Dissecting 'Leftist' Statism

            ‘Leftist’ Statism, the ideology that politicians and ideologues considered to be ‘on the left’ of the political spectrum use to justify government intervention, consists of three main pillars: belief in extensive government control over business, egalitarianism, and Social Safety Net-ism. We will examine and critique these pillars in this post to see what ‘left-wing’ statism is all about and why I think it is best to avoid most of it.

1. Government control over business:

            Leftist statists generally believe that government should be relatively heavily involved in the business world, whether through ownership of government enterprises, nationalization of industries, or regulation of otherwise private businesses. Some justify this on Marxist grounds, arguing that private business exploits their workers and/or rip-offs their customers regularly. Some justify it by pointing to positive and negative externalities, and in recent years, environmentalism has been used to justify government ownership and regulation.

The Marxist justification rests on the notion of ‘economic power’ being just as bad if not worse than power to inflict physical damage, which I am critical of here: http://thinkingabouthumansociety.blogspot.ca/2013/04/why-physical-violence-is-useful-basic.html    

The general externalities justification can be valid in some cases, but must be used with care and is liable to be abused, which I discuss here: http://thinkingabouthumansociety.blogspot.ca/2013/03/economic-externalities-raison-detre-for.html

The environmentalist justification is generally overplayed by leftists, and there are many better ways besides heavy handed government intervention to deal with any environmental problems that might arise, which I discuss in the series of posts starting here: http://thinkingabouthumansociety.blogspot.ca/2013/03/thoughts-on-environmentalism-general.html

However it is justified, whether there is some truth to the justifications or not, there are certain significant disadvantages of government interventions with business and government ownership of businesses which cannot be dismissed lightly by anyone seeking to make an informed decision on whether to support economic freedom or government interventionism in a particular case. These apply to any government-provided service that can be provided by private enterprise, and to a lesser extent to government regulation of private business, which is when the government arrogates to itself a portion of the ownership/management functions of an otherwise privately-owned business. They are:

1. Lack of market pricing for the government service and less importance placed on profit-and-loss calculations impairs the processes of capitalistic economic calculation that serve as a guide to private business. Political considerations (what will be popular or allow the incumbent government to maintain power) will correspondingly play a greater role in decision-making (for more on the benefits of economic calculation, see tip 5 here: http://thinkingabouthumansociety.blogspot.ca/2013/02/5.html).

2. The funds necessary to start and usually to continue operating the government enterprise are collected through taxation levies on the population. This will tend to lead to a more cavalier use of the initial ‘investment’ funds than private business would, who only receive investment funds by convincing investors that it is a promising investment, well-worth taking a risk on. In addition, when gathering private investment funds, the funds available are limited by the willingness of investors to put their money in one particular venture rather than in any other. When levying taxation money to fund a government service though, it is impossible to know exactly how much to levy to fund that particular service over other government services, or over leaving the money to private individuals. The willingness of investors and their consideration of the prospects for profit of a particular venture over any other sets a limit to the amount of private investment going into any enterprise, but this limit does not exist for government services. Also, the taxation levy will generally fall more heavily on the funds of richer people, which will tend to undermine incentives to produce for the consumers and will most likely undermine capital accumulation (discussed in more detail here: http://thinkingabouthumansociety.blogspot.ca/2013/03/issue-analysis-higher-taxes-on-wealthy.html)

3. Either through legislation or through the unfair advantage of being able to get funding through coercive taxation levies, government enterprises are able to legislate away (by prohibiting competition) or drive away all of their private competitors. As a result, not faced with fierce competition as private enterprises are, government enterprises are able to be more lacklustre and less cost effective in their service to the consumers.

4. When it comes to pricing, government enterprises tend to either charge subsidized prices, below what would have been the market price for the service, or monopoly prices, above what would have been the competitive market price for the service due to their legal or quasi-legal monopoly position in the industry. If they charge below-market, subsidized prices, the service is not allocated efficiently to the consumers who want it most urgently, and shortages result because of the government artificially stimulating demand without an increase in supply. ‘Free’ roads are a good example of this, and constant traffic jams their logical result. If the government charges monopoly prices in order to try not to run too big a deficit to be paid for by taxpayer money, then access to the service is artificially reduced below what it otherwise would have been if free-market competition had been allowed to operate to reduce costs and prices, and improve quality, in the industry, as it so often does.  

            

           The main error in this aspect of leftist, statist ideology is to either ignore, deny, or unjustifiably downplay these important disadvantages of government ownership of business.

(Note: For a great, succinct critique of government-provided services, check out the following excerpt from Murray Rothbard’s Power and Market, found here: http://mises.org/daily/1471)

2. Egalitarianism:

            There is no getting around the fact that something about an inequality of material wealth and income among members of a society just bothers leftist statists, and thus egalitarianism becomes a major pillar of their ideology. One can sometimes convince holders of this ideology that a certain degree of inequality of material wealth and income is necessary in a prosperous society to maintain incentives to produce for the consumers and such, but they will tend not to be happy about it and will constantly seek ways to reduce it.

             

           There is certainly something to be said for considering more material equality among members of a society, other things equal, as a good thing. Though we cannot say so with scientific certainty, it is likely that a billionaire accumulating another billion dollars would result in less of an increase in general happiness than 10000 people with modest incomes being able to accumulate an extra hundred-thousand dollars each. The problem is that, unless this change in income distribution occurs through the play of market forces, other things are necessarily not equal. If it is brought about through government tax and transfer policies, then incentives to produce for the consumers and capital accumulation are reduced, while harmful government bloat is encouraged, all resulting in a tendency towards a decline in the material standards of living of all members in a society. For a full discussion of this, see: http://thinkingabouthumansociety.blogspot.ca/2013/03/issue-analysis-higher-taxes-on-wealthy.html

            

           However, even if an egalitarian were to recognize these negative effects of egalitarian government policies (which most do not), the question remains: how highly does the social thinker evaluate egalitarianism, taken on its own? More specifically: how much societal material wealth is the social thinker willing to sacrifice in pursuit of egalitarianism?

            

           To these questions, I, personally, would respond: egalitarianism is generally overrated as a good. if we are to value ‘fairness’ in the distribution of material goods as a good in its own right, what’s wrong with market-meritocracy (reward through ability to serve the consumers) as a standard? Most egalitarians probably wouldn’t be convinced to change their views because of this answer, and I wouldn’t really expect them to. Whether a more egalitarian distribution of material goods or a more market-meritocratic distribution of material goods (divorced for now from the respective consequences of their implementation) is more ‘fair’ is, I think, a bit of a subjective question. For whatever reason, I think the latter is fairer, while for whatever reason, others think the former is fairer. I don’t think that there’s a rational way, divorced from the utilitarian effects of the implementation of these ideals, of evaluating which standard of distribution is fairer, just as there’s no rational way, divorced from say, their respective health effects, of evaluating whether chocolate or vanilla ice cream is ‘better’. The answers will change depending on whose subjective preferences are being consulted.

            

           How then, to critique the egalitarian aspect of leftist statist ideology? Even if we can’t ultimately critique people’s subjective evaluations of egalitarianism as an isolated good, we can critique egalitarianism based on the other utilitarian effects of its implementation through the coercive power of government, which we have done above. We can also critique the conviction, found among many, though perhaps not all, egalitarians, which holds that egalitarianism, is objectively, morally better than any other standard for evaluating the distribution of material goods among members of a society. These people are certainly entitled to their opinion, but at the end of the day it must be recognized that this is merely a value judgement that not everyone accepts. As such, it should not be employed as some kind of intellectual trump-card, used to banish any objections to egalitarian policies by merely proclaiming them to be ‘immoral’.

3. Social Safety Net-ism:

            Social Safety Net-ism is the doctrine that government has a right and a duty to ensure, using funds levied from taxpayers, that people living in the territory under their rule do not die or suffer serious physical damage due solely to their material poverty. This is the aspect of leftist statist ideology that I, and I think many others, sympathize the most with. Leftists seem to realize this, and as such use Social Safety Net-ism as the vanguard of much of their argumentation in favour of government intervention. Consider the following disparaging remark about libertarianism from leftist political comedian Bill Maher, saying that while Social Security and Medicare are flawed programs: “it beats stepping over lepers and watching human skeletons shit in the river and I also like not seeing those things. I’m selfish that way!”. Here, Maher is using Social Safety Net-ism to try to discredit an entire intellectual movement and to defend some pretty questionable and controversial government policies. Of course, libertarians contend that such horrors would never occur in a prosperous free-market society due to the greater general material prosperity that would result from greater economic freedom, combined with private charitable efforts that would almost certainly grow if they weren’t being crowded-out by government programs. Even if we were to ignore or reject such considerations though, Maher’s criticism is still misleading.

            

           We see why when we ask the question: is the entire apparatus of the United States welfare state really necessary to prevent people from dying in the streets? Is that really the sole purpose of these programs and policies? Obviously, the answer is no. Social Security and Medicare have clear egalitarian motivations, and both are premised on the assumption that government will be able to make better use of the money collected from taxpayers through these programs than individuals would. Medicare is also premised on the assumption that a private medical market is not the way to go, and that heavy government interventions are necessary to ‘correct’ the alleged ‘failings’ of that market. In fact, if the entire current US welfare state was scrapped, and simply replaced by a welfare system that came to the aid of truly impoverished people who really were at risk of death or serious physical damage due solely to poverty, the principle of Social Safety Net-ism would be preserved in a form that would cost the taxpayers much less of their funds and liberties. What wouldn’t be preserved would be the first two principles of leftist statism which we discussed earlier, the desirability of government control of business and egalitarianism, principles that are embedded in the vast majority of government welfare programs.

            

           Thus, leftist statists, particularly when confronting libertarians, often pull an intellectual bait-and-switch maneuver. They use their most sympathetic principle, Social Safety Net-ism, to argue against libertarianism in general, using it to defend policies that also involve a heavy dose of government control of business and egalitarian principles.

            

           Personally, I sympathize enough with Social Safety Net-ism to advocate it as a political principle, but I am always careful to separate it from government ownership of business and egalitarian principles. For my reasons for advocating Social Safety Net-ism, and my proposal for a government welfare system that advances this principle and this principle alone, see the following: http://thinkingabouthumansociety.blogspot.ca/2013/03/issue-analysis-welfare-social-safety-net.html.

           

           Besides unjustifiably lumping it together with policies that clearly advance government control of business and egalitarian principles, leftist statists also tend to overrate the importance that Social Safety Net-ism policies would take on in a free-market society. This is because they tend to underrate the extent of upward social mobility in a free-market society and mistake it for a caste society, an idea which I criticize here: http://thinkingabouthumansociety.blogspot.ca/2013/04/why-free-market-society-is-not-caste.html