In September 2024 and June 2025, I wrote memos that were critical of governments’ attempts to override the laws of economics, based on my conviction that trying to do so is likely to prove ineffective and potentially harmful. Economies are naturally functioning organisms, and trying to steer them will distort their functioning and, usually, worsen the overall result. Sometimes doing so is necessary to prevent outcomes society deems unacceptable, such as widespread poverty or unemployment, but it should be done selectively and with great caution.
The best analogy is to nature. There’s a “Circle of Life,” as described by a song in the movie The Lion King. The Circle has negative aspects – since it works through processes such as “survival of the fittest” – but it keeps the whole in balance. Humans can take steps to suppress a predator for the protection of prey, but interventions of this kind can have second-order effects, causing other species to grow out of control and throwing the overall environment out of balance. Having one species prey upon another may seem unkind, but human efforts to improve the overall result can easily produce unintended consequences. And that leads me to efforts to dictate the operation of markets.
To read more, Shall We Repeal the Laws of Economics – Part III, please visit: https://www.brookfield.com/
See more: Signs Point to a Normalization, Not a Crisis
A message from Advisor Perspectives and VettaFi: Discover something new! Click here to register for our upcoming webcasts.
