Howard Marks: The Economic Facts of Life

In this article, Howard Marks argues that while well-intentioned, most government interventions in the economy that contradict fundamental economic principles are doomed to fail and policymakers should respect rather than attempt to repeal the basic laws of economics. The free market, even with its flaws, has the best track record of producing prosperity.

Here are the key take-aways:

• Politicians often make economic promises that ignore the realities and laws of economics. There is no “free lunch” in economics, despite what candidates may assert.

• The free market system, driven by incentives and allowing unequal outcomes, has historically produced the best economic results. Command economies that try to ensure equal outcomes have a poor track record.

• Government attempts at controlling prices, such as anti-price gouging laws, rent control, and minimum wage hikes, often backfire and cause negative unintended consequences by interfering with normal supply and demand dynamics.

• Economic regulations tend to be populist attempts to pick winners and losers that sound good superficially but ignore economic realities. They often benefit select groups short-term at the expense of long-term prosperity.

• Ultimately, the immutable laws of economics driven by free markets are more powerful than government fiats. Attempts to repeal or override these economic laws are futile and counterproductive, even if they make for attractive politics.