TGIF: On Fairness

Fairness and its synonyms are among the most abused words in English. By that I mean they are commonly manipulated for ideological ends. Wokeness has aggravated a situation that has existed for some time. What better way to score points for a political position than to declare that fairness demands it? The tactic puts the unprepared opponent on the back foot.

For example, people say it is unfair that some people have more than others. There are "haves" and "have-nots," although the latter phrase is either grossly exaggerated or outright dishonest. By and large, Americans are the richest people who have ever lived, and extreme poverty worldwide has declined from 90 percent to less than 10 percent in a dramatically short time.

At any rate, this condition of inequality, regardless of its explanation, is routinely thought to be unfair. Inequality of any kind—not just before the law or something similar—is "just not right."

But is it so?

Not If we see society and its division of labor as a large-scale decentralized cooperative wealth-creating effort. That's the global marketplace. In this light, income and wealth wealth and income inequality are certainly not prima facie unfair. For any large group of people, the contributions to wealth creation will vary widely. People differ in all sorts of ways, from mental agility and energy to ambition and disposition. Why wouldn't the rewards vary widely as well? Recall that when the government does not try to manipulate people, incomes and wealth are determined, not by a central decision-maker, but through countless marginal voluntary transactions. The parties agreed to transact, preferring what they received to what they gave up. There is no distribution until government comes on the scene.

In Human Action, Mises wrote:

In the market society direct compulsion and coercion are practiced only for the sake of preventing acts detrimental to social cooperation. For the rest individuals are not molested by the police power. The law-abiding citizen is free from the interference of jailers and hangmen. What pressure is needed to impel an individual to contribute his share to the cooperative effort of production is exercised by the price structure of the market. This pressure is indirect. It puts on each individual’s contribution a premium graduated according to the value which the consumers attach to this contribution. In rewarding the individual’s effort according to its value, it leaves to everybody the choice between a more or less complete utilization of his own faculties and abilities. This method cannot, of course, eliminate the disadvantages of inherent personal inferiority. But it provides an incentive to everybody to exert his faculties and abilities to the utmost. [Emphasis added.]

That certainly is reasonable, but many people reject this perspective. They need to ask themselves what the alternative is (besides equal poverty). Those critics suffer the delusion that no connection exists between production and so-called distribution. John Stuart Mill unfortunately believed this. But that cannot be. If the state expropriates the wealth of producers in Period A, they can hardly be expected to remain vulnerable to expropriation in Period B and beyond. Even an increase in top income-tax rates prompt strategies (legal and illegal) to pay less tax. You can't have your cake and eat it too.

Does a fairer alternative to the market economy exist? Mises went on:

The only alternative to this [above-mentioned] financial pressure as exercised by the market is direct pressure and compulsion as exercised by the police power. The authorities must be entrusted with the task of determining the quantity and quality of work that each individual is bound to perform. As individuals are unequal with regard to their abilities, this requires an examination of their personalities on the part of the authorities. The individual becomes an inmate of a penitentiary, as it were, to whom a definite task is assigned. If he fails to achieve what the authorities have ordered him to do, he is liable to punishment.

In other words, everyone is potentially subject to physical force, not because he aggressed against persons or property, but because he failed to fulfill the social engineers' plans. This does not make for a decent society.

We have not fully reached that point yet in America because the market is still "allowed" to operate to a significant extent. But for many intellectuals and activists, America still has too much market freedom; they would quash what is left. They don't like that "impersonal market forces"—that is, persons who freely choose with whom to do business—determine wealth and income ultimately according to the producers' ability to please consumers. The anti-market parties would shut down the market economy if they could. Meanwhile, they'll settle for increasing political impediments to free action. Government control of nominal private property of the means of production is what Mussolini meant by fascism and corporatism.

The only choice is between price and police, Mises taught:

No system of the social division of labor can do without a method that makes individuals responsible for their contributions to the joint productive effort. If this responsibility is not brought about by the price structure of the market and the inequality of wealth and income it begets, it must be enforced by the methods of direct compulsion as practiced by the police.

The police? We shouldn't like the sound of that. As Mises, no anarchist, put it elsewhere in Human Action:

Government is in the last resort the employment of armed men, of policemen, gendarmes, soldiers, prison guards, and hangmen. The essential feature of government is the enforcement of its decrees by beating, killing, and imprisoning. Those who are asking for more government interference are asking ultimately for more compulsion and less freedom.

Another example of abuse of the term unfairness is that market competition is often thought to be unfair to the inferior competitors who lose out to superior competitors. Again, a key point is missed. An economy does not exist for competitors. People spontaneously generate the economic process because they want a variety of consumer goods in a world of scarcity and uncertainty—where choices must be made among alternative uses of resources and labor. It would be nice if all people could have everything at no expense, but we can't. Yet compare the modern world to previous eras.

Here's Mises on competition:

Catallactic [marketplace] competition must not be confused with prize fights and beauty contests. The purpose of such fights and contests is to discover who is the best boxer or the prettiest girl. The social function of catallactic competition is, to be sure, not to establish who is the smartest boy and to reward the winner by a title and medals. Its function is to safeguard the best satisfaction of the consumers attainable under the given state of the economic data.

Equality of opportunity is a factor neither in prize fights and beauty contests nor in any other field of competition, whether biological or social. The immense majority of people are by the physiological structure of their bodies deprived of a chance to attain the honors of a boxing champion or a beauty queen. Only very few people can compete on the labor market as opera singers and movie stars. The most favorable opportunity to compete in the field of scientific achievement is provided to the university professors. Yet, thousands and thousands of professors pass away without leaving any trace in the history of ideas and scientific progress, while many of the handicapped outsiders win glory through marvelous contributions.

Isn't that unfair? Equal opportunity, except in the sense of the abolition of legal impediments, is not an option. Under no circumstances could everyone have the same shot at a given position. But again, it's not producers but consumers who are center stage.

It is usual to find fault with the fact that catallactic competition is not open to everybody in the same way. The start is much more difficult for a poor boy than for the son of a wealthy man. But the consumers are not concerned about the problem of whether or not the men who shall serve them start their careers under equal conditions. Their only interest is to secure the best possible satisfaction of their needs.... They look at the matter from the point of view of social expediency and social welfare, not from the point of view of an alleged, imaginary, and unrealizable “natural” right of every individual to compete with equal opportunity. The realization of such a right would require placing at a disadvantage those born with better intelligence and greater will power than the average man. It is obvious that this would be absurd. [Emphasis added.]

Frédéric Bastiat said the same thing in the 19th century in demolishing the case for tariffs. Protectionists often defend their position by calling for a "level playing field" for all competitors, foreign and domestic. Yet in "Equalizing the Conditions of Production," a chapter in his Economic Sophisms, Bastiat set the record straight:

Here as elsewhere we find the advocates of protectionism taking the point of view of the producers; whereas we defend the cause of the unfortunate consumers, whom they absolutely refuse to take into consideration. The protectionists compare the field of industry to a race track. But at the race track, the race is at once
means and end. The public takes no interest in the contest aside from the contest itself. When you spur your horses on with the single end of learning which is the fastest runner, I agree that you should equalize their weights. But if your
end were getting an important and urgent piece of news to the winning post, would it be consistent for you to put obstacles in the way of the horse that had the best chance of getting there first? Yet that is what you protectionists do with respect to industry. You forget its desired result, which is man’s well-being; by dint of begging the question, you disregard this result and even go so far as to sacrifice it.

A key to the economic and pro-freedom way of thinking is to never take your eye off the consumer.

 

TGIF: "We Have Met the Enemy and He Is Us"

The famous line "We have met the enemy and he is us" is from Walt Kelly's comic strip, Pogo. Kelly adapted the line from a U.S. naval commandant who, during the War of 1812 against Great Britain, reported to his superior, “We have met the enemy and they are ours.” Kelly did the parody for the first Earth Day in 1970, a pro-state, antimarket, antihuman occasion.

More constructively, we can apply Kelly's slogan to a bigger matter, namely, who's to blame for the bad policies that representative democracy turns out? Is the culprit an elite group of politicians, bureaucrats, and Big Business/Big Labor cronies, that is, a ruling class that conspires against the public interest? Or is the culprit " us," or, more precisely, the voters?

Most libertarians, like most progressives, would reply "ruling class," although David D. Friedman, a leading libertarian free-market anarchist, has been a major exception. (See The Machinery of Freedom: Guide to Radical Capitalism, 3rd ed., ch. 38, free online.) So too is economist and anarcho-capitalist Bryan Caplan.

Two important libertarian thinkers, Frédéric Bastiat (1801-1850) and Ludwig von Mises (1881-1973), also dissented from the common view that democracy is routinely hijacked. "One striking feature of the Bastiat-Mises view," Caplan writes, "is that politicians are actually tightly constrained by public opinion. On their account, democratic competition keeps elected officials in line; if they deviate from majority preferences, they lose elections and their jobs."

In his classic work The Law, Bastiat, the fantastic French classical-liberal political-economic essayist, pointed out that in a democracy with universal suffrage, the main potential threat to liberty and property would come not from a ruling elite but from the voters, who previously had no voice in the government. If voters know nothing about economics and are antimarket to boot, watch out! They will want the politicians to interfere with market relations, not realizing that intervention is harmful because it has significant opportunity costs: all the good things that would have been produced had the government not engaged in "legal plunder." The benefits of free markets are counterintuitive, and understanding requires knowledge, which the voters lack. So they favor import restrictions, business and farm subsidies, regulations, heavy spending, and other apparently free benefits.

Since the politicians want to be elected and reelected, they will cater to the voters' preferences, even if the politicians know that those preferences are harmful. Democracy supplies poison because voters demand poison. The voters' will is not substantially throttled by special interests.

Bastiat wrote:

Up to now, legal plunder has been exercised by the minority over the majority as can be seen in those nations in which the right to pass laws is concentrated in just a few hands. However, it has now become universal and equilibrium is being sought in universal plunder. Instead of the injustice existing in society being rooted out, it has become generalized.

In another place (Selected Essays on Political Economy, chap. 9), he wrote that "public opinion, whether enlightened or misguided, is nonetheless mistress of the world."

And again (Economic Harmonies, chap. 4): “Political power, the law-making ability, the enforcement of the law, have all passed, virtually, if not yet completely in fact, into the hands of the people, along with universal suffrage.”

H. L. Mencken, that keen observer of America in the first half of the 20th century, might have read Bastiat: "Democracy is the theory that the common people know what they want, and deserve to get it good and hard."

Caplan confirms Bastiat's view. In various writings he explains that while most social scientists, including public-choice economists, believe that special interests do thwart the voters, it is untrue. 

The "point is not that no unpopular policies exist," Caplan and Edward Stringham write after scouring the data (citation below). "But bona fide examples are hard to come by, and quantitatively significant ones are scarcer still." Time delays and "frictions" may put the politicians and voters out of sync—but only temporarily.

Voters can afford to be, in Caplan's words, "rationally irrational." In any election, each person can costlessly vote according to his antimarket biases since no single vote is decisive and the total cost of a candidate's bad policies will be shared by all.  (See The Myth of the Rational Voter: Why Democracies Choose Bad Policies and the articles linked below.)

Caplan points out that Ludwig von Mises took a position similar to Bastiat's. In Theory and History, Mises wrote:

A statesman can succeed only insofar as his plans are adjusted to the climate of opinion of his time, that is to the ideas that have got hold of his fellows’ minds. He can become a leader only if he is prepared to guide people along the paths they want to walk and toward the goal they want to attain. A statesman who antagonizes public opinion is doomed to failure… [T]he politician must give the people what they wish to get, very much as a businessman must supply the customers with the things they wish to acquire.

I found that quote, like the Bastiat quotes above, in the first of two Caplan blog posts: Mises and Bastiat on How Democracy Goes Wrong, Part I, and Part II. (For more, see Caplan and Edward Stringham's "Mises, Bastiat, Public Opinion, and Public Choice.")

We might resist the claim that the people, not a ruling class, are to blame. But if we have a ruling class, it must be damned incompetent. The United States has the most progressive income tax in the West. The bottom half of income taxpayers pays only a tiny fraction (2.3 percent) of the national government's revenue from the tax. The top 1 percent pays over 45 percent. Big businesses face myriad regulations, often with exemptions for small firms. New restrictions are proposed almost every day. Antitrust prosecution always looms for the successful. Businesses and farmers get subsidies and other favors, but most people support them as socially beneficial.

Moreover, privileges granted to one industry impose higher costs on others. Tariffs for U.S. steelmakers burden steel-using companies, making them less competitive in the global market. If this ruling class is so fragmented and ineffective, maybe the concept is so imprecise that it is misleading.

When well-connected interests (who include not only business people) influence policy, Caplan writes, it's at the margin and, if anything, waters down what the majority wants. Caplans notes that more-educated people tend to understand economics better than less-educated people. Without "elite" influence, tariffs and minimum wages might be more destructive than they are.

Well, if the state is not "the executive committee of the ruling class," as Marx claimed, what is it? It's a bazaar where candidates offer goodies to blocs of economically illiterate citizens. The currency is the vote. To gain power, politicians need to win a majority—repeatedly. Yes, the people are propagandized, but just as businesses fail when enough consumers exercise skepticism about a product, regardless of advertising, so voters can exercise skepticism about the politicians' claims. People are not robots, and they encounter competing sources of propaganda/information. The joint that connects official propaganda to popular opinion is, to say the least, loose. If people are gullible, who's to blame?

What's the bottom line? No one can triumph in a struggle without first identifying the adversary. If the adversary is a shady, manipulative, nearly omnipotent ruling class, that would require one strategy. But if the adversary is the public's economic illiteracy and, as Mises repeatedly put it, its failure to grasp its "rightly understood (i.e., long-run) interest" in the free market, that's another matter entirely. Since that is indeed the case, freedom advocates should act accordingly.

The battleground is human understanding and nothing else, not even institutions, Mises says. As he wrote in Human Action, using 1930s monetary policy as an example (emphasis added):

"Whatever the constitutional state of affairs may be, no government could embark upon 'raising the price of gold' if public opinion were opposed to such a manipulation. If, on the other hand, public opinion favors such a step, no legal technicalities could check it altogether or even delay it for a short time."

Democracy and Free Stuff

Democracy: the matching up of people who want free stuff with politicians who promise free stuff. Problem: free stuff as they all imagine it does not exist. 

However, it does exist in the market, as explained by Frédéric Bastiat in Economic Harmonies, chapter 8, "Private Property and Common Wealth." See my discussion of that chapter.

How Dare You Vote!

If you have not mastered Frédéric Bastiat's "What Is Seen and What Is Not Seen," how dare you vote! How arrogant of you to presume to set rules for everyone else! Do something constructive on election day: stay home and mind your own business.

TGIF: The Economic Way of Thinking Can Save Lives

Thomas Sowell

The Cambridge economist Joan Robinson (1903-1983) wisely said, "The purpose of studying economics is not to acquire a set of readymade answers to economic questions, but to learn how to avoid being deceived by economists."

Excellent point, though I would both broaden and narrow her category of suspects. I would include most politicians, bureaucrats, pundits, and social-science and humanities professors in the suspect group. And I would exclude the economists -- spoiler alert: primarily those of the Austrian school, although others stand out -- who paint a much more realistic picture of the world than the others do.

For the record, Robinson was sympathetic to John Maynard Keynes and, later in life, communist China's Mao Zedong, and North Korea's Kim Il Sung. Obviously, her study of economics did not teach her how to avoid being deceived by all who represented themselves as economists. (I heard once that Che Guevera became head of Cuba's national bank in 1959 because when Fidel Castro asked his cadre, "Who here is a good economist?" Guevara, thinking he heard, "Who here is a good communist?" raised his hand. But that's apparently apocryphal.)

At any rate, mankind would have been spared a good deal of misery had people learned at an early age to engage in the economic way of thinking. If I were to sum it up in a short phrase, I would say: in a world in which the law of identity, causality, and scarcity rule, you can't do just one thing. Human action has consequences. This apparently is also the first law of ecology, but oddly, environmentalists (as opposed to humanists) seem ignorant of it.

The point is that all human action has rippling consequences across society and across time. The economist who called his textbook The Economic Way of Thinking, the late Paul Heyne, wrote, "All social phenomena emerge from the choices of individuals in response to expected benefits and costs to themselves." (Happily, Peter J. Boettke and David L. Prychitko keep updating the book. It's in its 10th edition.)

Heyne's maxim applies to the choices of politicians and bureaucrats also. So before proposing or endorsing a government policy, one ought to wonder about the social phenomena that are likely to emerge from it. Economics is an indispensable tool in this respect.

Henry Hazlitt's classic, Economics in One Less, is a great way to get started. Hazlitt wrote, "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups." Hazlitt's book elaborated an important message of his intellectual ancestor, Frédéric Bastiat, the 19th-century French laissez-faire liberal, in the classic essay "That Which Is Seen and That Which Is Unseen."

Individuals who adopt this way of thinking are better equipped to judge the promises of politicians, etc. who support taxes, minimum-wage laws, rent control, general wage-and-price controls, and the rest of the program of political authority over contractual freedom and other peaceful conduct. Even well-intended regulations will have unintended bad secondary consequences. Good intentions are never enough.

Any good introduction to the economic way of thinking will introduce readers to concepts like opportunity cost, the unseen, sunk costs, the margin, and tradeoffs. Most people seem to intuit some of these in their own lives. But they fail to do so when it comes to society as a whole. They are encouraged by politicians and pundits to think that common sense in private life does not apply to the big picture.

Opportunity cost refers to the fact when you choose a course of action, you necessarily foreclose another course of action. The true cost, then, is the (subjectively judged) next-best choice forgone. If you buy something for two dollars, your cost isn't really two dollars. It's what you regard as the next best use of those two dollars -- the future not chosen. You might decide afterward that you made a mistake: "I could've had a V-8!" Good economists do not regard people as omniscient robots.

Opportunity cost is another way of looking at trade-offs. If you do or choose A you can't do or choose B. Thus you trade B for A. Trade-offs are inescapable. Thomas Sowell, for whom the word genius is woefully inadequate, dramatically drew attention to this feature of life when he wrote, "There are no solutions. There are only trade-offs." Today's problems, he adds, may well be the result of yesterday's solutions. We'd do well to bear this in mind, especially in deciding what the government should be doing (if anything).

Opportunity costs and trade-offs are examples of the "unseen," another important concept in good economics. Bastiat's fable of the broken window (see link above) debunked the myth that destruction stimulates the economy by prompting spending and thus makes communities or nations as a whole richer. Bastiat showed that a town does not get richer when a store owner has to buy a new window. Sure, he spends money, benefiting some people in town, but wouldn't he have spent the money on something else? What else? No one knows. It's unseen. But we know that he and others are now worse off. The owner has the window, but he would have had a window plus whatever he wishes he could have spent the money on. No general enrichment occurs.

Remember that next time a pundit rhapsodizes about the silver lining in earthquakes and hurricanes ("Think of the jobs that will be created!") or a politician proposes to spend your money. Ask yourself, "What sort of things won't happen?"

Although many other concepts are entailed by the economic way of thinking, I will mention only one more variation on the unseen. This one has incited ugly bigotry and cost many lives: it's the concept middleman.

No one has documented this as well as Thomas Sowell, not only its economic dimensions but more broadly as well.  As Sowell shows in many works (see, for example, Black Rednecks and White Liberals), middlemen -- peddlers, storefront and chain-store retailers, importers, and money lenders -- perform an important service in the market by matching up people who would gain from trade but might otherwise have a hard time finding each other. Retailers specialize in matching manufacturers with consumers, sometimes extending credit, while wholesalers match manufacturers with retailers. Money lenders specialize in matching lenders with borrowers. (Estimating the creditworthiness of borrowers is no piece of cake.)

In short, middlemen save us a lot of inconvenience. Free exchange is win-win or it does not take place. If they do their jobs well, middlemen make us richer, which is why they earn profit. If their function were inherently superfluous, they would be driven out of business by better business forms.

Alas, the value produced by middlemen is unseen by the economically ignorant, but it is real. Historically, successful middlemen, even if they were only slightly richer than the people around them, have been despised for their success, especially (but not exclusively) if they had started out poor and were immigrants who noticeably differed racially or ethnically from the majority population. Why? Because the ignorant believed the middlemen were exploiters. They made good incomes seemingly without creating anything. They "merely" moved goods or money around or made them available sooner rather than later -- as if place and time were irrelevant. Where's the value in that?

Sowell's work shows that this animosity born of economic ignorance and envy is at the bottom of a great deal of the world's racial, ethnic, and religious bigotry and violence, including mass murder, even when such ignorance is obscured by added rationalizations. (Demagogues often fanned that bigotry for political gain.)

"Middleman minorities" have in fact been the most persecuted groups in history all over the world, Sowell writes. That description might bring the Jews to mind, but Sowell shows that the Jews were far from unique in that respect. His list of chronically persecuted and even slaughtered middleman minorities includes the Chinese in Southeast Asia, Lebanese in west Africa, Indians and Pakistanis in east Africa, Armenians in the Ottoman Empire, Ibos in Nigeria, Parsees in India, and Tamils in Sri Lanka.

The magnitude of that violence, Sowell says, dwarfs that of other violence. Middleman minorities were hated not only for their higher incomes but also for the distinctive cultural traits that made that success possible, among them thrift, willingness to work long hours, strong families, and so on. The majority population often was at an economic disadvantage because of its cultural disadvantage; it wouldn't or couldn't compete against the minority, fanning the hatred.

The story is tragically common. Sowell says that while the overseas Chinese and other groups have been called the "Jews of [insert pertinent location]," that could easily be turned around: the Ashkenazi Jews were the Chinese, Lebanese, etc. of Europe.

While emphasizing these beleaguered groups' commonalities, Sowell does not deny the uniqueness of each group's story. The Nazi's unprecedentedly bureaucratized and mechanized elimination of Europe's Jews, of course, comes to mind. Nevertheless, Sowell writes in Black Rednecks and White Liberals (PDF), "In view of what was actually done to some of these other groups [the Chinese and Armenians, for example], there is little reason to doubt that their persecutors would have used such technological and organizational capabilities [as the Nazis used] if they had them." Sowell is no ivory-tower, library-bound intellectual. He's traveled the world more than once for an international perspective on this and related issues.

As I said, mankind would have been spared a great deal of grief -- and would have been much richer -- had people early on learned the economic way of thinking.

TGIF: Sam Harris on Saving Democracy from Voters

Neuroscientist/philosopher Sam Harris caused quite a stir recently by defending the social networks' conspiracy (his word) to suppress news coverage of Joe Biden's son Hunter's smoking-gun laptop shortly before Election Day 2020. Harris said the suppression was justified because Donald Trump was such a threat to America that he had to be defeated whatever the cost to the election's integrity.

In other words, according to Harris, such tampering is okay as long as he deems it necessary to save American democracy from the voters.

The social networks are privately owned, of course, but remember that Facebook chief Mark Zuckerberg has acknowledged that the FBI warned him, shortly before the New You Post broke the laptop story, that unspecified major Russian disinformation aimed at the election was about to surface. The authenticity of the laptop, with its damaging emails about Hunter Biden's lucrative business dealings with Ukrainian and Chinese entities while his father was the vice president, was known early on and has since been confirmed by others. Even the New York Times now concedes it. Allegations of Russian election tampering had as much merit in 2020 as they had in 2016, when Trump was portrayed by his critics as a Russian stooge.

But with or without prodding from the FBI, the social network operators, should not have suppressed the laptop story for a host of obvious reasons. These businesses acquired huge numbers of participants on the promise that they would be open forums. When they first began to interfere with that process, the networks let users down. To do this during a presidential election is a particularly egregious disservice. Why do people still depend on them for information? (No, this does not justify antitrust action.)

I leave it to others to debate whether Harris's assessment of Trump is accurate. I'm more interested in the principle Harris has set out.

Although I am as far from Trump fandom as anyone could be, the first question I would ask Harris is whether he considers himself the only person wise and trustworthy enough to decide if a candidate is sufficiently threatening to justify concerted suppression of unflattering information about the other candidate. If he says yes, then he's as self-centered as Trump. If he says no, he might do us the courtesy of spelling out how that decision would be made. Does he want a constitutional office created? How would the decider be chosen?

If he were to answer my questions, I would move on to this one: what makes him think that if his principle was adopted, he would like its future applications? Supreme Court justices have often disappointed the presidents who appointed them. For similar reasons, the decision makers anointed to carry out the Harris principle might somewhere along the way disappoint him. Harris must be a lousy chess player because he doesn't think even two moves ahead.

Still, Harris's remarks do raise an interesting dilemma. It's not a new conundrum: what if democracy looks to be on a suicide course? Does the "sacred" principle of majoritarianism, which libertarians as individualists abhor, extend to the principle itself? Or is it proper to cripple democracy to save it?

Small-d democrats might say, "Yes -- temporarily." But there's the rub. The future is uncertain. Temporary in intent is not necessarily temporary in fact. Governments taught us that long ago. We know that people don't like to give up power, as Lord Acton taught us. Power doesn't only tend to corrupt; it attracts the already corrupt. Wouldn't that suggest that democracy should never be suspended or tampered with in the present for fear that the winner of an election might suspend or tamper with it in the future? What say you, Sam Harris?

If this problem is addressed only after it arises, it's probably too late. The time to think about it is before a democracy with few real limits on power is launched. The War Games line, spoken by the computer after learning that nuclear war is futile, applies: "The only winning move is not to play."

It's not as if the original classical liberals and their libertarian descendants didn't warn us. Individualist political economists and social philosophers long ago pointed to the dangers of a democratic state with the power to meddle in all aspects of people's lives. For these thinkers, the whole point of laissez-faire in the age of democracy was to keep elected rulers, and thus the electorate itself, out of our private peaceful productive affairs so that the contest for political power would not become socially and economically disruptively cutthroat. When the government is just about omnipotent, everyone will want to get to their hands on it -- if only for defensive purposes.

Even if those pioneering political economists did not want to dispense with government entirely (a few did), they understood that society essentially runs itself without a heavy-handed state because people generally understand that their best interests are served through cooperation with others. Thomas Paine, for example, in Rights of Man wrote:

Great part of that order which reigns among mankind is not the effect of government. It has its origin in the principles of society and the natural constitution of man. It existed prior to government, and would exist if the formality of government was abolished. The mutual dependence and reciprocal interest which man has upon man, and all the parts of civilised community upon each other, create that great chain of connection which holds it together. The landholder, the farmer, the manufacturer, the merchant, the tradesman, and every occupation, prospers by the aid which each receives from the other, and from the whole. Common interest regulates their concerns, and forms their law; and the laws which common usage ordains, have a greater influence than the laws of government. In fine, society performs for itself almost everything which is ascribed to government.

Thus, at most, governments should be kept on a short leash, with their powers dispersed and their missions held to the barest minimum necessary to protect the peace, that is, individual rights. If we can eliminate the state altogether, even better!

What the good liberals didn't tell us -- because there's no magic formula -- is how to keep government to the bare minimum. Constitutions are no guarantee, are they? Today's libertarians are still working on cracking that nut. Most people are not going to read books on political philosophy or economics, even something as accessible as Frédéric Bastiat's The Law. So somehow we must strive to create a taboo against asking the government to do anything more than keep the peace in ways that respect everyone's rights. How do we do that?

Ten Favorite Books

Keith Knight, host of the Don't Tread on Anyone podcast, interviewed me about ten of my favorite books. 

Bastiat Foresees 1/6

"As long as it is admitted that the law may be diverted from its true purpose—that it may violate property instead of protecting it—then everyone will want to participate in making the law, either to protect himself against plunder or to use it for plunder. Political questions will always be prejudicial, dominant, and all-absorbing. There will be fighting at the door of the Legislative Palace, and the struggle within will be no less furious."

Frédéric Bastiat, The Law (1850)

TGIF: Is Socialism Good in Theory?

This is an expanded version of something I wrote for The Freeman, October 2003, during my tenure as the editor.

Socialism has been mortally discredited on economic grounds, thanks to Ludwig von Mises, F. A. Hayek, and history. But for many people it has not been discredited on moral grounds. You can tell this by how often people say that while socialism doesn’t work in practice, it is good, even beautiful, in theory. (Even Thomas Sowell has said that.)

Strange notion—that a theory which doesn’t work in the world can somehow still be good. Where else is it to be judged? William Graham Sumner, I believe, pointed out the contradiction: there must be a good theory that explains the system that does work in practice, but that theory would conflict with the other theory also held to be good. So we end up with two good but conflicting theories. Something is wrong.

Keith Knight Interviews Me

TGIF: Trading Places

"What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war." --Henry George

When Donald Trump can propose tariffs on imported steel, aluminum, washing machines, and solar-panels without being roundly booed off the stage, one has to wonder if reason has any power to win the day. Is this truly a democracy of dunces?

Read TGIF at The Libertarian Institute.

TGIF (The Goal Is Freedom) appears on Fridays. Sheldon Richman, author of America's Counter-Revolution: The Constitution Revisited, keeps the blog Free Association and is executive editor of The Libertarian Institute. He is also a senior fellow and chair of the trustees of the Center for a Stateless Society and a contributing editor at Antiwar.com.

Become a Free Association patron today!

Make-Work Is Wasteful

My final column for the American Institute for Economic Research is "Make-Work Is Wasteful."

All Economies Are Service Economies

My column "All Economies Are Service Economies" is posted at the American Institute for Economic Research.

Free Markets Reduce Consumption Inequality

My latest column for the American Institute for Economic Research is "Free Markets Reduce Consumption Inequality."

Storm Clouds and False Silver Linings

Yet another column at the American Institute for Economic Research: "Storm Clouds and False Silver Linings."

TGIF: We Are the Economy They Want to Regulate

Critics of the libertarian philosophy think they can score points by calling libertarians “market fundamentalists.” It’s supposed to conjure images of dogmatic religious fundamentalists, just like the term global warming denier is supposed to conjure images of Holocaust deniers. It’s a smear, of course, and if you think the tactic discredits those who employ it, I agree.

The fact is that libertarians cannot be market fundamentalists. Why not? Because in the libertarian worldview, the market is not fundamental. What’s fundamental is every person’s right to be free from aggressive force. So fine, I’m a freedom fundamentalist. Guilty.

Read TGIF at The Libertarian Institute.

TGIF (The Goal Is Freedom) appears on Fridays. Sheldon Richman, author of America's Counter-Revolution: The Constitution Revisited, keeps the blog Free Association and is executive editor of The Libertarian Institute. He is also a senior fellow and chair of the trustees of the Center for a Stateless Society and a contributing editor at Antiwar.com. Become a Free Association patron today!

Mandated Paid Family Leave Harms Its Intended Beneficiaries

My latest article at the American Institute for Economic Research is "Mandated Paid Family Leave Harms Its Intended Beneficiaries."

Trump, Russia, and Business

If Trump's business interests explain his nonbelligerence toward Russia, wouldn't that support the the pacifist case for free international trade? If goods don't cross borders NATO soldiers will.

Ironically, Bastiat, Cobden, and Bright could be vindicated by an ardent protectionist.

Things Frederic Bastiat Did Not Write (But Obviously Thought)

1. Paris gets fed.
2. If goods don't cross borders soldiers will.

(HT: David Hart of Liberty Fund)

Bastiat and Subjective Marginal Utility

Frederic Bastiat really was a precursor of the Austrian school. 

Menger was indeed a revolutionary, but that does not mean that no one before him glimpsed ideas that would later blossom into the Austrian school. As far back as Socrates, thinkers grasped the theory of subjective value in the praxeological sense, and we find a nearly complete subjectivist-marginalist framework 20 years before Menger took pen to paper — in the work of Frédéric Bastiat.

In Bastiat’s unfinished magnum opus, Economic Harmonies (1850), he, like Menger, put the spotlight on the choosing individual and what she tries to accomplish through exchange. Trade, for Bastiat, is an exchange of services that will render useful things: I’ll do something for you (furnish a useful thing, for example) if you do something for me. It’s up to each individual to evaluate the terms and decide if the exchange is worthwhile. Methodological individualism, marginalism, and subjectivism are all to be found in Bastiat.

Read about it here.