LTE: Rational Economy

Economic woes are the result of regulation and intervention
Tim Peck | Asheville Citizen-Times | December 28, 2008

Dear Editor,

In his guest commentary, “This is a great time to invent a truly rational economy,” (AC-T, Dec. 19), Bill Branyon characterizes the inevitable consequences of government interference in the marketplace as the “current crisis of capitalism.”

There is no free market in this country – and never has been. And it certainly cannot have magically become the cause of any “current crisis.”

On the contrary, our current crisis is due precisely to government intervention and regulation, and not from any lack of them. Far from it, our hampered economy is heavily regulated; most notably, the banking, housing, and auto industries.

Capitalism, on the other hand, is the social system of freedom and it demands a strict wall of separation between economy and state. (Ironically, Mr. Branyon would have us believe that we are prisoners of freedom?)

For a slave, there are no degrees of freedom. He is either fully free or some variety of slave. Neither are there degrees of capitalism. Any form of “mixed economy” is simply a species of statism; whose key contributions to the economy are the destruction of liberty and wealth.

Mr. Branyon glibly informs us that we are “prisoners of the invisible hand of capitalism.” The only thing invisible in this matter is Mr. Branyon’s grasp of economics and history.

###

Gordon Smith wrote:

Is it also fair to attribute economic boomtimes to government interference?

MY RESPONSE:

Yes, the government is responsible for boom-bust business cycles by manipulating the money supply and interest rates.

The “boomtimes” are entirely artificial and must inevitably bust. It is a falsification of reality by the government and this causes malinvestment, poverty, inflation and unemployment — none of which are articles of “faith.”

These booms help the rich and well-connected and the busts hurt the poor and middle class.(Just recall the so-called “Roaring 20s” and the subsequent wrenching Great Depression.)

It is not the job of the government to run the economy and its interference is the cause of the (artificial) booms and (very real and painful) busts.

What we see in the economy today is a repeat of the ill consequences of intervention and regulation of an otherwise free market that continually seeks equilibrium. The only thing preventing those market corrections is the disastrous meddling of government in the economic affairs of free individuals.

For a more detailed analysis of the Austrian Business Cycle Theory, I recommend reading Ludwig von Mises on the subject. As Rothbard succinctly states:

“The classical, and now the Mises, theories have been generally scorned by modern writers, and mainly for this reason: that Mises locates the cause of business cycles in interference with the free market, while all other writers, following Mitchell, cherish the idea that business cycles come from deep within the capitalist system, that they are, in short, a sickness of the free market. The founder of this idea, by the way, was not Wesley Mitchell, but Karl Marx.”


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About Tim Peck

Unaffiliated Objectivist
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