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The Government Isn’t “We” or “Us”

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Here’s a letter to a college-student reader of Cafe Hayek:

Mr. Caleb Owens

Mr. Owens:

Thanks for your e-mail asking “Why should we Americans stand idly by when China’s leaders work hard to grow that economy?”

I fully agree that we Americans ought not stand idly by. And by advocating free markets, including free trade, I and other skeptics of government intervention emphatically do not advocate standing idly by. Indeed, we advocate an amount and quality of economic activity that in the face of tariffs and other government interventions is impossible.

Eliminating tariffs, subsidies, and other government interventions clears paths for hundreds of millions of ordinary people to better pursue their own economic objectives using their own unique knowledge of time, place, and circumstances. With government out of the way, we get more active and creative entrepreneurship. We get more and better – “permissionless” – innovation [2]. We get more productive cooperation and healthy competition.

And we get much less waste. Resources are allocated by people spending their own money in competitive markets rather than shuffled by state officials spending other people’s money in political settings. Under the reign of markets, inefficient uses of resources are quickly discovered and stopped. Under the reign of politics, inefficient uses of resources are long camouflaged and subsidized.

What you mistake for China’s rulers “working hard to grow that economy” is, in fact, China’s rulers standing in the way of economic growth. They are working hard to artificially prop up politically favored sectors of that economy and, in so doing, to stifle the entrepreneurship and consumer sovereignty of the Chinese people. The result is slower economic growth and less prosperity in China. And what you mistake for our government standing “idly by” is our government standing out of the way – standing out of the way of entrepreneurs, investors, businesses, and consumers actively cooperating and competing in the countless creative ways that are necessary to ensure maximum possible economic growth and widespread prosperity.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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