When I sit back and actually think about the artificial constructs in our economy, I’m not sure if the proper response is screaming or nausea. You’re probably wondering what on earth is a “artificial construct.” Well, to put it simply: an artificial construct is a segment of the economy which is not needed nor required in a truly free market. In other words, an industry or segment which produces nothing of actual value– but yet is basically required by law to exist.
Allow me to start with an “easy” example… Americans spend more than $300,000,000,000 to get their income tax returns prepared for them. Can anyone really think that making a tax code so complex that it necessitates such expenditures just to fill in forms can be even vaguely rational? Why not a flat tax? No need to divert all those accounting minds away from things like discovering Enron’s malfeasance BEFORE it crashes…it’s more useful to use those minds to prepare 1040 forms…. Right?
Sticking with taxes… what about all the estate attorneys whose sole job it is to protect your wealth from inheritance taxes? They would not be needed if we eliminate the Death Tax. But, its not like we could use their help in things like advising prospective homeowners about the implications of 18% home loans or reviewing contracts to prevent bad corporate mergers and deals. It’s much more useful to put brilliant legal minds to use working out creative ways to avoid paying taxes… Right?
Think that airplanes are the best way to travel around the country? Worried about carbon emissions? Worried about travel safety? Well, thanks to the Federally funded airport system, most people fly in airplanes… But who cares that a train can move 1 Ton over 420 miles on a single gallon of diesel fuel (the average car can move 1 ton about 35 miles on a gallon of gas). Of course, trains can’t be forced to knock down skyscrapers nor do they make appealing terrorist targets–not to even mention the whole thing about how the train simply stops if the engine goes wonky. But, no one cares about that…. Right?
Then, what about the Federally funded highway system… shall we even discuss the fuel required to move millions of tractor-trailers around the country since a single train can carry the load of hundreds and hundreds of trucks with a single engine? But, Washington knows that we’d prefer to have our roads full of trucks…. Right?
The list goes on and on, but I’ll stop here for now… my point is this: When Congress spends money, it creates artificial constructs in the economy which would not naturally exist–thus de-balancing the system. Why is it so hard for people to understand that Congress and the President can do NOTHING to help the economy– they can only choose to get in the way or stay out of the way. And the whole getting in the way thing hasn’t exactly been a success– just take a look at all the mortgages going bad because the CRE (community reinvestment act) encouraged/forced mortgage lenders to make bad loans all in the name of “equal access”. Well, boys, the piper has come and its time to pay the bill! What else could that money have been used for….?