Problems of-big-government-abstract


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Problems of-big-government-abstract

  1. 1. Problems of Big Government AbstractLast night, Daniel Currie, the VP of Editorial Content, gave us an insightful presentation on the woes ofbig government. He spoke in depth of five problems of big government. The first problem of governmentintervention was money. Daniel proclaimed that more money is spent as the government grows bigger. Asmore money enters the economy, eventually the purchasing power falls in accordance with the rise inprice inflation.The next topic was continuous intervention. This is an idea developed by the economist Ludwig vonMises. Daniel detailed how once the government controls one aspect of the economy, unintendedconsequences soon follow. These unintended consequences would not have been foreseen by thegovernment and the government would try to control them. This would eventually lead to a trend ofintervention throughout the economy and Hayek’s deathly ‘Road to Serfdom’ would become a reality.Additionally, Daniel spoke in great detail of the soaring debt in the United States. The debt currentlystands over $16 trillion (depending on the source) and much of it is held by China. This high debtpresents a massive problem to America because it may come to the point where the internationalcommunity loses faith in the redemption of the debt. When this gloomy day arrives then this will causewidespread panic and instability as interest rates on government bonds will rise following a massiveincrease in taxes.This was followed by a quick discussion on business cycles. Daniel detailed the Austrian Business CycleTheory that showcased how the government was always the progenitor of recessions and depressions. Thegovernment’s intervention on interest rates and printing of money would alter the incentives of thepopulation. This would lead to bad decision making and eventually a bubble would be fostered. As thebubble bursts, massive reconstruction of the economy would take place as it recovers from the‘malinvestment’ that was ripe before the crisis.Lastly, Daniel spoke on ‘collective corruption’. This is when the government’s fiat money system is ableto buy friends at the highest class of society. This results in a system dominated by corruption, in whichthe poor do not benefit. An apt example would be when a stimulus is undertaken and the rich benefit first.The poor only receive this stimulus after the inflation has been embedded in the economy, which by thattime the money would be worth nothing.This detailed presentation was followed by a question and answer session.THIS PRESENTATION DOES NOT REPRESENT THE OPINIONS OF THE BOSTON UNIVERSITYUNDERGRADUATE ECONOMICS ASSOCIATION.For more information, please contact us at