Are You Getting Your Money's Worth; W. M, Curtiss

But what are you getting for Dr. Curtiss is Executive Secretary and Di rector of Seminars at The Foundation for Eco nomic Education. your money today? How much of your spending is for things you'd rather do without if the choice were entirely yours! One might argue that we always spend our money in the way we choose, given the alternatives. We pay a dentist to relieve a tooth ache, not because a trip to the beach wouldn't be more fun. but because it is less painful to visit the dentist. If we lived in a dry climate we might avoid the pur chase of an umbrella. If we lived near our work we might avoid buy ing a second car. If we lived in Maine, we might not buy an air conditioner. And so on through many choices like these, where no one else is forcibly influencing our decision. Even under coercion, we still '7?'7 728 THE FREEMAN December choose among alternatives. We may give our wallet to an armed rob ber, under the circumstances. Most of us grudgingly pay our taxes, rather than face the consequences of refusing to pay. But these choices, the alternatives we choose under duress, differ from our purely voluntary spending. And in order to know whether we've "ever had it so good," we ought to con sider those expenditures which are forced upon us, for things we'd rather do without.

Crime Costs An example is the cost of crime. Government is essential for the protection of life and property, and most people will willingly pay to be protected from the few per sons who have no respect for the life and property of others. But the mounting incidence of crime in our affluent society calls for further consideration of the costs and possible causes. How do you feel about the cost of installing a burglar alarm sys tem in your home? Or having near tamper-proof locks put on your outside doors? Or the extra cost of a buzzer to make certain you remove your auto keys? Or the extra cost of taking a taxi be cause you're afraid to ride a sub way? These are just a few of the many examples of the rising costs of crime over recent decades. More direct costs, of cOllrse, include losses of life and property by per sons who are objects of the bur glary or perhaps just innocent by standers. Mounting also are the costs of prevention, detection, and punishment, including the hiring of extra police, additional court costs and the like. Attempts have been made to estimate such costs but who can say, and with what accuracy? What is certain is that the money one is forced to spend either to prevent crime or to re pair the damages is money that cannot be spent voluntarily for other things.

No doubt, the people of the United States are among the most productive and affluent in the world. We have a very high level of living in automobiles, color tele vision sets, the quality of food we eat, education, medical services, housing, leisure, travel, and a host of other things. But our level of living also in cludes a few items we might change if we could. The costs and consequences of crime are among these items.W e can take little comfort in knowing that our crime costs per capita may be the highest in the world! Much of the cost is buried in the total expenditures by governmental units - federal, state and local-the total support of which takes some 40 per cent of 19'72 ARE YOU GETTING YOUR MONEY'S WORTH? 729 our very high productivity. So, we may say that our affluence sup ports the most costly government in the world. But, if we had our "druthers," is this the "level of living" we would buy?

Why Crime Increases Much of the crime, especially in our larger cities, is tied to the in creasing use of illegal drugs. The daily cost of supporting a drug habit far exceeds what many a user is able to earn legally. Many addicts thus turn to robbery, pros titution, "pushing" drugs on others, and various sorts of or ganized criminal acti vity. Why does this happen? If a product or service is forbidden by law, and if some people want the product or service badly enough, someone will undertake to provide the illegal item, usually at a price to cover the risk of getting caught breaking the law. A classic· ex ample comes from the "prohibi tion era" following World War I, with the resultant high cost of bootlegging, gang wars, and at tempted law enforcement activi ties. Prohibition eventually was ac claimed a failure and was repealed. Whether the morality of the peo ple was improved or diminished by the experiment is not the sub j ect of this inquiry. Nor is the question of whether the government should attempt to legislate morality. We are merely pointing out the tremendous costs involved, costs forced upon individuals who might rather have spent their money in some other way.

Not repealed, however, is the governmental attitude toward al coholic beverages. Instead of di rect prohibition, there is now a "prohibitive" tax on liquor. Like wise, "cigarettes may be hazard ous to your health," and are heavily taxed. These taxes and the high costs of enforcement are a part of today's high cost of living. These three examples - drugs, cigarettes, and liquor - illustrate problems which arise l~rgely out of government intervention, and then have to be controlled, to some extent, at very high costs to tax payers. In any event, when the total cost of government becomes as burdensome as it is in this country, the incentive to cheat is strengthened, as anyone could testify who either files or fails to file an income tax return. There is a strong temptation to get "a piece of the action" by government workers who handle "public money," award contracts, purchase items for government use, and the like. And even the rare few who occasionally expose such cheating must be sorely tempted not to do it. Who wants to be a model of in tegrity in a den of thieves!

730 THE FREEMAN December Welfare Costs Government welfare activities are another source of corruption. Such programs-have grown by leaps and bounds in the past quar ter century at a time when the na tion was never more affluent. The reasons are many and often com plicated. Many social workers and other government employees seem to measure their success by the number of cases handled and the amount of money distributed. So cial Security offices, for example, post notices in local papers saying in effect: "Are you getting all the Social Security you are entitled to? Come in and let us help you!" Workmen's Compensation clients are officially advised not to deal with employers but to come di rectly to the Board. Aside from the outright cheat ing, one of the causes of the rising cost of welfare, a cause which the welfare client cannot change, is minimum wage legislation. Wages, set higher by law than they would be in a free market, increase un employment. The unemployables are especially the young, the old, and members of minority groups.

Whether for lack of skill, or of education, or whatever the rea sons, unemployment rises sharply in such categories whenever mini mum wages are raised by law. In creasing unemployment means in creasing welfare costs. Respect for Property Part of the problem is the break down of respect for property. And especially is this true of the grow ing volume of "unowned" or "pub lic" property. Consider, for in stance, the breaking of windows and other destruction of school property. The problem is serious enough that some schools have gone to the considerable expense of installing "unbreakable" glass. Some new school buildings are be ing built without windows. College buildings and grounds are prime targets for vandalism; public parks and playgrounds also are used and treated with disre spect. It seems that what belongs to everyone belongs to no one. The cost to those who must pay for such vandalism and destruction lowers their level of living, de prives them of alternative ways they would spend their money.

Governmental efforts at "con sumer protection" go far beyond curing us of the "bad habits" of drugs, alcohol, and tobacco. The government also tries to do to us what is "good" for us. An illustra tion is the requirement that vari ous grocery and other items be priced by weight so that shoppers can more easily compare products of different distributors, different size packages, and the like. How ever, after sellers have gone to the expense of doing this (which con1972 ARE YOU GETTING YOUR MONEY'S WORTH? 731 sumers pay), few shoppers pay any attention to it. Similarly, when consumers bor row money, or buy on install ments, shouldn't they know their interest costs expressed as a sim ple rate per year? How else can they compare different sources of credit? So, the revealing of these figures is required by law and adds to the cost for the consumer who is to be protected. Again, there is evidence that few con sumers use this new service they have paid for.

One of the most absurd of all consumer protection items is the compulsory addition of seat belts to autos. Why should I have to be compelled to pay for seat belts to protect me in an auto accident? If I think seat belts are useful, I will have them installed and will use them! Who is likely to be more in terested than I am in protecting me from inj ury? Upon discovery that only one-third of the drivers were using the seat belts they had been forced to pay for, all drivers were then subjected to the costs of installing buckle-up buzzers and lights and other educational de vices. Other consumer protection items such as air bags, more effective bumpers, and other gadgets will be compulsory additions before long and the cost of automobiles to the consumer is bound to reflect the additional expense. It is estimated that by 1975 the cost of these ad ditions, which the consumer did not order, will be more than the total cost of a new car when Amer icans were less affluent than today.

This might be a part of your "level of living" you would do without if you had a choice. Most "consumer protection" plans show a complete lack of faith in two very important as pects of the market. One is the wisdom of the consumer in look ing after his own interest and. the other is the power of competition between suppliers in an unfettered market to serve the consumer as he wishes. Gambling The attitude of governments toward gambling is a curious thing . At times, it has appeared that governments have considered gambling to be immoral and have tried to ban it completely. More recently, governments have per mi tted gambling in some places, but not in others; You may be per mitted to bet on a horse race at the race track but not elsewhere. You may indulge in games of chance if they are conducted by churches licensed by the state. So, perhaps gambling is not really a moral problem at all!

In recent years, in their quest for new sources of revenue, more 732 THE FREEMAN December and more states are permitting and encouraging gambling so long as the state gets a substantial cut of the proceeds. In New York State, you need not go to the track to bet on the horses if off-track betting is more convenient. State lotteries also are gaining in popu larity and respectability, with a large "take" going to the state. Still, the state is partly in and partly out of the gambling busi ness. Many types of gambling such as the "numbers" game, bet ting on human athletes or teams, and other games of chance are still illegal. It would be difficult if not impossible to estimate the amount of money which governments spend unsuccessfully to enforce gambling or anti-gambling laws - another example of spending your money in a way you might not spend it yourself, given a choice. The Problem Most of the economic problems tha t are left to the mar ket are solved without great fanfare. We either buy, or refrain from buy ing, and thus send a meaningful signal to the producer. It doesn't require a committee or a govern ment commission, or a popularity vote to make the decision. If enough people object to tail fins on their autos, the manufacturer will soon get the message. And if the decision of the market goes against the lover of tail fins, he rarely makes much of a fuss. But let the decision be made by a gov ernment bureau, or even a Harvard professor, and a feeling of disen franchisement is certain to arise.

Practically all of the maj or economic problems that seem so troublesome are the result of some activity of government when it has gone beyond its principled role of protecting life and property. One of our most serious, with ramifi cations in many areas of life, is inflation. Inflation is simply the re sult of the Federal government spending beyond its means and expanding the supply of money to support its profligacy. School problems, involving such questions as how to finance them, who should run them, who should attend them, and what should be offered in them, are largely prob lems which arise because govern ment has assumed much of this responsibility. Little choice is of fered those concerned. The problem of housing, espe cially in urban centers, is largely a result of the intrusion of govern ment into urban renewal, rent con trols, construction codes, and other restrictions.

Consumer protection would cause no difficulties if it were a voluntary thing between buyer and seller. Auto manufacturers would ghidly supply seat belts to those 1972 ARE YOU GETTING YOUR MONEY'S WORTH? 733 who want them and are willing to pay for them - just as radios are made available. The problem arises when motorists who neither want nor use them are compelled by law to pay for them. Just now, control of pollution of air and water is being promoted by a few vocal individuals, organi zations, and an imaginative press, In haste to respond to such pres sures, governments are certain to further add to their already over extended activities. Are you getting your money's worth? The question finally boils Freedom down to whether you are primarily interested in freedom of choice for the individual - your choice with your own money - or "full security and protection" by government in every last detail.

True, some consumers will make a lot of mistakes, as judged by you and me, in their choices as to how to spend their money. But far more serious than the combined errors of individuals is the master error - a belief that such mistakes could be avoided if only the gov ernment were in total control of our lives. t) IDEAS ON LIBERTY FREEDOM CAN WELL BE LOST to us through misinterpretation of it. When we think it gives us the right to another man's harvest, or entitles us to an honor we are unwilling to earn, we place our selves in a bondage that curtails our true growth in every way. Through the privilege of choice our way is opened for us to become what we will. The wise use of this faculty brings out the best that is in us, and thereby places us in positions and circum stances that are compatible with our abilities and much to our liking ... Freedom does not mean that each shall have the same thing, or even express in the same way; for it is every man's right to discover the path to his highest good. But how we use this priceless heritage of choice decides what we become. True freedom is· experienced as we· earn it through thought and deed.

LA VERNE BOWLES From the "Daily Guide to Richer Living" for September 15, 1960, appearing in Science of Mind.