This is a reply to a post written by callmebeerbaron, under the article, Senator Booker derides the notion of ‘rugged individualism’ on American Thinker  

Callmebeerbaron is not unique in his misunderstanding. Even the President could use a good deal of education in this topic. This comes under the heading of “institutions”. Very few people understand the functioning of institutions. I have written about socialism and I will be writing more on the topic of institutions, both generally, as this essay is and on particular institutions, as in the case of socialism.

Callmebeerbaron wrote,

“How is this is any way controversial? If there were no government, there are no roads. No GPS, no internet. There are no rules to prevent every town in America from being like Flint and drinking actual poison. There are no armies and no borders. Wannabe “Rugged Individualists” can pretend all they want, but since roughly the end of the 18th century there is simply no such thing.

I for one prefer the modern world to living in a log cabin crapping in a hole in the ground. There are plenty of flyover states where you can wander off the grid and still aspire to live that life, but for the rest of us it turns out that the interdependent and advancing nature of society is actually a good thing.”

There are far too many people, even on the right, who don’t have a very good understanding of this topic. The “you didn’t build that” crowd is just as ignorant as the “rugged individualist” crowd. If I only react to your post it becomes a back and forth tennis match of unsupported opinion. I decided to bring out the heavy artillery in the beginning.

You are overreacting from the left just like the “rugged individualists” overreacted from the right. You also have the relationship priorities reversed. Private enterprise comes first in its development and needs. Then government comes next and provides the important institutional infrastructure that the private markets need to continue, even to grow and innovate. This has gotten lost in the mists of time and growth of institutional complexity. The complaint from the individualist side is that the collectivist side has claimed supremacy in the relationship. When economically and historically the private sector has been and should be the equal if not the senior partner in the relationship. Your own comments provide a lot of fuel for that resentment.

The complaint is that the government has gone from supporting the growth of private enterprise and benefiting from that, to now behaving as if it invented all of the institutional structures, and claiming that it is now the senior partner and that it will be making the decisions from now on. Even worse it is now misbehaving by manipulating the private markets for its own reasons, including the misguided notion that it’s decision making abilities are inherently superior to that of private individuals and markets and worse yet, intervenes corruptly. This corruption can be seen in a variety of ways, including sugar subsidies and tariffs, ethanol regulations, the Import-Export Bank, solar subsidies, fossil fuel subsidies, minimum wage laws, failing to secure borders and control the entry of non-citizens, and murdering sellers of cigarettes because they haven’t paid taxes to do so. This last is a reference to Eric Garner.

Private individuals, private enterprises and private markets don’t belong to government. But as government has grown to provide more institutional support it has begun to behave as if it’s the owner. This is an important change in the relationship. The collectivist sphere has come to look at the private sphere as no more than an adjunct to its governmental aspirations. It sees the private sector as just an economic servant, a producer of wealth for government purposes.

The main institutional function of the government should be to provide the legal muscle to enable the private side to perform its function. All of the things you wrote, such as armies, roads and borders require legal force, something that private institutions lack. This includes laws and the power to enforce them. There is no question that private markets need government, but government is subverting the very process it should be supporting. Borders and non-citizens?

A great source that deals DIRECTLY with this topic of “who built it?” is Douglass C. North. He is a Nobel Prize winning economist. His paper, “Institutions”,  written in 1991 uncannily predicted the argument over this topic. It is 21 pages long, and available for free on the internet. I got it from JSTOR. This paper provides a tremendous amount of back up for what I have just written. He has written a lot more, of course, but this has the essential points. He does not write this from a political perspective. He is writing as an economic historian.

North wrote extensively about the development of institutions and especially why Western Europe developed into a wealthy continent and others did not. His point is that what came first was NOT the government infrastructure. There was government, but at first it was not only incapable of supporting productive enterprise, it stifled it.

What came first was the wealth producing activities, such as production and especially trade. In the Middle Ages private individuals were creating wealth, but in many areas the local lord was interfering too much. Mostly over taxing, robbing his subjects and not protecting them from private robbers, either.

The merchants needed larger markets and so traveled to great fairs in the Middle Ages to access more customers and suppliers. The merchants traveled through and to those areas where the lord provided security for their person and property.

This then began to include other non-governmental enterprises, such as banking. If the local lord robbed the bankers, the bankers would leave. The banker also needed the lord to help enforce his contracts. A mutual relationship was born. So, part of the lesson here is NOT that the local lord was so smart that he created roads and security and banking in the hope that the merchants would come to his jurisdiction. It was the opposite.

In return for security, better roads, better laws and proper law enforcement, the lord received taxes. The more productive enterprises there were in his area, the more taxes he could levy.

So, the point is that the infrastructure provided by today’s modern government is in response to the needs of the private producers and did not come before there were private producers.

Certainly today there is a more connected and symbiotic relationship between the private market and government. But don’t misunderstand what comes first or ignore the idea that government is our servant and we as citizens decide what’s best and not government.

It is hard to control a partner that is the muscle side of the partnership. It is literally the same as having the Mafia for a partner. Eventually, the guy with the gun is going to realize he can control the relationship for his own purposes and the other partner is his economic hostage. Government has become no better than a legal, national Mafia. It needs to be tamed and brought under control.

 

http://vandanson.com/wp-content/uploads/2016/07/161729493.jpghttp://vandanson.com/wp-content/uploads/2016/07/161729493-150x150.jpgVanDansonEconomicsInstitutional EconomicsTrolling for NonsenseDouglass C. North,institutions,rugged individualism,you didn't build thatThis is a reply to a post written by callmebeerbaron, under the article, Senator Booker derides the notion of 'rugged individualism' on American Thinker   Callmebeerbaron is not unique in his misunderstanding. Even the President could use a good deal of education in this topic. This comes under the heading of 'institutions'. Very...Countering the Myths of Economics and Politics