Government Intervention Distorts Natural Demand
Demand caused by government intervention is “no substitute” for natural demand, said Steve Forbes, the chairman and CEO of Forbes, during the “Economic Summit” held Thursday at the FreedomFest conference in Las Vegas.
Something that is overlooked in the current debate about health care reform is that consumers whose bills are covered by third-party payers do not have the same understanding about costs that they do about other kinds of goods and services, Forbes said. With the federal government’s involvement in Medicare and Medicaid as a third party payer, the current U.S. health care system is not driven by true market forces, he said.
There are ways to turn around Medicare and Medicaid, as well as Social Security, Forbes said. But expect the solutions to be found by the people who create the benefits, not the politicians in Washington, he added.
The tax “tea parties” in the United States that took place earlier this year are signs that citizens will demand change from the federal government, Forbes said.
“While we’re pessimistic short term, people are ready to fight,” Forbes said.
The U.S. government’s increased role in the economy and financial markets is reducing economic freedom in the country, warned Ed Feulner, president of the Heritage Foundation. His Washington-based public policy organization has gained attention for producing an annual ranking of countries based on how much their policies support economic freedom.
Indeed, economic freedom means more than economic growth, Feulner said. The Heritage Foundation is expected to release its next set of “economic freedom” rankings soon and he cautioned that no one should be surprised if the United States falls from its current No. 6 position or drops completely out of the Ten Top.
Feulner also voiced his concern about lawmakers who have “no understanding” about how markets work, as well as the Securities and Exchange Commission (SEC), which is about to begin to occupy a building that can accommodate an additional 2,000 employees. They are no match for the smart people on Wall Street who seem able to maneuver around any new rules that are created to safeguard the markets, he added.
One byproduct of the expanded role of government is that the Heritage Foundation has grown from 300,000 to 465,000 members within the past 18 months, Feulner said. People who have a conservative view of how the government should operate increasingly want a way to make their voices heard, he explained.
In the United Kingdom, its Prime Minister Gordon Brown favors tax increases and has proven to be an “economic fool” who is unlikely to be re-elected, said Julian Morris, executive director of the International Policy Network, a group that champions free-market policies throughout the world.
The cause of the current economic crisis is a credit “orgy” largely originating in the United States that has entailed “fairly dramatic” consequences for Great Britain, Estonia, and other countries around the world, Morris said. At least the U.K. government now realizes that it needs to cut spending, Morris said.
For U.S. attendees of FreedomFest, Morris interjected, “You do not want a national health system,” Morris said.
The economic crisis stemmed from having too much money in the financial system, along with too many lawmakers and regulators who did not do their jobs.