The Sheep Prefer a Bureaucracy

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.

Scrooge the Benefactor

A few weeks ago, one of the moderators on the “I bet Ludwig von Mises can get more fans than John Maynard Keynes” Facebook page, posted the following analysis of Charles Dickens’s Ebenezer Scrooge:

So, an alternative take on A Christmas Carol [...] is that it’s actually a thinly veiled, trenchant critique of the corrosive effects of welfare statism and instead argues for, and celebrates individual [acts] of charitable giving. 

Recall that in the beginning of the Dickens novel, Scrooge disparages individual charity because, he reasons, “are their no prisons, are there no workhouses?” – [suggesting] that since he’s already having a portion of his wealth forcibly extracted for these programs that address the effects of poverty, there is no need for him to be individually charitable. Dickens no doubt was observing this change in attitude in many as government welfare programs were set up. Not only does welfare statism encourage passivity and victimhood in it’s recipients, it provides a (cheap) moral excuse for the more well-off amongst us to avoid extending true acts of charity towards others…. leaving aside from the fact that welfare statism in the end impoverishes us all.

I think it’s pretty clear that Dickens was not using A Christmas Carol to critique the state’s welfare programs and promote private charity in its place. This doesn’t detract at all though from the fact that such intervention would tend to distort voluntary contributions to charities. Those who are concerned for the poor needn’t worry that in a free society the impoverished would go without.

First, it’s not clear there would be such poverty in a free society. This is not to suggest that an umhampered market would mean an end to all wants, but it’s erroneous to assume the same level of poverty would exist absent the state. Many of the poor are made so because of distortions such as price inflation, minimum wage laws, and myriad barriers to entry. It’s evident that a free market is more conducive to rising standards of living for the masses, so there would no doubt be less poverty for a free society to address.

But assuming there is still a sizeable poor population, private charities need not fear running out of resources.

Murray Rothbard notes in Man, Economy and State that “one of the most popular objections to the free society” is that “‘it leaves people free to starve.’” He then quips that ”from the fact that this objection is so widespread, we can easily conclude that there will be enough charitable people in the society to present these unfortunates with gifts.”

As for alternate perspectives on the classic Christmas story from Dickens, Michael Levin’s “Scrooge Defended” is my favorite. In it we see Scrooge, who is sadly painted as the villain, for what he truly is: a great benefactor of society.

Scrooge apparently lends money, and to discover the good he does one need only inquire of the borrowers. Here is a homeowner with a new roof, and there a merchant able to finance a shipment of tea, bringing profit to himself and happiness to tea drinkers, all thanks to Scrooge.

Dickens doesn’t mention Scrooge’s satisfied customers, but there must have been plenty of them for Scrooge to have gotten so rich.

Despite his surly disposition, Scrooge might be one of my favorite characters. It’s a shame he wasn’t given better treatment before his hauntings by those three ne’er-do-well apparitions.

Capitalism Contributes to the Aesthetics

In reading Man, Economy, and State, Murray Rothbard’s economic treatise, I’ve come across an interesting passage on the importance of material wealth and its impact on promoting aesthetics in a money economy.

He explains in section 7, of chapter 3, that when an individual owns a surplus of consumer’s goods he will tend to place them lower on his value scale (according to the law of marginal utility). If, however, he has very few consumers’ goods, he will tend to rank them higher on his value scale, again in accordance with marginal utility. Therefore, in the case of what Rothbard calls “unexchangeable” goods, e.g. an aesthetically pleasing monument, the greater the amount of consumer’s goods a person owns, the higher the value such a monument will be ranked on his value scale, when compared to other possessions.

This is important when considering a common complaint from opponents of the market economy, that capitalism, money, or technological progress in general detracts from culture, by somehow devaluing the arts, nature, or some other aesthetic ideal.

‘The State’s Favorite Activity’

That’s the title of Lew Rockwell’s latest podcast, in which Tom Woods explains how the Mises Institute helped shape his views on War, Peace, and the State.

An important point Woods makes here is how his background as a neoconservative provides an insight into that viewpoint, thus helping to communicate with many on the right. I too can relate to this in some ways, having been so die hard a neocon that I joined the army in order to participate in the spreading of freedom at the barrel of a gun.

Listen to the complete speech here.

‘Joan the Silencer’

If you haven’t seen the latest meme to go viral on Facebook, it’s “Paper Joan,” aka, ”Joan the Silencer.” There have been perhaps hundreds of variations on the basic “Paper Joan” theme (see below). Everything from her holding paper over the Tiananmen Square guy, to silencing Martin Luther King, Jr. has been plastered across the digital universe.

It all started during the Republican National Convention when a Romney delegate, Joan Clendenin, shamelessly (and totally ineffectively) tried to silence a Paul delegate attempting to address the convention. Following the embarrassing defeat of the GOP last week, Peter Gay, who has a special talent for creating hilarious and witty memes, published the picture below on Facebook:

Anyway, it exploded over the weekend, and after “Joan the Silencer” got her own page on Facebook, LRC contributor Ryan McMaken wrote that she had “been consigned to the fate of the ‘Casually-Pepper-Spray-Everything Cop.’”

This is one of the great things about the Internet: people like “Paper Joan,” Pepper Spray Guy, and Mitt Romney can’t get away with silencing political dissent, police brutality, and pandering. There was a time when such reprehensible behavior was able to go largely unchallenged, but that is all but gone now, with the advent of the digital age.

The ability for virtually anyone to transmit information makes these actions known to everyone, and allows for non-violent resistance through humor. After all, Murray Rothbard encouraged people to make fun of the state, to mock it, as a means to undermining its (illegitimate) authority.