Five Steps To Freedom

Let’s just get right to the bottom of what people want: inflation in their income and deflation in their expenses. (Allow me to diverge from the proper definition of inflation in this post; Here I’m talking about price inflation.)

Why do people want inflation? Because they think it symbolizes economic growth and progress. Yeah, that sounds warm and fuzzy. But what is being sought by the individual really? A better job. Almost there, keep going. More income. Bingo!

We think inflation is good because it will result in a bunch of stuff that, when reduced to the effect it will have on our individual lives, is manifested through more income. Great! Who doesn’t like more income? (Forget for the moment that incomes have not exactly been systematically rising over the past decade of inflation.)

Personally, I always prefer more income. Don’t you?

Just when these central economic planners seem to have it all figured out, in comes the other side inflation. What the @#$%! My expenses are going up too! And then the finger-pointing moves to the greed demons of capitalism:

• Healthcare is getting too expensive. We need the government to save us from the greedy health insurance companies.
• Gas is getting too expensive. We need the government to save us from the greedy oil companies.
• Food is getting too expensive. We need the government to save us from the…. errr… uh… greedy farmers? Yeah, the greedy farmers. That’s it.

Gosh, I guess this is the burden of living in a capitalistic society. These greedy bastards are making all our expenses go up!

What a tremendous coincidence, though. In capitalism, the existence of greedy price gougers encourages other entrepreneurs to begin offering competing goods and services. Where are all the competing oil companies, health insurance companies, doctors, and farmers who can take all of the business out from under the greedy pigs? An odd absence, perhaps.

Now let’s return to what we really want: inflation in our incomes and deflation in our expenses.

We want our food, energy, healthcare and [insert any other expenses here] to be cheap! The government can do that right? Can’t they just make a law that caps the price of all the stuff we buy? Let’s assume so and follow its effects all the way through.

We wake up tomorrow and gas is $1.00 per gallon. Everyone has health insurance with a $5 per visit co-pay. Feeding a person each month only costs $100 in groceries. Alas, a move towards a utopia! Okay, settle down, we have to finish following the effects of those new laws.

Let’s not forget that some people work in oil businesses, the food business, and the healthcare business. As mandated by law, we are all paying them less for their products and services. Guess what? The people who work in those businesses necessarily must now earn less. Well, everyone else is better off at large. It’s a small cost to create such a huge benefit of affordability to society. Maybe that’s what you think because you work in the computer businesses.

Let’s take a closer look at those people in the food/healthcare/oil business who make less money. Those people now have less money to buy computers. They also have less money to buy cars. And now the people in the car business are earning less and have less money to buy computers. Uh oh… less money is being spent on computers; Now you must take a pay cut or lose your job.  And now you see it all come right back to bite you in the rear. Deflation of your expenses was legislated through government onto some other people, but it’s indirect effects eventually led back to deflation of your income as well.

You see, we can’t systematically inflate everyone’s income and deflate everyone’s expenses. Why not? Because one person’s expense is another person’s income. Your income is someone else’s expense. If you are an employee, your income is the expense of your employer. But, even further, it originates as the expense of someone who bought products or services from your company. Additionally, your expense is someone else’s income. When you buy a product or service, the money you spend goes to paying the people involved in making, marketing, and delivering it to you.

Think of this as you observe the debate on healthcare, cap-and-trade, and any other government intervention into our freeish market…

The only way anyone can enjoy inflation of income and deflation of expenses as a result of a government action or policy is if the opposite effects are borne by someone else. Nonetheless, the government tinkers with our economy because those on the pleasurable side of the effects of the tinkering are made very happy. They vote for the tinkering politicians again and again. Heck, with the piles of cash coming in they can use some of that money to make sure their favorite politician is re-elected.

And what about those on the painful side of the effects of government tinkering? Further government tinkering is proposed as a way to solve their problems, and they flat out lack the economic education to realize they are being shafted. Well, why don’t we just get the government-run schools to educate them on econo——ohhh, I see what’s going on here.