Rebirth of Reason

War for Men's Minds

Snapshot Thinking
by Barry Kayton

The free market is sometimes criticised as short-sighted. Some critics point to historical examples such as the great voyages of discovery, the US space program, the construction of large-scale dams or the development of the Internet, where private enterprise has been slower to respond than governments. Their criticism goes something like this, "Look, if we erase the government from this picture, the following fantastic benefits are lost. So surely there’s a definite role for government to lead such long-range, high-risk projects, which ultimately bring substantial benefits?"

This is an example of what I call “snapshot thinking”, which attempts to hold almost everything constant while changing the role of government from intervention to non-intervention, and concludes that non-intervention causes one or more negative effects.

To see why this is faulty reasoning, consider this analogy. You’ve got a snapshot of the balls scattered around a pool table. You notice that you could probably bounce the blue ball off the red ball and into a pocket and you think, “Without the red ball I wouldn’t be able to sink the blue one.” The only problem is that the snapshot is an illusion. In fact, all the balls are in motion and two or three are already heading towards different pockets. The still photo merely gives the impression that they are at rest.

Similarly, don’t assume a non-interventionist government and at the same time assume that “all other things are equal”. When you eliminate government intervention you eliminate all its inherently negative effects (such as market distortions and the violation of individual rights). But beyond this you also need to make assumptions about culture and the effect of this form of government over a period of time. Here are some of the many corollary assumptions that need to be made:

  • A laissez-faire government’s budget is a fraction of what it is now because it is limited to its core functions: national defence, policing and the administration of justice.
  • Surplus capital that would have been collected as tax and destroyed by wasteful government programs is instead employed productively (some of it in projects such as space exploration).
  • Consequently economic growth, technological development and the further accumulation of capital are staggering, while unemployment is low or non-existent.
  • The government plays no role in any of the traditional social services (health, education, social security, etc.) which are instead provided more efficiently and effectively by many competing private institutions.
  • As a result of private education and greater personal responsibility, individuals are generally motivated to be much more rational than at present. Government is seen as having a very specific purpose (the protection of individual rights) and no other role but this.
  • Private property rights are developed to an advanced state and include: beaches, rivers, dams, ports, light-houses, emergency services, airwaves, etc.

When you accept that this is the full context of a non-interventionist government you realise how far from a free market our mixed economies actually are. You should remind critics of the “free market” that what they criticise is not at all a free market but is in fact a mixed economy. If they reply that you’re being rationalistic and that you’re trying to define away their criticisms, you need to point out that the difference between a laissez-faire and a mixed economy is not a matter of degree but a matter of principle -- with radical implications. After all, it is not the free market that is short-sighted, but its critics.

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