What's So Bad About Big Govenment Anway; G. Leef

by George C. Leef I n a recent conversation I used the term "big government," clearly in a pejorative way. Another person spoke up to challenge me, asking, "What's so bad about big gov ernment?" He went on to name some ben efits that he supposed were possible only with a powerful state. We debated whether it was true, for example, that you couldn't have old-age security without a government system like Social Security, but afterwards I wished that I'd had a more thorough answer to his question prepared. Since then, I have thought about this question and have boiled the answer down to five points. But before we get to those points, we first need to have a good idea of just what we mean by "big government." "Big" isn't usually a pejorative. There is nothing wrong .with big airplanes, which can carry more people more safely and economically than can small airplanes. There is nothing wrong with a big serve in tennis, although I don't like to see one coming at me. But there is no "right" size for airplanes or "right" speed for tennis serves, so we have no grounds for calling them "too big." There is, however, a "right" size for government. The right size relates not to its budget or number of employees, but rather to its functions.

George Leefis director of FEE's Freeman Society Discussion Clubs and book review editor of The Freeman. RightSized Government The functions performed by a rightsized government are those things that are nec essary to protect the life, liberty, and prop erty of the people. The word "necessary" is important here. There are many things that people can do for themselves to protect their lives, liberty, and property, and these, therefore, are no business of government. The government shouldn't buy and install locks on your doors. You can do that. The rightsized government simply pro tects the right of people to live their lives as they choose, so long as their actions are peaceful. The title of one of Leonard Read's books neatly encapsulates the boundary of government action: It should not interfere with "Anything That's Peaceful." Once gov ernment begins to do that, it becomes an aggressor against its citizens, compelling them to do things they would not choose to do (participating in Social Security, for instance) or preventing them from doing things they would like to do (such as build ing a home that's not in compliance with every paragraph of the building code), and taking away their money to support things they would not support voluntarily (such as foreign aid). When a government starts to do those things, it has become too big.

Thinking back to my questioner, why shouldn't government force people to do x, prevent them from doing y, or tax them to 744 The Foundation for Economic Education Irvington-on-Hudson, New York 10533 Tel. (914) 591-7230 Fax (914) 591-8910 E-mail: freeman@westnet.com December 1997 The Benefits of Immigration I n my October "Notes from FEE" I chal lenged a case, made by some market advocates, for immigration restrictions. I have since received scolding letters and E-mails from numerous people predicting that open borders would bring all manner of calamities. While some writers were less certain than others about the baleful conse quences of unregulated immigration, only one correspondent fully shared my sup port for eliminating all immigration restrictions. These many letters have prompted me to think longer and harder about immigra tion. Alas, my opinion remains unchanged: we should welcome all immigrants. Gov ernment should not redistribute income to immigrants, but neither should govern ment prevent immigration.

Each immigrant comes to America to make himself better off. Suppose govern ment no longer redistributes income to immigrants. Would immigrants still relo cate here? You bet! A handful will come because some Americans are willing to use their own resources to care for them. Most immigrants will come because each has sufficient skill and ambition to profit in the market. Absent government welfare payments to immigrants, immigrants who do not seek work burden no one other than family or friends who voluntarily assume this bur den. I here ignore such nonworking immigrants who receive no government hand outs. These immigrants do not raise the ire of anti-immigrationists. Opponents of immigration object most vehemently to immigrants who are eager to work. Such objections are mistaken. Let's see why. Juan is a hypothetical immigrant. He arrives in America and immediately begins looking for employment. Before finding a job, he must secure food, cloth ing, and shelter. He may do so from funds brought with him from his native country, or he may depend upon the kindness of family, friends, or charitable organizations here in the United States. In either case, because such transfers are voluntary, no American is harmed.

If Juan resorts to theft, however, the story is different. Some Americans are indeed harmed. But criminal law is the appropriate tool for dealing with such thievery. Restricting immigration on the grounds that a handful of immigrants behave criminally would be like denying drivers licenses to everyone just because a small percentage of people drive reckless ly. More focused and less ham-fisted means are available in both cases for weeding out the bad apples from the good. Juan, however, is no thief. He's a work er. Suppose that Juan has no skills of any value to any American. He can do nothing that any American is willing to pay for. In this case, Juan will eventually return home. No American is harmed. (Actually, Juan would probably not come to America in the first place. People so destitute of skills are unlikely to leave home in search of work in a foreign and highly competi tive economy.) But Juan is extremely unlikely to lack any skill for which Americans are willing to pay some mutually agreeable wage.

Readers who doubt this claim should con sult that cornerstone of economics called the theory of comparative advantage-a theory, by the way, that exposes the sense lessness of identifying people economical ly as being" above average" or "below average." The theory of comparative advantage makes clear that everyone is above average at some tasks and below average at many others. When Juan finds employment, not only is Juan made better off, but so, too, is his employer. Consumers are also made better off, for the higher output or lower cost that Juan's availability makes possible for his employer is shared with consumers through reduced prices or improved prod uct quality. Nothing to complain of so far. Some people, however, are harmed by Juan's availability-namely, American workers who compete with Juan. If Juan's most marketable skill is nearly identical to the most marketable skill possessed by Sam the American, Juan is a potential rival for Sam's job. Because of Juan, Sam's income may fall.

Protecting Sam from income loss, though, is inappropriate. To prevent Juan from entering America is to do nothing more virtuous than to protect Sam from competition. But it is also to preventGeorge and Bill and otherAmericansfrom freelydeal ing withJuan, who is someonethey wouldoth erwisechooseto deal with!To restrict immi gration is to deny to Americans their free dom of association. Sam, then, becomes a monopolist under immigration restrictions. If Sam suffers income loss when these restrictions are lifted, he is no more worthy of our solicitude than is any other monopo list whose monopoly privilege unravels. Suppose that government grants me the exclusive privilege to write newspaper op-eds. No longer can publishers carry the likes of Walter Williams, George Will, Mau reen Dowd, or Russell Baker. Protected from such competitors, my income skyrockets. Now imagine that government withdraws this privilege. Publishers-and readers! are again free to patronize op-ed writers other than me. My income plummets.

Should you feel sorry for me? Of course not. Would you conclude from the fact that this heightened competition reduces my income that the wealth of the nation falls? Of course not. Likewise, productively employed immigrants invariably increase the nation's wealth by intensifying compe tition and expanding the division of labor. Immigration restrictions, in contrast, reduce economic growth. Prosperity can not be bred by monopoly protections. Immigration opponents also fear that open immigration means overcrowding. This worry is overblown. First, the United States is sparsely populated. Second, own ers of private property have incentives to keep their properties from being over crowded. The proper solution to over crowding is privatizing those property holdings not yet privatized, not forcibly stopping productive people from coming to our country. Third, overcrowding is an elusive con cept. Among the people who wrote to complain that immigration spawns over crowding was a resident of New York City. But this person clearly doesn't mind crowds. If he did, he'd move to Oklahoma or Mississippi.

Manhattan is one of the most densely populated spots on earth. Yet it is also one of the wealthiest. New Yorkers often com plain of crowds, but no one is compelled to live in that city. The reason people live there is because economic opportunity in New York is vast. Living in close contact with lots of people is a price that many of us voluntarily pay for the opportunity to take advantage of the wealth-producing capacities of an extensive division of labor. New York and Los Angeles are crowded but wealthy. Oklahoma and Mississippi are sparsely populated but much poorer. This fact alone is ample evidence of the great economic benefits of immigration. Donald J. Boudreaux President YEAR..END CLEARANCE SALE Offer good while supplies last-or until January 15, 1998 6. 4. 2. 3. 7. 1. 9. 5. 8. 10. 11. 12. Howard Brandenburg: Economics and Marx: The Fraudulent Antagonists A lawyer shatters the theoretical foundation of "scientific socialism."

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People want to and have a right to at tempt to maximize happiness in their lives. Every time the government forces people to do things they would prefer not to do, prevents them from doing things they would like to do, or taxes them for things they don't want, it reduces their ability to max imize their happiness. That is fundamen tally wrong. Big Government vs. Liberty This leads me to the first of my five reasons why big government is bad. Big government is the enemy of liberty. Gov ernment actions that go beyond its defen sive, rights-preserving functions necessarily entail some form of coercion that dimin ishes the freedom of at least some people to do what they would like to do. The bigger the government gets, the more it reduces liberty. Examples abound. Consider the monop oly the government has conferred on itself in the delivery of first-class mail. Anyone who would like to peacefully contract with others to deliver certain kinds of written communications violates the law and faces prosecution and penalties for doing so. His liberty has been attacked so that the gov ernment's postal workers won't have to face competition. The government also has the arrogance to prescribe rules for the use of mailboxes. Even though my mailbox is on my property and I purchased it, federal 745 regulations say that no one, but postal employees delivering mail, may put any thing in it. I might prefer to allow others to put advertising in my mailbox rather than other places where they're apt to blow away or get soaked, but big government says no.

Or think about government licensing re quirements. In many cities, no one is al lowed to go into the business of transporting people without a license, and licenses are unobtainable. Those caught violating the law, transporting people who desire the service and are willing to pay for it, are subject to prosecution and penalties. Their liberty to engage in a peaceful, beneficial transaction is attacked. Big Government vs. Prosperity The listing of government attacks on liberty could take up an entire year's worth of The Freeman, so let's go on. Big govern ment is also the enemy of prosperity. This is so because big government invariably wastes resources. Individuals strive constantly to make the best use of their resources-their time, money, and physical resources, from forests to carpenter's tools, coal mines to comput ers. They carefully examine their options and decide how to allocate their resources to obtain the maximum benefit from them.

Sometimes people make bad decisions, but they will change them as soon as it becomes evident that they brought undesirable re sults. Self-interest produces the decisions that maximize our wealth and happiness. No one, not even the most ardent statist, likes having his freedom to choose how to spend his time and money usurped by others. Most people realize that turning decision-making authority over to others is apt to leave them worse off. What is true at the personal level is also true at the macroeconomic level, since the entire economy is merely the sum of untold individual decisions. The freer people are to make their own choices, the more prosperous the economy will be. Big government, however, interferes with those decisions by diverting resources from 746 THE FREEMAN • DECEMBER 1997 the realm of individual decision-making and putting them in the realm of political decision-making. Political decision-making means that the use of resources will be determined by people who don't own them and therefore do not stand to gain from being right or to lose from being wrong.

(Being right means using resources in a way that best satisfies consumers.) Com paring private and political decision-making is like comparing how you drive your own car to how joy-riding teenagers would drive it. Examples of wasteful government use of resources abound. Here is one of my favor ites. In my hometown of Milwaukee there is a large federal office building, built in the early 1980s, that soaked up a lot of resources for which taxpayers had to foot the bill. Was there any need for the building? The General Accounting Office had issued a report showing no shortage of officespace in downtown Milwaukee for the many federal agencies (themselves busy wasting re sources). But politicians and the construc tion unions (guaranteed a lot of high-priced work under the Davis-Bacon Act) wanted the project,and that settled it. Resources went .into an unnecessary office building rather than into whatever more useful projects they would have gone into had the governm.ent not interfered. A few people gained, but overall prosperity was lowered.

Big G.overnment vs. Progress Human·beings have a natural inclination to search for better ways to do things. When we succeed, we call it progress. The discov ery can be as simple as a housewife figuring out a faster way of getting her shopping done or as headline-grabbing as a break through in medical technology. The quest for progress is universal. When government is doing its proper job of protecting the rights of individuals, it indirectly assists progress by helping to protect innovators against attacks by those who don't want them to try new and differ ent things. In arresting and jailing the Luddites, the early nineteenth-century workers who violently opposed progress in textile production (power looms and factories threatened their old-fashioned ways of weaving cloth), the British govern ment aided progress. When government protects liberty and property, progress is maximized.

Big government, however, often fails to protect liberty and property. Frequently special-interest groups that feel threatened by some innovation will lobby the govern ment to do what they cannot legally do on their own, namely, interfere with the free dom of the innovators. As a political favor to those groups, big government often locks in the status quo with laws and regulations. Progress is thereby stifled. Here again, there are many examples that could be cited. Consider building codes. Building codes specify, sometimes in minute detail, how a building must be constructed. The owner and his architect can usually decide cosmetic issues (although if the building has been designated as "historic," they may not have freedom even here), but the structure, plumbing, wiring, and so forth must be "to code" even if the owner and experts whom he might consult agree that money could be saved or operations improved by doing something different.

Builders have pointed out for years that building codes significantly raise the cost of construction while adding nothing to safety. Why do we have them? Locking in the status quo on housing construction makes two politically potent groups happy: construction workers and code officials. Suggestions that building codes be liberalized or repealed send shiv ers down their spines. Building codes pro tect some of the jobs of the former and guarantee the jobs of the latter. To argue that codes drive up costs and get in the way of progress will elicit salvos of red-hot rhetoric about the "need to protect the public." Code defenders conjure up horror stories about what might happen if people were free to construct buildings any way they pleased. But owners (and their insur ers) have an incentive to construct safe, sound, durable buildings; the codes merely WHAT'S SO BAD ABOUT BIG GOVERNMENT ANYWAY? 747 get in the way of their search for the best ways of constructing them.

Try this little thought experiment. Imag ine that the British government had assisted the Luddites instead of thwarting them. Furthermore, suppose that every interest group that stood to lose by some innovation succeeded in obtaining government protec tion against it: candlemakers, carriage builders, ice cutters, and so on. What if, in other words, the government had locked in place the technology and social arrange ments of 1800? How much shorter and poorer would people's lives be? The answer is obvious. They would be much worse off. Big government, by making it easier and easier for our modern Luddites to obstruct progress through the proliferation of regu lations and regulatory agencies, is doing that to us now. Big Government vs. Harmony When government is rightsized, it out laws and punishes aggressive acts against people and their belongings. That raises the cost of aggression, thereby helping to deter it and channel people's desire to get more for themselves into peaceful means. Co operation and trade flourish in this envi ronment. People come to realize, at least implicitly, that there is a natural harmony among their interests. (For an intriguing discussion of human cooperation, see Matt Ridley's The Origins ofVirtue [Viking, 1997], and the book review in this issue.) Antag onisms and hatreds may not disappear, but they are minimized.

Big government, however, holds and in evitably uses the power to make some people better off at the expense of others. This creates hostility, bitterness, and some times violence where there would otherwise be none. Big government's labor laws have helped to perpetuate a false and counterproductive "us versus them" attitude among workers that gets in the way of harmonious labor relations. Many people have been injured and even murdered in strike-related vio lence that foolish labor laws indirectly encourage. "Affirmative action" laws create antagonism between members of the pre ferred and nonpreferred groups. In the United States hostility over affirmative ac tion is largely a matter of simmering bitter ness, but in other countries, as Thomas Sowell documented in Migrations and Cul tures (Basic Books, 1996), it has led to much bloodshed. Social Security creates antago nism between older and younger people.

"Public education" creates hostility be tween those who benefit from that enor mous subsidy and those who are forced to pay for it. And so on. Trying to get big government to interfere with the rights of others wastes resources, contributing to its attack on prosperity; but the greater loss, I submit, is in social harmony. An important but immeasurable component of the quality of life is a peaceful and happy frame of mind. By creating enemies where there would otherwise be none, big government changes many a peaceful and happy frame of mind to one that is angry and resentful. Some people want to ban products that might lead to high blood pressure, heart attacks, and other health problems. I think we'd accomplish more good in that respect if we banned big government as a risk to health and happi ness. Big Government vs. Morality Rightsized governments do not try to make their people moral. Instead, they preserve the freedom of individuals to act as they think best to promote morality.

Churches, civic groups, writers, and orators are free to try to persuade people to live what they regard as a moral life. Govern ment should protect the right of all to enter the marketplace of ideas about morality but should draw the line at actions that force others to live by those ideas. Arguing that alcoholic beverages are evil and should not be consumed is fine; smashing bars and burning down distilleries is not. One of the most important foundations of morality, and one that is reinforced by rightsized government, is the live-and-Iet748 THE FREEMAN • DECEMBER 1997 live philosophy. So long as a person violates no one's rights-deprives no one of any thing to which he is entitled-this philoso phy says we may not coerce him. Live-and let-live adherents may not approve of things that others do, but they do not believe they have any right to use force to make them behave differently. Might never makes right, and the willingness to renounce it is a hallmark of morality.

But big government undermines morality. It does so by seducing people into the belief that might does make right-provided that it is exercised democratically. When big government stands ready to enact laws and regulations that take from some and give to others, and when politi cians campaign by promising to do exactly that, it leads people to believe that coercion is morally proper. Do you want food, hous ing, education, or medical care provided to you at the expense of others? The leaders of big government say, "Don't steal from oth ers to get those things, but come to us and maybe we will do it for you." Do you want to cripple your competitors? Politicians say, "Don't burn down their businesses, but if you play the game right, I might cripple them with regulations." Do you want to see more handicapped people with jobs? Leg islators say, "You may not punish employers who prefer not to hire someone with a handicap, but come to me and perhaps I will do it for you."

Prior to the advent of big government, when people wanted to accomplish some thing, whether personal enrichment or the realization of some lofty social dream, they knew they had to go about it through peaceful means. Big government encour ages them to use politics to accomplish their objectives, thus legitimizing coercion. And with the legitimization of this variety of coercion, is it any wonder that many people conclude that coercion is permissi ble even without playing the political game first? The Bill of Indictment What is so bad about big government? My indictment of big government is that it is bad because it attacks liberty, prosperity, progress, harmony, and morality. Thanks to big government, we have significantly less of all of those good things than we would if we had been able to keep government right sized. Big government is cancerous. Like a can cer, it hurts the body and tends to spread, doing more and more harm as it grows. It is time for some radical surgery. D Attention, Teachers:Back-to-School Special Recent issues of THEFREEMAN for classroom use H ere l s a wonderful opportunity to introduce your students to ideas on liberty-at no cost to you or your school. We are offering cartons of past Freeman issues free of charge, postpaid. Each carton contains over 100 copies of a single issue. Simply send your request, with shipping instruc tions, to: FEE, 30 South Broadway, Irvington-on-Hudson, New York 10533.