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Feb. 27th, 2017 06:44 amThe first mistake is to believe the government when it claims that its policies are intended to help the poor. They almost never are. The great bulk of redistributive taxation and subsidization goes to benefit interest groups that are politically powerful, not economically vulnerable. Think Medicare, agricultural subsidies, and the mortgage interest deduction. And most existing regulation of business is, paradoxically enough, for the benefit of business itself. Regulation raises the cost of doing business, and so establishes a barrier to entry that benefits large existing firms at the expense of their smaller competitors. Occupational licensing, for example, whether of doctors, lawyers, or barbers, is almost never forced upon an unwilling industry by public-spirited regulators. Rather, it is actively sought after by established members of the profession itself, eager to insulate themselves against potential competition. And politicians are all-too-willing to cater to the interests of the economically powerful. Libertarians, in contrast, believe in free markets, and truly free markets are the enemy of big business.
The second mistake is to confuse intentions with results. Even if government policies were intended to benefit the poor, we would have good reason to expect them to fail. Good intentions often produce unintended consequences. Increased safety regulations at airports lead more families to travel by the much more dangerous method of driving and so lead to a larger number of deaths. Laws that limit price increases on essential goods in the wake of natural disasters lead to fewer of those goods being brought to market and more people having to suffer without them. Government bailouts of failed firms encourage more failed firms. Perverse consequences like this sometimes surprise us, but they shouldn’t. Society is a complex and dynamic system. Politicians lack both the knowledge and the incentive to cope with it effectively. Libertarians propose to deal with it by decentralizing decision-making to individuals who are free to make choices based on their expert knowledge of their particular circumstances. Individuals and corporations should reap the benefits of good decisions, and pay the costs themselves when their choices turn out poorly.
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The second mistake is to confuse intentions with results. Even if government policies were intended to benefit the poor, we would have good reason to expect them to fail. Good intentions often produce unintended consequences. Increased safety regulations at airports lead more families to travel by the much more dangerous method of driving and so lead to a larger number of deaths. Laws that limit price increases on essential goods in the wake of natural disasters lead to fewer of those goods being brought to market and more people having to suffer without them. Government bailouts of failed firms encourage more failed firms. Perverse consequences like this sometimes surprise us, but they shouldn’t. Society is a complex and dynamic system. Politicians lack both the knowledge and the incentive to cope with it effectively. Libertarians propose to deal with it by decentralizing decision-making to individuals who are free to make choices based on their expert knowledge of their particular circumstances. Individuals and corporations should reap the benefits of good decisions, and pay the costs themselves when their choices turn out poorly.
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