Equality

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It is widely believed in mainstream circles that equality between human beings, in one form or another, is some kind of virtue to which society ought to aspire and that rank inequality is a measure of severe injustice that needs to be corrected by state action. Equality between individuals has also been used as a primary weapon against those who favour capitalism and free exchange. Even though the worst excesses of inequality – such as the rising value of assets owned by the rich as a result of worldwide money printing – are in fact, products of a state corporatist system, it is true that proponents of the free market favour a system in which some people will be wealthier by virtue of their ownership of a greater number of resources than other people.

Our critique of equality here will be somewhat different from the usual free market or libertarian approaches towards tackling this issue, which normally explain the virtues of the free market and the ethics of private property and how these are better than striving for some kind of equality. Although we will certainly champion these arguments, our approach will be two-pronged. First of all, we will conclude that the aspiration towards some kind of perfect or immediate equality – i.e. the forced attempt to render all people absolutely equal now with today’s stock of wealth and resources – is undesirable, impractical and far from being a moral virtue. However, more importantly, we will go on to argue that, if someone desires a more approximate or gradual achievement of equality – such as the so-called “equality of opportunity” – statism, socialism and any kind of redistributionism must be abandoned and that those who seek to create such equality must instead embrace a social order that maximises the production of wealth. That social order is, of course, free market capitalism.

Perfect Equality

Our starting point in examining the advocacy for some kind of perfect or immediate equality is to acknowledge that nature places a formidable number of obstacles in the way of achieving such equality. One of these barriers is the fact of human action itself – the ability of each individual human to think, desire and consciously choose to devote the resources at his disposal in ways that he deems fit. In other words individual humans make decisions to act independently of one another. Some of these decisions will be good or better decisions while others will be bad or worse. Some people will make a greater number of bad or worse decisions than good or better decisions while others will make a greater number of good or better decisions than they do bad or worse decisions. The varying results of these decisions serve to place people in a state of inequality, with those that make good or better decisions ending up in a better condition than those who make bad or worse decisions. Any attempt to subvert these outcomes and to create, instead, a greater degree of equality between humans would subordinate all individually motivated behaviour to the directions of the state, lest anyone was to act in such a way as to put himself in a position better than that of his fellow human. Although this would be undeniably totalitarian and despotic the more crucial point is that any such drive towards equality would require a complete annihilation of the preeminent quality of human nature – that of rational action. It would render us all as nothing better than automated robots, unable to act upon our own feelings and desires while under the control of our political lords and masters. Hence, unless anybody is happy to become an unthinking cog in a society that represents mere machinery then we must conclude that equality is an inherently undesirable goal.

This formidable obstacle placed in the way of equality by nature – the fact that we think, choose, desire as individuals – renders perfect equality not only undesirable but also impractical. Let us say that even if we were able to stifle all individual human action and create a perfect material equality between every human being. It would still be the case, however, that individual people would value these possessions differently. A white stick, for instance, is likely to be very valuable to a blind man yet next to useless to a sighted man. If you give both of these men a white stick it is clear that, even though their physical, material possessions are identical, one has gained value more than another. Thus, if we have to strive for perfect equality it is useless to attempt to distribute resources equally, lest someone ends up more happy and content with the same possessions than somebody else and thus rendering them in unequal conditions. Perhaps such a problem could be resolved by simply giving them an equal amount of money? Wouldn’t everyone then be able to spend their equal amount of money on different things that are valuable to them? Unfortunately this would not work either because one person may need to spend more money to gain the same amount of satisfaction as another person. People who are more satisfied with spiritual and non-material needs may be content with spending very little of the money allocated to them whereas those who are materialistic and seek value in possessions may require a lot more for them to feel as happy as the non-materialistic folk. What the budding egalitarian would have to do, therefore, is to attempt to provide for each person’s needs regardless of the precise quantity of goods required for those needs. So in other words one person may receive a lot whereas another person would receive very little if they are both made equally satisfied by what they receive. This, however, turns the whole of economics on its head. Economising behaviour regulates needs to the goods available. Needs are insatiable whereas goods are scarce and we must choose which of our needs we value the most in order to allocate the goods available to them. There is not a fixed number of needs or a fixed quantity of happiness shared between all people which can be satisfied by an abundant stock of goods. Needs are also intangible entities, existing in only the mind. They cannot be measured with any yardstick and any attempt to do so would simply subordinate the real value of the needs as perceived by individual people to their value as perceived by some bureaucrat – and, of course, this bureaucrat will have his own motivations for determining who gets what. One’s own value of one’s needs is subordinated to the value of those needs as perceived by the state. Anyone who has needs deemed unworthy by the state, perhaps because they are “unpatriotic” or somehow not in keeping with the spirit of the “the people”, will be left far worse off than those who toe the state’s line, which is how redistributionist policy always works in practice.

If we look more broadly at the entirety of the natural state of human beings, things do not get much better for the budding egalitarian. Indeed so inherent is the natural state of inequality between human beings that we could even suggest that Mother Nature intended it to be so and that she willed such a state to be permanent. Individual people are born with different qualities – different heights, different weights, different physical and mental capabilities, and so on. So too are the environments into which they are born different. Not only will their parents and those around them also have varying characteristics and varying abilities at raising their offspring, but the precise climate, geography and availability of natural resources will differ from place to place. Hence, the Earth itself gifts different people differently and presents them with different degrees of challenge for them to live their lives. Some of these environmental differences are likely to have had a cumulative genetic impact as a result of natural selection that exacerbates further inequalities. A society which has developed in an area where resources are plentiful and where little work needs to be done to ensure survival will have had its physical and mental capabilities tested to a much lower degree than a society that has developed in a barren area where resources are scarce and what little the earth has to offer must be obtained through ingenuity and backbreaking physical work. Only the most intelligent and strongest will have survived and prospered in the latter society whereas practically anyone could have lived in the former society. After generations of reproduction, therefore, those who are born today in the latter society – the “difficult” one – are likely to have superior mental and physical attributes that are not enjoyed by those in the “easy” society. Ironically, therefore, those who descended from a society which originally had “less” are those who are likely to command greater wealth and income, by virtue of their superior strength and intellect, in today’s society characterised by global trade and the division of labour. Indeed, given that we have mentioned trade and the division of labour, we might as well point out that any drive towards an immediate and perfect equality would require the complete eradication of these elements for they are clearly founded on a rank inequality. The division of labour cannot exist unless people utilise different skills and different abilities to undertake different tasks. If two people wish to trade it is because they each start off with different things and each wish to obtain different things through the trade. In other words each partner to the exchange desires to be different and views himself as having gained something more than what he parted with.

The fact of all these inequalities alone does not, of course, prevent equality from being a virtue. Simply because something is does not been that it ought to be. However, the manifold extent of inequality that has been presented to us by nature indicates that, in order to reverse such a natural state, a considerable and extensive power of man over nature will be required. It is here where the notion of equality as an argument for some kind of socialism or redistributionism collapses. Creating a condition of equality will not require, as is typically supposed, a redistribution of existing wealth – that is, man’s existing power over nature – but, rather, the generation of more wealth in order to overcome the formidable barriers to equality that nature has put in our path. Those who desire equality should, in fact, not be dreaming up ways in which to rob the rich to give to the poor but, rather, should be finding the best possible way to ensure wealth creation. As we shall explore now it is in fact a society of private property and free exchange – i.e. of capitalism – which, by virtue of its superior productive ability, accomplishes this and which makes a tendency towards greater equality more likely.

The Equalising Tendencies of Capitalism

While we examine the equalising tendencies of capitalism, we must admit, lest w be accused of creating a straw man, that equality is not usually advocated in any perfect or absolute sense in the manner that we just subjected to criticism. Egalitarians do not typically strive for the complete eradication of all differences and idiosyncrasies between humans, even if social systems founded upon equality have tried to decimate all independent and unapproved opinions, culture, tastes, and personal habits. The staunchest of such egalitarians will still admit that the division of labour – upon which human prosperity depends – requires some people to be garbage collectors and others to be brain surgeons, for example, and that it would be a travesty for everybody to be garbage collectors or for everybody to practise brain surgery. Rather, the egalitarian strives for some kind of approximate equality. After all, approximate equality could be achieved so long as everybody is doing the job that he most enjoys and/or is best at, and surely people having some kind of access to roughly the same amount of wealth would be better than nothing at all? To implement such a programme through a socialist society would, however, produce the very opposite of equality. In a society governed by private property and free exchange, the ownership of all of the material wealth in existence is scattered between all of the private individuals who inhabit the Earth. As all persons are free to make their own decisions as to how best to deploy their wealth it is true that some people will have accumulated more while others will have accumulated less. However, those who accumulate more do so because they serve the needs of consumers better than anyone else – consumers entrust these resources to these particular people because the latter have, so far, proven themselves better at directing them to the most urgent wants of the consumers than anyone else. The wealthy in a capitalist society cannot abuse their position as their fortunes would soon begin to haemorrhage. Rather, they must continue to serve the needs of consumers better than anyone else, or consumers will drop them and their products in a flash while the productive assets that form their wealth will be transferred to other people. There also seems to be something of a limit on how much of societal wealth any individual can command in such a society. As of 2016 the wealthiest man in the world, Bill Gates, has a total fortune of $81.7 billion – a drop in the ocean compared to the $3.7 trillion budget of the federal government last year, and peanuts compared to the sums that central bankers like to print from thin air. Warren Buffett, widely regarded as the most successful investor in history, has admitted that achieving a significant annual return for his firm Berkshire Hathaway is now much more difficult than it used to be on account of the size that the firm has now achieved. It is typically believed that capitalism has a tendency towards monopoly, with more and more wealth being sucked into the clutches of a few powerful oligarchs. The opposite is in fact the case – one individual entrepreneur or investor can only direct his attention to so much before his talents are spread too thinly, or he has to delegate to lesser individuals. Hence, inefficiencies begin to creep in which provide an advantage to smaller, more nimble competitors and thus checking the growth of any established player. In a socialist society, however, matters are completely different. If you deprive all of the individual citizens of their ability to direct their labour and their resources to the employments that they feel are best then these decisions have to be made by somebody else. There must be someone who has de facto ownership and control over resources in order for these resources to be directed. These people are, of course, those who form the state and its planning bureaucracy. Clearly this amounts to an enormous concentration of wealth in the hands of a very small, political elite, a concentration which by far exceeds that of the wealthiest individual in a capitalist society. These elites will direct resources according to what they value rather than what is valuable for everyone else. Not only will you get parades of missiles accompanied by goose stepping troops, and the construction of vanity projects such as the unfinished 105 storey hotel in Pyongyang, but even if the direction of resources is for the benefit of other people this light will be refracted through the prism of the elites’ own preoccupations. If the minister of a particular socialist state or department thinks single mothers are hard done by then single mothers will get more; if he is an ex-railway worker then he is likely to account for the condition of railway workers more than someone who has no such background; if a relative of his died from cancer then he is likely to want to devote more resources to cancer research than someone who has had no such exposure, while those suffering from other illnesses and conditions must put up with lesser treatment. And, of course, he will have every incentive to direct wealth to personal favourites and political supporters that serve to keep him in his powerful position. No longer is his status and privilege determined by serving consumers who can choke off his supply of funds at any point they desire. Rather, he now depends upon currying favour with his political contemporaries. Furthermore, if he is able to maintain such favour he can simply resort, when directing resources to where he wants, to the use of force rather than the use of persuasion through offering a valuable service. Socialism does not eliminate any unequal, societal statuses; it simply changes the game of who rises to the top – and when you are at the top you are more unequal from the rest of society than in a capitalist economy. Moreover, socialism cements these statuses from a revolving membership determined by who best can serve consumers into semi-permanent and impenetrable political castes. All of this can be illustrated today in some of the so-called democratic socialist countries such as Venezuela, where the daughter of the late, former President Hugo Chavez enjoys a personal fortune of approximately $4.2 billion, while the country’s socialist policies have made basic necessities so scarce that the black market price for a dozen eggs have reportedly reached $150. According to The Daily Mail, at the Caracas Country Club the nation’s super rich socialists “enjoy lavish parties and gourmet cuisine, while middle-class people are forced to scavenge for food” at a membership cost of 458 times the average Venezuelan salary. The attitude of the elites is almost literally the modern day equivalent of Nero fiddling – “Should we stop enjoying ourselves just because the country is burning?” one is quoted as saying. Far from being a creator of any kind of approximate equality, socialism widens the gulf between rich and poor immeasurably, and to the extent that people are equal at all they languish in equal destitution.

Of course, after the twentieth century failures of communism and socialism, the aims of the equalisers and egalitarians have been watered down further into vaguer nuances such as the so-called “equality of opportunity” – i.e. that everyone may become richer and may become better off than other people as a result of their own talents and hard work so long as they all start off from the same supposed springboard. The idea is, in other words, that if an individual is born to wealthy parents resulting in a high quality of education and a comfortable upbringing he has a “head start” against someone from a poorer background who does not have these benefits, and that it is this kind of inequality that should be eradicated through redistribution. In the first place, any kind of birth into wealth and affluence does not by itself guarantee that the individual will have any talent or affinity for hard work. Indeed, the opposite is likely to be the case if he knows that, in order with stave off any hardship he encounters, Daddy will simply whip out his cheque book. Somebody who is less privileged, however, who has no alternative but to use his natural abilities and dedication to get ahead is more likely to do so. It is for this reason that most of the significant entrepreneurs and inventors were drop outs and rebels against the formal system of education and progression. The traditional path through school and elite university really only prepares one for a career in the establishment professions such as law, banking and the civil service – occupations which make you well off largely because the state ensures that your wealth is perpetuated. However, if we accept the premise that equality of opportunity through providing equal resources to the young will benefit the latter then it would not follow that the best manner to achieve this would be through redistribution. Rather, it would be better to follow a path of wealth creation so that the poorest in society are able to afford a high quality education – and an education of higher quality than the rich may have enjoyed in the recent past – sooner. The reason for this is that it is not the relative difference between rich and poor that is the significant factor – rather, it is whether the poor have enough to put them in a position in which they can compete effectively. While it is true that, in a capitalist society, the rich will get richer as the poor get richer and thus the rich will always be able to afford “more” than the poor, there is only a finite amount that they can spend productively on, say, educating themselves highly and sharpening their talents for entrepreneurship before any additional resources in this direction will produce diminishing returns. For example, a person can only read so many books in a day; if a rich person spends more on books he will not become more educated than a poorer person if he never has time to read those books. So if wealth creation results in the poor being able to afford as many books as the rich can read then both rich and poor will be equally well read. The rich may be able to afford more tutors than the poor, but they can only absorb so much information from so many tutors before all these mentors will drown themselves out in a cacophony of confusion. Therefore, if wealth creation permits the poor to afford as many tutors as the rich can absorb information from then both rich and poor will be equally well tutored. It is still true, of course, that the rich will spend more on educating themselves than the poor and it is also true that the rich will be the first to benefit from any innovations. However, as the poor get wealthier, this additional money spent by the rich tends to go towards additional pleasantries and luxuries rather than the substantial necessities of learning – for example, the classrooms may be nicer, the chairs comfier, the writing paper of a higher quality. But none of these things really matter a great deal when it comes to absorbing knowledge – or rather they matter far less than the poor being unable to afford any education at all. It is for this reason that wealth creation, through free market capitalism, rather than wealth distribution, produces a tendency towards equality and more adequately and permanently closes the gap between rich and poor, both in a very real sense but also in the sense of providing an “equality of opportunity”.

We can illustrate this further through examples in the wider economy. As Mises points out, when the automobile was first invented and only the rich could afford to purchase one, the gap between rich and poor was very wide. The rich had personal, motorised transportation while the poor had to go barefoot, put up with animal powered transport, or use the railway. Once, however, society became wealthy enough to mass produce cars that were affordable by the poor, both rich and poor now had access to motorised transportation. It is true that the rich spend more of their money on their cars than the poor do – and often a lot more. However, most of this additional money is spent on luxury additions such as higher quality paint and body work, sleeker aesthetics, leather upholstery and the fineness of the engine; the basic purpose of the car, to transport a person from A to B, is available to everybody and no amount of additional spending by the rich on their own cars can change this. This was not so before the poor could afford any car at all. Thus the gap between rich and poor has been narrowed through wealth creation. Similarly, the difference between a two bedroom terraced house and an enormous mansion is less than the difference between a house and no house at all; the difference between a gold plated toilet and a ceramic toilet is less than the difference between a toilet and no toilet. If a “poor” individual possesses a genuine talent his inability to afford champagne and caviar rather than bread and cheese is unlikely to prejudice his efforts to capitalise on this talent; but clearly he would be very disadvantaged if he could not afford food at all. What the rich spend on themselves goes towards luxuries and comforts which, while delightful, do not provide any significant material advantage to insulate themselves from a poorer person who can still afford the basics – and of course, the process of wealth creation soon places these luxuries in the hands of the poor anyway. Indeed, the rich, although they consume more goods and services than the poor, consume a lower percentage of their income than the latter do simply because more of their most urgent wants have been satisfied and additional consumption brings fewer and fewer benefits. The remainder of their resources therefore goes into investment or philanthropy – indeed, a wealthy society is awash with charitable giving simply because people have so much more to give. It is true, of course, that a poorer individual may have to demonstrate his talent if he is to persuade other people to fund him in his ventures, whereas a richer person could easily self-fund from his fortune. This, however, is arguably not a disadvantage. When you are risking other people’s money you have to rise to their standards and ensure that the decisions you are making are absolutely the right ones, decisions in which they will take a keen interest. Thus the talents and efforts of a poorer person are enhanced and focussed when he has to use other people’s money. Devoid of third party scrutiny, however, a rich individual, if he does not merely pursue his own flights of fancy without any check upon the hubris of his deluded conviction, is likely at the very least to be more slovenly and less disciplined in his approach. And in any case, if a poorer individual is genuinely talented then what is wrong with expecting him to establish this fact before others?

What we can see therefore is that any drive towards “approximate” equality or some kind of “equality of opportunity” is delivered not by a system of wealth redistribution but by a system of wealth creation. The only system that produces wealth creation, or at least produces it to its strongest possible degree, is a system of free market capitalism.

We might as well conclude with a final observation which is that people seem to be highly selective when it comes to advocating equality through wealth distribution. Apart from the occasional grumble it seems to be perfectly OK for elite sportsmen and women and movie starts to earn large amounts of money. Football enthusiasts in the UK are happy to wax lyrical about how many millions such-and-such a player is being “bought” for by a particular club, or how much one of them earns in a week, fully accepting the essence of the market and voluntary exchange in this arena. When it comes to the CEOs of multinational companies worth billions of dollars, however, it is always a different story – they are greedy fat cats, profiting off the work done by their underlings in the factories and production lines. This is so even though the multinational company may provide “essential” benefits to people such as food to eat and homes to live in, whereas the achievements of even the greatest athlete basically boil down to providing entertainment. The reason for this, of course, is that sporting and acting achievements are readily perceived by the individual, whereas the benefits of entrepreneurship and the stewardship of productive assets are not. If the cries for equality are to be consistent this should not really matter, of course – it should permeate all areas of human endeavour. However, if the ready perception of a wealthy person’s achievement is enough to justify it in the eyes of everybody else then clearly libertarians and free market enthusiasts should continue to extol the benefits of entrepreneurship and attempt elevate, to the level of sportsmanship and acting in front of a camera, the status of businessmen, investors and capitalists who provide goods and services which people want to buy at prices they can afford. This may be the surest way to purge mindless egalitarianism from mainstream social thought.


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Altruism, Freedom and Economic Progress

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The virtue of altruism is held in immeasurably high esteem in our society today. Selfless benevolence at one’s own expense is regarded as the pinnacle of human endeavours, with societies and cultures often reserving their most coveted honours and elevations for people who have apparently undergone acts of selflessness and generosity. Contrary to mainstream thought (and contrary to the thought of some free market proponents), there is nothing in either libertarianism or free market economics that disputes this view. It is true that, strictly speaking libertarians qua libertarians neither promote nor condone any voluntary act; rather, they simply take the position that such acts should not be countered with violent repressions. Whether such acts are good in and of themselves is another matter. Further, free market economists will note that although voluntary exchanges create net wealth (including gift giving in which the donor never “loses” as such but, rather, gains a psychic profit that, to him, must be worth more than what he gave up), there is no part of their science in and of itself that compels them to promote or encourage giving any more than they are required to promote any other type of exchange (although economists may of course note also that increased wealth creation usually goes hand in hand with increased generosity). Nevertheless, as a private individual, it is possible for libertarians and free market economists to regard such specific, overt acts of kindness and generosity – especially those that cause the donor to incur at least the risk of a great material cost, such as wading into a strong river to save a drowning child – as worthy of praise and adulation and that the congratulation of such individuals is far from being out of place.

On the other hand, mainstream thought has extrapolated, erroneously, from these individual, voluntary acts the conclusion that economic progress, the vanquishing of poverty and the path towards a greater and better society are themselves dependent upon altruism and self-sacrifice to the extent that these virtues can cohere into a social system – a system, that is of course, managed by state fiat, such as the welfare state. This belief is dependent upon a further error which is that, in the free market order, the fundamental interests of each member of society are pitted against each other and that one person’s profit must automatically transform into another person’s loss. In other words, the profit and loss system results in benefits to the few (or, at most, some) at the expense of the many. From this incorrect assumption one naturally leads to the conclusions that the only way to benefit more or the many is if these profits (or the wealth that is possessed by the few) are turned over to the many. It is these conclusions with which libertarians and, in particular, free market economists disagree. If that was not bad enough, however, we shall also see that the implementation of systemic methods of wealth distribution is, in fact, completely antithetical to and destructive of altruism and generosity.

This error is similar in nature to another error encountered in mainstream economics – that of supposed shortages of “demand” on an economy-wide sale. In the particular situation of an individual firm or industry, a withdrawal of demand from the firm’s products will result in a slowdown of business for that firm. If the firm is to recover then it is obvious that a recovery of demand for its goods and services is necessary. However, from this entirely correct conclusion regarding a particular circumstance is extrapolated the utterly false conclusion that increases in demand must benefit the economy as a whole. Or, in other words, that where there is a general economic malaise the effective response is to encourage a general increase in demand for an alleged “glut” of supply. As we know from Say’s Law, however, demand and supply are opposite sides of the same coin – the demand for one product is formed by the supply of another. Therefore, one cannot increase general demand without also increasing general supply, i.e. the production of real products. Simply printing more money or lowering borrowing costs does nothing to increase demand; it simply raises the prices of what is already available and shifts the purchasing power over these existing resources from the last or later recipients of the new money to the first or earlier recipients. The real problem in an economic bust is a relative glut of some products, namely, capital goods that are further up the chain of production, and a relative shortage of other products, namely consumer goods and capital goods lower down the chain of production. So too is a similarly false conclusion drawn with regards to altruism and self-sacrifice – that what may be good in one, specific situation is good for society as a whole; and so good, moreover, that the state should systematically force us all towards altruism and self-sacrifice. Let us now explore the reasons why this is false.

First, with particular, individual acts of kindness or generosity it is possible for a bystander to appreciate and form judgments concerning the variables that are weighed in the consideration of whether someone has performed a virtuous deed; the initial helplessness or the “worthiness” of the recipient; the magnitude of relief that the voluntary act of kindness provides; and the magnitude of at least the material cost to the donor. One can therefore form a personal judgment, based on empathy, of the positions of the particular giving and receiving parties as to whether the act of altruism is a good thing. On an economy-wide scale in a society of tens (may be even hundreds) of millions of people, however, it is not possible to form such judgments with any degree of specificity, and much blunter tools such as “income” are needed in order to judge who should be donors and who should be recipients. But such blunt tools tell us nothing about why, for example, someone’s income is low, whose responsibility it is and who should bear the burden of doing something about it. Moreover, there is no reason to suppose that someone who has a “high” income necessarily has cash to spare and does not have other commitments for those funds which the government wishes to redistribute – commitments which, even to others, may be valued as worthy, such as investing in his children’s education.

Second, in the long run massive transfers of wealth from the class of “haves” to the class of “have nots” does not benefit the latter in the long run. One of the most serious misconceptions concerning the ownership of wealth is that one must own it in order to benefit from it and thus only divesting wealth from those that have it and giving it to those that do not have it can ameliorate the plight of the poor and needy. What benefits the latter, however, is not the turning over of wealth to their hands so that it can be consumed and lost forever. Rather, what really hauls the poor up from the depths of despair is the investment of wealth in capital goods which are then able to produce more and more products and services at increasingly lower prices so that the poor can afford to buy them. We can illustrate this by adapting a well-known proverb: give a man a fish and he will feed himself for a day; invest that fish in a business that will produce fishing tackle that the man can afford and he will feed himself for a lifetime. The man in need never owned that original fish nor the capital goods that were produced from consuming it, yet it is clear that his life benefitted from its investment in a productive enterprise to a far greater extent than if he had ever gotten his hands on it directly.

Third, the very motivation towards altruism is most often dependent upon a close family or friendly relationship between donor and recipient where the welfare of the latter is of great importance to the former. Such a motivation is destroyed when your money disappears into a bureaucrat-run black hole. The result is that, as people lose their ability to spend their money in ways that they want, the motivation to producing wealth in the first place is destroyed. There is therefore less wealth to distribute anyway. Critics may, of course, argue that such a result is owing to the alleged “selfish” and self-centred nature of humans and that surely we – i.e. the state – has a duty to attempt to overcome this? There are at least two responses to this. First, it is part of the natural condition of humans that the primary ends and values that they hold are concerned with their immediate environment – that is, the welfare of themselves, their friends and their family; in other words, people whom they know, care about and have the ability to form empathetic judgments about. It is the stimuli from these sources that most potently determine our desires and choices. Everything else that goes on in the world is, for the most part, out of sight and out of mind, or at least very remote and can be brought to us only electronically through the media. But one does not even need to go that far, as most people are unlikely to even be able to appreciate the conditions, needs and desires of people in another neighbourhood in the same town – or even in the same street. People do, of course, devote themselves to causes that aim to help people far away about whom they may know very little; but these are specific causes towards which one may have a specific motivation. Wealth redistribution, however, aims at ameliorating hundreds, if not thousands of afflictions across many millions of faceless people. It is simply not possible for any human to form empathetic appreciations of all of those individual circumstances and, thus, neither will they be able to appreciate any kind of amelioration of these afflictions if they happen hundreds of miles away (this is before we get into any discussion of whether wealth distribution does, in fact, accomplish such ameliorations). Therefore, it is not possible for the typical human to motivate himself towards striding towards providing for a giant pot that aims to solve these problems, or at least not to the same degree he motivates himself towards providing for ends of his choosing. Moreover, we may ask whether a person with the ruddiest bleeding heart would, if it came to a choice, prefer to work towards contributing to the tax pot ahead of, say, caring for his sick and dying mother. Second, the very fact that wealth redistribution is forced (by the threat of imprisonment) rather than undertaken voluntarily does nothing to promote altruism in any way at all. Indeed, we might say that genuine altruism and selfless behaviour worthy of praise and recognition relies upon the fact that someone could have chosen, freely, to have done something “worthy” with his time and money. When I am forced to hand over my money, however, I have in no way “behaved” altruistically; in fact I haven’t really “behaved” at all – rather the money was simply taken from me. Further, rather encouraging any feelings of generosity the forced appropriation of my property it is likely to make me bitter and resentful and, moreover, to curb any desire to be generous with the remainder of the funds that I have left. To make matters worse, the welfare state does not leave the recipients of welfare spending as kindly and grateful beneficiaries who feel they were lucky to have avoided misfortune. Rather, the welfare state begets a sense of “entitlement” and dissolution of personal responsibility – that it is the state’s responsibility to provide for their needs and that they have a right to the state’s assistance. Ironically, therefore, the welfare state itself increases antagonism and selfishness rather than promoting their antitheses.

The attitude of selfless altruism can also be seen also in the elevation of those who devote themselves to so-called “public service” above those who compete in the allegedly greedy and grubby business of the private marketplace. Although positive views of politicians have soured considerably in the past generation, it is still widely believed that private industry is where people go to make lots of money to keep for themselves, while those who seek public office shun such squalid and base motivations and, with their visions of a “greater” society, can almost single-handedly make everyone better off without a thought of any benefit to themselves. Indeed, to the present author, it beggars belief that people are gullibly hypnotised by the illusion that all of their hopes and dreams are dependent upon a tiny minority, or even (when you witness the almost messianic reverence devoted to presidential candidates) a single person out of a society of millions gaining a job ahead of somebody else. It is in no doubt true, of course, that many people seek to enter politics with the desire, albeit the naïve one, to help people and to improve society. It may also be true that they could have amassed greater private fortunes by seeking employment in the private sector. Nevertheless, all political accomplishments (other than the few and far between measures that seek to roll back the interference of the state) necessarily produce a negative sum result – negative because what is given by government to one set of people must be taken by government from another, minus a cut to pay the salaries of the politicians and bureaucrats. This is before we consider the destruction of the incentives to create wealth that we outlined above. Even if, therefore, we stretched credulity and viewed politicians as truly angelic and selfless they would still not accomplish anything that would produce a net gain to society.

It is not the aim of our discussion here to suggest that a society distinguished by capitalism and free enterprise would suddenly create some kind of utopia where rank selfishness is without any negative consequences. Rather, it is simply to point out that, in the long run, the vanquishing of poverty is achieved by the investment of more capital goods in order to make more products affordable to people with the existing money that they earn themselves; not through giving them more money that is earned by and forcibly confiscated from somebody else. In such a society the high incidence of people needing the help of others would be prevented, not just cured. Nevertheless we might also note that it is a society that is highly prosperous and without a systematic welfare state that encourages rather than obliterates charitable endeavours. Overwhelmingly this is because people simply have more to give – it is no great mystery as to why most of the world’s great charitable foundations and societies originated in the nineteenth century, the era of the relatively most capitalistic progress and the least intervention by a formal welfare state. Ironically, it is the welfare state that has squeezed out private charity and genuine altruism from having any mainstream role in society. Additionally, however, in the absence of a compulsory so-called “social safety net” people rely on maintaining good relationships based on trust, reliability and selflessness with family and friends precisely so that they may be there for each other to cushion the consequences of the occasional unforeseen circumstance. Far from provoking any atomistic and individualistic existence freedom promotes and encourages a strong community and family spirit. If the virtue of altruism is to be nurtured then there cannot be a better place for it than there.

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Against the Welfare State – and Bank Bailouts

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The welfare state is undoubtedly one of the elements of government opposed by libertarians, not only due to its inherent injustice and economic destructiveness, but also because of its ability to provide fuel and sustenance to the growth of the metastasising state

If we are launch a critique of the welfare state we must first attempt to define it and to distinguish it from other categories of government activity. Such a task is not an immediately clear cut one as, fundamentally, all government expenditure sustains the welfare of its beneficiaries. If the government launches an invasion of a foreign country, spending on military grade weaponry, aircraft and whatever else will very much contribute to the “welfare” of armaments manufacturers yet we wouldn’t ordinarily classify this as part of the welfare state. Similarly, if the government decides to build a new road or railway line we wouldn’t usually describe this as providing “welfare” to the construction workers who undertake the leg work (although certain “job creation” schemes that simply pay people to carry out pointless work could be classified as welfare).

Whether or not a particular government outlay is classified as part of the welfare state is therefore defined more by its purpose rather than by its effect. The purpose of a foreign war is usually to gain control of valuable resources (even if it is veneered with an alternative justification such as spreading freedom and democracy). The purpose of building a road or railway is to “improve” the country’s transportation and communication networks. None of these projects is designed to provide some kind of comfortable lifestyle to those who undertake them (and, ignoring the possibility of benefiting favoured lobbyists and donors, to the extent that a government has a particular purpose in mind and wishes to achieve it efficiently it will have a desire to remunerate its suppliers as little as possible rather than as highly).

Welfare spending, on the other hand, is markedly different. Its purpose is always couched in the language of providing some kind of “help”, “care”, or “assistance” to the citizenry, as if the government is a giant nanny who appears with an equally giant milk bottle whenever one’s own teat runs dry. Given this, then, we can attempt to define the welfare state as that portion of government activity which is devoted to the sustenance of either the existing lifestyle of a particular citizen or to a lifestyle that is thought to be the minimum that is equitable in terms of wealth and income. The welfare state therefore provides a cushion or relief from events that may intercede in that lifestyle so, for example, if you get sick, the government will provide you with either free or subsidised healthcare; if you lose your job you will be entitled to unemployment benefit; and if you have baby the government will give you some money so that you are able to take care of it and give it an “adequate” upbringing. Granted, this definition if the welfare state is not precise and it will overlap with many other types of expenditure – few government outlays have a single purpose, even if some of these purposes are not made public – but we can be satisfied that it is reasonably accurate.

In spite of the fact that the welfare state is a moral issue and that its proponents believe that its existence is justified by the fact that the able should take care of the less able (“from each according to his means to each according to his needs”) it is arguable that the strength of its cause derives more from a misunderstanding of economics and that an amelioration of these misunderstandings is likely to weaken the foundations of the welfare state most effectively. Rather, therefore, than elaborating on the fact that the welfare state is, in a genuine free market, a morally unjustifiable confiscation and redistribution of property from its owners to non-owners respectively, let us concentrate mainly on a proper realisation of the economic effects of the welfare state in order to find the source of its undoing.

The type of welfare spending that we will focus on specifically is the bailout of the banks. This selection may appear surprising as surely most supporters of the welfare state are flat out opposed to bailing out the banks? And yet if we look closely, the qualities of bankers’ bailouts fits our definition of welfare spending all but perfectly. The financial services industry was accustomed to its business of expanding credit during the boom years and ploughing them into ultimately unsustainable malinvestments; its practitioners were richly rewarded for doing so and could afford big houses, expensive cars, private schools for their children, exotic foreign holidays, and so on. Metaphorically, they became accustomed to a lifestyle of gambling and partying fuelled by the punch bowl of monetary expansion. Following the inevitable crash that revealed the extent of the malinvestments and the huge losses that would ensue, the bailout of the banks was designed precisely to prevent the liquidation of this crumbling economic structure so that the banks could keep on making loans, keep on making profits from those loans, and so their top employees would not lose the lifestyle to which they had become accustomed. It was meant to refill the punch bowl and to keep the music playing so that the party would never end. The difference, therefore, between bankers’ bailouts and what we typically regard as the welfare state is simply a matter of degree, not of kind. They each provide a taxpayer funded cushion for their respective beneficiaries that insulates their lifestyles from the effects of either their own choices or from events that are beyond their control. Indeed, the collapse of the financial services industry as we know it would also have seriously curtailed the ability of governments to retain their accustomed lifestyle of borrowing and spending. To that extent, therefore, the bank bailouts were an exercise in self-preservation. The only perceived difference between bank bailouts and the welfare state is that the beneficiaries of the former were “rich” and not “poor”, which, it must be understood, is itself a misrepresentation. Many of those affected by a collapse of the financial services sector would not necessarily have been multi-millionaires as any insolvencies and downsizing is likely to have hit those lower down the pecking order first such as local branch managers and tellers before it hit those in the penthouse offices.

We have outlined this description of bank bailouts because every single argument that welfare statists use to oppose them are, in fact, the very same arguments that apply to their conception of the welfare state. We will therefore take each of these arguments in turn and show just how both bank bailouts and the welfare state, which are both a form of welfare spending, are economically destructive.

The first argument against the bank bailouts used by its opponents is that it creates moral hazard. In other words, if the banks can privatise their gains yet socialise their losses it provides an incentive to carry on and, indeed, augment the very destructive activity that was the source of the problem in the first place. All of this is true and we can have no quarrel with it. Yet it applies equally to the welfare state as well. Proponents of the welfare state imagine that if the government throws money at all of the events that manifest themselves as pitfalls in one’s own lifestyle then these pitfalls will simply go away. However if the government simply pays for a problem when it occurs then it creates as much of a moral hazard as the bank bailouts because all you have done is simply lowered the cost to individuals of bearing these pitfalls – and lowered cost leads to a swelled demand. If you pay people when they get sick, there will be more sickness; if you pay people when they are unemployed there will be more unemployment; if you pay people when they have children people will produce more children that need a roof and need feeding. The welfare state is not the solution to the problems it seeks to resolve; it is, rather, a fertiliser for their growth and proliferation, just as bank bailouts are a fertiliser for the growth of credit expansion, malinvestment and repeated boom and bust cycles.

The second argument against bank bailouts, related to the one we just outlined, is that it shoves the cost of the bad decisions of the bankers onto the shoulders of everybody else. Yet isn’t this precisely what the welfare state does? Welfare statists imagine that nearly every unfortunate circumstance in which people find themselves is not the product of their own making and that they are therefore blameless and should be (patronisingly) pitied – in short, that people do not bear any responsibility for their own circumstances. However, this is not the case with many of the issues that the welfare state attempts to address. As was argued in a previous essay on universal healthcare, the majority of medical ailments from which people suffer are not the unfortunate result of a random, illness lottery but are, rather, directly related to their environment and lifestyle – particularly diet, exercise and consumption of alcohol, tobacco and narcotics. If, therefore, people choose to pursue a lifestyle of eating gluttonously, exercising little and smoking and drinking heavily with this resulting in sickness, then if the government picks up the tab this simply forces the cost of these bad decisions onto everyone else. People, in most cases, choose to have children, or at least to engage in the intercourse that results in children – it isn’t a random, spontaneous event that appears out of nowhere to inflict itself upon people’s lifestyles. To the extent, therefore, that people cannot afford to raise these children properly and the government intervenes then the cost of other people’s bad decisions is again shovelled onto the shoulders of everybody else. But even those aspects of the welfare state that are not necessarily the fault of the individuals concerned – such as unemployment – is usually the result of government anyway. Low employability is caused not only by inadequate state education, but also government interference in the labour market such as minimum wages and excessive regulations that cause the cost of employment to exceed that of the productivity of the lowest skilled workers. Why, therefore, do welfare statists propose a government solution to what is a government created problem? Why not just get rid of the government created problem?

The third argument against bank bailouts is that they perpetuate what we might call a crony “corp-tocracy” where taxpayers’ money is siphoned off into the hands of the government’s favoured millionaire chums. Yet this is precisely the result of the welfare state also. Although the nominal beneficiaries of the welfare state are individual people, someone has to be paid in order to carry out the work of the welfare state. Not only does a welfare state require the creation and sustenance of a vast, leeching bureaucracy to administer it all but particular parts of the welfare state have to be contracted out to individual specialists. For example, public housing schemes need to find construction companies, hospitals need to find doctors and they need to purchase medicines from drug companies. The interests of these suppliers to the welfare state is to ensure that their compensation for carrying out their tasks is as high as possible; indeed, one of the reasons why the welfare state is such a burgeoning expense is because the disconnect between the consumer that pays and the supplier that is paid results in spiralling costs for the services of the latter, with the result that the majority of welfare spending goes not to the individual people but straight into the bank accounts of large corporations and contractors. Moreover, the welfare state is not usually a fixed pool of services that are provided by the government, but includes also private organisations and charities that lobby the government for money in order to solve the particular societal “problems” and grievances that they happen to have identified. Much of this money is simply wasted, as suggested by the recent collapse of Kids Company, a UK children’s charity, around a week after it received a £3 million grant from the government. Indeed, in the UK – when the chief executives of high profile charities are paid six figure salaries and they have been chastised for “aggressive” funding raising strategies that were recently attributed, at least in part, to the death of a pensioner – the substantive difference between a charity on the one hand and a corporation on the other is becoming increasingly questioned.

The fourth argument against bank bailouts is that they distort the economy, shovelling excess funding into the financial services sector and expanding their profits at the expense of other industries. Again, nothing about this is untrue and, indeed, as “Austrian” economists we would make an even more detailed case about how the resulting credit expansion distorts the consumption/investment ratio in order to result in unsustainable malinvestments across the entire economy. Yet the welfare state distorts the economy also, only in a more incremental and pacing manner. In the first place, the increased incentive caused by the welfare state to exacerbate the very problems it is supposed to solve, such as sickness and unemployment, reduces the capacity of the labour market and thus shrinks the extent of the division of labour that would otherwise have been possible. Second, the burgeoning cost of the welfare state caused by an artificially inflated demand for welfare requires more and more resources to be confiscated by the government in order to fund it. Thus, the areas of the economy that are devoted to providing welfare are swollen at the expense of other areas of the economy which must correspondingly shrink. Third, this is compounded by the fact that a large, government pot of gold encourages rent seeking behaviour, which in the case of welfare means (as we stated above) large numbers of special interest groups lobby the government each with a claim that they have identified some societal affliction that is ripe for resolution by government spending. Governments are eager to attract this kind of attention for more government spending means not only more power and prestige but also provides another outlet with which to bribe citizens with their own money when making election “promises”. The result of this, again, is that the total portion of the economy that is devoted to welfare spending is artificially inflated compared to what consumers would otherwise prefer.

The final argument against bank bailouts that we will consider is that they create a feeling of bitterness and resentment in the general population, a fissure of hate, contempt and distrust between the bankers and the people whom they supposedly serve. Again, all of this is true. However, it applies just as readily to the welfare state. Its proponents usually justify the imposition of the welfare state by stating that it is morally good for us to care and look after one another as if we are all one big family. This may be true enough, but the welfare state does not create that situation. In order to become a morally better person I have to choose to care and to look after my fellow man – I have to decide to do it voluntarily. I am looked upon with admiration because in spite of all of the personal luxuries I could have spent my money on, I willingly deprived myself of them and was happy to give the money to a person in need. The welfare state, however, does not give me any choice in this regard – it just forces me to do it regardless of what I want. The action, therefore, is not as the result of any personal sympathy or empathy for the plight of the less fortunate, nor of any aspiration to moral heights. Instead, the void left by an absence of sympathy and empathy is likely to be filled by bitterness and resentment as my hard earned money has just been confiscated from me to go to people who I believe may not deserve it, particularly if it goes to some cause that I may disagree qualifies for welfare spending (such as breast enhancement surgery on the NHS or unemployment benefits to those who are just workshy). The welfare state therefore creates the opposite of any charitable feeling whatsoever and destroys any notion of brotherhood or family. When this is coupled with the welfare state’s encouragement of the afflictions it seeks to solve then the result is a society with a lower, rather than higher, moral standing. This is exacerbated by the interdependent relationship between bank bailouts on the one hand and the welfare state on the other. Bank bailouts mean that the banks take the money of the taxpaying public and plough it into assets so that the income of anyone who owns these assets – i.e. the bankers themselves – is swollen while the incomes of those who do not stagnates. The resulting price inflation lifts the affordability of assets such as houses and basic necessities, such as food, out of the grasp of those on low incomes. The consequence is another artificially swollen demand for welfare to give ordinary people somewhere to live and something to eat. Thus, the poorest in society demand increased taxes on the rich – i.e. the very bankers who were bailed out – in order to fund increased welfare spending. The result, therefore, is a toing and froing of mutual theft, a circle of robbery where bankers demand taxpayers’ money to continue their casino operations, after which everyone else demands some of it back to ameliorate the resulting effects. Far from being a moral and harmonious society all we end up with is hating each other and trying to grab whatever we can out of each other’s pockets.

What we can see from this brief comparison of the welfare state to bank bailouts, therefore, is that there is very little qualitative difference between the two and that the arguments that are used to oppose bank bailouts apply just as easily to the welfare state. The amelioration of welfare demand is achieved not through the redistribution of a fixed pool wealth but through the raising of real incomes by increasing the productive output per person. In order to achieve this we need to eliminate both the bank bailouts and the welfare state so that we can return to a genuine economy where everyone serves each other rather than engages in mutual plunder. The rich would have to earn their wealth by directing and increasing the productive capacity of the economy to best meet the needs of the consumer; the poor earn their money by providing the labour to bring about this direction, with their wages being able to buy more and more goods as a result of the increased output. Not only would this create a more prosperous society where poverty has truly been consigned to the history books, but the vanquishing of hatred, resentment and antagonism would create a morally superior one too.

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The Myth of Overpopulation

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Overpopulation, either locally or globally, is often blamed on a number of apparent problems from the shortage of particular (usually “essential”) resources all the way up to the outright poverty of entire continents. Although few governments, most notably the Chinese, have enacted any strict policies in order to control their populations (except with regards to immigration), factoids such as the allegation that, if every single human wanted to enjoy a Western lifestyle we would need something like a dozen earths, attempt to create an unwarranted degree of hysteria.

The myth of overpopulation rests on the belief that humanity is akin to some kind of cancer which, as it grows exponentially, devours a fixed or arithmetically growing pool of resources that must be shared between everyone who has been unfortunate enough to have been born. This would have been the case in a hand-to-mouth society that preceded capitalism and the division of labour. There was effectively no production and the birth of each individual person constituted merely another mouth to feed. In other words, an increase in population led to an increase in demand for consumption without any corresponding increase in production, thus putting pressure on the existing stock of resources that had to be shared by everyone. Nevertheless, when it comes to shortages of goods in local markets today we can surmise that even if there was a fixed or otherwise relatively limited pool of resources that everyone had to share we couldn’t pin the blame for shortages on such a fact. In a free society, a particular good might be very expensive but it should never be the case that we cannot find anything. As the population increases the price of resources would rise and thus choke off demand for the least valuable uses. Shortages, rather, are always the result of government price controls that try to create the illusion of abundance without the reality, decimating the current supply and obliterating any incentive to produce more. That aside, however, the blatant reality for a capitalist society marked by the division of labour is that there is not a fixed or arithmetically growing pool of wealth and resources, and that the whole purpose of such a society is to grow, exponentially, the amount of wealth that is available. Indeed, as we shall see, humanity has succeeded in this endeavour to only a fraction of its capacity.

When the first human being trod the virgin soil of the earth, he found himself in a situation of almost unrelenting poverty. Mother Nature, as anyone trapped for an extended period of time in the wilderness has discovered, is far from a kind host, providing very little (except air to breathe and fruit on wild trees) by way of resources that can be consumed immediately for very little effort. Yet all of the matter contained in every resource that we enjoy today – buildings, cars, refrigerators, televisions, computers, clothing, medicines, and so – was, give or take a little, right there at the beginning of the world’s existence. Strictly speaking, no human being has ever created anything – rather he has merely transformed matter from one thing into another. So why, if all this matter was there from the very start, weren’t these wonderful things available to our first human? The reason is, of course, that a human must apply his labour in order to change the matter available in the world into useful resources that fulfil his ends. Yet the work of one man with his unaided body alone was not sufficient to create all of the wonderful things that we enjoy today. Indeed, it might take a single human being an entire day to hunt or catch enough fish for just one meal before the process must be repeated the following day. How can this be limitation be overcome?

The first answer is quite simply the very bugbear that is complained about – an increased population. A greater number of humans can together lift and carry a far greater amount than one man alone. Several or many men building a house would accomplish the task in a far shorter time than one man alone. More importantly, however, the widening of the division of labour as the population grows ensures that production stays ahead of population growth. Additional humans constitute an additional demand for consumption – ten humans may require ten houses whereas one human would require only one. But the fact that these men are also producers means that each can now fill his day by specialising in a particular task. One man, devoid of the ability to specialise, may take a year to build one house and he would have to undertake every single activity related to the building work on his own. With ten men, however, two may specialise in lumber felling, another two in transport, some in building, and the task of one the men may be solely to produce food and other supplies for the men doing direct work on the houses. The result of this is a greater degree and concentration of knowledge and an increased perfection of technique and expertise in each task. The resulting time saving means that, whereas one man would take one year to build one house, ten men would less than one year to build ten houses. Thus the rate of house building overtakes the rate of the increase in population. We therefore see that the quantity of labour has a marked effect on the accumulation of wealth and the transformation of matter into useful economic resources, provided that a society is distinguished by capitalism and the division of labour. To further emphasise this point, it is the twin effect of the consumption demand of the additional people coupled with the fact that these people are also producers that makes an ever increasing widening of the division of labour possible. If ten houses have to be produced then it might not be possible for one man to concentrate on any single task in order to fill his day; he might have to work in installing the wiring, the plumbing and the wallpaper. If one hundred houses have to be built then he might be able to concentrate on plumbing alone. If one thousand houses are built then he might be able to specialise on plumbing just bathrooms whereas someone else works on plumbing kitchens, for instance. The ever increasing volume of demand from an increasing population therefore begats an ever increasing division of labour when that population is put to work, and with it come all the benefits of specialisation and expertise.

Second, although it is flexible, the human body is a relatively weak and feeble creature, capable of moving and lifting only a tiny amount of matter at any one time. Regardless, therefore, of the quantity of labour available we can see that fifty men carrying sacks on their back would fail to transport as many goods in as short a space of time as, say, a railway locomotive hauling some wagons. The power of labour is therefore a further limiting factor on the number of resources that can be enjoyed. This power can only be increased by accumulating ever greater amounts of capital. All such goods – machines, tools, vehicles, and so on – are, fundamentally, merely extensions of the human body that enable its labour to accomplish more than it otherwise would. A man with an axe can fell a greater a number of trees than a man whose body is unaided by this implement. For centuries, humans could not labour to extract oil from the ground and refine it into petroleum. Yet with the capital available to construct drilling apparatus, oil rigs and refineries this is no longer the case. Indeed, most direct labour today is not concerned with the production of consumption goods at all. Rather, it is devoted to the production, augmentation and improvement of capital goods. In short, it is directed towards increasing the power of labour.

What we begin to see, therefore, is that it is not necessarily the scarcity of resources burdened by an ever increasing population that is the real obstacle to the growth of wealth and economic progress; rather, it is the scarcity of labour and the power of that labour as represented by the stock of capital goods which serve to enhance it. Goods are, to be sure, the original source of scarcity. We apply our labour only because the available quantity of a given resource exists in insufficient supply relative to the ends to which it could be devoted. Yet the power of our labour is a significant compounding factor on the degree of scarcity that we must endure. My body may only have enough capability in order to fetch a few buckets of water from a nearby stream – yet more than three quarters of the globe is covered in water. It is because the power of my labour is relatively weak that most of this water is either too far away or of insufficient quality to serve me any practical end. Only be improving the power of my labour – by being able to move greater distances, lift heavier volumes and develop processes of purification – could I hope to enjoy more water.

Such a circumstance is not limited to such a clearly abundant resource such as water. The entire world, right from the depths of the core of the Earth all the way up to the stratosphere is densely packed with matter. Our labour has only ever been able to harness a mere fraction of these resources, mostly skimmed from the Earth’s crust. As time goes on however, as population increases and with it capital accumulation and the widening of the division of labour, we harness the ability to tap into more and more of these resources. Hence, mines and oil fields that were once too costly to drill are now drilled (and, indeed, are more productive than the most productive fields of yesteryear); such mines could eventually reach depths of miles rather feet; and valuable elements can now be extracted from more complex ores. There is no reason to believe that this process cannot continue. Even today, the sea contains traces of elements such as gold which, in their totality, amount to a far greater quantity than all of that ever mined from beneath the land – 20 million tons compared to 175,000 tons respectively. Yet our labour is insufficient to take advantage of this fact. Indeed the sea remains one of the greatest untapped resources available to us. Unlike private land settlement which led to a prosperous agriculture and exploitation of the land, government has pretty much closed off areas of the sea to the possibility of settlement, preventing the development of a full-fledged aquaculture and robbing us of the ability to exploit this wonderful gift of nature.

It is for this reason – the increasing power of labour – that all predictions of resource depletion as a result of overpopulation (not to mention the ridiculousness of disingenuous “facts” such as the allegation that twelve earths are required to give everyone a Western lifestyle) – have failed. In the well known Ehrlich-Simon wager, for instance, economist Julian Simon made a bet in 1980 with biologist Paul Ehrlich that the price of five metals of Ehrlich’s choosing would have declined in price ten years later – indicating increasing availability of resources rather than increasing scarcity. Simon won the bet outright, in spite of a population increase of 800 million during that decade. Other peddlers of the overpopulation thesis, such as Albert Allen Bartlett, have labelled the views presented here as “cornucopian” or “the new flat earth” – mythical, whimsical and not based on any serious scientific understanding. What these people share in common is that they simply do not account for the future economic viability of production from what are currently viewed as uneconomic resources. For the clear result is that as population has increased we have been able to apply more labour with a greater power of that labour to a greater number of the world’s resources in ways that we were not able to do before. The ultimate goal, needless to say, would be something akin to molecular engineering – the ability to transform worthless matter such as dirt, trash or even air – into valuable resources. The futuristic “replicators” on TV shows such as Star Trek can apparently conjure goods such as a fully cooked meal out of thin air; yet the science behind would not be too difficult to imagine. We have already harnessed the ability to transform matter into energy through processes such as combustion. We can envisage that one day we could do the reverse and transform energy into matter. An inedible sack of coal could end up as a fabulous meal on your dining table.

Overpopulation does, however, give the appearance of being a problem as a result of government interference. Above we noted above, additional consumption demand represented by an increasing population serves in increase wealth provided that the additional population are also producers and therefore will act so as to widen the division of labour and the accumulation of capital. Yet the actions of government serve to swell consumption while choking off production. Pressure on resources and industries therefore arises from government control of these things. Britain’s decrepit healthcare, energy and transport systems are bursting at the seams as a result of demand and increasing costs, a direct result of inefficiency combined with prices that are too low which serve to swell consumption demand in these industries. Government pays its citizens to produce babies and thus increase the population, while an increasing immigrant population today is induced not by the freedom to pursue one’s own goals and to better one’s own life for oneself through hard work and productivity, but, rather, by generous welfare states. All of this causes a rising population that contributes to consumption but very little by way of production. In other words, if you set up the economic system to make consumption as care free as possible and production as costly as it could be then the excess of consumption and a deficit of production will give the illusion of overpopulation. Government therefore begins to look on its citizens as pests and parasites, wanton consumers of precious resources that are desperately running out. Yet the problem is not with resources; rather the problem is with the ability of the government to swell the ranks of consumers and its inability to increase the power of labour, together with its incessant stifling of anyone else who tries to do so. Every additional person who is born in the world is another mouth to feed, another person who will demand the consumption of resources. Yet that person could also be a producer who will widen the division of labour and help to grow the capital stock. Government succeeds only in breeding the consumer in a man while totally destroying in him the producer.

Turning to a related aspect, the fact that whole continents, such as Africa, are mired in poverty has nothing to do with the allegation that the richer countries refuse to “share” their wealth. If the richer countries did not have their wealth, it would not mean that poorer countries would have more – the wealth simply would not have been produced, period. Indeed, whatever wealth that does exist in poor places is often the result of Western enterprise or outright gift. These places do not lack resources; rather, they lack the institutions of private property and voluntary exchange that enable capitalism and the division of labour to flourish, and with them a greater command of labour over resources. Indeed, many of these countries are proceeding down the wrong path by setting up welfare states, trade unions and Keynesian economic (mis)management overseen by democratic institutions which are, of course, the very things that are destroying the standard of living in the West. The West achieved its greatest accomplishments in a pre-democratic, pre-welfare state and pre-union age before Marxism and socialism succeeded in leading the onslaught against capitalism and private property.

What we can see, therefore, is that overpopulation is not a fundamental economic problem. It is only an apparent problem in a society that is hampered by government intervention and the stifling of private property rights, the division of labour and capital accumulation. However, even if population started to put pressure on resources when, in a capitalist society, we reached the (unlikely) point where we were regularly turning over all of the matter in existence to meet our ends – we would still conclude that this would not be a problem worthy of any serious attention. Or at the very least, it would certainly not be a problem that merited any centralised, government control. For as population increases relative to the supply of resources, the latter become more expensive. The cost of raising a child therefore itself becomes prohibitively more expense and people would need to choose between devoting ever more valuable resources to themselves or to their children. Indeed one of the first of such resources to exert this pressure may well be land, assuming we have not, by then, invented the ability to produce more of it artificially. We could, of course, build upwards and end up living in skyscrapers but people may prefer to breed less and have more land available to themselves rather than to their children. Such choices may serve to relieve, naturally, any exponential growth in population figures. Even if, though, people desired to keep on having more children it would only indicate that they prefer the company of children to enjoying more resources for themselves. There is no objective standard by which to complain about the result of such a choice. Nevertheless, even when it comes to the question of land, humanity is currently so far from this point that we hardly need to bother mentioning it, except to try and concede to the overpopulation thesis its best possible case.

The illusion of overpopulation is exacerbated today by a fundamentally antagonistic attitude from what Murray Rothbard called the “professional foes of humanity”, the environmentalist movement1. Apart from this movement’s interference in one the most crucial markets for capital accumulation – the production of energy – the fundamentals of their philosophy view the earth as inherently beautiful and sacred, and any of humanity’s attempts to exploit it as sacrilege. Such a view is radically anti-human and can only hold that the problem with the Earth is that there are too many of these stupid, dirty, polluting, and wantonly consuming human beings. Given the influence that this movement holds it is no small wonder that such thinking permeates into more mainstream views. That aside, however, we can conclude from what we have learnt here that humans need not fear increases in population. What they should fear, however, is their government turning additional people into spoon fed eaters with shackled hands – consumers who cannot produce. It is this fact that puts a very real pressure of resources. It is therefore not overpopulation that is the real problem but, rather, “over-government”.

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1Murray N Rothbard, Government and Hurricane Hugo: A Deadly Combination, Llewellyn H Rockwell Jr, (ed.), The Economics of Liberty, pp 136-40.

Economic Myths #14 – Share the Wealth

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Clement Attlee is, with little doubt, one of the more notable of Britain’s former Prime Ministers. Apart from the long lasting effects of his legacy he was, in 2004, voted the “Greatest British Prime Minister of the Twentieth Century” in a poll of 139 academics. Needless to say, with such a high ranking in academic circles, almost every “accomplishment” of the post-war government that he led (with the possible exception of decolonisation) is likely to be an anathema to libertarians. Not only did he nationalise key industries such as the railways, canals, road haulage, coal mining, gas, electricity, telephones and steel manufacturing, he practically created the “cradle-to-grave” welfare state, the jewel in the crown of which was the now untouchable sacred cow, the National Health Service. Furthermore, he successfully entrenched the “Keynesian consensus”, the idea that full employment would be maintained by Keynesian fiscal policy, that was to unite all parties of any stripe for another three decades until the election of Margaret Thatcher’s government.

With such profound and fundamental changes to British society, many of which are still felt today, it is important to have an insight into Attlee’s motivations towards the legislation that his government passed. His own background, (not unlike that of most left wing intellectuals) was decidedly non-working class. The son of a solicitor, he was raised in Putney, an area of London populated by the professions. He was educated at an independent school and later read Modern History at University College, Oxford. He was not exactly born with a silver spoon in his mouth but neither was he consigned to life working in factories or in the coal pits. According to Wikipedia, his original political leanings were conservative. It was after he spent three years managing a charitable institution for working class boys in Stepney, East London, that he “came to the view that private charity would never be sufficient to alleviate poverty and that only direct action and income redistribution by the state would have any serious effect”. Thereafter, he became a “full-fledged supporter of socialism”. Which such self-assuredness, can we expect Attlee’s post-war government (to borrow a phrase from the infamous Beveridge Report that influenced his government’s policies) to have come close to completely “abolishing want”? Unfortunately, the facts speak otherwise:

  • Coal production in 1947 fell seven million tons below the output of privately owned mines ten years earlier, resulting in a three week industrial power cut in London and the Midlands;
  • The government constructed 134,000 fewer homes per year at a higher cost per unit than were built in either of the two years preceding the war;
  • Wages were frozen to wartime levels while the cost of groceries soared as their supply declined;
  • When US and IMF loans dried up, the costs had to be borne by the British working man, leading to the “taxation and tears” budget of 19491.

And summing up the welfare state:

The [Beveridge] plan merely furnished a thin cushion against total disaster for the most impoverished third of the population. True, every citizen (whether or not he needed it) was entitled to prenatal care, a birth subsidy, hospitalization and medical care of sorts, unemployment insurance, an old-age pension, funeral costs, and an allowance for his widow and dependent orphans. The subsidies and allowances were tiny, and, with mounting inflation, barely sufficed for the poorest – sixteen dollars at birth and eighty dollars for a pauper burial. Medical services were spread so thin that even at the price of nationalizing the existing medical profession, it was impossible to guarantee first-rate care. With food rations hovering near the starvation level, sickness became more frequent and national; production fell still lower. So poverty was not eliminated but increased to plague proportions, and life was a nightmare for everyone but the most dedicated bureaucrats. A man might have “social security,” yet he could not go out and buy a dozen eggs. After four years of Socialist government, he was only entitled to an egg and a half per week, as decreed by Marxist No.1, John Strachey, Fabian Minister of Food and Supply2.

The origin of Attlee’s political views betrays his belief in a common economic error, a belief that can clearly have disastrous consequences if its holder happens to one day become the leader of his country. This view of either private charity or forced redistribution as the solution to poverty is based on the flawed notion that there is a fixed pool of wealth for everyone – that when one person possesses wealth it necessarily results in another person being without it. From this false premise it follows that the alleviation of the poverty of one person requires wealth to be disgorged from another. The solution to poverty, however, is that wealth is created and not simply redistributed – the pie gets bigger and not just chopped up in a different way. Capitalism and the free market, far from creating haves and have-nots, involves the progressive accumulation of capital that produces more products at cheaper prices that everyone can buy. More factories, more machines, and more tools that produce a greater supply of goods for less and less effort serve to alleviate material poverty. All of us become better off as a result. If, on the other hand, wealth is to be confiscated from some and redistributed to others, it retards this very process of wealth creation. While a specific redistribution may allow the beneficiaries to afford to purchase a bit more in the short term, in the long run there will be less work, less saving, and less capital investment and accumulation. The number of products produced will fail to increase and thus their prices will remain high and out of the reach of the poor. Redistribution is, therefore, a temporary solution at best. At worst, it traps the people permanently in the stagnant poverty that you are trying to get rid of.

Let us imagine ourselves, for one minute, as employees of the charitable institution of which Attlee was manager. How do we interpret that which we may see every day? From some kind of absolute standard, the poverty and destitution of the slums in the East End of London may have been “terrible” or “bad”. No one would ever seek to deny this. It is important to realise, however, that poverty, fundamentally, is not caused by humans but by nature. The earth is and never has been the Garden of Eden, full of delicious goodies that are ripe for our picking. The first person who trod the virgin soil of the Earth was in a position of absolutely crippling poverty by our modern standards. All he had was himself and his bare hands – no shelter, no food, no clothes, no tools, absolutely nothing. (Indeed, we might ask, how on Earth would “redistribution” have helped him when there was nothing to distribute!). But from the moment he dug the soil with his hands, from the moment he picked up the first plank of wood to build into a shelter, from the moment he fashioned a tool from basic materials such as a rock and a stick, so began the long, slow process of capital accumulation and wealth creation, a process that only really began to accelerate in the early 1800s. Humans, in other words, have to work to overcome the natural state of poverty in order to build up a civilisation as prosperous as the one we have today. To view a snapshot of this process at any one moment in history and to declare self-righteously that “those people over there are in poverty!” is to judge this march of progress against an ideal – as if earth should be the Garden of Eden. The appropriate standard against which to make a judgement however, is the best that can be done given the eternal condition of scarcity. If one cries “something must be done” it ignores the possibility that something is already being done and has currently reached its best possible stage before moving forward to bring greater things. Wealth creation and capital accumulation takes time – we did not get refrigerators and cars the very moment the first person on earth decided to get off his backside and start working. But this process has caused the percentage of people living on one dollar a day to fall from 85% to 20% in two hundred years – and that achievement has been accomplished while the population has multipled five or six times.

The only way, then, by which we can judge that there is “too much poverty” at any one time is to ask a single question – is there anything that is slowing down or causing an artificially imposed constraint upon the process of wealth creation? The answer can only be what Franz Oppenheimer referred to as the “political means” for an individual to gain wealth – that, rather than work oneself to use unowned resources, or to trade goods voluntarily with others, one confiscates them violently from people who already own them. Although we can see that Attlee’s solution – redistribution through the welfare state – is a major part of this, so too is any restrictive and regulatory encroachment upon private property. In Attlee’s day, we can point to the fact that the decade of his birth, according to historian David Cannadine, marked the peak of aristocratic power and influence in British society. Today, it is the power of the privileged financial barons of Wall Street that benefit from cheap, freshly printed money, robbing the poor of the their purchasing power and ploughing it into assets, causing bubbles, malinvestments, booms, busts, unemployment and misery. If we really want to solve poverty, we should be removing these barriers to wealth creation that favour the privileged elites rather than compounding the entire sorry state of affairs with further economic evils.

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1Rose L Martin, Fabian Freeway – Highroad to Socialism in the USA 1884-1966, Ch. 7.

2Ibid. p. 76.

Economic Myths #13 – Wealth Inequality and “The 1%”

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The inequality of wealth and income has been in the news again lately. According to the Daily Telegraph, 1% of the world’s population will own half of its wealth by next year. The Executive Director of Oxfam, who provided the figure, said that “an explosion of inequality was holding back the fight against poverty”, asking the rhetorical question “do we really want to live in a world where 1% own more than the rest of us combined”?

The mainstream debate over this issue fails to understand the true nature of the problem. The pro-free market side are wont to point out that such inequality “doesn’t matter” and governments should not do anything to interfere with the progress of business. The likely call from the opposite side, however, is for increased taxation and redistribution and, indeed, Oxfam itself stressed the need for a greater crackdown on tax avoidance by large, multinational corporations. However, the reality is much more subtle than simply left vs. right and, indeed, the debate produces a false dichotomy between “pro-business” and “pro-government/anti-poverty”.

On the one hand, we can agree that wealth inequality does not, on its own, create any problems for the generation of wealth and the reduction of poverty. The common attitude towards the rich appears to assume that someone like Warren Buffett or Bill Gates has tens of billions of dollars lying around in a bank account for them to spend and enjoy. The reality is that these figures represent the value of capital goods – machines, tools, factories and so on – that are invested in producing goods and services that everyone wants to buy. If these resources are in the hands of just a few people – say, “the 1%” – who most accurately devote them to the most urgently desired needs of consumers, then there is nothing economically deleterious with wealth inequality. Indeed, wealth inequality, in this scenario, is exceedingly good as any attempt to reduce it would divert resources into the hands of those less capable of directing them to the ends that people desire, or into those who would consume them. It is capital investment – more capital invested in more production processes to churn out more products that people need – and not taxes and redistribution that solves the plight of poverty.

However, this scenario is conditional upon the crucial aspect that resources must be in the hands of those who are best suited to serving the needs of consumers. In other words, those who are rich must have become so by meeting those needs. However, it is patently obvious that the current ownership structure does not reflect the voluntary choices of consumers. Rather, it is the product of crony capitalism, of cheap printed money that is ploughed into malinvestments and of taxpayer funded bail outs when it all collapses. The growth in wealth inequality is due not to the fact that consumers are voluntarily choosing to place that wealth in the hands of a few select people; it is because the government is throwing cheap money at this tiny elite so they can steal all of the world’s assets.

What, then, is the solution to this problem? Taxation and redistribution would clearly compound the economic evils rather than solve them. And, in any case, in spite of the hullaballoo about tax avoidance, the rich will always be able to influence tax policy to their benefit and to arrange their affairs so as to avoid it as much as possible. Rather, what is needed is a wholesale withdrawal of government from either supporting or hindering anyone in the pursuit of gaining wealth. All wealth should be obtained through the voluntary nexus of serving the needs of consumers and everyone should gain their wealth through their abilities and not through their political connections. What might such a world look like? Would it encourage wealth inequality or would such inequality be unlikely? One the one hand, it is arguable that wealth would still be highly concentrated. Genuine entrepreneurship is a rare talent and is likely to always remain so. However, if that is the case it is also likely that those particular individuals who own the world’s resources will rotate relatively quickly, with the top dogs remaining on the pedestal for only a short time. Indeed one aspect of the current wealth divide that is ignored is whether the same people remain stuck within their wealth/income group or whether there is relatively fluid movement between the different groups. Successful entrepreneurs make their biggest successes when they are small, nimble and contrarian. Once they have achieved their wealth, however, and their enterprises have morphed into large, multinational companies, they become large, unwieldy, inefficient and complacent. A former rebel becomes a part of the establishment who then becomes vulnerable to the insights of later entrepreneurs. Part of this can perhaps be seen with the technology industry where no, single player has managed to dominate each successive era. Microsoft put a PC into everyone’s home in the 1980s-90s; Google was the number one in internet search; Facebook was on top with social networking; and we are now, seemingly, entering a fourth phase where Apple seems to dominate smartphone technology. No single outfit has been able to carry through its dominance from one era to the next. Corporate dynasties and everlasting companies controlling everything will certainly not be a feature of a genuinely free market. Even a stock investor such as Warren Buffett, who has profited from a great many businesses in numerous decades, would be unlikely to achieve the wealth that he has done. Buffett’s mantra of value investing relies upon the price of a stock to become undervalued relative to the underlying value of the business, and for the price to then reach parity with, or exceed, that value. But the large distortions in stock prices – both up and down – have been precisely because of central bank flooding the markets with cheap, freshly printed money that results in excessive booms and busts. It is unlikely that Buffett, in a genuine free market, would have been able to buy and sell at such favourable prices as he was able to do in recent decades. On the other hand, however, it is also possible that a free market would reduce wealth inequality. As wealth creation ensues and the standard of living rises, ordinary people will find themselves with increasing amounts of disposable income that they may decide to divert into saving rather than increased consumption. Such funds, through savings accounts and the bond market, may form the backbone of investment funds that are ploughed into productive use. Thus, ultimate ownership of wealth may be more diverse than it is at present. Either way, however, we can be sure that the resulting structure of production and ownership will be one that best serves the desires of consumers and changes and adapts as the tastes of consumers change. Ultimately, it will always be the everyday folk, through their purchasing habits, who decide on the level of wealth inequality – not governments and central banks handing out favours to their political cronies.

Economic Myths #9 – Social Safety Nets

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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.

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