The myth of YOYO
I came across a term that appears to be in wider use than I knew: YOYO. It stands for "You're on your own." Ironically, if it were not for the contraction, it would be YAOYO, which is Chinese for "giant man (YAO) [made] of straw (YO)."*
YOYO trumps any idea of government in the liberal tradition (note: "liberal" originally shared some etymology with "liberty" and was used to describe the tradition of Locke, Hume, Smith, Mills, Emerson, and Thoreau, and still shares that sense outside the English-speaking world and in the sense of neoliberalism). Under the YOYO argument, freedom of action (freewill) is turned on its head and implies a curse rather than a blessing.
But YOYO is a myth. It implies that government action is the only help you will get. It isn't clear how people acquire an altruistic and economical disposition when they become bureaucrats and politicians which they don't have when they're you're family, friends, and neighbors. Somehow, the otherwise stupid populace shucks their greedy or self-seeking motivations in the voting booth and elects similarly enlightened legislators who pass well-crafted acts which are enforced and enacted by wise and virtuous bureaucrats. Somehow, joining the Civil Service is thought to remove any of their lower motives and inclinations and turns them into thoughtful agents of altruism. These assumptions are completely preposterous.
YOYO has two other bogus assumptions: that no institutions exist to deliver aid if they aren't government institutions, and that government institutions are as effective as they are assumed by their proponents to be. A slightly more reasonable version of YOYO says that private institutions are always and everywhere imperfect, while government institutions are always and everywhere better. History shows that these assumptions are untrue.
Government programs have a serious competitive disadvantage in dynamic analysis. Long after the supposed rationale for an intervention has passed, the government program continues and moreover continues in its original configuration. As our experience with Mutual Aid showed, private aid is dynamic and responds to the market because it is possible for innovators to introduce new approaches. Some of those will fail, but some will not, and everyone will quickly adopt the successful approach. A government program will be defended in its original conception to the bitter end; politicians may only make the barest change because they come and go while the bureaucrats and their organization remain. As modern examples of mutual aid, I give you the hippy "communalism" ideal, cooperatives, and even Wikipedia.
I concede that privatization is a difficult case to make for those goods and services which are pure public goods, but there are three points to be made in that regard. First, few government enterprises are actually built to address market failures such as public goods problems, and in fact many public goods arguments are made up to justify existing government programs. Second, few public goods are pure public goods. Third, the fact that something is a public good does not mean that private institutions don't find a way around the barriers involved. Radio is a public good which is made available by mixing it with a public bad (commercials). Lighthouses were once thought to be an example of a pure public good until Ronald Coase showed that many if not most were privately built and funded (the only significant counter-argument to this merely bolsters a an alternative form of taxation favored by classical liberals, user fees). Roads and police are a less-pure public good whose history includes similar levels of private provision (see here for Dan Klein's extensive writing about private roads, and see here and here for but two of many articles David Friedman has written about the history of private law enforcement). National defense is just about the toughest case to make for private provision, but YOYO generally fails to defend the Army as something helpful to the individual.
That's interesting, since the army is the clearest illustration that when you aren't "on your own" due to government intervention, it is because the government is using force. In fact, force is behind every government intervention, either to effect the change in behavior or to acquire the money. "We're from the government and we're here to help" is so much more rhetorically appealing than, "We're going to jail or kill anyone who resists", so I can understand the reluctance to include that side of the question. When the opposition party seizes control of the levers and abuses them, they are demonized while the underlying structures and mechanisms are defended. Indeed, when one's own party abuses the system, even the abuses are defended. Thus, we can see the left defend the use of warrantless searches (Carnivore, Echelon), secret evidence and limitless detention for foreigners (Nasser Ahmed and the 1996 Antiterrorism and Effective Death Penalty Act), and foreign intervention (Somalia, Bosnia, Iraq, Afghanistan) under Clinton, and then both parties reverse roles under Bush, each acting as if things would be different if only they had power with no sense of irony whatsoever.
It is furthermore insulting to claim that you aren't on your own due to the largess of the government. There is no federal carwash or bake sale: they only get money by printing it or taking it from you. Thus, the claim that they are here to help is a claim that they are here to spend your money on your behalf. How is that better than spending your own money on your own behalf? The only way in which that can be helpful is if they are spending someone else's money on your behalf.
The alternative is not between a society where the government provides things perfectly and one in which a market provides them not at all (the YOYO argument). It is also not between a society where government provides them badly and a market provides them perfectly (the lazy libertarian's argument). It is between a society where government provides such goods and services imperfectly and one in which private parties provide them imperfectly. The significant advantage of the latter, however is that change is made slowly if at all, politicians use the system to acquire and maintain power at the expense of the intended beneficiaries, and the means of preventing opportunism (fraud and abuse) are expensive in the state provision case, while in the private system change is comparatively rapid, the system is transparent and largely free of power abuse, and the creative fraud and abuse prevention mechanisms are much less expensive.
* If it is not true, which it likely isn't, it should be.
YOYO trumps any idea of government in the liberal tradition (note: "liberal" originally shared some etymology with "liberty" and was used to describe the tradition of Locke, Hume, Smith, Mills, Emerson, and Thoreau, and still shares that sense outside the English-speaking world and in the sense of neoliberalism). Under the YOYO argument, freedom of action (freewill) is turned on its head and implies a curse rather than a blessing.
But YOYO is a myth. It implies that government action is the only help you will get. It isn't clear how people acquire an altruistic and economical disposition when they become bureaucrats and politicians which they don't have when they're you're family, friends, and neighbors. Somehow, the otherwise stupid populace shucks their greedy or self-seeking motivations in the voting booth and elects similarly enlightened legislators who pass well-crafted acts which are enforced and enacted by wise and virtuous bureaucrats. Somehow, joining the Civil Service is thought to remove any of their lower motives and inclinations and turns them into thoughtful agents of altruism. These assumptions are completely preposterous.
YOYO has two other bogus assumptions: that no institutions exist to deliver aid if they aren't government institutions, and that government institutions are as effective as they are assumed by their proponents to be. A slightly more reasonable version of YOYO says that private institutions are always and everywhere imperfect, while government institutions are always and everywhere better. History shows that these assumptions are untrue.
Socialism, like the ancient ideas from which it springs, confuses the distinction between government and society. As a result of this, every time we object to a thing being done by government, the socialists conclude that we object to its being done at all.An important but long-forgotten example of private aid (and complete refutation of the YOYO ideal), Mutual Aid societies provided unemployment insurance, medical care (especially preventive care), catastrophic health coverage, hospital coverage, widow and orphan protection, and coverage for large swaths of minorities and the working classes, even in a less enlightened era (roughly, 1880-1920). They were arguably better than the Medicaid system available today; in fact, much of the current social safety net was based on early private institutions like unemployment insurance, and surveys of satisfaction were consistently high for the Mutual Aid societies while recipients of public health care in the US are less than satisfied by it. A large part of the problem with government interventions, though, is not what they do in static analysis, but in dynamic analysis.
We disapprove of state education. Then the socialists say that we are opposed to any education. We object to a state religion. Then the socialists say that we want no religion at all. We object to a state-enforced equality. Then they say that we are against equality. And so on, and so on. It is as if the socialists were to accuse us of not wanting persons to eat because we do not want the state to raise grain.
-- Bastiat
Government programs have a serious competitive disadvantage in dynamic analysis. Long after the supposed rationale for an intervention has passed, the government program continues and moreover continues in its original configuration. As our experience with Mutual Aid showed, private aid is dynamic and responds to the market because it is possible for innovators to introduce new approaches. Some of those will fail, but some will not, and everyone will quickly adopt the successful approach. A government program will be defended in its original conception to the bitter end; politicians may only make the barest change because they come and go while the bureaucrats and their organization remain. As modern examples of mutual aid, I give you the hippy "communalism" ideal, cooperatives, and even Wikipedia.
I concede that privatization is a difficult case to make for those goods and services which are pure public goods, but there are three points to be made in that regard. First, few government enterprises are actually built to address market failures such as public goods problems, and in fact many public goods arguments are made up to justify existing government programs. Second, few public goods are pure public goods. Third, the fact that something is a public good does not mean that private institutions don't find a way around the barriers involved. Radio is a public good which is made available by mixing it with a public bad (commercials). Lighthouses were once thought to be an example of a pure public good until Ronald Coase showed that many if not most were privately built and funded (the only significant counter-argument to this merely bolsters a an alternative form of taxation favored by classical liberals, user fees). Roads and police are a less-pure public good whose history includes similar levels of private provision (see here for Dan Klein's extensive writing about private roads, and see here and here for but two of many articles David Friedman has written about the history of private law enforcement). National defense is just about the toughest case to make for private provision, but YOYO generally fails to defend the Army as something helpful to the individual.
That's interesting, since the army is the clearest illustration that when you aren't "on your own" due to government intervention, it is because the government is using force. In fact, force is behind every government intervention, either to effect the change in behavior or to acquire the money. "We're from the government and we're here to help" is so much more rhetorically appealing than, "We're going to jail or kill anyone who resists", so I can understand the reluctance to include that side of the question. When the opposition party seizes control of the levers and abuses them, they are demonized while the underlying structures and mechanisms are defended. Indeed, when one's own party abuses the system, even the abuses are defended. Thus, we can see the left defend the use of warrantless searches (Carnivore, Echelon), secret evidence and limitless detention for foreigners (Nasser Ahmed and the 1996 Antiterrorism and Effective Death Penalty Act), and foreign intervention (Somalia, Bosnia, Iraq, Afghanistan) under Clinton, and then both parties reverse roles under Bush, each acting as if things would be different if only they had power with no sense of irony whatsoever.
It is furthermore insulting to claim that you aren't on your own due to the largess of the government. There is no federal carwash or bake sale: they only get money by printing it or taking it from you. Thus, the claim that they are here to help is a claim that they are here to spend your money on your behalf. How is that better than spending your own money on your own behalf? The only way in which that can be helpful is if they are spending someone else's money on your behalf.
YOYO never examines the evidence of whether that is actually the case; they want you to assume it's someone else's money (someone they demonize as less deserving than you), and that it is being spent on your behalf. They take away $1 a penny at a time so you don't notice, give you back $0.50 worth of "benefits", demand gratitude and loyalty for the trick, and demonize those who would let you keep the $1 on the grounds that they actually intend to take the $1 and keep the $0.50, but never ask whether you are actually getting $0.50 worth of value that is spent “on your behalf”. What about
Government is the great fiction through which everybody endeavors to live at the expense of everybody else.
-- Bastiat
- Corporate welfare -- they are either spending your money (if you are an employee or owner of an affected business: oil, agriculture, etc.), or causing you to spend more of your own (through price supports, regulations, and taxes). But of course, it isn't advertised this way. Agricultural subsidies are for the benefit of family farms, the environment, market stability, and so on. If you own a farm, you may indeed be getting something albeit it out of your own pocket; if you don't, you are paying more than you get. Price supports for sugar are helpful to growers of corn because high fructose corn syrup is the preferred substitute. They don't help consumers and arguably lead to environmental degradation in sugar-growing regions, yet we still have them. YOYO conveniently forgets that such examples of government failure inconveniently mirror the market failures which they feel trump all argument.
- Social Security and Medicare -- There are costs to your employer for keeping you employed beyond the income that finds its way into your pocket. These include the employer matching for your SSI and Medicare, benefits, unemployment insurance, regulatory compliance, and paperwork. It is not clear how you are better off when money your employer would otherwise pay to you is diverted on your behalf to purchase goods and services that you could buy yourself. At retirement, it's tempting to think that your SSI is a free lunch, but it isn't. It's your own damn money, coming back to you at less than market rates (actually, it's your grandchildren's money, but that argument is only valid when used to describe government spending, and more specifically, only when used by Democrats when Republicans control Congress, or Republicans when Democrats control Congress, but never by the same party that controls Congress).
- In fact, it's worse than not being a free lunch. SSI is thought to be progressive, but is in fact regressive. In order of strength of effect: (A) People with lower incomes retire later and don't live as long, so they pay longer and receive fewer lifetime benefits. (B) People with lower income don't defer entry into the workforce to go to college, so they start paying earlier. (C) The tax is assessed against the first $90,000 of income, so the rate falls as your income rises above that (the definition of regressiveness). You would in most cases be better off on your own, especially if you are a post-Baby Boomer, since your lifetime returns are estimated to be between negative 1% and 3%.
- Many of your personal costs are higher thanks to regulations that protect businesses from competition. Beneficiaries include the steel industry, doctors, utility companies, and insurance companies. But, without these, YOYO argues that doctors might be incompetent, the steel industry might fail, and insurance companies might charge more. YOYO makes the absurd claim that by protecting them from competitors, they are protecting us from competition on the basis of the equally absurd claim that competition in a private good or service leads to higher costs and lower quality.
The alternative is not between a society where the government provides things perfectly and one in which a market provides them not at all (the YOYO argument). It is also not between a society where government provides them badly and a market provides them perfectly (the lazy libertarian's argument). It is between a society where government provides such goods and services imperfectly and one in which private parties provide them imperfectly. The significant advantage of the latter, however is that change is made slowly if at all, politicians use the system to acquire and maintain power at the expense of the intended beneficiaries, and the means of preventing opportunism (fraud and abuse) are expensive in the state provision case, while in the private system change is comparatively rapid, the system is transparent and largely free of power abuse, and the creative fraud and abuse prevention mechanisms are much less expensive.
* If it is not true, which it likely isn't, it should be.
Labels: philosophy
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