- Don’t Confuse Free Markets with the Interventionist State - December 2, 2020
- The Legacy of Thanksgiving is Free Enterprise - November 23, 2020
- Do Not Trust Governments with the Control of Money - November 17, 2020
In 1951, German free-market economist Wilhelm Röpke (1899–1966), delivered a series of lectures in Cairo, Egypt, titled “The Problems of Economic Order.” Looking over the terrain of modern politics and policy thinking in the world at that time, he told his audience,
If I were asked to say what appeared to me as one of the gravest features of our time I would answer: One of the worst things is that people do not seem to stop and think and ask themselves quietly what exactly they are doing…. More and more people no longer know what it means to put first things first and to think in terms of the principles involved. Consequently, only a few still have a real philosophy which separates the essential from the accidental and which puts everything in its place….
Confusion, loss of orientation and lack of philosophical insight are worse than ever, and so we are drifting on an uncharted sea. We are running after current events, instead of stopping to reach the solid grounds of principles and to ask ourselves seriously what have been the reasons why so much goodwill, energy, intelligence, time, and money have been wasted or not given the result we had the right to expect.
Röpke’s words need to be heeded today as much as when he spoke them nearly 70 years ago. And this is never truer than in the midst of an election cycle such as the one we are currently in. A good deal of the focus in the news and social media is on the seemingly unending promises of those offering themselves as candidates for the presidency of the United States.
The politics of paternalist government
In the process, certain fundamental questions and concerns get implicitly shunted aside as attention is almost completely on what each of the prospective candidates says he will do for the people of America, if only he is the one who wins the keys to the White House, come the November 2020 election.
The contentious issues become, By how much will the minimum wage be increased? How soon and in what form will “free” health care be provided to all the citizens of the country, and by how much will the taxes of the “1 percent” need to be increased to pay for it? How shall the government shore up Social Security, so that it remains economically viable for the next generation of retirees? With what technologies and government subsidies will alternative energy sources be funded to battle “global warming,” along with government-mandated transformation of everything we do to prevent “climate change”?
How large and with what procurements should the Defense Department budget be increased to continue America’s political and military presence potentially anywhere around the globe? What types of additional surveillance intrusiveness into people’s privacy is needed in the name of “national security” to keep America “safe”?
The list of things the would-be White House occupants present as their respective lists of promises for enlarged or new government programs appears to be endless. Not that what the U.S. government is already doing is not an expensive list of activities.
In Uncle Sam’s 2020 fiscal year that began on October 1, 2019, it is estimated that the federal government will spend around $4.4 trillion, of which about $1 trillion will be with borrowed money to cover the budget deficit of that amount. If projected spending by state and local governments is added to that amount, the total government take in the United States practically doubles to $8 trillion.
Compare that with the Gross Domestic Product (GDP) of some of the larger economies around the world. China’s GDP is estimated to be $15.4 trillion; the GDP of Japan is $5.3 trillion, followed by Germany with a GDP of $4.4 trillion; India’s GDP is $3.1 trillion, while the GDP of France and the United Kingdom are, respectively, slightly more than $3 trillion, with Italy’s below that with a GDP of $2.3 trillion.
The three levels of government in the United States together absorb an amount that makes them a combined entity with the third-largest GDP in the world!
One response might be that the United States economy stands far above the rest of the world with an estimated Gross Domestic Product of $21 trillion. But that does not change the fact all levels of government, together, absorb almost 40 percent of all the productive output and income produced within the United States. If governments in the United States were not siphoning this output and income out of the private sector, on a per capita basis, each of us could be 40 percent richer than we currently are.
It may be responded that even a limited government has to tax away part of the income and output in society to do its far more narrow, legitimate functions; but suppose that half of what government currently consumes would still have to be used by federal, state, and local authorities; that would still increase people’s per capita financial position by 20 percent.
In other words, for every $1,000 you now have, you would have an extra $200 added to that. For someone making, say, $50,000 a year, his income would increase to $60,000 annually. Most people in that income category would find desired uses for $10,000 more that came their way through a reduction in the cost of government.
While it is crucial never to lose sight of the dollars and cents, since after all knowing it reminds us of the burden of government in our society, it still partly deflects our attention from the underlying and more fundamental principles that Wilhelm Röpke was referring to in the earlier quotation from him.
If Uncle Sam spends and intervenes so massively in American society — and if a field of presidential hopefuls can make the core of their respective pitches to the voting public about how much more they are proposing and promising to implement, if only one of them is the one elected to the office of chief executive — this is implicitly telling us that the underlying premise in 2020 politics is that doing all these things is considered part of the legitimate and desirable functions of government.
The importance of principles
We need to step back from the everyday electioneering promises of continued and increased political plunder — away from the existing terms of the debates about how to “save Social Security”; away from the proposals for centrally planned health care “for all”; away from the disputes over whether the minimum-wage law should be set at $15 per hour or higher; and away from whether the United States should maintain its existing military presence in the Middle East, or whether American foreign policy strategy should “pivot” toward Asia and a “China threat.”
If not those policy issues, then what? The answer requires us to go back to those “first principles” to which Röpke was alluding. What is it that a government in a free society should be doing? That requires a “stepping back,” as Röpke was saying, to think about the nature of man, society, and government in human affairs. If an election year is not the time to do so, then when?
Perhaps somewhat colloquially, we might think about this in the context of the following observations by the 20th-century Chinese social philosopher, novelist, and essayist Lin Yutang (1895–1976), from his book Between Tears and Laughter (1943, pp. 71-72):
The Chinese believe that when there there are too many policemen, there is no individual liberty; when there are too many lawyers, there can be no justice; and when there are too many soldiers, there can be no peace. Peace can be obtained only by putting government in reverse. Since this is a mixed world of mixed characters [some good people and some bad people], let there be a government to put a few fellows in jail. That is all government exists for….
Americans, who are intensely practical, may agree that government by police, particularly secret police, is highly repellent. They may agree that government by law, though workable, may be slightly inadequate and fall short of the highest ideal [of self-controlling and mutually respecting individuals]. They know that a government by a series of verbotens in the Prussian style is not good enough for the democratic individual and that the good life is something more than obeying a series of “Thou shalt not’s.” They know that in a mature, full-grown democracy, peace and order ultimately depend on the decency and self-respect of the individual.
Subordination of the individual to the state
I will add one more quotation from Lin Yutang, this one taken from another of his books, With Love and Irony (1941, pp. 248-49). In the midst of the Second World War, when Europe was engulfed in destruction, death, and Nazi barbarism, and when in Asia the invading Japanese were brutalizing the innocent civilians of China, Lin Yutang made the following observations:
What threatens civilization today is not war itself or the destruction of war, but the changing conceptions of life values entailed by certain types of political doctrines. These doctrines directly impinge upon man’s ordinary, natural privileges of living and subordinates them to the needs of national killing. The importance of killing supersedes the importance of living, from the totalitarian standpoint.
It cannot be denied that from the point of view of the State, organized for war and conquest, totalitarianism has everything to be said for it, but from the standpoint of the individual as the ultimate aim served by civilization, and for the purpose of enjoying the ordinary blessings of living, it has nothing to be said on its side. It is neither the machine nor the war that is destroying modern civilization but the tendency to surrender the rights of the individual to the State which is such a powerful factor in contemporary thinking….
Only by recapturing the dream of human freedom and restoring the value and importance of the common man’s rights and liberties of living can the undermining threat to modern civilization be averted.
Now, of course, Lin Yutang was writing during a world-encompassing war in which the collectivist conception of man and society was in its starkest reality in Nazi Germany and Soviet Russia. Both totalitarian regimes insisted on the absolute subordination of the individual to the guiding commands of those in control of the State.
At that time, references to “democracy” were often meant to refer not only to the political mechanism of electing people to political office through the peaceful means of the ballot box. They also still implied, for many, the liberal ideas and ideals of individual freedom, civil liberties, rule of law, constitutionally restrained government, and freedom of enterprise.
Democracy and paternalism
As the Swiss economist and political scientist William E. Rappard (1883–1958), expressed it in a lecture delivered in Philadelphia in 1936 entitled “The Relation of the Individual to the State,”
The revolutions at the end of the eighteenth century … were essentially revolts of the individual against the state — expressions of his desire to emancipate himself from the ties and inhibitions which the traditional state had imposed on him…. After the rise of individualism, which one may define as the emancipation of the individual from the state, we had the rise of democracy, which one may define as the subjection of the state to the will of the individual.
But as Rappard goes on to say,
In the latter half of the nineteenth century and up to the present, the individual, having emancipated himself from the state and having subjugated the state to his will, has furthermore demanded of the state that it serve his material needs. Thereby he has complicated the machinery of the state to such a degree that he has again fallen under the subjection to it and he has been threatened with losing control over it…. The individual has increasingly demanded of the state services which the state is willing to render. Thereby, however, he has been led to return to the state an authority over himself which it was the main purpose of the revolutions in the beginning of the nineteenth century to shake and to break.
What thinkers from the middle decades of the 20th century were asking us to focus on was that the fundamental issue of our society is not whether the minimum wage should be $13 or $15 an hour; whether Social Security benefits can be maintained by raising the retirement age and increasing that program’s withholding tax; or whether it is possible by taxing “the rich” enough that government spending can cover health care for everyone in society.
That already assumes the premise that government has the responsibility and duty to impose a series of plans and programs on all the members of the society by means of political coercion. Having accepted that premise, all the debates are and should be over the extent and forms of paternalistic agendas.
What Rappard was lamenting was that after revolutions in ideas and policies in the 18th and early 19th centuries to free the individual from the all-controlling state, an increasing number of people had been buying into the idea that the purpose of the democratic vote was to have government once more institute a form of welfare statist paternalism, but this time as an expression of “the people’s will.”
In Rappard’s eyes, clearly, political paternalism and coerced compassion were just that, the use of force to make people conform to what those in political power concluded was good for them, and in our own times by those who were placed in positions of governmental authority through democratic rather than dictatorial means. Liberty, in other words, could be and was being lost under a system of democracy, no less than under an authoritarian regime.
Democracy was confused with liberty, because of the process by which the elected were voted into office. But liberty is not the same as the will of a majority, no matter how rhetorically expressed. The purpose of constitutions is to restrain even democratically elected governments from abridging or abolishing the rights of the individual to peacefully live his own life as he chooses, whether that individual is a member of the majority or the minority.
Leave people free to live their lives.
As Lin Yutang was conveying it, the presence of too many police and too many soldiers suggests that the state is far too intrusive and pervasively controlling the everyday affairs of the citizenry. It indicates a government that is watching, restricting, and threatening people’s liberty, both at home and aboard. The death of the young in wars entered into by their governments is a blood tax that is the price of foreign political and military interventionism. “Reasons of state” take precedence over the lives of those placed in harm’s way by the designing pretensions of the political paternalists.
In another of Lin Yutang’s works, On the Wisdom of America (1950), he quotes from the 19th-century journalist and historian David Grayson (1870–1946), and then comments on the most important lesson to be learned for the preservation of a free society (p. 227):
One of the best lines from Grayson is the following: “One thing I am coming to learn in this world, and that is to let people haggle along with their lives as I haggle along with mine.” That, I believe, embodies a whole philosophy of life, not easily arrived at except by one who has pondered and thought a great deal about the human drama….
And once [Grayson] reflected, “I remember how, once in my life, I wasted untold energy trying to make over my dearest friends…. Because we are so fond of them we try to make them over to suit some curious ideal of perfection of our own — until one day we suddenly laugh aloud at our own absurdity (knowing that they are probably trying as hard to reconstruct us as we are to reconstruct them!) and therefore we try no more to change them, we just love ’em and enjoy ’em!”
What has been lost is what David Grayson came to understand: That a free society is one in which each allows others to live their own lives their own ways, just as we would want others to do the same in reference to ourselves. That is the only just and livable society.
Why? Because when we try any opposite of this, we get the society we are currently living in. What is the underlying premise in the politics of our times? It is that people, as individuals, cannot be trusted and must not be allowed to make their own decisions about the ends to pursue, and the means to apply to attempt to achieve those ends; and that human interactions of any type must be planned, programmed, and policed by those in political power for purposes of remaking human beings into a form that those in government authority know is better and more just than the undesigned and uncontrolled actions of people left free to make their own choices.
When David Grayson tried to remake his friends into a shape that he, no doubt, sincerely thought would make them happier and better people, he was probably politely or angrily reminded by them to mind his own business. He finally came to the insight that letting them go their own way was a far better way for everyone to live, human mistakes and all. Moreover, by following a personal policy of laissez-faire towards others, he did not run the risk of losing the friendship and associated benefits of his relationships with them, which he might have lost if he irritated them beyond a certain point of endurance.
When governments practice such “making over” business, they have the use of legitimized force to bring to bear. That soon divides society into factions, interests, and groups who try to gain political power into their own hands, so they can use the state for their visions of “the good” before some other coalition gains control, instead, and tries to remake society at their expense.
For the sake of personal liberty, social harmony, and human betterment in general, we need to turn our backs on the politics of today, and say, “No!” We need, as Lin Yutang said, to put the government into reverse, and radically move it back in the direction of leaving people alone. That is the opposing principle, the principle of human freedom, that must be taken up to challenge the pontificating paternalists in the world in which we live, and especially in an election year.