Friday, November 21, 2008

Why America Isn't Way Ahead

Tibor R. Machan

In his recent book, Post American World (W. W. Norton, 2008), Fareed Zakaria, host of the disappointingly drab and no longer original CNN TV program GPS (Global Public Square), made some excellent points about how it is with the U.S.A. these days. The central point of his thesis was that America hasn't so much deteriorated, economically and otherwise, but that other countries are beginning to catch up with it now. I myself had compared this phenomenon several years ago to that famous U.S. basketball "dream team" which for a while was way superior to others around the world. In time, however, the national teams of other countries caught up and by now the Americans aren't certain winners at the various international tournaments.

Similarly, the United States, which had been an exceptional country for a long time--despite some of its serious flaws (slavery, military conscription)--is no longer alone in the world with its substantially free institutions. It is no longer the only major country that has a substantially free market economy. Its civil libertarian legal system is also beginning to be replicated elsewhere. And some of the drastically different countries, which had been out and out tyrannies and in which human advancement had been nearly completely retarded, are no longer so different. Take China, for an example, where although much of the old communist ideology is given lip service, the actual economic policies have freed up much of the society's economic energies. Indeed, this is evident in many other countries where there are no fully free institutions but elements of free market capitalism are gradually becoming prominent.

Because the U.S.A. was virtually alone for the better portion of its existence with many free institutions, especially those bearing on economics and the free development of ideas, enormous development occurred here. The immense wealth of the country, as economists like Adam Smith had predicted, arose from removing the government as the primary director of economic affairs. The Wealth of Nations, Smith's famous and path-breaking book that practically invented free market economic science, came out in 1776 and America had followed its advice pretty closely (though by no means fully). In consequence, the country lurched ahead economically, of all others around the globe.

This also produced some undesirable but subtle side effects. The welfare state feature of the American system also grew tremendously; the political power of big labor unions and industries became nearly unchecked so that members could cut some truly awesome (though less than fully voluntary) deals to gain high wages, subsidies, protectionist measures, etc. Indeed, it is arguable that compared to those around the rest of the world, American industries became spoiled. Like the dream team, they could pretty much sit on their laurels.

This is not about whether they deserved it. This is about whether the economic conditions in America made the flourishing of enterprise at all levels quite impressive. The country became the economic model to emulate throughout the world, the economic leader. And this position engendered a great many features of American society that became entrenched, practically fixed. High salaries and wages, good credit ratings, comfortable living for millions, and there-through the envy of the world.

But as other countries started to learn from the Americans, they made progress too, including in their competitiveness with American industry. Given that economic agents around the world had far lower expectations than did American ones, their ability to pose serious competition to Americans grew by leaps and bounds. In time the Americans had to realize that they were no longer able to coast so easy in various areas of the economy and maybe had to tighten their belts, lest they be dispossessed of their economic superiority. The auto industry is a good case in point.

But once people get used to living exceptionally well, it's not an easy thing to say good bye to this advantage over the rest of the world. Great expectations, dreams and all, do get checked by new realities but the mind tends to resist this. And that is where we are now, along with some stupid mistakes made by the ever meddling politicians and bureaucrats who populate our welfare state.

Still, this isn't the end of the world. Once it is acknowledged that the substantially free ride that came from comparatively superior institutions is over, effort and innovation will have to double up and America could well remain on top, though not by default. That is the hope that president-elect Obama ought to be telling us about, not the vague stuff most folks associate with getting a free ride, by way of the largess of the welfare state which is no longer affordable.

Thursday, November 20, 2008

"Gifts" from Government

Tibor R. Machan

It was as if President Bush became Santa Clause. An MSNBC-TV anchor announced that the president signed into law a bill that extend unemployment compensation payments to jobless Americans and said, without flinching, that this is "good news." Only mainstream nonpartisan media can carry this off.

For starters, extending the period of time the unemployed will receive money from Uncle Sam is not such good news, even for the unemployed. It doesn't encourage them to find a new line of work from which they could then make an honest living, perhaps even a better one than they made from their old job. Also, the source of the unemployment funds are not personal wealth of donors who do not need to be paid back but come from members of current and future generations, thus making the unemployment payments a kind of loan from unwilling strangers. Overall, the funds turn out to be a loan which will be a burden on the unemployed once they get a job again. Then--and this one is a real lulu--the unemployment funds will be a burden on millions of yet unborn Americans while they had no opportunity to have any say about how the funds should be spent. There goes "No taxation without representation" down the drain even though it was one of the victories that had been won at the founding of the country.

But there is more. What is a professional newscaster doing praising a dubious public policy, especially one that so clearly amounts to robbing Peter in order to pay Paul? Is it really a good thing for a society to practice this way of dealing with problems? Does it teach a good lesson to young people concerning responsible household management and personal finance? One would hope that funding people's expenses by this means isn't something anyone would want to advocate. It is totally unproductive. Any gain by the unemployment compensation recipients must be a loss to those who will have to cover the public expense involved. Yet a major news anchor calls this "good news"!

One way some political theorists and commentators justify policies involving this kind of transfer of financial burdens from one group of Americans to another is by claiming that we are all in the same boat, that America is, after all, a big family or team and everyone must be ready to help out everyone else, especially in an emergency. But this is a myth--we are not a huge family, not, especially, in a country with some 300 million citizens with a immense variety of backgrounds and beliefs.

It is often forgotten that the kind of resource transfer involved in providing the employed with compensation does not even amount to helping. Help is something that's given voluntarily, as when one makes a contribution to the Red Cross or a philanthropic group that supports poor children, stray animals or medical research. Funding the program isn't voluntary and amounts to an unwillingly assumed burden on both living and yet to be born citizens.

Those who claim that all this must be accepted as the price of membership in a human community don't appreciate that such public policies actually undermine the humanity of the community. They make out of people involuntary servants of one another, robbing them of the freedom of choice to contribute to each other when in special need. Civilized people do not simply dip into their neighbors' resources when they are in special need but make a request and await the granting of such a request. Only parasites take from others without those others' consent.

Then of course there is the corrosive impact of public policies such as unemployment compensation when they make it a matter of public policy to treat people as if they could be used by others without their consent. And what about the ill effects of using unearned resources to support oneself and one's family? It is in fact quite humiliating to go on unemployment and, then, it doesn't quite serve to make up for the income one earned while working for pay.

But, of course, the system is now thoroughly entrenched and undoing it would take a revolution, a widespread realization that people must lend a hand to each other of their own free will and not by being commanded to do so by government officials who really have no moral authority to do this. Still, it is useful to call to mind the fact that in a free and just society no one is another's slave or involuntary servant, even in times of emergency.

Tuesday, November 18, 2008

Society versus the State

Tibor R. Machan

Some careless people, even with academic credentials, confuse the state and the government. But just think, there is no consent where the state is concerned whereas with government you can have, even if it is rare and difficult, the consent of the governed.

Over the centuries countries have mostly had states, organizations that involve some few people ruling, regimenting, regulating the vast majority. This is statism, wherein people are seen as but small parts, even cells, in the large body of the state. Prominent statists were Plato (read in a certain way), Hegel, Marx, and the Nazis, Fascist and Communists. For these folks the individual lacks independent significance. It isn't that individuals do best in life when they form communities among themselves but that they lack an identity apart from membership in such groups. As Marx called us all, we are species beings, ones whose very nature is firmly, irrevocably linked to all the rest Choice is, of course, impossible to such people and is viewed as but a mirage.

A free country, in turn, consists of a large number of individuals who choose, once adults, to be together, to form social units of many varieties but reserve the right of exit. They are at odds with the statists exactly on this point. Statism doesn't accept that individuals are free to be or not be part of a society and that in principle, at least--though with admittedly great difficulty and disadvantage--they could even be hermits. (But it is better to be a hermit than a member of a Fascist or communist state!)

I am moved to remark on all this because several of the people with whom I associate in the academy insist on claiming that everyone belongs to society and that thinking of people as having independence, the right of freedom to choose, amounts to regarding them as atoms, unrelated to anyone else. (The image is silly, of course, since atoms are tightly linked to each other.)

From this rejection of independence follows, of course, the belief that we are all obligated to the state and those who elect to speak for that state may regiment us around, compel us to follow their vision of how we must relate to other people. For centuries and even today many political thinkers and leaders held this idea so the notion that individual have natural rights to their lives, liberties, and property had been rejected and forcibly resisted, too. And indeed it still is, even in that famous free country, the U. S. A.

For example--and many could be listed--the idea of taxation really amounts to the claim that everyone with resources may be compelled to part with quite a bit of it so the "leaders" can do with it as they judge right. And that means, of course, that everyone is subject to forced labor since a great many people's resources come from their work. By the collectivist view this work is the state's property! (Even Karl Marx had some trouble with this notion!)

I am proud to report that I resist such collectivist thinking not just in theory but in practice, as much as I am able. For a small example, instead of staying in hotels, where the proprietor is legally required to take some of my money and hand it to the state, I stay with friends and acquaintances as much as I can. Then I will take them out to dinner or show them my gratitude some other way. I may even "rent" their spare car. In short, I pit the free society of which I am a part against the coercive state into which many folks would gladly conscript me.

I urge you to do the same! On many other fronts, too, one can legally evade the state and, thereby, statism. One need not be a bomb thrower, which tends to harm innocent bystanders. One can come up with various ways to remain relatively free, more so than most, even while the agents of the state, as well as their academic cheerleaders, manage to command the police and army in their efforts to impose their will. Let us continue the American revolution and not make it easy for them. In time these statists might indeed wither away and leave us only with a remnant that makes sense, a just and free government that governs with the consent of the citizenry.

Sunday, November 16, 2008

Are the Poor Petrified?

Tibor R. Machan

When I came to America I was seventeen and a half and once I turned eighteen I ran away from my family. My father was a brute and in America I didn't have to accept him as my lord and master past age eighteen.

But, of course, I had nothing at all to my name. I did manage to sneak into the house late one night and take some of my clothes but they were very few. I was really poor but I was finally free, not only of the political system of the country where I grew up, Hungary, but also of my tyrannical father. Nothing else but free! But that was a lot!

First I went to the Salvation Army but it wasn't what I was hoping for so I approached a friend and borrowed $75.00 for a couple of weeks' room rent. The place was not much more than a closet but had a bed and sink and I was glad of it all. I went out an got a job, too, although I was also attending high school and as a new arrival had problems with English. Still, I got a job as a short order cook, preparing salads in what now would be considered a fast food restaurant. A few weeks later I got a better job, in a swankier restaurant, as a bus boy, but it didn't last long since they served liquor and I was too young. I got fired. So then I found another job--as a draftsman at Carrier Air Conditioning. I had some talent drawing and it came in handy here. This was an actual half time job and allowed me to continue with school.

Slowly but surely I saved a few bucks, even established credit with some stores which later served me well with my credit rating. On and on I went, two steps ahead, one behind, more or less. There was also a serious recession in the country after a while and I became unemployed since Carrier couldn't afford me. I went on unemployment for two or three weeks but it got so annoying, to wait in line and then have very little to spend while doing nothing much that I quit. I left the town in which all this went down and found work in another state, not without a little help from friends whom I sought out. I kept getting odd jobs--I recall one was repacking hundreds of boxes of motor oil, which lasted about two months--and I also rented some better places than I did initially, after I bolted from home.

Now I could continue with this but there are millions of such stories, involving folks who are poor and then got less poor and in time joined what is dismissively called the middle class--as if people permanently belonged in those artificial classes conceived of by political theorists of one kind or another. Suffice it to say that by way of some effort, persistence, prudence, and luck I eventually stopped being poor, got some savings together, started a family, bought a home and another and then another, each a bit better than the one before. And my jobs, too, improved because I persisted in going to school and in time earned several degrees.

None of this was awful although at the time some of it seemed so and even scared me some until I learned how to deal with the difficulties. (I insisted on learning to speak nearly fluent English, even though I was a late arrival in America, partly because I was told back in Europe that no Hungarian will ever lose his accent, partly because I wanted to make a living speaking and writing!)

My purpose in telling this story is to point out that poor people aren't crippled. They lack resources other than their resolve and tenacity but those are not negligible by a long shot. If you are alert to opportunities, if you are diligent, if you don't get all dejected by being surrounded with wealth which you lack, etc. and so forth, you can pull yourself out of your poverty and in some cases even become immensely wealthy; it often depends on you, although a bit of luck helps.

Now all this is fairly plain, so why does it need retelling? Because so very many social theorists and commentators have a view of human beings whereby they are all stuck, petrified, frozen in their economic situations and unable to extricate themselves. So they become "the poor," a category of humanity like "the bald" or "the tall." This conception of human beings leads to the widespread belief that unless some great force, such as the all powerful and wise government, comes around to shake things up, the poor will remain poor forever. In fact, however, as the economist Thomas Sowell has reported, most American poor remain poor for about 4 to 5 years and then stop being poor. And if there is a free market for them to navigate economically, matters are even more favorable--the poverty of the poor lasts for an even shorter period.

I suppose it is a bit like talking of the sick as if they were permanently so, not just for a while, now and then, after which they could well recover. For some reason, though, social theorists are very inclined to see people as if they had no way of changing their economic circumstances. Moreover, they refuse to even consider that in certain cases people knowingly choose to be poor, economically unambitious, because they pursue different ways of self-development.

As I noted before, some of this is obvious enough but now and then it is worth reflecting on it anew. It can help us to think more sensibly, even more optimistically, about some of the dire circumstances we face in our lives.
Bailouts Destroy Prudence

Tibor R. Machan

So you notice that your income has shrunk, you may even have lost your job. So you decide to trade in your gas guzzler for a small vehicle and even reduce your monthly car payments, if you have such. And in other realms of your life, too, you may be making adjustments to cope with the general economic downturn. You cook at home instead of eating at your favorite restaurant; you do not purchase that pair of shoes you would have otherwise, etc., etc.

In short, you are acting prudently, tightening your belt, as the saying goes, in the face of the widespread economic contraction. Never even mind why the contraction occurred--some of it could actually have come around simply from people changing their preferences and behavior. (Instead, of course, it happened because the government has been abandoning its proper role as the protector of our rights and like a rouge referee, has been inserting itself into the game for decades on end!)

But now that the results of such bad government have hit so many of us, you are taking steps to deal with them. Ah, but no such luck. Instead of making it possible for you to deal with your reduced resources, instead of letting you make the budgetary adjustments you can make within the context of your own life circumstances, the politicians are insisting that if you refuse to spend the big bucks on those Detroit gas guzzlers, for example, they will tax you and hand over what they have extorted from you to the car makers, never mind your prudent choices. In time the savings you thought you could garner from your good sense and discipline will have to be shelled out in extra taxes so as to bail out those who aren’t getting your business any more. Instead of insisting that those who make the big cars and whatever else that’s no longer in demand in the market place make their own adjustments, tighten their own belts, etc., the politicians insist that they continue to be paid as if nothing had happened, no one changed his or her purchasing behavior, as if the economy continued to be in fine shape.

This is just one of thousands of results of the mixed economy, the welfare state, in which your individuality is abolished and you are treated as a member of some ant colony or bee hive. You will be conscripted to be part of it all, never mind how sensibly you may figure out to deal with the fiasco. No, you will not be allowed to use your good sense, virtue, and occasional luck to address the economic mess the politicians, bureaucrats and their rent-seeking clients produced. These folks were the ones who prevented the realization of the free market and instead created a top-down, planned or managed arena of wealth redistribution.

In such an situation it is impossible to identify the good versus bad players because the government lumps us all into the public for which it presumes to make decisions. Individuals are seen as simple cells in this public body, with governments and their cheerleaders in the academy and think tanks as the head of the body.

All of this is not something that no one could foretell. Among those who warned about where the planning done in a welfare state can take a society was F. A. Hayek, whose The Road to Serfdom, published back in 1944, pretty much foresaw it all. Members of the Austrian economic school, lead by Hayek’s own teacher Ludwig von Mises, kept issuing warnings in all their books and articles but, alas, they were ignored by the all mighty politicians and bureaucrats. (Von Mises’ book, Socialism, published in the early 1920s and translated into English in 1936, showed, among other things, that central planning just cannot produce a productive economy.)

But socialist and near-socialist dreamers kept pressing their wish upon politicians that a top-down system of economic organization be attempted, in one or another form, and in America this came out to be a mixed economy, one with capitalist as well as socialist elements. Such an economy can muddle along for a while but, in time, it simply cannot do what it is expected to, namely, produce wealth and forcibly distribute it so everyone will be equally well off. (I produced an essay for the journal The Personalist, back in 1969, “Justice and the Welfare State,” now part of my book The Right Road to Radical Freedom, in which this point was driven home!)

So if you are appalled that your efforts at economic prudence get you nowhere very fast, the culprit is our blessed mixed economy, the welfare state.