Friday, August 12, 2011

From Machan's Archives: 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.)
Krugmann’s Failed Analogy

Tibor R. Machan

Ok, so I’ll give him this: finally Dr. Krugmann put forth something akin to an argument instead of merely demonizing those with whom he disagrees! (See his column, The Hijacked Crisis, The New York Times, August 11, 2011.) The argument, however, is an analogy and as with many analogies, it fails to be an apt one.

Krugmann tells us that suggesting that what the US government should do is significantly cut back on spending is misguided because the economy is in need of immediate and drastic emergency treatment. Like a man who is bleeding profusely, this is not the time to counsel greater prudence and preventive treatment. What it needs is the infusion of massive doses of blood, as some patients require blood transfusions so as to save them from imminent death. We may assume, then, that once the infusion has done its job, the long term remedy of cutting spending can get under way. As he wrote recently, "For the fact is that right now the economy desperately needs a short-run fix. When you're bleeding profusely from an open wound, you want a doctor who binds that wound up, not a doctor who lectures you on the importance of maintaining a healthy lifestyle as you get older. When millions of willing and able workers are unemployed, and economic potential is going to waste to the tune of almost $1 trillion a year, you want policy makers who work on a fast recovery, not people who lecture you on the need for long-run fiscal sustainability. ... What would a real response to our problems involve? First of all, it would involve more, not less, government spending."

Looks like a good piece of advice initially, but it misses the mark. The economy, first of all, isn’t some biological system. (And Krugmann has never ever conceded that spending cuts are needed, ever! Government must always spend and thus stimulate the economy.) As to the first point, the government’s taking massive amounts of money from people so as to spend it on "public" works, as per the priorities of government officials and their advisers, doesn’t constitute an emergency measure but only a change of who will do the stimulation. Instead of having the citizenry spend its labor and resources on what it chooses to spend it on, it will be government officials--politicians and bureaucrats--who will do so.

Even if the analogy had some promise, there is no reason to believe that these officials are going to spend our labor and funds on projects that will stimulate anything, certainly nothing that will do so better than were the citizens themselves to spend their own labor and resources as they see fit. If anything, when government takes over what by right we should be doing, they are far more likely to misspend than we would. You and I have some pretty good idea as to what we need to spend our funds on, whereas those in government are at best getting their priorities via the political process which very likely distorts the feedback system that informs the economy about what is most important to invest in, to spend on. Worse than that, they actually get it from their own imagination and fantasy, as when they want to build huge dams or highways where they are not at all needed.

The radical remedy Krugmann favors could well work in the case of a human individual, a biological entity whose medical needs can be ascertained by most physicians. But when it comes to an economy such as that of the USA, wherein the “demands” of the citizenry are inordinately diverse and can, thus, be best assessed locally, not by planners from Washington or even state capitols, doing the kind of stimulus Krugmann favors is just impossible (a la Hayek’s good teachings). Which is why the stimulus didn’t work before and isn’t working now.

So, yes we finally have something of an argument from Paul Krugmann. But it involves a misguided analogy. Individual human organisms are one thing; economic systems of a huge country another entirely. So what he attempts to derive from his analogy is in fact a colossal non-sequitor. It doesn’t follow and never has.

Thursday, August 11, 2011

Further Distortions of Libertarianism

Tibor R. Machan

In his essay “The Tea Party Jacobins,” with its hyperbolic and besmirching title, Mark Lilla, whose The Reckless Minds: Intellectuals in Politics I once favorably reviewed, advances the notion that the Tea Party’s “libertarian irruptions … [attracted] individuals convinced that they can do everything themselves if they are only left alone.”

I am reminded of this point by Andrew Hacker’s essay “The Next Election: The Surprising Reality,” in The New York Review of Books (August 18, 2011), which quotes Lilla favorably. But check this: Libertarians demonstrably do not believe what Lilla claims they do. Libertarians aren’t “convinced that they can do everything themselves if they are only left alone.” What they believe, instead, is that free men and women can do things much better than bureaucrats and politicians, mostly in voluntary associations. Teams, orchestras, clubs, corporations, choirs, and many other such associations aren’t “individuals convinced that they can do everything themselves.” No libertarian I have every known--and I have known a great many, having edited one of the first collection of essays by libertarians for Nelson-Hall Publishers of Chicago back in 1973 (The Libertarian Alternative)--is convinced of such an idiotic idea. None want to do things “themselves.” What they want is not to be coerced into associations to which they may object, especially by the government. They don’t believe people ought to be forced to contribute to social security, medicate, and similar programs not of their own choosing. It is a complete non-sequitor to hold that this means they want to do things by themselves.

Comments like those by Lilla suggest to me that critics of libertarianism are running very low on bona fide objections to the position. Instead they need to make it appear that the libertarian positions embraces ideas that it clearly does not embrace or even remotely implies. Only that way can they come of up with criticisms of it.

This has been going on for centuries, actually. For example, Marx argued that individualists, the libertarians of yesteryear, think they are self-sufficient and defend the right to private property so as to make use of what they own arbitrarily and selfishly. As he put it, “the right of man to property is the right to enjoy his possessions and dispose of the same arbitrarily, without regard for other men, independently from society, the right of selfishness.” This line of criticism, along with the charge that free market advocates believe in atomistic individualism, has been repeated over and over again, not just by the Left but also by the Right. And it is bunk.

In fact, the main thing that the right to private property secures is the individual’s liberty to choose how to dispose of his or her labor or resources. It is this choice that bothers the critics who all contend that they, not you or I, can decided best how we ought to use our labor and goods. Indeed, under socialism your and my labor is public property and to be allocated as the party leaders decide because they have the requisite knowledge, something you and I supposedly lack. (Why they but not we is an unanswered question!)

Anyway, Lilla and his ilk just don’t want to deal with the bona fide libertarian viewpoint. They need the nonsense they impute to libertarians so as to make the position appear ridiculous. But contrary to what they suggest, it is not at all ridiculous. It does not hold that people are all isolated atoms who believe they can fend for themselves, all alone. No sane person believes this. But once you allege that some people do, they can be dismissed as nut cases, which is just what it seems Lilla & Co. would like to do with the Tea Party folks. One cannot help thinking that what these critics are after isn’t to get it right about politics and economics but to secure for themselves the exclusive authority to call the shots for everyone.