Money for nothing

Wouldn’t you like money for nothing? Who wouldn’t? Well, there’s one way that you can have it: by getting elected and collecting your tax money. Taxes and “common welfare” are our rulers’ way to justify modern highway banditism. The end result of this scam is that money is power, and the more money the government can wrestle away from you, the more power it has to implement its social programs and other shenanigans. While communists (who can be proud of counting amongst their past leaders the two most evil men of the century) and other proponents of authoritarianism may complain that what happened in Russia, China and all the other countries that tried these systems was not a “true representation” of their systems, the fact is that it is the power given by the possession of property and lives which makes possible these excesses of violence. Taxes are clearly undesirable and do not respond to any fundamental need, nor do they bring anything to a society — rather, they destroy its economical and social fabric.

However, it seems that the common position is to consider taxes as a necessary evil — necessary to maintain an ordered society. Even in libertarian circles, it seems an unlikely possibility that taxes could be abolished. I am reminded of Mark’s article on taxes [Paying Taxes in the U.S.: A Mandatory, Multi-Charitable Contribution] which talked about “the psychology of taxes”. Every socialist measure builds on the last one — makes us accept past wrongs which are still used today and focus on the present. This is how the erosion of freedom works. We don’t want to hear about ongoing problems, we want to hear about the present issues, and this blocks our view of the past. Most people, for example, ignore the fact that before the government all but destroyed this whole sector of the economy and took it over for its own benefit, the charity market was flourishing.

In political terms, taxes are theft. They are anathema to the right of property. Everyone has a right to the property gained thru free trade, and therefore the government has no proper basis for holding a gun to people’s heads, especially since it not only gives no return, but on the contrary further damages our standard of living thru its actions.

“In political terms, taxes are theft. They are anathema to the right of property.”

Even if taxes were justifiable on natural grounds, they still could not be desirable. A government qua government cannot produce anything — it merely redistributes value according to its own interests. Are politicians more habilitated to spend your money than you are? Of course not. As an individual, you make your own evaluation of your interests, needs and values. The government, in the other hand, does not even allow direct representation. It can help causes to which you are opposed, even on personal grounds. So not much brilliance there.

But practically, some people may think taxes must have a usefulness — however that is not what we observe. What does the government do with your money today? Mainly four things. The first is to pay the salaries for their humongous bureaucracy. The second is to redistribute it amongst government-approved programs, companies or people. The third is to finance public companies (power, mail, etc). The fourth is to finance governmental core functions (police, justice, army).

Salaries are dependent on the other categories. The less functions you take over, the less people you need to pay. Redistribution of money only serves the government’s interests by handicapping various sectors of society and maintaining the need for governmental controls: it diverts the economy from its optimal voluntary state.

What about public companies? Since in a free society all these sectors would be opened to private companies also, the government would be forced to fall back to a consumer-producer system. In essence, the government would derive profit from it only to the extent that it offers a service that the market deems preferable to its public alternatives. This would be one source of money.

The last point is the one that creates the most problems. How, I have heard a lot of times, can we finance a public police, a judiciary system, and a full army? This makes many people turn to anarcho-capitalism: reducing politics to a subset of economy. This, however, is not an acceptable solution, if only for the simple reason that it does not insure the protection of one’s rights any more than democracy does, and for the same reason. Therefore we must look for a solution in what we already have.

First, let’s establish the context. In a libertarian society, these three core systems would be reduced to an unimaginable level. The police and judiciary would no longer be slowed down by the huge number of non-victim arrests (including drug arrests, which are higher in number than violent crimes in the United States). The army, accordingly with isolationist policy, would no longer need to station itself everywhere in the world and thereby open the country to resentment, hostility and needless deaths.

“Taxes are clearly undesirable and do not respond to any fundamental need, nor do they bring anything to a society — rather, they destroy its economical and social fabric.”

Starting from here, we see that the needs in money to finance the three core functions in question would be much reduced — as a proposition, about two-thirds reduced. Having already established the undesirability of taxes and other impositions, what solutions are available to us?

Three possibilities immediately come to mind, depending on the government’s financial situation. In the short term, the money from selling government property should cover a number of years. Then, it may be possible to take voluntary contributions along with the monthly or annual payments from public companies. It may also be possible to benefit from lack of competition in a market occupied by a public company by raising prices in order to fill the deficit encurred. Also, a system of pay-per-use could raise enough money to pay for these systems. A combination of these three measures can be used. None of these measures involve taxes or any forcible removal of property.

Let’s examine each of these options. Why would people give voluntarily to the government? Such a proposition seems at first sight an absurdity. However, currently people do not give any credibility either to the government, police, or the judiciary system. They also get a large part of their income get stolen by the system. With both of these negative factors gone, people may be more inclined to help maintain the small political domain of initiation of force.

What about raising prices? Well, starting from the premise that the government keeps some public companies (while, of course, opening the markets to private competition and investment), the ones that pertain to public goods, we can therefore surmise that some of these markets will be more competitive than others at a given time. If that is the case, then prices may be raised for a while — a maneuver which, while not exactly being in the public interest, would help raise money honestly.

Finally, a system of pay-per-use could be implemented. This would probably be the safest solution since it does not depend on exterior factors. Now you might say, but wouldn’t that in fact reduce itself to a tax? No, for the simple reason that a tax is a forced imposition. If you suppose that people are free to resign their rights at any time, and therefore retreat from society, it couldn’t be a forced imposition. A person who would resign his rights would of course not be subject to protection of any kind. However this solution poses one particular problem: the military, which is a core function, is also a public good. In short, the army protects everyone, even people who resign their rights.

The US Constitution does allow for taxes and duties for certain limited functions, and the 16th Amendment (ratified in 1913) allows for income tax. However, I think I have made my point that such damageable loopholes are unnecessary and even undesirable.