Freedom in One Lesson

35.

The Free Market Ignores the Poor

For years, I have toyed with writing an article I would title “Ignore the Rich.” The core idea would be that focusing on “the rich” leads to envy and, from there, all sorts of restrictions that hinder the incentives for people, rich and poor, to use their productive assets in the service of others. Ignoring the rich and instead focusing on effects produced for everyone could help bring about far better policies and far broader benefits for society.

Leonard Read follows a similar path in “The Free Market Ignores the Poor” (Read 2014b), first published in his 1962 book Clichés of Socialism. Today, almost every policy—say, the imposition of higher electricity bills or mortgage loan rates on those with higher incomes or better credit scores— is “justified,” at least in part, by its helping the poor through some form of government coercion. But ignoring the poor as well as the rich, beyond giving them the same justice and protection, would also benefit society.

Once an activity has been socialized for a spell, nearly everyone will concede that that’s the way it should be.

Without socialized education, how would the poor get their schooling? Without the socialized post office, how would farmers receive their mail except at great expense? Without Social Security, the aged would end their years in poverty! . . .

Agreement with the idea of state absolutism follows socialization, appallingly. Why? . . .

Once an activity has been socialized, it is impossible to point out, by concrete example, how men in a free market could better conduct it. How, for instance, can one compare a socialized post office with private postal delivery when the latter has been outlawed? It’s something like trying to explain to a people accustomed only to darkness how things would appear were there light. One can only resort to imaginative construction.

Read gives one of his favorite examples of such a socialized activity—the US Postal Service.

During recent years, men and women in free and willing exchange (the free market) have discovered how to deliver the human voice around the earth in one twenty-seventh of a second; how to deliver an event, like a ball game, into everyone’s living room, in color and in motion, at the time it is going on; how to deliver 115 people from Los Angeles to Baltimore in three hours and 19 minutes; how to deliver gas from a hole in Texas to a range in New York at low cost and without subsidy. . . . Yet, such commonplace free market phenomena as these . . . fail to convince most people that “the post” could be left to free market delivery without causing people to suffer.

He then develops an imaginative extension to reinforce this illustration.

Imagine that our federal government, at its very inception, had issued an edict to the effect that all boys and girls, from birth to adulthood, were to receive shoes and socks from the federal government “for free.” Next, imagine that this practice of “free shoes and socks” had been going on [since America’s founding]. Lastly, imagine . . . one with a faith in the wonders of what can be wrought when people are free—saying, “I do not believe that shoes and socks for kids should be a government responsibility. Properly, that is a responsibility of the family. This activity should never have been socialized. It is appropriately a free market activity.”

What, under these circumstances, would be the response to such a stated belief? Based on what we hear on every hand, once an activity has been socialized for even a short time, the common chant would go like this, “Ah, but you would let the poor children go unshod!”

However . . . where the activity has not yet been socialized, we are able to point out that the poor children are better shod in countries where shoes and socks are a family responsibility than in countries where they are a government responsibility. We’re able to demonstrate that the poor children are better shod in countries that are more free than in countries that are less free.

Read then explains what he means by his claim that the free market ignores the poor and why in doing so it improves our experience.

The free market ignores the poor precisely as it does not recognize the wealthy—it is “no respecter of persons.” It is an organizational way of doing things featuring openness, which enables millions of people to cooperate and compete without demanding a preliminary clearance of pedigree, nationality, color, race, religion, or wealth. It demands only that each person abide by voluntary principles, that is, by fair play. The free market means willing exchange; it is impersonal justice in the economic sphere and excludes coercion, plunder, theft, protectionism, subsidies, special favors from those wielding power, and other anti-free market methods by which goods and services change hands. It opens the way for mortals to act morally because they are free to act morally.

Today, Read’s analysis would be met with the rebuttal that markets fail us when people do bad things, followed by some version of the current reigning non sequitur that government must intervene in those cases and fix things. Unfortunately, that counterclaim ignores Thomas Sowell’s often repeated insight that in a world of unavoidable scarcity, public policies can offer “no solutions, only tradeoffs,” which means government, which has no resources but what it has taken from people, must violate citizens’ property rights to provide its alleged “solutions.”

Further, to portray government as a paternalistic solution ignores not just the theft involved and the undermining of productive incentives but also the fact that it has insufficient information and incentives with which to make decisions. Government dictators care less about citizens than people do about themselves and parents do about their children. They also know less about the preferences and abilities of people and the tradeoffs they are willing to make. Moreover, government benefits by making citizens dependent rather than independent.

Read’s rebuttal to the argument about human imperfection is:

Admittedly, human nature is defective, and its imperfections will be reflected in the market (though arguably, no more so than in government). But the free market opens the way for men to operate at their moral best, and all observation confirms that the poor fare better under these circumstances than when the way is closed, as it is under socialism.