I am in the process of editing my book "Has Capitalism Failed?" and changing the title to something more provocative. The following is an edited chapter from this book.
I was recently re-reading Henry Hazlitt’s “Economics in One
Lesson” and was inspired by his discussion of the advantage that liberals have
when they recommend large spending programs:
“…there is a…factor that spawns new economic fallacies every day. This is the
persistent tendency of men to see only the immediate effects of a given policy,
or its effects only on a special group, and to neglect to inquire what the
long-run effects of that policy will be not only on that special group but on
all groups. It is the fallacy of overlooking secondary consequences.
“In this lies the whole difference between good economics and bad. The bad
economist sees only what immediately strikes the eye; the good economist also
looks beyond. The bad economist sees only the direct consequences of a proposed
course; the good economist looks also at the longer and indirect consequences.
The bad economist sees only what the effect of a given policy has been or will
be on one particular group; the good economist inquires also what the effect of
the policy will be on all groups.”[1]
Hazlitt accuses progressives of pointing to a problem and then recommending
government spending as the solution; focusing on the problem but ignoring the “unintended
consequences” of government action. He says elsewhere that you can easily point
to the job or money that the government beneficiary receives but you cannot
point to what was lost - because it no longer exists. The loss is in the
products the taxpayer could not buy and the job that was not created because
the money went to the government or the beneficiary.
I would like to suggest a way that you can see the unseen consequences of
government action as they affect you personally. But first you have to understand
that re-distribution is a form of altruism. You’ll also have to acknowledge the
role of abstractions in human understanding. You will recall Marx’s axiom “from
each according to his ability to each according to his needs.” This is a
statement of altruism and it establishes the enslavement of ability for the
sake of the needy, the person who cannot survive by means of his own effort. This
Marxist axiom is a call for re-distribution, and because re-distribution is
altruism, it represents a loss (the unseen) for the productive and a gain for
the recipient of altruism who has not earned it. The unseen, here, is the
effects or taking from the productive, and once we understand this, we can
begin to recognize that every form of re-distribution is destructive of human
values.
Notice that Hazlitt’s formulation here does not take cognizance
of this altruistic element and this blinds him to the real cause of the broken
window fallacy which is the desire to affect re-distribution by means of
altruistic taking from the able to the needy. It is not merely that the loss to
the able is unseen, it is unseen because altruism is considered good. It is
blindly thought that the result of altruism is good which is a false notion
that justifies every looting politician and gives him the sanction of a false morality.
So, one could say that the broken window fallacy not only creates unseen
consequences but those consequences can only be seen by observing that altruism
is implicit in any act of re-distribution.
Take a look at your latest tax filing form and identify how much money you paid
through out the year on taxes. Then ask yourself what you would have bought
with that money. Then take a trip to a store where that item is sold and find
it on the store shelf. Now you can see with your own eyes what you have lost,
what you do not have. Then you will understand what altruistic “giving” has
done to your life. Now notice that the poor are still poor.
Would it have been immoral for you to have that item? Is it a
new Recreational Vehicle, a new Home Theater, hundreds of books you could have
read or even a new Jacuzzi? Look at them in the store; spend a few minutes
contemplating what you would be doing if you had that item in your possession
right now; how much better your life would now be with that item. Then realize
that this item has been taken from you by the government because it holds to
the principle of altruism, that your goal in life is not to enjoy your earnings
but to give them up for someone else. Feel better? Those people who take your
money and spend it on something else don’t seem to have much concern for you
and your needs – yet you are the one working to make their spending possible.
If you want to get even more wistful, look at the latest report you received
from the Social Security Administration detailing how much you have paid into
that program. Depending on the number of years you’ve paid into the system,
I’ll bet you could have bought a much nicer house; or perhaps several vacations
over the years, maybe even a real pension that isn’t threatened by extinction. Remember
that Social Security came from the government’s altruistic notion that you are
better served by their taking your money now, having the government spend it on
other programs, and then taxing your children and grandchildren to take care of
you.
Now go to an online Real Estate website and look through some
houses whose prices match the amount of money taken from you for your Social
Security account; or look at some travel agency brochures and figure out how
many places you could have visited with that money. Savor the pictures of the places
you were not able to visit. Now you can see what you have sacrificed. I might
add, parenthetically, that the house you might have bought with this money
could have been a retirement house, which means you would have retained all
that money as equity. Now, as a pensioner, you will only get it back in small
monthly payments that are barely enough to survive on. Again, ask yourself what
good all this altruism is doing for you compared to whatever good you could
have done for yourself with your own money.
Some would say that the exercise I am recommending is a selfish way of looking
at the issue and that you should instead consider the good that the government
has done with your money. Rather, I would say, do some research on government
waste and identify a program that has not been a boondoggle or that has not benefited
a Congressman by setting up a phony business so he (through proxies) could
pocket your money. Or learn about how much money was paid by government to
friends or relatives of politicians and you’ll see the harm that has been done
to you. You may also consider that the house you could have bought would not
involve anything but your own sense of self and what you can accomplish for
your life. If that is selfish, make the most of it.
Hazlitt was a classical economist who taught his generation to look at all
aspects of a government program, not just the beneficiaries but the harm that
is done to the people who earned the money. Classical economists were not blind
to the fact that the government was violating the individual and property
rights of some people in order to give benefits to their voting blocks. Their
arguments were critical of socialist ideas but they missed the truth that the
government did not have the moral right to take the property of citizens. They
considered themselves to be number-crunchers; like dutiful pragmatists, they only
wanted to consider the actual results of socialist schemes and thought that
questions of value were irrelevant to a discussion of economic effects. So they
never (or seldom) brought up the impropriety (or evil) of the idea of
re-distribution. Needless to say, armed with the moral argument for altruism
and the imposition of guilt upon anyone who refused to sacrifice, the left won
the day.
Working hard in order to live a better life and educating
yourself so you can earn more money, are both moral actions and anyone who
decides to engage in such acts is a moral agent, a good person. To look at
those actions and then to claim that there is no moral issue involved is a
crude mistake, if you don’t mind my saying so. You have a moral right to better
yourself and it is immoral for the government to violate your right to a better
life. Well, look with your own eyes at the benefits you have been denied; the
very benefits that have been forbidden to you; benefits that would enable you
to have a better life and also to create more jobs so other people can live
better lives. Isn’t the denial of your right to be moral a denial of morality?
Is this not evil?
You did the work, did you not? You exerted your energy and your thinking in
order to make this money, did you not? Was it not a moral decision to decide
that you should be the beneficiary of your actions? Since morality is a
normative study, how could someone say that living and making the decision to
live (well) are not moral decisions? How can someone make mere statistics out
of being moral?
Why
should anyone take your money from you? Who gave the government the authority
to expropriate your property? Who gave them the moral authority, the moral
right, to decide what to do with your money; money that would not have been
created without your effort? The answer is that there is no such authority, no
such right held by any man anywhere to decide what to do with your earnings and
property.
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[1] Economics in One Lesson,
Henry Hazlitt, Three Rivers Press
