Thursday, December 4, 2008

Democracy is bad for business

Via the fledging blog A Letter To The Times, two quotations from the 1972 book Panics & Crashes and How You Can Make Money Out of Them, by Harry D. Schultz.

Left to itself the business cycle would probably ebb and flow in small waves at relatively frequent intervals. No government can stop this from happening. All it can ever do is alter the timing. For example, government may stop us having a minor recession every couple of years, one which we would barely notice. Instead, we get the recession in one big glob every 20 years or so, and then we suffer for several years from it.

Why does government do this? To buy time. A politician’s first duty is to get elected. Thus when things look slightly bad the politician feels obligated, for self-survival, to cover up.


Politicians also find inflation a good thing. They can promise wage increases and subsidies. They can announce all sorts of public works projects, knowing full well that inflation will soon offset their grandiose figures.

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