The Cost of Statism
JANUARY 01, 1975 by BRIAN SUMMERS
Mr. Summers is a member of the staff of the Foundation for Economic Education.
For 6,000 Years of recorded history, men have lived under some form of statism. That is, mankind has never known a truly limited government — a government whose force is purely defensive in nature, protecting all from humanly initiated force and fraud, and doing nothing more. Thus, people have always experienced an aggressive component of governmental force, a component that takes from some and gives to others. This aggressive component, this legal plunder, has been at the expense of human beings. Let us examine the cost.
The cost of statism cannot be measured, for we have no way of knowing how life would have proceeded were it not for statist disruptions. Thus, there is no way of placing a dollar value on the consequences of government economic interventions, no way of measuring the suffering resulting from statism, and no way of accounting for the loss of life, for who knows how life and death would have proceeded in a free society?
Does this mean that we are stymied before we even start? Not at all. One examines the cost of statism by considering the nature of statism. And the nature of statism — legalized aggressive force by men against men — is perhaps best revealed by focusing one’s attention on particular statist interventions. Let me suggest how such a survey might proceed.
Begin at Home
It is probably best to begin at home. There are millions of laws in America, so many, in fact, that no one can more than guess the number. How many of these are statist in nature? As many as are not specifically designed to protect people from humanly initiated coercive force and fraud.
Americans have laws that tax some and give to others, laws that prevent the hiring of nonunion workers, minimum wage laws that result in the unemployment of workers whose hourly productivity is less than the minimum wage, laws that prevent unlicensed barbers from cutting your hair, laws that restrict advertising and other forms of competition, antitrust laws that penalize efficient producers, laws that restrict imports, and on and on.
Not one of these laws protects people from coercion or fraud. Rather, every one of them is aggressive in nature, directed against taxpayers, nonunion workers, unskilled workers, efficient producers, and all their families. Who can measure the cost to these people?
And note that every one of these laws restricts and discourages production. With an eye on the simple truism that consumers cannot consume any more than producers produce, it is clear that these taxes and interventions victimize millions of consumers. But the cost does not stop here.
We must also consider the effect current taxes and interventions will have on the future. The quantity and quality of tomorrow’s production, and thus tomorrow’s standard of living, will be greatly dependent on today’s capital investment. To the extent that current taxes, interventions, and the threat of taxes and interventions prevent and discourage this capital investment, our children will pay the price.
We should note well that this cost will not merely be in terms of material consumption. Tomorrow’s leisure time, goods and services used during leisure, charitable contributions, and funding of medical care, medical research, education, science, and the arts will be greatly dependent on tomorrow’s standard of living. And tomorrow’s standard of living will be based on the tools of production we are building today.
A World-Wide Problem
Of course, statism is a worldwide phenomenon. One sees its destruction in every land. Consider the many wars of conquest. Who can measure the loss of capital? And, of far, far greater importance, who can account for the suffering? Who knows what contributions the unfortunate victims would have made had they only lived to see another day?
Or consider the cost of a controlled press. Of concentration camps. Of immigration and emigration laws. What is the cost of the Berlin Wall?
Statism is with us at this very moment. Men and women are paying the price. And their children and their children’s children will also pay the price in terms of the destruction of capital, the destruction of liberty, and the destruction of people.
All this is not to say that the alternative to statism, a truly limited government, is without cost. However, the cost of government that protects people from humanly initiated coercion and fraud, and does not intervene otherwise, is measured primarily in terms of taxes that support these two legitimate functions. As an economy grows, as it always has when men have come anywhere near the ideal of limited government, these two functions consume a smaller and smaller percentage of productive output. That is, we would expect limited government to be supported, except in time of war, by a falling relative burden of taxation.
This, of course, is an ideal that may never be attained. However, in light of the tragic cost of statism, this ideal must be pursued for as long as people turn the forces of government against their fellow men.