Fearful Symmetry - the Fall and Rise of Canada's Founding Values. Brian Lee Crowley
to “get your share” puts you at a competitive disadvantage. Even if you prefer to mind your own business and just do your own thing, you cannot. If trade unions are going to lobby the state for special powers (such as laws forbidding replacement workers), companies need to be there to make sure their interests are protected. If your competitors are going to lobby for special tax breaks or subsidies or trade barriers or tariffs or regulations, you need to get “your share” by being at the table or your taxes will be financing your competitor’s advantages. If others are going to get state-financed welfare benefits or social services, if you don’t get the ones you want, you will foot the bill but get little in return. Everyone is drawn to the state in unproductive activity that is essentially defensive.
Three, human beings have a visceral reaction against what they perceive as unfairness. Most of us are morally outraged if we see someone getting ahead through unfair means, by cheating on a test, or sleeping with the boss, or sycophancy or lying or bribery or exploiting family connections. Human nature being what it is, a surprising number of people, seeing such things going on, feel themselves to be morally entitled to act improperly, and the more widespread the illicit behaviour, the more people will feel that they are chumps if they do not abandon their principles and grab what they can while the going is good. Put another way, the cost of being good is low when the vast majority are good but rises rapidly as larger and larger shares of the population defect from this standard. Once some tipping point is reached, playing by the rules is simply allowing yourself to be taken advantage of, because decisions about who gets what are being taken arbitrarily and on the basis of relative power rather than merit or justice.
On the other hand, unless our character and judgments are disfigured by corrosive and unworthy emotions like envy, we have little quarrel with people getting ahead in economic terms on the basis of merit, which is the application of the principle that people should get out of the economy something closely related to what they contribute. Similarly, on a narrower range of goods (especially those provided by the state and therefore supported by compulsory taxation), generally speaking we don’t quibble too much about everybody getting the same share of desired things (which is just the application of an equality rule). But when the patronage powers of the state become too large and the largesse is distributed according to the preferences of those in power, rather than by merit or the equality rule, we react very differently.
Why does all this matter in trying to understand how the growth of the Canadian state (at both the federal and provincial levels) became self-perpetuating, even though people thought that dependence on the state was a bad idea in principle? Because of the way rewards are distributed in the marketplace versus the way they are distributed by the state. Markets reward and encourage people for producing valued goods and services for each other. The state rewards and encourages people to organize politically to use the state to get the things they want based on their relative political power.
You may think that your employer determines, in his or her sole discretion, what you will be paid, but nothing is further from the truth. Your boss is constrained by the market. If he pays too little, other employers will bid away valuable employees by offering them more money. If he pays too much, his product will be overpriced in the marketplace or his return on investment will be too low and he’ll go out of business. One of the critical pieces of information that employers are always chasing is what the market is paying today for the kind of employees they have and wish to keep. And ultimately the value you have to your boss is determined by the value you give, measured by your productivity. If you are more productive than the average employee in your field, you’ll command a premium wage. If you give less than average value, you probably won’t last long in your job.
That means that most real jobs in the real economy offer an opportunity for someone who wants to get more than they get today, and the way that they avail themselves of that opportunity is to work harder. They can then either get better pay or, if their boss doesn’t want to reward superior productivity, they can find an employer who will. It is just the same with people offering services, lending money or selling widgets. In most circumstances you get ahead by providing superior value.44 And here is the crucial point: the other party to these transactions has to agree that they are getting the value they are looking for, because transactions in the market are not compulsory, but voluntary. I don’t have to hire you; you don’t have to buy from me. We engage in these kinds of exchanges only when both parties see the value in doing so.
So we get ahead by creating more value (or by “making”), and we are not subject to the arbitrary will of others in our business or employment relationships because, except in very exceptional circumstances, we have choices about what we buy and sell, when and to whom. No party to the vast majority of economic transactions sets the terms of those transactions unilaterally.
This is the exact opposite of transactions with the state. The state takes its resources compulsorily from taxpayers, not as a result of a negotiation of value to which each party must agree. It then distributes them in accordance with the will of those who hold political power, whether directly or indirectly. And while people will generally acquiesce in the distribution of income and so forth by the market because that distribution is not the imposition of someone’s will or preferences, they quickly grow to resent the arbitrary awarding of benefits and advantages to those close to government.
Why You Can’t Just Mind Your Own Business
This phenomenon, where more and more members of society are drawn into taking rather than making, is known as “rent-seeking,” an extremely ugly social science term that I try to avoid whenever I can (even though it will slip into this book from time to time).45 It is easier to think of it as “People Using Political Power to Enrich Themselves by plundeRing You” or, if you will forgive the acronym, what I call “PUPPETRY,” in the same spirit as “Fannie Mae” is understood to mean the Federal National Mortgage Association, or “Freddie Mac” the Federal Home Loan Mortgage Corporation. This idea of people winning unearned benefits at others’ expense through successful political activity was first systematically described in modern terms by the American political economist Mancur Olson, most famously in his little classic The Logic of Collective Action. One of his students summarized his thinking:
“The great majority of special interest organisations redistribute income rather than create it, and in ways that reduce social efficiency and output,” said Olson. Groups rarely propose ‘social benefits’ that don’t also handsomely benefit themselves.... As society becomes more and more dense with networks of interest groups, as the benefits secured by groups accumulate, the economy rigidifies, Olson argued. By locking out competition and locking in subsidies, interest groups capture resources that could be put to better use elsewhere. Entrenched interests tend to slow down the adoption of new technology and ideas by clinging to the status quo.... At last society itself begins to change. “The incentive to produce is diminished; the incentive to seek a larger share of what is produced increases.” The very direction of society’s evolution may be deflected from productive activity and toward distributional struggle. [Emphasis added]46
Another way of thinking of this shift is that the character of individuals and the society that comprises them begins to change, from one of making to one of taking. This insight that the state becomes a temptation to immorality and a character-corrupting institution when it is permitted to engage in excessive redistribution was best expressed by the nineteenth-century French political economist Frédéric Bastiat.
Since, Bastiat notes, we are all asking the state to take from others and give to us, and since the state cannot give to us without taking from everyone, the state may properly be defined as “the great fiction through which everybody endeavours to live at the expense of everybody else” [emphasis added].47
In other words, when we allow the state to become an instrument of redistribution on a large scale instead of impartially administering laws that treat everyone the same, it too easily becomes the instrument of some groups imposing their will on others. When you know that political power may be used against you, from a purely defensive point of view it becomes imperative to organize and to seize that power, even if all you want is to be left alone.