It has been claimed that the difference between success and failure in an economy is people responding to incentives.  Incentives that people respond to favorably tend to grow business. The reverse is also true; witness the recent Bud Light marketing debacle.  If a growth rate of 2% compounded over decades can lead to prosperity, as the United States appeared to achieve during the twentieth century, then incentives to grow need to be greater than the alternatives that inhibit that growth.

Measuring production efficiency, as Frederick Winslow Taylor did at the turn of the 20th century, certainly improves overall productivity, but that is only part of the equation.  Increasingly, we need to consider governmental, cultural, and social issues that are inhibiting economic growth and rising prosperity for all Americans.  The top 1 percent appear to be weathering this economic problem.  The incentives necessary to increase wealth for all, instead of just that 1 percent, appear to be under siege in America.

Increasingly, income growth for the past 30 years or more has been concentrated in the upper income brackets, except for a short period under President Trump.  What incentives have been accumulating in these years to increase economic growth?  The federal government has increasingly tried to steer government financial incentives to its favorite social cause favored industries, like Solyndra and Tonopah solar energy.  Not content with those investments, according to The Wall Street Journal, on August 1, the government is expected to provide subsidies of up to $710 million to First Solar.  First Solar of Arizona apparently makes solar panels.  The government's track record on productive economic growth incentives is less than stellar.  Perhaps it would be appropriate to consider if they should even be providing direct financial incentives to specific industries and their resident Democrat party donors.

It has traditionally been the market that analyses new companies, venture capitalists who finance prospective new companies, and entrepreneurs who provide the willpower and effort to bring a new product to market.  Sometimes creating whole new industries and most times failing to succeed, the entrepreneurs of Silicon Valley are a perfect example of why it should be the private sector that finances startups and industries struggling to survive.  Government has no business picking winners and losers in our economy.

Silicon Valley created an economic effect on the world that has impacted our life, no matter where you live or your economic bracket.  The growth of this relatively new sector of the economy has provided good-paying jobs, increased wealth for all, and improved productivity across the entire economy.  Its political impact has been equally acute — witness the issue between China and Taiwan, with ASML creating the leading-edge semiconductors.  The entrepreneurial culture of Silicon Valley appears to be successful and the opposite of governmental groupthink.

Incentives that work for the economy seem to be at odds with the social agenda of the progressive mentality of government control.  Increasing regulations that advance social agendas for the favored in Washington, like eliminating gas stoves, creates roadblocks to an economy that grows and allows individuals to make the choice themselves not to buy a gas stove.  Within our society, the ability of the individual to make economic decisions is being constrained by an increasingly aggressive and dominating government that is not working for anyone except the favored in Washington.

Incentives are not just monetary; they also include the legal framework within which our economy exists.  Only when people can trust the system can it work efficiently and enhance the quality of life experienced by all citizens.  When perceptions of a two-tiered level of justice take hold, it becomes almost impossible to increase the wealth of all citizens.  When small business, or any business, can’t depend on legal authorities to enforce laws that are already on the books, we create a disincentive to grow business.  Indeed, we incentivize business-owners to move or close, further harming those who live in the area and depend on those businesses for their products and livelihoods.  Rudy Giuliani understood this when he was in New York.  A recent article in the Daily Mail pointed out that one small hardware store near San Francisco is losing $700,000 per year to shoplifting. 

Allowing this type of behavior to continue creates an incentive for it to expand.  Progressive government increasingly represents a break on economic growth, and leftists' determination to promote social agendas via financial incentives, onerous regulations, and the refusal to enforce laws creates an environment that will decrease the economy, not grow it.  Right now, our federal government is hurting the economy, not helping it, and people do respond to incentives.

Image: pasja1000 via Pixabay, Pixabay License.