10 Things People (Wrongly) Believe the Government Does


Here are ten things people mistakenly believe governments are actively doing or can do.

1). Create jobs. Nope. By coercively shifting money towards one area of the economy or even particular projects (according to the preferences of politicians), they prevent from coming to be the jobs in other areas that otherwise would have been created with that money (according to society’s needs as expressed through profit and loss signals). Governments can only redistribute. They can never create.

2). Stabilise the economy. Nope. Government regulation of and intervention into society’s markets invariably has unintended consequences, such that the intended beneficiaries are left worse off, and creates perverse incentives (e.g. the sub-prime mortgage disaster). And government subsidies create economic bubbles, which always burst (think housing, stock market and start-up bubbles).

3). Make people on low wages better off. Nope. The minimum wage renders unemployable everyone whose economic worth to a business is less than the hourly rate set by the government. Also, it raises the costs of the kinds of goods people on low wages buy the most.

4). Keep us safe from terrorists. Nope. They (inadvertently, most probably) create them by stomping all over other people’s freedoms in foreign lands or otherwise interfering in their political affairs. IRA and ISIS anyone?

5). Stimulate economic growth. Nope. Growth comes from savings and production, not consumption and spending. When governments keep interest rates artificially low and encourage banks to hand out cheap credit to increase ‘aggregate demand’, they merely fool people into consuming more – as if society has already produced more to consume, but it hasn’t! Which means the total amount of goods available shrinks.

6). Protect us from criminal gangs. Not really. That’s like believing the Mafia protects people from organised crime.

7). Do good by giving money to the poor and the disabled. Giving your own money to charities supporting poor and/or disabled people is indeed an act of good. But systematically stealing money from innocent people and then redistributing it to anyone who convinces a government bureaucrat of their need for it is not ‘doing good’. In consequence, it creates a permanent underclass of people who become dependent on handouts and leads society into a false sense of security because we all think the government is (doing a good job of) taking care of the poor and the sick.

8). Give people good educations. Nope. Fundamentally because the state monopoly on education forces society’s educators to teach all children the same thing in much the same way and in the same environment. To put it another way, it prevents society’s educators from specialising and diversifying to meet society’s demands by teaching a variety of curricula in ways and in environments that create the most value for each individual.

9). Protect us from monopolies. Most definitely, nope. All governments monopolise money supply, education, protection services, dispute resolution and many monopolise infrastructure, public transport in major cities and healthcare too. In the presence of governments as we know them today, there is no escaping monopolies.

10). Protect the environment and conserve our natural resources. Nope. Governments are often the worst polluters. And common, shared or franchised government ownership of natural resources incentivises actors to use up as many resources as quickly as possible (e.g. over-fish or cut down trees at an unsustainable rate) because they won’t suffer the long-term economic consequences of doing so.

When we realise that the exercising of state power in countless ways not only doesn’t produce all the social benefits we thought it did, but also causes social harm, the questions we must ask ourselves are: Why does the state continue to exist as the ultimate institution in society? Who is benefiting from its continued existence?

The short answer to the former is: because most people believe the state must exist for society to exist at all. The simple answer to the latter is: the beneficiaries are every person and enterprise whom the exercising of state power privileges and benefits overall more than it disadvantages and harms. Which, essentially, is the very richest people and the largest corporations.


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