G. Edward Griffin


    Those of us who advocate less government, hold to certain economic principles which we believe to be in accord with the freedom our Constitution was designed to protect. To describe ourselves accurately in this category, it would be proper to say that we are--are you ready?--laissez-faire capitalists.

    I never knew what a laissez-faire capitalist was until I went to college. And then, I learned that it was a big, fat man--with an expensive cigar, a diamond stick-pin in his cravat, spats on his shoes--sitting on a huge bag of money squeezed out of the exploited toil of frail women and starving children. Seriously, if anyone had told me then that he was a capitalist, much less a laissez-faire capitalist, I would have thought that he was the meanest, greediest man in the whole world. It wasn't until many years later that I found out what those words actually meant. And, lo and behold, I was shocked to discover that I was a laissez-faire capitalist!

    Laissez-faire capitalism merely means the private ownership of property--in other words, owned by the people instead of by the politicians--with a minimum of government, interference in the market place. Laissez-faire means, simply, "Let the people do it."

    Now, let's get one thing straight right here. There are very few rich people who actively defend economic freedom. I wish we had more, but we don't. Most of us come from the lower and middle economic levels of the nation. In other words, we're part of that broad middle class that still works for a living and pays the taxes. Frankly, we would like to become rich if we could, and I think most of you would, too. Even our socialist friends would like to be rich socialists. They don't object to wealth. It's just the other guy's wealth that bothers them. As a matter of fact, some of the richest people in America are socialists. Millionaires like Cyrus Eaton, Nelson Rockefeller, and others of the same political bent are not capitalists. They're just rich socialists. The amount of money they have means nothing. What makes a person a capitalist or a socialist is what he "thinks", not what he has. We who believe in economic freedom "think" laissez-faire capitalism!

    The desire to become rich, of course, is by no means our only motivation for promoting free enterprise, nor even our primary motivation. We're quite aware that, in spite of our best efforts, most of us will never accumulate vast wealth. But it's our firm conviction that laissez-faire capitalism not only makes it possible for some to enjoy the true luxury of riches but, more important than that, it enables all the rest of us to raise our standard of living far in excess of what is possible under any other economic system. And this is the key.

    No one wants to see people go hungry or live in poverty. And the one thing that collectivists and individualists hold in common is their desire to produce a system that will raise the level of the poor. Their differences lie, as always, in how to achieve this goal. The collectivist is not very complicated in his approach. He looks around him. He sees some very rich people living "high on the hog." he sees poor people with barely enough to get by. He remembers the old Robin Hood movies and, eureka, he's got the solution! Take it from the rich and give it to the poor. What could be simpler than that? It's the perfect solution, except for one minor detail. It doesn't work!

    One reason why it doesn't work, never has worked, and never can work. is that the rich just don't have enough to go all the way around. for instance, on the international scene, we know that the United States, by comparison to the rest of the world is a very rich uncle. Yet, if we had some magic device for converting everything of value in this country into cash and then dividing it equally among the people of the world; if we could tear down every building brick-by-brick and cash them in--including the value of the labor, if we could cash in all the machines, roads, automobiles, TV sets--everything except the clothes on our backs, do you have any idea to what extent we would raise the standard of living of the people of the world? They would be allowed to eat and dress and live like we do in this country for about one week. And then it would all be gone.

    If all the millionaires in America were taxed 100% of their incomes each year--not a single penny left for themselves--it would run the federal government for less than thirty-nine hours. In fact, if all the income were taken from those making only $25,000 a year or more, if they were allowed to keep nothing for themselves, it would still run the government for less than seventy-two hours.

    Now, when you consider these facts, several things become rather obvious. First, it's the little guy who's paying most of the taxes. And, secondly, it always will be the little guy who pays most of the taxes, because, even if we take it all away from the rich man, there just isn't enough to do the job.

    The point is simply this. You cannot help the poor by pulling down the rich. It may make you feel better to do so. You may envy the wealth of others. You may resent the attitude and behavior of those with wealth. You may feel that they don't deserve it. You may be a politician who knows you can always get votes by promising to soak the rich, but if your concern really is only for the poor, then you're wasting your time. You cannot help the poor by pulling down the rich.

How, then do you help the poor?

    Well, first of all, individualists recognize that there is no utopia. There will always be those who, for a variety of reasons, will be unable to produce: infants, the sick, the lame, the mentally retarded. And we also recognize that the only way for these unproductive individuals to live at all is off the surplus of those who do produce. That's basic. The problem before us, then, is how to expand the surplus. Unless we can do that, the poor shall stay poor, no matter how much we wish to help them.

    Following this in sequence then, how do we expand the surplus? How do we achieve a situation in which each productive human being becomes increasingly more productive? The answer, of course, is that the productive individual must be given some incentive for making an increased effort, for working harder, or longer, or for investing in tools. Few people choose to work unless they are motivated by some incentive outside of the work itself.

    There are four kinds of human incentive: fear (the motivation of the slave), hate (the motivation of the victim), altruism (the motivation of the philosopher), and fourthly, desire for reward (the motivation of everyone). Of the four, the desire for material reward is, by far, the most powerful and sustaining incentive for most people.

    It follows therefore--and please note this carefully-- the degree to which government taxes away the material rewards from those who produce in order to give to those who do not produce, is the degree to which government destroys the incentive to continue producing; and, hence, is the degree to which it reduces the surplus and hurts those who must live off that surplus, the very people, supposedly, it's trying to help.

    We all know of cases where the progressive income tax, for instance, has discouraged a wealthy businessman from expanding his business. The man says to himself, "Why should I take on a new business venture? It would only mean more work and more headaches. And why should I risk my capital? I could lose everything. On the other hand, if I did everying right, made no mistakes at all, the government would only take most of my profits anyway, so why do it?" And he doesn't do it. Which means there's one more business never begun, one more factory never built, thousands of jobs never created, millions of dollars never added to the surplus. And who is hurt by this process, the rich man? Of course not. True, he may not become quite as wealthy as he would otherwise, but he continues to live very well, indeed. In the final analysis, government manipulation of the market place always hurts the poor far more than the rich. And this is a fact of life the collectivist never seems to understand. Minimum wage laws are a classic example of this phenomenon. Every time Congress raises the minimum hourly wage rate, untold thousands of marginal workers--the handicapped, the very old, the unskilled--lose their jobs. In 1967, for instance, when the government raised the minimum wage to $1.40 per hour to help those in the lower wage brackets, over a half million such workers lost their jobs. Their employers simply couldn't afford to pay the new rate. As a matter of fact, thousands of small businesses were forced to close down and go out of business altogether because of the government's action. Thus, not only did those in the lower income brackets lose their jobs, but some of those in the higher brackets, as well. But since they were skilled workers, they had little difficulty finding new jobs. As always, it is the marginal worker, the poor, the handicapped, that are always hurt most by the very government programs which, supposedly, are for their benefit.

    The collectivist approach always is to divide up the existing economic pie into equal shares, to make sure that no one gets any larger or smaller piece than anyone else. Of course, you may have noticed that those in charge of dividing the pie usually wind up with a larger piece for their "equal" share. This, by the way, is one of the great contradictions between Marxist theory and practice. In theory, Communism is a classless society. Everyone, supposedly, belongs to the same class with no economic differences or privileges. Yet, in practice, in every country where Communism has come to power, the Commissars and cadre of the Communist Party live like kings, while the workers and peasants continue to struggle for the bare necessities of life.

    The individualist recognizes the fact that, under any system, someone is going to have more pie than others. The only question is, who is it going to be? Should it be the politicians and bureaucrats who divide the pie? Or should it be the people who have worked to make the pie? If the dividers of the pie get the larger piece, then the producers slow down and there's less pie for everyone. But, if the producers are allowed to keep what they produce and dispense the surplus as they see fit, then they'll invent, they'll invest, and there'll be more for everyone. And then, those who have even the smallest pieces out of the larger pie, will end up with more pie than those who are stuck with equal pieces, so-called, out of the smaller pie.

    Now, that's a lot of pie for an analogy, but it's an accurate summary of the humanitarian function of the free enterprise system and the reason why, in less than 150 years. this nation sprang up from a hostile wilderness and became the envy of the collectivist Old World.

    Of course, the free enterprise system no longer functions in America. We're kidding ourselves if we say it does. We've returned to the womb of the Old World concept. We're traveling now almost entirely on momentum. Daily we see an expanding government destroying the incentive of its citizens to continue producing. And daily we approach the end of the line.

    But the voter of today is told nothing of this. He is told that we are living in a free enterprise system, that all the economic problems and failures are traceable to that. Capitalism is in crisis, he's told and the only solution is to replace it with socialism. Good grief, it was replaced with socialism years ago! The failures of today are socialist failures. Not capitalism, but socialism is in crisis, as it always has been.

    Over a hundred and twenty years ago a French economist by the name of Frederic Bastiat wrote an essay entitled The Law. It contains one of the clearest and most compelling statements of political philosophy that you'll ever find. In straight-forward language and logic Bastiat proves beyond all doubt that the proper function of government is to protect the lives, liberty, and property of its citizens, but not to provide for them. TO PROTECT AND NOT TO PROVIDE. For in order to provide for some, it must first take from others. And once it has been granted the power to take from some and give to others, then it becomes a potential mechanism for legalized plunder. The control of that mechanism becomes highly coveted by individuals and groups who wish to line their own pockets out of the taxes taken from someone else. They attempt to bribe politicans, or buy their own way into office, or form into pressure groups with powerful lobbies at the seat of government. Everybody wants in on the "take." Businessmen clamor for tariffs and price-fixing laws so they can charge higher prices. And when the consumers discover what's going on, instead of calling for the elimination of all such government favoritism, they merely start demanding that they get theirs, too. Labor unions clamor for minimum wage laws, farmers nuzzle up to the trough and demand price supports, the unemployed want benefits, families want apartments, students want grants, colleges want subsidies. The entire process spirals around and around until, finally, everyone is plundering everyone! And in the end, when taxes skyrocket to the point where there's nothing left to plunder, the whole system collapses, and the game is over. All that left is the plundering mechanism, itself--total government--and freedom is lost.

    This process described by Bastiat over 120 years ago is exactly what's happening in America today. And his warning about the end result of that process constitutes still a third reason why we champion the free enterprise concept. Even if collectivism were not morally wrong, even if it did produce a higher standard of living, we would still oppose it, because freedom is more important than prosperity.

    To resist a tyranny, you must be independent of that tyranny for your subsistence. If the government provides your food, your clothing, your shelter, your education, your job, your medical, your retirement, then the government controls you most effectively, indeed. If that government should ever become tyrannical--and they have a way of doing that in history--then, you've had it, my friends.

    We believe that one of the greatest lessons history that so desperately needs to be re-learned by the American people--our forefathers knew it well--is this: Anytime a government is powerful enough to give the people everything they want, it is also powerful enough to take from the people everything they have. You cannot have one without the other.

    We believe, therefore, that government is too big! That's the problem. If we really want to preserve freedom, we need to talk about ways and means to reduce the size and reach of government, itself. This goal is summarized very concisely by the motto: Less government, more individual responsibility, and, with God's help, a better world.

Copyright 1972 by G. Edward Griffin

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