Fundamental Lesson for Politicians

Doug Carlin: What if you had to tell someone the most important thing in the world, but you knew they'd never believe you?
Claire Kuchever: I'd try. 
--Deja Vu

Sheldon Richmond directs this missive toward President Obama, but his message is one that all politicians must learn. Richmond presents reasoning, grounded in fundamental axioms, as to why government intervention restrains prosperity. The thought process goes like this.

We live in a world of scarcity, where our wants and needs always outstrip means to achieve them.

We therefore economize in order to achieve as many desirable ends as possible.

Economizing means that scarce resources such as materials, labor, and time must be allocated toward one purpose at the expense of another. It also means that we seek the most benefit from the least cost.

Each of us chooses among competing ends by assessing the tradeoffs (a.k.a. opportunity costs), because we do not want to inadvertently give up something we prefer in exchange for something we value less.

When free of government interference, markets help us accomplish the economizing process to a remarkable degree thanks to the pricing system, which helps coordinate production and distribution in a manner that allocates resources to meet needs at the top of our lists.

Government intervention throws this process out of whack. Government forcibly takes resources from people and reallocates those resources in manners other than those desired by people engaging in voluntary exchange.

Moreover, the incentive system for government projects almost guarantees that the resources taken by force will fail miserably. While private sector producers are motivated by profit--which can be realized only if customer needs are met well and in an efficient manner, government bureaucrats face no such motive. Instead, politicians are motivated by the prospect of receiving votes, which leads them to allocate resources for the benefit of special interest groups that promise support at the polls.

Unhampered markets assure that bad trade-offs are avoided or are correctly quickly. No corresponding process exists in hampered markets. Resources are allocated by prospects of political favor. Misallocations, and the likelihood that they will persist, are nearly certain.

Because top consumer needs are no longer being addressed by the market, when government takes resources from some for the benefit of, prosperity declines.