Sunday, January 23, 2011

Healthy government protects citizens, their property

Published in The Tennessean, Sunday, January 23, 2011

Healthy government protects citizens, their property

by Richard J. Grant

With the advent of personal computers, we heard talk of something called the “information society.” It is certainly true that this new technology enabled us to save, process, and communicate certain types of information more cheaply and efficiently than ever before. But a bigger truth is that we have always lived in an information society.

Thousands of years ago, the acquisition and interpretation of information was no less important to the survival of our ancestors than it is to ours today. Knowledge of how to find food and to evade enemies and other threats has always been important. We have also benefited from the improvement and use of tools and the expanded production of consumer goods that this made possible.

We see the still-evolving Internet as a great and complex innovation, which it is. A spinoff from Defense Department research, it took on a life of its own. But even the Internet, with all its power and potential, is but a relatively crude tool compared to that resilient human-network phenomenon that we call “the market.”

We speak of the market as being the product of human action, but not of human design. Nobody invented, or even thought of inventing, “the market.” As a network of human trade relations, the market, in this broader sense, just emerged. It was natural for individuals to trade goods and services and to produce whatever they couldn't find. Such individual trades enabled goods to change hands many times and to travel long distances.

Such trades generate a type of knowledge that could not exist otherwise. The act of trading reveals information about the desires of the traders and about the availability of the goods that are exchanged and of any resources needed to produce them. By necessity we are interested in prices, quantities, and qualities. Knowledge of particular prices from recent trades tells us how much of one good we might expect to receive in exchange for another.

We are best-served in such relationships when the trades are voluntary and free of coercive interference. Only then can we be sure that the traders are acting on their true preferences and are able to offer their best goods and services.

No matter how sophisticated and powerful our communication technologies become, markets will always remain a human phenomenon. No machine, or committee, or politburo can ever do more than guess at the types of choices that individuals would make. This is why the centralization of economic choices by governments, whether through regulation or direct control, tends toward disappointment.

In this sense, when we coercively collectivize an activity, we tend to dumb it down. That is why successful societies, the societies most likely to survive and prosper, are those in which individuals are relatively free from the coercion of freelance thugs or government officials.

Private associations and corporations distinguish themselves from governmental organizations by their voluntary nature. They demand a mutual respect for each individual's property and person. This is civil society; and this is why private forms of association are superior for most types of activities.

Governments earn their keep only to the extent that they assist in the protection of citizens and residents against force, theft, and fraud. A healthy government will assist in strengthening the definition and enforcement of private property rights. An unhealthy government will infringe on those rights and yield incivility.


Richard J. Grant is a professor of finance and economics at Lipscomb University and a scholar at the Tennessee Center for Policy Research. His column appears on Sundays. E-mail: rjg@richardjgrant.com

Copyright © Richard J Grant 2007-2011