It's The Market, Not a "Sector"

"Human society is an association of persons for cooperative action."~~~Ludwig von Mises,  Liberalism: The Classical Tradition  

Talk of the "private sector" is just irksome.  When I hear it tossed around I wince, much when the phrases a whole nother, suposebly, or anywho crops up within earshot.  Fingernails down a chalkboard would be an euphonious melody if said fingernails were raking and slashing these phrases on the chalkboard, starting with "private sector." 

There is no such thing as a "private sector" of the economy.  The phrase implies the economy has parts and that private free enterprise is just one part of the overall economy.  Further implied is that the economy would be incomplete or unbalanced if "the private sector" was responsible for all economic activity.

Private enterprise and the market---you, me, and every other individual voluntarily participating as producers, consumers, and savers---is the economy.  The market is the sum total of the free actions of individuals who participate and contribute to its existence and movement.  Without individuals seeking their self interests there would be no market.  This is no mere sector of the economy. 

(Did one day, deep in the past, government authorities somewhere declare, "Let an economy come forth from nothingness, and we shall determine which sector will be private"?  Or did individuals, respectively seeking their own self interests and making mutually beneficial transactions voluntarily cooperate themselves, and thus their societies, out of hand-to-mouth existences?) 

Furthermore, when individuals voluntarily participate in the market, of which they are by definition a part, they can only contribute to the the economy.  By contrast, when government "participates" in the economy, it, by definition of being outside the market that is had nothing to do in creating, can only interfere with the operations and voluntary interactions of individuals, that is, the market.  And when it interferes, it does so using the force of law and regulative coercion, something individuals in the market cannot do, minus the legislative assistance of the government.  (Think of GE lobbyists stealthily working for Cap and Trade legislation.)

Basically, individuals create wealth, therefore economic activity.  Government confiscates, retards, and interferes with wealth creation, therefore creating uncertainty and instability in the economy.  These two mutually opposed entities cannot therefore constitute two sectors of the same enterprise.  There is the market and there is the government. 

Yes, government has a role in the economy, but that role is always from outside, hence its role is interference. How much interference is desirable, just, counterproductive, etc. is a matter for another time.  One might even say it is a matter for a whole nother Chalk Talk.

Video: Signs, Signs, Everywhere Signs (of Unconstitutional Government and Government-Mandated Monopolies)

The Federal Highway Administration is ordering, with the coercive arm of the federal government, all local governments to buy new street signs.   What's so important that the federal government had to force itself into local affairs?  Street signs should have mixed lettering, not just all CAPS.

Whew!  At least we can rest assured this coercive, unconstitutional, bureaucratic fiat is for high and good purposes.  (What's that old authoritarian maxim about the means and ends...)

Let's repeat this situation in different terms:  Local governments, funded by local taxpayers, have been ordered by an unelected bureaucratic wing of the central government to use local tax dollars to remove all existing street signs and replace said signs with new street signs.  (The term "federal government" will hereby be changed, by fiat of the author, to "central government" for the remainder of this post, for reasons that will be easily inferred by the reader.)   

Are local and city governments incapable of deciding for themselves which signs best suit their traffic conditions?  Put another way, is a categorical, one-size-fits-all federal government central government  edict going to work out best for every single local municipality across the country?

And what about that whole federalism thingy set up in the Constitution?  The federal government central government is allotted specific tasks it is constitutionally empowered to pursue.  Everything else, by default, falls to the state and local governments.  Skipping right over the state government and ordering local municipalities what to do and how to do it is an even broader, bolder slap to federalism than, say, arm-twisting state governments with federal highway funding. 

But wait!  It gets even worse.  Pick up at the 0:55 mark of the Fox News video below to hear about the private company that helped to fund the so-called research that went into this very important task of the central government that had to take place during a recession:


The 3M company that just happens to make the new-and-improved reflective material now mandated by the central government contributed to the research that revealed that every local government in the country just had to purchase and install new signs.  3M could deserve the good citizen award, one could suppose, for being so concerned about traffic safety they cut into their profit margin to help fund such research.  One big problem: 3M happens to make the reflective material that will be used in the manufacturing of all those signs that local governments are required by law to purchase.

As Dana Carvey's beloved Church Lady used to say, "Well isn't that conveeeeeenient?"

Side-stepping honest competition in an openly competitive market and using the force of government to corner the market and regulate out of business pesky little competitors is nothing new.  Ever since the federal government central government began interfering in the otherwise free and cooperative interactions of free individuals--the market--corporations have parlayed the regulative apparatus of the federal government central government to legally leverage for profits.  In other words, some corporations find it more convenient to use the coercive power of the federal government central government to make competition illegal and/or force the purchase of their products than compete openly by persuading consumers to freely purchase their goods.

As Tim Carney makes abundantly clear in his invaluable book, The Big Ripoff, the history of big government is the history of big business, and consumers and taxpayers have been paying a higher and higher price for the unholy alliance.

Who suffers in this anti-free market game?  We the People suffer, once as consumers paying artificially high prices for goods and a second time as taxpayers burdened with funding the bureaucracies and regulations that is at the heart of this mess.  And the bigger the federal government central government gets, the worse that problem.

If you have not read Carney's book, please buy a copy and do so.  There will soon be bright new street signs that show you the way to your local bookstore!

High Income Does Not Equal Being Wealthy

Leaving aside the impropriety of taxing rich Americans at a higher percentage, we should recall an important fact that is buried in all the claptrap going back and forth about the current tax rates.

That fact?: Income is not wealth.

Everyone who earns in one year more than whatever arbitrary demarcation line divides the "rich" from the proles is assumed to be wealthy.  (What is that number this week?  Last I heard it was inching up to $1 million a year.) This assumption leads to the next step of wanting to categorically tax these individuals' incomes as if they themselves are rich.

Yes, many "rich" people have high incomes, and many high income earners are "rich."  But many is never all.  High income earners and "the rich" is no exception.

The wealthiest safe-made people in America were not "rich" the first year they brought home $x or more.  Many people earning high incomes this year are not yet "rich" or are on their way down from being "rich" onto their way to being in the middle class. We just do not live in an economic caste system, all the bellicose class warfare bilge notwithstanding.

As Thomas Sowell points out in Intellectuals and Society, the Treasury Department (that bastion of people interested in abolishing the progressive income tax system) reported that among the highest income earners of 1996--the top 1/100 of 1%--a mere 25% remained "rich" by 2005.

This underlying assumption of this assumption holds that everyone getting hit with higher taxes has sooooo much loot lying around they can use their riches to buy, invest, and promote economic growth.  So tax, tax, tax away.  Wrong.  Tax high income earners who are not "rich" and you're confiscating out of their hands and the economy that much more possibility for real capital investment and growth.   

Again, we're leaving aside the debate over the propriety of progressively taxing some people more than others.  The above assumption is simply incorrect.  Moving along tax policy based on this assumption is simply not justifiable.  Using demagogue verbiage like "...the richest Americans" to push such tax policy is either a poorly thought out effort or just thinly veiled partisan chicanery.

The assumption articulated in the caption below is better grounded and more thought out than this high-income-equals-being-rich assumption.  And both are hilarious.

Video: Beware the Omnipotent Government

Below is a brief and worthwhile video of F.A. Hayek. Democratic forms of government require constitutional limitations of power.  The fact such governments are in some way democratically chosen does not do away with the need to limit their power.  Believing democracies need not be limited in their powers relegates voters to a a choice of masters, not a participation in their government.  

In The Constitution of Liberty Hayek deals extensively with the indespinsable need for democratic governments to observe the rule of law, not be the a law unto themselves.

Germ-o-Phobia and Liberty

"[E]veryone is a 'progressive' by their own lights."  Thomas Sowell, Intellectuals and Society

I'm a germ-o-phobe.   I also love liberty.  Enjoy the confluence.

Progress and the status quo are primarily antithetical of one another.  Primarily because the goal at which one wishes to inch along society might well be something worth preserving or, put another way, not progressing away from.

Example: C.S. Lewis reminds us that washing the bacteria from our hands is a way of maintaining a very important status quo, the status quo of clean hands that predate dirty hands.  Every time we wash our hands we are retarding the progress of bacterial growth, hoping to regress toward the clean hands we had at one point in time before we had to interact with all those other germ-toting agents of disease we call other people in the petri dish we call society.

But regressing bacteria on one's hands and, consequently, one's community is a very progressive thing to do to.  Only a regenerate, uncouth, backwards-looking reprobate would knowingly build up and spread around bacteria in society.   Taken to an extreme, such a person could be considered a purveyor of biological warfare.

That would definitely be regressive.

(Side note: For the love of Pete please wash your hands after using the restroom,  blowing your nose, or touching anything you would not put directly into your own mouth.  If you think it is none of my business to request so much, think how many other people will have to touch the same door knobs and dollar bills that you grace with your disgusting fingers.  Come on, it's not 1802 anymore.  Don't let Louis Pasteur's life's work be in vain...) 

As Thomas Sowell points out in Intellectuals and Society, everyone believes they are progressive.  We all have an ideal for society we think best.  For self-described "progressives" that ideal is a society whose organization is primarily controlled--that is, regulated--by the decisions and planning of an elite few.

The crescendo of such command-and-control of society in the United States occurred during the New Deal of the 1930s.  The extent to which elites in government controlled everything from the price of pressing suits to how many hogs would be slaughtered while millions wallowed in hunger is what was new about the New Deal.  These drastic power grabs were certainly a break from the status quo of a primarily free market and concomitantly American free society.  And we have never washed our hands of the overreaching legacies of the New Deal.

Taking the long (and sad) view of freedom in world history, however, we need to ask: Just how progressive was the New Deal?  In this light, is such government control of society ever really a step forward?  

"Progressive" for liberty-minded conservatives, libertarians, and constitutionalists is a progressing away from the New Deal center of politics whereby state-control of the direction of the economy and society is the default setting for government policy.  Free and responsible people cooperating peacefully is the best way to organize society.  It's work every time it has been tried.  As Milton Friendman remarked, distrust of the "private sector" or "the market" is nothing less than a distrust of freedom itself, and a distrust of people to be trusted with freedom.  That's terribly patronizing and elitist, in addition to being regressive.  

Considering how America has always been the world's freest society (the New Deal notwithstanding) diminishing liberty was a terribly regressive policy, then and now.  And since the redistributive, bureaucratic model has had its tentacles in D.C. for over seventy years, at this point in time it would be very progressive to move beyond its premises and (re)embrace freedom.

To return to Lewis' analogy, if we are going to wash our cultural and political hands we have a great deal of government bacteria to wash off.  Ever since the New Deal, such infringement of liberty has been caking up like so many layers of germs eating away at liberty.  Clean hands would be nice, but at this point I'd be happy with cleaner hands.

Now go was your hands, America, both literally and figuratively.

John Stossell on Friedman's Free To Choose

Here is a very good introduction of an excellent book, Friedmans' Free to Choose:

"The Options Destroyers"

"The Options Destroyers" by Thomas Sowell originally appeared as a newspaper article; it is narrated in this video:


This piece dovetails with what I recently read in Sowell's Intellectuals and Society, as well as a recent video post by the folks at Reason.

Top-down regulations, by their very nature, reduce the number of options for consumers in the market.  That's what they are designed to do: reduce the number of perceived bad options that otherwise free people might act upon.  (Soon we will no longer have the option--freedom, that is--to purchase incandescent light bulbs.)  Real life choices become fewer as a result of the near-sighted effects of reform crusaders and their vote-catching politician allies in legislatures.  What's a recent and real world example?  Oregon's state wide ban on payday loan interests rates above 36%, mentioned in a recent Freedom Lessons post.  Poor and options-strapped folks in Oregon now are even more options-strapped.

Worse still, excessive regulations introduce a third set of terms between consumers and the purveyors of goods and services.  When left free to cooperate and interact freely, consumers and businesses make mutually beneficial transactions.  That's mutual consent between two parties.  Intrusive and short-sighted regulations introduce a third party--the options destroyer--and force a third set of acceptable terms into the transaction, thus providing disincentives for economic activity.

Rent control is a good example.  Landlords are forced to satisfy both their tenants' demands and the demands of local governments.  With less profit to make there is less incentive to upkeep buildings, let alone provide new living quarters to the public.  An artificially high number of people want to rent due to an artificially low rent, and an artificially low number of apartments are available to rent.  Real shortages occur, existing buildings deteriorate, slums crop up, and commuters are forced to travel great distances past empty and boarded up buildings.

In a free market unhampered by well-intentioned busy-body do-gooders pushing intrusive interventionalist policies upon us, we self-interested people who know best about what is best for ourselves would find a way to get by just fine.

Just think about all the options we would enjoy!

If I Had To Recommend One Book...(Video)

Repeat, had to.  My one recommendation for anyone interested in freedom, and both its friendly and hostile forces, would be Henry Hazlitt's Economics in One Lesson.  Hazlitt's conversation masterpiece is oncise, grounded in fundamental economic principles, illuminated with historical examples, void of arcane economist-speak and pointy-headed graphs (Sorry, economists.  You know it's true.), and crisply written.

Line one, chapter one: "Economics is haunted by more fallacies than any other study known to man."

Here is a good introduction to the book, Hazlitt, and the enduring impact of this brief book, compliments of the Ludwig von Mises Institute:

Video: Now and The New Deal

 "Underlying a lack of faith in free markets is an underlying lack of faith in freedom itself."~~~Milton Friedman

Are there similarities between the current recession and the FDR New Deal era?  The folks at Reason put this video together arguing so much.

Statists and enthusiasts of excessive control of the market enthusiastically liken Obama to FDR, the premise of their enthusiasm being FDR's hyper intervention saved the country from a crushing depression.

The comparison of Obama with FDR, however, is not be a flattering one.  As Jim Powell amply illustrates in his book FDR's Folly, government control and manipulation of nearly all aspects of the economy--and therefore society--turned a not uncommon to American history depression into a deep and abiding depression, lasting over a decade.  If President Obama is the new FDR, we have worse economic times ahead, and for a long time.

Hence, the great depression.

Put another way, why was this one depression bad enough to be remembered our only great depression?

A market economy runs primarily on freedom: cooperation among individuals, contractual agreements, entrepreneurship, pursuit of respective self interest, and marginal business growth require free society.  In order to create wealth, employment, and standard of living for a diverse population of millions, capital and limited resources with alternative uses must be efficiently allocated and utilized.  Controlled and over regulated markets have never been up to this task and create the uncertainty in market condition-- lack of freedom, that is--that stagnates growth.  Government destruction of the freedom required by the market and regulation beyond its proper role (and there is a good role for government) inevitably brings about economic stagnation and high unemployment.

Remember to ask, what and who is "the free market," or what is more commonly tossed around, "the private sector"?  It is nothing less than you, me, and other individuals freely and responsibly pursuing our respective self interest.  Demand more regulation of "the private sector" and you're demanding more control of your own lives! 

Of course, it's never ourselves and our own liberty we don't trust; it is always the other guy.