During this presidential campaign season, there’s going to be much talk about the government’s need to “do something” about the economy. To a large degree, the economy we have now is the result of government doings.
Government, you see, cannot actually do anything to help the economy. Government can only hurt the economy; it can tax and it can regulate. That is, it can take away money that might be better left in private hands and it can impose costs on businesses and individuals. Neither of these can aid an ailing economy. You cannot tax your way to prosperity.
At best, government can hurt the economy less. Government functionaries call this “helping” the economy. This is like the schoolyard bully twisting your arm somewhat less and then taking credit for making you feel better. One can’t help but think that we’d have been better off without the arm twisting altogether.
“Government is the great Naysayer. The only things government can do are regulate and redistribute, prohibit and penalize, confiscate and command. Are these the things that liberty is made of? Somebody else’s money and an endless list of Thou Shalt Nots?” — James Bovard, “Freedom in Chains” ISBN 0-312-21441-3
The kinds of things that help the economy are starting businesses (which creates jobs) and providing needed goods and services. Government cannot do these things. More correctly, government can only do these things by preventing someone else from doing so. That is, to provide government services, government has to take money from the (private) economy and spend it.
Once removed from the (private) economy, that money cannot be used for what it might otherwise have accomplished. The previous owner of taxed-away money has lost the opportunity to invest it as s/he would have preferred. See “opportunity cost”
Government at all levels in the USA taxes away between 40% and 50% of every dollar earned in the economy. And that’s why this article is titled Government v. The Economy.