One important thing to note about GDP is that it does not take into account broken windows.
The concern I have about the principles we’ve been discussing is that I don’t think they would work well unless implemented in full. For example, the Austrian view seems to be that government regulation is bad, period. So what happens if Ron Paul gets elected, and due to an uncooperative Congress is unable to end the fed - but our Wall St.-funded Congress does agree that all regulations on Wall Street should be repealed. So then we’d still have the same easy-money madness we have now, except Wall St. would be even freer to exploit the casino economy. In my opinion that would be a whole lot worse than what we have now.
That’s very perceptive. You’re much quicker than most. Yes there is some danger in that, but it’s not very probable. I actually think competing currencies would be legalized before all financial regulations would be repealed. The only way financial regs would disappear would be if the public made it politically profitable to remove them. And I think the only way that would happen is if they were getting in the way of enough people, and enough people were confident that other regulations (such as the regulation of the market itself) would be more effective and/or lead to better conditions.
Ultimately I think it will take the death of the dollar before you can even seriously talk about ending the Fed entirely, and even then it will be a tough going, because there will of course be plenty of push to maintain that kind of monopoly power, and there will be plenty of public outcry for our wise overlords to bring “stability, confidence, and strength” to the markets again. (As if.) And the powers that be will be waiting in the wings, more than happy to make that arrangement.
The key will be a large enough coalition that understands enough about the business cycle to be there with the real answers when that happens. And the more people who hear about it beforehand, the better…for even if they don’t become one of the ones who understands it by the time it happens, they’ll be that much more willing to listen to someone who told them it was coming when it actually does. And that someone could easily be you or me. “The public” may not “remember”…but “people” will. And that means your friends, your neighbors, and your co-workers. People you talk to every day. People you could easily plant seeds with. And that’s why Ron Paul is so important. For one thing, the number of people he has already influenced to become educated is incalculable. He has already done more than any man in modern history to rally people to the cause of liberty and engage them to educate themselves…and he’s done it all while being 1 of 535 representatives in Congress, officially representing a small coastal district in Texas…being mocked, laughed at, ignored, and attacked. Imagine what he could do as President.
That’s the thing I think a lot of people don’t realize (or don’t want to admit). Even some liberty-minded individuals like to try to rain on Paul’s parade and claim there’s really nothing he could do as President, he’d still have a Congress to deal with, blah blah blah. Some I think it’s because they truly don’t get it, others I think because they have a need to be contrarian and rag on people, and still others because they’re narcissistic pricks who don’t know how to constructively deal with their jealousy. Not only do I not think these people have a full appreciation for the power of the Executive Branch (especially in the hands of someone who is a voluntarist), but I also don’t believe they fully see the big picture. Most people still don’t even know who Ron Paul is other than possibly “that kooky Republican guy who wants to end the wars”. And that’s only if they’re lucky. The minute that guy wins even the R nomination…let alone the Presidency…the whole game changes. Everything he says automatically becomes infinitely more legitimate, and heard by 100 times more people. The impact someone like that could have, not only on policy in a bully-pulpit sort of way, but on public opinion in a leader/teacher sort of way, is unimaginable.
He talks about how he’s not just trying to win an election, he’s trying to change the course of history. I guarantee you, if that man becomes President, that’s exactly what would happen. And not because of anything he’ll do in government. He won’t pass some law that will redefine the political system. He won’t eliminate some department that history will call “the repeal that changed everything”. He will affect change in the greatest, most important way possible…in the minds of people. Just imagine 4 whole years of that man talking…with the Presidential Seal hanging behind him. And as if that wasn’t enough, times are going to get tougher…probably as tough as they’ve ever been, relatively. People will be ready, more than ever, to listen. You thought people were scared, hurting, ready for change, and looking for a leader with Obama…just wait.
If that wouldn’t change history, nothing would.
That was interesting to see the Ron Paul video about voluntaryism. Having seen that, his positions make a lot more sense. I had always wondered, for example, about him invoking private property rights to deal with environmental problems - I had never heard anyone else deal with it in that way. I’m personally not anywhere near being a voluntaryist, but I don’t see why we couldn’t have some sort of opt-out system, where those who wish to live without taxation/government services are allowed to do so. I think we need to have a 100% transparent tax system where it is absolutely clear where every dollar goes, rather than just giving a lump sum and having government distribute it in secret. Then, those who wish to opt out of the tax system can do so, and they will not receive those associated services. If they wish to opt out of some services and not others, that would be fine as well. It would be a simple matter of accounting. The all-or-nothing idea is what strikes me as problematic. Certainly a majority could agree on that. If enough people learn about the problems of Fed, money printing, etc. I definitely think a majority would come to see that clearly as well. But I don’t think we’re anywhere near the total abolition of government, and personally I wouldn’t want to live in a society like that. But I don’t see why both sides can’t get what they want without imposing on the other.
Then, those who wish to opt out of the tax system can do so, and they will not receive those associated services.
It also makes sense to remove the monopoly the government has on providing these services, right? Otherwise, what good is ability to opt out?
And when you agree to remove this monopoly - presto, there is NO government! It’s just another service provider on the market!
That’ll never happen. The tax system must be opaque because its true purpose (to take as much as possible from as many as possible) must be concealed.
Clayton -
Shhhh, don’t scare off the new guy.
Clayton -
There’s no reason competition can’t be legalized, and if people see that the private companies are providing better service and lower prices, they will naturally shift in that direction. But in the meantime, those who still want to pay into the government system may do so through taxes. The elimination of monopoly doesn’t mean government suddenly would cease to exist. The difference I suppose is that the government would provide these services on a not-for-profit basis and the private sector would be for-profit.
The books of a company are not 100% transparent either, but that doesnt mean they can’t provide a valid service. All i mean is that when someone pays taxes, there would be a list of services that they are buying into, and those that they don’t want or would rather get elsewhere they are free to do so.
Don’t worry I can take it
The difference I suppose is that the government would provide these services on a not-for-profit basis and the private sector would be for-profit.
Sounds great. Who is going to pay for this deficit in profits? I mean, how can an entity (“government”) continue to operate in face of constant losses? The current government fixes this by making unwilling parties to make up for the deficit.
BTW, I like your approach, really good questions.
Um, lots of men with guns who have absolutely no intention of allowing competition is not a “reason”?
Not overnight, but basically, yeah, it does mean that. The USPS would go bankrupt overnight if it were cut loose.
This sounds very nice (almost charitable) but “not-for-profit” is really a euphemism for “tax-funded”. The problems with tax-funding go far beyond the simple fact that they are collected coercively. The de-rationalizing effect of taxation is at the heart of Mises’s calculation problem.
This doesn’t work. I could opt out of paying for the Pentagon? I could opt out of paying for the judiciary? I could opt out of paying for the police? I doubt it.
Clayton -
The problem with taxation is not lack of transparency. Of course the books of a company are not transparent, it’s a private business. Why the hell should any private person be forced to open the books on his business except to auditors he himself has hired (perhaps to maintaint membership in a better-business-organization)?
The problem with taxation is that it is logically indistinguishable from robbery. The government takes by force. Wal-Mart does not rob its customers. They can’t hold a gun to your head and make you pay them a price you don’t want to pay for a good or service you don’t want to receive. The government can and does.
Taxes have long been billed as a kind of “social duty” or any of a number of rationalizations and euphemisms. The root source of these self-serving rationalizations is invariably the State itself. Nobody wants to pay taxes otherwise it wouldn’t be involuntary. The fact is that the act of taxing (stealing) is immoral and, hence, the State must obfuscate exactly what it’s doing.
Here’s a brief history lesson to put this in perspective. Many centuries ago, wealth taxes were far more common than they are today. You didn’t owe the King a portion of your income, you owed him a portion of your wealth. The problem with this system is that people got better and better at hiding their wealth and pretending they had much less than they really had. Faced with wealth taxes, the economy went underground. With the invention of writing and the keeping of records, it became easier to tax transactions rather than wealth. The advantage of taxing transactions is that they are much harder to hide since there are always two parties to a transaction. A wealthy man may bury his children’s inheritance in a secret location that only he and his eldest son can find again but if you want to buy or sell something, you probably have to involve a stranger in the transaction who will be perfectly happy to rat you out to the King rather than be punished himself.
So, rather than taxing wealth stocks, governments today tax wealth flows. They bill this out as some kind of enlightened move towards greater fairness or some such nonsense. But the simple fact is the government can generate larger absolute tax revenues when it taxes wealth flows instead of chasing down ever-dwindling and ever-receding wealth stocks.
This shapes the entire face of modern life. Nearly every transaction in the entire economy is recorded. Why? So it can be taxed. Look at the VAT… it takes this to a whole new level - not only are transactions taxed but even stages along the production process are taxed. And perhaps the greatest distortion of all has been the income tax.
People don’t understand that the income tax inherently favors the monied class. What I mean by this is that the income tax (I prefer to call it the labor tax) favors those who can earn an income from buying and selling something other than their labor. Most people don’t have sufficient capital (and inclination) to be professional speculators. These people have only one thing to sell to feed and clothe themselves: their time and talents (labor). It’s extremely difficult to hide the sale of labor because you must generally be bodily present to labor. It’s much easier to hide the sale of non-labor goods or to strategically structure your transactions in such a way as to minimize (or eliminate altogether) your tax liability. So, the little guy is inherently punished by this system while the fat cats continue to rake in the dough. Then, the useful idiots take to the streets protesting “capitalism” never stopping to wonder how it is that those with money come to have so much power.
Warren Buffett had just $63 million of income last year. If you do the math, it would have taken him 624 years to build his present stock of wealth at that rate of income. What rubbish! Yet nobody even bats an eyelash at such asburdities.
Clayton -
Well obviously in the present system that is the problem, but we are talking about hypotheticals here, no? Who are the people who keep this going? Our elected representatives. So if reasonable people are voted in there is no reason things can’t change.
If that’s the case then so be it! It would prove your theories right. The government would have to ask people in an honest, up front manner for more tax dollars to sustain the USPS, people would get fed up with it, and they would turn to the market for alternatives.
Yes, but it is not coercion if people are paying into it by choice. One of my problems with left-liberals is that they often have this air about them that they know what is best for everybody and want to “protect them from themselves” and foist their vision upon the masses. This is completely repellent to me. Whatever side we are on we need to be careful to avoid this. I think we have to realize that different people have different philosophies of life, and so if people believe in the idea of government, believe in paying taxes, believe that it is possible to run institutions in a non-profit manner for the common good, they can do just that. As long as government monopoly is cancelled, then the playing field is leveled. If the de-rationalizing effects that you mention are true, then they will become evident shortly after this monopoly is ended. But it would be better to let it play out so people see the two things side by side.
Honestly I would love the option to opt-out of funding the Pentagon. They waste such enormous sums of money it is unbelieveable. If people want that level of military presence, they should have to make a conscious choice about it. The way things are now, the money is already there, so people have no qualms about using our military in ridiculous ways. As far as the judiciary - if you want to use the government-run judicial system, then you’d have to pay for it, otherwise you’d have no right to a trial. Police is tricky since they respond to emergencies - they can’t spend time looking up people’s history of tax payments, so they would likely still respond to any emergency, and you would be charged after the fact. If you can’t afford it, then the only penalty would be the social stigma of being helped by a system you reject and don’t pay into. But I would assume that people who don’t believe in such a system would in general not abuse it and would find other ways to manage their security.
Hehe. I’m afraid you’re already there, and the second and third clauses of that sentence prove it. But here’s even more…
Don’t look now, but you just described a voluntarist system. 
If the payments were voluntary, they wouldn’t be taxes. If there were no taxes, there would be no real way to enforce a monopoly on force…this would mean what you’re calling “government” wouldn’t actually be a government.
I realize it’s a big shift to wrap your head around, and you intuitively feel uncomfortable with the idea, but it’s not so outlandish.
Have a look here, then check out the Mises Wiki page for the book he’s talking about. There’s quite a few article links (as well as a link to a free download of the book itself)
I don’t feel uncomfortable to give up the idea of government by force. I guess the most uncomfortable thing is the idea that we need profit as a motivating force in society at all times and there is nothing we can achieve collectively through government, that absolutely everything must be handled by the free market. It is an idea I’ve honestly never heard anywhere else. And I’ve followed Ron Paul for a while, but he doesn’t speak quite as openly as the people here about it. Also I have trouble squaring environmental concerns with a pure-market philosophy. It seems to me that some collective action is needed in this area. I will certainly read the book you linked to and share my reactions to it.
It’s quite short…I wouldn’t even call it a book. It might just be called a “double essay.” Only about 50 pages. And the articles in that links section (which are by the same author as the “book”) are obviously just article length, but are also incredibly helpful.
But just for conversation, what do you mean handling things “collectively through government”? I’m not sure how you’re defining that term. If it doesn’t have a monopoly on force, and does not collect taxes, how is it a government?
And if it’s not a government, what sort of “collective action” are you talking about? People group their efforts all the time. The groups are often called “companies”, “churches”, “universities”, “charities”, “think tanks”, “institutes”…many of which do not operate for profit, yet are not government affiliated in any way (other than exemptions from the tax laws). What exactly is it you’re thinking of that could not be handled by private individuals through voluntary action? Why is force necessary?
This is a caricature of the idea of rational self-interest or what Mises termed human action. Economics he placed in the study of catallacty (voluntary social interactions). Frederic Bastiat says of the domain of economics (then called “political economy”):
The subject of political economy is man.
But it does not embrace the whole man. Religious sentiment, paternal and maternal affection, filial devotion, love, friendship, patriotism, charity, politeness—these belong to the moral realm, which embraces all the appealing regions of human sympathy, leaving for the sister science of political economy only the cold domain of self-interest. This fact is unfairly forgotten when we reproach political economy with lacking the charm and grace of moral philosophy. How could it be otherwise? Let us challenge the right of political economy to exist as a science, but let us not force it to pretend to be what it is not. If human transactions whose object is wealth are vast enough and complicated enough to constitute a special science, let us grant it its own special appeal, and not reduce it to talking of self-interest in the language of sentiment. I am personally convinced that recently we have done it no service by demanding from it a tone of enthusiastic sentimentality that from its lips can sound only like hollow declamation. What does it deal with? With transactions carried on between people who do not know each other, who owe each other nothing beyond simple justice, who are defending and seeking to advance their own self-interest. It deals with claims that are restricted and limited by other claims, where self-sacrifice and unselfish dedication have no place (Economic Harmonies, ch. 2)
This describes the vast bulk of how almost everyone on the planet spends their day. Doing things on behalf of people they don’t know and may not even personally like in order to defend and advance their own self-interest.
Here are some quotes from Mises on the subject.
The primary purpose of introducing economics into political discussion is not to justify unjustifiable behavior or wish society to be even more avaricious than it already is. Rather, the purpose is to impose some discipline on the discussion by acknowledging the constraints of reality. So often, political discourse is of the form “the government should do this” and “the government should do that” without asking the rather obvious question of where the government is going to get the resources to do this and that. While it is true that the government has a unique power to motivate people through the threat of whip and jail instead of merely the promise of monetary payment, the history of humanity is nothing if not a lesson in the superior productivity of free labor versus slave labor.
And I doubt that someone like yourself really wants to apply the whip and jail. Without those, the government really has no magical abilities that any private firm does not also have. The government can organize? Private individuals invented organization. The government keeps records? Private individuals invented the keeping of records. And so on.
Clayton -
I’m kind of thinking out loud at the moment, so I’m not exactly clear on what I mean, to be honest. I guess without the rule of law backed by threat of force, it is not government as we know today. So by government I mean a set of elected representatives who make laws for the “greater good” (supposedly). Then that leads to the problem of the “tyranny of the majority”… I guess it really comes down to the fact that many of the elites (whether power elites or intellectual elites) believe that the masses are too stupid and immoral to organize themselves and chaos will break loose without that central controlling force. It may be that that was true at some point and in some societies in human history, I don’t know. Actually, I have some Chinese friends. many of them smart people, who speak that way about China - that the vast majority of the people there are too ignorant and it is better to have the government in control. Of course they are only having the success they are now because of the introduction of some market forces there.