Government is Friction

In this world any kind of motion involves some amount of friction. In designing a mechanical system engineers always strive to eliminate as much friction as they can in order to increase the system's operating efficiency. That's why lubricants were invented and why airplanes and automobiles have evolved toward a smooth, sleek design. As friction is reduced the energy required to get the same amount of work done is reduced. That is, it costs less to get the same amount of work done or more work can be done for the same cost.

If we apply a mechanical system analogy to our economy, government is friction. Whether some functions of government are necessary for the operation of our economy or not, it is still friction. It's necessary that a car push through air but it still adds to the friction involved in operating the car. It could be argued that some government functions actually help the economy to run more smoothly. That is, reduce friction. But those are minimal at best and even they involve substantial cost.

So, if government imposes friction on the economy, how can borrowing and taxing to expand government stimulate the economy? Yes, some roads and bridges are getting repaired, but is during a recession the right time to be doing that? If you have lost your job and are already in debt are you going to borrow more money to paint and put a new roof on your house? No, you're more likely to cut back on expenditures and spend most of your time looking for a new job. If your roof has a few leaks you will just deal with it until you can afford to repair it.

But our government, in the face of declining revenue from income and other taxes, is planning to increase the existing tax rates, levy new taxes and borrow more money so that it can keep expanding at an unprecedented rate. What if a local supermarket in an area hit hard by the recession followed a similar policy? Could it raise its food prices across the board to compensate for the fewer purchases and maintain its customary gross revenue level? No, because it would result in still fewer purchases. A supermarket is more likely to reduce its prices during a recession.

As the machinery of our economy struggles to keep operating and maintain its normal level of output, the government is adding more friction.

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