February 12, 2004
Pro-Market, Not Pro-Business
This article by Bruce Bartlett belongs in the “I was thinking about posting on this topic but someone beat me to it” category.
Bartlett makes a very important point: pro-market is not pro-business. More precisely current big businesses don’t have an incentive to encourage free markets. They would prefer that governments lock out their competitors to guarantee their own continuing profits. That isn’t conservative economic policy. That is economic pandering.
Conservatives need to keep this distinction in mind when analyzing government action in the economy. Just because a successful business wants certain types of government regulation does not mean that the measure in question is pro-market. It could very likely be merely pro-that-business. Ideologically conservatives believe that generally free markets lead to increased growth and innovation when compared with other systems. Businesses often try to pull a fast one on us by suggesting meddlesome pro-business measures which act to protect their profits. That doesn't fit the model. Businesses which are protected from competition do not grow and innovate in the same way as businesses which are constantly forced to respond to competitors. Conservatives ought not have a vested interest in any particular current business, we need to express an interest in the system as a whole. If one established company is replaced by two better and newer companies, we should be thrilled. It isn't the function of conservative economic policy to insure the survival of current businesses. We are merely supposed to encourage the overall health of the economy. The argument we apply to outsourcing is just as true for businesses.
A couple of examples:
Farm subsidies--great for large company farms, awful for anyone who eats food or pays taxes.
Disney getting a huge copyright extension--great for Disney, not so great at striking a balance between intellectual property and public use.
Steel Market Protectionism--great for inefficient steel mills, awful for people who use steel in cars, machines and buildings, atrocious for international trade negotiations.
Bartlett also provides an example:
The worst example of subverting conservatism to aid business is the recently enacted Medicare drug benefit, which the Bush administration rammed through Congress with unprecedented pressure. This legislation will cost trillions of dollars. A key reason for the high cost is that it applies to all elderly, including those who already have drug coverage from their employers or private insurance. It would have cost a fraction of what it will cost now to aid only those without drug coverage. The incredibly more-expensive option was chosen exclusively to benefit big businesses. The universal option justified the inclusion of large business subsidies in the legislation in order to keep companies from simply dropping their retiree drug coverage and dumping it all on the taxpayer. Some large companies are anticipating hundreds of millions of dollars from the federal government in coming years — funds that go straight to their bottom lines, relieving them of a liability they already have.
I suspect that another reason for this 'universality' was as a sop to Democrats, but the business reason was probably just as important.
In any case I think it is vital for conservatives to pursue pro-market policies instead of pro-business policies. In some cases that will mean butressing union rights. In some cases that will mean making competition against established companies much easier. We shouldn't be afraid of that. And as a great side benefit, it will insulate us somewhat from the worst of the class warfare charges because we won't be protecting business, we will be growing the economy. That isn't always the same thing.
Posted by Sebastian Holsclaw at February 12, 2004 02:59 AMI agree with most of this, it’s pro-market and pro-logic.
Is there an implied criticism of Bush within this piece?
I know you’ve deliberatley kept the piece short and sweet, but for what it’s worth, I’d like to add that the market should work to the benefit of society and not the other way round. This means that, in principle at least, not all policies should be pro-market all of the time. I think it’s impossible that what’s good for the market will ALWAYS be good for society.
Posted by: Bob Hope at February 12, 2004 07:11 AMActually the piece isn’t all that short. The explict criticism of Bush is just hiding behind the ‘continue reading’ button.
I don’t believe that what is good for the market is always good for society. I believe that the supposition is a good default value, which you depart from only when it is clear both that there is a market problem AND when it is clear that government action can resolve that problem AND when it is fairly clear that the action won’t cause other problems in the market which outweigh the benefit of the government action.
Posted by: Sebastian Holsclaw at February 12, 2004 11:54 AMSebastian, excellent discussion and treatment of the issue.
Question: What if an issue which is not good for society is not addressed by the free market?
The marketplace would have us remain as petroleum dependent as possible. This is obviously not good for society.
And what if society demands intervention in the marketplace and the options available for that intervention are NOT presciently clear that resolution will be achieved, or that such intervention will not create other problems? Are you suggesting under these circumstances where our crystal ball is foggy, that society be ignored in favor of the marketplace?
Well Mr. Bartlet, you leave me nothing to do but rant. So feel free to wrap the reigns twice around your hand because this afore mentioned is but the tip of the iceberg when it comes to monopolistic favoritism that is eroding our nation. By no means can we keep giving away our rights to competition to multinational corporations that do things on a far larger scale than we can effectively compete with. And that in itself is what it boils down to. When we deregulate in essense we are throwing away our abilities to compete within our economy with other such upstarts in doing so all that can come from it is business stagnation, commercial dependency and more lack of choice through monopolization (via who can offer the lowest wholesale, which is usually the shoddiest product).
(I’m going to go in an obscure direction but I’ll loop back to topic.)
Let’s take for instance W*lmart and its other subsidiaries. Now we know that the greater portion of those dollars that are made from it are going out of state back to their home offices wherever and under a third actually get circulated within the local economy(not to mention kills small businesses). But there is another erosion taking place and that is demand upon manufacturing contracts. Such as with L*vi’s right now which is being sold at W*lmart. Now with W*lmart there is a certain expectancy on all products being available at bargain basement prices essentially. Now upon taking those contracts you have to meet not only the production and shipping demands but you have to be able to wholesale those products at a price which meets with W*lmart’s retail needs and still turn a buck (let’s say to sell at $12 a pair, $3 bulk wholesale). But what this means for our labor market is that it forces manufacturing overseas where they can get cheap overhead and a workforce to produce product for 11 cents on the dollar. We are losing jobs by cities and states rolling out the red carpet with incentives for these superstores. Yes they create jobs, low wage as most of them are. Yes, when they come in they do create temporarily jobs in construction. Yes, they are a savings but it’s not NATURAL market forces that would be there through small business competition driving prices down through competition as markets expand. It’s pure artifice competition. In other words the prices are low by forcing manufacturing overseas as a means to meet with consumer demand and pricing needed to hold those contracts. And thereby destroying local competition as a by product. And now we want to deregulate them further? And yes Bush is driving the dollar down through mischievous spending, which is good if you are buying from outside our borders things here, but hurts visa versa not to mention tarrifs which Bush raised. This hurts small business who buy overseas but does’nt hurt large corporations buying overseas because they don’t have to absorb the cost, they can through contracts, demand their suppliers offer a cheaper price for goods or lose those contracts.
Now lets talk welfare, not single mothers with two kids who need to find work, daycare and the location of deadbeat dads, Newt’s red herring scapegoat ala carte. But the real welfare which destroys small agriculture and competition through favoritism. Our nations heartland is drying up due to these subsidies, there’s almost no reason anymore to stay in these regions for the families in those states. If you can’t compete why stay and if republicans are stabbing you why stay with them as well, sorry to say. Now if the subsidies were in the forms of loans and they could stop the monopolies from expanding and help out with debt consolidation to make it affordable to smaller agrarian outfits, I think it would help immensely. If we stop favoring corporate agriculture with grants and help to make possible the streamlining of small farmers getting goods to market as we should be. I say let prices naturally taper down through competition and not artificially through monopoly programs favoring the large corporations. The commodity markets (corn, wheat, soybeans,cattlefeed etc.) can re-adjust but we can’t as people.
I’ll stop there. But there is an interesting letter I found online from Senator John McCain on fish monopolies and how this administration via favoritism set it up so that fisheries are now only allowed to sell their goods to a handfull of companies to be sold on the open market. And Fishermen are losing out because they in effect can’t ‘shop around’. It somehow must go to one of these monopolies. Again brings prices down but not by natural means of competition.
(Damn long winded liberals! will you ninnies never shut up!)
Posted by: HOOBRUNGYA at February 12, 2004 12:36 PM“And what if society demands intervention in the marketplace and the options available for that intervention are NOT presciently clear that resolution will be achieved, or that such intervention will not create other problems? Are you suggesting under these circumstances where our crystal ball is foggy, that society be ignored in favor of the marketplace?”
I’m not sure what you mean here. My rule of thumb is a logical tool not a governmental law. Since taking anti-market action often produces a host of problems which the anti-market proponent often ignores when proposing change, it basically suggests that anti-market proponents ought to have a really good explanation for how their current proposals will avoid the problems of their intellectual or populist forefathers. Or at the very least demonstrate an awareness of the problem. Nevertheless, if society demands foolish intervention, I’m sure that the foolish intervention will occur. That doesn’t make it less foolish.
Funny how we are on opposite sides of the ‘unknown risk’ debate on both foreign policy and economics since arguably we both flip-flop the analysis in each arena. I’ll have to think about the implications of that for my own position re foreign policy risk, since I’m pretty sure I’m right about the economic risk.
Posted by: Sebastian Holsclaw at February 12, 2004 01:21 PMHoobrungya, take a look at my comments regarding Dr. Mesplay’s platform issues. We seem to be in agreement on some of these basic issues which are killing the MidWest’s communities.
Posted by: David R. Remer at February 12, 2004 01:50 PMSebastian,one question, what exactly were the problems of our ‘intellectual’ or ‘populist’ forefathers? I’m following your arguement in the macroversal sense, but I just can’t wrap my head around the last part. Nor the part about you’re “rule of thumb being a logical tool not a governmental law?” Yeah dude, you lost me. I know it is the means by which you are basing your analysis, perhaps the interpretation came out a bit fuzzy, Please explain further.
Posted by: HOOBRUNGYA at February 12, 2004 04:45 PM
The most recent intellectual anti-market force would be Socialists. They of the controlling agricultural markets turns the Ukraine into a food importing area fame. Also we have Great Depression-era rules which lengthened it and ‘anti-poverty’ measures which helped create a permanent underclass. We also have rent-control which always leads to housing shortages, a lesson which has been often repeated but apparently not learned by many. The lesson of the market is always that costs are paid, one way or another. Those who try to avoid the market like to think they are avoiding costs, but in reality the just aren’t paying attention to the costs.
“rule of thumb being a logical tool not a governmental law?”
David asked me what I would do if society ‘demanded’ an anti-market move which would not be justified by the questions I asked above. I replied that the society would probably get the anti-market move but that it would almost certainly reap negative consequences from ignoring the market attuned questions which I posed. So I am trying to say that the pro-market concept is not something like a Constitutional understanding which would make certain actions illegal. It merely suggests that certain anti-market actions would be unwise, especially if you fail to address the reasons why the market isn’t already doing what you would like it to. People do unwise things all the time. I’m certainly not capable of stopping that.
Sebastian, continuing our dialogue, what I am asking is if your premise is that the market should be left unencumbered unless a clear advantage and positive outcome from intervention can be indisputeably established?
If that is the case, when are we ever to regulate the market since any such regulation will never be certain to work, nor obvious to all to have a positive outcome?
On your other comment, that is an interesting observation on our respective positions. I will have to ponder that a bit to try to find some meaning to it, if there is any. Get back to you. I do respect your reasoning if not always your conclusions. : )
Posted by: David R. Remer at February 12, 2004 10:12 PMThis is an issue near and dear to my heart.
Free markets are in fact a state of nature, not a political philosophy. It is the natural order of things, and by such I do not mean survival of the fittest, far from it. The free market, aka capitalism, is an evolved product of western civilization. An intrinsic part of which is the common law, and the idea of individual liberty, and dare I say it: our present day idea of Democracy itself.
Sebastian has hit upon the truth that lays just below the shallow rhetoric the political class puts out these days.
Posted by: Eric Simonson at February 12, 2004 11:28 PMIt is quite true that the concept of free markets (which we do not have across the board in America) is an evolved product of western civilization.
What is not true is calling it natural. Natural is barter. When the Babylonians, Greeks, and Romans coined money, markets became unnatural in a hurry. Try picking up Wealth of Nations, if it gets boring after a few hundred pages, it still makes a great door stop.
Posted by: David R. Remer at February 13, 2004 02:48 AMI think the point that Sebastian made about the respective the flip-flopping positions of liberals and conservatives in different debates is quite interesting.
I might be stretching a little, but as I see it Sebastian objects to government messing with the markets because they are looking only in the short term and in the long run it has a negative impact. This seems to mirror quite nicely the current foreign policy debate. I think that it’s in the long term that it will become obvious to all just how foolish Dubya’s foreign adventures were.
I was listening to a former memeber of the (rightwing) Conservaitve UK Govt. and he was of the opinion that in the UK/Europe at least, one of the reasons for increasing voter apathy is that all the big political debates have concluded. The right has won nearly all of the economic arguments and the left had won nearly all of the social arguments. So now everybody’s scrambling for the political middle ground. The clearer separation of church and state in Europe has expedited this process, but I think, that although it might take a while, this will inevitably happen in the US.
Posted by: Bob Hope at February 13, 2004 10:10 AMInteresting debate. I don’t understand much of what you folks are saying, but I do know there is very little, ‘free enterprise’ system left in the good ole USA because of the constant mergers, and I also know that by controlling the interest rate I get on my life savings the ‘free enterprise’ system is automatically eliminated. Alan Greenspan is just another jerk who has been bought by the Republicans.
But - enough! I have a question. Since when is the stock market the economy?? Let’s see. We give a huge tax break to the rich. They will gamble in the stock market. We eliminate interest rates. People who have saved all their lives will be forced to gamble in the stock market. All that new money chasing the same number of shares is automatically going to run up the price of a share. The Republicans can then shout, “We were right. The economy is improving.”
In the meantime not one decent job is being created.
What I mean by natural is that free markets are not a product of a utopian ideology. Capitalism is in fact the default state of affairs between people. Trade, including barter, is natural. In order to have trade there must be an agreement. No one is forced to buy Levi’s at Walmart made in China.
Contrast this with competing ‘economic systems’. Marxism and all of it’s derivatives are based on a theoretical morality that is totally disconnected from the people who are involved in the transaction. In practice those who oppose capitalism end up violating the freedom, liberty, and eventually the sanctity of life of those they supposedly represent.
The ‘practical capitalist,’ who I would define as those who have to do the business of doing business, is not concerned with what should be only with what is and what opportunity is available to him. Free markets prices are not set by a coercive mechanism. They are set by mutual cooperation.
This drives to the heart of Sebastian’s original piece about the diffence between pro-business and pro-market. To be Pro-market is to be pro-freedom and an advocate of government as an impartial arbitrator of the rule of law.
Passing laws for reasons of economic morality is a pandora’s box. Who defines morality? Who’s economic interest? If small business is endangered by multi-national corporations today, tommorrow it is the multi-national endagered by other multi-nationals, or by foreign state enterprises.
Posted by: Eric Simonson at February 13, 2004 12:17 PMFree markets are a body of systemic mechanisms governed by laws to resemble if not ensure fairness essentially, as I see it (although obviously more to it in a technical sense). But free markets in the more literal sense could prove hazzardous in the sense of deficits. And dually noted the excesses of irrational protectionism could in effect hamper if not defeat ones own marketplace that you are trying to cultivate(domesticly as well as internatonally). But I could be wrong.
And before I meant ‘natural’ in the sense of an effect of an unhampered market structure (subsidiarally non-favoritist) not in application of how or by what means things are being traded, bartered, sold etc. Just to reiterate.
Posted by: HOOBRUNGYA at February 13, 2004 12:48 PM(checking back on watchblog after a 6 month break, this thread caught my interest..)
@ Eric -
I have 2 problems with your last post-
1)Capitalism is in fact the default state of affairs between people.
Has this been proven, because that seems very much debatable. One of the defining concepts of Capitalism is the right to property ownership - i.e. that an individual can “own” some material object(s).. I dont see how that must necessarily be a natural state of existence.. I see it as a convenient form of social organization, but not intrinsic..
2)Passing laws for reasons of economic morality is a pandora’s box. Who defines morality? Who’s economic interest?
Thats a good question, but you seem to imply that because it is a tough question, it should not be answered and we should let free market capitalism go unregulated- which, as we are seeing, is becoming a domestic social concern in the increasingly global marketplace. I think monitoring, and in some cases restricting, economic policies and practices is less about “morality” and more about the concern for the general welfare of our nation’s citizens on many issues- not just economic ones. This may mean health care, retirement, environmental issues, as well as the economic issues of job security, etc.. Morality as a concept has some inherent implications, which may or may not be a part of the economic and social agenda of a particular nation, which is why I was trying to reiterate. I think it becomes a more tangible issue when we are talking about the basic rights and welfare of citizens.. I know this is also debatable, and is a core difference between political parties - the question of “what do we owe to the less fortunate members of society”.. But completely unregulated capitalism would mean that we owe them absolutely nothing, and I shudder to think that people actually feel this way..
Posted by: peezee at February 13, 2004 03:04 PM“what do we owe to the less fortunate members of society”.. But completely unregulated capitalism would mean that we owe them absolutely nothing, and I shudder to think that people actually feel this way..I would disagree with framing the argument as if regulating the market has anything to do with the less fortunate. What you are really advocating is nationalizing charity. Why would you want to take that out of my hands? What if I want to actually go to the less fortunate and help them myself with the 30% of my income the government takes from me ostensibly for that purpose?
Diversity and passion are powerful forces. Do you really think so little of your fellow citizens to say that without coercive government programs people would starve or die for lack of medical care?
I would contend that unregulated capitalism does not mean giving corporations the power now held by governments. Capitalism would wither under such a situation.
Capitalism requires the rule of law. Without a stable government which protects it’s citizens from coercion and violence, allows contracts to be enforced, and creates an economic environment of liberty opportunity dries up.
The difference is one of force. Do we have rational relationships based on mutual trust and choice or do we rely on force to make sure everyone is doing exactly as we think they should?
What you are really advocating is nationalizing charity. Do you really think so little of your fellow citizens to say that without coercive government programs people would starve or die for lack of medical care?
First, not nationalized charity- I was referring to rules and regulations on conglomerates and corporations. The history of the US economy shows that unregulated capitalist marketplaces lead to monopolies. We have laws to prevent monopolies, but they leave many loopholes which have led to our current state of a few huge conglomerates that control entire business sectors. And to stay competitive, employees and employee benefits are sacrificed for profit margins. I don’t think your taxes should be making up for it, I think the owners of those conglomerates should be responsible for most of the burden. And getting to your next sentence/question- those conglomerates have a pretty bad track record for voluntary care of the community/environment/etc…
The Waltons are one of the richest families in the world, and their retail floor personnel are without healthcare, and cannot unionize. Coca Cola plants in central and south america have been linked to para-military groups in the murder of employees who have engaged in union building. I think the Walton’s have more than enough money to provide some basic benefits/support/charity for their employees, and yet they display no desire to do so.
It boils down to the world of corporate heavywieghts in the advanced stage of capitalist economics in which stocks/profits mean everything and employees mean nothing. In order to maintain a presence and to compete on a global scale, Walmart is the current standard to match, and to match their profits / make stocks palatable to investors- competitors have to put the profits ahead of social welfare of their employees. This is the direct effect of deregulation, and this is more or less what I was getting at with the whole “economic morality” thing.
I don’t doubt your tendencies for charity or anyone elses on a personal level, but in the big economic marketplace its another story, and they have much more power to make vast improvements than you or I do, yet examples of such charity are few and far between - it doesn’t make good business sense, so unless someone tells them to- its probably not going to happen..
Posted by: peezee at February 13, 2004 04:51 PMSince nobody has resoponed, I’ll add one more thing to reiterate my point- a statistic I’m sure many of you are familiar with:
In 1980, the average CEO made a salary of 42 times what the average blue-collar worker made. Today, the average CEO salary is 475 times the average worker’s salary. Remember that $1.3 trillion tax cut in 2001? Almost 50 percent of it went to the wealthiest 1 percent of the population.
The gap between that 1% and the blue collor worker is like nothing America has seen since the 1920s. I am no policy maker, and I don’t know even where to begin in terms of business taxes vs tariffs vs employment standards, etc.. But that statistic alone is proof enough for me that the economy could use a little regulation in some way shape or form before we find ourselves in some kind of corporate dictatorship..
The only real “charity” I see coming from the top 1% is generally for tax write-offs - which is also a form of government regulation in the economy.. if those write-offs were not available, I’m sure we would see even less than we do now..
Sorry, I’m sure I’ve wandered off topic, but was just trying to clarify my original response to eric’s comment that I already forgot. Please keep the discussion going though, as its a very important and thought-provoking issue, and I’ll be watching from the sidelines to try to absorb some more knowledge..
Posted by: peezee at February 13, 2004 09:57 PMpeezee,
I fear we must agree to disagree. I don’t understand the fear that corporations are a source of dictatorship. Or that somehow one man’s gain is anothers loss.
Government, which has the power of life and death over people, has far more potential to be oppressive, dictatorial, and downright corrupt.
Everything that is bad about a corporation can and often is said about government. They are both beauracratic organizations, and government holds a true monopoly.
Businesses have to make choices about how to be profitable. They can and do make bad choices. Businesses that don’t produce, and don’t serve people at some point are punished by the market.
Posted by: Eric Simonson at February 14, 2004 01:29 AMMany conservatives and libertarians make the following populist argument:
“If you don’t pay your taxes, men with guns will come to your house, arrest you, and seize your property.”
The implication here is that you are being extorted to pay taxes, and this theft amounts to a violation of your rights. Although the events described are technically correct — you should expect such a response from any crime you commit — the implication that the government is aggressing against you is false, and not a little demagogic.
Taxes are part of a social contract, an agreement between voters and government to exchange money for the government’s goods and services. Even libertarians agree that breach of contract legitimates a police response. So the real question is not whether a crime should be met with “men with guns,” but whether or not the social contract is valid, especially to those who don’t agree with it or devote their allegiance to it.
Liberals have two lines of argument against those who reject the idea of the social contract. The first is that if they reject it, they should not consume the government’s goods and services. How they can avoid this when the very dollar bills that the economy runs on are printed by the government is a good question. Try to imagine participating in the economy without using public roads, publicly funded communication infrastructure, publicly educated employees, publicly funded electricity, water, gas, and other utilities, publicly funded information, technology, research and development — it’s absolutely impossible. The only way to avoid public goods and services is to move out of the country entirely, or at least become such a hermit, living off the fruits of your own labor, that you reduce your consumption of public goods and services to as little as possible. Although these alternatives may seem unpalatable, they are the only consistent ones in a person who truly wishes to reject the social contract. Any consumption of public goods, no matter how begrudgingly, is implicit agreement of the social contract, just as any consumption of food in a restaurant is implicit agreement to pay the bill.
Many conservatives and libertarians concede the logic of this argument, but point out that taxes do not go exclusively to public goods and services. They also go for welfare payments to the poor who are allegedly doing nothing and getting a free ride from the system. That, they claim, is theft.
But this argument fails too. Welfare is a form of social insurance. In the private sector we freely accept the validity of life and property insurance. Obviously, the same validity goes for social insurance like unemployment and welfare. The tax money that goes to social insurance buys each one of us a private good: namely, the comfort of being protected in times of adversity. And it buys us a public good as well (although tax critics are loathe to admit this). If workers were allowed to unnecessarily starve or die in otherwise temporary setbacks, then our economy would be frequently disrupted. Social insurance allows workers to tide over the rough times, and this establishes a smooth-running economy that benefits us all.
We should also note that the program most popularly known as “welfare” — Aid to Families with Dependent Children — takes up less than 1 percent of the combined federal and state budgets. (1) That tax critics would raise such a big stink over such a paltry sum begs an explanation. Their typical response to this is to expand the definition of welfare. But suppose we include all programs that involve one-way transfers of wealth with no expectation of immediate repayment or return services. According to the Library of Congress, in 1992 such expenditures at the federal, state and local level came to $289.9 billion, or 12 percent of their combined budgets of $2,487 billion. (2) It still seems incredible that such fiery anti-tax rhetoric is reserved for 12 percent of a person’s taxes. But keep in mind that this 12 percent includes such popular middle class programs as Medicaid, student grants, school lunches, pensions for needy veterans, etc. Voters have ultimately agreed that these programs provide not just social insurance, but social investment. Certainly our society benefits by enabling more young people to attend college. Some may dispute the need for such social insurance and investment, but the majority of voters have (ultimately) agreed to put it in our social contract.
And this brings us to the second line of liberal argument: the best form of social contract is majority rule. It’s not perfect, but its better than minority rule and still better than one-person rule. Government by unanimous consent is impractical, since it almost never happens, and society by anarchy results in “kill or be killed.” So what do libertarians and conservatives propose in democracy’s stead?
Of course, nearly all democracies have constraints on majority rule, designed to protect the rights of individuals and minorities. In the U.S., these are embodied in our constitution. But to be legitimate, a constitution must be a document of the people; hence it must be approved by the majority. (In the U.S., a supermajority.) And the constitution of the United States clearly allows taxation. Article I, Section 8, states:
“The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States.”
And the 16th Amendment states:
“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
But should the constitution allow taxation? If conservatives and libertarians feel that it should not, then it is up to them to describe a constitutional or political system that would work better than majority rule. Do they prefer minority rule? Or dictator rule? The only alternative to these historical atrocities is self-rule — but again, that’s anarchy, kill-or-be-killed.
Of course, some may wish to keep the current political structure, and simply convince the majority of voters to pass an anti-tax amendment. But if they do, then they are legitimizing the social contract… which hardly puts them in a position to call taxation “theft.”
Understanding the above points allows you to see through common anti-tax arguments. Here is a real example taken from the Internet:
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The “How Many Men?” Argument (1)
Suppose that one man takes your car from you at gunpoint. Is this right or wrong? Most people would say that the man who does this is a thief who is violating your property rights.
Okay, now let’s suppose that it’s a gang of FIVE men that forcibly takes your car from you. Still wrong? Still stealing? Yup.
Now suppose that it’s ten men that stop you at gunpoint, and before anything else they take a vote. You vote against them taking your car, but the ten of them vote for it and you are outvoted, ten to one. They take the car. Still stealing?
Let’s add specialization of labor. Suppose it’s twenty men and one acts as negotiator for the group, one takes the vote, one oversees the vote, two hold the guns, one drives. Does that make it okay? Is it still stealing?
Suppose it’s one hundred men and after forcibly taking your car they give you back a bicycle. That is, they do something nice for you. Is it still stealing?
Suppose the gang is two hundred strong and they not only give you back a bicycle but they buy a bicycle for a poor person as well. Is it still wrong? Is it still stealing?
How about if the gang has a thousand people? ten thousand? A million?
How big does this gang have to be before it becomes okay for them to vote to forcibly take your property away without your consent? When, exactly, does the immorality of theft become the alleged morality of taxation?
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This argument is based on a faulty premise of ownership. Suppose the gang of ten men had helped you buy the car, pitching in with a loan that covered 29 percent of the sticker price (which is about the percentage of the GDP devoted in the United States to taxes). And suppose they simply wanted return payment. By not returning the favor, it is you who become the thief. If you want a car that is 100 percent yours, simply pay the full price of one. Of course, by accepting the loan from the gang of ten men, you were able to buy a better car than you could afford in the first place…
Arguments like “taxation is theft” are extremely egoistic. It’s the equivalent of saying “Everything I make is by my own effort” — a patently false statement in an interdependent, specialized economy where the free market is supported by public goods and services. People who make arguments like this are big on taking these goods but short on seeing why they need to pay for them. It doesn’t matter that they believe these public services should be privatized — the point is that the government is nonetheless producing them, and they need to be paid for. It doesn’t matter that any given individual doesn’t agree with how the government is spending their money — many people don’t agree with how corporations pollute the environment, but they still pay for their merchandise. It doesn’t matter that any given individual thinks some government programs are wasteful and inefficient — so are many private bureaucracies, but their goods still demand payment. If tax opponents argue that a person doesn’t have to patronize a company he disagrees with, then liberals can argue that a person doesn’t have to vote for a public official he disagrees with.
Ultimately, any argument against paying taxes should be compared to its private sector equivalent, and the fallacy will become evident.
