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Essays, Opinion, & Commentary |
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by Gordon Francis Corbett
A Commentary That the welfare state wastes untold treasure that otherwise could fuel untold progress in aviation, medicine, electronics, and other fields of endeavor, everyone knows. Few recognize how it cripples people psychologically, and how that harm weakens them economically. A sound economy comprises more than a sound currency, full employment, substantial investment, and minimal debt. Economics is, as von Mises pointed out, "human action." A sound economy's primary component is sound people: people whose health, whose skills, and whose general psychology are sound. Webster's 1913 Dictionary defines "sound" as, "(4) Free from error; correct; right; honest; true; faithful; orthodox--said of persons; as, a sound lawyer; a sound thinker." If, in this context, we define "correct" as meaning, "that which conforms to principles of reality," then "sound psychology" embodies the principles of epistemology, etiology, and ethics. Epistemology studies knowledge: what it is, how it is derived, and how it works. Aristotle said that a thing cannot simultaneously be and not be. Therefore, reality is not whatever we wish that it were; its nature exists independent of our wishes. To survive, we discover that nature and use it. Etiology studies causation. Event "A," occurring to thing "B," causes result "C." Etiology teaches that these results are replicable. This undergirds all scientific knowledge. To survive, we study the relationship of causes to their effects. Ethics studies standards for human conduct and measures our actions by those standards. To survive, we examine standards; we compare them; and we ponder their consequences. Economics studies how human beings produce, distribute, and exchange goods and services. It combines all of these other studies. It also teaches something else. "Psychology," says "The Electric Library," is the "science or study of the thought processes and behavior of humans and other animals in their interaction with their environment." Practicing economic action teaches practical psychology. Learning to win a job and to keep it, learning to bargain well, and learning to invest profitably and securely, all teach psychological wisdom rarely seen in a classroom. Someone possessing such acumen sees through fictions. He knows, if only implicitly, that reality is one thing, governed by one set of non-contradictory principles. When he hears something which contradicts those principles, he will regard it as a fiction, and he will not rely on it. If he hears that the government forbids bosses to enforce certain standards, rules, and quotas, he will remember that all organizations must have bosses, and that to be bosses, they must exercise their economically rightful powers. He will regard the government's law as a fiction, and he will not rely on it. If he hears that the government promises to teach children as their parents wish, he will remember that the government owns the schools, and that those who own a thing ultimately control it. He will regard the government's promise as a fiction, and he will not rely on it. If he believes that people favoring a given philosophy control a political party, and he hears that they invite philosophic opponents to join it, he will know that the controllers would not invite their own disempowerment. He will regard the controllers' invitation as a fiction, and he will not rely on it. In short, he will know that natural laws known collectively as "praxeology" govern economic action, and that anything seeming to contradict them is false. He will understand more than that. He will understand not only that any law, promise, or invitation, that contradicts sound praxeology is false, but that that it should be false. Remember? "You cannot cheat an honest man." Honest men do not need to study praxeology. They can learn it from experience: the so-called "college of hard knocks." Many honest men lacking formal education can spot an untrustworthy promise a mile away. Nevertheless, many people persistently follow economic mirages. Teachers want to teach unfettered; so, they trust in the promise of "academic freedom," which supposedly forbids principals' setting goals, methods, and standards, despite the principals' clear economic right to control their teachers. Parents want others to pay for their children's education, so, they trust the government's promise to teach their children as they wish, despite the government's clear economic right to control what it funds. Conservatives want to further conservatism with the Republican Party's name and money; so, they trust the Establishment's promise to lend those things, despite its clear control of that party and its opposition to their ideas. Free enterprise teaches using sound economic laws. By seeming to repeal those laws, the welfare state seems to obviate learning them. When reality's laws no longer apply, unreality rules; and in unreality, wishes command. Fortunately, politicians cannot repeal reality; wishes cannot command; and therefore, anything that seems to do so wreaks havoc. Here is a classic case. In California, Proposition 103's promoters promised that enacting their measure would cut twenty per cent from the voters' automobile insurance bills. The insurance companies' attorneys replied that it was un-Constitutional, and said that legal appeals would make drivers living outside urban areas subsidize those living in them. After the people voted in Proposition 103, the Californian Supreme Court stripped out all but the rate-levelling provisions. One could speculate endlessly about the promoters' motives. They may have wanted California's Supreme Court to make some Californians pay some of the others' insurance costs. Also, they may have wanted to make working in Los Angeles and Silicon Valley more attractive. Few free enterprisers would have supported this proposition. Proposition 103 was immoral. It would have effectively outlawed profit. Profit is a return for one's goods or services that exceeds their cost. Profit is the producer's wage. Only slaves work for nothing, and slavery is immoral. Proposition 103 was a legal fiction. Price controls always fail. Proposition 103 would have set California's automobile insurance rates far below the market level, and that would have dried up the supply of insurance. If Proposition 103's promoters wanted only its "equalizing" provisions, their goal was stupid. Insurance manages only the financial aspect of risk. By lowering urban California's natural insurance prices, Proposition 103 has led Californian urbanites to continue tolerating the other risks of driving in dense traffic. The natural rates would have driven efforts to create countermeasures, such as working with computers at home. All of these points, and more, people schooled in free enterprise's "school of hard knocks" saw. They knew that wishing cannot make "it" so. When we have more such people, hucksters will not even try foolishness like Proposition 103. Perhaps Ayn Rand said it best: "Nature, to be commanded, must be obeyed." The free exchange of goods and services rewards best those who learn nature's laws best. It also teaches normative skills that militate for truth and against fraud. Can anyone wonder why some politicians hate it?
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