Friday, June 24, 2005

Free Markets, Free People, and Utter Disgust with Government

The societal value of a good or service -- its value to persons other than its producer -- is neither intrinsic nor determined by, say, the amount of labor that goes into its production. The societal value of a good or service can be determined only when a free market establishes a price for that good or service. This simple assertion, which I will prove below, explains why government intervention in the economy -- through spending, redistribution, and regulation -- causes the economy to underperform and creates general harm, as I have shown here, for instance.

Consider this: I may labor skillfully for days on end to carve a miniature portrait of John Stuart Mill on the shell of a walnut, but if no one wants to buy that portrait, it has no value to others. Does it still have a value? Well, if I decide -- before setting out on my quixotic carving task -- that I would want the carving for myself, whether or not anyone will buy it, then I am ascribing a personal value to the work. My personal value is the market value of the labor I forbore to sell to a willing buyer so that I could carve the likeness of John Stuart Mill. But that value is my value, not a societal value, which is zero because I cannot turn around and sell the carving for the value of the labor that I forbore to sell to a willing buyer.

Some will say "So what?" If I derive value from a carving I can't sell, at least I have something of value to show for my labor. Here's "what": Suppose I do nothing with my time but make carvings that no one will buy. Suppose, further, that a powerful clique of persons wants to encourage me in my artistic endeavors and therefore forces others to buy my carvings at a price and frequency that enables me to feed, clothe, and shelter myself. If you are one of the persons who is forced to buy one of my carvings, you receive nothing of value for yourself, but -- thanks to the powerful clique -- I deprive you of some portion of the food, clothing, or shelter you might have been able to buy from income you earned from willing buyers of your product or service.

The same powerful clique might as well force you and others to give me money in exchange for nothing. It would amount to the same thing, inasmuch as no one places any value on my walnut carvings. If it happens that your neighbor comes to acquire a taste for walnut carvings, he may be happy with the exchange. But that does you no good; cost-benefit analysis to the contrary, you neighbor's happiness and yours are incommensurable. If your neighbor wants walnut carvings, let him buy his own; if he wants to give money to indigent walnut carvers, let him give his own. Why should you help subsidize his acquired taste for walnut carvings?

The powerful clique of my metaphor stands for government, of course. The powerful clique's decisions are analogous to government spending, redistribution, and regulation, which:
  • Deprive you of a portion of your earnings in order to subsidize the production of government services that you may not want.
  • Force you to donate some of your earnings to persons who produce nothing for the money they receive.
  • Effectively dictate the kinds of goods and services that may or may not be produced. (It is but a small further step to dictate how goods and services must be produced.)
Free markets, by contrast, call forth only those goods and services that are of value to you. Unless you are a net beneficiary of government intervention -- and relatively few of us are -- the powerful clique that is government invariably makes you worse off through spending, redistribution, and regulation.

But, you may ask, what about providing for the aged, the poor, the handicapped, and the elderly; what about protecting the environment, ensuring the safety of drugs, assuring that medical doctors are properly trained, providing for the common defense, and all the other functions that have been assigned to government?

The short answer is this: Read this blog, starting with this, this, this, this, this, this, this, this, this, this, this, this, and this, and following the links and sources cited therein.

The slightly longer answer is this: There is almost nothing government can do for you that you can't do for yourself, or that you can't buy in a truly free market, including environmental protection (to name but one supposedly indispensable function of government). With government out of the way we would be so much more prosperous that there would be few needy persons and ample private charity for those who cannot fend for themselves. Asking government to "solve problems" is somewhat like gambling at a casino; the odds are against you because the house takes its cut. But it's worse than that, because government cannot know what you know about what you want and how to produce what others want. As I wrote here,
think of yourself as a business. You are good at producing certain things -- as a family member, friend, co-worker, employee, or employer -- and you know how to go about producing those things. What you don't know, you can learn through education, experience, and the voluntary counsel of family, friends, co-workers, and employers. But you are unique -- no one but you knows your economic and social preferences. If you are left to your own devices you will make the best decisions about how to run the "business" of getting on with your life. When everyone is similarly empowered, a not-so-miraculous thing happens: As each person gets on with the "business" of his or her own of life, each person tends to make choices that others find congenial. As you reward others with what you produce for them, economically and socially, they reward you in return. If they reward you insufficiently, you can give your "business" to those who will reward you more handsomely. But when government meddles in your affairs -- except to protect you from actual harm -- it damages the network of voluntary associations upon which you depend in order to run your "business" most beneficially to yourself and others. The state can protect your ability to run the "business" of your life, but once you let it tell you how to run your life, you compromise your ability to make choices that are right for you.
The government that forbids you to raise cannabis for your own use and that can seize your property at will is the same government that's here to "help" you "solve" your problems. It's "help" like that which makes us less free and less prosperous, day by day.

As the character Howard Beale said in Network, "I'm mad as hell, and I'm not going to take it anymore." Well, I won't take it quietly. In fact, I am close to changing my mind about defense, which I have long argued is a legitimate function of government. Look what happens: We create a government for self-defense and the next thing we know it's telling us how to run our lives. Enough is more than enough. We are careening down the slippery slope toward serfdom.