The race for governor here in Virginia is reaching new heights of boredom with a new battle between the candidates. This time the raging battle is over which candidate can better “manage the economy.”
How ridiculous is that?
Think about it: how in the world does a governor — or any other government official — “manage an economy”? More important, what business does any government official have trying to “manage the economy”?
First of all, I wonder where our gubernatorial candidates received their training for managing an economy. After all, that seems like an awfully important job — economy manager, one that obviously requires years of education and training.
Second, what precisely does an economy manager do? After all, the only tools at his disposal are laws, rules, orders, and edicts, all enforced by the state or local police. How does a governor use those things to “manage the economy”?
An economy is actually an intricate process by which human beings are engaged in an endless series of voluntary economic transactions, mostly with others. As producers, people engage in pursuits by which they offer goods and services to others, hoping that other people, in their role as consumers, will purchase them.
With the money the producers make, they turn around and become consumers, purchasing goods and services that other people are offering.
Some people also save their money, which adds to the overall stock of capital, which producers use to purchase equipment and tools, which make workers more productive.
The entire process is based on a sophisticated information-transmitting tool known as prices. When prices are high, producers tend to produce more and consumers tend to produce less. When prices are low, the opposite tends to happen.
So, what do the economy managers bring to this natural process? They bring tax and regulatory schemes that do nothing but cause economic damage to people. With their tax schemes to manage the economy, they suck capital out of the system or create perverse incentives. With their regulatory schemes to manage the economy, they frustrate the plans of people in the marketplace.
In fact, what the economy planners fail to realize is that it their tax-and-regulatory schemes that are a root cause of economic crises. Then, in an attempt to fix the crises, they perversely make things worse with their various plans to manage the economy.
The Nobel Prize-winning Austrian economist Friedrich Hayek wrote a book entitled The Fatal Conceit. The conceit to which Hayek was referring was of those government people who honestly believe that they possess the requisite knowledge to plan something as intricate as a market.
No economy-managing scheme can ever serve as an adequate substitute for the myriad plans of people seeking their own self-interest in the marketplace. It is impossible to measure the harm that this fatal conceit does to people.
Oh well, I suppose we should count our blessings. At least the governor of Virginia lacks the power to print money as part of his plan to “manage the economy.”