"If the major opportunities for future growth of government lie in the area of conventional taxation, are there any defenses available to the citizenry? ... Perhaps the most fruitful advice comes in two parts. The first piece of advice is to avoid war and the rumor of war: this is history's greatest boon to the tax man. ... The second piece of advice is to seek ways of inhibiting government's ability conveniently to increase its collections. Possibly the very increase in that ability that is in prospect can be turned to account by a constitutional provision which forbade the income tax, and perhaps even the storage of information regarding individual incomes by third parties, including government." ~ Benjamin Ward
Fortuna and the Free Market
Column by Michael Kleen.
Exclusive to STR
“And thus does Fortune's wheel turn treacherously
And out of happiness bring men to sorrow.”
~ Geoffrey Chaucer
Imagine you and another man are standing around a roulette wheel at a high-end casino. You place $50 on black and the other man places $50 on red. The ball had landed on a black or red number the past dozen times, and you are confident it will land on either black or red once again. Both you and the gentleman are hoping to double your money. Your odds are not 50/50, however. In an American roulette wheel, there is a single zero and a double zero, both green, nestled among the other 36 numbers. The odds of hitting these are slim, and so you and the other man push that probability out of your minds.
The attendant calls for final bets, and at the last minute, an elderly lady places $5 on zero. The wheel spins. The ball lands on the single green zero, and the elderly lady walks away with $180.
Dumbfounded, you and the other man each place your last $100 on the same colors as before in an effort to win back your losses and come out ahead. This time, the ball lands on black. You walk away with $200, while the other man leaves penniless. You know, however, that it could have just as easily been you leaving with an empty pocket.
Every day at the roulette table, that merciless turn of the wheel makes some people rich and others broke. I have seen a man win thousands of dollars over the course of an hour, only to lose it all in a matter of minutes. What never changes, however, is the cold probability that decides a gambler’s fate. Gamblers are famous for courting Lady Luck with all kinds of strange tokens and gestures, but every gambler knows that someone has to win and someone has to lose. For every story of a gambler who strikes it rich, there are dozens (if not hundreds) of untold stories of failure.
In the ancient world, this concept was personified by the Goddess Fortuna for the Romans, or Tyche for the Greeks. She was often depicted wearing a blindfold while spinning the Rota Fortunae, or the Wheel of Fortune. The wheel turned, bestowing wealth and prosperity to some, and poverty and misfortune to others. It turned again and that order was overthrown. Because Fortuna was blind, these terrible twists of fate could befall anyone, no matter what their circumstance.
In economic terms, those who accept the rise and fall of fortune favor a free market, those who seek to control fortune are socialists, and those who try to manipulate the system in their favor are state-capitalists. A socialist is one who goes broke at the roulette table and then asks, “How can I rig this game so that no one ever loses?” A state-capitalist, on the other hand, asks himself, “How can I rig this game so that I always win?” Only the anarcho-capitalist, or the free marketer, accepts the game as it is, knowing that there is always a chance to lose, but if you never make a bet, there will never be a chance to win either. That is the understanding every gambler takes to the table.
The free market, like the roulette wheel, rewards only a few investments out of the many laid on the table. Some people lose everything and some win a fortune, but the majority find themselves somewhere in between and go home to try again another day. There is a simple blind fairness at play. Everyone knows the risks and that the odds are against them, but they also know the potential rewards. Without that drive to take risks, an understanding of the unpredictable nature of fortune, and a willingness to accept the outcome, the whole free market system could not function. Unlike the game of roulette, however, life gives us no choice. We are forced to play the moment we are born and there is no guarantee of success.
Unfortunately, there are many who blame the free market for their unfavorable outcomes, and they want to rig it to insulate themselves from failure. In the process, they make the market unfair for everyone. These risk-averse critics of free markets are as wrong in blaming the market for their failure as they would be in blaming the roulette wheel, and it would be correctly seen as cheating if they tried to manipulate either one for their own gain. No amount of manipulation will stop the inexorable turn of Fortuna’s wheel, however. Although often perceived as harsh and unforgiving, in the end, Fortuna is the only truly impartial arbiter of fate.