Minnesota’s Economic News — W/E 7/1/22
State and local taxes and spending CBS News: Scott Jensen seeks tax cuts to help Minnesotans cope with inflation Willmar Radio: Jensen wants to eliminate state income tax Voice of…
I have recently joined the Center of the American Experiment as an economist to contribute to the Center’s research and analysis of Minnesota’s economy as well as various policy issues.
Growing up in Malawi, Africa, I thought of the government as a provider, a protector, and a planner. Generally, the government of Malawi provided most basic goods and services or subsidized them when they were privately produced. For this reason, I wanted to understand the functions of government as they relate to the economy. After experiencing a chronic scarcity of basic goods and services, most of which were provided by the government, I wanted to know what can be done to improve the provision of those goods and services.
My initial plan was to join the Malawi government after completing my studies. I was going to contribute to its benevolent work of ensuring the survival and the progress of society. I was also going to make sure the government was providing high-quality education, and health and transportation services, among others.
While studying Economics at Troy University, I was introduced to the idea of free markets and how they lead to economic growth. During my graduate studies I delved deeper into the Austrian theory of Economics, specifically the ideas of Frederick A. Hayek, and his research on what ultimately leads to social and economic advancement.
The more I understood economics, the more I resonated with Hayek’s idea of what the fundamental problem of any society is. In Hayek’s words, the fundamental problem of society is:
…how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or to put it briefly it is a problem of the utilization of knowledge not given to any one in its totality. – Use of Knowledge In Society.
It became clear to me that it is not a question of how many resources any society has or is given by outsiders, but how it allocates those resources that ultimately determines its level of advancement. And the market is the only way to allocate resources efficiently through the signaling role of prices. In essence, we need the market to convey information on the best ways for scarce resources to be invested for maximum benefit. And we need liberty for the market to succeed, because we are not omniscient:
If there were omniscient men, if we could know not only our present wishes but also our future wants and desires, there would be little case for liberty. And in turn, liberty of the individual would make complete foresight impossible. Liberty is essential to leave room for the unforeseeable and unpredictable; we want it because we have learned to expect from it the opportunity of realizing many of our aims. It is because every individual knows so little and because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it.
In the prosperous West, it is easy to overlook many of the institutions that are responsible for the economic growth that provides a high standard of living. This is because these institutions are deeply embedded in the foundation of western society, have evolved over time, and are not the result of the efforts of any single man or entity. Growing up in a poor and primarily welfare-state society, with very few institutions to ensure the existence and protection of individual and economic liberty, I can easily appreciate the role that these institutions play. It is important that our free market system be preserved because it is essential for the continued growth and existence of America’s successful society.
I am excited to be part of an organization that seeks to advance the ideas of limited government and free markets. I look forward to contributing to effective and efficient policy in Minnesota, which in the long run will benefit all Minnesotans.