Good News Tucson Magazine's Blog

The Premiere Christian Magazine for Southern Arizona

Who Makes the Goods — Government or Business?

Some people bash business and call for government to run the economy.  They forget that government does not produce goods.  Business does.

We use the word “goods” to describe things people want, like food, shelter and clothing.  We often talk of “goods and services”.  These things are “goods”. Almost all goods and services come from businesses.  Many people don’t know that.

Government does not grow the food.  Business does.  Government does not make clothes, houses, cars, phones, computers, medicine, or electricity.  Business does.  Even the things government does provide, like water, are only possible because businesses produce the means, such as pipes, pumps, and power.

Imagine life without businesses.  We would be back in the Stone Age.  We would have no indoor plumbing, no food except what we could dig up or kill, no way to communicate except by shouting, and shelter only from  rocks, vegetation, and animal hides.  Without businesses producing goods and services, life would be bad.  And short.

Many people underestimate what it takes to produce goods and services.  It takes a lot of people working hard to produce food and get it to the grocery store.  Not only farmers, but also people who make farm machinery, trucks, tires for the trucks, gasoline, the store itself, electricity to run the store, loans and investments to finance everything, etc.

Do all these people provide these goods and services out of the goodness of their hearts and out of concern for your welfare?  No, they do it for themselves.  They do it to make a living.  That’s what business is all about, from a solo craftsman to a giant corporation.

A sustainable business provides a living for its employees and a profit for its owners or investors who take risks to create the business.  The only way to create a sustainable business is to do something good for others, to provide something people want at a price they think is affordable. Even then it is hard to sustain a business, as anyone who has tried can tell you.  The only way a business can keep on producing the stuff we depend on is by making a profit, which is hard to do.

Government often makes it even harder to be profitable because of its regulations, fees, taxes, etc. Ultimately, government regulation may reduce the availability of goods and services, raise prices, and/or limit the number of jobs.

Government plays an important role in enforcing laws against fraud, public endangerment, etc., by both businesses and individuals.  Government also funds necessary infrastructure, like roads, bridges, water mains, and sewers (though it is businesses that do the actual construction). But when government takes control of business, the result is inefficiency, shortages, and poverty.  Venezuela, the Soviet Union, Zimbabwe, and many other examples prove the point.

The reason government fails when it tries to produce goods and services is that people in government are not motivated by profit.  If they don’t produce enough goods at a reasonable price to make a profit, the government workers don’t lose their jobs or their investments.  They get paid the same regardless.

They have no incentive to succeed.  So they produce shoddy goods or no goods at all.  The Soviet Union had constant shortages of almost everything. Their people suffered terribly at the hands of their government.

A privately run business, on the other hand, is highly motivated to satisfy customers and operate efficiently in order to make a living and a profit.  This incentive drives intense competition among businesses to produce the amazing abundance of goods and services we all depend on, not just for our lifestyle, but for our lives.

One reason some people instinctively turn to government for economic solutions is the assumption that people in government are motivated by what is good for us all.  We know businesses are self-centered, but we sometimes think people in government are different.

They’re not.  They’re human, like the rest of us.  When they see a chance to benefit themselves, they usually do.

Look at Congress.  With all the talk about health care and financial reform, we forget that our lawmakers take care of themselves first.  They have health and retirement benefits the rest of us can only dream about. And pay for. They raise their own pay and perks, exempt themselves from laws that burden the rest of us, spend our money to boost their personal investments, and worse.  Examples of government corruption abound, from national to local, all over the world.

It is the very nature of people in government to seek more power so they can enrich themselves in the guise of doing more “good”.  But more power in government means less freedom for individuals to do things to help themselves and each other.  It means less business, fewer jobs, fewer goods and services, and less innovation to solve problems and provide for the future.

Government can do much good by fostering economic freedom, the rule of law, and protection of personal and property rights.  Those things make it possible for businesses to produce the goods that help make life good.  However, when government tries to run the economy, life gets worse.

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June 1, 2010 - Posted by | Uncategorized

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