For the People

“By the people, for the people” is a familiar mantra. Americans are proud of our democracy, presumably, because it is the institution that assures the greatest amount of freedom for the people. But does it? What many aren’t willing to acknowledge or admit is that democracy actually GUARANTEES coercion. Often, a great deal of it.

Every time votes are tallied there is some group that loses. If a majority rules, that group could be up to 49%. If a simple plurality decides, then the group that suffers is often much larger. All democracy guarantees is freedom for roughly 50% of the population. What is the alternative?

With very few exceptions, the answer is the free market. In his characteristic simple brilliance, Milton Friedman would make this point with the “green tie analogy” (a YouTube search was unsuccessful). In a democracy, if I want a blue tie and you want a green tie, and the majority of people agree with you, then (much to my chagrin) I have to wear a green tie. Simple enough. Just let people choose their tie in a free market. Where most people lose the analogy is in realizing that markets deal in more than consumer goods. There are also markets for ideas, culture, religion, fashion, art and any other activity that involves human decision-making and choice.

Markets and individual choice is the only sure way to expand freedom; whereas, democracy is a direct limitation to freedom. Occasionally limited freedom is necessary. But once that conclusion is reached, it becomes natural to slowly broaden the definition of what justifies collective decision-making. People begin to think that because democracy works well in one instance, it must work in other similar situations. It’s very intuitive that the wisdom of a crowd and deliberate planning will achieve better outcomes than the *anarchy* of individuals acting in their own self interest. But intuition is not always correct. The slope becomes slippery and freedoms are eroded.

A post at Free Exchange is getting at this concept when it refutes the idea that we must choose between existing as “economic particles in constant collision in a material marketplace, and hence can equate flourishing with robust competition, or we can conceive of ourselves as civic beings embedded in communities, who thrive on cooperation.” It's a false dichotomy. There is a third option: “civic beings in constant cooperation in a material marketplace.”

The entire concept of democracy having a monopoly on creation and expansion of freedom and civility is utter bupkis. Markets achieve cooperation and unanimity. Applied in excess, democracy breeds conflict, coercion, and oppression.

Markets are where people trade. Trade stands second only to speech as the quintessential form of human cooperation. The competition at the heart of capitalism is a competition to cooperate on ever better terms -- a competition to offer consumers more for less.

A culture of individualism is a culture of innovation and customization. Market competitions to cooperate with consumers to mutual gain are won by constantly innovating in ways that ever better gratify individual desires.

Democracy is essentially a mechanism of conflict to which we repair when the cooperative unanimity of market exchange is infeasible. Unable to provide certain necessary goods through voluntary market mechanisms, we require a decision procedure that works on less than unanimity and an institution that can back up those non-unanimous decisions with force. A decent constitution minimizes the wasteful competition and conflict inherent in democracy by strictly limiting the scope of democratic choice to a bare minimum.