Government manipulation of economy messed up the country one more time. Soon after the recovery from 1958-59 recession, Federal Reserve was alarmed by the threat of an oncoming inflation. So, they tightened the monetary policy. That threw away the country into another recession which lasted for about ten months. The unemployment rate peaked at 7.1%. It was proven once again that pundits at the helm of affairs do not know better than the hidden hand. Variations in prices, demand, supply, interest rates, wages and employment rates are the part of natural economic cycles and these variation perform the necessary adjustments to keep engine of economic growth running. When these variables are manipulated, the whole cycle gets interrupted, resulting into unwanted and unexpected results.
Time and time again history has shown us that the free and open market forces are only forces which guarantee a rapid, long and strong, overall, long term growth. The Keynesian manipulations of markets always try to make peaks and troughs shallower and smaller by artificially increasing and decreasing the money supply and fiscal manipulation. They are scared of large increases in both inflation and deflation. What they do not understand is that these higher inflationary and deeper deflationary adjustments are sometimes necessary for long an overall, long term rapid growth.
Since the Western and other governments have started manipulating economies through their Keynesian policies, the peaks and troughs in economic cycle have become smaller. But, the overall growth in any given cycle over a period of time has also decreased sharply. The worst part is that these dismal growth rates in so called recovery periods cannot keep up the pace with population growth. So, overall employment rates, wages and standards of living are falling in each cycle. When peaks and troughs are allowed to run their natural path, the adjustments through deflation and inflation result into a much bigger and stronger overall increase in employment generation, wages and standards of living.
The deflationary, recessive part of the cycle, if allowed to run its course, cause reduced prices, reduced cost of living and doing business, provides incentives for savings and investments, reduces interest rates, drives down wages and hence creates far more and wider range of jobs. The inflationary part of the cycle, again, if allowed to run its course, increases profit margins, hence the real incomes and wages, increases demand for non-essential goods and services, increases capital flow to research and development, brings out novel, higher end, more expensive and better products, and services, and raises the standards of living. The overall result of the cycle is a much better off population, workers and entrepreneurs.
In contracted cycles, under Keynesian manipulation, these adjustments do not take place. Deflation never reaches a point where it can refuel the economy with improved savings and investments. Inflationary cycle, never reaches a point where it may take the real incomes and wages to the next level where creativity, innovation and invention can uncover a brand new world. Under these manipulations, it would take at least twice as much time to have enough resources available for research and development to bring into market the inventions like automobile, airplane, railway, television, telephone and internet, for example.
Since, it takes much longer to bring about these revolutionary changes to markets, all the growth that is produced by such revolutionary products and services happens at least at half the speed. All the manufacturing, all jobs, all supply chains, all transportation and communication, and all the increase in efficiency which is the result of these type of revolutionary products and services, take at least twice as much time to take full effect. That is why it is becoming increasingly uncommon to experience economic growth rates higher that 2-3 percent.
Put this in our historical perspective, and you will realize that these kind of growth rates were considered dismal, in past, when our economy was far less regulated. Although the recessions and depressions were deeper, the people turned out to be much better-of, after each cycle. Current 2-3% GDP growth rates are far less than the population growth. Hence, in real terms, there is no growth. Taking the population growth into account and you realize that we are actually in a continuous recession. These growth rates cannot accommodate the population growth.
In simple terms, accepting the current growth rates as normal, means that we have sealed our fate. We have embraced the fact that an increasingly larger proportion of our population will always remain unemployed. Because an increasingly larger proportion of population will be unemployed, the demand for labor will always be lower than supply. In other words there will always be an excess supply of labor. An excess supply of labor means that wages will not increase. They may even fall, even further. It will be increasingly harder to find a full time job. So, a larger proportion of population will be chronically underemployed.
Reduced demand for and excess supply of labor will also have very adverse effects on work environment. Employers and managers will not need to improve or even maintain a healthy and respectful work environment. With so many unemployed people always available to work, the jobs will always be a take it or leave offer. “This is the way it is”, “Thank God that you have a job”, “If you are not happy you are most welcome to leave”, will become regular and normal responses to work related complaints. Wages and benefits will be systematically cut and reduced. Human beings will not be better than the parts of a machinery.
So, what needs to be done, is to stand up to unlawful and unconstitutional government encroachments on our rights, our property, our money and our country. Last few decades have proven that this gradual take over by government will not stop at any point until a complete global corporate rule is established. No one is safe. You could be the next, I could be the next, and anyone could be the next. Do not think, if it has not directly affected you, yet, than it is not your problem.
Disobedience Shop
