Once a geek, always a geek I guess. I admit it, I have been reading Ludwig von Mises. Doctor von Mises passed away in 1973, but for decades was the most prominent member of the Austrian school of economics.
An ardent capitalist, I think he does a very good job of explaining “the slippery slope” of government interference in the economy. [For example] Let’s just say that we all want the latest cell phone and none of us like paying $650 for it. The Occupy protestors decry that a smart phone is a necessity these days but most people can only afford to pay $100 for a device. They want the government to mandate that the phones be sold for $100. What’s wrong with that?
Well, if this arbitrary price does not cover the cost of production, then the merchants and manufacturers will not sell the phones. They will hold on to them, hoping that the legislation will be repealed and that the devices in inventory can then be sold at a profit rather than a loss.
So, socialist legislators with no understanding of economics, will then move on to not just fixing price, but mandating the sale of the devices. But… because the price is now artificially low, the demand will increase while the supply remains the same. This means that people who go to the electronics store prepared to pay $100 for their government-promised gizmo….go home empty-handed.
NOW, to avoid the anger of the Occupiers who STILL don’t have the latest phone, the legislators must implement rationing. One phone per household. (All the Occupiers are still on mom and dad’s cell plan anyway, right?)
But once all the inventory on hand is exhausted, what company is going to produce a product that they are forced to sell at a loss? No one will and you end up with a scenario where in its attempt to provide a coveted product to everyone, the government vaporizes the availability of the product for everyone.
Smart phones are a silly example, but the basic premise can be applied to any good or service. Think healthcare and be afraid. Be very, very afraid.
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Some freebies, like smarts, are -actually- free. And this 'geek' has got plenty.
I'm just glad she's my friend...
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