Unintended Consequences in Economics

Thoughts on a Free Market Economy…
“Unintended Consequences in Economics”
By Phyllis Hunsinger
April 1, 2017

Considered among the leading economic thinkers of his time (1894-1993), Henry Hazlitt has been credited as a fundamental influence on supporters of free-market capitalism. He believed the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence:
“The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.” Economics in One Lesson by Henry Hazlitt

Unintended consequences potentially are the bane of any decision anyone makes. If a decision is made without considering the long-term effects or the impact of that decision later on down the road, the decision may solve an immediate problem yet create an even larger problem in the future. In the U.S. government, problems of a large magnitude facing us today have been the result of poor economic decisions made to address a much smaller problem in the past.

There appears to be an unwarranted faith in government spending, which is offered up as a panacea for any economic woe. Once again a reminder is in order: the government has no way to obtain money unless the funds are confiscated from individuals through fees, taxation, etc. And everything an individual receives must be paid for in some way.

An example of unintended consequences in economics is the Federal government printing money to jumpstart the economy. In a more graphic manner, this is similar to “cutting off the dog’s tail to feed him fresh meat.” Printing money takes away the value of the existing money. Nothing of value is created; therefore, it is impossible to provide a boost to the economy by printing additional money. For a brief period of time there are more dollars available, but each dollar is now worth considerably less. This is evident in the rising price of commodities and is called inflation. Inflation is one of the unintended consequences of printing money.

Citizens need to be aware of the danger in asking the government to solve problems. The unintended consequences are generally far worse than the original problem.

https://www.free-dom.co.us, Phyllis Hunsinger © 2013 All Rights Reserved

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