Bad Economic Policies Hit the Holidays

By Josiah Dalke
December 16, 2021

The Christmas season represents a major source of cultural optimism that encourages people to spend more freely, sparking quick and, at times, unsustainable economic vitality. While this usually provides a boom, economic circumstances aggravated by government actions could mean a leaner holiday for thousands of Americans.   

Due to current economic hardships like inflation, the consumer price index reported that the price for goods and services have increased 6.2 percent over the last year (that number increased by 0.9 in the last month alone). Things are getting more expensive and under normal circumstances, people would be much less likely to consume more expensive items beyond what they need to buy out of necessity. Additionally, supply chain problems have led to a shortage of items one can buy. Meanwhile, the federal government of 2021 had a consistent pattern of policies that discouraged labor participation and increased monetary inflation.

However, despite economic challenges, consumer spending still occurs. This should not be surprising as the Christmas season generally represents a period in which people are not as concerned about the price tag. The data shows that even though holiday spending is less than previous years, people are still spending more than they typically do in other parts of the year.

This should be encouraged. Regardless of what economic theory you hold, consumer demand and spending are an essential part of boosting the economy. Even in the supply-side framework, cutting taxes for businesses to create jobs only works if those businesses have a demand for their product. The biggest problem that stands in the way is if companies can keep up with the demand when they themselves are running into a supply shortage. The ultimate solution to this is having the government come alongside businesses and help them make it easier to make goods by cutting red tape.

Mississippi is far from avoiding this problem during the Christmas season. Gas, food, and other consumer products are rising making it more difficult to travel and celebrate. Cultural optimism certainly helps with the state’s ability to maintain the economy. However, the true and sustainable solution to promote a healthy economy is by continuing to promote the free exchange of goods and services. Mississippi has already taken a step in testing this by creating a tax free holiday in the month of July. However, it can take further steps in promoting free market principles this holiday season by simply allowing companies to operate freely and becoming a help, rather than a hinderance, to them.

Ultimately, both businesses and consumers should be free to pursue what is most prudent for their interests. One of the greatest myths people believe regarding the economy is that simply because the nation is entering into economic hardships does not mean that government intervention is warranted.

This Christmas season may exhibit a time in which people will sacrifice, spend, and travel less, but that conclusion must be made by the consumers themselves, rather than government policymakers. As we enter the Christmas season, the choices of the people, rather than the government’s central planners and regulators, should be at the forefront.


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