Caveman economics

BY RANDY ALCORN
Few things require the public’s caution and vigilance more than when politicians attempt to solve problems, either real or perceived, especially if those problems involve economics. Typically, such attempts are misguided, ineffective, and result only in increasing taxes and eroding civil freedoms. Not only do these attempts not solve the problem, they often make matters worse by interfering with self-correcting market forces.

For example, President Nixon’s price controls back in the 1970s did not curtail inflation, they only caused shortages and black markets, and delayed market homeostasis. Government attempts to douse economic conflagrations are as effective as attempts to quench wildfires in high winds. In spite of all the effort, such infernos will run their course.
At the local level, another example of official economic futility is found in Santa Barbara, where the high cost of housing excludes many people who wish to live there. Local politicians preach that the economic and social health of the community requires a diverse economic stratum, especially a middle class. Developers, therefore, are legally required to artificially lower the prices of some of their houses and sell them to economically eligible buyers — i.e. middle class. But, who determines what is middle class, what is affordable, and who gets lucky? Government.
As with any commodity, the price of housing is determined by willing buyers. Price a home too high, and it won’t sell. And, even though the price range of real estate in Santa Barbara is higher than that of most communities, the houses there still sell — even without government price controls.
Gauging what is middle class is relevant to individual economies. The measure of middle class between America and India is quite different. Likewise, the economic stratum in Santa Barbara reflects its local economy. Measure the income or net worth of the local households and you will find a quantitative range that can be segmented into percentiles — call them whatever you like, upper, middle and lower.
Historically, official tamperings with market forces have proven futile. Anyone who still believes the myth that FDR’s New Deal policies rescued America from the Great Depression should read Amity Shlaes’ history of the Great Depression in which she reveals how government’s attempt to resuscitate the economy resulted in nothing more than the growth of government and the diminution of American self-reliance.
Nevertheless, like a childhood bogeyman, the Great Depression lingers in the American psyche, and as the current economy continues to tailspin, Americans are becoming increasingly uneasy about their financial situations. That is why Americans’ attention has so abruptly turned to economic matters and why each uptick in the price of gasoline, and each downtick in the stock markets turn stomachs. Americans are scared, and as we have seen in the past, when Americans are scared they become susceptible to pandering politicians promising solutions and security.
So, here we go again. Attempting to mitigate the impact of skyrocketing fuel prices, a Michigan Congressman has proposed that the nation return to a mandatory 55 mph speed limit. The rationale is that by reducing speed, drivers will reduce their fuel consumption and in turn their fuel expense. A number of politicians believe that this makes such good personal economic sense that everyone should be forced by law to adopt it.
But, are the majority of Americans so mentally incompetent that they can’t make the choice of economizing on fuel without the gun of government being pointed at their heads? If they really want to reduce their fuel budgets, Americans will voluntarily drive slower, or less often, or with properly inflated tires, etc. They will figure it out. Ultimately, economics is about individual choices made within individual financial circumstances.
Most economic problems, therefore, will resolve themselves, but government often feels compelled to interfere in the process by imposing some quick-fix pseudo-solution. Why should those who choose to adjust their budgets for higher fuel costs and prefer to drive at 70 mph be forced to economize by driving at 55? This is supposed to be the land of freedom, not the land of micro-managing state paternalism and enforced egalitarian economics.
Part of this nanny state nuttiness derives from so many politicians having the economic acumen of cavemen trying to operate calculators. With so many economics illiterates in government, we would be better off giving elected politicians those Hasbro toy steering wheels with which they could harmlessly delude themselves into thinking they were really running things. Meanwhile we could go about managing our own lives as free people making our own choices without the interference of government’s economic Neanderthals.
These Stone Age economists, having just learned how to count with their fingers, now think they can run the economy. Please, politicians, go back to tracing your hands on the walls and leave the economy alone.