“It’s Not The Economy, Stupid… It’s The State!”
The number one problem of all public debate about politics and economics is the failure to name the state. If this would change, so would public opinion.
There is no shortage of examples. People talk about health care for all, solving climate change, providing security in old age, universal educational access, boosting wages, ending discrimination, and you can add to the list without end.
That’s one side.
The other speaks of national identity, protecting jobs, making us more moral, forming cultural cohesion, providing security against the foreign enemy, and so on.
All of this, no matter how fancy the language, is obfuscation. What all of this really means is: put the state in charge. What’s strange is the unwillingness to say it outright. This is for a reason. The plans the politicians have for our lives would come across as far less compelling if they admitted the following brutal truth.
There really are only two ways to allocate goods and services in society: the markets (which rely on individual choice) and the state (which runs on compulsion). No one has ever found a third way. You can mix the two — some markets and some state-run operations — but there always is and always will be a toggling between the two. If you replace markets, the result will be more force via the state, which means bureaucratic administration and rule by force. If you reduce the role of the state, you rely more on markets. This is the logic of political choice, and there is no escaping it.
The above paragraph is the great truth of political economy. I’ve never seen any evidence to dispute it. And yet it is the great unsayable truth. Seasons of political rhetoric fly by with no frank discussion of what precisely this or that proposal would require of the state and how that will affect our lives, much less a serious analysis of the risks of making a problem worse by replacing market forces.
Diversity in Markets
To be sure, when I say markets, I don’t only mean the money-exchange economy in which prices and accounting govern choices. Markets include philanthropy, familial organization, houses of religion, volunteering to work without pay, and everything else in the social order that relies on human volition. There are infinite varieties in the way markets instantiate themselves in human lives. The variations are contingent on culture, norms, traditions, and so on. There can be more or less voluntary ways the market expresses itself just like there can be more or less coercive forms of statism.
But let us not deny that the choice is real. If this is correct, it is strange how much people complain about markets and how little the only alternative is discussed, studied, evaluated, and finally judged. This is because the statist means will also come up short.
Depending on the state to deliver some social good depends on using the threat of violence to compel people to do what they otherwise would not choose to do. There is also no clean path to doing so; the bureaucracy always ends up as the everyday mediator between the individual and the point of a gun.
You Don’t Like Government
The reason we hear so little frank talk on this subject is that hardly anyone has ever really enjoyed their dealings with a state bureaucracy when it is imposed upon them. You think that the local DMV experience is subpar; wait until you face your first federal audit or FBI investigation, or seek benefits from some agency. Or perhaps you have a relative who is mixed up in the criminal-justice system. Whatever it is, no experience in the private sector can compare.
It means unpredictable wait times. You aren’t really a customer; you are a bother — at best. Objecting to any aspect of the service is mostly pointless. Step out of line and you are in trouble. You are a subject, and the sullen faces and dreary postures of your fellow citizens in line underscores the point.
The truth is that no one relishes dealing with the government at any level. Where would you rather be: the driver’s license bureau or McDonald’s? The school district office or a local bar? A military base or a car plant? The courthouse or the shopping mall? Want to deal with a government cop or a private security guard?
There’s a pattern here. It’s a hugely important one. The relationship between the individual and the state, vs. the same individual and the market, is fundamentally different. We all know this intuitively.
I personally know no one who relishes dealing with government. And yet I know plenty of people who support letting government take over ever more aspects of our lives, especially when they don’t understand that their favorite program means exactly that.
How can we make sense of this paradox? Well, most expansions of government power are pushed without overt public approval, with plenty of deception, and with the unfair advantage that government itself has in the political process. In other words, it is not necessary that people actively favor government expansion for government to continue its imperial march through society. It only requires a certain level of passive compliance.
The creation of the Department of Homeland Security — and the TSA as the centerpiece — is a great example. I was talking with Edward Lopez, economics professor at Western Carolina University, about how this came about. We were both around at the time and we compared notes.
How did it happen? Government took advantage of public fear and panic following 9-11 to impose what government had always wanted. There was private lobbying too: plenty of contractors have gotten rich, so their lobbying has paid off. The airlines might have played a role too in offloading security liabilities.
Anyone who knew the nature of government could have predicted the results. There have been exploding costs. Individual rights have been violated. Our privacy and constitutional protections have been shredded. Inefficiencies have ballooned. And what for? No credible terrorist threats have really been stopped.
Somehow, at the time this gigantic government apparatus was created, many people imagined that this time would be different, that government would magically do a better job at securing us than the private sector could or would do. Of course this time is never actually different. The bureaucracy gets created, and then people shake their fists at it. But, by then, it is actually too late.
A bureaucracy created tends not to go away. It gets worse even as it expands and takes on a life of its own. The abuses, wastes, and inefficiencies mount, and no one can do anything about it.
What I conclude from this is that the average person lives with a complete mental disconnect when it comes to government. We don’t like dealing with it. We know the truth in our hearts. And yet we keep suspending our incredulity on the belief that government must be doing some wonderful thing somewhere even if we don’t experience it ourselves.
Government promises always fall short. Even worse, government wrecks what it touches. Wars increase violence. Moral crusades produce opposite results. Cultural planning backfires. Welfare programs break and fail to serve. Monetary policy from the Fed yields massive financial distortions. Government efforts to protect industry lead to inefficiency, shutdowns, and stagnation. Government security makes us less secure and subjects us to scary regiments of spooks and thugs.
In other areas of life, we are seeing the rise of massive innovation in the private sector that shows the failure of government. Large companies are generating their own power. Global digital money is making new inroads. Local zoning laws and taxi monopolies are being strained by private initiative. And the daily excitement about private communication systems is breaking down the capacity of political elites to control the conversation.
The tendency toward loss of political control has inspired new, more extreme, and more obscurantist forms of selling state control to us. As the dynamics of public vs. private continue to shift, we can look forward to ever more obfuscation about the reality of displacing market forces. But once you see what’s going on you, can’t unsee it. The most effective path toward helping others see too is simple: name the state.
The bitter truth about most public policies being sold by the political class is that they give them more power to control our lives. If you favor some of these policies, be honest with the rest of us about what you mean, so that we can make more clear-headed judgments about the kind of society we want to live in.