There is more talk these days from Washington and from those on the campaign trail that government needs to take an active role guiding the economy. With entrepreneurship the driving force in our economy, and for that matter in most economies around the globe, this is an alarming trend. Sen. Clinton is talking about the need for the federal government to set our economic priorities and strategies.
This is absolutely counter to all that we know about the appropriate role for government in entrepreneurially-based economies. The more government gets involved in managing economies, the more complex the tax code gets (they use this to shape our behaviors) and the more regulation inevitably follows. These are two of the major factors that stifle entrepreneurial activity.
But, the activist approach to economic policy (what I like to call socialized entrepreneurship) also creates lots of mischief that leads to even more regulation and government intervention at the micro level.
Case in point from governmentexecutive.com:
The chairman of the Senate Small Business and Entrepreneurship Committee is demanding an explanation from the State and Defense departments for how a wealthy 22-year-old arms dealer, under investigation for providing decades-old ammunition to Afghan security forces, was inappropriately classified as a small disadvantaged business on dozens of federal contracts.
Responding to an April 3 report from Government Executive, Sen. John Kerry, D-Mass., sent letters to Defense Secretary Robert Gates and Secretary of State Condoleezza Rice on Thursday requesting responses about AEY Inc. of Miami, and its owner, Efraim Diveroli.
Kerry is interested in how AEY obtained its SDB designation -- despite never requesting or garnering such a classification from the Small Business Administration -- and if the company received any preferential treatment as a result of the mistake.
Just as people seek to exploit opportunities in the market, they will seek to exploit artificial market opportunities created by government policies. That is why big government Republicans are quite happy with the status quo of the current 65,000 page tax code. Those who help shape the code through lobbying also get to exploit it economically.
But, not to worry. Sen. Kerry has it all under control. He has called for hearings, which will surely solve all of the problems created by the regulatory mess he and others in Washington helped to create in the first place. More rules, more regulation, more hearings..... it never ends.
