Sunday, September 10, 2006

Political vs. economic means

Read an excerpt from John Mauldin's recent book, Just One Thing, that I wanted to reproduce here. It was an essay by Bill Bonner entitled, "The Means are the Ends", posted here under the alternate title, "A Thousand Clowns".

In this piece, Bonner explains that the traditional means of human interaction and achievement have been taken over by political (dishonest) means. Here's an excerpt:

In the early 20th century, John Maynard Keynes came up with a new idea about economics. The politicians loved it; Keynes explained how they could meddle in private affairs on a grand scale - and, of course, make things better. Keynes argued that a government could take the edge off a business recession by making more credit available when money got tight...and by spending itself to make up for the lack of spending on the part of consumers and businessmen. Keynes suggested, whimsically, hiding bottles of cash all around town, where boys might find them, spend the money, and revive the economy.

The new idea caught on. Soon economists were advising all major governments about how to implement the new “ism.” It did not seem to bother anyone that the new system was a fraud. Where would this new money come from? And what made anyone think that the economists’ judgment of whether it made sense to spend or save was better than individuals? All the Keynesians had done was to substitute their own guesses for the private, personal, economic opinions of millions of ordinary citizens. They had resorted to what Franz Oppenheimer called “political means,” instead of allowing normal “economic means” to take their own course.

The crucial point in this essay lies in this piece of wisdom: the way we choose to do things greatly influences the outcome. Too often people believe (and repeat) the saying, "the ends justify the means". We believe that the means are the ends. The way we seek our goal will largely determine the outcome, for good or bad.