Can the Government Run the Economy?|5 Minute Video
With the smartest specialists and the best economic experts, could the federal government run the U.S. economy? Steve Forbes, Chairman and Editor-in-Chief of Forbes Media, describes why no one person or group can “run” the economy, and why any attempt to do so can only make things worse.
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Script:
Is our economy a device, like a train, a power or a vehicle plant?
One constantly hears expressions such as the economy “is overheating” or “needs to cool off” or “might use some stimulus.” These aren’t safe metaphors. They exemplify how financial experts have actually taught us to see an economy– as something that can be controlled, directed or driven. And guess who does the driving? The government.
The federal government is expected to ensure that the economy “hums” along at an even speed, going neither too fast nor too slow. However the economy is not a maker. It is made up of people, and nobody can control what billions of them are going to do.
What gets ignored, underplayed or merely neglected is the remarkable “churn” in the activities of a free market. New organizations open while others close, constantly. In the U.S. throughout normal times a half-million or more jobs are produced weekly, while another half-million are cut. Business owners continuously roll out new products and services, most of which flop. Those that succeed can considerably improve our quality of life.
What federal government can and must do is to positively influence the environment in which this hum of activity takes place through practical tax, monetary policy, federal government costs and policy. And in nearly all instances the best prescription for financial health is “less is more.”
Catastrophic errors by federal governments can poison the marketplace, as happened during the Great Depression in the 1930s, to a lower extent in the 1970s, and after that once again in the panic of 2008– 09.
The government’s recent mistakes have actually been compounded by tax boosts and an avalanche of antigrowth policies from ObamaCare, the Dodd-Frank monetary services bill and all those Washington regulative firms, such as the FCC, the EPA and the National Labor Relations Board. If you wish to understand why the American economy has been growing at the anemic speed of 1 to 2 percent a year, look no more.
Once again, the idea of an economy that purrs along like a well-oiled device harms, not boosts, wealth production because usually, it results in growth retarding government intervention. Which brings us to bubbles.
Shouldn’t the government, the argument goes, a minimum of attempt to stop them from happening? Well, it depends. Those triggered by misdirected federal government policies like the housing bubble of the mid 2000’s, yes. Those triggered by the free enterprise, no. Bubbles have a bad name, but not all of them are developed equal. There are healthy ones and unhealthy ones. The great kind establishes when a lot of individuals at the same time acknowledge an excellent chance.
Computer systems are an excellent example. Throughout the early 1980s there was a boom in personal computers– followed by a severe shakeout, when business such as Atari and Commodore bit the dust.
In the late 1990s a number of companies acknowledged the value of search engines. Google emerged supreme with Microsoft and others relegated to fractional market shares.
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source
Can the Government Run the Economy? With the most intelligent specialists and the best economists, could the federal government run the U.S. economy? Could it keep America’s $17 trillion economy going like a well-oiled device? Steve Forbes, Chairman and Editor-in-Chief of Forbes Media, explains why no one individual or group can “run” the economy, and why any attempt to do so can only make things worse.
The federal government is supposed to make sure that the economy “hums” along at an even speed, going neither too quick nor too slow.
