Instinctive Economic Theory- Rough Draft

We now have, in most communities including ours, an integrated government system that is so burdensome that exceptions and favors must be granted to induce new businesses to form and attempt to survive in our society. This amounts to government sponsorship of selected business enterprises. Most existing businesses are penalized by higher taxes and stronger regulations or disfavor in contract competition to favor new or evolving enterprises. Herein, government has created yet another level of burden, but renamed it a public/private enterprise (a potentially corrupt mixture) to promote economic activity. Santa Rosa county has a taxpayer-funded board of unelected officials who have favored some businesses while penalizing others for many years. It is no wonder that few stay for long after the initial perks and incentives are spent.

Instinctive Economic Theory is the theory that all economics grow naturally due to human nature and instinct unless choked down by excessive government intervention or other negative conditions. Human nature tends to engage in production and trade so long as adequate conditions exist and producers are allowed to keep a good portion of their profits. The human intellect understands that increased comfort, health and security can be achieved through economic intercourse. Governments create conditions that can either encourage or discourage trade and productivity. For example, adequate transportation and security from theft and assault can be provided to a society thereby allowing traders to travel, distribute and sell goods and services. Yet attempting to force businesses into a governmentally prescribed zone seldom provides for a stable economy. Thomas Jefferson understood the importance of allowing the citizens to engage in business according to their own goals and objectives. A stable form of currency (money) may allow for the transfer of value, making trade much easier. An adequate level of regulation controls deceit and trickery, creating a sense of fairness in the trading arena. Good contract law by the state provides for economic fair play. The natural environment cannot be allowed to be permanently and severely degraded. However, all governmentally imposed regulation is extremely expensive, requiring costly monitoring and enforcement penalties. Every new government regulation creates inestimable financial burden to someone in the private sector. Enforcers must be hired, boards and courts maintained and remedies or penalties enforced. The best regulatory situation in many cases is for government to acquiesce to private monitoring, such as “better business” organizations or consumer driven publications and reporting. All government intervention creates an added fixed financial premium which, when enacted too extensively, will add enough systematic financial burden that economic intercourse begins to contract. It often produces a “parasite and host” situation where the parasite (government structures) grow so large that the host (private sector enterprise) is choked to death. Simply put, traders and producers will leave the marketplace and find another more suitable marketplace or simply shut down and begin to “fend for themselves” rather than yield a large portion of their goods or profits to a burdensome government, even if done in the name of economic development, orderly society, land planning, security, fairness, equality, the environment, improved infrastructure or any other reason. A correct level of intervention must be discovered and maintained for the economic prosperity of all society. To start an economy, a sustained condition must be established wherein a low tax burden and low tax compliance burden (low government intervention) exists while freedom of operation, proper transportation and safe operating environment (low crime and protection of private property) also exists. It may be noted that, if not prohibited, the private sector will self-protect and regulate in many areas (for example, the right to bear arms and protect private premises) thereby decreasing the needed level of government provided security. The urge to trade and barter is naturally inherent in the human condition. However, the role of government has a drastic influence on human economic initiative. A good argument could be made, which is now difficult to refute, that government interference has provided incentives for citizens to abstain from being productive and otherwise choked down the once powerful American urge to produce and trade.

A “mechanical governor” on a gasoline or diesel engine may provide an analogy here. As the engine revolves faster, a governor is forced to move, generally by centrifugal force, which operates the fuel throttle thereby slowing the engine. As the engine slows too much, the governor relaxes, generally as the result of a spring action, which allows the engine to acquire more fuel and increase the speed of the engine. Governing is needed to protect the engine and create safe operating conditions. Likewise, good economic governing in the proper amount is needed to created a good environment for people to engage in economic activity. The urge to trade and barter is naturally inherent in the human condition. However, the role of government has a drastic influence on human economic initiative. A good argument could be made, which is now difficult to refute, that government interference has choked down the once powerful American urge to produce and trade.

A huge overburdening centralized government choked out private enterprise in the Soviet Union. Private property was confiscated. Wages were regulated, jobs were assigned by bureaucrats. Businesses were sponsored by government. Producers were not allowed to keep their profits. The citizens stopped working and the acquisition of alcohol became the daily goal for a huge segment of society. The Soviet Union was eventually dissolved.    

We now have, in most communities including ours, an integrated government system that is so burdensome that exceptions and favors must be granted to induce new businesses to form and attempt to survive in our society. This amounts to government sponsorship of selected business enterprises. Most existing businesses are penalized by higher taxes and stronger regulations or disfavor in contract competition to favor new or evolving enterprises. Herein, government has created yet another level of burden, but renamed it a public/private enterprise (a dangerous mixture). Santa Rosa county has a taxpayer-funded board of unelected officials who have favored some businesses while penalizing others for many years. It is no wonder that few stay for long after the initial perks are spent.   

Excessive Insurance interferes with the natural cycle of economics because it allows for unreasonable risks and otherwise dangerous behaviors. For example, health insurance tends to promote unhealthy lifestyles because a third party pays the medical bills. People may indulge in excessive and poorly managed eating habits because a third party system will expend its assets to rectify the deteriorating health of a person. People will buy vehicles they could not otherwise afford to risk putting at risk because others will pay the loan off if the vehicle is wrecked, stolen or otherwise ruined. Borrowing and insurance coupled allow for people to live in a “bubble” of affluence that will eventually burst. People can delay planning for their elder years because other workers will provide their needs. People can be reckless with their personal relationships because there will be no interconnected reliance issues when a government or insurance system is to offer a general social security blanket. For example, when the social security blanket was largely dependant on the family (immediate and extended), families were cohesive due the practical reasons. Future grandparents knew that they would rely on their next two or three generations for life support. Hence, family ties tended to be much stronger through the generations. The young needed the old at first and the old needed the young. Understanding this, the younger and middle stages in life were generally spent inculcating in future generations a respect for the elderly. The elders did not isolate and alienate the younger, for their future support was dependent on the younger. Each family thrived or suffered largely dependent on how they managed their interpersonal relationships and according to their vigor in being productive as a group. For this reason many family businesses thrived such as mercantile stores, lumber mills, iron working shops, farms, and etcetera.

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About thegovophilemonitor

The larger the government, the smaller the individual.
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