Voice For Liberty

Category: Role of government

  • The Williams rules

    Here’s why we should listen to the economist Walter E. Williams. From a column of January, 2007.

    The kind of rules we should have are the kind that we’d make if our worst enemy were in charge. My mother created a mini-version of such a rule. Sometimes she would ask either me or my sister to evenly divide the last piece of cake or pie to share between us. More times than not, an argument ensued about the fairness of the division. Those arguments ended with Mom’s rule: Whoever cuts the cake lets the other take the first piece. As if by magic or divine intervention, fairness emerged and arguments ended. No matter who did the cutting, there was an even division.

    …

    We have a set of rules that are known, neutral and intended to be durable. Those rules were created by our founders and embodied in the U.S. Constitution. Those rules have been weakened by a Congress of both parties that picks winners and losers in the game of life. The U.S. Supreme Court, which was intended to be a neutral referee, has forsaken that role and become a participant. All of this means we can expect a future of bitterly fought elections and enhanced conflict.”

  • The Plunder of the Legislative Process

    It is amazing to read the words of Bastiat, written over 150 years ago, but applicable today:

    Your principle has placed these words above the entrance of the legislative chamber: “whosoever acquires any influence here can obtain his share of legal plunder.” And what has been the result? All classes have flung themselves upon the doors of the chamber crying: “A share of the plunder for me, for me!”

    — Frédéric Bastiat, Selected Essays on Political Economy [1848]

  • I have nothing to offer

    Writing from Charlotte, North Carolina

    One of the appeals of big government is that is has so much to offer everyone. Those, myself included, who want government to radically reduce its size, intrusiveness, and power have nothing to offer except freedom and liberty. Sadly, those things don’t seem to matter to many people today. Or perhaps people have forgotten what these words mean and how much government infringes on both.

    How has government become so big, and why are calls for smaller government so unpopular? In an article titled Handing Out The Goodies, Gene Callahan quotes Jim Henley as follows:

    At bottom the problem is this: limited-government types, conservative or otherwise, don’t much like politics. We think politics should retreat from broad areas of economic and social life rather than advance into new ones.

    We’re exactly the sort of people who are going to suck at political activity.

    And we haven’t got a lot of goodies to offer. The State-Capitalist GOP can offer businesses all sorts of subventions. All we can offer them is “a chance to compete on a level playing field.” The Christian Right can offer busybodies a country in which the police enforce their morals on the unrighteous. All we can offer them is the right to try to hector the unrighteous into agreeing with them. The national-greatness right can offer the chance to kill foreigners and Do Good and feel part of a grand enterprise. All we can offer is boring old peace. The welfare state left can offer people oodles of other people’s money. We got squadoosh.

    Political success comes from energizing defined constituencies and we ain’t got any.

    Mr. Callahan’s article continues to explain how coercing people to spend more than they freely want to on government makes them worse off. It reduces their wealth and well-being. This is because when the government takes from one and gives to another, there is no improvement in peoples’ lives. One person’s gain exactly equals one person’s loss.

    In market transactions, however, both parties are improved, as people enter into only those transactions they believe will benefit them.

    The coerced transactions that the government forces upon us benefit one person or group at the expense of another. Now as government becomes larger and more intrusive (and it has under administrations in a long time, including that of President Bush) it has more methods at its disposal to benefit one person at the expense of another. There arises a powerful incentive to lobby the government for favors. As Mr. Callahan explains:

    Once this process is set in motion in some society, an ever greater part of its members’ efforts to improve their lives will tend to be directed towards manipulating the political system into sending as many of the goodies it hands out in their direction as possible. Of course, that activity, unlike the voluntary exchange of goods and services characterizing a free market, is a zero-sum game, where every gain of mine is offset by a loss of yours. But the losers in one “round” of the game are thereby inspired to devote even greater effort towards ensuring the next round goes their way. And the existence in every society of power-hungry individuals, who will come to realize that they can exploit this struggle over cuts of the distributive pie for their own ends, ensures that there will be no lack of “leaders” intent on organizing these competing interest groups and assuring them that their demand for more goodies is an expression of justice itself.

    All this effort spent getting the government to grant favors, be they subsidies for arts, culture, or museums in Wichita; or businesses seeking tax abatements, industrial revenue bonds, subsidy, preferred treatment, or set-asides; or the outright asking of government for money, all this is economically unproductive and diverts time and effort from value-producing activities. We would all be wealthier and better off if government would stop coercing us into making transactions that don’t benefit both parties.

    The problem is that with government spending there is a third party involved, that being the politicians that gain favor with groups and individuals by sending them someone else’s money, and with that, taking away a big chunk of freedom and liberty.

    This is the system that is so entrenched and growing so fast that calls to end it and return to a limited government are brushed away as laughable and untenable. That is a sad realization.

  • What to do with others’ money

    Writing from Pittsburgh, Pennsylvania

    In a June 20, 2006 Wichita Eagle editorial, Rhonda Holman writes about the WaterWalk project in Wichita.

    Evidently there is controversy over the public not knowing the name of the “destination restaurant” that is being courted and favored with a gift of $1 million. To me, the controversy is not the identify of the restaurant or when and how the city should conduct its negotiations, but that we are paying for a restaurant to be built.

    We are not lacking for fine restaurants in Wichita. On both the east and west sides of town (and other parts, too), many excellent restaurants have been opened recently, and more are being built as I write. The Eagle has even reported on their astonishment at how many there are.

    The problem is, I believe, that these restaurants were not built where Ms. Holman and our local government leaders feel they should have been built. But that’s not a problem, except to her and them.

    The people who built these restaurants did so by investing their own money, or the money that others entrusted to them. These people did so voluntarily. They presumably built their restaurants where they thought they could earn the best return on their investment. And having invested several million dollars of their own money in the restaurant, they have a strong incentive to make the restaurant a success.

    But that’s not good enough for Ms. Holman. Evidently she does not appreciate the sacrifice that people have made in order to accumulate the funds needed to make these spectacular investments. She may not be aware of — or maybe she does not respect or value — the tremendous effort and work it takes to run a successful restaurant.

    Just because these people did not build their restaurants where she (and our local government leaders) thought they should have been built, she wants to tax them — and the rest of us, too — and give the proceeds of that tax to a new competitor.

    Is this the type of behavior by our local government and our town’s leading newspaper that is likely to lead to other new private investment?

    Ms. Holman’s editorial stance, along with the actions of our local government leaders, constitute a slap in the fact for those who have been foolish enough (we can now conclude this) to invest money in any industry in which the government is likely to set up their competitor.

    This harmful attitude is summarized in this plea to get the WaterWalk project moving faster, “… so that citizens not only can see where their money is going but also soon start enjoying more of their investment.”

    Making an investment, I might remind Ms. Holman, is something that people do voluntarily because they believe it is in their interest.

    The WaterWalk project and the new downtown restaurant are being paid for by taxes. The expenditure is being made to serve the interests of politicians, subsidized developers, and people like Ms. Holman who believe they know best what to do with others’ money. There is a tremendous difference between the two.

  • Government harms those it means to help

    A column by economist Thomas Sowell Preserving a Vision–at the Expense of the Facts tells just how harmful big-government liberalism is to those it aims to help. In particular, black families have been harmed. “… the black family, which survived centuries of slavery and generations of discrimination, has disintegrated in the wake of the liberal welfare state is only one example.”

    After the end of slavery, blacks started to advance in America. Even though they were often discriminated against — both informally and formally by government, as in the case of Jim Crow laws — they were making progress in education and economically, too. But then government gets involved and wants to “help.” Here’s the legacy:

    One of the most telling examples of the social destructiveness of the left’s welfare-state vision can be found among the white slum dwellers in Britain described in the brilliant and insightful book “Life at the Bottom” by Theodore Dalrymple.

    There it is not possible to blame social degeneracy on slavery, racism or any of the other things cited as causes of the behavior and consequences found among blacks in American slums. Yet the results are virtually identical, right down to children beating up classmates for trying to get an education.

    But the left will not admit its mistake, and continues to doom a class of Americans to failure.

  • A Return to republican (small “r”) government

    Writing from Miami, Florida

    Would you rather live in a republic or a democracy?

    In an article by the economist Walter E. Williams (Are we a republic or a democracy?) we discover the difference between a republic and a democracy:

    So what’s the difference between republican and democratic forms of government? John Adams captured the essence of the difference when he said, “You have rights antecedent to all earthly governments; rights that cannot be repealed or restrained by human laws; rights derived from the Great Legislator of the Universe.” Nothing in our Constitution suggests that government is a grantor of rights. Instead, government is a protector of rights.

    In recognition that it’s Congress that poses the greatest threat to our liberties, the framers used negative phrases against Congress throughout the Constitution such as: shall not abridge, infringe, deny, disparage, and shall not be violated, nor be denied. In a republican form of government, there is rule of law. All citizens, including government officials, are accountable to the same laws. Government power is limited and decentralized through a system of checks and balances. Government intervenes in civil society to protect its citizens against force and fraud but does not intervene in the cases of peaceable, voluntary exchange.

    Contrast the framers’ vision of a republic with that of a democracy. In a democracy, the majority rules either directly or through its elected representatives. As in a monarchy, the law is whatever the government determines it to be. Laws do not represent reason. They represent power. The restraint is upon the individual instead of government. Unlike that envisioned under a republican form of government, rights are seen as privileges and permissions that are granted by government and can be rescinded by government.

    I suppose that if you happen to hold the same beliefs as the majority in a democracy, you’re in a good position — unless you want to let others believe and live differently.

    Another good article by Dr. Williams on this subject is How to create conflict.

  • The descent of the good column

    Writing from Miami, Florida

    Last week I explained how a column in The Wichita Eagle (see How a Good Column on the Bad Lottery Fell Apart) started out well but took a sharp turn downwards.

    What Mr. Scholfield did to destroy this potentially valuable newspaper column was to propose higher minimum wage laws as the solution for people who aren’t paid enough. He even proposes a living wage law that reflects the costs people face rather than the value of what they are able to produce.

    Either of these proposals will harm the very people that Mr. Scholfield seeks to help. As Milton Friedman writes in Capitalism and Freedom:

    Minimum wage laws are about as clear a case as one can find of a measure the effects of which are precisely the opposite of those intended by the men of good will who support it. Many proponents of minimum wage laws quite properly deplore extremely low rates; they regard them as a sign of poverty; and they hope, by outlawing wage rates below some specified level, to reduce poverty. In fact, insofar as minimum wage laws have any effect at all, their effect is clearly to increase poverty. The state can legislate a minimum wage rate. It can hardly require employers to hire at that minimum all who were formerly employed at wages below the minimum. … The effect of the minimum wage is therefore to make unemployment higher than it otherwise would be.

    The great appeal of a higher minimum wage, or a living wage rate as some localities have passed, is that it seems like a wonderfully magical way to increase the wellbeing of many people. Those earning less than the new lawful wage and keep their jobs after the increase are happy. They are grateful to the lawmakers, labor leaders, newspaper editorialists, and others who pleaded for the higher minimum wage. News stories will report their good fortune.

    But as Frederic Bastiat wrote a long time ago: “Between a good and a bad economist this constitutes the whole difference — the one takes account of the visible effect; the other takes account both of the effects which are seen, and also of those which it is necessary to foresee. Now this difference is enormous, for it almost always happens that when the immediate consequence is favourable, the ultimate consequences are fatal, and the converse.”

    The not-so-visible effect of the higher wage law is that demand for labor will be reduced. Those workers whose productivity, as measured by the give and take of supply and demand, lies below the new lawful wage rate are in danger of losing their jobs. As Dr. Friedman says, the law says if you hire someone you must pay them a certain amount. The law can’t compel you to hire someone, or to keep workers on the payroll.

    The difficulty is that people lose their jobs in dribs and drabs. A few workers here; a few there. They may not know who is to blame. The newspaper and television reporters will not seek these people, as they are largely invisible, especially so in the case of the people who are not hired because of the higher wage law.

    If we are truly concerned about the plight of low-wage workers (and I am very concerned, personally), we can face some harsh realities and deal with them openly.

    The simple fact is that some people are not able to produce output that our economy values very much. Passing a law that requires employers to pay them more doesn’t change the fact that we still don’t value their output very much. So a law that requires these employees to be paid more than their output is worth means, in all likelihood, that their jobs disappear.

    Some may say that it is a harsh judgment to say that someone’s work isn’t valued very much. But it really isn’t the greedy evil employers that make that judgment is it? If so, why are some employees, say physicians, paid very well? Is it because the hospital likes to pay high salaries? Or that we as healthcare consumers like to pay high doctor bills? Instead, it’s realizing that we place a high value on the output of a physician. And because it’s difficult to become a physician, and therefore the supply of physicians is low, we have a situation where there is a high demand for something that is in short supply. That means high wages for physicians.

    Henry Hazlitt, writing over 50 years ago in his important work Economics In One Lesson explained how to increase wages:

    The best way to raise wages, therefore, is to raise marginal labor productivity. This can be done by many methods: by an increase in capital accumulation — i.e., by an increase in the machines with which the workers are aided; by new inventions and improvements; by more efficient management on the part of employers; by more industriousness and efficiency on the part of workers; by better education and training. The more the individual worker produces, the more he increases the wealth of the whole community. The more he produces, the more his services are worth to consumers, and hence to employers. And the more he is worth to employers, the more he will be paid. Real wages come out of production, not out of government decrees. (emphasis added)

    One way to increase the value of workers’ output, as explained above, is education. Sadly, as documented in many articles on this website, our public education system is failing children badly.

    Capital — another way to increase wages — may be a dirty word to some. But as the economist Walter E. Williams says, ask yourself this question: who earns the higher wage: a man digging a ditch with a shovel, or a man digging a ditch using a power backhoe? The difference between the two is that the man with the backhoe is more productive. That productivity is provided by capital — the savings that someone accumulated (instead of spending on immediate consumption) and invested in a piece of equipment that increased the output of our economy. Those who call for higher taxes make it more difficult to accumulate capital.

    Technology, innovation, and efficiency improvements are important, too. But I feel the two most important things that government can do to help low-wage workers are these: First, get out of the way of progress in education. Let parents have more control over education. Let markets rather than bureaucrats shape the future of education. Second, eliminate taxes and policies that promote immediate consumption rather than saving and investment, that is, eliminate policies that work against the accumulation of capital.

    If the solution was really as simple as Mr. Scholfield claims, that in order to increase the wellbeing of low-wage workers we could merely pass a law, shouldn’t we be outraged that this law wasn’t passed a long time ago?

    Then, if a law is passed to raise the minimum wage to x, shouldn’t we insist that it have been increased to x + $1, or x + $2, or x + …?

    No, the solution to low wages is much more difficult than that.

  • Political Decision Making Increases Conflict

    A column by economist Walter E. Williams (Why we’re a divided nation) strongly makes the case for more decision making by free markets rather than by the government through the political process.

    When decisions are made through free markets, Dr. Williams says, both parties win, because in a free market, parties voluntarily enter into only those transactions that benefit them.

    When decisions are made for us by the government, however, it is almost always the case that one party’s gain is someone else’s loss. Therefore, there is conflict. The more decisions made through politics, the more potential for conflict. Coalitions arise in order to try to get more from the government, and the most effective coalitions “are those with a proven record of being the most divisive — those based on race, ethnicity, religion and region.”

    The final paragraph of the column is this: “The best thing the president and Congress can do to heal our country is to reduce the impact of government on our lives. Doing so will not only produce a less divided country and greater economic efficiency but bear greater faith and allegiance to the vision of America held by our founders — a country of limited government.”

    In an earlier post, I mentioned some columns by Dr. Williams that I thought were important. This column is certainly one of his best, as it very simply, in one short page, shows us a major fault in our current political landscape.

  • Attacking lobbyists wrong battle

    The economist Walter E. Williams has a column dated January 18, 2006, that places the current lobbying scandal in proper perspective.

    (We should caution Democrats against overindulging in schadenfreude [enjoyment obtained from the troubles of others] at this time. Democrats took money from Jack Abramoff too, and if there were more Democrats in positions of power, you can be sure there would be more money given to Democrats.)

    Professor Williams explains to us that given the “awesome growth of government control over business, property, employment and other areas of our lives” Washington politicians (and I would add state and local politicians too) are in the position to grant valuable favors. “The greater their power to grant favors, the greater the value of being able to influence Congress, and there’s no better influence than money.”

    Continuing: “The generic favor sought is to get Congress, under one ruse or another, to grant a privilege or right to one group of Americans that will be denied another group of Americans. A variant of this privilege is to get Congress to do something that would be criminal if done privately.”

    “Here’s just one among possibly thousands of examples. If Archer Daniels Midland (ADM) used goons and violence to stop people from buying sugar from Caribbean producers so that sugar prices would rise, making it easier for ADM to sell more of its corn syrup sweetener, they’d wind up in jail. If they line the coffers of congressmen, they can buy the same result without risking imprisonment. Congress simply does the dirty work for them by enacting sugar import quotas and tariffs. The two most powerful committees of Congress are the House Ways and Means and the Senate Finance committees. These committees are in charge of granting tax favors. Their members are besieged with campaign contributions. Why? A tweak here and a tweak there in the tax code can mean millions of dollars.”

    What is the solution? I believe, and I know Dr. Williams does too, that we should reduce the power that government has over our lives. I believe we should rely more on free markets for solutions to problems, as these markets are composed of people voluntarily entering into transactions, rather than a coercive government forcing decisions on us based on who lobbied the hardest. Dr. Williams also relates this story and solution: “Nearly two decades ago, during dinner with the late Nobel Laureate Friedrich Hayek, I asked him if he had the power to write one law that would get government out of our lives, what would that law be? Professor Hayek replied he’d write a law that read: Whatever Congress does for one American it must do for all Americans.”

    Hayek also wrote in his book The Road to Serfdom: “As the coercive power of the state will alone decide who is to have what, the only power worth having will be a share in the exercise of this directing power.” We are well down this road, where government becomes more important than liberty and individuality. This is the battle we need to fight. Lobbying scandals are just a symptom and manifestation of the larger problem.