The late Murray N. Rothbard once published a major article titled “Ten Great Economic Myths.” Included on Rothbard’s hit list were the notions that deficits are the cause of inflation and that economists can accurately forecast the future.
One myth that he didn’t cite dominates Washington today: that the economy can be successfully “managed” from some central point. This idea underlies, directly or indirectly, all of the others Rothbard mentions.
Unfortunately, society’s intellectual, political, and economic “mainstream” still accepts what should be called the Central Economic Fallacy of the Twentieth Century. The “mainstream” just doesn’t get it. Thus, we continue to see a basic progression. First, government subsidizes x or regulates y to correct for some government-diagnosed problem z. Unwanted side effects result, and z, assuming it exists, often grows worse. Government intervenes again to fix the side effects and redouble its efforts to battle z. More undesirable side effects result. And the process continues, with government growing inexorably as interventions accumulate. More and more of the economy is micromanaged through increasing webs of subsidy, regulation, and quick fix. The logical end result, as Ludwig von Mises has shown in great detail, is socialism.
Read the whole article. The author makes a lot of sense.