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What Every Debater Should Know About Economics

#9 Political decision-making favors plunder over production.

The great French political economist, Frederic Bastiat, wrote in 1850:

Man can live and satisfy his wants only by ceaseless labor; by the ceaseless application of his faculties to natural resources. This process is the origin of property.

But it is also true that a man may live and satisfy his wants by seizing and consuming the products of the labor of others. This process is the origin of plunder.¹⁴

Bastiat went on to say that the purpose of law is to protect property by preventing people from using plunder against each other. This is a pretty important function. For one thing, the entire market economy is based on this foundation of secure property rights, which creates strong incentives to produce and to cooperate through peaceful, voluntary exchange. Preserving this fabric of civil society by protecting individual rights is usually the primary reason people give for having a government with the legitimate right to use force.

But governments often do much more than protect people from plunder and coercion. Government's power to tax can indeed be used to pay for police, courts, and military defense but the same power may be used to dispense other benefits. To someone who can influence the government, its power can be a tool for gaining access to other peoples' property. Bastiat called this "legal plunder" and argued that it was no more just and no less destructive than the criminal plunder of a thief. If people can compete for legal access to their neighbors' wallets and purses through the political process, it will not be long before a government designed to protect peoples' rights becomes one of the greatest threats to those rights.

Understanding the dangerous incentives inherent in concentrating power in a central government, the founding fathers sought to constrain the government with a binding Constitution. Under the Constitution, Congress was to have only those powers delegated to it as enumerated in the document. "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." Specifically Congress was permitted to raise taxes to "provide for the common Defense and the General Welfare" of the people, but not for the special defense or welfare of particular groups. Madison and Jefferson insisted that this clause be included as a shield guarding against the misuse of federal powers.

The extent to which the original purpose of the Constitution is today ignored by Congress and the Supreme Court is testimony to the powerful temptation of legal plunder. The majority of the modern federal budget is devoted to the transfer of resources from the taxpayers to various particular groups in society: farmers, industry, small business owners, homeowners, scientists, artists, the poor, the elderly, nature lovers, classical music lovers, even peanut lovers. In fact, government has grown so large with programs for each special interest group that today more than 35 percent of what we produce (GDP) is consumed or redistributed by federal, state, and local governments ¹⁵.

A great deal more legal plunder is perpetrated by regulations which protect one group's economic interests at the expense of others. Labor unions lobby for a higher minimum wage to protect union jobs from competition by cheap labor. Taxi drivers and hair dressers ask for mandatory state licensing to reduce competition from upstart new entrants. And hundreds of domestic industries pressure the International Trade Commission and Commerce Department to impose heavier tariffs on consumers when they try to buy foreign-made goods. Those who benefit most directly by subsidies, tariffs or protective legislation have strong incentives to be politically organized, while the much larger group who share the costs tend to be less vocal. Government officials pay most attention to those who are paying attention to them.

As more of what a people receive comes to them through government and less through their individual labors, this has predictable effects on their productivity. More resources are devoted to plunder and less to production. Living standards grow more slowly, or even decline. Poverty becomes entrenched. International comparisons cited in the Gwartney and Stroup book show that a nation's economic progress is generally inversely related to the size and scope of its government¹⁶ .

For debaters and extempers the lesson here is clear. Be wary of proposals to expand the aspects of our economic lives over which politics has control. Political decision-making delivers the spoils to the groups that are most politically organized (most likely to determine election outcomes). In the free market, by contrast, resources tend to flow to where they are most valuably employed in satisfying consumers. Whereas market competition tends to increase wealth by expanding the range of opportunities available, political competition tends to consume wealth by diverting resources into organized legal plunder. Lobbyists, lawyers, and government relations departments are the private sector counterparts to the government bureaucracies and agencies that spend billions of tax dollars each year directing benefits to various special interest groups.

¹⁴ Frederic Bastiat, The Law, 1990, p. 10.

¹⁵ William Niskanen and Stephen Moore, Cato Handbook for Congress, 1995, p. 73.

¹⁶ James Gwartney and Richard Stroup, What Everyone Should Know About Economics and Prosperity, 1993, pp. 110-112