Updated: Mar 6
Originally written on March 31, 2019
In absence of incentives, people are likely to do whatever they are naturally driven to. The moment an incentive is introduced into the system, their behaviors start to formulate according to the incentive.
In an economy that has expanded beyond basic needs and wants, if money is added to incentivize more production, what is there to be produced? To grab the new money, people may engage in ventures that they might have not engaged in otherwise. For example, when a nation incentives education, hordes of people, who aren't intellectually inclined, enroll in educational institutions. As students, they do badly. As researchers, they produce sub-par scholarship. This continues until so many people get degrees that the value of a degree gets diluted to less than the cost of it. Similarly, economic incentives to any industry or market invite players that are bound to perform sub-par because they were not naturally/organically interested.
The incentive of dumb money also leads people to do useless things. There are people popping bubble wraps on Youtube. Some solve problems that do not really exist. Others create problems to solve them (in business incubators, they try to sound smart by using the term "problem solving"). Just because there is money to be made, they do things they don't really care about. A big part of the finance industry exists because money is fiat. So many lawyers exist because there are so many laws. So many accountants exist because there is SEC. Most insurance companies exist because the government has terribly rigged the market, reducing the supply of whatever these companies insure. So many tax professionals exist because the process is complex, beyond being mostly unneeded. In an open market, majority of people in the above sectors won't be needed. Deep down, they know they are throwing away their lives. Thus, it is only natural that modern people struggle to find meaning in life. Just how much satisfaction does a YouTuber derive from popping bubble wraps for a living? I won't be surprised if he's depressed. His job means nothing to the real organic market.
Incentives externally motivate people to do things that they are not naturally inclined to. Doing things just for money makes people sad once they have experienced the momentary pleasure of money. They also lack a sense of meaning/purpose in their work because their work really does not mean anything to anyone. The demand side struggles, too. Extrinsically motivated individuals produce sub-par and unneeded products. Today, pretty much everything people buy is dumb shit. Then, they are dissatisfied that they spent all their money but have no clue what they spent it all on.
Update on March 24, 2021 -
Very few places have economic freedom. The west appears to have a little of it. But they, too, have been brainwashed in a way that they do things that nourish the body, not the spirit. Most of their jobs are artificial. These jobs are artificially created whenever something blemishes the free-market. For example, teaching jobs are created when public schools are built using stolen money (taxes). Since these artificial jobs don't serve the real world, they don't nourish the spirit. Thus, you have folks who have everything but are prone to depression.
You can pay people to dig ditches and then pay more people to fill them up (example borrowed from Peter Schiff). You just don't produce anything. Money can't create jobs. It can only fuel stupid activities. We call them stupid jobs. People feel dispirited when they do it. You can't manufacture economy.