Honolulu Advertiser Second Opinion column by Cliff Slater

August 7, 2001

Footnotes:

(1) Cox Radio Hawaii, “Privatization: Future of Hawaii’s Unions.” A one-hour radio debate with Randy P. Perreira, HGEA Deputy Executive Director, Karen P. Ginoza, President the Hawaii State Teacher’s Association, Cliff Slater, representing the Reason Foundation and Senator Bob Hogue. Taped 6/24/01.

(2) Adam Smith. An Inquiry into the Nature and Causes of the Wealth of Nations. Volume I. Liberty Fund. 1981. p. 456.

& Adam Smith. The Theory of Moral Sentiments. Adam Smith Institute. 2001. Part IV, Ch. 1.

Profiting off Hawai'i? No

Wealth creation is a win-win process, so if private industry took over our public schools it would have to provide services at a price we are willing to pay.

I have an advantage over my conservative friends; I was born and bred a socialist, as were virtually all working-class British kids of my time. Thus, I fully understand, at an emotional level, the attitudes and beliefs that go with progressive liberal thinking; I once had them.

For example, the word ‘profit’ is a particular red flag to progressives and they often use it with the word ‘off’ as in ‘profit off’ something. An example is a recent question posed to me by Ms. Karen Ginoza, head of the Hawaii State Teachers Association (HSTA). She asked, “Do we want to allow private business to come in and make a profit off of education?”(1) I believe the question was uttered with such disdain that, to her, it was merely rhetorical. Mr. Thomas Huff in a letter (7/27) to this newspaper evinced a similar attitude.

To Ms. Ginoza, it was not just whether a profit-making entity could provide a better education for Hawaii children. Instead, she spoke of profit in a moral sense. I believe she used it in the same context as one might discuss allowing child molesters into the school as in, “Do we really want people whose sole motive is making a profit into our schools—to corrupt our teachers and students?”

“Profit off’ implies a zero-sum game; if I win, you must lose. If someone makes a profit in education, there is less for the children and the teachers.

But wealth creation is a win-win process. Taking the long view, we see that everyone has become steadily far, far better off than were our forebears of 100 years ago, especially the poor. How did that happen? Free markets require that for me to voluntarily exchange my money for your products—or vice versa—you must create a product or service that I value more than my money, else I will not make the exchange. This is the win-win basis of wealth creation resulting from free market exchanges.

If competing private companies educated our children more effectively than does the government, yet spent less, then our community would be that much richer. We would have more funds to either return to taxpayers or spend on even better education.

Progressives have difficulty comprehending that good can come from the ‘bad’ intentions of seeking profits. Yet, the wealth of all affluent nations was built on individuals each pursuing their own ‘enlightened self-interest’—greed, if you insist.

As Adam Smith explained in 1776, businesspeople “in spite of their natural selfishness and rapacity” and seeking “the gratification of their own vain and insatiable desires” nevertheless are led as if by “an invisible hand to promote an end which was no part of their intention” and thus, “advance the interest of the society.”(2)

This means that the manufacturers and retailers of clothing seeking your business have to offer you what you want, for you to exchange with them what they want—your money. They are not slaving over your wants for you; they are doing it for themselves and the only way they can achieve their needs is by pleasing you.

Understanding Smith’s ‘invisible hand’ means you can stop worrying about Hawaii business peoples’ intentions. Instead, you should worry about those people with good intentions since—as the old proverb has it—the road to hell is paved with good intentions.

Cliff Slater is a regular columnist whose footnoted columns are at www.lava.net/cslater