Disability and the Free Market

Leave a comment

Whenever faced with the opportunity to explain the benefits of the unfettered free market, the libertarian will often find himself cross-examined and required to explain how a political economic system of liberty will handle various societal ills and issues. One of these issues is disability and how disabled persons, inflicted with some kind of impairment that is (usually) no fault of their own, will be able to sustain a quality of life comparable to that of non-disabled persons. For the sake of brevity we will explore this issue here in relation to physical disabilities rather than mental.

The statist solution to disability is, typically, nothing short of rank egalitarianism. First of all, one must define a hypothetically “typical” able-bodied human being and the characteristics of that person. Anyone who does not meet this standard through either the absence of tissue (such as an arm or an organ) or damage to the same that impairs functionality to a significant degree is considered to be “disabled”. The state’s response to this, in addition to disability benefits funded by the taxpayer, is to forcibly require private providers of goods and societies to maintain equality of access for disabled citizens, including the installation of ramps, lifts, disabled spaces on transportation facilities, and so on. Tackling disability, therefore, is a plank of social justice, of redistribution not from the financially rich to the financially poor but from the physically wealthy to the physically deprived. Just like any other arm of the welfare state, one set of people is forced to fund remedies to problems that are borne by another so that the cost of disability is shifted from the disabled to the able-bodied.

A preliminary problem with this approach is defining precisely when a person will be considered to be “disabled” and which characteristics we are examining when we make such a definition. At the extreme, few people can run as close to as fast as Usain Bolt. Should we not consider Bolt and those of his calibre as able-bodied and the rest of us disabled? If Superman appeared on Earth today, wouldn’t we all appear to be chronically crippled in comparison? Shouldn’t Bolt or Superman be required to fund the rest of us with disability benefits? Clearly this would be ridiculous but when we attempt to make a similar judgment against the “typical” human being we see that we all have varying physical strengths and weaknesses compared to other people that make us either more or less suitable to certain pursuits. Indeed the very reason why we have the division of labour is because of these varying qualities, with weaknesses regarded simply as differences rather than disabilities. At what point does a weakness become a disability? While it may be possible in common parlance to state that a man without an arm is “disabled” whereas a person who has a fully functioning arm is “able-bodied”, determining a clear legal definition of disability for cases in between these two extremes will require at least a degree of arbitrariness. What, for example, should we make of a person who has an arm but cannot extend it fully in a particular direction? And if we are talking about typical characteristics, females are generally physically weaker than males – should we regard all females as “disabled” with all males required to subsidise them with disability benefits? Furthermore, simply because a person is disabled in one way does not rule out the possibility that he may excel beyond the capabilities of his able-bodied brethren in another that, in his eyes, more than makes up for any loss of functionality caused by the disability. What is also clear is that, for the most part, we have to consider a not only a “typical human” but also a “typical disability”. While any disability is capable of being “compensated” by tax-payer funded benefits, when it comes to forcing equality of access only disabilities suffered by a small but significant percentage of the population can be considered. The reason why there may be ramps and wide car park spacing for wheelchair users is because wheelchair users form such a minority. If, however, an individual suffered from a really unusual disability that could only be met through special accommodation unique to him is it likely that all businesses and public spaces in the entire country would be forced to cater for this? As with all statist solutions that lead to redistribution, defining the deserving beneficiary will always be haphazard, encompassing some of those whose ailment is little more than a minor irritation while leaving out in the cold those with significantly impacting impairments.

Leaving this consideration aside, however, and taking it as a given that we can define someone as “disabled”, the libertarian response to the statist solution must be that, however awful and debilitating one’s disability, no one possesses the right to shift the cost or the burden of that disability to another individual. Although it may not be the fault of a disabled person that he possesses a disability, neither is it the fault of anybody else and hence there can be no entitlement, enforced by the violent imposition of the state, to have other people fund a remedy or compensation. It will be the case, therefore, that disabled individuals may command lower earning power in the marketplace simply because their productivity is lower. However, this is no different from the fact that a slightly weaker man may have lower earning power than a slightly stronger man in the market for physical work; the difference between the slightly weaker man’s earning power and the disabled man’s earning power is one of degree rather than of kind. Why should the individual with the greater impairment acquire an entitlement to compensation whereas the individual with a lesser one must shoulder the burden alone? In any case, however, a physical disability does not automatically mean that a disabled individual can command lower earning power – if his mental faculties are intact then his productivity in mental tasks may exceed that of the physically able-bodied in physical tasks. Furthermore, a disabled person has no right to enforce private providers of goods and services to provide some kind of equal access to those goods and services – such as the installation of ramps, lifts, wide car parking spaces, etc. Precisely how much access a private provider grants to his goods and services is dependent upon whether the cost of doing so is less than the resulting revenue. Such questions are very broad as well as very narrow. Should, for example, the supplier set up a bricks and mortar store? If so, where should this store be sited? Should the supplier set up a website? Or would sales be maximised by sending individual salesmen round to every door with the very products in hand, ready for the purchasers there and then? All of these are questions of access. If a minority of customers with disabilities are significant enough to make increased access profitable then it will be provided, otherwise resources are diverted from ends which are more urgently desired by consumers. It is important to realise in this regard that shops, bars, restaurants and so on are not “public” premises; they are privately owned premises into which members of the public are invited to conduct trade. It is the owner’s prerogative which members of the public whom he chooses to serve – he cannot be forced to associate or disassociate with any particular customer, regardless of race, creed, or physical ability.

What, then, would be the position of disabled persons in the unhampered free market? Where a person’s earning power is markedly lower as a result of a disability, or where “access” is impeded by the same, we could suggest that private charity would exist to ameliorate the situation – something that is more likely in an economy where people are allowed to keep more of their money. Such charities could, for example, provide disability benefits to those who are disabled and fund the installation of facilities that improve accessibility. However, the essential difference between the free market and the welfare state is that the latter, in all of its guises, is preoccupied only with wealth distribution whereas the free market is the powerhouse of wealth creation. In the first place, it is only because capitalism and the free market has generated so much wealth that the existence of disabled persons in society can be funded. In impoverished past times, if a person could not work or only worked to a lesser ability than the able-bodied he may simply have starved to death, if he was not actively killed beforehand for being a burden on everyone else. Our advance in this regard is solely because even the lesser productivity of the physically disabled is, in the free market, able to afford them a comfortable standard of living, something that would continue along with increased wealth creation. Capital invested on behalf of the able-bodied is also capital invested on behalf of the disabled and the productivity of both is improved with economic growth. Second, it is not true that there would be no redistributive remedy under the free market. The whole purpose of insurance, for example, is to provide compensation for those catastrophic, but unlikely events that are no fault of the victim. Where physical disabilities are present from birth, for example, prospective parents could purchase medical insurance that will promise a certain pay out in the unfortunate event that their baby is born with a disability, compensating them for the additional costs of care and raising a disabled child. Similarly, insurance would cover the incidence of faultless accidents which leave you with a disability. It is of course the prerogative of each individual to purchase such insurance and it is entirely up to him whether he wishes to run the risk of being unfunded after an accident. But this is his choice and such a person cannot be forced to put his money towards an end that he does not deem suitably urgent enough for fulfilment. If, however, you do believe this is a valuable end then you will not left high and dry with the only option to die following an accident simply because the state is not there to lend you a crutch. Third, redistribution by the state to remedy a certain ill completely distorts the incentives that lead towards the occurrence of that ill. If one knows that a disability will be compensated by the state then, quite simply, it reduces the cost of being disabled. Disability with state compensation is relatively a more attractive proposition that disability with no such compensation. Therefore whatever steps could be taken by persons to reduce the incidence of disability will be taken to a lesser degree. Given that ability and disability is intricately linked to a person’s health overall, people will be less careful with their health; they will take more risks with their bodies; they will be involved in more accidents; indeed, even obesity is now, according to the European Court of Justice as of last month, defined as a disability – would anyone doubt that the level of obesity would be as high as it is without government funded healthcare programmes? Moreover, there will be less of an incentive for couples who possess a genetic risk of passing on a disability to a child to avoid giving birth to disabled children. There will, therefore, be more disabled children born. In short, if you confer upon people a right to be paid when they are disabled, you will, all else being equal, have more disability. Fourth, such distorted incentives also perpetuate the accommodation or compensation of physical disabilities ahead of attempting to find long term solutions that would result in their eradication. If the burden of disability is reduced it also reduces the impetus to find a cure. Disability is simply put up with instead of solved. With the free market, however, as the division of labour widens and more capital is accumulated it affords the wealth not only to increase specialist outlets and solutions that may cater specifically for disabled persons, but also it makes possible increased research and development into long term cures for physical disabilities. Imagine if a person without legs could grow new ones, or if a person who is deaf could resolve the problem simply by swallowing a pill? A truly wonderful world is not one where everybody is forced to compensate and accommodate disabled persons; it is one where we have the wealth and technology so that, to quote the prophet Isaiah, “the eyes of the blind shall be opened, and the ears of the deaf unstopped…the lame man leap as an hart, and the tongue of the dumb shall sing”. This is not to imply that there will be no attempt at achieving cures for disability under statist regimes; but with retarded wealth creation and distorted incentives the desire towards and capability of achieving it is greatly diminished. Moreover, with the free market, the point at which a person’s disability is considered a problem worth spending money finding a solution for is determined by disabled individuals and not the arbitrary decrees of the state. Let us therefore banish the statist accommodation and compensation of disability and unshackle the free market so that disabled persons, like everyone else, may enjoy not only an increased standard of living but the possibility of a complete cure for their afflictions.

View the video version of this post.


Economic Myths #9 – Social Safety Nets

Leave a comment

It is often trumpeted as a virtue that “civilised”, social democratic countries offer their citizens one or more types of “social safety net” in attempt to eliminate the most dire effects of, say, unemployment, illness or some other kind of incapacity that could inflict a condition of extreme poverty upon the individual members of the citizenry. The idea is that the most basic wants will always be guaranteed by the state should one be unable to provide them for oneself and no one need have any fear of hunger or lack of shelter – situations that are said to be “intolerable” in a modern, 21st century society.

The first problem with this theory is that poverty is not some selectively appearing disease that crops up every now and then to infect an otherwise healthy and wealthy society. Rather, poverty is the natural state in which human beings first found themselves. When Adam and Eve were expelled from the Garden of Eden they saw the world to be a barren and harsh place that is capable of providing precious little – may be just oxygen to breathe – without the conscious effort of its inhabitants. The only way to alleviate this harsh situation is for humans to work to produce the goods that they need and, eventually, to bring about capital investment in order to expand the amount of consumer goods that can be enjoyed – whether it’s cheap food, housing, education, holidays or whatever – a process that only really got underway in any significant form in the 1800s. If the individual beneficiaries of a social safety net are not able to produce these goods themselves then somebody else must do so. Simply legislating the welfare state into existence does not create the goods and services it needs to dispense to the poor and needy in order to banish poverty and want. Rather, existing goods have to be forcibly confiscated from those who have produced them and dished out for free to those that haven’t. Social safety nets are compulsory redistribution programmes, not wealth creation programmes and any benefit one receives under them will be at the expense of another person.

The economic effects of this are familiar to economists not only in the “Austrian” tradition but of other free market persuasions also. The most naïve error made by any proponent of redistribution is to believe that people’s behaviour is somehow hermetically sealed from the government intervention that seeks to achieve a certain end – i.e. that increased taxes on activity A will not discourage people from carrying out activity A; or increased funding to eliminate a “dire” situation will not, in fact, exacerbate that situation. Whenever a new tax is proposed the estimations of new revenue to be raked in are always based, incorrectly, on the assumption that people will still wish to carry on doing the taxed event just as they did before, as if the tax makes no difference. And if some new programme to be financed by this revenue is proposed, they will calculate the amount of money needed to cure the existing problem without considering whether throwing money at it will make it worse. All else being equal, if you pay people to when they do something they will do more of it; if you charge someone when they do something they will do less of it. In the case of social safety nets, if people are charged to produce wealth in order to fund it the cost of creating wealth is forcibly raised. Relative to other activities such as engaging in more leisure time, the attractiveness of producing more goods, more capital and more resources is reduced. There will, therefore, be less production, less capital investment and fewer consumer goods at higher prices – hardly the situation that one would expect to be conducive to the abolition of poverty. Similarly, if you grant a guaranteed right to be paid upon the occurrence of a bad event – such as sickness and unemployment – then you lower the cost of that event and the relative cost of preventative measures is raised. All else being equal, you will have more sickness, more unemployment and so on.

The focus of many of these social safety nets today appears to be on so-called “hardworking families” – never mind the fact that single people also work hard and struggle to make ends meet. Children, in particular, appear to be little more than a metaphorical blank cheque that the state writes to “protect” them from poverty and hardship. Yet children do not appear out of nowhere and a conscious decision must have been made at some point to have a child – or at least to carry out the act of procreation. The same economic effects will therefore result from any safety net that benefits parents with children. If you pay people when they have children then there will be more children in families that struggle to pay the bills. The resources to feed these hungry young mouths must be confiscated from those who do not have children – either through inability, a lack of desire or good old fashioned financial prudence – and redistributed to those who do.

The running theme through all of this, therefore, is that throwing free money at a problem in which people have at least some kind of influence will only aggravate that problem. Indeed, in spite of more than half a century of the welfare state we in the Western world still seems to be afflicted with the scourge of poverty – although a rather bizarre form of it where those who are poor appear to suffer more from obesity rather than from starvation. One would associate progress with a reducing, not widening social safety net. We might as well also mention the “cynical” view that government prefers to retain people in a state of dependence because it means more reliance upon the state and more votes.

A powerful weapon in the arsenal of proponents of the welfare state is the false dichotomy – that the choice is either between a government social safety net motivated by care and compassion on the one hand or some kind of selfish, greedy, sink-or-swim and dog-eat-dog society on the other. This is plainly ridiculous; the free market exists precisely because people have needs and others are willing to advance the means to fulfil them. The whole purpose of insurance – presently and regrettably distorted by government interference – is to protect from genuinely catastrophic events that are not your fault in return for a premium paid in advance. Furthermore, opting for the alternative of the free market does mean the abolition of care and compassion – rather, it gives people the freedom to be caring and compassionate. Indeed it is such private benevolence that is discouraged by the welfare state as it obliterates the need to cultivate personal relationships upon which you can rely. Real benevolence, selflessness and caring for one another springs from these relationships and from private choice; the forced redistribution demanded by the state, however, leads to the very opposite – bitterness, antagonism and cynicism when your hard earned money is taken to be given to others, all of whom – in spite of whether they are genuinely needy or not – are tarnished as workshy and endless breeders. It is no accident that many of the great charitable foundations appeared in the nineteenth century, the most relatively free and capitalist period in history – and not in the era of the welfare state. As for the argument that social safety nets are necessary for civilisation, what could be less civilised than violently wrestling something you want from someone at the point of a gun?

The social safety net therefore needs to be realised for the destructive force that it is – not as a hallmark of economic and societal progress but as one of retrogression of civilisation and as a retarding influence on the very real cure for poverty and illness – more capital, more production and more goods for everyone to be able to buy at cheaper prices.

View the video version of this post.

Economic Myths #7 – Government means Harmony

Leave a comment

One of the aspects of capitalism and the free market that the typical lay person finds difficult to comprehend is the fact that the complex structure of work, production, distribution, and trade could possibly take place without some kind of centralised, directing authority in order to co-ordinate everybody’s efforts. Wouldn’t there just be chaos and mal-coordination with everyone trying to make their own, independent plans with no government tiller to steer the giant ship?

This fallacy stems from the belief – accentuated by holistic concepts such aggregate statistics and, indeed, national identities – that “the economy” is some kind of enormous machine that has “input” and requires one operator to “process” the “inputs” into “outputs”. In fact, rather than being one giant, amorphous blob “the economy” is made up of millions and millions of independent unilateral acts of production and two-way trades, many of which will never have anything to do with each other. Indeed, I may sell an apple to my neighbour for 10p in London; another person may sell an orange for 20p to his neighbour in Manchester. Neither of the two pairs of people has ever met, nor need any of them have anything to do with the exchange of the other pair; and yet both exchanges would be regarded as part of “the British economy” in mainstream discourse. Rather than being a top-down operated machine, the economy is a bottom up network of independent transactions – motivated by the ends desired by each and every one of us rather than a bureaucrat – joined only together through the communication of the price system. All of the trades together, stimulated by varying and changing desires and ends that people seek, will have a constant and unceasing influence on the prices that regulate the supply of goods relative to their demand. Ironically, it is precisely because of such complexity that the attempts of any central authority to control and direct it are nothing short of futile – as Ludwig von Mises proved as long ago as the birth of the world’s greatest collectivist experiment, the Soviet Union, in Economic Calculation in the Socialist Commonwealth.

An oft-heard complaint, particularly from the left, is that “globalisation” and expanding markets has led to a decimation of the local culture and community. All this means, however, is that the market for goods has simply expanded so that one can source one’s needs from pretty much anywhere on the globe. It is still the case that the driving force of demand is not global or holistic – it resides very locally in every individual person’s tastes and desires. Such complaints therefore fail to recognise the irony in calling for a very distant and hardly local entity – the government – to halt globalisation and expanding markets by replacing what individual, local people desire with its own ends.

This myth, of course, goes further than economics and has more than seeped into philosophy as well, stemming from a basic misunderstanding about what is required for the human race to live in peace and harmony. It does not mean that we all need to be pursuing the same ends, following the same plan or singing from the same hymn sheet and we do not need some centralising authority to prevent “discordance” between the actions of one person and another. Rather, what is required is that we can each follow our own plans while not conflicting with the plans of others. This is precisely what private property and the free exchange accomplish. Recognising that all conflicts have their origin in the contest over physical goods, an exclusive right is granted to the first user-producer (or to the recipient of the good in a voluntary exchange) so that he may fulfil his ends without molestation from other people; and other people can use the goods for which they are the first producer-user without interference from him. Any person arguing in favour of “one direction” and “harmony” at the behest of centralised control really means that everyone else’s plans should be overridden by his own – and should be forced to accept them. Indeed every forced, government transaction requires there to be at least one loser, one person who does not want his funds directed to the ends desired by government. Rather than producing harmony what results is merely bitterness and antagonism. Furthermore, aside from the economic chaos that such a system brings, rather than inspiring such qualities as productivity, self-reliance, hard work, prudence, patience and responsibility, the resulting social disorder instils, in their stead, laziness, apathy, conflict, corruption, impatience and cynicism – hardly the human qualities that one would wish to exemplify as the hallmarks of a “peaceful” and “harmonious” society.

True harmony can only be brought about by allowing each and every individual to pursue his own ends with the scarce resources over which he has lawful ownership, while allowing everyone else to do the same – permitting the human race to flourish peacefully and devoid of conflict. Not only does government fail to aid this process, it is the active cause of its destruction – and the sooner we recognise this the closer we will be to building a lasting peace and prosperity.

View the video version of this post.

The Choice Illusion

Leave a comment

In the mainstream debate both for and against a free market, one argument that appears continuously is that the free market is predicated upon choice and the ability of the individual to choose. Those in favour will argue that more choice promotes competition and increases the freedom of the individual to meet his ends, and so the increasing of choice and stifling of monopoly wherever it appears is a good thing. Opponents will counter that choice can be wasteful, costly, inefficient and overwhelming particularly when it concerns supply of provisions as basic as water, and, furthermore, that often the appearance of choice is merely an illusion conjured up by private companies that basically operate in a profit-maximising cartel.

Wading into this debate as a libertarian we can see that the basic statements on each side are not incorrect. However they either overlook or misunderstand the true nature of choice in a free society. The kernel of truth in the pro-choice argument is that voluntary behaviour, expressed through choice, leads to market outcomes that provide the most benefit to the consumer. But such an advocacy is formal only – people choose voluntarily not only which suppliers they are willing to patronise, but also the extent of choice itself in a particular industry is the outcome of voluntary action. In some industries, for example, particularly those that are growing and innovative, consumers are willing to support multiple suppliers with a large range of different products and all of these may be viable. We might say that smartphone manufacturing is representative of this kind of industry. In other industries, however, which are perhaps maturing or consolidating and reaching the end of their innovative stage, the benefits to be gained from economies of scale and simple and straightforward products with little differentiation might be what consumers desire. This is particularly true of the supply of commodities where the only differentiation is price and the only benefit to consumer can be reduced costs. This kind of supply naturally lends itself to one or only a bare handful of suppliers and choice in such an environment may be reduced to minor differences in customer service but is otherwise likely to be stressful, wasteful and unnecessary.

However, pro-choice advocates often are not arguing in favour of this formal meaning of choice, but rather they assume and press ahead for a choice that is substantive. In other words, for every single industry there must, necessarily, be several suppliers from which a consumer can choose, however basic the product and however costly the splintered operations. We have already examined the economic fallacies of this belief from the point of view of competition law and the shibboleth that increasing competition is always a boon to the consumer. However, it is also a dangerous ruse that can be used to create nominal or illusive choice while preserving an overarching government monopoly or control that allows government favoured private companies to line their pockets, at the same time allowing all of the blame for the waste and inefficiency to be directed not to the governmental element but to the “free market” vestige of the particular industry. In the UK the privatisation frenzy of the Thatcher and Major governments was often justified by the need to give “choice” and “competition” to the consumer. Britain’s railways for example, are now “privatised” and whenever you board a train there will be a private company’s logo emblazoned on the carriage and you will see front line members of staff wearing uniforms that indicate their representation of these private companies. But the track, stations and signalling are wholly owned by Network Rail, a statutory company that has no shareholders and is under the de facto control of the government. The train operations themselves are not subject to the forces of natural competition but are parcelled out by the government into geographical monopoly franchises to private companies chosen by the government and who, with the government’s blessing, are allowed to operate the franchise for a set number of years before they must retender. This cauldron of public and private activity blended together led to the UK’s railways being judged the worst in Europe from the point of view of cost and efficiency in early 2012. Yet it is “privatisation” and “competition”, those fancy public-facing corporate logos on the timetables and uniforms, that are lumbered with the blame, rather than the government string-pulling. The energy industry is just as bad, if not worse. The electricity infrastructure is owned by National Grid, with six dominant, government-licensed suppliers sending their product through the same wires in what is a ridiculously regulated and cost-heavy sector that is not only seeing rising prices for consumers and talk of fuel poverty but is also on the verge of collapse. Indeed the Soviet-style description of the regulatory framework by Energy UK, the industry’s trade association, only scratches the surface but it is a succinct summary:

The electricity and gas markets are regulated by the Gas and Electricity Markets Authority, operating through the Office of Gas and Electricity Markets (Ofgem). Ofgem’s role is to protect the interest of consumers by promoting competition where appropriate. Ofgem issues companies with licences to carry out activities in the electricity and gas sectors, sets the levels of return which the monopoly networks companies can make, and decides on changes to market rules.1

All of this is before we even go near the odious and destructive high street banking cartel.

Given all of this is, is it any surprise that people lay the blame for poor service, for high costs, for inefficiency, for waste, and for private companies lining their pockets at the door of free marketers’ obsession with choice and competition? Is it any surprise that, not realising that it is the underlying control and forcing of substantive choice to the benefit of its favoured friends in “private” industry, that there are calls for renationalisation of public communications networks and utilities? There is a strong case to be argued, not only from the point of view of its danger to the reputation of the free market but also from that of the level of service offered to consumers, that private companies operating government controlled services is often worse than explicit and outright nationalisation.

As libertarians who cherish the free market our devotion to choice is encapsulated by our commitment to voluntary behaviour and interaction and is only a subset of this wider concept. We do not mean a controlled and enforced, substantive choice in every industry, nor do we mean the illusion of choice created by the government that rips off the consumer and leaves the free market to bear the brunt of their ire. Leave the consumers alone entirely to express their preferences through voluntary action. Leave them alone to determine how much choice they want. Only then will we see industries that are genuinely able to meet the needs of consumers with ranges of products that are suitable to their ends at prices that they are able to afford.

View the video version of this post.

1http://www.energy-uk.org.uk/energy-industry/the-energy-market.html. Emphasis added.

Austro-Libertarianism – Fighting for the Truth

Leave a comment

In the battle of ideologies, Austro-Libertarianism (that is, “Austrian” economics and libertarian political philosophy), in spite of (or, sometimes, perhaps because of) its logical consistency and rigorous passion for truth and justice, is lumbered with several burdens that are not always shared with opposing philosophies. Some of these – such as the fact that libertarianism is not a complete moral philosophy and can look, at best, cold and emotionless, or, at worst, a recipe for rampant selfishness and egotism – we have examined elsewhere. Let us explore a few more of them and suggest reasons for how they can be overcome, or at least mitigated as much as possible.

The Collectivist Mentality

Perhaps the biggest problem we face is that the fundamental tenets of the modern, democratic state are not viewed as being open to question. It is seen to be paradigmatic that democracy is the best system of government, that voting means freedom, that politicians serve their people and “the nation”. Whatever the current moral or political debate it is always seen as being a debate that should take place within the system rather that as an attempt to revolt against it. Indeed, in the history of political philosophy, consideration of alternative methods of rule has never been at the low that it is now whereas the possibility of no rule at all (anarchism) is completely off the radar. All alternatives to social democratic government are believed to be just baffling or bewildering, a mentality is reinforced and engrained by two aspects.

First, questions are always posed in the form of the collective and people are encouraged to debate only by thinking of the needs of the whole rather than of the individual parts that make up that whole. “Should Britain do X?” “Should we have nationalised railways?” “What should be done about our health service?” By not even allowing the possibility of individual tastes and desires to find expression, people are always geared towards the notion that there must, for every problem and issue, be a single solution that everyone must be made to endure. Although this is endemic throughout all political debates it can be seen in force in the current possibility (at the time of writing) that the United States will engage in military action against the Syrian government in response to the alleged use of chemical weaponry. “What should we do?” “The United States has a moral obligation…” “Our country will not waiver in its resolve” etc.

In what way can Austro-Libertarians face this challenge? The problem is that it is tempting to accept the terms of the argument and dive head first into discussing only collectives. In response to, for example, the question “should we have a nationalised health service?” a libertarian may find it difficult to prevent himself from crying “no!” and reeling off all manner of facts and  figures to show why a system of private healthcare would be far superior. Libertarians, however, must avoid this temptation entirely because it accepts, in principle, the notion that everyone must accept the same solution. It is also the expected answer from one’s ideological opponents and they are likely to be prepared with an array of counterarguments to nullify or at least blunt one’s own. Rather, an intelligent libertarian should attempt to change the terms of the debate and break out of the collective mentality altogether and focus on individuals. So in answer to the question concerning healthcare, one might retort the following:

“I have no problem whatsoever with the Government providing your healthcare through the National Health Service or whatever you want to call it. I don’t want to stop you from doing what you think is best for your needs with your money. But what right do you have to force me to do the same? I want to look after my healthcare needs in the way that I want with my own money. Do whatever you want with yours, just leave me out of it!”

This is a response that will almost certainly catch someone on the back foot. Having expected an argument about what is best for everyone and there being no possibility of “their” solution taking hold unless they win, they now, suddenly, have to face the fact that actually, they are most welcome to go ahead with what they want with the resources that they can muster. They just have to leave everyone who does not want to be a part of it alone. The terms of the debate have therefore switched from arguing about the merits of their system to arguing about why they should have the right to force everyone to become a part of it. That, they might find, is far harder for them to justify, especially once it is revealed that such a system as they advocate can only take place through the methods of violent enforcement. Liberals (in the modern sense of the word), lefties and collectivists do not like to think of themselves as being violent people and revealing them for what they are might be something of a shock.

Who Will Build the Roads?!

The second problem is related to the first and is manifest in the following types of argument. “How will we defend ourselves?” “Who will take care of disabled people?” “Won’t poor people die without nationalised healthcare?”  All forms of this argument may be summarised as the “Who will Build the Roads?” problem, where government has carried out a function for so long that people cannot imagine how else it would be done.

The obvious answer is, first, to point out how government has never invented or run anything that was not first done so by free individuals (except, perhaps, for nuclear weaponry – developing the machinery of mass killing is something that seem to come naturally to government). Knowledge of a few examples, such as how turnpikes were funded and constructed, and the history of the railways (and their subsequent deterioration under nationalisation) would be beneficial. But so too also is pointing out the fact that the opponent’s argument boils down to little more than this: “I don’t know how else X could be done. Therefore everyone else must be violently enforced to do it my way”. In other words, one should perhaps retort by questioning why that person’s lack of imagination means that everyone else must be subjected to violent enforcement. The whole point of the free market is that it unleashes the creative power of individuals and no one knows precisely what this creative power will produce and in what form. Government, on the other hand, causes nothing but stagnation in everything it runs. Schools, for example, are still teaching in the same way that they have done for nearly two centuries – a teacher in front of a class full of students, a method that seems to be rapidly failing as numeracy and literacy rates decline. Why is education stuck in a time warp whereas the free market around it is innovating and improving all of the time?

Nevertheless this may be a battle easily lost. There is a curious tendency in debates of this type for people to press one continually about how each and every minute issue would be resolved in a free society. Even if you bat away each one for six with success, as soon as there is something that you cannot explain, something to which you cannot illustrate a free market solution in any concrete fashion, however trivial and insignificant, you are expected to surrender and admit that government is necessary. Even if it is not possible to explain how a free society could possibly tackle one, single alleged problem, why is this one, minor “defect” claimed as a sweeping victory for government? Such a view is the result of the wilful (as opposed to merely passive) ignorance and closed-mindedness of one’s opponent and that is perhaps the hardest thing of all to overcome.

Market Chaos and the Fight for Resources

The next problem is the belief that individualism and freedom can only lead to chaos and collapse, a war of all against all in which everyone is motivated only by their greed in the fight for the scarce resources available. Surely there must be someone with their hands on the steering wheel to guide and take control, to steer everyone in the same direction, to ensure that free markets do not become over-zealous and drive us all to ruin? After all, everyone knows that the free market caused the Great Depression, right?

Apart from the usual explanations of how it was, in fact, government that causes economic crises and how it is government that causes the chaos of allocation through its inability to calculate, the more important and hard hitting retort to this accusation is to point out that freedom does not mean a lack of control at all. It simply means that individuals have control over their own lives as opposed to some central bureaucracy. Contrary to the opinions of even some free market proponents, there is nothing “spontaneous” or “disorderly” about freedom1. Rather every human action unfolds as the result of a purpose and desire and one is permitted to achieve these desires with one’s own person and property, and the person and property of those whom you can solicit to join, voluntarily, your enterprise. In this way the ends of everyone can be satisfied as far as they possibly can with the scarce resources available. Government, on the other hand, must always result in the substitution of one person’s or set of people’s purposes for everyone else’s, enforced by violence. Indeed, where someone says that government is needed to “steer us all in the same direction”, the very problem is what should that direction be? Nobody ever has precisely the same vision of how enforced collectivism should be implemented, nor of the goals that it should achieve. Ideological battles and physical wars have seldom been between liberty and collectivism but rather between different brands of collectivism. Fascists and communists, for instance, were pitted against each other in World War II even though they are both brands of totalitarian government. As Mises put it, an advocate of collectivism “always has in view his own brand of socialism” (Omnipotent Government, p. 253). It is government and collectivism, then, with its desire to forcibly direct everyone else’s person and property towards ends that they do not desire that causes chaos, conflict, and fighting. Further, if the market is motivated by greed, then what could be greedier than not only wanting to achieve your ends with your own property but with everyone else’s as well? And if everyone else refuses to play ball then you will fight them and force them to comply! At least a greedy free marketer has to stick to his own turf and needn’t have anything to do with you.

Economic Law and the Laws of Natural Sciences

Another problem is people’s perception of economic law as opposed to the laws of the natural sciences. Many of the latter are either immediately apparent, such as the law of gravity, or are accorded a high degree of respect when scientific research reveals them. Few feel that they have the ability to question the results that scientists produce, particular as we seem to live in a positivistic and evidence-obsessed culture. Economic law, however, is never accorded the same respect and for some reason it has always been believed, from eras of kings and conquerors through to prime ministers and presidents, that government can repeal and banish it through a simple decree.

If government attempted to legislate against the law of gravity – for instance, by demanding, that every object must be 2 feet from the ground – people would have little hesitation is declaring the politicians to be stark raving mad. Yet if the government attempts to alleviate shortages or unaffordability by enacting price controls, even though economists have, for generations, explained the necessary effects of such a measure, it is still believed that such an attempt is legitimate. The laws of economics are as scientific and true as the laws of the natural sciences. Only the precise conditions that bring them into play – that is the valuations of the individual humans and the uncertainty of future, natural events – are scientifically indeterminable. But so long as certain conditions are met, economic law cannot be counteracted. A reason for ignorance of this fact is that the ultimate causes of an economic distortion – human valuations and interference by government control – are difficult to link through to the result, except by a chain of deductive reasoning. Where prices rise for example, no one necessarily witnesses the increase in demand relative to supply (and no one witnesses the increase in the quantity of money that is brought about by government-controlled central and fractional reserve banking). All that it is seen is the numbers on the price tags getting higher, a fact that can easily be blamed on the greed of the merchant or trader. If subsequent price controls cause a shortage, again, the actual cause is not perceived. All that is seen is those same greedy merchants refusing to stock their shelves because now the price doesn’t allow them to “extract” a “huge profit”.

Part of this problem is also owing to a misunderstanding of the subject matter. The natural sciences deal with inanimate objects, i.e. their laws concern matter that feels no desires or purposes and is incapable of expressing choice. Hence the laws of the these sciences are seen to be immovable and true for all of time. Even if good or bad results follow from these laws one has to work with or around them rather than simply ignoring them. No one can, for example, simply dismiss the law of gravity or ignore air resistance if one wishes to fly. A bridge can only be built by understanding geometry and how loads affect various structures. Economics, however, concerns human choice and desire, something that may not only be impulsive and of the moment, but also has results – beneficial or bad – that are motivated and subject to influence and change. It is therefore perceived that economic law, dealing only with the supposedly wishy-washy vagaries of human desire rather than the concrete and immovable facts of the universe, can be overcome – by force if necessary. What is not realised is that economics does not deal with the substance of choices and resulting actions but with their form. Economics takes peoples choices and actions as a given, examining what must be true as a result in spite of their specific content. Its laws are universally valid even though certain choices may be necessary to demonstrate their effects (no could witness the interplay of supply and demand, for example, unless people were actually willing to trade).

Perhaps the epitome of this misunderstanding is that people even go as far as seeming to relax their awareness of the condition of scarcity. Government, in particular, is deemed to be an endless fountain of plenty that should forever be funding more or doing more to cure X, Y and Z. In citing various facts and statistics that demonstrate deficiencies and deplorable situations – “30% of people can’t afford to heat their homes!” “40% of people spend more than half their income on food!” “Child poverty afflicts a third of all families!” – all that our outraged social pioneers accomplish is pointing out the fact that we do not live in the Garden of Eden. Aside from not even entertaining the fact that freedom and lack of government is the path to prosperity, these busybodies have no proposal or specific method for determining precisely which needs are more pressing and must be resolved and which must be left to languish, however deplorable. All we get is that “something must be done!” a cry that will forever be heard until we live in the land of Cockaigne. An additional, exasperating cause of this is the incentive to engage in rent seeking behaviour. When government is sitting on a big pile of cash that could be spent on pretty much anything it wants, it becomes more economically viable for people to stop producing and to start demanding a share of the existing productivity. It is therefore not surprising that a whole host of problems and ills come crawling out of the woodwork when they can be solved, conveniently enough, by their sponsors and promoters receiving government money.

It is very difficult to overcome this mentality but there are some simple things that one can do to countenance this type of ignorance. If someone has difficulty in comprehending the validity of economic law, a basic way of shining some light on the truth is to point out the motivations of other parties in a situation – to put the person in the shoes of someone else. If, for example, the debate concerns price controls, persuade the person to appreciate the point of view of the seller as opposed to that of the buyer. What if he was in that situation and was suddenly told that he can’t sell an item for more than, say £10 each yet his costs are £15? In short, ask him, would you continue to sell in that situation? Secondly, where someone proposes a government measure to alleviate an alleged ill, ask for justification of why that problem deserves funding compared to others (having a few other of these problems at one’s finger tips may assist in this regard). As he is unlikely to be able to offer a definitive method of prioritising government spending, the answer will almost certainly dissolve into “raise taxes on the rich!” That will open the door to a wider discussion of the efficacy of government vs. the free market in creating wealth and vanishing problems such as poverty.

Truth and Lies

Perhaps the greatest intellectual difficulty that Austro-Libertarians face, however, is not the existing mentality of the people or their biases towards collectivist solutions. Rather, it is the fact that we are not always up against people who are interested in the truth. Government, relying on violence rather than entrepreneurial talent in order to attain its revenue, provides an easy and luxuriant income to hoards of individuals who would never have a hope of attaining that income on the free market. This is not to suggest, of course, that everyone who receives government funding is stupid and useless. In most cases it is simply the fact that their talents would not be in high demand on the free market. All human beings seek to further their ends and to make their lives more comfortable and rewarding through the means that are available. Economics frequently talks about how humans use objects as means to achieve their purposes, but so too can other humans be used as means. After all, why bother doing something for yourself if you can just order someone else to do what you want? Power, and the exercise of it, is therefore an extremely seductive potion, one that, once drunk, is very difficult to relinquish the effects of. But government has never survived on its own by simply crying “We are better for you!” “We are morally right!” etc. Rather, it has had to buy in other sectors of the population at large in order to retain its veneer of legitimacy. There are two of these that we shall mention here.

First, intellectuals are a prime category of those persons who are unlikely to obtain the income that they do on the free market. It is only through government funding and largesse that their theses and research papers would ever have a hope of being written. There is also, perhaps, the snobbish aspect that intellectual endeavour is somehow “above” the market and represents higher truth or something better than grubby trading (the same mentality one can often find pervading that other sink pit of government money, the arts). But that aside, when, for example, the majority of macroeconomic research is funded by the Federal Reserve, what likelihood is there that the budding and bright PhDs who can only find employment in one of these research programmes are going to churn out conclusions that are critical of central banking? Or when hoards of scientists are swept up by the Intergovernmental Panel on Climate Change (IPCC) what chances are there that their conclusions will not invoke the need for more government control? This essay is not the place, of course, to determine the merits of specific scientific research. Rather, the point is that one has to be extremely suspicious of Government-funded programmes that conveniently either justify or warrant an increase in the size of government. But it is also true that some intellectuals themselves may wish to disingenuously cloak the truth in favour of a cherished political agenda – they simply believe that big government is a good thing. In any case, bringing on board seemingly impartial and objective intellectual justification for government is a massive boon.

Secondly, one might say that the population itself has been bought off. Democratic governments effectively bribe the citizenry with their own (or, rather, other people’s) money, not only by promising wonderful schools, hospitals, transport networks etc., but also by directly showering handouts from (and creating dependence upon) the ballooning welfare state, all conveniently paid for by taxing “the rich”. Even if one manages to resist the siren song of the former, it is very hard to denounce one’s receipt of a stream of free money. Given that there are so many people who are reliant upon government today it is difficult to envisage how one may even go about the practical operation of dismantling it, let alone attempting to convince people of the justification of such a move.

One cannot necessarily condemn individuals we have been discussing as being totally evil and immoral. If the livelihood of oneself and one’s family is reliant on, say, a tax credit or if one is in a government-funded job then it is understandable, if not forgivable, that people will tow the government line. But that only means that the exceptions, the ones who do not follow the Pied Piper’s tune, shine ever more brightly into the ether and it remains the fact that the justification of government is fundamentally nothing more than a charlatan operation. The supreme irony has to be that people are paying for the justification of their own enslavement.

It is very difficult to challenge this problem in the search for the truth. One could resort to challenging the credentials of one’s ideological opponents, but this can lead one down a dangerous path, resulting in ad hominem attacks and accusations of sour grapes. One should probably only restrict such observations to the most general terms, as we have done here, or at least ensuring that they only pepper solid arguments and counter-arguments that concern the specific issues. Instead, one can only countenance illusions and wizardry with one’s own solid passion for truth and justice, a reputation that one might have to earn through patient adherence to it. Lies and falsehoods will eventually be revealed for what they are. We, as Austro-Libertarians, know that government cannot ever achieve its promises, we know that it is a foregone certainty that it can never control the entire economy without collapsing, we know that it is immoral, violent and destructive. Everything that government does simply sows the seeds of its own doom. Perhaps we are starting to see the beginning of this at the time of writing, as Western populations, having been lied to once over the Iraq war, having seen the mess created in Afghanistan, and having grown ever more distrustful of the so-called “War on Terror” in general, are showing strong resistance to endorsing the US government’s desired attack on the Syrian regime that we mentioned above. Crucially, people are convinced that governments are lying about its supposed justification – “trust us” and “we know there is evidence” is no longer working. It may be only be a matter of time before this sentiment is linked towards the continued failure of government to find a way out of its self-induced economic malaise since 2008 and all of government’s chickens come home to roost. Who then, when all of the liars, conjurers and charmers have vanished will be left to pick up the pieces and who will people turn to for a way forward? Only those who all along remained steadfast to the truth and to what was right – the Austro-Libertarians.

View the video version of this post.

1As we have said elsewhere the notion of the market as a “spontaneous order” is metaphorical in only the very strictest sense.

Liberty in our Lifetime

Leave a comment

Perusing many libertarian and “Austrian” oriented websites, podcasts and newsreels, it is very easy for one to lapse into despair when considering the possibility of ever achieving a world of liberty. The stories and the commentary are always the same – of collapsing economies, increasing government interference in our private lives, and the increased propensity for war and conflict. Indeed, at times, the state can seem so overwhelming in its march towards total domination that the typical libertarian, normally isolated as he is, can only sink into despondency over how any of this may be stopped let alone reversed.

There are, however, five reasons to be optimistic for the prospect of gaining liberty, even in our lifetime. Furthermore these are not mere fleeting trivialities but, rather, relate directly to aspects that are pertinent and essential to the existence and strength of government. Let us consider each of them in turn.

1. Government is Small

As government is parasitic upon the productive element of the economy it can never, in its totality, consist of more than a mere fraction of the total population. If the majority become the parasite and the minority the host then the latter will simply collapse under the weight of the burden. Government cannot continue to siphon labour and capital from the productive sector and divert it to the unproductive. Even if we live in an era when all of our emails and telephone calls are stored, the government will always be in the position of having only a handful of people who will be able to scrutinise and read these emails. It takes even more than that – talent and intelligence – to analyse these communications and to put two and two together. In short there will never be enough man-hours in order for the government to manage and spy on the lives of everyone from dawn until dusk. Even before we had mass electronic communication and had to rely on snail mail the government still failed to crack down on black markets, drug shipments, smuggling, and all of the other free market responses to the non-crimes that it created, the circumvention of which was successful because it served the needs of the majority. Government will forever be burdened by the fact that it is in the minority and this is a major obstacle towards both its growth and the effectiveness of its meddling.

2. Government is Stupid

Why was Great Britain the biggest imperial superpower of the nineteenth century and why was that role taken on by the United States in the twentieth? By contrast, why did the Soviet Union fail to make any headway at all in international dominance after World War II up until the point it collapsed? Both Great Britain and the US were internally liberal countries in their respective eras, both accumulating a massive amount of capital that enabled a vast number of goods to be produced and the resulting standard of living to rise. There was, therefore, a plentiful store of wealth into which the government could tap in order to fund its foreign ventures. The Soviet Union, on the other hand, with its centralised, socialised economy, could not produce the wherewithal necessary to enable it to enforce itself imperialistically on foreign nations. In other words, government relies on keeping the society on which is leeches relatively free in order to guarantee the productivity that will enable government to expand its operations. In contrast, government itself, as has often been said, cannot even run the post office. Indeed government has failed to invent anything valuable or worthwhile during its entire existence and is only able to take over and operate industries that were kindled and developed in the private sector. This is true of every government operation that is, today, taken for granted – roads, healthcare, communications, utilities, and so on. The only thing that government has ever been able to do with modest efficiency is construct gallows and develop nuclear weapons, i.e. to invent the machinery that kills millions of people. Because of the absence of prices, profits and losses, totally socialised societies failed to harmonise the stages of production that is necessary in order to produce a vast amount of wealth, and very quickly these societies had to revert to at least a kernel of market activity. Indeed, it was a running joke among Soviet economists that they needed at least one country to remain free of international socialism so that the planners and bureaucrats would know what the prices of goods should be. Government without the free market is blind and stupid, unable to generate the resources it needs to carry on its overreaching activities. Therefore, if government was to extend itself to an all-encompassing dominion the only thing it could be certain of achieving is suicide.

3. Government is Greedy

Libertarians often point out that what is often forgotten in mainstream discussion of government is the fact that it too is populated with human beings who have desires, choices and ends and that they will happily use the legitimated violence through the mechanism of the state in order to achieve these ends. It follows, therefore, that as soon as that system fails to enable them to grab the wealth and riches that they desire, then they too, the government officials and the bureaucrats, will lose faith in their own organisation. One of the reasons why the Soviet Union collapsed is not because the people revolted but because the inner circle themselves began to see that the very system they were operating was not even giving them a particularly high standard of living. They were simply (to use a clichéd phrase) rearranging the deck chairs on the Titanic, playing around vainly with an ever diminishing pool of wealth on the path to destruction. It is, therefore, a mistake to suggest that any post-Cold War politician is a “socialist” or a “communist” in the true sense of those words. Rather, they have to keep the capitalist means of production going in order to blood suck from the wealth that is furnished by private industry. The most we are likely to get today is government partnership with big business, a form of fascism (minus, perhaps, the excessive nationalistic overtones of Hitler and Mussolini) rather than strict forms of socialism or communism. Ironically, therefore, government’s own greed for luxury and largesse will itself stop government from becoming too powerful and overreaching.

4. Government Cannot Risk Revolution

All governments, being a minority of the population, require, at least, the tacit acceptance of the majority of the population in order to remain in power. As soon as this acceptance is lost and there is active resistance then government ceases to function and will simply collapse. One of the reasons why the majority of the population today has become so tacit is because the standard of living, compared to previous ages, is so high. Although this standard would be much higher in the absence of any government at all, it is still the case that capitalist production and free exchange is able to both fund all of government’s boondoggles and also ensure that even an average wage earner in the Western world can live in relative comfort. It must be admitted that, on balance, in spite of the proportion of their productivity that is siphoned off by the government being at its highest point in history, people are relatively content. Although we are not yet quite as soma-induced as the inhabitants of Huxley’s Brave New World, the attractions of entertainment and leisure time that are made possible by capital accumulation through the free market provide a permanent and satisfying distraction from all of the nasty things that government is doing. Indeed some people’s thoughts never move much beyond analysis of the last football game or of the latest participants in The X Factor. The resulting apathy towards political and social matters, we might say, is the very bedrock of the tacit acceptance of government. Government, therefore, cannot risk destroying the origin of the production of the standard of living that makes this possible if it is to continue to gain its tacit acceptance. Whereas in previous ages there was nothing much to lose from the tightening of a king or emperor’s grip, today there will be a very marked change in the efficacy of production if the government’s tentacles strangle the capitalist system. Deprived of supermarket shelves stocked full of food, water that runs as soon as the tap is turned on, lights that illuminate with the flick of a switch, and televisions that flood their living rooms with Strictly Come Dancing, people would flock to overthrow the government that had so obviously failed. Indeed, it has been said that any nation is only three meals away from revolution but with our standard of living so much higher now it might not even take an empty stomach to arouse the masses. Hence any government worldwide could be less than a single day away from being toppled if its citizens are deprived of some comfort that was, hitherto, taken for granted. Food for thought, one might say, for any politician in power.

5. Government will be Out-Innovated

It is something of a truism amongst military historians that generals are always fighting the last war. They fail to adapt their methods of assault and defence to the new technologies and methods of fighting that have emerged since the previous conflict. Hence the mechanised horror and destruction of World War I made possible by twentieth century technology was met with strategies and tactics that dated from the nineteenth. This points to what is, perhaps, the biggest hope that we have for liberty in our lifetime – that government will not be able to keep up with the pace of free market innovation. The free market is necessarily heterogenous, decentralised and unbureaucratic whereas government is the precise opposite – big, unwieldy and burdened by procedure in a lengthy chain of command which always puts it on the back foot compared to the scattered mass of private citizens. We have already stated that government cannot create anything useful and must largely rely on the innovation of capitalists from which to draw its expertise and technological know-how. And further, we have also already pointed out that government has always failed to control black markets and underground trading that emerge in response to government induced shortages and prohibitions. These aspects can only accelerate in the technological age, when it is possible to transfer wealth and information to the other side of the world at the click of a button. Already innovations such as virtual currencies have emerged in response to the debt-laden and corrupt government-approved financial system and no doubt, in the wake of the scandal of the US’s spying program as revealed by a former NSA contractor and CIA operative, Edward Snowden, there will be increased market innovations to provide for privacy and security. Indeed we might even say that the internet itself caught government on the back foot – with a worldwide network of information and resources emerging and developing successfully before they were even aware of it, it’s difficult to believe that government wouldn’t want to turn back the clock and put strangleholds on such a boon to freedom. In short, government always has to react to the obstacles that are put in its way by innovative forces that are far superior. If the free market invents letter writing government has to find a way to intercept letters. If the free market invents the telephone it has to find a way to tap phone lines. And if the free market invents email then the government must determine how it can download and read these. The ultimate achievement will be when each individual person will be able, at very low cost, to protect his/her person and property from the aggression of others – perhaps through some kind of invisible force field or other such futuristic invention. The precise means are not as important as the concept; for if this could be achieved it would, in one fell swoop, eliminate both the means through which government leeches off its productive citizenry (force) and its very raison d’être – the production of security and the protection against private criminals and foreign, invading states. Indeed the latter might prove to be more important than the former given that the very justification of government for most people lies in the fact that society would be consumed by plundering and pillage in the absence of government. Take that alleged necessity of government away and what reason is left for it to exist? The fact that it would not even be able to exist in such a world where it would obviously be deprived of tax revenue might just be the icing on the cake.


Far from sinking into depression or despair at the state of the world today, we have demonstrated that there is, in fact, much to be hopeful for in the prospect for liberty. Furthermore, if the last point we noted above is true, then we should also be optimistic of the chances that there will also be very little violent revolution and we can look forward to a libertarian world emerging peacefully and with little bloodshed.

View the video version of this post.

Free Choices or Coerced Choices?

Leave a comment

The Academy of Medical Royal Colleges, which apparently is a “united front” of the medical profession, says its doctors are seeing the consequences of unhealthy diets every day and that it has never come together on such an issue before. Needless to say a whole raft of interventionist measures are recommended to curb this apparent problem:

  • A ban on advertising foods high in saturated fat, sugar and salt before 9pm;
  • Further taxes on sugary drinks to increase prices by at least 20%;
  • A reduction in fast food outlets near schools and leisure centres;
  • A £100m budget for interventions such as weight-loss surgery;
  • No junk food or vending machines in hospitals, where all food must meet the same nutritional standards as in schools;
  • Food labels to include calorie information for children.

We will set aside for the moment the issue of whether it can be said that there are “right” choices for people to make when it comes to what they want to do with their own bodies (why, for example, should people prefer a longer life to the enjoyment provided by a burger and fries washed down with a pint of coca-cola?). Instead, the problem here is rather more grievous which is that, whenever members of the public make choices about how they want to live their lives there is the ever present assumption that, as these choices are made with apparent freedom, that it is the free market that has failed in preventing the emergence of the “undesired” outcome. What is never discussed or even raised is the possibility that people’s choices are already constrained or influenced by existing Government interference to the extent that, not only is it impossible to say that the choices made would be the same as those that would be made on a genuine free market, but that Government intervention is itself causing the undesirable choices to be made. And, lo and behold, blinded by such ignorance, the call is always for more Government intervention to augment that which we already have to put up with.

The present author has examined in detail why socialising healthcare will lead to greater ill health. There is little need to repeat all of this here except to say that people prefer doing that which comes at a lower cost, all else being equal. So that if you lower or remove the cost of becoming ill then, relatively, you will have more people who lead lifestyles that will result in ill health.

But the same fallacy is advanced in all cases where the proximate cause of a problem is people’s apparent free choices. Let’s examine some of the most popular:

“There is not enough food in the world! If the free market has brought such widespread hunger then Governments much intervene!”

The allegation here is usually some variant of the rich world refusing to share its wealth with the poor world. Leaving aside the fallacious belief that one person having means that another must not have, just why is it that we have widespread poverty in the age of the iPad? The plight of poor nations has nothing to do with being unable to understand technological development, nor are they in anyway lacking a rich diversity of raw materials. Rather it stems from the lack of capital investment per head of the population compared to the West. In the West, we have more machines and better tools that can churn out more and better goods per person than they can in poor nations. So yes, investors and capitalists have not invested in poor countries. The free market has not reached these nations, it must have failed! But the precise reason why the West has benefited from the free market is that it has long cherished institutions that have allowed to the free market to flourish, in particular strong legal rights to private property and relative political freedom. These are precisely the conditions that are lacking in poor nations, conditions that cause entrepreneurs to seek other havens for their investments. At the back of their minds, no doubt, is also the mass expropriation of foreign investment in the post-colonial era. Why should anyone bother investing in a poor nation if their wealth will just be pinched by the Government? To make matters worse, poorer nations began to model themselves on their Western role models just at the point when the latter started to turn away from a social order based on private property towards interventionism and social democracy with the result that the wrong lessons are being learnt. A product of this tide has been that Western governments now heavily interfere in world food markets, whether it be through such wicked and wasteful outfits as the Common Agricultural Policy, subsidies for farmers to devote farmland to ethanol production, or the vast regulatory network that impedes food production at the behest of a few powerful lobbyists. The recent scandal of horse meat appearing in processed beef products sold in UK supermarkets should be viewed in this context.

Poverty and hunger are therefore a failure of Government, not of the free market.

“The forests are disappearing! The free market, seeking ever greater profits, is decimating our natural resources! The Government must stop it”

Let’s go even further: add to the list fish stocks, elephants, whales, and any other of the countless number of “endangered” species that you like. Yes, there is a great problem, and yes, looking at the issue at face value, it appears that capitalists are running down these resources.

But this raises the question of why has the free market not produced similar shortages of other things? The dairy industry, for instance, exploits cows for profit but we never hear of a shortage of cows. Nor do we seem to be in short supply of chickens to supply us with eggs on our breakfast plates. So why is it only some resources that seem to be in danger of depletion? What is the difference between the endangered group and all the others?

The reason is that people are not permitted to own the capital value of forests, parts of the sea, elephants, tigers, etc. If one is able to own the capital value of the resource then exploiting it for present revenue has to be balanced against the loss of capital value in doing so (a full explanation of this is available here). But if one does not own the capital value then the only concern is for present revenue – there is no cost to exploiting resources to their fullest now. In fact the only cost is that someone will get there before you. So instead of all the myriad of Government restrictions and regulations concerning these depleted resources in order to “cure” the alleged free market ravaging all that is needed is to extend full private property rights to these resources and they will be conserved. Once again the problem is not too much free choice but the fact that people have been prevented by the strong arm of the Government from having a reason to make the “right” choices.

And let us conclude with the most pertinent of all alleged market failures, the phenomenon of “boom and bust”:

“Free market greed has caused capitalists to invest in wasteful projects! Clearly they need the Government to give them speed limits!”

Once again, looking at only the proximate causes of boom and bust will reveal that entrepreneurs invested too heavily in a particular sector, inflating a bubble that eventually pops, causing widespread misery and unemployment. In the 2007-8 financial crisis, the effects of which are lingering with the current malaise, a summary of the charge is that greedy bankers had lent money to people who could not afford to pay it back. End of story. But what is not told by peddlers of this narrative such as Paul Krugman is the moral hazard created by the so-called “Greenspan put” which had the effect of financial institutions expecting their profits to be retained and their losses to be borne by an influx of monetary liquidity during any risk of collapsing asset prices (i.e. in short paid for by inflation). If one can keep one’s profits and socialise one’s losses is it any wonder that people took wild risks? If there is only ever an upside then wouldn’t you? This is before we consider the fact that credit expansion is the cause of the business cycle in the first place that will always lead, by falsifying the societal time preference rate, to the expansion of unsustainable investment projects that must be rendered wasteful as soon as the inflation stops.

Therefore, next time you read that the “free market” has caused this, that, or the other, stop and think as to precisely what the options of the free market participants were. More often than not you will trace the source of the bad decision to some kind of Government interference.

View the video version of this post.