no third solution

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Taxation is Not Coercive? But Property Is. Or Isn’t. Is it?

May 15th, 2007

None of it is my doing, but the Cato piece I referenced earlier in the week has stirred up quite the discussion. The vanguards of liberty seem to be in very short supply these days, and this is terribly unfortunate for a number of reasons – not the least of which is the fact that most of the writers are distinguished scholars in one field or another. Consider Richard Epstein’s response, where, towards the end, he addresses the libertarian idea that taxation is akin to theft:

But [Libertarians] typically overstate their categorical case against taxation, because they refuse to look at the benefit side of the equation…

That is to suggest there is a benefit side of the equation, and since all tastes and preferences are subjective, we can conclude that anyone objecting to the tax or the program it funds clearly does not recognize a benefit. And further:

Therefore, if a tax is designed to provide some public good, and we can say all persons who pay some tax receive a benefit that they value in excess of the amount of the tax, then the arrangement is a form of justified coercion…

Oh, where to start? It is terribly presumptuous of Epstein to assume that everyone who pays receives a benefit, however small – but it’s fucking flat out wrong to conclude that the benefit exceeds the amount of the tax in all (or many, or most) instances.

Starbucks does not effect violence in order to persuade me to buy coffee, Chrysler did not threaten to imprison me if I didn’t lease a Jeep, and NewBalance did not garnish my wages in order to provide me with new running shoes. On the market, people pay for things voluntarily when they determine the benefit exceeds the cost. If all persons received a benefit in excess of the cost, no coercion would be necessary – this is elementary public finance, and indeed the Pareto improvement would be to remove the coercive element entirely. The idea behind public finance is that public goods are to be provided by tax revenues because people otherwise either don’t want them, or don’t know they want them – neither of which necessarily justifies the taxation in question – but this is not a discussion of public finance.

Buridan’s Ass does not “prefer” one bale of hay to the other – he merely prefers “some” hay to death. Similarly, we do not prefer certain degrees of tyranny, we merely prefer some semblance of freedom to certain death. All market-decisions are predicated upon a choice between alternatives which includes abstention or deferral. Government provides no such choice, and where choice is absent, we can’t even begin to hypothesize as to where these things fall on individuals’ value scales, and therefore we cannot conclude with any certainty that the benefits exceed the costs in even a single instance, that is, unless Epstein has found a way to definitively bridge the interpersonal utility comparison gap. That would be a nice trick. (For more on IUC, see this thread, or this one – particularly the “related posts” link preceding the comments section.)

Finally, he casually tosses out Proudhon’s (probably misunderstood) slogan, “La propriété, c’est la vol!”

Proudhon would ask this question… How dare you make this property, which has always been common, private? And the answer, in all cases, is: because it is to the long-term advantage of all.

In all cases, if it is not previously owned, then it cannot be stolen – I wish I could come up with a more eloquent way to describe this than “finders keepers,” but I can’t. Since all property originally was in this murky state, the idea that private property cannot emerge from first use, prior appropriation, or discovery, contradicts any notion of ownership; no property can ever be freely and individually owned, and all “property” succumbs to the murky depths of the “commons,” none of it is ownable, and all claims to it are simultaneously valid and fraudulent. Either the commons are held by a group of people who would voluntarily relinquish their claim for a certain price, or they are not held or used by anyone, in which circumstance no objection to appropriation can be sensibly put forth. In the first instance, it just so happens that the property is loosely and informally owned, and to acquire it from them and their use, you would need to make an offer sufficient enough for them to recognize and formalize their collective ownership.

The conclusion, that privatization is to everyone’s long-term advantage is not quite intuitive, but I believe it is more or less accurate. That said, it is a blade that cuts both ways – and because of this, I’m not quite sure what the hell the conclusion of his essay has to do with the rest of it. Of course we need private property – we more than “need it,” it’s fundamental to our existence; but privately held property makes possible concepts like “theft,” which undoubtedly fall under the mantle of “coercion.” It is because we recognize rights – property, ownership, life, &c., that we understand what is or is not coercion – and I’ll reiterate: the exercise or defense of one’s rights is not coercive, and to conflate the two concepts is a serious error in reason: Whereas rights can clearly be exercised without coercion – it’s a stretch, but we can imagine a world where nobody lies, cheats, or steals – and in such a world, the concept of defense is null, coercion cannot occur without a recognition of rights.

Why The Flat Tax Isn’t Any Better

April 28th, 2007

Last month’s “Carnival Freak” is Praveen, who, for reasons unknown to all but himself, neglected to follow the Carnival’s stated rules, and submitted a column arguing in favor of the flat, national sales tax. He is solely responsible (and deserving of) any ridicule others may cause him to suffer. But I have better things to do than tear apart his naievète.

Ha! No, I don’t. But I’ll at least try and be civil about it

This will not be a column against the principle of taxation – that’s a much bigger beast to slay. Here I only endeavor to demonstrate that the “flat tax” is not nearly as charming as its proponents would have you believe. It should not be inferred that I favor the status quo over the flat tax. I hope to make a broader argument against the principle of taxation in the future, but for now, I’m only concerned with Praveen’s flat-tax proposal.

Fire Protection as a Public Good

April 25th, 2007

The more you look into “public goods,” the more historical evidence you find that suggests that they weren’t always as “public” as we’ve been led to believe, viz., we are taught that certain goods or services cannot be produced on the market, therefore the government must provide them, and therefore taxation is justified in securing the necessary funds to operate the programs that provide them. I previously examined the Lighthouse Problem, after coming across an interview on the subject with Ronald Coase, at Reason a while back. Tonight, I learned about another example

In 1666, the City of London burned to the ground. Shortly thereafter, an Englishman by the name of Nicholas Unless-Jesus-Christ-Had-Died-For-Thee-Thou-Hadst-Been-Damned Barbon (seriously) is generally credited with creating the first sort of fire insurance:

Afterwards, insurance companies formed private fire brigades to protect their clients’ property. Insurance brigades would only fight fires at buildings the company insured. These buildings were identified by a badge or sign.

Today, most properties are insured against fire, either by covenant or regulation, so the free-rider problem is pretty much non-existent.

So, why do we pay taxes for this sort of thing today?

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UPDATE: Russ Roberts, from CafeHayek e-mailed me today to point me to one possible answer: Rent Seeking.  You can read Fred S. McChesney’s “Smoke and Errors” over at Econlib.

Thanks, Russ!

no third solution

Blogging about liberty, anarchy, economics and politics