08/02/13 – Sheldon Richman – The Scott Horton Show

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All right, y'all, welcome back to the show.
I'm Scott Horton.
This is my show, The Scott Horton Show.
Appreciate y'all tuning in.
Our next guest is our good friend Sheldon Richman, vice president of the Future of Freedom Foundation and editor of their journal, The Future of Freedom.
Welcome back to the show, Sheldon.
How are you doing?
I'm doing fine.
Always glad to be with you.
Well, I'm always very happy to have you here and always happy to read your articles at FFF.org.
You can tell they're old school if they got FFF.org, am I right?
There you go.
The TGIF, The Goal is Freedom article for this Friday is Frederick Bastiat and Subjective Marginal Utility.
Before anybody thinks that's boring because it sounds boring, just wait because you'll find out that it's really exciting.
You're right, Sheldon.
I believe it is.
Well, what's so exciting about it then?
Well, one thing it does is show that economics is about people.
It seems to me that when you hear discussions of economics either in the news or in a normal regular textbook you're bound to find at college, it's this weird ... the economy's kind of a machine that's got to be tended usually by government to make sure it's running right and put the throttle on sometimes, put the brake on sometimes, and it's disembodied.
It's divorced from human beings.
Well, Bastiat and the tradition, especially the Austrian tradition that came about 20 years later, and my point is they have a lot in common, is it shows that economics is people.
The economy is people, people pursuing objectives that they regard as important to make their lives better, to improve their lot in life and their families' lot in life, and the institutions that arise out of people pursuing their objectives.
That's what economics is about.
It's flesh and blood.
It's what's called humanistic economics.
Well, now, so when you look at it that way, why does that cause you to get things right that the scientists or pseudoscientists miss?
Well, for one thing, if you take people out of it, you're thinking ... or if you almost make them an afterthought that somehow, oh yeah, they'll get the benefits of whatever the policy makers are going to do, that's how you're thinking about it.
First of all, it's not going to be good for people, and it's going to lead into this sort of planning mentality that the economy is only a machine.
A machine, yeah, think of a machine like in a big plant or something.
It needs to be tended.
It's not human.
You need a human being there who's smart and understands the machine to make sure it's well-oiled and has all the parts when they wear out.
It's a dehumanized look at the economic process.
But what the Bastiat and then the later Austrians constantly pound away at is that we're talking about people pursuing their ends, and therefore the policy makers, the planners, are just getting in the way.
They're substituting their judgment for our judgment, and that can't end up good.
All right, well, two things.
First of all, we need to talk about exactly what you mean by marginal utility and all that, but before that, if you could, I guess, give us an example of what you mean where the pseudoscientists end up with their magnificent plan ... and don't invoke the Soviet Union.
Talk about American Democrats and Republicans and technocrats.
How they mess things up by missing the point that you're making here about human action versus some car that's got to be tinkered with or whatever.
Yeah, okay.
It's very easy.
In fact, it relates to an article I had the day ... yesterday, so the two articles work together.
As we know if we're reading the papers, we know that this week fast food workers have been walking off the job in different cities for 24 hours to protest the low wage.
And so there's a movement that's now building behind them that we ought to double the minimum wage or more than double it from, what is it, $7.25 to $15 an hour so that these people can have a living wage.
Well, I'm totally in sympathy with people having wages, high wages, much more than a living wage, but the minimum wage idea embodies this mentality I'm talking about.
The idea that a wage can just be decreed, that it's just a number.
Somehow we just throw a dart on a board, and that's how people come up with a wage.
And they don't understand that the wage is a result of a process.
And I want to talk about the process.
I think it's not free, and I want it to be free, but as it stands now, if you tinker with a wage without doing anything else, and you sort of just decide to raise it because you have the goodness of your heart, let's assume the motives are all good, it doesn't necessarily mean you're going to get the objective that you are aiming at.
You may end up throwing people out of work in the name of raising their wages, which I think everyone would agree would be a bad outcome.
So that's what I mean by the planning mentality.
If you have a machine and you make some adjustment in it, I presume the adjustment will take its effect, and if you understand the machine, it will then do what you want it to do.
But an economy is not like that.
You can't say, oh, I think the wage of a fast food worker should be higher, therefore I pass a decree.
It may not be below $15, and everybody's going to be happy.
Uh-uh.
It doesn't work that way.
All right.
Now, wait a minute.
I'm not going to call you a democrat for a second, but one who's actually been to school and say, well, now, hold on a minute.
I know that, hey, at some very edge of the margin somewhere, people are going to be thrown out of work for a raise in the minimum wage.
But on the other hand, you know, they may be better off than stuck in a situation that is ultimately exploitative.
If they're making so little, you know, waking up in the morning and working eight to five, and they're still making so little they can't hardly survive, what's that worth anyway?
You're better off on unemployment or taking out a loan and getting some better skills and whatever.
And meanwhile, it's sort of a dehumanizing and horrible thing to have, and you know they're kind of collectivists, the Democrats, to have a society where we value people's lives so little that we're willing to let them basically go hungry, pay them so little to show up at work that they can't take care of themselves.
They all have to go on welfare anyway, right?
I mean, like the minimum wage, they say, you know, that all food stamps and WIC and Medicare and all this stuff is basically just welfare for Walmart, ultimately, because they won't pay their employees enough.
Well, that's why they need to read yesterday's article as well as today's.
The point of that is to show that the way to help lower-skilled people who have low wages is not to decree a higher wage, and then if they lose their jobs, say, oh, well, it's good.
Those were crappy jobs anyway.
That hardly seems very humane.
What I do is say that what I point out is that wages will rise, you know, there's a lot of reasons wages rise, but one thing that can keep wages from rising is lack of alternatives.
Right?
If you can walk off a job and find an alternative job or go into business for yourself, you know, in a small scale of street vendor, let's say, a taxi driver, or form a worker-owned project, enterprise, then you can basically say to an employer who you don't like, who's paying low wages or not treating you well, screw you.
So you have clout as a worker to the extent you have options, alternatives.
Now, the point of yesterday's article was to show that government systematically closes off options, and usually as a favor to people who are already established in business.
And I give a list of some, there are many more, but occupational licensing, hundreds of professions, and I'm not talking about doctors, I'm talking about all kinds of work.
In Louisiana, I'm talking about florists.
You need a license, a costly license, to get into a business, and who gives the test?
The existing practitioners of the work, and they're not interested in seeing a flood of new competitors that lowers their incomes.
So it's harder to get in.
You have to spend thousands of dollars, let's say, to go to a school, a special class, even if it's not terribly relevant.
You have to then maybe spend money for the fee to take the test.
And it's costly.
So there's all kinds of barriers.
Zoning puts up barriers.
First of all, it makes housing more expensive.
Often it means you can't use your house or apartment for a small business, because it's not zoned commercial, and you can get in trouble for that.
Intellectual property puts barriers in the way of people starting businesses, because then they could get sued if their product is regarded as infringing someone's patent or copyright.
There's a whole bunch of things.
Taxes and regulations obviously take much more toll on an individual trying to start up a business than an established business, or certainly a big corporation.
They have a legal department and an accounting department, and they say, here, you worry about it.
But think about just a small-scale person who wants to leave his job because he hates it, hates the wage, the onerousness of a wage job, and wants to start a small business.
He's going to be intimidated by all the rules.
And so all those things, and there's a ton of them, and they're systematic, and they've been added on over the years, cut off people's alternatives.
If you cut off people's alternatives, you are reducing their bargaining clout.
And if you reduce their bargaining clout, they have to take whatever they can get.
And employers know that.
Employers know that if they have a worker that they regard as troublesome or an upstart or somebody who is asking a lot of questions and maybe is, you know, lippy and has suggestions about why don't we do it this way, he doesn't have to care about getting rid of the guy because there's a ton of other people in line who will take the job, because their options have been cut off.
That's what we need to talk about.
This business with the minimum wage is a cruel hoax on low-income people and low-skilled people.
If you call the white elite, you know, the ruling white elite will throw a few crumbs to low-income people, and they'll be so grateful to us.
Meanwhile, they'll leave all these barriers to alternatives in place.
That's no coincidence.
It's a cruel hoax on those people.
Yeah, well, that's what Harry Brown always said, right?
The government, they break your leg and then hand you some crutches.
Exactly.
And then they go.
And the crutches aren't even good crutches.
They break.
Yeah, and if it wasn't for us, you wouldn't be able to get around at all.
Right.
And the muggers would get you.
They want their votes.
They want people beholden and dependent, so they talk them into, oh, yeah, it's not our fault that you can't find other alternatives.
You know, it's the system, and here we're trying to fix the system by raising the minimum wage or by, you know, giving you WIC or some crap like that.
But it's a joke, and the leaders who spout this stuff, they must know by now it's a joke, because after all these years, how come we still talk about people being in poverty?
You know, if the system, if their ideas worked, wouldn't this problem have been in the past now?
What's going on?
It doesn't work.
They don't want it to work, which means, in effect, it is working.
It's working for the sake of the power elite.
Right.
Well, you know, it's funny.
I think probably a big part of the problem is people, you know, libertarianism is that unified field theory that puts all these different criticisms into a big pile together where other people sometimes can't quite make the connection, because, you know, I grew up my whole life where you didn't have to be a political person at all.
Everyone knows at some level, whether it's just a lawyer joke level or not, but everybody knows that government is corrupt, that the taxi cab business in every town is a racket, that the whole thing, you know, you're polite to call it lowercase F fascism.
It might just be capital F, you know, the way it's all just gangsterism.
Or if you know anybody who ever was in the army, he could tell you, yeah, man, we did a secret war in El Salvador where we killed all these people and nobody ever knew about it.
Or whatever.
You know what I mean?
Everybody knows that there's this alternative reality, the real reality, compared to the one on TV, where everything is a rigged game.
And like, I can tell you about the cab business.
That's a great one that you brought up where here, a regular guy who's not very good at much and maybe can't even read very well, could have a car and drive for a living.
And maybe you could argue in a collectivist basis that the town, the city or the county has the right to make him get a background check and make sure he's not a felon or whatever.
I might concede that one, you know, all other things being equal.
But it ought to be anybody can just get in their car and have a phone number and give people rides.
What the hell is this?
Is this the Soviet Union or something?
But instead, every cab business in America is run as a political cartel out of the commissioner's court or the city council.
It's not even a business at all.
It's a Nazi thing.
No, and right.
And it's not just cabs.
In some cities where they've allowed this, there's something called the Jitney, which is something between a cab and a bus.
Right?
It doesn't quite have a fixed schedule or route.
Every has a fixed route, but not a fixed schedule.
It's some kind of hybrid that and the vehicles aren't as large as a bus, but they're bigger than cabs.
And where they've been allowed to work there, they're quite nice for for a lot of people.
And yet they're all not allowed in in some cities because they don't want to either fool with the they don't want to mess up the municipal bus system, which is, you know, usually owned by the city or interfere with the cab cartel, which is a source of patronage and all kinds of favoritism.
And it hurts people.
You know, we we know what people can do if simply left alone.
And the reason we know this, even people of low with, you know, with few resources, there's been plenty of study of the what's known as the informal market in Latin America and other places.
And by now, by this, I don't mean the black market.
It's more like a gray market, right?
It's not the black market in drugs or stuff that has been declared a contraband.
We're talking about people who are sort of selling things which aren't illegal, but they're doing it without the official papers, the permits and all that stuff.
And maybe they can't even afford to rent a store.
So they're using a kiosk or a pushcart or something like that.
It's and they and for one reason or another, the police and the government just look the other way.
Those people do very well for themselves and they really get a start on life.
And if and they begin to face these people, they work very hard, they save and they get their you know, they they help their kids.
They're thwarted from getting maybe even more successful because of all the all the legal stuff.
But you can see we we still have an indication of what people can do.
If the government even just does as much as look the other way and leave them alone.
They begin to they sell, they buy and sell.
And you know, it's mutual aid.
It's the vision of labor.
It's all the stuff that radical free market people predict will happen.
And it's not just a prediction because we see it.
There have been many studies of Peru and places all throughout Latin America where the informal market thrives.
It's what keeps people alive.
Well, now here's the problem that we're up against, too, which is the reason that a government can afford seven thousand hydrogen bombs is because there's so many people making so much money because there is as much freedom as there actually is.
And the American people have been able to afford the one of the meanest governments ever.
The biggest government ever.
I guess you can't really compare it to.
Well, no, I mean, really, if you if you count since the end of World War Two, never mind all the terror bombing during World War Two, but just since the end of World War Two, you're talking Nazi level body counts of civilians at the hands of the American empire.
I mean, you could compare it to the very worst regimes.
And it's because of freedom.
Right.
All these people producing all this great stuff is they're just ripe for the tax man.
They don't care.
It's like a golden goose's throat just for one egg.
And there's so many gooses to take the eggs from.
They don't care.
You know, that's a good point.
We this is a very rich country.
And I would argue that it's, you know, because of the degree of entrepreneurship that's that's permitted, even though it's highly forwarded in a lot of ways.
But that has enabled the government to, you know, suck an awful lot of wealth from the people.
And it still leaves because there's so much it leaves enough for, you know, for people to to do, you know, relatively OK.
Sure, we could be we'd be doing better if they weren't sucking all that money away.
But it doesn't leave the general population destitute.
So people don't notice it.
Plus, they get all the propaganda about how this is all good for their security.
Otherwise, the barbarians will be, you know, pouring through the gates and what and what not.
So, yeah, you make a great point.
In a way, the wealth has come back to haunt us because the government can get away with so darn much.
Yeah, I learned that from Star Wars and I was a little kid that that was what was wrong with the Republic was it was free and so everybody made so much money that then they got as greedy as the pile of money was high.
And then it all became a corrupt, evil empire and they killed everybody.
So there you go.
Jedi Knights couldn't stop it.
Well, there's a lot of ironies like that.
I mean, I pointed out that one of the great things about a free market is you don't have to you don't have to understand how it works for it to work right.
It's just people going about the business and it works.
That's the point.
It's it's market forces are, in that sense, impersonal.
We're not aiming at creating market forces.
You and I are just trading, buying and selling.
And but that as a result of that, you get this huge you get this big overall order.
These are this institution, the price system and whatnot.
And we don't really have to understand how it works, obviously, would never get off the ground if you understand that first, how did it ever start?
But the danger of that is, since nobody understand, I won't say nobody understand how it works, is most people don't need to understand how it works.
They don't know what will threaten it.
They take it for granted.
And so what's a virtue is also a huge not a vice, but it's a danger.
The fact that it doesn't require our understanding.
Right.
Yeah.
All technologies are double edged swords one way or the other, you know?
Yeah.
You know, if there's a deity, he had a really bad sense of humor.
Yeah.
Or a really good one, depending on how evil you are.
I think, you know, Mencken said that, you know, he didn't think there was one God.
He thought there was a committee of gods because that's the only reason you could explain some of these problems.
It was designed by a committee.
Yeah, well, he was good with the quips, not me so much, but all right.
Well, and I want to bring up one last thing here at the very end, which this is pretty much universal.
The cost of driving a car and you can get a car pretty cheap from somebody somewhere, you know, for under a grand or whatever, you can scrape one together.
But man, all the insurance and all the licenses and all the fees and all the different trips you've got to make down there and all the different crap, it is really cost prohibitive to someone who, say, has some health problems, you know what I mean?
And I know this actually, again, from being a cab driver for so long.
I've met 150,000 people before in my life and I've talked to them all and I know what they're all about and what they're going through and whatever.
And this is a huge problem for people that they could drive if they were free, but they're not.
Well, and another thing that's true, a lot of that's everything for getting to your new job or trying to get a new job is you've got to have a car so you can go get a new job.
Right.
And then so you can show up at it tomorrow.
And a lot of the things the government has done, and whether this was the objective or not, you know, who knows?
You'd have to look at each case.
But one of the things that the government, various kinds of government regulations have done is to create the necessity for a car for people who might otherwise not need one.
For example, zoning, the traditional philosophy of zoning, it might have changed in recent years with the separate uses.
So residential areas were kept separate from commercial areas, were kept separate from, say, light industry.
So you had to travel to get to a job.
You couldn't just walk to your job.
And since, as we said, jitneys were not allowed and cabs were made artificially expensive by the cartel, a lot of people want a car who never would have bought one.
So it's just another same old, same old.
Yep.
Giant perversions of the market every time the government breathes.
All right.
FFF.org.
That's where you find Sheldon Richman.
Thanks, Sheldon.
Anytime, Scott.
Thank you.
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