Does Government Really Work?

What We Should Learn From “Occupy Wall Street”

by Danny de Gracia II

“We had the experience but missed the meaning.”

-T.S. Eliot, Four Quartets

Since the 2008 financial crisis, America has become increasingly distrustful of government, disillusioned with its leaders and disgusted with the way both have altered their way of life. The latest manifestation of citizen anger, termed “Occupy Wall Street” is a pattern we are seeing not just in our country but around the world. Whether you agree with the sentiments driving these protests or not, one thing is very clear: people don’t like what’s happening in the world today.

In F.A. Hayek’s Road to Serfdom, we see that government’s tendency to plan and intervene has disastrous consequences which lead to more government intervention and worse disasters over the course of time. Hayek argues that in a democracy, people use their freedom to choose someone who makes all the choices for them – “a man with a plan” if you will – only to discover that the more the government plans, the less they are able to plan and no one plan can work for everyone, thus the road to serfdom is complete. Democracies vote their liberties away, hence John Adams’ warning that “democracy never lasts long. It soon wastes, exhausts and murders itself. There was never a democracy yet that did not commit suicide.” The problem with all government in general but especially democracy is that it is a “garbage in, garbage out model”: it only works if everyone in the decision-making loop is flawless and as far as I can tell, no one in the world is perfect.

Economist Hans-Hermann Hoppe explores the limitations of our garbage in, garbage out system further in Why Bad Men Rule: “the selection of government rulers by means of popular elections makes it nearly impossible that a good or harmless person could ever rise to the top. Prime ministers and presidents are selected for their proven efficiency as morally uninhibited demagogues. Thus, democracy virtually assures that only bad and dangerous men will ever rise to the top of government. Indeed, as a result of political competition and selection, those who rise will become increasingly bad and dangerous individuals”. Hoppe’s libertarian theory finds agreement in the seemingly unlikely contrast of the Soviet-era Gulag Archipelago philosopher Alexandr Isayevich Solzhenitsyn who bemoaned in his 1978 Harvard address that “A statesman who wants to achieve something important and highly constructive for his country has to move cautiously and even timidly; there are thousands of hasty and irresponsible critics around him, parliament and the press keep rebuffing him … Actually an outstanding and particularly gifted person who has unusual and unexpected initiatives in mind hardly gets a chance to assert himself; from the very beginning, dozens of traps will be set out for him. Thus mediocrity triumphs with the excuse of restrictions imposed by democracy.”

What then, is the optimal model of government for those seeking the highest possible quality of life and maximum equality, if not the much-lauded democracy? My answer: none but an absolute free market. The problem with government planning is that all government decisions carry with them the force of law i.e., the initiation of force to accomplish change. When government commits to bad or destructive policies, everyone is bound to that policy until someone abolishes the policy or removes the policymaker. In a free market, change and correction can occur instantaneously and unprofitable or destructive processes can be discovered rapidly, permitting the consumer to discover for themselves what their preference for rewards and risk are. In a free market quality of life is therefore determined not by entrenched political power brokers or resource bureaucrats but by the individual alone.

Equality likewise cannot be fairly represented or established by government because equality by its very etymology (from Latin, aequalitatem) implies a mathematical uniformity and evenness which with human beings is impossible to define in strictly mathematical terms with all of our manifold differences. As anyone who remembers kindergarten can testify, everyone is assumed to be equal but no one child gets equal experiences. Equality as it relates to government is a subjective concept, which means government must advantage some (reward) and disadvantage others (plunder) according to the worldview of a policymaker through the initiation of government force in order to establish equality. The end result is that the policymakers are the supreme privileged class, the rewarded see themselves as dependent and the plundered see themselves as oppressed. In a free market rewards and losses are private, not public, which means no one gains and no one loses anything but what they voluntarily choose out of preference and investor intelligence to expose to risk.

More government and more “deciders” is not the answer to popular anger. We may not accomplish this task overnight, but as we find the faith in America to reduce government intervention, we will discover in its absence the lack of need for its very existence. Free markets will mean free people and a better future.


Danny de Gracia is the economic policy adviser for Grassroot Institute and is an elected member of the Waipahu Neighborhood Board. He holds a master of arts in political science from Southwest Texas State University. Contact him by e-mail at degracia@fas.harvard.edu.

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