Stossel on the Macroeconomy

From TownHall.com, John Stossel moves from macro to micro...

The presidential candidates have been repeatedly asked how they would "manage the economy." With the exception of Ron Paul, every candidate has accepted the premise that this is something the president of the United States should do.

Or can do.

Nonsense.

Democrats act like the president is national economic manager. Republicans pay lip service to free markets, tax and spending cuts, and less regulation -- before proposing big programs to achieve "energy independence," job training and a cooler climate.

John McCain says it's important for government to do something "to sustain our leadership in manufacturing". Why? Manufacturing jobs are no better for America than other jobs. Some argue that they are worse. How many parents want their children to work in factories rather than offices? Increasing service jobs in medical, financial and computer sectors while importing manufactured goods doesn't hurt America. It helps America.

The candidates see the global economy as an arena in which countries compete against one another -- an economic Olympiad with winners and losers. Politicians love to promise they will keep America No. 1, as if that matters in a worldwide marketplace.

America as a nation does not compete against China or South Korea or Japan. American companies compete against companies in other countries, but that's something else. The purpose of production is consumption, and American consumers prosper when foreigners compete successfully with American companies.

A president who sees the global economy as a competition among nations will be tempted to intervene on behalf of the "United States" and create "good American jobs." That's how governments mess up economies....

Politicians who talk about managing the economy ignore the fact that, strictly speaking, there is no economy. There are only people producing, buying and selling goods and services. Keep that in mind, and one realizes that government action more often than not interferes with the productive activities that benefit everyone. When politicians propose regulations to fix some problem, they should ask if some earlier intervention created the problem and if the new regulations will make things worse. The answer to both questions is usually yes.

The economy is far too complex for any president -- no matter how smart -- to manage. How can politicians and bureaucrats possibly know what hundreds of millions of individuals know, want and aspire to? How can government employees fathom what trade-offs to make in a world of scarce resources?

They can't. That's why free people are more prosperous than unfree people.

Presidential candidates should promise to keep their hands off the economy.