Monday, March 31, 2008

April 2008 Meeting

The next Bastiat Society monthly meeting will be Wednesday, April 2nd. Our distinguished speaker for the evening will be Radley Balko, senior editor at Reason magazine.

Location: 175 King Street, Charleston SC

Time: 5 pm reception , 6 pm speaker

RSVP: Megan Rock

About our Speaker (in his own words):

I'm a 32-year-old writer and editor living in Alexandria, VA - just outside Washington, D.C. I live with my wonderful girlfriend and our dogs, a Sharpei/Lab mix named "Harper" (after Harper Lee) and a bulldog-terrier mix named "Isabel" (after Isabel Paterson).

I'm a former policy analyst with the Cato Institute, now a senior editor for Reason magazine. I'm also a biweekly columnist with I've been published in lots of places, from Playboy to the Wall Street Journal, and have done lots of TV and radio interviews. My work has also been cited in a Supreme Court opinion, helped get a guy off death row, and I've testified before Congress a few times.

I'm originally from Greenfield, Indiana. I attended Indiana University and graduated in 1997 with a BA in journalism and political science.

I'm a "small-l" libertarian.

I like to write. I'm a music buff, a sports nut and a political junkie.

One day, I'll teach one of my dogs to retrieve a beer from the refrigerator on command.

Sunday, March 30, 2008

What Business is Not

  1. The purpose of business is not to promote the public good.
  2. Business does not exist to foster employees' physical or emotional well-being; still less is its goal their ultimate fulfillment.
  3. It is not the aim of business to provide full employment for the nation's labor force
  4. Business does not exist to provide jobs for local workers.
  5. Business's purpose is not to serve the interests of customers or of managers or of the community.
  6. Business's definitive purpose is not to produce goods or services, or to add value.
  7. Business is not a charity or a church, a school or a club
  8. Business is not, except incidentally, an agency of government or of social policy.
  9. To focus on business's function as a producer, supplier or adder of value is to misconstrue business's purpose. If the nature of the goods or services, or the way they are produced, takes priority over maximising long-term owner value, then the activity involved is not business. An organization whose guiding principle is producing the absolutely best widgets (e.g., engines, books, healthcare) or the very cheapest ones -- independent of the consequences for long term owner value -- is not operating as a business...even if, incidentally, it sells the widgets profitably.
From Just Business, by Elaine Sternberg

Friday, March 28, 2008

Trade is Better than Battle

An editorial in Scientific American quoted a United Nations expert, Jan Egeland, who is happy that war is receding around the globe, but who complains that war is getting "crueler" because it now involves civilian populations, not just armies. Egeland says we could end war, if only politicians would muster the will to triumph.

The editorial goes on to warn that global warming might ignite a new round of environmental wars, spinning out of control.

I guess the only way to deal with that possibility is to find politicians with even greater will. I cringe anytime someone calls for a politician with the will to triumph, even when the topic is ending war.

From an evolutionary perspective, war is just one of the ways humans have struggled to survive, as victors on either offense or defense. There is no such thing as a war without cruelty. War is cruelty. United States General William T. Sherman said so when he was waging a war against a civilian population one hundred and forty four years ago.

The reason war is diminishing is that its survival value is declining. We have discovered that market economies and individual liberty are far better social arrangements for human survival. Trade is better than battle.

As for global warming, it need not ignite another war. Market forces are adaptable enough to deal with climate change. However, global warming is dangerous precisely to the degree that politicians try to "will" a solution.

Many lives have been lost in the triumph of the will.

Thursday, March 27, 2008

Sternberg on Business Ethics

"There is, consequently, still a need to combat what can most appropriately be called the 'oxymoronic approach' to business ethics. In the early 1990s, this view was commonly associated with social responsibility; now it is more often described in terms of stakeholding. In whatever form it is expressed, however, the oxymoronic view holds that being ethical in business means replacing the pursuit of owner value with the pursuit of some other end -- social welfare, environmental protection or stakeholder interests, for example. Since, however, the essence of business is maximising owner value by selling goods or services, this view of business ethics is literally absurd: it makes refraining from business the condition of being ethical in business."

Elaine Sternberg, Just Business: Business Ethics in Action

Sunday, March 23, 2008

Life Gets Better

"Intellectuals and theorists have long expected, almost demanded, that average Americans would develop political antipathy toward the prosperous and vote to confiscate their wealth. Perhaps average Americans do not do this because they know they have spent the last several generations gaining on the well-to-do in significant ways. Whatever faults the United States and the European Union may have -- they are many -- in recent generations, both have methodically improved daily circumstances for almost everyone. The same social engine that in the United States and Western Europe is producing spoiled and insufferable billionaires is also producing steady, significant gains for the middle and for the poor."

Gregg Easterbrook, The Progress Paradox

Saturday, March 22, 2008

Liberty and Economics

Far from being a body of abstract thought, economics is the study of what makes business possible. Get it wrong, and there will be no food in the stores.

This video introduces one of the great champions of free-market economics: Ludwig von Mises. He grew up in an intellectual environment that was even more hostile and contemptuous of business than the environment is today. As he described it:

"By 1900, practically everyone in the German speaking countries was either a statist or a state socialist. Capitalism was seen as a bad episode which fortunately had ended forever. The future belonged to the state. All others would be regulated in a way that prevented businessmen from exploiting workers and others."

Friday, March 21, 2008

Four Views of Human Progress

By any objective measure, life on earth is getting better.

Health? Infectious diseases kill about 50 people per 100,000 – a 14-fold reduction in death from infectious diseases in the last century. Longevity? From the mid-18th century to today, life expectancy in developed countries jumped from less than 30 years to about 75 years. Even in the poorest countries in the world, life expectancies have increased, in some cases by 50%. Infant deaths? In 1900, more than 1 baby in 10 died. In some areas of the US, 1 in 4 died. Today, only about 1 in 150 babies dies within the first year. Mothers dying in childbirth? One hundred years ago, the maternal death rate was 100 times higher than it is today.

The list of indicators goes on and on to an inevitable conclusion. Whether we look at diet and nutrition, the distribution of wealth, the state of poor Americans, the state of children and teens, the American worker, leisure and entertainment, housing, transportation and communication, invention and scientific progress, technology, education, safety, environmental protection, the supply of natural resources, social and cultural indicators, sports, the condition of women, racism, or the freedom of the individual, life on earth is clearly getting better.

Why don’t more people know it?

Why are people convinced the world is bad and getting worse?

Who or what is the agent of progress?

Answering these questions requires that we define the idea of progress. We immediately run into a problem. Not everyone views progress the same way. There are at least four different views of human progress in the modern world. We can classify these views as conservative, libertarian, socialist, and communist. Understanding these views can help clear up much of the confusion surrounding the idea of human progress.

The Conservative View of Progress

The conservative view of progress is profoundly skeptical. Sometimes – perhaps often – it rejects the idea of progress altogether. It may use phrases like “the end of progress,” “the limits of progress,” the “limits of growth,” or “mankind should not play God.” When presented with evidence that the world is getting better, the conservative simply claims we are measuring the wrong stuff, looking the wrong way.

In the conservative view, the present is a degenerate state filled with dangerous ideas masquerading as progress. Mankind has fallen from a Golden Age, an Eden, or a pristine state of nature. This is a view shared by groups as different as radical environmentalists and religious fundamentalists, no doubt to each group’s mutual outrage. The common theme in their world view is that unrestrained progress is a threat to whatever good is left the world. The only meaningful progress is that which restores what has already been lost.

In this view of progress, man’s task on earth is redemption. How this redemption is achieved is the distinguishing characteristic between conservative groups. Some groups see it in nature, some in faith, and some in patriotism. Individuals are not free to decide the path of their own redemption. Redemption must follow a course laid out by a proper authority such as a hereditary aristocracy, a religious leader, a group of secular moralists wielding political power, or a democratically elected official.

Whatever the type of authority in question, it is the driving agent of progress, not the individual. Authority guides the conditions, traditions, institutions and faith of all human activity in accordance with a divine or natural plan for the redemption of a fallen race. Authority sets the acceptable limits of individual behavior. Authority determines the difference between entrepreneurship and crime. Authority defines the social goals and the means to achieve them. Such a world view requires faith more than reason, tradition more than innovation.

The Libertarian View of Progress

The libertarian view of progress is organic and evolutionary. Society is organized by the self-interested economic activity of individuals in voluntary arrangements. Only the most successful arrangements survive. Predicting exactly what will survive in complex and constantly changing conditions is nearly impossible. Knowledge is too fragmented, dispersed, and fragile to collect and use for central planning. Only the decentralized process of the market can effectively use such knowledge.

Progress is messy and unpredictable, but creativity is very high. There are lots of individual goals, but there is no clearly defined social goal. Nor can there ever be one without interfering with the organic order. Social results are the unintended consequences of individual behavior. Business people and entrepreneurs are the agents of progress. The only limits imposed on their behavior are rules against force and fraud.

While tradition, faith, and reason are all present for individuals to use however they see fit, the libertarian view of progress does not require any individual to submit to any of them. What is essential in the conservative view is purely voluntary for the libertarian.

In the libertarian view of progress, there are no infallible guides toward an ideal social order. Progress is not a matter of redemption. It is a limitless evolutionary process with unpredictable social results. The world is always out of balance, in the middle of change, surging in some new direction. Progress is institutionalized innovation.

The Socialist View of Progress

In the socialist view of progress, human activity is best organized by human reason via political action. Its consequences are measurable and predictable. Progress is movement towards a clearly defined, socially desirable goal. The future is what man wants it to be. Reason is man’s essential planning tool, more useful than faith (which a socialist calls superstition), tradition (historical and social inertia), or free markets (chaotic production).

The agents of progress are technocrats who have both the technical expertise for the problem in question, and the political power to improve the organic order, i.e. the power to improve the marketplace of free and voluntary exchanges. In its mildest form, the socialist view of progress co-opts the very word in its name: Progressives. In its strongest form, it sees business people and entrepreneurs as the enemies of progress.

Today, it is almost impossible to imagine the immense confidence that early 20th-century intellectuals had in the power of planning, what was once called “socialist calculation.” They believed that all they had to do to make a better world was plug a few thousand variables into an equation, add a few thousand coefficients, and – voila! – achieve optimal outputs and a just distribution.

Before 1914, many sincere intellectuals praised pre-war Germany as a leading example of an advanced, scientific social order. “Unscientific” was the ultimate intellectual put-down, and it was often used by non-scientists to criticize the work of other non-scientists. Faith, tradition, and commerce were obstacles to progress. Remove them, and reason would achieve, at last, a more dignified life for mankind.

The Communist View of Progress

The communist view of progress is that history follows laws as reliable as the laws that govern the physical universe. History is not a chain of random events. History is the unfolding of the inevitable class struggle over the means of production. Each event expresses a historical necessity. At the present moment, mankind is not sufficiently developed to understand historical necessity. An enlightened few do, however, and these form a Party to act as the embodiment of the will of history. The Party is the agent of progress. Arthur Koestler described this view in his novel Darkness at Noon:

“The Party can never be mistaken…You and I can make a mistake. Not the Party. The Party, comrade, is more than you and I and a thousand others like you and I. The Party is the embodiment of the revolutionary idea in history. History knows no scruples and hesitation. Inert and unerring, she flows towards her goal. At every bend in her course she leaves the mud which she carries and the corpses of the drowned. History knows her way. She makes no mistakes. He who has not absolute faith in History does not belong in the Party’s ranks.”

The Four Views in Action
After nearly a century of ascendance, the Communist view of progress began dying out around 1980. Born out of the socialist ideals of the late 18th and 19th centuries, Communism left a wake of death, misery, and suffering unparalleled in human history, including the deaths of 10 million people from deliberate famine in the Ukraine in 1932 and 1933; the Gulags where millions suffered for crimes as small as making an anti-government joke; the occupation and misery of Eastern Europe; the Korean and Viet Nam wars; and the killing fields of Cambodia where nearly 2 million died. Communism was an intoxicating vision, built on grand ideas, logic, and careful conclusions, but it was an utter failure in the real world. It turned out to be an intellectual fairy tale with a horror-show ending. It smolders on in North Korea, Venezuela, and a few English departments. It has been abandoned in everything but name in China and Viet Nam.

Where did the Communists turn after their faith in the Party as the agent of progress was shattered? They retreated to the solace of the socialist view en mass, and that is where most of them are today. They reluctantly abandoned their belief in historical necessity – and with it, their willingness to sacrifice lives in the name of progress. They adopted the view that progress requires smaller individual sacrifices of liberty and property, offered up to the right people, acting according to the right reasons.

The world today is a volatile mixture of these three views of progress: conservative, socialist (composed of both original socialists and lapsed communists), and libertarian, each vying for supremacy. In reality, there is no clear dividing line between these views. They represent a continuum. However, for the purpose of exploring the idea of progress, it is helpful and not wholly inaccurate to treat them as distinct sets. Indeed, it is usually when these views overlap that trouble begins, because one view can quickly overrun another.

For example, people with differing views of progress might all accept the necessity of some form of government planning for infrastructure (defined here as transportation and communication networks). When a community builds a road, it faces a problem that is very difficult to solve solely by voluntary agreement. All it takes to shut the network down is one holdout. Some degree of enforced social planning, i.e., government, is required to deal with holdouts.

However, once we concede the necessity of government planning for infrastructure, we open the door to all kinds of mischief in the name of progress. Every problem can cleverly become an infrastructure problem. Unchecked, government planning leads straight to a struggle between those who would use it to redeem mankind (the conservatives), and those who would use it to build a scientific state (the socialists). The libertarians are notably absent. They would rather not use government at all.

Is it really true that something as familiar as the local zoning board is actually the scene of a political shootout between one group’s vision of redemption and another group’s vision of the scientific state? Of course it is. Conservatives use zoning to control adult businesses, and thereby moral behavior. The Greens (another brand of conservatism seeking redemption in nature) use zoning to control development, something they view as a moral issue. Socialists use zoning to rationalize unrestrained markets. All of these groups are arguing about the right way to use government, but they rarely argue whether it should be used at all. All of these groups seek the power of government because of the good they believe they can do with it, in the name of progress. They do not see in their efforts the danger of igniting bitter civil disputes. They only want what reasonable people want. In this, they are dangerously naïve.

Government power is not simply a social contract. The Nobel-prize winning economist Friedrich Hayek made that point decades ago when he said that the most minor government functionary has more arbitrary power over another individual than the wealthiest man in town. That is precisely why government can solve network problems: the most minor government functionary can command involuntary compliance under the threat of fine, seizure, or imprisonment. Or, as George Washington said almost two hundred years before Hayek, “Government is not reason, government is not eloquence, it is force.”

Until economics developed a substantive body of economic research on the actual operations of government– what is called public choice theory – the proponents of government planning had a relatively unobstructed field to promote planning in the name of progress. Public choice theory revealed the weaknesses in their plans. Government officials are only human. True to human nature, they tend to use their offices and powers for their own benefit, the benefit of their friends, and the harm of their enemies. Business is tempted to use government to limit competition or fix prices. Labor is tempted to use government to protect jobs and benefits. Consumers are tempted to use government to lower prices and dole out benefits. Politicians are tempted to use government to buy votes and shake down contributors. The end result of this orgy of temptation, self-interest, and force is a zero sum game where someone has to lose.

Public choice theory builds a powerful case against using government as a tool of progress. It teaches us that we must carefully distinguish between those things that government can do well in the name of progress, and those things that are best left to free individuals acting in their own self-interest in the market. Knowing where to draw the line between the two is difficult. Knowing that a line must be drawn is essential.

The future of human progress – defined here as a steadily improving standard of living – depends on well drawn lines. You might consider them guardrails. On one side, the conservative rail emphasizes tradition and culture, the unspoken rules of how we should deal with one another and the world around us. On the other side, the socialist rail emphasizes reason and the unique power of public solutions. Between the two, the libertarian view of progress rushes forward in an unpredictable rush of human creativity and change that looks subversive to the conservative and looks like unreasonable greed to the socialist.

So long as tradition and reason remain the guardrails that direct and contain human creative behavior, they serve a valuable purpose in promoting human progress. But that does not mean that individuals who hold those views – those who form the guardrails -- will approve of the results. There will be inevitable friction and even violent disagreements. The relative influence of each view will wax and wane among populations, but that is precisely how progress is born, where it lives and works, where it delivers its best results, and where it dies.

To summarize, progress is what happens when free men and women act creatively within -- and sometimes beyond -- the fluctuating cultural and political constraints established by their civilization. Sometimes, progress simply improves things. Sometimes, it changes them forever.

In conclusion, let me return to the questions I asked at the beginning.

Why don’t more people know the world is getting better? That fact does not fit into their world view.

Why are people convinced that the world is bad and getting worse? The more conservative or socialist a society, the more likely people will believe that the world is getting worse.

What is the engine of progress? It is the unlimited creativity of free individuals.

Wednesday, March 19, 2008

Hagrid's Advice

In the fifth book of the Harry Potter stories, Harry Potter and the Order of the Phoenix, the character Hagrid is sent as an ambassador to persuade the Giants to join the fight against the evil wizard, Voldemort.

His job is unusually difficult. Giants are known for being stupid and violent.

After Hagrid returns from his mission -- visibly bruised and battered -- he offers the following explanation that is useful advice for anyone involved in tricky negotiations, "If you overload them with information, they'll kill you just to keep things simple."

That's good advice for CEOs, economists, and anyone else making a presentation.

Tuesday, March 18, 2008

The Audacity of Hopelessness

Monday, March 17, 2008

Who's in Control?

A defining characteristic of this economy that produces such enormous abundance for us all (and yes, despite the current downturn, it continues to produce prodigiously) is that no one is "in control." Indeed, no one could possibly be "in control." A far greater danger to Americans' prosperity than a President with a poor speaking style and a penchant for standard-fare political shenanigans is the spread of the belief that economic salvation lies in having someone "in control."

Don Boudreaux, at Cafe Hayek

Sunday, March 16, 2008

Balzac on The Machinery of Government

The year 1850 marked the death of two notable French intellectuals: the statesman, journalist and economist Claude Frédéric Bastiat, and the novelist Honoré de Balzac.

Balzac was known as one of the founding fathers of French realism. In the following passage from his novel Le Père Goriot, he quickly captures the dehumanizing reality of the French government bureaucracy.

This passage is from a translation by Ellen Marriage, available at Project Gutenberg.

"There is a race of quill-drivers, confined in the columns of the budget between the first degree of latitude (a kind of administrative Greenland where the salaries begin at twelve hundred francs) to the third degree, a more temperate zone, where incomes grow from three to six thousand francs, a climate where the bonus flourishes like a half-hardy annual in spite of some difficulties of culture. A characteristic trait that best reveals the feeble narrow-mindedness of these inhabitants of petty officialdom is a kind of involuntary, mechanical, and instinctive reverence for the Grand Lama of every Ministry, known to the rank and file only by his signature (an illegible scrawl) and by his title--"His Excellency Monseigneur le Ministre," five words which produce as much effect as the il Bondo Cani of the Calife de Bagdad, five words which in the eyes of this low order of intelligence represent a sacred power from which there is no appeal. The Minister is administratively infallible for the clerks in the employ of the Government, as the Pope is infallible for good Catholics. Something of this peculiar radiance invests everything he does or says, or that is said or done in his name; the robe of office covers everything and legalizes everything done by his orders; does not his very title--His Excellency--vouch for the purity of his intentions and the righteousness of his will, and serve as a sort of passport and introduction to ideas that otherwise would not be entertained for a moment? Pronounce the words "His Excellency," and these poor folk will forthwith proceed to do what they would not do for their own interests. Passive obedience is as well known in a Government department as in the army itself; and the administrative system silences consciences, annihilates the individual, and ends (give it time enough) by fashioning a man into a vise or a thumbscrew, and he becomes part of the machinery of Government."

Saturday, March 15, 2008

Police State

I do not spend time watching MTV -- although I was young enough to be a member of the target demographic when it began. These two infomercials currently running on the cable channel are so thought-provoking, they may make me tune in again.

The critical question raised by these ads, however, was answered by F. A. Hayek almost sixty years ago. What leads to a police state? Central planning is the road to serfdom.

Via Scott Horton at Harper's Magazine.

Friday, March 14, 2008

Those Who Know Better

"...all poetical imitations are ruinous to the understanding of the hearers"

Plato, "The Republic," Book X

Plato was not the first well-educated intellectual to believe that he knew better than other men, but perhaps he has been the most influential. In his blueprint for a better world, The Republic (circa 360 BC), one of the social improvements he called for was banishing all poets, because poets do not tell the Truth; they just sell a bunch of lies.

Today, there is another group of well-educated intellectuals calling for banishing -- or, at the very least, the irreparable disgracing -- of another group of individuals on the basis of its departure from the Truth. The former group is made up of militant atheists. The latter group includes anyone who is religious.

The new militant atheists believe that religion is, in the words of one of their most outspoken advocates, Christopher Hitchens,
"violent, irrational, intolerant, allied to racism, tribalism and bigotry, invested in ignorance and hostile to free inquiry, contemptuous of women and coercive toward children."

Of course, humans have used religion as an excuse to do horrible things to one another. But can we rely on human reason to do any better? Is reason that much more reliable than faith?

Most of the human atrocities of the 2oth century did not occur at the hands of men of faith; they occurred at the hands of men who believed they were acting according to reason and science. Lenin, Hitler, Stalin, Mao, Ho Chi Mihn, and Pol Pot all at least gave lip service to the idea that they were leading mankind away from a history of ignorance and superstition and towards an enlightened future. They believed they were the vanguards of human progress.

Hitchens gets around this uncomfortable fact by claiming that these guys were in fact religious leaders, not political ones. Granted, many of their political movements eventually acquired a religious fervor, but does not that prove that human nature needs a religion, and when it cannot find one it will create one out of whatever raw material is available?

Make no mistake, the power of human reason is a wonderful thing. But it is not great enough to coordinate the actions of six billion people in almost two hundred countries on seven continents. For that task, reason requires a companion, something more adaptable to individual and local conditions; something that does not depend on formal education as much as it depends on local knowledge passed from one generation to another in ways often unspoken.

We call that companion culture, and it is a kind of reason mined from the rich vein of all the human past. Religion is a very important part of culture. Religious forms, practices, and reputations will vary, but religion's universal presence attests to its value. Only a wise man or a fool would insist that we would all be better off without it.

Thursday, March 13, 2008

He's Come Undone

The editors of National Review on Eliot Spitzer...

"If there is any comfort at all from this episode, it is that a man who pursued his political ambitions by any means will almost certainly not be trusted with public office again."

Wednesday, March 12, 2008


One of the most exciting new areas of research is an area that crosses traditional academic borders. It is called emergent behavior.

Emergent behavior is what happens when a relatively simple set of rules goes through many iterations, eventually producing a result that is complex and desirable, but completely unplanned by the individual actors themselves.

Take the game of chess, for example. It is a game with fewer than two dozen rules. Yet, the possible game variations are greater than the number of atoms in the universe. Simple rules, complex results.

On a larger scale, everything from corporations to the entire economy appears to work the same way. Individually, each of us operates with a simple set of rules -- some we can articulate, and some we cannot -- distilled from the social and physical processes of trial and error.

Contrary to popular opinion, we certainly do not act on the basis of thousands and thousands of pages of policies and procedures, regulations, and laws. Our brains simply cannot retrieve that much information. Complex rules result in the very undesirable consequence of utterly confused behavior. This is bad news for those among us who believe there must be a policy statement for everything. Human behavior will always default to a simpler set of rules.

The only thing a complex set of rules can achieve is widespread contempt for the very idea of rules in the first place. The lesson for business management is this: keep your rules simple, and measure the success of your rules by the results.

Beyond a certain point, every new rule, added to a new policy, published in a new manual, amended by a new law, established by a new decree, governed by a new committee, enforced by a new official, is a step towards the kind of world Franz Kafka wrote about in this three great novels, The Trial, The Castle, and Amerika, a world of contradictory rules and arbitrary enforcement; a world where an individual can be guilty and still be ignorant of his crime; a world where men live more in fear than in hope; a world where it is safest to do nothing.

Image of Franz Kafka, source: - Zenodot Verlagsgesellschaft mbH

Tuesday, March 11, 2008

Trust and Trade

" is the best thing we can do to break down the natural animosities between groups. For trade to work, two individuals have to have a certain amount of trust. We know from game theory that once trust breaks down, subjects begin to defect rather than cooperate. What does it take for them to cooperate? Trust. What does trust take? Trust takes a number of exchanges in which there are no defections."

Michael Shermer, in reason, April, 2008

Monday, March 10, 2008

Sunday, March 9, 2008

The Merchant Ape

by Dori LeCroy, PhD.
Copyright, Dori LeCroy. Reproduced here with permission.

Dori LeCroy ( is an independent scholar and board member of The Bastiat Society in Charleston. South Carolina.

Living creatures have adapted to their environments through millions of years of natural selection operating on both physical and behavioral characteristics. Cats climb trees and catch mice because in addition to installing the necessary physical equipment for these activities, natural selection also “designed” cats to want to do them.

Behavioral adaptation is crucial to survival, as is physical adaptation, and natural-selection pressures have influenced the behavior of all the animal species, including the human animal. An inclination to form alliances, greater generosity to relatives than to nonrelatives, mistrust of strangers, and delight in gossip are all examples of human behaviors resulting from millions of years of evolution. They are present, as the norm, in all cultures.

Evolved behaviors are natural tendencies to notice some things more than others, to have feelings about certain things, and to act in certain ways. Behaviors evolve because, more often than not, they foster survival and reproduction in the face of relatively constant environmental challenges. During our evolutionary past, avoiding predators was a constant challenge. This likely led to a human tendency to be nervous in the dark and to lie low at night. The saber-tooth got those who weren’t nervous, and only we nervous ones are left. Nervousness in the dark is an evolved characteristic. So is the human sweet tooth. Those who ate more of the sugary fruits during the ripe period stored more energy, and over the long run had a reproductive edge over those without a sweet tooth. So here we are, the descendants of sugar-craving, fruit-gorging ancestors paying outrageous prices for Godiva chocolate and dieting the rest of the time. But the most interesting human adaptations are the social ones.

We are group-living animals, and we evolved as such. The human mind evolved in the context of a subsistence hunter-gatherer existence in groups numbering upwards of 100 or more individuals. During our millions of years of evolution all the necessities of life emerged from group membership: protective alliances, cooperative hunting, sharing food, all kinds of exchanges of goods and services. And this never was a “one for all” arrangement, but rather one of “reciprocal altruism,” as evolutionary psychologists call it. Goods and services are given to another in the expectation of reciprocation, but not necessarily simultaneously, in kind, or by the same person. Each individual was part of a reciprocation network where a favor in the form of a food donation might be returned with a future gift of food or some other valued item like aid in child-care, support in a dispute, or another endeavor. Also the reciprocator might be a relative, friend, or alliance partner of the original recipient of the food donation. The expectation is that what goes around comes around in one form or another and by one route or another.

For the marginal existence of our ancestors, networking was essential for survival and reproductive success, and those who did it best are our ancestors. Or to put it the other way, we are the descendants of ancestors who were the most skilled in the reciprocal-altruism arena. This means that natural selection favored psychological traits that supported success in this arena—traits like noticing and remembering who gives what to whom, how much, and under what circumstances. When a society is organized around dozens of individuals linked by mutually beneficial exchanges, a sensitive and efficient accounting mind is highly advantageous.

Due to its gradual accumulation in our ancestors over evolutionary eons, we carry the genetic material that supports these accounting capabilities. Our brains evolved under pressures to make efficient neural circuits that serve specific kinds of keeping-track-of-things. Once set in this direction in the context of small-group living, the human bookkeeping brain had no trouble extending its calculating abilities to a broader scope. The migrations of peoples led to intergroup contacts, and although warlike conflicts were common, so were commercial contacts.
Archeologists are constantly discovering new evidence of trade between ancient peoples deeper and deeper in the past and over wider and wider areas. Materials were gathered by one set of exchanges and traded in another set, sometimes at great distances, all prior to the advent of writing or currency. The power of the human mind to keep accounts is extraordinary, and it has been at work for a long time. Our great ape cousins, the chimpanzee, the gorilla, and the bonobo (also called pigmy chimpanzee) are capable of rudimentary versions of this kind of bookkeeping and are also socially organized around reciprocal altruism, but we far outdistance them. We are most truly the merchant ape.

Role of Emotions
All this sounds terribly calculating and cold-blooded, but actually emotions are very much involved. Behavior is motivated by emotion, and natural selection has seen to it that our emotions support our mercantile relations. Gratitude encourages reciprocation, guilt discourages nonreciprocation, and anger discourages nonreciprocation by others. Anxiety is evoked by suspicion of nonreciprocation. Contentment comes through inclusion in a reciprocation network, and happiness through personal achievements (skills, reliability, and other virtues) that demonstrate worthiness and therefore value as a reciprocation partner. From an evolutionary point of view, any evolved characteristic must confer a fitness advantage. There is little doubt that human emotions along with human reason were supported by natural selection to the degree that they successfully regulated reciprocal exchanges in the hunter-gatherer context of ancestral life.

But all this doesn’t imply that we are evolved to follow a golden rule. Skillful participation in networks of reciprocation also included skills for cheating and deceit. Clearly nonreciprocators were unlikely to be carried as free riders by our struggling ancestors. However, stingy reciprocation that escapes detection is another story. Successful cheating gives a reproductive advantage, so selection pressures supported it. And, of course, those best at detecting deception also had a reproductive advantage over those easily duped. As a result, through a kind of arms race, we evolved mental talents specifically “designed” both to detect deception and to deceive. At some point in this arms race a new weapon came along that had a pervasive impact on human nature: self-deception.

What better way to deceive another than to be oneself deceived? No clues in facial expression, body stance, or tone of voice are available to alert the target. We can be so convincing. The division of the mind into unconscious and conscious realms may well have evolved because it supported self-deception in the service of deception of others. Again, to reiterate our theme, those best at self-deception were our ancestors. They were the best at gaining advantages over others in the exchange of goods and services. Escalation of this talent was inevitable as self-deception dealt with ever-refining deception detectors. We are a species of self-deceivers. Freud told us this, as does great literature and our own introspection. Now evolutionary psychology weighs in.

Self-deception is adaptive because it served mercantile cleverness. It allows for storage of information outside of awareness, and authentic-appearing behavior inconsistent with unconscious knowledge. I can make a deal with you that is biased to my advantage and negotiate with you in a belief that it is a fair deal, and by my honest appearance be more effective. You may also have an interest in deceiving yourself about it.

Hierarchic Groups
Human groups are hierarchic arrangements of dominants and subordinates. An individual may be dominant in one context and subordinate in another (at work and in a church group for example), but we are all subordinate somewhere. Let’s say your boss has decided to promote a colleague rather than you. The reason he gives is that you will have time for special training that will be a greater ultimate advantage for you. In spite of evidence that he is really acting out of self-interest, you might benefit from deceiving yourself into believing his story. Self-deception in this case would support authentic-appearing good-humored deference, and you would avoid the costs that might be incurred if suspicion and resentment should reveal themselves. Perhaps, in his own self-deception, your boss also misleads himself and really believes his decision is in your interest. This allows him to behave convincingly toward you and also get the bonus of feeling beneficent.

However, all this isn’t to say that our commercial psyche is strictly designed for manipulation and exploitation, deception, and self-deception. Equally essential for successful participation in exchange networks are empathy, a sense of fairness and of right and wrong, and an inclination to form trusting bonds of mutual support. Warm feelings develop between consistently reliable coalition partners. Feelings that support mistrust are useful when dealing with a new partner, but an emotional bias supporting trust of a tried and true partner will get you past misunderstandings that might destroy a vital alliance.

In other words, reciprocal altruism, the exchange of goods and services, flows on a rich and sensitive current of human emotional life that may itself have been selected for the mercantile advantages it provided. This means that along with cheating and deceit, what we might think of as the worst of the human character, our merchant nature also gave rise to the capacity for social responsibility and for commitment and loyalty between friends and partners in endeavor and trade. One might even speculate that this capacity laid the groundwork for long-term, affectionate working partnerships between men and women.

Perhaps such partnerships were the beginning of divisions of labor. Because of differences imposed by reproductive biology, as with all species, human males and females always did different things. But at some point these differences became coordinated into mutually beneficial systems. We don’t know when or why domestic arrangements changed so many thousands of years ago. Perhaps it had to do with the ice ages when meat became more essential and the dependence of females on male provisioning increased, as would have the need for females to maintain the all-important fire while males hunted. But division of labor is also based on individual differences in talents and inclinations within the sexes as well as between them. In ancient times, for example, one guy might be better at finding promising rocks and another better at chipping the tools out of them. So the second guy makes two tools and repays the first for his trek to the mountain.

However it started, evidence for division of labor or specialization and, by inference, systems of barter date from 1.5 to 2 million years ago. Over subsequent millennia, trade increased in geographical ranges. If we fast forward until about 30,000 years ago we may see awkward barter systems eased by the use of money. The existence of representational ornaments and cave paintings suggest that the symbolic psychological processes necessary for the use of intrinsically valueless items for the representation of IOU’s for goods or services were in place. There is no evidence of these economic or psychological developments for contemporaneous Neanderthals who were then becoming extinct.

We are certainly the symbolic species. But what selection pressures, besides social selection for the exchange arts, could have driven the evolution of human psyche to this level of sophistication? We have been called the bipedal ape, the tool-using ape, the language and symbol-using ape, and we are all of these, but, I suspect, we are most fundamentally the merchant ape.

Saturday, March 8, 2008

Economic Harmonies, March 208

This is the first issue of the Bastiat Society's newsletter, Economic Harmonies. It is named after one of Bastiat's last books, published in 1850, the year he died.

Economic Harmonies is a monthly publication, distributed via email. If you would like to subscribe, please contact me here.

You can open a full screen pdf of the newsletter by clicking on the far right box on the Scribd toolbar.

Read this doc on Scribd: EH 03 2008

Friday, March 7, 2008

A "Helping" Industry

In a visit to Zanesville, Ohio, Michelle Obama urged a group of women to go into the "helping" industry, rather than to pursue better paying careers in business. Laudably, she warned against amassing loads of student debt.

She could have added -- but did not -- that student loans are no different from any other type of debt. A borrower must carefully assess the advantages and disadvantages of borrowing the money, including the strategic value of the skills acquired, and the probable time and ability to repay the loan.

After a promising start, Mrs. Obama revealed how she really thinks the economy works: it is pure luck that determines the difference between success or failure. Either that, or magic. She said,

"The salaries don’t keep up with the cost of paying off the debt, so you’re in your 40s, still paying off your debt at a time when you have to save for your kids.

Barack and I were in that position. The only reason we’re not in that position is that Barack wrote two best-selling books… It was like Jack and his magic beans. But up until a few years ago, we were struggling to figure out how we would save for our kids.

Don’t go into corporate America. You know, become teachers. Work for the community. Be social workers. Be a nurse. Those are the careers that we need, and we’re encouraging our young people to do that."
What a shame someone did not have a copy of Benjamin A. Rogge's 1979 book, Can Capitalism Survive? handy. There, she could have read Professor Rogge's advice to the students of Wabash College. He wrote,

"I take as granted then your desire to do something useful to serve society. Can you do it as a businessman? That many still answer “no” to this question is a tribute to the enduring quality of an old myth—the myth that in an exchange, what one party gains, the other must lose. In a voluntary exchange, both parties must expect to gain or no exchange will take place. A businessman is a specialist in voluntary exchange, and his success is largely determined by how well he succeeds in serving others.

Don’t I really mean, by how well he succeeds in deceiving others into thinking he is serving them? Isn’t a kind of sophisticated dishonesty a requirement for success in business? I make no claims for the superior moral fiber of the businessman, but I will say this: A basically dishonest man can survive longer in the church or the classroom than he can in the grain exchange or the furniture business. The penalty system in the business world operates with some real precision and certainty, largely unencumbered by a mystique of occupational sanctification.

There are dishonest men in the business world, of course, but if you go into the business world, you will be under no greater pressure to stretch the truth than if you get a job as an editor of a college catalogue or as a speechwriter for candidates for political office or a member of Nader’s Raiders."

Thursday, March 6, 2008

Weather Channel Founder Denounces Global Warming Fraud

John Coleman, who founded the Weather Channel in 1982, denounces his creation for being a cheerleader for global warming hysteria (from the Business and Media Institute).

An excerpt...

Coleman also told the audience his strategy for exposing what he called “the fraud of global warming.” He advocated suing those who sell carbon credits, which would force global warming alarmists to give a more honest account of the policies they propose.

“[I] have a feeling this is the opening,” Coleman said. “If the lawyers will take the case – sue the people who sell carbon credits. That includes Al Gore. That lawsuit would get so much publicity, so much media attention. And as the experts went to the media stand to testify, I feel like that could become the vehicle to finally put some light on the fraud of global warming.”

Wednesday, March 5, 2008

Reason Weekend in Charleston

The Bastiat Society is pleased to announce that Paul Atkins, Commissioner of the Securities and Exchange Commission in Washington, DC, and Kathy Gornik, President of Thiel Audio in Lexington, Kentucky, are recipients of Bastiat Awards. Mr. Atkins will receive the Bastiat in Public Policy Award, and Ms. Gornik will receive the Bastiat in Business Award. The awards will be presented at a gala dinner in Charleston, South Carolina on Saturday, April 5th, 2008.

The Bastiat Awards are given in four areas: Public Policy, Culture, Academics, and Business. The awards honor individuals who, in the course of their professional lives, have distinguished themselves in promoting free market ideas and a greater appreciation of the socially beneficial and inherently moral nature of peaceful commercial activity.

The Society and the awards are named after the French economist Frédéric Bastiat (1801 – 1850), one of the all-time great spokesmen for classical liberalism, who was famous for his ability to translate complex economic ideas into language anyone could understand.

You have your choice. You can register for the entire Reason Weekend -- highly recommended -- or register for just the dinner.

The schedule follows. You can open a full-screen version of the schedule by clicking on the far right button of the Scribd toolbar.

Read this doc on Scribd: rw2008schedule

Reason Weekend 2008
April 3-6, 2008
Charleston Place Hotel
Charleston, SC
Register for the weekend now!

Reason Weekend is an outstanding opportunity to connect with friends who share a passion for liberty. Join Reason President David Nott and Reason Founder Bob Poole in Charleston, South Carolina for three days of outstanding speakers, excellent food, and stimulating conversation.

Located across from the Old City Market in the heart of downtown Charleston , Charleston Place combines Southern charm with the luxuries you expect from a five-star hotel. Golf, tennis, and a private walking tour of the city have also been arranged for our guests.

Register for the weekend now!

Tuesday, March 4, 2008

So Far, So Good

"A market economy is like an internal combustion engine. It can get a lot done at 45% efficiency. It's a waste of time to try for 100% efficiency. The question is, can we get to 50% or 55%?"

University of Chicago professor Richard Epstein.

The amazing thing about free enterprise is not how much goes wrong. The amazing thing is how much goes right. Free enterprise begins with the unpromising prospect of error-prone humans working with dispersed and limited knowledge. Yet it produces a complex, adaptive economic system that gives the average person the opportunity to daily enjoy the kinds of things once reserved for kings.

A key feature of the free enterprise system is how it deals with errors. In this, it differs dramatically from political systems. Free enterprise regularly purges itself of errors. We call it bankruptcy. On the other hand, political systems retain -- and continue to fund -- their errors for years, decades, even centuries.

For example, if a private pension scheme tried to operate the same way Social Security operates, it would be declared deceptive and illegal, and its organizers would be doing time in a federal prison. As it is, Social Security is hailed as a great success in perpetual need of just one more fix, and its organizers are living it up at the Willard Intercontinental Hotel in Washington, DC.

College tuition grants and loans? These programs are working so well that college tuition is rising at twice the annual rate of inflation. It seems no one explained to the legislators who dreamed up these programs that if you give people more money to spend on something, they will spend it, in turn driving up the price of whatever you wanted to help them buy in the first place. This is just another version of a monetary phenomenon called inflation. Print more money, all prices go up. Print money just for college prices go up faster than other prices.

Home loans and home buying programs? For decades, the federal government has been active in the market for homes, all in the name of trying to make homes more affordable and lending less restrictive. Well, if you give people money to buy homes, they will buy them, and thereby drive up the prices of homes, leading to an unprecedented bubble in home prices, which of course results in more calls for more government programs to make homes affordable, until somebody borrows too much money to buy a home he cannot resell or refinance. Credit crisis.

Anyone else smell another government "solution" coming soon?

The track record of human errors making a mess of things is so large we have a special name for it: history. The difference between human errors in free enterprise and human errors in government is the difference between a mid-course flight correction and a plane headed straight down while the pilot tells everyone on board "So far, so good."

Monday, March 3, 2008

Free Audio

Free Audio has a high quality and growing list of free audio books and essays on liberty. Titles include Bastiat's The Law and "The Candlemaker's Petition."

Free Audio is a project of Art Pollard. In a recent email exchange, he describes how it came to be:

"I decided that too many people are worried about winning the latest election. The problem is though, you can have a government that promotes freedom but, if the public wants something else, the "reforms" will not last. Thus came the idea of which tries to educate the public so that the average voter will understand why free handouts are not a good thing. I believe that it is through education -- not elections -- that the fight for liberty will be won. With education, the elections will come on their own volition."

Sunday, March 2, 2008

The Businessman and the Defense of Capitalism

Benjamin Rogge's collection of essays, Can Capitalism Survive?, is a great choice for any business person interested in a clear and subtly humorous presentation of the source and future of the world's greatest economic system.

How many books by economics professors begin with a paper presented at the Playboy Club in Lake Geneva, Wisconsin?

You can order your own copy from the Liberty Fund by clicking on the book's image.

Below, I offer the entire chapter entitled, "The Businessman and the Defense of Capitalism,," from the online version of the entire text, available thanks to Liberty Fund at the Online Library of Liberty.

"The Businessman and the Defense of Capitalism"
The question before this house is not whether the survival of capitalism is in doubt (this is admitted). The question for us, as it was for Lenin at an earlier time, is, What to do? His concern was how best to hasten the collapse of capitalism; our concern is how to postpone or ward off that collapse.

Frankly, I feel more at ease as the diagnostician than as the therapist. Cancer is still easier to identify than to cure and so is overexpanded government. Admittedly, diagnosis must usually precede therapy. After a lengthy diagnostic examination, the doctor looks up at the patient in some puzzlement and asks, “Have you had this before?” To this the patient replies, “Yes,” and the doctor says, “Well, you’ve got it again.” Quite obviously something more than this is needed. Proper therapy usually rests upon diagnosis of the specific problem, including some notion of how the patient got into his fix, whatever it might be.

I begin then with the question, “What is our problem?” In an earlier sentence, I identified the problem as that of overexpanded government. This is not really correct for the purposes of therapy. Overexpanded government is, in fact, but the most noticeable, objectively evident symptom of our problem. Our problem is in the form of a set of ideas whose implementation calls for the use of force, and government is that agency of society given a monopoly of the right to use force. For so long as those ideas are dominant in society, Behemoth will continue to grow. Nor is it useful for those who hold and espouse those ideas publicly to regret the associated growth in government and all its instrumentalities. Thus Senator Edward Kennedy has said recently that “one of the greatest dangers of government is bureaucracy,” and Senator Gaylord Nelson has said, “The federal bureaucracy is just an impossible monstrosity.” All well and good, but that growth in bureaucracy which they so rightly lament is the necessary and inevitable outcome of the ideas that these two (and others) have so well and so convincingly espoused.

What are these ideas that produce bureaus as larvae do moths? They can be expressed in various ways but their essence is to be found in the following related propositions:

(1) There exist individuals and groups in society who know not only what is best for them but what is best for others as well.

(2) This wisdom, when combined with the coercive power of the state, can be used to produce “the good society.” An accurate verbalization of these ideas is to be found in the statement of Newton Minnow, who said as chairman of the agency controlling television in this country, “What is wrong with the television industry in this country is that it is giving the viewers what they (the viewers) want.”

Compare this, for example, with these words from Adam Smith’s Wealth of Nations:

What is the species of domestic industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.94
Some of you may see in other idea-systems (such as economic determinism, relativism, envy, or what have you) the real source of our malignancy. God, my wife, my children, and all of you know that I am fallible, and perhaps I have chosen poorly in this case. What I am prepared to argue in a more strenuous way is my conviction that our struggle is at the level of ideas and not that of men or institutions. In the words of the celebrated John Maynard Keynes,

The ideas of economists and political philosophers both when they are right and when they are wrong, are more powerful than is generally understood. Indeed, the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.95
My first point then is that we are involved in a war of ideas. My second is that our target is not the masses but those men and women in society who deal in ideas and who shape the thinking of the masses. In the words of one of the great idea men of this century, the late Ludwig von Mises, “The masses, the hosts of common men, do not conceive any ideas, sound or unsound. They only choose between the ideologies developed by the intellectual leaders of mankind. But their choice is final and determines the course of events. If they prefer bad doctrines, nothing can prevent disaster.”96

My third point is that the ideas that finally count are those that relate to such fundamental questions as the nature of man, his purpose here on earth, and the moral character of human action. Arguments on the basis of economic efficiency are not alone capable of saving capitalism.

In the words of Joseph Schumpeter: “It is an error to believe that political attack (on capitalism) arises primarily from grievance and that it can be turned by justification. Political criticism cannot be met by rational argument.... Utilitarian reason is in any case weak as a prime mover of group action. In no case is it a match for the extra-rational determinants of conduct. The stock exchange is a poor substitute for the Holy Grail.”97

I have now enumerated my assumptions as to the nature of the task in which we are involved. I have argued that we are really involved in a struggle for the souls of men, that in that struggle it is ideas that count, and that the questions that are relevant are largely ethical in nature. Moreover, I have argued that our target is not the masses but those who live by the spoken and written word and who thus largely shape opinion in society.

If these assumptions be even roughly valid, what then is implied as to the role of the businessman in the fight to save capitalism? Before attempting an answer to that question, let me consider one that seems to precede it. Should the businessman as businessman even get involved in the struggle?

A number of factors would seem to indicate a negative answer to that question. To begin with, the businessman is not typically hired by the stockholders to carry on programs of social reforms; he is hired to add to the net worth of the company. Admittedly the net worth of the company may be adversely affected by particular acts of government, and the stockholders would surely approve of management action in opposition to those specific threats to profits—for so long as the potential gain exceeded the cost. At the same time, the company may often stand to gain through specific acts of government, including actions that work against the principles of capitalism. Is it a tariff against foreign steel producers? or an export subsidy that would increase the demand for the company’s products? or a government-enforced price or interest rate that adds to the profits of the company? How now the businessman? How can the president of the Mobil Oil Company be a convincing spokesman for free enterprise when his job seems to require that he oppose immediate decontrol of oil prices? How can the president of General Electric stand four-square for capitalism, yet support export subsidies for many of the products sold by his firm?

The fact is that there is hardly a businessman in this country who is not receiving favors from government in one way or another. The fact that this is true of most other elements in the society, including his critics in the ranks of the intellectuals, does not really change the nature of the businessman’s dilemma. His job may seem to require of him that he support specific government intervention in the economy of precisely the kind that, in the fight for men’s souls, he must condemn as general practice. Knowledge of Kant’s Categorical Imperative—do only that which you would be willing to see done by all—may get you an A in a college course in philosophy but may get you fired if you attempt to practice it as a businessman.

In other words, his very position may seem to require of the businessman that, in the struggle against government intervention, he be as often a part of the problem as of the solution. Moreover, how can he face those he is attempting to persuade to hold the capitalist faith when his own hands are so obviously unclean?

A second reason for a possible negative answer to the question of whether the businessman should get into the fight to save capitalism is that he is usually an amateur in the practice of the arts required by that struggle. The art required is not that of making or selling men’s suits or aircraft motors; the art is that of the dealer in abstract ideas, including and particularly systems of ethical judgment. Don’t misunderstand me; it is not that the businessman is unintelligent. I yield to no one in my respect for the great practical and theoretical intelligence required for effective entrepreneurship. It is simply that his intelligence is not applied, day in and day out, to the kinds of questions and considerations that are at the center of the argument. Not only is this not his turf, but he is usually not adept at the word games that go on on that turf.

What I am saying in essence is that here, as in most of life, the prizes (in this case, the souls of men) will go largely to those who are specialists in the arts involved. Admittedly there are some such (I could name you a dozen or so) from the ranks of the businessmen, but their skills in the arena of ideas and words are not a product of their business experience but of what they have done on their own initiative to improve their own understanding of the ideas involved here and their skills in communicating those ideas.

Where then does this leave us? Can the typical businessman do nothing but deplore the growth of government and go on about his task—which may have been made easier in some ways and more difficult in other ways by that self-same expansion of government involvement in economic life? I believe that the answer to that question is “no”—but I have some real sympathy with those businessmen (and this will be the great majority) who by their inaction say “yes.” After all, as Henry David Thoreau put it, “I came into this world, not chiefly to make this a good place to live in, but to live in it, be it good or bad.”98 Nor, as I have argued elsewhere, is it the administrator-businessman who has the most to lose from the passing of capitalism. Most of them will end up as administrators of socialist enterprises if and when full socialism arrives. It is the masses who have the most to lose—and who also have the least understanding of that fact.

But for those of you who are interested in doing something as business and professional people to counter the drift to collectivism, here is what I would suggest that might be both useful and consistent with the profit-oriented role for which you draw your pay.

(1) Work with your own staff members and employees. A work force that has some understanding of the marketplace and of where its own goodies come from may (and it is only a may) be a less troublesome, more effective work force over time. Any number of such programs, of varying effectiveness, are now in operation and available for general use.

(2) Work with the appropriate audiences in the communities where you have operations. Here again, there may be some payoff in terms of a better political environment in which to function. Again, there are a number of such programs now in operation.

Anything more? Frankly, I am not much impressed by the usefulness of business attempts to reach nationwide audiences with free-enterprise propaganda.

What else? The “else” is what the businessman shouldn’t do rather than what he should do. Moreover, it requires that the individuals involved must have done their own homework.

In fact, let me say right now that even the first two steps I have identified can do more harm than good if the people selecting and authorizing the operations have not themselves taken the time and effort to decide exactly what it is they believe and why. There is nothing about being a successful businessman (even a very successful businessman) that automatically endows one with an understanding of or an attachment to the principles of freedom—a statement I could support with a hundred examples, if time permitted. In fact, some of the great fortunes of America have been made by those who have learned how to use government intervention to their own advantage.

I cannot emphasize too strongly that the very first thing each of you who wishes to be a truly effective part of this struggle must do is your own homework. This requires reading, thinking and, yes, writing. I challenge each of you to go home tonight and put down in brief form your guiding principles in life and their applications in this area of the relationship of the individual to his government. You might also find it interesting to follow that with a list of those things which you and/or your company or group are now doing that are clear or possible violations of those principles.

Am I asking you to immediately cease all ideological wrongdoing? to cut yourself off completely from all areas of government involvement? Were you to do so, there would be literally no way you could eat or move about or keep warm or survive—such is the extent of government’s involvement in our lives. Each of you, in your professional role, must decide for yourself the limits of your compromise with the apparent demands of the moment.

Let me summarize:

(1) I am arguing that the first and indispensable step for any person who wishes to be a part of the effort to save capitalism is a determination of precisely what he believes and why. This will usually involve, not just putting down the already determined, but active study, reflection, and discussion. This is your intellectual and philosophical armor, and without it you are not only vulnerable but as likely to be a handicap as a help in the struggle.

(2) Try as best you can in this imperfect world to live by those principles.

(3) In using your professional role or your company in the struggle, do only those things that seem consistent with the long-run interests of those whose money you are using. Remember, not all stockholders will wish to have their money used in this or any other crusade.

(4) If you wish to play a personal role, apart from your company or professional connection, then you must dig deeper into what you believe and why; you must know even more fully the arguments and values of those with whom you disagree; you must continually seek to improve your skill in expressing your ideas and in demonstrating the errors in contrary positions. My guess is that only a few of you will carry through to this level of participation—but it is not a numbers game anyway; it is a game in which it is the quality of the few that finally counts.

I spoke earlier of the things that you should not do but didn’t specify them. What are they?

(a) Don’t make a pest of yourself by trying to force your free-enterprise ideas down the throat of every passerby—whether in your home, your office, or at the cocktail party. In the words of Leonard Read, founder and president of the Foundation for Economic Education, who has taught me everything I know on this and many other questions, “Go only where called—but do your damnedest to get good enough to be called.”

(b) You may not be able to avoid involvement in departures from principle, but at least don’t lend your voice or your money to the support of those departures. You may have to pay into social security or submit to a system of wage-price controls but you don’t have to join committees or groups who support such programs.

In a hundred different ways and forms, the American businessman is aiding and abetting the enemy by continuing his involvement in organizations and programs which are as likely to propose as to oppose extensions of government. Don’t let this reciprocity game you people of substance play with each other or your desire to be a good guy lead you to give your money and/or your name (and hence, by implication, your support) to activities or organizations that are working the other side of the freedom street.

To return to Thoreau:

It is not a man’s duty, as a matter of course, to devote himself to the eradication of any, even the most enormous wrong; he may still properly have other concerns to engage him; but it is his duty, at least, to wash his hands of it, and, if he gives it no longer thought, not to give it practically his support.99
Forgive me if I seem to blaspheme, but even your church and your college should be examined with some care before you bless them with your dollars and your support. You don’t have to prove you are a nice, broad-minded guy by providing the devil with the coal for your own burning.

Again to be specific, you needn’t insist that every professor on your old campus think exactly as you do, but I believe it completely appropriate for you to find out if the general idea system that you believe to be best is well and ably represented in the ranks of the faculty.

I close this sermon with these words: Avoid anger, recrimination, and personal attack. Those with whom you are angry are probably (taken by and large) at least as filled with or as empty of virtue as you. Moreover, they are the very ones you might wish later to welcome as your allies.

Avoid panic and despair; be of good cheer. If you’re working in freedom’s vineyard to the best of your ability, the rest is in the hands of a higher authority anyway. If you can see no humor in what’s going on (and even at times in your own behavior) you’ll soon lose that sense of balance so important to effective and reasoned thought and action.

Finally, take comfort in the thought that the cause of freedom can never be lost, precisely because it can never be won. Given man’s nature, freedom will always be in jeopardy and the only question that need concern each of us is if and how well we took our stand in its defense during that short period of time when we were potentially a part of the struggle.

[94. ]Adam Smith, The Wealth of Nations (New York: Modern Library, 1937), p. 423.

[95. ]John Maynard Keynes, The General Theory of Employment, Interest, and Money (New York: Harcourt Brace, 1936), p. 383.

[96. ]Ludwig von Mises, Human Action (Chicago: Henry Regnery Co., 1963), p. 864.

[97. ]Joseph A. Schumpeter, Capitalism, Socialism, and Democracy, 3rd ed. (New York: Harper & Row, 1962), pp. 144, 137.

[98. ]Henry David Thoreau, “Civil Disobedience,” in Walden and Other Writings (New York: Modern Library), p. 645.

[99. ]Ibid., p. 642.

The copyright to this edition, in both print and electronic forms, is held by Liberty Fund, Inc. Used with permision under the conditions of fair use. This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit.

Saturday, March 1, 2008

The Candlemaker's Petition

This is an audio version of Bastiat's famous satire, "The Candlemaker's Petition," where he pleads for the French government to protect France's domestic candle industry from unfair, low-cost foreign competition: the sun.

Bastiat's petition was published in 1845, and it is still effective as a brief but damning exposé of the self-serving logic of protectionism.

An excerpt...

" We are suffering from the ruinous competition of a rival who apparently works under conditions so far superior to our own for the production of light that he is flooding the domestic market with it at an incredibly low price; for the moment he appears, our sales cease, all the consumers turn to him, and a branch of French industry whose ramifications are innumerable is all at once reduced to complete stagnation. This rival, which is none other than the sun, is waging war on us so mercilessly we suspect he is being stirred up against us by perfidious Albion (excellent diplomacy nowadays!), particularly because he has for that haughty island a respect that he does not show for us."

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