Good intentions. That is what most politicians have when planning out their public policies. It is what gets the same bureaucrats enough votes to be elected into office over and over again. Many of these well-intentioned policies have negative unintended consequences. Sometimes, these consequences are known but are deemed acceptable by the bureaucrats who believe they are somehow qualified to run the market (and by extension everyone’s lives). Below are 5 examples of well-intentioned policies that hurt the very people the bureaucrats claim to protect:
1. Subsidized Stafford loans for college students. On the surface, this sounds good, doesn’t it? However, having government subsidized loans actually hurt the very students the government is claiming to help. The government claims that these loan programs must exist in order to help students attend college is spite of skyrocketing tuition rates. What these bureaucrats do not tell you is that it is these very same loan programs that are responsible for the dramatic increase of tuition rates. If a student is able to attend college because the government guarantees the schools that the tuition will be paid irregardless of the price, then what incentive do these schools have to keep tuition rates low. Instead, these schools have the incentive to jack up the prices to whatever levels they wish since the government will pay these tuition fees no matter what. As a result, these students graduate from college drowning with debt while struggling to find jobs.
On the other hand, if the university system operated under the free market system, tuition rates would be more affordable to college-bound students. Without government-guaranteed loans, schools will have no choice but to dramatically lower their tuition rates since nobody would be able to afford going to college. As with other industries, free market competition will lower the price AND improve innovation/efficiency, thus improving the quality of education college students receive.
2. Bailing out failing companies. In a free market, businesses that succeed in satisfying market demand will thrive while businesses that do not will fail. In today’s crony capitalistic economy of the United States, the government gets to pick winners and losers. Specifically, when certain companies are at the precipice of failure, the government steps bails them out by injecting them with emergency funds. Why does government decide to bail out these companies? The government bails these failing companies out in perpetuate the image that they are trying to keep save jobs. Two big problems arise when government decides to rescue failing companies: (1) the industry fails to restructure itself, and (2) the government increases the risk of hyperinflation.
When the government decides to bail companies out, the industry fails to improve (aka restructure) itself. Let us look at the banking industry during the 2007-2008 financial crisis as a prime example. Due to government intervention (ie. legislation that encouraged banks to loan to low income families and the manipulation of interest rates by the Federal Reserve), the subprime mortgage crisis erupted. In a free market, banks suffered from massive default rates due to their engagement of subprime lending would fail (most banks would not even be in this position if the government did not incentivize subprime lending). The surviving banks would eventually gobble up the market share of the failed banks and as a result, reabsorb the unemployed workers back into the economy. These surviving banks would also take measures to ensure that they do not make the same mistakes as the failed banks, and thus the industry restructures itself. In today’s system, the Federal Reserve props these failing banks up with their bailout money. This creates a terrible precedent since these banks have no incentive to stop their irrational lending activities. In their eyes, since the Federal Reserve will always be there to bail them out, they can continue to engage in risky behavior and thus the industry fails to restructure itself.
These bailouts also dramatically increases the broad money supply (aka inflation). Keep in mind, when the government bails out failing companies, these funds are created out of thin air. If we were to do that, we would be labelled as counterfeiters. When money supply increases, the general prices of consumer goods and services increase as well. In other words, the purchasing power of your dollar decreases, and thus your standard of living decreases as well. Inflation is a hidden tax, and by extension a form of theft.
3. Spreading democracy and freedom to other parts of the world. It is absolutely flummoxing that many politicians and their supporters believe that bombing and occupying other nations will spread the reach of democracy and freedom, and thus strengthen the country’s national defense.
First and foremost, how do these warmongers expect to pay for the continuous invasion and occupation of foreign lands? Should we increase taxes? Even if we were to increase taxes to 100%, it would barely make a dent to the national debt. Should we continue to borrower from foreign nations by selling them treasuries? There are signs that many countries, including China, are losing faith in the United States’ ability to repay their debt and are thus decreasing their “investments” in long-term treasuries. Should we print our way to oblivion in order to finance the wars? As stated before, inflation is a hidden tax and by extension it is a form of theft.
Second, these warmongers erroneously underestimate the dangers of collateral damage. For every innocent civilian we kill, we probably create 100 new extremists that want to avenge the deaths of their family, friends, and neighbors. It is an absolute joke that warmongering politicians and their supporters believe that our nation is hated because of our freedoms and our way of life.
Last, but not least, these warmongers have continuously ignored the US Constitution while drooling at the prospects of additional aggression against foreign nations. What happened to the concept of having Congress declare war before actually going to war? Didn’t these politicians take an oath to protect and defend the Constitution before entering office.
It is a joke and a travesty that these politicians and their supporters believe that their foreign policy makes the US safer. This is the equivalent of an ostrich sticking its head in the sand. But instead of being an ostrich, it is the typical Washington bureaucrat that has its head tucked neatly inside of a hole.