In a universe where even the most elegant of nature’s systems cannot reach complete efficiency, it comes as little surprise that economic systems subject to the whims and emotions of humans are no different in that regard. The risk of downturns is present under any system because all economic entities, whether they be companies, government institutions, or individuals, have the potential to fail. History has shown that market failure, government failure, and individual failure are not particularly rare occurrences. This is expected considering the billions of people and organizations that exist. As a result of these natural failures, every economic system ever implemented has seen downturns.

This lack of perfect efficiency is not something to be dissuaded by though; it has, after all, still allowed for all of the progress that we as a species have made. When it comes to economics, our role as an intelligent, free-thinking society should be in attempting to understand and estimate the benefits, costs, frequency, and response effectiveness of each imperfect system in order to decipher the optimal policies for prosperity. This is where the difficult and ultimate task in economics lies.

It is a task that has often been undermined by governments and people, usually to their demise. The costs and benefits of policies are often not intuitive and can be extremely hard to measure due to the sheer number of variables involved. All too often, natural failures are met with politically charged pushes (many times even in good intention) towards action that is not thoroughly considered before implementation. Unfortunately, most of the time, these restrictions do not fulfill their creators’ original goals and instead lead to unforeseen problems of their own that cost more than the original problem did.

And despite mountains of historical evidence and great strides made in economic tools and methods over the past few decades, modern governments continue to fall into some of these age-old traps. Crises such as the recent housing bubble have only increased knee-jerk reactions to market changes and as time passes, it will undoubtedly become clear that many of the policies currently being implemented will end up causing greater problems than they tried to solve.

And just as in the past, many of these policies will remain in place for years to come as they tend to be difficult to overturn politically. This is a result of markets evolving to rely on or maneuver around these policies as well as fear of ridding legislation that might be honorable in name (but not practice). As a result, many of these policies will remain in practice despite strong evidence for reversal.

It is precisely because of this difficulty in removal and the comparative ease in the passing of such policies, that law-making bodies should proceed with extreme caution in attempting to control natural markets. This is especially true when the people’s freedom is being limited in the process as the unnecessary loss of freedom would be nothing short of a tragedy in a world history of servitude, slavery, and authoritarian rule, only broken by brief periods of relative liberty. A lack of caution and proper cost-benefit analysis in passing restrictive policies will undoubtedly create a spiral into a system that once more fosters the tyranny and misery that has been so often seen in human history.