On Bastiat

Frederic Bastiat said:

“Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all. We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.”

I actually have a minor quibble with Bastiat’s quote.  Socialists go even further, saying things like, “Water is a human right.”  While calling water a ‘human right’ does fit Bastiat’s description of the socialist confusing government with society and assuming that anything government does not provide will not exist, the socialist is not making the argument Bastiat says they are.  Rather, Bastiat lists an faulty assumption socialists make.

The assumption that if government does not provide something it will not be provided, is of course a faulty assumption, but it is one of the underlying assumptions at the very heart of socialism, and from this assumption, socialists make moral arguments, saying for example, “It is immoral to deny people water, thus water must be made a human right.”  The implication of this statement is, of course, that water must be provided by government.

There are actually two separate questions that need to be asked, with regard not only to water, but to all of the essentials of life.  The first question is, ‘do people need that necessity?’, and this first question is the only one socialists ask.  The second question, ‘what is the best means to have that necessity provided?’, is actually the more important question, and it is one socialists completely ignore.

There are any number of ways water could be provided.  The most obvious is to let people collect water on their own, for their own use.  People can dig themselves wells, they can collect rain water, they can walk to a water source and bring water back from it – there are a number of ways to get water for oneself.  Some people might be able to collect more water than can others, and may want to sell water to others who, for whatever reason, can do other things more efficiently instead.  By letting people do whatever they can do most efficiently, and letting them buy water from those who can collect water most efficiently, we allow each person to get the water they need without having to collect it themselves.  I, for example, do not collect my own water.  I sell my services to an employer for money.  The money my employer pays me is a representation of the value of my labor.  I sell all of my labor to one employer, and trade the value of some of that labor for water.  I sell the value of some of my other labor for food, shelter, clothing, and all of the other basic necessities of life.  I am free to meet those needs however I wish, and once my basic needs are left, I can spend the rest of the value of my labor on whatever I want.  In this system, I can get water from whomever I wish, and will probably buy the highest quality water I can, at the lowest price available.

The socialist solution is to have government seize all the water, distributing it however government sees fit.  Government decides how much water each person gets, and the people have no means to get more than given.  Unlike in a private system, in which people can change suppliers if they do not like the product supplied, with government there is no option other than taking whatever the government chooses to give, on whatever terms government demands.

I’m using water as an example only because water was the subject of the conversation that inspired this post.  I could use any good or service, for any good or service can either be supplied freely by those living within a society, or by government.  Really, when it comes to the delivery of goods and services, we have three choices:

1) The political elite can be owned by the economic elite, managing every aspect of the human condition for the betterment of the economic elite, and treating the common person essentially as a farm animal;

2) The political elite can BECOME the economic elite, managing every aspect of the human condition for their own betterment, and keeping the common person as essentially a farm animal; or

3) Government can limit itself to doing those things that expand human liberty, allowing private people to provide each other goods and services under whatever terms people choose.

Only under the third option are the common people anything more than farm animals.  Under option three, society freely chooses how to provide goods and services, with government doing little more than enforcing contract law and preventing fraud.

All three of these options involve greed, power, and control.  In option one, it is the greed of the economic elite that determines who gets what, and the common person gets only what the economic elite wants them to have, which is generally just enough to keep the common person doing labor for the economic elite.  It should be obvious why I compare the common person to a farm animal in this system, and I think everyone will agree that this system is seriously flawed.

It surprises me that so many people believe that if we change the phrase ‘economic elite’ to ‘political elite,’ suddenly greed goes away.  Are politicians not greedy?  The same special interests that exist when the economic elite buy government also exist when politicians are the economic elite.  Are we to believe that greedy people pushing for their political best interests are somehow more moral than the same people working for their economic interests?  Are political interests somehow different than economic interests?  Does Bernie Sanders think he needs three mansions only because he is a politician, or is it possible that Bernie Sanders would be just as greedy if he worked for a business?  Was his wife not greedy when she ran a college into the ground?  What makes Bernie Sanders unique is not a lack of greed, but a lack of common sense.  Bernie Sanders is an intelligent man, but he believes in socialism as a religion, clinging to it in spite of the fact that it does not work, and in spite of the fact that it would be immorally based on compulsion even if it did work.  Note to Bernie Sanders:  people are not farm animals.

The hard part of getting socialists to support free markets is not in convincing them that socialism does not work, but that such a thing as ‘free markets’ exist.  The socialist will point out that without government, there would be nothing stopping the strong from forcing the weak to perform labor for them.  In other words, in the absence of government, you do not get ancap heaven, but warlords.  Warlords are a form of government (and not a very good one), making the ancap dream silly.  This is a fair criticism – ancap is an impractical dream.  Free markets are not, however, what one gets in the absence of government.  Free markets are what one gets when government is relegated only to the role of expanding freedom for those living under it.  Libertarians have what we call the ‘Non-Aggression Principle,’ and most libertarians want government to enforce the Non-Aggression Principle.  Most libertarians also want the government to enforce contract law, to prevent fraud, and to handle situations where externalities arise.  It is in fact difficult to envision a free market operating without government doing these things.  Socialists however then go right back to the Bastiat quote and suggest that because government should do some things, it must do everything.  Socialists are somehow incapable of believing that ‘we the people’ are more than capable of looking out for one another’s needs through voluntary acts of exchange.  Compulsion is not necessary.

To make free markets breathe again, we need to get people to understand three things that should be obvious, but that many in our society have been indoctrinated against believing.  The first of these things is to understand that businesses do not really taxes, but spin them off to customers, employees, and/or shareholders, through higher prices, lower wages, and/or lower rates of return.

The next thing we need people to understand is that corporations are nothing more than large numbers of shareholders pooling resources. Corporate profits represent pension profits, 401k profits, and profits for private shareholders. We need not hate profits; profits are a natural byproduct of all voluntary transactions, and in fact both sides of a voluntary transaction generally profit.  My employer pays me for my services.  My paycheck is the profit I get from working.  I bought two vinyl records yesterday: The Eagles Greatest Hits Vol 1 and 2, and Queen A Night at the Opera.  Barnes and Noble profited when they sold me those records by what I spent on those records, minus the cost of those records and all the costs associated with putting those records in front of me.  My enjoyment of the records is my profit.  Profit is not evil.

The final thing we need the public to understand is that private businesses only have two ways to make money: they either have to get people to buy their goods and services willingly (which they will only do if doing so makes them better off), or they have to get government to take money from the people and give it to businesses.  When businesses have to get people to buy their goods and services willingly, that’s free markets.  When businesses can use government to force people to buy their goods and services (or have government buy those goods and services itself and tax the people to pay for it), that’s cronyism.  Free markets are a force of good.  Cronyism is a force of evil, and socialism is nothing more than a form of cronyism.

Once people accept these facts, they can stop worrying about making businesses pay their ‘fair share’ of taxes.  Businesses pay nothing, so they have no ‘fair share,’ and we should eliminate business taxes entirely.  We should tax customers, employees, and stock holders directly.  One can also stop worrying about corporate profitability.  As long as there are no artificial barriers to entry, profit is a good thing – the quest for profit is what drives business activity, and through business activity, the quest for profit is what drives society to provide one another with water, food, clothing, housing, and all of the other necessities of life.  Without the quest for profit as an incentive, the only incentive left is the threat of violence.  Only a fool would choose a system based on violence over a system based on profit.  Socialists are fools.

This notion that if government does not provide water, there will be no water, is absurd.  This notion that if government does not provide food, there will be no food, is absurd.  The notion that if government does not provide healthcare, there will be no healthcare, is absurd.  We do not need government to provide these things.  ‘We the people’ are more than capable to taking care of ourselves without having an obstructive government trying to micromanage our lives.

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