Thursday, 19 January 2012

Hannan on capitalism and ethics

Another good article from Daniel Hannan:

In an open market based on property rights and free contract, you become wealthy by offering an honest service to others. I am typing these words on a machine developed by the late Steve Jobs. He gained from the exchange (adding fractionally to his net wealth) and so did I (adding to my convenience).

Under the various forms of corporatism tried by fascist and socialist regimes, by contrast, someone else – generally a state official – gets to allocate the goodies, guaranteeing favouritism and corruption.

That’s not to say, of course, that malpractice is unknown in capitalism. Man is fallen and, under any system, some will give in to temptation. It’s just that in a state-run economy, corruption is systemic and semi-legal. Indeed, the most egregious forms of wrongdoing in our existing Western economies tend to be the ones that involve governments: lobbying for improper favours, securing taxpayer bailouts and the like.

He goes on to consider the moralistic hypocrisy of the Left, epitomised by their generosity with other people's money:

I have told the story before of how MEPs reacted to the Indian Ocean tsunami. Speaker after speaker rose to propose gazillions in aid. But when one old boy, a sweet-natured Italian Catholic, rose to suggest that we make a personal gesture by donating a single day’s attendance allowance, the warmth drained from the room. Those who had been promising vast sums on behalf of their constituents glowered sullenly at the poor fellow. His proposal was icily dismissed and the meeting moved on.

Nor does this double-standard apply only to governments. It is equally true of ‘corporate social responsibility’. When you boil it down, this too means being generous with someone else’s money. Businessmen get to feel good about themselves while loading the costs on to their shareholders, their clients and their suppliers. Wouldn’t it be far better if they openly set out to maximise their profits, and then chose, as individuals, to give a chunk away?

It can’t be repeated too often: when you give to good causes, you are making a moral choice. When the government takes an equivalent sum from you in taxation and spends it on your behalf, you are not. This is not to say that all taxation is wrong: some things need to be paid for collectively. But the argument for state involvement is a practical, not an ethical, one.

I recommend the whole article.

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