Economic Flow and Political Dams:
In the course of US history there have been many examples of politics
used to try and alter the effects of economics.
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It was decided that a person should not be able to sue if pollution from
a nearby company crossed that person's property. Imagine the detriment
to the industrial revolution if landowners could have sued for water and
air pollution. In retrospect, imagine how much cleaner companies
would be if they knew they would be held responsible for chemicals they
released into the air and water.
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There are many laws that affect how things progress. Farmers are
paid subsidies not to grow food.
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Taxes are levied on imported goods to support the price of goods made domestically.
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There is a constant push between having and not having larger percentage
income taxes on higher incomes -- having them would make the range of incomes
more egalitarian, while not having them would leave the capital concentrated
enough that it would be more likely to be invested and not consumed.
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There was a point where inflation was thought to be getting out of hand
so the government imposed price controls. The result was that the
goods that had prices held lower than they otherwise would have ended up
out of stock. When the controls were lifted, the prices shot up to
the level they would have been anyway if they had not had their prices
controlled.
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And the inflation was a byproduct of the government spending more money
on large social programs and military expenditures than it took in in taxes,
which had the effect of diverting production away from consumer goods.
Less consumer goods were being chased by more dollars because the dollars
were coming back into the economy from the governmental wages and benefits
for things that were not what consumers wanted.
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Then the government lapsed into an even less painful way to get its current
needs met without making people pay for it: make the people of tomorrow,
who were not then present to represent themselves, pay by taking out loans
that ballooned the national debt to well over the annual gross national
product. The interest alone currently makes up about a third of current
national spending. We are blessed with a benevolently low interest
rate right now that keeps the interest from becoming our undoing.
The government fiddles with the interest rate to try to keep inflation
at bay while letting the economy expand at a "sustainable" rate.
There is no guarantee that this benign situation will last.
Maintaining a steady economy is a tricky thing. The better the flow
in the first place, the less necessary are controls to try to change things.
The "communist" regimes of the 20th century were in reality thin disguises
for authoritarian (usually brutally so) "planned" economies that were far
more susceptible to corruption than the Western nations. People will
by nature look out for themselves at whatever level -- individual, company,
nation. They will assert that things should be such that it happens
they will benefit. Thus complete laissez faire or anarchy is not
really an option. Yet the more control there is the more that control
is susceptible to special interests at many levels.
Ideally we would do well to strive for disseminating as much power as
possible. But we have to realize that we need some sort of outside
view to balance what we would do in our interest vs. what we should do
in everyone's interest.