All Souls College, University of Oxford,
philosopher Amia Srinivasan, wrote in the New York Times Opinionator that defenders of the free market and classical liberalism must answer
“yes” to four questions to remain consistent. She thinks her four questions rope and tie
free marketeers like a calf in rodeo: if we answer ‘yes’ to all four we
prove what disgusting immoral people we are, but if we answer no to any
of them then we don’t support free markets.
However,
like most debates with socialists, Amia’s success in roping and tying
us free marketeer calves depends upon us accepting her definitions of
words and her economic assumptions, which she cleverly keeps hidden from
the sleepy rodeo fan. So before I answer her four questions and
still maintain that I support free markets, let me clear out some of the
manure that people are stepping in.
First,
no one has to accept Rawls’ definition of justice. He spun it and wove
it from his own imagination. It’s an interesting one, but that’s all.
His entire argument hinges on readers accepting his definition. If we
don’t, the rest of his argument collapses. So why did Rawls feel
compelled to invent a new definition for justice? Because he didn’t like
the results produced by the definition that dominated the West for 300
years.
Before the advent of capitalism in the Dutch Republic of the late 16th
century, justice was whatever the king and nobility said it was. They
tended to be biased. The Dutch first made everyone in the nation equal
before the law and from then on justice mean procedural justice – the
state treated everyone the same. That applies to distributive justice
where the state distributes anything to citizens. Rawls didn’t like that
idea of justice. He wanted equality of outcomes, not just procedure.
Helmut Schoeck, the great German sociologist, demonstrated in his book Envy: A Theory of Social Behavior
that the desire for equality of wealth oozes from the most egregious
member of the ancient seven deadly sins – envy. Envy insists that no
member of a society excel more than others. Envy became
institutionalized in most cultures, poisoned innovation and destroyed
economic development from 10,000 BC until 1600 AD in the Dutch Republic.
Schoeck credits Reformed Christianity for creating a formula that
restrained envy and encouraged innovation and personal success. As a
result, the standard of living for the West grew 16 fold. Rawls and
other socialists want to turn back the clock to pre-capitalist days when
envy ruled mankind and kept everyone equally poor.
Second,
there has been no dramatic increase in economic inequality in the US.
The philosopher chose figures to shock uninformed readers,
but most economists who deal with inequality use the Gini coefficient or
one of its variants. Nobel Prize winning economist Robert
Fogel wrote in his book Escape from Hunger and Premature Death
that the UK cut inequality from a Gini coefficient of
.65 in 1700 to .55 in 1900. The Gini drifted lower until hitting .32 in1973,
then started rising again. The US experience was similar. Today it is back to about .38. Keep in mind
that the Gini has risen in spite of the most ambitious welfare programs
in the history of the US beginning with Johnson’s Great Society
legislation.
A large part of the
rise in the Gini has been merely a statistical fluke. Those who
calculate Gini use household data and households today are smaller with single mothers heading many of them, most of whom are poor. In the 1970’s
many of those single mothers would have lived with family and been part
of a wealthier household. Also, the US has enjoyed a massive invasion of poor immigrant from the south.
Still,
how can we explain the fact that the “top 1 percent of Americans saw
their income multiply by 275 percent in the period from 1979 and
2007...” The answer lies with sound monetary theory. Since 1965 the
Federal Reserve has inflicted upon the US a policy of massive money
creation. New money enters the economy through loans and those who
receive the new money first get to buy assets before their prices rise.
In other words, the Fed’s inflationary policies benefit the top 1
percent. On the other hand, those who receive the new money last, the
working poor, get it after prices have risen. Their wages never keep up
with price increases, so the Fed punishes the poor with its policies. The Fed is a quasi-governmental organization with a monopoly on the creation of money. It has no part in a free market economy.
Finally,
when we free marketeers extol its virtues, we assume the rule of law in
which government protects the rights of citizens to life, liberty and
property. That means the state has the duty to punish fraud, theft,
kidnapping, slavery, murder, extortion, etc., not the market. Socialists
fabricated the fantasy that laissez-faire economics means the
elimination of law and order. That has
never been true for free marketeers at any time in history or any place
on the planet. Now to the questions.
No. As the
Church scholars of the University of Salamanca, Spain determined in the
1500’s, for exchange to be free there must be no fraud involved. As for
compulsion, that would include the state passing laws that forced
consumers to pay a set price.
Add
fraud and compulsion by the state to “compelled” and free marketeers
would say no. People should not be allowed to sell themselves into
slavery.
People
don’t “deserve” anything other than eternal punishment in hell. But
they have a right to whatever they are able to get through free
exchange. A gambler or lottery winner doesn’t deserve what he got, but
he still has the right to it because of the ancient and morally superior
right of private property. The same goes for inheritance. Property gained by luck is just a valid and morally defensible as any.
That depends. Natural law, sometimes called God’s law, such as the prohibitions of theft and murder, obligate everyone at all times regardless of how they feel. Helping the poor is a moral obligation, but not a legal one that the state can enforce. Outside of natural law and moral obligations, people should be free to do what they want to do.
See, I answered no to three questions and maybe to the last one and am still a consistent defender of free markets. But it’s probably a free market different from the caricature that socialists have invented and fight against daily.
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