“In socialist countries, it is not the seller who has to be grateful, it is the buyer. The citizen is not the boss; the boss is the Central Committee, the Central Office. Those socialists committees and leaders and dictators are supreme, and the people simply have to obey them” (Mises, 2006, p.36). Free market thinkers need to change their anti-government attitude (2021), says Robert H. Frank writing contributor for New York Times, as well as a Cornell University professor. Many free-market advocates condemn the notion that it’s a good day when government is looked upon for economic growth, and instead advocate for policy that paves the path for entrepreneurs and private companies to continue to have the freedom they need to succeed; however, Frank finds danger in rhetoric that steers away from big government.
Frank, in his article titled “Why the Economy Needs a Strong Government Hand”, suggests there is a cost to continuing anti-government rhetoric. He gives such examples as Hurricane Katrina, the 2008 recession, and most recently, the COVID pandemic as examples for government needing to play a greater role. Yet, according to what we know about the 2008 economic crises, it was the government playing “crony capitalism” (Gwartney, 2016, p.78) that created a major economic crisis for the United States. Freddie Mac and Fannie Mae, serving the whims of the government, set the stage for “mal-investments” (p. 84). The government needed stability (2016). “Monetary stability is an essential ingredient of the environment for economic progress” (p.84). Once there is monetary instability, we find that people will not remain have integrity in their commitments, as well as not know how far they can reach in their endeavors (2016).
In the case for big government, the COVID-19 pandemic revealed the necessity for less government overreach. The call for “relief” to build back the economy has been met with printing more money than the market can catch up to. Thus, inflation has risen and the pathway to recession has begun. Excessive government spending always causes alarming inflation. “If the expansionary monetary policy continues, it will generate inflation, which will cause monetary policy-makers to shift toward a more restrictive policy” (Gwartney, 2016, p. 82). Frank writes that there needs to be more collaboration between the private market as well as the government. The two can work together (2021). Frank’s view is that government spending is mostly towards things that people care about; it’s towards things people value (2021); however, one question that arises is how much of allocated government funds is too strong of a hand from the government? How helpful are the government allocations in aiding and improving a failing economy?
The article proceeds to give examples of government remedies and paints a scenario of the value in the government taxing activities that bring harm to others. He suggests that it is the individual that needs to be restricted of their rationale; he doesn’t mention the faction in human nature when leaders have too much power over its citizens. Frank’s examples legitimize current mask mandates and limiting attendance to everyday life scenarios including special events as well as travel; he suggests limiting attendance to those who are vaccinated is about collective interests (2021). Basically, if the government says it is in the peoples “best interests,” than do it. Thinking the government can be a major problem to the improvement of an economy or society is, to Frank, a “barrier” to meeting and fixing threats to society (2021).
Thomas Sowell in his book “Applied Economics”states a different point of view: “India and China likewise had large increases in their economic growth rates after their markets were freed from many government restrictions that had previously applied both domestically and internationally” (Sowell, 2009, p.267). If we look historically at government intervention, we can find that less government intervention and restrictions set the foundation for a free-market to thrive and, thus, see economic growth and recovery.
Frank, Robert H. (2021, April 4). Why The Economy Needs a Strong Government Hand. The New York Times. https://www.nytimes.com/2021/04/02/business/markets-strong-government.html
Gwartney, James D. (2016). Common Sense Economics. St. Martin’s Press.
Mises, Ludwig Van (2006). Economic Policy. Mises Institute.
Sowell, Thomas (2009). Applied Economics. Basic Books.
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