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When the Government Picks, Everyone Loses

I began today writing about sound bites and the terrible decline of voter knowledge.

And then I was called in to work, where I had the privilege of telling over 40 people that the government rebates they wanted to redeem had expired on December 31st.

This government rebate program was actually a very good way to test my hypothesis (I live in Canada), which was based on how environmentally friendly newly purchased appliances were.

Essentially, the rebate ensured that, if you decided to buy a very efficient appliance, you would get a $75 rebate; if you bought a cheap, inefficient model, you wouldn’t get a rebate at all.  There are several other levels of rebate in between, but overall, the idea is pretty simple.  While the rebate program ended on December 31st, this short story is a just a microcosm of a much larger problem, shown in both the (outrageously overlooked) Solyndra scandal and the (ongoing, currently being overlooked) LightSquared scandal: the government doesn’t belong in the free market.

Let’s examine the top three flaws in the philosophy of government intervention in the marketplace.

#1: It’s the government’s job to decide what products should succeed.

Let’s start with establishing this basic premise.  Government has many duties that its citizens expect it to fulfill. However, none of them involve choosing which companies are allowed to succeed.  When the government seizes this power, it must be reclaimed by the people.

Our money is spent by our governments, often by faceless bureaucrats with no accountability. Some of these bureaucrats get to decide where large swathes of tax dollars get distributed.  Oddly, many large donors have their companies given these massive grants and loans from the government.  Weird. It’s almost like they’re…rigging the game in their favor (I’m sure you can find example of this happening in every administration, honestly; but I’d also be willing to bet $10,000 that the Obama administration has substantially more than the average level of donor kickbacks).

#2: The market needs the government’s influx of funds to survive.

Outside of very, very limited cases (i.e. T.A.R.P. [which, by the way, was only necessary because of government intervention in the market.]), government intervention in the market is a disaster.

For example, let’s look at the Obama administration prioritization of funding for “green energy.” Solyndra springs to my mind.  There are some others, as well.

The free market works by constantly balancing supply and demand.  The government sitting on one side of the scales simply causes the amazing malleability of the market, that flexibility that allows it to adapt to all situations, to grow flawed solutions to non-existent economic problems.  Then, when the intervention is stopped, the critics of the market cry out, “It needs us! Without government stimulus, the market collapses!”, while ignoring the fact that if they had left it alone, the roaring market would never have stopped growing in the first place.

#3: The government can make better decisions than the people.

This is the main thrust of the argument. Government acts to subsidize products it likes that the market does not support. If the market supported it, there would be no reason to subsidize it.  Again, this is a pretty simple idea.

But once we dig a little deeper, we begin to uncover the fundamental arrogance of government.

It takes our money in larger and larger chunks, while borrowing against our continued economic growth, holding future generations hostage. Bureaucrats grow the size of government nearly universally, and there is very little we can do to slow the distension.

Luke Stibbs // University of the Fraser Valley // @LukeStibbs

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Comments

  1. Luke, this is a good article. I hope you will write more.

    Ron

    http;//theoxfordteaparty.blogspot.com

  2. Take a microeconomics course. This isn’t government meddling in markets and trying to decide outcomes; this is remedying the positive externalities produced by energy efficient machines. (See http://en.wikipedia.org/wiki/Externality)

  3. renewableenergys says:

    Luke, you are on the right track, the government definitely has it’s hands in to many pies. Most people like their pie without fingerprints. Harry.

  4. This all comes down to loose regulations on ‘donations’. Obama was shooting to shut down all the coal plants in the states, except for ones owned by juicy donors General Electric. Like everything the government does, it’s all about doing the “good” they’re obligated to do, while making as much money off of it as they can. The way they’re supporting green initiative is better than nothing, but these scandals can really ruin it. I think the regulations are a lot better up here, but corruption is a hard thing to stamp out.

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