The brilliant Thomas Sowell has an informative piece explaining to the lay economist, like me, how our economy got to this point. If only Washington would listen...
When more cows are needed to produce more milk to make ice cream,
then fewer cows will be slaughtered and that means less cowhide
available to make baseball gloves. Supply and demand mean that
mitts are going to cost more.
While this may be easy enough to understand, its implications are completely lost on many people in politics and in the media. If everything is connected to everything else in a market economy, then it makes no sense to have laws and policies that declare some given goal to be a "good thing," without regard to the repercussions, which spread out in all directions, like waves that spread across a pond when you drop a rock in the water.
Our current economic meltdown results from the federal government, under both Democrats and Republicans, declaring home ownership to be a "good thing" and treating the percentage of families who own their own home as if it was some sort of magic number that had to be kept growing-- without regard to the repercussions on other things.
Read the whole thing , Magic Numbers in Politics