Tuesday, November 10, 2020

1889 Institute: Let us work!

Let Us Work! The Futility of “Stimulus” to Counteract Foolish Covid-19 Shutdown Orders 
By Byron Schlomach

When did you last eat money? When did you last wear it? Ever shelter under it during a storm? Fact is, money is only useful for purchasing the things we need. That’s the problem with talk of more federal government “stimulus” over COVID-19. Each and every thing we eat, use, and consume must be produced. That means “stimulus” is, at best, a temporary delusion. Give people money they have not worked for, sooner or later, there’s nothing left for them to spend that money on.  

When it comes to production – the true source of ALL our prosperity –most people don’t view it as fun, so incentives critically matter. Many have chosen to take advantage of widespread confusion and overwhelming workloads in state employment agencies to quit their jobs, (fraudulently) apply for unemployment, take stimulus checks, and have a high time at everybody else’s expense. 

Once state and local governments imposed lockdowns and the federal government had no legal power to reverse these actions, it’s easy enough to see the quandary the federal government was in. No doubt, it seemed there was little to do other than attempt to spend the nation into economic stability. President Trump has made a fair point that many who were unemployed due to shutdowns had no choice in the situation. The problem is that the path to prosperity is not through spending. It’s through production. 

Adam Smith’s chief common-sense insight over 200 years ago was that a nation’s true wealth lay in its productive capacity, and that a nation’s productive capacity was best built largely through free markets, not by government diktat, tax and subsidy incentives, or through regulation. And Smith has been proven absolutely correct. Of course, people with money to spend provide an incentive for producers to produce, but not when the government hands out money to everybody for doing nothing. We are all producers; all producers are people; all people are incentivized NOT to produce when money is handed to them for nothing. It’s that simple. 

Federal stimulus payments made with money practically manufactured out of thin air is no way to ensure the nation’s prosperity. The only way to ensure prosperity is to allow people to work – to produce – and that means local and state government officials need to get out of the way and let us all do just that. Perhaps, if Covid-19 presented the kind of threat the hysterical press has proclaimed it to be, it would be different. Facts, however, belie the hysteria. And due to so many officials’ foolish responses, we are undoubtedly being made poorer for it, regardless of what a stock market pumped up by Fed money otherwise says. 


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