Harvard sponsored a conference last weekend about how advocates of the free market are, in essence, off their rockers. Thomas Woods wrote a nice article on the conference over at Mises.org; one line I particularly enjoyed was,
Of course, if there’s one guiding principle behind the largest government in world history, it’s free markets.
Anyway, check it out. Tell me what you think of Woods’ article.
Economist Walter Williams of George Mason University writes, in part:
The financial collapse of Fannie Mae and Freddie Mac is not a failure of the free market because lending institutions in a free market would not have taken on the high-risk loans. They were forced to by the heavy hand of government. The solution is not a taxpayer-financed bailout. The solution is to let them fail and allow the people who invested in them, as well as the people who purchased homes they couldn’t afford, suffer the losses. Of course that takes a level of political courage that is in short supply.
Well, duh. Read the whole (relatively short) article here.
A while back I posted a short blog dissing on conservatives. The post had to do with the inconsistency in logic, specifically regarding how they hate most government-run programs, but worship the military. My brother Ben called me out on a bunch of stuff, and I never had the chance to respond. I hope to accomplish that now.
For starters, the US Constitution was written just over 221 years ago. (I’m the only person I know who celebrated its birthday.) I have a mild feeling of ambivalence for this document: simultaneously holding it in high regard, yet feeling portions of it are a bit antiquated. I know I’m not the only one who feels this way; for example, liberals think the 2nd Amendment should be taken away, and conservatives think we should tack on more amendments to ban gay marriage. I realize it seems like I might be picking and choosing which portions of the Constitution I feel are worthwhile, and furthermore, that this might lead some to think that I don’t respect Madison and crew for writing it. However, this couldn’t be further from the truth.
I wish to state emphatically that, though I feel no necessity for a nationally- or otherwise governmentally-run military, this does not mean I think the Founding Fathers were wrong to include its provision in the Constitution. On the contrary, I feel that this belief is much more in line with the ideals of the Founding Fathers than those who do support a military as we have today. Let me explain.
The Founders of the country, inspired as they were, and educated as they were, knew they could form a government better than any government previously attempted in history. The Declaration of Independence and the Constitution of the United States both unequivocally point to the fact that the Founding Fathers knew the purpose of government, and this purpose was coined by Thomas Jefferson in the second paragraph of the Declaration, “…that all men…are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men…”
It is clear that the purpose of government is to protect an individual’s rights to Life, Liberty, and the pursuit of Happiness.
In order for a society to respect life, liberty, and the pursuit of happiness, a political and economic system must be in place which helps to foster these ideals. This political and economic system is known as capitalism.
One of the shortcomings of capitalism 200+ years ago was the fact that it couldn’t really work properly. In order for capitalism to work how it is supposed to, individuals and firms in the system must have perfect or near-perfect information of the market. Additionally, transaction costs must be low. By transaction costs, I mean things like shipping and contracts — things that require both time and money — for the parties involved in the transaction. Unfortunately, in colonial America, this situation did not exist.
Two hundred twenty one years ago, the country was a different place. The economy was almost entirely agrarian. It took weeks to get information from one part of the country to the other. Technology consisted of power looms, bifocals, and steamboats. Obviously, capitalism in the perfect sense could not be practiced. In order to aid its working in the country, the Founders gave Congress many powers.
There are several things enumerated in Article I Section 8 of the US Constitution for which Congress has the authority to do, like establish post offices and roads, coin money, provide for the general welfare, among many others. Although the “general welfare” clause has been stretched and bastardized to cover a multitude of ridiculous government programs, I believe its intention was for government to help out in “capitalistic” ways. Establishing roads and post offices, as well as money, would have been difficult or even impossible for a pre-Industrial Age country. Clearly these were put into the Constitution in order to assist capitalism, ie. roads, post offices, and money ALL make information easier to obtain and lessen transaction costs.
Now let’s fast forward 200+ years. I am writing this blog, and as soon as I post it, my friends in Japan will be able to read it. I could call, email, or text message them and tell them to do so. Afterward, I could go to Amazon.com and buy a book. It will ship to me from somewhere in California, or maybe Texas, and I’ll have it in two days. Technology now consists of microchips, nanotechnology, and robots. And new technology is increasing exponentially faster than it was 200 years ago.
Obviously, technology and society have advanced enough that private industry could build and maintain roads, post offices, and even coin money. And it would get done better than the government does it. In our age, private industry can potentially do anything better than the government does. And this knowledge is exactly what I was referring to with conservatives. Conservatives are intelligent, responsible, and ambitious enough to realize this fact about private industry and government, yet they feel that somehow private industry couldn’t manage something like “public safety” — the police and the military.
The US Constitution was and still is an amazing document. It is still a valid and important piece of law. But it was written for a society and an economy that is different from today.
The Founding Fathers, understanding the proper role of government, as well as the ideal political and economic system to administer such a government, would desire these changes in the Constitution. Having the government administer programs which could be run better by private industry is much more contrary to their philosophy than having the government maintain that power simply because they’ve always maintained it.
As roads open for capitalism, they should be taken, rather than barricaded.
Check out this short blog on Marginal Revolution about the health benefits of Wal-Mart.
I have a blog draft I’ve been brainstorming about for the past couple weeks called “Everything Wal-Mart” — maybe I’ll work on it this afternoon, and talk about some of the many ways that Wal-Mart rocks my world.