Art Carden August 24, 2023 @ American Institute for Economic Research
We have made fantastic strides in our understanding of how the physical and social worlds work. While the Great Enrichment of the last three centuries or so that happened because we adopted the Bourgeois Deal of “Leave Me Alone and I’ll Make You Rich” has lifted us to standards of living our ancestors could not have imagined. However, the prosperity we enjoy is constantly under attack by a political monster that never stops putting obstacles along the road to riches. The monster is a powerful beast with three heads: ignorance, avarice, and arrogance. Together, they help us understand why public policy is not much better.
Ignorance
First, we don’t know what to do. It is a revelation to many economics students that policies like minimum wages, rent controls, laws against “price gouging,” and tariffs on goods made in foreign countries hurt the people they are intended to help. People don’t appreciate how well markets work, they don’t know how poorly communism has fared, and they don’t understand just how much better off we are than our ancestors were. We try to correct this with education, but economics is not easy–and for the individual citizen, learning the ins and outs of supply and demand analysis is not likely to do much to change public policy.
Second, we don’t know what is being done. This isn’t because we’re lazy or failing in our civic duty; rather, it’s because public policies generate concentrated benefits but dispersed costs. Sugar tariffs, for example, are worth many millions to U.S. sugar producers, but they probably don’t cost an individual family enough for it to be worthwhile to even measure the burden. A quick glance at the Federal Register on Friday, August 4 contained a front-page link to this request for
comment on a proposal to update the National Highway Traffic Safety Administration’s New Car Assessment Program (NCAP) to provide consumers with information about crashworthiness pedestrian protection of new vehicles. The proposed updates to NCAP would provide valuable safety information to consumers about the ability of vehicles to protect pedestrians and could incentivize vehicle manufacturers to produce vehicles that provide better protection for vulnerable road users such as pedestrians. In addition, this proposal addresses several mandates set forth in section 24213 of the November 2021 Bipartisan Infrastructure Law, enacted as the Infrastructure Investment and Jobs Act.
How many people know section 24213 of the November 2021 Bipartisan Infrastructure Law? How many people had a reminder in their task manager that they needed to submit a public comment (the deadline was July 25, by the way)? Few and fewer, I suspect, because it’s exceedingly unlikely that taking the time and energy to concentrate on this is going to change the course of public policy. Of course, auto manufacturers probably have someone whose job is to know because there might be millions of dollars at stake.
Avarice
Why live at your own expense when you can live at someone else’s? This, incidentally, is precisely how Frederic Bastiat defined government, as “the great fiction through which everybody endeavors to live at the expense of everybody else.” A lot of us may not realize we’re doing this. People would recoil in horror at the idea of breaking into a neighbor’s house and stealing the cash in his wallet. They vote enthusiastically, however, for policies that take a slice out of his paycheck. Reining in avarice requires constitutional checks that oblige us to respect others’ rights. It also requires a cultural change whereby we reject the ancient notion that other people exist to serve us and recognize that they have their own prerogatives we may not know or approve of but that are literally none of our business.
Even when rules, regulations, and spending programs look like they are there to protect the innocent, they usually have support from a special interest that stands to make a lot of money from it. Consider the New Car Assessment Program mentioned above. Incumbent automakers can make it harder to compete by mandating new safety equipment that is there to protect pedestrians. We get more expensive cars and automakers get higher profits because they have fewer competitors. And due to the Peltzman effect, pedestrians might not end up being much safer.
Arrogance
Arrogance is our political beast’s third head. Arrogance comes with thinking the world is a simple place that would be easy to fix if we only had the political will to put the right people in power or make the right policies. Experts in international economic development tend toward arrogance: It is easy to see the cures for all that plagues Southeast Asia, Africa, and Latin America from a comfortable office at an American or European university.
Modern noblesse oblige demands that those of us who know better boss around the benighted fools who do not share our enlightened worldview. Maybe it is for their own good. Maybe it is because we among what Thomas Sowell called “The Anointed” are burdened with glorious purpose like Loki in the Marvel Cinematic Universe. Doesn’t everyone know that we are going to change the world? Historically, it might have been because someone was chosen by the local deity. Nowadays it might be because we are experts in The Science™, which is settled. Regardless, the world has not yet realized that we should be in charge, and they would gladly hand us our rightful scepters and crowns if they knew what was good for them.
Can we slay this three-headed monster? Doubtful, but there is reason to be optimistic. The last three centuries of rhetorical, institutional, and cultural change have clapped it in irons to the benefit of a world that is rapidly making poverty history. Even with these handicaps, it still does a lot of damage; however, if we can bind the monster even faster by eschewing political relations and embracing commercial relations, we can reduce its threat to our freedom and flourishing.
Art Carden
Art Carden is a Senior Fellow at the American Institute for Economic Research. He is also an Associate Professor of Economics at Samford University in Birmingham, Alabama and a Research Fellow at the Independent Institute.
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