F. A. Hayek, in his book The Fatal Conceit, makes the
basic argument for capitalism and free market economics, and the
case against the “fatal conceit” of central planners in
socialism:
“To understand our civilization, one must appreciate that the
extended order resulted not from human design or intention but
spontaneously; it arose from unintentionally conforming to certain
traditional and largely moral practices, many of which men tend to
dislike, whose significance they usually fail to understand, whose
validity they cannot prove, and which have nonetheless fairly
rapidly spread the means of an evolutionary selection — the
comparative increase of population and wealth — of those groups
that happened to follow them.”
Said another way, the unruliness and mayhem of West Germany’s
spontaneous economic order outperformed the centrally designed and
less changeable economy of East Germany. Or as Hayek put it, “Order
generated without design can far outstrip plans men consciously
contrive.”
The problem with giving a central authority the power to direct
the operation of an economy, explained Hayek, is that the economic
order is “so extended as to transcend the comprehension and
possible guidance of any single mind,” or any single committee.
In contrast, capitalism works because “the extended order arises
out of a competitive process in which success decides, not the
approval of a great mind, a committee, or a God, or conformity with
some understood principle of individual merit.” The basic economic
process in capitalism, “natural, spontaneous, and self-ordering,”
runs itself by automatically collecting, organizing, and acting
upon “a greater number of particular facts than any one mind can
perceive or even conceive.”
The validity of Hayek’s analysis, on a global scale, has been
demonstrated by the collapse of an endless string of centrally
planned “utopias” — from Cuba to the economic failures of Eastern
Europe, from Tanzania to Nicaragua.
In each case, the “fatal conceit” was that central planning
could create something more efficient than the self-ordering
process of a free economy, something more orderly, more equal —
and a system where intellectuals and government planners would have
a greater hand in calling the shots in order to keep things
shipshape.
Hayek stated it uncompromisingly: “There can be no deliberately
planned substitutes for such a self-ordering process to the
unknown,” i.e., no satisfactory substitute for capitalism. “The
curious task of economics is to demonstrate to men how little they
really know about what they imagine they can design. “
Worldwide, Hayek’s message is one that is no longer disregarded.
Except, it seems, in Detroit, where a new welfare scheme for a
non-spontaneous “Africa Town” is on the front burner.
“THE IDEA IS TO BUILD an ‘AfricaTown,’ similar to Little Italy and
Chinatown,” explained Charles Oliver in a recent issue of
Reason magazine, referring to a vote by Detroit City
Council to spend $30 million a year in public money to develop a
blacks-only, race-based district of entrepreneurship in downtown
Detroit.
The concept of this black version of Little Italy originated in
a $112,000 report commissioned by the council: “A Powernomics
Economic Development Plan for Detroit’s Under-Served Majority
Population.” The problem is that Detroit’s population is poor,
shrinking, and overwhelmingly black. By official count, Detroit is
83 percent black and 26 percent of the city’s populace is living
below the poverty line, more than double the national rate.
As for blame, the “Powernomics” report contends that the city’s
“under-served majority population” is being passed up economically
by a mixed bag of nonblack newcomers. More specifically, the
complaint is that entrepreneurial immigrants from Latin America and
the Middle East are opening up too many stores and selling too much
of everything to blacks. In doing so, it’s alleged that these
money-grubbing greenhorns are stealing jobs and business
opportunities from blacks.
The solution, according to the politicians on council, is more
welfare and more central planning, the creation of a black Little
Italy, dubbed “AfricaTown,” funded in large part by taxpayers’
dollars and made up of black-owned businesses catering to a black
clientele. “By a 7-2 vote,” reported Oliver, “the council has
decreed that only black businessmen and investors can qualify for
the money.”
The analogy to Little Italy, of course, doesn’t work. There’s
nothing about the proposed development of “AfricaTown” that bears
the least resemblance to how Little Italy happened.
The Italian immigrants first settled in the Lower East Side of
Manhattan in the 1850s, eight decades before the U.S. even had a
minimum-wage law (i.e., 25 cents an hour in 1938) and long before
the federal government got in the business of safety nets. The
Italians, in short, came to Mulberry Street for an opportunity, not
a handout.
A 1901 study by Dr. Kate Holladay Claghorn, “The Foreign
Immigrant in New York,” describes the beginning days of Little
Italy: “The little handful of Italians that made up the immigration
from Italy in the early decades were mainly a vagabond but harmless
class of organ grinders, ragpickers, bear laders and the like.”
Reported Claghorn: “There was little pauperism among these
people, if we may judge from the relative infrequency of Italian
cases appearing in the reports of private charitable societies.
They were a class of people who worked and paid their rent. They
were strict in keeping their agreements. They are considered very
desirable tenants.”
The “handful,” in short order, grew to “a great army of barbers,
bootblacks, fruiterers and shoemakers,” along with “about 400
persons employed in macaroni factories” and “many Italian
watchmakers, bakers, confectioners, keepers of cafes and ice cream
saloons, wine dealers, grocers, dry-goods dealers, and many in
other businesses.”
WHAT WORKED WAS hard work. Again, as Claghorn recounted: “The
Italian fruit peddler bestows a considerable amount of his
inherited racial art sense in ‘composing’ his wares to form an
attractive picture; the Italian barber pays considerable attention
to the attractiveness of his place; the Italian bootblack is not
the little ragged urchin of yesterday with battered box and a
shrill velocity of motion, but a well-kept looking individual
anywhere from 15 to 30 years of age, with a regularly established
place of business ranging from the throne-like arm chair and
umbrella to the regular shop as well-kept as the barber’s.”
Across the board, reported Claghorn, rich or poor in Little
Italy, “all classes are highly industrious, thrifty, and saving” —
the exact formula for upward mobility and business expansion. “The
tradespeople prosper rapidly,” she reported. “The Italian barber
enlarges his shop, perhaps finally sells out and becomes a banker;
the fruit peddler buys a little shop, then a bigger one and may
finally become a wealthy importer; and in like manner with other
shopkeepers. The more ambitious and successful move to the suburbs
and become property owners in Long Island City, Flushing, Corona,
Astoria, etc.”
That’s how Italians got rich. It’s how America got rich. Or as
historian John Steele Gordon explained it: “If America is famous
for its get-up-and-go, it’s because we have ancestors who got up
and came.”
Little Italy, in short, was successful because of the
spontaneity, because good spaghetti and meat balls attracted
throngs of customers, not because someone got a handout from city
council.
