Quotation of the Day…

by Don Boudreaux on March 1, 2020

in Crony Capitalism, Hubris and humility, Man of System, Reality Is Not Optional, Virginia Political Economy

… is from page 262 of George Will’s superb 2019 book, The Conservative Sensibility:

Government, Burke said, exists to deal with wants. Modern government, however, exists in part to generate wants, to stimulate appetites for public goods and services that the political class will be rewarded for providing.

DBx: Yes. Why so relatively few ordinary people see this reality is a mystery, for they, in the end, are victimized by this political dynamic.

Not mysterious at all, however, is intellectuals’ role in this process of expanding the reach and power of government. Intellectuals are prone to fancy themselves as the designers and supervisors of – and as the consultants to – all such government interventions. The typical intellectual – and, increasingly, regardless of where he or she perches on the political spectrum – is under the delusion that social and economic arrangements that differ from the ideals floating in his or her head can and should be engineered to look more like what floats in his or her head.

What arrogance.

Of course, the only agency apparently capable of such an engineering feat is the state. That society and economy are so unfathomably complex as to make the state in fact incapable of such successful engineering is a reality utterly lost on most intellectuals.

Yet the situation is worse even than is conveyed in the above quotation from George Will. The reason is that, because the state has the power to coerce, holders of state power can extract payments from private people simply by ‘promising’ not to inflict harm on them. “Nice access to low-cost inputs from China you have there, Mr. Factory Owner in Alabama or Ohio. It’d be a shame if that access were obstructed by tariffs, now wouldn’t it?

The late legal and economics scholar Fred McChesney, in his pioneering 1997 book, Money for Nothing: Politicians, Rent Extraction, and Political Extortion, offered a compelling theory of rent-extraction: politicians are not mere sellers of the tariffs, export subsidies, occupational-licensing restrictions, and other special privileges; politicians actively produce these privileges. And they profit both by creating, selling, and imposing such privileges and by threatening to create and impose such privileges and then refraining from carrying out their threats. In each case the outcome is determined by which private faction bids the most: those who gain from imposition of the special privilege or those who would be harmed by that imposition.

Politics is a racket. And politicians are, of course, major players in such racketeering. The notion that politics and politicians can be relied upon to use discretionary power to bring society and economy more in line with some intellectual’s ‘vision’ is completely bonkers – unless, of course, that vision is a society and economy ever-more like one infested with the Mafia, a society and economy swollen, poisoned, and debilitated by rampant rent-seeking and rent-extraction.

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