The main difference between statists and individualists can be found embedded in the Warren/Obama “You Didn’t Build That” meme. The so-called progressives — which for convenience, here, I will continue to designate as “statists,” for that is the precise term for them — attempt to systematically undervalue the contributions of people in the private sector by showing the instrumental role played by government in business success, and, in so doing, make a case for higher tax rates. An individualist need not deny that the institutions of government play a crucial role in providing the foundation for social co-operation. Indeed, the classical liberal theory of society places upon government the key role in social flourishing. But it identifies that role as limited, and as dangerous beyond that limit.
More importantly, individualists specify the exact transactions that make up government and society. They make much of the distinctions between typical governmental actions and typical market actions, and they find much of interest in distinguishing the terms of these various transactions.
Statists, on the other hand, speak broadly and vaguely of the institutions and their “importance,” forgetting that the key to explaining the social world are not big gulp concepts, but marginal changes, the ones that actually make up society in the first place.
This summer, I wrote a short response to the Elizabeth Warren/Barack Obama argument. But did not publish it at the time. I forgot. I just unearthed it, and published it, below, backdating it to the time of writing. The point I tried to make, there, is that by ignoring the actual transactions in the past, and instead talking about vague influences and instrumentalities, statists deflect our attention away from the terms of past deals.
This business helped that business through trades at such-and-such prices; that government emprise aided this business and that business with such-and-such a program, paid for by taxes settled in the past. And all the businesses and individual workers that aided Successful Business X did so under terms of specific contracts. Later on, after the success of Business X, they don’t have warrant to demand more money, because of their instrumentality in aiding Business X and its success. No more, one would think, should the governments that help Business X hold out their hands after success has been reached. Not for increases based on the success of Business X or the past aid of Government Y.
The question of raising or lowering taxes is not an easy one to answer by classical liberal theory. It is even harder when you unlimit the scope and power of government, as statists have done. By what standard should a tax be raised or lowered, for whom?
Statists then choose vague, emotional arguments to bolster their eternal demand for more funds. But the rationale has zero intellectual content. It is all emotional, puerile. Childish. It resembles more the whining of children demanding the exact same size of a piece of pie that some other child got. “It’s not fair!” a child may rage. But, once you enter the adult world, one makes deals not on some cosmic or familial “fairness” standard, but on terms mutually agreed upon, usually after haggling. To wish to change those terms, as statists now seek — hoping to get more from “the rich” and from “corporations” — requires adult kinds of argument. Appeals to marginal units, of advantages and costs and benefits.
But this is tough work. They are, of course, in a sea of nescience, and have no real standards other than that of the child or the pirate. It’s all “fairness” with them, or else they fixate on the size of the targeted storehouse they seek to plunder. Terms of payment depend on “ability to pay” and nothing else.
They dare not negotiate as adults, cognizant of the exact kind of transaction that pertains to the issue at hand. That wouldn’t be nearly as satisfying. No, instead of talking about the transactions that make up the institutions we are concerned about, they focus on “classes”: all “businessmen”; the “top 1 percent”; “the rest of us.”
It’s great demagoguery. But it is base rhetoric and it is sub-intellectual.