To Grow, An Economy Must Experience Highs and Lows

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"...our calamities are heightened by reflecting that we furnish the means by which we suffer." -- Thomas Paine.

I came upon free market principles by accident. In that way, it differs from my inevitable, genetically predisposed descent into madness in college, the course of which was charted even in grade school when I wrote in my journal: "I really want to rot and die but I'm only 10." Usually it's the other way around for those with libertarian leanings. They discover Adam Smith or Ayn Rand at an impressionable age, a seed is planted, and the rest is history. What did I discover instead? That I was destined for a life of erratic moods.

I've spent a lot of time writing about what happened to me, how I left Dartmouth then tried to return only to find myself more unstable, how I stood on the brink and almost fell forever, how I made my way back and earned my degree. Yet, it's always been in very personal terms.

The story can also be told in the language of the economy.

The essence of free markets and laissez faire capitalism is that the economy is best left alone without intervention or unnecessary regulation. Such is the attitude of most people when confronting psychological disturbances - there is a natural skepticism toward doctors and medication.

Medication is to the condition of bipolarity what undue government meddling is to the economy. Some people put faith it its ability to manipulate irregularities in a positive, controlled way; some people find it puts a straitjacket on inherent fluctuations, hampering periods of creativity.

Like moods, the economy naturally cycles. Bubbles form, they burst, a recession sets in, bad business practices are purged, capital is put in the hands of more savvy entrepreneurs, and a boom follows. Moods are normal, they shift, depression sets in, horrible thoughts of the life-taking variety are considered, but avoided, mania takes over and it's all elation and fervor and productivity, things even out, and they shift again.

What happens, though, to the economy when natural cycles are interrupted? It stalls. In mitigating the effects of the downswing with government spending, for instance, the upswing is delayed. By eliminating negative feelings with an unrelenting cocktail of chemicals, mania or even normal activity is deadened.

For people who believe that what society needs is stability, this is all well and good. Let the government intervene in innate oscillations if it means that no one suffers. Never mind that no one will prosper either.

In the same way, it is easy to come to the conclusion that moods must be highly regulated as well. What follows in reality is a period of ennui and stupor, of mental and emotional stagnation.

Until recently, I was under the impression that regulation and intervention was a boon, that it tamed what was out of control. Now, however, I have discovered that what it does to me is wash me out and make me gray, just as it dulls the recovery that should be happening in our economy.

The cost of all this is worth mentioning briefly, too. Before I finally met my health insurance deductible, my parents and I were paying out of pocket one-third of my paycheck for unbelievably priced medication and visits to my psychiatrist. Meanwhile, government spending in the U.S. is 40% of GDP. It's unsustainable.

What is to be done?

The government has to scale back its involvement and let the free market take over, allowing the private sector to assume roles it should have naturally had in the first place. Such a shift might prove difficult, though. Alan Blinder wrote in the pages of the Wall Street Journal recently that contemplation of contracting the economy by cutting spending on the level we need to would be sign of "a dark, self-destructive impulse." The same could be said for leaving extreme mania or depression untreated.

I argue, however, that there is a balance to be struck. Is it possible to loosen the grip of regulation to allow for a return of natural highs and lows? Yes. Will it be a painful process to get there? Perhaps. But if living with unfettered moods is a reasonable solution to the inertia induced by too much intervention, then liberation of the market may likewise remedy the sluggishness of our current economy.

 

Maura Pennington is a writer based in Washington, D.C. She can be reached at maura.pennington@gmail.com

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