Speak of Political Problems, Instead of Economic Ones

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Money Rand inflation

During this recent coronavirus outbreak as well as before it, talk of economic problems to describe consequences of governmental action were always abound. Even among proponents of liberty, free markets and private property, the ‘economy in a crisis’ are terms used to describe moments of correction in the market. Correction because the market is an institution of human creation but not of human design, and every time organization or design is introduced to it, it must self-correct given the malfeasance and inefficiency wrought by design. Crashes are testaments of the inherent self-correcting nature of free markets, if the correct lessons could be deduced from them, their prevalence would be reduced as well as their severity, if not wholly eliminated. Yet their very cause is recommended as the medicine; government intervention, mostly in the form of spending coupled with artificially depressed central bank lending rates.

Our problems in the economic sphere are not ‘economic’ as most would have us believe; they are political. It is governmental problems that must be spoken of, regulatory ones, interventionist ones. Even during this outbreak, the engine of the economic sphere, the organization of resources by private individuals to satisfy human desires, entrepreneurship, has not waned. It is instead frustrated by strenuous governmental regulations whose arbitrariness would make even Austin blush.

The ‘problems of the economy’ are not due to a lack of free enterprise on the part of the citizens of this great Republic. The moment government declared alcohol and cigarettes prohibited for sale, a black market opened up, a testament of the spirit of free enterprise inherent in the citizens of our country. The problems are governmental in that they are due to a floundering of the Rule of Law by interfering with the autonomous actions of the individual arbitrarily. Yet the system of free enterprise and its antecedents of private property and the Rule of law are said to be the problematic ones. Entrepreneurs across the length and breadth of the country are satisfying the desires of the people, even though their representatives deemed them ‘non-essential’.

The government intervenes in the economy, when it goes into recession as a result, it then recommends more government intervention as a solution to a problem caused by said intervention in one way or the other. The most recent recession comes to mind, the famed 2008 one. The government interventions through its agencies buying risky mortgages from banks, to a central banking system that artificially depresses lending rates to ‘stimulate’ the economy but the result being a temporary ‘boom’ followed by a nasty crash. The false boom is only an inflationary injection of money into the economy to avenues that have no value or at least that aren’t as valuable as they otherwise are under inflated conditions (bubbles). This boom is of course followed by a crash which is really a correction in the market, a realization of this artificial interference in the operation of the institution and an attempt at healing, which if allowed to be complete, although painful, is sure to be better in the long term.

The recent crash is on our throes, roughly ten years later too since the last one, and although the virus outbreak will be blamed, the state’s actions in this regard seem justified to the average news consumer due to the pretext of it ‘saving lives’. There is also the contingent that is going to blame the whipping boy of all societal ills, capitalism, the system of free enterprise for it.

Yet those adept at sound economic analysis have been in anticipation of this crash well before the coronavirus became the punching bag for every governmental failure and illegal action. Whilst everyone in the mainstream financial markets was singing the praises of the stock markets of economies like the US, hitting record highs. Investors adept at the Praxeological tradition of the Austrian school of economics were warning of an inflated stock/equity market wrought by central bank interest rates that were near zero for nearly the entire span of the ‘boom’ and an inflationary distorted economy caused by large injections of liquidity into the economy by central banks expanding their balance sheets through the printing press in a process they call quantitative easing.

Our problems are political. They are wrought by government interfering in the provision of goods and services among individuals. If the South African or even world population were lazy en masse in that they were unwilling to use their property to act and satisfy each other’s desires, from basic to extravagant, then the problem could be said to be economic. And only then! When the government puts barriers and uses its monopoly on force to organize this voluntary satisfaction of desires by individuals in some manner, the problems must surely be governmental.

When there is rampant unemployment, or when there is an outflow or a lack of capital investment, the problems are not economical, their genesis is the state, for the actions necessary for these events are natural for mankind yet they are perpetually undermined by zealots of different stripes throughout time with their societal visions.

Economics is premised on human action, and human action by nature is always striving towards ends. The value of these ends is a subjective phenomenon for every individual. When another individual seeks to determine ends or their importance for individuals in some shape or form, the consequences are always repressive or even deadly for the individual whose ends are being determined by the politician and his bevy of intellectuals. Since human action is intersubjectively ascertainable (prices) at the most, any attempt at organizing it, assuming objectivity, must be enforced through coercion, and its consequences are death, if the Holodomor famine of Ukraine, and plenty other experiments gone wrong are anything to go by. They are.

The problems that afflict man’s pursuit to organize property for his own betterment stem from the violation or more aptly the attempts at violating and frustrating the inordinate rules of voluntary interaction that define human existence. Economic problems are creatures of myth, invoked to sanctify the state action that not only caused but perpetuates the problem.

The problems that will afflict us are not economic by any stretch. They are simply consequences of the ambitions of leviathan and its cheerleaders both in industry and the academy. Our problems are consequences of organization of the free market of private proprietors. They are not inherent to the market of private proprietors which would make them economic problems, but they are rather caused by state intervention in this system in one way or the other. Our problems, are political, governmental.

The Eloquent Peasant.