Monthly Archives: January 2013

Rothbard on the “Freedom-to-Starve” Argument

For a free version of Man, Economy, and State by Rothbard, visit this link.

Our example of the “worst possible case” enables us to analyze one of the most popular objections to the free society: that “it leaves people free to starve.” First, from the fact that this objection is so widespread, we can easily conclude that there will be enough charitable people in the society to present these unfortunates with gifts. There is, however, a more fundamental refutation. It is that the “freedom-to-starve” argument rests on a basic confusion of “freedom” with “abundance of exchangeable goods.” The two must be kept conceptually distinct. Freedom is meaningfully definable only as absence of interpersonal restrictions. Robinson Crusoe on the desert island is absolutely free, since there is no other person to hinder him. But he is not necessarily living an abundant life; indeed, he is likely to be constantly on the verge of starvation. Whether or not man lives at the level of poverty or abundance depends upon the success that he and his ancestors have had in grappling with nature and in transforming naturally given resources into capital goods and consumers’ goods. The two problems, therefore, are logically separate. Crusoe is absolutely free, yet starving, while it is certainly possible, though not likely, for a given person at a given instant to be a slave while being kept in riches by his master. Yet there is an important connection between the two, for we have seen that a free market tends to lead to abundance for all of its participants, and we shall see below that violent intervention in the market and a hegemonic society tend to lead to general poverty. That a person is “free to starve” is therefore not a condemnation of the free market, but a simple fact of nature: every child comes into the world without capital or resources of his own. On the contrary, as we shall see further below, it is the free market in a free society that furnishes the only instrument to reduce or eliminate poverty and provide abundance. – Man, Economy, and State, p. 339-340

In the one of the 2012 Republican presidential debates, CNN’s Wolf Blitzer asked Ron Paul a hypothetical question about a man who chooses to be uninsured. If he ends up in a horrible accident and has to go to the hospital, who should pay for it? Should society just let this man die?

Rothbard’s response to the “freedom-to-starve” argument is applicable here as well. Considering Blitzer’s objection is so common, we would expect there to be plenty of people willing to pay for this man’s hospitalization absent government coercion!

But also note the fundamental confusion Blitzer displays of libertarianism when he asks his question (I realize this question per se does not expose a misunderstanding of libertarianism, but I believe it is implied. Even if Blitzer happens to have a sound grasp of libertarian theory, I believe this is a common confusion so it is worth clearing up regardless). It’s not libertarianism that says whether people should or shouldn’t allow the man to die. Libertarianism is a philosophy that argues that every individual has rights and it is a transgression against these rights to force one man to pay to pay another man’s health care costs. However, “should people let him die?” is a question unanswered by libertarianism. This is a moral question for individuals and society to answer, whether or not the society is a libertarian, Stateless society or a society with a State.

So let me answer Blitzer with my own opinion. No, society should not let this man die. However, it should be noted that a society with the general affluence free markets bring will be better able to take care of him. Without government interference, not only will the price of health care likely be lower but so will the price of insurance. And questions such as the one Blitzer brought up will become trivial.

The so-called “living” wage

I’ve seen this for a long time, and it’s annoyed me for a long time, so I figured I would finally respond to it. Thanks to Billy, aka Amidst the Noise, for indirectly giving me the idea for this blog post.

Here, Ana Kasparian of TYT uses the phrase “living wage” in reference to McDonalds and Walmart paying their employees minimum wage. This is a bit of a tangential away from the main point of the video, in which Kasparian and Jimmy Dore discuss a lawsuit against Carrols Corporation, Burger King’s largest franchisee, for sexual harassment.

Kasparian states  (3:05)

For instance, if you just look at McDonalds alone, the amount of profit they made last year and how they still continue to pay their workers minimum wage. I mean, it’s the same situation that you see with Walmart as well, right? And then basically the government subsidizes them because they have no choice but to help these individuals with healthcare or public assistance, so, um,  there needs to be more regulation into these types of businesses so they don’t pay this so-called “minimum wage”. Minimum wage is not a living wage. [my emphasis]

What is a living wage? The obvious answer is a wage that allows a person to live. But how much money does a person need to really just survive?

Well, with perhaps under 5 dollars you could go buy some bread and peanut butter from the grocery store. Another option would be to buy sandwiches from the very fast food chains Kasparian is criticizing for not paying their employees high enough wages. So food could be managed for under 10 dollars a day. With some water and a make-shift shelter in the woods, you could definitely get by for not a whole lot more.

Now, considering the federal minimum wage is $7.25/hr, it would not take many hours at all to accomplish this amount of money. But aren’t progressives implying that the living wage is much higher than the minimum wage?

What they’re really talking about, is not a living wage, but a living-well wage, or a living-decently or ok one. Of course, these alternative terms don’t have the same emotional appeal that the term “living wage” does, and so it’s doubtful they will be adopted.

What progressives actually do, when they throw out terms like this, is end the argument without having a proper argument at all. I don’t think they do it on purpose. I don’t believe progressives literally think in their heads “Ha! Got those damn conservatives/libertarians again! I’ve avoided talking about the real issue, the fact that we all want people to have higher real wages and the proper method of achieving that!” But it is a bit of a “Ha! People arguing against a higher minimum wage don’t care about the poor!” moment. And that’s how they make their opponents look to anyone listening to them.

If we want to move forward and have a real discussion about how to improve everyone’s lot, we have to abandon these nonsense phrases used solely for emotional appeal.

Rothbard was trained in…

Ever wonder why people are so obsessed with this guy?

Well, for one, he was an absolutely brilliant writer. He never pulled back punches against others and was extremely entertaining while writing informative content. Here’s one example from Man, Economy, and State, with the background first (in my multi-year expedition of this book, I am thrilled to announce I am finally on Ch.5!). You can skim through this first block-quote if you’re short on time.

The use of the mathematical concept of “function” is particularly inappropriate in a science of human action. On the one hand, action itself is not a function of anything, since “function” implies definite, unique, mechanical regularity and determination. On the other hand, the mathematics of simultaneous equations, dealing in physics with unmotivated motion, stresses mutual determination. In human action, however, the known causal force of action unilinearly determines the results. This gross misconception by mathematically inclined writers on the study of human action was exemplified during a running attack on Eugen Böhm-Bawerk, one of the greatest of all economists, by Professor George Stigler:

. . . yet the postulate of continuity of utility and demand functions (which is unrealistic only to a minor degree, and essential to analytic treatment) is never granted. A more important weakness is Böhm- Bawerk’s failure to understand some of the most essential elements of modern economic theory, the concepts of mutual determination and equilibrium (developed by the use of the theory of simultaneous equations). Mutual determination is spurned for the older concept of cause and effect.

The “weakness” displayed here is not that of Böhm-Bawerk, but of those, like Professor Stigler, who attempt vainly and fallaciously to construct economics on the model of mathematical physics, specifically, of classical mechanics.

Again, the above is just the background. In the footnotes, Rothbard states (my bold):

Stigler appends a footnote to the above paragraph which is meant as the coup de grace to Böhm-Bawerk: “Böhm-Bawerk was not trained in mathematics.” Stigler, Production and Distribution Theories. Mathematics, it must be realized, is only the servant of logic and reason, and not their master. “Training” in mathematics is no more necessary to the realization of its uselessness for and inapplicability to the sciences of human action than, for example, “training” in agricultural techniques is essential to knowing that they are not applicable on board an ocean liner. Indeed, training in mathematics, without adequate attention to the epistemology of the sciences of human action, is likely to yield unfortunate results when applied to the latter, as this example demonstrates. Böhm-Bawerk’s greatness as an economist needs no defense at this date.

The only response I can imagine Stigler coming back with is “Touché.”

Oh, and Rothbard was trained in mathematics.

I, Pencil: The Movie

HT2 Ken

Leonard Read was a brilliant guy to use the example of a “simple” pencil to explain how complicated the market process is, yet that it occurs without any central planner. If you want to read the original article that led to numerous short videos like this one, you can find it here.