I remember a time when the pastor of a Philippine Senator shared the latter’s plan in a Facebook forum to increase the salary of public school teachers. Everybody praised the lawmaker. The pastor is my former teacher and so I respect him. However, studying economics since 2009, I expressed my opinion on the matter. I commented that everybody loves to see an increase in their salary. How about if the firemen ask the same and other government agencies and departments? Who will pay the bills?
My teacher saw the logic of my statements. He then changed his tune. He said it was just a proposal.
Just this morning, I read another lawmaker who is proposing a salary increase for government cybersecurity experts. Admittedly, cybersecurity is a sensitive issue these days. And so, I expect that almost everyone would consider such a proposal praiseworthy and commendable.
The goal of the proposal is to prevent IT experts from leaving the country or transferring to the private sector looking for better opportunities. She even suggested the creation of more positions in critical IT agencies in the government.
Who Pays the Bills?
Again, I asked the same question: How about if other government departments ask similar increase? Who will pay the bills?
Both an increase in salary and the creation of new positions in civil service would mean an increase in government expenditures and the need for more taxes. This would also mean a bigger government and less freedom.
Perhaps, it’s too ideal of me to expect lawmakers to behave differently. That’s what they are paid to do and that’s the reason why they are in the position in the first place – to pass laws and proposals to serve specific special interest groups – and ultimately to get a larger portion from the public chest.
The Ways of Lawmakers
The ways of lawmakers are the exact opposite of the ways of good economists. Public policies these days are either highly politicized or inspired by bad economic policies. Yes, there is a huge difference between good and bad economics. Henry Hazlitt captured this distinction in his book, Economics in One Lesson:
The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups (Economics in One Lesson, p. 4).
Yes, most people just see the immediate effect of a certain bill or law on a specific group. And add to it the fact, that the good effects of that law will be covered by popular media and those who benefitted will be interviewed. For most people, that’s sufficient evidence that the new policy is good. None would inquire about the long-term effect of such a policy on the whole of society.
F. A. Hayek shared a story about his conversation with an aspiring politician in his book, The Road to Serfdom. After reading Hayek’s book, the aspiring politician expressed that he would enter politics to set things right. Hayek warned that society will only be changed by good ideas propagated by the intellectuals. Hayek advised him to make an intellectual case instead of running a public office.
Two Outstanding Gentlemen
Such a piece of advice is considered laughable these days. It reminds me of two good people in our country. Both were doing good in their private capacity. The first one due to the influence of his close friend, ran the highest office in the land and was cheated. I am not certain if that was the cause of his untimely death.
The other is a legend in boxing. He has been doing a lot of good to the country with his economic initiatives as a citizen. But he thinks that his service to the country is not enough to introduce change. He too, ran for the highest position in the country and lost.
Role of Education
Why do people think that the political way is the better way? I suspect most people lack the basic training of the mind to understand the critical issues of our time. Most people don’t understand what freedom is and the character of the market economy. All they heard about the free market are coming from Marx and his followers.
In response to the question of who pays the bills for the expansion of government power and expenses, most people just point to taxes, and that’s it. It is as if the tax is perceived as unlimited and all the legislators have to do is to create a law to justify the additional expenses.
I love how Frederic Bastiat describes taxation:
You compare the nation to a parched piece of land and the tax to a life-giving rain. So be it. But you should also ask yourself where this rain comes from, and whether it is not precisely the tax that draws the moisture from the soil and dries it up. You should also ask yourself further whether the soil receives more of this precious water from the rain than it loses by evaporation.
Are taxes a life-giving rain? Or is it the cause of the barrenness of the land? Nobody asked these hard questions this day in the public space. Everybody thinks that taxation is the “highest good.”
The Forgotten Man
We need to retrieve an old speech by neoclassical liberal thinker William Graham Sumner about The Forgotten Man to figure out who pays the bill. The hardworking, independent person in society who doesn't ask for special favors or attention, according to his logic, is the one who foots the bill for the salary increase and the addition of new positions in the civil service. This person, who is frequently an honest worker, makes a big contribution by working hard, providing for his family, paying taxes, and taking part in civic responsibilities like voting and community activities. Despite playing a crucial function, he is ignored since he doesn't make any demands for attention, make any emotional appeals, or look for compassion from the public. They are referred to as The Forgotten Man by Sumner
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How come people forget the identity of such a great contributor to social improvement? Again, the culprit here is politics. As already emphasized, originally, the term The Forgotten Man represented responsible and productive workers and taxpayers. However, over time, its meaning was distorted. Progressives, especially Franklin Delano Roosevelt, misapplied the term to refer to the "poor," shifting the focus away from the hardworking taxpayers it was intended for. This misinterpretation led to the neglect of the true contributors to society and marked a shift in societal focus.
How can we help alleviate the burden of The Forgotten Man?
Sumner identified two ways to help ease the burden of The Forgotten Man:
The first suggestion emphasizes the importance of critically evaluating social reform efforts, being aware of the funding sources, and defending The Forgotten Man against new attacks, even if it means being accused of opposing the poor.
The second proposal focuses on legislative actions to secure the earnings and savings of The Forgotten Man, including ensuring the security of capital, opposing detrimental financial practices, and upholding the integrity of contracts.
However, in our time, it is rare to see a lawmaker willing to take risks to help The Forgotten Man due to potential political consequences.