Their are two schools of thought when it comes to allowing economic growth. On one hand you have coercion, where the government tells you what to do and you must follow. On the other hand you have cooperation, where everyone is free to decide for themselves what to do no matter what. In Dr. Antony Davies lecture on Cooperation and Coercion he goes into detail as why both ways of economic handling do not work, and by only a combination of the two do we see the most economic growth.
Dr. Davies describes how coercion doesn’t work by three points; knowledge problem, regulatory capture, and political profit. The knowledge problem is when the people in charge of economic policies cannot see the full picture of the problem. Dr. Davies uses the example of traffic where no individual can see or hear out of their vehicle and must rely on a person viewing the vehicles to tell the drivers where to go and how fast or slow to move, as well as many other things. This system would cause many accidents since not even an expert could control multiple vehicles at a time.
The regulatory problem is when those who are implementing policies do not see the interests of the people. Dr. Davies uses the war on poverty as an example, and in it he points out that all the money used on the war on poverty could have been used to give a $10,000 check to each impoverished person annually from when it was first started over 50 years ago. The $21 trillion has not solved out poverty problem because the programs that have been instituted to fight poverty benefit only a few who are becoming rich from it, and don’t benefit the people. The political profit problem is when personal intrests are put over the peoples interests. Dr. Davies points out that politicians value voters over the people, and as a result will do actions against the peoples best interest such as raising taxes on the wealthy.
The main issue with just using cooperation is that it leads to a market where the week are prayed upon by the strong. While we don’t want totalitatiranism, we also don’t want a corporatocracy. The best case scenario is in the middle ground where cooperation is used along with coercion to prevent harm to others. This creates economic freedom that provides a safe system for the economy to grow, its like letting a wild flower grow, too much control over the plant and it won’t grow very creatively, yet if you let it grow free then it will grow everywhere. This balance will overall improve economic status and allow the government to spend less.