Wednesday, September 22, 2010

In addition to the core argument you laid out that government provides the skeleton for all economic activity, without which all of Ayn Rands' value-creating, rapist supermen would be useless puddles of muscle and entrails, there is also a historical argument. As if it needed to be made. But since the marketplace of ideas in this country seems to be overstocked with shoddy merchandise, here goes:

So, yes, without contract enforcement by the government, transaction costs on just about every deal would be so immense (think: hiring one's own private enforcement squad) as to snuff out all economic activity.

In addition to this, the business climate in this country that has allowed thousands of people to amass fortunes has been a product of government since the country's inception. One could start with the government's massive, let's say, appropriation of real estate, which provided a whole lotta Lebensraum for future John Galts to lay train tracks on. (Oops, bad choice of examples - the railroads weren't built by rugged capitalist individualists on their own, but through government subsidy, eminent domain, and trusts.) Or one could start with the protectionist policies the United States government enacted in the 19th century to protect and nurture its infant industries, which eventually grew to be internationally competitive, indeed dominant, providing cheap inputs and fat-walleted employees (customers) to other businesses.

Or one could do the proper American thing: forget history entirely, and limit one's scope to the present. In the present, government diplomacy twists arms to open country after country to U.S. products, allowing U.S. businesses to make more money (and preventing other countries from following the policies that countries from Britain to Korea used to become wealthy). Government subsidies keep agribusiness from collapsing under the pressure of cheaper food imports from countries with lower labor costs. Government regulation props up consumer confidence in the safety and quality of products in the marketplace, again lowering transaction costs. Government immigration policy keeps professions like medicine free from being completely overrun by millions of foreign professionals willing to work for far less than what domestic professionals currently enjoy behind a protectionist wall. Government environmental controls keep the commons and its wealth from being destroyed by individual self-interest. Government currency creation and maintenance prevents the deflation and economic contraction that would result from a precious metal-based system of exchange, and the inflation and busts that would result from competing currencies issued by private banks. Etc.

If you want to go somewhere where none of your wealth will be unjustly taxed by government, go to an uninhabited island to do your value-creating.

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