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Picking Winners and Losers

by Michael Austin, published

If anybody is interested, my vote for Most Obnoxious Talking Point of 2014 is “government shouldn’t pick winners and losers.” This has become the universal answer to any form of government regulation, incentive structure, or redistribution of income. The term can be used to attack pretty much anything that government does beyond fixing potholes and invading stuff.

It’s easy to see how this became such a popular talking point. It sounds profound. It appeals to our innate sense of fairness. And, it activates a fascinating quirk of human nature that psychologists call the

Lake Woebegone Effect, or the belief of more than 90 percent of the population that they are above average and would therefore obviously be “winners” in a fair competition.

The Lake Woebegone Effect, however, gets it almost completely backwards as far as winners and losers are concerned. Nature, when left to its own devices, produces mainly losers. This is just how evolution works. Most organisms do not survive long enough to reproduce, which is why the ones who do end up spreading their genes relatively quickly across an entire population. The rigid logic of natural selection is very good at picking winners and losers. This is the way to go as long as you’re OK with almost everyone being a loser.

It is worth asking, then, how winners and losers ought to be picked according to those who think that government should never pick them. The answer, of course, is that markets should pick winners and losers. This is, in fact, part of the current Republican Party platform.

“Unlike the current Administration, we will not pick winners and losers,” it declares. “Instead, we will let the free market and the public’s preferences determine the industry out-comes.”

Well, that’s swell. Government won’t pick winners and losers—the market will. That makes everything better.

Except that it doesn’t. Unlike the government, which is clunky and inefficient, markets are extremely efficient and logical in the way that they pick winners and losers. But their logic is the logic of natural selection. This logic encourages the strong to press their advantages to become stronger at the expense of everybody else. The world has plenty of experience with societies that follow this logic. They invariably provide incredible standards of living for a very few, and convert the vast majority of people into expendable labor. When people say, “the government should not pick winners and losers,” then, what they are actually saying is, “we should allow winners and losers to be chosen by fundamentally amoral market forces that encourage acquisition, accumulation, and cutthroat competition and empower those with small advantages to press them until they become crushing economic weapons.”

It has taken thousands of years for societies to get to the point where most people in them did better than they would have on their own. Many societies aren’t there yet. But, the countries in the world that people actually want to live in have all found ways to harness the productive forces of free markets without succumbing to their fundamentally amoral way of ordering winners and losers. This does not mean that every way that every government picks winners and losers is a good way to do it. Many governments, including ours, have come up with truly awful ways to put their fingers on the scale.

But let us not pretend that the government of a complex society can, or should, do nothing in the area of winner-and-loser picking. Anything that government does, or refrains from doing, will give some advantage to some people and some disadvantage to others. That's why they call it a "complex society." Clearly, people who have more resources--who will be winners as long as nobody regulates them in any way--have a strong interest in the government appearing to do nothing. But that picks winners and losers too, and it does so for reasons that do not even pretend to have anything to do with morality or justice.

Instead of just saying "government should not pick winners and losers" as though this were possible or desirable, then, perhaps we should try to understand how winning and losing happen--no matter who is doing the picking--and structure a society where winners and losers are picked by rules that everybody has some say in creating. Largely, this is what it means to live under a government.


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