Consequences and Responsibility

Because I just can’t seem to get along with having only one or two books in process at a time, I started reading Money, Greed, and God: Why Capitalism is the Solution and Not the Problem by Jay W. Richards. It’s another book I bought years ago but never read. When I saw it the top of a stack in my bedroom last week, I decided it was time. So far, so good. Richards does a good job of explaining basic economic principles and illustrates with examples that are easy to grasp. One of the first principles he discusses is the importance of of realizing the need to be concerned with outcomes, not intentions:

Our minds and our motives aren’t isolated compartments. God gave us minds and reason, so we’re responsible for thinking through the consequences of our actions. In fact, it’s morally self-indulgent to feel good about our motives when it comes to actions that affect the world. When the focus is personal spiritual growth—sure, we should examine our motives. But when it’s time to roll up our sleeves and actually try to help someone, fixating on our motives can become a stumbling block. It can distract us from discovering the right action at the right time. …

Helping the poor, for instance, hinges on prudence. That’s because, in the economic realm, actions have all sorts of unintended consequences. We can’t anticipate all of them. But we can anticipate a lot of them. Therefore, if we really want to help the poor, we have to exercise prudence—to know what the world is really like, and act accordingly.

Henry Hazlitt, an economic journalist, thought this was so important that he defined economics in terms of consequences. “The art of economics,” he said, “consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

Richards then goes on to cite some specific examples in which consequences differ significantly from intentions. For instance, minimum wage laws:

To a business, employee wages are costs. The fact that Washington sets a minimum wage doesn’t mean an employer can pay it. That’s why countries with high minimum wages like France tend to have higher unemployment than countries with low minimum wages (like the United States). That’s no surprise. A wage is a price on a commodity—labor. Different kinds of labor, such as dishwashing and retina surgery, are going to have different values economically, depending on the who, where, when, what, and how of the labor. A minimum wage fixed by law ignores that reality. It’s a form of price fixing that tries to distribute wealth before it’s been created. …

The people most likely to suffer from these laws are those at the bottom: unskilled, young, inarticulate, and handicapped workers, who need to grab the bottom rung of the economic ladder. Raise it too high, and the rung is out of reach. In a diverse economy, remember, low-paying jobs are entry-level jobs. Like it or not, some people need entry-level jobs very close to the ground floor. Few people stay in these jobs forever. The experience and connections that such jobs provide can be more valuable than the salary itself. Minimum-wage laws favor vocal and visible workers over the vulnerable workers who can least afford to be unemployed. Good intentions don’t change that.

His explanation of subsidiarity (a concept I wish more people understood) is particularly good:

A centralized government knows less about individual problems than does practically anyone closer to the problem. …

Think of responsibility as a cluster of overlapping circles of jurisdictions. The person or group with the narrowest jurisdiction has the most detailed knowledge and the most responsibility. The narrowest jurisdiction is the responsibility I have for myself. I know a lot more about what I need and when I need it than anybody else does. …

If the mayor of Grand Rapids, Michigan, where I now live, suddenly had to assume responsibility for feeding me, giving me my medicine, and telling me when to breathe, he’d botch it, and I’d probably be dead, even if he’s a member of Mensa and has a saintly disposition. And if he took over these responsibilities for years (assuming I lived), I might eventually forget how to do these things for myself.

Of course, none of us is Robinson Crusoe; sometimes we need help. Parents take care of their children for years before those children can take care of themselves. Two-year-old Maria Gonzalez from Quana, Texas, isn’t responsible for herself. Her parents are. That’s the narrowest jurisdiction. It’s only when parents are abusive, incompetent, or absent that other family members need to get involved. If no other family or neighbors are around, a church or nonprofit should step in. If that doesn’t happen, the city or state government might have to step in. The federal government should be the last resort, because the more levels up the responsibility moves, the more Maria will have to be treated like a generic toddler: the more distant the jurisdiction, the less knowledge of the specific toddler. …

This is the problem with welfare dispensed by the federal government: it runs roughshod over this intricate web of overlapping responsibilities and assumes knowledge where none exists. When the federal government jumps in and ignores this intricate web, it violates the principles of subsidiarity. That’s a fancy word for a simple idea. Here’s how Pope Pius XI explained the principle:

Just as it is wrong to withdraw from the individual and commit to a group what private initiative and effort can accomplish, so too it is an injustice for a larger and higher association to arrogate to itself functions which can be performed efficiently by smaller and lower associations. This is a fundamental principle. In its very nature the true aim of all social activity should be to help members of a social body, and never to destroy or absorb them.

When the state takes over a task that is better handled by someone closer to the problem, it transgresses its proper boundaries and creates more problems than it set out to solve.

For the last forty years, we’ve reflexively looked to government to solve every problem, especially social problems. Child care, children’s health insurance, rapid response to hurricane damage, homelessness, drug abuse—you name it, and somebody in Washington, D.C. is supposed to take care of it.

I’m only 51 pages into the book. I imagine as I read further I’ll find more good passages to share.

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