Quote of the Day: Mises on Capitalism and Risk
Jason Kuznicki on Oct 17th 2007 06:11 am |
If I wanted to talk to liberals about libertarianism, and to suggest to them that it is a thoughtful, sophisticated political philosophy, rather than the caricature that is usually made of it on the left, I might begin with the following quotation from Ludwig von Mises’s 1957 Theory and History:
[T]he present-day bourgeois, those who are already wealthy capitalists and entrepreneurs, are in their capacity as bourgeois not selfishly interested in the preservation of laissez faire. Under laissez faire their eminent position is daily threatened anew by the ambitions of impecunious newcomers. Laws that put obstacles in the way of talented upstarts are detrimental to the interests of the consumers but they protect those who have already established their position in business against the competition of intruders. In making it more difficult for a businessman to reap profit and in taxing away the greater part of the profits made, they prevent the accumulation of capital by newcomers and thus remove the inducement that impels old firms toward the utmost exertion in serving consumers.
Those who have already succeeded, and who look to their self-interests in the narrowest sense, will try to use their successful position to prevent others from competing. The initial winners in the game of laissez faire try to pull up the ladder and prevent anyone else from climbing. Libertarians hope — vainly? — to stop all that. Liberals unwittingly help the process along by increasing the burden of taxes and regulation, even though this hurts consumers most of all.
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Or, in short, “no one hates capitalism more than capitalists.”
There’s also a great Hayek quote along the same lines where he talks about why calling it “capitalism” is a misnomer because that name implies that owners of capital are the prime (or intended) beneficiaries of the system, when in fact it makes their lives the most difficult.
I think running a war without taxation is ludicrous. There aren’t any programs, even the entitlements that spend that money per day as the war. My unsolicited two cents.
Not every liberal would have as much regulation as you would think, but their are a few things I’m squemish about, where unregulated industries would cause dead consumers.
I have several problems with the argument, in particular this statement:
“Liberals unwittingly help the process [suppression of competition] along by increasing the burden of taxes and regulation, even though this hurts consumers most of all.”
- it ignores that today von Mises’s “talented upstarts” (eg, high tech companies) often have no entrenched competition and in any event pay no taxes during the period when they are trying to build their businesses. Hence, they suffer no disadvantage due to taxation.
- it isn’t immediately obvious to me that a blanket statement that business taxes “hurt consumers most of all” is accurate. If one assumes (ideally) that taxes are set to match expenditures and that tax policy changes should be revenue neutral, then taxes can only be shifted. Whether any specific group is net helped or hurt depends on the specifics of the shift.
- a blanket condemnation of “regulations” seems naive. No FDA approval for drugs, meats; no fair lending practices; etc? Some qualifier seems appropriate.
- IMO all statements of the form “liberals/conservatives/libertarians” do foolish thing X are content-free and indicative of sloth. If the target is those who know little about business tax policy and its effects, I think you can rest assured that the typical “conservative/libertarian” falls into that group with roughly the same frequency as the typical “liberal” since most people in general do. If you have in mind people who know and care enough to have an informed opinion, saying “those who support X are wrong because …” conveys the position minus the negative aspersion.
None of which is meant to argue for or against any given level of business taxation and regulation, just to suggest that the issue is much more complex than the statement implies – and to point out the irony of imbedding an implicit stereotype of “liberals” in an appeal for them not to stereotype “libertarians”.
- Charles
Charles,
You write,
[The above] ignores that today von Mises’s “talented upstarts” (eg, high tech companies) often have no entrenched competition and in any event pay no taxes during the period when they are trying to build their businesses. Hence, they suffer no disadvantage due to taxation.
A startup business that is only marginally profitable will suffer from taxation more than one that is entrenched and able to draw on more extensive financial and tax-related resources.
it isn’t immediately obvious to me that a blanket statement that business taxes “hurt consumers most of all” is accurate. If one assumes (ideally) that taxes are set to match expenditures and that tax policy changes should be revenue neutral, then taxes can only be shifted. Whether any specific group is net helped or hurt depends on the specifics of the shift.
I’m not sure I accept this ideal assumption. First, deficit spending is generally the rule, and this means paying back what the government borrows plus interest. Also, just because a policy change is revenue neutral doesn’t mean that it’s harmless to innovation.
Suppose a revenue-neutral tax policy change is being debated. Who gets to spend the most money lobbying for favorable tax measures? The companies that are already in existence and already wealthy. Presumably, then, tax policy changes will be more favorable to the companies that spend the most on lobbying. This can’t possibly be fair to smaller businesses or to startups that haven’t been created yet. But these last are the businesses that tend to innovate and do the most for consumers, both in terms of price and quality.
a blanket condemnation of “regulations” seems naive
You’re right. I would not dismantle all regulations. I do think, however, that the problem stated above is endemic to regulation, and even regulations that aim at good ends — pure food and water, for example — can be skewed inappropriately.
IMO all statements of the form “liberals/conservatives/libertarians” do foolish thing X are content-free and indicative of sloth.
Point taken. Yet where are the liberals who want to simplify or cut taxes? Where are the liberals who would simplify or cut the regulatory burden? The only ones that fit the bill are the classical liberals, like von Mises.
My first point was that whether “increasing the burden of taxes” on business in general in fact “hurts consumers” depends on specifics. I think your replies reinforce that point.
The question isn’t “where are the liberals who want to simplify or cut taxes?” but “where are those who want to have a serious, knowledgable discussion of tax policy?” It isn’t apparent to me that members of that rare breed reside mostly on the right, and it’s unequivocal that they don’t reside exclusively on the right. Champions of “lower taxes” per se certainly do, but that hardly qualifies as “serious, knowledgable discussion”.
That’s where the “sloth” in my comment comes in. Partisan slogans are easy (and IMO, pointless); serious discussion is hard. I welcome the latter, though only as a modestly informed reader – I have no expertise to contribute. The former are merely irritating.
- Charles