only need to look at the state of affairs in Europe to see what happens when this process goes wrong. How do we then stop it from going wrong? There is two short answers, firstly, stop societies from thinking government is all powerful and stop governments from thinking they know what they’re doing. Secondly, accept the truth, sometimes you win, sometimes you lose. The societal demand for perpetual economic growth and an ever larger slice of that growth is what’s making the system no longer functional, Australia has had over two decades of uninterrupted economic growth, and we as a society are in for a rude shock when that finally stops being so, and we must accept that some people are going to lose.
We must also accept that it is not only government at fault for its undue and often mismanaged influence on the economy, it is often at societal demand that government takes on more and more responsibility and thus, more and more economic influence. Society wants its fortnightly cheques to be delivered and really couldn’t care less where the money comes from, and the government requiring those votes will give it to them without caring about the consequences. This is on top of another important area where the government has skewed the economy, by means of employment, imagine if you had a total labour pool of 2,000,000 people and a single employer employed 250,000 of them, what sort of influence would that employer hold? Now consider what happens to the pool when two other large employers begin to take their share, now consider that all three of these employers require revenue to be largely collected from the remaining working population and the business’ who employ them to pay their employees. It isn’t hard to imagine how this may alter the dynamics of any economy, nor is it hard to see how much of an economy may be consumed by government trying to manipulate the economy and society.
What happens when the above dynamic becomes unsustainable? One only has to look at Europe to glimpse the consequences of governments trying to too much whilst at the same time employing far too many people. Why would any government follow that example? Why would any government knowing the risks persist in continuing a strategy of economic manipulation that has always failed? Simply, and for two reasons, firstly, people are greedy and governments are lazy, secondly, as long as people and governments are greedy and lazy they’ll keep doing it regardless of the risk or certain failure.
Do we need government to manipulate the economy? Does the government do a good job of manipulating the economy? Should the economy be left to its own devices? The government shouldn’t be manipulating the economy not only because it doesn’t do a good job of it but also because its reasons for doing so aren’t based on making the economy better, but simply garnering votes from people who wouldn’t and don’t know any different. The economy doesn’t need to be left to its own devices to be successful, but it does need to be able to function without demand that it contort to societal and political visions of what it should look like or how it should perform.
Certainly all economies need to operate within certain boundaries, and generally benefit those within the scope of that economy in some way, but how do you best achieve that? How do you determine the boundaries? Who determines those boundaries? How do you define benefit? Who gets to define who gets what benefit? Do we really want governments largely made up of lawyers, union officials, their associated hangers-on and party apparatchiks making those decisions?
Alternatively, do we really want those who would seek the greatest of benefits from the economy making all the decisions? Or do we want a society that has grown fat suckling at the teat of ever more powerful government making those decisions? Or do we let the whole house of cards fall over and start over some time in the future? Or, do we push it over and hope for the best?