derryl

It's Time to Stop the Economic Gloom and Doom

johngaltfla wrote,

"When deleveraging is allowed to occur within a normal free market system, the pain is sharp but the duration short. Unfortunately there is this "mommy mommy I scraped my knee please kiss it and make it better" mentality in this country where losing is no longer an acceptable option. There are winners and losers in real capitalist economies and since we are no longer willing to accept losers..."

While I am sympathetic to Mr. Thoma's observation that there must be something wrong with a system where unmet wants live side by side with idle capital and labor, I agree with johngaltfla that the collectivist cure causes more problems than it solves.

From a broad philosophical perspective I believe that suffering is supposed to motivate us to get off our butts and think up a way to cure our own suffering. This means searching our own mind to discover why we are stuck in the pit we are in, then dumping wrong ideas that keep us in the pit and exercising our creative intelligence to replace bad beliefs with better ones. We are goaded into developing ourselves personally and in Darwinian terms making ourselves more fit for survival.

Big Nanny State wants to eliminate the pain from this equation. Should a parent insulate his/her child from all suffering? Or do we let kids suffer just enough to "learn the lesson" and change their wrong ideas and behavior?

When I was a young parent I correctly predicted the outcome of other parents who over-insulated their children: they got permanent dependents instead of kids who learned how to make their own way in this world.

For selfish personal reasons some parents want to keep their kids permanently needy and close at hand but what happens to your dependents when you die? You haven't let them learn the life skills they need to make it on their own so unless you left them a huge inheritance they're screwed when the source of their support is gone.

Politicians love being Santa Claus and keeping voters in a state of permanent dependence to ensure a large block of support. As George Bernard Shaw put it, "A government that robs Peter to pay Paul can count on the support of Paul."

Peter is the businesses and individuals in the productive economy who have to supply all the goods and services the government gives away. A society that systematically robs its productive class discourages production and encourages neediness. Leadership "works". You get more of what you encourage and less of what you discourage. Over time the whole system is producing less for everyone, as the Soviet system demonstrated.

There are probably limits to this downward spiral of productivity. The John Galts of Atlas Shrugged fame will never let themselves become needy as long as they have breath. But there is no mystical capitalist valley to go live in so the John Galts continue producing and paying taxes.

My point is you get what you pay for. If you pay people to be needy you get neediness. If you pay people to be productive you get productive people. If you pay people to speculate on financial products you get speculation replacing economic investment. So the question is, how productively diminished do we have to "collectively" become before this whole getting something for nothing system collapses?