In our mixed economy, as individuals act responsibly, cut spending and save more, the government offsets these positives (from Tibor Machan, one of the founders of Reason):

But now that the results of such bad government have hit so many of us,
you are taking steps to deal with them. Ah, but no such luck. Instead of
making it possible for you to deal with your reduced resources, instead of
letting you make the budgetary adjustments you can make within the context
of your own life circumstances, the politicians are insisting that if you
refuse to spend the big bucks on those Detroit gas guzzlers, for example,
they will tax you and hand over what they have extorted from you to the
car makers, never mind your prudent choices. In time the savings you
thought you could garner from your good sense and discipline will have to
be shelled out in extra taxes so as to bail out those who aren’t getting
your business any more. Instead of insisting that those who make the big
cars and whatever else that’s no longer in demand in the market place make
their own adjustments, tighten their own belts, etc., the politicians
insist that they continue to be paid as if nothing had happened, no one
changed his or her purchasing behavior, as if the economy continued to be
in fine shape.

This can be seen most dramatically in Japan over the last 15 years of off and on recession. Individuals have attempted to do the right thing by saving more. The government has offset that by running up a national debt that is now 180% of GDP. And the Japanese economy still struggles as Japan enacts one more “stimulus” plan that will work just as well as all the others they have enacted in the last decade and a half.

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