Unlimited Government vs. Capitalism

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In her essay, “The Anatomy of Compromise,” Ayn Rand wrote: “When opposite basic principles are clearly and openly defined, it works to the advantage of the rational side; when they are not clearly defined, but are hidden or evaded, it works to the advantage of the irrational side.” An example of this can be found in an article by Julian Zelizer, a professor of history and public affairs at Princeton University.

In the article, which is titled “The Phony War of Markets vs. Government,” Zelizer writes, “The debate today is not between big government and free market capitalism but rather about how we should structure our mixture of these two systems.” In a sense, Zelizer is correct—it is a phony war. Most politicians and pundits, including many alleged defenders of capitalism, accept the mixed economy as a given and simply disagree over when and where the government should intervene. And, while this debate rages, the real issue—statism versus capitalism—remains unnamed.

Statism holds that the individual’s life belongs to the state, which may seize the individual’s property and control his actions in the name of the “common good.” Statism holds that it is proper to force you to pay for government schools, recycle your plastic bottles, and purchase medical insurance regardless of your own choices, desires, or values. Statism holds that you must place the “public interest” before your self-interest.

In contrast, capitalism holds that each individual owns his own life. Capitalism holds that each individual has a moral right to his own life, his own liberty, his own property, and the pursuit of his own happiness. Capitalism holds that you have a moral right to act on your own judgment in the pursuit of your own values, so long as you respect the mutual rights of others.

In a statist society, you are forced to act as government officials decree. Under statism, you can only act with the permission of government. In a capitalist society, you are free to act as you choose, as long as you refrain from using force or fraud.

A mixture of these two systems means a mixture of freedom and controls. It means that, in some instances you are free to act as you choose, and in other instances you are forced to act contrary to your judgment. In some instances your rights are recognized and protected, and in other instances your rights are ignored and violated. You are “free” to choose your profession, but if you want to be a plumber, electrician, veterinarian, or one of the 800 licensed professions, you must first get government permission. You are “free” to use your property as you choose, but first you must secure building permits and zoning permits.

Freedom is an absolute—either you are free to live your life as you choose or you are not. A slave who must toil for his master five days of the week is not a free man because he gets weekends off. Similarly, a taxpayer who must toil for the government for three months of the year is not free to spend his money as he chooses.

“Big government” is not the issue. A government with unlimited powers is. Government’s proper purpose is the protection of individual rights, and government should be as big as is necessary to fulfill that purpose. The issue is unlimited government versus limited government. Statism holds that government should have unlimited powers; capitalism holds that government should be limited to the protection of individual rights.

Until the issue is framed this way, government will continue to gain more control over the lives of individuals. Until Americans understand that their choice is between unlimited government and the protection of individual rights, government will continue to expand and individual liberty will continue to shrink. Until the fundamental issue is clearly and openly defined, it will work to the advantage of the irrational—those who wish to control our lives.

Can the Government Really Pick Winners?

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It is often claimed that new technologies would not be developed without massive government expenditures. Advocates of this view point to NASA, the Internet, and the interstate highway system as examples. Thus, they claim, government should invest in “green energy.”

While it is true that NASA, the Internet, and the interstate highway system have contributed to improving our lives, this is not evidence that such improvements would not have occurred in the absence of government involvement. Further, we have abundant evidence that private businesses can and do develop a wide variety of life-enhancing values without government involvement.

For example: the steam engine, the telegraph, the telephone, the automobile, the airplane, the phonograph, photography, moving pictures, refrigerated railroad cars, and much, much more. At the time of their invention, these were life-changing innovations that dramatically improved the lives of individuals. Even today, innovations like smart phones and flat screen televisions are the result of private individuals, not government “investment.”

But innovations do not always occur at the speed or in the direction that government officials would like. They believe that they can accelerate the process by stealing money from millions of taxpayers, pooling it, and then doling out that money to those who will engage in the activities that Congress finds desirable. And this is nothing new.

In 1862, Congress passed the Pacific Railway Act to facilitate the construction of a transcontinental railroad line. The act awarded railroads land for a right-of-way to construct the rail lines, as well as land adjacent to completed lines. The adjacent land was to be sold to settlers as a source of revenue. The act also authorized the federal government to purchase 30-year bonds from the railroads with an interest rate of 6 percent. Every company that was supported by these government subsidies eventually went bankrupt.

The reason is simple: the government attempted to provide a service that was not needed. In the 1860s, there was no market for a transcontinental railroad. That is why the private companies did not build one. The government intervened, and the results were destructive.

Today, private companies do not invest in “green energy” for the same reason—there is no market. Yet, the government insists otherwise, and it is pouring billions of dollars down the same sewer that was once the transcontinental railroad.

Those who do not learn from history are doomed to repeat it. And so are those who reject principles.

The “Free Rider Problem”

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Advocates of a number of government interventions often argue that such measures are required to deal with the “free rider problem.” Indeed, Mitt Romney has called his insurance mandate in Massachusetts a “free rider surcharge.”

Wikipedia describes the “free rider problem” as:

In economics, collective bargaining, psychology, and political science, a free rider (or freeloader) is someone who enjoys the benefits of an activity without paying for it. The free rider may withhold effort or resources, or may impose the costs of his or her activities on others. The free rider problem is the question of how to limit free riding (or its negative effects).

Interestingly, the “free rider problem” does not arise with private businesses. For example, while it is argued that public parks are necessary because of free riders, Disney World has no problem excluding those who will not pay. The “free rider problem” only arises when government is involved.

For example, it is argued that those who do not have health insurance are a burden to tax payers. While this is true, it begs the question: should taxpayers be forced to pay for the health care of those who cannot afford to pay themselves? The answer is; NO. Nobody should be forced to pay for anything against his own judgment. If government quit forcing taxpayers to pay for the health care of the needy, the “free rider problem” in health care goes away. In truth, there is no “free rider problem” in regard to any product or service.

Consider taxation, which should be abolished. Without the use of coercion, government funding would have to be obtained through voluntary means. Often, when someone hears this claim, they respond, “If supporting government is voluntary, nobody would volunteer.” Such a statement is wrong, both factually and philosophically.

Factually, even with today’s oppressive taxation, millions of individuals provide voluntary support for the legitimate and proper functions of government—the police, the courts, and the military. Millions of Americans support police departments through the 100 Club, police foundations, and other fund raising activities. They support the military through the USO and hundreds of other organizations. Rational individuals recognize the value provided by government, and they willingly and voluntarily provide financial support.

But what of those who do not provide support for government? Aren’t they “free riders”? Aren’t they getting the benefits of government without paying for it? The answer is: yes they are. But why is this a problem?

If someone robs my neighbor, it is in my self-interest that the criminal be caught and punished, whether my neighbor has donated to the police department or not. My neighbor may be the victim today, but if the thief remains free, I could be the victim tomorrow. In other words, the violation of my neighbor’s rights is a threat to mine, and I definitely have an interest in removing such threats.

The philosophical root of the alleged “free rider problem” is altruism. According to altruism, we have a moral duty to self-sacrificially serve others. Thus, taxpayers should be forced to pay for the health care of the poor and needy. The poor and needy thereby become “free riders.”

Further, according to altruism, selfishness means sacrificing others to oneself. According to altruism, life requires sacrifice, and the only issue is who will be the victim. Consequently, altruists believe that selfish individuals will not voluntarily contribute to government, and therefore, they must be forced to do so. As I briefly noted above—and address in greater detail in my book—this claim is patently false. Selfish individual value a government that protects their rights, and they will (and do) voluntarily pay for the protection of those rights.

As with virtually every perceived political problem, the real issue lies in morality. We can solve the “free rider problem,” not with government force, but by rejecting the morality upon which it stands.