Individual vs. Group

As Ludwig von Mises explained in his masterpiece book Human Action, the economy consists of individuals performing actions based on their individual preferences and engage in market exchanges “catallactics” with other individuals. People act to satisfy their needs and the needs of other citizens involved. For example, an employee performs his job to meet the goals set by his employer and to earn compensation. We can understand what happens in the market through analyzing the actions people make and the needs they satisfy. For example, when an entrepreneur starts a business that provides a product or a service that meet a certain need, people who value this need will buy this product or service to meet that need and while doing that they satisfy the entrepreneur’s need to have a successful business. If that business doesn’t satisfy enough customers to generate a profit, the entrepreneur will have to either adapt his business to the market or go out of business freeing his time and resources to work on something else.

Many politicians rely on a different standard in the analysis. They explain everything as a conflict between two groups of people:

  • Karl Marx and his followers explain everything through a class struggle between the workers and the business owners, proletariat vs. bourgeois.
  • Progressives in the United States explain everything in terms of business exploiting customers and the need for government to protect the customers.
  • Race activists explain everything in terms of whites exploiting other races.

Of course, there are business owners that abuse their workers, businesses that cheat their customers and white people who discriminate against minority people. But there are also many business owners that treat their workers very well, many businesses that do everything they can to serve their customers and many people who don’t consider race at all in their actions.

When the political system focuses on identity politics, it creates laws and regulations to target the supposed aggressor group in favor of the supposed victim group instead of relying on the law and the market to correct individual harmful choices. Instead of relying on customers who get bad products or services from a business to sue that business or file criminal charges against it, the government creates regulations that every business has to follow to prove to the government that it will not offer what the government considers a bad product or service. Instead of relying on the free market to drive abusive business owners out of business, the government passes laws to force businesses to have labor unions and offer benefits. Instead of relying on the free market to increase the cost of racist businesses or individual, the government creates regulations to force racial quotas and affirmative action programs.

These rules and regulations not only inflict unnecessary costs and punishments on businesses and people who were not going make undesired choices, but also they don’t prevent making these unwanted choices. Businesses who choose to cheat their customers will cheat the government regulators. Abusive business owners will continue to mistreat their workers relying on the regulatory burden to restrict competitors’ entry into the business. The government may force racist people to work with the minorities they hate, but it cannot force them to deliver good service to them.

The other downside of identity politics is that it encourages the individuals of the supposedly victimized group to choose to act like victims. A minority race employee may believe that every performance feedback he gets from his manager is motivated by race, a worker may not conduct his job in a way consistent with the employer’s best interest, and a customer may always assume every business is cheating him. On the other side, members of the supposed aggressor groups will develop resentment towards members of the supposed victim groups and will always view their success as a result of government policies instead of skills.

Only politicians and activists who engage in identity politics benefit from its results because they gain more power while every individual in the society loses opportunities and pay higher prices for goods and services.