A Society of Contract or of Status?

by Don Boudreaux on July 17, 2012

in Adam Smith, Complexity & Emergence, Myths and Fallacies, Other People's Money, Taxes

Here’s a letter to the Wall Street Journal:

James Taranto rightly criticizes Pres. Obama’s assertion that any individual’s success in the market is so overwhelmingly the result of the efforts of other people – such as those who build roads, staff courts, and do the myriad additional tasks that make society possible – that no successful person really has a defensible moral claim against the government on his or her ‘private’ wealth  (“Political Correctness and Racial Tension,” July 17).

Like Mr. Obama, all serious people understand that modern society results from the efforts of millions of people.  Adam Smith – no supporter of an expansive state of the sort that Mr. Obama champions – famously marveled that the production of an ordinary woolen coat requires countless workers, nearly all of whom are strangers to the coat’s owner.  More recently, in a memorable segment of the PBS program “Free To Choose,” Milton Friedman explained that a seemingly simple pencil is in fact so complex that it can be produced only through the efforts of millions of workers spread across the globe.

But Smith and Friedman and other people of good sense understand also something that Mr. Obama does not.  They understand that the agreements through which each of millions of people contracts to contribute to the production of coats and pencils and peas and policing and roads and barges and engineering textbooks and on and on and on are not open-ended.  Selling wool to tailors does not thereby give shepherds an open-ended claim upon the wealth of coat owners.  Government’s success at persuading taxpayers to fund the hiring of more teachers and the construction of new highways does not thereby give government (or teachers or highway workers) an open-ended claim upon the wealth of private citizens who benefit from these teachers or who use these highways.

Such open-ended obligations would mean that people aren’t citizens represented by government so much as they are slaves ruled by the state.

Sincerely,
Donald J. Boudreaux
Professor of Economics
George Mason University
Fairfax, VA  22030

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