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Friction
by Chris Claypoole
[email protected]

Attribute to L. Neil Smith's The Libertarian Enterprise

I was re-reading "Individualism and Economic Order" by Friedrich A. Hayek when I came upon the following passage and footnote:

That the existence of common conventions and traditions among a group of people will enable them to work together smoothly and efficiently with much less formal organization and compulsion than a group without such common background, is, of course, a commonplace. But the reverse of this, while less familiar, is probably not less true: that coercion can probably only be kept to a minimum in a society where conventions and tradition have made the behavior of man to a large extent predictable.

Is it necessary to quote Edmund Burke once more to remind the reader how essential a condition for the possibility of a free society was to him the strength of moral rules? "Men are qualified for civil liberty," he wrote, "in exact proportion to their disposition to put moral chains upon their own appetites; in proportion as their love of justice is above their rapacity; in proportion as their own soundness and sobriety of understanding is above their vanity and presumption; in proportion as they are more disposed to listen to the councils of the wise and good, in preference to the flattery of knaves" (A Letter to a Member of the National Assembly [1791], in Works [World's Classics ed.], IV, 319)

As anyone with a passing familiarity with economics can tell you, one of the barriers to a vigorous and dynamic economy is what economists call "friction". Friction in this sense is anything that impedes or slows economic activity or reduces efficiency, much like mechanical friction reduces efficiency in an engine. Any economy without the rule of law and enforced private property rights has a lot of friction, and is a major reason why those countries are poor. If people must, for example, cautiously check out the other person or business before engaging in a purchase, or haggle prices because they have no assurance that the other party is not cheating them, economic activity is slowed substantially. Often in such economies, most economic activity is only pursued with those among one's extended family, clan, or tribe. And while the rule of law in the United States is fraying around the edges, one can still walk into a place of business in most parts of the country with reasonable confidence that your desired transaction will be completed honestly and with little "friction".

(Digression: While checking some articles on related topics, I came upon one from the New York Times in February 2012, discussing friction. It seems that the writer doesn't want "too much efficiency", using Bain Capital as a stalking horse. Given that the author is a professor of psychology at Swarthmore College, he is pretty accurate on his economic analysis until he gets into judgment calls, and has some interesting points to make near the end that are tangentially related to the Burke quote. RTWT)

This is largely because Americans in general have for many decades agreed in principle to what used to be called The American Dream. That dream included the rule of law and private property rights; that anyone with the get-up-and-go to perform better than his or her peers could become a success. Sure, there were barriers at times and in different parts of the U.S. for some minorities and women. Over time, economic need broke down most of those barriers. Governments even sometimes jumped on those bandwagons and took credit for any improvements, but it was individuals who began and pushed the changes, for often the barriers were put in place and enforced by some governments. (And still are, in the guise of licensing laws, minimum wage laws, etc.)

In the last few decades, however, there has begun a change. Many Americans no longer view themselves first and foremost as individual Americans, but as members of some group, whether an ethnic "hyphenated" American, a member of a political organization or a union, or a particular profession, such as police. Such people are putting their group above all other individuals, disregarding any harm that may be done to others in order to gather more wealth, status, and/or power for their group members. This is what Burke, as quoted by Hayek, was pointing out.

I am not advocating equality of outcome or railing against anyone with a better idea or work ethic. Rather I am observing that many people are using the political power of groups to obtain economic advantages over others. Such people have, under Burke's (and my) formulation their qualification for "civil liberty". When so-called public unions demand pay and benefits that threaten to bankrupt (and sometimes do, in California) a local government, they are following the path of rapacity, vanity, and presumption. And how many members of the political (ruling) class do not listen to the "flattery of knaves"?

While writing this, I read in one of my favorite blogs, Bayou Renaissance Man, his take on the latest revelations in the ongoing scandals in the Catholic Church. While the organization is international and far older than the United States, the handling (cover-ups) of these crimes against young church members by the American church hierarchy is a prime example of how some members of a group that certainly should be able to "put moral chains upon their own appetites" have failed to do so. When, as the essay notes, loyalty to a group (or a sub-group) becomes more important than one's humanity, trust is dissolved in a way that creates many negative effects.

Thus as American society devolves into a large number of special interest groups, each clamoring for a larger portion of the plunder that our governments extract from Americans, more and more coercion is needed. As that greater coercion is applied, more people will perceive the need to join or create interest groups to protect their "piece of the pie" rather than concentrate their economic activities on growing that pie. Hayek's point that the "existence of common conventions and traditions among a group of people will enable them to work together smoothly and efficiently" may have been considered a commonplace in 1948, when this work was first published. Now, not so much.

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