Tuesday, April 15, 2008

What Are Taxes?

Tibor R. Machan

In the April 15th edition of The New York Times Richard Conniff suggests that what the government collects from us each year on or about this date be called "dues" instead of "taxes" ("Abolish All 'Taxes'”). As he puts it, "we need language to remind us that this is our government, and that we thrive because of the schools and transit systems and 10,000 other services that exist only because we have joined together."

Nice try but it won’t fly. First, many of those services would easily exist without government and in fact do. But, unlike with government’s “services,” they aren’t paid for by means of extortion. You know about extortion, at least from the movies, no? It is when someone promises you that unless you pay him or his organization a certain sum, you will be killed or maimed or your property will be burned down. And this was called by Oliver Wendell Holmes Jr. “the price of civilization”!

Second, government tends to establish monopolies, so one reason it is difficult to get its “services” elsewhere is that it makes sure no one can provide them. Take first class mail! Only the US Postal Service may provide this! Or the issuance of passports.

Third, when one pays dues to, say, Costco, Sams, the health club or the gym, one may exercise the exit option--that is, stop going and paying--anytime one so decides. There may be some provision one needs to fulfill but only because one has agreed to do so in the first place. Taxes must be paid with no consent involved, with no exit option. One is born in a country and unless one stops being its citizen and leaves it, one must pay taxes. In fact, one must pay if one merely visits to do some business there.

Fourth, consider how taxes came to be in the first place. The ruler of the realm--king, tsar, Caesar, whoever--imposed it on those under his or her command in payment for the privilege of living and working what that ruler owned, namely, the country! “You live and work here, so you pay me!” That was when it was widely but mistakenly believed that the powerful who conquer a place are its rightful owners. But what the American revolution was about is the abolition of this ridiculous myth, that the government owns the country. Instead, it is private citizens who do--they have the right to private property (just as it is clearly implied in the U. S. Constitution). Government, in turn, is supposed to protect this among some other of the citizenry’s rights. Government is like a hired body guard, not a ruler, not in a free country at any rate.

In times when monarchies were the political norm--which is still the case in many places around the globe--ordinary people (“subjects”) lived by permission of the government! They had no right to their lives, liberty, pursuit of happiness, property or freedom of speech. Serfdom was widespread, meaning people were legally tied to the lands where they lived--they belonged to the ruler.

Renaming taxes “dues” isn’t going to change its nature as a form of legalized extortion. Mr. Conniff should know that a rose by any other name is still a rose and taxes by whatever euphemistic label one were to attach to them would still be taxes, the expropriation of resources by the rulers of the realm.

What other means could the few legitimate services of government be paid for? By the voluntary system of contract fees! All contracts, which are backed by law, would have a fee attached. But no one would be forced to get this backing, only it would be unwise not to do it. So there could be plenty to fund the strictly limited government that a free society should have. Not, of course, the bloated leviathan that we now have, one that has departed from the American Founders’ idea that governments are instituted to protect our rights!

What renaming taxes “dues” would accomplish is to prolong the time it will take to finally abolish this brutal feudal device from what is supposed to be a free country. The price of civilization my foot!

Monday, April 14, 2008

Two Stupid Ideas

Tibor R. Machan

Time for morning exercises! One will involve repairing some bad thinking on Barack Obama’s part, another trying to fix the mental mess on the part of a columnist for the New York Times who wants to fix the housing mess with a $25K federal grant to first time home buyers.

As to Senator Obama, he told a Pittsburgh audience that when he gets to be president, he will not be working for special interests and lobbyists but for the people. Talk about confused elitism--are those special interests, like farmers, union members, doctors, patients, students, professors, truck driver and such not among the people? Are they frogs or geese or what? For the umpteenth time: the people are made up of all those who belong to the special interest groups, period.

Now it is not entirely Senator Obama’s fault that he gets away with this kind of doubletalk. His audience gave no sign of protest, no criticism of his silly ideas but just sat in awe of him, never mind what he said. With that kind of constituency why should a candidate work hard at making any sense at all? Just babble on, without rhyme or reason, in a tone of know-it-all, and they’ll gobble it all up, the gullible bunch that they are. They may even elect you precisely because you sound so bright as you befuddle them all with your nonsense. Maybe that’s what the people believe we need for the presidency.

Now as to the suggestion that the feds provide a $25K grant to first time home buyers, how about making it clear that the feds do not have any funds to give out. No, they must first extort the funds from citizens, take a good chunk of it for themselves--do folks even have a clue now many perks those guys in Washington get--and then hand a bit of it back to some of the people. The feds have no funds they do not first take, or that they borrow against the work of members of future generations. None!

But columnists and journalists across the country keep writing and talking as if the federal government were some kind of productive and rich person or organization that made lots of money and now has the option to give some of it away, like Bill Gates. All that is a fraud. The feds confiscate that money and keep some and then give it to people who they hope will keep them in office.

Are these notions too difficult to grasp? I cannot believe that. Many of my college and university students over the last four decades have been able to understand this take on how government works--it is one among several that we cover in the political philosophy course I teach. And they know well enough that this is one interesting, probably even correct, way to see politics in our day. But then why do they become blinded when they read the apologists for reckless federal largesse?

Similarly, I have had many students who understand that there is no such entity as “the people” but only a bunch of individuals and groups of individuals with various agendas they’d like politicians to support at other people’s expense. Yet maybe after they learn that idea in college they become afflicted by stupidity, by the crazy hope that they are both part of “the people” as well as members of the evil special interest groups, carrying on some endless fight between the two parts of themselves.

Of course, there are many ideas students encounter during their higher education, including the post-modernist notion that logic and reason are obsolete methods by which to figure out the problems people face and that it is best to just embrace some form of magical thinking. Yes, you can be both “the people” and a member of one of those nasty special interest groups. You can both be and not be, all at once, all the same way.

Nonsensical thinking is ancient--folks like Heraclitus and Cratylus promoted it in ancient times and today it’s certain European and American pseudo-philosophers who peddle it fast and furious. So is it any wonder that our leading politicians get away with laying such stuff out for the voting public?

Sunday, April 13, 2008

Blaming Freedom Again

Tibor R. Machan

It happened, of course, with the Great Depression. Instead of seeing it as a result of government intervention and mismanagement, that calamity was supposed to have occurred because of the free market. Free adult men and women in America and in time elsewhere supposedly produced a colossal downturn in various economies--massive unemployment, bank failures, fall in productivity, you name it. All the fault of freedom, none that of government meddling.

We are back to this once again. Peter S. Goodman wrote, on Sunday, April 13, in that great journal of economic history, The New York Times, that our current “downward spiral of the economy is challenging a notion that has underpinned American economic policy for a quarter-century--the idea that prosperity springs from markets left free of government interference.” So it is freedom, people working for other people who want them to work for them, earning incomes they can then use to buy goods and services as they judge fit, that’s responsible for the downward spiral. This is then what makes Hillary Rodham Clinton’s call for an economic tsar--“a commander-in-chief of the economy”--so attractive and even necessary. Yes, it is freedom that must be stopped, at all cost, and in its place what is needed is more government, with all of those wise and virtuous politicians and bureaucrats who of course know so much better and will force--or as two academics at the University of Chicago would have it, "nudge"--us all to do better.

But it is all a ruse. Sadly, however, neither Democrats and Republicans will straighten out this story.

Democrats love government meddling--they tend all to believe that once they are in power, they will whip us into shape in no time. Their ideal, going back to the economic philosophy of the New Deal and its hero John Maynard Keynes, is the command economy. (Keynes himself said, in his preface to the German edition of his famous book The General Theory of Employment, Interest and Money [1936], that the Third Reich was best positioned to put his ideas into play!)

Republicans like top-down economic management no less than Democrats, only they tend to favor business more than their political opponents, but not with policies of freedom but protectionism, subsidies, bailouts, and other approaches that are anything but what the late Milton Friedman--the ostensible subject of Mr. Goodman’s essay--and other libertarian political economists advocated. So do not hold your breath waiting for a letter to The Times from John McCain denouncing the smear of the free market by Mr. Goodman!

With the silence of the Republicans and the distortions in the attacks of the Democrats, the victim in all this is human liberty! The myth that we have had a free market system in place over the last 25 years is being spread indefatigably by the likes of Goodman and, especially, Paul Krugman who promotes it in his regular column for The Times.

As Allan H. Meltzer, the free market economist at Carnegie Mellon University (quoted in Mr. Goodman’s piece) put the point, “Now we’ve come into a crisis that has dampened enthusiasm for those [free market] policies, and we’re headed back into a period of more regulations that will do the same bad things as in the past.” The only mistake in this remarks is its implicit acceptance of the idea that Professor Friedman’s free market philosophy did in fact guide the American government’s economic policy for the last quarter century. Greenberg claims, for example, that when “Ronald Reagan entered the White House” he commenced “elevating Mr. Friedman’s laissez-faire ideals into a veritable set of commandments.” Not so. Reagan didn’t really implement too many free market policies and he barely managed to cut back some government economic regulations. Moreover, with the massive borrowing he perpetrated in order to help end the Cold War, Reagan didn’t achieve turning American economic policy toward freedom. (Of course, he was working with a Democratic Congress much of his time in office, so he alone cannot be blamed for that.)

But none of this will be pointed out in The Times since that newspaper is eagerly supporting returning to Keynesian economic top-down management, never mind that this ideas has been discredited far more than have Friedman’s free market views. The faith of the editors of The Times and Mr. Goodman in handing people’s economic lives over to a bunch of politicians and bureaucrats is blind. And it seems to induce them toward rewriting economic history as well.