The problem of power
One of the great problems of the world is the power to do evil. This seems obvious. What may not be so obvious is that power is power. This means that the power to do evil is precisely equal to the power to do good and vice versa. Power is always given to or seized by someone granted the ability to do so. More correctly, it is purchased on a quid pro quo basis i.e. ‘if you grant me power, I will do X for you’. This exchange can take all sorts of forms: raise your status, vanquish your enemies, create a political utopia, unite our people, etc. Almost universally, this works out for the benefit of some to the detriment of others. The results are also never as good as promised. People are always required to work harder to support the bureaucracy necessary to manage utopia. Of course, there always seems to be a need for just a little more effort to get this utopia just right and always just a few people whose dangerous ideas are in the way. If only we can get those people out of the way and get the right thinking people into positions where they can fix the problems then everything will be all right.
If we look at the worst people, who have done the most harm in the world, they have all been granted the power to make the things worse by people who have given them this power to make things better for themselves. Sometimes this is democratic. When enough people want something, that they will unite to get it, they do. Sometimes, it is by revolution; an uprising by people who want something enough to kill for it and keep killing to hold onto it. Sometimes it is by conquest (see previous), the power to make war having been granted by those who feel they have something to gain.
Government, here to help
Rarely is ruin brought about by those minding their own business. When such ruin does come about, it is most often through the instruments of force or fraud. What is often perceived as the evils of business is, in fact, said businesses being given access to governmental instruments of power or the lack of government intervention to prevent force or fraud. Very often laws, that seem good, have unintended consequences. An example of this would be the minimum wage laws. These laws do exactly as they were initially designed to do. They segregate the workforce to exclude those with the necessary skills to enter at the minimum wage level. That is to say, if the minimum wage is $7 and you have the skills to do a $5 job then you are excluded from the workforce until someone is forced to hire you at a wage higher than your skillset. In all likelihood, you will be the first to be fired when a person whose skills match the job comes along. The real issue with this is that the law requires that you, by necessity, must eliminate all $5 jobs.
When I use the word force people often misunderstand the meaning. Government is a body that creates and enforces laws. All laws are ultimately backed by force or they are merely suggestions. For instance, the federal government forces tobacco companies to place a warning on cigarettes. However, the warning is itself a suggestion not to smoke. However, the ban on smoking in public places is enforced against places who are compelled to comply.
When talking about fraud it’s important to put it into perspective. There is a term “puffery” which is the exaggeration of claims not to be taken seriously. An example of this might be “Dr. Schols air cushioned insoles will make you feel like you are walking on clouds” No one expects you to think you will actually feel that way. However, you are supposed to think your free lunch is free. You are supposed to believe that the services the government will provide you will be better than the services you could by for yourself. When you ensure a loan with default swaps that is insurance. If you are selling insurance without the money to ensure that a default can’t happen you are committing fraud. The fact that the regulators were allowing the selling these insurance schemes without the rules required by insurance schemes means they were complicit in the fraud.
A free market is free from two things force and fraud. A certain amount of regulation is necessary to set rules that everyone must abide by. However, government should not be in the business of creating artificial monopolies and using its power to force out competition. Free enterprise to some extent means free to fail. Programs to protect business do so to the detriment of competing businesses. The monopolies the government breaks up are rarely anti-consumer. This is to say if you plan to drive all your competitors out of business out of business by producing a cheaper product then good for you. If on the other hand, you plan to use your position in the market to prevent competitors from entering the market then that’s bad and anti-competitive. If you promote a product as safe and it isn’t that’s fraud. However, if I want to smoke that is not the government’s business.
Virtually none of the actions of government have made more jobs available to more people. You might think ‘hey wait but the government builds roads and bridges and other things, those employ people’. All that is true, but where did the money to employ those people come from? Taxes. It came right out of the economy. If you had had that money to spend you would have likely spent it on goods and services that benefited you. Other people would have been employed to provide those goods and services. Perhaps those roads and bridges, etc. will allow for more commerce and hence pay for themselves in some fashion but most are not a net gain.
Grease is the word
In any case, no matter what government does, it does the most to satisfy the squeaky minority at the expense of the majority. An example of this is the building of equipment the armed forces do not need or want. The parts for said equipment are built in a great number of states and each manufacturer of those parts contributes to the campaign of the politician who pushes for the equipment to be built. Thus the politician is purchasing the election at the expense of the taxpayer who must foot the bill for this equipment. This is sold to the local electorate as a jobs program. After all, they will need those jobs to pay for the other equipment build elsewhere that they must also pay for.
Second law of thermodynamics
Taxation can’t be used to produce a perpetual motion machine. You cannot take money from people and spend that money in a way that will make the lives of those people better than if they spend the money themselves. This is the false vision of the utopianist. The best you can do is provide a framework for people to be protected from force and fraud and ensure that systems of commerce are built and maintained. The money taken out of the economy in the form of taxes is subject to the law of diminishing returns.
The dangers of altruism
People act in their own self-interest. Always. Even when they seem not to. How can someone have another interest other than their own? Clearly, I would like you, the reader, to take an interest in what I am saying. If you do take an interest, that is your choice and it could be said that you had an interest in taking an interest in my point of view. If you try to help others you are acting out of your own interest to help other people. Perhaps you are doing this to feel better about yourself or to make others look at you in a better light or because you have determined that you wish to be the kind of person who does the ‘right thing’. Whatever you choose to do it’s your choice, and so you are acting in your own self-interest not out of altruism. Altruism is an illusion. The desire to be altruistic is a desire and as such must be a desire of self; a selfish desire to feel like a good, altruistic, person. One cannot become unselfish because one can never become an un-self. In no scenario can you become unselfish. For instance, if you decide to go to Africa and dig wells for people who need water and your mother calls and tells you that she is dying and needs you to care for her in her last days, what is the altruistic thing to do? Let your mother die without you or finish the well? What is most likely is that you will do what matters most to you. In fact, this is a certainty.
When we talk about altruism We should be clear on what it is. Urging someone to be altruistic is a way to get them to comply with your notion of right; a means of influencing the actions of others. In essence, it’s a way of applying social pressure to compel individuals to do things for others rather than themselves. When does this become a problem? It becomes a problem when fraud becomes involved. Let’s take the above scenario and assume that Johnny goes to Africa to do the ‘right thing’, contracts Ebola and dies. Oops. Now let’s just say that Dudley played down the risks of going to Africa and told Johnny he’d be “perfectly safe”. Now he’s dead. This is an extreme example but clearly illustrates the problem of puffery. No socialist state, brought about by revolution, is the workers paradise that it was advertised to be.
Anarchy and its drawbacks
Anarco-capitalists envision a world of absolute freedom. This, however, is not a natural state. It is the natural inclination of some to judge that others are incapable of running their own lives and will, therefore, chose to ‘help’ them by running their lives for them. How very selfless of them.
It is very difficult to exist with no government. The reason being, that someone always wants to do something that intrudes on another’s liberties. If I want to dam a river to run my plant that might be great for me, but what about others access to the water? What if I want to dump my waste products into the water or air etc.? Clearly there must be a means of governing this and allowing all people the reasonable enjoyment of their property and lives. A government should exist to protect the liberties of everyone. But also to be limited in scope beyond this function.
The benefits of individual initiative
With a few exceptions, the greatest boons to mankind have been created by those who acted in their own interest. In cases where a government created a boon to mankind, it is often private interests that then exploited those boons to the betterment of mankind. In order for these things to occur people need to be free to explore the possibilities of invention without impediments. The dotcom revolution sprang out of individual initiative and that initiative has changed our world. The companies that are creating self-driving cars and artificial intelligence are companies that started from just a couple of guys.
There is a great temptation to milk this prosperity and redistribute the wealth. The great problem with that is that the possibility of striking it rich is a tremendous incentive. For every Bill Gates or Jobs & Wozniak, there are hundreds or thousands that risked money and then lost. This is because there is no guarantee that any idea is worth anything. Many others simply made a moderate living with some idea that was good but not groundbreaking. It’s these people we need to encourage and not discourage. People are over-taxed, over-regulated and in general, disincentivized to keep trying.
Arguments against capitalism
When we look at the arguments against capitalism they are rarely against free market capitalism. The arguments, more often than not, are against cronyism. This is where a company or individual gives money to someone in power to have the laws adjusted to favor him or his company. An example of this might be companies like Uber or Lyfte. These companies use technology to break the government assisted taxi monopolies. The taxi monopolies are a great example of government taking the free out of free enterprise. With taxies, government creates (at the behest of the taxi companies themselves) barriers to entry into the taxi market such as licenses and medallions. The cost of a medallion in New York can be hundreds of thousands of dollars but when ride-sharing services broke the monopoly people who bought into the monopoly started to go bankrupt. When we look at a system like the taxi monopoly it is very clearly not a system designed to provide the consumer with the best product at the lowest cost but rather the opposite. It creates a system of a few who buy into it for protection from competition. If you are an Uber or Lyfte driver the taxi lobby is trying to put you out of business or raise the cost of your business to make it easier for them to compete with you.
Government’s role in a free enterprise system
“The business of America is business”. This was said a few years before the Federal Reserve in tinkering with the money supply caused the great depression. Any system that allows for the tinkering with things as vital to the economy as the money supply is a bad idea. Believe it or not, the idea of inflation was thought to be a good one to promote the spending of money over the saving of money. This sort of government tinkering with the economy has proven to be ill-advised. Now we are stuck with it.
The role of government in a free enterprise system is to ensure that it remains free. That is to say that no enterprise should impose on others a cost or burden. This means that industries must not produce undue pollution into the air and water shared by others. This is one of the things overlooked by anarcho-capitalists. Government itself should not place a burden on those who wish to be free to enterprise. This includes artificially ‘leveling’ the playing field. Government has no obligation to protect business but has an obligation to protect the consumer. It is the concern of business to provide the best product or service at the best price. A business unable to do this should not receive special considerations to allow it to better compete.