The impact of big government on socioeconomic welfare
As with the bosomy among the fairer sex, big government inevitably stimulates public interest and invites frenetic courtship and unrelenting pursuit. The pursuers are usually rent-seekers, lobbyists and representatives of all sorts of sectional interests. In some cases, big government may also provoke alienation, dismay and sometimes a sense of powerlessness, but seldom indifference. In this context, critical engagement is appropriate, especially by those who are ever concerned and vigilant about the risks of government expanding at the cost of individual liberty.
The phenomenon of big government requires rigorous ongoing scrutiny, especially as it relates to the economic welfare of a country. The inquiry must start with an analysis of the original concept of government.
Prior to the advent of modern democratic forms of government, monarchs or oligarchs ruled most states. These rulers protected the inhabitants from external aggression and regulated internal conflict within defined geographic boundaries. They also exacted taxes or tribute, which they used for themselves, for public works and later on misappropriately rewarding loyal followers and close associates. The expansion of government is characterised by the progressive usurpation of functions that have traditionally fallen within the realms of individual freedom and personal responsibility.
Historical research and political theory depict the original role of government to have been the protection of a country against external aggression and the protection of people and property within the country from assault, theft, and malicious damage to property. It is plausible to posit that in the quest to ensure stable communities, the enforcement of contracts was strictly observed, and the common practice of voluntary exchanges became entrenched as the common law of the day. An overriding concern was to ensure that no force or fraud was involved in socio-economic transactions. Where this was detected, some form of common law remedy or punitive sanction was meted out. If this were not so, social disorder would have resulted. Over time these basic measures crystallised into coded principles which found universal acceptance within most countries. In the modern era, inspired by classical liberal philosophers such as John Stuart Mill, the principles of equality before the law, the separation of legislative, judicial and executive powers, the independence of the judiciary and the supremacy of individual rights increasingly came to define the parameters and limits of government power. While the philosophers provided inspiration and justification, it was the active struggles against absolutism and tyranny that precipitated these changes. Cases in point are, for example, the Glorious Revolution in England in the 1600s and the American Revolution in 1773-83.
This is underscored by the following words of John Stuart Mill (1806 – 1873):
“The only purpose for which power can be rightfully exercised over any member of a civilised society against his will, is to prevent harm to others”.
Let us now focus on the economic arena so as to demonstrate how big government negates economic growth, while further curtailing individual liberties. Before the advent of government, people engaged in unfettered economic production and exchanged goods and services without restriction. However, it must be acknowledged that before the advent of monarchies, chiefs and their counterparts often taxed the produce of their followers and subjects. They also taxed long distance trade. There are many examples in African history. However, the interference with economic activities was far less pervasive than it is today. The exchanges were predicated on the various subjective values that people placed on the products exchanged. To illustrate the point, before the advent of money, a blacksmith can be imagined charging on the basis of reciprocal exchanges in kind for the making and repair of weapons, horseshoes agricultural implements. Or imagine a hunter exchanging part of his booty for a good spear with a person who specialised in and was skilled at making weapons but not at the actual hunting. Likewise, with the exchange of labour for goods or other services. Or labour might be offered by one party to cultivate land or herd livestock belonging to another person. In exchange, the landowner might offer the cultivator or herdsman a share of the produce.
Extrapolating from such basic acts of mutually beneficial voluntary exchange in products or services, it can be seen how, in all voluntary economic transactions, the contracting parties come away with returns on which they subjectively place a higher value than the value of the goods or services they had willingly surrendered in exchange. Such exchanges are predicated on subjective, but rational, self- interest and are calculated to improve the lives of the parties involved. Expressed more forcefully, this definitive trait of human nature - the pursuit of self-interest - is irretrievably embedded in the human DNA. Admittedly and irrefutably, this is the case universally and across all cultures.
It is the essence of human nature as it is. What it ought to be, is the stuff that various schools of social engineering are made of.
In the words of Svetlana Alliluyeva (1926 – 2011), daughter of the late Josef Stalin, communist dictator and butcher of over 20 million of his own Russian citizenry: “It is human nature that rules the world, not governments and regimes.”
Friedrich von Hayek, the late Austrian economist, referred to this phenomenon as a “spontaneous order.” He stated that this is the natural order of things as people, guided by self-interest while in pursuit of their socioeconomic aspirations, find themselves co-ordinating their endeavours in synchrony with those of the rest of their fellow-humans. In the process producers provide products that people (as consumers) need. The co-ordination of their endeavours and transactions is a natural phenomenon and not the result of an artificially imposed order.
Human nature propels people to aspire and strive to progress from less satisfactory situations to progressively more satisfactory ones. This cycle is self-perpetuating. As a corollary of this, it can be said that people are condemned to experience a perpetual sense of dissatisfaction with what they have and to engage in an insatiable search for more and better progress. This state of mind further causes them to utilise enabling resources, intellectual or material, so as to address their need for progress. In these business ventures everyone operates in his or her own self-interest. This is the reality whether one likes it or not. It has nothing to do with ideology at all.
Back to the era before the growth of states: when at some stage it became complex and impractical to barter the ever-growing variety of products and services, the concept of money naturally evolved to facilitate exchanges. .Thus, it can be seen that the concept of money also further contributed to the expansion of trade and the growing complexity of commercial transactions. Verbal agreements transmuted into written contracts.
Adjudication became necessary to resolve disputes that could not be settled by the contracting parties. Given these developments and other facets of social progress, the need for supra-national oversight arose. Hence the role of government was further reinforced. In this scenario, an important thing to be borne in mind is that the principles of common law - respect for voluntary contracts; live and let live; do not steal etc, were the order of the day for most of the people. If this had not been the case, the cohesion of established societies would have been undermined if not collapsed. It can therefore be seen why the protection of these rights constituted the glue that held communities together and later on countries together.
Regrettably, America has abandoned the very tenets that made her great. These tenets, articulated by her founding fathers, were based upon the core value of the liberty and supremacy of the individual. Succumbing to socioeconomically impoverishing pressures such as political correctness, wokeism and consequently veering towards a paternalistic, nanny neosocialist form of governance, this is eroding the spirit of enterprise that has historically set America above the rest of the world.
In the words of William John Boeteker (1873 – 1962), echoed by President Abraham Lincoln:
“You cannot bring about prosperity by discouraging thrift.
You cannot strengthen the weak by weakening the strong.
You cannot help little men by tearing down big men.
You cannot lift the wage earner by pulling down the wage payer.
You cannot establish sound security on borrowed money.
You cannot further the brotherhood of man by inciting class hatred.
You cannot keep out of trouble by spending more than you earn.
You cannot build character and courage by destroying men’s initiative and independence.
If America is to maintain its economic supremacy and its position as the world’s economic powerhouse, it has to implement policies that are informed by and encapsulated in Boeteker’s insightful words. It must ditch easily rebuttable redistributive policies – such as those advocated by Thomas Piketty which penalise wealth creators, with the wealthiest especially targeted for most the most punitive tax measures, All this rationalised and justified and thus advocated by Piketty in his book, Capital in the Twenty-First Century. South Africa and any other country that is chasing the mirage of income equality and other statist, interventionist policies that undermine the spirit of enterprise at the peril of liberties of individuals and entities that constitute the crucial core of wealth and job creation in the economic arena must take heed of the foreseeable consequences of such negative counterproductive policies.
In conclusion, I am of the firm view that the resentment and wrath incurred targeting the successful creators of wealth and jobs is based on envy and covetousness and the desire to destroy the hard-earned fruits of labour of the targeted especially the most successful among us.
Lest it be forgotten the founder of communism, Karl Marx stated that “There is only one way to kill capitalism - by taxes, taxes and more taxes.”
Welcome comrade Piketty!