This philosophy of restricting markets is typically justified from two different, although related, motivations.
- 1) people's "best" judgments often get them in trouble, and so we must restrict them from making those bad choices.
- 2) centrally planned policies will create greater wealth than the sum of the individual best judgments of citizens.
PROTECTING PEOPLE FROM THEMSELVES
I will start by agreeing that this is certainly true with children, whom we protect from oncoming traffic in putting their hands on a hot stove. They are ignorant of the effects of their choices, and so we restrict their choices to avoid them experiencing the negative effects. This restriction is a recognition that reality operates according to its own cause effect principles, regardless of what the child intended. The child's ignorance can be destructive to themselves for others, even fatal, so we restrict the choices because we understand the potential destructive consequences. We use our knowledge of reality to create restrictions to compensate for their ignorance.
When it comes to adults, this justification becomes increasingly problematic. On the one hand, in economic terms, many adults have not learned how to avoid oncoming traffic, and do not recognize that a hot stove will burn them. Poverty, bankruptcy, and a profound under utilization of people's potential are all evidence of the effects of people's ignorance on their lives. It is fair to describe this as immature, childish behavior, and it makes sense for a guardian to protect them from themselves by restricting their behavior.
On the other hand, many other adults have a greater understanding of the processes involved, and choose behaviors that have the potential for either profit or loss according to their tolerance for risk. Some of them succeed wildly, and create new technologies and profit/wealth for their communities and investors. Others fail in their intended results to various degrees, and create losses for their communities and investors. This is mature adult behavior, and it is both counterproductive and an indignity for a guardian to treat them like children and protect them from their own risk tolerance by restricting their behavior.
In summary, when we treat legal adults as if they were children and restrict their choices, we can both protect them from potential harm, but also prevent them from creating tremendous good for themselves and others.
WHAT DOES IT MEAN TO BE AN "ADULT?"
This conversation hinges on our concept of what it means to be a "legal adult." Currently, our legal and social definition of an adult is someone who has lived a defined number of years and who has "basic mental competence. Until they are an adult, their parents/Guardians are legally responsible for their actions, and are the only legal signatory to a contract. Once someone is deemed a legal adult, they become able to enter into legal contracts, where they are both protected by and liable to the laws that underlie those contracts.
The ability to enter contracts is the central feature of becoming a legal adult in modern society. Note that, as long as someone is not mentally retarded (which is a more appropriate term in this context than "developmentally challenged"), they become a legal adult when they have lived the defined number of years, which are 18 in most of the United States. This is true regardless of their levels of knowledge or ignorance of the basic skills necessary to survive and thrive in modern society. There is no test that someone must pass to demonstrate that they understand the basic laws of the society, the basic principles of contract and credit, or the impact of their actions on their health, their family, their communities.
In one sense, this is a fine system, because we do not discriminate against people, but allow everyone to enter society as an adult and to achieve whatever levels of success or failure they achieve. However, this creates two challenges which we outlined above:
First, treating all people as equally competent to enter into different types of contracts is profoundly dangerous. Ignorance is not bliss; in fact, it can be tremendously destructive. Because we recognize this as a simple fact of existence, we as a society feel the desire to protect people from their ignorance, and so we restrict their behavior from actions that we deem might be destructive to themselves or others.
Second, treating people as equally _incompetent_ to enter into different types of contracts is insulting and demeaning. It not only steals the dignity of the human being who wants to make the choice, but it creates obstacles to the creative process of wealth and technology creation for the betterment of the individuals and humanity.
A RADICAL SOLUTION: DEMONSTRATING COMPETENCE TO ENTER CONTRACTS
One solution to this issue is to expand and defined what it means to have "basic mental competence," by understanding that ignorance and competence are contextually determined.
We already do this in some contexts. For example, there are certain types of Financial instruments that only people with specific qualifications are allowed to invest in. We only give driver's liscenes to people who have passed a driving test that includes understanding the laws and competence with the vehicle.
If we were to apply this more generally, we could create a system in which the contracts that we are allowed to enter into as adults are restricted based on a demonstration that we understanding the processes and risks involved in that contract, i.e., that we are competent to into that contact. Instead of becoming a "legal adult" in one fell swoop, with a blanket capacity to enter into legal contracts, we can create tests that people must pass demonstrating competence to enter into contracts. Until people have passed the appropriate tests and demonstrated competence, we treat them like children in that context, and do not allow them to enter into those contracts. Once they have passed those tests and demonstrated competence, we treat them as adults in that context, and allow them to enter into legal contracts and hold them responsible for the consequences of those choices.
I understand that this idea is radical and provocative given our current traditions. However, I also believe that it is uncontroversial in its sensibility and simplicity. I publish it to begin a dialogue on the subject. What your thoughts?
