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What About the Poor? A Story of How the State Can Hurt the Poor

By Davi Barker

Published in SF Muslim Examiner September 2, 2009

Yes, my dear reader, it’s time to talk about that old objection. “What about the Poor?!” In my mental undulations through libertarianism that was the hardest objection for me to personally give up. In fact, to this day there is a little statist in my head who chimes in from time to time. So, for those statists who think that the best way help the poor is to elect a class of unaccountable people with a monopoly on coercive force, who put a gun to our necks and fleece our wealth, skim the cream off the top for themselves and then throw the bones to the poor I’d like to tell you about Larry Moore. There have been a handful of articles about Larry since March, but I’m not sure the state subsidized journalists at the San Francisco Chronicle fully realize just how instructive his story is. So, I humbly submit the following executive summary, and commentary.

For six years Larry was a homeless hapless drunk, living under a bridge, begging for “sp’ange” from strangers. Last September Larry acquired his own shoeshine stand, got himself a nice looking suit and starting earning $7 a shine. He hasn’t touched a drop of alcohol since. It’s not a lot of money, not a prestigious job, but anyone who knows Malcolm X’s story knows that shoe shining is the bottom of the economy for the entry level entrepreneur. Larry’s shoeshine business was so successful that the SF Chronicle did an article about him last March (1). They called him, “the best-dressed shoeshine man in the city.” And when they interviewed him he said, “I used to push a shopping cart in this town. Now I have my own business. I feel blessed every day!” You see Larry had a plan to save himself. He was squirreling away the money, and on his way to saving the $600 he needed to rent into an apartment.

Well, then some bureaucrat from the Department of Public Works saw the article and sought out Larry to inform him that he needed to purchase a $491 sidewalk vendor permit. Christine Falvey, Spokesbureaucrat from Public Works, said the department’s contact with Larry was meant to be, “educational.” “We certainly don’t want to hamper anyone’s ability to make a living. Our educational efforts are actually meant to support that effort by making our streets an enjoyable place for people to visit.” Bollocks! So, Larry, this saint, dutifully attempted to comply with city laws and handed over almost every penny for this permit. Just one problem, Larry doesn’t have a valid CA driver’s license, and had to send away for a replacement birth certificate from Kansas. This bureaucratic SNAFU was described in a second article published on the 4th of June (2).

The response of the public was described in an article less than a week later (3). “Hundreds of customers flooded his make-shift stand with shoes and money in hand… After collecting nearly $1,000 from so many new clients, Moore is finally able to pay his way into some temporary housing.” Mabruk Larry!

So, why is this important? Because Larry’s story exemplifies perfectly exactly how the state (A monopoly on coercive violence) fails to help the poor, and the fair market (the aggregate of all voluntary economic exchanges) absolutely succeeds. In fact, it would likely be a better story if I could discover how Larry ended up on the street in the first place, but I can’t find that story. Let me explain.

In the beginning Larry is a broken man living in a nation with one of the most bloated federal welfare programs in the world, in the most socialist state in the union, in the most lefty pinko city in the state. If a violent monopoly was going to solve poverty anywhere it would be in San Francisco, and yet this guy slipped through the social safety net for 6 years. The state did nothing for this man, but people did. And if you examine it statistically you’ll see that the more tax money they take for the social safety net, the more bureaucratic and inefficient it becomes. So, we know no state solution is ever EVER going to solve the problem of poverty. However, we also know the fair market value of a homeless drunk to well intending strangers. This is the true social safety net, and this is a function of the fair market, the aggregate of all voluntary economic exchanges. At the very bottom, it is voluntary interaction in the market, not coercive redistribution of the state, that kept Larry fed for 6 years. So, despite estimates of 40-60% taxation in this country, the market is still providing for the poor. So, a coercive tax takes money out of the safety net that works and puts it into the safety net that doesn’t.

And now the little statist is screaming, “but without the government the poor will starve in the streets!” And I think that’s kind of funny. Is there some reason why you think people who wouldn’t give money to the poor would vote for a bureaucrat to take it from them by force? I mean, the fact that we continually vote for larger and larger welfare programs seems to me to imply that helping the poor is a pretty universal value in our society. If it’s a universal value we don’t need to be forced to act on it. If it isn’t a universal value… than we’re not going to vote for it. The very fact that nearly every single person I’ve ever had this conversation with instantly responds, “What about the poor!” tells me that we are good people. And we are able to help the poor without coercion.

Then enters the shoeshine stand. Entrepreneurship is how the fair market raises the poor out of the safety net. In a fair market absolutely everyone has value and can create wealth from nothing. With just a minimum of creativity and ambition anyone can begin earning money for themselves, and no one is worthless. Statism tells us that some people are worthless, which is why it usually results in some sort of genocide. By imposing a minimum wage the centrally planned economy raises the barrier of entry into the market and prevents people like Larry from participating under their own steam. People in Larry’s situation have value, and are prevented from earning based on that value because they have dropped beneath the minimum. They have to mow lawns, shine shoes, or wrap themselves in tin foil and put on a street performance. Why? Because these activities still exist in the fair market. Were it not for minimum wage laws Larry would have been allowed to prove his value to an employer by offering to work for a reduced starting wage. He could have swept hair in a barber shop for $4 and hour and earned $600 in less than two months. But no employer is going to risk $8 dollars an hour, and all the taxes, and liability that come with employing someone, on a homeless drunk. So, despite the raised barrier to entry preventing the homeless from rising out of poverty, the market is still finding value in the poor who have an entrepreneurial spirit. So, coercive minimum wage laws take jobs away from people who can prove their value in the fair market and gives jobs to bureaucrats who cannot prove their value.

And now the little statist is screaming, “but without government greedy capitalists will exploit the workers!” And I think that’s kind of funny. Is there some invisible difference between a capitalists and bureaucrat? We’re all human beings, motivated by similar needs, right? Yes? Ok, than what makes you think that a business owner, who interacts with people on a voluntary basis, must prove the value of their services, and must maintain a benevolent reputation or risk a boycott would exploit people more than a bureaucrat, who wields coercive force, has a monopoly on his services, and is only accountable to the public once in an election cycle? In your experience are violent people with no competition or liability more virtuous? I mean, the fair market boycotts products for exploiting dolphins.

Then enters the state. Can you imagine! The government that is supposed to embody the very social safety net completely ignores Larry for six years and then when they learn of his independent success swoops in and takes his every penny. Just when he was on the verge of actually lifting himself off the street he’s attacked by the third head of the hydra. Licensing laws. As I’ve said before, the ability of the state to license is the ability of the state to prohibit. If you need to ask for state permission it is not a right, it is a privilege. And I’m not sure what the reason for the “sidewalk vendor permit” is, but I know why it’s important to the Department of Public Works. Because everyone, the capitalist, the bureaucrat, grade school teacher, the celebrity, the poor, you, me, Barry Obama, EVERYONE acts upon market incentives. And the state acquires revenue through licensing laws. Plain and simple. The difference however is that the state is not required to prove it’s value. It is a monopoly on coercive violence. Willing to extort $491 from every sidewalk vendor, effectively keeping the poor poor.

And now the little statist is screaming, “…” Nothing. And I think that’s kind of funny. Because what’s he going to say? “Without the government poor people will all be selling stuff on the street! They’ll be providing value in the market, earning wealth, satisfying customers, and improving their condition!” And this is always the end result of any rational discussion about coercive violence. Eventually the statist runs out of arguments from fear and arguments from morality and has nothing left but irrational preference, which is a dangerous motivation when people’s lives are at stake.

Then enters the fair market. Larry was not saved by the state. Larry was saved by the fair market. All it took was a little advertising in the form of news paper article and there were hundreds of people lined up for blocks to get their shoes shined. Because the fair market is not only blind calculating heartless capitalism. The fair market is the aggregate of all voluntary economic exchanges. And in the fair market, in the hearts of people, the homeless have value, the down trodden have value, charity has value, Larry has value. And all that it takes for good to prevail to for people to live their values without coercion.

So I hope this has been helpful. Everything right and true is from Allah. Any mistakes are from myself. And I hope you’ll go to the corner of New Montgomery and Market Street in San Francsico and get your shoes shined by Larry Moore, the best-dressed shoe shine man in San Francisco.

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