True Cost and Free Choices

During an appearance in Gettysburg yesterday, Sarah Palin was asked her position on ethanol subsidies.  She told Scott Conroy of Real Clear Politics that she opposes all energy subsidies:

“I think that all of our energy subsidies need to be relooked at today and eliminated.  And we need to make sure that we’re investing and allowing our businesses to invest in reliable energy products right now that aren’t going to necessitate subsidies because, bottom line, we can’t afford it.

“We’ve got to allow the free market to dictate what’s most efficient and economical for our nation’s economy. No, at this time, our country can’t afford the subsidies. Before, though, we even start arguing about some of these domestic subsidies that need to be eliminated — should be — we need to look at ending subsidies and loans to foreign countries and their energy production that we’re relying on, like Brazil.”

Palin’s point about our inability to afford these subsidies is obvious to anyone who glances at the current national debt.  Her imperative to “allow the free market to dictate what’s most efficient and economical for our nation’s economy” is a separate, but equally important, point.  Even if we could afford these subsidies, they are crippling the efficiency of the free market, and they are offensive to the moral basis of capitalism: the freedom of choice.

Free choice requires honest information.  Fraud is a form of compulsion, because it robs the victim of his ability to make an informed choice.  For example, if a realtor falsely persuades you to purchase a property by concealing its high taxes and maintenance costs, you have been denied the information you needed to properly exercise your free will as a buyer.  You didn’t know what that property really cost, so you couldn’t accurately compare it with other options.  False information has been used to control you.

Our legal system appropriately treats fraud, and various other dishonest methods of manipulating the market, as crimes.  At the same time, our government perpetrates massive fraud against all of us, by concealing the true cost of virtually everything.  This robs us of the information we need to make informed purchasing decisions and sound financial plans.

What is the true cost of a gallon of gas, a gallon of ethanol, or an electric car?  Who knows, when every stage of research and production is distorted by massive subsidies?  Everything from the hourly cost of labor, to the value of capital improvements, is hidden within a creaky old haunted house constructed from price supports, price ceilings, price floors, and regulatory walls.

These subsidies are not distributed as rewards for excellence.  They are not “investments,” as politicians like to call them.  Investments are informed choices, accepting risk in the pursuit of profit.  They are free choices, which means an investor gambles his own money, and accepts the possibility of loss.  Investment is a process of finding greater efficiency, as losses destroy inefficient companies and unwise investors.

Government subsidies, on the other hand, are issued to ensure the survival of products and companies which have failed comprehensively in the free market.  They are an attempt to force you to purchase certain things, by using tax money collected through compulsive means to support industries that cannot fairly attract your business through free-market competition.  Poor government “investments” don’t drive Uncle Sam out of business – they merely oblige him to seize more of the peoples’ assets to fund further adventures, or run up the deficit to continue imposing ideology in defiance of free-market truth.

The distortion of price through Big Government ideology is even more profound when you consider that our bankrupt government finances its vast network of subsidies with deficit spending… and much of our national debt is money the government has borrowed from itself.  Costs are being distorted with federal money that doesn’t really exist.  It all boils down to central planners setting prices through decree.  The entire system is a fraud, which pumps a blizzard of lies into our faces, to sustain its preferred illusions.

The sheer volume of these subsidies and anti-competitive regulations has corrupted the stream of pricing data flowing into the vast, widely distributed network of the free market.  Consumers have a combined genius for efficiently allocating resources… but only when they are given accurate cost information to make their millions of individual decisions. 

America has drunk itself blind on subsidies.  In order to be free, we must be allowed to perceive our surroundings clearly.  We must be able to fairly estimate the value of our labor, and the products offered by our neighbors.  Free people are not the subjects of endless manipulation, carried out by politicians who know that compulsion against the citizens of a democratic republic must be concealed. 

Freedom is not found in a choice between illusions.  Our current recession is filled with the sound of illusions shattering upon contact with a reality that cannot be voted away, or dismissed by decree.