The Philosophy of Safety Nets

File:Mitt Romney by Gage Skidmore 3.jpg
Source: Wikimedia Commons

Achieving happiness is easy. I don’t mean eudaimonia – that oversophisticated happiness for Pinot-snuffling yuppies. I mean ordinary, practical happiness for ordinary, practical folk: utility. Achieving eudaimonia is definitely not easy; at your very approach it dances away like a will-o’-the-wisp on gossamer winds of pretentiousness. But utility? Utility is solid and graspable. In fact, Australians say ‘utility’ to refer to what Americans call a ‘pick-up truck’. A ute, we normally say. What’s more blunt and practical than that? Eudaimonia is a concept for sprinkling on your puy lentils to add that certain je ne sais quoi. Utility, on the other hand, is a concept you could change your sparkplugs with.

So, achieving ute is easy. Here’s how you do it. Start with the things you have. Now exchange them with people for other things you would prefer to have. People will participate in these exchanges whenever their preferences are different to yours. This will be often, since humans are psychologically diverse. Keep exchanging for as long as your preferences fail to be maximised, and you’ll always be getting closer to full happiness.

As long as there are free markets, the opportunity for exchange will be there. You may not like where you are, but you can always exchange your way to somewhere better. Suppose, for example, you inherit a large manor house from your parents, but you don’t like manor houses. Suppose, also, that you’ve always wanted to be a collector of comic books, but you don’t own a single one. Blast! But exchange provides the way out of this cruel trap. In fact, it provides the way out of all cruel traps. More money than sense? Buy yourself some education! All dressed up and nowhere to go? Exchange some of your clothes for invitations to exciting events! Water, water everywhere, and not a drop to drink? Find somebody who prefers non-potable water to potable water, and let the trading begin!

Why does it somehow happen, then, that markets are relatively free and yet people aren’t moving towards full satisfaction? There are three main explanations. Maybe people are already fully satisfied. Maybe they’re refusing to exchange on account of some perversion. Or maybe they’re screwing up. (There is a fourth possible explanation, which is that some factor external to the whole system of exchange is causing interference. This possibility threatens to undermine the whole theory by introducing untestable ceteris paribus clauses into its main principles. Let’s never talk about it again.) So, as I said, there are THREE explanations. The third requires the introduction of a new concept. It’s possible to screw up by being mistaken about your preferences or by forming false expectations. This is why we need the safety net.

The safety net is a familiar concept from the circus. The tightrope walker, for example, is meant to walk across a rope, but sometimes she makes mistakes. So, as she’s training, they put a net under her. Otherwise she would fall. See? Safety net. Likewise, a free market lets you exchange your way to happiness, but just in case you make mistakes and make yourself less happy, there’s the safety net, in the form of the welfare system. It keeps you from getting too unhappy as a result of your own maladroit exchanges. You could also call it ‘training wheels’. It’s for people who haven’t quite got exchange right yet – people whose hedonic balance is a little off. Don’t worry, little darlings. We’ll catch you. Now, back on the rope.

I said back on the rope! Yes, you see? The problem with the safety net is that it also catches the aforementioned perverts, who simply refuse to help themselves to greater happiness through exchange. Imagine a lazy circus student who doesn’t even try to walk the rope, tumbling straight off every time and using the safety net as a big hammock until somebody prods him off. That’s a good reason not to make the safety net too comfortable. Make it out of some kind of tough material so it chafes the skin, or, better yet, rig it up like the rope-beds in the hostel described by Sam Weller in the Pickwick Papers: every morning the ropes go slack and oversleepers are dropped onto the hard wood.

The above should give you everything you need not only to achieve happiness but also to build the good society. So why is there so much debate about political economy? Because people don’t understand these simple principles. Maybe they didn’t read The Constitution of Liberty, because it was too long. Now they can read this blog post, which is much shorter with no loss in content.

Take Mitt Romney. He recently got into trouble for saying he wasn’t concerned about the very poor, because there was a safety net for them. That’s perfectly sensible, as I have proven. People like Paul Krugman might come whinging with their statistics about tax rates and poverty, but they ought to listen to Adam Smith, who said ‘I have no great faith in political arithmetic’ (Wealth of Nations, Book IV, Chapter V). The theory I’ve just fully outlined requires no reference to numbers; it’s a piece of folk psychology. Treating it as some kind of scientific theory, tractable in terms of quantitative laws with specific values for its variables runs it straight into the objection that all attempts to do so hitherto have rendered it either false or so generic as to be vacuous (see my previous post, which asserts the same point, also without evidence). Let’s never talk about that again either.

Back to Romney, who next said something even more sensible, which is that if there are holes in the safety net, he’s happy to repair them. Good thinking! Imagine if the circus school net-maker wasn’t vigilant! The real problem is the next thing he said, which is that he wants to focus on the middle classes, rather than the very poor or the very rich. Certainly focusing on the very rich would be silly and pointless. They’re miles above the safety net! They’re not just walking the tightrope; they’re flying over it, somersaulting off unicycles and pogo sticks with big goofy grins on their faces. The middle classes are also above the tightrope, leaping up to swing on trapezes at various levels. But that means Romney’s idea is foolish. If government starts trying to help the middle classes, this will involve putting safety nets at different levels above the tightrope instead of below it! But if you do that, the nets will get in the way of the performances! This is what economists call ‘crowding out’.

In conclusion, Romney’s views are horribly confused and show a basic failure to understand political economy, which consists, to recap, of the following two principles: (1) people make themselves happier by exchanging, and (2) government’s only role is to provide a safety net for people who suck at exchanging. Deviating from these principles, Romney will end up wrapping up the whole circus in safety nets like a crazy incontinent spider.

Perhaps, however, his social philosophy is not the one I have just outlined. Maybe he is applying some heretical social philosophy, one that draws from a stock of concepts going beyond those of exchange and safety nets. If so, he must tell us so, and what his new, deviant social philosophy is. But then he also shouldn’t confuse the matter by using a term like ‘safety net’, which immediately signals commitment to a classical theory admirable in its straightforwardness, if nothing else.

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