Sunday, May 25, 2008

Ours is not to reason why, ours is just grow or die

Long ago, when I was in my teens, I remember remarking to an acquaintance about how our economy was/is built upon a grow-or-die model. This is fine if it’s natural growth, but it seems we have growth artificially stimulated via interest rates, taxes, and other incentives.

Producers, of course, like growth, but they only have the power of persuasion through marketing and advertising to attempt to keep it going. When we get to politicians*, however, we get to the real culprits. Because of their penchant for giving unearned money to the least productive elements of society, and of financing unnecessary pet projects for their home districts, and myriad other wastes of hard-earned capital, we have inflation, the bane of the welfare state, and the real impetus for never-ending growth.

With this in mind, is it any wonder why this incessant focus on growth is so important to the powers that be? Without growth, the steamroller of liabilities politicians have created that’s always just two steps behind the economy would overtake and crush it. With this sword of Damocles hanging over the economy, the normal rhythms, the ebb and flow, of an economy must be suppressed at all costs.

In any free, unfettered economy, if you could find one in the Western world today, natural, healthy up-and-down cycles occur over a given period of time. The down-cycle is just as necessary as the up-cycle, for the down-cycle gives time to gain perspective, marshal resources, and cull weak businesses and bad debt, thereby making the entire system stronger and more resilient. When the down-cycle is not allowed to function, the entire system is weakened in the end, although artificially prolonging the up-cycle may obscure that fact for a while. But the down-cycle can’t be suppressed forever, and when it does reassert itself, the effects will be brutal and the entire system less able to tread water until better times, which can/will result in a death spiral to a depression if further measures are taken by politicians to prematurely get back to the up-cycle.

Do you remember the massive fires in Yellowstone National Park that occurred in the late 1980s? These fires were so intense that no amount of effort by firefighters could stop them; they were forced to let the fires burn themselves out. Do you know why the fires occurred? Because of many decades of a US Forest Service policy to quickly extinguish any and all fires, which on the surface seemed fine, but in reality allowed underbrush to get so thick that when a fire did start in overgrown areas, it would be too hot and strong for any human effort to handle. This is exactly what happened, and the resulting conflagration destroyed old-growth trees which might have made it through milder fires, leaving thousands of acres that resemble the moon’s surface (I’ve been there and I've seen it with my own four eyes).

Now, extrapolate what you’ve just read and apply it to an economy that’s never allowed to have smaller, debris-clearing fires. What do you think will happen when, someday, a fire starts in an economy weakened by government interference? If you said, “Far more devastation than would have happened had the natural cycles been allowed to function,” you get it. If you didn’t reach this conclusion, you need to think more deeply; you also need to stay away from the voting booth this November, because you’re likely to do more harm than good.

Take care.

*I’m not letting those who voted for the politicians off of the hook. An electorate that believes in a candidate's promises/abilities to circumvent reality is, ultimately, at the root of the problem.

1 comment:

The Other Mike S. said...

This unnatural interference by government will always end up the same: Fewer true highs and more brutal lows. They attempt to FORCE a sort of middle-of-the-road outcome for everyone/thing, but it is impossible to plan for everything. Then nature rears her ugly head - finding the holes in the plan - and punches you in the gut.

A quick look at history shows how successful planned economies have fared in the past. Don't our "leaders" read?