Fixing it ’till it’s Broke

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Speaking at a conference of the Confederation of German Trade Unions, Merkel said that recent speculation against the euro “is only possible because of huge differences in the economic strengths and debt levels of member states.”

With the rescue package, “we have done nothing more than to buy time until we have brought order to these competitive differences and to the budget deficits of individual euro countries,” she said.

One of the most serious flaws with Socialism and the commonly used Keynesian economic theory that most Western Nations are following today is that when fixing a failing section of a large and complex centrally planned economy, you inevitably break another part of the system due to incomplete knowledge and unintended consequences.

No sooner than you bring order to some perceived competitive difference, order is lost elsewhere, because interregional economies are so complex and when they are centrally planned, they are not flexible.  This is because Keynesian models create a zero sum game where one party gains only at the expense of another.

Capitalism, on the other hand, promotes flexibility and positive sum game through supply and demand while discouraging zero and negative sum gain via the Rule of Law.  It allows people to predict the outcome of their individual labor and investments, similar to growing crops and predicting the weather, while making adjustments depending upon flaws in their predictions and changes in the weather.

Socialists and other central planners believe they can and should, instead of allowing individuals to predict and adjust their futures, force an equal and just outcome for the masses.  But economies are as fickle as the weather so the authorities are constantly having to make adjustments to their over engineered yet far from adequate plans that require constant reform.

Capitalism with the Rule of Law is as close to how nature (most efficient) would spontaneously plan an economy, where individuals are sovereign, as possible.  Capitalism allows for the greatest amount of choice and the Rule of Law allows folks to predict the outcomes of their and others actions.

Capitalism works just fine, socialism is just the man made attempts to fix nature until it’s broke.

Pay attention to how Nature does it, because the End is Far,

Steve A Morris

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Posted in Economy
One comment on “Fixing it ’till it’s Broke
  1. […] is that when fixing a failing section of a large and complex centrally planned economy, …Continue Reading Cancel […]

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