A while ago, I commented on an odd little paradox: when the economy slows, there is a greater demand for government services for the needy — while at the same time, the slowed economy means that government revenue is also decreased.
That thought has been preying on my mind, and I think I’ve finally resolved it.
Yes, when things get rough, there is a greater need for government services. But in nearly every case, the government assistance is purely temporary and transient. And it almost never has any lasting effect — if we’re lucky.
If we’re not, then that short-term benefit ends up costing us far more in the long run.
Let’s take the infamous “Cash For Clunkers” program. That was sold to the American people as a “shot in the arm” for the auto industry and a boon for the environment, as older, less efficient, more polluting vehicles were taken out of circulation.
What we got bore almost no resemblance to those promises. Yes, carmakers got a boost in sales — at the expense of later sales. Shortly after the program ended, auto sales took a nosedive.
We also saw which car companies reaped the benefits of the program — mostly foreign makers. The only domestic maker to do respectably with it was Ford — the one of the big three that didn’t take government bailout money. It’s all too likely that the American consumers took the opportunity to express their displeasure with the bailouts.
The program also devastated two secondary markets — the used auto parts market and the low-priced used cars market. In other words, the junkyards and the cheap cars — two staples in providing transportation to the poor.
All of which was cynically predicted by plenty of people — who were ignored and mocked and denigrated and denounced.
(It’s OK. We’re used to it. Really.)
It’s simply the nature of the beast. The federal government is practically a generator for examples of the law of unintended consequences.
And, for some reason, our current elected officials can never seem to grasp that essential truth.
(Update: I done forgot half this article. Instead of updating it, I’m posting it this afternoon.)