Basic Precepts [II] - 5/22/07

[It would be unfair to reprint I without II. This was the end of my Basic Precepts series, which succumbed to last year's irregular blogging. Wasn't a bad idea though. This one, for example, has ideas that run through many of my subsequent posts, and, in rereading it, I'm surprised to see how explicit I was able to make my ideas.]

I believe in democracy and the free market.

What I don't believe is that they are necessarily correlates, that is, unlike a lot of what is said today, they do not "naturally" go together. The basic idea that underlies democracy is "one person, one vote." Everyone, whether Bill Gates-rich or homeless-poor, gets (in theory) an equal right to have a say in our government. No one has more of an effect on choosing our leadership than anyone else.

Free-market capitalism, on the other hand, is "one dollar, one vote." Bill Gates gets 40 or so billion votes, I get a lot fewer. The goods and services available to me will have a lot more to do with what Bill wants than what I want.

So why are these two systems inevitably linked? Because in one area, that of individual choice, they are similar. We choose whom to elect, we choose what to buy. For people who pride themselves on having a right to choose, this is quite compelling.

But there are many differences between the two systems. In one vital area, rationing, they are completely different. Markets act as rationing devices, with price used as the mechanism (maximal profits occur at a certain price/production point; it is rare that that point allows enough production for everyone to "get one"). Democracy, at least in its classic formulation, is not rationed, not governed by price.

It would appear that if there are goods and services that we feel uncomfortable rationing, they shouldn't be subject to the market. Health care is a good example. There is a lot of talk about how Canada's system rations health care, leading to long waits for certain procedures. But the U.S. system just as surely rations, but conceals it within the cloak of market mechanisms.

We have two systems in the U.S., then, which are not entirely compatible. To determine where we might be heading in the future, it's natural to ask whether the two systems can get along, or whether one is on the rise at the expense of the other.

Need one ask? Attempts to inject some form of democracy into, say, corporate governance are almost inevitably beaten down. Politics, as has been chronicled everywhere, is infected with the influence of money and large corporate interests. Governments are filled with the spirit of privatization, in which elected leaders admit that they cannot properly manage the complexity of, for example, a parking garage, and turn it over to private companies that will utilize "relentless efficiency" to make parking a wonderland of fun (and give everyone a pony!).

When one system is forging ahead, it is natural to wonder if there's an inevitability to that; do people want the free market to take precedence over the ideals of democracy? Or are there powerful forces pushing us in this direction against the true preference of the American people?

For the past 25 or so years, the message has been, government is bad, the market is good. This is believed to have been originated by Ronald Reagan, but he just made it popular. (Always interesting how many people are eager to associate themselves with an institution that is so blitheringly incompetent, including Mr. Reagan himself.) We have a whole generation of citizens who have been inculcated with the idea that public works are doomed to failure from a cost-benefit standpoint, while private industry supplies us with all that is good.

But the goals of private industry are not always the goals that we would choose in a perfect society. CEOs do not even profess to be great leaders of the masses, confining themselves to the upward motion of profits (and, quite often, personal enrichment). It seems to me that much of the trouble that the average American sees in the future results from the idea that the market is king, and that democracy, as expressed so imperfectly by elected officials through government, is outmoded and unnecessary.

I don't think we know that's what we're doing, however, and that is what is so profoundly troubling about where we find ourselves.