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The War on Cars Is a War on Workers and the Poor – Article by Gary M. Galles

The War on Cars Is a War on Workers and the Poor – Article by Gary M. Galles

The New Renaissance Hat
Gary M. Galles
November 6, 2015

A just-released poll of Los Angeles residents found that 55 percent of respondents indicated their greatest concern was “traffic and congestion,” far ahead of “personal safety” — the next highest area of concern — at 35 percent. So if their city government was working in their best interests, it would be doing something about automobile congestion.

It is. Unfortunately, it will make things worse.

Los Angeles’s recently adopted Mobility Plan 2035 would replace auto lanes in America’s congestion capital with bus and protected bike lanes, as well as pedestrian enhancements, despite heightening congestion for the vast majority who will continue to drive. Even the City’s Environmental Impact Report admitted “unavoidable significant adverse impacts” on congestion, doubling the number of heavily congested (graded F) intersections to 36 percent during evening rush hours.

Driving Saves Time and Offers More Opportunity

Such an effort to ration driving by worsening gridlock purgatory begs asking a central, but largely ignored, question. Why do planners’ attempts to force residents into walking, cycling, and mass transit — supposedly improving their quality of life — attract so few away from driving?

The reason it takes a coercive crowbar to get most people out of their cars is that automobile users have concluded cars are vastly superior to the alternatives.

Why is automobile use so desirable:

  • Automobiles have far greater and more flexible passenger — and cargo-carrying capacities.
  • They allow direct, point-to-point service.
  • They allow self-scheduling rather than requiring advance planning.
  • They save time.
  • They have far better multi-stop trip capability (this is why restrictions on auto use punish working mothers most).
  • They offer a safer, more comfortable, more controllable environment, from the seats to the temperature to the music to the company.

Those massive advantages explain why even substantial new restrictions on automobiles or improvements in alternatives leave driving the dominant choice. However, they also reveal that a policy that will punish the vast majority who will continue to drive cannot serve residents effectively.

How Restrictions on Automobiles Punish the Working Poor the Most

The superiority of automobiles doesn’t stop at the obvious, either. They expand workers’ access to jobs, increasing productivity and incomes, improve purchasing choices, lower consumer prices and widen social options. Reducing roads’ car-carrying capacity undermines those major benefits.

Cars offer a decrease in commuting times (if not hamstrung by city-government planning), providing workers access to many more potential employers and job markets. This improves worker-employer matches, with expanded productivity both benefiting employers and raising workers’ incomes.

One study found that a 10-percent improvement in travel time raised worker productivity 3 percent. And increasing from a 3 mph walking speed to 30 mph driving speed is a 900-percent increase. In a similar vein, a Harvard analysis found that for those lacking high-school diplomas, owning a car increased monthly earnings by $1,100.

Cars are also the only means of assembling enough customers to sustain large stores with highly diverse offerings. Similarly, “automobility” dramatically expands the menu of social opportunities that are accessible.

Supporters like Los Angeles Mayor Eric Garcetti may dismiss the serious adverse effects of the “road diets” they propose (a term whose negative implications were too obvious, getting it benched in favor of the better-sounding “complete streets”). But by demeaning cars as “the old model” and insisting “we have to have neighborhoods that are more self-contained,” the opponents of auto use do nothing to lessen the huge costs or increase the very limited benefits they plan to impose on those they supposedly represent.

Further, the “new model” of curtailing road capacity to force people out of cars is really a recycled old far-inferior model. As urban policy expert Randal O’Toole noted in The Best-Laid Plans:

Anyone who prefers not to drive can find neighborhood … where they can walk to stores that offer a limited selection of high-priced goods, enjoy limited recreation and social opportunities, and take slow public transit vehicles to some but not all regional employment centers, the same as many Americans did in 1920. But the automobile provides people with far more benefits and opportunities than they could ever have without it.

Gary M. Galles is a professor of economics at Pepperdine University. He is the author of The Apostle of Peace: The Radical Mind of Leonard Read. Send him mail. See Gary Galles’s article archives.

This article was published on and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

The Intellectual Intolerance Behind “Check Your Privilege” – Article by Gary M. Galles

The Intellectual Intolerance Behind “Check Your Privilege” – Article by Gary M. Galles

The New Renaissance Hat
Gary M. Galles
July 19, 2015

A decade ago, no one had ever been told to “check your privilege.” Now it commands an appreciable “market share” in academia and social justice rhetoric. But it does so despite sharply opposed interpretations of its meaning. In fact, its expanded footprint is partly because of its ambiguity.

It Could Be an Invitation to Debate

In a sense, “check your privilege” largely amounts to “check your premises” behind your views, and many are willing to recognize that such a reminder can be useful in advancing conversations about social issues.

However, I question whether people are so bereft of concern for, or understanding of, one another that they need repetitive “check your privileges” reminders that imply they would believe more accurately and act more effectively if only they were more empathetic. I tend to agree with Adam Smith, in The Theory of Moral Sentiments, that:

How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it … we often derive sorrow from the sorrows of others.

Further, repeatedly sermonizing to fix people as a way of “uplifting” them becomes little more than nagging, and any insight it may add gets crowded out. In the same way, repeatedly invoking “check your privilege” tends to destroy its usefulness leaving increased irritation and disharmony.

But the Phrase Could Simply Mean “Shut Up”

And when does “check your privilege” become code for “be quiet” rather than “evaluate your premises”? “Check your privilege” is about shutting down discussion when the user is making the assertion that you are hopelessly confused in your understanding, and that your opinions amount to aggression (whether “micro-” or “macro-”). This position was wellarticulated decades ago by Robert Heinlein, in The Moon is a Harsh Mistress:

Where do you start explaining when a man’s words show there isn’t anything he understands about [a] subject, [but] instead is loaded with preconceptions that don’t fit facts and [he] doesn’t even know …?

The assertion of your hopeless confusion then becomes the basis for claims that, unless you are a member of some accepted victimized class, you must be part of the oppressor class. Therefore, as Max Borders put it,

Your rights and opinions are invalid and you have no real complaints or suffering because you belong to X group. Or, more to the point, you are obligated to pay because people who look like you in some ways did bad things at some point.

In other words, others assert that they don’t need to listen to you, much less respect your arguments.

The Ad Hominem Attack

That leap involves several logical failings. Included in that list is the idea that any guilt for what was true of some members of an arbitrarily defined class or group (rather than treating people as the individuals they are) at some point in time passes on to every current and future member of that class or group. In addition, it incorporates the ad hominem fallacy that because you are judged as bad or part of an oppressor class, your argument is false, while conversely, their self-defined goodness and non-oppression means theirs must be true, both of which are unrelated to the logical validity of an argument.

Given that “check your privileges” could mean either “remember to be empathetic, so we can better understand and help” or “we can disregard your beliefs and violate your rights,” how can we tell which one is intended?

Where confusion reigns, to better understand and help requires the confusion to be replaced with clear, accurate understanding. That, in turn, requires a serious, ongoing “give and take” conversation.

However, when “check your privilege” is used to preemptively cut off conversation by stopping those who disagree from any chance to be heard, much less to rebut their demonization and targeting, no improvement in either empathy or results can result. So the key to evaluating “check your privilege” is to ask what would be entailed if it was intended to advance such a serious conversation.

How Real Dialogue Happens

Importantly, any conversation would not stop at “watch your privileges.” It would only begin there. By itself, the phrase says you are wrong in your understanding or views, but it leaves how completely unspecified, beyond having something to do with membership in some allegedly dominant or privileged group. Stopping the conversation there leaves “check your privileges” as an insult, without any ability to clarify understanding or reduce disagreements or disharmony.

Progress toward better understanding and results would require several more steps.

It would start by precisely specifying what faulty premises, assumptions, or arguments someone supposedly holds, either included or excluded inappropriately. Then it would explain why it is inappropriate for the issue being considered. It would lay out the correct or appropriate premise that would take its place and articulate the reasons why.

Building on that foundation, it would show how the “new and improved” premises would change one’s conclusions. Consequently, it would lay out the appropriate remedy based on the alternative analysis. In the process, it would have to explain how the proposed remedy cannot be explained solely on a narrowly self-interested “more for me” basis, completely apart from the argument offered, as part of laying out the new special privileges that would be created for those put forward as victims. It would also have to explain how others will be affected in order to address the asserted problem, including whether there would be coercive impositions on members of the supposedly dominant or victimizer class who had nothing to do with the “sins of the fathers.”

When “check your privilege” means think more carefully about others’ circumstances, which may be far different than yours, and to be empathetic, it can be useful in advancing our potential for mutual understanding. But it has to be only the beginning of a much farther-reaching discussion to bear fruit — a discussion which, carefully and earnestly pursued, would lead us back to the self-ownership and voluntary arrangements of liberty.

In contrast, when “check your privilege” is used as a magic phrase to peremptorily end “social justice” discussions, it is the assertion of a special privilege for some to be allowed to define themselves as white hats and those who disagree as black hats, without ever having to make a real argument. It also allows users to turn it into an epithet of social demonization to try to impose their “solutions,” always at the expense of the supposed black hats. In the process, it undermines social cooperation by undermining the rights upon which it is built.

Gary M. Galles is a professor of economics at Pepperdine University. He is the author of The Apostle of Peace: The Radical Mind of Leonard Read. Send him mail. See Gary Galles’s article archives.

This article was published on and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

For the Love of Money? – Article by Gary M. Galles

For the Love of Money? – Article by Gary M. Galles

The New Renaissance Hat
Gary M. Galles
April 13, 2014

It’s not unusual to hear market systems criticized for relying too much on money, as if this comes at the expense of the altruistic relationships that would otherwise prevail. Ever heard the phrase “only in it for the money”? It’s as if self-interest has a stink that can corrupt transactions that generate benefits for others, turning them into offenses. So this line of thinking suggests reliance on market systems based in self-ownership would be tantamount to creating a world where people only do things for money, and lose the ability to relate to one another on any other terms.

People Don’t Do Everything for Money

One need not go far to see the falsity of the claim that everything is done for money in market systems. My situation is but one example: I have a Ph.D. in economics from a top graduate program. It is true that, as a result, I have an above-average income. But I did not do it all for the money. One of my major fields was finance, but if all I cared about was money—as my wife reminds me when budgets are particularly tight—I would have gone into finance rather than academia and made far more. But I like university students. I think what I teach is important, and I value the ability to pass on whatever wisdom I have to offer. I like the freedom and time to pursue avenues of research I find interesting. I enjoy the ability to tell and write the truth as I see it (particularly since I see things differently from most) and I prefer a “steady job” to one with far more variability.

Every one of those things I value has cost me money. Yet I chose to be a professor (and would do it again). While it’s true that the need to support my family means that I must acquire sufficient resources, many things beyond just money go into choosing what I do for a living. And the same is true for everyone.

Ask any acquaintances of yours who they know that only does things for money. What would they say? They would certainly deny it about themselves. While they might apply this characterization to people they don’t know, beyond Dickens’s Ebenezer Scrooge and his comic book namesake, Scrooge McDuck, they would be unable to provide a single convincing example. If market critics performed that same experiment, they would recognize that they are condemning a mirage, not market arrangements.

Confusing Ends and Means

Beyond the fact that all of us forego some money we could earn for other things we value, the fact that every one of us gives up money we have earned for a vast multitude of goods, services, and causes also reveals that individuals don’t just do things for the money. Each of us willingly gives up money up to further many different purposes we care about. Money is not the ultimate end sought, but a means to a vast variety of possible ends. Mistakenly treating money as the end for which “people do everything” is fundamentally flawed—both for critics of the market and for the participants in it.

To do things for money is nothing more than to advance what we care about. In markets, we do for others as an indirect way of doing for ourselves. This logic even applies to Scrooge. His nephew Fred’s assertion that he doesn’t do any good with his wealth is false; he lends to willing borrowers at terms they find worth meeting, expanding the capital stock and the options of others.

That an end of our efforts is to benefit ourselves, in and of itself, merits neither calumny nor congratulations. Money’s role is that of an amoral servant that can help us advance whatever ends we ultimately pursue, while private property rights restrict that pursuit to purely voluntary arrangements. Moral criticism cannot attach to the universal desire to be able to better pursue our ends or to the requirement that we refrain from violating others’ rights, only to the ends we pursue.

To do things for money in order to achieve world domination could justify moral condemnation. But the problem is that your intended end will harm others, not the fact that you did some things for money, benefitting those you dealt with in that way, to do so. Using money to build a leprosarium, as Mother Teresa did with her Nobel Prize award, does not justify moral condemnation. Similarly, using money to support your family, to live up to agreements you made with others, and to try not to burden others is being responsible, not reprehensible. Further, there is nothing about voluntary arrangements that worsens the ends individuals choose. But by definition, they place limits on ends that require harming others to achieve them.

It is true that money represents purchasing power that can be directed to ends others object to. Money is nothing more than a particularly powerful tool, and all tools can be used to cause harm. Just as we shouldn’t have to forego the benefits of hammers because somebody could cause harm with one, there’s no reason to think society would be better off without money or the market arrangements it makes possible just because some people can use those things for harmful ends. And if the ends aren’t actually causing harm, then the objections over them come down to nothing more than disagreements about inherently subjective valuations. Enabling a small class of people to decide which of these can be pursued and which can’t makes everyone worse off.

Those who criticize people for doing everything for money also do a great deal for money themselves. How many campaigns have religious groups and nonprofit organizations run to get more money? How much of government action is focused on getting more money? Why do the individuals involved not apply the same criticism to themselves? Because they say they will “do good” with it. But every individual doing things for money also intends to do good, as he or she sees it, with that money. And if we accept that people are owners of themselves, there is no obvious reason why another’s claims about what is “good” should trump any “good” that you hold dear, or provide for another in service through exchange.

Criticizing a Straw Man

Given that the charge that “people do everything for money” in market systems is both factually wrong and logically lame, why do some keep repeating it? It creates a straw man easier to argue against than reality, by misrepresenting alternatives at both the individual and societal level.

At the individual level, this assertion arises when people disagree about how to spend “public” resources (when we respect private property, this dispute disappears, because the owner has the right to do as he or she chooses with it, but cannot force others to go along with or allow it; “public” resources are obtained by force). The people who wish to spend other people’s confiscated resources in ways the original owners disagree with claim a laundry list of caring benefits their choice would provide, but foreclose similar consideration of the harms that would be caused to those they claim care only about money. That, in turn, is used to imply that the purportedly selfish person’s claims are unworthy of serious attention. (Something similar happens when politicians count “multiplier effects” where government money is spent, but ignore the symmetrical negative “multiplier effects” radiating from where the resources are taken.)

This general line draws support from a misquotation of the Bible. While more than one recent translation of 1 Tim 6:10 renders it “the love of money is a root of all sorts of evils,” the far less accurate King James Version rendered it, “the love of money is the root of all evil.” When one simply omits or forgets the first three words, it becomes something very different—“money is the root of all evil.” Portray those who disagree with your “caring” ends as simply loving money more than other people, and they lose every argument by default. Naturally, it’s a seductive strategy.

At the societal level, criticizing market systems as tainted by the love of money implies that an alternate system would escape that taint and therefore be morally preferable. By focusing attention only on an imaginary failing of market systems that would be avoided, it allows the implication of superiority to be made without having to demonstrate it. This is a version of the Nirvana fallacy.

By blaming monetary relationships for people’s failings, “reformers” imply that taking away markets’ monetary nexus will somehow make people better. But no system makes people angels; all systems must confront human flaws and failings. That means a far different question must be addressed: How well will a given system do with real, imperfect, mostly self-interested people? And it shouldn’t be necessary, but most political rhetoric makes a second question nearly as important: Does the given system assume that people are not imperfect and self-interested when they have power?

Given that the utopian alternatives offered always involve some sort of socialism or other form of tyranny, an affirmative case for them cannot be made. Only by holding the imaginary “sins” of market systems to impossible standards, while holding alternatives to no real standards except the imagination of self-proclaimed reformers, can that fact be dodged. But there’s nothing in history or theory that demonstrates that overwriting markets with expanded coercion makes people more likely to do things for others. As Anatole France noted, “Those who have given themselves the most concern about the happiness of peoples have made their neighbors very miserable.” And as economist Paul Heyne wrote, “Market systems do not produce heaven on earth. But attempts by governments to repress market systems have produced . . . something very close to hell on earth.

Money at the Margin

Money is not everything. But changes in the amounts of money to be earned or foregone as a result of decisions change our incentives at the many margins of choice we face, and so change our behavior. Such changes—money at the margin—are the primary means of adjusting our behavior in the direction of social coordination in a market system.

Changes in monetary incentives are how we adapt to changing circumstances, because whatever their ultimate ends, everyone cares about commanding more resources for those purposes they care about. It is how we rebalance arrangements when people’s plans get out of synch, which is inevitable in our complex, dynamic world. In such cases, changing money prices allow each individual to provide added incentives to all who might offer him assistance in achieving his ends, even if he doesn’t know them, doesn’t know how they would do so, and doesn’t think about their wellbeing (in fact, it applies even if he dislikes those he deals with, as long as the benefits of the arrangements exceed his perceived personal cost of doing so).

For instance, consider a retail gas station faced with lengthy lines of cars. That reflects a failure of social cooperation between the buyers and the seller. Those in line are revealing by their actions that they are willing to bear extra costs beyond the current price to get gas, but their costs of waiting do not provide benefits to the gas station owner. So the owner will convert those costs of waiting in line, which are going to waste, into higher prices (unless prevented by government price ceilings or antigouging directives) that benefit him. That use of money at the margin benefits both buyers and sellers and results in increased amounts of gasoline supplied to buyers.

Further, people can change their behavior in response to price changes in far more ways than “outsiders,” unfamiliar with all the local circumstances, realize. This makes prices, in turn, far more powerful than anyone recognizes.

Consider water prices. If water prices rose, your first thought might well be that you had no choice but to pay them. You might very well not know how many different responses people have already had to spikes (ranging from putting different plants in front yards to building sophisticated desalinization plants). Similarly, when airline fuel prices rose sharply, few recognized in advance the number of changes that airlines could make in response: using more fuel-efficient planes, changing route structures, reducing carry-on allowances, lightening seats, removing paint, and more.

If people recognized how powerful altered market prices are in inducing appropriate changes in behavior, demonstrated by a vast range of examples, they would recognize that the cost of abandoning money at the margin, which enables these responses by offering appropriate incentives to everyone who could be of assistance in addressing the problem faced, would enormously exceed any benefit.

Massive Improvements in Social Cooperation

If we could just presume that individuals know everyone and all the things they care about and the entirety of their circumstances, we could imagine a society more focused on doing things directly for others. But in any extensive society, there is no way people could acquire that much information about the large number of people involved. Instead, this would extend the impossible information problem that Hayek’s “The Use of Knowledge in Society” laid out in regard to central planners. You can care all you want, but that won’t give you the information you need. Beyond that insuperable problem, we would also have to assume that people cared far more about strangers than human history has evidenced.

Those information and other-interestedness requirements would necessarily dictate a very small society. But the costs of those limitations, if people recognized them, would be greater than virtually anyone would be willing to bear.

Without a broad society, the gains from cross-pollination of ideas and different ways of doing things would be hamstrung. The gains from comparative advantage (areas and groups focusing on what they do best, and trading with others doing the same thing) would similarly be sharply curtailed. A very small society would eliminate the incentive for large-scale specialization (requiring more extensive markets) and division of labor that makes our standard of living possible. Virtually every product that involves a large number of separate arrangements—such as producing cars or the gasoline to power them—would disappear, because the arrangements would be overwhelmed by the costs of making them without money as the balance-tipper. As Paul Heyne once put it,

The impersonal transactions that constitute the market system . . . have, over the course of a few centuries, enormously expanded our ability to provide [for] one another . . . while at the same time vastly extending our freedom both by offering us a multitude of options and by freeing us from arbitrary restrictions on our choice of life goals and on the means to further those goals. To reject impersonal transactions as unethical amounts to rejecting the foundation of modern life.


A pastiche of false premises leads many to reject out of hand what Hayek recognized as the “marvel” of market systems, which, if they had arisen from deliberate human design, “would have been acclaimed as one of the greatest triumphs of the human mind.” This is great for those who seek power over others—they have an endless supply of bogeymen to promise to fight.

But it’s a disaster for social coordination. The record of disasters inflicted on society demonstrates what follows when voluntary arrangements are replaced by someone else’s purportedly superior vision.

But it’s often forgotten. We must continue to make the case.

Gary M. Galles is a professor of economics at Pepperdine University. He is the author of The Apostle of Peace: The Radical Mind of Leonard Read. Send him mail.

This article was originally published by The Foundation for Economic Education.

Why Are Jurors Expected to Work for Below-Market Wages? – Article by Gary Galles

Why Are Jurors Expected to Work for Below-Market Wages? – Article by Gary Galles

The New Renaissance Hat
Gary M. Galles
January 1, 2014

Jury duty garners complaints from those who have been drafted into service, but it seldom gets media attention. Other than when there is a celebrity involved (e.g., when Oprah Winfrey was chosen for a murder trial), juries seem to enter public discourse only when there is a sensational case, such as the upcoming trial for Aurora theater shooting suspect James Holmes.

Even when juries get noticed, it is not the inefficiencies and the waste of juror time that get the attention, yet the large number of jurors to be called for sensational cases (6,000 for the Holmes trial) often makes those problems more obvious than usual.

Serious inquiry highlights the single most effective reform available: ensuring a sufficient number of qualified jurors by paying them what their time is really worth. Because jury system problems primarily arise from treating jurors as if their time has little or no value, paying jurors instead of drafting them would produce real advantages over our current system, not just in lower costs to society, but in better dispensing dependable justice.

The greatest inefficiency of current jury service is its huge waste of juror time (e.g., 165,000 of 6 million Californians who performed jury duty actually served on a case last year). But with juror services essentially costless to judges and lawyers, they have little reason to reduce the waste. If jurors were paid something that reflected the true value of their time, they would be utilized far more effectively.

Another problem is uncomfortable and unpleasant jury facilities. With drafted jurors, there is little incentive to accommodate their preferences. If they had to be recruited voluntarily, like other employees, they would be willing to work for less under more pleasant conditions, and courts would provide for more juror comfort and convenience to cut the cost of wages.

No-shows are another major problem which increases both costs and administrative difficulties. Courts have to guess how many draftees will actually appear, wasting many jurors’ time on many days, and wasting court resources when there are too few jurors. Jurors paid a market rate for their time would show up like other employees whose jobs depend on it, reducing such waste.

Underpriced jurors cause other problems. Facing below-market costs for juror time, some courts limit jurors’ ability to take written notes, leading to delays, mistakes and avoidable jury room disputes over what was actually said. Similarly, jurors are often restricted in submitting questions to clarify their understanding, or to discuss the trial during breaks, causing confusion and wasted juror and court time. If jurors had to be paid a competitive wage, such time-wasting practices would be trimmed.

If jurors were paid, attorneys would be pushed to use plain language rather than legalese to facilitate more efficient communication. Tighter time constraints would be imposed to force attorneys to make their points more quickly and clearly, and to avoid repetitive questions (a pet peeve of jurors). Paid jurors would also spur other efficiencies, such as speeding up jury selection (e.g., by limiting peremptory challenges).

Paying jurors would also induce jurors to become more educated on the law, evidence, and procedure, reducing the chance of mistrials and the resources now devoted to ensuring jurors understand and follow the rules.

Offering sufficient inducement to attract “professional” jurors would also make justice more reliable as professional jurors would seek to cultivate a reputation as reliable and unbiased.

Currently, the primary incentive of many drafted jurors is to finish their involuntary servitude faster. That offers little assurance of attentive jurors or evenhanded rulings (not to mention creating big payoffs to jury consultants for finding “leaners” who can change the outcome in their direction). In contrast, paid jurors’ incentives would be more like those of current mediators, which litigants increasingly find preferable to court trials.

Mediators must be thorough and evenhanded if they want to continue in that role, because they must remain acceptable to both sides involved. Obvious bias or sloppiness would end their careers. Those wanting to continue to serve as paid jurors would similarly want to be fair and balanced, to preserve that possibility. Since, as according to California’s courts assert, “the duties of a juror are as important as the duties of a judge,” these incentives are crucial.

Jurors are the only resource our justice system treats as essentially costless, though, as with a military draft, the very real costs are really “paid” by the draftees. Our current system is made slower, more wasteful and more inequitable because the costs imposed on jurors, which all too often are a serious financial and personal hardship for many, are essentially ignored.

Americans’ right to a jury trial does not imply that drafting jurors is the best way to provide that right. A paid volunteer juror system would be an important positive reform, bringing us closer to providing the “liberty and justice for all” that is the goal.

Gary M. Galles is a professor of economics at Pepperdine University. He is the author of The Apostle of Peace: The Radical Mind of Leonard Read. Send him mail. See Gary Galles’s article archives.

This article was published on and may be freely distributed, subject to a Creative Commons Attribution United States License, which requires that credit be given to the author.

Buy Team America? – Article by Gary M. Galles

Buy Team America? – Article by Gary M. Galles

The New Renaissance Hat
Gary M. Galles
August 18, 2012

Samuel Johnson once wrote that “patriotism is the last refuge of a scoundrel,” criticizing adverse policies and proposals falsely claimed to be based in patriotism. This has been most recently illustrated by the political furor over “made-in-China” Team USA uniforms. Many politicians asserted that it was un-American, with Senate Majority Leader Harry Reid saying those uniforms should be burned. Supposedly patriotic pressures to mandate “buying American” sprang up immediately, and Ralph Lauren quickly capitulated, promising to “go and sin no more.”

While some of the details of this flap are unusual, protectionism dressed up as patriotism follows a well-worn script.

Imports are found to cause some domestic harm. Given that those imports harm competing domestic producers, “Buy American” or some other version of protectionism is put forth as the patriotic response (with the producers seeking protection from superior competitors leading the patriotism bandwagon). The Team USA version simply exploits the Olympics’ peak in pro-American sentiment and symbolism to make the same case (though it makes no more sense than requiring that we grow our own coffee and bananas for our athletes).

The problem is that imports always harm competing domestic producers, so that the patriotism argument can always be used as political cover whenever any domestic producers get the government’s ear. And there are always politicians ready to listen.

One person who recognized the abuses and illogic of this approach was Leonard Read. In particular, his chapter “Buy American,” in Having My Way (1974), lays out a better way to approach the issue.

The admonition to “Buy American” has two diametrically opposed meanings. The first is its popular and mischievous meaning — shun goods produced in foreign countries. The second, and loftier meaning embodied in these words, is rarely mentioned or thought of — shun principles and practices alien to the American dream of limited government and personal freedom.

Producers who plead with consumers to “Buy American” are appealing to blind patriotism. Buy my product because it is made here; heed not its price or quality. This is sheer chauvinism. Suppose I were to urge your acceptance of my ideas, rather than those of Marx or Machiavelli, merely because of our differing nationalities. The absurdity of such an appeal is obvious: neither goods nor ideas are properly judged in this fashion; geographical origin has nothing to do with the matter.

Read points out that that the traditional use of “Buy American” is to justify some citizens beggaring their own neighbors, rather than something that advances any sensible interpretation of our general welfare. However, there is an interpretation that does advance our general welfare. Don’t buy (i.e., accept and make use of) actions that violate the American principle of freedom to choose your own productive associations, as long as you don’t violate the common, inalienable rights of others.

Read recognizes that whether a principle is true or not has nothing to do with where it comes from (i.e., ad hominem or “against-the-man” attacks do nothing to invalidate something that is true, although you wouldn’t know it from political rhetoric). As a result, he offers an excellent way to test whether some supposed general principle is valid — change “Buy USA” to “Buy Chinese” or “Buy Mexican,” and ask if Americans would accept the proposition as true based on their patriotism. If it is really a general principle, it is as valid for others in their dealings with us as their potential suppliers as it is for us in dealing with them as our potential suppliers, and the answer would not change. We would support others’ protectionism just as much as our own. But if it is really special pleading, rather than a general principle, people’s answers would change, as when people hypocritically attack other countries for their protectionism at the same time we defend ours as principled.

Read also recognized that the extent of protectionism is far vaster than most people recognize.

All obstacles to competition, be they foreign or domestic, are but variants of this theme.

The difference between a ban on buying a foreign country’s products and imposing tariffs, quotas, or any of a host of nontariff barriers is only one of degree. Whether it benefits or harms Americans does not change; only the degree of such benefit or harm. Similarly, change “Buy American” to “Buy Local,” as with locavore campaigns in agriculture, and the logic is equally invalid.

Such protectionism goes well beyond international trade, as well.

Change the wording to “Buy Union,” as with project labor agreements and prevailing (higher-than-competitive) wage laws, and the logic is the same. Union members are protected from the competition of other workers who would work for less. But that protection not only harms nonunion workers; it also harms customers, whose costs are increased.

Price controls are also protectionism. For example, a minimum wage protects other workers from competing with those who would be willing to work for less, but it harms both those denied their most productive employment and consumers.

The vast majority of antitrust cases are also forms of protectionism. They are not brought by consumers, who generally gain from the practices involved, but by outcompeted rivals who want to take away others’ advantages — advantages passed on to customers. Those outcompeted rivals don’t want potential customers to go elsewhere — and use antitrust to restrict consumers’ ability to access superior options.

A vast array of licensing schemes follows the same pattern. They hide behind masks of quality or safety but primarily keep new competitors out and keep those who would offer lower-quality–lower-price options some customers would prefer from doing so.

Leonard Read offers a powerful solution, powerfully illustrated by America’s own past.

Enough of this mischievous notion. Let us try instead to appreciate and “buy” the American ideal of freedom.

Ralph Waldo Emerson had this to say: “America is another name for opportunity. Our whole history appears like a last effort of divine Providence in behalf of the human race.”

As to the best in political economy, consider the Constitution of the United States. Regardless of its several flaws, no other nation’s charter has equaled it in an economic sense.

In what respect is this distinctively American? Here is the answer: “No state shall without the consent of the Congress, lay any imposts on imports and exports … “

In a nutshell, no tariffs, quotas, embargoes between the several states…the world has never known a free trade area as large as the U.S.A. when measured in value of goods and services produced and exchanged. Never perfectly free, but the nearest approximation to freedom!

In other words, the freedom to associate for productive purposes however and with whomever one chooses, because people were protected from many of the violations of that principle that governments have imposed throughout history, was the essence of the American miracle. And at its heart, as Thomas Jefferson wrote, was “the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.”

Further, Read’s focus on America’s free internal trade offers a counterpoint to a frequent misinterpretation. Those who defend protectionism as a valid principle claim that it was the protectionism adopted by the United States in the form of tariffs that advanced our staggering early economic success. While it is true that import tariffs were imposed, and eventually dramatically raised (see the history of the “Tariff of Abominations” as an example), that was not the source of our success any more than hurdles — which slow running speeds — should be given credit for increasing running speeds because hurdlers are fast. The reality is that the positive impact of our massive internal free-trade zone and other constitutional restrictions on government interference far outweighed the negative impact of international-trade restrictions.

Read then addresses one particular common defense of protectionism: the “infant-industry” argument that free trade may be good in general, but that industries must be protected until they can grow to a scale where they can compete, which amounts to a claim that the benefits of freedom require restricting the freedom that generates them.

In reality, it is competition which protects “infant industries” — it protects them from stagnation and persuades them to grow.

In the absence of competition and freedom of transactions, producers stagnate. It is only when others are doing better that one attempts to overcome, to gain strength. Competition, combined with free exchange, makes strong giants out of weak infants — this is the password to economic opportunity and well-being — an American idea well worth buying.

Read recognized that from the perspective of consumers it is the competition that takes place without artificial assistance or restriction that expands their options the most. It does not matter whether competition leads to a foreign producer who offers better terms because of superior efficiencies or if that producer is American. So there is no reason to artificially nurture American infant industries (which often claim to be infants virtually forever), because it is the results of real superiority that benefit consumers, and artificially tilting the playing field only inhibits the process that best discovers and passes on the gains of such superiority.

Read next turns to another test that rejects the logic of protectionism. If we accepted protectionism in principle, we would be for it in all cases. But, as he notes, we are all free traders when it benefits us. In other words, we recognize that we gain from free trade, except when we are the one benefitted by special treatment — necessarily at others’ even greater costs — by those restrictions. We abandon our own revealed preference for freedom only when bribed by receiving some of what is essentially stolen from others.

Regardless of all the noisy arguments to the contrary, everyone known to me favors both competition and free trade. Name one who does not favor competition among those from whom he buys. Logically, then, how can one favor competition among millions of others and be against it for himself! This is irrationality, not disagreement.

Precisely the same can be said for free trade — domestic or foreign. Name one who would not welcome an order for his products from another country or county. Everyone favors exports. Imports? Favoring exports and objecting to imports is the same as favoring selling and objecting to being paid. This is an absurdity, not disagreement.

Leonard Read realized that the logic of protectionism is riddled with errors and that the practice of protectionism, in its myriad forms, is theft that impoverishes everyone except those bribed by the gains of their protected status and those whose political clout greases those transactions. It is a far cry from either liberty or justice for all. Read’s conclusion:

What then is meant by “Buy American” in its proper sense? Let willing exchange prevail among all people, locally and worldwide. Let each buyer or seller be guided by his own scale of values. Sell the American way and buy the American way — not as presently practiced, but as once prevailed and ought to be reinstituted. Keep ours the land of opportunity for everyone.

Gary M. Galles is a professor of economics at Pepperdine University. Send him mail. See Gary Galles’s article archives.

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Copyright © 2012 by the Ludwig von Mises Institute. Permission to reprint in whole or in part is hereby granted, provided full credit is given.