Innovation—changing resource use to reflect new knowledge, new opportunities, or new problems—can substantially increase the sustainable output from a given resource. But change always brings painful transition, and if those orchestrating the change cannot personally benefit (for example, by growing richer), then they will be less willing to fight through the changes or indeed to take the initial risk.
Typically, an entrepreneur has only to convince a few investors that his or her innovation has promise. By contrast, in democratic politics, the change is financed by taxpayers so the majority of all relevant decision- makers in the political system must be brought along. But those decision-makers, unlike investors, personally have little to gain by taking a chance on an innovation until it has a proven track record or broad backing by voters.
Innovation, by its nature, is risky. In the private sector, the risks are diversified because the entire society is not committed to a single, agreed-upon course of action. Individuals commonly disagree on what the future holds, as well as on what should be done about it. In an economy, as in an ecological system, diversity of approaches is probably a survival characteristic. Nothing in theory prevents government from being innovative. But the battle is harder and the rewards are smaller.
—Richard L. Stroup, writing in the Spring 1991 issue of Population and Environment
Who Is to Blame?
Many of us are all too quick to blame politicians in Washington or at our state capital for the problems that we face as a nation. This is absolutely wrong. You cannot blame politicians. You might blame them for not acting like statesmen, but 99 percent of the blame rests with each of us. Politicians are doing precisely what we send them to Washington and our state capitals to do, namely to use the power of their office to take that which belongs to another American and then to bring it back to us.
—Walter Williams, speaking at Saint Vincent College, February 5, 1991
Forget what you have heard and read about lazy, thieving Soviet workers. It is the socialist system that is rotten, not the people. The old Soviet socialist system was unproductive because it was a mass of disincentives. Moscow dictated the salary of a Norilsk miner far in the North and of a cotton grower deep in the South. You got what some bureaucrat said you should get rather than a market-clearing wage. This led to bad labor discipline; the fired drunkard immediately crossed the street and went to another factory for the same small salary.
Yet factory managers fought to swell their payrolls. To squeeze more money out of the bureaucracy, each company tried to fake the number of working hands it needed. Unneeded workers were known as “dead souls”—after Nikolay Gogol. There were some 12 million of them in the Soviet Union.
—Vladimir Kvint, writing in the May 27, 1991, issue of Forbes
Culture Begins at Home
Conservatives hardly are agreed on the proper role for government in culture; in my opinion the burden of proof of the benefits of government intervention lies with those who advocate such intervention, not with those who oppose it. But whatever the role of government should be, conservatives should be clear about one thing: people should not be forced into certain kinds of cultural expression, and out of others. What conservatives ask for from culture, they must ask for in the culture of their own lives. In the formation of culture, conservatives should not talk about “them,” but about “us.” In this, as in so many other matters that affect our lives, culture begins at home. We must always remember that it is only through example, not through compulsion, that a freely chosen culture can be formed.
—Samuel Lipman, publisher of The New Criterion, speaking at The Heritage Foundation, June 14, 1991
Why are there underpriced resources available in the market? Because of ignorance. If every participant knew exactly what the factors of production are worth, there would be no profits or losses. But no one knows for sure what anything is worth, that is, what the rational, market-clearing price of anything ought to be. It is the continual quest for better information about the proper pricing of factors of production that is the driving force of the capitalist system. It is not just goods and services that are for sale in the free market; it is also accurate information about prices. We pay dearly for accurate information. Sometimes we pay dearly for inaccurate information. (If we had better information to begin with, we wouldn’t.)
—Gary North, writing in the June/July 1991 issue of Biblical Economics Today
The Moral Basis of Society
Within the business community, if you don’t have a moral basis for entering into economic transactions it’s going to be very difficult to carry them on. You need trust; you need a sense of the dignity of the individual . . . .
One of the issues that the Soviet Union and Eastern Europe are facing is how they rebuild their moral and ethical basis for actions so that they can have market economies. Simply going to those economies and saying “All you need is freedom, private property rights and prices” is not enough. You have to have a moral basis for a society to function.
—P. J. HILL, from an interview in the November/December 1991 issue of Religion & Liberty
Reader’s Digest recently reprinted two Freeman contributions by Donald G. Smith. Don’s September 1991 Freeman article, “How to Be an Individual,” was reprinted in the January 1992 Reader’s Digest as “If You Want to Make a Difference.” And his July 1991 Freeman Perspective, “Anyone Can Do It,” was carried as a “Point to Ponder” in November 1991. We have Digest reprints of “If You Want to Make a Difference.” Let us know if you would like one or more copies.