DemocracyThe God That Failed (22 page)

4

On
Democracy,
Redistribution,
and
the
Destruction
of
Property

Imagine a world government, democratically elected according to
the principle of one-man-one-vote on a worldwide scale. What would the probable outcome of an election be? Most likely, we would get a Chinese-Indian coalition government. And what would this government most likely decide to do in order to satisfy its supporters and be reelected? The government would probably find that the so-called Western world had far too much wealth and the rest of the world, in particular China and India, far too little, and that a systematic wealth and income redistribution would be necessary.
¹
Or imagine that in your own country the right to vote were expanded to seven year olds. While the government would not likely be staffed of children, its policies would most definitely reflect the "legitimate concerns" of children to have "adequate and "equal" access to "free" french fries, lemonade, and videos.
²

With these "thought experiments" in mind, there can be no doubt about the consequences which resulted from the process of democratization that began in Europe and the U.S. in the second half of the
nineteenth century and has come to fruition since the end of World War I. The successive expansion of the franchise and finally the establishment of universal adult suffrage did
within
each country what a world democracy would do for the entire globe: it set in motion a seemingly permanent tendency toward wealth and income redistribution.
³

¹
The combined population of China and India is around 2.2 billion (of a current world population of about 6 billion). By contrast, the combined population of Westem Europe and North America is approximately 700 million.

²
During the mid-nineteenth century the average life-expectancy in Western Europe and North America was approximately forty years. At that time, apart from being restricted exclusively to males as well as by significant minimum property requirements, the franchise was restricted by a minimum age requirement of typically twenty-five years (in some places such as the United Kingdom and Sweden the requirement was as low as twenty-one years, and in others such as France and Denmark it was as high as thirty years). Nowadays, while the average life-expectancy in Western Europe and North America has risen to well above seventy years, the franchise extends everywhere to males and females, all property requirements have been abolished, and the minimum voting age has been generally lowered to eighteen years. If the original "maturity" requirements had been maintained, the minimum age should have been raised instead: from on the average twenty-five years to about fifty years!

One-man-one-vote combined with "free entry" into government democracy implies that every person and his personal property comes within reach of and is up for grabs by everyone else. A "tragedy of the commons" is created.
⁴
It can be expected that majorities of "have-nots" will relentlessly try to enrich themselves at the expense of minorities of "haves." This is not to say that there will be only one class of have-nots and one class of haves, and that the redistribution will occur uniformly from the rich onto the poor. To the contrary. While the redistribution from rich to poor will always play a prominent role, it would be a sociological blunder to assume that it will be the sole or even the predominant form of redistribution.
⁵
After all, the "permanently" rich and the "permanently" poor are usually rich or poor for a reason. The rich are characteristically bright and industrious, and the poor typically dull, lazy, or
both.
⁶
It is not very likely that dullards, even if they make up a majority, will systematically outsmart and enrich themselves at the expense of a minority of bright and energetic individuals. Rather, most redistribution will take place
within
the group of the "non-poor," and frequently it will actually be the better-off who succeed in having themselves subsidized by the worse-off. Consider, for example, the almost universal practice of offering a "free" university education, whereby the working class, whose children rarely attend universities, pay through taxation for the education of middle-class children!
⁷
Moreover, it can be expected that there will be many competing groups and coalitions trying to gain at the expense of others. There will be various changing criteria defining what it is that makes one person a "have" (deserving to be looted) and another a "have-not" (deserving to receive the loot). At the same time, individuals will be members of a multitude of groups of "haves" and/or "have-nots," losing on account of one of their characteristics
and gaining on account of another, with some individuals ending up net-losers and others net-winners of redistribution.

³
As a rough indicator of this tendency one may want to relate successive expansions of the electorate during the late nineteenth and early twentieth century to the rise of the socialist and social-democratic voter turnout (and the parallel decline of classical liberal parties). A few examples will have to suffice here. (1)
Germany:
For the years 1871,1903, and 1919, the total number of votes cast was 4.1, 9.5, and 30.5 million respectively; the socialist voter turnout was 3, 32, and 46 percent respectively; the liberal voter turnout was 46, 22, and 23 percent respectively. (2)
Italy:
For the years 1895,1913, and 1919, the total number of votes was 1.3,5.1, and 5.8 million respectively; the socialist voter turnout was 7,18, and 32 percent respectively; the liberal voter turnout was 80,56, and 35 percent respectively. (3)
United
Kingdom:
For the years 1906, and 1918, the total number of votes was 7.3, and 21.4 million respectively; the socialist voter turnout was 5, and 21 percent respectively; the liberal voter turnout was 49, and 25 percent respectively. (4)
Sweden:
For the years 1905,1911, and 1921, the total number of votes cast was 0.2, 0.6, and 1.7 million respectively; the socialist voter turnout was 9, 28, and 36 percent respectively; the liberal voter turnout was 45,40, and 19 percent respectively. (5)
Netherlands:
For the years 1888,1905, and 1922, the total votes cast was 0.3, 0.8, and 3.3 million respectively; the socialist voter turnout was 3,17, and 27 percent respectively; the liberal voter turnout was 40, 28, and 9 percent respectively.

⁴
The "tragedy of the commons" refers to the overutilization, waste, or depletion of resources held in common (as publicly owned goods). See
Managing
the
Commons,
Garrett Hardin and John Baden, eds. (San Francisco: W.H. Freeman, 1977).

⁵
See on this Joseph A. Pechman, "The Rich, the Poor, and the Taxes They Pay,"
Public
Interest
(Fall 1969); Murray N. Rothbard,
For
A
New
Liberty
(New York: Collier, 1978), pp. 157-62.

⁶
See on this Edward C. Banfield,
The
Unheavenly
City
Revisited
(Boston: Little, Brown, 1974), esp. chap. 3. Typically, Banfield explains, poverty is merely a transitory phase, restricted to the early stage in a person's working career. "Permanent" poverty, by contrast, is caused by specific cultural values and attitudes: a person's present-orientedness or, in economic terms, its high degree of time preference (which is highly correlated with low intelligence, and both of which appear to have a common genetic basis). Whereas the former—temporarily-poor-yet-upward-moving—-individual is characterized by future-orientation, self-discipline, and a willingness to forego present gratification in exchange for a better future, the latter—permanently poor—individual is characterized by present-orientation and hedonism. Writes Banfield:

If [the latter] has any awareness of the future, it is of something fixed, fated, beyond his control: things happen to him, he does not make them happen. Impulse governs his behavior, either because he cannot discipline himself to sacrifice a present for a future satisfaction or because he has no sense of the future. He is therefore radically improvident. ... He works only as he must to stay alive, and drifts from one unskilled job to another, taking no interest in his work He is careless with his things ... and, even when nearly new, they are likely to be permanently out of order for lack of minor repairs. His body, too, is a thing "to be worked out but not repaired." (pp. 61-62)

⁷
See on this Armen Alchian, "The Economic and Social Impact of Free Tuition," in idem,
Economic
Forces
at
Work
(Indianapolis, Ind.: Liberty Fund, 1977); Rothbard,
For
A
New
Liberty,
chap. 7. Other examples involving this type of redistribution are farm subsidies, favoring in particular large wealthy farmers, minimum wages, favoring higher paid skilled (and unionized) workers at the expense of unskilled (and nonunionized) workers, and, of course, all forms of "business protection" laws (protective tariffs), favoring wealthy owners of corporations at the expense of the mass of comparatively poor consumers.

The recognition of democracy as a machinery of popular wealth and income redistribution in conjunction with one of the most fundamental principles in all of economics that one will end up getting more of whatever it is that is being subsidized provides the key to understanding the present age.
⁸

All redistribution, regardless of the criterion on which it is based, involves "taking" from the original owners and/or producers (the "havers" of something) and "giving" to nonowners and nonproducers (the "nonhavers" of something). The incentive to be an original owner or producer of the thing in question is reduced, and the incentive to be a non-owner and non-producer is raised. Accordingly, as a result of subsidizing individuals because they are poor, there will be more poverty. By subsidizing people because they are unemployed, more unemployment will be created. Supporting single mothers out of tax funds will lead to an increase in single motherhood, "illegitimacy," and divorce.
⁹
In outlawing child labor, income is transferred from families with children to childless persons (as a result of the legal restriction on the supply of labor, wage rates will rise). Accordingly, the birthrate will fall. On the other hand, by subsidizing the education of children, the opposite effect is created. Income is transferred from the childless and those with few children to those with many children. As a result the birthrate will increase. Yet then the value of children will again fall, and birthrates will decline as a result of the so-called social security system, for in subsidizing retirees (the old) out of taxes imposed on current income earners (the young), the institution of a family—the intergenerational bond between parents, grandparents, and children—is systematically weakened. The old need no longer rely on the assistance of their children if they have made no provision for their own old age, and the young (with typically less accumulated wealth) must support the old (with typically more accumulated wealth) rather than the other way around, as is typical within families. Parents' wish for children, and childrens' wish for parents will decline, family breakups and dysfunctional families
will increase, and provisionary action—saving and capital formation—will fall, while consumption rises.
¹⁰

⁸
On the economics of redistribution see Ludwig von Mises,
Socialism:
An
Eco
nomic
and
Sociological
Analysis
(Indianapolis, Ind.: Liberty Fund, 1981), esp. chap. 34; Murray N. Rothbard,
Power
and
Market:
Government
and
the
Economy
(Kansas City: Sheed Andrews and McMeel, 1977),pp. 169ff.; idem,
ForANew
Liberty,
chap. 8.

⁹
For a detailed empirical investigation of these and numerous related issues see Charles Murray,
Losing
Ground
(New York: Basic Books, 1984).

As a result of subsidizing the malingerers, the neurotics, the careless, the alcoholics, the drug addicts, the Aids-infected, and the physically and mentally "challenged" through insurance regulation and compulsory health insurance, there will be more illness, malingering, neuroticism, carelessness, alcoholism, drug addiction, Aids infection, and physical and mental retardation.
¹¹
By forcing noncriminals, including the victims of crime, to pay for the imprisonment of criminals (rather than making criminals compensate their victims and pay the full cost of their own apprehension and incarceration), crime will
increase.
¹²
By forcing businessmen, through "affirmative action" ("nondiscrimination") programs, to employ more women, homosexuals, blacks, or other "minorities" than they would like to, there will be more employed minorities, and fewer employers and fewer male, heterosexual, and white employment.
¹³
By compelling private land owners to subsidize ("protect") "endangered species" residing on their land through environmental legislation, there will be more and better-off animals, and fewer and worse-off humans.
¹⁴

¹⁰
Concerning the effect of "social security," compulsory school attendance laws and the prohibition of child labor on the progressive destruction of families see Allan C. Carlson,
What
Has
Government
Done
to
Our
Families?
(Auburn, Ala.: Ludwig von Mises Institute, 1991); also Bryce J. Christensen,
The
Family
vs.
the
State
(Auburn, Ala.: Ludwig von Mises Institute, 1992).

¹¹
For one of the earliest, most profound, and most farsighted analyses of this see Mises,
Socialism,
pp. 429-32 and 438-41. Writing in the early 1920s, Mises described the effects of "social insurance" as follows:

By weakening or completely destroying the will to be well and able to work, social insurance creates illness and inability to work; it produces the habit of complaining. ... In short, it is an institution which tends to encourage disease, not to say accidents, and to intensify considerably the physical and psychic results of accidents and illnesses. As a social institution it makes a people sick bodily and mentally or at least helps to multiply, lengthen, and intensify disease, (p. 432)

Moreover, Mises proceeds to the heart of the matter and explains why insurance against most health and accident risks, and in particular against the risk of unemployment, is economically
impossible:

The value of health and accident insurance becomes problematic by reason of the possibility that they insured person may himself bring about, or at least intensify, the condition insured against. But in the case of unemployment insurance, the condition insured against can never develop unless the insured persons so will Unemployment is a problem of wages, not work. It is just as impossible to insure against unemployment as it would be to insure against, say, the unsaleability of commodities. . . . Unemployment insurance is definitely a misnomer. There can never be any statistical foundation for such an insurance. (p. 439)

On the logic of risk and insurance see further Ludwig von Mises,
Human
Action:
A
Treatise
on
Economics,
Scholar's Edition (Auburn, Ala.: Ludwig von Mises Institute, 1998), chap. 6; on the dysgenic consequences of social "insurance" see Seymour W. Itzkoff,
The
Road
to
Equality:
Evolution
and
Social
Reality
(Westport, Conn.: Praeger, 1992); idem,
The
Decline
of
Intelligence
in
America
(Westport, Conn.: Praeger, 1994).