Monday, January 28, 2013

Why governments can’t make things better for everyone


Consider this:

In the absence of coercion, every individual will choose to do only those things—make those exchanges—that he or she feels will improve his or her condition for having undertaken such action.

That is to say, if there is no fraud or coercion, every transaction between two individuals will only be consummated if both participants believe their personal condition will be improved by engaging in the transaction. Both parties walk away "happier" or more "satisfied" as a result of the transaction.

Note: This does NOT mean that both will actually be happier. Individuals sometimes miscalculate in economic transactions just as they do in emotional transactions (such as marriage). But they would only complete the transaction if they sincerely believed (at the time) they will be better off after the transaction than before.

Since such a "free market" transaction always results in an increase in the relative "happiness" or "satisfaction" of each participant (at least at the point of consummation), happiness or satisfaction in society is always maximized by free-market transactions without coercion or fraud.

The only need for coercion is when someone—usually the government—wants a different out come in exchanges than a free market would generally produce.

Note: If government wanted the same outcome as a free market would produce, the government would take no action whatsoever.

Since coercion produces a result in which at least one party to the transaction must take an action that differs from the result a free market would have produced, then at least one party has his or her "happiness" or "satisfaction" reduced rather than increased following the transaction.

THEREFORE, it can be stated conclusively that, while a free market is predicated upon individual actions and individual "happiness" or "satisfaction," the free market, nevertheless, increases the happiness or satisfaction across all individuals and therefore raises society’s level of satisfaction to its highest possible degree.

The coercion of government, on the other hand, can not produce the highest levels of happiness or satisfaction in a society because at least one individual must be less happy or satisfied in each coerced transaction.

Make sense?

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