Saturday, March 14, 2009

Myths Are Born This Way

Tibor R. Machan

Education is filled with more or less accurate accounts of what is what, including human (American) history. Various champions of systems of ideas eagerly work to capture for themselves the stories that bolster their doctrines. This is one reason so many prominent statists are relentlessly spreading the lie that our current economic fiasco is the result of market forces—of the free market, capitalism, free enterprise, the unregulated market place, and so forth.

If they are successful in spreading this rank distortion, they secure for themselves and their ideological brethren a greater chance of ascension to political power, which is what statist desire most.

Defenders of the free society haven’t any political power at stake in the debate about how the fiasco was produced because in no case are they going to gain, for among other matters they do not want, political power. What such folks are after is the truth and the reason is that with the truth comes, in this instance, a more prosperous and more just political economy.

Yes, defenders of the market are also quite self-interested in this matter for they know that everyone’s lot has a better chance of improving when freedom reigns in a society. No, there is no guarantee that freedom will make us all happy and successful in life. That utopian dream is only peddled among the dishonest promoters of statism since with the state’s rise to economic power we are all supposed to do well. All one needs to verify this is to listen to the likes of Barack Obama, Paul Krugman, Robert Kutner, et al. They are all advocates of greater government power over the economy for the purpose of solving our economic problems, problems that stand in the way of the country’s flourishing. With sufficiently huge stimuli plucked out of thin air and dumped into the American, indeed, world economy at various points, everyone will be happy and, especially, equal justice will be served big time.

Free market advocates cannot make this promise because they know that none has the power to deliver such a result to millions and millions of human beings in a highly complex and uncertain economic environment. Sure, free market advocates do argue that free men and women are more prone to prosper since they are, naturally, free to turn their careful attention to their economic prospects. But that has never been a guarantee of triumph over unforeseen obstacles; it is merely the best chance of overcoming them.

So what is one to make of a letter such as this one in the International Herald Tribune (3/14-15/09): “David Brooks gives Republicans sensible advice. But for all of Brooks’s honesty, we could wait forever and neither he nor the Republicans will own up to how they overestimated the power of market forces”? We can tell that it is a clear illustration of the attempt to distort history. After all, there have been hardly any genuine, bona fide market forces at work in the American economy for decades now, not since the federal government basically seized the reigns of American finance back when the Federal Reserve Bank was established, since the dollar was destroyed as a sound currency, and since all those alphabet soup federal agencies began to intervene with the decisions of market agents in every nook and cranny of the economy. Ours, as well as those of all Western societies’ economic systems are mixed ones, plain and simple, with huge doses of socialism and fascism operating within corrupted markets.

So however well or badly “the power of market forces” would do, such forces haven’t been in evidence for honest students of economics to study and track. Instead economic history has been a history of substantially and predominantly statist forces, as they have been throughout human history with but bits and pieces of exceptions in small regions of the world. Sure, prospective market agents will naturally try to turn all of it to their advantage—that’s their job just as most of us attempt to do well in our commercial endeavors—mostly, however, in the messy arena of markets-cum-politics. Yes, the exceptions have most likely produced economic wonders that are denied only by statists who just cannot credit economic freedom for anything good anywhere—such freedom leaves them with nothing much to do! But because of the massive doses of state intervention at every turn, no clear record of how the market is doing can be gleaned from taking some time slice such as the recent fiasco and reporting on it.

There haven’t been clean, undisturbed market forces at work for us to tell just from the record of events what their impact has been on our lives. For that it is necessary to do some very honest and detailed theoretical and historical research. Instead, of course, the statists just keep asserting that the free market is responsible for every economic problem we have which, if believed by enough, will help them gain and keep political power. What free market are they talking about?

Friday, March 13, 2009

Beholden to our ancestors

Tibor R. Machan

When the idea of paying taxes, especially the exorbitant ones extorted from the well to do, is debated, defenders sometimes maintain that these are due because we owe it to our ancestors who forged institutions and other results that now benefit us all. So even our own selves, our bodies, health, pleasant looks, and, of course, any inheritance we were left by our elders do not really belong to us free and clear.

No, these are all owned by us conditionally, provided we pay back some of the goodies, through taxation and other burdens on us. We owe it, in other words, to our ancestors because they left us with lots of benefits, including such institutions as the legal system that protects us and our property. The great art we have inherited from those who went before us, for example, and the science, too, are what came our way and our use and enjoyment of these all bestow upon us the obligation to pay with our labor and resources which, of course, are to be collected from us by the government. As one prominent defender of heavy taxation and government wealth redistribution put it, "we haven't just 'come across' our unearned wealth. We--meaning the children of the rich--have inherited through a systematic institution, which needs principled defense or critique." And from this it is supposed to follow that we owe the government(!) and those it picks for its largess big time.

Well, all this is quite open to dispute and skepticism. For one thing, even if our ancestors, including parents and grandparents, left benefits and riches for us to enjoy, it doesn't follow that we owe something in return. They, too, gained from their parents and grandparents and from the surrounding world from which they obtained what they picked. And when they produced what we inherited from them, they didn't do so, at least as a rule, so as to benefit us! It is a fair assumption that they created and produced all the values they did because they believed it was something they ought to do, something important quite apart from those of us who followed in their footsteps. So we may safely assume they made their wealth, art, science, and so forth because they wanted to do it quite independently from what we inherited from them, except when, in fact, they specifically planned to benefit their offspring or some causes they believed in.

Another problem with this thesis is that when you give a gift to someone who hasn't asked for it, you don't later get to go to that individual or group and ask for payment! Unsolicited benefits are supposed to be given gratis, free and clear of obligations in return. The artists and scientists and entrepreneurs who have benefited us all unless they were coerced to do so did it of their own free will and for reasons of their own and did not attach the rider, "You may have all this provided you pay your government for it." (Why, indeed, would it amount to payback to fork out money to the government for all this? Those who provided us with the benefits are, after all, long gone and current governments are not working for them any longer but for current citizens.)

The best system for what some call inter-generational justice--for squaring with our ancestors fairly--is the private property system that does a reasonably decent job of securing for everyone what he or she has a right to, what everyone is entitled to. The country's system of property law translates this idea of the right to private property from one generation over to the next and except for cases of corruption or error, this is how rights and obligations stretch out into the future. Those in the past may be presumed to have taken good care of themselves with the aid of this system as we are supposed to do for ourselves. (Cases of corruption would be when those in the past stole from their fellows, like the Europeans did from the native Americans for instance, and when slave holders robbed the labor and time of their slaves, or when successful common criminals did this from their victims! In these cases restitution is due where it is possible to establish it through a just and functioning legal system.)

Over the history of political thought there have often been those who wanted to represent previous generations and take from current ones what they regarded as payments but it is little more than either a gross error or an outright ruse. It is a ploy by which some today get to take from their fellows and has nothing at all to do with collecting various mythical obligatory repayments!

Thursday, March 12, 2009

The Unearned Wealth Trap

Tibor R. Machan

Sometimes defenders of human liberty put their case badly and one such instance is when they defend the right to private property by identifying all expropriation or extortion as the taking of earned wealth. But it isn't a matter of whether the wealth was earned or not--quite a lot of one's wealth, the benefits one enjoys in life, belong to one even if one hasn't earned these.

Surely it is not even possible to figure out how much of what one has is earned, how much one came by through luck or accident--even in the market place sometimes there are windfall profits or earnings, as when someone sells his or her labor for big bucks yet it took little effort to provide it. Indeed, when one finds a bargain one would have paid much more money for, one is getting something extra, beyond what one has earned. Some artists, for example, sell works that took just a tiny bit of effort for huge sums and many of us work at jobs we love and would do even if we were paid less then we are. Beautiful people often get paid big bucks to appear on covers of magazines or just adorn something in a commercial. It is convoluted to claim they all earned this as if they had done hard labor to get the goodies.

So if one rests one's case for private property rights on whether the owners actually earned their wealth or resources, much of what people actually do own will appear not to be rightly theirs and there for others to claim for themselves.

Fact is, we all have stuff we just ran across, stuff that we obtained simply because of being somewhere at a lucky time or being born into a hard working or lucky family. And yet the goods that come with this luck are all ours by right, no one else's. If the opposite were true, other people could rip off our good fortunes with impunity. Any wealth we got without strictly earning it could then be construed as public property, available for others to confiscate from us. Any money we get for just being lucky would then turn into unowned resource and others could take it for themselves and trying to hang on to it would make the owners some kind of thief.

No. Even if you have what you have by sheer luck, others have no authority to take it from you. It is what is called in logic a non-sequitor to deny the point--it doesn't follow from the fact that my pretty smile gains me fame and fortune that others may take this from me, not by a long shot.

For one, that kind of outlook would make slaves of us all. People could just take any benefit we enjoy that we were born with, our talents, our attributes that are popular with others and bring wealth to us as a result. Why should it be these others rather than the original lucky ones who have the authority to use and dispose of the wealth that's come by through fortune? No reason at all. Those others who claim a share of our wealth because we came by it through luck have no leg to stand on since we didn't promise other people that they could have such wealth, the wealth we didn't earn.

Now it may appear to be a plausible idea that if one hasn't earned his or her wealth, this means others may have it but it isn't true. What makes it plausible is all the talk about how one's property involves what one has earned, worked hard to obtain. But that idea is wrong. So it follows that the belief is false that such unearned wealth is available to others, however much they might like or even need it. (After all, if one didn't enjoy the luck--say, by not having been born at all--others couldn't even imagine getting it for themselves!)

The bottom line is that what one has a right to is one's life, one's liberty, and the property that arises from these whether come by some hard way or easy. Otherwise we would all be at the mercy of other people who see fit to intrude on us at their pleasure. But they haven't the moral and should not have the legal authority to do such a thing, however tempted they are to do so.
Government Regulations Revisited

Tibor R. Machan

You might not think it considering my relentless concerns about the growing power of government, but I am not a pessimist. There are many areas of life where liberty is making advances--e.g., gays are no longer being so persistently harasses by government and even the obscene "war" on drugs may eventually give way much saner policies. But in the economic realm, where it causes so much direct damage to us all, government's interference is on the rise.

Yet many people do not fully appreciate how that interference is evident throughout the economic sphere. As a friend recently pointed out to me, many people believe that government regulation of business, industry, the various professions and so forth is but a legitimate effort to carry out the fundamental task of a government, which is the protection of our basic rights. Government regulation, according to this view, amounts to no more than shielding Innocent citizens from "the bad guys," say the likes of Bernard Madoff or the Enron team of corporate rogues.

How, then, could most people appreciate that government regulation amounts to what I have for years called petty tyrannies? All those regulators are like the cop on the beat, standing there to repel crime. Isn't that so?

There are elements of the regulatory system that do function like that, yes. For example, the SEC (Securities and Exchange Commission) polices corporate fraud, among other things, which is indeed one legitimate function of the government of a free country. And other regulatory agencies, too, do some things that amount to rights protection--for example, the FCC (Federal Communications Commission) prevents invasions by some broadcasters of others on the electromagnetic spectrum or the airwaves.

But the bulk of government regulation is very different. It involves regulation or regimentation, leading various professions by the hand to act in accordance with various codes or rules that are intended to preempt any malpractice. That is to say, such regulations target innocent people in the various professions, mostly in business but also in medicine or farming, so that the professionals avoid malpractice, so they are prevented from doing anything wrong--dangerous or hazardous. The FDA (Food and Drug Administration) is a clear case in point--their edicts to drug manufacturers and researchers is all about guiding the conduct of the people working in the industry, as is OSHA's (Occupational Safety and Health Administration).

Government regulations are, in the main, preventive measures which is why I refer to them as a species of prior restraint and policies that aren't compatible with the principles of a free country. These principles prohibit controlling people's conduct unless the people have been shown to have done something wrong. Government regulations are more akin to the policies of a police state, where the government regiments the population so as to make sure everyone is acting correctly, properly.

Measures like such regimentation are attractive because many people believe that governments are highly qualified to supervise what we do, as if they were like our parents or teachers or coaches. But the plain fact is that government is simply a bunch of other people, with no special qualifications to run our lives, to supervise us all. Many of the American Founders and various prominent presidents were aware of this so that, for example, Abraham Lincoln wrote that “No man is good enough to govern another man, without that other’s consent.”

Not only is government regulation unjust because it places some people in a position to rule others--albeit always with the excuse that this serves the public interest--but it is most often quite ineffective. Government regulators are frequently captive to the very industries they are meant to steer straight. They don't actually know much about the industries or professions they are required to regulate--for example, the SEC had no clue at all about derivatives when all the financial shenanigans occurred over the last few years. Or, as with the FDA, the regulators are so afraid of risks that they themselves facilitate illness and even death by policies that delay the availability of medicines.

As usual, the immoral turns out also to be largely impractical. And this exactly how it is with government regulations.
Regulation Mania

Tibor R. Machan

Government regulation of the American economy--with the implication for all economies--is back in favor with politicians, bureaucrats and, most importantly, certain outspoken economists. (Nobel Laureate and Princeton University professor Paul Kurgman, who is a regular columnist for The New York Times and a very frequent talks show guest is a good example, as is political scientist James Galbraith of the University of Texas at Austin.) These and a lot of other people have lamented the very moderate deregulatory efforts under the Reagan and subsequent Republican administrations. Their refrain goes, "If only there had been more government regulation, the current economic fiasco would never have happened."

A couple of matters need to be said in response to the mania for government economic regulation. First and foremost, government regulators are no Gods, nor angels, but human beings every bit as susceptible to making mistakes and even being corrupted as are all those folks who work in the market place. The question, "And who will regulate the regulators?" hasn't ever been answered satisfactorily because no one will. It is an irreparable situation--something for which Professor James Buchanan received the Nobel Prize when he and Gordon Tullock identified the problems with public choice. The gist of this theory is that all persons, in or outside government, tend to promote their own agendas. I would add that this is especially the case in government where accountability and budgetary constraints are minimal and where the very loose, vague idea of the public interest is impossible to follow as a guide to forging policy.

There is also a serious problem with government regulation that is rarely mentioned, namely, that it involves something inimical to the free society, namely, prior restraint. In the criminal law it is well recognized that no one may be incarcerated or otherwise punished unless he or she has been convicted of a crime. But government regulations impose burdens on millions in the market place who haven't been convicted of any crimes! This is unjust. Not that matters of injustice figure heavily in contemporary political thinking which is now proudly pragmatic, unprincipled, and thus allows for arbitrariness.

Third, government regulation is very, very costly and removes resources from the market place that could generate economic growth, employment, and deposits that could be used to provide loans for starting business enterprises. I am not here in the position to recount the enormous cost of government economic regulations but there are many works that demonstrate it clearly and convincingly, including such popular fares as John Stossel's early special on ABC-TV, "Are We Scaring Ourselves to Death?" Stossel showed, with concrete numbers, that the cost of government economic regulation actually results in extensive poverty, something that is the major cause of misery in a society.

Arguments for government regulation are plenty but they aren't good ones. One is based on the phenomenon of market failures but omits from considerations that there is a far greater hazard from political failures when governments regulate the market. Another is based on the myth of positive human rights, duties everyone owes to others to take care of them, a position that encourages impermissible involuntary servitude in society. The only slightly credible support for government regulation, identified in an article by Kenneth J. Arrow, another Nobel Laureate in Harper's Magazine back in 1984, comes from what Arrow called judicial inefficiencies associated with air pollution and other negative externalities or harmful side effects of economic activities such as manufacturing. But even this is unnecessary when one considers that such bad side effect could be dealt with through public health laws that prohibit defiling the air mass and other public realms.

All in all, the case for government regulation is weak and those who promote the idea seem more convinced of their own invincibility as managers of the economic lives of the rest of us than of any positive elements of the process. It is time to stop the expectation that government regulators can solve our problems.

Monday, March 09, 2009

One's Right to be Wrong

Tibor R. Machan

In a recent demonstration outside the Earl Warren Bldg in San Francisco someone was waiving around a sign that read: "A moral wrong can't be a civil right." Well, in fact it can! A simple case in point is when someone writes something that is immoral or produces pictures or movies that are morally corrupt or writes a book that praises Hitler or Stalin or Pol Pot (Khmer Rouge). In America one definitely has a legal or civil right to do all this even though it's all arguably morally wrong. And all human beings have this right, actually, whether their legal system acknowledges it or not.

Indeed, the entire point of having rights is to be in charge of a sphere of one's life, which means one is free to act well or badly within such a sphere--it is entirely up to the individual and others may not invade the sphere even if quite rightly they judge what one is doing morally wrong.

This does not mean there is no right and wrong, or that no one can know it. It means only that whether one does what is right or does what is wrong must be up to the oneself and may not be imposed on one. The only exception is with wrong conduct that is a violation of someone else's rights because in that kind of case the intervention is not for correcting the bad conduct but for protecting the victim of rights violation.

This, at least, is the way rights are understood in a fully free society or country. Obviously in regimes that do not prize individual rights and liberty, what the people "in charge" will try to do is impose their own understanding of right on everyone else, just as if these others were their children! Even in a relatively open welfare state such as America, Britain, Canada, or Germany, the government will often impose on people its conception of what it amounts to be moral or ethical, thereby robbing them of their chance to be sovereign, to govern themselves. For example, all the so called compassion that governments engage in involves forcing citizens to part with their resources so governments than can do with them as they see fit, which sometimes amounts to helping certain citizens but more often comes to supporting some favorite project of the politicians and bureaucrats. The same with forcing people to be prudent about their use of drugs or alcohol! These are all challenges individuals must face on their own or with the help of family and friends.

Why should people have the freedom to do what is wrong, provided they aren't violating anyone's rights? Because they are by their very nature moral agents which means they can make decisions based on their convictions and this is how they earn credit or blame for how they live. And doing so is a person's major life project, to do the right thing of his or her own free will. But that also means they might fail, as many of us do quite often. By not permitting one to fail at living a morally good life, one also robs him or her of the chance to succeed! And that basically amounts to undermining their very humanity, the thing that makes them human--their moral nature.

What many folks even in America do not grasp is that the most important aspect of the American political tradition, including the revolution that got it more or less fully implemented in the country, is this establishment of the regime of individual sovereignty, of demoting the king and governments in general from their pretense of being in charge of the lives of their so called subjects. Government was identified, for example in the Declaration of Independence, as existing only to protect the rights of the citizenry not to run those lives.

Indeed, president Barack Obama would do well to keep this in mind as he talks of laying out grand plans for the country, plans that inevitably intrude on the personal projects of the citizenry. A free country isn't about such plans but about making it possible for all citizens to embark upon their own peaceful plans and projects, grand or modest.
Opulence for All!

Tibor R. Machan

As I drive to work in the morning I pass a community college on my right and for years now I have been struck by its opulence. This facility looks like some palace built for pharaohs, not a supplementary educational institution helping people with a few under-division college courses each term. No, by now at least California has several of such fabulous schools--I recall Foothill College up in the Bay Area, which matches some of the best endowed private universities in its architecture, as well as Santiago Canyon or Santa Barbara City College. These and others stick to my mind but there are hundreds of them, as well as similar so called public facilities that show enormous investment at taxpayers' expense or on government credit.

When I hear about California's enormous budget deficit--were they not constitutionally required to balance it each year?--my mind quickly focuses on these and other indulgences throughout the state. They certainly make it appear that whoever plans the state's educational programs has no concern about frugality or thrift. Instead the mentality that appears to go into these projects is that if anyone anywhere is studying at a marvelous college, well then everyone must, including those who spend but a few hours three times a week on campus.

This egalitarian mentality seems to me to have contributed big time to the country's financial wows. Although I am convinced of the superiority of privatizing all education, I figure that if the government is going to get into the education industry, it could certainly practice some restraint. Subsidized education ought at least to be modest and the opulence witnessed around California and some other regions of the country--Long Island, New York comes to mind, as does Florida and Texas--is simply way over the top. Certainly if I am going to ask my friends to help me out with some of my personal needs, such as purchasing a car or dish washer, I would be abusing the privilege if I spent their good money on the most expensive of these items.

But the egalitarian entitlement mentality is such as to insist that if some people in society are studying at institutions with outstanding and beautiful facilities, well then everyone is entitled to the same. Never mind that the money is obtained through the extortion method called taxation, a relic of feudal times when monarchs had to be compensated for allowing their realm to be used by their subjects.

Which brings to mind a related matter--Nevada Senator Harry Reid's recent contention in an interview widely circulated on the Web that taxation is voluntary and that when taxes are collected, it's like collecting dues from us which we all owe because we choose to pay them. Bunk.

Dues are the result of signing up for a benefit with the provision oft paying an agreed upon weekly, monthly, or yearly fee. But taxes are nothing like this. Just being born and trying to make a living qualifies one as the subject of it, to being extorted arbitrary portions of one's livelihood.

But back to the egalitarian opulence that has contributed to the current fiscal meltdown in so many regions of not only America but the rest of the world. It may be driven by envy or by a phony political ideology, namely that everyone is naturally entitled to equal "shares" of the country's wealth but in either case it is nonsense. And it's costing big time.

Of course there is an ancient habit afoot that supports this sentiment. It is one that sees society as a club or team to which everyone belongs as an ant to a colony and from which everyone may draw maximum benefits, so long as the leadership allows it. In the time of kings and other mythical leaders of state it was an ideal to aspire to because it was one way to wrest of the wealth from the rulers--persuade them it isn't theirs in the first place (which it wasn't though they firmly believed it was). But once it was widely enough realized that societies were supposed to be realms wherein we all were to be free to work and aspire to some level of success but not entitled to end up like everyone else, this was supposed to change and we are all more or less competing with the understanding that in a competition people end up in different places at different points of the race. But by refusing to see it this way, the society is seen as obligated to maintain everyone in a state of economic opulence and that is simply unsustainable and leads to George Orwell's very apt depiction of an egalitarian society in his novella, Animal Farm, wherein everyone is equal only some are far more "equal" than others.