Can Government Create Opportunity?

Last year, the Boston branch of the Federal Reserve put out a working paperwhich contained detailed data on the declining trend of economic mobility in the United States. According to the paper, the percentage of Americans who reside in the lowest income quintile and move up either to the middle quintile or higher has been in decline over the past three decades. This statistic should be alarming as it is indicative of stagnation within an economy that supposedly fosters the entrepreneurial spirit. Without the opportunity to create and deliver things which enhance the lives of others, society as a whole ends up being denied the work of the most constructive members. To some, it has meant that government at all levels is doing an inadequate job in addressing what appears to be a growing divide between the haves and have-nots. Calls for higher taxes to pay for programs and schemes of redistribution which would enable the less-fortunate in following their ambitions usually follow.

It is standard fare for pro-government advocates to defend the notion that the state exists to create opportunities for the people. In first presidential debate between U.S. President Barack Obama and challenger Mitt Romney, Obama articulated his belief that the federal government should “create ladders of opportunity” as well as “create frameworks where the American people can succeed.” The president is not alone as economist and leading voice of progressivism Paul Krugman expressed his dismay in his New York Times column over Washington’s failure to create “equal opportunity.”

Conventional examples of government-created opportunities include cheap college loans, public education, small business loans, land grants for universities, housing for those on low-income, and an array of infrastructure projects meant to facilitate transportation. Proponents of these measures see them as a necessary springboard for social mobility; that without these resources, the downtrodden would forever remain in a state of destitution.

The problem with this assertion is that the ability to lift one’s self up by their proverbial bootstraps is only ever hampered by the state. The various efforts to create “opportunity” by lawmakers necessarily mean less opportunity created in the non-government sector. Nothing government has a hand in ever comes for free. Unlike the private sector which relies on voluntary payment or donation, the state obtains its resources through force and fraud. This impairs the ability of political spenders to engage in efficient economic calculation and gives rise to cronyism. The opportunities created by politicians are for their favored interests; hardly ever for the benefit of all.

In a free society there would be ample opportunities to meet the desires of others. As long as the rights of others are respected and protected, people can pursue their own happiness without fear of violent retaliation.

Life, in a sense, is opportunity. It is a chance to live and prosper or fall and whither away. This is a reality that no ruling institution, governmental or spiritual, can alleviate. Man entered this world with only the natural world at his fingertips. The modern age is no different. All of the conveniences enjoyed today still come from the Earth. The difference is that as that mankind’s population has grown, trade has expanded across the world, and the division of labor has deepened, goods and services have improved the human life well beyond than what any individual thought possible just a few decades ago. When left to its own devices, the market economy will tend to bring that which was once considered luxury into the hands of even the poorest in society. As long as man’s desire remains limitless, the progress made will only continue.

Government is not an enabler of this kind of opportunity but a barrier to enterprise. Certainly the multitude of bureaucracies at every level of government can provide a career to anyone interested. But this employment comes at the expense of the non-coercive, private sector. The ruling class makes it its job to regulate and control. This means interference in the free dealings of people.

The classic example is that of minimum wage laws. In the name of lifting the lower class out of poverty, lawmakers establish price floors enforced through the threat of fines or imprisonment. This dictate has the opposite effect of pricing out those whose added marginal productivity does not exceed the level deemed politically appropriate. A chance to work at a lower wage and gain applicable experience is all but cut off. Instead of helping the poor, minimum wage legislation is extremely detrimental to the low-skilled. For smaller business, the mandating of higher wages makes it more difficult to compete with larger, more profitable competitors who are in better financial shape to meet the new requirement. The result is less opportunity for both prospective workers and self-starter companies.

When a member of the political establishment speaks of “creating opportunity,” it is almost always a sign of a coming boondoggle where a close affiliate’s pockets are lined with taxpayer money. The state erects obstacles to prosperity; never pathways. In a world of scarcity opportunity for a better life is an ever-present reality.  In the marketplace, success is achieved by making others better off. Achievement for the state means trampling on the rights of others. One embodies the elements of peace and cooperation which give way to fostering incalculable opportunities to thrive. The other results in a perpetual state of conflict between what 19th century American political theorist John C. Calhoun labeled as “two great classes.” The first class consists of those who “pay the taxes” while the other is “those who are the recipients of their proceeds.” The state creates opportunity for latter and decimates it for the former. The only way to set free the innovative minds who build wealth and opportunity is to scale back this exploitive state of affairs. 

*Post courtesy of James E. Miller at Miller's Genuine Draft.