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Dec 9, 2010

Property and Pigs

Official:  I see that you have a large income. We need more of it.
Mike:  I work legally for my income and I pay 35% at the top tax rate. Isn't that enough?

Official:  The economy is bad now. We need to take your money and pay other people. They will spend it and improve the economy.
Mike:  Why do you think the economy will improve?

Official:  10 years ago the top rate was 39.6% and the economy was good.
Mike:  Those things aren't related. How would higher tax rates produce a growing economy?

Official:  I don't have time to discuss philosophy with you. You have the money. We want the money.

Property ...

12/09/2010 - Neo-Neocon [edited]:

Dowd: It’s easy to explain to Americans in distress that the protection of vast fortunes should not be the priority of government.

That may be the most revealing sentence in Dowd's column. Dowd seems to imply that an income of $250,000 a year is vast wealth. Given the circles in which she moves, does she believe that?

More importantly, a main function of government is to protect the property of everyone. Wealth belongs to the person who earned it, if that wealth is amassed without robbing anyone or breaking any laws, whether the wealth be vast, middling, or small.

The rich pay taxes, as well they should. But there is nothing special about being rich that entitles others to take more and more of their money just because those others are "in distress.” A government is in big trouble when it sees the money of the rich as not worthy of being protected, and even as fruit ripe for the picking.

... and Pigs

From a comment by Artfldgr:  How to Catch Wild Pigs  [edited]:

An exchange student explained that he had been shot while fighting communists in his native country. They wanted to install a communist government. In the midst of his story he asked "Do you know how to catch wild pigs?" He explained that this was not a joke.

Put corn on the ground in the woods. The pigs will come every day to eat the free corn. When they get used to that, put a fence along one side of the area. When they get used to the fence, they will resume eating the corn. Then, put up another side of the fence. They will get used to that and resume eating.

Continue until you have all four sides of the fence with an open gate. The pigs will soon come through the gate to eat. Slam the gate on them, and catch the whole herd.

Suddenly, the wild pigs have lost their freedom. They will run around and around, but they are caught. Soon, they will go back to eating the free corn. They are used to it and have forgotten how to forage for themselves, so they accept their captivity.

- -
Public Tax Meeting - We Voted On It

Are taxes fair just because the majority voted? The social compact of the United States is for economic and personal freedom. The Constitution is not a suicide pact nor an agreement that the government can take what it wants.

The Congress has discovered (for the moment) that it can issue unlimited guarantees and borrow unlimited amounts. This does not give the Government moral authority to exploit those loopholes. This cannot lead to a better society, because the government must take from some and give to others, without creating a stable, prosperous society.

The government says that its deficit spending is "stimulus", but this is an excuse for paying supporters. The government will levy higher taxes on the people who organize jobs in the private sector, to pay back the borrowed money with interest. The private sector knows this, and refuses to work harder only to see their incomes taxes away. That is one cause of our jobless, stagnant economy.

Would you want to work hard for a better future, and then have the government decide you were too successful? With a government like that, who needs robbers?

Dec 7, 2010

Your Dog Owns Your House

Bob:  You put out the fire. I can't thank you enough.
Official:  Hand over the keys. We own that house now. It would have burned to the ground without us.
Bob:  But, I already paid taxes for your help.
Official:  I apologize. You have a point. Instead, pay us in tax half of what you produce. That is for our effort in providing all of our vital services.

Your Dog Owns Your House
April 2002 - Econlib.org by Anthony de Jasay
- Via Cafe Hayek

Jasay presents and then criticises the following flawed argument for government redistribution of wealth and control of all property and business [edited].

Your dog owns some part of your house. This is obvious when you consider the ethics and economics of redistribution.

Your dog may have repeatedly protected your possesions from being stolen. The actual value of your home minus its unguarded value is the contribution of your dog, even if not exactly known.

We might consider: who owns anything? The fire brigade keeps your house from burning down, and deserves some ownership of your house. The house would be worth much less without water and electricity, so some value can be assigned to the utility companies. And, without the protection of society, you would have nothing.

Your house and other possessions really belong to society as a whole, and so do the possessions of everyone else. Everybody has a rightful stake in your holdings and you have a rightful stake in everyone else's holdings. Society is alone entitled to decide how big everybody's stake ought to be, to take from Peter and give to Paul, and to regulate production, commerce, and consumption.

Here is some contemporary thinking [edited]:

A medical researcher might have worked terribly hard to discover something of great commercial value. But, who trained him? Who worked before him to make the discovery possible? Who built, operates, and pays for the lab in which he worked? Who maintains the enduring social institutions that give him commercial opportunities? He has cleverly exploited the social framework, but he has to thank that framework."

Jasay presents reality and the flaws in the above argument.

A minor point. You cannot owe a debt to a "framework"; it is not a natural or legal person. "Institutions" do not act, and "society" has no mind or will, and makes no contributions. Only people do these things. You cannot assign credit for accumulated wealth, current production, and well-being to entities that have no mind or will. Individuals have a mind, but not a collection of individuals.

The major point. All contributions by others to building your house were paid for at each link in the chain of production. All current contributions to its maintenance and security are likewise being paid for. Value has been and is being given for value received. That value is not always money and goods, but is sometimes affection, loyalty, or duty. In the exchange relation, a giver is also a recipient, and the reverse.

In a voluntary exchange, the parties are quits after each side has delivered and received the agreed contribution. Seeking to credit and debit them for supposed outstanding claims is double counting.

Cooperation and Price

People exchange things in cooperation, and they voluntarily place a value on what they exchange. The exchange creates value for both sides.

Say that I start with two toasters and you have 40 loaves of bread. After I trade you a toaster for 20 loaves, we both go home to have breakfast toast. Our cooperation and trade has made us both better off and has created value for us. This is the basis for all specialized production and trade.

At the extreme, I might have been willing to trade two toasters for the bread, and you might have been willing to trade 40 loaves for a toaster. But, we don't hold out for the extreme, because each of us is free to walk away and find a better deal. Other people make toasters and bake bread.

A socialist says "I'm from the government. We provide protection to you, so we have a right to everything that you produce. Without us you would be nothing." This denies your individuality and personal worth. You have the natural right to find your protection from private sources or a different government. You have the natural right to assert that you do not owe the government everything merely because it provides a vital service.

Say a man points a gun at you and declares: "Believe me, you will be worth nothing if you don't hand over the money. This contribution to me will make you better off. It is well worth it." This is a crazy argument supporting a crime.

How is this different from a government official saying: "Believe me, we will put you into jail unless you give us half of what you produce. This contribution to us, I mean society, makes your life possible. We need the money to provide vital services to you. Anyway, we voted on it."

A free people owe each other the option to walk away and to make better arrangements in their life whenever it is at all possible. They owe each other cooperation which is determined by competition, not by the highest price that a person would pay at the extreme. If at all possible.

- -
Public Tax Meeting
09/2009 - EasyOpinions
Most of the citizens in a small town visit the richest man in town to ask for more help. They say it is only fair. After all, they voted on it.