Economics Dictionary of ArgumentsHome
| |||
|
| |||
| Government policy: Government policy refers to a set of principles, guidelines, or actions established by a governing body to address specific issues or achieve desired outcomes within a society or economy, such as economic growth, social welfare, healthcare, education, or foreign relations. See also Government budget, Government debt, Politics, Society, Economy._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
| Author | Concept | Summary/Quotes | Sources |
|---|---|---|---|
|
Murray N. Rothbard on Government Policy - Dictionary of Arguments
Rothbard III 945 Government policy/Rothbard: Payment/taxation: Payment is made (…) not by users on the basis of their voluntary purchases, but by a coerced levy on the taxpayers. A basic split is thus effected between payment and receipt of service. This split is inherent in all government operations. Police/school system: Many grave consequences follow from the split and from the "free" service as well. As in all cases where price is below the free-market price, an enormous and excessive demand is stimulated for the good, far beyond the supply of service available. Consequently, there will always be "shortages" of the free good, constant complaints of insuffciency, overcrowding, etc. An illustration is the perpetual complaints about police insuffciency, particularly in crime-ridden district, about teacher and school shortages in the public school system(…). Free market/Rothbard: In no area of the free market are there such chronic complaints about shortages, insuffciencies, and Iow quality service. In all areas of private enterprise, firms try to coax and persuade consumers to buy more of their product. Efficiency/Public sector/Rothbard: Where government owns and operates, on the other hand, there are invariably calls on consumers for patience and sacrifice, and problems of shortages and deficiencies continually abound.(1) Rothbard III 946 Price/market: The same is true, to a lesser extent, wherever the price is under the free-market price. >Free market/Rothbard. Government decisions: The government is faced with insuperable allocation problems, which it cannot solve even to its own satisfaction. Thus, the government will be confronted with the problem: Should we build a road in Place A or Place B? There is no rational way whatever by which it can make this decision. It cannot aid the private consumers of the road in the best way. It can decide only according to the whim of the ruling government offcial, i.e., only ifthe government oficials do the "consuming," and not the public.(2) If the government wishes to do what is best for the public, it is faced with an impossible task. >Government services/Rothbard. Solution/„Operation on business basis“: Government may (…) may genuinely try to find the true market price, i.e., to "operate on a business basis." [This] is often the cry raised by conservatives - that government enterprise be placed on a business footing, that deficits be ended, etc. RothbardVs: Almost always this means raising the price. Is this a rational solution, however? Efficiency: It is often stated that a single government enterprise, operating within the sphere of a private market and buying resources from it, can price its services and allocate its resources effciently. This, however, is incorrect. There is a fatal flaw that permeates every conceivable scheme of government enterprise and ineluctably prevents it from rational pricing and effcient allocation of resources. Because of this flaw, government enterprise can never be operated on a "business" basis, no matter how ardent a government's intentions. What is this fatal flaw? Taxation: It is the fact that government can obtain virtually unlimited resources by means of the coercive tax power (i.e., limited only by the total resources of society). Private sector: Private businesses must obtain their funds from private investors. This allocation of funds by investors, based on time preference and foresight, "rations" funds and resources to the most profitable and therefore the most serviceable uses. >Time preference/Rothbard. Rothbard III 947 Government/control mechanisms: Government (…) has no checkrein on itself, i.e., no requirement of meeting a test of profit-and-loss or valued service to consumers, to permit it to obtain funds. Privet sector: Private enterprise can get funds only from satisfied, valuing customers and from investors guided by present and expected future profits and losses. Government/rationality: Government gets more funds at its own whim. With the checkrein gone, gone also is any opportunity for government to allocate resources rationally. Gain and loss: The profit-and-loss test serves as the critical guide for directing the flow of productive resources. No such guide exists for government, which therefore has no rational way to decide how much money to spend in total or in each specific line. The more money it spends, the more service, of course, it can supply - but where to stop?(3) Solution/as if: Proponents of government enterprise may retort that the government should simply tell its bureau to act as if it were a profit-making enterprise and to establish itself in the same way as a private business. Rothbard III 948 RothbardVs: There are two basic flaws in this theory: (1) It is impossible to play enterprise. Enterprise means risking one's own money in investment. Bureaucratic managers and politicians have no real incentive to develop entrepreneurial skills, to really adjust to consumer demands. They do not risk loss of their money in the enterprise. (2) Aside from the question of incentives, even the most eager managers could not function as a business. For, regardless of the treatment accorded the operation after it is established, the initial launching of the firm is made with government money, and therefore by coercive levy. Arbitrariness: A fatally arbitrary element has been "built into" the very vitals of the enterprise. Rationality: Furthermore, future decisions on expenditures will be made out of tax funds and will therefore be subject to the same flaw. Rothbard III 950 Competition: In addition, the establishment of government enterprise creates an "unfair" competitive advantage over private firms, for at least part of its capital was gained by coercion rather than service. >Government services/Rothbard. 1. See Murray N. Rothbard, "Government in Business" in Essays on Liberty (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1958), IV, 186 ff. It is therefore characteristic of government ownership and "enterprise" that the consumer becomes, not a "king" to be courted, but a troublesome fellow bent on using up the "social" product. 2. Thus, the government offcial may select a road that will yield him or his allies more votes. 3. Cf. Ludwig von Mises, Bureaucracy (New Haven: Yale University Press, 1946), pp. 50, 53._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
||
> Counter arguments against Rothbard
> Counter arguments in relation to Government Policy
Authors A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Concepts A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
