We are often told that things are getting worse: the poor are getting poorer and the rich getting richer. While the gap between rich and poor may indeed be increasing, this does not necessarily equate to the poor or middle class getting poorer. In the United States, smart phones are ubiquitous, as are tablets, access to the Internet, computers, gaming systems, and many other electronic devices. Additionally, conveniences like central heating and air conditioning, microwave ovens, clothes washers and dryers, and automatic dishwashers are increasingly available to those less well off. The standard of living in the U.S. has been steadily increasing for wealthy and poor alike.
As a sign of these improvements, recent articles have delved into the shrinking number of laundromats across the country. In The Atlantic, for example, we’re told of the trend in new construction including washer-dryer units. In Hoodline, an online San Francisco periodical, a similar pattern of diminishing laundromat coverage is chronicled in that city. However, as Steven Horwitz of FEE points out, the dwindling number of laundromats is generally painted as a bad thing. The fact that the market for these services has declined as a result of lower cost alternatives is bemoaned by progressives as detrimental to the poor and underclasses.
Laundromats, like shopping malls, book stores, and arcades, are going the way of jukeboxes, Blockbuster Video, phone booths, and dial-up Internet. Market forces impact industries, replacing the less efficient as alternatives arise. The availability of more affordable washer and dryer units is a good thing for everyone and is reflected in declining numbers of laundromats.
In Planning for Freedom, and Sixteen Other Essays and Addresses, Ludwig von Mises said: “If one rejects laissez faire on account of man’s fallibility and moral weakness, one must for the same reason also reject every kind of government action.” Another way Mises might have put this is to say that governments do not act, humans do.
Progressives and conservatives alike regularly descry what they claim to be the flaws of humanity. They tell us that humans are morally weak, that we care little about one another and, left to our own devices, we would rather kill one another than cooperate. Despite the fact that this is both logically and demonstrably false, hey insist on outlawing drugs, alcohol, guns, free association, and anything else that encroaches on their ability to control the masses. At the same time they claim democracy is the cornerstone of civilization, enabling representation in government policies. The irony of claiming “fallibility and moral weakness” in private affairs while believing in the ability of these same people to select wise leadership appears lost on them.
In addition to the inconsistency routinely exhibited by proponents of state power, it is common for those less enamored with government oversight to blame government for wars, recessions, or other social ills. While the presence of government certainly might enable such things, governments themselves cannot actually start wars, tamper with economies, or otherwise impact societies absent the actions of those in command. Even when working in unison, all actions are individual actions and all responsibilities can only be ascribed to individuals. As a result, when the next war or economic downturn occurs, responsibility for these events will fall with those whose actions and policies directly led to them.
One of the great misconceptions about economics is the belief that consumption drives growth. While it’s certainly true that consumers ultimately decide who and what succeeds in a free market economy, this is not the same as driving growth. Much like the chicken and egg, it is ultimately savings that drives economic growth rather than consumption.
With just a cursory review, it’s easy to see how consumers are secondary to producers. If I stand in line at Best Buy to purchase the latest gaming system, for example, my effort is pointless without the prior creation of the latest gaming system. In order to develop such technological advances, it is necessary for capital accumulation to occur as a means of paying development, funding infrastructure, and ensuring marketing.
This is even more clear when we consider Crusoe’s efforts to survive alone on his island. Crusoe’s consumption varies only as much as he is able to endure. To ensure that he can create a fishing net, for example, he eats less fish for a number of days to have food for the days of construction. Without saving food, he’ll never be able to develop the tools necessary to dramatically increase future consumption. In other words, similar to economics in general, consumption doesn’t drive the growth of Crusoe’s economy.