May 28, 2006

Economic Thoughts, Part IX: More on the Coercive Role of Government

Donald B. Hawthorne

This posting is Part IX in a series of postings about economic thoughts.

D. W. MacKenzie wrote in the October 2002 issue of The Freeman: Ideas on Liberty, the monthly publication of the Foundation for Economic Education, about the coercive role of government:

I am government...

Coercion is both my vocation and my avocation; it is in my very nature to compel others to do that which they otherwise would not do. My nature should then be of great concern to you as I impinge on your liberty. My nature affects your life profoundly. Indeed, there is little in your life that escapes my grasp. I am also a mystery to many. Some see me as benevolent, though I murdered 119 million people in the twentieth century. Some see me as omniscient, though I face an insurmountable knowledge problem in trying to comprehend the society I seek to control. Some see me as an absolute necessity, though people have lived in societies without me. But those whom I use seldom recognize any of this. These naive convictions grant me an unwarranted place in society. These misconceptions have imposed great hardships on ordinary people, though they have served an elite of rulers well...

I benefit few at the expense of the many. Small groups organize easily, and large ones do not. Hence if I serve any interests other than those of actual rulers, I serve narrow interests. I grant monopoly privileges to influential industrialists and trade associations. I do this with tariffs and import restrictions that hobble foreign competitors. I do this with regulations that place burdens on new businesses. I do this with licensing laws that restrict access to professions. Of course, these interests pay me to get what they want. Sometimes they pay me simply to leave them alone.

My form is difficult to comprehend as well. I am vast and complex. No one can fathom me in all my complexity. I comprise a gargantuan array of agencies, statutes and regulations, and discretionary policies. No one would have the time or the intellectual capacity to know me fully even if he were to try. There is little point in trying anyway. One person can do nothing to me. No significant election has ever turned on a single vote, so voters have no obvious incentive to learn about me...

I am responsible for all the worst unnatural tragedies and unnecessary burdens that mankind has endured. Yet it seems that no one knows how to stop me. How can this be? My true nature is not easy to discern. When tragedy strikes, I am called into action. If I raise taxes to fund the effort to deal with crises, all can see my costs clearly. If I instead expand my authority to conscript resources, I hide my true costs, thus causing many to overestimate the net benefit of my actions. This instills unduly favorable beliefs about me in many minds.

...There have been successful efforts to restrain me for extended periods of time...In such places, people have prospered. But I have often succeeded in making strong comebacks. Some seek to limit my power with constitutional rules. However, there are strong reasons to doubt the efficacy of these rules. Persons who have power to enforce constitutional rules also have the power to flout them.

Why then do I ever fail?...There must be an answer, because I do sometimes failures are relatively uncommon. As difficult as the issues here are, they are vitally important to you because the continued success of free societies hinges on them. What is more important to you than that?

Part X to follow...

For previous postings on Economic Thoughts, refer to:

Part I: What is Economics?
Part II: Myths About Markets
Part III: Why Policy Goals are Trumped by Incentives They Create & the Role of Knowledge in Economics
Part IV: The Abuse of Reason, Fallacies & Dangers of Centralized Planning, Prices & Knowledge, and Understanding Limitations
Part V: The Relationship Between Economic Freedom and Political Freedom
Part VI: More on the Relationship Between Economic Freedom and Political Freedom
Part VII: The Role of Government in a Free Society
Part VIII: The Unspoken, But Very Real, Incentives That Drive Governmental Actions