Economic Narcan
Recent news reports speak of a “Deflationary Spiral” in the automobile industry. Prices are falling as a result of growing inventory and higher interests rates. The inventory glut comes as consumers delay new car purchases, both in response to interest rate increases and in the hope or expectation that prices will go even lower. The same reports acknowledge what to some is likely already obvious: The market for durable goods, which includes automobiles, is already in recession. [Business Insider]
In recent years, government involvement and interference have directly affected markets. Regulations seek to push manufacturers and consumers away from traditional carbon-emitting “gas guzzlers” to “greener” EV’s. Government subsidies were used to offset the substantially higher prices of EV’s, and the financial incentives worked to make the “challenges” of ownership somewhat more palatable. However, the organic demand never developed, and the efforts at social engineering were unsuccessful. Demand for EV’s has waned despite the endless hype and efforts to goad consumers. Having invested and lost billions to date, automakers are rethinking their “conversion” plans and reconsidering additional investments.
As to the higher interest rates, government artificially suppressed interest rates for most of the period since the Great Recession (over a decade-and-a-half). Government did this in essence by creating many Trillions of Dollars out of thin air, but they feigned surprise, when their efforts resulted in inflation. They disingenuously and insincerely acted as though inflation is not the natural by product of their conscious and deliberate actions.
They did these things not for the benefit of consumers but to hide their own fiscal irresponsibility. In order to buy votes and to assure their (re-)elections, they were motivated to promise everything to everyone. They made (multi-)trillion-dollar annual deficits commonplace and “accepted.” The effect was to make consumers believe that abnormally low interest rates represented a “new normal.” Therefore, as interest rates once again rise to historical averages, there is a hue and cry.
Government economic “stimuli” and “fixes” are similar to addiction in two ways:
First, the “satisfaction” wanes with each “fix.” The intervening act never has the desired (or promised) effect. It offers only temporary respite and relief. It does nothing to relieve the addiction. The desire to chase the dragon means that the need or “craving” will motivate more frequent ineffectual fixes with increasing potency. That which cannot provide even a moment’s peace is eventually too much for the body (politic) to bear. [See $35 Trillion National Debt.]
Second, viewed as a “recovery” mechanism (i.e. medication — Narcan), utilization should only be in the event of “emergency.” The hope is that it might address “accidental” overdoses, thus preventing an avoidable death. But, what of the quality of the life being lived? Where is the incentive to “get clean” — to do better — if the expectation is that someone else will always be around to pick up the pieces and to remedy the harms?
At some point, a single dose is no longer sufficient, so there must be a second … and a third. Eventually, the antidote no longer works. Or, the recklessness or detachment from reality becomes so extreme that no one plans for it to be available, or in vainly seeking solace in solitude, there is no one sufficiently “well” or unaffected to administer it. [See Keynesian Economics and MMT.]
Government is management by crisis, and political minions are quick to embrace any “crisis” or “emergency, whether real, imagined, or manufactured, as may justify their zealous hold onto power.
At some point, behaviors, which might have originated in care and compassion, become enabling. Enabling behavior is detrimental to both the enabler and to the “enabled.” Rather than providing a remedy for self-destructive tendencies and behaviors, it extends and reallocates the responsibility, fault, and harm well beyond the original (ab)user. Having tools, resources, and opportunities means nothing if those who need them — those who would benefit from them — refuse to use them judiciously and effectively.
The Nanny State infantilizes the populace. Its effects are felt throughout society and the economy. In an effort to “remedy” the consequences of bad acts — both individual and collective, government “fixes” destroy self-reliance and personal responsibility. Government eschews proper behavior and prudence, in favor of perpetual crisis. The political classes see opportunity to thrive on the chaos and to profit from the resulting destruction.
Removing the consequences of bad acts is tantamount to placing a premium upon those acts. The result is more bad acts never less. Rather than encouraging “good” behavior, it fuels recklessness and irresponsibility. For a time, the acute pain or loss suffered by a particular individual may be avoided or lessened. However, the fundamental pain and underlying harm are not eliminated. The losses are redirected and spread over a larger population (e.g. family, friends, or the public at large). Without motivation and commitment to change, however, the “success” in avoiding acute harms to the primary actor assures that chronic long-lasting harms and losses are imposed upon others.
This also applies to economic markets, and the effect of incessant government interference is protracted economic recovery (or no recovery at all). Eventually, the “remedy” is more detrimental than the “harm” that it was supposed to address. The cumulative costs, pain, and losses are eventually more than any and all can (or will) bear. We should not be called upon, nay commanded, to serve as (socio-economic) martyrs to the causes of others, especially persons and peoples, who are not sufficiently motivated and committed to help themselves.
