The Latest from Cafe Hayek

(Don Boudreaux)

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Someone recently wrote to me asking for a reference to something that I’d written comparing the way that we Americans purchase groceries to the way that most of us purchase K-12 schooling. On May 5th, 2011, I published an essay on this topic in the Wall Street Journal, but a search of Cafe Hayek reveals that I have yet to reproduce here that essay in its entirety.

Here it is:

If Supermarkets Were Like Public Schools

Teachers unions and their political allies argue that market forces can’t supply quality education. According to them, only our existing system — politicized and monopolistic — will do the trick. Yet Americans would find that approach ludicrous if applied to other vital goods or services.

Suppose that groceries were supplied in the same way as K-12 education. Residents of each county would pay taxes on their properties. Nearly half of those tax revenues would then be spent by government officials to build and operate supermarkets. Each family would be assigned to a particular supermarket according to its home address. And each family would get its weekly allotment of groceries — “for free” — from its neighborhood public supermarket.

No family would be permitted to get groceries from a public supermarket outside of its district. Fortunately, though, thanks to a Supreme Court decision, families would be free to shop at private supermarkets that charge directly for the groceries they offer. Private-supermarket families, however, would receive no reductions in their property taxes.

Of course, the quality of public supermarkets would play a major role in families’ choices about where to live. Real-estate agents and chambers of commerce in prosperous neighborhoods would brag about the high quality of public supermarkets to which families in their cities and towns are assigned.

Being largely protected from consumer choice, almost all public supermarkets would be worse than private ones. In poor counties the quality of public supermarkets would be downright abysmal. Poor people — entitled in principle to excellent supermarkets — would in fact suffer unusually poor supermarket quality.

How could it be otherwise? Public supermarkets would have captive customers and revenues supplied not by customers but by the government. Of course they wouldn’t organize themselves efficiently to meet customers’ demands.

Responding to these failures, thoughtful souls would call for “supermarket choice” fueled by vouchers or tax credits. Those calls would be vigorously opposed by public-supermarket administrators and workers.

Opponents of supermarket choice would accuse its proponents of demonizing supermarket workers (who, after all, have no control over their customers’ poor eating habits at home). Advocates of choice would also be accused of trying to deny ordinary families the food needed for survival. Such choice, it would be alleged, would drain precious resources from public supermarkets whose poor performance testifies to their overwhelming need for more public funds.

As for the handful of radicals who call for total separation of supermarket and state — well, they would be criticized by almost everyone as antisocial devils indifferent to the starvation that would haunt the land if the provision of groceries were governed exclusively by private market forces.

In the face of calls for supermarket choice, supermarket-workers unions would use their significant resources for lobbying — in favor of public-supermarkets’ monopoly power and against any suggestion that market forces are appropriate for delivering something as essential as groceries. Some indignant public-supermarket defenders would even rail against the insensitivity of referring to grocery shoppers as “customers,” on the grounds that the relationship between the public servants who supply life-giving groceries and the citizens who need those groceries is not so crass as to be discussed in terms of commerce.

Recognizing that the erosion of their monopoly would stop the gravy train that pays their members handsome salaries without requiring them to satisfy paying customers, unions would ensure that any grass-roots effort to introduce supermarket choice meets fierce political opposition.

In reality, of course, groceries and many other staples of daily life are distributed with extraordinary effectiveness by competitive markets responding to consumer choice. The same could be true of education — the unions’ self-serving protestations notwithstanding.

Mr. Boudreaux is professor of economics at George Mason University and a senior fellow at the Mercatus Center.

(Don Boudreaux)

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… are the closing lines (found on page 185 of the original edition) of James M. Buchanan’s and Richard E. Wagner’s important 1977 book, Democracy in Deficit: The Political Legacy of Lord Keynes:

On the one side, there lies the falsely attractive path toward “national economic planning,” a choice that would have us allow government to go beyond traditional bounds because it has failed even to fulfill its more limited promises. On the other side, there is the way of the free society, of men and women living within a constitutional contract that also keeps governments in well-chosen harness. This way, so well understood by Americans two centuries past, has been obscured by the underbrush of burgeoning bureaucracy. Will we, like Robert Frost’s traveler, choose the road less traveled by?

DBx: In 1977, Buchanan and Wagner were warning against the pretensions mostly of professors, pundits, and politicians on the political left. In 2020 these same people remain sufficiently – perhaps even more – pretentious and, thus, we should continue to beware of them and their mix of hubris, economic and historical ignorance, and wild fantasies.

But in 2020 Buchanan’s and Wagner’s warning is increasingly applicable also to self-identified American conservatives – people such as Marco Rubio, Josh Hawley, Tucker Carlson, Daniel McCarthy, and Oren Cass. Despite some differences that separate each from the other, and that separate each from self-identified “Progressives,” conservative who support interventions such as industrial policy are, no less than their “Progressive” counterparts, ignorant of history, clueless about economics, naive about human nature, uncritical of pop and potted accounts of recent events, dismissive of much of what they profess to respect (including the U.S. Constitution), contemptuous of principles, and stupidly trusting of those in their tribe who possess state power.

Like “Progressives,” these conservatives too often mistake the unavoidable making of inescapable trade-offs as manifestations of problems ‘solvable’ by state intervention. They also – and also like their “Progressive” counterparts – mistake their ability to imagine splendid social and economic outcomes, or to describe such outcomes on paper, as sufficient evidence that such outcomes can realistically be engineered into existence by the state, and will be so engineered if only we entrust the right officials with sufficient power.

These conservatives and “Progressives” would have us lose touch with reality. Looking down one path, they see reality, and they dislike it. Looking down the other path they see only beautiful mirages conjured by their imaginations. Believing the latter to be real, they recommend the latter path. Reality-based people do not follow them willingly down this path, because behind the mirages is a reality far worse – a reality more impoverished and more filled with oppression – than the other path.

(Don Boudreaux)

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… is from page 31 of the original edition of Lee Francis Lybarger’s 1914 book, The Tariff (which I just received as a generous gift from David Henderson) (original emphases):

But the word [“protectionism”] as used in the Tariff has the very opposite meaning. It does not protect the people from extortion. It subjects them to extortion, by leaving them to the tender mercies of only one set of sellers. It does not protect the people from high prices. It exposes them to such conditions as make prices high. That is its purpose. The only way a Protective Tariff can possibly operate is to increase the price of the things on which it is levied.