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Consumer Sovereignty vs. Man’s Autonomy

Written by Gary North on November 28, 2015

A few years ago, United Airlines ran television ads that featured the phrase, “you’re the boss.” Passengers in the ads were constantly being told, “You’re the boss”, by all the smiling actors who were portraying the United Airlines employees. One fellow l know always made it a point to inquire on every United flight, “Who’s the boss?” invariably, there would be some confusion, and then he would announce, grinning, “I’m the boss!” He even went so far as to shout, “Who’s the boss?” into the pilot’s compartment, and when the captain dutifully answered, “I am,” my friend laughed. “No, I’m the boss.” No doubt this endeared both him and the advertising agency to all the United employees who were treated to this little lesson in free market economics.

Actually, my friend is an entrepreneur himself, the owner and operator, along with his family, of America’s most financially prosperous profit-making Christian day school. He is also a minister of the gospel. So, when he says, “I’m the boss,” he mentally qualifies the phrase with, “God’s the boss, and I’m only his steward.” But at the same time, he knows that he, as consuming steward, is indeed the responsible boss; without his purchase the seller of goods and services forfeits the profits that might have been made on the sale. The seller who ignores this fact loses.

Who Owns What?

My friend and his family own the school and its grounds. In other words, they have legal title to it. Since it is profit-making, he has to pay local property taxes on the building and grounds. The civil government holds him liable. The government says that he’s the owner, and therefore he is personally responsible for the taxes. It is only slightly ironic that the bulk of his property taxes go to support the government school system, his zero-tuition competitor. It is also ironic that voters think that he pays the taxes; consumers of the product pay the taxes.

Since he has not incorporated his business, he is a “sole proprietor.” The state and national governments therefore classify him as self-employed when they send out the income tax forms. He is the owner of the business, and therefore the tax collectors regard him as self-employed.

Yet if “he’s the boss” when he buys an airline ticket, how can he also he the boss when he sells seats in his school? How can both consumer and producer be the boss? If he is self-employed, then who pays him the money for tuitions? Isn’t the boss the one who pays? Aren’t the parents of the students the bosses, economically speaking?

The market distinguishes between owner and employer, even if the tax collector has failed to understand the difference. The owner holds legal title to the property. The employer hires the use of all or part of the property from the owner. The employer, in effect, rents the good (including the labor time) owned by the legal owner. The truly “self-employed” person is either a hermit or bankrupt.

The buyer of a resource, or in another example, the person who rents the other person’s property for a specified period of time — a seat on a plane, a seat in a classroom, or whatever — offers in exchange some valuable resource. Perhaps the exchange is e bartering of services, or even mutually borrowed tools. Or it may be a transfer of ownership, such as dollars for education. The point is this: two parties claim ownership of certain resources, over which they are legally sovereign, yet each must regard the other as the boss if he wishes to affect a mutually profitable exchange. If one man wants the use of another’s asset, either on a temporary or permanent basis, the private property economy forces him to become humble concerning the asset he presently owns which he wishes to exchange for the other person’s asset.

Mutual exchange therefore demands, if not emotional humility, then at least visible, demonstrated humility. The fact that a person desires the use of another person’s asset in no way destroys his own legal sovereignty over his presently owned assets. He, as a consumer, is sovereign over what he owns. But as a potential seller, his legal sovereignty enhances the other man’s sovereignty as a potential consumer. The other man has legal control over his asset, too, so that he cannot be compelled to hand it over. Each man has legal sovereignty over his own asset; each man has consumer sovereignty over his own asset; and each man must honor the other: sovereignty, both as owner and consumer, if a mutually beneficial exchange is to take place.

(For the rest of my article, click the link.)

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