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Living the legislated life.

Just in case any of you are finding the world a little hard to bear at the moment, take heart—a better life can be legislated. At least this is what one adviser to the Australian Democrats believes. Writing in The Australian, she says that governments can, and should, influence "love, sex, and happy marriages".

What this particular writer had in mind are laws mandating flexible, and shorter, working hours, and longer, better paid, maternity and paternity leave. I am certainly not against these things, provided, of course, that employers and employees can make them work.

But to tell you the truth, I am not sure that these measures will really spread joy through the land. Instead of timid little demands, the recent election was an opportunity to extract really big whoppers from the new government. Here is my idea of a happiness platform:

People of Australia, vote for us, and we will devote ourselves to improving your personal life and making your marriage happy. As our first measure, we will require all single people to enrol in government-subsidised dating services. If we are elected, even the most desperate of you will be guaranteed a date every Saturday night. For those new to the mysteries of romance, we will provide free sex videos (suitably censored, of course, to ensure wholesome family values). To help maintain relationships once they are formed, our centralised message bank will automatically send a reminder to your mobile phone one week before your partner’s birthday or your anniversary. Tax deductions will be allowed for gifts of government-approved champagne, flowers and chocolates.

Now I may be just an old grump but, as you can probably tell, I am a little dubious about the idea that legislation can make you happy. The way I see it, if laws made people happy, we should already be the most jovial nation on earth. Every aspect of our behaviour is already subject to some sort of legislation. There are laws controlling smoking, drinking, schooling, working, buying, selling, driving, holidays, even dying. Nothing is too small to be left to chance. For example, in my state of Western Australia, it is against the law to purchase a new car after 1:00 PM on Saturday. I cannot tell you how happy that law has made us.

The truth is that Australians are not very happy at all. There is an epidemic of depression in our land; we have one of the highest youth suicide rates in the world. Australians are not happy, and I humbly suggest that less, not more, legislation is the answer.

According to most psychological theories, what would really help make people happy is more freedom. Depression is a complicated problem, one that has touched me personally, and I do not wish to trivialise it by being overly simplistic. But one common trait among depressed people is a sense of powerlessness – of not controlling their destiny. People with depression become despondent because they feel "helpless". One of the goals of psychological treatment is to give depressed people a sense of power; to instil the belief that what they do, and how they act, will affect their future.

All of us, not just those who are clinically depressed, need to possess a similar sense of control over our lives. The more dependent we are on others, including the government, the more powerless we feel, and the more depressed we become. Political and economic freedom, empowerment, and the pursuit of happiness are inextricably entwined – you cannot have one without the others.

Although the connection between dependency and depression is well known, some Australian intellectuals, as we have seen, continue to insist that we need more, not less, government in our lives.

Who are these intellectuals? According to Harvard’s Robert Nozick, they are wordsmiths who trade in ideas, using the media to publicise their viewpoints on social and political matters. Their ranks contain few engineers or scientists, no dentists or doctors, and scarcely anyone from the military or business communities. Social scientists, however, are common among their numbers. And their biggest gripe is with freedom of choice, especially free-market capitalism. Although, the specific aspect of capitalism that annoys them is hard to pin down – it seems to vary with time and place.

For example, in the 1930s, critics argued that "failure" of the free market caused the economic hardships of the depression. Of course, these critics meticulously ignored the decades of government-sponsored market interference that preceded the depression.

Later, in the 1950s and 60s, which were both decades of economic growth, criticism took the opposite tack. Capitalism had not failed; it was too successful. In his famous indictment of the capitalists of the 1950s, a book called The Affluent Society, J. K. Galbraith described those who championed free markets as people who were prepared to sell their souls for useless consumer goods in a bleak, utilitarian, society. In other words, you can’t win. Capitalism is damned when it fails to ensure prosperity and damned for materialism when it succeeds.

In Australia, capitalism is often referred to as "economic rationalism". This term appears to be unique to Australia; no one else in the world uses it. The pejorative use of the word rationalism reminds me of Mr Spock from the old Star Trek series. Spock was always rational and never emotional. When things were going well, the crew always bowed to his logical mind. But when the Klingons attacked, and enemy phasers rocked the Starship Enterprise, fear and loathing swept the crew and Spock’s ice-cold rationality was condemned as inhuman. As, of course, it was.

Critics portray rational economics, especially free markets, in a similar way. Markets are inhuman, they claim. Markets have no empathy or compassion, and they leave some people worse off than others.

Yet, the market consists of people freely interacting with one another. If the market is unfair, heartless or cruel, then it must reflect our human weaknesses. After all, the market is only the sum total of our individual choices.

But, you might say, what if the outcome of free market activity leaves some very rich and others poor? Surely, such unequal outcomes make it obvious that markets are unfair, and that more legislation is needed to ensure a just outcome.

To show the fallacy in this view, I turn to a thought experiment proposed some years ago by Robert Nozick. I have modified it slightly for our times.

Imagine a society of one thousand persons each of whom has an identical total wealth of $10,000. One member of this society happens to be Kylie Minogue. Suppose she decides to stage a concert. Any member of this society is free to attend, or to stay home. Those who choose to attend will be charged $100 each for a ticket. The exchange is purely voluntary. Those attending give up what they value less for a concert that they value more. As it turns out, everyone decides to hear Kylie sing. At the conclusion of the concert, this society, which once had perfect equality of wealth, now has massive inequality. Kylie is more than ten times richer than everyone else.

Now, here is the point. If the initial state of affairs in this society was just, because everyone had equal wealth, and if it is also just to allow people to voluntarily exchange their money for something they want (assuming their desires are not harmful to others), then it follows that the final unequal distribution of wealth is also just. It is really difficult to find the unfairness.

So, why do critics argue that inequality in wealth is unfair, no matter how it arises?

The usual answer is jealousy. Those with less envy those with more. This may be the reason why so many critics of free markets prefer to measure relative poverty rather than to define poverty in absolute terms. In relative terms, some people will always fall at the bottom of the income scale. They may have homes, cars, mobile phones and colour televisions but they are still less well off than those who have more. Defining poverty in relative terms permits critics to argue that free markets are always unfair, no matter how much prosperity they produce.

According to Robert Nozick, again, many wordsmith critics oppose capitalism because of formative experiences in their school days. His hypothesis goes like this. Wordsmith intellectuals in capitalist societies feel entitled to the highest rewards available in society and they are unhappy because, by and large, capitalist societies do not honour intellectuals.

Why do wordsmith intellectuals consider themselves so deserving? According to Nozick, it starts in school. The wordsmiths were verbally facile, wrote better than their classmates, and were rewarded for their performance in the school system. Prizes, scholarships and the chance to make the valedictory address are not distributed by a market mechanism. When they graduate, intellectuals find that the skills that were so prized in school are not nearly as valuable in the market-driven world. Charm, humour, athletic prowess, affability, aggression, dedication, enthusiasm, hard work and most of all, luck, count as much or more than good marks at school. This is not exactly news. As written in the Book of Ecclesiastes:

… the race is not always to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all.

After they leave school, wordsmiths who cannot bolster their skills with other characteristics valued by society may experience downward mobility in comparison with their more successful, but less intellectual, classmates. This breeds envy and resentment. Clearly, any system that allows Kylie to get rich while leaving intellectuals behind cannot be trusted. It produces the "wrong" outcome. Sometimes, they call this "market failure".

Note, this yearning for a "merit" system can come from both the right or left of politics—although the two sides may have different orders of merit. Nozick claims that schools exert such an important life-long influence because they are the first social institutions children encounter outside their families.

Whatever the cause of their unhappiness, the proposed solution offered by critics is to re-create the system that served them so well at school. This brings us back to the legislated life. Intellectuals want to make laws (lots of them) to ensure that the benefits of society are allocated by a central government according to a merit system, preferably one devised by them.

Thus, they favour laws that take from Kylie and give to the opera (a much more meritorious recipient). In an extreme example of imposing your merit criteria on society, the WA Greens once advocated increasing the tax on beer but not on wine.

Anyway, you get the idea. Take from everyone and give back to those who meet the merit criteria. All this taking and giving back puts enormous power in the hands of government. We have to assume that the government will make fairer judgements than we would by freely interacting with one another. Unfortunately, world history does not support this assumption. There have been many more bad governments than good ones.

To protect freedom, we must guard against those who seek to legislate it away, but we must also guard it from ourselves. I said that world history is not full of good governments. It is not full of good voters either. Remember, Adolph Hitler was elected to office.

The blessings of social and economic freedom are always under threat, even from those who benefit from them. Let us not permit the freedom that has given us so much to be devoured by a jealous few. Let’s refuse to live the legislated life.

This is an edited version of the Centre for Independent Studies’ 25 Anniversary Lecture, given in Melbourne on Thursday 25 October 2001.

Professor Steven Schwartz is Vice Chancellor and President of Murdoch University.

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