Government Fundamentalism
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Filed Under: Columns • Pursuit of Happiness
Tags: central planning • economy • free market • fundamentalism • government intervention • infrastructure • public works • stimulus • toll roads
In the last year or so, when I have advocated free-market solutions to specific problems, I’ve more and more frequently been dismissed as a “market fundamentalist.” By hiding behind that term, the person on the other side deftly avoids actually addressing the specific case I’m making.
But an even bigger problem is the use of the term “fundamentalist.” I understand Christian fundamentalists to be people who, as Bryan Caplan writes in The Myth of the Rational Voter, “ignore or twist the facts of geology and biology to match their prejudices.” So wouldn’t a market fundamentalist be someone who distorted facts to make the case for markets? We can certainly imagine such a person, but I’m not one—nor are many of the people who are strong advocates of free markets. It’s not that I think markets will always work perfectly. It’s just that they work so much better than the coercive solutions that are proposed by those who call me a “market fundamentalist.” Of course, there are times when standard free markets might not work well, but in many of those cases, voluntary charitable activity and simple fellow feeling fill the gap. We don’t think of it as a market transaction, for example, when a stranger in a strange city gives me directions to my hotel. But it certainly is an exercise of his freedom, and it generally works pretty well.
Government Fundamentalists
What should we call people who seem to regard government as the solution regardless of the evidence? I propose the term “government fundamentalists.” How would you identify a government fundamentalist? One characteristic would be a tendency, after the person points out market failures, to argue for government intervention as the solution. Rarely does anyone who proposes a government solution spell out how the incentives will be set up so that the government will actually solve the problem. Even many economists who are strongly committed to free markets will agree that economic freedom can underprovide defense from foreign attackers because of the notorious free-rider problem: Those who refuse to pay will get the same defense as those who pay, giving all an incentive not to pay. The possible result is that national defense is underprovided. But I’ve yet to find an advocate of government provision of defense who can explain how incentives will be set up so that government actually defends us and doesn’t simply engage in national “offense,” picking fights with a dictator in Iraq or a demagogue in Panama, to cite two examples of the U.S. government’s so-called defense.
But given that even some passionate advocates of economic freedom approve of government solutions to problems caused by market failure, we need another characteristic to distinguish government fundamentalists. Here’s the characteristic I propose: a tendency to advocate government solutions even in the face of evidence that those very solutions have not worked.
Take the tax on gasoline. The original idea for taxing gasoline was that users of roads would pay for them. Even at its best, though, the gas tax was not a great solution. The revenues were put in a big pool and politically allocated. There was no necessary connection between where people valued having roads and where roads were built, a connection that automatically would have existed had the revenues been collected with tolls. Tolls, after all, are prices not taxes.
It got worse. In the late 1960s, governments started diverting some gasoline-tax revenues to other uses. The first big diversion was to government-run mass transit that couldn’t survive on its own without subsidies. Later, more funds were diverted for bicycle lanes and lanes on roads and freeways that were dedicated to money-losing bus service. So the whole idea of user-supported roads has been steadily undercut.
Moreover, in response to higher gasoline prices, people have reduced their driving and shifted towards higher-fuel-economy vehicles. Because the federal tax on gasoline is in cents per gallon, revenues fell slightly, from $21.053 billion in fiscal year 2007 to $20.982 billion in fiscal year 2008, a drop of $71 million. In most years, by contrast, revenue grows as the number of drivers grows.
What should be done? If you notice how politicized road construction is, if you notice that a gasoline tax that was supposed to be used only for roads is now used for other things, and if you notice that the shift to higher fuel economy is reducing the growth of revenues for road-building, you might consider a market solution. You might consider taking the issue out of politics, allowing private entrepreneurs to build roads and charge tolls for their use. You might realize that doing so would forever free road construction and maintenance from the vicissitudes of gasoline tax revenues and from the politically powerful governments that grab the funds for their money-losing projects.
More Government Will Fix Failed Government?
But what do many people advocate when they notice this problem? Higher gasoline taxes. If you assume that government solutions are better than free-market solutions, you would naturally conclude that the gasoline tax should be increased. But if you are to avoid being a government fundamentalist, shouldn’t you actually look at the evidence on how well or badly gasoline taxes and government provision of roads have performed? Shouldn’t you also look at the how well or badly toll roads work?
That’s not what many people have done. Take political writer Thomas Frank. In a January 28 article in the Wall Street Journal, “Toll Roads Are Paved with Bad Intentions,” Frank wrote that few state governments “are willing to raise the gasoline taxes which pay for the repairs” to government-owned roads. In other words, Frank sees that there is no necessary connection between the need for repairs and the willingness to raise gasoline taxes. Isn’t this failure to fund roads a strike against government-funded roads? Not in Frank’s mind. He points out a problem with an incomplete system of toll roads: Tolls will price some drivers out, and some of these drivers will then spill over to nontoll roads. But this wouldn’t be a problem if all roads were toll roads. Frank, though, does not consider such a system.
Economist Jeff Hummel recently captured the essence of government fundamentalism this way: If markets don’t work, have government intervene. If government intervention doesn’t work, have government intervene further.
Notice the irony. Many free-market economists like me are quite willing to admit that markets don’t work perfectly and to examine and accept government solutions if their advocates can show how governments can be motivated to actually carry them out. And yet we are called market fundamentalists. On the other hand, many people who call us that are unwilling to change any of their views about the efficacy of government intervention no matter how badly the intervention works. Who are the fundamentalists here?
Comment by B Shantanu on 25 May 2009:
Very interesting David…Thanks.
Comment by R Esquivel on 27 May 2009:
Mr. Henderson, I think your coining of the term “Government Fundamentalist” is silly. A word for those who seek the government solution for everything is “liberal.”
The basic problem is our educational system in which few get a real grounding in our economic system. Business is bad, greedy, short sighted. And of course liberals use the few, although sometimes magnificent “failures” as evidence of the failure of free markets. No attention is paid to the innumerable successes, big and small.
Regarding the Constitution, some use the term “Originalist” but basically it comes down to a “fundamentalist” understanding of the document. Your reference to the religious context is flawed. Bryan Caplan sounds like an idiot who is intolerant of religious people. I take it your reference to his book is about the creation vs. evolution debate. But as usual, liberals don’t debate. They have “consensus” that is final. No debate.
(FYI – Christian fundamentalism is about belief in the Bible being the “Word of God” given to man for his instruction on how to live life and in achieving everlasting life beyond the grave. Things like the 10 commandments are not negotiable and are not a “living” list that man can choose to follow. I’m not saying that fundamentalists are perfect but they insist that there are things about life that are truths for all time.)
I also find your reference about the common defense as opposed to “offense” trite. I know you believe “Bush lied, people died.” Your literal use of the word “defense” is immature.
However, I do agree that those 40% who pay no taxes and live off the taxpayers, read government, largess do benefit from our common defense. You have to admit, 40% is one whopper of a number! And it will only get worse over time.
I read your article because the title interested me. I, as a businessman with an MBA, I try to explain things to family and friends only to have them spout liberal slogans and shut their ears. I am, like you, labelled the ignorant one because I am part of the business community. Therefore I take advantage of people, the environment, am greedy and contribute nothing to the community or society at large. I try, but it is a futile effort. So I go back to my thing until the next family gathering. Keep on keeping on!
Comment by ChrisW on 28 May 2009:
@R Esquivel: I think much of your criticism is off base.
First, the term “liberal” is not equivalent to “government fundamentalist”. In fact, it’s quite the opposite. The liberal philosophy is one of laissez-faire respect for the individual. I believe that you must have meant “Liberal” (with the capital “L” differentiating the political movement from the philosophy).
Second, if referring to “Liberal”, then you’d be right, but it may not be a good strategy. Framing the terms of an argument (e.g., “right to life” vs. “choice”) is an important step in victory; don’t let your opponent determine the terms of the argument.
Comment by fundamentalist on 1 June 2009:
“I understand Christian fundamentalists to be people who, as Bryan Caplan writes in The Myth of the Rational Voter, “ignore or twist the facts of geology and biology to match their prejudices.”
Bryan Caplan likes to invent new definitions for words because it’s easier for him to change definitions in such a way that his arguments automatically win rather than forcing himself to take part in honest debate.
In the first place, no creationist twists biological or geological evidence. They merely present evidence that evolutionists refuse to consider. On the other hand, evolutionists do quite of bit of fact twisting. Roger Lewin, an evolutionist, describes the torture of evidence by evolutionists in his “Bones of Contention.” In addition, evolutionists offer only evidence for micro-evolution, what is commonly called selevtive breeding, for macro-evolution, which is the change of one kind of animal into another. Of course, Bryan is weak on his knowledge of economics and his knowledge of biology and geology is virtually non-existent.
The term “fundamentalists” was adopted by American Christians at the turn of the 20th century to distinguish themselves from the “liberal” churches who denied the deity of Christ, his virgin birth and his bodily resurrection. They used the term correctly, because a fundamentalist is someone who emphasizes the fundamentals of his discipline. In football, the fundamentals are tackling and blocking. In investing they’re the economic causes of price changes as opposed to chart reading. In economics, the fundamentals are marginal pricing, subjective valuation, supply and demand, and money supply. People fall into error when they get away from the fundamentals. Austrian economists are fundamentalist economists because they emphasize the fundamentals of the disciple which mainstream economists ignore.
Deceptive journalists diliberately misused the term in the 1980’s, by applying “fundamentalist” to Islamic terrorists. The whole purpose was to slander American fundamentalists with guilt by association, even though the two had absolutely nothing in common. Socialists have always been dishonest by changing the definitions of words. Promoting this misuse of the term is not only dishonest, but contributes to the break down of communication.
Comment by fundamentalist on 1 June 2009:
PS, As Bryan Caplan how many books on creationism he has read. I’ll eat my hat if he has ever read even one. I regularly ask PhD’s in the sciences who consider themselves experts in creationism that same question and have found without exception that none of them have ever read even the back cover of a creation science book.
Comment by vepxistqaosani on 17 July 2009:
Re Fundamentalism –
It\’s not necessary to read too far into \’creation science\’ literature to realize that one needn\’t read further. For me, that point occurred about six pages into a creationist tome foisted on me by my wife\’s sister-in-law, when I read about the \’Doctrine of Apparent Age\’ — in other words, the idea that God created the world to look exactly as if it had evolved over billions of years.
As theology, this is remarkably stupid. As science, it is utterly worthless.
So, no, I won\’t be reading any \’creation science\’ books, and, yes, I will continue to regard creationists as morons and Luddites.
Comment by James Madison Fan on 17 July 2009:
Actually I’ve read several Creationist publications such as “Of Pandas and People” put out by the “Foundation for Thought and Ethics.” I’ve also read treatise put out by a well known Creationist sophist named Kent Hovind who has intentionally damaged fossils in an effort to support Creation knowing full well he was attempting to deceive people which is a direct violation of the Ninth Commandment: “Thou shall not bear false witness against thy neighbor.” Widely interpreted as “Thou shall not lie.”
I’ve also read the Bible and have friends and relatives that are religious scholars. My sister, for instance, held a Masters of Divinity from Princeton and was an ordained Minister. If you would like to debate Creation versus Evolution I’d be happy to join in, but in looking at the article above it seems that such a discussion is wildly inappropriate since the author is writing about Economics rather than Evolution. Both start with the letter E so I can see how they might be mistaken for each other but I would hope that we as gentlemen and ladies all can search out the topic at hand rather than generating one whole cloth as well as treating each other with some level of respect rather than calling on ad hominem.
The flaw in Mr. Henderson’s argument is he is assuming that since taxes are being misused the concept of a gas is therefore inappropriate and the defacto cure for this is to leave it to the free market.
I fail to see how a free market road system would work. How would competition work in this proposed free market roadway when it would be prohibitively expensive to get the necessary right-of-ways and property to build a parallel road way so as to compete?
If anyone has driven in New Jersey they will learn very quickly that the toll system is not the panacea Mr. Henderson pretends. Freeway conditions in California are already absurd but stopping every couple of miles to pay a new toll would make it even worse.
Even if it were practical, how many freeways would he like to see spawned and what happens to these freeways if they go bankrupt? In a few years the roads would be a monopoly and monopolies do not foster a free market. In fact, Smith clearly indicates monopolies are the bane of a free market. So the government would have to step in and break them up and the process would repeat. Sounds like a waste to me but perhaps Mr. Henderson can provide a workable model under the free market since it eludes me.
What Mr. Henderson appears to be missing is if the tax were applied as it was envisioned it would act as toll paid at the pump rather than at a booth saving time and money. It may not work that way due to politicians “raiding the larder” but that’s not inherent in the gas tax, only in the lack of ethics demonstrated by politicians. So let’s put the blame where it belongs, on those that are stealing from programs the voters want so they can fund programs the voters do not want.
Comment by Ragnar Danneskjold on 18 September 2009:
@fundamentalist: contact me privately (you can use the Facebook group page listed above to find me) and I’ll gladly supply my address so you can examine my small shelf of creationist literature, which I collect as I collect books on Marxism by Marxists, as examples of opposition research.
Bryan Caplan can be cantakerous, but he’s anything but dumb. You’re welcome to join in on Pete Boettke’s workshops, weekly during the GMU semester, if you wish to address him in person.
Thank you, David, for fleshing out a term I, too, have begun using. I find it useful to wager with the alleged government fundamentalist, in the James Randi style, as follows:
Is there any point at which the federal government will have spent sufficient money on this problem [could be any perceived wrong that government coercion must right] that you would be willing to concede, this approach has failed, it’s time to try something new and get the federal government out of this endeavor? It can be any number, though obviously billions/trillions are preferred, as we are dealing in those sorts of figures at this level. I will ask you to write this down, preferably via email or other mode containing a time and datestamp, and should spending on this issue hit that point, I will hold you to your promise.
Should the person fail to accept your reasonable wager, effectively declaring there is no point at which sufficient resources have been exhausted to consider alternative, noncoercive methods of addressing various issues, the phrase “government fundamentalist” may very well be appropriate.
“Fair? It’s I against the organized strength, the guns, the planes, the battleships of five continents.” (”Ragnar Danneskjold”)
Comment by James Madison Fan on 18 September 2009:
Mr. Danneskjold,
In an effort to explore your point, it would seem to me that it depends entirely on the perceived wrong that needs to be addressed and if it is something that can actually be cured.
I have some difficulty seeing the Market solution as always being the best solution if for no other reason than economy of scale. I know this is heresy to the Capitalist and Objectivist purist and some may want to revoke my claim of being a Libertarian but I am every bit as alarmed by the prospect of corporate oppression as I am of a tyrannical government.
In this case Henderson writes against the gasoline tax. I am not a fan of taxes so I can sympathize. Unfortunately by rallying against the status quo he has the responsibility to provide an alternative that is close to parity, at parity, or superior rather than making a vague nod to toll roads and pretending like that is sufficient.
The gas tax is one of the better taxes because it is “voluntary” in the sense that it is a function of usage rather than arbitrarily collected from everyone’s paycheck. In addition to this it is (supposedly) targeted directly at supporting our economic infrastructure. The more gas you use the more you use the roads and the more taxes you pay to service the roads you use. I know that the gas tax is there. I know what it is (supposed) to fund. I do not see it as being any more coercive than paying a toll except the government collects it at the pump rather than on the road via a booth or box on my windshield.
I wish more taxes were directly linked to the item they (supposedly) service rather than something truly coercive like the Income Tax which sucks money out of my wallet without any promise of actually going someplace that does me any good. Common defense? Great. Welfare and healthcare for foreign nationals? No thanks.
We should be supporting taxes like this where the tax goes to something that it is directly linked to rather than being collected from everyone and dumped into a nebulous pool that is allocated by the whim of the Polit Bureau… um… Sacramento / Washington.
Comment by Ragnar Danneskjold on 21 September 2009:
\"I know this is heresy to the Objectivist purist\". The folks on either side of the Peikoff/Kelley split who haven\’t spoken to me in well over a decade because I insisted on coming to my own conclusions and thinking for myself (!), will be glad to know I\’ve been designated back in their camp(s), I\’m sure
\" … could be any perceived wrong that government coercion must right\" – I was speaking in the style of the categorical imperative and spotting the believer in government solutions their own concepts for sake of argument, whereas with markets there often is no \"one solution\" to a problem. Thus, with \"perceived wrong that needs to be addressed and if it is something that can actually be cured\", we\’re already off on the wrong foot, here.
\"I have some difficulty seeing the Market solution as always being the best solution\". Singular? I thought the entire point was that markets offer choice. There may or may not be one \"best\" solution to a problem for everyone. The feedback mechanism that the price system offers, also tends to correct. Few such opportunities to examine \"how we\’re doin\’ so far\" (Ed Koch), exist in a world of no profits and thus, no losses, where losses simply dictate more funding.
Agree that the gas tax does a better job of being a proxy for how private roads could be funded, than nearly any other tax in existence. There is at least *some* connection between miles driven and what one pays. You suggest the counter, though, when you say \"via a booth or box on my windshield.\" Already you\’ve doubled the options for paying that currently exist. Thank you
\"I am every bit as alarmed by the prospect of corporate oppression as I am of a tyrannical government.\" I shop at Wal Mart when I want, and no one from their organization sends me notices informing me that my wages are to be levied or liens filed against my property, if for whatever reason, I withhold (!) my funds and choose not to spend them there for a time. You show way more than the brainpower necessary to complete the analogy. This is a crucial difference and does indeed define libertarian approaches, whether one comes at it from Ayn Rand, Murray Rothbard, Milton Friedman or any of dozens of other directions
Speaking of Rothbard, who did more than \"[make] a vague nod to toll roads and pretend like that is sufficient\" in For a New Liberty – two words: EZ Pass
All right, four words altogether: check cards
\"Quis custodiet ipsos custodes?\"
– \"Danneskjold\"