PA Budget Deadlock and the Pitfalls of Socialism

Bastiat_QuoteThe pitfalls of socialism are many, and the current budget deadlock in Pennsylvania reveals yet another. This budget impasse is among the longest in State history (all but two previously were resolved before Christmas). And now we are hearing all the horror stories, such as foster parents not receiving state aid payments to care for the children they have taken in, school districts forced to borrow money and now beginning to run out of credit, college students not receiving their financial aid payments, etc.

My intention with this post is not to analyze the situation and cast blame or make specific policy recommendations. Rest assured, there is plenty of blame to go around, and the Internet is riddled with pieces casting blame and offering ‘common sense’ solutions. I just want to take this opportunity to point out something that isn’t talked about as much – that the root cause of all these problems is not the budget fiasco per se, but the socialist policies we have implemented that require a state budget deal to provide these services.

The proper role of government is to protect the rights of the people, not to provide foster care, education, and the like. We have implemented these and other socialist programs out of a just sympathy for those in need, but have in the process lost sight of the moral issue at stake.

We have previously recommended Bastiat’s “The Law” and continue to do so. Bastiat observes that law is the collective action of the people. Thus, government has no special rights beyond what any one individual has. And all taxation is the embodiment of force – or at least the threat to use force against those who don’t pay taxes. Therefore, Bastiat concludes, “Law, because it has force for its necessary sanction, can only have the domain of force, which is justice.”

No one has the right to forcibly extract money from others to pay for education or foster care for poor children. Neither does the government have that right.

Nonetheless, we look to the government to provide these services and conveniently overlook the moral truth. We justify these socialist policies under the mistaken impression that it is necessary for the government to provide care for the needy. In the processes, we commit the “Broken Window Fallacy” that Bastiat identified in his 1850 article “That Which is Seen, and That Which is Not Seen” and Henry Hazlitt famously expounded nearly a century later in his “Economics in One Lesson” (also highly recommended). See relevant excerpt here.

According to this fallacy, a hoodlum’s breaking a window would be considered an economic benefit to the community because it creates work for a glazier to repair and thus stimulates the economy. Hazlitt (following Bastiat’s line of argument) corrects this by noting the unseen consequences:

But the shopkeeper will be out $50 that he was planning to spend for a new suit. Because he has had to replace a window, he will have to go without the suit (or some equivalent need or luxury). Instead of having a window and $50 he now has merely a window. Or, as he was planning to buy the suit that very afternoon, instead of having both a window and a suit he must be content with the window and no suit. If we think of him as a part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer.

The glazier’s gain of business, in short, is merely the tailor’s loss of business. No new “employment” has been added. The people in the crowd [who fell for the broken window fallacy] were thinking only of two parties to the transaction, the baker and the glazier. They had forgotten the potential third party involved, the tailor. They forgot him precisely because he will not now enter the scene. They will see the new window in the next day or two. They will never see the extra suit, precisely because it will never be made. They see only what is immediately visible to the eye.

In embracing socialist policies, we have fallen for the broken window fallacy. We see the immediate consequence of the socialist intervention – foster parents receiving payments that enable them to care for needy orphans, etc. – while ignoring the unseen consequences that would occur if that money was left to individuals. As it stands, private charities have been forced out of the market – they can’t compete with the government’s forced expropriation through taxation. People are much less inclined to give to charities if the government is already taking a portion of their income, both because they have less left over to donate and because they perceive less need for additional private charity services with the government filling that role.

Private charities could provide for these services in place of the government’s coercive taxation (as they did before modern large-scale socialist intervention). This would not be a perfect solution, but it would be much better than the status quo for several reasons:

  • Individuals would be able to decide themselves which causes to support, and to what degree, rather than the one-size-fits all approach that results from government compulsion.
  • The most urgent causes and most effective organizations would receive the most donations, ensuring a higher quality of service.
  • There would be far less corruption and waste; and when corrupt practices are revealed, individuals would simply stop donating to the guilty charities so that more trustworthy ones could step in.
  • It would truly be charity, worthy of moral approbation. There is no merit to giving money to the poor when it was extracted from you at gunpoint (nor for donating money you extracted from another at gunpoint). In a free, private system, individuals could meet their moral obligation to care for the needy.

The above list is certainly only a partial list, and one additional benefit that recently dawned on me is related to the budget gridlock we are witnessing. This whole debacle would not happen under a private charity system! We wouldn’t need to wait for politicians in Harrisburg (or D.C.) to strike a budget deal before charitable services could be provided.

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