Saturday, December 10, 2011

Shared Sacrifice and the Government Game

Originally written in the Fall, 2010 [after the 2010 election]

Almost 40 years ago, in his seminal The Machinery of Freedom, economist David Friedman offered the following explanation (which I paraphrase from memory) of the working of government. He called it the “government game.” Here’s how you play:
Imagine 100 people sitting in a circle. You, the government, move around them. Each round, every person puts $1 into the circle. $1 is not much. Each person thinks little of it. You, the government, collect the 100 dollars. You then put $50 in front of one person. $50 is a windfall! The person celebrates his fortune. This game is played for 100 rounds. Each round you place the $50 in front of a different person. At the end of the game, each person is $50 richer, $100 poorer, and happy.
We are now playing—or preparing to play, or alleging we are preparing to play—the government game in reverse. We are preparing to cut government, and there is a great gnashing of teeth. The Sunday morning pundits are all talking of “shared sacrifice,” as are the members of the Simpson-Bowles committee. Even Senator Tom Coburn (R-OK), the physician-turned-senator known as Dr. No because of his so frequent votes against spending, speaks of shared sacrifice.
To quote the President, let me be clear: When Lincoln freed the slaves, he did not speak of shared sacrifice. He did not lament the loss to slaveholders of their chattel and he did not mourn the move of the former slaves away from guaranteed employment. 
If the more than $100 billion spent yearly on rather obvious corporate welfare schemes were eliminated, it is true some corporations—specifically, those who had grown accustomed to feeding at the taxpayer trough rather than earning a meal in the competitive marketplace—would be worse off. But the taxpayers—and we are all taxpayers—would be better off. 
If the tens of billions in subsidies given yearly to major agribusiness concerns (known publicly as “the poor farmers”) were ended, some people in those industries might lose their jobs, and Archer-Daniels-Midland shareholders might suffer. But consumers at the grocery stores—and we are all consumers at grocery stores—would be better off. 
The US cost of sugar is twice that of the world market as a result of government quotas. Ending these quotas will cost a few bureaucrats their jobs, and it would likely lower the salaries in American sugar-producing corporations. But the cost of items that use sugar will drop, benefiting most Americans. Confectionary companies that have moved abroad because they could no longer compete in the world market while buying artificially high-priced American sugar might come back, bringing new jobs with them. 
This is not “shared sacrifice.” This is the sacrifice of those who have previously benefited from government largesse—this is the sacrifice of special interests! These sacrifices benefit the overwhelming members of the public. This is something we should do even if there were no deficit problem.
Granted, our government has grown so great that most of us are, in one or another aspect of our lives, beneficiaries of government largesse. We are all special interests. Not to put too fine a point on it, we are all, to one extent or another, modern-day slaveholders, holding the lash over the heads of taxpayers even while other lashes rain down on our own backs, a perverted daisy-chain of fiscal sadomasochism. And, as Friedman noted, this perversion makes us happy. 
We are so enmeshed in this complex of government holdouts and giveaways that we fail to see how normal markets work. We think ending farm subsidies is the same as condemning farmers to destitution, as if farming only became profitable in the 20th century. We think ending the Department of Education is equivalent to a desire to leave people uneducated, as if human education only began in Jimmy Carter’s administration. 
To see past the “shared sacrifice” meme we must remember what, in the past, normal human beings accepted as part of their responsibilities of adulthood: caring for themselves and their loved ones; offering goods and services at market for others to choose or reject as they saw fit, at prices set by supply and demand. To require that of people now is not asking for a sacrifice. It is asking them to stop demanding more, in a democracy, than political equality.
Imagine a circle of 100 people and you, playing the role of government. Each round, one person puts $50 into the circle, cursing his loss as he does so; you [the government] match it, and every person takes out $1, a token amount, not worth much. The game is played for 100 rounds, each round a different person putting $50 into the circle. At the end of the game, each person is $50 poorer, $100 richer, and anguished by his loss. This is the nature of the shared sacrifice we are being asked to contemplate.