In reaction to the European debt crisis, we have seen sophisticated and coordinated efforts by European leaders to come together to create more government and more intervention. More government, however, has been shown to only aggravate the current economic and political atmosphere.
Why must government get out of the way?
Limited government means limited power and limited regulation on our economy. Limited regulation creates a favorable environment for entrepreneurship, and more competition in any given market means businesses are working harder for your money.
Problems emerge with excessive regulation. When corporations must comply with over-burdensome regulations, the smaller ones are less likely to survive as they can no longer compete; the cost of complying no longer makes their business model viable. In other words, they lose their competitive advantage; they can no longer compete.
For instance, under excessive regulation XYZ company may have to hire more administration to deal with the extra bureaucracy. In this situation, over burdensome rules could actually benefit larger corporations as they can charge more for their work since their competition has been eliminated. Another factor is that larger corporations generally receive many more government contracts than smaller companies, since these corporations pay out more money to lobbyist groups that specialize in acquiring public work projects and funds.
In the end, more regulations tend to breed cronyism in any given economy.
More Government Benefits the Few
If the free market were to act freely, businesses would rely heavily on their reputation to expand operations. That is hardly the case in today’s world, as large corporations have become so big that they are considered by the mainstream as “too big too fail,” and thus continue to place risky bets as they know they cannot fail–or rather, they the forces that be will not let them fail. In turn, most people work with these corporation due their government backing, and the small corporations once again suffer as a result. If these large corporations would fail, then yes, it would most certainly create havoc in a economy, however this would only be temporarily, and it would be the necessary medicine for a better future economy. The smaller corporations with proven business models would pick up their assets and create new jobs, and the economy would be back on its feet on solid, real growth.
Instead, Europe and much of the western Coinstar fees world is creating distortions in the market from government intervention and dependency.
Overall, free markets and low government intervention increase the general prosperity for everyone. More government intervention increases the prosperity for the ultra elite. When there is more government, there is more bureaucracy, and this creates a burden for the tax payer to support. Tax dollars used to support the government slowly trickle down the bureaucratic chain until there is little left for productive use.
I am sure that most of you have had experiences with municipal or national bureaucracy. Share them below.