Its funny how so many well meaning people constantly cry fowl over every injustice in the world, and continue to advocate the same solutions to everything. The answer is of course, more government, everywhere, all the time. It doesn't seem to matter what the issue is. The instinctual reflex of everyone on the left is to advocate more government. It is a constant frustration for me because government intervention of any kind always leads to its own problems. The intervention in the market creates a distortion, which hurts people. The market is then blamed for failing, and government steps in again to "fix" the market. The whole thing becomes cyclical, with the inevitable result that the market becomes so disfunctional that direct government control is the only answer. Its about time that "government failure" be exposed, and not just "market failure."
Just look at the American economy, and you quite easily see the end result of these political "fixes". Look at our last recession. Which sectors of the economy were the most responsible for the crash? housing and finance. Which two sectors of the economy also happen to have been the most regulated?Housing and finance. All sorts of real estate laws in the states lead to intense market distortions that guarantee restricted supply, and government intervention in finance guaranteed easy money to those that couldn't afford it, inflating demand. One example was the strict building codes in California. Few building permits were ever granted because the environment came first. However noble this may seem, it meant that the supply of housing in California, since the 80's, has not kept up with demand. This led to housing prices exploding in California. This then led of course to liberals crying fowl that the poor could not afford decent housing...which was due to their policies. The answer of course, was to force banks to give out easy money to people that could not afford it. This then exploded demand even more, leading to a vicious cycle of rising house prices. The book, "The Housing Boom and Bust," goes into this in great detail.
Now consider this, according to the Economist, California has the highest poverty rate when adjusted for cost of living in the United States, at 25%. Its funny how time and time again, the states that are supposedly the most progressive are increasingly becoming expensive enclaves for rich enlightened liberals. I mean if you are lucky enough to have a house in California, you are set. Skyrocketing prices guaranteed your standard of living would go up. Therefore the haves had no incentive to do away with the strict environmental regulations because it benefited them. Meanwhile their less fortunate neighbors voted with their feet, to states where housing is far less regulated and cheaper. Liberals constantly assume they care more for the poor, but the reality is despite all their best intentions, their policies are exactly to blame for the plight of the poor.
Another interesting example of how liberal policies have screwed over the poor is rent control. Controlling rents, on the face of it, sounds like a wonderful way to guarantee affordable housing. However in practice it restricts supply. In fact it does worse than this, it destroys neighborhoods. You think I am exaggerating, but I am not. In New York City, there was a story from back in the 70's of a landlord that could not charge enough rent to even cover his operating expenses for the building. It was absolutely absurd. He took in less from rent than he had to fork out in utilities and property taxes. As a result he never invested anything in upkeep and tried his hardest to get the property off his hands. He even tried to give the property to the tenants, for free! Guess what...they wouldn't take it! It was cheaper for them to just pay the rent. No sane person would invest in developing apartments in such an environment. And guess what? No one did. People could not find places to live in the city, leading to exodus, and the neighborhoods that did exist declined into ghettos since nothing was invested in upkeep. The ghettos did not just happen, they were the result of well intentioned policies that had disastrous consequences.
Where the government has not interferred, such as in the internet and technology, prices have fallen and the economy has prospered. Where the government has heavily intervened, as in housing, education, and healthcare, prices have been increasing far faster than incomes. Either by restricting supply or by inflating demand, the government has stimulated price gouging. In the process the portion of the electorate the liberals supposedly care about the most, the poor, are hurt the most. Yet continuously the market is blamed time and time again, without ever being given a chance to work in the first place.
Last thing before I close up, yes its true that perfectly aimed policies can have a positive effect on an economy. I don't deny that. However lets look at two things. 1) Humans are not omniscient, so its inevitable that a variable (out of the potentially infinite) we did not consider will rear its ugly head. 2) Its a stretch to think the politicians making the laws actually have an interest in making perfect policy. What matters is winning votes, and the best way to gain votes is to create voting blocs that are dependent on you. If people are self sufficient, then what need would there be for the politician? However if your voters have something to lose if they don't vote for you, then they will vote for you, if for nothing else, to make sure the other guy doesn't take away their goodies.
Why else would democrats constantly oppose consolidating welfare programs (according to the Economist, there are 126 anti poverty programs run by the federal government, many of which overlap)? They oppose it because there is a constituency for each program that fears losing their goodies, which not only includes the welfare recipients but the bureaucrats. If you consolidated the welfare programs, then there would not need to be as many bureaucrats, which inevitably means less dependent government employees that will vote democrat (In an economics textbook I read in college, it showed that only 1 out of 7 dollars currently spent on welfare programs goes to a welfare recipient...where do you think the rest goes?). The same goes for Republicans and funding the military. Despite the fact that the growth in benefits and pay for the military has ballooned as a percentage of Federal spending on the military over the past 10 years, no Republican would dare lift a finger to cut any of it. They, just like the Democrats, have a constituency that fears losing its goodies.
The point of this article is that government intervention has consequences, and they are often negative. Things are not always as they seem. Just because the intentions are good does not mean the result will be good. In addition often the intentions are not good. Often the elites know what they are doing, and do it because it keeps them in power. I suppose one day it will be possible to make perfect laws. However until then, I suggest that we keep government interference to a minimum, and let the market operate.
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