These opponents of the free market see liberty in a different light, almost wholly separate from personal responsibility, because they view responsibility as a job for society as a whole. Material needs become a human right and society, through its agent the state, is responsible for providing such needs. In such a system, equality is material and justice distributive. Metcalf and others have attacked libertarian thought by showing so-called flaws in Robert Nozick’s entitlement theory (with his famous example of Wilt Chamberlain). But as Steven Horwitz points out, this completely misses the point Nozick was making.

Nozick wasn’t attempting to justify, morally or otherwise, the free market but instead used the example to show how you cannot have a theory of distributive justice and allow individuals to use their private property as they see fit. The point then is that if you believe in a distributive theory of justice you must also advocate the restraint of liberty to dispose of individuals’ income. A consequence of liberty is an inequality of material well-being. So we must choose what type of equality we want. Do we want equality of outcomes? If so we must treat people unequally. Or do we want to be treated equally? If so, then we must put up with some level of unequal outcomes.

What is interesting, though, is that, countries that attempt to create equality of outcomes end up with much less of both equality of outcomes and equality under the law. Freedom in these countries is greatly curtailed and major wealth gaps exist with the majority in relative poverty. Countries, on the other hand, that put the responsibility in the hands of the individuals, find more freedom and equality under the law and more equality of outcomes. True it is not perfect, no system can achieve that (at least not without creating equality in poverty) but those societies tend to be wealthier overall, even for those in the lowest economic positions. As Leonard Read points out in the article, it is the countries that attempt to provide free shoes for the poor that have many more individuals without shoes.

Why is that? In a way it could seem counter-intuitive but the reason is that, yes people are working for their own self-interest but in order to make oneself better off they must make others better off. And the more people you make better off, the more you can achieve for yourself. Through the market process competition lowers prices so more individuals can have more material things at lower costs. In this sense, the market far from ignores the poor, it helps lift them up out of poverty.

Take away the incentives embedded in the free market system and efficiency will go with it. As Read noted, “Agreement with the idea of state absolutism follows socialization, appallingly.” Once this happens it becomes hard to remember how well the market works because in stomping out real entrepreneurship we have also crushed our imaginations. And despite what the critics think, with their wholly inaccurate caricature of libertarianism and the free market, I believe that is not just sad, it is abhorrent.

Download The Cliches of Socialism Number 8 “The free market ignores the poor” by Leonard E. Read here.

The example with the fly tells us that the state should be restricted to those tasks, and only those tasks, that it can do well. It is up for a debate, even amongst libertarian/classical liberal circles, just what these tasks are but what is clear is that there is a limit. For example, some libertarians believe the state is not necessary at all. The provision of law and order and defense should be left to the private market. Other libertarians/classical liberals believe in, what has become known as, the night-watchman state, where the role of government is limited to the provision of law and order, defense, and possibly providing some public goods. Still, no matter what anyone’s position is, we must admit that the state is not capable of doing everything. There will certainly be many functions the state simply cannot perform well, or at all, and thus we should never ask it to.

Forgetting the past is a very dangerous thing. It can lead to the Cliché of Socialism number 48, “There ought to be a law.” As William C. Mullendore explains the growth of government, in terms of both scale and scope, grows out of this often well-intentioned phrase. A certain situation will attract the attention of sympathetic or disproving citizens, who then turn to legislators to fix the problem. Soon this becomes a rally cry for all our problems.

It is rarely asked whether this is something the government should be doing and instead is simply assumed it should. More often than not the government’s legislation would fail to achieve its intended ends and instead of repeal, new laws (that also are unlikely to work) would be enacted to fix this, costing us more and more freedom.
In his book Democracy in America, Alexis de Tocqueville titled one of the chapters, “What Sort of Despotism Democratic Nations Have to Fear.” The answer is majoritarian despotism, and this is exactly what we have today. Tocqueville warned that an intrusive government in attempting to protect and relieve its citizens “from the trouble of thinking and all the cares of living” would create a sort of “orderly, gentle, peaceful slavery.”

By crying, “there ought to be a law” at every problem, we have given the state parental authority. The result has removed our personal responsibility and also has led to the surrender of many of our freedoms. For freedom and personal responsibility are two sides of the same coin. By turning to the state, instead of finding ways to voluntarily interact and solve our problems, we are reducing ourselves into a condition of perpetual childhood.

This is not the way of a self-governing society; in fact, it is a means of destroying our ability to self-govern. If we truly wish to be a free society, we must learn that the state is not capable of taking care of others or ourselves. The state is not a substitute for personal responsibility. At best the state is a coercive tool that is easily abused. As the founders of our country realized, the larger the state grows the more dangerous it becomes to a prosperous society. The point of our constitution was/is to restrict and constrain the government but it hasn’t worked. Maybe Leviathan cannot be constrained. Perhaps the state can only institutionalize predation. Even if this is the case, if we have any hope for a solution, it must start within ourselves. We must learn to be a society of free and responsible individuals.

Download the Clichés of Socialism number 48 by W.C. Mullendore here.

This leads to the question: why the misconception that economists are heartless? I believe the answer has to do with emotions. The suffering of human beings, no matter who they are, is no laughing matter. This is just another reason that solutions need to be looked at calmly, coolly, and objectively. We need to find the correct solutions and this requires checking your emotions at the door.

Humanitarians seem to become too attached to their stance at an emotional level, even seeming to suffer from a mystical belief in the moral superiority of their solutions, no matter what the outcome. In fact, this has led to the enactment of countless terrible public policies. Economics, on the other hand, is a science. The economist’s job is to take the end as given and then explain the best ways to achieve that end.

For example the issue of sweatshops is one of the most emotional issues, which enrages many Americans today. People see struggling women and children “forced” to work in terrible working conditions and call: “Sweatshops must be Stopped!” “Ban them!” “We must boycott!” The question is: will closing sweatshops stop “exploitation” and get people out of poverty?

Many economists argue that these solutions would have detrimental effects on the poor.

Today’s document is the Cliché of Socialism Number 40 by Paul L. Poirot, in which he correctly argues why the labor laws put in place to prevent child labor and improve working conditions are not responsible for ending sweatshops in the United States. That kind of labor was necessary at one time, but as wealth was accumulated, this type of labor became undesired and went away. In fact, laws banning sweatshops, if put in place at that time, would have done more harm than good and would not have achieved the desired ends. Paul Poirot is not alone; many economists point that there are some positive benefits of sweatshops for the poor. One of these economists is Professor Benjamin Powell.

“Positive benefits! Outrageous, would you want to work in a sweatshop?” Of course not, none of us would, if given the right choice, but sweatshops are not the problem, poverty is. Poverty creates a situation where sweatshops might just be the best option given all other alternatives. When we step back and look at the problem objectively this becomes clear. First, there is no magic solution to quickly eliminate poverty but with the right institutions in place individuals will have incentives to create and foster economic growth. Second, opportunity costs matter. If you take away sweatshops, what will these workers do? Well, many will be “forced” to work in much worse and less paying jobs, some (perhaps even children) may resort to prostitution, others may simply starve to death. If sweatshops create slavery it would be another matter, but the fact is this: given all opportunities and constraints these individuals want to work in the sweatshops. As workers become wealthier competitive forces improve working conditions, increase wages, create more leisure, etc. So, they can enjoy the same benefits, us people living in wealthy countries enjoy today. There is no quick path to this point and wealth must be built up.

Once humanitarians acknowledge this fact, the right response should be to encourage trade with countries where sweatshops exist. Buy sweatshop goods, higher demand for their services means the quicker wealth accumulation by these workers, which inevitably will lead to disappearance of sweatshops. Restricting trade with countries where sweatshops still exist keeps these individuals poor, which is the opposite of what we want.

Download the Cliché of Socialism Number 40 “Without Legislation, We’d still have Child Labor and Sweatshop Conditions” by Paul L. Poirot here.

The problem is that it can’t be both. Are interventions into the market economy the cause of prosperity? If they are, then free markets cannot be blamed when things go wrong because we don’t have free markets on first place! It could, of course, be argued that there are not enough regulations but there are two problems with this. First, the flaw is still not that free markets failed us. And second, it is empirically not true.

The evidence tends to point to the importance of free markets for achieving high sustainable economic growth. Recently two empirical papers, Harvard University economist Andrei Shleifer’s “The Age of Milton Friedman” and George Mason University economist Peter Leeson’s “Two Cheers for Capitalism?”, analyze economic growth throughout the world in the last quarter century. Both find similar results. Countries that became more “capitalist” during this period, meaning the freer the markets were, became wealthier, healthier, more educated, and politically freer. On the opposite, countries that restricted markets endured stagnating income, shorter lives, less education, and oppressive political regimes.

In other words, when it is appropriate to say, “we have never had it so good,” the reason is because markets have produced wealth in spite of the regulations and restrictions. In times of trouble the appropriate response should be to blame the regulations, which distorted the markets that were responsible for the wealth in the first place. What is needed in both good and bad economic times is not calls for the state to intervene, but instead calls for freer markets. The empirical evidence for pure free markets are a lot stronger than many give it credit for. As my colleague Daniel J. Smith once said, “It doesn’t make one dogmatic to embrace these facts, it makes one dogmatic to refuse to acknowledge them.” The world needs more individuals to fully embrace these facts, and maybe the world needs more market fundamentalism.

Download the Cliché of Socialism Number 32 by Leonard E. Read here.

This is unfortunate. As this nicely represents the Clichés of Socialism Number 26, “I prefer security to freedom” by Leonard E. Read. As Benjamin Franklin once said, “Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.” (see Robert Higgs’ Book as well). While it is true we are not surrendering all our freedoms through the use of the TSA for our airport security, we don’t have to fly after all, it is certainly a step in the wrong direction.

As Read points out, there is no real tradeoff between security (in the traditional sense) and freedom. They are not mutually exclusive. Personal achievements and savings provide a backdrop for many to fall back on in hard times and competition provides the incentives to create a safer and more secure environment for us all to interact. As Read says, “Freedom sets the stage for all the security available in this uncertain world.” What does this mean for the TSA issue? Well, for starters there is no reason to believe the airline companies could not, and would not, provide more than adequate security. Security, after all, is important for an airline’s reputation, which it has large sums of money riding on. If they mess up then they will go out of business and another airline will step up and fill in their shoes. Now with the use of a government monopoly in charge of all security that incentive is gone.

Instead, the type of second type of security is sought after, namely “the guaranteed life.” This is the use of the state to remove our personal responsibility and live at the expense of others. This is why Frederic Bastiat defined the state as “the great fiction through which everybody endeavors to live at the expense of everybody else.” In reality, there is no such thing as a free lunch and this situation will have its unintended consequences (see Steve Horwitz on CNBC on this). Instead of through a process of competition we have left airport security in the hands of a government bureaucracy. This raises the costs of government. When the TSA messes up it will not go out of business but instead seek more government funds. Eventually this leads to insecurity as the government stretches beyond its means. The more we expect the government to do, taking away our personal responsibility in the process, the more freedoms it will take away. In the case of airport security the responsibility should be left in the hands of the airlines who have an incentive (which the TSA does not really have) to provide a safe travel environment for travelers.

This recent issue with the TSA Body scans illustrates the sad fact that our society is increasingly saying “I prefer security to freedom.” This needs to be reversed before it is too late. As H.L. Mencken said many years ago and is sadly still true today, “Most people want security in this world, not liberty.” The state loves this and will attempt to use this to their ends. After all, to quote Mencken again, “The whole aim of practical politics is to keep the populace alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary.” If there is a real terrorist threat to our airports then all the more reason to leave it to personal responsibility. Real strength and security comes from freedom not by running and hiding. Leave the provision of security to the freedom and competition of the market place.

Download the Clichés of Socialism Number 26 by Leonard E. Read here.

Dean Russell tackled this cliché by discussing Sweden’s much acclaimed state housing projects. Russell admitted the system did indeed look good and upon his visit to the country, since he was “a reasonably honest person,” gave credit to the housing situation. But upon closer inspection things were not so dandy. The government control of housing created a shortage and those waiting for government housing could end up on a waiting list for ten years! And it got worse, since private housing was non-existent due to the incentives the system created. So Russell stuck with his original hypothesis that government cannot outperform the market.

Russell uses only this one example, but what about other areas? Today the health care issue is all the rage and Sweden (along with England and Canada, which all have different types of state-run systems) is counted as a rousing success. But again, a closer look into all the consequences, including the long-run effects, is necessary. Horror stories, like patients being forced to wait for months despite being in pain, abound.  The system also forces patients to attend extremely understaffed local clinics.  These are just a few of the problems.

Supporters of the recently passed Obamacare should seriously analyze the bill as Bastiat suggests all good economists should, by seeing the seen and the unseen effects. This means looking at all groups and in the long-run. It’s not that free market advocates are heartless in opposing free health care for all, it’s that we are “reasonably honest people” who analyze the issue by looking at all the consequences and find that state run health care will make us all worse off in the long-run, particularly those who will need it most. The US health care system has its problems, but they are due to too much regulation, not too little.

What long-run consequences do you see from Obamacare?

Download Clichés of Socialism 66 here.