Thursday, June 4, 2015


Most people seem to believe implicitly that freedom is a zero-sum game.  In order to expand the freedom of some, you must deny it to others.  So we mistakenly try to free the workers by shackling the employers; free the consumers by controlling the sellers; free the oppressed by oppressing the erstwhile oppressor in return.

All the while, most people don't realize that they've got it all backward, and all their efforts at controlling and restraining and herding their fellow human beings are counterproductive to their own stated desires of making things better for the worst-off.  Freedom is not zero-sum; it multiplies when you extend it to everyone, and it contracts when you deny it to some.  When we feel our own freedoms are constrained, rather than looking to do the same to someone else, we might more profitably look at the bigger picture, and see who else wants unshackling and deregulating.

Case in point: The best way to help workers and consumers is not with ever-heavier taxation on businesses, or mandating that employers pay ever-higher minimum wages, or imposing ever-tighter regulations on the productive.  Those things all make it more difficult for a business to succeed.  Fewer businesses means less competition for labor services, which exerts a downward pressure on wages and upward pressure on unemployment.  Fewer businesses means less overall production and less competition between producers, which exerts an upward pressure on prices and downward pressure on the diversity and quality of products.  It's like a Chinese finger puzzle: the harder you pull, the tighter it squeezes.

If you want real wages to rise, unemployment to fall, and social mobility to increase, take the shackles off employers and entrepreneurs.  Instead of futilely squabbling over the division of an ever-shrinking pie, allow the pie to expand.  The less of a burden we lay on entrepreneurs, the more people will be able to start and run their own businesses.  No, not every worker is a potential entrepreneur, but every one who does leave the labor force to go into business for him- or herself is one who no longer competes with the labor force, but instead becomes a purchaser of labor services.  The supply of, and demand for, labor are allowed to reach a more natural equilibrium.

Every dollar you don't tax away from business, or force it to spend complying with regulatory burdens, is a dollar it can spend on increasing production - more and better capital, more and better labor.  That's a real increase in societal wealth that disproportionately benefits the poorest: the more goods there are to be bought, the greater the purchasing power of even the lowest wages.  The rich benefit a lot less from a greater supply of consumer goods than the poor do.  For the most part they already are able to buy everything they want, with plenty left over for saving and investment.  It's the ones at the bottom who find themselves able to live better when the price of food or shelter or energy falls.  I don't know about you, but I'd rather be making $2 an hour and be able to buy a week's worth of groceries from a day's work, than to make ten times that and have it buy half or three-quarters as much.

I really wonder sometimes how much of the currently prevailing "wisdom" is born of good but misguided intentions, and how much is informed instead by unacknowledged evil intentions, an implicit desire to do harm to those perceived to be better off out of envy and spite.  One thing that's clear to me, though, is that the freedom and prosperity of the less advantaged will always be less than it could until we're ready to stop trying to force our way out of this finger puzzle and realize that every individual's freedom is ultimately a mirror of that which he extends to others.

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