WEBVTT

NOTE Does Government Regulation Crowd Out Private Responsibility? An Economic, Philosophic, and Theological Investigation

1
00:00:00.000 --> 00:00:08.000
So it is my humble opinion that in the garden, in that state of grace, there was a good deal of frolicking.

2
00:00:11.000 --> 00:00:14.000
Let's see, I've got to work this out here. Here we go.

3
00:00:14.000 --> 00:00:17.000
So does government regulation crowd out private responsibility?

4
00:00:17.000 --> 00:00:20.000
Yes. Thank you very much.

5
00:00:20.000 --> 00:00:25.000
This is an economic, philosophic and theological investigation.

6
00:00:25.000 --> 00:00:32.560
In the debates between control and liberty, whether in economics, philosophy, or theology,

7
00:00:32.560 --> 00:00:38.000
people often don't ask questions about coercion and volition.

8
00:00:38.000 --> 00:00:42.520
They don't ask questions about must and should.

9
00:00:42.520 --> 00:00:48.840
We ask these questions in this paper and we show the good fruit of freedom and the hazard

10
00:00:48.840 --> 00:01:00.160
of Society Outsourcing Private Responsibility to the Coercive State in Three Areas, Charity,

11
00:01:00.160 --> 00:01:02.800
Economics and Religion.

12
00:01:02.800 --> 00:01:08.900
We show what happens to people when they don't ask themselves, is it right?

13
00:01:08.900 --> 00:01:12.300
But instead ask, is it legal?

14
00:01:12.300 --> 00:01:18.620
So first, beliefs and practices about government and private responsibility in the American

15
00:01:18.620 --> 00:01:19.620
and Tradition.

16
00:01:19.620 --> 00:01:24.380
As we all know, the Founding Fathers well understood limited government as the only

17
00:01:24.380 --> 00:01:30.220
context in which man could seek out his desire for self-determination.

18
00:01:30.220 --> 00:01:39.460
However, however, they also understood that man needed a strong moral code provided largely

19
00:01:39.460 --> 00:01:48.740
through religious beliefs to ensure social order required to result in optimal liberty

20
00:01:48.740 --> 00:01:49.740
for all.

21
00:01:49.740 --> 00:01:56.500
Well, the many associations that Americans formed, to use Tocqueville's phrase, uniquely

22
00:01:56.500 --> 00:01:59.780
tempered American individualism.

23
00:01:59.780 --> 00:02:06.240
The pervasive ethos at the time was that a man was first responsible for himself and

24
00:02:06.240 --> 00:02:32.040
The State's role in what used to be called charity is so huge that people assume, wrongly,

25
00:02:32.040 --> 00:02:38.760
But if the government didn't provide a safety net, the poor would plummet to oblivion.

26
00:02:38.760 --> 00:02:45.400
Today the debates aren't about the size of the welfare state, rather, today the debates

27
00:02:45.400 --> 00:02:51.040
are about the size of the welfare state, not whether there should be a welfare state or

28
00:02:51.040 --> 00:02:52.760
not.

29
00:02:52.760 --> 00:02:57.560
The general populace seems to believe that before the progressives and before the New

30
00:02:57.560 --> 00:03:04.120
New Deal in the Great Society, all those self-interested American individualists did nothing for their

31
00:03:04.120 --> 00:03:05.120
neighbors.

32
00:03:05.120 --> 00:03:07.800
Well, that, of course, is a myth.

33
00:03:07.800 --> 00:03:13.840
Now, in our paper, we tell the story about how American culture shifts from liberty towards

34
00:03:13.840 --> 00:03:22.000
control from charity as the provenance of individuals and voluntary associations, clubs,

35
00:03:22.000 --> 00:03:25.480
churches, synagogues to the government.

36
00:03:25.480 --> 00:03:31.920
And the driving impetus is unsurprisingly the same ideas at play in economics and philosophy

37
00:03:31.920 --> 00:03:34.660
and in theology.

38
00:03:34.660 --> 00:03:41.840
And the premises of individualism and individual responsibility were challenged by both secular

39
00:03:41.840 --> 00:03:46.080
and religious philosophies emerging in the 19th century.

40
00:03:46.080 --> 00:03:54.360
We have religious universalists and secular Marxists coming out in the 1840s and following.

41
00:03:54.360 --> 00:04:02.960
The Universalists believe that all human beings are inherently good and have a right to eternal

42
00:04:02.960 --> 00:04:09.400
salvation regardless of the profession of faith or one's actions, and therefore they

43
00:04:09.400 --> 00:04:13.960
also have a right to temporal prosperity.

44
00:04:13.960 --> 00:04:21.840
And as voluntary associations lost moral standing, they were crowded out as the government took

45
00:04:21.840 --> 00:04:22.840
over.

46
00:04:22.840 --> 00:04:27.440
Well, I'm going to give you an example.

47
00:04:27.440 --> 00:04:37.440
As government expenditures rose in the mid-1930s, private charity dropped despite, now here's

48
00:04:37.440 --> 00:04:50.260
the kicker, despite charitable giving having risen five-fold, five-fold between 29 and 32.

49
00:04:50.260 --> 00:04:57.060
So charity is going up and then the new deal.

50
00:04:57.060 --> 00:05:03.220
Well further indication of crowding out is seen as, quote, individual giving as a proportion

51
00:05:03.220 --> 00:05:15.620
of personal income dropped 13% between 1960 and 1976 despite rising prosperity.

52
00:05:15.620 --> 00:05:23.780
The proportion of philanthropic giving devoted to social welfare declined from 15% to 16%.

53
00:05:23.780 --> 00:05:30.460
And by the mid-1970s, governments spent about ten times as much on social services as non-profit

54
00:05:30.460 --> 00:05:37.460
agencies, and non-profit agencies themselves received over one-half their revenues from

55
00:05:37.460 --> 00:05:39.260
the government.

56
00:05:39.260 --> 00:05:46.140
We'll contrast this with the end of the 19th century, when nearly all poor relief was provided

57
00:05:46.140 --> 00:05:49.540
through private associations.

58
00:05:49.540 --> 00:05:53.300
But the numbers don't tell the complete story.

59
00:05:53.300 --> 00:05:59.500
Individual attitudes towards personal responsibility help us to understand the crowding out effect.

60
00:05:59.500 --> 00:06:04.580
And we get this largely from the work of Brooks.

61
00:06:04.580 --> 00:06:12.380
So in 1996, a large sample of Americans was asked to respond to this statement, quote,

62
00:06:12.380 --> 00:06:17.900
The government has a responsibility to reduce income inequality.

63
00:06:17.900 --> 00:06:19.700
Well here's how people answered.

64
00:06:19.700 --> 00:06:26.900
43% of respondents disagreed with the statement, 33% agreed.

65
00:06:26.900 --> 00:06:31.180
When it came to charity, those two groups were radically different.

66
00:06:31.180 --> 00:06:35.420
Not only were those who disagreed significantly more likely to give money to charity than

67
00:06:35.420 --> 00:06:43.580
those who agreed, they also gave away, on average, four times as much money per year.

68
00:06:43.580 --> 00:06:47.940
So with tragic irony, when someone believes it's the government's responsibility to

69
00:06:47.940 --> 00:06:53.540
spread the wealth around, his personal giving of money and time decreases.

70
00:06:53.540 --> 00:07:00.860
In 2002, people who stated that they thought the government was spending too little money

71
00:07:00.860 --> 00:07:05.920
on Welfare were less likely than those saying the government is spending too much money on

72
00:07:05.920 --> 00:07:11.060
welfare to give food or money to a homeless person.

73
00:07:11.060 --> 00:07:15.820
Proponents of sharing the wealth through the government are less likely to volunteer their

74
00:07:15.820 --> 00:07:23.460
time or even give blood than people who favor voluntary giving.

75
00:07:23.460 --> 00:07:28.260
Here's what Brooks writes, this is nothing more than substituting political opinions

76
00:07:28.260 --> 00:07:33.380
Opinions for Private Donations Opinions may or may not be sound, but the

77
00:07:33.380 --> 00:07:39.680
giving is conspicuously absent To summarize, when coercive government takes

78
00:07:39.680 --> 00:07:46.720
over charity, voluntary charity decreases and therefore human dignity and civil society

79
00:07:46.720 --> 00:07:49.720
suffer.

80
00:07:49.720 --> 00:08:04.720
There's this idea, of course, that there are just these horrible conservatives who are just so self-interested and they'll never do a nice thing for anybody else, so let's take over the park and play our drums.

81
00:08:04.720 --> 00:08:11.720
Are there market forces, market incentives that encourage us to do the right thing?

82
00:08:11.720 --> 00:08:14.720
Well, here's a quote from an investment manager.

83
00:08:14.720 --> 00:08:23.720
When we have regulators, we outsource our thinking.

84
00:08:23.720 --> 00:08:34.720
Austrian economists believe that profit-oriented incentives based on human nature and human action are sufficient to ensure moral behavior over time.

85
00:08:34.720 --> 00:08:38.720
You all know that, so I'm just going to move forward just a little bit.

86
00:08:38.720 --> 00:08:45.680
And here's some interesting little experiments that have been tried and played out recently.

87
00:08:45.680 --> 00:08:53.040
From David Wessel, he described economic experiments in which market participants routinely acted

88
00:08:53.040 --> 00:08:57.900
more generously than mainstream economists predicted.

89
00:08:57.900 --> 00:09:02.700
Not only were the results of these experiments counterintuitive to mainstream economists,

90
00:09:02.700 --> 00:09:05.720
they were consistent across cultures and societies.

91
00:09:05.720 --> 00:09:14.960
The more involved people are in market activities such as working for wages or buying and selling

92
00:09:14.960 --> 00:09:19.920
goods to others, the more generous they are.

93
00:09:19.920 --> 00:09:31.200
And a great little example from a recent thing is provided by the History of Investment Trusts,

94
00:09:31.200 --> 00:09:36.880
which developed in the mid to late 1800s, and they produced an efficient capital market

95
00:09:36.880 --> 00:09:40.400
to fund the Industrial Revolution.

96
00:09:40.400 --> 00:09:46.520
These trusts were precursors of the modern investment vehicles known as mutual funds.

97
00:09:46.520 --> 00:09:54.280
These capital market innovations were highly dependent on the morality of management.

98
00:09:54.280 --> 00:10:00.060
Trust was more than just a word describing the business entity.

99
00:10:00.060 --> 00:10:13.020
One of the early financial innovators, Paul Cabot, in 1929 wrote, the honesty and ability

100
00:10:13.020 --> 00:10:19.980
of the management are paramount. Free competition is bound to keep this greed down to a reasonable

101
00:10:19.980 --> 00:10:27.940
figure. Cabot also noted that the futility of government regulation of security markets,

102
00:10:27.940 --> 00:10:38.940
No law can replace the necessity for investors to think intelligently and to investigate a situation before investing their money.

103
00:10:38.940 --> 00:10:46.940
Thousands of pages of financial regulation did not prevent the meltdown of 2008.

104
00:10:46.940 --> 00:10:52.940
And Thomas Woods argues that instead it actually led to the meltdown.

105
00:10:52.940 --> 00:11:03.940
So government regulation both incentivizes immoral behavior and disincentivizes moral behavior.

106
00:11:03.940 --> 00:11:09.940
Government regulation does indeed crowd out personal responsibility.

107
00:11:09.940 --> 00:11:16.940
So I've got one minute left, right? Well, I've got religion. I've got one minute to talk about religion.

108
00:11:16.940 --> 00:11:32.940
Wow, a minute and a half. That's awesome. I just want to bring up just this one little quick thing here. Maybe some of you have heard of the secularization thesis, and it's basic to sociology.

109
00:11:32.940 --> 00:11:45.940
And the thesis is, as modernity advances, religion decreases. Well, what's the problem with that? Americans. So how do sociologists answer this? Well, Americans are stupid.

110
00:11:45.940 --> 00:12:08.940
This is an Austrian answer. If you look at Europe, they still have established churches. Churches where people's taxes pay for the clergy, pay to keep the buildings going.

111
00:12:08.940 --> 00:12:15.940
To this day, I've read that in Germany 8% of your income tax goes to churches.

112
00:12:15.940 --> 00:12:20.940
I heard about how this works in Italy. I know it works in the Church of England.

113
00:12:20.940 --> 00:12:23.940
I'm an Anglican. That's how it goes.

114
00:12:23.940 --> 00:12:32.940
Well, in America you got all these hucksters running around planning churches, trying things, wacky things, these entrepreneurs.

115
00:12:32.940 --> 00:12:38.940
Try thinking about those crazy people on TV as entrepreneurs.

116
00:12:38.940 --> 00:12:44.940
That's part of the American genius. It's free. It's free.

117
00:12:44.940 --> 00:12:48.940
And when it's free, people choose it.

118
00:12:48.940 --> 00:12:55.940
So does government intervention crowd out private responsibility? Yes.

119
00:12:55.940 --> 00:12:58.940
And I want to leave you with one last thought.

120
00:12:58.940 --> 00:13:04.140
And it's been hotly contested of late.

121
00:13:04.140 --> 00:13:07.220
Am I not supposed to be my brother's keeper?

122
00:13:07.220 --> 00:13:08.860
No, you're not.

123
00:13:08.860 --> 00:13:11.500
You're not supposed to be your brother's keeper.

124
00:13:11.500 --> 00:13:17.180
You're supposed to be a neighbor, but not a keeper.

125
00:13:17.180 --> 00:13:21.860
God didn't create us to coerce others or to be coerced.

126
00:13:21.860 --> 00:13:26.820
He created us to love one another as He loved us.

127
00:13:27.860 --> 00:13:35.860
Applause