Ignore Economic Principles at Your Peril

Thoughts on a Free Market Economy…

“Ignore Economic Principles at Your Peril”

By Phyllis Hunsinger

April 1, 2019

            The political climate today is overrun with proposals that sound good to the uneducated; however, there is a cautionary tale to be told.  Randomly promising free health care for all, higher minimum wage, a guaranteed income for those unemployed or unwilling to work, and forgiving student debts are just a few of the campaign promises of many current day politicians.   These goodies sound too good to pass up by the seriously uninformed voters.  But just like you cannot defy gravity, you cannot defy basic economic principles either.

            The world is filled with scarcity.  Scarcity is the gap between limited resources and unlimited wants.  To promise free health care for all is to blatantly deceive.  There will always be unlimited demands for health care and limited health care resources. .As Trevor Loudon said, “The laws of supply and demand are as immutable as the laws of physics.  You can no more cheat the market than you can defy gravity.”

            A higher minimum wage does not simply come out of the employers’ profits or the consumer’s wallet without any consequence. Almost immediately there will be changes in the behavior of both employers and consumers.  Wages are not arbitrarily set by employers.  Wages are factored in with utilities, rent, and all other overhead expenses; therefore, when employers are forced to pay more in wages, the employers will respond by reducing their number of employees.  Likewise any costs passed on to consumers result in changes to the behavior of consumers; that is, consumers may opt to limit their purchases from that establishment or shop somewhere else completely. Wages and prices are not randomly selected in competitive markets.

            The government has no way to obtain money except through confiscation of funds from the citizens through taxation and fees.  To guarantee an income for the unemployed and those unwilling to work or to forgive student loan debt, the funds must first be confiscated from working taxpaying citizens.  And this brings up another economic principle that cannot be denied:  when hard-working taxpayers realize their wages are being confiscated at a higher and higher rate, many will decide it is not worth the effort to work when they do not get to keep the lion’s share of their earnings. This will cause the government to extract even more funds from the remaining taxpayers, and soon the fairy tale of “Killing the Goose That Laid the Golden Egg,” will become a true to life story!

            Economic principles give important knowledge about the way the world works.  Ignoring these economic principles is perilous for civilization.

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

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