5 Worst Economic Fallacies Committed by Statists


Engaging with statists often feels like mental masochism—akin to bashing your forehead with a rubber duck wrapped in barbed wire—but there are some benefits. When discussing politics or economics with statists, I like to fine-tune my logical faculties and attempt to identify all the errors contained in their pro-government arguments. It’s like an Easter egg hunt for fallacies! And, when you’re dealing with dyed-in-the-wool statists, the bounty is usually plentiful.

Frederic Bastiat is famous for introducing the world to the “broken window fallacy” and no doubt modern statists fall for that one all the time. But I’d like to describe and refute more modern fallacies that, while equally egregious, may be less obvious.

  1. ‘Who Will Build the Roads’ Fallacy

This has become a bit of a cliché in libertarian circles in response to the hapless statist inquiry, “But without government, who will build the roads?” This is of course to imply that excavation of dirt and pouring of asphalt is so complicated that only professional bureaucrats can handle the task. But it’s absurd to think that if there is a need to get from point A to point B that industrious people won’t just make that happen without the blessing or skill of government workers. In fact, that’s just what happened all across the world before governments became synonymous with roadbuilders. History is packed with examples of roads that were built and maintained by private enterprise—sometimes requiring a toll, sometimes not. And whenever you drive in a mall parking lot or through an amusement park like Walt Disney, you’re driving on a private road.

People think that just because governments are in charge of providing a product or service now that it’s the only institution that can possibly provide it ever. When assessed logically, the claim seems absurd. It doesn’t require a collection of people to forcefully take money from one group of people or take out loans they can’t pay with other people’s money to produce important products or services.


  1. ‘You Didn’t Build That’ Fallacy

President Obama notoriously asserted that if you have a successful company, that’s great but, “you didn’t build that. Somebody else made that happen.” He was referring to the teachers that taught you, the Internet that you use, and the roads that allowed you to transport your goods—all of which are supported by public money. In other words, you didn’t build your business in a vacuum, you owe society—government really—credit for building it for you.

This theory, bandied about by Elizabeth Warren and other statists, is compelling on the surface. It’s true that every example of successful free enterprise has used public goods to its benefit to some extent. But, looking at it another way, government didn’t build anything on its own, either. Everything government creates or produces is 100% due to the blood, sweat, and tears of individuals and corporations through taxation. Yes, businesspeople benefit from the positive externalities of government, but government exists completely on the backs on those same businesspeople. Obama and Warren hilariously miss this obvious point, making them unwitting hypocrites.

  1. ‘Ayn Rand Too’ Social Security Fallacy

Like little toddlers with Hitler mustaches, statists decry whenever libertarians willfully benefit from a government program. The most notorious example is that Ayn Rand, founder of the Objectivist movement, collected Social Security benefits. “If you’re so against government, then you shouldn’t take Social Security!” they’ll protest. But Ayn Rand was forced to pay into the Social Security program. Why shouldn’t she be able to reap the benefit? I don’t think the government should be in charge of building and maintaining roads, but I’m not going to off-road it everywhere I drive in protest. It’s like some thug who stole your car then tried to give it back to you. The statist would claim that because you didn’t want to be robbed that you shouldn’t take the car back. When viewed at like this, it’s clear to see how nonsensical this fallacy is.


  1. ‘It’s Important So Government Must Control It’ Fallacy

People assign the misnomer ‘right’ to various goods/services (like healthcare or education) and they say it’s so important that government must ensure it. The problem is that once government enters the market, they squeeze out all the competition because they get their funding through theft, with which private enterprise cannot compete. And when there’s no competition, the incentives for producing a quality service disappear and we’re left with a shoddy product (public education) or in Venezuela’s case, no toilet paper. Making universal prosperity a “right” is the surest way to universal poverty.

  1. Government Cheese Fallacy

Velveeta_Cheese“Look at all these amazing things that the government gives us!” statists will shrilly assert. “Government gives us roads, schools, parks, and the Internet. How can you be against that?” It’s true, the government does produce some good with the $4 trillion it extorts from people every year. But it also produces some pretty dramatic flops like the $3.2 billion blimp the Pentagon gave up on or the $2.87 million NIH spent trying to determine why lesbians are fat. Even the stuff that government has a legitimate role in doing (protecting citizens’ Natural Rights), it screws up. For example, police are used more and more for revenue generation through civil asset forfeiture or traffic stops than actually protecting people.

An analogy is if you’re hungry and a friend takes $10 from you against your will. He goes and buys some cheese (because everyone likes cheese) and brings back some disgusting processed orange stuff. A statist would say you better be happy with your government cheese, but you know better. Your friend took your money against your will, spent it inefficiently, and gave you something you didn’t really want in the first place. This is basically what government does with all of its goods and services. The free market would do a much better job with your money.

Hopefully, with this short list, you’ll be able to make exchanges with statists more fruitful and perhaps even fun.

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JSB Morse is a husband, father, author, entrepreneur, and philosopher. He has recently written "Paleo Family" with his wife and previously written the political thriller "Gods of Ruin" and the spiritual fiction "Now and at the Hour of Our Death". He is editor of "The Libertarian Catholic" and can be found at jsbmorse.com.


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