- Socialism maximizes equality of opportunity — but at the expense of incentives to succeed.
- A capitalist economy without government is a barter economy.
- Given that government is necessary for capitalism (due to failures of the market economy) the question becomes –> which form is best?
- –> Capitalism does not imply democracy — nor does democracy imply capitalism.
- –> Types of government:
- Capitalism creates wealth.
- Capitalism does not create equality.
- “The pathetic belief in the collective wisdom of individual ignorance.” – H.L. Mencken
- “The worst form of government, except for every other.” – Winston Churchill
Government exists to protect, defend and support the capitalist economy. The capitalist economy / free market–not the government–lifts individuals from poverty. The free market–not the government–produces and provides. The end goal of capitalism is wealth — which I define as a proxy for social welfare.
The properly and only role of government is the regulation of market failures. These include
- externalities – both positive and negative – and implies taxing some activities and subsidizing others, as well as providing public goods.
- imperfect information / asymmetric information
- adverse selection
- moral hazard
- monopoly (though this last has not been unequivocally observed in the last century — suggesting that monopoly is merely a particular manifestation of imperfect information)
Any and every government policy (and/or program) must be justified by one of the above.
Paradoxically, this narrow definition of the proper role of government is hugely liberating and empowering.
Questions of “right” and “wrong” are inherently intractable — and therefore useless, aside from their merit as parlor discussion topics or other forms of entertainment (though, really, who has a “parlor” anymore?).
The question of “should gay marriage be allowed” — which can not be universally or satisfactorily answered — becomes “is there a market failure justification for government regulation of marriages between couples of the same sex?”
Though this question is no easier — rather, far more difficult — to answer at a glance, it can be answered (or worked toward) in a scientific and quantitative fashion.
Health care, similarly, can be logically addressed. The question is not “should government be involved in health care” — for which the answer is clearly yes — but rather “to what extent is government intervention in health care justified?”
Nothing could be more useful toward the end of achieving meaningful and effective reform than to rephrase the debate in these terms. Ultiamtely, this is the question — but the debate has centered on questions of “fairness” and depended on anecdotal evidence.
A second question must be identified — and its answer clearly stated as an assumption underlying any intellectual or rational debate involving forms of economic organization, governments, etc. The question is:
Are people inherently
- autonomous, independent, rational, capable, and masters/creators of their own individual tastes, preferences and (ultimately) destinies?
- weak, impressionable, subject to the whims and caprice of governments, corporations, media, mass culture?
If the latter, government is necessary (and appropriate) to protect people form themselves. This viewpoint presupposed that people, inherently, need protection — and further that government can provide that protection. This further supposes that it is possible for the government to know “what’s good for people” better than the people themselves.
Do people need protection by the government, or is the government best that governs least?
And, perhaps, the truth is somewhere in between. For myself, my friends, and my family, the answer is clearly that we are masters of our own destinies (for better or for worse) — rational decision makers who know our own self-interest better than any governing policy or body.
But the people I encounter on a daily basis — and by whom I judge and calibrate my idea of the “ordinary person” — are, perhaps, less than a representative sample. They all have college degrees, are all willing and cognizant participants in the free market economy.
We sell our ability to think, and buy the product of others! We think critically about the advertisements we encounter, the ideas that are shared with us, and can accurately predict and understand the consequences of our actions.
But are all of these things true of the other 80% of the American population (yes, I know 20% of the American population … don’t quibble!) who do have not not completed advanced education — of that proletariat mass who have only their physical labor to sell?
Perhaps, then, my question is not a valid question. Of course it’s not — any question that asks “are people A or are people B” is tautological and false.
Can the answer be that some people are weak (impressionable, if you prefer) and some people are strong (rational masters of their own destinies, that is)?
( ** And, yes, I too find my use of the terms “weak” and “strong” bothering.)
If so, we must ask an entirely new question — what is the best form of economic organization, given that some people are weak and some people are strong? What is the best form of government, given that some are weak and others are strong?
Is is the government that best defends the weak? Or is it the government that best enables the strong?
Which begs another question — given that there are weak and strong, do the strong inherently or naturally prey upon the weak?
I would answer a screaming “no” — but as a student of history, when have the strong not preyed upon the weak? Perhaps with the advent of modern governments — democracy, socialism, communism.
Buy, Ayn Rand asks, should the weak be allowed to prey upon the strong?
This is communism: all are equal because none are great.
So here is the tension that must be resolved (once and for all!) — the strong preying upon the weak, as in the state of nature or the unfettered capitalist economy — against the weak preying upon the strong, as in the communist economy (where none are permitted to be great), or the socialist economy, where the potentially great must carry the burden of all those who are not given to rise.
This is John’s Gultch: an idealized world where the strong are unfettered, and the weak are not preyed upon. Only — in John’s Gultch — the weak are simply not permitted — are left to their own devices — to anarchy and ruin.
So is Rand’s point that the weak owe the strong a debt — for protecting their world from anarchy and darkness?
Here we’ve come full circle.
- people are strong or people are weak
- some are strong and some are weak
Conclusion number one I’ve rejected as a false.
But conclusion number two implies a tension between classes, implies class struggle, implies Marxism, implies intractable struggle between “those who have, and those who ain’t got” (with apologies to the Dead Prez).
But it’s not a struggle between those who possess or lack material wealth — it’s a struggle between those who have or lack the spark of a creator — between those who make their own destinies and those who are helpless against the tide.
How can we have a world of equality and justice when people are inherently unequal?
Justice is always defined according to whom. Justice is not treating all people the same — if that same treatment favors one class or another.
Given inequality as immutable fact, how can one ever arrive at equality? Given that A does not equal B, what series of filters or functions could ever make A equal B?
Given inequality, equality is unattainable.
Given that equality is unattainable, do we uphold it as a value? Do we strive toward it?
“From each according to his ability — to each according to his need.”
Does this describe America? Does this explain our social welfare programs? When one reaches the threshold of need, the government provides. Is there an economic justification for sparing people from poverty? There is clear justification for providing unemployment insurance .. and the same seems true of many social programs (think: free / reduced lunch).