A couple of days ago, Kevin Carson, who holds the position of Karl Hess Chair in Social Theory at an organization called The Center for a Stateless Society, published an attack on Richard Ebeling and me, entitled “Libertarian-splaining to the Poor.” Carson describes himself as a “left libertarian,” which Wikipedia defines as one who subscribes to “anti-authoritarian varieties of left-wing politics, either anarchism in general or social anarchism in particular.”
Carson’s attack arose out of last week’s segment of our weekly Internet show, The Libertarian Angle, whose theme was “Do Libertarians Really Hate the Poor?”
Every single item in their discussion is on the same general theme: making the rich even richer or otherwise empowering them so they can help the poor. Of course they tip their hat to the existence of some “corporatism” in the Gilded Age, but go on to treat it as a marginal phenomenon in a system that was mostly laissez-faire. Indeed the defining characteristics that made the Gilded Age “laissez-faire” were 1) the lack of welfare for the poor (with the unfortunate exception of Civil War pensions), and 2) the ability of the super-rich to accumulate unlimited amounts of wealth. In a tired replay of Republican “job creators” rhetoric, Ebeling and Hornberger argue that the best way to help the poor is to encourage the rich to amass huge piles of capital so that they can afford to hire lots of poor folks. And if the rich got rich enough they could also afford to give more to charity!
Now, if Richard and I had actually made that argument in defense of the free market, I would agree with Carson and concede that it was a terrible argument to make, and that would be the end of the matter.
Of course, the best evidence of what Richard and I said is the video of the show itself. But I can categorically and unequivocally state that neither Richard nor I made that argument during the show or, for that matter, ever in the 26-year history of The Future of Freedom Foundation.
Judge for yourself:
Here is a link to the show: The Libertarian Angle: Do Libertarians Really Hate the Poor?
Posted below is a transcript of the show.
The Libertarian Angle: Do Libertarians Really Hate the Poor? (December 1, 2015)
HORNBERGER: Hi, this is Jacob Hornberger, president of The Future of Freedom Foundation. This is this week’s issue of The Libertarian Angle. I’m joined by my co-host Richard Ebeling, who teaches economics at the Citadel. Richard, welcome back for another round.
EBELING: It’s great to be back and I hope all the viewers and listeners had a Happy Thanksgiving.
HORNBERGER: Yeah, me too. You obviously stuffed yourself. You look a little more overweight than usual. Okay, I thought we….
EBELING: And that’s being said for posterior here on video. That’s disgusting. Okay.
HORNBERGER: Okay, I want to talk today about an attack that liberals love to make against libertarians. They have made this attack ever since I discovered libertarianism many years ago. And that is that libertarians hate the poor. We hear this often from the left because we favor the dismantling of the welfare state—you know, Social Security, Medicare, Medicaid, education grants, minimum wage laws. And so the attack comes in as: “Oh, you just hate the poor.” And when we ask them, “Why do you say that?” they say, “It’s obvious. If you want to dismantle the welfare state, then that means that you obviously hate the poor.” What do you think about that, Richard?
EBELING: Well, let me start with the following imaginary story. Suppose that someone came up to you and said that they were in New York City and wanted to know the easiest and most straightforward way to drive from New York to San Francisco. You told them that the best and most efficient route, to save time, ease, and convenience, would be to take Interstate 80, which runs directly east-west from New York to San Francisco.
Now, let’s suppose that after giving them that advice—if you want to go from New York to San Francisco, the most expeditious route is Interstate 80 running directly from east to west—but then you notice that this person is headed south on Interstate 95, which if they continue on Interstate 95 will end them up in Miami, Florida.
Now, you draw to their attention that they have taken the wrong route. It’s not only a wrong route but it’s a route that is clearly going to not get them to their desired destination or would require a extremely circuitous route that will finally get them to their final goal.
What might be their response: “Why don’t you want me to get to California?”?
“I didn’t say you don’t want to get to California. I merely said that you are on Interstate 95 heading south rather than Interstate 80 out of New York going to San Francisco.”
“You obviously dislike California. What do you have against the people of California? Why don’t you want me to be happy and to be in California?”
“I’m have nothing against you being in California. I hope you’ll be happy there. I’m trying to get you there in the best and most efficient way possible.”
“Oh, clearly you dislike me and hate California.”
Now, that story, okay, is a variation of the attitude of many progressives on the left, modern-day liberals when they hear the criticisms or the arguments of one who is pro-free-market, limited government, and libertarian, for instance. What the libertarian is basically saying is that you have a goal — and that is to try to devise policies and institutions that will be most conducive to improving the conditions of the poor. Raising people out of poverty, creating opportunities for improvement in human capital — that is, intellectual and knowledge abilities to make yourself more profitable for the employer — to devise ways to start your own business, and that you propose such policies as low or minimal taxes, deregulation of virtually every private, competitive part of the economy, and so on, and leave the individual, in Adam Smith’s phrase, in a system of natural liberty, free to peacefully and honestly compete with anyone he desires to get honest money by making a better product available to consumers.
But what is the immediate response of this argument, as the institutional methods to help alleviate the circumstances of the less well-off than ourselves?
“Oh, you obviously hate the poor. You don’t want people to improve themselves. You hate society.”
Now, what people on the left often do, Jacob, is that they confuse or choose not to see that a disagreement about the most appropriate ends to achieve a goal means that you disapprove of the goal or the end itself. So merely because, for example, you or I would say that the welfare state is going to entangle people into permanent dependency, or that minimum wage laws may permanently put some low-skilled people out of the market by pricing them out of a job, that redistribution of wealth is not the way to create positive incentives for people to want to either work or to get out of a situation of a low income on their own. They interpret that disagreement about the means to an end as a disagreement about the end.
And that is not the case. The fact is that from the beginning of modern economics and modern classical liberal thinking — let’s say the second half of the 1700s — the 18th century — the time of Adam Smith. Her wrote a book called An Inquiry into the Nature and the Causes of the Wealth of Nations. He was trying to analyze, interpret, and then propose policy prescriptions precisely to improve the economic and material conditions of humanity, especially those who are least well-off. His defense of individual rights, his defense of private property, his arguments for the efficacy and efficiency of the “invisible hand” — that is, to set loose self-interest to serve one’s self as well as others in the competitive marketplace.
All were meant to be the means and method by which to raise man out of the squalor and subsistence condition that had been the human condition since all of recorded history and in the most effective and efficient manner, to eliminate poverty in the shortest amount of time. That was the entire goal of the advocates of liberty.
Now, that’s two arguments — if I can just continue with this — the classical liberal, the libertarian, makes a general, philosophical argument about the rights of the individual — that an individual should be left free to live his life as he chooses as long as he does it peacefully and honestly in his relationships and associations with others. And government is the securer of rights and not the violator of those rights.
But there is also a utilitarian argument. Not only does such a system secure the person — the most respected and protected right over his own life — to live as he chooses, but it also is the institutional method by which people have the greatest chance to improve their own circumstances in associative relationships with others through the marketplace and other social mechanisms.
So, what the classical liberal, the libertarian, is arguing is that if you believe in liberty and if you want prosperity, the institutions and mechanisms of the free marketplace are the ones most conducive to achieving those ends.
Has that been successful? Well, one can look at the historical record. Three or four hundred years ago, all of humanity suffered from the conditions of poverty that is often portrayed in the imagery of people still today in Africa or Asia or Latin America. Compare that to what has happened, first, in those countries in Western Europe and then North America that adapted to a greater or more full extent, perhaps not completely, the institutions of individual liberty, private property, free commerce and association, limited government under rule of law, and how that created the institutional environment conducive to individuals’ having the latitude and the incentives to start improving their own circumstances and through that the circumstances of all with whom they associated and interacted.
Compare that to those parts of the world where the state has been more heavy-handed, controlling, regulating, oppressing, even authoritarian or totalitarian in modern history, and there you see not just only a lack of freedom but prosperity and opportunity and the individual having the institutional setting in which the incentives create a motive in which he can apply himself in creative, innovative, and productive ways to improve his own circumstances to the mutual benefit of his neighbors as well.
It is liberty and the marketplace that will eliminate poverty and has been eliminating global poverty now for at least the last 300-400 years. It is the heavy hand of the state that either has prevented it or retarded or slowed it down. And the left arguments — the progressive or modern liberal arguments for the welfare state, the regulated economy …(unintelligible)… to the continued improvement of the human condition.
It is not a disagreement about the broad sense — Do you believe in the betterment of humanity? You do. I do. All those in the world who are not just malicious monsters do. The question is: What are the most appropriate means, methods, institutions, and ideas to make that a possibility and then a reality? And the left just often does not see that.
HORNBERGER: Yeah, I think your analogy about getting to California is a very good one because really our goal is to create a society where the poor are not poor anymore. I mean, where they’re living nice standards of living. And the question is: How do you get there? And the left just automatically assumes that wealth exists in a society and then it’s just a question of let’s just take money from the rich and give it the poor and then there won’t be any more poor anymore because they’ll have the money that’s been taken from the rich. And that’s the left’s concept of how you help the poor. When we libertarians oppose that concept, their natural reaction is, “Oh, well, you hate the poor because here’s a way to benefit them — just take the money from the rich and give it to the poor.”
Well, we look at things quite differently. We argue that that kind of system is the very reason why people have remained mired in poverty throughout the ages. In fact, my favorite period of history is the late 1800s in the United States. Now, I’m not suggesting that it was a perfect libertarian paradise—corporatism, government-business partnerships, and so forth—but those people really did provide the light for how to get out of the despair of poverty. They pointed the way, and they drew on ideas of Adam Smith, they drew on ideas from Thomas Jefferson’s principles in the Declaration of Independence.
So, here you have, Richard, a society where there was no income tax, no welfare state to speak of. I mean, there was land grants to the railroads, but there was no Social Security, no Medicare, no Medicaid, no education grants. I think the only real welfare program was pensions to Civil War veterans. And so here you had a society where government didn’t take care of anybody.
And what was the result? The result was that you had poor people who were going from rags to riches in one generation or maybe two generations, where people would save their money. The best proof of how beneficial this was to the poor was that you had countless penniless immigrants that were fleeing Europe and Asia and coming to the United States, where there were no guarantees, where it was “root, hog, or die.” You’re on your own. But they said, “That’s the kind of life we want” because they saw that the poor were getting wealthy.
Not only that, but when people were free to accumulate unlimited amounts of wealth, they used that wealth to assist the poor. Look at the grand churches that were built in America in the late 19th century. That was all built with private money. Now, there was no way for a poor person or a group of poor people could ever build those churches. Yet, the poor could walk into this beautiful building, worship God in their own way, that had been built through the largess of people who had been free to accumulate wealth. So, there’s this huge spillover effect in a society where people are free to accumulate wealth.
But most of all, when people are not infringed upon—their economic liberty is not infringed upon by government—by government taking care of them—are free to engage in enterprise on their own and in conjunction with others, entering into trade, the plight of the poor was significantly increased—standards of living for people when that type of society was in existence.
And unfortunately, as you point out, the progressive movement came into being, totally rejected that philosophy, which is why we now live in what is really the same basic kind of society that mankind has always lived under—and that is a government-managed economy, a government welfare state, a government-regulated economy, and one in which, fortunately, there is still enough private enterprise and capital to overcome his. But who knows in the future because the burden of this welfarism is now starting to get heavier and heavier, where there can be a caving-in effect. And when that happens, see what happens to the poor. And the best example of that is what has happened in Greece today.
EBELING: Yes, I think two more important points should be made along the lines of what you and I have already said.
One is the concept that was developed by the famous economist and classical liberal Frederic Bastiat in the first half of the 19th century in his famous essay “What I Seen and What is Not Seen.” Too often people just look at the surface of things. As Bastiat says, they see the government putting people to work building a road or repairing a bridge. They see government sending money to build a hospital or to re-tar a public-school building roof. They see jobs. They see achievements. They see goals. They see income being generated.
But as Bastiat goes out of his way to emphasize again, again, and again, is that you must look beyond what is seen to what is not seen. That is, all the jobs that would have been created — the wealth that would have been generated—if the government had not siphoned off the private-sector’s wealth, that is, the money that was earned and accumulated in people’s pockets to spend in the government’s way instead of in privately guided, profit-oriented productive ways instead. That there is no miracle of government spending. There is no horn of plenty or manna from heaven. The only way that government has anything to spend — to create jobs, to redistribute wealth — is to take the wealth and the income from some, who have already productively produced it, and then hand it over to others that the political paternalists and the authorities consider by their criteria and decisions more deserving.
The other aspect of this, which is sort of an extension of that concept of Bastiat’s, is unintended consequences. And that is that merely because you have a goal in mind does not mean that the outcome or the result is what you had intended or wanted. It is very possible that a course of action can bring about consequences either irrelevant or even counterproductive.
Let’s take the minimum wage, to use an example of this poverty situation. The people on the left see those who are earning a low income. They say, How could a person live on $7.25 an hour in our modern age and the cost of living? Now, clearly, all we should have to do is to raise the minimum wage — that is, the legal minimum at which an employer can hire someone to do a job in the workplace and say: You have to pay him $10.10 or $15 an hour and then the poverty problem will be alleviated.
What they don’t realize is that that can have unintended consequences. That is the employer does not consider that particular worker, in terms of his value added to the firm, to be worth the $10.10 or $15 an hour that the government mandates, then that person will either be let go or a job that could have been his will never be created.
Another instance of this is that if you impose regulations that supposedly in the name of assuring consumer safety and competition in the marketplace by setting up regulatory hurdles that make it very difficult to start up a business, grow a business, expand and invest in a business, then you are not harming only that individual businessman through these regulations and controls but you’re inhibiting him and preventing him from having the opportunity and the capital resources to hire the complimentary labor with which he would go about his new and innovative production. And therefore you deny people jobs.
Another example that we could talk about is this controversy over this non-regulated taxi service that is now spread up all over the world, known as Uber. In virtually everywhere in the world, government regulates the right to drive a taxicab. You have to get a government license. You have to be approved by the state. People buy up these licenses as sort of cartel or monopoly riggings of markets because of political favors. And then if you want to drive a taxicab, you have to be hired by one of these people who bought up or own a large number of legal licenses to do cab work.
What does this inhibit? The person who may have a functioning and safe vehicle, has a driver’s license, knows the city, and would like either to earn a living or supplement his income to make his family’s life better by offering himself, part-time, or fulltime, being available to give people rides when they want it, where they want it, in convenient, safe, and efficient ways.
That’s what Uber has been offering to some people. I’ve been riding Uber recently, quite a number of times. And I talk to the drivers: Why are you doing this? What are the opportunities this makes available to you? Has it made your financial situation better? And the answers have been, Yes. And some of these people are people who had lost their jobs or were trying to start a new career and needed an income to support their family in between new careers. But whatever the motive, this has been a market, competitive opportunity to improve the availability of transportation for the customer, as well as earning a livelihood for those who drive—against the monopoly controls of special interest groups with their government licenses.
All of these things are counterproductive if one wants to improve the conditions of those less well-off than ourselves. And this just shows that good intentions can have unintended bad consequences for many of the very people you say you’re interested in assisting.
And those two concepts—what is seen and what is not seen, as Bastiat emphasized, and the difference between intentions and unintended consequences, have to be kept clearly in mind when analyzing and critiquing the arguments of those on the left for a greater heavy-handed interventionist welfare state.
HORNBERGER: Yeah, it’s a great point—that good intentions don’t matter. As you know, Richard, I grew up a liberal, a leftist. I believed that the role of government was to help the poor. There was never any question in my mind all the way through my mid-20s. I remember thinking: Why are people objecting—why should anyone object—to government helping the poor? Of course, it never occurred to me that government doesn’t have its own money, like a private business. I thought that was the way it was operating. It never occurred to me that government got its money by taking it from people, much like a robber takes money from people.
As you point out, the good intentions are actually the exact opposite in terms of results, which means then that your good intentions don’t matter. Your point about minimum wage is absolutely right on. They lock out of the labor market the people whose labor is valued at less than that minimum. For example, you look at black teenagers and the unemployment rate for black teenagers. For years, it has been a permanent, chronic unemployment rate of 40-50 percent. And yet, what does the left say about this? They lament it, they say it’s regrettable. But when you point out to them that this is a direct result of your minimum wage laws—that is, if you didn’t have these minimum wage laws, these black teenagers could come into employers and say, “I’ll work for $3 an hour. Just give me a chance. Let me have my foot in the door. I want to learn the business. I want to learn the trade. Sure it’s going to be tough. I might have to live at home for a while, but then once I start learning how a business operates, then I can start thinking about going out and maybe opening my own business up.”
But that’s they deny them. They deny them that ability to get their foot on the first rung of the ladder. And time and time again, you see this with leftist programs that are supposedly meant to help the poor.
Another example is public housing. Many years ago, when I was practicing law, I had some clients who lived in public housing down in Laredo, Texas. They told me that if they made too much money, they would be kicked out of their public-housing project. And so I said, “Why don’t you move into a private facility, like an apartment?” And they said, “We don’t have that money.” And so there’s this gap, in between where they’ll be kicked out of public housing and moving into an apartment complex, that they couldn’t meet. And so what they were doing is cheating. They were earning money on the side which they were not reporting to the public-housing authority because they’d be kicked out. So it actually teaches people to lie and cheat. But most important it keeps people trapped within this public-housing project, in the name of helping them.
Now, I’ve often wondered, if you really love the poor, why don’t you just give them the house? Why do you have the government owning it and have people move in, and then say, If you make too much money, we’re going to have to kick you out? If you really cared about the poor, you would just give them title to the property and let them own the property. I’m not advocating that but certainly it flies in the face of the leftist mindset of helping the poor.
And finally and this was one of the first things that triggered me off to exploring libertarianism was that they say they love the poor, Richard, but look at how they treat immigrants and illegal aliens. The left is just as responsible as the right for these detention centers and these raids on businesses where these deportations of poor people that are just struggling to try to sustain their families. I mean, to me a concern for the poor should be universal, a genuine concern. Shouldn’t just be, well I’m concerned for American citizens who are poor. It really should be a concern for everyone. And that’s the thing about libertarianism. We are the only ones that call for open borders, including open immigration. The right of people to move across borders, to sustain their life, to search for a better way of life, to engage in enterprise freely in the attempt to better the economic plight of their family.
EBELING: Yes, I think we should point out one other thing in the mindset of too many of those on the left and that is an arrogance and a hubris of presuming to know how people should live and the standards of life they should have. Now many years ago Milton Friedman, the well-known, free-market, Chicago University economist, had argued that rather than in-kind payments, public housing, food stamps, government medical care, if the government was going to have such programs they should just give these people a sum of money under the presumption that the individuals would know how best to spend money given their family or individual needs better than the government arrogantly saying this much on food, this much for this, this much for that. Now don’t get me wrong, I don’t agree with Milton Friedman on the idea that the government should redistribute anything — either sums of cash from some to others or in kind. But the premise that he was trying to get at is that even if you believe in the redistribution of wealth, you should show a certain degree of dignity and respect for the person who you say you are concerned with. That they know their own circumstances and their own situation and their own needs and wants of their family better than you, the bureaucrat, or the ideological special interest in a faraway national capital.
What the left often wants to do, not just give people money, they want to take, use money taxed from others and transfer the power and control over those sums of money from the taxpayer to themselves, the bureaucrats, the politicians, the ideological special interest groups who arrogantly, hubrisly believe that they know how other people should live. This is the type of food you should eat, this the type of housing you should have, this is the medical care that you should be eligible for, this is the retirement, both the age at which you should retire and the sum of money that will be just sufficient for you and so on and so on and so on. It is the mindset of the social engineer, the planner.
Adam Smith, which we both mentioned earlier, wrote an earlier book called The Theory of Moral Sentiments, before his book The Wealth of Nations, and he had a great metaphor in there in which he said that, he talked about the social engineer as the man of system who viewed society as a great chessboard and he wants to move the pawns on this chessboard around to form the patterns and shapes and relationships that he thinks would be right, good, or ascetically attractive, but the man of system, the social engineer forgets with that great social chessboard of society is that each of those pawns that he just is trying to move about is one of us — a living, breathing, conscience, willing dreaming, hoping, planning, desiring individual who wants to place his own self on someplace on the great chessboard of society.
Where do I want to be? What goals do I want to pursue? What type of relationships and associations do I want to have, in terms of patterns of others around me in various types of societal and family and commercial connections? Rather than imposing it upon all because the man of system, the social engineer, has the arrogance and hubris of knowing how the society should be designed, developed, and allowed to operate, better than the individuals themselves. That shows a disrespect, a disregard, a lack of understanding and appreciation of the uniqueness and the dignity of the individual human being and that in a deeper sense makes their call for government an act of immorality and injustice, if you believe that the just and moral thing to do is to show a respect and a dignity and a right of the individual to live his life peacefully for himself.
HORNBERGER: Yeah, because the person might make choices and will make choices that don’t meet with the approval of the planners. They might go out and buy some marijuana and ingest illicit drugs or they might go out and use their money to buy a six pack of beer or they might go on vacation when they really should be spending money on their child’s education. In other words they are making irresponsible choices that we would say that’s part of what a free society is all about. You have the right to make mistakes, to make the wrong choice, that is the unpopular choice, but not in the mind of the planner. The planner says we know what’s best for the poor, we know what’s best for everyone, let’s face it. And I’m glad you brought up the moral argument because we also got to address the immorality of that basic construct of taking from the rich in order to give to others. And it’s not just to the poor, they give corporate bailouts, that’s welfare. They give money to big dictators like in Egypt today. They confiscate from everyone and distribute out to whoever they think needs the money more or who can do more things for them. But notice the basic immorality of it, if a private thief goes and robs somebody in an alley and forces them let’s say to take $10,000 out of their ATM, even if that robber goes and gives all that money to the poor, helps people get operations, helps people with their child’s education, we would still say, look, you didn’t have any right to do that, you are a common thief, we’re going to put you in jail for that. If you want to help people, you do it with your own money. But somehow or another, in the minds of the left, they have this blind spot. That as soon as the government is involved in this process, it all becomes holy and sacrosanct, Now all of a sudden everybody is a good and caring person because the state is now doing what the robber was doing – it’s taking money from people and giving it to others. And it really goes to show, Richard, that we do live in a consistent universe. That when we have evil means like that you end up with really horrible consequences and the people who bore the worse consequences of this system are those at the bottom of the economic ladder.
EBELING: Absolutely. And that is why if one believes in both freedom and prosperity, there is no path other than the political philosophy and economic policies of individual rights, rule of law, private property, and limited constitutional government, in which the individual is given the greatest latitude to design and guide his own life for mutual betterment with his fellow man through peaceful exchange. That is the path to a world without poverty.
HORNBERGER: Yes and in a practical sense what we libertarians favor is a society where everybody is free to keep everything he earns, no income tax, no IRS, no restrictions on going into occupations or trades or licensing permits, in other words, no government regulation or management of economic activities. That’s what Adam Smith was alluding to and that’s what people, our American ancestors, were pointing the direction of. And that’s what we are fighting for as libertarians. In any event Richard — out of time for the week. Enjoyed it as always.
EBELING: It was a pleasure and once again my best wishes to our listeners and viewers. Until next time.
HORNBERGER: See you all next week. Thanks for tuning in.