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Government Intervention Is a Lose-Lose Situation For the Poor

By: Steve Johnson

11/16/2009 - 32 Comments

If given the choice of being shot in the chest or forced to work for everything you have, which one would you choose?

That is the difference between government intervention and free market capitalism. 

In the last few days, I've read a few more articles that blame the greed of the free market for the recession.

Almost every book or article against the free market always blames capitalism for the problems that
socialism and government intervention cause.  

In almost every case the authors end up talking about how the growing inequality of money between the rich and the poor is the primary reason against the free market. 

This age old issue of inequality is at the center of the 'social justice' movement that led congress to create the housing bubble that is now busting and has taken the rest of the economy with it.  The issue of social justice is the primary reason that Obama was elected, as he promised more government intervention to solve the problems that decades’ of government welfare have been unable to solve

The promises of socialism and inflation continue to fail, yet millions are still holding on to the hope that one day when the government gets large enough to control the entire economy - it will be able to give everyone a high paying job.  All the while, the expanding government is the cause of declining jobs.

The Evil Side of Capitalism

The evil side of capitalism is a condition of the human heart and has always existed since creation. When we can be, we are all greedy and selfish - despite the belief that people are generally good.  A few months ago Obama said in a speech that he places the hope of the future in the goodness of people. 

The trouble is that he doesn't believe that. If he did, he would put less faith in expanding the government and more faith in the good will of the people.

Our founding fathers were not so easily fooled.  They knew that no man could be trusted with too much power (“the heart of man is deceitful and wicked, who can trust it” Jeremiah 17:9) as evident in how they created the founding documents of our great nation.

The good news is that the free market forces greed to compete with itself. The result is that it is very difficult to remain greedy in a free market. The free market forces greedy people to make a decision to reinvest their money back into the market and if they make a bad investment decision or they mistreat their customers or employees, they will lose their money to someone else that conducts business in a much less greedy way. 

The only way to remain greedy in the free market is to create a competitive advantage that protects your business from competition.  And that is accomplished by using government influence to control your industry with excessive regulation, trade agreements, labor, political contributions and other policies. 

Controlling government policy is the only way to remain greedy in a free market. The way to stop businesses from controlling government policy is to not allow government policy to interfere with the economy. 

The more influence the government has in controlling the economy the more likely that greed is going to get involved. Government intervention opens the door for capitalism to fail and that is exactly what happens. 

The Effect Of Government Central Planning

Government central planning is the notion of allowing the government to plan the economy rather then letting the free market consumers guide what products are produced and purchased.  Government central planning results in government intervention to control labor, capital and production with the misguided idea that someone is wise enough to manage the economy. 

The evil side of capitalism is a condition of the human heart, as stated above. But the same condition resided in the hearts of the government leaders - only without the constraint of competition. The result is massive government corruption and a destroyed economy. 

Just look at Russia for example. They have perhaps one of the largest gaps of wealth inequality, yet billions of dollars have been given to Russia in the last few decades to help the starving poor - to no avail. 

Government expansion doesn't help inequality, it only accelerates the trend. Capitalism is the lesser evil of the two, but government intervention opens the door for capitalist to use the government to create barriers for their competitors. 

Using government central planning to solve inequality allows capitalism to corrupt government and the result is far greater inequality.

The empty promises of more government programs results in greater inflation and higher taxes, which gives capital markets even more leverage over the poor while prices increase. 

Government intervention is a lose-lose situation for the poor. Yet they lack the understanding to see through the empty promises of the politicians that promote more government intervention.

The Free Market is the Best Solution

The free market is the best solution, because it allows competition to squeeze greed out of the market and supports a profit motive that creates jobs for everyone.  We desperately need to return to a free market before we are going to see an economic recovery. 

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