Governments are expensive, inefficient, and distort markets
Note: This is a condensed version focusing on core arguments. For the full essay with detailed examples, charts, and comprehensive analysis, please see the complete version.
Free markets consistently outperform government at delivering services. Government is expensive, inefficient, and distorts markets through regulation. The evidence is overwhelming: competition drives innovation and reduces costs, while government monopolies stagnate and waste resources.
TINSTAAFL: “There is no such thing as a free lunch”
Government has no money of its own. Every dollar spent must be:
- Taken by force (taxation)
- Borrowed (creating debt)
- Printed (destroying purchasing power)
Demand is infinite, supply is finite. We must produce before we can consume. Production drives economic growth, not consumption.
The US government spends $4.5 trillion annually—money diverted from the efficient private sector to the inefficient public sector.
Private companies must earn customers. Government takes money by force.
Profit signals show companies are delivering value efficiently. Companies that can’t profit fail. Government lacks this mechanism and faces no risk of failure.
Technology example: Every year, phones and computers get more powerful and cheaper due to intense competition. Imagine if government controlled tech—innovation would stop immediately.
Government intervention distorts natural market mechanisms:
Minimum wage creates unemployment by setting artificial price floors above market rates.
Price controls create shortages. Rent control makes everyone want cheap apartments but disincentivizes building more housing.
Price gouging laws during emergencies ensure the first customers buy everything, leaving others with nothing. Higher prices ensure fair distribution and attract supply from other areas.
College: Government-guaranteed student loans caused tuition to explode. When students can borrow unlimited amounts backed by government, colleges raise prices accordingly. No private bank would loan an English major $200,000 when average starting salary is $38,000.
Compare health insurance to auto insurance: - Auto insurance: Prices decline yearly, customizable plans, prices known before purchase - Health insurance: Prices rise yearly, limited options, prices unknown until after service
Why? Healthcare has more regulation and less competition.
Three simple fixes:
1. Remove employer tax benefits (kills individual choice)
2. Limit malpractice to fraud cases (reduces costs, increases innovation)
3. Approve drugs demonstrating safety (FDA restrictions cost billions, delay life-saving treatments)
Assuming climate change is real and human-caused, government regulation still isn’t the optimal solution:
Politicians are motivated by power, not results. They promise solutions to win votes, then fail to deliver. Companies are motivated by profit, which requires satisfying customers.
Lobbying distorts markets: When companies can pay $10 million for regulations that eliminate competition, they can protect billions in profits. This isn’t free market capitalism—it’s crony capitalism.
Compare regulated industries (healthcare, education) to competitive ones (technology, restaurants, consumer goods):
Regulated industries: Rising costs, declining quality, limited choice Competitive industries: Falling costs, improving quality, endless choice
Why would this pattern not continue in services we deem most essential?
Economists estimate child hunger in the US could be solved for 16% of Social Security’s annual cost. How is $4.5 trillion not enough?
Answer: Government is inefficient. Bureaucracy consumes resources without delivering value. Private charities spend 70-90% of donations on actual programs; government programs often spend more on administration than recipients.
It’s foolish to think a few bureaucrats in Washington can outperform millions of entrepreneurs working separately to solve society’s problems. The biggest challenges are too complex to trust to government—better to leave them to markets.
The pattern is universal: Wherever free markets operate, you get better quality, lower costs, and more innovation. Wherever government controls markets, you get higher costs, lower quality, and stagnation.
Continue to Part 3 for historical evidence showing how government intervention destroyed America’s economic engine.
Disclosure: The content herein is my own opinion and
should not be considered financial advice or recommendations.