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31 January 2020

The Long Fingers of Government

Money isn't worth a thing - blog image.

The Invisible Hand of the Market is an economic concept developed by Adam Smith an economics pioneer. His studies into economics and free-market ideas often give him the title of “Father of Capitalism” and even “Father of Economics”. Adam Smith saw the invisible hand of the market as behaviour by economic participants which promotes the welfare of society and healthy economic development without actually having any such intention.

These participants behave in a manner which is consistent with economic self-interest, yet serve the interest of society and economic development at the same time. A simple example is that the driving force of greed and a desire for riches result in the employment of large numbers of people, not driven by these emotions. There is no objective whatsoever to do “good” and the motivational forces are usually considered distasteful at best or downright objectionable by society. Yet, the end result is a significant socio-economic benefit. One in his greed does good to the many in need – certainly an irony.

Sadly we have the opposite result when the government steps out to execute its mandate to do good. Here we see an objective to do good usually driven by the demands of its constituency. It is always a certainty that the budget for doing good will vastly exceed the available sources of income to fund that budget.

Thus, the government is set-up for failure in ‘satisfying’ the promises it usually makes to its constituency but it will always be determined to try and achieve its objectives in spite of its irrationality. From that is born an insatiable hunger for money. Unchecked, a government will strip an economy bare in it desire to do good. It will rob and outright steal from one citizen, usually the one producing a surplus, to give to its constituents.

Governments are creative and do it invisibly – without you even knowing about it like when they create new money out of thin air at the Central Bank and then passing it back to themselves by issuing government bonds to the Central Bank. The immorality inherent in this process will attract immoral players who bring with them corruption, nepotism, graft, and downright theft of those already scarce public resources.

So instead of an invisible hand of the market which results in good, and intended good results in long fingers of the government. One in its desire to do good will harm many in need –  another irony.

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