Liberalism And Money - How They Are Connected
Liberalism was founded on the premise that the greatest government is one that rules as little as possible; however, political experience in the West has now recast this libertarian ideal as one of liberalism. There is a lot of confusion in the lexicon because of the change.
Author:Gordon DickersonReviewer:Frazer PughMay 30, 202312.2K Shares330.9K Views
Liberalism was founded on the premise that the greatest government is one that rules as little as possible; however, political experience in the West has now recast this libertarian ideal as one of liberalism. There is a lot of confusion in the lexicon because of the change.
For liberality, enabling people to indulge in all their pleasures while shielding them from the repercussions was the purpose of government, whereas liberalism claimed that the function of government was to let people to live in liberty and reap both the advantages and the penalties of their acts.
The function of government was recast as a wish-granting genie in social, economic, and political terms, and the populace just had to vote for what it desired to have it realized. We'll see how liberalism and moneyare connected in this article.
This Classical Liberal Vision Of Governance Requires Sound Money
Served as a natural check on government excess and totalitarianism. Until it could raise all of its funds without extorting its citizens, the government could only do so much with the resources it had.
Governments had to maintain a balanced budget by limiting their expenditures to the amount of tax revenue they received. For the government to be able to function, citizens must agree to the use of sound money. As a result, the general public will have an accurate idea of the real costs associated with this plan, which they can then weigh against the potential benefits. New government initiatives will be funded either by taxation or the sale of long-term government bonds.
Taxes and debts would be relatively easy to levy on a populace that could clearly perceive the advantages of genuine national military and infrastructure initiatives. But if a government increases taxes to pay for a monarch's extravagant lifestyle, the legitimacy of his reign would be put in jeopardy and his rule will become more unstable.
The Difference Between Sound Money And Unsound Money
As a result, governments had to be more honest and transparent in order to keep their reign within the acceptable and desired limits of the people. Society-wide open and honest cost-benefit analysis, together with the economic responsibility required for every company or person to prosper in life: Consumption follows production.
However, governments may use unsound money to purchase the loyalty and popularity of their people without having to deliver the bill to them. As a result, the true cost of government schemes isn't felt by citizens for years, when inflation drives up prices, and it's then easy to lay blame on foreigners, bankers, ethnic minorities, or previous or future governments.
Most Voters Think The Current Illusion Is Based On Unsound Money
Most people including those who study current macroeconomics at the university level think that government actions have no opportunity costs and that government may operate with an almighty magic wand to create the reality it wishes. Unsound money lies at the core of this modern fallacy. There is a widespread belief among modern citizens that none of the issues they care about — such as eradicating poverty and enforcing morality — have any real financial costs, and that all that is required for their goals to be achieved is "political will," "strong leadership," and a lack of cordial relations with other countries.
The concept of trade-offs and opportunity costs has been eliminated from the minds of those thinking about public issues because of unsound money. When it is pointed out that all of these lovely things you desire cannot be pulled out of thin air by your favorite politician or his opponent, it will startle the common person. Every single one of these products must be made by actual people—people who have to get up early in the morning and work tirelessly for long periods of time in order to give you what you desire.
Summary
Tyrants, repressive regimes, and illegitimate governments benefited from unsound money because it allowed them to avoid the reality of costs and benefits by increasing the money supply to finance their projects first, and then let the population deal with the consequences later as they watch their wealth and purchasing power evaporate. Governments who have the power to print money have a long history of using this power against their own people, as history is filled with instances.
Gordon Dickerson
Author
Frazer Pugh
Reviewer
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