If this point is lost on you, then watch the 1998 DreamWorks animated film “Antz.” The setting is an ant colony in which all ants are expected to behave as an obedient blob. This is very convenient for the tyrant ants in charge, each of which possesses a very unique personality indeed. The debilitating collectivist mindset is shaken by a single ant who marches to a different drummer—namely, his own self—and ultimately saves the colony through his individual initiative.
Karl Marx was a collectivist. Mother Theresa was an individualist. One dealt with people in lumps. The other one treated them as individuals. The lessons in that clear-cut dichotomy are legion. They are ignored only at great peril.
So what does humanity look like to you—a snowstorm or snowflakes?
If your answer is the latter, then you understand what the philosopher and historian Isaiah Berlin meant when he wrote in 1958, “But to manipulate men, to propel them toward goals which you—the social reformers—see, but they may not, is to deny their human essence, to treat them as objects without wills of their own, and therefore to degrade them.”
SUMMARY
•If you see the world as a collective lump of humanity, you’ll likely come to very different conclusions about life and economics than if you see it as composed of billions of unique individuals
•A snowstorm is only as big as its individual snowflakes are numerous
•Abstractions are just that, while individuals are real
•Take individuals out of the equation and you remove humans from humanity
#19
“BIG GOVERNMENT IS A CHECK ON BIG BUSINESS”
BY JULIAN ADORNEY
A MYTH RUNS THROUGH MOST OF AMERICA TODAY, AND IT GOES LIKE THIS: BIG business hates government and yearns for an unregulated market. But the reality is the opposite: big government can be highly profitable for big business.
Many regulations restrict competition that would otherwise challenge existing firms. At the same time, government institutions such as the Export-Import Bank—many created during the New Deal—funnel money to the largest corporations.
When government regulates X industry, it imposes high costs that hurt smaller firms and reduce competition. Imagine that the Department of Energy imposes a new rule that dishwashers must be more energy-efficient. Coming up with designs, retrofitting factories to produce these energy-efficient models, and navigating the forms and licenses around this rule might cost a dishwasher-producing firm thousands of dollars. An industry giant, with more revenue and sizeable profit margins, can absorb this cost. A small dishwasher factory that’s only a year or two old, with little revenue and less profit, cannot. The latter would have to shut down. That means less competition for the industry giant, enabling it to grow even bigger and seize even more market share.
Barriers to entry, such as expensive licenses, also cripple startups and reduce competition. The progressive New Republic speaks favorably of how Dwolla, an Iowa-based start-up that processes payments and competes with credit card agencies, had to pay $200,000 for a license to operate. Rather than hire employees or build a better product to compete with its entrenched competition, Dwolla was forced to spend its first $200,000 on a permission slip. Dwolla could afford it; but how many less-well-funded competitors were forced from the market? How many were deterred from even starting a payment-processing business by this 6-figure barrier to entry?
For big businesses, which often sacrifice agility for size, smaller competitors are a major threat. By limiting smaller competition, government helps the industry giants at the expense of everyone else. Barriers to entry can kill the next innovative firm before it can become a threat to its giant competition. And, when this happens, we don’t even know it: the killed-before-it-can-live company is a classic example of the “unseen” costs of regulation.
While regulations minimize competition, government entities subsidize big business. The Export-Import Bank, established in 1934 as part of the New Deal, exists to subsidize exports by US-based firms. The primary beneficiaries: large corporations. From 2009 to 2014, for instance, the Ex-Im Bank financed over one-quarter of Boeing’s planes. Farm bills, a key element of the New Deal that still exist today, subsidize huge farms at the expense of smaller ones. The program uses a variety of methods, from crop insurance to direct payments, to subsidize farmers. The program is ostensibly designed to protect small farmers. But 75 percent of total subsidies—$126 billion from 2004 to 2013—go to the biggest 10 percent of farming companies. The program taxes consumers to funnel money to large farms.
Nor are these programs unique. National Journalism Center graduate Tim Carney argues that, “The history of big business is one of cooperation with big government.” In the time of Teddy Roosevelt, big meat packers lobbied for federal meat inspection, knowing that the costs around compliance would crush their smaller competitors. New Deal legislation was only passed with help from the national Chamber of Commerce and the American Bankers Association. The Marshall Plan, which subsidized the sale of billions of dollars of goods to Europe, was implemented by a committee of businessmen. President Johnson created the Transportation Department in 1966, overcoming resistance from shipping interests by agreeing to exempt them from the new rules. Costly regulations for thee, but not for me.
If progressives want to see what free enterprise looks like, they need only look at the Internet. For the past twenty years, it’s been largely unregulated. The result? Start-ups erupt and die every year. New competitors like Facebook bring down existing giants like MySpace, and are in turn challenged by a wealth of social media competitors. Yahoo! was the internet search king until two college kids founded Google. Google has been recently accused of monopoly status, but competitors spring up every day.
Let’s imagine if the Internet—a playground of creative destruction—had been as subject to big government as brick and mortar businesses. Yahoo! would have been subsidized. Facebook would have had to pay six figures to get a licensing fee, crushing college kid Zuckerberg before he got started and preserving MySpace’s market dominance. Businesses that learned to play the lobbying game would have been allowed to write regulations to crush their competitors.
For those who doubt, the proof of business’ collusion with big government is in the pudding. In 2014, a surprising number of libertarian-leaning men and women are in Congress. How has big business responded? K Street has spent millions of dollars working to replace laissez-faire advocates with those who are establishment-friendly. Sadly, cronyist businesses are fighting to keep free market advocates out of power.
A final note: I have criticized progressives here, but the institution of big government, which enables businesses to hire lobbyists to write regulations or give themselves a subsidy, is the primary problem. The bigger government grows, the more powerful a tool it becomes for business prone to use it for private advantage. That’s not capitalism, it’s what one economist (Gene Epstein of Barron’s) properly labeled “crapitalism.”
SUMMARY
•Big Government and Big Business often play well together, at the expense of startups, little guys, and consumers
•Artificial, politically-instigated barriers to entry make markets less competitive and dynamic, and established firms more monopolistic
•A free market (true capitalism, not its adulterated “crapitalism” version) maximizes competition and therefore, service to the consumer
#20
“GOVERNMENT CAN BE A COMPASSIONATE ALTERNATIVE TO THE HARSHNESS OF THE MARKETPLACE”
BY LAWRENCE W. REED
IN EVERY ELECTION CAMPAIGN, WE HEAR THE WORD “COMPASSION” AT LEAST A thousand times. One political party supposedly has it, the other one doesn’t. Big government programs are evidence of compassion; cutting back government is a sign of cold-hearted meanness. By their misuse of the term for partisan advantage, partisans and ideologues have thoroughly muddied up the real meaning of the word.
The fact is that some of what is labeled “compassionate” is just that
, and it does a world of good; but a whole lot of what is labeled “compassionate” is nothing of the sort, and it does a world of harm. The former tends to be very personal in nature while the latter imposes involuntary burdens on others.
As Marvin Olasky pointed out in his 1994 book, The Tragedy of American Compassion, the original definition of compassion as noted in The Oxford English Dictionary is “suffering together with another, participation in suffering.” The emphasis, as the word itself shows—“com,” which means with, and “passion,” from the Latin term “pati,” meaning to suffer—is on personal involvement with the needy, suffering with them, not just giving to them. Noah Webster, in the 1834 edition of his American Dictionary of the English Language, similarly defined compassion as “a suffering with another.”
But the way most people use the term today is a corruption of the original. It has come to mean little more than, as Olasky put it, “the feeling, or emotion, when a person is moved by the suffering or distress of another, and by the desire to relieve it.” There is a world of difference between those two definitions: One demands personal action, the other simply a “feeling” that usually is accompanied by a call for someone else—namely, government—to deal with the problem. One describes a Red Cross volunteer, the other describes the typical progressive demagogue who gives away little or nothing of his own resources but lots of yours.
The plain fact is that government compassion is not the same as personal and private compassion. When we expect the government to substitute for what we ourselves ought to do, we expect the impossible and we end up with the intolerable. We don’t really solve problems, we just manage them expensively into perpetuity and create a bunch of new ones along the way.
From 1965, the beginning of the so-called War on Poverty, to 1994, total welfare spending in the United States was $5.4 trillion in constant 1993 dollars. In 1965, total government welfare spending was just over 1 percent of gross domestic product, but by 1993 it had risen to 5.1 percent of GDP annually—higher than the record set during the Great Depression. The poverty rate, which had been steadily declining before the Great Society, thirty years later was almost exactly where it was in 1965. It was apparent when “welfare reform” was enacted in 1996 that millions on welfare were living lives of demoralizing dependency; families were rewarded for breaking up; and the number of children born out of wedlock was in the stratosphere—terrible facts brought about, in large part, by “compassionate” government programs.
A person’s willingness to spend government funds on aid programs is not evidence that the person himself is compassionate. Professor William B. Irvine of Wright State University in Dayton, Ohio, once explained: “It would be absurd to take a person’s willingness to increase defense spending as evidence that the person is himself brave, or to take a person’s willingness to spend government money on athletic programs as evidence that the person is himself physically fit. In the same way as it is possible for a couch potato to favor government funding of athletic teams, it is possible for a person who lacks compassion to favor various government aid programs; and conversely, it is possible for a compassionate person to oppose these programs.”
It is a mistake to use a person’s political beliefs as the litmus test of his compassion. Professor Irvine said that if you want to determine how compassionate an individual is, you are wasting your time if you ask for whom he voted; instead, you should ask what charitable contributions he has made and whether he has done any volunteer work lately. You might also inquire into how he responds to the needs of his relatives, friends, and neighbors.
Many of the political world’s most boisterous welfare statists are also among the most duplicitous and selfish (in the bad sense of the term) hypocrites. While small-government conservatives and libertarians usually give generously from their own pockets, charitable organizations are often lucky to get a little more than token donations from the “progressive” welfare statists of the world. For a mountain of evidence in that regard, see the 2006 book, Who Really Cares? by Arthur Brooks, then at Syracuse University and now president of the American Enterprise Institute.
It’s worth noting that not even progressives donate to supposedly “compassionate” government agencies a penny more than the law requires them to. There’s nothing illegal about writing out a check to the “Department of Health and Human Services” but progressives, when they seek to personally help others, tend to write their checks out to private agencies. Government agencies almost never receive “donations.”
True compassion is a bulwark of strong families and communities, of liberty and self-reliance, while the false compassion of the second usage is fraught with great danger and dubious results. True compassion is people helping people out of a genuine sense of caring and brotherhood. It is not asking your legislator or congressman to do it for you. True compassion comes from your heart, not from the state or federal treasury. True compassion is a deeply personal thing, not a check from a distant bureaucracy.
In a television interview in Nassau, Bahamas in November 2012, I was asked by host Wendall Jones, “Mr. Reed, what about the Good Samaritan in the New Testament? Doesn’t that story show that government should help people?” My reply: “Wendall, what made the Good Samaritan good was the fact that he personally helped the stricken man along the road. If he had simply told the helpless chap to ring up his congressman, no one to this day would have the gall to call him anything but a good-for-nothing.”
“But what about Christianity itself?” Jones then asked me. “Isn’t it in favor of redistribution as a compassionate way to help the poor?” Fortunately, I know a few things about the Bible and Christianity. My reply: “Wendall, the Eighth Commandment says ‘Thou shalt not steal.’ It doesn’t say, ‘Thou shalt not steal unless the other guy has more than you do or unless you’re convinced that you can spend it better or unless you can find a politician to take it on your behalf.’ And even more to the point, a new book on the subject, For the Least of These: A Biblical Answer to Poverty, answers this in both a detailed and scholarly fashion.
Progressives are often so convinced of their moral superiority that they tend to be very intolerant of a good, opposing argument. Mr. Jones edited out the above exchange before airing the show but you can see the rest by searching on YouTube for “Lawrence W. Reed on the Platform, Nassau N.P. Bahamas.”
The marketplace is often dismissed as a cold, impersonal and selfish place where compassion takes a back seat to self-interest. But that view ignores some important facts: 1) The marketplace is what produces the wealth that compassion allows you to share or give away; 2) Historically, the freest of societies are the most compassionate in the truest sense of the term; 3) Nothing about being a government employee spending other people’s money makes you more compassionate or effective than the rest of society; 4) Government “compassion” usually gets diverted towards vote-buying and programs that perpetuate the very problems it was supposed to remedy. The news brings daily reminders that there’s no shortage of “harshness” in government—as well as greed, waste, fraud and inefficiency.
The next time you hear the word “compassion,” probe the person invoking it to find out if he really knows what he’s talking about—or at least to determine if he does it with his own resources.
(Editor’s Note: Earlier versions of this essay have appeared in FEE publications under the title, “What is Real Compassion?”)
SUMMARY
•“Compassion” isn’t simply giving something away, especially if what you’re giving wasn’t yours in the first place
•True compassion means getting personally involved
•Instinctively, when we want to help others with our own time and resources, we overwhelmingly tend to do so through donations of time and money to private agencies, not to public ones
•The marketplace, where self-interest is a powerful motivator for the creation of wealth, is therefore the primary source for whatever wealth anybody has to give away
&nbs
p; #21
“CAPITALISM’S SWEATSHOPS AND CHILD LABOR CRY OUT FOR GOVERNMENT INTERVENTION”
BY PAUL L. POIROT
PREVALENT IN THE UNITED STATES AND OTHER INDUSTRIALIZED COUNTRIES IS THE belief that without governmental intervention, such as wage and hour legislation, child labor laws, and rules concerning working conditions for women, the long hours and grueling conditions of the “sweatshop” would run rampant.
The implication is that legislators, in the days of Abraham Lincoln, for instance, were cruel and inconsiderate of the poor—no better than the caricatured factory owners of the times who would employ men and women and children at low wages, long hours, and poor working conditions. Otherwise, had they been humanitarians, legislators of a century ago and earlier would have prohibited child labor, legislated a forty-hour week, and passed other laws to improve working conditions.
But the simple truth is that legislators of a few generations ago in the United States were powerless, as Mao or Nehru or Chavez or Castro have been powerless in more recent times, to wave a wand of restrictionist legislation and thereby raise the level of living and abolish poverty among the people. If such a miracle were possible, every dictator and every democratically chosen legislator would “push the button” without hesitation.
The reason why women and children no longer find it necessary to work for low wages under poor conditions from dawn to dusk six days or more a week is the same reason why strong healthy men can avoid such onerous labor in a comparatively free industrialized society: surviving and earning a living are made easier through the use of tools and capital accumulated by personal savings and investment.
Excuse Me, Professor: Challenging the Myths of Progressivism Page 8
