How To Debate A Progressive On Economics

Avoid analogies, personal experience, anecdotes, economic statistics, economic "research" and morality.

Why morality?

Because economics is not about how human beings should act; it is about how human beings do act: with purpose.

Why avoid economic statistics and the rest?

Because economics is an abstract, rational science. Economic truth is discovered by means of ratiocination. Logic is the final arbiter. And because economics is a rational science, its discoveries cannot be disproved by the empirical evidence of sociological or historical "facts." This is a difficult concept for most people to understand and accept. However, the essence of it is quite simple.

Just as the rational science of mathematics is the tool by which we understand natural phenomena, the rational science of economics is the tool by which we understand human action and human history, which is simply the record of individual human actions in the past.

We assume that there exists in natural phenomenon a regularity in the concatenation of events. If a physicist observes an apple fall from a tree to the ground, he does not assume apples have a mind of their own and that this particular apple wanted on this occasion to fall to the ground rather than fall up to the sky. He assumes that all apples fall from trees to the ground. He formulates a theory which seeks to explain why this is so. He tests his theory by experimenting in the laboratory by isolating all related variables and observing the outcomes. His observations either conform to his theory or contradict it. In a properly conducted experiment, a single instance of theory contradicted by empirical observation is evidence that the theory is not true. In physics, observation of real world phenomenon is the final arbiter of truth.

In the realm of human action this is not so. Unlike inanimate objects in the physical world human beings act with purpose, i.e., they conceive of ends and use means available to them to attain those ends. Moreover, the ends sought by human individuals are not uniformly the same. Humans actors are not mindless apples that are inexorably pulled to the ground by the immutable forces of nature. Human actors use the forces of nature to satisfy their own individually conceived purpose. The purpose or end of individual human action cannot be observed or detected by means of laboratory experimentation.

Run a thousand rats through a complicated maze and virtually all of them will behave in a uniform manner to any given stimulus because, even though rats are animate, their behavior is pushed and pulled along by the immutable forces of nature in much the same way as an apple is pushed and pulled along. Based on a careful study of the behavior of these thousand rats in the maze, a biologist can induce a theory about the forces of nature, both within and without the rat, which affect the behavior of all rats. Not so with humans. Human beings do not behave, they act with purpose.

Put a thousand human actors in a complicated maze and virtually all of them will act differently because each human actor in the maze has a separate and individual purpose in mind which motivates his action. Each individual human will use the means available to him in the maze to satisfy his purpose. Any conformity of action detected by an outside observer, say a biologist, has more to do with the conformity of the means available to the human beings in the maze than it has to do with some conformity of purpose. The biologist may suspect that the purpose of most of the human beings in the maze is the same, i.e., to escape the maze, for example. However, this suspicion cannot possibly be learned by observation alone. It can only be formed by the human biologist's subjective and prior understanding of what it is like to be a human and how most other humans of his acquaintance have acted in the past in similar circumstances.

The only regularity in the concatenation of events in the maze that the biologist might subjectively recognize that applies equally and always to all the human actors is that they all act with individual purpose. However, this regularity of purpose could not be observed by the biologist, it could only be subjectively assumed as the premise of human action, a premise that is subjectively assumed by all human actors to be self-evidently true.

Is there any human being in the universe who really believes that he speaks, writes and thinks without purpose? If so, the rest of us should ignore what is spoken, written and thought by such a creature by reason of his own argument!

All of the economist's theories with regard to human actions are deduced from the single, self-evident premise that man acts with purpose. Thus, correctly reasoned economic truth is as true as the mathematical certainty that one plus one equals two.

And so we see that economic truth is the product of logical reasoning not of the gathering and observation of "economic" statistics, which are, after all, nothing but history, i.e., the accumulated observations of individual human events in this most complicated of mazes imaginable: human life in society here on earth.

Some say that human beings are no different than rats in a maze, that they are not motivated by different and individual ends, that they do not seek to attain these unique ends by the varied means available to them. They say that human beings are merely biological machines, far more complicated than rat machines, but machines nevertheless, driven by biological impulses such as genes and DNA. They say human beings considered in the aggregate are no different than any animal species considered in the aggregate, or any inanimate phenomena considered in the aggregate, like weather, for instance. They say if man's tools or technology becomes powerful enough and fine enough not only will scientists be able to forecast individual human behavior, they will be able to mold individual human behavior into something more peaceful and likeable by tweaking the social forces that push and pull man's behavior this way and that.

The goal of some scientists is to manipulate the weather, which has always been the unpredictable bane of man's existence. These scientists theorize that weather, properly considered in the aggregate, is nothing more than the system of accumulated atoms in the atmosphere the world over pushed and pulled by various natural sources of heat, radiation, animation and the like. They imagine, probably correctly, that if they could construct a computer powerful enough, and software intelligent enough, to account for every, single variable which causes what we know as "weather," they could learn to control weather by manipulating these variables.

Scientists who compare human beings in society to atoms in weather, who claim that the actions of human beings might eventually be predicted and altered just as, with the proper tools, weather might be predicted and altered, fail to consider that each human being does have a mind and a will and purpose of his own. No scientist in his right mind, equipped with the most advanced and powerful computer, would claim he could predict and control the weather if each atom in the universe had a mind and a will and a purpose of its own. So no "social scientist" can predict and control human action unless, that is, the mind, will and purpose of each human being can be coerced to act in common purpose.

Modern liberals and progressives are, as Ayn Rand would say, "concrete-bound." They see the world and everything in it in materialistic terms of cause and effect. There is no difference between a human being and a rat in a maze or a hydrogen atom in the atmosphere. All are inexorably subject to the laws of nature which science can learn to manipulate in man's favor. Progressives endlessly quote economic studies and statistics. They exist in the world of "macro" economics where individual mind, will and purpose are pushed and pulled by the immutable, political forces of "society" which direct and control the "macro" economy. Of course, we understand this direction and control is accomplished by means of state coercion, but progressives would never face up to that truth.

When debating a modern liberal or a progressive, this mindset that individual men are no more than nature-directed animals must be challenged. The debate must immediately be brought around to the abstract, to the individual, to individual purpose, and to ends and means.

Economists have "discovered" the inevitable effects of the laws of supply and demand over centuries of extensive and arduous ratiocination. Progressives believe they can void these reasoned economic truths by citing the results of an economic survey of West Virginia coal miners conducted by an obscure Harvard professor in 2002. Over the years economists have proven beyond a shadow of a doubt that minimum wage laws, for instance, create unemployment when the enforced minimum wage is set above the wage rate that would otherwise obtain in a free and unhampered market. Progressives seek to discount this truth by citing the results of a "study" of a small town in Vermont where a minimum wage law was imposed and the results predicted by economists were not "scientifically" observed.

It never occurs to these progressive social "scientists" that employed and unemployed human beings are not rats in a maze, and that a small town in Vermont is not a hermetically sealed scientific laboratory in which every single variable that influences human action, save one, can be controlled and isolated or neutered. Real human beings live their lives in an ever-changing sea of variable and interconnected means and influences that motivate their action. No observer could possibly detect, let alone isolate and control these variables.

When debating economics with a progressive the best tact is to begin the conversation with a question: Do you believe in unfettered capitalism? In other words, Do you believe in an economic system in which each human individual uses the means available to him as he sees fit, free from state or individual coercion, to seek in peace after his own particular and unique ends?

Perhaps the vast majority of progressives will answer with a flat "no." This is fine. At least you will know where you stand with your opponent and you will be able to decide how much, if any, of your valuable time you want to spend exploring the depths and sources of this progressive's intransigence and/or ignorance.

Perhaps a few will answer with a qualifyied "maybe," or even with a more hopeful "well sure, but...." These are the few progressives who might still be open-minded and worth your time. When they say they would support a free market but only if it were regulated, you can easily point out the absurdity of what they just said.

When they object that corporations and other successful individuals become greedy and powerful in the free market and are able to control and exploit others who are less greedy and successful, you can ask them to explain to you the nature of the "power" of which they speak, and how such power could be wielded in a system in which the only legitimate means of commerce are persuasion and uncoerced trade.

Yes We Can!

A few days ago President Obama said: “We can’t simply cut our way to prosperity. We need to do what’s necessary to grow our economy; create good, middle-class jobs; and make it possible for all Americans to pursue their dreams.”

Let me translate this Washington doublespeak into plain English: “You must allow us to continue to tax, borrow and spend without limit because only we are smart enough to decide what is best for you and your family. If you tell us to stop, the markets will implode, the Treasury will default and we will all lose.”

Don’t believe him.

Federal politicians are fond of playing Chicken Little and speaking in riddles. For example, they claim we have a “mixed economy” in this country. In truth we have two, separate economies: the private market and the public market. These markets are as different as oil and water. Each expands at the expense of the other. And, like oil and water, they can’t and don’t “mix.”

The private market is where individuals voluntarily buy and sell goods and services. The public market is where individuals involuntarily participate in coerced transactions. The private market is based on the principles of (private) property, freedom and peace. The public market is based on the principles of shared ownership, administrative command and control, and political conflict. The private market operates spontaneously according to the will of individual participants. The public market operates compulsively according to the will of government politicians, bureaucrats and regulators.

Sadly, the public market is expanding, while the private market is shrinking. Consider the state of our GDP, which is a rough measure of the size of the American economy. At the beginning of the 20^th century, “the federal government collected three percent of GDP in taxes. A century later, it collects between 15 and 20 percent of GDP.” In 1903 federal spending amounted to 7% of GDP; in 2010, 40%. By 2016 the Gross Public Debt of the United States is projected to be over 100% of GDP. Even more shocking, the first issue of The Federal Register (The Code of Federal Regulations) was published in 1936 and contained 16 pages. In 2010 the number of pages in The Federal Register was 82,589!

Keep in mind that these figures pertain ONLY to the federal government. State and local taxing, spending, borrowing and regulating is another animal entirely.

Why should we care that the private market in the United States is being replaced by the public market?

Because economic theory proves that both parties are always satisfied by a voluntary trade. If you doubt this truth, remind yourself that human beings do not trade on a whim. Human beings act with purpose. If they didn’t expect to benefit from a trade, they wouldn’t voluntarily trade their labor for a wage or their money for a gallon of milk.

Granted, the benefit expected doesn’t always pan out. The satisfaction gained doesn’t always last. Conditions change and no one can know the future with certainty. But compare this result to the alternative.

At least one party will always be disappointed and unsatisfied in an involuntary trade. Why? Because if both traders expected to be satisfied, coercion would not be necessary in order for the trade to take place.

Consider taxation. Unless you believe the lie that citizens pay taxes voluntarily, politicians and bureaucrats force you to pay them your money. In exchange, you get something you don’t want, or more of something you don’t need, or something you want but could get for less on the private market.

For instance, would you voluntarily spend $10,000 per year to train Chinese prostitutes to drink more responsibly on the job? Of course not! Your family has more urgent and necessary wants and needs, like food, clothing, shelter, gas, utilities, a day at the beach and the like.

Still, federal politicians and bureaucrats recently spent $2.6-million of your tax money to research the drinking habits of Chinese prostitutes.

In this day and age we become desensitized by large numbers. Let’s put $2.6-million into perspective. Let’s assume that there are 260 families in your middle-class neighborhood. Let’s also assume that you and your neighbors pay an average of about $10,000 per family per year to the federal government (which is about right if your family income is $50,000 per year). It would take a year’s worth of taxes from your entire neighborhood to pay for that absurd study of Chinese prostitutes!

Remember, this example is just the tip of the boondoggle iceberg. President Obama’s proposed 2011 budget totaled $3.8-trillion in federal spending. Moreover, taxes from you and your neighbors only covered $2.2-trillion of this spending. The rest, $1.6-trillion, was put on the national credit card.

Are you starting to get the picture?

Taxes collected by coercion and spent on the public market by fat and pampered elites benefit and satisfy mainly fat and pampered elites. But don’t get stuck thinking only about wasteful spending and frivolous regulations. The truth is that ALL government spending and regulation transforms private markets into public markets.

Whether for Social Security, Medicare, the US military, the poor and downtrodden or Chinese prostitutes – the effect of government spending is the same. Goods and services wanted by the favored few are produced at the expense of goods and services wanted by the many. Dissatisfaction multiplies. Political conflict abounds.

Yes, we can tolerate some small percentage of public market transactions. But we didn’t build this great nation by conducting 40% of our business on the public market. Until recently, we respected private property and honored freedom. As a result, we were richly rewarded with peace and prosperity.   

Now we pay lip service to property and freedom. As a result, our prosperity declines.

But why? Why is the private market more productive, more efficient and more responsive to consumer demand?

Because politicians, bureaucrats and regulators do not know scarcity. They are exclusively consumers and spenders. When they run out of money to spend, they simply tax more or borrow more. Or, in a pinch, they print more. They do not understand that public market borrowing crowds out private market borrowing, that bad money crowds out good.

In the private market producers and consumers are one and the same. Traders in the private market do not enjoy unlimited resources. They are constrained by scarcity. Thus, they spend their money wisely and carefully on things they need and want most. Frivolous spending inevitably comes back to bite them.

Is it any wonder why incomes are falling and prices are up? Or why Washington thrives while middle America suffers? Or why politicians, bureaucrats and regulators plead for more spending and new taxes despite a raging recession?

Mr. Obama is wrong. We CAN “cut our way to prosperity.” We can cut spending, cut taxes, cut borrowing and cut regulations. Raising taxes on anyone will not only kill what’s left of the American private market; it will kill what’s left of the American dream.