When economic freedom exists, prosperity broadens. Anyone willing to work can make a better life for themselves and their children. But for a few unprincipled opportunists among us, it pays off to restrict economic freedom in favor of government controls and interventions — because you plan on reaping unearned gain from rigging the system.
Because knowledge is disperse though (Hayek’s primary point), when you deliberately reduce the number of decision-makers in society — such as by having a committee try to “run the economy” (something which Mises refuted) — then poverty ensues and human living standards stop becoming better off and, instead, start to become worse off.
Society is more wealthy when people — through the spending of wages — make more of the economic decisions throughout society than does any minority or singular entity, such as government.
The most reliable wage data is from the IRS. When total wages reported are divided by total people reporting wages, you get an average wage reported to the IRS — which can be put into real (constant) dollars. Here is what a century of such data looks like:
The gray dots at left are less reliable IRS data because only a minority of wage earners were reporting wages in those years. The blue dots at center indicate the outcome seen when economic freedom exists, meaning that there is sound money, government spending is low, and government regulation is low (and trade is relatively free).
The orange line represents the outcome when a nation moves away from economic freedom (e.g., real wages stop growing). The thin blue line represents a possible future that US wage earners might have had, if economic freedom in the US remained central and primary — as it was during the founding of the USA. Here is the same graph with notes in it:
Going back to the original point, for a few cronies, there is an opportunity to acquire unearned gains when there is control and intervention. A large part of unearned gain acquired comes from Cantillon Effects which occur whenever a government prints new money.
The Cantillon Effect means that the very first person to receive printed money (typically a banker, or what can now be referred to as a “bankster”) gets full benefit, because the prices haven’t risen yet — and THAT person is more rich now.
For the rest of us, it doesn’t pay to print new money, because price inflation extracts more wealth than it adds. This imbalances resource allocation, as “dealers in money” acquire a greater and greater share of the resources of society.
To get new money printed, it would be strategic to have the government paying for more things, rather than people individually paying for things while practicing self-determination (having control over their lives).
Here is a graph showing how it is that workers (people) used to make most of the economic decisions inside of the United States — back when the US economy was a free market society. It also shows how deliberate enlargement of the government has put the US government into primary control of the US economy (this is known as a ‘command economy’):
The blue line is the wage share of GDP, showing that workers (people) were in control of about 42% of all resource allocation when there was more economic freedom. Workers were spending roughly 42 cents of every dollar spent. The government share is the red line. The total government (federal + state + local) was spending as low as 21% of GDP.
Workers had over twice the “buying power” of the government. If economic freedom is restored inside of the United States, then the sum total of all private wages paid will once again become over twice the sum total of all-levels government spending.
If not, then not.
A command economy can be defined by whether the government is the primary allocator of resources, such as is true of the US in the last few years. Other economic agents, such as private investors and private-sector workers, do not allocate as much resources as the US government does.
Here is the same graph with notes in it:
While sold as being “good for the many”, relative government growth is actually “good for the few, at the expense of the many.” What is “good for the many” is economic freedom, and the more of it, the better. The concept of “too much economic freedom” is a misnomer.
You won’t hear that from those behind the Great Reset though. They’ll try to convince you that having government spend 46 cents of every dollar spent — rather than the people deciding where the dollars go — is a good thing. Don’t fall for it though.
The Great Reset is a (well-thought-out) scam.
Total agreement.
The only thing I wonder, which perhaps cannot be known but maybe speculated, is whether "progress" in the form of advancements would have been as flourishing in the last 5 decades if we had maintained course from the 50s (the blue line). Many advancements were funded by that first allotment of new money from the banksters or not far from, and if we'd followed the projected blue line, perhaps more people would have simply been satisfied to draw a wage, rather than to take a risk with a new enterprise and new innovation. Just a thought I had