Those who wish to turn ever-more decision-making power over to government – and, hence, to take such power from individuals operating in their private spheres (including, but not limited to, private markets) – believe this bizarre notion: when Jones has the power to spend Smith’s money and to order Smith about, Smith’s welfare is improved compared to when the power to spend Smith’s money and to determine how Smith will act is reserved to Smith, with Jones’s authority confined to his – Jones’s – own business.
In private-property markets each individual has the power to say “no”, and when each individual says “yes”, that individual spends only his or her own money. Also, in private-property markets each individual’s choices are significant: if Smith chooses to buy a new car, Smith gets the new car that he chooses; if Smith chooses not to buy a new car, Smith gets no new car.
These basic features of private-property markets, along with a handful of other features that are embodied in the common law, ensure not that markets operate “perfectly”, but that the market process is always in action to generally improve the operation and outcomes of markets.
The political marketplace is nearly the exact opposite. In the political marketplace, Jones spends Smith’s money, and Smith has no real power to say no. Nor [are] Smith’s choices ever genuinely significant (unless, of course, Smith becomes one of the relatively small percentage of people who succeed in grabbing hold of political power).
If a malevolent all-powerful being were intent on designing a market that is destined to abuse the vast bulk of people, that devil could do no better than to impose on his victims majoritarian politics largely unconstrained by constitutional rules. This devil – being, of course, ill-mannered, and evilly-intentioned – would seek to destroy private-property markets.
Don Boudreaux, “Bonus Quotation of the Day…”, Café Hayek, 2019-07-31.
August 29, 2023
QotD: Private versus public decision-making
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