sábado, 27 de maio de 2023

Government in the economy act of faith

  Government in the economy

act of faith

 

The growth of government intervention in the economy is due to increased social inequalityBecause few have much and many have little, the savings destined to investment in society is sliding to meet the interest of those few. In other words, economics does what is profitable and not what is necessary, everyone needs to eat, but not everyone has money for it. Demand is only effective with will and economic capacity. To have enough for demand it is necessary to have power – money in the pocket. Yes, but and the economic boom of agro – record harvests meet domestic and external demand – always where there is demand – the economy does not study geography, it does not know dividing lines of countries: supply and demand is the great law of the economy. In fact, those who favor state intervention only defend the state economy while they are in power. When they move to the private sector they quickly become liberals. Everyone likes to be on the side of the whip handle. Moving to the other end, they change their minds.

Inequality is the central focus. Governments start acting to make up for this. Let's look at some examples.

Minimum wage – it seems reasonable for politicians to try to increase it because they are unaware of the laws of the economy. It is impossible to set a price for acts of political will. By setting high minimum wages, the government removes from the dining table those workers with lower schooling – some eat better, but there remains a crowd of excluded, that the government itself will have to support with family allowance, help for this or for that. More government becomes needed in this case.

Fuel prices – the government seeks to keep them under control to prevent inflation. Another impossibility: when a new president comes, he changes rules. Commodity prices are defined by the higher law of supply and demand, even if manipulated by international oligopolies. This bankrupts companies if you insist on using it for social purposes.

All government interventions in the economy are a disaster – what worries most about this statement is the invariability!!!!

The Law of supply and demand in the economy equates the law of cause and effect in human lifeIt is impossible to manipulate or manage it. It is the most democratic because the actions are defined by "His Excellency" the collective will and not by a single bureaucrat or group of politicians. In fact, politicians or bureaucrats, when they intervene, they do so for an act of faith and not according to economic science or lawIt is true that faith or belief in something is inexplicable in religion, but in the economy it means effect without cause. “Since we've always done this, we'll get the same results we've always had".

Focus should be to mitigate inequality to put everyone in the same starting position. A new Social pact having nutrition, health and education to employees and dependents under the responsibility of the company, buying at free market price and the government reducing the corresponding taxation.

The total opening of the economy will bring it to full productive employment and without any need of government intervention. Who will solve our problems will not be the government but the market economy or "His Excellency", the collective will.

 

Cordially

 



Ronaldo Campos Carneiro, a production engineer, was a professor at USP/PUC, a project negotiator for the Brazilian government with the World Bank, IDB and bilateral agencies. He was the owner and executive of a private coffee and coffee machine company. Retired from the Brazilian electricity sector.

rcarneiro4@gmail.com

http://rcarneiro4.blogspot.com.br

ANE - National Academy of Economics - academic - chair 169

ABROL - Rotary Academy of Letters of the Federal District - founding scholar

 

Author of the book – "Return back to the origins to deserve a better future", a socioeconomic essay of political theory. Released in Germany in several languages on 9/26/2018

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