Tuesday, November 24, 2015

Impovershing the Community

At least relative to the baseline.  The baseline being that level of well being, read income, that we could achieve if the item in question didn't exist.

Each and every sub optimal transaction, lack of a beneficial transaction and mal investment that occurs in an economy either contributes to the baseline of what is possible in shared well being or subtracts from what is possible.

People desire well being.  They prefer, as the economist Mises said in Human Action (Ch8 Sec. 2), "...life to death, health to sickness, nourishment to starvation, abundance to poverty."  I would add that they prefer leisure to labor and now versus later.

Most regulated transactions are sub optimal, at least from a pure financial transaction point of view.  If they were not, then they would take place without regulation.  Often, the regulation is designed to create an additional objective - fairness, equality, protection of the weak, protection of the commons.

In all cases, what one person receives without working for, another person must work for without receiving.

Examples of sub optimal transactions abound.  Licensing hundreds of professions?  Undertaken in the name of consumer protection, but generally associated with restricting new entrants to the trade in order to keep the prices all of us consumers pay, up. The lack of price transparency in health care makes almost every transaction their likely to be sub optimal.  How would one know when, usually, neither the doctor or dentist or the prospective patient knows what they are being charged and paying?  That doesn't sound likely to provide a way to figure out the highest and best use of either parties resources - the time of the physician or the money of the patient - does it?  Or take mal investment.  How about a bridge to no where in Alaska?

That does not mean there is no need to create additional objectives or for us to collectively pool our resources to support the rule of law and safety nets for the young, sick and old.

But the next time you think, 'the government shouldn't let that happen,' or 'somebody should do something about that,' keep in mind that the cost of doing so is money you take away from each of us and then spend to further monitor and hamper our behavior.  Every penny reduces our ability to spend on what is really necessary.  Most of the behaviors die out under their own weight.

Accurate Reality:  We spend so much serving other masters and letting the government run ineffectively and meddle in unnecessary areas that we squander the incremental well being, read money, that we could use to easily pay for the real objectives we all agree on.

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