Tonight, I want to . . . lay out a blueprint for an economy that’s built to last. . . .

Considering that an economy (a free one, that is) is just people engaging in exchanges for mutual benefit, it defies blueprinting, which sounds ominously like central planning. The last thing an economy needs is an architect, especially one with the legal power to use aggressive force.

Thomas Friedman agrees in his New York Times column “The Earth is Full” (June 8, 2008), in which he says, “[P]opulation growth and global warming push up food prices, which leads to political instability, which leads to higher oil prices, which leads to higher food prices, and so on in a vicious circle.”

In his article “What Nobody Wants to Hear, But Everyone Needs to Know,” University of Texas at Austin biology professor Eric R. Pianka wrote, “I do not bear any ill will toward people. However, I am convinced that the world, including all humanity, WOULD clearly be much better off without so many of us.”

However, there is absolutely no relationship between high populations, disaster, and poverty. Population-control advocates might consider the Democratic Republic of Congo’s meager 75 people per square mile to be ideal while Hong Kong’s 6,500 people per square mile is problematic. Yet Hong Kong’s citizens enjoy a per capita income of $43,000 while the Democratic Republic of Congo, one of the world’s poorest countries, has a per capita income of $300. It’s no anomaly. Some of the world’s poorest countries have the lowest population densities.

Planet earth is loaded with room. We could put the world’s entire population into the United States, yielding a density of 1,713 people per square mile. That’s far lower than what now exists in all major U.S. cities. The entire U.S. population could move to Texas, and each family of four would enjoy more than 2.1 acres of land. Likewise, if the entire world’s population moved to Texas, California, Colorado, and Pennsylvania, each family of four would enjoy a bit over two acres. Nobody’s suggesting that the entire earth’s population be put in the United States or that the entire U.S. population move to Texas. I cite these figures to help put the matter into perspective.

Let’s look at some other population density evidence. Before the collapse of the Soviet Union, West Germany had a higher population density than East Germany. The same is true of South Korea versus North Korea; Taiwan, Hong Kong, and Singapore versus China; the United States versus the Soviet Union; and Japan versus India. Despite more crowding, West Germany, South Korea, Taiwan, Hong Kong, Singapore, the United States, and Japan experienced far greater economic growth, higher standards of living, and greater access to resources than their counterparts with lower population densities. By the way, Hong Kong has virtually no agriculture sector, but its citizens eat well.

One wonders why anyone listens to doomsayers who have been consistently wrong in their predictions—not a little off, but way off. Professor Paul Ehrlich, author of the 1968 bestseller The Population Bomb, predicted major food shortages in the United States and that by “the 1970s . . . hundreds of millions of people are going to starve to death.” Ehrlich forecasted the starvation of 65 million Americans between 1980 and 1989 and a decline in U.S. population to 22.6 million by 1999. He saw England in more desperate straits: “If I were a gambler, I would take even money that England will not exist in the year 2000.”

Expert Poverty

By a considerable measure, poverty in underdeveloped nations is directly attributable to their leaders heeding the advice of western “experts.” Nobel laureate and Swedish economist Gunnar Myrdal said (1956), “The special advisors to underdeveloped countries who have taken the time and trouble to acquaint themselves with the problem . . . all recommend central planning as the first condition of progress.” In 1957 Stanford University economist Paul A. Baran advised, “The establishment of a socialist planned economy is an essential, indeed indispensable, condition for the attainment of economic and social progress in underdeveloped countries.”

Topping off this bad advice, underdeveloped countries sent their brightest to the London School of Economics, Berkeley, Harvard, and Yale to be taught socialist nonsense about economic growth. Nobel laureate economist Paul Samuelson taught them that underdeveloped countries “cannot get their heads above water because their production is so low that they can spare nothing for capital formation by which the standard of living could be raised.” Economist Ranger Nurkse describes the “vicious circle of poverty” as the basic cause of the underdevelopment of poor countries. According to him, a country is poor because it is poor. On its face this theory is ludicrous. If it had validity, all mankind would still be cave dwellers because we all were poor at one time and poverty is inescapable.

Population controllers have a Malthusian vision of the world that sees population growth outpacing the means for people to care for themselves. Mankind’s ingenuity has proven the Malthusians dead wrong. As a result we can grow increasingly larger quantities of food on less and less land. The energy used to produce food, per dollar of GDP, has been in steep decline. We’re getting more with less, and that applies to most other inputs we use for goods and services.

Ponder the following question: Why is it that mankind today enjoys cell phones, computers, and airplanes but did not when King Louis XIV was alive? After all, the necessary physical resources to make cell phones, computers, and airplanes have always been around, even when cavemen walked the earth. There is only one reason we enjoy these goodies today but did not in past eras. It’s the growth in human knowledge, ingenuity, and specialization and trade—coupled with personal liberty and private property rights—that led to industrialization and betterment. In other words human beings are immensely valuable resources.

What are called overpopulation problems result from socialistic government practices that reduce the capacity of people to educate, clothe, house, and feed themselves. Underdeveloped nations are rife with farm controls, export and import restrictions, restrictive licensing, price controls, plus gross human rights violations that encourage their most productive people to emigrate and stifle the productivity of those who remain. The true antipoverty lesson for poor nations is that the most promising route out of poverty to greater wealth is personal liberty and its main ingredient, limited government.

T. S. Eliot said, “Humility is the most difficult of all virtues to achieve; nothing dies harder than the desire to think well of oneself.”

If you’re not sure what humility is, these lyrics from an old Mac Davis tune will at least remind you of what it’s not:

Oh Lord it’s hard to be humble when you’re perfect in every way.

Oh Lord, it’s hard to be humble!

I couldn’t disagree more with those words. It’s not hard to be humble if you stop comparing yourself to others. It’s not hard to be humble if your focus is building your own character. It’s not hard to be humble if you first come to grips with how little you really know. “The wise person possesses humility. He knows that his small island of knowledge is surrounded by a vast sea of the unknown,” noted Harold C. Chase.

One of the greatest teachers and theologians of our day, Pastor Timothy Keller of Redeemer Presbyterian Church in New York City, makes this keen observation: “Until the twentieth century most cultures, including ours, held that having too high an opinion of oneself was the root of most of the world’s troubles. Misbehavior from drug addiction to cruelty to wars resulted from hubris or pride—a haughtiness of spirit that needed to be deterred or disciplined. The idea that you were bigger or better, or more self-righteous, or somehow immune from the rules that govern others—the absence of humility, in other words—gave you license to do unto others what you would never allow them to do unto you.”

These days, however, it’s a different story. Being humble rubs against what millions have been taught under the banner of “self-esteem.” Even as our schools fail to teach us elemental facts and skills, they somehow manage to teach us to feel good in our ignorance. We explain away bad behavior as the result of the guilty feeling bad about themselves. We manufacture excuses for them, form support groups for them, and resist making moral judgments lest we hurt their feelings. We don’t demand repentance and self-discipline as much as we pump up their egos.

Don’t get me wrong. Humility doesn’t mean thinking less of yourself. It means thinking of yourself less. It means putting yourself in proper perspective. It means cultivating a healthy sense of your limitations and the vast room you have to grow and improve. It means you don’t presume to know more than you do.

Fifty-three years ago this month (December 1958) Leonard Read’s essay “I, Pencil” made its debut. Let me summarize it for you here: No one person—repeat, no one, no matter how smart or how many degrees follow his name—could create from scratch, entirely by himself, a small, everyday pencil, let alone a car or an airplane.

A mere pencil—a simple thing, yet beyond any one person’s complete comprehension. Think of all that went into it, the countless people and skills assembled miraculously in the marketplace without a single mastermind—indeed, without anyone knowing more than a corner of the whole process. It’s impossible not to think of the huge implications of this lesson for the economy and the role of government.

It is in fact a message that humbles the high and mighty. It pricks the inflated egos of those who think they know how to mind everybody else’s business. It explains in plain language why central planning of society or an economy is an exercise in arrogance and futility. If I can’t make a pencil, holy cow, I’d better be careful about how smart I think I am.

Big Plans, Broken Shells

Maximilian Robespierre blessed the horrific French Revolution with this chilling declaration: “On ne saurait faire une omelette sans casser des oeufs.” Translation: “One can’t expect to make an omelet without breaking eggs.” He worked tirelessly to plan the lives of others and became the architect of the Revolution’s bloodiest phase: the Reign of Terror. Robespierre and his guillotine broke eggs by the thousands in a vain effort to impose a utopian society with government planners at the top and everybody else at the bottom.

That French experience is one example in a disturbingly familiar pattern. Call them what you will—socialist, interventionist, collectivist, statist—history is littered with their presumptuous plans for rearranging society to fit their vision of the common good, plans that always fail as they kill or impoverish people in the process. I’ve said it in this magazine before but I’m happy to say it again: If big government ever earns a final epitaph, it will be, “Here lies a contrivance engineered by know-it-alls who broke eggs with abandon but never, ever created an omelet.”

None of the Robespierres of the world knew how to make a pencil, yet they wanted to remake entire societies. How utterly preposterous and mournfully tragic!

The destructive acts of pride don’t always come from brash and fiery revolutionaries or egotistical tyrants full of pompous and hateful rhetoric. More often they come cloaked in benevolence and disguised as the wisdom of the elders, who have only the best of intentions for the whole community. An outstanding example of this type of hubris is the political philosophy in Plato’s Republic, in which he maintains, with breathtaking vanity, that the world would be a harmonious and prosperous place if only philosophers like himself were given absolute authority to run it as they saw fit!

We would miss a large implication of Leonard Read’s message if we assume it aims only at the tyrants whose names we all know. The lesson of “I, Pencil” is not that error begins when the planners plan big. It begins the moment one tosses humility aside, assumes he knows the unknowable, and employs the force of government to control more and more of other people’s lives. That’s not just a national disease. It can be very local indeed.

In our midst are people who think that if only they had government power on their side, they could pick tomorrow’s winners and losers in the marketplace, set prices or rents where they ought to be, decide which forms of energy should power our homes and cars, and choose which industries should survive and which should die. They make grandiose promises they can’t possibly keep without bankrupting us all. They should stop for a few moments and learn a little humility from a lowly writing implement.

So humility, in my book, is pretty important stuff. It may well be the one virtue of strong character that is a precondition of all the others.

Despite the widespread acceptance of this narrative, there are many reasons to question whether it accurately portrays the motivations and hopes of some Progressive-Era reformers. In a 2005 article in the Journal of Economic Perspectives, “Eugenics and Economics in the Progressive Era,” the economist Thomas C. Leonard offered a completely new historical account of the sources of Progressive-Era labor legislation and the intentions of its supporters. Leonard’s work, including an important 2009 article coauthored with legal scholar David E. Bernstein for Law and Contemporary Problems, “Excluding Unfit Workers: Social Control Versus Social Justice in the Age of Economic Reform,” indicates that lurking behind what many people see as humanitarian reforms was something much uglier.

Leonard and Bernstein argue that some of the most prominent of the Progressive reformers were “partisans of human inequality.” They supported interventions as ways to forward their eugenic goal of a purer (that is, whiter) human race by eliminating the opportunities for the “unfit” to get meaningful work. The “unfit” here included not just nonwhites (especially African-Americans) but also the “insane,” immigrants (especially from central and eastern Europe), and in a somewhat different way, women.

In other words, what we today think of as the unintended consequences of laws supported by today’s well-meaning but economically uninformed Progressives were actually the intended goals of some of their intellectual ancestors a century ago. Early Progressive economists understood the effects of these interventions, but they thought those effects were desirable.

The Progressive economists of the late nineteenth and early twentieth centuries saw social science not merely as a means of inquiry and understanding but as a guide to social management and control. The advent and broad acceptance of Darwinism in the late nineteenth century, combined with a more general belief in the power of science and scientific management to solve social problems, led to a fascination with eugenics and the possibility of using public policy to ensure the “survival of the fittest” and the purity and strength of the human race. In the hands of many thinkers at the turn of the twentieth century, Darwinian theory became a rationale for using the power of government to weed out the “undesirable” and “unfit” in much the way that the new understanding of evolution was changing agriculture and animal husbandry. Eugenics clubs and societies grew rapidly and many of the leading intellectuals of the early twentieth century, including a number of well-known economists (such as John Maynard Keynes and Irving Fisher, perhaps the most famous American economist of the time), were active in these groups and saw their work through the lens of eugenics.

Eugenics and Intended Consequences

We look back on the eugenics movement with proper horror. Yet the same ideas that led to forced sterilization also led to restrictions in the workplace, because labor markets were one place where eugenics-oriented economists could combine their two interests. They recognized early on that legislation which  excluded the “unfit” from labor markets would advance their eugenic goals. Most of these laws were enacted at the state level during this period, but the New Deal era saw many of the same arguments applied at the national level.

Consider minimum wage laws, for example. Today we tend to think people support them because they believe a minimum wage is a free lunch that will help the poor. Classical-liberal economists have long criticized such regulations, arguing they are a perfect example of the law of unintended consequences and of the disconnect between intentions and outcomes. In a competitive labor market any worker who can produce value is hirable at some wage up to that value. Even workers with limited skills are employable. What the minimum wage and other mandated benefit laws do is create a minimum productivity criterion for hiring, closing off the labor market to workers whose productivity is too low to justify that cost.

Leonard’s work shows that some advocates of the minimum wage, including many giants of the early days of the economics profession, such as John R. Commons and Richard T. Ely, understood exactly what minimum wage laws would do and liked it. In addition, various Progressives and socialists who were not economists, such as Eugene Debs and Beatrice and Sidney Webb, also supported minimum wage laws and other interventions into the labor market precisely because they would weed out those who were deemed too stupid or lazy to compete in a market economy—in particular, women, immigrants, and blacks.

Leonard writes, “the progressive economists . . . believed that the job loss induced by minimum wages was a social benefit, as it performed the eugenic service ridding the labor force of the ‘unemployable.’” He quotes the Webbs’ statement that “this unemployment is not a mark of social disease, but actually of social health.” Further, he quotes Henry Rogers Seager of Columbia University, who suggested that minimum wages were necessary to protect workers from the “wearing competition of the casual worker and the drifter.”

A. B. Wolfe, who would one day be a president of the American Economic Association, wrote in the American Economic Review in 1917 (quoted in part by Leonard and Bernstein): “If the inefficient entrepreneurs would be eliminated [by minimum wages,] so would the ineffective workers. I am not disposed to waste much sympathy upon either class. The elimination of the inefficient is in line with our traditional emphasis on free competition, and also with the spirit and trend of modern social economics. There is no panacea that can ‘save’ the incompetents except at the expense of the normal people. They are a burden on society and on the producers wherever they are.”

In the context of the early twentieth century this group largely included nonwhites, immigrants, and women, as well as white males with physical or mental disabilities—the very same groups the Progressive eugenicists thought were diluting the quality of the human gene pool. Unlike their modern successors, these supporters of minimum wage laws were under no illusion about the effects of their proposed policies; they understood and intended the negative consequences that economists now go to great lengths to argue will be the outcomes of the policies favored by contemporary Progressives. A great irony of the Progressive movement for a minimum wage is that while it aimed at eliminating the “unemployable,” it in fact created a group of “unemployables.”

Leonard’s research shows that even professional economists, including some for whom distinguished prizes and lectures are named today, engaged in a manner of thinking about issues like minimum wages that was profoundly—even obscenely, given their explicitly racist goals—anti-economic. According to some Progressives, wages were determined not by marginal productivity but by the living standards to which a particular worker was accustomed. Competition from women, children, and members of “low-wage races” threatened the dignity of white male heads of households, the robustness of the white genetic stock, and ultimately the social fabric. Leonard and Bernstein quote sociologist Edward A. Ross, who wrote that “the coolie, though he cannot outdo the American, can underlive him.” If society was to endure, white male breadwinners needed protection from outside competition.

Economists today sometimes argue that subsidies or expansion of negative income tax programs like the earned income tax credit are far more efficient ways to help the poor than policies like minimum wages. Leonard and Bernstein point out that according to Progressive economist Royal Meeker, wage subsidies were undesirable precisely because they would create more employment, particularly among “unfortunates.” The virtue of the minimum wage was that it increased the supposed dignity of white labor while separating “unfortunates” and “defectives” from jobs they would have otherwise had. Minimum wages were supported by explicit racists seeking explicitly racist ends.

Fast-forward a few decades and the results are still the same even if the intentions are more noble. In a recent paper, “Unequal Harm: Racial Disparities in the Employment Consequences of Minimum Wage Increases,” William Even and David Macpherson argued that in states fully exposed to the most recent minimum wage increases, the law cost young African Americans more jobs than the recession has. We should judge policies by results, not intentions. As the economist Thomas Sowell might say, whether a policy is deemed “compassionate” or not should depend on its effects rather than the stated goals of its advocates.

Other Labor Market Interventions

Eugenics provided an allegedly scientific pretext for protectionist legislation—specifically, restrictions on immigration. The eugenicists supported immigration restrictions because they believed that members of “low-wage races” would compromise not only whites’ living standards but also whites’ genetic stock through miscegenation. According to them, immigrants and other outsiders (read: African-Americans) would degrade the labor force and debauch the species. The Progressives proceeded on a model of society in which a (white male) breadwinner earned a “family wage” sufficient to support a (white) wife and (white) children. Women were to fulfill their roles as “mothers of the race,” and children were to be trained to do the same in the following generation.

In his 2005 article Leonard pointed out that restrictions on child labor were enacted specifically to prevent the lower classes from putting their children to work. Presumably this would then cause them to think twice about procreating as well as limit their incomes.

The Progressives used the same techniques to reduce the labor market opportunities of women. Women were seen both as fragile—in need of protection from the rigors of the workplace—and as having a special role in bearing children and managing the household as “mothers of the race.” This was in contrast to the perceived “overbreeding” of nonwhites and immigrants from places like eastern and southern Europe. Progressive reformers tried to keep women out of the labor force by enacting a variety of “protective” legislation at the state level, including maximum hours and minimum wage laws for women, both of which were set differently from those for men. Such laws made women less desirable and more expensive employees, which limited their labor force participation—precisely the goal of the reformers.

The perils of the 1930s provided an opening for additional burdens on the labor market designed to exclude “unfit” workers. Leonard and Bernstein report that the Davis-Bacon Act, for example, was “passed with the intent of preventing itinerant African American workers and others from competing with white labor unionists for jobs on federal construction projects.” The amplification of interest-group politics was evident in the relatively transparent attempts by New Deal Progressives to protect special interests from low-wage competition from the South—from African-Americans and other “low-wage races.”

In the 1930s U.S. Rep. John Cochran (D-Mo.) said he had “received numerous complaints in recent months about southern contractors employing low-paid colored mechanics getting work and bringing the employees from the South.” Rep. Clayton Allgood (D-Al.) joined in: “Reference has been made to a contractor from Alabama who went to New York with bootleg labor. This is a fact. That contractor has cheap colored labor that he transports, and he puts them in cabins, and it is labor of that sort that is in competition with white labor throughout the country.”

The disemployment effects, for example, of the National Industrial Recovery Act (NIRA) were stark. Leonard and Bernstein cite one estimate that the NIRA’s “wage provisions directly or indirectly led to the dismissal of 500,000 African American workers.” They also write that “the American Federation of Labor took credit for the failure of the FLSA [Fair Labor Standards Act] to provide for a lower minimum wage in the South,” preventing southward capital flows.

The Progressives, the Modern Left, and the Dismal Science

This history can be read as the American version of what happened earlier in England. David Levy has shown that economics became known as the “dismal science” because classical-liberal economists (such as J. S. Mill) favored racial equality in a free labor market. Reactionary, elitist British Romantics such as Thomas Carlyle and John Ruskin argued that the free market, with its underlying assumption of equality, would eliminate racial hierarchies and bring a “dismal” future of racial mixing. It was the classical-liberal economists who were providing the intellectual support for that future.

The moral of the story is that, despite the modern left’s continued claim that the pro-market philosophy is racist, sexist, and xenophobic, history demonstrates that classical liberals/libertarians were proponents of equality and opponents of racism, and that those who viewed the races as unequal were likely to seek backing from the State, particularly in labor markets. The historical record of the left on these counts is much more mixed than it is willing to acknowledge.

Despite their odious views on race and the use of the State to enforce their eugenically informed vision of the future, Progressive-Era reformers were ahead of their modern liberal counterparts in one important way. They understood that free markets, especially free labor markets, are the enemy of racism.

What was true for an Englishman was true also for a citizen of the United States. There were unfortunately many in both countries who thought that freedom was not enough. They believed that in addition to liberty, people had also the right to a large measure of protection from the struggles and uncertainties of human existence. In America the crusade for a government large and powerful enough to offer such protection was led by the so-called Progressives. One of them, Walter Lippmann (1889–1974), later observed that the older faith was that human rulers’ limited moral and intellectual capacities could not safely be trusted with unlimited power. The Progressives believed, by contrast, that there were no limitations on man’s ability to rule others and therefore no need to limit the powers of government. They had renounced the wisdom of the ages, he said, in order to embrace errors that the ages had renounced.

That’s what Lippmann believed in 1937, when he was America’s most popular journalist. His “Today and Tomorrow” column was in 155 daily papers and would soon be in 200. At the height of his popularity he would have over 10 million readers, many of whom, it has been said, did not know how they should think about the issues of the day until they had read his comments. A lady in a New Yorker cartoon told a friend, “A cup of coffee and Walter Lippmann are all I need.”

His credentials as a libertarian were less than impeccable. As a student at Harvard he developed a fondness for the British Fabians, who believed they could overcome the prejudices and inefficiencies of popular democracy with a small core of selfless leaders. In 1914 he published Drift and Mastery, in which Frederick W. Taylor’s principles of scientific management were used to draw up a blueprint for the rational arrangement of society. (Editor’s note: See “Taylorism, Progressivism, and Rule by Experts,” by Kevin A. Carson, The Freeman, September 2011.)

Applying this blueprint, he said, would lead to an America in which the role of private entrepreneurs would be taken over by salaried bosses, government commissioners, and labor leaders. His Public Opinion appeared in 1922 and quickly became the subject of college courses, articles in scholarly journals, master’s theses, and even a few dissertations; it was described by John Dewey as “the most effective indictment of democracy as currently conceived ever penned.”

Lippmann spent most of his life, both before 1937 and afterward, writing things of which someone like Dewey would approve. His conversion to free-market principles was brief and fleeting. Still, it was sincere for as long as it lasted. It seems to have begun with his frustration over the blundering statism of Herbert Hoover. News of the stock market crash was still in the headlines when the President began a series of conferences in which he told industrial leaders that they must promise not to reduce wages. His Agricultural Marketing Act gave farmers a half-billion dollars in 1929 and another hundred million early in 1930. In 1931 he offered a nine-point program of government intervention, which broadened the range of those eligible for assistance of this kind.

As things grew worse Hoover justified himself with words remarkably similar to those of another troubled administration 80 years later: “We might have done nothing. That would have been utter ruin.” Instead of allowing things to take their course, he said, his administration had devised American history’s greatest program of economic defense. He blamed the problem on investors, criticized their interest in profit, and was amazed to see stock market prices continuing to fall.

Lippmann’s patience with all of this sagged rapidly and finally snapped when Hoover put his name to the Tariff Act of 1930 (aka the Smoot-Hawley Tariff), which raised the rate on some 20,000 imported goods to record levels. Hoover signed this despite the more than one thousand economists who endorsed a petition urging a veto. He could not, he said, go back on party pledges: “Platform promises must not be empty gestures.” The words were for Lippmann simply Hoover’s confession that his policies, far from being intended for the general good, were actually an appeal to special-interest groups.

Although he would later become what someone has described as “one of the Roosevelt administration’s most important journalistic assets,” he had no initial enthusiasm for Hoover’s replacement. Franklin Roosevelt, he said, was “a pleasant man without any important qualifications for the office, who would very much like to be president.” The New Deal, he observed, was little more than an extension of policies begun under Hoover, and it was in every way as much of an appeal to special interests. The Agricultural Adjustment Act, for example, helped large landowners at the expense of sharecroppers and agricultural laborers. Lippmann later attacked Roosevelt’s plan to pack the Supreme Court and found himself assailed by the left-wing press as a reactionary.

For the first (and only) time in his life he was excluded from the inner circle of “the intellectual elite.” Upset and a little angry, he sat down to apply his wide reading and literary talents to a defense of ideas he had once opposed and a reconsideration of ideas he had once espoused. The result, The Good Society, was for the most part a brilliant examination of the intellectual, logical, and moral impossibilities of economic planning.

Social Planning: The Intellectual Impossibility

The intellectual problems with social planning are illustrated by Colbert’s troubles in managing the economy of Bourbon France. The regulations for the textile industry, to take one case, filled four volumes of 2,200 pages and three supplementary volumes. It was discovered in 1718 that planners had in spite of this neglected to include the number of threads appropriate for use in the cloth of Langogne, “a matter which must be attended to without fail.” The information for attending to it could be obtained only by means of reference to existing procedures, which was available only from established manufacturers, who were thus empowered to use the law for preventing innovative competitors from introducing new methods.

This points to the dark truth behind every “plan” for “improving society.” Governments, Lippmann said, are made up of people who meet to make speeches and write resolutions, of people who study papers, listen to complaints, and shuffle paperwork. These people suffer from indigestion, asthma, boredom, and headaches, and all of them would rather be making love than passing laws. They know whatever they have happened to learn, are aware of what they have happened to observe, and are interested in whatever has happened to catch their imagination. A power-holder may sometimes have high ideals, but he is in the end no more than a human being, “a little man in trousers, slightly jagged,” as William Vaughan Moody put it.

Such a person cannot possibly know enough to devise wide-ranging schemes for society as a whole. No matter what the source of their authority human rulers are human beings, and as such have only a severely limited understanding of the world in which they find themselves. The social planner sits down to a breakfast that is the final link in a chain stretching far beyond his comprehension. Society goes on as it does because of processes that are habitual and unconscious, and it is only because people can take so much for granted that they have the time to attend to anything. Anyone who attempts to plan everything is immediately trapped in a web of details. “The real, rather than the apparent, policy of any state will be determined by the limited competence of finite beings dealing with unlimited and infinite circumstances,” Lippmann wrote.

In his efforts to manage this complexity every ruler must imitate Colbert in calling on the expertise of those whose industry he hopes to regulate. In attempting to plan the production of cloth in eighteenth-century France the government got its advice from existing manufacturers and passed decrees that would protect them from competition. This led to laws against the production of printed calicoes, which then were all the rage. Attempting to regulate health care in early twenty-first-century America, the Obama administration accepted the advice (and contributions) of the American Hospital Association and the Federation of American Hospitals. These represent the interests of large community hospitals, whose dominance is threatened by the emergence of smaller hospitals offering superior service in particular physician groups’ areas of expertise. With its provisions against the creation of any additional doctor-financed hospitals, the Patient Protection and Affordable Care Act might have been better named the Large Hospital and Inferior Service Protection Act.

Earlier in his life Lippmann had endorsed a policy of gradual collectivism. He had never admitted to being a socialist, but he had argued that the government should gradually assume control of the economy, if not through outright ownership, then at least by means of detailed regulations. There should be a survey of all the available resources, and then national authorities should put together a plan for developing them. By the time he wrote The Good Society he had come to realize that such a plan would be flawed from the outset. The planners’ limited information must necessarily put them under the influence of such organized interests. “In practice,” he wrote, “gradual collectivism is not an ordered scheme of social reconstruction. It is the polity of pressure groups.”

Though they demand different things, these pressure groups agree in asserting that their interest is identical to the national interest. Those who believe the national interest is best served by means of cheap steel for the automobile industry, however, and those who believe it is best served by fixed and protected prices for the sake of the steel manufacturers, cannot both be right. Every new regulation, Lippmann said, is a decision in favor of some interest and against others.

Those who believe they have been harmed will react by seeking to protect their interests as well as they can. New laws lead to new violations, and these in turn to more new laws. In early eighteenth-century France lawsuits over methods for the production of cloth were endless. Observing that smuggling and bootlegging had become standard business practices Colbert decided to put the power of the State behind his decrees. An estimated 16,000 people were killed in his war on printed calicoes. A much larger number were punished somewhat less severely, though still with great cruelty. On one occasion 77 were hanged, 58 were broken on the wheel, 631 were sentenced to the galleys, one was set free, and none were pardoned. One assumes the Obama administration’s attempts to regulate health care will be less violent.

Social Planning: The Logical Impossibility

During the twelfth century there were 19 stations at which merchants travelling along the Rhine had to stop and pay a toll. Twenty-five more stations sprang up during the thirteenth century and 20 more during the fourteenth, all backed by the firepower of fortresses built for the purpose. Many of these were in the Duchy of Cleves, where they were referred to as the “treasure.” They were a treasure, though, only to the people involved in collecting the tolls. They added nothing to the peace or prosperity of Europe. They were merely a means for the forcible transfer of wealth. That, Lippmann said, is the real meaning of “economic planning.” The government does not produce anything. All it does is take from one group and give to another.

Even as he wrote, the policy of handing out money to appease the farm lobby, first planted by Hoover, was blossoming under Roosevelt. At the beginning of the twenty-first century’s second decade it has spread even beyond our shores. The Department of Agriculture gives American cotton planters about $3 billion a year. These handouts encourage overproduction, lower world cotton prices, and ruin small farmers in many Third World countries. In 2005 the World Trade Organization upheld a Brazilian challenge to these subsidies, but the United States ignored the ruling. When Brazil was granted the right to impose punitive tariffs and lift patent protections on a wide range of U.S. nonfarm products, Congress responded with a proposal to offer over $147 million a year to Brazilian farmers. Rather than eliminate a ruinous and unjust policy, our representatives wanted to expand the list of those who could make claims on it. In terms of Lippmann’s illustration, they decided that instead of abolishing the toll stations and tearing down the castles, they would “turn every cottage into a castle with a toll station of its own.”

The problem with such policies lies in the fact that the owners of these toll stations are the beneficiaries of a government-backed guarantee that they will receive additional income in exchange for reduced effort. Each is promised that his share of the national wealth will increase even though his contribution to that wealth has declined and perhaps even if he makes no contribution at all. This works for each of the stations for as long as there are only a few of them. Unfortunately they multiply. The granting of special treatment in one case is soon followed by the demand for similar grants to others, as in the case of the Brazilian farmers. There cannot in the end be more for everyone if everyone has been granted the privilege of producing less. Soon everyone, perhaps even the average toll station owner, is poorer than he would otherwise have been.

Social Planning: The Moral Impossibility

Specific economic contradictions may be eliminated by changing specific policies. Deeper and more difficult to eliminate is the effect of such policies on the character of the people. It is evident in the case of the cotton subsidy that it is gigantically helpful to the fewer than 20,000 planters who benefit from it. Nonbeneficiaries see this and come to the conclusion that the government has a magical power to create wealth. They forget about the iron chain that binds prosperity to production. They forget that wealth is the result of thought, effort, innovation, and thrift, and are gradually convinced that the path to abundance lies in the power of the State. They once understood that they could advance themselves only by increasing their service. They now believe that they must do it by imposing their will on those around them.

The greater the extent to which this idea is accepted, the more intense the struggle for power becomes. It goes on and must go on because the members of contending factions have been tempted to ignore the logic of their own beliefs. If power allows them to disregard other people’s preferences, their own preferences may be similarly disregarded by some third faction that has more power than they do. If they think about it, they will begin to see that their own liberty is ultimately dependent on their willingness to allow others similar freedom. In Lippmann’s terms, each man’s right to freedom from arbitrary treatment at the hands of his neighbor has an “inescapable corollary . . . the duty of man not to deal arbitrarily with others.”

Lippmann said he had been brought up to believe there was no such thing as a self-evident truth, but this seems to be one. It is also the most ancient axiom of morality. “What you do not want done to yourself,” Confucius told his followers, “do not do unto others.” Mohammed said, “Not one of you truly believes until you wish for others what you wish for yourself.” A Buddhist text says, “Treat not others in ways that you yourself would find hurtful.” The same truth appears even more tellingly in the Upanishads, in the teaching of Hillel, and of course in the words of Jesus: “Therefore all things whatsoever ye would that men should do for you, do ye even so unto them.”

Adam Smith’s notoriously self-interested butcher and baker understood this. They understood that they would have to close their shops if they did not succeed in delivering something their customers would like. The Golden Rule of morality is the golden rule of economics, and it works because it respects the free choices of everyone involved. Every economic plan that depends on the coercive power of the State, on the other hand, tends toward disaster because it is in the final analysis immoral. “Though it is momentarily triumphant,” Lippmann concluded, “it is a failure, and it must fail, because it rests upon a radically false conception of the economy, of law, of government, and of human nature.”

Franklin Roosevelt recognized that the war only provided a short-term fix for the economy—and a very costly one at that. What would happen after the war—when 12 million troops came home and the strong demand for guns, bullets, tanks, and ships ceased?

Roosevelt envisioned a New Deal revival. He had created the National Resources Planning Board (NRPB) in 1939 and urged it during the war to plan for peacetime. The NRPB leaders believed that government planning was necessary to promote economic development. They consciously (and sometimes unconsciously) followed ideas popularized in 1936 by John Maynard Keynes in his bestselling book, The General Theory of Employment, Interest and Money.

Capitalism was inherently unstable, Keynes argued, and would rarely provide full employment. Therefore government intervention was needed, especially in recessions, to spend massive amounts of money on public works, which would create new jobs, expand demand, and rebuild consumer confidence. Yes, government would need to run large deficits, but economic stability was society’s reward. If government planners could manage aggregate demand through public works, the boom-bust business cycle could be flattened and economic development could be managed in the national interest. No more Great Depressions. Man could indeed be master of his economic future.

Before and during the war Keynes’s ideas swept through the United States and first transformed the universities, then the political culture of the day. With statistics in hand and a near reverence for government, the Keynesians were the new generation of planners. They wanted to remake society. Not entrepreneurs, but economists were needed to gather data, plan government programs, and regulate economic development. Paul Samuelson, for example, a 21-year-old economics student, was cautious at first, but then euphoric after Keynes’s book was published. “Bliss was it in that dawn to be alive, but to be young was very heaven,” Samuelson wrote. Other economists soon accepted Keynes, and by the 1940s his ideas dominated the economics profession. In 1948, Samuelson would defend Keynes by writing the best-selling economics textbook of all time.

Planning for Peace

Those on the NRPB were among the excited disciples of Keynes and economic planning. The war itself seemed to be evidence that government jobs had pulled the U.S. economy out of the Depression. Now the economists and planners needed to take the nation’s helm to plan for peace.

According to Charles Merriam, vice president of the NRPB, “[I]t should be the declared policy of the United States government, supplementing the work of private agencies as a final guarantor if all else failed, to underwrite full employment for employables. . . .” That idea launched what Merriam and the NRPB dubbed “A New Bill of Rights.” FDR would call it his Economic Bill of Rights. Included was a right to a job “with fair pay and working conditions,” “equal access to education for all, equal access to health and nutrition for all, and wholesome housing conditions for all.”

New Bill of Rights

FDR viewed this Economic Bill of Rights as his tool for guaranteeing employment for veterans (and others) after World War II. But it was more than a mere jobs ploy; it had the potential to transform American society. The first Bill of Rights, which became part of the Constitution, emphasized free speech, freedom of the press, and freedom of religion and assembly. They were freedoms from government interference. The right to speak freely imposes no obligation on anyone else to provide the means of communication. Moreover, others can listen or leave as they see fit.

But a right to a job, a house, or medical care imposes an obligation on others to pay for those things. The NRPB implied that the taxpayers as a group had a duty to provide the revenue to pay for the medical care, the houses, the education, and the jobs that millions of Americans would be demanding if the new bill of rights became law. In practical terms this meant that, say, a polio victim’s right to a wheelchair properly diminished all taxpayers’ rights to keep the income they had earned. In other words, the rights announced in the Economic Bill of Rights contradicted the property rights promised to Americans in their Declaration of Independence and in the Constitution.

FDR promoted his Economic Bill of Rights in his State of the Union message in 1944, but he died before the war ended. Shortly before his death, Senator James Murray (D-Mont.) introduced a full-employment bill into the Senate for discussion. The bill committed the government in a general way to provide jobs if unemployment became too high. Many leading Democrats and economists supported Murray’s bill. “In this session of Congress,” The New Republic reported, “one of the first bills to be introduced will no doubt be the full employment bill of 1945, designed to carry out item number one in the Economic Bill of Rights.” The Nation joined The New Republic in endorsing the full-employment bill. “Mr. Roosevelt’s program,” it concluded, “is squarely based on the best economic authority available. It is entirely consistent with the economic doctrines of the distinguished British economist Lord Keynes.”

On September 6, 1945, President Harry Truman gave a major speech in which he supported the Economic Bill of Rights, especially a full-employment bill. Most congressmen, however, rejected both. Rep. Harold Knutson (R-Minn.) said, “Nobody knows what the President’s full employment bill will cost American taxpayers, but the aggregate will be enormous.”

Instead, Knutson and many other congressmen favored cutting tax rates and slashing the size of government as the best measure to restore economic growth. Senator Albert Hawkes (R-N.J.) even argued that “the repeal of the excess-profits tax, in my opinion, may raise more revenue for the United States than would be raised if it were retained.” Hawkes proved to be prophetic. After vigorous debate Congress scrapped the Economic Bill of Rights and cut tax rates instead. American business then expanded, revenues to the Treasury increased to balance the federal budget, and unemployment was only 3.9 percent in 1946 and 1947. The Great Depression was over.

The Yugo: The Rise and Fall of the Worst Car in History, by Jason Vuic, an assistant professor of history at Bridgewater College in Virginia, deftly describes yet another episode in the history of the fiascos that occur when governments enable political entrepreneurs.

What can one say about the Yugo? It started out as one of the hottest items in U.S. automotive history, only to become the butt of jokes such as:

Q: How do you double the value of a Yugo?

A: Fill it up with gas.

Interestingly, the very reason the Yugo even became an item was a U.S. government move to keep small Japanese cars out of the United States. The Japanese automakers responded to this protectionism by making mid-sized luxury cars, which created a void for a small, inexpensive vehicle. The Yugo would (at least temporarily) fill that void thanks to the foresight of entrepreneur Malcolm Bricklin.

Austrian economists such as Israel Kirzner point out that entrepreneurs first see an opportunity and then they act. Bricklin, who is described as a “habitual entrepreneur,” decided that American consumers wanted small cars, and he knew just the company to build them—Zastava, a State-owned firm in Yugoslavia.

Bricklin is always looking for business opportunities, but he likes shortcuts. These invariably land him in trouble and ultimately bankruptcy. Despite having already pushed several failed ventures, Bricklin kept going, proving the wisdom of P. T. Barnum’s declaration that “There’s a sucker born every minute.”

So how is it that the guy who had conned investors in a scheme to fund Handyman America stores (which went bankrupt in 1965) and managed nearly to kill the one good company he founded (Subaru America—and, yes, I drive a Subaru) could find people willing to fund the Yugo venture? Enter the politics of the Cold War.

As Vuic notes, Yugoslavia, a communist/socialist country with “non-aligned” status, was a “buffer” between East and West. The U.S. government aggressively cultivated its relationship with that country, which in normal political times might have gone almost unnoticed. With the Cold War still in full bloom in the mid-1980s, and with Americans wanting cheap transportation, a marriage between the U.S. market and a company making inferior cars (Zastava used an old Fiat plant it had purchased) was consummated. All it took were the efforts of the failed entrepreneur Bricklin and Washington fixers like Lawrence Eagleburger, a former official in Ronald Reagan’s State Department, then working for Kissinger Associates.

U.S. operations opened in 1985, and the car was a huge success. Yugo mania was in full swing, as people crowded the lucky dealerships and waited for months for delivery of their spanking new Yugos.

But trouble soon began. The Yugo, for all of Bricklin’s hype, still was true to its socialist, Eastern European roots. While it wasn’t as terrible as a Wartburg or a Trabant, no one was trying to market those glorified East German lawnmowers in the United States as a “smart” choice. Once people began to drive Yugos they came to realize that communist quality control meant that the workers had proper political attitudes, not that they could build a decent car. Demand plunged as drivers learned about the car’s pathetic quality. In less than a decade Yugo America was bankrupt, as was Bricklin once again. Eventually the Yugo enjoyed a second career—as pop art.

Even though Vuic is not an economist, his well-written and entertaining book sheds a great deal of light on the larger issues of State planning, economic calculation, and every other argument that Austrians have been making against socialism and crony capitalism for the past 90 years. The next time you hear someone talking about the wonderful future for some proposed government-business partnership, remember the Yugo.

Although the phrase “nation-building” sounds much more constructive and well-intentioned than the destruction and death that have normally accompanied the use of American power, the reality is that attempts to build nations are likely to fail. What the nation-builders overlook is a distinction made by Ludwig von Mises almost 100 years ago: A nation is not necessarily the same as a “state.” In his underappreciated little book Nation, State, and Economy, Mises argued that “nations” are defined not by geography or by political institutions, but most fundamentally by language and other similar cultural institutions that provide a basis for “mutual understanding.”

Therefore the nation, Mises argued, cannot be understood as a static object that we can manipulate as we wish: “Nations and languages are not unchangeable categories but, rather, provisional results of a process in constant flux; they change from day to day, and so we see before us a wealth of intermediate forms whose classification requires some pondering.”

This evolutionary perspective on what constitutes a nation suggests that it may be very difficult for an external observer to even know whether a given mass of people constitutes a “nation,” much less be able to know what it would take to build a nation out of their current “intermediate form.” As we know from F. A. Hayek, people learn how to coordinate their behavior with one another via such evolutionary processes. In other words nations are spontaneous orders that emerge from the daily choices of people about the language they use and the other ways in which they participate in, or withdraw from, a variety of cultural forms. The people themselves constitute a “nation” by their individual choices.

States imposed on nations by princes, Mises contended, are doomed to fail because they normally attempt to eliminate all forms of community that lie between the prince and the people. Anything that doesn’t come from the State is to be dissolved. In other words imposed States dislike and destroy the delicate, complex, and evolved connections that comprise a true nation. This is why totalitarian regimes try to control language, religion, family, and all of the other intermediary institutions between individual and State: because those institutions help to define what it means to be a nation as distinct from a State. They provide a buffer between the evolving choices of individuals and the attempt to control those choices from the top down.

Like other attempts to control spontaneous orders, nation-building faces significant knowledge problems. It is no different in principle from attempting to plan an economy domestically. As Mises and Hayek pointed out decades ago, when planners attempt to allocate resources from the top down, they have no market signals to guide their behavior or to indicate what value people place on various outputs and inputs—that is, no prices with which to engage in economic calculation.

Nation-building is even harder than central planning at home. Once we understand that true nations are the unintended consequence of decentralized cultural processes involving millions of choices by millions of people, the absurdity of trying to build a nation as if it were a child’s toy or even a skyscraper becomes clear. Mucking around in processes that are too complex to understand in all of their relevant causal connections is almost certain to produce unintended and undesirable consequences. All the intermediary institutions that define a nation (such as language, customs, religion, and family) themselves have strong elements of spontaneous order to them because they grow out of the day-to-day practice of individuals with no overarching plan. These are ways in which individuals try to coordinate their behavior, slowly evolving institutions to assist them. Such processes of coordination work best when individuals and small groups are free to use their own particular knowledge to determine what will improve their lives. To build a nation, in Mises’s terms, would require one to be able to do a better job than the decentralized social processes described above.

Economist Chris Coyne, in his wonderful book After War, confirms that postwar reconstruction (the form recent nation-building has taken) suffers from the same sort of knowledge problem that faces those who would “build” an economy domestically. If Mises and Hayek were right about the impossibility of socialist planning because economies are simply too complex to be surveyed by one mind without the help of signals such as prices, then nation-building is equally impossible. Just as the intervention of economic planners inevitably produces results that run counter to their stated goals, leading them to intervene again to solve those problems, so will nation-building create pushback and new forms of culture and community that frustrate the designs of the builders. The quagmires of Iraq and Afghanistan are clear evidence for this argument.

Coyne articulates a number of propositions that explain the failure of attempts at “exporting democracy.” Three of those are of particular relevance to the argument here.

Why Democracy Can’t Be Exported

First, he argues that while economists and other social scientists have a pretty good idea of what constitutes a functional nation, they have much less knowledge about how to bring a “failed nation” to that point. How nations emerge is a process that is both complex and unique to each particular country. All that we can do is get out of the way and let people figure it out for themselves.

Coyne also distinguishes between the factors that nation-builders can control and those they cannot.

He argues that the uncontrollable factors are what we generally call “culture” or the “informal rules and institutions” that constitute societies. These factors constrain those that we can control. In other words there are things nation-builders can attempt to do, such as initiate democratic elections as the U.S. government did in Iraq, but the success of those formal changes depends greatly on whether they are consistent with the underlying culture. Just putting formal changes in place because you can control them does not mean they will produce the desired result.

Nirvana-Building

Finally, Coyne points out that many attempts at nation-building suffer from what economists have long called the “Nirvana fallacy.” That fallacy lies in comparing the imperfection of existing reality to the perfect world they can imagine in their theories or on their chalkboards, then condemning reality for failing to measure up. In the chalkboard descriptions of how nation-building should take place, planners are presumed to be guided by the public interest with all the information they need to generate the desired outcomes. I have already discussed the problem with the latter. The former, though, also omits the imperfections of politics. The knowledge problem is compounded by perverse incentives.

There is a pitfall in assuming that those charged with using the political process to build, or rebuild, a nation will ignore their self-interest and be motivated solely by the public interest. Nation-builders need to correctly identify the public interest. Although they may know what the endpoint is, knowing what path will generate that socially desirable outcome is the fundamental challenge. It is not possible for them to know if any given nation-building action is actually in the public interest. With that constraint we should not be surprised to see the self-interest of the nation-builders predominating. Coyne documents how political self-interest has ruled U.S. nation-building efforts in Iraq and Afghanistan, manifested in the cozy relationships American politicians and policymakers have with private-sector firms with whom they had preexisting associations. Nation-building is a fertile ground for the sorts of corporate-State partnerships that undermine genuinely free markets.

Liberalism and Anti-Imperialism

Coyne’s book and the broader arguments I have offered above are part of the long-standing classical-liberal tradition of anti-imperialism. Perhaps because of the accidental alliances created by the Cold War, many have forgotten that tradition. In fact, classical liberals have always believed that the best way to encourage national development is through trade in goods and services and ideas—not through political or military intervention, even in the name of helping others.

The arguments against nation-building are much the same as those against domestic intervention (which can be recast as “economy-building” or “morality-building”). Both spring from the mistaken belief that outsiders can do better than the arrangements that emerge spontaneously and evolve continuously as individuals engage with each other. Both suffer from insurmountable knowledge problems and the perverse incentives of the political process. A better choice is to encourage unhampered exchange—within and between nations. Failure to grasp the impossibility—and often brutal consequences—of nation-building can remove yet another bulwark against further domestic intervention. If we can build a nation to our liking overseas, after all, why can’t we do it at home?

Now before Greenpeace hones a quill for a sharply worded reprimand, let me clarify: I am not dismissing concerns over anthropogenic carbon emissions (or nineteenth-century wolf-phobias for that matter), but wondering aloud whether or not our policy choices will have similar long-term unintended consequences. The amateur historian in me thinks the likelihood high that we will come to regret large-scale managed “solutions” to what ails us, whether the dragons we slay come slavering at night or quietly in the air.

A Pause for Reflection

Battling grievous menaces to public welfare ought, by all reason, to be supported at public expense. Or so the prevailing wisdom goes. Take wolves for instance. The long-running nationwide government wolf extirpation program has lasted for longer than our history as a nation. It continued for well over a century after Lincoln’s firsthand experience, and Jefferson himself had recalled state wolf bounty programs more than a century earlier. By 1914 the program really got down to business, and Congress gave the U.S. Biological Survey primary responsibility for wolf eradication, insisting that a third of its budget be used to kill wolves and their ilk (“survey” had an apparently different connotation in Great War America). Federal trappers killed the last two wolf pups in Yellowstone National Park in 1926, and wolf killing was being done from the air by Fish & Wildlife rangers as late as 1948.

And no, it wasn’t for lack of romantic attachment that wolves were removed from the habitable continent. Ernest Thompson Seton wrote with vivid prose lingering and sympathetic accounts of wolf trapping from the turn of the century (who can forget “Lobo” and “Blanca”?) Aldo Leopold writes with some dismay in Thinking Like a Mountain of his experience killing wolves as a forest ranger in Arizona in 1909. Qualms or not, however, wolves were a threat to progress. Government, clearly in the business of promoting progress by this time, was harnessed to do the dirty work and was, not surprisingly, rather successful at it.

Obviously Kevin Costner films weren’t yet in vogue. Or perhaps wolf imagery hadn’t quite made it onto the t-shirt scene. Either way, government bureaucrats weren’t privy to the sort of enlightened ecological sensitivity that even a grade-schooler possesses today.

Today Is Different

Well of course, you say, that was a darker, dumber era now firmly behind us. We ought now to rest easier, allowing officials license to focus their efforts on solutions to today’s clearly pressing concerns to the public welfare. Things like carbon pollution. Since the IPCC (Intergovernmental Panel on Climate Change) has deemed carbon emissions a “clear and unmistakable threat to the public welfare” and since an awful lot of experts seem to agree on this point, why buck the facts? Oh sure, there are a few misgivings by a few cranky troglodytes, but there are always some crackpots who won’t get with the program. I mean, when was the last time a panel of experts was wrong? Ignore for the moment Galileo’s interrogation proceedings, eighteenth-century European naturalists on the new world’s “stunted” growth, the Royal Society’s views on geologic superposition, the science of eugenics, socialism as a masterpiece of human happiness, the Population Bomb and Snowball Earth madness of the 1970s, Y2K, and more. There were probably even a handful of skeptics who claimed that killing all the wolves was a bad idea in 1816. Imagine.

Plans to reduce (and eventually eliminate) carbon dioxide emissions are not all that different from the plans to reduce (and eventually eliminate) wolf populations. A reward, of sorts, is given for each unit of reduction—be it a cash bounty for wolf heads, or a “credit” to keep a carbon emitter from having to pay a stiff fine. These credits, under a veneer of “free-marketism,” can be traded or sold to someone else who wasn’t as successful at reducing emissions as they were told. In Lincoln’s era, it was optional to hunt wolves, but today we are approaching a point where we are all coerced into the hunt for carbon credits. Even if you don’t happen to be a large-scale carbon emitter yourself, your consumption of things (electricity anyone?) will inevitably draw you into the chase.

Whether wolves or carbon, activity is being driven by central decision-makers as to what constitutes the proper way to handle things.

Again, it is not my intention to argue that carbon emissions aren’t important, or even to question whether or not they represent a public menace (they may well be as threatening as wolves!). My only purpose is to cast a jaundiced eye on the proposed solutions to the crisis du jour. The Environmental Protection Agency, for instance, now has the power to regulate carbon emissions and by all indications appears intent on restricting the output of the dangerous stuff. Does anyone else feel another “survey” coming on?

What Lurks Beneath

Society’s tastes and mores are in constant flux, driving the inexorable drift of the tectonic structures we erect to “improve things.” And while norms can change radically and quickly (Hula Hoops? birth control?), the plans, programs, bureaus, and institutions generally do not. In fact they generally continue along their predetermined paths, creating errors of Himalayan proportions. If we believe the myopic shortsightedness that nearly extinguished Canis lupus has been corrected, we are fooling ourselves. We know many more things, to be sure, and particularly in the fields of natural science and ecology. But to believe that we can remotely grasp, let alone master, the intricacies of global climate is surely hubris at its best.

When you ask government to get things done it generally does. And that’s precisely the danger. What is an unambiguously brilliant notion for one generation may not sit so well with the next. The apex of Progressive Era thinking in the 1930s gave us the magnificent damming projects of the arid west, projects now roundly decried (oddly enough) by heirs of the Progressive Left who now wish us to demolish these projects at taxpayer – oops — “government” expense. This sort of policy-pendulum is inevitable in a world marked by a less-than-perfect grasp on information.

The only way to mitigate this effect is to ensure that action keeps pace with the values and knowledge of the day. This can only be accomplished through the diffusion of power to an individual level, where actors with firsthand observations can react to dynamically changing situations.

I know we’re worried about global warming today. Nobody wishes to see Vanuatu slip under the Pacific. And maybe, for the first time in history, human-caused climate change represents “The Big Problem” that we need “The Big Fix” for. But I doubt it. Something tells me, deep inside, that managed overreaction to carbon emissions will lead just as surely to the kind of devastating policies that gave us wolves-as-an-endangered-species.

In fact, writing as I do from ground zero in the Gray Wolf reintroduction zone, I’d be willing to posit a bet. One hundred years from now (if carbon emissions are “solved” by the authorities), I give it better than even odds that governments will be requiring carbon emissions. Lincoln probably wouldn’t take the bet.

You’d probably say, “We need regulation—skating stoplights, speed limits, turn signals—and a rink director to police the skaters. You can’t expect skaters to navigate the rink on their own.”

And yet they do. They spontaneously create their own order.

At last January’s State of the Union, President Obama said America needs more passenger trains. How does he know? For years, politicians have promised that more of us will want to commute by train, but it doesn’t happen. People like their cars. Some subsidized trains cost so much per commuter that it would be cheaper to buy them taxi rides.

The grand schemes of the politicians fail and fail again.

By contrast, the private sector, despite harassment from government, gives us better stuff for less money—without central planning. It’s called a spontaneous order.

Lawrence Reed, president of FEE, explains it this way:

“Spontaneous order is what happens when you leave people alone—when entrepreneurs . . . see the desires of people . . . and then provide for them.

“They respond to market signals, to prices. Prices tell them what’s needed and how urgently and where. And it’s infinitely better and more productive than relying on a handful of elites in some distant bureaucracy.”

This idea is not intuitive. Good things will happen if we leave people alone? Some of us are stupid—Obama and his advisers are smart. It’s intuitive to think they should make decisions for the wider group.

“No,” Reed responded. “In a market society, the bits of information that are needed to make things work—to result in the production of things that people want—are interspersed throughout the economy. What brings them together are forces of supply and demand, of changing prices.”

The personal-computer revolution is a great example of spontaneous order.

“No politician, no bureaucrat, no central planner, no academic sat behind a desk before that happened, before Silicon Valley emerged and planned it,” Reed added. “It happened because of private entrepreneurs responding to market opportunities. And one of the great virtues of that is if they don’t get it right, they lose their shirts. The market sends a signal to do something else. When politicians get it wrong, you and I pay the price.

“We have this ingrained habit of thinking that if somebody plans it, if somebody lays down the law and writes the rules, order will follow,” he continued.

“And the absence of those things will somehow lead to chaos. But what you often get when you try to enforce mandates and restrictions from a distant bureaucracy is planned chaos, as the great economist Ludwig on Mises once said. We have to rely more upon what emerges spontaneously because it represents individuals’ personal tastes and choices, not those of distant politicians.”