Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“In 1765, Parliament passed the Stamp Act, which, as any American high school student can tell you, was an act that apparently had something to do with stamps.”     Dave Barry

July 29, 2008

Government — Won’t Save You, May Screw You

by Brad Warbiany

One of the key ideas that I find myself discussing in any election cycle is the desire of Americans to elect a savior. Not gonna happen. The system is bigger than the players, and the system is flawed.

But that doesn’t stop the average voter from trying to elect someone who will “run the country”, “fix the economy”, and “encourage growth”. Again, not gonna happen. There is very little that a government can do to improve the economy. Government is not an efficient economic actor. Usually, without getting into a debate on anarchism vs. minarchism, the traditional role of government in an economy is to set fair rules protecting individual actors from force or fraud, and enforce those rules in a consistent and predictable manner. Thus, the best thing that a government can do for an economy is not to get involved, but to stay out of the way unless a dispute arises to be settled by a supposedly neutral arbiter.

Of course, the fact that there aren’t many actions a government should take to improve an economy should not suggest that they don’t have power over an economy. They have plenty of power to cause mayhem and destruction with the stroke of a legislative pen, as we have seen in Zimbabwe, with their 2 million percent inflation:

With prices doubling every few days, Zimbabweans now spend huge amounts of time and energy preventing their meagre cash resources from completely evaporating. Trying to catch up with galloping hyperinflation, now officially running at 2.2m per cent a year and at least four times faster in reality, the central bank has been printing ever bigger denominations. But it is outrun by galloping prices: at last count, the most valuable banknote available was for 50 billion Zimbabwean dollars, now worth barely 70 American cents on the black market, and the stock of Zimbabwean dollars is dwindling. Local cash could become scarcer still, now that the German company that was providing Zimbabwe with paper to print its banknotes has cancelled its contract; the Zimbabwean monetary authorities are likely to turn to a less specialised supplier. Meanwhile, people do not even bother to pick up notes of hundreds of thousands on the pavements of Harare, the capital. At independence in 1980, the Zimbabwe dollar was more valuable than the American greenback.

It may seem odd that the local currency is still used at all. From Z$25 billion to the American dollar at the beginning of this month, the cash exchange rate had jumped threefold within a fortnight. In restaurants or shops, prices are still quoted in local currency but revised several times a day. Salaries are paid in Zimbabwean dollars, still the only legal tender. A minibus driver taking commuters into Harare every day still charges his clients in Zimbabwe dollars—but at a higher price on the evening trip home—and changes his local notes into hard currency three times a day. The local money is losing its relevance.

Zimbabwe’s currency is now so worthless that their German supplier won’t even sell them the paper to print it on. You can look at all the problems of Zimbabwe’s history, through colonialism, foreign rule, etc. But nothing about the current situation can be described as anything but massive failure at the governmental level. No private actor has the power to cause this much misery.

Libertarians generally believe that government is inherently evil, and should be minimized. But (with the exception of anarchists) they believe that the government is a necessary evil. Governments are like parasites: the good ones actually form symbiotic relationships with their hosts and rely on their hosts continued survival and success. Others, like that of Zimbabwe, continue eating until their hosts are consumed, leaving nothing but a carcass of a society behind that must be built anew.

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