What if our economy was built around the swimming pool industry? Building swimming pools requires designers, laborers, pumps and filters, and a whole chain of maintenance people. It creates a lot of jobs.
Politicians might campaign on the slogan, "What this country needs is a swimming pool in every back yard." People need to be happy and healthy, don't they? Wouldn't this come under the Constitution's "promote the general welfare" clause?
What if we gave nice tax breaks to people who owned swimming pools? The bigger the pool, the bigger the tax break. Special tax credits would encourage people to build lavish pools. Many people would build pools just because the tax benefits made them so cheap.
The swimming pool industry would keep growing and become a bigger and bigger part of our economy. More of our collective resources would be driven into the building and maintaining of swimming pools. Many jobs would be created, especially jobs that didn't require much training or education. The health of the economy would eventually become dependent on swimming pools. The swimming pool index would be closely followed.
Sooner or later, everyone who wanted a pool would have a pool. The slowdown to the swimming pool industry would ripple through to other parts of the economy.
Politicians would feel the need to do something. They couldn't stand by and watch people lose their jobs. They'd want to take very bold action to stimulate the swimming pool industry and thus the overall economy. The government might then embark on a huge public swimming pool building works program. If individuals aren't going to spend the money for new pools, then it's up to the government to step in and do the spending for them. Someone has to take the dive and make a big splash.
Maybe they would also give big tax credits of up to $15,000 to any home owner who decided to build a new swimming pool in their own backyard.
Eventually, taxes would have to be increased in order to pay for all of these swimming pools and tax credits that were given out. People would pay so much in taxes that there wouldn't be much money left to cover the basics of life, let alone the maintenance of all of the swimming pools. People would be pool rich but would go hungry. Many pools would fall into disrepair and be breeding grounds for mosquitoes.
What originally sounded so good ended up having negative consequences. Of course, all of the officials couldn't have seen it coming. It was a once in a lifetime event that we would all have to work together to solve.
The world has limited resources. How we allocate these resources determines what kind of life we end up living. When government gets involved, resources are allocated not by supply and demand signals of the free market, but by political decisions or by arrogant bureaucrats who believe they are smarter than the collective wisdom of the people.
Yes, housing is a good thing. It really sounds great for the government to get involved in helping the housing industry. But for every dollar that is directed by the government to be spent in one area, it's a dollar that isn't being spent on something that could possibly be much better.
It comes down to which is better at allocating resources, the free market or the government?
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