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Government in Theory and Practice

Does it provide needed services, or just steal from us?

by James Leroy Wilson
May 7, 2009

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Government in Theory and Practice

In theory, government is needed to provide what free exchange supposedly cannot. And so taxes are imposed to pay for these services. The people are expected to pay their share of taxes for the privilege of living in a civilized country.

It's a debatable premise, even a false one, but for the sake of argument I will concede this theory. Create your list of services that free exchange cannot provide, and I'll accept it. You will probably say defense, law enforcement, a currency system, and roads. Your list may also include clean air and water, schools, and hospitals. Postal services. Libraries. Public parks. Provision for the needy. I'll concede as much government as you think we need.

I will even concede that people who avoid paying the taxes to pay for these services are thereby cheating the rest of us and ought to be ashamed. Just like shoplifting means higher prices, tax evasion means higher taxes for the rest of us. Although it is wrong to take someone else's property, taxation is the exception because it makes security and liberty possible.

Admittedly, I don't agree with the theory. I believe free exchange is capable of providing far more than we can imagine. But the theory does seem to provide an acceptable arrangement. It seems like a nice world to live in.

But it's not our world. In our world, government's only purpose is to take from some people to give to others. That's it. The theory that government is necessary is only the pretext to command the people's loyalty. For if we concede that government must provide what free exchange can not, we must concede also that:

  1. There is no need for government to have a monopoly on its services.
  2. Taxes would go to financing the government and absolutely no other purpose, because that would be theft.

Consider the first point. If the free market is incapable of providing a postal service, why is private letter delivery prohibited? Why prohibit something that the free market is supposedly incapable of doing in the first place?

The fact is, we know that private letter delivery is possible, and most likely can be done at a lower price than the USPS does it. This would in turn force the USPS to be more efficient, which will mean fewer government jobs. Competition is a threat to the government employee unions.

Likewise, we could ask why there are compulsory school attendance laws and prohibition on child labor. It is true that private education and homeschooling have increased, but the compulsory laws still force most parents to send their kids to the "free admission" government school, which in turn creates a demand for teachers and support staff. That is, more government jobs. But what if a child grows better in mind and character if he apprentices at a job and gets paid for it? There are many safe, comfortable, unskilled tasks which adults currently do that children could do as well, or almost as well, for a lower wage.

Why not allow the option? Because if it's allowed, schools would have to change how they educate, or enrollment in government schools will decline and teachers will lose their jobs. This is because parents would intuitively understand that, if not forced by law and finances to send their kid to the "free" school, the kid would be better off spending his days elsewhere.

And consider government control of money. If the free market can't provide a sound money system, why need legal tender laws that force people to accept the government's fiat money notes? After all, if the free market can't provide money, the people will use the government dollars anyway.

But we do know that a free money-and- banking system is possible. And if people had a choice and could refuse payment in the government's dollars, they will likely prefer banks that base money in silver and gold. The Federal Reserve System would be forced to compete and tighten its credit line to the federal government, meaning less spending and fewer government jobs.

Far from providing the public with needed services, government instead monopolizes those services in order to preserve millions of comfortable, well-paying, secure jobs. Yes, in most cases these services are indeed delivered (with varying rates of quality), but at a higher cost to the taxpayer than what he would have paid in the free market. In this sense, the American consumer is robbed for the benefit of government employees and those who are employed through government contracts.

Now consider the second point, that if government was a necessary and just institution, taxes would go to financing the government and serve no other purpose. It hardly matters what kind of tax the government levies.

In the 19th century, for instance, the main way the federal government was financed was through tariffs. What divided the parties was that the Democrats wanted it applied only to raise sufficient revenue to finance the small federal government, while the Federalists/Whigs/Republicans wanted to use it to price foreign goods out of reach and force American consumers to buy from American producers.

It is obvious, as William Graham Sumner noted in 1881, such a system would mean a) higher prices, and b) less tax revenue, because foreign producers would export less to the United States. The scheme worked so as to take from the consumer to reward some classes of producers, with little or no benefit to the Treasury. Instead of raising needed revenue to finance the government, the scam was clearly intended to redistribute wealth from the bottom up.

All taxes serve the same basic function today. It's not about revenue for the government's functions. It's not even about economic justice; it's about redistribution to the State's favored interests.

Americans have long confused vices and crimes, turning the former into the latter. This has been most regrettable. Call whatever name you want of the prohibitionists of gambling, porn, prostitution, drugs, alcohol, or what have you. Call them ignorant. Call them intolerant. Call them theocrats. At least they think they know right from wrong.

But then there is a class of people, legislators, who would "legalize, tax, and regulate" to maximize revenue streams for the State, yet continue to criminalize activities to the extent they do not maximize revenue for the State. Take a cut of the profit from the licensed casino, but penalize the kitchen poker table. Such legislators don't care about right and wrong at all. They care only about special-interest clients and re-election. For instance, Daniel Flynn writes about a Massachusetts "legalized" marijuana law in which people are actually less free than they were when marijuana possession was criminal. The purpose is not morality or good government. It's about taking control of an industry to favor friends and punish enemies.

It's all about tax-and-redistribute, not tax-and-govern. A tax-and-govern system would have fairly uniform taxes, whether they are tariffs, ground rents, personal income taxes, or sales taxes. Marijuana wouldn't be taxed heavier than nicotine, which wouldn't be taxed heavier than alcohol, which wouldn't be taxed heavier than caffeine or aspartame.

No matter how the economy is taxed, simple, uniform taxes would maximize revenue to pay for the services we require of government. But this is not what we have. The entire system is instead designed to steal from some, give to others, and mount up massive deficits in the process.

The theory of government sounds nice. The reality of government, however, suggests it is nothing but an organized crime syndicate.


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