2009 April 29

Main Street Journal: On the Money: The Case for Non-Intervention

The following article is taken from the April 2009 issue of the Main Street Journal. Click “Subscribe Online” above to start your subscription.

On the Money: The Case for Non-Intervention
By: Chuck Bates

Much has been said by media, central bankers and politicians that something must be done to deal with our current economic crisis, the mortgage crisis, the situation in Iraq, etc, etc. But more often than not it would seem that this constant meddling can and does create a great number of new problems the meddling was deemed necessary to fix. Simply put some things are better left alone and time and common sense should be allowed to prevail over knee-jerk, interventionist policies.

Dr. Thomas Sowell recently noted, “In fact, our present economic crisis has developed out of politicians providing solutions to problems that did not exist—and, as a result, producing a problem whose existence is all too real and all too painful.” He further explained that the actions of government in the housing market from the Community Reinvestment Act on the Federal level to the open space laws in states such as California, only added to the cost of housing they were supposed to make more affordable. Government was attempting to do the impossible; “manage” the free market. I think it clear at this point in history that those states with the most interventionist policies and managed economies are the very same that are in the most trouble financially. One need only look to California or Michigan to see what too much government can and will do to an economy. Unfortunately these same states are now seeking additional monies not for their economies directly but for more government programs! The result is a flight of capital in the form of businesses and families from these states. For every truckload of household goods moving into California eight are moving out. In the past year I have witnessed this flight in the form of resumes flooding my office from all over the nation but particularly from applicants in California, Michigan, New Jersey, and other overly “managed” states. One applicant was so anxious to leave the terrible economic situation of Michigan that he was willing to move his wife and three kids across the country for a part time weekend job!

In the last several years we have seen a number of large companies move or build new plants in more business friendly states with less interventionist governments. Michigan is bleeding auto industry jobs and the beneficiaries are southern, right-to-work states such as Tennessee, Mississippi, Alabama and South Carolina. Nissan moved its North America headquarters to Tennessee. Toyota and Nissan have both built new plants in Mississippi. Even luxury auto manufacturers BMW and Mercedes Benz have built plants in South Carolina and Alabama respectively. Why not move to areas with auto workers who are out of work? Simply put they could not operate a competitive business model in those states where the unions rule and the government over manages and over taxes industry. These companies and their capital sought out politically and economically stable homes which to relocate.

On a local scale we can see this in the difference between various codes and rules within suburbs vs. more rural communities. Where large concentrations of people live their will inevitably be more rules promulgated that while may have had good intentions typically compound one on top of another and the end result is a bureaucrat’s utopia but not a very pleasant place to live. Contrast this to a more rural setting where rules are present but not overtly controlling and you tend to maintain a greater deal of natural civility and as a result freedom for innovation and entrepreneurship.

The basic point is this folks, we can make a rule for everything and grow government to the point that it controls our every move and takes every penny we make to pay for it or we can govern ourselves as intended by the founders of this nation and ultimately as the Creator designed it. It is important to remember that very little is ever accomplished positively when we or our elected officials just “do something” whenever a crisis presents itself. Instead let the cooler heads prevail and allow common sense to take over. Emotions are an important part of our humanity but we rarely make good decisions when we allow emotions to control our actions. Take education as an example. A politician comes on screen telling us it is for the kids and the typical response is for us to put our brains in neutral and empty our wallets. Instead we grown ups should start asking questions like, “What did you do with the money we just gave you?” And how about this one, “Why should I give you more money when 50% of the kids are failing or dropping out?”

Let’s not ask or allow politicians to “do something” without thinking through the long term consequences. We will definitely be better off.

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