Everything Popular Is Wrong: Malinvestment and Consumers

6769J. Dayne Girard writes in today’s Mises Daily: 

The same effect could be obtained by regulation. The government might require those who drive cars to study for a special license, then pay an annual fee for that license. Just like the loan program, this would cause an imbalance in economic investment. People would avoid buying cars because of the additional expense and hassle. Instead, they would be more likely to buy trucks, which don’t require the extra license.

The government intervention, in whatever form, causes an increase in revenue for the truck industry. This increase in revenue means larger marketing budgets for the truck manufacturers. Larger marketing budgets will afford more advertisements touting the value of trucks over cars. They will spend more money creating and promoting research that exposes the negative traits of other types of vehicles. With their larger marketing budgets, they can reach the masses with their message as never before.

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