Big Government–Big Risk
Those Who Trade Liberty for Security Get Neither
In his Freeman column last June, “The End Run to Freedom,” economist Russell Roberts makes the following argument: As people get wealthier, they demand more security. Their demand for security leads many people to favor the welfare state or the nanny state. The welfare state refers to a government that subsidizes people who bear losses; the nanny state refers to a government that regulates people’s lives to prevent them from taking certain risks that could lead to losses. The role of free-market advocates is to point out that much of the security that people demand can be provided by the free market. That is Russell Roberts’s argument, and I agree with it. As far as it goes.
But Roberts’s argument implicitly assumes that government provides security. That assumption flies in the face of much evidence on the welfare/nanny state. It ignores the government’s sometimes-lethal iron fist that is only modestly hidden beneath its velvet glove. Government’s tragic track record shows that regulations and spending programs often make people less secure. And even when they provide security, they often do so by trading one risk for another, sometimes bigger risk. Consider three areas where this happens: drugs, education, and jobs.
Since 1962 the Food and Drug Administration (FDA) has required that any new drug be tested not just for safety but also for efficacy. Economists have estimated that the efficacy requirement has added many years to the time between a drug’s discovery and its sale. Let’s grant that the requirement for proof of safety reduces risk. But the regulation that requires proof of efficacy does little or nothing to decrease risk and necessarily increases risk, sometimes lethally. Imagine you have a terminal disease and, without a drug that is currently being tested for efficacy, you will die in six months. Unfortunately, the drug won’t be on the market until after that. Imagine there is a 30-percent probability that it would extend your life. Has the government reduced your risk by forcibly preventing you from taking it? This example is not hypothetical. Economist Daniel Klein estimates that withholding new effective drugs causes at least 50,000 premature deaths a year. (See “Economists Against the FDA,” The Freeman, September 2000.)
And think of other drugs that government regulators try to prevent you from taking—drugs like marijuana, cocaine, LSD, and heroin. Here the issue is a trade-off of risks. One could argue that if the government makes the penalties harsh enough, you will decide not to take these drugs and will therefore avoid the associated risks. But stopping the analysis there is to engage in single-entry bookkeeping. We need to examine the other side of the ledger: the risks that government creates. For those who decide to use the drugs anyway, their risk is much greater—and the higher risk is due to government regulation. They face two new risks they wouldn’t face if the drugs were legal. The first is the risk of getting an impure drug. When drugs are illegal, providers do not have the same incentive or ability to provide high quality and establish a good reputation that they would have if the drugs were legal. Many people who die from illegal drugs do so because they don’t know the potency of the drugs or what they are spiked with.
The second is the risk of going to jail. One of the few effective anti-drug ads run by the federal government was the one that showed a drug user running from the cops. But notice that this risk is entirely government-created: if drugs were legal, there would be no risk of going to prison just for using them. And the risk of going to prison is not one of those little risks. As the drug warriors correctly point out, going to prison could wreck your life.
One might argue—and many do—that we should not be sympathetic to those who take illegal drugs and go to jail. To this I have two answers. First, those who make the argument cannot also argue for drug laws on the basis of saving people from harm because they have revealed that they don’t care about those people being harmed. Second, when I ask even strongly anti-drug audiences what they would do if they found illegal drugs in their teenager’s room, they never say they would report their child to the police. So they do seem capable of being sympathetic to at least some people who risk going to prison.
My second example of where government creates risk is the schools. Most schools in the United States are government-run, and parents are forced by law to enroll their students at these schools, at private schools, or in home-schools. Government schooling is not cheap: it now costs about $7,200 per student, which is about $2,500 more than the average tuition at private schools. But because government gives it away “free,” only those who value private schooling very highly will choose it for their children. If private school tuition is $4,700, for example, you won’t buy it unless it’s worth $4,700 more than the value of what the government school provides.
What does this have to do with risk? When you drop your child off at the government school, you have little control over what happens to him or her. Within broad limits the government can do a lot to your kid: teach him things you’d rather he not know, such as how to put a condom on a banana; teach him things that are not true, such as the idea that the industrialists of the late nineteenth century were “robber barons”; and, in thousands of little ways, deaden your child’s inherent love of learning. I’d call that a pretty big risk. Of course, all this can and does happen in private schools. But with lots of private-school choices, which you would have if the government exited the business and cut taxes to reflect its lower spending, the risk would be much less.
Harm from Forced Higher Wages
Finally, consider jobs. Government regulations give unions the power to force people to join or to at least have the union represent them in wage bargaining. Unions use that power to bargain for wages higher than they could have otherwise. At those higher wages new workers are less likely to find jobs and must settle for lower-paying jobs in nonunion sectors of the economy. When there’s a downturn in the economy, employers, facing unions that want to preserve higher-paying jobs for their more senior members, lay off the more-junior workers. Absent the unions’ legal monopoly, the employers and workers could have bargained for lower wages that preserved more jobs. So the loss in freedom due to government-granted union privileges goes hand in hand with a loss in security for younger, less-experienced workers.
Big government is a big lottery, and as in all lotteries, your expected winnings (which equal the probability of winning multiplied by the prize) are substantially less than the price of the ticket. But there is a fundamental difference between the big-government lottery and the typical game of chance. In the latter, the participants choose to play; in the big-government lottery everyone is forced to play.
Benjamin Franklin once said that those who are willing to trade liberty for security deserve neither. They’ll also get neither. If my major goal were security, I would want, even more than I do, freedom from government.
Comment by Tshaka on 25 March 2009:
Much of your points are valid but do not cover the broader problem and do not reflect the real issues at hand. I am not that well versed in the intricacies but I found your article interesting and so decided to reply.
1.The Governments of past have systemetically put in place a machine that as history is showing allows the average tax payer losses because of large corporations to take advantage of the deregulated system of capitalism. The question you raise about security is wanting. Evidently the welfare of the common man was not being taken into account,rather,the prior Obama administrations thought to secure deals in the name of growth of the economy via lobbyists group who sought and succeded in having bills passed to favor major companies.An ideal government is supposed to offer security.The previous government offered the security by spending trillions on wars that seem have deemed to be unecessary!(Iraq). The real security that a nation should have is knowing that your rights as a citizen of a nation are not violated.You say that the security offered by the government is traded for a greater security risk. in drugs,education and jobs. I would like to break down my argument as follows.
Drugs
1.The FDA does have a responsibility to research and to thoroughly test any medicine that goes to the market. The issue of efficacy is arguable ,but in the long run, I think having a system in place that can be effective in finding a drug that can cure cancer and has no side effects in the long run will be safer. But on the hand ,there should be circumstances that can allow a test subject to voluntarily take the said effective drug and know the consequences of taking the drug.Like I said before,this point can go back and fourth.
Your point on the non government regulated so called narcotics is on point. But it goes back again to that the government should secure the drugs that are sold to the public are safe.
Another point that I would like to put across is that the governments in the past have not targeted the drug trafficking as they should. Lack of any serious legislature was implemented in dealing with the problem. A double standard is employed when the dealer,who in most cases comes from an impoverished neighbourhood,has a misguided conception that this is his only way out of his predicament. The said drug dealer then receives an absurd sentencing that leaves them,\’wrecked for life\’as you put it. The real fact of the matter is that governments rarely cater to the individuals of their nations,they put in place policies that do not benefit them in the long run. The ugly side of capitalism is that the people fail to realise that prisons are a big earner. It is no coincidence that the problems are government created and prisons operated as business. It is also known that police need to meet a quota when it comes to making arrests. So there lies in some cases alot of bias which some could construe as racial profiling.
Education
On the issue of government schooling, I have observed in many cases that the school you send your kids go to is determined by where you live. Since government schooling is free, it also matters where the school is situated. The country is marginalised in such a way that it is obvious that the free schooling will vary depending on where you live. Since the government pays alot for the schools,the teaching should be reflective of an effective teaching program. Keep in mind that although the schools are public,the teaching is different in terms of content and level of education. The marginalisation of this country has led to different realities. The inner city youths who go to public school will not receive the same education as the kids who live in the suburbs and attend public schools. This is a problem the government has failed to effectively address. You speak of people who are able to send their kids to private schools but fail to mention about those who are not able able to afford private schooling?,you sound as if the people who do not send theeir kids to private schools do not value education and that sounds misguided to me.
You fail to mention that as much as the government school is wanting,many would rather send their kids to schools to learn as much as they can. MAny people fail to realise the power of education,the kid individual you mentioned earlier running away from the police for selling drugs could have benefitted by going to school. The examples you give for risks of government school are not valid. I ask you,what is a bigger risk,having your kid running around in the streets or in school learning?. You speak of kids learning how to put a condom on a banana!,I honestly do not think that is the best example you could give. Sex education can be left alone or be taught in school. The key thing is that it is being taught.Another point I would like to point across is that in some cases,some industrialists practiced dubious and unethical methods that can be traced to the financial woes the country is facing today. However,teaching should be objective and done in a way that is enjoyable to the child who is lucky to go to a school where they learn about the industrial revolution,the point is that they learn . The lack of enthusiasm can be attributed to poor teaching practices by teachers,this should have been rectified years ago but because of governments misplaced priorities it has resulted to this problem. Ideally,the government should have little or no participation in schools,but the sad reality is that a large number of children would not be able to attend school. The system in place is designed in a manner preventing those unable to earn a decent living to be left alone,and thus the government has been forced to step in and to provide security for the poor,in terms of education,which should be the biggest security one can have. The examples you give are not as great a risk as lack of education.
Lower or higher spending should reflect effectiveness.That point is arguable but effective,accounting should be a higher priority.Lower taxes are what should be applied but the system which is curently in place cannot sustain the necessary measures that are neede to rectify the system while simultaneously preparing the country avoid the mistakes that led to this problem.
Unions
You fail to mention that unions are designed to cater for the well being of the working man,it is more than just wage bargaining. The reason the government does this is to have security for the working individual in that they are not taken advantage by the companies who do not have to answer to anyone. The unions provide security for the worker.
On the point of bargaining salaries,keep in mind that the worker in most cases does not receive a bonus when the companies gaets profits,but will feel the pinch when the company decides to lay them off. Sensible union regulations would require the workers to be paid according to percentages,the level of expertise should play a role in the wages. The union,if is regulated in a democratic and effective way will greatly benefit the workers and finally the company. I agree on the fact that some union leaders will try to lay off the less experienced workers,but if serious reform and transparency is taken,such incidents will not take place because everyone would be represented in that union.It all comes down to effective union practices being taken into account.
With that being said,the reason there is big government is because the unregulated system of corporations has led to the government to come in and fix the problem. Remember,the people of this nation as of now have been robbed by the ugly side of capitalism,and the government has been forced to play police against the same practice that led to a \’free\’ market!.
I hope to hear from you on any issues you might have from my interpretation of what I wrote.
Comment by RZielinski on 2 April 2009:
I am thankful to FEE for articles such as this and assistance in seeing through the smoke screens that restrict liberty as espoused by TSHAKA in this comment.
Comment by joseph on 22 June 2009:
i disagree with TSHAKA
Comment by Rick on 22 January 2010:
So corporations, those contemptable entities, will be targeted and regulated, except for Fannie and Freddie who still get an unlimited financial permit to screw up. And no bonuses for corporate execs, unless you are an Obamabuddy, like Mr. Raines.
When are they going to do a little regulating on the unions, who always seem to acquire corrupt officials who then squander the dues either on themselves or on corrupt politicians making backroom deals? And what about some of those unions who appear to have gotten too big to fail without having a negative effect. Shouldn’t they be broken up into some smaller pieces too?
Comment by Capt. A. on 22 January 2010:
A fine, excellent penned article by Mr. David R. Henderson.
A favorite bumper sticker of mine: There’s No Government Like … No government.
Every person has an opinion; not every person is willing to back his or her opinion with his or her life at stake. Listen carefully to those who would risk their life to back up their opinions. They have the most to lose and maybe the most to gain. They accept full responsibility. They are indeed rare people.
The world is filled with nanny-state loving collectivists. Evidence: the lengthy comment by Tshaka on 25 March 2009. As tragic as it is, the incontrovertible truth witnessed by the economic Aceldama that befalls the world today (2010), leans heavily against free markets, liberty, freedom, financial privacy, personal privacy and private property rights. It is sad to behold. Americans have frittered away some of the most valuable attributes that make life truly worth living. I mentioned them above. America is fast becoming THE place to be FROM. I am from that place.
Opinions from erudites, pundits and individuals like Tshaka, staked without a life … are floaters that need to be flushed! Please … someone pull the handle.
C’est la guerre,
Capt. A.
Principaute de Monaco
GMT +1:00 CET
“Anyone who needs to be persuaded to be free, doesn’t deserve to be.” ~ L. Neil Smith
Comment by James on 22 January 2010:
@Tshaka
Your on the right track, keep asking questions and learn from your experiences. Too much of what we see and think is filtered by a media that has become politically biased. Take in the facts from both sides and make up your own mind. I know it is not easy with the wall of hype thrown up daily by news, and media outlets.
Unions, jobs, education, and government regulation are the critical issues that we must solve, I do not believe that anyone really has solved them yet. In America I believe we have reached a critical time, tipping point if you will, that drills right down to our own beliefs about who we are and what we stand for, and what kind of country we will be in the future.
These are scary, and confusing times, and people look for stability in those times. We are a liberal people founded on a government of liberal policies, those policies being, the absolute distrust of big government, the freedom of the individual in the pursuit of happiness, the rejection of elite ruling political classes, or tyrannical regimes that oppress it’s people in name of safety and security.
Keep your mind open, and follow those that are seeking truth, not those who claim to have found it, I don’t believe anyone has, or ever will.
Pingback by Taxes Loom for Tanning Salons | The Freeman | Ideas On Liberty on 29 March 2010:
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Comment by Daniel Shapiro on 29 March 2010:
It is human nature to desire security! It is necessary and urgent! Everyone want’s their life and property protected. The million dollar question is how to accomplish this. The historical, traditional, and irrational method is organized violence through the political state where the following contradiction emerges: You must be robbed in order to be protected. Can anyone resolve this?
Total capitalism is the only social mechanism that can realistically approach total protection of life and property. Each can choose and pay for the level of protection they desire.
Anyone who relies upon the state and the police to protect them is living in a fools paradise. In fact, these organizations systematically plunder my wealth, endanger my life, and erode my liberty. I rely upon locks and more advanced forms of technology to secure my life and property. Note that these are purely defensive and attack no one. If these fail, insurance will restore the monetary loss. This is government – non-political commercial-market government, i.e. property protection products and services. Political government is a fraud, a failure, and an enslaver.
Comment by Craig Wright on 29 March 2010:
Companies do not pay workers from duty, they do it to attract those who will provide a source of productivity. If a worker becomes more productive, they earn more as well as allowing the company to make profits.
Pay is not for turning up and randomly creating something that consumers may not want, it is for productivity. This means productive work. The more efficient worker should earn more and higher wages are a reward for greater efficiency.
“Since government schooling is free”. Not so. Taxes are taken to pay for ‘free education’. We all pay whether we use it or not and to whatever extent we use it.
It was a free market that provided the productivity gains that western society is built on. Tear down the foundation and let us see what results….
Pingback by Caffeinated Alcoholic Drinks Bring FDA Rebuke | The Freeman | Ideas On Liberty on 18 November 2010:
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Comment by willienelso3 on 5 December 2010:
to Craig Wright–
“If a worker becomes more productive, they earn more as well as allowing the company to make profits.”
Do they? Not if the employer can keep that productive worker w/o paying him or her more. That’s just good business. They less the cost of production (including labor costs, the greater the profit.
It is true that “The more efficient worker should earn more and higher wages are a reward for greater efficiency.” But there’s no compelling reason for a business owner to grant such a reward, so long as the productive employee must (or will) remain working for the business.
In fact, an owner or manager who gave higher wages every time the business became more profitable due to increased productivity would be foolish. Why pay more (and thereby drive up your costs and reduce your profits) to people who have been working all along for whatever you’ve been paying them?
[I have to stop for now before I end up sounding like a communist]