Economy

Do They Not Know?

Many of us who remember when eastern Europeans were imprisoned behind an Iron Curtain – and who rejoiced when that Curtain crashed in 1989, soon to be followed by the demise of the USSR in 1991 – look with a combination of befuddlement and contempt at young people who today clamor for socialism. While hardly a hot take, this report of befuddlement and contempt raises a question to which a good answer has yet to be given – namely, Why? Why are so many people today ga-ga for government direction of the economy? More generally, why today do so many people – on the political left and right – wish to replace free commercial markets with a system of bureaucratic diktats?

What, precisely, do such people not know?

Do they not know basic economic history? Do they not know that prior to the Industrial Revolution nearly all men, women, and children, since the origin of our species, lived in poverty that is to us today unimaginable? Do they not know that before capitalism, nearly everyone not fortunate enough to have laid claim to a cave, lived in cramped dwellings with dirt floors, thatched roofs crawling with vermin and insects, and no indoor plumbing?

Do they not know that the great economic equality that, before capitalism, was long the lot of 99 percent of humans was equality only of deprivation and high risk of early death? Do they not know that ordinary people began to enjoy a reasonable expectation of living above subsistence only when and where innovative commercial markets – extensive free markets – finally began to take hold?

Do they not know that life in modern market economies is not only richer in toys and trinkets than was life before modernity, but that those of us who live in modern market economies live much longer and more healthily than did our ancestors? And are today’s socialists unaware that in our longer lives each of us has access to a range of life choices that were inconceivable to people in the past?

Do they not know that inequality of monetary income and wealth is not remotely the same as inequality of access to goods and services? Jeff Bezos might well be worth, in dollars, 1.5 million times more than is the typical American family. But Jeff Bezos doesn’t eat any more than does the typical American. Nor does he have 1.5 million times more clothing, living space, or leisure.

Do cheerleaders for government intervention not know that, in terms of ability to consume, we are becoming ever more equal (at least before the devastation wrought by COVID interventions)?

Do today’s enemies of free markets not know that we ordinary Americans are now arguably wealthier – in terms of what we routinely consume – than was J.D. Rockefeller and other super rich Americans a mere century ago? Do these enemies of markets not know that the amount of time the typical American worker must toil in order to earn enough income to buy most goods and services has, over the long run, been steadily falling?

Do the protestors who now demand either that capitalism end or be significantly bridled by government have any idea of the enormous complexity of the modern markets that they seek to destroy or to replace with so-called “industrial policies”? Do these people not know that modern prosperity is impossible without a deep division of labor which encourages each producer to supply highly specialized skills and to learn highly specialized knowledge – knowledge that is dispersed in countless bits across billions of minds around the globe? Without this specialization, modern prosperity is impossible. Yet no human mind can begin to know enough to ‘engineer’ complex economic systems in ways that improve their performance. Is this reality unknown to those who are dissatisfied that markets fail to produce heaven on earth?

Or perhaps these proponents of government direction of the economy don’t know the history of socialism.

Do they not know that socialism, when and wherever it has been tried, delivered not prosperity but plunder and tyranny? Do they not know of Stalin’s famines and purges? Of Pol Pot’s massacres? Of Mao’s devastation? Of the calamity in Cuba caused by Castro? Of the economic and social chaos in Venezuela created by Chavez and Maduro? Do they really believe that Che Guevara was a romantic revolutionary with saintly designs? Do they not know that this man was in reality a cold-blooded thug?

Do people who trust government officials and distrust business owners and executives not realize that, no matter how much leeway a business person might possess in a free market, that person never has the power to coerce consumers or workers? Do enthusiasts for government not realize the importance of each worker’s ability to say ‘no’ to offers of employment, and of each consumer’s ability to say ‘no’ to a merchant’s offer of some good or service? Do these enthusiasts for government believe that government officials, who do not have to take ‘no’ for an answer, will – as a result of their ability to use coercion – treat ordinary people better than ordinary people are treated by business people, who do have to take ‘no’ for an answer?

Or perhaps those now screaming for socialism don’t really know much about human nature. Do they not know that individuals given power to coerce other individuals are prone to abuse that power – and that such individuals become more prone to abuse power the longer they possess power and the more extravagant are the promises that were made in order to secure power?

Do today’s socialists, as well as advocates of industrial policy, not know that human beings given the power unilaterally to take or to alter strangers’ property rights have little incentive to take into consideration the welfare of those whose property they take or destroy? Do advocates of socialism or industrial policy not know that the greater is government officials’ discretionary power to command economic arrangements the greater is the risk that these officials will be corrupted?

Do today’s skeptics of free markets – whether these skeptics be full-on socialists or advocates of ‘mere’ industrial policy – have any accurate knowledge of economic history, of economics, or of human nature? 

I think that they do not.

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