In order to see the theories of Austro-libertarians in action, Jim Fedako recommends participating at some level with one of the many bureaucracies established in every city across the country. He describes his experience on a local school committee in his latest column at LewRockwell.com, and it makes for an interesting read. I too would recommend this, if for no other reason than to get an idea of just how entrenched the bureaucratic mindset is.
Having experienced government ineptitude in the army, I thought I would be prepared for the display of hubris when my wife and I attended a city meeting a few years ago. I was wrong. The city sent out a notice regarding new recycling requirements, along with information about a meeting to explain the process, and mostly out of morbid curiosity we went.
First, a little background: the city we live in has tried to grant a monopoly on trash collection for years, but fortunately enough people have opposed it, so there are some competing companies remaining. The firm that has been considered in the past is probably the largest among the metropolitan’s trash services, and no doubt has pushed for the monopoly privilege for some time.
The county government published an ordinance requiring all of the cities to adopt a recycling program two years ago, which is what the meeting was supposed to explain. One of the requirements was that trash removal services provide an extra container for recycling and haul it away, and service providers were not allowed to list separate charges on billing statements. This obviously put additional pressure on the smaller trash services – which were already struggling to offer competing prices – one of which we did business with.
One of the concerns raised was whether they could absorb this additional cost, in particular furnishing new bins and maintaining separate trash trucks for both services. Most would assume that these higher costs would simply be transferred to the customers, who would just pay higher prices. And that’s what initially happened. Our trash service raised its rate by nearly 10 percent. Often though, it’s not so easy.
Businesses already charge the maximum rate they possibly can in order to earn the greatest profit, so they can’t just raise prices and shift additional costs onto customers. When governments impose further burdens, whether from taxes or other costs, the result is that marginal firms have to reduce their output or close down altogether. The larger companies are better equipped to absorb the higher costs, and if they can outlast their competition, eventually raise prices to offset the loss.
Some might assume this doesn’t present a big problem. They see it as really just a case of creative destruction, where capital from the least efficient businesses is transferred to the hands of the most efficient. But this ignores the initial cause, which is government coercion. Such intervention is morally wrong, but it also reduces the standard of living for many who benefitted from the now-closed firm.
When firms are shut down under such circumstances it’s not simply that one firm was more efficient than another. Often it’s the case that one company was the more successful lobbyist. And when other barriers to entry exist, such as licensing, taxation, minimum wage laws, and other price controls, competing firms are unable to come to market. This artificially creates monopolies, or at least results in an environment where fewer firms than otherwise would exist can operate.
One of the most disturbing aspects of the meeting was the way in which residents behaved in front of the city manager. Sheep-like is the best way to describe it. Most it seemed wanted their hands held; they wanted a paternal figure to do all their thinking, all their planning for them. At least one person was less-willing to be coddled, but only because he wanted the city to force everyone to start composting their waste in order to save space in landfills.
A representative from each of the waste disposal companies was present to take questions, and the difference between the two was striking. The larger company’s man was well-dressed, and obviously had experience working a crowd and hobnobbing with city officials. The other gentlemen, the one from the smaller company, gave the impression he was annoyed, and would have preferred to be collecting garbage rather than putting up with city bureaucrats. I didn’t blame him.
I haven’t gone back to any such meeting, and have no real interest in attending one ever again. Fedako is correct in that they are brilliant expositions of the economic and libertarian theories presented by Ludwig von Mises, Hans-Hermann Hoppe, and Murray Rothbard, among many others. So if you haven’t done so, go see for yourself, then start helping to change minds.