Government vs Market Resource Allocation

Yesterday on Lew Rockwell’s outstanding site, Walter Williams wrote a piece on differences between the way the market allocates resources and the way that government allocates resources.

Per Walter Williams:

“Free market allocation is conflict-reducing, whereas government allocation enhances the potential for conflict. But I’m all too afraid that most Americans want to be able to impose their preferences on others. Their vision doesn’t differ from one that says, “I don’t want my children to say morning prayers, and I’m going to force you to live by my preferences.” The issue of prayers in school is just a minor example of people’s taste for tyranny.”

There are two major points to make here. The first is that when governments act, social conflict is almost always increased because resource allocation by political means is almost always a zero-sum game. Williams uses the example of prayer in government schools. There are only two options: prayer in all government schools or no prayer in any government schools. Either way, someone loses. This is not the case when the voluntary market acts, though. The outcome is peaceful because it allows people of different opinions to express their preferences without conflict. If all schools were private, though, you could put your child in a school that allows prayer and I could put my child in a school that doesn’t.

The second point is to understand the danger of people using the government as a weapon. They seek to inflict and enforce their preferences and morality on everyone else in society.  You can see examples of this everywhere you look. Take your morally outraged Facebook friends who insist that not only is healthcare is a right, but also that no amount of tax dollars is too much to provide it. In New York, the state assembly just passed a universal health care bill that would cost over $90 billion dollars annually to manage. That is more than the all of the tax revenues collected by the state of New York in 2014 ($77 billion). This means that taxes on New Yorkers, already among the highest in the nation, will have to be doubled to make up the deficit.

Funding your moral projects by using the power of the government to steal money from your neighbors doesn’t make you compassionate and charitable. It makes you a thief. Actually, it makes you worse than a thief, because at least a thief steals the money himself. The market is always more efficient and effective than government and the market for healthcare is no different.


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