The principle of least intervention.

'...the intervention of the government has done to the economy what 58-2(B) did to democracy.'

One of the main propositions of conventional economic wisdom is that the least intervening governments are the best in delivering outcomes. This idea, proposed by Adam Smith in his ground-breaking work, 'The Nature and Causes of Wealth of Nation' in 1776, became the sole reason for the industrial revolution, innovation, growth, and democracy in Britain. He proposed, 'in competition individual ambition serves the common good'.

Everyone today discusses and praises the importance of the government to take the American financial sector out from the wretches of the financial crisis of 2008. There is another side to the coin-according to Sowell, the politicians changed the rules of mortgage securities as they want more people to have homes. This created an artificial incentive bubble in real estate. The American Federal reserve boosts that boom by lowering interest rates. Now, with less security approvals, easy mortgaging, and lower interests the housing bubble ballooned and eventually burst in 2008. Had the rules not been amended and the market left on its own, everybody would have lived happily ever after. So, it was actually the government that installed the crises in the first place. Government intervention, meddling with market forces creates more harm than good.

In our scenario, traditionally as a whole, we look towards the government to produce employment. What do we have as a result: nationalisation, nepotism, inefficient division of labour, and non-performing State-Owned Enterprises (SOEs). The SOEs alone cost the national exchequer up to Rs1.3 trillion in their total debt and liabilities in the year 2018. Why would people have an incentive in such a system to develop skills when the jobs are given on the basis of political favouritism? They have all the incentives to invest resources to gain political favours, not skills. And, why would an enterprise innovate in absence of competition, or when the state is present to subsidise their losses, or when the consumer does not have the power to run them out of the league?

Have you ever imagined that despite the fact that less than 2 percent of our population pays taxes, still somehow we have managed to get an although struggling but thriving economy? Because economies do not work on taxes. Rather, they work on markets. We have a huge functional informal market economy, free from government...