Last year Australia had one of the biggest stimulus packages per GDP than any other country. As I like to note “stimulus” is a dishonest euphemism ignoring the appropriation of private wealth.
Stimulus = socialist style wealth redistribution.
In the words of Mises:
The essence of the interventionist policy is to take from one group to give to another. It is confiscation and distribution. Every measure is ultimately justified by declaring that it is fair to curb the rich for the benefit of the poor.
Hazlitt’s lesson (examine all consequences) is ignored and the public is subjected to pragmatist rationalizing propaganda from politicians and media commentators. It was and still is quite irritating to read articles in the mainstream media that support the stimulus.
On the 26th of Feb, Sinclair Davidson of Catallaxy blog produced this interesting graph at this post:
In itself this graph is quite damming. We see that the size of stimulus does not correlate with unemployment avoidance.
In a truly free market, employment is always good thing – unless people choose to be unemployed, which is also fine under many circumstances. But we don’t have a free market or capitalist society. We live in a world of mixed economies with exponentially growing rates of regulation. The last decade or so should convince anyone who cares to look that government intrusion and control are generally trending upwards.
The point of my post is simply to note a basic idea in economics that Gerard Jackson often expresses with this line:
“Under Nazi Germany there was no unemployment”
The point worth noting is that productivity is the key to prosperity, not employment per se.
What I have been noticing around SA and in the Australian media are the many examples of “hole digging” – people employed to do something that isn’t needed. I have recently read articles about the unaffordability of housing in Australia (a problem made worse by government housing rebates). I have been subjected to TV ads where SA political party spokesman shout (with no shame whatsoever) that they will waste more of my money faster than their counterpart on useless infrastructure projects such as stadiums, theatres or tram lines. These projects should properly be privatised – you just don’t hear Australian politicians mentioning this option anymore. Another example: Every Australian who reads the papers must be aware of the government subsidising the electricity-conducting insulation that has now been involved in the deaths of several young tradesmen. A tragic loss of life. Frustratingly the Liberal party in opposition again miss the bigger picture and claim this is simply a fault of regulatory legislation. Apparently a problem largely brought about by government intrusion should now be fixed with more or stricter government intrusion into the free market!
When government controls and intrudes on the market place, confiscating wealth and venturing into the realm of goods and services, they necessarily violate the proper legal right we all have to full ownership of our own property. In addition, if it were possible to perform the complex analysis and weigh up all the “unseen” consequences it would be clear that there are always bad practical outcomes from forced wealth redistribution overall. I recommend Sowell for some excellent practical examples of destructive central planning. I recommend Hazlitt for the theory explained simply and succinctly.
Many examples of bad outcomes aren’t complex at all. Some instances of hole digging are so obvious that I find it appalling that most people don’t seem to know or care about them. Andrew Bolt has posted an example today on his blog here.
Tiny Koondrook Barham Football Club (pictured above) on the Murray River has been handed 17 new hot water systems – almost one for every player in a team. President Rod Barrington said the club knocked back even more units….
17 hot water systems to operate one shower block! I must say, I love the picture for this article – really does tell 1000 words.
Environment Minister Peter Garrett, who was demoted over the disastrous home-insulation scheme when he should have been sacked, hailed the Government’s solar hot-water program a success in cutting greenhouse gases.
But none of the hot water services at the Barham club is connected to a solar panel. They’re all plugged into mains power,
People in our society cannot imagine privatising health, education, roads. But virtually every time a government takes over a services such as these, rationing results. Inevitably productivity drops and technological advancement is stymied compared to what would have otherwise been.
We hear supporters of government socialism spouting off rationalizations such as “but health services are too important to privatize”.
So I wanted to end with a phrase Peikoff uses which goes something like this:
“Well then, surely nothing is more important than food? Why don’t we nationalize the food industry then?”
Obviously, every time a country has attempted this, citizens have suffered on a massive scale. Eventually starvation results. Unfortunately most people refuse to draw broad abstractions and think in principle. Governments, as the monopoly agency of force should not be providers of goods and services apart from the service of protecting individuals from initiary force and protecting individual’s right to life. Forced wealth re-distribution is both wrong and impractical.
Update 12/3/10: Andrew Bolt has been recording some instances of hole digging due to the malevolent government “stimulus”. See “Waste, waste, waste – and fires”
One minor point I’d like to add is that in my experience (and I’m sure most Australians are aware of this phenomena), tradesmen charge more for government contracts. The tradesman I know and have known, work for companies that charge more for work on government buildings and other projects compared to private projects. They know that in general their costing will not be scrutinized because the government department is using tax payers’ money. A private investor has far more incentive to ensure cost efficiency.
Just another way in which government spending is less efficient than free markets.