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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Friday, February 01, 2013

Short-Term Palliatives And The 5 Terrible Tendencies Of Government | Zero Hedge

Government, beyond it capabilities, ends up intervening in markets and typically does these 5 things:
(1) Waiting until forced to act, often too late and with great harm;
(2) Systematically ignoring long-run costs to provide short-term benefits;
(3) Trying unsuccessfully to circumvent the laws of economics;
(4) Ignoring the laws of arithmetic, selectively counting some effects while excluding others; and
(5) Enacting programs or spending money in a crisis or boom where especially large unintended consequences become apparent only when the economy returns to normal.
And the biggest problem is that these are short-term in nature. Enacting short-term programs is designed to create popularity and it is usually impossible to predict the long-term effects.

Like bankers, that everyone love to hate, the motivations for decisions and the rewards to these decisions are not necessarily connected. In the case of bankers, they are compensated annually but risks sometimes linger on over a long period of time. So compensation is based on short-term and not necessarily long-term performance. The same is true with government programs and these programs are much more insidious as they not create expectations and dependency that lead to an inability to turn back, but also these programs crowd out competitors and other institutions that would naturally arise to meet demand.

Short-Term Palliatives And The 5 Terrible Tendencies Of Government | Zero Hedge


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