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06 September 2012

The Proper Role of Government: Orgin of Wealth

It's been a while since I worked on President Benson's essay. I've actually come and looked at this section several times, and looked at some other things that go along with it, but I've not been able to bring it all into a post. However, I think this idea, along with the idea of Legalized Plunder, are some of the most important ideas that I've studied to date, because it explains the fundamental flaw in the thinking behind so many of the programs that we see coming out of government.

But first, the links to the previous installments in this series:

The Proper Role of Government, by Ezra Taft Benson
-- read the full text.
My commentary as I study his article:
Part I (Foundational Principles, Origin of Rights)
Part II (Separation of Church and State)
Part III (Source of Governmental Power)
Part IV (Powers of a Proper Government)
Part V (Government = Force)
Part VI (The US Constitution)
Part VII (Local Government)
Part VIII (Legalized Plunder)

Government Cannot Create Wealth
The assertion that he makes in this section is that government in unable to make wealth.

Students of history know that no government in the history of mankind has ever created any wealth. People who work create wealth.

Governments can tax and borrow money, if they are unscrupulous they can take it from their neighbors in conquest and imperialism, but they do not create wealth. Contrary to Mr. Obama's recent claims, the People really do build businesses, and through their work, they create the wealth of the nation. A very small percentage of that is legitimately used in taxes; the rest of it -the vast majority of money earned- rightly belongs to the person who did the work.

Cartoon Credit

 James R. Evans, in his inspiring book, "The Glorious Quest" gives this simple illustration of legalized plunder:
"Assume, for example, that we were farmers, and that we received a letter from the government telling us that we were going to get a thousand dollars this year for plowed up acreage. But rather than the normal method of collection, we were to take this letter and collect $69.71 from Bill Brown, at such and such an address, and $82.47 from Henry Jones, $59.80 from a Bill Smith, and so on down the line; that these men would make up our farm subsidy. "Neither you nor I, nor would 99 percent of the farmers, walk up and ring a man’s doorbell, hold out a hand and say, ‘Give me what you’ve earned even though I have not.’ We simply wouldn’t do it because we would be facing directly the violation of a moral law, ‘Thou shalt not steal.’ In short, we would be held accountable for our actions."

If I actually have the unbelievable gall to go around to my neighbors demanding money, most of them would not pay me. After all, they don't owe me anything. If I try to force them then it is a crime, and I should be punished. However, we have come to a point in our nation where many, perhaps even most, think nothing of taking government money for various entitlements, subsidies, and programs. But government produces nothing; that money comes from our neighbors. Which of your neighbors are you comfortable taking from? For myself, I think my neighbors should keep their money!

Cartoon credit

The free creative energy of this choice nation "created more than 50% of all the world’s products and possessions in the short span of 160 years. The only imperfection in the system is the imperfection in man himself." The last paragraph in this remarkable Evans book – which I commend to all – reads:
"No historian of the future will ever be able to prove that the ideas of individual liberty practiced in the United States of America were a failure. He may be able to prove that we were not yet worthy of them. The choice is ours." (Charles Hallberg and Co., 116 West Grand Avenue, Chicago, Illinois, 60610)

This system is the Free Market. And, contrary to what the labor unions and progressive politicians would like you to think, the Free Market is what is responsible for improving working conditions in America. It's not popular to say so, but the market, particularly when it really is free, and not the over-regulated sham of freedom we currently have, does a pretty good job of improving things. The best explanation of how this works that I have read comes from Thomas E. Woods Jr. According to Woods, we have "The Myth: The government and labor unions have protected American workers from greedy and exploitative businessmen." And we have "The Truth: Government intervention in the economy is counter-productive and ends up hurting the very workers it is supposed to help, as it hampers they very thing - capital investment - that raises our standard of living.  (33 Questions About American History You're Not Supposed to Ask, pg 172)" Since government does not and cannot create wealth, this makes a certain amount of sense, but Woods has a very clear explanation of exactly how it works.

Here's how Americans' real wages h ave been raised. ... In a free-market economy, businesses invest the vast bulk of their profits in capital goods that make labor more productive. Investing in a forklift, for example, makes it possible for a worker to move and stack far more pallets than before, and to reach heights that would have been impossible with his bare hands. Other kinds of machinery can multiply the efficiency of a single worker many times over, sometimes by orders of magnitude. The amount of goods the economy is capable of producing rises, at times even explodes. This is how wealth is created: we can produce more with the same (or a lesser) amount of labor. 

As a result of capital investment, firms can now produce many, many times more goods that before, and at considerably lower cost. Thanks to the pressures of market competition, firms pass on these cost cuts to consumers in the form of lower prices, better quality merchandise, or a combination of both. The ordinary person's standard of living increases, therefore, not because government takes from the rich to give to him or because labor unions "struggle" with employers to win him concessions. His standard of living increases because business firms can invest in machinery that makes it possible for more and more goods to be produced with fewer and fewer hands, thereby increasing the overall amount of material goods available and rendering them less and less expensive. (IBID 168)

Woods addresses working conditions of the past as well, another improvement that government and unions like to take credit for, but his explanation makes a whole lot more sense than the union story:

The objection is immediately raised: didn't workers in the past have to work very long hours? Without a doubt. By today's standards, people in the nineteenth century worked an exhausting schedule. But again, when output per worker is miserably low, then a supply of consumer goods that most people consider adequate requires people to work correspondingly long hours to produce them at all. That, and not the wickedness of big business, accounts for the low standard of living and long hours of work that existed in teh past. As the productivity of labor increases, and with it the level of real wages, people can begin to opt for additional leisure rather than continue to work the long hours of the past.

Without the need for any legislation or government coercion at all, a situation will eventually arise in which employers find it in their own economic interest to offer correspondingly fewer hours. ...

To the extent that maximum-hours legislation corresponded with people's desire to work fewer hours, it was superfluous, since such an outcome would have come about my means o the process just described. But tot he extent that such legislation was economically premature, forcing fewer hours on workers who needed the wages of their longer hours in order to maintain what they considered an adequate standard of living, it harmed the very people it was allegedly intended to help. (IBID172)

One other objection to the idea that unions are unnecessary and even counter-productive is that business sometimes take advantage of their workers. While that is true, and looking back into history from today's perspective, some of the conditions workers had to deal with were rotten. I'm a coal miner's granddaughter, and some of the stories of the things that happened to my Grandpa, it makes me wonder why he didn't prosecute! Which is my answer to what to do when a company does something criminal: don't pussy-foot around. Go down to the police station and prosecute! If it's a crime, it should be punished. If it's not, then the employee has a couple of options. They can get a different job (yes, I know this isn't always easy). They can put up with it. They can start their own business. The idea that folks are stuck, destined to work for a lousy company, unable to change their own fate is patiently false. It's often not easy to make the changes, but if things are bad enough, they'll do it. Especially if, working under a Free Market, they are assured that what successes they have, they can keep. America is supposed to be the land of opportunity. Certainly there is risk, but no reward worth having ever came without risk! And that includes building wealth.

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