An exchange market is self-regulating. Both buyer and seller are better off after every transaction because both have gained something that they did not have before it took place. The concept of supply and demand is Adam Smith’s “invisible hand” that naturally guides the economy.
The essence of economics is cooperation. The essence of government is coercion. No nation has ever been able to strike a harmonious balance between these two opposing spheres of influence.
There are more fallacies in economics than in any other area of study, and all have the same root cause: to focus on the immediate benefits of a policy to a single group (a) to the neglect of other groups, and (b) in ignorance of the long-term consequences to the economy as a whole.
The biggest fallacy of all is the mistaken belief that government can improve the overall economy. The government has no money of its own. It can only give to some what it takes from others. Every grant, subsidy, or stimulus package is ultimately paid for by consumers as taxpayers. Every manipulation of the money supply and interest rates hurts the entire economy. Government can only do good for some by causing harm to everyone else.
The more government controls our affairs, the more severely it restricts our rights and freedoms as individuals. The cover story we are told is that this is necessary for the benefit of all, that society cannot function unless each of us makes personal sacrifices for the common good. What in fact happens is that we subordinate our rights to the whim of bureaucrats who feign to know better what is to our collective best interests than we do ourselves.
