All Commentary
Sunday, July 1, 1973

Socialized Error

To see a grown man make a childish mistake is embarrassing, even if he is the sole victim and misleads or harms no one else in the process. Nor does one enjoy seeing two or more responsible adults collaborating to be wrong at their own expense. Yet, one observes errors all about him every day of his life; and his problem is to tolerate such behavior and to learn from it. Otherwise, one finds himself trying alone, or conspiring, to forcibly prevent others from making their own mistakes.

Unfortunately, in a highly industrialized trading economy such as ours, it seems increasingly difficult to be mistaken only at one’s own expense. A man mistakes a red light for a green and harms someone else in the process. His raucous hi-fi set disturbs his neighbors. His inefficient garbage disposal is an eyesore, or worse, to the community. The weeds on his vacant lot happen to be marijuana. His factory belches smoke. His cropping practices aggravate floods — or dust storms.

Now, it is especially annoying to see anyone making mistakes that are harmful not only to himself but to other quite innocent persons as well. Most of us can find considerable justification for bringing a bit of force to bear against such disturbers of the peace. Yet, in the process of applying that force, we may be committing the worst mistake of all: the socialization of error — compelling everyone in the society to share the cost of the reform we advocate.

Such is the anomaly of freedom. On the one hand, it allows more and more of us to live longer lives of greater comfort and ease. At the same time, it brings us closer to one another and makes each of us in his specialty more dependent on the other specialists with whom he trades goods and services. The open frontiers of land and air and water disappear. More and more of the bounties of Nature, once free for the taking, are drawn into the category of scarce economic resources which are worth owning and command a price in the market.

Effects of Crowding

As industrialized people become more and more crowded together in their increased affluence, personal mistakes not only become more obvious to others and more annoying but also tend more and more to trespass upon the property and to jeopardize the liberties and the lives of others. The limited rules of law and order applicable to the open range and frontier life seem inadequate to cover the increasing frictions of crowded urban living. In their distress at some of these noxious fruits of affluence and progress, many persons hasten to the conclusion that “there ought to be a law” — a bit of coercion to prevent the individual from making his own mistakes. And the result of this expanded sphere of governmental intervention and control is that everyone is compelled to help pay for mistakes that were none of his own doing. Here are a few samples of popular reform measures for which the taxpayer is held accountable:

·         government schools with compulsory attendance on the theory that this will teach the individual to make fewer mistakes.

·         government systems of transportation on the theory that this will facilitate the desired movement of goods and services and people.

·         government health and welfare programs on the theory that this will enable and encourage individuals to lead happier and more useful lives.

·         government parks, playgrounds, and other recreational facilities on the theory that these will lead to more constructive uses of leisure.

·         government communication facilities on the theory that people will thereby be better informed and more understanding of the views and the problems of others.

·         government supplied water, fuel, power, and other utilities on the theory that this will promote the fare.

·         government regulation and control of wages, prices, rents, interest rates, advertising, purity and quality of products, competitive practices, working conditions, insurance, banking, and numerous other aspects of business on the theory that voluntary traders are unfit judges of fairness and equity.

·         government privileges to labor, agriculture, industry, professional groups, and similar minorities on the theory of equality after the law.

·         government aid to other governments on the theory that this will improve the American image abroad and stimulate exports.

·         government printing of legal tender notes on the theory that traders otherwise might waste their time panning gold.

The foregoing list illustrates but by no means exhausts the ways in which mistakes are socialized in the name of preventing personal errors of judgment and action. This is not to question the desirability of and the need for education, transportation, health care, recreation, communication, water, fuel, electricity, insurance, banking, business integrity, charity at home and abroad, and above all, an honest medium of exchange. Nor is it to question the need for government to protect the lives and the property of peaceful citizens against fraud and violence. What is debatable is the use of governmental coercion to displace the market as the converter of scarce and valuable resources to the most efficient service of peaceful human desires.

The Role of Private Property

The multiplication of people and their desires accentuates the demand upon available resources, calling for the enclosure of what was once the commons. In other words, there is an increased role for private ownership and an added importance of property rights to bring clean air, pure water, and increasingly scarce resources of all types under the influence of voluntary supply and demand in the open market.

The mistake in this connection is the unwarranted assumption that new or additional laws are needed to do the job. Or, worse yet, the assumption that the increasing scarcity of a resource, relative to the demand for it, justifies bringing all available supplies under government ownership or control. In other words, if air or water or land or oil or any other resource seems to be in relatively short supply, then nationalize the supply and treat it as if it were a free good or costless in the market as far as the consumer is concerned; the cost is there, all the same, but is to be charged to taxpayers in general rather than directly to each consumer. Thus, the consumption of the scarce resource is subsidized and encouraged, whereas the producer of that resource is discouraged through total or partial confiscation of his property. That is the general nature of the mistake: the resort to coercive measures in the attempt to do a job which can only be accomplished through the peaceful procedures of the market.

How Market System Functions to Avoid Waste

The market recognizes the need and provides handsome rewards for specialists in the production and conservation and use of scarce resources. If there were no moral or other justification for private property, the foregoing alone would be ample and sufficient reason for it — the avoidance of waste. This is the same reason for all specialization and all exchange. And the lack of respect for private property is the basic reason why compulsory socialism is bound to fail — why it can neither detect waste nor avoid it, however harsh be the treatment of individuals. Instead of allowing persons to specialize as producers or savers or responsible users of scarce and limited resources in market fashion, socialism in effect compels everyone to serve as teacher, mail carrier, transporter, physician, supplier of utilities, lawyer, insurer, banker, philanthropist, and printer of fiat money. What waste of human talent, to say nothing of the other scarce resources squandered in such warlike processes! This is the great mistake we make when we refuse to tolerate the errors of self-responsible individuals and socialize such errors instead.

If it is education we desire, let us look to specialists in the open market rather than to the coercive process by which the policeman is to make every taxpayer a teacher. Perhaps some of the specialists will make mistakes; but such errors, primarily at the individual’s own expense, are far more tolerable than when socialized.

In similar fashion, the market may be trusted to provide the best transportation, communication, recreation, business service of all types, charities, and even the best money that can be had within the limits of available resources and human understanding. Among fallible men, we may expect some mistakes. Perhaps we can learn to tolerate them, for there is no other chance to be free.  

  • Paul L. Poirot was a long-time member of the staff of the Foundation for Economic Education and editor of its journal, The Freeman, from 1956 to 1987.