Smullyan’s Ham Sandwich Argument

Many, if not most, attacks on free markets take the form of the Straw Man logical fallacy. Instead of stating the views or your opponent in fair terms that the other party would accept  you create a “straw man” attack in its place. This straw man is easy to defeat and you pound Mr. Strawman unmercifully.  Irrelevant to the actual argument as the strawman might be; you declare victory and move on. The Straw Man fallacy is well known and fairly easy to spot.

A more subtle and sophisticated version of the Strawman fallacy was presented by Raymond Smullyan  in his book What Is the Name of This Book? (1978), He called it the Ham Sandwich Argument. Dr. Smullyan is a famous logician. (and a magician, a musician, and a mathematician) He claimed he could prove that a ham sandwich was better than eternal happiness.

“Certainly you would agree,” he said, “that nothing is better than eternal happiness.”

“Of course.”

“But you have to admit that a ham sandwich is better than nothing!”

“But…”

“And by the transitive property, therefore, we see beyond a doubt that a ham sandwich is better than eternal happiness. Q.E.D.”

Funny and very clever, and it shows that to change definitions mid-argument leads to fallacy. That is, the ‘nothing’ in the first statement means, “there is no thing” whereas the ‘nothing’ in the second statement means, “not having anything”. Don’t let anyone do that to you!

Hayek on Socialism

Hayek declared in 1961,

For over a hundred years we have been exhorted to embrace socialism because it would give us more goods. Since it has so lamentably failed to achieve this where it has been tried, we are now urged to adopt it because more goods after all are not important. The aim is still progressively to increase the share of the resources whose use is determined by political authority and the coercion of any dissenting minority.

So that would mean that for around 150 years now we have be exhorted to embrace socialism. This in spite of the fact that Mises demolished the idea of socialism in the 1920’s.

Socialism and Fascism as economic systems are different but only on the surface. Both require the awesome force of a coercive State to control the general population for the benefit of the ruling minority.

How many people work for government?

The following is a re-post of an attempt to estimate how many people work for government at all levels. I would argue that the estimate is vastly under-counted since so many people in private corporations are employed meeting federal, state and local mandates. But it is true that they don’t “work for” the government but only because of government mandates and laws.

Iain Murray wrote the following:

How many Americans work in government? That’s a difficult question to answer. Officially, as of 2009, the federal government employed 2.8 million individuals out of a total U.S. workforce of 236 million — just over 1 percent of the workforce. But it’s not quite as simple as that. Add in uniformed military personnel, and the figure goes up to just under 4.4 million. There are also 66,000 people who work in the legislative branch and for federal courts. That makes the figure around 2 percent of the workforce.

Yet even that doesn’t tell the full story. A lot of government work is done by contractors or grantees — from arms manufacturers to local charities, from environmental-advocacy groups to university researchers. A lot of the work they do is funded nearly entirely by taxpayers, so they should count as part of the federal government. Unfortunately, we can’t ask the Office of Personnel Management (OPM) how many government contractors and grantees there are. They don’t keep such records.

Instead, we can ask Prof. Paul Light of New York University, who has estimated the size of these shadowy branches of government. As he points out, while there are many good reasons for the government to use contractors (should the feds really be in the business of making dentures for veterans, as they were until the 1950s?), the use of contracts and grants also hides the true size of government:

[The federal government] uses contracts, grants, and mandates to state and local governments to hide its true size, thereby creating the illusion that it is smaller than it actually is, and give its departments and agencies much greater flexibility in hiring labor, thereby creating the illusion that the civil-service system is somehow working effectively.

OPM’s failure to keep records of the number of quasi-governmental employees indicates a lack of accountability, as Professor Light says:

Contractors and grantees do not keep count of their employees, in part because doing so would allow the federal government . . . to estimate actual labor costs.

Nevertheless, Professor Light was able to come up with some useful estimates by using the federal government’s procurement database. When he added up all the numbers, he found that the true size of the federal government was about 11 million: 1.8 million civil servants, 870,000 postal workers, 1.4 million military personnel, 4.4 million contractors, and 2.5 million grantees.

However, this turned out to be a low-water mark. Over the next few years, even before 9/11, the true size of government increased significantly, almost all in the “shadow” sector. By 2005, the federal government employed 14.6 million people: 1.9 million civil servants, 770,000 postal workers, 1.44 million uniformed service personnel, 7.6 million contractors, and 2.9 million grantees. This amounted to a ratio of five and a half “shadow” government employees for every civil servant on the federal payroll. Since 1999, the government had grown by over 4.5 million employees.

Professor Light’s figures are from 2006, but there can be little doubt that the size of the federal government has increased still further since. There are those new contractors and grantees working on “stimulus” projects to add. Then there are the employees of bailed-out and partially nationalized firms: General Motors (still owned in large part by the government despite the sale of stock in November 2010), AIG, and a large number of banks. GM alone employs 300,000 people. In addition, government has increased its mandates and general spending.

All of which suggests a significant expansion in “shadow” government employment since 2005. Even if it grew at the same rate as it did between 1999 and 2005 (a conservative assumption), that would suggest a further 4.7 million employees dependent on taxpayer funding since 2005, bringing the total true size of the federal government to just under 20 million employees.

Yet the federal government isn’t all. Despite its huge budgets, state and local governments dwarf Washington in direct employment. According to the U.S. Census Bureau, there are 3.8 million full-time and 1.5 million part-time employees on state payrolls. Local governments add a further 11 million full-time and 3.2 million part-time personnel. This means that state and local governments combined employ 19.5 million Americans.

When we add up the true size of the federal workforce — civil servants, postal workers, military personnel, contractors, grantees, and bailed-out businesses — and add in state- and local-government employees — civil servants, teachers, firefighters, and police officers — we reach the astonishing figure of nearly 40 million Americans employed in some way by government. That means that about 17 percent of the American labor pool — one in every six workers — owes its living to the taxpayer.

— Iain Murray is vice president for strategy at the Competitive Enterprise Institute in Washington, D.C.

Well, when the great federal bankruptcy comes, that 20% or so is going to make it just that much more difficult to weather the storm. Baton down the hatches!

 

The core fallacy of central planning

At Bastiat’s Corner I saw this:

The fundamental fallacious assumption that all central planners make in the course of their divine intervention into our personal affairs is not that they are smarter than the average person or even that they are the smartest person alive.  Rather it is that they are smarter than all of us put together.

This has been covered by many of the Austrian Economists over the years but it is always nice to state it explicitly if only to remind one’s self of the central evil of the planners.

Ralph Raico on liberalism

In “Liberalism: True and False,” Raico advances his definition of the ideal liberalism. He shows how far the supporters of the welfare state who usually call themselves liberals are away from being entitled to use the term to describe themselves:

The ideal type of liberalism should express a coherent concept, based on what is most characteristic and distinctive in the liberal doctrine — what Weber refers to as the “essential tendencies.” … Historically, where monarchical absolutism had insisted that the state was the engine of society and the necessary overseer of the religious, cultural, and, not least, economic life of its subjects, liberalism posited a starkly contrasting view: that the most desirable regime was one in which civil society — that is, the whole of the social order based on private property and voluntary exchange — by and large runs itself. (p.65, emphasis in original)

Raico has constructed a good definition of liberalism, one that clears up the confusion caused by the welfare socialists claiming the name “liberal”. But one wonders where this ideology arose from. It was a long process and this process began in a particular place: western Europe. Why did liberalism first arise there?