Excuse Me, Professor

Challenging the Myths of Progressivism

Lawrence W. Reed, Lawrence W. Reed

• Publisher: Regnery
• Year: 2015
• ISBN:
  9781621574668
• Topic: Education
• Subtopic: Teaching Social Science

There's little truly "progressive" about Progressivism. True progress happens when humans are free, yet the Progressive agenda substantially diminishes freedom while promising the unachievable. Excuse Me, Professor provides a handy reference for anyone actively engaged in advancing liberty, with essential essays debunking more than 50 Progressive clichés.Does the free market truly ignore the poor? Are humans really destroying the Earth? Is the government truly the first best source to relieve distress?Compiled and edited by Lawrence W. Reed in collaboration with the Foundation for Economic Education and Young America's Foundation, this anthology is an indispensable addition to every freedom lover's arsenal of intellectual ammunition.

#1

“INCOME INEQUALITY ARISES FROM MARKET FORCES AND REQUIRES GOVERNMENT INTERVENTION”

BY MAX BORDERS

INEQUALITY IS EVERYWHERE. IN A RAINFOREST, MAHOGANY TREES TAKE UP MORE water and sunlight than all the other plants and animals. In our economic ecosystems, entrepreneurs and investors control more of the assets than the rest of us. No one worries about the mahogany trees and yet there is terrible fretting about the wealthy. In the case of ecosystems and economies, however, there are very good reasons for an unequal distribution of resources.

The sources of some forms of inequality are better than others. For example, inequality that is a consequence of crony capitalism—or what Barron’s editor Gene Epstein refers to as “crapitalism”—is surely undesirable. Therefore, it’s important for us to make a distinction between economic entrepreneurs and political entrepreneurs: the former create value for society; the latter have figured out how to transfer resources from others into their own coffers, usually by lobbying for subsidies, special favors or anti-competitive laws.

If we can ever disentangle the crapitalists from the true entrepreneurs, we can see the difference between makers and takers. And inequality that follows from honest entrepreneurship, far from indicating that something is wrong, indicates an overall flourishing. In a system where everyone is made better off through creative activity and exchange, some people are going to get wealthy. It’s a natural feature of the system—a system that rewards entrepreneurs and investors for being good stewards of capital. Of course, when people are not good stewards of capital, they fail. In other words, people who make bad investments or who don’t serve customers well aren’t going to stay rich long.

Whenever we hear someone lamenting inequality we should immediately say “So what?” Some of the smartest (and even some of the richest) people in America confuse concerns about the poor with concerns about the assets the wealthy control. It’s rooted in that old zero-sum thinking—the idea that if a poor guy doesn’t have it, it’s because the wealthy guy does. But one person is only better off at the expense of another under crapitalism, not under conditions of honest entrepreneurship and free exchange.

Except for those who made lots of money hiring lawyers and lobbyists instead of researchers and developers, wealthy people got rich by creating a whole lot of value for a whole lot of people. Thus, the absence of super-wealthy people would actually be a bad sign for the rest of us—especially the poor. Indeed, it would indicate one of two things: either that not much value had been created (fewer good things in our lives like iPhones and chocolate truffles) or the government had engaged in radical redistribution, removing significant incentives for people to be value creators and stewards of capital at all.

Let’s face it. When resources are sitting in investments or in bank accounts, they are not idle. In other words, most rich people don’t just stuff their millions under mattresses or take baths in gold coins. In conditions of economic stability, these resources are constantly working in the economy. In more stable conditions, a portion finds its way to a creative restaurateur in South Carolina in the form of a loan. Another portion is being used by arbitrageurs who help stabilize commodity prices. Another portion is being loaned to a nurse so she can buy her first home. Under normal circumstances, these are all good things. But when too many resources get intercepted by Uncle Sam before they get to the nodes in these economic networks, they will be squandered in the federal bureaucracy—a vortex where prosperity goes to die.

We should also remember that, due to our productive markets, most of us live like kings. Differences in assets are not the same as differences in living standards, though people tend to fetishize the former. Economist Donald Boudreaux reminds us that Bill Gates’s wealth may be about 70,000 times greater than his own. But does Bill Gates ingest 70,000 times more calories than Professor Boudreaux? Are Bill Gates’s meals 70,000 times tastier? Are his children educated 70,000 times better? Can he travel to Europe or to Asia 70,000 times faster or more safely? Will Gates live 70,000 times longer? Today, even the poorest segment in America live better than almost anyone in the 18th Century and better than two-thirds of the world’s population.

When we hear people fretting about inequality, we should ask ourselves: Are they genuinely concerned for the poor or are they indignant about the rich? Here’s how to tell the difference: Whenever someone grumbles about “the gap,” ask her if she’d be willing for the rich to be even richer if it meant improved conditions for the absolute poorest among us. If she says “no” they are admitting their concern is really with what the wealthy have, not what the poor lack. If her answer is “yes,” then the so-called “gap” is irrelevant. You can then go on to talk about a legitimate concern—e.g., how best to improve the conditions of the poor without paying them to be wards of the state. In other words, the meaningful conversation we should be having is about absolute poverty, not relative poverty.

In so many of the discussions about income inequality, there is a basic emotional dynamic at work. Someone sees they have less than another and they feel envious. Perhaps they see they have more than another and they feel guilty. Or they see that someone has more than someone else and they feel indignation. Envy, guilt, and indignation. Are these the kinds of emotions that should drive social policy? When we begin to understand that the origins of wealth—honest entrepreneurs and stewards of capital in an inherently unequal ecosystem—we can learn to leave our more primitive emotions behind.

SUMMARY

       •  Economic inequality, like the personality traits that make up each individual, are a defining characteristic of humanity

       •  When economic inequality arises naturally in the marketplace, it largely reflects the ability of individuals to serve others; when it arises from political connections, it’s unfair and corrupt

       •  Allowing economic inequality to occur, so long as it doesn’t derive from politics, inevitably raises the standard of living for society as a whole

       •  Concern for “the poor” is often a way to simply disguise envy or disdain for “the rich”

#2

“BECAUSE WE’RE RUNNING OUT OF RESOURCES, GOVERNMENT MUST MANAGE THEM”

BY MAX BORDERS

MILTON FRIEDMAN ONCE SAID “IF YOU PUT THE FEDERAL GOVERNMENT IN CHARGE of the Sahara Desert, in five years there’d be a shortage of sand.” The great economist wasn’t just being cute. He’s pointing to a very serious problem with government management of resources. In this chapter, we’ll talk about why it’s a problem. But first we should ask: Why are people so concerned that we will run out of resources? How can we find a reasonable balance between using resources and conserving them?

When most people think about resources, they think about the possibility they might be used up. And running out of resources means there will be nothing left for future generations. This scares people. So the notion goes something like: If parents let kids get into the groceries on the first night of the camping trip, there won’t be any sandwiches left for the picnic. The parents wisely ration the resources and restrict the kids’ access so that there is something left for later. People who think government should manage resources are thinking that government will behave like wise parents. But does it?

What you may not have realized is that people in the market—under certain conditions—find a balance between consumption and conservation, which one might call “sustainability.” But first there has to be a complete market mechanism. This may be hard for some people to get their heads around, because most people think markets cause overconsumption. And certain kinds of markets can.

Healthy markets only exist under certain rules. The main rules are what we might call the Three Ps: Private property, price signals, and profit. These are the basic conditions of exchange. Without them there can be no healthy market.

Private property means that an individual has full ownership of a resource. We know who the owner is, how much they own and that right cannot be taken away arbitrarily. The owner may also have the authority to divest himself of the resource. That means we know the difference between mine and thine and in so knowing, we have one of the conditions under which to conserve, trade, or consume.

Prices are what economist Steven Horwitz calls “information wrapped in an incentive.” When the price of some resource goes high enough, owners have the incentive to do any number of things. They might use less of the resource (i.e. conserve it), they might find new creative ways to increase the supply of the resource, or they might find a substitute, which ends up conserving the resource. Of course, we make any such choice because we expect future returns, otherwise known as profit. And in this equilibrium created by prices, property, and profit, markets balance use with conservation.

Consider a resource that was once highly sought after: whale blubber. Whale blubber was used as an energy resource in the 19th century. But in the case of whales, there were only two of the three Ps. Whalers had prices and profit, but no private property. The whales belonged to what is known as the Commons—which meant anyone could hunt them. Unsurprisingly they were nearly hunted to extinction. Because no one owned them, whalers had a perverse incentive to hunt them quickly. The whales rapidly became scarce. Indeed, as the number of whales went down, the price of each individual whale went up and the incentives to hunt increased. But this can’t happen if there is a robust private property regime in place. If people could own whales, their incentive is not to destroy them unsustainably, but to raise them. (Ironically, fossil fuels saved the whales thanks to substitution.)

In the 19th Century American West, wild bison (buffalo) roamed the unfenced, commonly-held Plains by the millions. They were hunted nearly to extinction. By contrast, people could own and raise cattle. The use of barbed wire on private property made it feasible to do so. Today, there are far more cattle in the Plains than bison and even where bison are privately-owned, their long-term survival is now better assured than it ever was on “public” property.

Consider trees. In North America, there are more trees than there have been in over a hundred years. Not only do foresters have incentives to regrow trees they harvest, they have incentives to cut them at a sustainable rate. Of course, in certain parts of the world—like Amazonia and Africa—concerns about forest clearing are justified. What’s the big difference between forests in North America and South America? In one case, forests are largely government managed and in the other they are largely privately managed.

Since 1900, U.S. forestland acreage has remained stable, unlike some regions in the world where deforestation is happening at a rapid pace. When one includes the heavily forested Northern Forests of Canada, forestland in North America since 1900 has grown by a lot, according to the UN State of the World’s Forests reports.

By contrast, forests in many parts of the world are losing ground. Why are North America’s forests growing while forests in other areas are being lost? Certainly the biggest factor is whether the country has the Three Ps. The absence of property rights is known as the Tragedy of the Commons. If ...