This I Believe

Gabriella - Glenndale, Arizona
Entered on December 16, 2006

Milton Freedman said: “the business of business is business”. So, should our government be more or less involved in the “business of business”? To me, the question in not whether government needs to be more or less involved, but *how* it should be involved.

Unfortunately, Adam Smith was only partially correct. His theory which drew a correlation between personal incentives and economic growth had proven to be true. All we have to do is look at the failed economies of the Eastern Block –where personal incentives were almost completely removed– to see that without the promise of personal gains, people are not motivated to work hard and invent.

Adam Smith was an idealist. He believed that the wealth created by the “invisible hand” would bring out altruistic feelings in those who possessed most of the wealth. Quite obviously, this is not the case. Was it not for government regulations and laws, greed would still propel some to employ child labor and keep workers under the poverty line in unhealthy and unsafe conditions. Not healthy self-interest, but greed motivates too many individuals.

So I believe, government intervention is absolutely necessary, and I disagree with those who promote a free-for-all economy and letting local businesses regulate themselves.

On the other end of the pendulum is government owned and managed business. This is an oxymoron. Since neither competition nor profit exists in government, there are no incentives for management or employees to work toward the creation of wealth. U.S. government agencies exhibit inefficiencies and ineffectiveness with eerie resemblance to communist Eastern Europe. Every time I stand in line at the DMV or the post office, I am reminded of the days I lived in communist Hungary.

Trust me. You do not want a government operated health-care system, unless you want to get your teeth drilled and filled without local anesthesia (if you ask me, it is not fun).

One might say that the government-owned healthcare systems of the communist countries were inadequate because the economy itself was crumbling. That is partly true. If the economy was strong, the government would have had more money to support the health-care needs of the population. But even if so, where does the money come from? Not from the government owned and managed business, since –remember?—there is no profit. The money comes from the pockets of the tax payer, like in many Western European countries. Sure, they have very good healthcare system for rich and poor alike, but the cost of up to 85% taxes take the wind right out the of economy’s sail.

As far as a solution, I think the country needs to keep on the path it is on. Conservatives, liberals, democrats, socialists, republicans, the greens, small and big corporations need to keep arguing like they have been doing. This seemingly fruitless, back and forth arguing is slowly pushing society to become the best ever in the world, with a good balance between freedom to profit and obligations to care for all of our citizens and our mother, the environment.