Disability and the Free Market

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

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

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

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

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

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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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The False Dilemma

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Current, conventional thinking about social, political and economic subjects typically narrows the options available to a set of policies advocated by two, may be three political parties or scarcely dissimilar ideologies. Consequently any genuine radical or lateral thinking about these topics is abandoned and it is assumed and accepted that the fundamental questions of the state, the government, and of tackling the biggest societal problems of the day are already settled. Seldom are alternatives to these entrenched matters – such as whether the state should have any positive role at all in anything – given the light of day, let alone the opportunity of being debated. This phenomenon, which presents a distinct challenge to libertarians, is known as the “false dilemma” – the illusion that the only choice is between a very constricted range of possible options, preserving the status quo in favour of the state and its cronies while at the same time bestowing the illusion of control on a gullible electorate.

In the UK the “false dilemma” is playing itself out in such a way as to completely obliterate one of the basic truths (understood by Austro-Libertarians) that all humans can flourish and co-exist peacefully. Those on the ideological right such as supporters of the Conservative Party believe that business should be helped in order to boost economic growth, while cuts should be made to welfare and to public services in order reduce the government “deficit” (a much overused term given that the overall debt and not the deficit is the real problem) and to slim down the cash cow that the benefits system has become to the allegedly lazy and unproductive. Those of the ideological left believe that a strong welfare state, heavy taxes on the wealthy and increased government spending are needed to end the scourge of poverty. Both of these ideologies contain kernels of truth and genuine, honourable concerns that make their particular preoccupations seem plausible. It is true, for instance, that business needs to flourish if there is to be any economic progress at all, and that government needs to reduce its profligate borrowing, taxing and wasting with all due haste. On the other hand, it does not seem fair that a society should allegedly produce vast wealth for a few while leaving others to languish in stagnating poverty, nor is it necessarily true that wealth creation is “top-down”. The continuing result of this for UK politics seems to be that political action is becoming a choice, or a very false dilemma, between two broadly defined groups of people in society – a choice between those who are “rich” and those who are “poor”.

This impression is exacerbated by the fact that the political parties whose rhetoric represents these ideologies never achieve their aims, or never really carry them out. “Austerity” is proving not to boost economic growth nor help the plight of the poor simply because government spending is not, in fact, decreasing. Bank bailouts and cartelisation of businesses will not do the same either as they simply perpetuate malinvestment and economic waste. They do, however, save the politically connected rich from the consequences of their actions while leaving everyone else to foot the bill. On the other side, increased government spending and a burgeoning welfare state only siphon funds from the productive sector to be consumed and wasted by government. Both sides, therefore, in failing to ever be able to achieve their stated aims provide plenty of ammunition for the opposition, ammunition that is fuelling this apparent basic choice between “rich” and “poor”.

If we are ever to have any hope of recovery from the current economic malaise we must seek for a repudiation of this false choice and a restoration of the understanding that both economically and ethically the rich and poor can prosper side by side. At the heart of the problem, the false axiom accepted by each ideology, is the notion that government must help somebody in order to create a better society. There is curious mixture of economic and ethical arguments that are used in order for each side to select whom government should help and to whom it should deny the same. Take, for example, the supporters of big business. They will say that it is right to use taxpayers’ money to bail out the banks in order to avoid a complete financial meltdown. Conveniently “their chums” in the city will reap fat rewards from doing so. But they then deny this very same method – the diversion of taxpayers’ money – to welfare programmes to help the poor because people should work for what they earn without leeching from the productive and the so-called “benefits scroungers” should get off their backsides and find a job. In other words they are using primarily economic arguments to justify bank bailouts while using ethical ones to deny welfare spending. Their “lefty” opponents will argue that throwing cash at the rich who made mistakes is unjust and that they should be left to foot the bill for their own mistakes. Yet they then state that welfare spending is needed to eliminate poverty and fuel growth from the “bottom up”. So they too, deny the flowing of taxpayer’s cash to certain groups based on ethical grounds but then promote it to others based on economic grounds. Each side, will of course, pepper their ethical arguments with economic ones and vice versa – the right, for example, will, as we have said, argue that welfare spending needs to be cut in order to reduce government outlays, and the left will argue that alleviating poverty is a just and noble cause. But the main thrust of each side’s opinion cannot be denied.

If we unscramble all of this and look at the ethical and economic arguments separately we will find that there are no grounds whatsoever for any state involvement. If it is unjust to violently confiscate tax revenue from innocent citizens to fund the lifestyle of bamboozling bankers then it is equally unjust to do the same to fund the lifestyles of those who are poorer. The difference is one of degree rather than of kind. Nobody, whether he is a prince or a pauper, a saint or a sadist, or a capitalist or a labourer has the right to wrestle away the property of other people for his own benefit. And from the economic side, bailing out bad business will simply perpetuate the moral hazards and malinvestments that need to be eliminated, while continuously funding the poor through welfare spending will only exacerbate poverty as it makes being poor relatively more attractive, reducing any incentive for people to do more to lift themselves out of that position, while squeezing the role of benevolence and charity for the genuinely needy. Furthermore, government would do a lot more for the poor if it stopped interfering in wealth creation in the first place with all of its burdensome laws and regulations that make the exercise impossible but for a few large and politically connected corporate favourites.

The real choice is not between “rich” and “poor”, “left” or “right”, “Conservative” or “Labour” “employer” and “employee”, and whatever other faux selection that the establishment throws at us. The real choice we have to face is, on the one hand, whether we want to continue with a political and economic system that, whomever’s interests the particular delegates of the day purport to promote, will only result in a parasitic existence for the politically connected at the expense of the stagnation of the standard of living for the rest of us. Or, on the other hand, we could choose a system where nobody has the violently enforceable right to live at the expense of everyone else and that everyone is free to trade and produce whatever he wants with his property, a system that will raise the standard of living for everyone and not just a select few. Only by considering radical options and overcoming the assumption and acceptance that the fundamentals of our society are beyond debate can we hope to build a world that is both truly just and economically prosperous.

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