Economic consequences of interventionism (Utilitarismo)

When you subsidise poverty and failure, you get more of both. — James Dale Davidson

(like socialism) State economic intervention needs to be analysed in terms of the measures it imposes and the incentives it creates, rather than the hopes that inspired it.

The measures violate some people's rights and bring negative long-term consequences caused by

the reduction in social cooperation that the perverse incentives bring. 

Not infrequently, the outcome is opposite to the economic policy’s goal:


-In xxx year the Crown of England applied a simple policy with the intention of reducing the amount of snakes that habited in its colony of India, which consisted in monetarily rewarding any captured cobra.

Tax payers savings were then continuously being transfered to those in possession of cobras, so la cantidad de cobras en India había aumentado exponencialmente porque los incentivos económicos llevaron a la cría de cobras. 

-Price Controls is another example that frequently results in the opposite of what is supposedly intended.


Forcing prices to stay below those of the free market, means that a scarce good is forcefully disguised as abundant; so instead of increasing the availability of the good, a shortage and deterioration of the good occurs.


The providing the good may cease of being profitable, so the providers tend to disappear.

If it is only slightly reduced, then only those providers with smaller profit margins are driven out of business.

A possible adaptation may be to lower the quality of the good.  E.g. rental homes will not be properly maintained, repaired, nor Refurbished.


If temporarily a similar good is provided at the artificially low price, then the good is treated as abundant and demanded in higher amounts.   

Forcing prices to stay above those of the free market, means that goods are forced to look scarcer than they really are; so instead of helping all providers, those that are more efficient lose their competitive advantage while a surplus of the good appears as consumers decrease the amount demanded because their purchasing power is reduced. 

Example, Minimum wage laws: Wages are prices despite the difference in terminology. 

In this case, employers are the consumers of the work that employers provide. 

Those with less experience, less skilled or abilities lose their competitive advantage of requiring a lower wage, 

at the same time that unemployment increases because employers lost ability to hire.

a legislation establishing that no one shall be paid less than $X means that those who cannot produce more value than X$/hour are prohibited from having a job. As in most western countries Gasto por trabajador es casi 2x el salario mínimo due to taxes, then the employed has to be worth almost 2X/h the minimum wage. 

¿Se imaginan que se prohibiese trabajar por cuenta propia a todos aquellos trabajadores que no lograsen unos ingresos de 2x el suelo mínimo?

El paro deriva de la intervención y sus rigideces legislativas. Todos tenemos necesidades insatisfechas, el trabajo por hacer es ilimitado. There is as much WORK to be done as there are unfulfilled desires.​ El TRABAJO es una mercancía.

(((-Greham’s law: when prices of moneys are fixed by state controls, the artificially overvalued money drives the forcefully undervalued money out of the legal market.)))) 1 forced below: shortage of that exchange, no one wants to use it.  1 forced above: surplus. 

Propaganda política sells the idea of Intervened prices as "fair" rates, however, the only fare rates are those voluntary and mutually agreeable between two consenting adults.



refers to conjunto de intervenciones estatales that privilegian some businesses by imposing restrictions to their competitors.  A more precise term for it would be "privilegionism".

Las medidas proteccionistas favour a few businesses at the expense of everyone else. The restrictions specially harms those producers that are impeded to compete, but they also reduce real wages of all population. 


The ban of competition impedes the implementation of comparative advantages and consequently, cooperation is halted. 

"La competencia es la máxima forma de cooperación" - Antonio Escohotado.

"Competimos por ser mejores cooperadores, y cooperamos para ser mejores competidores" - Juan Ramon Rallo.

La competencia entre service providers guarantees the quality and abaratamiento del servicio, además de la calidad de los puestos de trabajo y el incremento de los salarios. 

If restrictions are specifically imposed to foreign companies to prevent national imports, then the proteccionismo is called mercantilismo.

Instead of being concerned in the availability of goods, Mercantilists are interested in having a trade surplus of products. Nevertheless they ignore any other kind of service in which there is no physical good involved or in which the products are kept in custody.

What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.” ― Henry George. 

El llamado corporativismo es un tipo de proteccionismo en que el clientelismo político privilegia a compañias ya establecidas mediante la imposición de restricciones a aquellas otras companies que no cuentan con lazos políticos. The result is the consolidation of monopolios and oligopolios.

La hyper-regulación tiene consecuencias similares as the entry of small innovators is prevented because there are economies of scale in complying with regulations.


INTELLECTUAL "PROPERTY" regulation is specifically designed to create intellectual monopolies. Its enforcement violates real property rights bforcing people to treat easily replicable concepts as extremely scarce physical goods, forbidding the reproduction of knowledge.

IP is frequently justified as a requirement for economic progress. However, Greatest inventions and obras maestras have historically been created without patents nor copyrights.

La compentencia por emular lo exitoso es parte esencial del desarrollo económico.  By slowing down development, progress does not speed up. 

Nevertheless, Interventionism loves to coercively forbid whatever some consider inmoral, like vices.

So certain peaceful actions and voluntary exchanges without victims are prosecuted as crimes by Government officials that act as guards that forcefully impede whatever they consider risky or not virtuous.
The prohibition tends to trigger the formation of gangs and mafias around the forbidden service, as the resignation of most providers causes a shortage of the good, which exponentially increases economic profits.

Real criminals are attracted to the business as they are already used to the risk of being imprisoned, and violence is therefore normalized.


Of all kind of interventions, the most aggressive and unjust are those that imply recurrent theft, i.e. taxation. 


Theft is the extraction of other people’s property without their consent.

Robbery is a theft in which violence is applied during the extraction, while extortion is the theft in which the property ends up being delivered by the victim to free himself from violence that is mainly exercised through threats.

Direct taxes then usually consist of extortions to obtain personal info that will be used to confiscate income and savings through further extortion.​ The right of privacy is essential for personal security, so the maximization of theft requires its systematic violation. 

Government spending and subvenciones financed by taxes are simply transferencias forzosas of some people's property to those that are favoured by the political will. 



The Corruption of officials is a regular and natural effect of interventionism, as it works as a mechanism to  appease the violation of rights that follow an unethical legislation.