Private Versus Public | Libertarian Society Singapore

Neo-Classical economists, Keynesians, and more recently Nobel-prize winning Joseph Stiglitz often comment on their belief as to how dangerous market failure is. As a necessary consequence of their line of thought, they often suggest that the government ought to intervene to some extent in markets to prevent market failure. Such suggestions are usually accompanied by the plea to the common good - that the state should intervene in private free markets in order to protect employment rates in the relevant country.

Unsurprisingly,  Government bureaucracies have had always been delighted in zealously welcoming such views. Such theories often revolve around suggesting government intervention to be not merely the all-encompassing solution, but also the only solution. Government incentives have always been centered around the expansion of its regulatory arms, all in a bid to increase the revenue it collects and the level of control that it possesses over its citizens.

What that is not understood, however, is the stark distinction between Private institutions and Public institutions.

Tax Code | Libertarian Society Singapore

So what's the key difference between Public institutions and Private ones? Are we not told that the public sector and the private sector ought to work together in order to promote the well-being of the nation? Are we not taught that political force is equitable with economic force; that the both ought to balance themselves out, and that a unregulated market is just as oppressive as an unregulated government? Shouldn't the market have "checks and balances", just like the State?

Government revenues and Private revenues
Government incentives are always predatory when compared to the actions of private markets. This is because the private institutions can increase their revenue only through providing services or products that nobody is forced to buy, but are traded for voluntarily.

Government institutions, however, can only increase their revenue thru levying a compulsory levy - the provision of superior services (and the necessity for competition) is always secondary. Often, the services that the government provides serves as an excuse to levy greater sums of money from the public. As taxpayers have no choice not to pay this levy (with the alternative being subjected to force by the State), neither are they exempted from the "services" when they do not want nor value. Consider the absurd notion of a taxpayer being forced to fund the Media Development Authority Singapore (MDA), when he does not want nor value the level of intervention it "provides" him against his will. How can such services be considered "public" goods, if they do not actually serve the entirety of the public, but often in fact hurt the values of the individuals involved?

Which brings us to the next question: Since the public good is always invoked to justify their actions, who exactly is this "public" and how does one join them?

Power and Favors in Politics

Since there is no one-size-fits-all solution, the only manner of which the government can determine the wants, desires and the demographics of the "public" is via the means of lobbying - that is to say, the attempt to garner political power and political pull by private institutions.

How political power and political favoring works is truly dire. When the government starts distributing favors to voters en bloc, it divides the population, as they scramble to become part of this "public". Who gets the favours? Often its the ones that the government finds the most beneficial, or whoever that is loudest in demanding for the favours at that point of time. What happens next is that some "oppressed" minorities would have more benefits than the everyone else - this is not to say that the government is not fair enough, it's to say that the government has no way to be fair, not when the decision is to subsidize or to penalize a specific group. It is impossible for a state to espouse legal egalitarianism and yet practice occasional favoritism from time to time.

The insalubrious moral premises not withstanding, the participation of the government in the relegation of such subsidies regressively incentivises the population to identify themselves into tribes to contest for benefits. Case in point - observe how religious institutions in Singapore need not pay taxes. Since the role of the government is not to serve as the arbiter of values, but only as a policeman protecting the rights of people, such favours dispensed to certain "tribes" only serve to demonstrate that the State values such tribes more than the other tribes. What does that say for legal equality?

The recipients of government subsidies by way of redistribution or services in-kind then, receives benefits by virtue of political power and favors. What would that say for the person that refuses to partake in such lobbying?

Such policies not only shifts the focus of people seeking to improve their lives via the means of hard work and productivity - this encourages behaviour that seeks to prey on sectors that are productive. If it has not been explicitly mentioned, in terms of economics, government sectors are the coercive non-producing section of the economy, serving to weigh down the productive free market. Any expansion of the coercive non-producing sector against the productive sector necessarily means less being produced (see the example of the Deadweight Loss), and hence a less prosperous standard of living.

Often I like to throw the rhetoric of " Do you think you are a net tax-payer or a net tax-consumer?" around. And I am often amused by the mixture of guilt, confusion, uneasiness and meek answers that it elicits, as if consumption of your own produce is morally unjustifiable.

I would usually allay those feelings by re-assuring my audience that: "We are all net tax-payers". Then, with their new found dignity of ownership over the fruits of their labours, I revealed the true thieves: the politicians.

Taxation is Theft | Libertarian Society Singapore

Free market and Government.

On a more serious note, the opponents of free market private institutions have always been benchmarking the free market against the Neo-Classical model of perfect competition. In such perfect competition, the free markets are expected to be rational, have a symmetry of information, and everyone is assumed to be benevolent.

Anything less than such expectations, are hastily concluded as market failures. And they are usually followed closely by recommendations of government intervention. Since men do not possess omniscience, or any degree of "perfection", when one ascribes attributes such as perfect benevolence, perfect information and perfect rationality onto fallible human beings, one is setting himself up for disappointment.

Since governmental intervention is suggested in order to correct such "market failures", it is only to fair evaluate government institutions against those same exact criteria of perfect benevolence, perfect information, and perfect rationality.

1. Perfect benevolence - As demonstrated above, governments incentives and how they act upon it are far more perverse than the private markets which justly distributes to deserving parties.

2. Perfect information - It is impossible for bureaucracies to know and to solve the problem of economic scarcity. Urban planning authorities may convince us that they are paying top dollar to employ certified architects within their ranks. However, no matter how intelligent and how capable a group of people are, they are unable to omnisciently decide every economic decision for everyone else in the sector.

3. Perfect Rationality - Humans are irrational; that is the default assumption that the State attributes to its citizens. Contrary to common belief, however, government institutions and politicians are, well, humans too. Are they then exempt from the possibility of irrational behaviour?

The defense of the free market is not the claim that humans are perfectly rational, it is precisely to admit that humans possess the latent possibility of irrationality. It is the peak of human irrationality of our times to submit individual economic decisions to an allegedly omniscient central decision authority.

How then, should one arrive at the right economic decisions?

Market Failures > Government Failures

Following the Hayekian suggestion that the right economic decisions are only discoverable via trial-and-error processes, the challenge is to ask which type of environment best encourages such behavior?

Is it a system where the central planning authorities make decisions for everyone, but that the unintended ill-effects of making the wrong decisions is shouldered by everyone else?

Or is it a free market system where entrepreneurs are free to choose, compete with each other and to be personally responsible for their choices?

Since the "checks and balances" that sustains the free market is the market itself, I submit that the latter is the better environment for discovering such proper economic decisions.

Libertarian Society Singapore

We believe that freedom and liberty is a moral right. The role of the Singapore government is not to run the economy and run our lives, but simply to protect the rights of Singaporeans. Find out more on various social media avenues!

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