The Parallel Universe of Prosperity and Peace

During discussions on economic policy, I sometimes utilize the Sci-Fi concept of a parallel universe.  To do this, I ask my friend in discussion if he agrees to the premise that capitalism - along with the required rule of law and protection of property - is the framework that enabled our relatively high standard of living compared to other countries and compared to our own past.  If he has any difficulties with this concept, we usually have to go back over some basic history and economics.  It is absolutely vital to know that this premise is true, that the economy is not a zero-sum game where there always was and will always be a fixed amount of wealth, but that through capitalism our wealth grew and we created general prosperity. 

Once he agrees to that premise, I like to ask him to imagine a world (or parallel universe) in which:

1. the government expanding follies of the New Deal were never committed, 
2. we remained on a Gold standard, instead of empowering the market-distorting, money-printing Federal Reserve, 
3. the labor force of the federal and local government had not grown to 22 million Americans, 
4. our debt had not ballooned to 16 trillion at the federal level and much, much higher at the local levels and when including unfunded liabilities, 
5. federal regulations had not grown to 170,000 pages, and 
6. the myriad of other market-distorting practices of government were never put into place.

How much richer would we be?  What would that level of productivity do to poverty in the United States? Or around the world?  What would it do to the average standard of living?  To what degree would the ills of society which are targeted by government social programs be fixed and eradicated through that wealth and the incentives of private individuals?

Every time an individual or group attempts to use the coercive power of government to get goodies for themselves (eg. farm subsidies, unnecessary military spending, energy subsidies, Medicaid, Medicare, Obamacare, etc.) they should have someone follow them shouting -

“YOU’RE MAKING US ALL POORER!”

I’ve always wanted to quantify how much poorer these short-sighted, power hungry oppressors are making us.  Luckily, some very smart individuals have done it for me.  John W. Dawson of Appalachian State University and John J. Seater of NC State University have conducted a study titled: Federal Regulation and Aggregate Economic Growth.  The study is also summarized, with some helpful additional information, by Reason Magazine in Federal Regulations Have Made You 75 Percent Poorer.  Both have excellent insight into how much richer we would be in the universe governed by sound economic principles.

I intend to uncover and discuss many of the ways government is making us poorer in subsequent blog posts.

Next time you hear someone talking about how they must have their pet big-government goodie protected, maybe you can be the person telling them how they are making us all poorer through their misunderstanding of economics.  But please, don’t shout.