All Commentary
Monday, June 1, 1998

Foolish Inconsistencies

Statist Ideas Show Marked Inconsistency of Thought

When a domestic steel producer solemnly croons for the television cameras about how high tariffs on imported steel are good for the American economy, you can be sure that he is not really interested in the well-being of his fellow citizens. He is undoubtedly a swindler motivated by no ideal more elevated than fattening his own wallet at the expense of American consumers. The same is true of the great majority of interest groups whose lobbyists infest Washington and other seats of government power.

It’s a mistake, however, to suppose that all champions of intrusive government are out for gains at the expense of others. Many proponents of high taxes and intrusive government sincerely believe that the state can outperform the market.

The sincerity of such beliefs, however, does not render them correct. Indeed, even the most sincere statist is typically so confused that his ideas are a muddle of foolish inconsistencies.

Consider that statists are firmly convinced that capitalism is bad because capitalists are concerned exclusively with squeezing every drop of profit out of their businesses. And yet, many statists are no less firmly convinced that capitalism promotes racial and sex discrimination.

Both beliefs can’t be true. If capitalists care only about the bottom line, they will energetically pursue profitable deals with anyone regardless of skin color or sex. A capitalist focused only on maximizing profits will not refuse to hire a black woman if this black woman promises to add greater net value to the firm than does a white man competing for the same job. To be single mindedly focused on profit is to be unconcerned about irrelevant matters such as employees’ or customers’ skin color or sex. In contrast, a capitalist intent on satisfying his own racial or sexual bigotry when hiring employees or choosing customers will not focus exclusively on the bottom line.

Statists also believe that large corporations are simultaneously obsessed with profits and indifferent to relatively small expenses. I attended a conference recently at which a participant remarked that a $1 million per day fine doesn’t bother Microsoft “because Microsoft is worth billions.” Perhaps. But if the company is indeed indifferent to being fined $1 million per day, then it is not (contrary to accusations) dogged about maximizing its profits. Microsoft and other corporations will not be cavalier about even small unnecessary expenses if these corporations in fact are consumed with a passion for making their bottom lines as large as possible.

Among my favorite statist inconsistencies is their insistence, in one breath, that income inequality is an evil of the first rank, along with the accusation in the next breath, that free-market advocates have an unsavory concern with material matters. Enemies of the market are forever applauding themselves for recognizing that non-material pursuits are far more ennobling and satisfying than the pursuit of financial gain.

Well, if non-material pursuits are deeper and more rewarding than are material pursuits, then income inequality should rank very low on statists’ list of capitalist outrages. The minimalist poet earns far less money than does the CEO of Coca-Cola, but the poet presumably enjoys far greater spiritual and mental rewards than does the corporate chieftain. Rather than taxing the CEO more heavily than the poet, perhaps government should offer the CEO a lower tax rate to help compensate him for his meager spiritual rewards.

Statists are also inconsistent in their assessments of self-interested actions. Corporations are scolded for seeking profits for their shareholders, while labor unions are glorified for seeking higher wages for their workers. There are, of course, differences between the self-interested actions of private corporations and those of labor unions. Corporations unaided by government privilege profit only by making those with whom they deal better off. Modern labor unions, in contrast, derive most of their effectiveness from government privileges and achieve their gains only by making those with whom they deal and even many with whom they do not deal!—worse off.

Another statist inconsistency is the confused attitude toward change. Statists today condemn the market because it brings change. Once-thriving industries are rendered obsolete by newer products and sources of supply. Towns once built around a particular industry are depopulated by the demise of that industry. Dejected workers, pink slips in hand, trudge haplessly across the television screen. Abandoned factories, windows broken and weeds overrunning their parking lots, appear in faux-poignant newspaper photos. The message is clear that market forces unfeelingly unleash immense changes that upset familiar and cherished ways of life.

The market is indeed a force for change, but always change that results in far more improvement than harm. Anyone who doubts that the market is a continual source of improvements for humankind need only reflect on what life in America was like, say, 50 years ago. Polio still raged, only the wealthy elite could afford air travel, all but the very rich sweated through the summer heat without air conditioning, and even top-of-the-line automobiles broke down with appalling frequency. Advances spawned by entrepreneurs and made widely available by the free market solved these and countless other problems that plagued Americans in 1948.

It’s true that workers who manufactured iron lungs for polio victims suffered job losses when Dr. Jonas Salk rendered their services unnecessary. But should we condemn the market for this change? Or should we applaud the market for making possible Salk’s cure? The answer is obvious—and the same answer holds for all changes, big and small, promoted by free markets.

Yet it is these improvements that statists condemn while going on in speech after speech about the nobleness of efforts to “change the world.”

They can’t have it both ways. If change is bad, then it’s bad whether it’s achieved by government or by markets. If some change is acceptable, then statists must make the case that change sponsored by government is superior to change sponsored by markets. But such a case is never made. Statists are content to condemn market-directed change and to praise all change that results in greater politicization of our lives.

If inconsistency of thought is a symptom of bad ideas, then the “ideas” sported by statists are surely about as bad as ideas get.

  • Donald J. Boudreaux is a senior fellow with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University, a Mercatus Center Board Member, and a professor of economics and former economics-department chair at George Mason University.