Free Markets, Free People

Daily Archives: September 24, 2012

Economic Statistics for 24 Sep 12

The following US economic statistics were announced today:

The Dallas Fed general business activity index improved but remained in negative territory, posting at –0.9 versus –1.6 in August. Production, however, jumped to 10.0 from 6.4 while new orders rose to 5.3 from 0.2, both pointing to future improvements in Texas business conditions.

The Chicago Fed National Activity Index fell to -0.87 in August from a revised -0.12 in July. This pulled the 3-month average deeper into contractionary territory, with the average falling to –0.47 from –0.26.


Dale Franks
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The fallacy of redistribution

Thomas Sowell, as he often does, puts the blue state model’s deficiencies into perspective in an easily understandable article. In this case he addresses redistribution.  If honest, even the most rabid redistributionist should come away from reading it understanding how redistribution is a doomed scheme.

Why?  For the same reason most blue state ideas fail.  They run counter to human nature.  In fact, they naively believe they can do something counter to human nature and it will both work and be sustainable.

Redistribution has been something tried among many nations in the past.  And, it has pretty much failed each and every time. Again the quesiton: “why”?

Those who talk glibly about redistribution often act as if people are just inert objects that can be placed here and there, like pieces on a chess board, to carry out some grand design.

But if human beings have their own responses to government policies, then we cannot blithely assume that government policies will have the effect intended.

Bingo.  While such schemes may work initially, they never factor in the reaction of human beings to something they find disagreeable, dishonest or just plain wrong.  Politician who want to tax things to change behavior find this out all the time.  But apparently we have to learn these lessons over and over and over again.  Throughout history, schemes which run counter to human nature rarely if ever succeed over any extended period of time.   There’s a reason for that:

In theory, confiscating the wealth of the more successful people ought to make the rest of the society more prosperous. But when the Soviet Union confiscated the wealth of successful farmers, food became scarce. As many people died of starvation under Stalin in the 1930s as died in Hitler’s Holocaust in the 1940s.

How can that be? It is not complicated. You can only confiscate the wealth that exists at a given moment. You cannot confiscate future wealth — and that future wealth is less likely to be produced when people see that it is going to be confiscated.

This would seem a simple lesson, given the amount of history in which it has been proven.  Yet, for whatever reason, politicians on the left (and many on the right) seem to discover it afresh in each generation.  That and the belief that the only reason it hasn’t worked in the past is because they weren’t in charge of its implementation.

We have one of those in office now.  For the “smartest guy in the room”, he has yet to understand how human nature works in this regard.

All I can say is if he’s unable to wrap his head around the consequences of pursuing such a policy and is still considered the “smartest man in the room”, it must be an awfully small (and empty) room.

~McQ

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