Once upon a time there was a King who decided the best way to keep the people happy would be to create more money and just give it to them so everyone could afford to buy what they wanted. It wasn’t long before there were lots of goods to be moved throughout the Kingdom. More goods than all the King’s horses and all the King’s men could carry. So, the King made the people of his kingdom pay more for their goods and rewarded his horses and his men accordingly. But the people struggled to pay the higher prices. They begged, bartered, gave up land and even sent their children to work for the King just to pay their bills.
Ultimately, the people of the kingdom just stopped buying things period. They decided to make do and go without. The economy of the kingdom ground to a halt. This alarmed the King, so he called an emergency meeting of his Privy Council. The King suggested that perhaps he should again create more money and give it to the people so they could afford to buy things. The younger members of the Council thought this was a great idea and even went so far as to suggest that the King should consider just paying people not to work. They advised the King that this would make him very popular with the people. He would be remembered as a kind and generous king; and even find favor with God.
Fortunately, the more senior members of the Council explained economic reality to the King and how the concept of money works in the real world. Even the Queen respectfully told the King that creating more money was not the best idea in the first place and just giving it to the people for producing nothing of value would eventually make the money…well, it would make the money worth nothing of value. So, the King chose to let economic forces work themselves out.
Sure enough, as demand for goods fell, so did the prices. By now there were more than enough of the King’s horses and the King’s men to carry the goods. Thus, the King allowed the people of his kingdom to pay lower prices. Eventually the Kingdom was once again prosperous, and its people were happy. So, the King and his Council decided this was the perfect time to raise taxes. There was much that needed to be done throughout the Kingdom and the people would no doubt understand.
“It is a popular delusion that the government wastes vast amounts of money through inefficiency and sloth. Enormous effort and elaborate planning are required to waste this much money.” – P.J. O’Rourke