Freeman

ARTICLE

Government

SEPTEMBER 01, 1981 by LUDWIG VON MISES

Government has no more ability than individuals to create something out of nothing. What the government spends more, the public spends less. Public works are not accomplished by the miraculous power of a magic wand. They are paid for by funds taken away from the citizens.

The more public works expand and the more the government undertakes in order to fill the gap left by the alleged “private enterprise’s inability to provide jobs for all,” the more the realm of private enterprise shrinks. Thus we are again faced with the alternative of capitalism or socialism.

There is no reason to idolize the police power and ascribe to it omnipotence and omniscience. It cannot conjure away the scarcity of the factors of production, it cannot make people more prosperous, it cannot raise the productivity of labor.

All this talk about contracyclical government activities aims at one goal only, namely to divert the public’s attention from cognizance of the real cause of the cyclical fluctuations of business. All governments are firmly committed to the policy of low interest rates, credit expansion, and inflation. When the unavoidable aftermath of these short-termpolicies appears, they know only of one remedy—to go on in inflationary ventures.

Currency and credit manipulation is today the main instrument by means of which the anticapitalist governments are intent upon establishing government omnipotence.

As soon as the economic freedom which the market economy grants to its members is removed, all political liberties and bills of rights become humbug. We may define freedom as that state of affairs in which the individual’s discretion to choose is not constrained by government violence beyond the margin within which the praxeological law restricts it anyway.

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September 1981

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Unfortunately, educating people about phenomena that are counterintuitive, not-so-easy to remember, and suggest our individual lack of human control (for starters) can seem like an uphill battle in the war of ideas. So we sally forth into a kind of wilderness, an economic fairyland. We are myth busters in a world where people crave myths more than reality. Why do they so readily embrace untruth? Primarily because the immediate costs of doing so are so low and the psychic benefits are so high.
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