Wednesday, November 12, 2008

Exceptions Not the Rule

Tibor R. Machan

As a nearly lifelong champion of the fully free society I routinely encounter skeptics who cite cases showing that now and then free men and women do not do the best for themselves and others. From this they conclude that therefore freedom isn't such a great thing after all. Indeed, often they go further than claim that these cases support measures that check freedom for various people and organizations.

For example, the free market system would not entrust to government regulations even if now and then such regulations have done some good. Yes, of course, some regulations can produce more benefits than harms, looked at piece by piece. But there real issues is whether the institution of government regulation of the economy, of various professions, indeed of much of human life, is sound public policy.

Many years ago I saw a guest on The Tonight Show with Johnny Carson who fell out of an airplane without a parachute, landed in a tree that slowed his fall and left him totally uninjured, and lived to write a best selling book about his experience. But, I am pleased to report, he did not become an advocate of everyone jumping out of airplanes.

When one considers the institution of government regulation one needs not only to remember Aristotle's famous statement that one swallow does not a spring make. One must also consider such matters as whether serious violence is being done by such regulation to human beings--after all, governments regulate people who have not been convicted of any crime and thus are perpetrating prior restraint which, in other contexts, is understood to be unjust. It needs also be considered whether some other way of encouraging prudence and foresight are available that do not involve treating people paternalistic-ally--for example tort law or some other type of legal adjudication. There is also the moral hazard that government regulation of market agents engenders--people are given the false impression that government is taking good care of them and they can then proceed without their own strict caution as they navigate the market place. Finally, at least for this short discussion, there is the very strong likelihood of non-governmental watchdog establishments arising in a free market economy where government regulation does not serve as a supposed cautionary measure.

When I make clear that I have fundamental objections to government regulation as an institution in a free society I am sometimes labeled an ideologue, one who blindly clings to a policy, never mind the damage this might produce, a dogmatist, in other words. But that is quite wrong--a principled opposition to various practices can stem from a careful study of the history of such practice as well as analysis of its likely impact. One who in principle opposes all non-consensual sex isn't some dogmatist but has learned that it is simply unacceptable for human beings to use one another without full consent.

Government regulation involves imposing undeserved burdens on market agents, professionals and others who are made subject to it. That is wrong even if on rare occasion it may accomplish something desirable. Using coercive force against people may often be the practical, expedient thing to do but that is no excuse for it. Sadly, we do live an era when principled thinking seems to be scoffed at, demeaned, and experts tend to look at public policies in piecemeal fashion. That is akin to a personal ethics of convenience--I'll lie when it suits me, tell the truth what that works, and generally do what gets things done as I would like them done, never mind integrity, justice, and morality in general.

Government regulation is, in fact, reactionary. It takes us back to an era of mercantilism, when governments intruded on people in the market place at the government's convenience because people really didn't matter much, only the heads of state and their agendas did. Let's not go there again.

Tuesday, November 11, 2008

The Big Corporations Excuse

Tibor R. Machan

Anytime I mention to someone from the Left that I consider the scope of government way beyond justice and prudence, I am likely to be told that it is big corporations that make this necessary. And, furthermore, I couldn’t really favor liberty for all if I don’t see corporations as a threat and in desperate need of being reigned in.

So far as I understand it, corporations are just large groups of people who have hired some experts in management aiming to achieve some goal they couldn’t achieve on their own, like grow the company, make it seriously prosper. So long as they do this peacefully, without using coercion to get ahead, I see nothing wrong happening. Size is no problem. This is evident in how we deal with people--some are tiny, some medium sized, some huge but they can all get along fine if no one resorts of violence. And if some big fellow comes off intimidating, a few smaller ones can surely contain him--or her, for that matter.

What then is the big problem with corporations? As far as my Leftist pals would have it, they can wield economic power. But what’s that? They can buy stuff, expand their commercial reach, and flourish, yes, but not without first pleasing their customers. And that means they can only get ahead if they serve others in helping them do the same.

Yet there is one area where corporations can be a threat to liberty, justice, and other fine things. This is where they get into bed with governments. Only if governments are strictly limited in their scope of authority, in what sorts of things they are legally authorized to do, can this be avoided. If governments may yield to public pressure to undertake various tasks like giving subsidies, bailing out failing companies, restrict foreign trade, and so forth, this will invite business corporations to seek or lobby for their help. And there is only so much help governments can give, so those who will get it will have an unfair advantage and will also be able to wield influence and political power.

This is where the trouble with corporations arises, although various other associations can gain similar favors from government, such as unions or large professional groups. What is the answer?

There are those who say nothing can help but giving government the countervailing power which will keep corporations in check. I have never found that a convincing solution. After all, usually the problem is government and corporations (or some other group) getting into bed together and running roughshod over others. (This is that famous process euphemistically called wealth redistribution and commonly advocated, naively, as a means by which the unfortunate will be helped but which in fact involves a lot of what economists call rent-seeking, taking from Peter and providing for Paul.)

If one is an economic determinist, one may think that nothing can be done to prevent the corporate state from engaging in predation. But what if education and some prodding can in fact help? What if people could learn, in time, that governments need to be limited to the exercise of certain specific, limited powers--as the American Founders put it, to “securing [our] rights”? What if we could advance along such lines just as we have made progress in the fight against slavery, racism, sexism, and other evils?

The approach taken by libertarians, over all, is to have confidence in the power of reason, in the capacity of human beings to learn to be just. Takes time, yes, but is it hopeless? If it is, then so would be entrusting the taming of the giant corporations--the title of an early book on this topic by Ralph Nader--to governments. Public choice theory has pretty much demonstrated that it is futile to count on government to behave in the saintly way it would have to if this approach held out promise.

The famous statement of Lord Acton, that “Power tends to corrupt; absolute power corrupts absolutely,” is right and undercuts the hope that the way to contain corporations is by giving governments greater powers. Why those on the Left don’t appreciate this baffles me.

Monday, November 10, 2008

The End of Exceptionalism

Tibor R. Machan

America has been thought of as an exceptional country because of its basic political principles. In particular, the recognition of individual rights, the sovereignty of the citizens instead of some king or even democratic assembly, rendered the country extraordinary as far as the nature of human community life is concerned. Although there have always been some who tried to point out that statism is a farce, that government is not what's important in human communities but the individuals who make them up, this idea gained explicit official recognition (in law, in public policy) only with the emergence of the United States of America. The Declaration of Independence, specifically, laid out ideals of human community life that were entirely exceptional, unique, compared to what has prevailed throughout history and dominates the world even now.

But none of this implies that what made America exceptional was the sole feature of this country's system of laws and public policies. America has always been a mixed system. It barely escaped become a monarchy--George Washington had been offered the throne but refused it! Alexander Hamilton much preferred the centralized government of Great Britain to the loose federation that had been the original USA. There was a huge debate about whether the country should have a traditional government-managed central bank and the supporters eventually won.

In short, many, many aspects of the United States of America did not conform to what made it exceptional, namely, its substantially free system. The capitalism so often described as America's political economy was never complete or pure, not be a long shot. Everything from blue laws in thousands of local communities to eventually massive taxation throughout the country undercut the capitalist elements. And later came all the government regulations, based on a (deliberate?) misreading of the U. S. Constitution's "interstate commerce clause." ("To regulate" was supposed to mean "to regularize" not "to regiment.")

None of this should be surprising. After all, for centuries on end throughout the world the dominant form of human community life has been and still is some variety of statism, a top down rule by some people of the rest. In most of history the rule has been brutal, unlimited, and only in some spots and after a while did it become popular to limit governments as the Magna Carta proposed. The notion that government should confine itself to "securing [our] rights" was indeed exceptional and still is. Opposite ideas, however, were quite popular, also, and still are, including with most of the intellectuals and scholars in the field of political theory. (One need but consider that in a supposedly free country education from the primary to the higher levels is mostly administered by governments. That is directly opposed to the notion that government should be limited in its scope to securing our rights!)

One reason all this needs to be considered is that too many people are aghast that Barack Obama is leaning very strongly in the direction of a socialist type government. That would be one wherein the wealth is deemed to belong to society, people themselves belonging to the state, and governments distributing and redistributing much of the country's wealth. There are numerous prominent law professors, for example, at prestigious universities who write books devoted to arguing that private property rights are a myth. (Just consider Professors Liam Murphy and Thomas Nagel, very prominently published book, The Myth of Ownership [Oxford University Press, 2002].) So the idea of socialism is by no means extraordinary in this society despite its going against its basic, original political philosophy. Senator Obama is, in fact, much closer in his outlook to what millions of college students are taught day in and out than to what made the country exceptional by way of what's contained in its declaration and constitution.

Unfortunately all of this is not much discussed in America's high schools and colleges. So when it comes to light in the popular media, it takes most people by surprise. It is time, though, that they realize it all and maybe do something about it next time they get the chance.

Sunday, November 09, 2008

What Fundamental Change?

Tibor R. Machan

Senator Obama won over millions of voters by promising fundamental change in America under his leadership. He was not specific about what kind of change but there were hints here and there and by now a fairly clear picture of the proposed basic change has emerged.

In America the way people became better off economically is by working and earning a living from their work. A bit of luck never hurt and some also experienced setbacks. But in the main the American system did not involve fixed economic classes, huge groups of people whose level of prosperity is fixed and rarely if every changes for better or worse. Instead, the American system approximated an on-going, never ending marathon race, with people's positions changing for the better or worse, depending on their self-initiated effort and some luck. Over all, the economy was taken to be, mostly correctly, a win-win process. One person's gain didn't come at another's loss--in all the billions of deals that were struck, big ones or small, all the parties were taken to come out ahead, as judged by their own needs and objectives.

This, indeed, is one central reason so many people from across the globe wanted to be living in America. Elsewhere they were pretty much stuck, for a variety of reasons. They included their social situation from which it is difficult to escape without gaining political pull, favor with the government and members of the upper classes. In America the idea was that people could move without such favoritism, at least in the bulk of cases and government would stick to guarding the rules of the process, with no theft, no fraud, no deception tolerated.

But it looks like that this picture of the economy in America, admittedly never fully realized, will now be systematically altered. Instead of accepting that the citizenry is stretched out over a lengthy economic continuum, from poor to wealthy with all the steps in between and the positions they hold constantly changing, the dominant picture now looks like what it used to be in feudal times, with a small segment of very rich at one end and a huge number of poor or moderately well off at the other. And this is seen to be fixed unless someone like Barack Obama and his team of government managers interfere and forcibly spread the wealth around.

The way the Obama team sees the American economy is that it involves what is called a zero sum game--someone's gain must be another's loss. Wealth is static. For those who lack it they need to take it from those who have it. And since ordinarily that would be criminal, it needs to be accomplished politically, in which case it is deemed to be legitimate wealth redistribution, a matter of socio-economic justice!

This picture also assumes that wealth just happens, that it doesn't require that people create it. Thus no one earns the wealth he or she owns--it just happened to come his or her way. And when some have a good bit of wealth, it must mean they were overly lucky and that, of course, is quite unfair. Those who lack wealth or a good bit of it are, in turn, unlucky. There is nothing they could have done other than what ended them in their situation. And that's grossly unfair.

To remedy the unfairness of it all, the fundamental change that Barack Obama and Co., and their supporters imagine must be achieved in Washington, D. C., the center of the country's political power (certainly not its economic engine). It is not work, entrepreneurship, investment, and some luck that will bring about the prosperity of those who haven't enough of it. No, it is politicians and bureaucrats making policies that will redistribute the wealth of the country. They will tinker with the economy, regulate business, assign privileges and duties and that way they will bring about basic change. They will institute a planned economy, one that rejects the ideals of the free market, of what the Nobelist F. A. Hayek called the spontaneous order, in favor of a highly regimented system.

Of course, that fundamental change has been tried over and over again throughout history, recent and ancient. Earlier it was mercantilism that embodied the idea of a top down planned economic system. It is this system that was criticized by Adam Smith for failing to enable people to produce wealth. Later the top down idea was embodied in socialism and fascism. Both of these were in time total flops.

We will now probably see whether Barack Obama and his team can work miracles by doing the impossible, ordering people to make wealth and taking it from them and redistributing it according to their vision of fairness.