Economic Differences

Paul Krugman repeats a traditional argument where the Government must intervene any and all times that an Economy is threatened with Recession. I have been following that argument the entirety of my life, and have always had reservations about it. A Recession is first and foremost a Correction, where an omnibus of bad economic decisions all face termination in a quick, and violent, relocation of economic forces. Government intervention purports to intercede to prevent the violence and depth of the Correction, slowing the speed of hazard through artificial transfer of financial assets. Herein lies the Problem, which I will hopefully explain.

The first element of Government intervention which may be adverse comes in the fact that Those who made the worst economic allocations receive the assistance of the Intervention. Stable economic units in the Economy will never hope to find financial aid from the Government; they forced to accept the Penalty of being economically sound. It is only the unstable, poor operation, economically unstable units of the Private Sector who obtain the funding; giving them a wide advantage in resource recovery, provision of Wage differentials, and maintenance of unreliable production methodology. Government intervention does not promote the economy per sec, it simply forestalls the implementation of natural Corrective forces.

Here is the quandary about Government intervention. They defeat the natural Corrections innate within a Recession, by the simple expedient of funding inefficient economic operations. Spurious Profits taken in earlier, successful economic times are protected by Government sanction and funding, while stable economic enterprise can only endure excessively high resource and Production Costs because of the Government intervention. It is a State rift with the forces inherent to motivate future Recessions, even if the current Recession can be avoided. I am not necessarily against Government intervention, but it should be Government action promoting successful Government Needs; Government resurfacing Roads programs rather the construction of new Roads, increasing the size of military reserves rather than underwriting the employment at the Big Three Car companies, or employment for widespread Social Cleanup programs revitalizing poor areas. lgl