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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.

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