Saturday, January 26, 2008

Taking Dictation

Thomas Sowell, the illustrious economist and social commentator, has observed that we can never dictate results, but can only initiate processes. This is true for everything we do.

Take weight loss, for example. If you want to lose fifty pounds, unfortunately, it is not as easy as snapping your fingers and decreeing the weight loss. You must initiate a process that, in some form or another, results in burning more calories than you consume over a sustained period of time, perhaps years. Generally, and superficially, the process consists of adding exercise to your daily routine, and saying no to many tasty foods that are high in fat, carbs, and calories. But more fundamentally, it involves changing the way you see food. You may need to learn why it is that you depend on food to bring joy into your life -- otherwise, all your dieting and exercising may be nullified when the joylessness becomes too much to endure. Justice plays a miniscule role in all this. A lot of people are beautifully proportioned who certainly don't deserve it, while a lot of people who are obese might deserve to be better proportioned. Maybe some day, a pill will change all that. But in the meantime, for the deserving and undeserving alike, diet and exercise is the process, and a better-looking body is the desired result -- fairly or not, it must be achieved, not decreed.

Personal wealth, for those of us who aren't born into it, is another such achievement. A process of being indigent probably won't make you rich; you'll have to start by selling your time and labor to someone willing to purchase it. This is called working. To get a good job, the ticket is to learn enough to demonstrate potential to an employer. This is called learning. Gradually, you will acquire experience, and hence the ability to get better and better jobs. And finally, you will have to accumulate a certain amount of capital, and then find a vehicle for it that earns value at a faster rate than the countervailing efforts of inflation and the IRS. This is called saving and investing. Learning, working, saving, and investing are nothing more than processes, however, and they are not guaranteed to make you rich. But if you are to become rich, some combination of these processes will be essential to your success. Again, justice is only a bit player, if that. Not everyone is smart enough to go far in school. Not everyone is psychologically equipped for the workplace. Not everyone has the discipline to save nor the insight to invest effectively. Many of us will someday achieve some degree of financial success, but few will become rich.

Regarding wealth, most folks in our society do not like where these processes, unbound, would tend to take us. Many would at least try to ensure that others aren't allowed to take away by force or fraud what you've worked so hard to acquire. This modest role for justice has been the prevailing one for centuries in Anglo-American history, but it is only justice with a small "j" -- justice as a member of the supporting cast. It does nothing to address the unfairness of life, but only tries to see to it that public policy will not add to whatever injustices one may already suffer. That's not a small thing, by the way, as our history of slavery and Jim Crow would attest. To do good, first do no harm.

And then there is that group of folks who believe Justice, with a capital "J", should be the star of the show. We call these folks liberals. If life is unfair, public policy should help to even things out. And it's hard to argue that it never should. Here's a family struggling hard to make it, and whatever the parents may have done to make things hard on themselves, the children certainly aren't to blame, are they? Don't we want to feed, clothe, and educate those poor kids? And over here is a fellow who has a physical handicap that makes it hard for him to find gainful employment; can't we find something for him to do? Or subsidize his efforts to better himself? It takes a heart of stone to say no, or so the liberals think.

Even so, there are problems with this viewpoint. For one thing, it's gloriously open-ended. Justice must be perfect, or else it isn't justice at all. Public policy becomes everyone's personal deus ex machina. Before you know it, whenever anyone suffers any sort of calamity, we expect government to kiss it and make it better. Another problem is that perfect justice requires perfect knowledge and perfectly pure intentions. Does anyone know a judge, a senator, or a president with perfect knowledge and intentions? Anyone? Anyone? Anyone? Buehler?

But the basic problem is that justice is a result, and, as previously discussed, results cannot be dictated. We can only initiate processes which may, or may not, help us secure a little more justice. But such processes are never free. They necessarily require taking money, resources, and opportunities from other folks, so that at best justice comes attached with a litany of trade-offs, the most obvious trade-off being the bill at tax time. The typical American taxpayer each year works from January to May before he has paid that fee. Does anyone think he gets his money's worth? Anyone?

But monetary cost is hardly the end of it. With each new process comes a change in the incentives, and so gaming the revised system becomes an intrinsic part of the process of getting ahead. Oddly enough, the folks who were already smart enough to get ahead without government largesse are the same folks who are better at gaming the system. And where's the justice in that?

An example: the federal government passed a law to give minority-owned businesses a leg up when competing for government contracts -- ostensibly, to partially mitigate all the years when minorities were prohibited from competing. But then, the government added women to the list of the oppressed classes, and who can argue with that? The result: all it takes for a business to take advantage of those laws is to place its ownership in the hands of a woman. Maybe she's the wife of the fellow who really started and understands the business. Maybe she's even white. That's okay with the law. Noting that the results weren't what the law's proponents may have originally had in mind, Thomas Sowell has asked, is there anything that was ever done to black people in America that justifies giving special preferences to upper middle-class white women?

Today, certain politicians are proposing that it is government's duty to protect not just our right to invest, but the investments themselves -- at least, those made by homeowners who bit off more than they can chew. As an economic class, homeowners are far better off than non-homeowners, but not to worry: politicians can always tell whenever an injustice has happened just by asking their pollsters. Once we have established that government has the power to pursue perfect justice, it's way too late to complain that now it pretty much has the power to do anything its decision-makers want. And what they want is to buy votes.

Once again, where is the justice? Such homeowners have certainly been unfortunate, but it's not like they didn't make the bad decisions that put them in their current pickle. I'm sympathetic. Really, I am. I have certainly lost a few chunks of change myself in bad investments, and it isn't a pleasant thing. Funny thing, though, is that nobody ever comes to us before buying an expensive house, promising to share its appreciation with us. They only come when it's clear that we will be sharing their losses.

Trust me on this: if the federal government starts bailing out bad real estate investments, at least three things will happen. One is, the rules governing the bailout will be written in such a way that most of the largesse will go to folks who are already better off than the typical taxpayer, turning it into a subsidy for the better-off by the worse-off. Secondly, the bill for all this largesse will be staggering. But thirdly, and most importantly, our economic incentives will have been dramatically altered. One thing about making bad investments, under normal circumstances, is that the incentive to quit making them is immediate and painful. Not allowing these investments to fail will, as a nation, make us more reckless about what we invest in, and thus will weaken the economy for everyone.

And that's just the start. We don't know where the ramifications will stop. That's the problem with instituting processes. They keep going and going. You can determine they are counterproductive long before you can determine how to kill them.

I am old enough to remember when we had a Republican Party that could be counted on to point out all these things whenever Democrats wanted to add another client class to the government teat. Let's close out this discussion with a quote from P. J. O'Rourke, made back during those halcyon days (see Parliament of Whores):

"God is a Republican and Santa Claus is a Democrat. God is an elderly or, at any rate, middle-aged male, a stern fellow, patriarchal rather than paternal and a great believer in rules and regulations. He holds men strictly accountable for their actions. He has little apparent concern for the material well-being of the disadvantaged. He is politically connected, socially powerful and holds the mortgage on literally everything in the world. God is difficult. God is unsentimental. It is very hard to get into God's heavenly country club.

"Santa Claus is another matter. He's cute. He's nonthreatening. He's always cheerful. And he loves animals. He may know who's been naughty and who's been nice, but he never does anything about it. He gives everyone everything they want without thought of a quid pro quo. He works hard for charities, and he's famously generous to the poor. Santa Claus is preferable to God in every way but one: There is no such thing as Santa Claus."

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