TGIF: Doing Good at a Profit

[P]eople started to believe that the bourgeoisie and its economic activities of trade and innovation were virtuous, or at least tolerable. In every successful lurch into modern riches from Holland in 1650 to the United States in 1900 to China in 2000, one sees a startling revaluation in how people thought about exchange and innovation.

"How the Bourgeois Deal Enriched the World"
Art Carden and Deirdre Nansen McCloskey

Perhaps it's time for another, similarly positive reevaluation of exchange and innovation. Heaven knows we need it. Our age features a distinct lack of appreciation of trade through the global division of labor, the innovation and prosperity it produces, and the signs of entrepreneurial success, namely, the wealth of innovators. We have witnessed a surge in good feelings toward socialism and various socialism-lites despite their unbroken record of death, oppression, and stagnation.

Could the varied opponents of market-liberalism—libertarianism in its purest form—suffer an allergy to what Adam Smith identified as a key feature of the "system of natural liberty"? In The Wealth of Nations Smith famously observed,

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.

Apparently, for people who dislike the market economy, producing even astounding benefits for others does not count if one does it at a profit. That is strange.

In 1900 about 80 percent of the world's population lived in extreme poverty. Today, less than 10 percent does. The reduction since the 1980s alone has been phenomenal. And during that time the world's population has grown dramatically —from under 2 billion in 1900 to 8 billion today!

Deirdre McCloskey and Art Carden write that since 1800 per-capita wealth has increased by 3,000 percent. Per capita! (They explain how and why in Leave Me Alone and I Will Make You Rich: How the Bourgeois Deal Enriched the World. Also see this.)

Malthus and Marx must be spinning in their graves. Paul Ehrlich, still alive, declared in the late 1960s that "the battle to feed all of humanity is over." About that prediction, Maxwell Smart would have said, "Missed it by that much." (Ehrlich still gets treated by the news media like an oracle.)

Do people know about this marken-driven progress? Did the establishment and alternative media report it? I must have missed it.

The eradication of poverty has many freedom-related reasons. Economic liberalization (marketization), that is, the freeing up of entrepreneurship and trade deserves much credit. But something else was also required. Economic historian McCloskey primarily credits a change in attitude toward the "bourgeois virtues," such as innovation. "In every successful lurch into modern riches from Holland in 1650 to the United States in 1900 to China in 2000," McCloskey and Art Carden write, "one sees a startling revaluation in how people thought about exchange and innovation." Envy and resentment at success diminished, freeing people to innovate, trade, and get rich while making consumers better off. Mass production emerged for the first time in history. Producers didn't work just for the political elite. How great was that?

Let's put it another way: poverty has been eradicated at a profit! Was that virtuous? Would it have been more virtuous had it been done by nonprofits? The antipoverty record of nonprofits, especially governments, is dismal.

Where is the praise for the market from all the usual antipoverty voices? I can find only one voice, however grudging: Rock star Bono, who said in 2022:

There’s a funny moment when you realize that as an activist: The off-ramp out of extreme poverty is, ugh, commerce, it’s entrepreneurial capitalism. I spend a lot of time in countries all over Africa, and they’re like, “Eh, we wouldn’t mind a little more globalization actually. I would point out that there has been a lot of progress over the years.” . . . Capitalism is a wild beast. We need to tame it. But globalization has brought more people out of poverty than any other -ism. If somebody comes to me with a better idea, I’ll sign up. I didn’t grow up to like the idea that we’ve made heroes out of businesspeople, but if you’re bringing jobs to a community and treating people well, then you are a hero.

As I said, grudging, but better than nothing. But did Bono's friends and fans become pro-market? I don't see it.

One might expect that in a world of scarcity, a system of political economy that harmonizes diverse interests and creates widespread wealth from those differences to win enthusiastic praise. But no. Enthusiasts for markets and economic success have been scarce throughout history because a relative few succeed fabulously as innovators while most others merely succeed as consumers—beyond their recent ancestors' wildest dreams.

"People before profits!" shout envious ignoramuses, who can't be bothered to figure out that businesses that fail to please people record losses, not profits, and go bankrupt. It's a profit-and-loss system (unless the government violates the system by intervening).

By the way, pure entrepreneurial profit emerges when a business can sell its goods for more than its costs, including wages. That is, an entrepreneur happens upon a discrepancy between the price (valuation) of inputs and the price buyers are willing to pay for the output. Hence my battle cry: Exploit price discrepancies, not people!

However, some find it more satisfying to look for exploitation in any encounter whether it is there or not. Sellers exploit buyers; employers exploit employees. It requires no proof because it is a sacred article of faith. The faithful are blind to the deep harmony of interests of sellers and buyers, of employers and employees. They need each other because the system of natural liberty, even when burdened by state intervention, makes all parties richer than they ever could be without the market, its prerequisites (respect for others and their property), and its consequences (the global division of labor).

Getting back to Adam Smith's point, what could be the objection to trade based on mutual benefit? Why should anyone expect the butcher, baker, and brewer to live for their customers? Like their customers, they have lives and families too. Are sellers wrong because they don't give away their wares? Do their customers give away their products and services? Then what's wrong with charging what "the market will bear," that is, what people are willing to pay?

We all agree that no one can own other people? If you want something that belongs to another person, you offer to trade. Just as you don't own other people—that's called slavery—you also don't own their belongings until they accept the terms of trade. Governments often seek to set the terms of trade, but it has no legitimate power to do so. Governments are usurpers. The terms are up to the parties because the parties are trading their property. (If they violate the rights of nonconsenting third parties, that's a matter for the courts.)

Smith didn't mean that buyers and sellers can't be friendly or care about one another. His point was that benevolence is not necessary for mutually beneficial exchanges. It would take place anyway. All that's required is the realization that trade is positive-sum. Each exchanges something less-preferred for something more-preferred. Person A gets what he wants by offering to Person B what he wants, and vice versa. One serves one's interests by figuring out what's in other people's interests. The pursuit of self-interest serves the interests of all. That's one fine arrangement.

Somebody once said that if America is worth saving, it's worth saving at a profit. That goes for the whole world.

TGIF: Back to Barbarism

Has Kamala Harris inadvertently done free-market advocates a favor? Let's not get too hopeful, but maybe. How so? By pandering to voters and marketing herself as a consumer watchdog who will stamp out (undefined) supermarket "price gouging." This could create teaching opportunities for champions of the unhampered market economy.

This should be our message:

• Prices emerge from countless transactions through which people seeking mutual benefit trade their money for goods and vice versa.
• Monetary exchange, unlike the barter system that preceded it, permits the widest possible division of labor because if you want to exchange eggs for apples, you need not search for someone who wants to exchange apples for eggs. Money, which arose through the market process, does the trick.
• The division of labor is the epitome of social cooperation, which enables everyone to acquire more and better goods than they could acquire otherwise. It lets masses of people live long and prosperous lives. As Adam Smith wrote, "The division of labor is limited by the extent of the market."
• Thus, an attack on money and prices is an attack on civilization itself, a step back toward barbarism.

This is Ludwig von Mises's open-and-shut case against socialism, the obliteration of the market economy. But it is also relevant to lesser government intervention in the economy. The standard case against government price controls and guidelines applies to what Harris vaguely proposes. That case can be readily found with any search engine. Tampering with prices brings unwanted shortages, gluts, discordination, misaligned investment, and social strife. (Try this for starters.)

Here I want to concentrate on the deeper, though related reason for concern about Harris's pronouncement. (Trump should not be allowed off the hook because many of his proposed interventions, such as tariffs and job-rescue plans, fall to the same objection.)

That deeper reason is this: an attack on market price-setting, whatever the rationale and however modest at first, is an attack on society itself. While most people think a price is just a number on a tag attached to a product on a store shelf, it is much more. It is even more than an informative exchange ratio that emerges from the interactions between countless buyers and sellers pursuing their interests and signaling relative scarcity and demand. Most important, a price is the result of a life-sustaining process. Free pricing is the glue that holds a great society together and makes other kinds of social bonds possible.

Isn't that an exaggeration? It is not. Even if you think the Harris proposal to stamp out "price gouging" is modest, we have no reason to think it would stay modest. Why only groceries? What about clothing, shelter, and other things we need? (The government already has a lot of influence over interest rates.) And if the "modest" measures fail to satisfy the bureaucrats or the most vocal part of the public, we may expect the politicians to try harder to rein in free pricing. They are not likely to give up their politically winning program. Failure will be grounds for expansion because voters are economically illiterate. Intervention may beget more intervention. Think mission creep and slippery slope.

Ludwig von Mises, writing in Human Action, thought that, short of bombs and socialism, there was no more serious way to destroy civilization than by crippling the price system. Price controls, inflation, and antitrust are among the ways to accomplish that. Intervention is destructive because the price system makes economic calculation possible, and monetary calculation is indispensable for rational thought in a modern society. As a medium of exchange and a common unit of account, money permits people to translate the disparate things they subjectively value into meaningful objective sums that producers and consumers can use to plan, coordinate, and cooperate in the market. Mises's insight is that monetary calculation is necessary for a free, humane, and prosperous society.

As Mises wrote, "Monetary calculation is the guiding star of action under the social system of division of labor." Need one point out that the division of labor based on property rights is essential to personal and social progress?

It is the compass of the man embarking upon production. He calculates in order to distinguish the remunerative lines of production from the unprofitable ones, those of which the sovereign consumers are likely to approve from those of which they are likely to disapprove. Every single step of entrepreneurial activities is subject to scrutiny by monetary calculation. The premeditation of planned action becomes commercial precalculation of expected costs and expected proceeds. The retrospective establishment of the outcome of past action becomes accounting of profit and loss.

Distinguishing profitable from unprofitable activities is necessary because while consumer wants are unlimited, resources and labor are scarce. At any given moment, we cannot have everything we want in the quantities we want, so we must make choices and accept trade-offs. Market prices tell producers what consumers want more of and less of. Looking back, prices signal success or failure—and prompt course corrections.

Mises next makes a crucial point:

The system of economic calculation in monetary terms is conditioned by certain social institutions. It can operate only in an institutional setting of the division of labor and private ownership of the means of production in which goods and services of all orders are bought and sold against a generally used medium of exchange, i.e., money. [Emphasis added.]

Then he clinches the deal: "Our civilization is inseparably linked with our methods of economic calculation. It would perish if we were to abandon this most precious intellectual tool of acting."

If you don't believe Mises, try to imagine living a free, decent, and prosperous life in a society deprived of private property, the division of labor, free exchange, and the resulting market prices. It can't be done unless you count images of chaos and barbarity. Ironically, some people who view themselves as foes of slavery are eager for the government to impose the terms for the disposal of other people's products.

Mises closed Human Action with these words:

The body of economic knowledge is an essential element in the structure of human civilization; it is the foundation upon which modern industrialism and all the moral, intellectual, technological, and therapeutical achievements of the last centuries have been built. It rests with men whether they will make the proper use of the rich treasure with which this knowledge provides them or whether they will leave it unused. But if they fail to take the best advantage of it and disregard its teachings and warnings, they will not annul economics; they will stamp out society and the human race.

Our future depends on how quickly we repel the economically illiterate clowns who seek political power. We won't find allies among so-called "progressives" and "conservatives."

TGIF: Gaslighting

I wonder who's gaslighting us now. Here are some of the major perpetrators:

• The pundits and pseudo-economists of all tribes who try to convince us that the government can spend, borrow, and create money almost without limit or harm. What happens when interest on the national debt swallows up so much of the federal budget that little is left for anything else? The government isn't likely to close shop (too bad), so we ought to be discussing what desperate measures it and its dependents will resort to when the well dries up.
• The "labor advocates" who try to convince us that the government can set a minimum wage without inflicting hardship on unskilled workers through lost jobs, curtailed hours, deteriorating work conditions, fewer amenities like training, or higher consumer prices, which those workers face as consumers.
• The "consumer advocates" who try to convince us that the price system is the enemy of the common man and woman. When a politician promises, as Kamala Harris does, to stamp out high prices, "gouging"—without mentioning the money-creating Federal Reserve—beware. You are about to be victimized by the perennial bipartisan war on prices, which means us.
• The regulatory crusaders who try to convince us that increasing the cost of producing goods and interfering with voluntary transactions can raise the general standard of living. It cannot.
• The so-called progressives who try to convince us that mass consumption can precede mass production. It cannot. And as economist Bryan Caplan points out, mass production has never benefitted only a small fraction of society. How could it?
• The Marxists, neo-Marxists, and those they have inspired who try to convince us that our free market transactions are inherently exploitative rather than mutually beneficial. Their condescension knows no bounds.
• The "environmentalists" (having seen socialism's dismal record) who try to convince us that the free market is bad not because it produces too little, but because it produces too much.
• The anti-trade agitators who try to convince us that tariffs harm foreigners (as though that were a good thing) rather than Americans. Centuries of evidence and sound theory show this is not true. Tariffs are meant to raise domestic prices and limit choice for consumers. That can't be good.
• The national conservatives and progressives who try to convince us that immigrants cause rising housing prices rather than the endless array of government restrictions on building. How cruel is that?
• The border closers on both sides who try to convince us that Americans would be better off without eager workers from around the world seeking to escape poverty and tyranny and make better lives in wealthy America, where they can at least double their incomes. The fixed-pie nonsense was invented by demagogues and is embraced by Donald Trump and Bernie Sanders alike.
• The gatekeepers who try to convince us that the government could pull off a historic mass deportation without jeopardizing everyone's liberty and disrupting the social cooperation that voluntary represents.
• The "social justice" warriors who try to convince us that any disparity deemed unflattering is the result of bigotry and oppression—evidence to the contrary be damned.
• The bigotry hustlers who try to convince us that America is the most racist and otherwise bigoted society in world history, with the only question being, not if bigotry caused a situation, but how it did so.
• The self-described "decolonizers" who try to convince us that the only way to rectify long-past injustices associated with Western imperialism and slavery is to destroy self-ownership, private property, the market, reason, the scientific method, and individualism—anything, that is, to do with modern civilization. Meanwhile, similar past crimes committed by non-Western ethnic and tribal groups are to be flushed down the memory hole. Somehow we're supposed to believe that civil strife over past wrongs is good for everyone.
• The Israeli government and its devoted American supporters who try to convince us that the mass murder of tens of thousands of children, women, elderly, and male noncombatants packed into a small space can be morally justified. Questioning this makes you a pro-Hamas antisemite.
• The advocates of the U.S. empire who try to convince us that if we don't fight Russia in Ukraine, we'll be fighting them here. Doubting this makes you a Putin agent.
• The "transgender" ideologues who try to convince us that sex is not limited to male and female, is not immutable, and is not important, and that human beings have "gendered" souls that can be wrongly matched to the bodies they are "trapped" in.  This allegedly justifies Nazi Mengele-type "medical" sadism on children, that is, mutilation and sterilization. (Adults should be able to do what they want to themselves. But parents do not own their children and have no right to abuse them, whether the children "consent" or not. When can third parties intervene to protect children? At what age does childhood end? Libertarians need to take up these questions.)

Strictly speaking, not all of this gaslighting. In the movie Gaslight the bad husband tries to drive his wife crazy by covertly doing things, such as dimming the gaslights, and making her think she had forgotten that she'd done them. Some of my examples involve assertions that Americans should know are wrong but don't. The dominant view is a lie intended to make them susceptible to demagoguery and tyranny. We can see it as advance gaslighting: when people see the facts, they won't believe their own eyes.

 

 

TGIF: Khan Controlling Trade

Lina Khan is a Washington, D.C., rock star. She is not only President Joe Biden's celebrated chief of the Federal Trade Commission (FTC); she's also a favorite of J. D. Vance, Donald Trump's pick for vice president.

This Lina Khan must really have something going for her—until you recall that Biden and Vance, and by implication Trump and Kamala Harris, reject individual freedom as an inseparable unity. In other words, personal freedom requires economic freedom and vice versa. What chance does freedom of speech and press have in a society without private property? Individual liberty in the absence of free enterprise—unsupervised by force-wielding bureaucrats—is a delusion.

Let's look at the FTC. It was created in 1914, which immediately should make you squirm. So-called progressive Woodrow Wilson was president in those days. He is a contender for the worst American of the 20th century if not of all time. Leaving aside his incredibly evil involvement of the United States in World War I, which helped make the century a slaughterhouse, he devoutly believed that the national government should be all-powerful.

Quaint ideas like limited government under a fixed constitution may have made sense in the 18th and early 19th centuries, he thought, but not in modern progressive 20th-century America. The national government (forget the several states) and its anointed, dispassionate, above-the-political-fray experts should run society. Americans should go along with whatever directives the experts think best. Any argument against that proposition was surely motivated by selfish, profit-driven, exploitative bad faith. If the untrusted market can't be abolished, then at least it should be guided by a category of person that has always had a sparkling record for trustworthiness: bureaucrats, who, unsullied by the profit motive, have the best intentions and perfect insight into the public interest. The FTC is an example of what Wilson had in mind. The marketplace will always fall short of the progressive ideal, so public-spirited bureaucrats must keep it on the right path.

The FTC's website proclaims: "Our mission is to protect consumers and promote competition." Sounds innocuous. It's not. If you've ever visited the FTC building in Washington, you've seen the two Soviet-style sculptures on the grounds. The sculptures were Michael Lantz's winning entries in a Roosevelt administration New Deal contest, which will surprise no one. (Lantz was the brother of famed Woody the Woodpecker cartoonist Walter Lantz.)

The sculptures depict a muscular human figure struggling heroically to control a wild horse that threatens to break free and run rampant through town, leaving death and destruction in its wake. The title is "Man Controlling Trade."

That's how Franklin Roosevelt and Woodrow Wilson saw trade. It's how the Federal Trade Commission sees it today: a wild animal that needs to be restrained. Today, Lina Khan the chief controller. Khan controls trade.

But the sculptures and mission make no sense. Trade is not a wild animal. It's a peaceful, cooperative activity that individual human beings engage in when they anticipate mutual benefit. Each party exchanges what he or she wants less for what he or she wants more. No exchange takes place otherwise if the parties are free. (Compare that to government eminent domain.) Historically, trade civilized human beings by demonstrating that cooperation through the division of labor is better than conflict. It's how to get rich.

Thus, likening trade to a wild beast is obscene. It's a self-aggrandizing lie by politicians, bureaucrats, and anointed experts.

The FTC says that "for over 100 years, the antitrust laws have had the same basic objective: to protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up." But don't businesses already have "strong incentives ... to operate efficiently, keep prices down, and keep quality up." And don't they have an incentive not to endanger consumers? Unlike the government, businesses face consumers who are free to say, "No, thanks. I'll shop elsewhere" Yes, business people sometimes try to take advantage of consumers or have bad judgment, but that's a feature of people, not business. Who runs the government regulatory agencies, saints? At least businesses face competition. You can't say that for government.

The progressive answer is that businesses have all the power and customers have none. Nonsense. Unless the government helps business by stifling free competition, "market power" means nothing more than the "power" to please consumers better. The FTC (and the Justice Department's antitrust division) claim to serve consumers, but in reality, they just protect inferior companies from superior companies.

Lina Khan has excited attention for breathing new life into government interference with trade, especially in high-tech America. Her dubious innovation is in believing the government can't leave big tech companies, such as Amazon, alone merely because they please customers with great service and low prices. As she wrote in a law journal article in 2017, "Animating these critiques [about tech companies] is not a concern about harms to consumer welfare, but the broader set of ills and hazards that a lack of competition breeds.” (Emphasis added. HT: Saul Zimet of the Foundation for Economic Education.) Khan continued:

To revise antitrust law and competition policy for platform markets, we should be guided by two questions. First, does our legal framework capture the realities of how dominant firms acquire and exercise power in the internet economy? And second, what forms and degrees of power should the law identify as a threat to competition? Without considering these questions, we risk permitting the growth of powers that we oppose but fail to recognize.

Khan, a lawyer not an economist, speaks gobbledegook. It's a blank check for overseeing and quickly overruling free enterprise, as an end in itself—central planning without nationalization. Bureaucrats know better. They need no profit-and-loss test.

As we should know by now, drawing on Ludwig von Mises's critique of socialism, no set of bureaucrats can know what she claims the FTC can know. They can't even define the relevant market in which to "measure" alleged monopoly power because they don't know what consumers will deem as suitable alternatives to a given good when dissatisfied with its price or quality.

Moreover, the bureaucrats ignore how potential competition disciplines a sole firm as much as actual competition does—as long as the government grants no privileges. Abnormally high prices and profits in an industry are engraved invitations to potential competitors. So are perceived abuses of consumers. It's also possible that what the FTC sees as abuse the consumer sees as a good deal. (Ads tailored to one's online buying patterns may be thought superior to random ads.)

Khan is also needlessly concerned about mergers and acquisitions. Many high-tech innovators have developed remarkable new products intending to sell them to an existing tech company for lots of money with which to move on to the next innovation. Venture capitalists earn fortunes by spotting such opportunities. Khan would obstruct if not do away with that process. We'd all lose out. Has she never read Bastiat's "What Is Seen and What Is Unseen"?

Khan says that data gathering and artificial intelligence present new challenges to the marketplace that the government must meet. But the fatal flaw in all market-failure reasoning is that the alleged solution—the state—is subject to far more pervasive government failures. In the market, entrepreneurs earn profit by solving problems. No counterpart exists in the government. On the contrary, bureaucrats can prosper by not solving problems or by creating new ones, justifying larger staffs and budgets.

The basic economic fact the FTC ignores is that competition is an open-ended, dynamic discovery process driven by rivalrous entrepreneurs trying to please consumers. Technology and consumer preferences change all the time, and all businesses must keep up or lose out to better entrepreneurs. No firm—if it has zero access to government coercion—can threaten competition, not even with noncompete agreements, which are contractual terms that will fall by the wayside if they don't ultimately serve consumers. While firms cannot "threaten" competition, they can indeed "threaten" competitors by being better at pleasing consumers. Bureaucrats, who are not market participants risking their own wealth, can only pretend to know what is best from their perch in the government, which, let's remember, is a monopoly. As George Mason University Donald Boudreaux advised, if Khan has such keen insight into market shortcomings, she should become an entrepreneur. She'll make a fortune and actually help society.

(See D. T. Armentano's classic, Antitrust and Monopoly: Anatomy of a Policy Failure and other material here and here.)

TGIF: Democracy as Religion

During a conversation with someone who loves representative democracy but hates America's current political situation, I pointed out a problem with his view. The current situation, I said, is a product of representative democracy. So you can't have the system without the lamented consequences.

Why is that? People like free benefits for themselves and society, and politicians prosper by promising and delivering apparently free benefits to enough voters. Individuals and interest groups see the government as a bazaar open for business 24/7.

The problem, of course, is that there are no free benefits. The government, which does not produce anything, can't give away anything it hasn't first taken from someone else. The system's inherent perverse incentives deliver big spending, high taxes, and growing budget deficits (when raising taxes is unfeasible) financed through massive borrowing. This process eventually leads to central-bank monetary inflation, rising prices, and shrinking purchasing power. The transfer of purchasing power from regular people to politicians is a form of taxation.

I proposed to my interlocutor that a better way to go would be to move the government's few legitimate functions to the free, competitive market, which aligns incentives more consistently with individual rights and general prosperity. The government's illegitimate functions should be abolished.

He mocked my position by holding his hand in the praying position and looking toward heaven as he said, "If only we all believe." I responded that it's no article of faith that freedom and free markets—classical liberalism—have eradicated most extreme poverty and created unmatched living standards worldwide. You can easily look up the graphs that show this astounding progress. The still-lagging areas lack freedom.

For roughly 200,000 years human beings lived short lives with virtually no material progress. Then a few hundred years ago things changed dramatically thanks to liberalism, the Enlightenment, and the Industrial Revolution. That was no coincidence, and understanding what economic historian Deirdre McCloskey calls the "Great Enrichment" requires no faith.

I could have said much more to my interlocutor, and I'll say it here.

First, classical liberalism, or what we moderns call libertarianism, is not mainly about believing; it's about respecting each individual's person, property, and liberty, and particularly about the government's respecting those things. It's also about understanding that freedom leads to social cooperation (the division of labor and trade), peace, and prosperity. Economic theory and history show it.

Second, it's democracy, not freedom, that requires faith in the absence of evidence. It's a religion that holds that If we believe hard enough, tens of millions of us going to the temple polls to vote will make the right decisions. No one explains why it should work out that way. And it doesn't. It's a faith in magic, and magic is not real.

There is a glitch in the democratic religion: most voters are ignorant. Poll after poll shows that most people know little about the government and the economic process, which the government regulates. They are not only ignorant of basic economic theory, which the evaluation of candidates requires; they are also ignorant of basic indisputable political facts, such as who their so-called representatives are, how they vote, which party controls the Senate and House, and how much the government spends and borrows. How can they vote wisely? (For more on voter ignorance, check out the many YouTube appearances of George Mason Law Professor Ilya Somin and his book Democracy and Political Ignorance: Why Smaller Government Is Smarter, 2d ed.)

People shouldn't be faulted for not knowing these things because they have an incentive not to spend time and money learning; their time and money could be better spent. Better spent than on becoming an educated voter? Yes. How so? Because anything else they did would have a better chance of making a difference.

Am I saying that voting does not make a difference? Yes. In almost any election, one vote contributes nothing to the outcome. Ilya Somin says that one vote for president, on average across the states, has one chance in 60 million of determining the outcome. The chance is larger in House, Senate, and other races but not enough to make make a difference. People vote for many reasons, but one reason not to vote is a determination to decide the result. Voters understand this. With no incentive to learn what's important, they vote for what makes them feel good and against what makes them feel bad. The result is the mess we're in today.

The political realm differs from the voluntary sector because politics separates choice from costs and benefits. In the voluntary sector, when you choose a dozen eggs, you get a dozen eggs: you pay the price, and you enjoy the benefits. Not so in politics. Choosing Candidate A  doesn't mean you get Candidate A; that depends on a lot of other people. And even if Candidate A wins, you will reap only a minuscule fraction of the benefits (if there are any) and pay only a minuscule fraction of the costs. The bulk of the costs and benefits will fall on everyone else. Under those circumstances, most voters will pay no price for voting according to their biases, so that's what they will do.

What hope is there if ignorant people choose the country's rulers? The informed among us might stop having rulers, but they won't let us opt out. Somin calls for shrinking and decentralizing power. Good idea. But how?