Saturday, February 5, 2011

Economic incentive: Part I

The United States has a remarkable record. Our most encouraging achievements are innovation through inventions of all types, not to mention an economic engine of the world for well over a century. Just look at the world leading progress through medical advances that the U.S. has been responsible for. And still is. A quick recap:

The cotton gin, the reaper, the rotating turret, the machine gun, mass manufacturing of steel, the telegraph, the telephone, the phonograph, the electric light, the AIRPLANE, how about mass manufacturing of automobiles, refrigeration, nuclear power, computers, just to name some of the most obvious. This stuff advanced ALL of mankind, not just the United States.

The rock upon which our economic record has been built upon is the concept that the individual person will make the best economic decisions when he/she is allowed to own the methods of production. The basic incentive is that a person will take much better care of a house if they own it themselves, rather than someone else. Personal property rights and the ability to profit from filling others wants and needs are actually a channel of human behavior toward constructive ends. The nations resources are best directed if they are privately owned. President Obama disagrees. President Obama appears to believe that capitalism is greedy and evil.

From what I have seen and heard President Obama say and do, he must believe that our government can allocate the national resources more fairly and wisely than when the decision making is in private hands. Just look at how he believes the stimulus will work, not to mention the take over of so much of the private economy. He appears to believe that private wealth is bad. Although many in this country agree with these ideas, these concepts are against historical American economics. This is where the phrase of someone who believes in this being called ‘un-American’ originates. The health care bill is an excellent example.

The United States was not founded upon the principle that the government can wisely allocate the resources of the national economy. In fact, the U.S. was founded on quite the opposite principal. Government involvement in the economy was to be minimal, if any at all. The channel of human ingenuity and industry will be directed into constructive methods if people were allowed to own the means of production and benefit directly from their own decisions concerning risk of investment in time and of resources. Our country has been moving in a different direction for generations now. The takeover of the health care system by the national government is only a glaring and the most recent example. And now the economy is struggling. I can’t imagine why.

I read a comment last week that pointed out how the United States became so prosperous because of our government. This is both correct and wrong at the same time. The reference was that government DROVE the inventions, such as paving roads and the nuclear bomb. In a sense, this is correct. The money allocated to roads did pay for the actual product, but private companies gathered the resources, obtained the expertise and invented the machinery to actually do it. (Nuclear weapons were a notable exception) During the 19th century and the first part of the 20th centuries, the US government (State and local as well) was noted for it’s non-interference with economic events. Government intervention did not take place during the 3 depressions and many recessions that took place before the Great Depression in the 1930’s.

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