How do you convince someone through a media sound bite that Obama's new Public Works program is really a Public Waste program and that his New Deal II is in reality a New Disaster?
How do you convince someone through a media sound bite that Obama's new Public Works program is really a Public Waste program and that his New Deal II is in reality a New Disaster? Even if you had time to explain Bastiat's analogy ofthe broken window, there is a chance that many will still misinterpret it and fall for the fallacy, or even promote it-after hearing it! Fortunately there are free-market spokesmensuch as Ron Paul, Peter Schiff, and Jim Rogers who are able to accomplish this feat. Without a doubt they are huge assets to the Austro-libertarian movement.
These three spokesmen have provided somegreat entertainment and excitement in 2008, and provided Austro-libertarians with some great quotes. For example, Peter Schiff, when responding to questions about the auto bailout on CNN says, “What we don't want is the government determining what type of automobiles GM should be manufacturing, because if we think the companies are losing money now, wait until we see how much more money they lose when the government is running them.” Or take Jim Rogers who, when asked about the financial effects of the “primarily Western crisis” on Asia, says, “I find it outrageous that anybody has to step in and bail out abunch of 29-year olds driving Maseratis.” And, finally, Ron Paul-who was so bold as to mention the Austrian theory of the trade cycle during the Presidential debates-has taken on Chairman Ben Bernanke and the Federal Reserve on many occasions. He questions Mr. Bernanke and asks, “How in the world can we expect to solve the problems of inflation . . . with more inflation?”
But, in addition to this great trio, there are many others who promote liberty in myriad ways. Specialization and the division of labor are wonderful ideas in economics-and vital to human prosperity-and it is important to remember these ideas when spreading the notion of free markets and Austro-libertarian ideas. We should specialize in that which we do (relatively) best, which means some will promote libertarian ideas through short media clips, others through writing articles, and others through opening their mouths to their friends. By specializing in what we do best, others benefit from our expertise, and vice versa.
As Ludwig von Mises pointed out, specialization occurs because of differences in the relative skills and abilities of individuals and differences in resource location. It fosters human cooperation and coordination. It also creates a community of individuals who are able to serve-and not at the expense of-one another because each expects to benefit in a voluntary exchange.
Specialization allows us to buy products and services that we do not produce. It allows us to go to a doctor or mechanic, whom we count on specializing relatively more than us in their professions. It is because of this inequality that we are able to benefit from the knowledge of others. Thus we can see the danger of promoting the destructive goal of equality-egalitarianism-something taught and enforced in government schools. It is only through a destruction of freedom and liberty that egalitarianism can be brought to pass. And the effects of that would be to make everyone worse off.
Murray Rothbard pointed out the important connection between the free society and specialization. Freedom allows for the mutually-reinforcing relationship between the division of labor and the development of the market. Rothbard explains:
By allowing full scope for investment, mobility, the division of labor, creativity, and entrepreneurship, the free economy thereby creates the conditions for rapid economic development. It is freedom and the free market, as Adam Smith well pointed out, that develop the “wealth of nations. “Thus, freedom leads to economic development, and both of these conditions in turn multiply individual development and the unfolding of the powers of the individual man. In two crucial ways, then, freedom is the root; only the freeman can be fully individuated and, therefore, can be fully human.
Rothbard pointed out that entrepreneurshipis one of those areas that can lead to rapid economic development. This entrepreneurship is only allowed to flourish under freedom, a freedom that isbeing removed almost daily as companies and institutions are being bailed out, to the printing-press tune of trillions of dollars, and rewarded for failure at the expense of those entrepreneurs who are making a profit and cutting costs. The freedom to fail is an essential part of the market. These failing companies must go bankrupt to allow entrepreneurs, who are more specialized in making failing companies profitable, the opportunity to make better use ofexisting resources.
As an example of the government's recent efforts to destroy entrepreneurship, Ms. Nicole Donnelly is a victim of Barack Obama's “stimulus” plan to reward failing companies. Due to Ms. Donnelly' sparticular situation, and the current financial situation in general, she worked hard to cut her costs. Yet, as the Wall Street Journal blog reported, she will not benefit from Mr. Obama's plan because she did not experience “huge financial losses this year.” Ms. Donnelly wrote:
This stimulus package seems to reward the ones who have kept spending, and ignores the diligent business owners cutting off their limbs to save the core of their business. . . . This program is likegiving an F student the opportunity for extra credit to raise their grade. We won't be spending any “stimulus” money because our little business will break even in '08 and limp along through '09.
Ms. Donnelly's solution? Cut taxes for all businesses. In this sense, perhapsthe government could use a littleegalitarianism. But that is called justice and equality before the law, something governments abandoned long ago, if they ever had it.
Entrepreneurs who are allowed to benefit from their superior judgment in recognizing and exploiting opportunities are the ones who thrive in environments of uncertainty and risk. Yet they are the ones being punished by the government for their entrepreneurialism. But it seems the public cries out for security at the expense of liberty.
Most people attempt to eliminate uncertainty and minimize risk. But there are those entrepreneurs, like Ms.Donnelly, who specialize in their judgment of turning uncertain, risky situations into more certain, profitable companies. This can only happen in a free market, where companies experience losses, and are free to fail. Entrepreneurs like Ms. Donnelly should be rewarded for their efforts, in the sense that they should be allowed to make a profit. Those entrepreneurs are the ones the public should cry out for, because the State will never fill that role.
Chris Brown is a lecturer and management consultant at the Australian Graduate School of Entrepreneurship. He also centrally plans a blog at Austro-libertarian.com. Send him email at austrolibertarian@gmail.com.
