Economics - explained plainly - and why government doesn't care
Over at WhizBang is one of the best plain spoken treatises on economics that I have read. While I have excerpted key parts, go and read the whole thing.
It taught me one thing: I saw exactly why government should be allowed to take our money but ONLY uner our watchful eyes:
First, let's start off with a definition of "worth" or value". He defines it as:
For example, "value." "Value" is "what you can get someone else to pay for your item."
Later, he shows us what NOT to do with economics:
The first thing I know about economics is that it does not take well to attempts to control it. Almost every single example I can think of where a government or other body has attempted to command the economy, it has worked out disastrously.
And provides the same example that I have used in the past - yachts are just not about rich people:
It's kind of like the time in the 90's when the government thought it would be a good idea to "soak the rich" by taxing yacht sales. The rich just started buying and registering their yachts overseas, and the end result was the near-destruction of the American yacht industry, putting a lot of boat builders out of work -- very few of whom were millionaires.
In essence, the best thing the government can do to fix most economic problems is GET THE F*** OUT OF THE WAY. The free market is not perfect, by any stretch of the imagination, but it has a hell of a lot better track record than any well-meaning bureaucrat or politician.
And this is why we have to be vigilant on watching government and our money:
Here's how the government can mess up even the most simple concepts. As I said earlier, the value of an item is whatever you can convince someone to pay for it. This boils down to "I will charge you the most I can get you to pay, because if I make it any higher, you will either get it from someone else, go without, or take it from me and pay nothing." And the buyer says "I will pay you this much and no more, or I will get it somewhere else, go without, or just take it." Negotiations boil down to who can con the other into thinking that those values are not what they are.
Again - the emphasis is on individual responsibility - you have a price and I have 3 options - I get to decide - nothing is forced upon me.
And now for the government part:
Government tends to ruin this because it introduces "idealism" into a system designed to work off the fundamental human principle of enlightened self-interest.
I once saw this diagram that illustrated the problem with government spending. It was a simple 2X2 grid, with "YOUR MONEY" and "OTHER PEOPLE'S MONEY" on one axis, and "YOUR BENEFIT" and "OTHER PEOPLE'S BENEFIT" on the other.
When you're spending your money for your benefit,...
When you're spending your money for others' benefit, you tend to focus on efficiency. You want the best results for the least expenditure.
When you're spending other people's money for your benefit, you focus on satisfaction. Since it's not your money, why not get the best, price be damned? It ain't coming out of your pocket.
When you're spending other people's money for other people's benefit, most any considerations go right out the window. It ain't your money, you won't see any of the benefits, so who gives a rat's a**? It's just numbers moving around a spreadsheet. It's a very dull version of Math Invaders, or a Sudoku for those who can't handle that kind of excitement.
So, given that succinct analysis of "why it matters who is spending whose money", we get the summary:
And that's what government spending boils down to: people getting paid to spend other people's money for other people's benefit. There is no motive for the spenders to get value for their expenditures, and no consequence for spending foolishly.
And they're doing it with OUR money. That's MY money, and YOUR money.
(H/T: Weekend Pundit)
