The Mighty Bastiat speaks across the centuries:
A friend of mine, commissioned to make inquiry into Parisian industry, has assured me that the manufacturers have revealed to him a very striking fact, which proves, better than any reasoning can, how much insecurity and uncertainty injure the formation of capital. It was remarked, that during the most distressing period, the popular expenses of mere fancy had not diminished. The small theatres, the fighting lists, the public-houses, and tobacco depots, were as much frequented as in prosperous times. In the inquiry, the operatives themselves explained this phenomenon thus:--"What is the use of pinching? Who knows what will happen to us? Who knows that interest will not be abolished? Who knows but that the State will become a universal and gratuitous lender, and that it will wish to annihilate all the fruits which we might expect from our savings?" Well! I say, that if such ideas could prevail during two single years, it would be enough to turn our beautiful France into a Turkey--misery would become general and endemic, and, most assuredly, the poor would be the first upon whom it would fall.
-- From Essays on Political Economy
So, what do you suppose will happen when the government’s primary policy for economic growth is to discourage savings (i.e., the increasing of capital) and encourage consumption? Is there any reason to think that might lead to a disastrous economic collapse?
Bastiat continues:
Workmen! they talk to you a great deal upon the _artificial_ organisation of labour;--do you know why they do so? Because they are ignorant of the laws of its _natural_ organisation; that is, of the wonderful organisation which results from liberty. You are told, that liberty gives rise to what is called the radical antagonism of classes; that it creates, and makes to clash, two opposite interests--that of the capitalists and that of the "prolettaires." But we ought to begin by proving that this antagonism exists by a law of nature; and afterwards it would remain to be shown how far the arrangements of restraint are superior to those of liberty, for between liberty and restraint I see no middle path. Again, it would remain to be proved that restraint would always operate to your advantage, and to the prejudice of the rich. But, no; this radical antagonism, this natural opposition of interests, does not exist. It is only an evil dream of perverted and intoxicated imaginations. No; a plan so defective has not proceeded from the Divine Mind. To affirm it, we must begin by denying the existence of God. And see how, by means of social laws, and because men exchange amongst themselves their labours and their productions, see what a harmonious tie attaches the classes one to the other! There are the landowners; what is their interest? That the soil be fertile, and the sun beneficent: and what is the result? That corn abounds, that it falls in price, and the advantage turns to the profit of those who have had no patrimony. There are the manufacturers--what is their constant thought? To perfect their labour, to increase the power of their machines, to procure for themselves, upon the best terms, the raw material. And to what does all this tend? To the abundance and the low price of produce; that is, that all the efforts of the manufacturers, and without their suspecting it, result in a profit to the public consumer, of which each of you is one. It is the same with every profession. Well, the capitalists are not exempt from this law. They are very busy making schemes, economising, and turning them to their advantage. This is all very well; but the more they succeed, the more do they promote the abundance of capital, and, as a necessary consequence, the reduction of interest. Now, who is it that profits by the reduction of interest? Is it not the borrower first, and finally, the consumers of the things which the capitals contribute to produce?
It is therefore certain that the final result of the efforts of each class is the common good of all.
The difference between me and an Obamatron socialist is that I love freedom. I love freedom more than comfort or security. The great sin of socialism, the great crime is that it limits our freedom exactly to the extent that it promises us security. The classical liberal sees through the lie, knowing that security is never really to be held. There are no guarantees in life.
Some socialists claim to base their system on Christianity, as, for example, in the book of Acts where we read about the believers selling possessions and having all things in common. It is all well and good to give to one another, but giving must be of one’s own volition to be pleasing to God. It cannot be done for show (ask Ananias and Sapphira), and it cannot be coerced. Peter made it clear to Ananias that the Church did not compel him to sell his property. It was his and he could have done with it as he pleased.
The Puritans tried an enforced version of this at Plymouth and very nearly starved. Like modern socialists they tried to make a necessity of a virtue. It failed.
As Bastiat says, between liberty and restraint, I see no middle path. The more government regulates and restrains, the more it attempts to control and enforce, the more it will impoverish and enslave – all, it will say, for the common good. Conversely, the classical liberal view is that the common good is best served by liberty, by the give and take of markets, by the wisdom, and indeed by the foolishness of the individual going about pursuing his own best interests in his own limited way.
My father never read Bastiat or Hayek or Friedman, but he was a farmer who tried to be diverse. He raised grain at times. He always had a few cows and dabbled in dairy. We had a few chickens and sometimes raised a few hogs, though we often had only one or two which we would butcher ourselves. When the government began to offer price supports to local milk producers, Dad was smart enough to see that the dairy business was going to take off, and he bought Jerseys and built a new barn. The idea the Department of Agriculture had was to provide fresh milk and other dairy products to local markets from local producers. In some ways it wasn’t a bad idea, but the supports should have been dropped as soon as there were producers and processors in various regions. The continuation of artificially high milk prices for producers led to overproduction in the mid-1960’s. Processors began to cut their rates to the dairy farmers.
Farmers even tried to unionize at one point with the National Farmers Organization (NFO), and we, along with many others, opened the valves on our bulk tanks and dumped raw milk down the barn gutters.
As Dad often noted, more poetically than I can render it, if the government tries to help the grain farmers, they hurt the dairymen, the feedlot operators and the consumers. If it tries to help the livestock, milk, and pork producers, they create overproduction and ultimately suppress prices paid by the processors and packing houses. Government is a very poor farmer, and, I suspect, a worse banker or automobile manufacturer.
Whether government is attempting to help preserve family farms, regulate consumer prices, protect the environment, provide people with home ownership, or mandate mileage standards for American motor vehicles, the result is inevitably FUBAR. I am not sure there is anything the government does -- apart from national defense and the military -- that could not be done cheaper and better with less pain by the free market. Health care is a primary example as we have discussed before.
The only thing government can really do is redistribute capital. (Let's use the word capital instead of wealth because the IRS does not give a hoot if you are "wealthy". It pulls what it considers excess capital from my paycheck and yours every cycle, regardless of our actual efforts or needs.) Interestingly, the capitalist free market can and does redistribute capital as well. One of the differences is that government requires an increasingly gluttonous bureaucracy which absorbs ever more of the money that passes through it to create an ever-decreasing effect. Free markets distribute the benefits of capital naturally and effortlessly. Is there lag and dearth in the free market at times? Inevitably! But the market is self-correcting as opposed to bureaucracies which are self-perpetuating.
Liberty is precious, on a level with life itself as the Founding Fathers knew. Bureaus and ministries, secretaries and czars are enemies of freedom, though their intentions may be of the best. Even with high ideals and motives, their choices, decisions, edicts and actions will of necessity favor one over another. They will ask, is it fair for Paul to go hungry while Peter dines sumptuously, and they will rob Peter to pay Paul. But, we ask is it fair to take hardworking Peter’s capital by threat of violence to subsidize the wastrel dreams of Paul? I will say it again: let Peter give of his own free will to support his brothers, cultivating the virtue and grace of giving before his God. Socialism is a crime, and government is the criminal.
