As you may have guessed, none of the contributors to this site are fans of “Big Government”. The concept of “big Government” is difficult to define – but suffice to say, my own preference is for Government to have an absolutely minimal impact on our lives. Personally, I consider that Government functions should primarily focus on the protection of property rights – justice, police and defence. On the other hand, I strenuously object to Government actions which:
1. Are based on making outcomes “fairer” – this requires huge levels of tax, enormous amounts of regulation and thousands of public servants to “ensure” that outcomes are “fairer”. How taxing the productive to give to the unproductive (plus a large commission for the public servants on the way) is fair, I am not sure
2. Are aimed at protecting us from ourselves. I don’t smoke and nor do I like the smell of cigarette smoke, but if someone wants to smoke until they get terminal lung cancer, why should I stop them? (provided I do not then have to fork out for their hospital bills). Also note that recent studies place the revenue earned from tobacco to exceed health related tobacco costs by a factor of 6
3. Are aimed at eliminating all risk from our lives. This is unrealistic and leads to the infantilisation of the population generally. What is wrong with people paying for the consequences of their actions?
4. Reduce our liberty. Every time a Government taxes, legislates and regulates, our liberties are diminished. I want the freedom to succeed or fail by my own merits
5. Use compulsion to achieve its ends. The concept of a free market, a much abused term (not least by Kevin Rudd who we suspect doesn’t even know what a market is) depends on free exchange between free men and women. Why should the state have a role in any form of exchange, be it prices, wages or anything else? For instance, if I am happy to work for $9.98 per hour, but the minimum wage prevents me and my would-be employer from employing me for anything under $10.00 per hour, how is that just?
The trouble is, nearly every action that Governments take will seek to make a situation “fairer”, protect us from ourselves, reduce risk, reduce liberty and /or use compulsion.
In addition to the above, a productive society depends on the creation of wealth, not the consumption of it. Entrepreneurs and capitalists create wealth – Governments consume it. A really useful test on whether or not an activity is wealth creating is as follows. Ask yourself two questions:
. Is the product of my endeavours exportable?
· Is there a secondary market for this product?
If the answer is “no” to each of these questions, the chances are that you are not creating wealth, but, rather, living off the productivity of others. Many activities would answer “yes” to both (e.g. mining), and others to just one (e.g. tourism). For nearly all Government jobs, however, you would answer “no” to both these questions.
The secret of wealth creation and rising living standards is actually not much of a secret. It is, in fact, a no-brainer. Wealth creation depends on:
· The investment of capital in productive, wealth producing enterprises (the source of output and jobs)
· Investment, in turn, occurs as a direct result of the accumulation of capital
· Capital – or “savings” as the more old fashioned amongst us would know it – is accumulated in the way it has always been accumulated, through hard work and thrift (i.e. my out-goings are less than my in-comings).
This simple equation reveals why the Commonwealth Government’s stimulus packages are such a crock. More about them another time.