Why You Get Poor When Government Kills Incentive

greed money

It is an obvious mistake to make business unprofitable by overtaxing, over regulating, and taking away the incentive to do business.  A far more invasive move is to create such an atmosphere in the market that fear is the dominant emotion and even if profits are possible they come with such a risk of penalties and fines and incarceration that the money just isn’t worth it.

People have to have enough to survive but if they are ambitious and want more out of life they move to acquire savings and credit to start a business and make a profit. They simply may invest in the market with the long term expectation they will acquire a nest egg for their children’s education, a vacation home or a retirement fund. People do this with the expectation they will be able to plan and stability will be predictable enough that a reasonable expectation of success is possible.  This requires they do not acquire debt that they have not initiated.  This means no one else creates debt that they must be saddled with.

The government is killing the profit motive.  The fall of Wall Street is the voice of investors telling the world we are no longer interested in putting our money into enterprises that cannot profit.  It is less unstable to just toss your money into a slot machine.  At least if the machine pays off there will not be a government agent changing the payout rules on a daily basis.

In the market no matter which company or fund you choose, you do not know what regulations will be cast upon them and how it will affect their bottom line. The car industry has been saddled with emission controls and gas mileage requirements, taxes and work rules that have diminished the ability to make a profit.  Money won’t put them into a profitable position. Money will only be spent on the requirements the government attaches to the bailout payments.  There is no hope for reestablishment of a profitable business in the auto industry.  Much like the coal fired generators regulation has killed the incentive to produce.  The costs are obviously higher than those of many foreign makes and those needing a car will not pay a premium for a  car that may not have a manufacturing facility to supply parts or warranty service.  The GM executives could not provide a profitable plan to the government and if they could, why would they want to announce trade secrets?  There is so much about business that government does not know.  They do not understand that profit making is the key element and they are not willing to admit that they are killing profits the minute they enter the picture.  As long as the profits are adequate and not choked off the profit motive lives.  Once the point of no return arrives the profit motive dies.  Who wants to try to profit if the deck is stacked against you?  The gamblers know what the odds are and they know that the house usually wins.  Business is based on a plan that assumes some degree of stability.  Business gets worried if the money supply is distorted, if incentive to profit is destroyed and when these conditions emerge a retrenchment occurs.  This is what is happening today.

Politicians by nature don’t know the place to stop to keep the profit motive active.  Like their estimates of anything to do with the free market they are wrong.  They cannot mange an economy because they cannot predict or forecast future conditions.  This forecast of future conditions was what Ludwig Von Mises called the ultimate source of profits.  This is what businesspersons attempt to do based on their experience and expertise.  Politicians mainly focus on the drifting desires of their constituents.  This is not the way to make an economy work.  Pandering to massive amounts of voters who want something for nothing only diminishes the profit motive for the producers who eventually fold up and say, “it’s not worth it.”

The government cannot stimulate an economy by ignoring the profit motive.  If your rewards for trying to make a profit consist of harassment by pompous Senators who have created a far bigger debt than most folks can imagine, or fines and imprisonment staring you in the face the effort may very well not be worth it. After all, if you do succeed you will only be funding the millions who have decided not to.  How long do you want the status of goat?  The latest movement of “Going Galt “ is a conscious movement designed to rebel against the socialist premise of wealth redistribution and rewarding the unearned.  The withdrawal of consumption is a fear that drives survival.  Get by on what you can and don’t acquire debt as you may simply lose what you have.  This attitude was given to us by the government.  Consumers realize that with their savings disappearing and equity in their house gone there is only the route of savings and thrift left.  Government hasn’t come to that realization and is flailing with dollars it doesn’t have to simply continue ignoring the state of the economy.

We don’t need people trying to run the country from Washington who don’t recognize what they have done wrong, continue to do wrong and refuse to make the necessary corrections in their behavior.  We saw what happened when we ignored the Bush spending and now we are repeating the same apathy.  Voices of rebellion need to be heard loud and clear.  We have seen what this socialistic nonsense has done in other countries and we cannot lead the free world as a slave state.  America will no longer be the land of opportunity without the ability and desire to profit.  This needs to be explicitly recognized and communicated.  It is the positive step that Americans can make to turn this around but they have to quit giving the benefit of the doubt to downright stupidity.

Quit voting for tax increases at all levels, let the Republican party die on the vine,( they don’t represent a party of principle ), don’t make a move to encourage any politician to believe he or she can “do something” to help the economy.  Politicians do not have the necessary premises to prioritize business concerns while they constantly look at political consequences that impact their “career”.  If anyone thinks politicians think in such a way that they don’t get some benefit from their actions they are ignoring how humans are.  Regardless of the altruistic rhetoric the motivation for gaining popular support is to keep their position.  It is a means to an end. It needs to be recognized and refuted. If not it only feeds the profit retardation.  The spoof of public “servant” has been exposed for what it is (blatant false advertising).

We have turned over an economy to people intellectually inept to remedy what they have destroyed.  Even a former businessman (such as Romney) when placed in a political position will cater and pander forgetting that government and business are like oil and water ( they don’t mix).  The answer to improving the economy is to put the businessmen and businesswomen in charge of managing their businesses.  This means taking away the government ‘s ability to meddle at its whim.  Government must be limited and it cannot be limited until the recognition is made that it has no ability to improve an economy, only disrupt and distort what true market conditions are or should be.

To try to reinvent human nature by destroying the profit motive and business just to wield power is as evil a motive as can be formed.  It leads to rewarding the undeserving and punishing the ambitious.  It leads to favoritism and bribery.  It leads to corruption and coercion.  It is the commonality of criminality and unlimited government control.  It is what will turn America into the last of the free nations on earth.

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The opinions expressed in this commentary are solely those of the author and are not not necessarily either shared or endorsed by iPatriot.com.

Dale Netherton

Author of four published books, former Marine, forester, former plant services manager,former KT facilitator, former campgound builder and manager, handyman now retired to writing , chess , golf and fishing. ISU graduate, M.B.A. from Nova University and longtime supporter of ARI. http://www.amazon.com/Dale-L.-Netherton/e/B00G1T6A26/ref=dp_byline_cont_book_1

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