You’ve Been Conned!

The word “con” derives from the word “confidence” in that the perpetrator of a con first develops in you an attitude of confidence, which is then used to exploit your trust in him to your detriment, such as promoting a fraudulent investment. Unfortunately, it is often the case that we have succumbed to multiple con games which have their genesis in attitudes arising from Progressivism in the late 19th century. They exist because we would not willingly accept the conclusions the con imposes in the absence of its deception.

Con #1 – Climate Change. Put briefly, there is a concerted effort to gain your confidence in the notion that the earth’s average temperature is increasing at a rate that will have serious consequences in the relatively near term; this warming is said to be directly related to the increase in atmospheric carbon dioxide, a byproduct of recent industrialization. The remedy is immediate and drastic reduction in CO2 emissions by the developed countries.

The arguments for accepting this include: (1) a purported consensus among “scientists” of its truth; (2) denigration of critics as “climate deniers”; (3) the assertion that the “science is settled” with respect to climate change.

To which I reply that the so-called consensus is among a group, the vast majority of whom are not climate scientists, who belong mostly to academe and whose livelihood and project funding depend on going along with this conclusion. And, of course, denigration and name-calling are not arguments, and the tone of the discussion recalls accusations of apostasy, i.e. climate change has become a religion of sorts. Finally, it is fundamental that, for any given theory, the science behind it is never fully settled, and is always open to new discoveries. The gist of the proponents here is that they are overwhelmingly correct and any dissent should not be tolerated. Viewing an interview with one of the more rabid proponents should convince you where they are coming from; just view the YouTube video of Tucker Carlson interviewing Bill Nye, the Science Guy. The appeal here is not to logic or facts, but authority.

It should be noted that most of the climate change scare is predicated on computer models which purport to predict the magnitude and timing of increase in global average temperatures. It should also be noted that recent satellite and other temperature data in recent years has not conformed to the predictions that the models delivered for those time periods; also, each successive publication of the UN IPPC (Intergovernmental Panel on Climate Change) has contained downwardly revised historical temperatures and the text produced by the actual scientists involved is much more “conservative” and cautious than the Executive Summaries which constitute the bulk of the material quoted by the media and by climate activists. Forbes has an article that discusses the efforts of companion, Non-governmental International Panel on Climate Change (NIPPC) to compare and contrast the IPPC promulgations. 1

The bottom line: adopting hugely disruptive (and coercive) policies based on computer models’ predictions is, frankly, ridiculous.

One should also recall the similarly strident calls for action to deal with the so-called Population Bomb in the 1960s and the high level of concern about Global Cooling in the 1970s. Regarding the population problem Paul Erlich’s book made egregiously exaggerated claims for the relatively near future, to wit:

The battle to feed all of humanity is over. In the 1970s hundreds of millions of people will starve to death in spite of any crash programs embarked upon now. At this late date nothing can prevent a substantial increase in the world death rate…

Note how frantic tone of the above is very similar to the assertions of Al Gore, Micheal Moore and others regarding the urgent need to respond to the climate change predictions. In 2006, Al Gore was heard to say:

unless drastic measures to reduce greenhouse gases are taken within the next 10 years, the world will reach a point of no return.”

Sound familiar? I leave to the reader to ascertain whether the predictions just discussed above have proven accurate.

The reason why rejecting the Progressive view of climate change is so important is that the proposed remedies are drastic and would likely take the developed countries back to the beginning of the 19th century by denying us the continued use of fossil fuels, and prevent the developing countries from achieving anything beyond their current standard of living. Just witness the hostility to coal, to the new extraction method of “fracking”, to pipelines, and to most new developments generally. The Progressives are in danger of becoming the new Luddites.

Con #2 – The Nature of Economics . We are all subject to the gigantic con that current methodologies and policies are well founded in a mainstream economic theory based on concern for aggregate economic performance (e. g. GDP) and ways to intervene in the economy to influence outcomes. Fully 90% or more of economists you might hear from are of this school of thought, which derives from the writings circa 1930 of English economist John Maynard Keynes; additionally, economics has largely become a mathematically based discipline which attempts to accurately predict events.

Once again, the appeal here is to authority because the results in practice have been abysmal. The worst case is the recent severe downturn of 2008; most economists blamed greed and excessive risk-taking combined with insufficient regulations for the crisis, which some claim is inherent in capitalism. For the Keynesian school, the boom-and-bust cycle is a natural phenomenon that can occur spontaneously and whose causes are not understood.

The actual facts regarding 2008 are these: the central bank (the “Fed”) kept interest rates historically low during the recession of 2001-2; when combined with government policies that mandated the creation of heretofore unknown volumes of high risk mortgages for low income buyers, the results were perfectly predictable— a housing bubble, i.e. more houses built than there was a legitimate demand for. Add to that the innovation of certain relatively new types of mortgage securities which pooled these riskier mortgages together, we have the ingredients for a crisis. Almost all the impetus for this was supplied by government intervention: the Fed, the Congress, and the housing GSEs Fannie Mae, and Freddie Mac. Sorry, not capitalism’s fault. 2

There exists an alternative body of economic thinking — the Austrian School, which is largely non-mathematical and sees economics as predicated on peoples’ choices, i.e. on human action. This school of thought asserts that economics is a social science, not a “hard” science like physics, chemistry or biology, and hence, the move to introduce mathematics in attempt to provide predictive accuracy is nothing more than an extension of the Progressive philosophical conviction that is not only possible, but desirable to exercise “scientific” control over society and the solution of social problems.

The Austrian School emphasizes the study of individual human decision making in formulating the laws of economics, and shows how such laws provide understanding of the tendencies of things to occur, but not the magnitude of the occurrences. Just because it avoids the use of mathematics and is suspicious of the universal mainstream tendency to view all macro-economic activity as the study of aggregates ( e.g. “aggregate demand”, which is so central to the Keynesian point of view), does not mean that it is unsophisticated or invalid. It does assume, however, that mere mortals like you and me can understand the arguments presented, i.e. economists are not ( or at least, should not be treated as ) “high priests”. If you want an altogether different view of the economic crisis of 2008, please view the YouTube presentation by Tom Woods on “Austrian Business Cycle Theory”3

Climate Change and Economics are examples of how we are being conned into accepting a bad situation, which benefits some but damages most of us. Worst of all, these cons extend and exacerbate the control that Progressives can exercise over every aspect of our lives! Next, we discuss two cons that claim the services they offer are so unique that they are special cases.

Con #3 – Schooling should be Free (and Compulsory ). Most people nowadays consider public schools to be a norm that was always present, and, moreover, that it represents the way things ought to be because education, unlike most services, is somehow unique and different.

The history of education in this country does not support this view—schools were mostly private until around 1850. An article at FreedomWorks4 explains: “It must be pointed out here that the United States had not previously been a nation of illiterate citizens. Estimates reveal that 90% of all whites in the mid-19th century were able to read, write, and perform basic arithmetic. These statistics like nothing else reveal that the impetus behind compulsory schooling was always more political than educational.”

The political considerations here were essentially a somewhat bigoted reaction to the influx of Irish and Italian immigrants whose children were attending Catholic parish schools, partially funded in many cases by local governments. Attempts were made to pass a Constitutional Amendment prohibiting such funding, but it failed; there were, however, successful attempts at the state level in around 38 states.

So, it was not the case that public schools were founded on the failure of private schools to educate. Nearer the end of the 19th century, Progressives like Horace Mann and John Dewey promoted universal, compulsory, free education as something not intended primarily to benefit the individual but to mold the society, to wit: “…through education society can formulate its own purposes, can organize its own means and resources, and thus shape itself with definiteness and economy in the direction in which it wishes to move.” Dewey also allowed that

“The Russian educational situation [post 1917] is enough to convert one to the idea that only in a society based upon the cooperative principle can the ideals of educational reformers be adequately carried into operation.”

Consequently, the idea that education is really no different than any other service, and hence, can be voluntarily bought by the actual consumers based on satisfaction of their desires, was replaced by the notion of coercion, one-size-fits-all uniformity ( and conformity). And, of course, one of the biggest cons of all is the idea that state-sponsored education is free. No, it is tax-paid, a form of coercion applying even to those without children to educate.

The major contemporary argument promoting public education is that education is a public good, by which we mean that the free market would either under-produce or fail entirely to produce the good because of (1) “jointness of consumption” which more simply put means that once the good is produced, additional consumers may enjoy the good without any increments of additional cost, and also because of (2) “non-excludability”,i.e. the inability of the producer to exclude potential users. Ergo, the free market, it is said, will generally not be interested (have no incentives) in providing the good or service in question. This is the argument that undergirds a whole host of public goods for which, it is asserted, the only legitimate provider is the state, including roads and major infrastructure.
Even though a close examination does not very well meet the criteria in (1) or (2) above, education has nevertheless been argued to be a public good and hence in need of government funding by taxation. The reason is that it is in the interest of the state to be the nearly exclusive agent in charge of education in order to legitimize the state and the arguments in favor of the status quo and the validity of democratic choices. All the participants (teachers, administrators, researchers, et al ) are beholden and hence supportive of state goals, not individual learning. The mastery of bodies of knowledge and acquisition of intellectual skills is entirely secondary to the influence public educators exercise in favor of the state.5

Con #4 – Health Care is a Right. Here too, the idea that health care should be a private transaction between one or more providers and the individual needing care has been supplanted, at least in democratic socialist quarters, by the notion that health care is somehow unique and so different that only the state is competent to make health care decisions.

Proponents for its uniqueness claim that it is different than most services in that: a) if you don’t utilize it, you may die; b) providers know more about your health problem than you do (“Asymmetry of information”); c) consumers sometimes have difficulty in determining the value of the service even after delivery.

It seems to me that the gist of these arguments is that “others in authority” know better. So, the state with its access to “ expertise” is a better bet to control what happens. The defect with this approach is that all decisions are then based on aggregate judgements about welfare, costs vs. benefits, etc. Such utilitarian decisions are fine, as long as it is not your care that is denied.

The essence of this con is, of course, that a cursory examination shows that health care, while it may present the consumer with problems that are not universal, is still a service that the recipient needs to control.

The notion that either health care or education are rights runs contrary to the concept of rights supported by the Constitution, where rights are prohibitions on government, not promises to deliver a service.

Just as with education, government involvement in health care is justified with the same bogus public goods arguments that we have explored above. That potential consumers can be excluded is obvious, and it is hardly the case that providing care to additional consumers is a cost-less event. However, one risks absolute vilification if exclusion (for non-payment or supposed inability to pay) is even suggested, hence the automatic distribution of emergency room care costs across entire populations.

There is a rational way of dealing with the emergency room syndrome: first let it be known that only serious or life-threatening issues will be dealt with–no colds or flu or ingrown toenails and that a fee will be charged for the triage necessary to determine the need for a visit if it turns out not to be an emergency, i.e. restore the true meaning of “emergency” in Emergency Room medicine. Second, let the patient or those with him know that the cost of care will be ultimately be billed to him; reasonable efforts will be made to recover costs, except that the hospital may not bill the ER patient any more than the least cost it has negotiated with any entity ( e.g. an insurance company ) for that service. It is well-known that the full “retail” cost for hospital procedures charged to individuals is typically several times more than to other classes of payors.

In addition to a likely substantial reduction in ER costs which have to be reflected in increases to hospital fees generally, it is imperative that legislation and policies be put in place which will tend to revive the fully implemented concept of insurance: payments are made by individuals based on the size and composition of the risk pool and any individual risk characteristics. Other forms of insurance ( auto, casualty ) presuppose that the insured-for event may not even occur in the policy lifetime, hence a paucity of claims; health insurance has evolved such that it has instead become an ongoing health care payment mechanism that encompasses all types of care, serious or routine, rather than the classic insurance situation. The advent of this mode was incident upon the government intervention that allowed employers to deduct the cost of insurance premiums for their employees circa 1942.6

To address the problem of of employer provision, the deduction put in place for this cost should be phased out and we should endeavor to eliminate all restrictions on the insurance contract and allow insurance sales nationwide, with emphasis on contracts which are oriented primarily towards catastrophic as opposed to routine care .

Con #5 Debts and Deficits are not a Problem. Most people are aware that when the federal government spends more than it takes in, there is a budget deficit for that year, which amount is added to something called the National Debt. You may even have heard that the current value of this debt is about $ 19.5 trillion, about 105% of the value of the entire annual economy (GDP).

The vast majority of us have made a studied effort to ignore this situation, some because they consider it irrelevant to their daily life, and others because they feel that ultimately there will be some horrendous reckoning in the far future.

Because almost all politicians and economists refuse to focus on this, many of us are conned into believing that near term inaction to reduce or eliminate the debt is probably OK. They would be wrong.

Economists of the Keynesian persuasion ( go back and re-read Con #2) declare the debt not problematic because “we owe it ourselves”, i.e. U.S. residents own most of the Treasury Bonds. However, a debt this size has strongly deleterious effects in the here and now. Specifically, all those who depend on fixed income investments, directly or indirectly, are affected by the government’s deliberate combination of interventions—controlling the interest rate and keeping it very low, and fostering a moderate but continuous rate of inflation, both of which, operating in concert, reduce real appreciation of pensions, retirement accounts, and all fixed income instruments. Much of the time we experience negative real interest rates ( e.g. a 1.5 % nominal rate combined with 2.5% inflation is a negative 1% real rate—you are losing value in that investment ). Governments adopt this strategy because its pernicious effects are harder for the public to perceive than austerity programs and large tax hikes, yet the result is the same: the debt is gradually devalued along with the currency. So, it is not the case that the only impact will be on your grandchildren having to repay this huge amount in some distant future. No, it’s right here, right now. The state is using private savings to pay down public debt using these stealth tools.

Con # 6 – Economic inequality is harmful and unfair. We hear much nowadays about the so-called 1%, i.e. that group of people who are at the top of the heap income-wise and the implication is nearly always that this is a bad, very bad thing! If you are a dyed-in-the-wool egalitarian who thinks everyone should be equal in all things, then yes, this could be a source of angst for you, but in fact there is almost nothing of consequence in what leftists generally think of as a mal-distribution of income.

The most common objection to unequal incomes is that, if less of the total income went to the top (10%, 1%, 0.1%, take your choice ) then more of that amount would wind up in the hands of the rest of income recipients. The first thing to note about such thinking is that it suggests a static situation, i.e. that the income pie is not growing. If such is the case, then it is probably much more important to think about and deal with factors stagnating growth than to limiting the top incomes. Furthermore, these factors are inevitably traceable to some government policies—policies that take money away from capital investments, policies that cause monetary inflation, policies that result in substandard education, etc. etc.

If the income pie is growing, then the question becomes one of whether the living standards of the non-top-income group are increasing or not, and this is frequently not alone a function of taxable income received.

In any event, the bottom line here is that those who think a particular income distribution is unjust and/or unfair always seem to have in mind some coercive remedy as suggested by the following discussion:

When we talk about a social injustice – not just the unfairness of bad luck – what we mean is that there is an inequality which is unfair and which could be remedied if our social institutions were different.7

( I have written extensively about Justice and Fairness—see the three-part series of posts by that name in this blog.)

As a parting thought on this matter, consider the amount by which the incomes of the non-top-income group could be augmented by seizing (Yes, seizing! ) the entirety of the income of the top group, whichever option you have selected. In the case of the top 10% vs. the remaining 90%, dividing the top group’s total of $ 4.3 Trillion income by the number of taxpayers in the bottom 90% only adds an increment of about $3,500 to the adjusted gross income of each taxpayer in the bottom 90%. This is only significant for the three lowest brackets (i.e. those having Adjusted Gross Incomes less than $20,000); for the rest it augments their income by at most 20% before any additional taxes resulting from a move to higher bracket. To accomplish this magnanimous feat, you will have essentially eliminated (!) an entire class of entrepreneurs and small business people who demonstrably provide most of the jobs in this country. Nice going, you magnificent social justice warriors!

Summation. Let’s now discuss the implications of the five cons discussed. What if you refuse to be conned?

If you reject the Climate Change con and refuse to have the clock turned back 100 years on your standard of living, then vote the proponents out of office!

If, having an open mind, and having investigated the Austrian School of Economics, you realize that you have been conned big-time into thinking that the layman simply cannot understand economic theory, then, having educated yourself at the hands of the likes of Tom Woods and Bob Murphy next time someone blames “greed” and lack of regulation for the 2008 meltdown, why you can pipe up and set him straight; then go vote for someone who is willing to abolish the “Fed” and return to free market monetary regulation. 8

If you can get up the courage to resist being shunned, then dare to suggest that maybe your school choice should not be determined by your zip code! Maybe the demonstrably low performance of American students in all types of school districts ( i.e. not just inner-city schools) is directly related to the substandard performance of tax-paid public educators. And to the fact that the primary motivation for educators is not mastery of subject matter, but molding children into social beings. Time to suggest and then support a fully private alternative and remove taxpayer funding from the formula.

If you can get past the absurd notion that health care is some kind of right or entitlement, ask yourself: Was there ever a time when health care was delivered on a fee-for-service basis and the costs were manageable and you had personal relationships with your care providers? And you, the patient, were mostly in charge of the situation? Well, you have been conned into accepting a situation where, because you are no longer the one who pays, many others are making decisions for you about your care. The increase in costs we now experience was driven largely by the existence, first of Medicare, then later MedicAid, and by employers becoming the responsible payment entities. It is analogous to the situation in education when a large pool of taxpayer money ( in this case, government funded student loans) is set before them, providers will increase their prices to meet this artificial demand. Instead of replacing the ACA with something similar, you should demand the gradual elimination of all government intervention into health care, and the dropping of all regulations that keep insurers from selling across state lines, or otherwise creating a multitude of competitive insurance contracts, which could allow abundant consumer choice among various cost alternatives.

If you will stop and think about it for a second, you may find it easier to quit being conned by egalitarians who insist on having you accept their undefined notions of fairness and their unilateral declarations about justice. Justice and fairness are sometimes related but are not identical concepts as they would have you believe.

The most essential, most bare-bones, most stripped-down essence of the concept of fairness is contained in the phrase “equal treatment”; note well, this does not mean failing to get an equal distribution of income and wealth, which, the egalitarians posit belongs to us all equally.

The most essential, most intuitive, most reasonable interpretation of the notion of justice is based on the concept of entitlement. Note well, this is an utterly different idea from the concept of a social entitlement like Social Security or Medicare. The entitlement concept of justice deals with who rightfully may lay claim to resources and what it is that justifies this claim. In other words, who has a right to property and why.9

The very bottom line here is to recognize who is conning you and to utterly reject them! Yes, it’s the Progressives! Every con discussed above can be traced directly to one or more well-known Progressive personages.  Who woulda thought?

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  1. See the following discussion at: https://www.forbes.com/sites/realspin/2014/03/31/the-ipccs-latest-report-deliberately-excludes-and-misrepresents-important-climate-science/#7561ddfb428e []
  2. See the book by Peter J. Wallison , “Hidden in Plain Sight” where he discusses how the bail-outs of 2008/2009 were not necessary, and how the only way to minimize risk-taking behavior is for there to be consequences for the individual firms. There never was a “systemic risk”. []
  3. See it at:https://www.youtube.com/watch?v=9a-eUKjnDfM. []
  4. See “A Brief History of Public Education: School Choice in America Part II“ found at: http://www.freedomworks.org/content/brief-history-public-education-school-choice-america-part-ii?page=6 []
  5. An excellent discussion of the bogus nature of the public goods argument can be found in the podcast at: (( http://tomwoods.com/ep-864-the-bogus-public-goods-rationale-for-government/. []
  6. The Economic Stabilization Act under the Roosevelt administration sought to prevent inflationary wage increases during wartime by allowing employers to compete by offering an additional non-taxable benefit–health insurance. This is a great example of an unintended consequence shaping the delivery of care for generations afterward , and putting the patient in second or third place in the healthcare equation because the patient was no longer the source of payment and that what kinds of care could be reimbursed became the subject of consideration primarily between the employer and its insurance company. []
  7. The quote was taken from “Thinking about fairness and inequality” which can be found at: http://www.ssc.wisc.edu/~wright/ContemporaryAmericanSociety/Chapter%2010%20–%20inequality%20&%20fairness%20–%20Norton%20August.pdf. []
  8. See Murphy’s blog at: http://consultingbyrpm.com/blog and his bio at: https://mises.org/profile/robert-p-murphy []
  9. See the excellent discussion of Robert Nozick’s Entitlement Theory of Justice in his famous book Anarchy and Utopia. See also a similar theoretical approach by legal scholar Randy Barnett in his Liberal Conception of Justice to be found the his book entitled The Structure of Liberty. []

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Filed under Progressivism---the Giant Step Backwards

Not all radishes are Red…

     What is all this business about radishes, anyway? Well, the humble radish is a root crop, and is closely related  etymologically to the Latin word radix, meaning root; sharing this heritage is the politically charged term radical, which has come to be associated with extremists, even bomb-throwing, anarchist extremists.  Despite this unfortunate connotation, I am one to insist that it is a decent, perfectly acceptable term to describe those wish to get to the root of a problem as opposed to beating around the bush, attending to false appearances, etc., etc.

     Historically a lot of those who called themselves radicals were of a Leftist persuasion—socialists, communists, and others with a collectivist bent. There is no reason, however, that someone on the Right, or, even as I would express it, the libertarian Not-Left, could not intellectually embrace the notion of discovering and promoting solutions to political and social problems that went to the heart of the issue.  Both Leftists and the Conservative Right are afraid of getting down and dirty into the fundamentals.  It might involve changes, indeed huge changes.  Such changes invoke fear in many of us.  Don’t upset the apple cart, they say!

     Or is it the radish cart?  I am sorry, but I will persist in this, as the radical approach is the only true path to change. Incrementalism is safe, but sorry.

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Overview and Purpose

After years of neglect, the political situation in the United States is approaching that of a crisis. The reason for this crisis, I believe, is fundamentally a failure to define and implement what must be the appropriate role of government. Both major political parties, while contending that they offer differing, and even opposing points of view, have failed us in providing a definition for government’s role that is appropriate either to reasoned arguments for its functions or for adherence to the concepts in our founding documents. The purpose of this work will be to change some minds—minds of voters and potential voters who call themselves moderates, centrists, or are what the polls call the politically undecided. It also addresses certain of you who have a so-called “conservative” orientation, but who, as I see it, lack the explicitly defined political principles necessary to the solution of our crisis by being too narrowly focused on social issues, too strong an emphasis on “traditional” values, or who may have a strong authoritarian bent.

This work is particularly addressed to reasonably well-educated people who, in the author’s experience, conduct their personal lives using reason, common sense, and prudence, yet when it comes to political orientation and public policy, adhere to ideas which, I hope to show, are in direct conflict with a reasoned and sensible approach to governance, and whose moral basis for such policies relies on faulty thinking. Members of this group frequently come to their political beliefs, not through reasoned adoption, but from mother’s milk, or from the inability to divorce themselves from a social matrix which conditions social acceptance upon adherence to certain political norms.

So,  it is my conviction that nothing changes until, and unless, public opinion changes. Seldom does one’s opinion ever change in the absence of some outside input. It will be my limited effort in this blog to provide that input.

The core of my belief is that, for any given political question, there is really only one “correct” answer; there are initial premises which must be accepted or rejected, but having been accepted, there is a predictable, orderly sequence of logic which leads to a valid alternative. I do not subscribe to the notion that “nothing is black and white” or that “most things are shades of gray”. My belief is that the Aristotelian dictate that something cannot be both A and not-A simultaneously combines with a set of facts whose truth can be ascertained to result in arguments whose structure and content can be evaluated for their validity. I have no interest in philosophical worlds where facts and logic do not hold sway.

Moreover, I think it is essential that the fabric of one’s political ideas and values be of a whole cloth, i.e. that each part, each issue, each principle be part of an internally consistent and coherent body of ideas.

Should the reader decide to come to grips with the concepts in this work, my fondest hope is that it will result in changes in behavior, in particular, voting behavior, since that is, in the last analysis one of the few ways in which the individual can influence political events. Possibly, some readers may become engaged by these new ideas to such an extent that they become “activists” in attempting to influence others, even if this is simply being an informed advocate at informal gatherings when politics is up for discussion.

Underlying most issues of a political nature are questions of right and wrong. We talk about what is just and unjust, fair and unfair. And it is in this arena that those who would defend a concept of individual liberty have fallen down on the job and have either refused to deal with fundamental concepts or have acquiesced to concepts propounded by those who are, frankly, unfriendly to liberty. So, I will start out discussing selected moral theories of justice and fairness and attacking head-on notions which both American political parties have not adequately dealt with on an intellectual level. I also hope to assist the reader in confronting the fact that not all moral rules should be subject to social enforcement, and to refine their own arguments as to where the line separating them is to be drawn.

If anything is central to my thesis, it is the question of the proper role of government, and it is the two major parties’ failure to define matters in terms of this question that has resulted in the present crisis. The players feel restricted to discussing things as if they were individual, compartmentalized “issues” which have little or no context, socially or otherwise. For instance, I maintain that any legislator, when proposing any new law,  is obligated to consider first and foremost —does this new law pass the test of being appropriate to government’s proper role?  Opponents of liberty frequently find that there is no law which runs afoul of this test; these are the people whom we wish to expose in this work.

I will speak to the issue, which statists blithely dismiss, of whether government is necessary at all, and to the various historical ideas which have gradually led us to the current nation-state, including the notion of a Social Contract. Having likely accepted that some government is justified,  the concept of what its proper scope should be is worked out. The most notable recent experiment in government is, of course, the American one. It turns out to be an exercise in limiting the ability of government to negatively influence the life of the individual while providing some level of protection to his scope of action.

The most important aspect of the American approach to government is the effort, upon its founding, to define limitations on its powers, to enact restraints on the very real potential for abuse of discretion. The implements of this policy are two: constitutionalism, and the rule of law.

A written constitution sets forth a set of powers allowed to the governors, and defines or delimits the areas in which additional legislation may be contemplated. Only certain powers may be exercised and there are whole realms where legislation is forbidden. The essence of the American document is restraint, limitation, minimization, and I will show that, despite appeals by statists and others to the contrary, there is no legitimate alternative interpretation. Also revealed in some detail is the unfortunate history of judicial review which has enervated the American constitution and ripped out the strictures and controls with which it was  crafted.

Co-equal with a written constitution is the concept of the rule of law. There is near universal agreement that humans living in a social setting require rules to live by; we note, however, that such rules are not commands, but rather abstractions which must be made to apply to all persons and situations equally. These abstract rules, i.e. the set of laws, will be seen to require creation by one entity and enforcement or interpretation by others; this is part and parcel of the preservation of liberty under the rule of law, and is generally expressed constitutionally by an explicitly stated concept of the separation of powers. It is because laws are not simply commands that men can obey and still be free.

I will spend considerable time untangling the confusion, fostered by statists, concerning the need for the overall co-ordination of human activities by a central intelligence, for, as F. A. Hayek has said “ the enemies of liberty have always based their arguments on the contention that order in human affairs requires that some should give orders [ i.e. ‘commands’], and others obey.”

Although our Founders strove to set up a plan to establish and preserve a limited form of government under the rule of law, in well under a hundred years forces opposing the fundamental concepts incorporated in the Constitution, and in the understanding of the people,  had coalesced into a movement to undermine and replace the basic concept of freedom under the law with an alternative set of doctrines; the movement was Progressivism, a philosophy erroneously  influenced by the rise of science and technology to the point that its adherents came to feel that all human problems were of a deterministic and mechanistic nature and hence always admitted of some solution by man’s intervention, i.e. a philosophy of human and societal perfectibility. The most damaging exponents of Progressivism were members of the federal judiciary. I will endeavor to show where and how constitutional concepts were ignored, denied, or re-defined by judicial doctrines and decisions. Second to the judiciary was a near plurality of U.S. presidents from Lincoln onward, including some of the most highly regarded, whose actions favored the Progressive cause to the detriment of the Constitution and of liberty.

The most fertile ground for finding and exposing misconceptions which plague the body politic is in the arena of economics and the understanding of how markets work. I will try to briefly survey the historical and current state of economics as a discipline with an eye to convincing the reader that there is indeed but one basic approach which stands out above all others from both a moral and practical viewpoint. I will compare and contrast capitalism and socialism, emphasizing the wealth of misconceptions surrounding these familiar economic (actually moral/economic) systems. Great emphasis will be placed on understanding capitalism and free markets as first and foremost among a family of what Hayek and others have characterized as “spontaneous orders”. I will highlight the concepts of personal and local knowledge and other characteristics which run counter to the centralized, command-and-control mentality which socialized solutions requires

The entire effort described above  is really nothing more than an elaborate justification for the author’s preferred set of institutional changes, reforms and revisions which I have called my Three Plank Platform, and is designed to be adopted by political players who are serious about solutions, who abjure lip service in favor of real and substantial action.  I will explore these proposed changes in great detail, and demonstrate the extent to which a whole panoply of societal problems can be addressed by a simply stated, three-pronged approach of sufficient synergy, even though it appears superficially to be concerned only with matters economic.

The Platform features three facets: (1) revising the way we tax, (2) exerting real control over governmental spending, and (3) moving towards eliminating the ability of government to manipulate the supply of money for policy purposes. For each of these facets, I develop a strong explanation of how it implements one or more moral principles as well as having strongly beneficial practical effects, emphasizing the absolute necessity that solutions must be simultaneously both moral and practical.

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Justice and Fairness – Part One

 For well over a century, the Left has generally been conceded to have morality, justice, and “idealism” on its side; the Conservative opposition to the Left has largely been confined to the “impracticality” of its ideals. A common view, for example, is that socialism is splendid “in theory,” but that it cannot “work” in practical life. What the Conservatives failed to see is that while short-run gains can indeed be made by appealing to the impracticality of radical departures from the status quo, that by conceding the ethical and the“ideal” to the Left they were doomed to long-run defeat. For if one side is granted ethics and the “ideal” from the start, then that side will be able to effect gradual but sure changes in its own direction; and as these changes accumulate, the stigma of “impracticality” becomes less and less directly relevant.

—Murray N. Rothbard in Egalitarianism as a Revolt Against Nature

While you are reading this blog, you should begin to formulate your own answers to two of the main questions which this work poses: first, under what circumstances can the use of force in human relationships be justified? And second, what is the proper role of government? Note the use of the words justified and proper.  Both of them relate to the way things “ought” to be. This is the realm of what political philosophers call “norms” or “normative behavior”; ordinary people call it morality. The grist of this work will be how various commonly accepted misconceptions (the “conventional wisdom”) have distorted the moral positions which underlie our political decisions.

Most of us understand morality to be a set of rules or principles which one accepts as governing one’s behavior, and, in particular, one’s behavior toward others. There would also be little dispute, I suspect, that some portion of this morality is personal and applies only to the individual, and can vary from one person to the next, and that some other fraction consists of rules, principles, and institutions which are intended to govern society as a whole, by which I mean that each and every individual is expected to adhere to this set of rules, once adopted. In the first instance, one might include personal decisions of a religious or personal conduct nature, e.g. should one eat meat, or should one abstain from sexual activity under certain circumstances, etc.; the list of such personal morality issues is large indeed. There exists another moral realm, however, which is our core subject matter, and that is the set of rules and institutional arrangements which are intended to apply equally to everyone in society: these would include, of course, proscriptions against murder, mayhem, fraud, extortion, and theft which I call crimes, together with assorted other behavioral proscriptions and/or imperatives which are considered serious enough to deserve legislative treatment. It is with this second, and, I believe considerably smaller, realm that political philosophy and, in particular, discussions of justice and the related concept of fairness, are concerned. While for personal morality, it is between us and the bedpost whether we adhere to our own rules, for the second realm, the crucial questions to be answered concern enforcement of the rules. The locus of enforcement is, of course, government, and the means is coercion, in one form or another.

In the second realm there is again a bifurcation: first, we have a body of law to deal with crimes, which I define as forms of aggression, i.e. the use of force, violence, threats, or deception to achieve one’s ends, and second, we have a body of law which deals with everything else. While it is the case that many people do not object to calling any violation of a law a crime, I refuse to do so; I would merely call it illegal. Because crimes involve aggression against persons or property, it is not difficult to enlist people in defining crimes as immoral and, consequently, deserving of the legal use of force to prevent and/or punish. It is in the subset of things which are illegal but not crimes that one must be morally clear about whether the use of force is appropriate, or indeed, even acceptable.

While there are an almost unlimited number of possible “moral” issues which this special subset of illegality can be made to cover, the most important, from the standpoint of each individual vis-a-vis his government are matters of justice, excluding, however, the previously discussed criminal justice realm, sometimes also called procedural justice. At this point I am mostly speaking of the desire of individuals and groups within society to enforce certain norms of behavior which they believe will benefit society, and which they believe are necessary for a just society. Chief among these norms is “social justice”, or “economic justice”, or more descriptively, “distributive justice”; they all point to the same concept, the notion that society must have rules for determining who gets what.

This brings us to our first instance of a misconception masquerading as a reasonable and widely held proposition. Conventional Wisdom Re: Justice and Fairness: A society can only be considered just if its societal arrangements result in an equal distribution of income and wealth, goods and services, and opportunities,  or if not equal, then arrangements that result in minimal inequality of these, consistent with the collective welfare of the society.

Consider the following brief ( and totally typical) discussion regarding the concept:

Distributive justice is concerned with the fair allocation of resources among members of a community. Fair allocation typically takes into account the total amount of goods to be distributed, the distributing procedure, and the pattern of distribution that results.
Because societies have a limited amount of wealth and resources, a question arises as to how those benefits ought to be distributed. The common answer is that public assets should be distributed in a reasonable manner so that each individual receives a “fair share”. But this leaves open the question of what constitutes a “fair share”.[1]

Or perhaps this one:

The basic thought behind my talk is this: when political philosophers discuss social justice, they almost always think about the distributive principle or principles that define justice. What constitutes a fair distribution of rights, resources and opportunities? Is it an equal distribution, in which case an equal distribution of what, precisely – resources, opportunities, welfare etc? This question has caused much ink to be spilled. Or is it a distribution that gives each person what they deserve, or what they need? Or a distribution that gives everyone an adequate minimum of whatever it is that matters, or one that raises the minimum to the highest possible level? There are more candidate principles of justice than there are for a Conservative party leadership election… [2]

Please notice that both of these discussions share the common idea that justice equates to fairness, i.e. that these concepts are either essentially equivalent, or perhaps that one is wholly contained in the other. Those who do not specifically equate distributive justice with fairness often equate it with equality, which in turn is identified with an outcome considered to be fair. Still others link justice with that which is “due” to one, or alternatively, that which is deserved. But isn’t not giving someone his due or what is deserved tantamount to unfairness? Isn’t it also unjust? If yes, then the discussion once again revolves around justice as fairness.

Most discussions like those cited above take the idea that justice is based on fairness as a given, and then go on to discuss how justice principles and institutions can be made to be fair. This is what I call the “argument from assertion”: one simply takes the premise in question to be an axiom  for all subsequent discussion. This, unfortunately, is true of many of the arguments made by statists [please see my Methodology page] and their sympathizers: they begin with an assertion that they consider self-evident, or “intuitively obvious”, etc. —I contend that there is no room in our discussions about vital issues like justice or fairness for this kind of sloppy thinking. Because the resulting moral position inevitably leads to “societal arrangements” that involve the use of force, there is an overwhelming obligation, it seems to me, to give reasons and to make arguments.

In dealing with justice and fairness, one must define terms. First let’s look at the concept of ‘fair’ and/or ‘fairness’. Leaving aside the usage that is related to aesthetics ( “fair weather”, a “fair lass”) and the notion that it describes something that is less than good, as in the spectrum “good-fair-poor”, we begin to approach a notion of fairness in that “the term fair is employed for the most part…to express approval between a consequence and the cause to which it is imputed.” Examples of this would be: (1) jobs that are demanding pay more than jobs which are not, (2) all the runners in a foot-race start from the same position, i.e. no gets a head start, (3) an accused person may not be punished without an opportunity to present a defense. The consequences in these examples are a fair wage, a fair race, and a fair trial. A more colloquial set of fairness examples would include:

“A fair statement”- one that is even-handed, taking all sides or points of view into account.

“Fair Play” – action that does not involve one party taking advantage of others.

“A fair deal” – a transaction in which neither party got the better of the other.

“Fair shares for all” – in the absence of any reasons to the contrary, the presumption for many people is that a fair share is an equal share.( Much more about this one as we go forward.)

The above examples illustrate quite a range of interpretations of the concepts of “fair” and “fairness”. Additionally, one may say that fairness involves “treating like cases alike”, which includes making discriminations about what makes them alike.

Now let’s examine the concepts of “just” and “justice”. There is a definition that I like: “The theory of justice is the theory of what society may do ‘in the way of compulsion and control’, as Mill puts it. To say that a person’s action is unjust is to say that those actions are of a kind that society should, or at least may, coercively intervene to prevent or punish, that is, to override the individual’s own preferences in that instance.”[3]

If one is concerned about criminal matters, certainly the perpetration of a crime ( as I have defined it, i.e. a form of aggression ) would qualify as unjust by the above definition, but basically it would appear to have little or nothing to do with aspects of fairness. That the victim of a crime did not “deserve” it, or that it was not his due, or that it was unfair seems not to apply, except to the extent that all people should be protected from all forms of aggression at all times.

So justice has its rules, which are in turn based on principles of justice, as will be seen shortly.

The above suggests that we have the situation that, at times, some things are fair but not just, and some things are just but not fair. The principles of justice must take this into account. As an example of the latter, consider the biblical parable of the vineyard workers[4]: some workers, hired for a penny a day at the outset, work all day; some others, approached throughout the day and told only that they will by “duly paid”, work only a few hours. At day’s end everyone gets the same penny, regardless of time worked. The resulting grousing by those initially hired about the manner of payment is met with the admonishment that the first group was under a specific contract, while the pay for the others was a product of the owner’s grace. Clearly, the manner of payment was unfair, but it was not unjust.

As an example of the former, consider the principle expressed by the rule “first come, first served”. Suppose that a soup kitchen for the homeless has a finite amount of food on a certain occasion, and they have limited the seating to whatever their dining hall will hold before doling out the servings. The tables are filled in the order of arrival, and the tables with those coming first are served first. In the instant case, there turns out not to be quite enough to go around, with the result that a woman with three children, having come dead last, should not get served, while many able-bodied young men would be able to eat. Someone in charge intervenes, noticing the woman and her kids, and moving them up in the priority before serving. Four young men at the first table are turned away. In this instance fairness trumps justice, for the principle here is a justice principle, and was established in the manner of a convention and not through any notions about fairness.

Which brings us to a discussion about conventions. Most of what is called the common law is the result, not of specific rules handed down at discrete intervals by certain personages (e.g. monarchs and rulers) over time, but rather of concepts for handling social problems which arose spontaneously over a long period and gained gradual acceptance until such time that the informal rule graduated into a law.[5] Most conventions are supported by the populace at large as much as by specific parties to which they  may apply because it is perceived that they provide protection and resolution of disputes to which anyone may be subject at some future time. It may even be said that such conventions, like property and contract, are “antecedent to government.” Moreover, conventions are largely independent of fairness notions, with only the occasional case where the fair outcome and the outcome dictated by a justice convention are identical. It should also be noted that the social order is determined largely by conventions of one sort or another, as opposed to bargaining amongst various parties—conventions are adhered to without anybody necessarily agreeing with anybody else, but simply deciding to follow the convention as they understand it, and because it has an empirical history of providing good solutions.

Justice As Fairness

Although discussions of distributive justice more often than not rely on the mere unsupported assertion that fairness should be the standard by which societal arrangements should be judged, there are a few formal, even academic, attempts to argue for fairness as a standard. The most well-known of these is the famous 1971 book by Harvard professor John Rawls: A Theory of Justice. The theory embodied in the book has become known simply as “Justice as Fairness”, after the title of an individual essay by Rawls which pre-dates the book. A huge volume of both criticism and support for this theory has been written, and most modern supporters of the statist persuasion have adopted it in whole or in part. For that reason, it is worth examining the main concepts and their implications in some detail.

It is said that Rawls devised his theory as an improvement on the distributive justice principles, if such there be, of Utilitarianism, the philosophy that relies on one main concept, namely that the moral value of societal arrangements is based whether or not they maximize happiness (or welfare, or ‘utilities’) across the entire society. This idea is also expressed by the maxim “the greatest good for the greatest number”. Utilitarianism is vulnerable to criticism, according to Rawls and many others, because it ignores or fails to deal with certain problems. The nature of these problems concerns the collective focus of the Utilitarians—if the algebraic sum of all utilities experienced by individuals is at a maximum, the principal (and only) criterion for Utilitarian justice is met. This permits individuals ( who are, after all, part of the collective) to enjoy a high level of gains or suffer a high level of losses of utility even as the society viewed as a whole is experiencing a good average amount of utility. More specifically, Rawls and others are concerned about the existence or evolution of arrangements that are patently exploitative of certain individuals, which are allowed to persist because they are thought to contribute to the maximization of utility or welfare overall. One such institution is slavery; there are certainly moral objections to slavery, but since the Utilitarian has only one moral principle, relating to maximizing utility, such objections can be dismissed as irrelevant under their theory. Rawls himself expresses this as follows:

The striking feature of the utilitarian view of justice is that it does not matter, except indirectly, how this sum of satisfactions is distributed among individuals any more than it matters, except indirectly, how one man distributes his satisfactions over time. The correct distribution in either case is that which yields the maximum fulfillment. Society must allocate its means of satisfaction whatever these are, rights and duties, opportunities and privileges, and various forms of wealth, so as to achieve this maximum if it can….Thus there is no reason in principle why the greater gains of some should not compensate for the lesser losses of others or more importantly, why the violation of the liberty of a few might not be made right by the greater good shared by many….For just as it is rational for one man to maximize the fulfillment of his system of desires, it is right for a society to maximize the net balance of satisfaction taken over all its members.[6]

The notion of “the violation of the liberty of a few might not be made right by the greater good shared by many…” is illustrative of the fundamental objection that many critics of Utilitarianism make. A provocative moral dilemma known as The Trolley Problem, formulated by Philippa Foot, is a generalization of the Utilitarian principle in action, to wit:

A trolley is running out of control down a track. In its path are five people who have been tied to the track by a mad philosopher. Fortunately, you could flip a switch, which will lead the trolley down a different track to safety. Unfortunately, there is a single person tied to that track. Should you flip the switch or do nothing?

The answer for strict Utilitarians, is, of course, to kill one to save five, giving the maximum overall utility. A similar made-up dilemma involves a more likely real-life situation with possible future ramifications relating to “health care policy”:

A brilliant transplant surgeon has five patients, each in need of a different organ, each of whom will die without that organ. Unfortunately, there are no organs available to perform any of these five transplant operations. A healthy young traveler, just passing through the city the doctor works in, comes in for a routine checkup. In the course of doing the checkup, the doctor discovers that his organs are compatible with all five of his dying patients. Suppose further that if the young man were to disappear, no one would suspect the doctor.

What should be done? Should one be sacrificed for the sake of the five? Three guesses as to the Utilitarian choice.[7]

So it could be said that Rawls has sought to modify the Utilitarian principle in such a way that inequalities ( in the things that have utility) for individuals are permitted as long as certain restrictions are observed.

The philosophical school to which Rawls belongs is Contractarian, that is, it deals with developing principles of justice based on some sort of social contract. Other important  figures of this persuasion are Thomas Hobbes (1588 – 1679), John Locke (1632 – 1704) and Jean-Jacques Rousseau (1712 – 1778).

All three of these thinkers set out frame their ideas about justice based on the notion that people in the State of Nature  would agree to surrender certain rights to act on their own behalf to some higher authority in exchange for protection of their life, liberty and property by the authority in question. Hobbes described five “circumstances of justice”, all of which obtained in the State of Nature:

(1) Human Vulnerability: we are all vulnerable to attack by others at some stage of our lives.

(2) Approximate Equality: No one is so strong as to be immune from attack.

(3) Limited Altruism: altruism is intermittent and unreliable.

(4) Limited Resources: resource scarcity creates inevitable conflicts between people and reasons for people to initiate attacks on others.

(5) Limited Understanding and Strength of Will: people will succumb to temptation to pursue what they construe to be their own best interests at the expense of others in the absence of some agency which can detect and punish such transgressions.

So, it was Hobbes’ assertion that rational persons would therefore be willing to forbear the use of violence, fraud and theft on the assumption that others would do the same. They would therefore be willing to form a pact with one another to continue in this forbearance. The rub is, however, that some few would subscribe to the pact, yet when the opportunity arose, attempt to gain an advantage by violating it, i.e. by “cheating”. The remedy for this is the creation of the state as the enforcer of rules. The essence of the social contract then is that it is a kind of bargain—the people will subordinate themselves to the state, but only in exchange for its protections.

The State of Nature envisioned by Hobbes was somewhat lawless and brutal, with everyone at everyone else’s throat, and so he was willing to accept almost any kind of authority as the enforcer, including monarchs and other types of absolute rulers. Another, perhaps even better known Contractarian, was John Locke, whose social contract was based on the concept of natural rights. Locke had a different and less stark view of the State of Nature:

According to Locke, the State of Nature, the natural condition of mankind, is a state of perfect and complete liberty to conduct one’s life as one best sees fit, free from the interference of others. This does not mean, however, that it is a state of license: one is not free to do anything at all one pleases, or even anything that one judges to be in one’s interest. The State of Nature, although a state wherein there is no civil authority or government to punish people for transgressions against laws, is not a state without morality. The State of Nature is pre-political, but it is not pre-moral. Persons are assumed to be equal to one another in such a state, and therefore equally capable of discovering and being bound by the Law of Nature. The Law of Nature, which is in Locke’s view the basis of all morality, and given to us by God, commands that we not harm others with regards to their “life, health, liberty, or possessions”. Because we all belong equally to God, and because we cannot take away that which is rightfully His, we are prohibited from harming one another. So, the State of Nature is a state of liberty where persons are free to pursue their own interests and plans, free from interference, and, because of the Law of Nature and the restrictions that it imposes upon persons, it is relatively peaceful.[8]

What most social contract theorists have in common is that regardless of how the state of nature is described, it nevertheless is necessary to introduce some entity, call it the state or government, that exists primarily to make it unattractive for the inevitable minority of those who would say they accepted the concept of forbearance, accepted the pact, but yet refuse to honor it when the opportunity to renege presents itself. The state exists to provide for  consequences or sanctions if the agreed-upon rules are not followed. It has been suggested that the type of bargain represented by the social contract is similar to that which is implied by a thought experiment known as the Prisoner’s Dilemma.[9]  In short, this problem, an artifact of modern game theory, is constructed to show that, even where it would appear to be to everyone’s advantage, it is difficult to consistently get people to co-operate. When the scenario of the Prisoner’s Dilemma is augmented by adding punishment as an incentive to co-operate, the results with respect to compliance are greatly improved. Thus, enters the state into the equation.

So, we have the evolution of a state-like entity from the propensity to co-operate as set forth by the various early Social Contract theorists. The resulting state, which some have called the “minimal state” is dedicated to the protection of life, liberty, and property from those who would “cheat” on the established rules of conduct ( no violence, threats, or fraud). Even though it is obvious that the Social Contract probably never existed in any specific form, nor if it was, did all those affected agree to be bound by it, and certainly, later generations cannot be considered to be bound by to something to which they never explicitly agreed. It is a purely artificial device, meant to suggest the way in which people might have adopted a pact between themselves and the incipient state.

A central question of this treatise is, if most people accept the concept of forbearance implied by most versions of the Social Contract, then to what extent should the existence of the state go beyond the rudimentary protections of the minimal state and be used as the agent to enforce a whole panoply of rules, most of which have little or nothing to do with protection of the individual against various crimes or violations of rights? We are surrendering our right to personally counter aggression against us in exchange for protection against that aggression. Should we also agree to the state’s use of the same level of force against those who do not agree with a set of principles about who is to get what, i.e. to enforce certain notions of social, or economic, or distributive justice?

For egalitarians, utilitarians, and those like John Rawls, the answer would appear to be a resounding yes! For Rawls, the Social Contract includes, indeed is principally constituted by, the setting up societal institutions to facilitate justice as he understands it.

As I have already noted, most discussions of distributive justice jump immediately to the details of how to implement a mostly egalitarian distribution of goods, without even any attempt at arguing as to why such patterned distributions should be mandated. For those who feel uncomfortable with the argument by assertion, Rawls is the gold standard for justification of their plan.

Rawls has attracted the interest of intellectuals who support this brand of distributive justice because of his use of a novel device, a way of imagining how people might have arrived at what he considers the correct principles of justice as fairness. The device is called the Original Position, which some have called a highly abstracted version of the State of Nature.

People in the Original Position are assumed to be motivated by rational self-interest, but have the unusual characteristic of only having partial self-knowledge, the particular circumstances of age, sex, race, talents and abilities, etc. are concealed from the bargainers by what Rawls calls the Veil of Ignorance. This scenario is required to guarantee a lack of bias on each person’s part—it is said to put everyone on the same footing, this being necessary for justice to proceed out of fairness. Others have described this situation as follows:

In such a position, behind such a veil, everyone is in the same situation, and everyone is presumed to be equally rational. Since everyone adopts the same method for choosing the basic principles for society, everyone will occupy the same standpoint: that of the disembodied, rational, universal human. Therefore all who consider justice from the point of view of the original position would agree upon the same principles of justice generated out of such a thought experiment. Any one person would reach the same conclusion as any other person concerning the most basic principles that must regulate a just society.[10]

There are two  principles of justice which Rawls contends would be discovered by people in the Original Position operating under the Veil of Ignorance:

First Principle of Justice: …each person is to have an equal right to the most extensive basic liberty compatible with a similar liberty for others (the Equal Liberty Principle).

Second Principle of Justice: Social and economic inequalities are to be arranged so that:

a) they are to be of the greatest benefit to the least-advantaged members of society (the Difference Principle);

b) offices and positions must be open to everyone under conditions of fair equality of opportunity.[11]

It is interesting to note that Rawls maintains that just these principles would be the ones thought up and selected. Not one principle, not four principles, but just these two. I may be missing something, but this seems unsupportable to my way of thinking. Here is one argument for why the Equal Liberty Principle might be chosen.

There are certain liberties or rights that everyone would want to be respected by the forms of social organization or institutions of their society…regardless of who he or she turned out to be or whatever specific interests and abilities he or she turned out to have [ and these are]  referred to collectively as civil liberties or personal liberties, [including] freedom of speech, worship and assembly, plus freedom from physical and psychological coercion, freedom of movement. Everyone, whatever his interests or desires would want the maximum of these liberties to pursue his interests; he would want this whatever else he wanted. Everyone in the OP would see this point; hence, everyone in the OP would choose to have the maximum of these liberties granted to everyone.[12]

This argument, if one could dignify it as such, is largely just an assertion that the writer thinks or feels that “everyone” would think or feel as he does about some specific set of liberties. Why? Because everyone would value liberty for himself? Perhaps, but it is the specific set of liberties or rights that are set forth which, I maintain, do not pass muster as some irreducible minimum body of rights which must be protected. They are, in fact, a subset, by and large, of those rights comprising the Bill of Rights in the U.S. Constitution, with certain important exceptions. If these are the civil liberties selected by people in the OP, why is it necessary to operate from behind the Veil of Ignorance? Is not a maximum of liberty valuable even to those with full self-knowledge? Moreover, without half trying, one could come up with any number of rights or liberties which could be included under the same justification of being wanted regardless of what else was wanted. For example:

(1) The right of free association;

(2) The right to possess the means to physically protect oneself against aggression; also,the right to possess the means to resist the state when it exceeds its constitutional powers.

(3) The right to determine the final disposition of one’s physical body at death (i.e. not to be compelled to be an involuntary organ donor). [Recall the above discussion re: Utilitarianism and The Transplant Problem.]

(4) Various other self-ownership rights with respect to one’s own body, in particular decisions about what to ingest, including alcohol, psychoactive substances, and even types of food ( animal vs. vegetable protein, etc.); rights to privacy in one’s activities may be included in this category.

(5) Economic Rights. A close reading of Rawls reveals that the “basic liberties” envisioned by him in the First Principle do not include property rights beyond the simple possession of personal property—ownership of real property and capital items ( property used in the production of goods) are most emphatically not included as basic liberties; neither is the right to bequeath property to one’s heirs. Some of the above property rights may be allowed ( I would say tolerated), but they would not have the same level of protection as the “basic” rights.

With the possible exception of economic rights in (5) above, none of the additional rights or liberties mentioned above would, I submit, be influenced by having or not having knowledge of one’s own station in life, one’s talents and abilities, one’s family situation, etc. So, I would suggest that one need only look to the “distributive” part of distributive justice to discover why they are not included—despite the superficial appearance of an orientation toward liberty and personal freedom, the Rawlsian Liberal-Egalitarian institutions are only one step removed from the collectivist Utilitarian principles of justice previously mentioned. The economic arrangements implied by these institutions do not co-exist easily with individuals who can band together in groups, who have the means to resist a police state, and are the exclusive agents in making decisions concerning their own bodies and are free from constant surveillance. The existence of all these liberties makes it too difficult for the state to realize its august goals. Most importantly, the entire notion of property and ownership as fundamental must be ruled out as much as possible. The best one can hope for in the world according to statists is that private property is optional.

The world of Rawlsian distributive justice is a top-down command-and-control type of society. One admirer describes it thus:

The Basic Structure of Society

Rawls has persuasively shown that social justice is of crucial importance to social life and that it should inform constitutions, laws, policies, legal processes, etc. In fact, according to him, the primary subject of justice is the basic structure of society. His principle of social justice justifies, and is justified by, liberal democracy, a regulated market economy and the liberal-egalitarian welfare state. He states that for translating his Difference Principle into practice, the government should have four branches, viz., (1) an allocation branch “to keep the price system workably competitive and to prevent the formation of unreasonable market power”; (2) a stabilization branch to bring about “reasonably full employment” and, jointly with the allocation branch, to maintain the efficiency of the market economy; (3) a transfer branch to attend to “the claims of need and an appropriate standard of life”; and (4) a distribution branch “to preserve an appropriate justice in distributive shares” by taxation measures and adjustments in property-rights.” [ Emphasis added.][13]

One should note that the popularity of Rawls’s ideas among statists is at least partially because its tolerance for inequality under some circumstances permits it philosophically to co-exist with a limited version of capitalism, i.e. that private ownership of the means of production is permitted. The Difference Principle states “All social primary goods – liberty and opportunity, income and wealth and the bases of self-respect – are to be distributed equally, unless an unequal distribution of any or all of these goods is to the advantage of the least favoured.” Under such a restriction the higher than average compensation of a highly trained or skilled person ( including managers) can be justified on the basis of the higher output of goods and services that may result. Statists of all stripes have long since realized that full-blown socialism is a failed system, and they need the production which a “regulated market economy” can provide. So the state must allow limited entrepreneurship and private capital investment, while exercising as much control as possible over the owners and managers of enterprise.

With respect to economic rights, I can see no reason why people in the OP would not want, nay, insist on the right to own more than just personal property. Yes, the Veil of Ignorance keeps them from knowing whether they have any existing property interests to protect, but all persons, it seems to me, would wish to be able accumulate property over time and to have the ultimate disposition and control over it, whether or not they had any property in the beginning. If there are to be any entrepreneurs in this brave new world, how could they function without the full protection of property rights over the capital equipment needed for production? Rawls, and all those allied with him, are ignoring the most fundamental economic fact of life, namely that all economic progress stems from the gradual accumulation of the surplus that results when production exceeds consumption in a given period of time. The name of this surplus is anathema to statists—it is called profit. Economic progress and rising standards of living are impossible without profits.

I submit to you that there is nothing about the OP or the Veil of Ignorance that should prevent the people there from knowing about and acting on economic fundamentals and insisting on rights to protect the accumulation of wealth. This is because all people stand to benefit from a thriving economy, whether or not some are more adept at accumulation than others. There is, however, something in the Second Principle of Justice that does actively militate against property rights and that is the notion that economic inequalities are to be arranged so that “they are to be of the greatest benefit to the least-advantaged members of society.”

As with the Equal Liberty Principle, I fail once again to see how this particular restriction on inequalities would be the unique focus of people in the OP. I can see how someone who does not know whether he is in a favored or disfavored position in life might opt for an absolutely equal distribution of goods ( i.e. strict egalitarianism) because that would tend to guarantee that he would be no worse off than anyone else. But to add the bit about allowing inequalities under certain circumstances suggests to me, once again, that Rawls is being a realist about economics and knows that free markets and capitalism produce the greatest overall stock of benefits to be divided up, and that some concession from the strict egalitarian regime is therefore justified. Perhaps Rawls is saying that people in the OP also perceive this inasmuch as he declares them to be rational, self-interested  beings.

The type of society that would likely result from Rawls’s Two Principles of Justice is a heavily regulated mixed economy.

Before moving on from the issue of property rights in Rawls’s conception of justice, one needs to consider that, if individuals are only to have a strongly defensible property right in personal property, then it seems that one of two situations would obtain: (1) real property and property used for the production of goods ( capital property) would belong to the state, and the state would have a collective right to said property, or (2) in a mixed economy, individuals and associations of individuals ( i.e. corporations) would be allowed to own land and the means of production, but the ownership would be a qualified one, where a great amount of control over the use and disposition of that property would be exercised by the state through taxation, regulation, and other legislatively generated means. In case you didn’t recognize it, when carried to its logical conclusions theoretically, the first option is called socialism, the second option is very similar to fascism. Both are philosophically forms of collectivism.

In the case of option (1), one needs to deal with the problem of why, if the basic rights of  individuals do not include full property rights, then is it not incumbent upon this theory of justice which excludes individuals to explain why and how the collective has acquired the right to the subject property? No such justification is forthcoming from either Rawls himself or the followers of Rawls, save perhaps such tired nostrums as “We’re all in this together”, or the idea, which has great moral force for collectivists, that we absolutely must “share and share alike”. These are not well-articulated arguments, they are simply unjustified re-statements of some particular parties’ moral intuitions.

As a matter of fact, a close reading of Rawls’s Theory, reveals at best a very equivocal attitude toward capitalism and the free market. He admits that “private property in the means of production” is a “major social institution”, yet we have already seen that Rawls does not include this as a basic liberty, only the right to personal possessions. Quentin P. Taylor is moved to ask “ If such rights are not basic to liberty, what is their relation to liberty, if any? Is there any right to property beyond personal holdings? If so, what is the basis for this right, and how may it be justified? If no such right exists, does this lack imply that justice requires the public ownership of the means of production?”[14] In my opinion, Rawls does not provide satisfactory answers, even by implication, to these questions.

Rawls also refuses to endorse either socialism (a liberal socialist democracy) or a free market capitalistic system, implying that either one can be made to work for justice’s sake by suitable modifications that do not do violence to his justice principles. His statement that “the economy [he envisions] is roughly a free market system, although the means of production may or may not be privately owned” displays what I regard as a profound ignorance of economics, at least the kind of economics which relies on a priori reasoning for its conclusions. There is such an animal as “market socialism”[15], and it really sounds as if Rawls is drinking this Kool-Aid. When capital is not owned privately and as such cannot be priced, capitalism as we know it cannot be practiced; more about this later.

Aside from the refusal to endorse a specific type of economic system or organization, perhaps the greatest criticism of Rawls that Taylor asserts is that his Theory does not qualify as comprehensive because of his failure to deal with property relations. Taylor notes as follows:

Reference to the history of political thought provides a second standard for assessing the status of Rawls’s political philosophy. Those familiar with the canon of political classics (and with the history of political theory generally) know that questions of property relations have figured importantly (and sometimes prominently)in the works of nearly all the major political philosophers. Plato, Aristotle, Cicero, Aquinas, Machiavelli, Hobbes, Locke, Montesquieu, Hume, Rousseau, Publius, Kant, Burke, Hegel, Marx, and Mill had something significant (and often something definite) to say about property in one form or another. As Howard Williams, a Kant scholar, writes: “That the concept of property has been a central concern of political philosophy from classical times onward is not surprising in view of the fact that the way in which wealth and goods are held determines a great deal of the structure and make-up of a community. Property relations go to the root of any social system.”[16] [Empasis added]

Please see Justice and Fairness – Part Two for a continuation of this discussion.

 


                                NOTES for Part One

[1]. From The Notion of Fair Distribution by Michelle Maiese, June 2003; Knowledge Base essays at www.BeyondIntractability.org.

[2]. Justice and Boundaries, in  Politics, Philosophy and Economics. David Miller, Nuffield College, Oxford.

[3]. From Chapter 6, Justice as Pure Efficiency, in Respecting Persons in Theory and Practice by Jan Narveson.

[4]. See the Book of Matthew,  20:1–16, King James Version.

[5]. Later on in this treatise, I will hold forth at length on the concept of a spontaneous order, of which the common law is but one example.

[6]. Rawls, Theory of Justice, p.26

[7]. The Transplant Problem is attributed to Judith Jarvis Thomson. It has been observed that “it looks as if cutting up the ‘donor’ will maximize utility, since five lives have more utility than one life. If so, then classical utilitarianism implies that it would not be morally wrong for the doctor to perform the transplant and even that it would be morally wrong for the doctor not to perform the transplant. Most people find this result abominable. They take this example to show how bad it can be when utilitarians overlook individual rights, such as the unwilling donor’s right to life.” [from the entry entitled Consequentialism in the Stanford Encyclopedia of Philosophy at http://plato.stanford.eduarchives/fall2012/entries/consequentialism. See Section 5. “Consequences of What? Rights, Relativity, and Rules”.]

Certainly, I would be among the first to assert that the would-be donor has the inalienable right to life and that such a right supercedes any and all other considerations; this shows the Utilitarian attitude towards the concept of rights ( especially natural rights, or as I would prefer to call them, pre-existing rights). Despite the lip service given to rights by John Stuart Mill ( author of the essay On Liberty), the best that Utilitarians can come up with is a predilection of minimize or avoid, not eliminate or proscribe, the violation of various individual rights. Furthermore, the rights which we have come to call civil rights, like free speech, voting, etc. are the substance of Utilitarian rights; there is little, if any, discussion of economic or property rights among Utilitarian theorists. You could take my word on that or, better yet, read Sidgwick, Bentham, and Mill in the original. Sidgwick in particular was heard to call natural rights “nonsense on stilts”.

While I regard  the concept of individual rights as highly important, it is interesting that almost no criticism of Utilitarianism is directed at its flagrant orientation toward the collective—all utility is judged, not from the standpoint of the individual, but of some entity comprised of a group of individuals, as if the entity had a life of its own. I regard a moral decision made by an individual (actually I submit that there is no other kind) as reflecting some value that the individual has, and most often, some self-interest that wants to be served. Groups cannot have values, only individuals can have values, and so morality when viewed through the lens of the collective becomes perverse. Much more on this idea later on.

[8]. From “Social Contract Theory” in the Internet Encyclopedia of Philosophy at
http://www.iep.utm.edu/soc-cont/.

[9]. “A classic example of the Prisoner’s Dilemma (PD) is presented as follows:

Two suspects are arrested by the police. The police have insufficient evidence for a conviction, and, having separated the prisoners, visit each of them to offer the same deal. If one testifies for the prosecution against the other (defects) and the other remains silent (cooperates), the defector goes free and the silent accomplice receives the full one-year sentence. If both remain silent, both prisoners are sentenced to only one month in jail for a minor charge. If each betrays the other, each receives a three-month sentence. Each prisoner must choose to betray the other or to remain silent. Each one is assured that the other would not know about the betrayal before the end of the investigation. How should the prisoners act?

If we assume that each player cares only about minimizing his or her own time in jail, then the prisoner’s dilemma forms a non-zero-sum game in which two players may each either cooperate with or defect from (betray) the other player. In this game, as in most game theory, the only concern of each individual player (prisoner) is maximizing his or her own payoff, without any concern for the other player’s payoff. The unique equilibrium for this game is a Pareto-sub-optimal solution, that is, rational choice leads the two players to both play defect, even though each player’s individual reward would be greater if they both played cooperatively.”

See the discussion on Wikipedia – http://en.wikipedia.org/wiki/Prisoner%27s_dilemma

[10]. See the discussion of John Rawls: A Theory of Justice in the Social Contract Theory section, Internet Encyclopedia of Philosophy at http://www.iep.utm.edu/soc-cont/

[11]. Rawls, Theory of Justice, p.303.

[12]. Three Theories of Justice at http://lilt.ilstu.edu/pefranc/3-ts%20of%20justice.htm. Note, in particular to the use of the word granted with respect to rights; this reveals the statists’ view of rights, i.e. that they have no independent existence outside of their creation by the state. Such rights are ethereal and can be withdrawn as easily as created.

[13]. John Rawls’s Liberal-Egalitarian Principles of Social Justice by Pan Mohamad Faiz at  http://faizlawjournal.blogspot.com/2007/01/john-rawlss-theory-of-justice.html.

[14]. Taylor, Quentin P., “An Original Omission? Property in Rawls’s Political Thought”, The Independent Review, Winter 2004, p. 389.

[15]. Market socialism has been described as a hybrid type of system having the virtues of both pure socialism and the free market. There are many variations, but the primary focus is to utilize the allocative efficiency of the price mechanism to control what and how much is produced. In even the most free of the market socialism versions, however, agents of the state are the managers and controllers, and the “profits” are distributed to the workers, as in various existing profit-sharing arrangements, or are rebated back to the state. Although there may be performance incentives for the managerial class, they are not of the same type as provided by the free market . There is, then, none of the incentives of the capitalist free market, and the agent/managers have no right or ability to buy, sell, or dispose of the “means of production”, i.e. what is traditionally called “capital”. Without these rights and incentives, it is inappropriate to ascribe to this system any actual free-market virtues.

[16].  Taylor, p. 399.

 

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Justice and Fairness – Part Two

Justice as Respect for Rights
Justice as Fairness is not the only game in town. There are other ways to view distributive justice; there are other answers to the question as to who gets what. I now review some alternative approaches to justice. Before we can proceed, I feel obliged, because of contemporary problems with terminology, to discuss and define what constitutes for my purposes the concept of “rights”. In popular discourse, there are two generally accepted interpretations of a right: one is a concept that defines a domain within which persons ought to be at liberty or free to do as they please free of interference by others; this is the so-called ‘negative right’ or ‘liberty right’. The rights recognized in the U.S. Constitution’s first ten amendments (Bill of Rights) are of this type–right to free speech, bear arms, etc. The other major interpretation of a right involves the assertion of a “valid” or “justified” claim. The first type is constrained by the need to describe a domain and actions to be protected, while the latter type, I submit, is practically open-ended, allowing for most anything at all to be made into a justified claim, and in fact this is by far the more common type of right discussed by modern philosophers. Such claims also go under the term “positive rights”, “welfare rights”, or with respect to certain government programs, “entitlements”. These latter rights include such things as: the right to an education, the right to a ‘living wage’, the right to unemployment benefits, the right to income security at retirement, etc. Suffice to say, the type of rights that I will be discussing with respect to the Classical Liberal concept of justice focuses primarily, if not exclusively, on liberty rights. One question I feel needs to be answered from the outset is “where do rights come from?” Some assert that rights are granted by government. I reject that notion, and instead assert that explicitly defined rights are simply a recognition of conditions which must exist for human beings to survive and prosper, (or to function in a political context, as with the right to free speech and expression) and, moreover that their recognition is calculated to solve the numerous social problems which can arise when people come into conflict over the use of scarce resources. ( Note that such conflict is characteristic of what I have called the State of Nature.) I reject the notion of government granting rights because it is the antithesis of the recognition concept just elucidated—what the government gives, it can take away just as easily. Granted rights are arbitrary rights, bearing no relationship to human nature. I also reject the notion of granting rights because I believe that, in addition to, and augmented by, the various legal rights implemented in a system of justice, there is an underlying set of natural or background rights upon which both justice and its resulting rule of law rely. Another issue which is fundamental with respect to rights of the type I am discussing is that of conflicting rights. For each right in a set of rights to be valid, it is necessary that it not conflict with some other right in that set. Such a set of rights is said, according to the eminent rights theorist Hillel Steiner, to be compossible. According to Steiner:

The elementary particles of justice are rights…. We learn something about justice by examining the formal or characteristic features of rights. These features constrain the possible content of justice principles in much the same way as architectural precepts must be informed by the properties of the construction materials they orchestrate…. Any justice principle that delivers a set of rights yielding contradictory judgements about the permissibility of a particular action either is unrealizable or ( what comes to the same thing) must be modified to be realizable. Particular applications of such a principle would drive us to say “Leave it to the judge / legislator / heaven to sort this one out.” And they, after all, seem sufficiently busy already.”[1]

What I mean by a conflict between rights is that by respecting one right I am at risk of violating, or actually violate another right. For example, one may claim that has a right to freely express one’s opinion; another may claim that one has a right not to be discriminated against. If the opinion expressed in the first instance involves discriminating against one person or thing as opposed to another, there is clearly a potential for conflict between these alleged rights. I maintain, that, as described above, one of them has got to go, or be severely modified, if they are to be part of a compossible set. I would also like to suggest at this point that all acceptable conceptions of justice should utilize only compossible sets of rights as the basis for legal precepts and the resulting rule of law. Basing justice on respect for rights is first and foremost a practical matter—it is designed to prevent serious and pervasive social problems that arise from human action: whenever human beings act, they are risk of interfering with the actions of other human beings. This is because most problematic actions involve scarce physical resources and their use and disposition. The purpose of justice is to provide principles and rules to allow humans to avoid in advance these social problems, what Randy Barnett calls the problems of knowledge, interest, and power in his comprehensive and rigorous exposition of the classical liberal conception of justice The Structure of Liberty.[2] Barnett summarizes his formulation of this concept as follows:

Justice is respect for rights of individuals and associations. (1) The right of several property[3] specifies a right to acquire, possess, use, and dispose of scarce physical resources—including their own bodies. Resources may be used in any way that does not physically interfere with other persons’ use and enjoyment of their resources. While most property rights are freely alienable, the right to one’s person is inalienable. (2) The right of first possession specifies that property rights to unowned resources are acquired by being first to establish control over them and to stake a claim. (3) The right of freedom of contract specifies that the rightholder’s consent is both necessary (freedom from contract) and sufficient (freedom to contract) to transfer alienable property rights —both during one’s life, and, by using a “will”, upon one’s death. A manifestation of intent is ordinarily necessary unless one party somehow has access to the other’s subjective intent. (4) Violating these rights by force or fraud is unjust. (5) The right of restitution requires that one who violates the rights that define justice must compensate the victim of the rights violation for the harm caused by the injustice, and such compensation may be collected by force, if necessary. (6) The right of self-defense permits the use of force against those who threaten to violate the rights of another. Normal self-defense is permissible when the commission of a rights violation is imminent. Extended self-defense is permissible when a person has communicated, by prior rights violations or some other prior conduct proven to a high degree of certainty, [to be] a threat to violate rights in the future. Self-defense should be proportionate to the risk posed by the threat.

Clearly, this formulation was intended to address the entire range of justice issues, not just the issue of “distributive” justice which is the focus of the Utilitarian and Rawlsian conceptions; I shall focus on the first three of the rights enumerated above: the right of several property, the right of first possession, and the right of freedom of contract. These comprise what Barnett ( and many other rights theorists) have called a set of ‘natural’ or ‘background’ rights. As I understand it, these fundamental rights are natural because they reflect the nature of both the world and the human beings living in it. Humans are self-interested and legitimately so, and most human interests revolve around some sort of property, so the rules of justice must be derived from principles which specify rights and obligations we have with respect to property. Regarding human nature, the seventeenth century natural rights theorist Samuel Pufendorf had this to say:

[I]n investigating the condition of man we have assigned the first place to self-love, not because one should under all circumstances prefer only himself before all others or measure everything by his own advantage, distinguishing this from the interests of others, and setting forth as his highest goal, but because man is so framed that he thinks of his own advantage before the welfare of others for the reason that it is his nature to think of his own life before the lives of others. [Emphasis added.][4]

The problem of knowledge mentioned above becomes a social problem when individuals (or associations) are (a) not able to utilize their personal and local knowledge of how to use resources, or (b) do not have adequate advance knowledge of what justice requires, or (c) those who are responsible for translating the abstractions inherent in a set of rights into legal precepts and rules do not have sufficient local and/or personal knowledge. The rights in Barnett’s formulation solve the problem of knowledge in (a) by giving jurisdiction over physical resources to those who are in the best position to use their own personal and/or local information; this is in opposition to having all property owned and controlled by a central authority, e.g. the state. These rights also deal with the problem in (b) by forming the basis from which a set of legal precepts and rules can be developed which will tell people in advance what the requirements of justice are. This assumes that most people are interested in adhering to its requirements, if only they can be made explicit— there is, of course, some subset of us who are intent on ignoring any such requirements. The notion of jurisdiction as used here is similar, but not identical to that used with respect to the administration of justice. Here I mean that we recognize the need for individuals (or associations) to have defined domains in which they are free to act on their own personal and/or local knowledge. Another way of saying this is that individuals (or associations) are in the best position to make decisions about resource use. This brings us to the allied concept of an “order of actions”, or the creation of a social order, a regime which brings orderliness to social interaction. Societies can be ordered in either a centralized or decentralized manner; examples of centralized ordering include families, companies, and the military, in which persons at the top are charged with ordering and controlling lower levels of the hierarchy. On the other hand, a decentralized order features an atomistic situation in which decision making occurs at the very lowest level, usually that of the individual. In societies where the order is centralized, attempts are made to control actions with elaborate sets of rules, even though the personal and local knowledge needed to develop the rules is nowhere available to the rule-makers. In societies that respect decentralized jurisdiction over resources, the rules evolve over time in a natural and self-correcting way. Readers familiar with F.A. Hayek will immediately recognize the parallel between a centralized order and a decentralized order and Hayek’s “made” order versus his concept of a “spontaneous” order. The most well-known spontaneous order is the free market economy. The problem of interest is broken down by Barnett into three parts: the problem of partiality, the problem of incentive, and the problem of compliance. As noted above, humans have a natural predilection to act in their own self-interest, which sometimes can lead to conflicts and to unjust actions. The problem of partiality occurs when parties who are empowered to make judgements that affect others favor ( or are “partial” to) their own interests or to those who are close to them at the expense of the others involved. The decentralized jurisdiction concept inherent in the rights of several property, freedom of contract, etc. restricts the harm that partiality can cause to a narrow jurisdiction; centralized orders make mistaken or unjust decisions which can apply to as much of society as its entirety. The problem of incentive occurs when individuals ( or associations ) are required to make choices regarding resources, which choices incur costs to the decider, and cannot be passed on to others. If justice and the rule of law do not provide incentives for incurring these costs, decisions to develop or invest will not be made. The right of first possession, for instance, provides that the costs to develop unowned property will not be in jeopardy from a subsequent claim to the same property by another. Also, according to Barnett, “the principle of freedom from contract helps insure that changes in control of the resource reflect the interests of the original rights-holder. Only if the rights-holder consents to a transfer will it be recognized as valid.” Similarly, the right of freedom to contract “provides positive incentives for beneficial transactions by enforcing agreements motivated by the prospect of receiving a benefit or ’profit’ ”. Additionally, the right of restitution (see item 5 in the formulation of justice), which compels compensation for unjust (i.e. non-consensual) takings (of property) supports the incentives needed to make decisions subject to the costs mentioned above. The problem of compliance is the need to close the gap between the conduct that justice and the rule of law require and what people perceive to be in their interest to do. Some people, especially those with very high time preferences[5], will frequently perceive a gap between their needs and the requirements of justice. When, for either pecuniary or psychological gain, these people act unjustly, we consider them criminals. The existence of items 5 and 6 in Barnett’s formulation of justice provides a means to deal with them. Finally, the problem of power. Since the liberal concept of justice includes the use of force to deal with rights violations, there is a problem of enforcement error—the inevitable cost to the occasional innocent who is the subject of an erroneous enforcement. “Because the use of power imposes costs on the innocent, and rights legitimate the use of power, we need to limit the number and kind of rights we recognize to those which address pervasive social problems that cannot be dealt with by any other means.” The preceding discussion of ideas from The Structure of Liberty does not adequately reflect the rigorous arguments and elegant construction found in that book. Barnett makes a strong case for a conception of justice which involves moral constraints yet is highly practical in that it conforms to human nature with its concept of natural or background rights. One of the most important take-home observations by Barnett is that the validity of the rights in his formulation, especially the property rights found in items 1-3, is greatly reinforced by the fact that they address, and have the potential to prevent, multiple pervasive social problems.

Nozick—Bringing Justice Back Down to Earth

An alternate view of the Liberal Conception of Justice can be gleaned from the award-winning 1974 book , Anarchy, State and Utopia by Harvard philosopher Robert Nozick. It shares some of the same conceptual ground as Barnett, but with a much stronger emphasis on the moral basis for its strongly libertarian point of view. Nozick, like most political theorists, including those mentioned here, deals first with the state of nature issues and endeavors to show how the concept of the state might have evolved from a simpler structure of private protective agencies, whose only charge was to provide protection for the rights of those in the state of nature. The model for the state of nature used by Nozick is from one of the prime originators of natural rights theory, John Locke. Locke’s state of nature is neither the nasty and brutish one of Hobbes or the idyllic one of Rousseau, but rather a place where natural rights are recognized by many, there is reciprocity and co-operation, but there are virtually no institutions for resolving the inevitable conflicts between the various actors, particularly those conflicts arising over the use and control of physical resources. Men are free to act in whatever way their conscience ( or lack thereof ) dictates; the flip side is that they may look to no else to defend themselves against whoever may violate their rights. In a series of steps that resemble the “invisible hand” type of process mentioned earlier, Nozick speculates as to how what he calls the “minimal state” might have evolved from the pure state of nature, with various associations offering to provide protective services to various sets of clients in a given geographical area. Also, Nozick dares to raise the question of whether or not the anarchic situation in the state of nature is not better than the minimal state inasmuch as even this minimal state, due to its monopoly on the use of force and its mission to provide universal protective services for its citizens, might be construed by some ( e.g. individualist anarchists[6]) as redistributive, in that some will wind up paying more than others for the same level of protection. In answer, Nozick shows how what might look redistributive is actually devoid of such moral objections (Yes, Virginia, there really are some people who object to redistribution on moral grounds!!) . Based on a prior discussion of the need to compensate those whose rights are violated, Nozick has constructed an elegant explanation of how, in a state of nature, independent actors who did not choose to sign up with the dominant protective agency could, instead of being accused of “free riding”, are actually the subjects of just compensation:

If the protective agency deems the independents’ procedures for enforcing their own rights insufficiently reliable or fair when applied to its clients, it will prohibit the independents from such self-help enforcement. The grounds for this prohibition are that self-help enforcement imposes risks of danger on its clients. Since the prohibition makes it impossible for the independents credibly to threaten to punish clients who violate their rights, it makes them unable to protect themselves form harm and seriously disadvantages the independents in their daily activities and life. Yet it is perfectly possible that the independents’ activities including self-help enforcement could proceed without anyone’s rights being violated…. According to our principle of compensation…,in these circumstances those persons promulgating and benefiting from the prohibition must compensate those disadvantaged by it. The clients of the protective agency, then, must compensate the independents for the disadvantages imposed upon them by being prohibited self-help enforcement of their own rights against the agency’s clients. Undoubtedly, the least expensive way to compensate the independents would be to supply them with protective services to cover those situations of conflict with the paying customers of the protective agency. This will be less expensive than leaving them unprotected against violations of their rights… and then attempting to pay them afterwards to cover their losses through having (and being in a position in which they were exposed to having) their rights violated.[7]

Whew, that was a mouthful. So, the bottom line of this argument is that the minimal state, in the form of a monopoly protective agency in a region, is not, after all, redistributive, since the provision of universal protective services including the independents ( i.e. those who don’t sign up) is seen in the light of the principle of compensation, not as a free ride. As you have seen, Nozick’s book is not exactly a light read, but it is thought-provoking, especially for those whose only exposure to political philosophy has been to statist-oriented authors. Where Barnett endeavors to create a structure that can be translated into legal precepts and thence to the rule of law, Nozick deals primarily with the aforementioned justification for a compact, virtually single-purpose state, and with the notion of ‘distributive justice’, which others, mostly having a statist orientation, call ‘social justice’, or ‘economic justice’. Nevertheless, the principles espoused by Nozick seem to be clearly related to the property rights in Barnett’s formulation. The three major topics in what Nozick calls his “entitlement theory of justice” are (1) original acquisition of holdings, (2) transfer of holdings, and (3) rectification of justice in holdings. Definitional notes: First, the use of the word entitlement here has absolutely no relation to its use in reference to what we have called ‘welfare rights’; rather it is to put emphasis on principles to justify why one might be entitled to a particular holding. Second, Nozick uses the word ‘holding’ in much the same way as Barnett uses ‘several property’. Nozick’s entitlement theory of justice consists entirely of principles, which would then be elaborated by specific implementations; he makes no pretense to a complete theory. Nozick asserts as follows:

If the world were wholly just, the following inductive definition would exhaustively cover the subject of justice in holdings.

1. A person who acquires a holding in accordance with the principle of justice in acquisition is entitled to that holding.

2. A person who acquires a holding in accordance with the principle of justice in transfer, from someone else entitled to the holding, is entitled to the holding.

3. No one is entitled to a holding except by (repeated) applications of 1 and 2. The complete principle of distributive justice would say simply that a distribution is just if everyone is entitled to the holdings they possess under the distribution.[8]

When we examine the formulation of Barnett, we see essentially the same conceptual framework, but the issues have been dealt with explicitly. For example, the right of first possession is generated from the principle of acquisition of holdings in that it states that the rule for how entitlement is to be recognized uses the concept of “first in time is first in right”. One must identify the property and then stake a claim to it. So persons who do that have a first right of possession over a previously unowned property.[9] We should stop right here and proclaim that the justification given by Barnett saying, in effect, that the criterion for deciding on a claim over unowned property between someone who first found it and staked a claim and someone else who later comes across it is not necessarily the only criterion that could have been used. Alternatively, one could have used the rule that the property should go to the one who needs it the most, or some other rule. There is nothing in the principle of justice in acquisition which would necessarily prevent this from being the case, and the “inductive definition” given above would still be valid. A distribution made according to those rules would be considered just. The problem with many of the possible options is that the rule used may violate moral side constraints about how people may be treated, violate other rights, or create still other unintended consequences. Likewise the Nozickian principle of justice in transfer is implemented in Barnett’s right to freedom of contract, which specifies that all transfers of property (holdings) must be consensual to be valid, i.e. freedom from contract specifies that the right-holder’s consent is necessary to make the transfer, and freedom to contract specifies that consent is sufficient.[10] Moreover, the fundamental right of several ( i.e private) property, “the right to acquire, possess, use and dispose of scarce physical resources—including their own bodies”[11] follows immediately from the set of distributive justice principles developed by Nozick. Additionally, the principle of rectification of injustice in holdings spawns the right of restitution in the Barnett formulation. If the two principles of distributive justice given above are violated with respect to ( the entire history giving rise to) any given holding, then the holding is subject to Nozick’s principle of rectification, or literally, “making it right”. Barnett’s implementation is:

The right of restitution specifies that one who violates the rights that define justice must compensate the victim of the rights violation for the harm caused by the injustice.[12]

Before leaving the discussion based on Anarchy, State and Utopia, we need to discuss one more extremely relevant issue of political philosophy, and that is the notion of moral side constraints. This is the idea that, when considering a theory of justice and the concomitant societal arrangements to be made, any constraints upon actions done to realize one’s goal cannot simply be incorporated by reference into the goal itself. For example, if there is to be a societal arrangement that provides that every person should receive monetary income at such a level as to insure certain existential conditions ( re: food, shelter, health, etc.) are satisfied, subject to the constraint of minimizing violations of certain liberties, e.g. property rights, this would be an example of building the constraint into the goal itself. If, on the other hand, one would propose a societal arrangement such that every person should receive a minimum monetary income as described above, provided only that in doing so, no violation of anyone’s liberties or rights should be allowed at all, that would be an example of a moral side constraint. As Nozick explains:

Side constraints upon action reflect the underlying Kantian principle that individuals are ends and not merely means; they may not be sacrificed or used for the achieving of other ends without their consent.[13] [Emphasis added.]

Additionally, “The moral constraints on what we may do, I claim, reflect the fact of our separate existences . They reflect the fact that no moral balancing act can take place among us; there is no moral outweighing of one of our lives by others so as to lead to a greater overall social good. There is no justified sacrifice of some of us for others. This root idea, namely, that there are different individuals with separate lives and so no one may be sacrificed for others, underlies the existence of moral side constraints, but it also, I believe, leads to a libertarian side constraint that prohibits aggression against another.”[14] In addition to the matter of a lack of attention to side constraints, which I feel is a deal killer for any one who is not a thorough-going Consequentialist[15], Nozick has a multitude of other well-argued objections to the theory as propounded by Rawls ( and which would apply to a whole host of Utilitarian, egalitarian, Marxist, or socialist theories about “social justice” as well). One could classify his objections as follows: (1) Issues relating to a lack of context, to a narrow focus on the subject of distribution; (2) The fact that the distributions which result from Rawlsian principles are of the patterned, or “end-state” or “end-result” type; (3) Questions about Rawls’s attitude toward what he calls the “morally arbitrary” characteristics of individuals which might be used to explain and/or justify the existence of inequalities in distribution; (4) Issues about legitimacy of the holdings of individuals.

Context, or the Lack of It

Arguments in favor of egalitarian types of distributions are frequently, if not exclusively, isolated from any context about how the initial set of conditions ( e.g. goods to be distributed) came to exist. To reiterate an earlier quote from The Notion of Fair Distribution:

Distributive justice is concerned with the fair allocation of resources among members of a community. Fair allocation typically takes into account the total amount of goods to be distributed, the distributing procedure, and the pattern of distribution that results.

It seems that the only problem that exists here is how to make the distributions. It is assumed that they need to be made, and that some unspecified agent will be in charge. Nozick has it right when he says:

Hearing the term “distribution,” most people presume that some thing or mechanism uses some principle or criterion to give out a supply of things. Into this process of distributing shares some error may have crept. So it is an open question, at least, whether we should do again what has already been done once, though poorly. However, we are not in the position of children who have been given portions of pie by someone who now makes last minute adjustments to rectify careless cutting. There is no central distribution, no person or group entitled to control all the resources, jointly deciding how they are to be doled out. What each person gets, he gets from others who give to him in exchange for something, or as a gift. In a free society, diverse persons control different resources and new holdings arise out of the voluntary exchanges and actions of persons. There is no more a distributing or a distribution of shares than there is a distributing of mates in a society in which persons choose whom to marry…[16]

Another failure in the realm of context with respect to this view of distributive justice is that it ignores anything historical about how the holdings of various persons came about. For Rawls and his ilk, these questions are totally irrelevant, and for Nozick they are crucial:

To think that the task of a theory of distributive justice is to fill in the blank in “to each according to his _________  ” is  to be predisposed to search for a pattern, and the separate treatment of “ from each accord to his ________”  treats production and distribution as two separate and independent issues. On an entitlement view these are not two separate questions. Whoever makes something, having bought or contracted for all other held resources used in the process…, is entitled to it. The situation is not one of something’s getting made, and there being an open question of who is to get it. Things come into the world already attached to people having entitlements over them. From the point of view of the historical entitlement conception of justice in holdings, those who start afresh to complete “to each according to his _______” treat objects as if they appeared from nowhere, out of nothing….[17]

I strongly suggest that anyone who treats objects as if they appeared from nowhere, and out of nothing is not thoroughly grounded in reality, and furthermore, that we should not put any stock whatsoever in his arguments, moral or otherwise.

Patterned or End-Result Distributions

The type of distributions which justice as fairness dictates are called patterned distributions. They are calculated by some rule to achieve some particular end-result, i.e. at some particular point in time a certain distribution is to exist, the characteristics of which are defined in advance. For example, absolutely equal shares is a patterned distribution. Distribution of goods based on hours worked up to a specified maximum ( hours or goods) is another.

There are numerous problems, both moral and practical, with the concept of patterned distributions. Allowing for the moment that one may wish to divorce production from distribution, the most fundamental problem with distributions designed to achieve a particular end-result is that the implementation of such distributions inevitably interferes with liberty, which Rawls has supposedly enshrined as his First Principle of justice. Supposing that one receives some distributive share in accordance with some acceptable societal arrangement under justice as fairness. If one then takes one’s share and does any of a number of different things with it other than simply using or consuming it, then this is likely to upset the desired end result. Under a patterned distribution, it is undesirable that people should give away portions of their distributions, or alternatively, save them up, convert them to some form which assists in the production of goods, the private sale of which augments one’s share over time, etc., etc. In order for the pattern to be protected, it becomes necessary to, in essence, outlaw acts of capitalism or even of gift-giving. If such things are allowed, then unless they are “rectified” by a redistribution, then things tend only to get more and more out of shape compared to the originally desired end-result. So, clearly, any kind of reasonable economic liberty must be ruled out in Rawls conception. And, in fact, it is[18].

This brings us to the necessity, in most cases, of constantly re-evaluating and re-making the distributions on an ongoing basis, a policy which, one can easily imagine, undermines any kind of market based economy[19]. An additional problem with end-result principles is that when they are instilled in the legal matrix, they give each citizen an enforceable claim to some portion of what must be construed as the social product, the sum total of goods and services as of some point in time. According to Nozick:

Whether it is done through taxation on wages or on wages over a certain amount, or through seizure of profits, or through there being a big social pot so that it’s not clear what’s coming from where and what’s going where, patterned principles of distributive justice involve appropriating the actions of other persons. Seizing the results of someone’s labor is equivalent to seizing hours from him and directing him to carry on various activities. If people force you to do certain work, or unrewarded work, for a certain period of time, they decide what you are to do and what purposes your work is to serve apart from your decisions. This process whereby they take this decision from you makes them a part-owner of you; it gives them a property right in you. Just as having such partial control and power of decision over an animal or inanimate object would be to have a property right in it. End-state and most patterned principles of distributive justice institute (partial) ownership by others of people and their actions and labor. These principles involve a shift from the classical liberals’ notion of self-ownership to a notion of (partial) property rights in other people. Considerations such as these confront end-state and other patterned conceptions of justice with the question of whether the actions necessary to achieve the selected pattern don’t themselves violate moral side constraints. Any view holding that there are moral side constraints on actions, that not all moral considerations can be built into the end states that are to be achieved, must face the possibility that some of its goals are not achievable by any morally permissible means….[20]

The more one reflects on patterning, the more difficulties and improprieties one can think of. The last one I shall focus on is the fact that the conditions of the Original Position virtually dictate that the only type of distributive justice that the bargainers will consider are patterned distributions.

If things fell from heaven like manna, and no one had any special entitlement to any portion of it, and no manna would fall unless all agreed to a particular distribution, and somehow the quantity varied depending on the distribution, then it is plausible to claim that persons placed so that they couldn’t make threats or hold out for specially large shares, would agree to [Rawls’s] difference principle rule of distribution. But is this the appropriate model for thinking about how the things people produce are to be distributed? Why think the same results should obtain for situations where there are differential entitlements as for situations where there are not? A procedure that founds principles of distributive justice on what rational persons who know nothing about themselves or their histories would agree to [the Original Position] guarantees that end-state principles of justice will be taken as fundamental….For people meeting together behind a veil of ignorance to decide who gets what, knowing nothing about any special entitlements people may have, will treat anything to be distributed as manna from heaven.[21]

So the two conceptions of distributive justice cannot be easily reconciled—one allows for historical entitlements, the other is blind to them. Rawls theory presumes that no historical theory, however constructed, can be the correct one.

Moral Arbitrariness

One of the greatest objections that Rawls and his sympathizers express is their antipathy to the individual’s natural assets, talents, and abilities insofar as these are construed to result from factors not under the person’s control, such as initial distribution of income and wealth, family situation, supposedly innate abilities, etc. because they are presumed to be “morally arbitrary”, which I believe is another way of saying “undeserved.” This why Rawls goes on at length about the need for societal institutions that guarantee access to social and political positions, and educational opportunities. On the surface, such concerns may seem worthy, and perhaps even quintessentially fair. Yet this need to nullify the results of a person’s character and ignore his accomplishments while ascribing his success to uncontrollable outside factors is indicative of an attitude that is not congruent with the theory’s supposed end results. By insisting, as Rawls does, that even the more conscientious behavior of the more advantaged individuals is itself morally arbitrary[22] is going one step too far. Nozick observes that “this line of argument can succeed in blocking the introduction of a person’s autonomous choices and actions (and their results) only by attributing everything noteworthy about the person completely to certain sorts of “external” factors. So denigrating a person’s autonomy and prime responsibility for his actions is a risky line to take for a theory that otherwise wishes to buttress the dignity and self-respect of autonomous beings….” One should never forget that final results always involve intermediate steps, and those who have native abilities may either develop them or ignore them. Those who start life with pecuniary advantages may frequently experience poverty at life’s end. Is it reasonable twenty or thirty years downstream to insist that one’s situation at that point in time is all predicated on inherited characteristics? The only reason that this kind of thinking could be tolerated is that no one (specifically the moral theorist) is looking at the individual, only at the aggregate, the collective. In fact, it is Rawls’s position that one’s talents and abilities actually belong to the collective, to wit:

We see then that the difference principle represents, in effect, an agreement to regard the distribution of natural talents as a common asset and to share in the benefits of this distribution whatever it turns out to be. Those who have been favored by nature, whoever they are, may gain from their good fortune only on terms that improve the situation of those who have lost out….No one deserves his greater natural capacity nor merits a more favorable starting place in society. But that does not mean one should eliminate these distinctions. There is another way to deal with them. The basic structure [of society] can be arranged so that these contingencies work for the good of the least fortunate.[23] [Emphasis added.]

Having noted the above Rawlsian predilection, one should recall the previous assertion by Nozick that the ability to tax away a significant fraction of your income is tantamount to having a partial property right in you. It seems to me that the common asset idea dovetails nicely with the partial property right notion. Now I can hear some of you saying “How can you attack taxation in such a way? After all, there has to be some way to fund the government.” Let’s look at this in yet another, perhaps deeper, way. Let’s say that you find it legitimate to seize a progressively larger portion of the wages of a person who elects to work more than the minimum required hours so that he can enjoy some extra goods or services because he prefers to have these more than to have some certain number of hours of leisure time. Take then, the case of the man who elects to work only the minimum number of hours at his job because he values his hours of leisure more highly than any extra goods or services. Would it then also be legitimate to force this second man to work some extra hours (equivalent to the extra increment of wages withheld from the first man) without compensation so that the work product may be distributed to others? I maintain that those would say the first case is legitimate and the second is illegitimate are fooling themselves. It should be abundantly clear that these two cases fundamentally equivalent. Yet, I can guarantee you that most advocates of progressive taxation would be up in arms over any suggestion that the second alternative has any legitimacy at all!

Additional remarks on Justice and Fairness are to be found in Part Three

Notes for Part Two


[1]. Hillel Steiner, Essay on Rights.
[2]. Randy E. Barnett, The Structure of Liberty: Justice and the Rule of Law, Oxford University Press, 1998.
[3]. The use of the phrase ‘several property’ is similar to the phrase ‘private property’ but is favored by Barnett in that it emphasizes its widespread and decentralized character, as opposed to situations where property is concentrated in the hands of the state.
[4]. Samuel Pufendorf, De Jure Naturae.
[5]. People have varying time horizons as to their value for either current or future consumption. Those with limited horizons (i.e. can’t or won’t see into the future) are said to have high time preferences, and frequently demand immediate gratification; converse-ly, those with low time preferences can see the value of postponing gratification.
[6].Individualist anarchism refers to several traditions of thought within the anarchist movement that emphasize the individual and his/her will over any kinds of external determinants such as groups, society, traditions, and ideological systems. Individualist anarchism is not a single philosophy but refers to a group of individualistic philosophies that sometimes are in conflict. Early influences in individualist anarchism were the thought of William Godwin, Henry David Thoreau (transcendentalism), Josiah Warren (“sovereignty of the individual”), Lysander Spooner (“natural law”), Pierre Joseph Proudhon (mutualism), Herbert Spencer (“law of equal liberty”) and Max Stirner (egoism). From there it expanded through Europe and the United States. Benjamin R. Tucker, a famous 19th century individualist anarchist, held that “if the individual has the right to govern himself, all external government is tyranny.”
[7]. Robert Nozick, Anarchy, State and Utopia, Basic Books, 1974, P.110.
[8]. Ibid. P. 151.
[9]. The reader may be objecting at this point that there is precious little in the way of unowned property to which this right would apply; that might be true if one were thinking only of real property, i.e. land. But in the modern world, there is abundant new property created both as a pure product of the human mind ( e.g. music, art, computer programs, other “intellectual property”), and manufactured items, all of which fits naturally, I suggest, into both the principle of justice in acquisition (from Nozick) and its explicit formulation as the right of first possession (from Barnett). It is worth noting that this is one of the great strengths of the natural rights approach that it addresses potential problems or issues (like new kinds of property) that had not yet arisen when the concepts were first put forward, by Locke et al.
[10]. “In logic, the words necessity and sufficiency refer to the implicational relationships between statements. The assertion that one statement is a necessary and sufficient condition of another means that the former statement is true if and only if the latter is true. A necessary condition of a statement must be satisfied for the statement to be true. Formally, a statement P is a necessary condition of a statement Q if Q implies P. For example, the ability to breathe is necessary to a human’s survival. Likewise, for the whole numbers greater than two, being odd is necessary to being prime, since two is the only whole number that is both even and prime. ‚ A sufficient condition is one that, if satisfied, assures the statement’s truth. Formally, a statement P is a sufficient condition of a statement Q if P implies Q. Thus, jumping is sufficient to leave the ground, since an intrinsic element of the concept jumping is leaving the ground. A number’s being divisible by 4 is sufficient for its being even. A condition can be either necessary or sufficient without being the other. For instance, being a mammal (P) is necessary but not sufficient to being human (Q), and that a number q is rational (P) is sufficient but not necessary to q‘s being a real number (Q). A condition can be both necessary and sufficient. For example, at present, “today is the Fourth of July” is a necessary and sufficient condition for “today is Independence Day in the United States.” Similarly, a necessary and sufficient condition for invertibility of a matrix M is that M have a nonzero determinant.” —-Wikipedia, Internet Free Encyclopedia
[11]. Randy E. Barnett, The Structure of Liberty, P.65.
[12]. Ibid. P. 159. Students of the law will recognize this right as the fundamental basis for tort law.
[13]. Nozick, Anarchy, State and Utopia, P. 31. Nozick is here referring to Kant’s famous categorical imperative which states “Act in such a way that you always treat humanity, whether in your own person or in the person of any other, never simply as a means, but always at the same time as an end.”
[14]. Ibid. P. 33.
[15]. Ibid. P. 149.
[16]. Ibid. P. 159.
[17]. At the risk of going over old ground, we should recall that the First Principle of Justice as stated by Rawls himself is: “each person is to have an equal right to the most extensive basic liberty compatible with a similar liberty for others.” He also states: “The basic liberties of citizens are, roughly speaking, political liberty (the right to vote and be eligible for public office) together with freedom of speech and assembly; liberty of conscience and freedom of thought; freedom of the person along with the right to hold (personal) property; and freedom from arbitrary arrest and seizure as defined by the concept of the rule of law.” [Emphasis added.] So, the First Principle, of maximum liberty, which is supposed to take precedence over the distributive mandates of the Second (Difference) Principle clearly does not include a general concept of liberty, namely action without external interference, but a highly qualified “basic” kind of liberty in which only the right to personal property is to be protected—never you mind about your real property, or your productive machinery, or any other kind of “capital asset”, as that cannot be construed as sufficiently “basic.” You can keep your kit bag, however, and everything in it, and society will defend your right to do so. For an extremely germane discussion of the role economic liberty fails to play in Rawls’s theory, please see A Puzzle about Economic Justice in Rawls’s Theory” in Respecting Persons in Theory and Practice by Jan Narveson. Narveson clearly shows that, with respect to reconciling the Difference Principle with the Liberty Principle, (1) “Either it goes the whole hog one way, leaving no socially reinforced tendency toward equality in the distribution of wealth…” ..or (2) “it goes all the way the other way, giving us Christ’s injunction [“…sell all that you have and give it to the poor…”] as a requirement of justice—out and out communism in one understanding of the word.”
[18]. The reason it undermines a free-market economy is that at its heart is the accumulation of capital through having a surplus of production over consumption. Taxing away the profits of an enterprise militates against storing up capital for increased production.
[19]. Ibid. P.172.
[20]. Ibid. P.198.
[21]. Rawls, Theory of Justice, p. 311-12.
[23]. Rawls, Theory of Justice, p. 102.
[24}. Later on we will be discussing at some length various formal theories of “tax justice”; the core idea involved in most such discussions is that of “equal sacrifice”; taxes are to be engineered so that everyone is hurt equally. By this standard, the forced labor example given is, I submit, beyond criticism.

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Justice and Fairness – Part Three

Legitimacy

Let’s look again at Rawls’s idea re: natural assets. We have already heard that:

No one deserves his greater natural capacity nor merits a more favorable starting place in society. But that does not mean one should eliminate these distinctions. There is another way to deal with them. The basic structure [of society] can be arranged so that these contingencies work for the good of the least fortunate.

Nozick responds: “And if there weren’t ‘another way to deal with them’? Would it then follow that one should eliminate these distinctions? What exactly would be contemplated in the case of natural assets? If people’s assets and talents couldn’t be harnessed to serve others, would something be done to remove these exceptional assets and talents, or to forbid them from being exercised for the person’s own benefit or that of someone else he chose, even though this limitation wouldn’t improve the absolute position of those somehow unable to harness the talents and abilities of others for their own benefit? Is it so implausible to claim that envy underlies this conception of justice, forming part of its root notion?” [Underline added.]

Lurking in the background of most discussions of social justice is a thinly veiled suggestion that the good fortune, the wealth, or whatever, of the so-called favored individuals is somehow illegitimate— undeserved and perhaps even ill-gotten, and so, society’s imposition of the measures required by Rawlsian or egalitarian distributive justice, as described above, is more than justified, considering that not only may there have been no merit ( i.e. a lack of desert) there may even have been a history of actual injustices involved in the holdings being re-distributed. But, as I have shown, the egalitarian types do not dare go down this road very far because, in doing so, they would have to cite some sort of history for these misdeeds, and that would open the door to an historical explanation for distributive justice, and the reason for the current distributions would be reduced to rectifications for past injustices. For this reason, the suggestion of wrongdoing will always remain an almost subliminal part of the discussion.

This leads us directly into a discussion of entitlement versus desert. First there is an almost direct analogue with our earlier assertion concerning the concepts of “just” and “fair”. Just as something can be just but not fair or fair but not just, one may be entitled to something without deserving it, or deserve it without being entitled to it. One may have a contract to exchange something for a stated price, and one is therefore entitled to receive that price at the time of exchange. It may also be the case that one deserves to get that price, but it would not be because of the existence of the contract, but for some other reasons. In the case of entitlement, one is owed something and there is no option about whether he is to receive it, but in the case of desert it is the case that some other person has decided to bestow or give the thing in question on the basis of some set of reasons for doing so, which the giver has stipulated and which the receiver has fulfilled. It may be that, in a given situation, one may have both the entitlement and deserve the thing in question, but that is not a requirement, i.e. one does not imply the other.

Possibly the most maligned of all things of value which people can receive is profits. For those of the statist persuasion, a large proportion declare outright that they are not legitimate. People are not entitled to profits, nor do they deserve to have them, according to this view. I believe a good case can be made that people are both entitled to, and deserving of profits. This leads us to our second instance of a misconception masquerading as a reasonable and widely held proposition. Conventional Wisdom Re: Profits. Although it would appear that profits are a necessary part of a market based economy, they are considered suspect and must be both limited and controlled to prevent exploitation and the excesses of greed. I will show that nothing could be further from the truth.

Mixed up in this issue are the concepts of property and of ownership. First, consider that everyone has some property—themselves, their own bodies. Second, consider that ownership speaks to the matter of control, that the owner will ultimately be the arbiter what is to be done with his property, and that this decision is not required to be shared jointly with anyone else, unless one agrees to it in advance. To own something is to be entitled to do with it as we please,subject to the restriction that others’ rights to a similar freedom are respected. So, ownership is essentially an entitlement concept. I have already exposed you to Nozick’s Entitlement Theory of (Distributive) Justice as an alternative to the egalitarian theories. The principles underlying the Entitlement Theory deal with property that is external to persons. Is there such a right to “external” property? Many of the objections of the egalitarian theorists center on their problems with the concepts of property and ownership: in truth, they are highly inimical to the level of individual autonomy that these concepts imply. In particular, they object to the reasons given for how ownership of previously unowned things could be achieved. Without going too deeply into this subject, we note four similar, but not identical approaches which individualist thinkers have taken to this problem. The first originates with John Locke, and we have also briefly discussed the justice principles as stated by Robert Nozick and Randy Barnett, both of which are property-centered. Finally, we have the “first-use” principle of Jan Narveson.

In his labor theory of ownership John Locke, a natural rights theorist, that holds that property originally comes about by the exertion of labor upon natural resources. In his Second Treatise on Government, Locke asked “by what right an individual can claim to own one part of the world, when, according to the Bible, God gave the world to all humanity in common. He answered that persons own themselves and therefore their own labor. When a person works, that labor enters into the object. Thus, the object becomes the property of that person.” Locke added an additional condition to the effect that when acquiring an original property right to things found in nature that one must leave “enough and as good in common…to others.” Nozick has elaborated on the condition to create what he called the Lockean Proviso. The Proviso says that though every appropriation of property is a diminution of another’s rights to it, it is acceptable as long as it does not make anyone worse off than they would have been without any private property. This makes strong note of the fact that every appropriation of heretofore unowned property into a private property system has the potential and even the likelihood of making everyone’s situation a little better through the general increase in wealth, i.e. it is the net benefit which must be considered.

Recall that Randy Barnett echoes the labor theory of ownership with his “right of first possession”which specifies that property rights to unowned resources are acquired by being first to establish control over them and to stake a claim.

Seeking, as always, to find principles that are compatible with liberty, Jan Narveson sets forth his “first-use” principle, namely that “She who gets there first and commences to use it, in ways that require ongoing access to it, may use it so long as she wants. No one else may use it without her say-so, so long as she neither sells it or gives it to somebody, dies without leaving a will, or ceases to care.”

What all these property-centered principles have in common is that (a) they respect the principle of liberty, i.e. non-interference with what people are already engaged in, (b) they go a long way toward reducing or eliminating conflict by giving people a way to know in advance how they should behave with respect to scarce resources and (c) they respect human action in that some non-trivial amount of effort is involved in establishing one’s ownership. Narveson illustrates how these are virtues:

Why this rule [“first-use”] and not some other? For example, why not “second come, first serve” or “all comers, no matter when, get equal control”? The answer is that second-comers intervene in first-comer’s uses, and thus violate the general liberty principle. They prevent the continuation of a commenced activity, one which harmed no one when initiated, and in which the initiator invests effort, on the results of which he forms expectations and plans.

One major objection to attempts to define a right to unowned property is that using principles such as those cited above “You can acquire absolute rights over a disproportionate share of the world, if you do not worsen the condition of others” and furthermore 4) It is relatively easy to acquire absolute rights over a disproportionate share of the world.[1]

In response to this objection, focus first on the word ‘disproportionate’; this word is not part of the Lockean Proviso as stated by Nozick, nor is it implied in any of the other property-centered principles regarding initial acquisition, and does not the original condition of Locke almost explicitly state that one cannot take command over such a large share of a resource that little or none is left for others to exploit? Continuing, how does one define disproportionate with respect to some object or resource which may be unowned. Does it mean that, since there is a large population of humans that only a tiny slice of any particular physical stuff is in proportion to what may legitimately be appropriated. How does one know when one has crossed the threshold from reasonable and proportionate to unreasonable and disproportionate? In order to do this in any reasonable way, one would have to know at a minimum (a) the total amount of the resource in the entire world, (b) the number of people alleged to be competing for this resource, and this is only if we assume that the correct proportionate share would be an equal one. We have already suggested that equality as a standard has more than its share of problems. Suppose that land is the resource in question and equality is the standard, then one’s proportionate share would be the total surface area of land divided by the total number humans potentially wanting land. Using known figures for land area and population, this works out to approximately 5 acres as any ones’ proportionate share of land if all the land today were unowned and all the people alive today laid claim to it. If the amount of actually desirable ( for example, arable) land were used, then the figure would be smaller yet. But remember that there would have to be a historical dimension to this inasmuch as much of the desirable land was appropriated in distant times when populations were vastly different. Anyway, for most resources under consideration, the amount of the resource in existence is not known with exactitude. Given how problematic this is, I conclude that trying to come up with an appropriate idea of proportionate is futile. Moreover, consider the following:

If Columbus lands on a new continent, is it legitimate for him to proclaim all the new continent his own, or even that sector ‘as far as his eye can see’? Clearly, this would not be the case in the free society that we are postulating. Columbus …would have to use the land, to ‘cultivate’ it in some way, before he could be asserted to own it…. If there is more land than can be used by a limited labor supply, then the unused land must simply remain unowned until a first user arrives on the scene. Any attempt to claim a new resource that someone does not use would have to be considered invasive of the property right of whoever the first user will turn out to be.[2]

This is certainly a much more rational standard than the equality example cited above, and does not lead to disproportionate appropriation; also, and this is important, to accomplish the utilization of what one has appropriated is not an easy task—it requires a consistent human effort that other possible rules ( e.g. “all comers, no matter when, get equal control”) do not demand. It is certainly not “relatively easy” to acquire title—it does not consist of planting a flag and making a declaration, or even the somewhat more arduous staking out or fencing a parcel of land. Continuous use and development are implied by all of our property-centered principles of first acquisition.

Since the critics of the classical liberal approach to property rights as described here seem to feel that the Achilles Heel of the argument is the issue of first acquisition, we would be remiss if we did not also at least allude to the argumentative proof of the correctness of the first-use approach by social philosopher Hans-Hermann Hoppe. Hoppe notes that the problem of social order is purely one derived from scarcity: in the Garden of Eden with unrestricted access to goods, conflict, at least with respect to external goods, is avoided. Ethics is nothing more nor less than the rules which prevent conflict over scarce resources ( including that scarcest of all resources, one’s own person). Hoppe points out that property rights based on first acquisition rules also satisfy one’s initial moral appraisal or intuition, but then goes in a disciplined fashion to actually prove that no other set of rules for dealing with property is appropriate. Here is my paraphrase of Hoppe’s argument:

(a) The definition of ownership includes the exclusive control by the owner of the property in question, and any uses by others requires the owner’s consent.

(b) The principle of first acquisition says that previously unowned property may be appropriated by the first person who, through his own efforts, creates the property, or utilizes the property without interfering with property owned by others. One’s own body is to be regarded as among those things appropriated by the principle of first acquisition.

(c) Assume that the principle stated in (b) is not valid, i.e. that the first person to appropriate property ( including his own body) is not to be considered its owner. Then, one of two situations must be true: first, that some other person or persons is (are) the owner, not only of property which you as first user appropriate, but also your body, or the second alternative, that every person is the co-owner of every other person and their property.

(d) In the first instance above, there are two classes of people, one of which is subservient to the other, and the those in the subservient class must obtain consent from the overlords to use or benefit from the property; since moral rules must apply universally to be valid, the two-class situation rules out that case. In the second instance, since consent for use is required, and all other co-owners must be consulted before anything is supposed to happen, ownership of everyone by everyone else simply cannot be implemented.

(e) So, unless you can come up with a third alternative[3] to the ownership scenarios described above, one must conclude that the first-user principle of initial acquisition of property, in addition to satisfying one’s moral intuition, is also logically valid.

Hoppe’s argument is somewhat more rigorous, and those who are interested may find it verbatim in the note.[4]

Assuming that I may have made at least some headway in getting you to accept that goods can be either “yours” or “mine”, i.e. that ownership ( including self-ownership) is itself a valid concept as the basis for moral discussions, then I can resume the discussion of how one can be both entitled to, and to deserve profits.

Ownership, as I have noted, includes control, i.e. being able to decide what to do with one’s property, as long as doing so does not interfere with the rights of others. So, employing property to create new property which may be exchanged voluntarily for some other type of property, with the incidental result that a “profit” (net benefit of some kind) accrues to the first party is something that the first party is absolutely entitled to do. This is true because, as I have suggested, ownership itself is the result of entitlements.

Whether one also deserves profits is more complicated. Earlier in this chapter, I said “In the case of entitlement, one is owed something and there is no option about whether he is to receive it, but in the case of desert it is the case that some other person has decided to bestow or give the thing in question on the basis of some set of reasons for doing so, which the giver has stipulated and which the receiver has fulfilled.” The consumer, who values a newly created good or service more than he values the amount of money asked for it thus bestows on the creator of the new good or service ( the capitalist) the requested amount. Both have reckoned that they have received adequate value in the exchange and this is the basis for the consumer considering that the capitalist has deserved his profit. He is the final arbiter. He determines the aforementioned set of reasons. So, the entrepreneur is frequently both deserving of, and entitled to profits.

Now historically many of the opponents of profit-making have argued that profits are illegitimate ( and hence cannot be deserved) because the only basis for deserving any material goods is a person’s labor. This is the well-known Labor Theory of Value, and its best known proponent is the well-known Karl Marx. This theory looks at the inputs, which are typically both labor and materials and compares the final price of the good or service less the cost of materials plus other costs and asserts that any wages totaling less than the final price less the sum of these assorted costs,including rent, interest charges, etc., is unjustified and essentially a theft of the worker’s labor. The failure of this theory is that it looks only at the input side of the transaction, how much in the way of time and energy is expended; forgotten is the other side of this value-equation, the consumer who buys the product and whose concept of its value to him sets the price at what it is. The worker is only making a partial contribution to the value: the materials (including assorted costs) and the capitalist are the other factors. Marx, and others refuse to acknowledge that the capitalist has a legitimate role in the production process–the capital, they say, could just as well come from society at large. But, in the market setting, the capitalist is the guy who (a) determines that there is a consumer need to be filled, (b) is willing to take all of the risks of time and capital to create a business entity, and (c) co-ordinates, manages and otherwise brings the project to fruition, to provide a consumer good or service which might not exist but for his activities, his human action . And for all of this, the Marxists have the nerve to imply that the surplus of proceeds of price over cost is some kind of theft! The typical worker has no stomach for doing any of the above; he wishes to take the safe way to getting his compensation by working for wages. The typical worker has no stomach for the risks involved. It is nonsensical that workers would also feel that the price of the of the goods or services produced by the enterprise should be set at the sum of their labor contribution (wages and benefits) plus the raw material costs ( if appropriate) with no residue for the guy that organized the whole thing, who made their job possible!

Political philosopher Jan Narveson summarizes relevant ideas concerning the legitimacy of profits:

The questions of desert concern when such considerations are in order, who applies them, and why. And here our answer is that when someone deserves something he deserves it from someone. No sense can attach to simply “deserving” something all by itself. It takes a minimum of two parties…. And those who bestow the prizes, who hold the goods in which the rewards consists, and so on, are the fundamental wielders of these notions. They apply them on the basis of interests and values they bring to the context. This explains why desert is not exclusively reserved for such things as effort, diligence, and application of ingenuity. It is also available for the exercise of native intelligence, talent, skill, or the display of natural charm, which are not producible merely by effort alone. Nevertheless, those who have the relevant interests in these displays may see fit to reward them.[5]

Reviewing what been said about profits, it becomes clearer and clearer that social justice advocates, in their insistence on the undeserved nature of various forms of compensation, and their refusal to grant legitimacy to the time-honored concepts embodied in the property-centered entitlement theory of justice are really interested in using that relatively small fraction of humankind who are the prime movers and achievers as if they were nothing more than draft horses whose rations, after all, are decided by their owners. They should work for whatever they are lucky enough to get. This predilection, I suggest, does not go very far towards mitigating the basic objections one might have to unalloyed Utilitarianism.

I have spent so much time on John Rawls’s approach for several reasons. As noted earlier, it is one of the few attempts to actually formulate some sort of rational argument for the distributive notions of social justice, instead of just accepting that they should be implemented and proceeding immediately to a discussion of methods. However, Rawls’s work is also important because it accurately reflects attitudes which arose around the time of its writing due to various historical trends—first, what can be called the “rise of the economy of mass consumption”, and second, the “moral drama of the civil rights movement”. These two factors go far in explaining why the Rawlsian and/or simpler egalitarian distributive ideas have been accepted almost uncritically.

At the time A Theory of Justice was written (1971), we had experienced about two decades of unprecedented economic growth, with real incomes almost doubling in the period 1950 to 1970. As early as 1958, economist John Kenneth Galbraith was claiming that “the fundamental issue was no longer how to achieve sufficient production, but how to distribute what was being produced”.[6] Galbraith was an economist of the Keynesian school, which focused almost exclusively on aggregate demand as the motive force for the economy. “In this land of high consumption, moreover, goods were so widely available they seemed almost to be part of the natural landscape. Galbraith believed that the problem of production had essentially been solved and that the remaining problem was how to distribute the available goods and services—to determine who gets what. Political agency existed in this view because policymakers could make decisions about whether to direct spending toward what they regarded as private luxuries [7] or to putative public benefits. Economic agency, though, largely disappeared from view as the economy took on the guise of a vast impersonal machine, automatically cranking out supplies in response to aggregate demand. Seen chiefly as consumers, Americans tended to be understood as passive recipients who contributed to the economy by receiving. Official attention turned to those who received the least because they were the ones least able to play the consumer role in boosting demand”.

At the same time as concern for a certain group which were deemed to be “deprived” relative to the majority was increasing, another phenomenon was developing: the civil rights movement of the 1950s and 1960s. Whereas civil liberties had been conceived of as providing freedom from regulation or interference by government, the concept of a civil right was focused on government protecting individuals through law and regulation. No one will argue that American citizens of African origin have not suffered historically both from slavery, and then subsequently from racial discrimination in voting, the use of public facilities, and other things we all take for granted; likewise, few will say that correcting these abuses was not a moral issue or not deserving of support. Burning black homes and churches, murder of civil rights activists, and other heinous crimes were and are unconscionable. It has been observed that…social movements require an energizing myth to create group solidarity and to give meaning to collective action. A highly successful myth can move beyond a movement’s adherents and become part of a larger culture. By “myth” I do not mean false or illusory account , but a narrative with enough moral and emotional force to give clarity and inspiration to an account of events. The largely nonviolent civil rights movement worked so well as moral drama in part because of the violence with which it was met and in part because the vision of an oppressed people struggling for freedom evoked themes of existing American cultural narratives.[8]

Using this selfsame narrative, the civil rights movement changed America’s social vision such that Americans began to think of themselves in terms of groups or categories of persons who required protection. Given this attitude, it is not unusual then to see the rise of movements based on discrimination and/or maltreatment of one sort or another, including, but not limited to, other racial groups ( Hispanic, American Indians), those with special sexual preferences ( gay and lesbian), those with one or another type of disability, and finally just “the poor”. Carl Bankston summarizes what happens when groups like these try to co-opt the myth of the black civil rights struggle:

Seeing disabilities or variations in sexuality according to the civil rights model minimizes the differences between these aspects of the human condition and the historical experience of African Americans. Second, social myths oversimplify our institutions and relations by dramatizing them as sharply drawn stories of good or evil. This moral simplification not only reduces social theory to caricature but also invests political positions (such as redistributive arguments) with automatic virtue, Third, a widely accepted social myth imposes a template on thinking that discourages alternative views or the examination of assumptions. In particular, the civil rights myth discourages approaching questions of political economy as matters of competing interest groups or as matters of overall national interest. Instead, it answers these kinds of questions with assertions of irreducible rights. [Emphasis added.][9]

So, we are beginning to see that there are multiple aspects responsible for the largely uncritical acceptance of “justice as fairness” and its distributive consequences—they include unsupported moral intuitions on one hand, as well as the rationales developed by Rawls in his Theory, and the historical and cultural factors noted above. I submit that the actual intellectual substance, in terms of what I would consider a logically acceptable justification for economic or social justice, is very, very thin.

Taxation

Leaving behind for the moment, issues about the principles of distributive justice, I need to move your attention to what is the normal result ( in an at least partially market-oriented economy) of implementing the Rawlsian type of “arrangements”, and that would, of course, be taxation. Wikipedia [10] defines it thus:

To tax (from the Latin taxo; “I estimate”) is to impose a financial charge or other levy upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state such that failure to pay is punishable by law.

My first response to this kind of definition is negative, for I resent its attempt at neutrality, its attempt to avoid making any value judgements about what is really going on here. The fact, the bald-faced fact is that a tax is an expropriation of property, “a coercive, non-contractual transfer of definite physical assets (nowadays mostly , but not exclusively money), and the value embodied in them, from a person or group of persons who first had these assets and who could have derived an income from further holding them, to another, who now possesses them and now derives an income from so doing.”[11] In plainer words, it is a legally-sanctioned form of theft. That it is coercive and non-contractual is what makes it so. It is but one example of how government (the state) violates what I contend is a bedrock moral principle, namely, that if something would be viewed a crime if done by a private citizen, then under no circumstances imaginable, should the state be able to do that same action with impunity. Let me re-state it in a slightly different way, and label it as Bedrock Principle #1 : If some act is a crime for the citizen, and so prohibited, then it is likewise prohibited for the state.[12]

I will go on to assert that, like all theft, all taxation is inherently bad—it has no saving grace whatsoever. It is an unmitigated evil. But I won’t stop there. I will go on to show why I believe this to be the case.

First, there are only three ways a person can realize income from assets: (1) the asset was acquired through the first-user type of appropriation we have previously discussed, (2) the asset was used, together with one’s labor, to create some new asset, or (3) the asset was either acquired or transferred by some contractual arrangement. If some significant fraction of the asset is removed (read expropriated) by taxing it, then the owner loses not only that physical amount, but also its ability to contribute to a higher future income. Hoppe puts it in terms that better explain its economic implications:

… any form of taxation implies a reduction of income a person can expect to receive from original appropriation, production, or from contracting. Since these activities require the employment of scarce means—at least the time and the use of one’s body— which could be used for consumption and/or leisure, the opportunity cost of performing them is raised. The marginal utility of appropriating, producing, or contracting is decreased, and the marginal utility of consumption and leisure is increased. Accordingly, there will be a tendency to shift out of the former roles and into the latter.[13]

In light of the fact that we will be delving deeply into economics in future posts, it is perhaps not too early to introduce some economic concepts of consequence.

Opportunity cost is the “cost” (monetary or otherwise) which is entailed in making a choice between two mutually exclusive alternatives, i.e. it is the cost of doing one thing instead of another, where the cost is based on the value of the thing forgone. The opportunity cost of producing x amount of product A instead of 1.5x amount of product B is the value of the amount of product B. Similarly, the opportunity cost of watching a ball game on TV may be the loss of quality time spent tossing around a ball with your son instead.

Marginal utility has been defined as “a measure of relative satisfaction gained or lost from an increase or decrease in the consumption of that good or service.” For example, the marginal utility of a of having fourth pair of shoes may be relatively high whereas the marginal utility of having a second or third car may be considerably less. Typically, as the supply of items increases the marginal utility of each additional item is seen to decrease. Note that this is not an objective measure, but depends on the situation of each individual.

Using these concepts, we can translate Hoppe’s language above into a simpler set of assertions, namely that taxation changes the structure of incentives so as to favor consumption over production. Hoppe further observes that

by lowering the present value associated with future-directed value-productive efforts, taxation raises the effective rate of time preference [14]…and, accordingly, leads to a shortening of the period of production and provision and so exerts an inexorable influence pushing mankind in the direction of an existence of living from hand to mouth.

In simpler terms, what this means is that when taxed people will tend to adopt methods of production which deliver the desired goods in a shorter time frame despite the fact that a lengthening of the production period by developing and using more efficient or appropriate tools and procedures would ultimately deliver more of the product and possibly at a lower cost per unit. The loss to taxation of the capital required to do this is thus a loss that cannot be recovered from and creates a downward cycle of progressive impoverishment. And, of course, the damage done in this manner is proportional to the amount of capital taken by taxation.

As you will learn soon enough, there are many different schools and viewpoints among economists, and some have declared that taxation either has no influence on standard of living or economic well-being, or that it can be shown to actually increase the same. Yes, some economists trot out empirical evidence that increased taxation can occur simultaneously with increased output, say increased GDP. Now surely you can see through this one: the mere existence of a positive correlation between two phenomena does not prove that one caused the other or is even related to it in some logical way—this is the fallacy of post hoc ergo propter hoc. [15] One has to be an inveterate believer in the virtues and efficacy of the state to attribute the relatively high per capita wealth of a country like Sweden to the existence of its high levels of taxation. Whatever has been achieved in such situations is despite high taxes, not because of them.

A less strong assertion by some empirically oriented economists is that, while perhaps not causing increased economic well being, taxation is at least neutral in this regard. To the extent that statistical data might show this to be the case, a fairly simple and obvious explanation is at hand: when looked at over a reasonable time period, we note that concurrent with the damage inflicted by taxation, there is a possible, in fact probable, improvement in methods and technology which causes an increase in output to offset the loss by taxation. If the improvements are sufficiently advanced, it can also answer the question of how increased wealth could go hand in hand with high taxes.

While in most cases, the empirically oriented economist does not expound a theory as to why the phenomenon ( of high taxes and high or steady wealth) should occur, some have suggested that the higher taxation causes the taxed individuals to work harder so as to make up for what was taxed away, i.e. to become more of a “workaholic”, however, “it is still the case that the income of value-productive individuals has fallen. Even if they produce the same output as previously, they can only do so if they expend more labor now than before. Since any additional labor expenditure implies forgone leisure or consumption (leisure or consumption which they otherwise could have enjoyed along with the same output of valuable assets), their overall standard of living must be lower”.[16]

The preceding discussion does not exhaust all the claims made concerning the alleged lack of negative influence of taxation on economic well-being and standard of living. I refer the reader to the work of Hans-Herman Hoppe (see Notes 11-14).

Since it does not appear that we are to be spared from taxation any time soon, I next want to look at the various notions people have developed concerning the types and amounts of taxes being advocated and to the particular idea of “tax justice”. This leads us to a Conventional Wisdom Re: Taxes: Those who have higher incomes should pay taxes at a progressively higher rate than those with more moderate incomes.

Now, as has become a norm with me, the first question to be asked is WHY? And the standard answer is “Because they can afford it” or alternatively, “they have the ability to pay”. (which reminds one of the old saying about why one robs banks—it’s where the money is…). As with most answers in support of liberal-egalitarian propositions, any supposed explanation or justification stops at this point; it resembles the already-discussed assertion that everyone should have equal distributive shares because “it is the only fair thing to do…”. For most egalitarian statists, there is nothing to say beyond that point. They then move on quickly to discussions of how to implement redistribution.

But again, as with our exposition concerning John Rawls, there are several attempts out there to provide some sort of intellectually respectable, or academic justification for the tax schemes in effect, and I will hold forth briefly on the most common.

To begin with, tax schemes are evaluated according to two primary criteria as to being equitable: vertical equity and horizontal equity. Vertical equity deals with how to tax incomes that are significantly different, and horizontal equity relates to taxing people whose incomes are similar.

There are a number of approaches to vertical equity. The most common is the ability-to-pay concept cited above; there are however, three variations to be considered. One approach says that the amount of wealth (“endowment”) should be used to determine the tax; a special case, which is more common in actual use, is the amount of income received. The only apparent justification for this stance is “those who have more, should pay more”. Another approach to the ability-to-pay concept is known as “equal sacrifice”, i.e. the idea that the tax on the wealthier ( or higher income ) person should be set “so as to ensure that each taxpayer sustains the same loss in welfare—so that the real, as opposed to the monetary cost to each is the same”.[17] The equal sacrifice argument ( if it can be characterized as such) relies on the previously mentioned marginal utility idea—the money taxed away from the wealthy person is in dollars that have less marginal utility to him than the same amount to a person of lesser means: the last $10,000 of a $ 300,000 income has less utility than the last $10,000 of a $75,000 income, for instance. The third alternative is called “ability-to-pay as an egalitarian idea”. This notion insists that the equal sacrifice scenario clearly does not conform to egalitarian norms of how to tax those with substantial wealth or incomes because for those who have or receive more, proportionally greater sacrifices are required. Again, when pressed, the only justification for the egalitarian norm is “fairness”, which term is not ever explained.

Another principle sometimes cited for setting rates and amounts of tax is the “benefit principle”. In its simplest form it says that taxes should be adjusted to reflect the benefit that the taxpayer receives in the form of government services. Most tax theorists are unhappy with this idea because of the difficulty in assessing the benefit to any given individual, and to what they claim is a baseline of the level of welfare experienced in the absence of government.

The preceding review of the traditional approaches to tax justice is based on a 2002 book by Liam Murphy and Thomas Nagel entitled The Myth of Ownership. Messrs. Murphy and Nagel are strong proponents of the virtues of government:

What sort of life would be led in the total absence of government? It would be wrong to imagine life roughly as it is now, with banks, houses, and cars, and lacking only the most obvious government services such as Social Security, the National Endowment for the Arts, and the police. The no-government world is the world of Hobbe’s state of nature, which he aptly described as a war of all against all. And in such a state of affairs, there is little doubt that everyone’s level of welfare would be very low and—importantly—roughly equal. We cannot pretend that differences in ability, personality, and inherited wealth that lead to great inequalities of welfare in an orderly market economy would have the same effect if there were no government to create and protect legal property rights and their value and to facilitate mutually beneficial exchanges. (We leave aside the fact that without government the earth would support only a tiny fraction of its present human population, so that most of us wouldn’t even exist in Hobbe’s state of nature.).[18]

These authors seem to feel that we should be eternally grateful for the benefits the state confers upon mankind. Reading the foregoing, one has to wonder about their priorities, however. Most of us would not put Social Security, the National Endowment, and the police all on the same level. Of course, the legal benefits and protections provided by the courts and various enforcement mechanisms and a certain minimum of infrastructure are important to the functioning of a market economy, but I maintain that social welfare programs, support for the arts, the Department of Housing and Urban Development, the Department of Education, the Department of Labor, and a whole host of other government “services” could disappear tomorrow forever and, for many people, never be missed. Life would be much like America in say, 1960, which was not such a bad place (if you were not concerned about the evils of a materialist, consumer-oriented society). The bald truth, as I see it, is that the average person, and more particularly, the above average person who runs a small business or is otherwise one of the producers of things is likely to justifiably view both the operations and demands of government as a net negative influence at this point in time. And, I venture he would say, “we should pay extra for this?”

In short, The Myth of Ownership’s principal pre-occupation is with the idea that we are not the owners of our pre-tax income, and even the ownership of our income net of taxes is considered by the authors as merely a legal convention, which, upon action by the democratic body politic could be rescinded. Murphy and Nagel show a complete and utter disrespect for the entitlement theory of distributive justice that we have discussed. They feel that the matter of tax justice is bound up inextricably with questions of distributive justice, and their attitudes in this regard resemble, if not exceed, those of Rawls and company.

Reading Myth and other treatises on tax justice, one cannot help but get the feeling that all of the discussion, rather than reflecting a notion of fairness that demands equal treatment, and this to me seems most often the central notion that people subscribe to, turns the entire fairness concept on its head. How can you, in good conscience, insist on taking huge, progressively larger sums from people simply because they have it, and for no other reason? The idea that high income earners benefit so extraordinarily from the things that government provides that we can justify a 10-fold or more difference in taxes would be laughable if it were not so sad. No, I submit that the entire treatment of fairness we see around us is perverse, and frankly immoral by the standards we discuss here. Also, what about all of those who in effect are paying no taxes? Economists sometimes fret about the “free rider” problem. Well, we have them in spades—as of this writing something approaching 50% of all U.S. tax filers pay no income tax, and a significant fraction of those, if their Earned Income Credit received is netted against their payroll ( FICA, Medicare, etc.) taxes, their contribution via both income and payroll taxes to our federal government is zero! These are people making $ 30,000 – $40,000 in many cases. Where, from the perspective of those who do pay tax, is the fairness in that? By any standard one could imagine, they are receiving roughly the same or greater benefit from the existence of government than the high income individual who is so progressively taxed. With respect to whatever legitimate benefits government might provide, half the population is supporting the other half. And this is a case of implementing the “fairness” principle of “treating like cases alike”? We are all people, and we all need protection of our rights, which I maintain is one of the primary functions of government. The idea that having a high income is some kind of “relevant” difference between people for the purposes of paying for something is absurd. Prices for items in the marketplace are not set based on how much income the buyer has, and neither should taxation.

Before leaving the tax justice discussion, one should note that all of the schemes of taxation seem, to me at least, to have a strong punitive element; for instance, the “equal sacrifice” requires inflicting economic pain on taxpayers, with greater pain for the reason only that someone, for whatever reason, has more income or wealth to be taxed. Why is it a function of government to punish innocent citizens, especially if those citizens are likely more productive, and for that reason, more useful to the rest of society? One cannot read Myth, for example, without coming away with the feeling that the authors are lording it over those with higher incomes, and rejoicing in “putting them in their places”, so to speak; the entire treatise is an attempt to give intellectual respectability to a theory without using any real substantive arguments.

Now suppose, despite all that has come before, you still think that we are not taxing the rich to the extent required. Since for the likes of Murphy, Nagel, Rawls, et al, property rights are mere “conventions”, then it is possible, indeed as things are currently progressing, likely, for the nature or extent of these rights to be changed politically, i.e. by majority vote. Suppose we were to implement the suggestion of that most revered Democratic president of our time, Franklin Delano Roosevelt, that no one should be entitled to have a net income after taxes of more than $25,000! Yes, FDR actually said that in Fireside chat No. 21 ( April, 1942) and repeated it again in No. 22 (September, 1942).[19] This figure is equivalent to roughly $350,000 in today’s dollars. There are no doubt many of the statist persuasion who would absolutely welcome such a taxation proposal. Using income tax data from 2007, I have calculated that this would add approximately $ 2 trillion dollars to the actual revenue figure of $1.2 trillion. We have just gone through the so-called “debt crisis” of 2011. Our current president has insisted on new sources of revenue to reduce annual deficits; since the deficit to be dealt with is of the order of $1.3 trillion, or 40% of our expenditures, and the spending cuts proposed were so clearly token, you can see how much and how draconian any new taxes would have to be, how closely any proposal would need to approach the Rooseveltian one to make any difference. But why not go even further, perhaps confiscating all income over say, $100,000? After all, who really needs more than $100,000 to live on?

The point I am trying to make here is that, if you accept the statist/egalitarian argument that they have the monopoly on morality with their putative societal “arrangements”, then there is essentially no limit to the amount which government can confiscate and still be considered morally correct in doing so. The only impediments are the so-called practical issues, i.e. the matter of destroying incentives, etc. Or simply an appeal to “reasonableness”. It then all comes down to who has the votes, and the numbers of producers are always and ever less than those whose only predilection is to consume. Who do you think will prevail in that situation? How does this not resemble a situation of “my gang is bigger than your gang”? How does this have anything to do with morality? Morality is not, and cannot be allowed to be, simply whatever the majority declares it to be. In the last analysis, implementing the statist/egalitarian morality involves the use of force, most especially against those who have done nothing wrong. I submit that the only morally appropriate use of such force is against those who are bent on violating the rights of others, i.e. criminals. To use force just to get your way, which is, after all, what insisting on social or economic justice boils down to, is, I submit, morally reprehensible.

Liberty

When discussing Rawls and even John Stuart Mill, I touched upon the concept of liberty. Rawls’s Theory calls for a principle of Equal Liberty, even for maximizing (certain kinds of ) liberty. This term, however, needs a definition. Perhaps this will do: Liberty is the freedom to make and then implement the decisions a rational being both needs and desires to make in order to live life as he desires it without interference from outsiders. [20] This definition involves action on the part of the person who is at liberty.. The presence of the concept of interference brands this as a definition of “social liberty”, which is the only kind I have an interest in pursuing here. The terms liberty and freedom, as I shall use them, are essentially synonymous.

As with the concepts of “fairness” and “justice”, one may belabor the concept of freedom by citing various usages of the term. One may speak of not having the freedom to accomplish one’s ends due to various external factors, such as ill health, lack of physical capacity, or other conditions beyond one’s control. This does not fit the social context I am discussing. Yes, one may speak of there being both positive liberty and negative liberty, but this does not lead to the conclusion that many advocates of statism cite as essential to their case. Jan Narveson explains it thusly:

(1) Positive Liberty: we can identify positive liberty with the presence of those conditions, such as the means for doing x, that enable you to do something, if circumstances permit; one way of being unfree to do it would be for one or more of those conditions not to obtain. These conditions can be either internal or external to the body or mind of the agent….The internal conditions are your powers: to have the requisite internal enabling conditions, granted absence of obstacles, is to have, in one main respect, the power to do the thing in question….

(2) Negative liberty: this, by contrast, refers simply to the absence of factors that would prevent you from doing x: you’ve got what it takes to do x, but something stands in your way, blocks your path—interferes, in short. [ This would include physical factors and natural limitations.] [21]

Statists frequently capitalize on the confusion of these two aspects of freedom by insisting that the state must create the conditions that promote or optimize the ability of the individual to realize his desires; this, of course, includes all of the typical welfare measures, like a guaranteed income, the right to a “living wage”, i.e. all sorts of “positive” or welfare rights. The failure to provide these makes one unfree, according to them. Take, for example, FDR’s famous speech on the Four Freedoms:

In the future days, which we seek to make secure, we look forward to a world founded upon four essential human freedoms.

The first is freedom of speech and expression—everywhere in the world.

The second is freedom of every person to worship God in his own way–everywhere in the world.

The third is freedom from want—which, translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants—everywhere in the world.

The fourth is freedom from fear—which, translated into world terms, means a world-wide reduction of armaments to such a point and in such a thorough fashion that no nation will be in a position to commit an act of physical aggression against any neighbor—anywhere in the world.

The first two are clearly negative rights ( or freedoms) as we have defined them, while the third and fourth are positive rights, and require the action of entities outside the rightholder in order to be fulfilled. By mixing these two together in one presentation, FDR was attempting to give equal status, importance, and credibility to the third and fourth “freedoms” by including them along with rights that are widely and generally supported in that they are incorporated in Amendments 1 and 4 in the U.S. Constitution’s Bill of Rights. I call this intellectual smuggling, the mixing of apples and oranges in the hope of receiving he listener’s uncritical acceptance, hoping that he will swallow them whole.

Narveson sums it up as follows:

You are at liberty in the social sense when others do not, by their actions, prevent you from doing what you want. You are at liberty in this sense when nobody is interfering with your liberty. Your liberty to do x, on the other hand, is not interfered with when someone else, even if that someone could do so if she chose, fails to provide you with something that would enable you to do x. [Additional emphasis added.][22]

So, it should be clear that “freedom from want” is not of the same order as freedom of expression; freedom from want almost certainly is going to involve, at some point, the forcible taking of something that already legitimately belongs to someone, and giving it to someone else. In other words, to exercise the right to be free from want, it is necessary to violate another right, the right of ownership. Harking back to what Hillel Steiner has said, this is not a compossible set of rights. But, of course, FDR purposely did not include “freedom to own (and/or keep)” as one of his Four Freedoms. He does this for the same reasons that Rawls limits property rights so severely in his scheme.

Why dwell on liberty? Because I believe that “individual liberty is the fundamental and only legitimate concern of any just society”.
[23] Liberty, not fairness, is the basis for justice.

By this time I hope that I have demonstrated to your satisfaction the following points about justice and fairness:

  • The first level of justification for statist/egalitarian proposals for economic or social justice in most cases, involves at most an appeal to moral intuition ( “it’s only fair”); this is the argument from assertion—no further justification is required.
  • Justice has to do with those things which society uses forcible means to accomplish; the historical justification for giving up one’s own right to enforce in favor of enforcement by an entity like the state is explained by appealing to the device of a “social contract” whereby a compact of mutual forbearance of threats, violence and fraud is created between the individual and some sovereign power, who will punish those who would cheat on the terms of the compact. There is a serious question as to whether the use of such force by the state should extend beyond the enforcement of mutual forbearance, and, if so, what is the justification for such an extension?
  • About the only intellectually respectable attempt to justify economic or social justice, i.e going beyond the argument from assertion, is the theory of John Rawls, called “Justice as Fairness”. This theory was a reaction to the philosophy of Utilitarianism which has a primary principle that looks only at aggregate welfare as the standard of the good, i.e. it is a collectivist approach to morality. Because it can clearly sacrifice individual liberty, Rawls tried to compensate for this with his First Principle, the Equal Liberty Principle.
  • Rawls’s conceptual framework is deeply flawed:

(1) The Equal Liberty principle includes only civil liberties; economic liberty is considered unimportant and unworthy of protection. Inasmuch as “Property relations go to the root of any social system.”, Rawls has gone against virtually all previous historical efforts by ignoring its importance.

(2) Although Rawls appears to accommodate capitalism as an acceptable economic system, he makes no commitment to its necessity, insisting that socialism ( including state ownership of the means of production) would be equally good. The fact that he insists that an equal distribution is the default one, unless one can justify some inequality, together with the toleration of socialism, makes this as collectivist as any Utilitarian theory. The best that could be hoped for under Rawls is a heavily regulated mixed economy.

(3) Rawls’s exposition, like most statist/egalitarian theses, suffers from a lack of context, to wit, that distribution ( i.e. consumption) is considered as isolated from production, when the two are actually intimately related. Furthermore, the distributions advocated are all of patterned, end-result type, which defies the real world of existing distributions, and must be continually re-done to satisfy the end-result desired.

(4) Rawls insists that characteristics of individuals which might justify inequality of distribution ( which occurs naturally) are unimportant because they are “morally arbitrary”, which is another way of saying they are undeserved. Our discussion shows that there is a lot of false thinking behind this concept, and that the root of its existence is likely a simple envy of some people by others. We also show that people ( i.e. producers) are frequently both entitled to, and deserve whatever profits they make, and that the Marxian labor theory of value is fallacious. I have suggested that there is an aura of illegitimacy to the existence of inequalities that is never made fully explicit, but nevertheless colors the attitude (and consequently, the conclusions) of the egalitarian theorist.

(5) The bargainers in the Original Position behind the Veil of Ignorance are not well grounded in reality: people who treat objects as if they appeared from nowhere, and without any special entitlements ( i.e. ownership) will treat anything to be distributed as “manna from heaven”. Moreover, the bargainers will be constrained to come up with only patterned, end-state distributions, because no historical distribution is possible to people who have no history, i.e are behind the Veil.

(6) Nozick notes that in Rawls’s and other egalitarian schemes, moral ends are completely embedded in the end goal and such limitations as are placed on accomplishing the goal are included within it. He claims that this arrangement will violate moral side constraints that exist independently. Such an overriding side constraint is the Kantian injunction that “people may not be sacrificed or used for the achieving of other ends without their consent”. For me, the entire argument for individualism versus collectivism hangs on observing this constraint. I submit that no goal is so worthy that this injunction can be set aside to achieve it.

In addition to Rawls’s A Theory of Justice, the attitudes toward social or economic justice have been heavily influenced by certain historical and cultural phenomena—the advocates of redistribution have attempted to justify their demands (i.e. make their claims) on the basis that enforcement of income equality is justified by its semblance to the civil rights model, i.e. the idea that certain groups or categories of persons have been maltreated, and this maltreatment must be continually rectified. If to this, you add the notion that all problems with production have been solved, that America is the Affluent Society, then it is all the more acceptable to deal only with the problem of how to distribute all this largess, to isolate production from consumption.

It is not enough to point out the numerous fallacies, errors, and faulty conceptual underpinnings of the theories behind social or economic justice as currently espoused. There are also alternative theories of distributive justice, theories about who gets what.

These theories rely on the fundamental importance of property in our lives, and so, attempt to formulate rules about entitlements to property, including how unowned property is first acquired. Nozick has his Entitlement Theory of Justice; Randy Barnett propounds a set of justice principles that echo Nozick, but emphasize their relationship to liberty, and the practical importance of how these rules (property rights) are able to solve pervasive social problems that arise when there are disputes about scarce physical resources ( including, of course, one’s own body). Hans Hermann-Hoppe has provided a rigorous proof of the validity of the principle of first acquisition to bolster Nozick’s discussion of what he calls the “Lockean proviso” and Narveson’s “first-use” rule and Barnett’s “first right of possession”. All of these views converge on the notion that people may justifiably acquire an initial title to unowned property, and that, in so doing, a fundamental theoretical problem with property rights is resolved.

Our final discussion in relation to what rules should govern property involves taxation, which, in the form of income taxation, is the ultimate means of implementing the kind of redistribution called for by social or economic justice. I discuss the various forms of taxation with respect to their supposed degrees of equity, and I note that, because of its negative influence on accumulated capital, it can never be anything but a negative influence on the general increase in wealth. I note particularly that some contemporary economists claim that taxation can either be said to increase wealth, or that taxation could be considered as neutral in this regard confuse the situation by relying on empirical data unsupported by a corresponding a priori theory as to why this should be the case. One of the more well-known works on tax justice (The Myth of Ownership) goes as far as to claim that no one has any property right in his pre-tax income; this is quite a remarkable claim, and dovetails nicely with the need of economic justice advocates to command whatever sums they require for their income-leveling plans. The authors do not answer the question of what limits, if any, are imposed on determining how much of a person’s income is included in the “pre-tax” portion; one can justifiably assume, then, that the final rate of tax is subject to political adjustment and that 100% of one’s pre-tax income is not out of the question.[24] I note that there is no moral principle whatsoever that appears to operate to limit this amount, other than majority rule.

With regard to liberty, I note that its primary earmark is the lack of interference by others with a person’s desired actions. However, interference is not, and can never be, construed as the failure to provide or facilitate some action that I would wish to take.

So what would I have you believe on the strength what I have said so far? I would hope that:

(1) You would reject all claims that justice is synonymous with fairness.

(2) You would realize that the arguments in favor of social justice are at best weak, and at worst almost non-existent, especially in comparison with the relatively robust and rigorous treatment accorded to the entitlement theory of distributive justice I have elaborated here. More important, I would hope that, regardless of what you may have thought in the past, you would come to agree that there is a moral imperative of not ever using other people to achieve one’s goals, and a recognition that the social justice theories of all sorts require one to ignore that imperative.

(3) The entitlement theory represents ideas that are thoroughly grounded in reality, have stood the test of time, and answer the need that principles be based on human nature; it is in the nature of human beings to be motivated primarily by their self-interest ahead of the interest of others, and thus the rules of justice need to take this into account. Property is essential to life, and issues about who gets what are the source of pervasive social problems; the entitlement theory provides solutions to these problems and has provided the basis for our commonly accepted legal precepts and the rule of law. Egalitarian notions of social or economic justice run counter to human nature, and require the more or less continuous use of force for their implementation, whereas the entitlement theory only invokes the sanctioned use of force against those who would violate rights, a huge difference, as I see it. In short, based on all these reasons, you would reject the content of my statement of Conventional Wisdom Re: Justice and Fairness.

(3) You would regard taxes as having nothing beneficial about them, and that their minimization should be an overriding goal; in particular the method of taxing incomes should abolished as too coercive, and replaced with some form of consumption tax, since income taxation is a wholesale violator of our Bedrock Principle No. 1 (q.v.). Realizing that the steeply progressive taxation that is required by social justice, you would reject my statement of Conventional Wisdom Re: Taxation.

(4) The existence of anything other than the “minimal” or night-watchman state, consisting largely of agencies which protect property rights and administer justice is probably the most extensive state that is morally justified. Given that it is unlikely any time soon to achieve this status with government, one should at least draw a secondary line which defines a sphere of government activity which eliminates all programs or activities whose intention is to transfer wealth from producers to non-producers. If there is to be any type of “safety net” for those are unable to help themselves, then the redistributive aspects of such programs should require proof of need, and be recognized as the form of charity which it is, and not a matter of entitlement, and the scope of such programs should be a tiny fraction of what is currently in effect.

(5) Having considered my arguments regarding profits and whether people can be either entitled to, or deserving of profits, you would reject my stated Conventional Wisdom Re: Profits.

(6) Last, you would realize that, despite having heard it for most of your adult life, the frequent claim that the statist/egalitarian advocates have morality on their side is patently false; their program is both impractical and morally bankrupt. This is true because it relies on violence, it ignores human nature, it requires a degree of deceit in order to persuade adoption, it denies that there is any historical[25] entitlement to property, and it sacrifices the liberty of some people in order to provide benefits to others. The welfare and, more important, the plans and aspirations of the individual might as well be trash if they interfere with the statistically relevant welfare of the group. Contrast, if you will, all of these characteristics with the entitlement theory principles and what flows from them.

 


                               Notes for Part Three

[1]. This is part of what is called Kymlicka’s Objection to the Lockean Proviso as stated by Robert Nozick. See Will Kymlicka, Contemporary Political Philosophy (Oxford University Press, 2nd ed, 2002) p. 104.

[2]. Murray N. Rothbard in Man, State, and Economy, Chapter 2, Sec. 12. 12. Property: The Appropriation of Raw Land

[3]. Two additional possibilities present themselves: (1) that some central authority (the state?) owns everything, or (2) nobody owns anything. With respect to (1), I fail to see how that provides any kind of moral solution to the pervasive social problems involving conflicts over scarce resources. Alternative (2) denies the concept of ownership and property entirely; this would seem to take us into another realm altogether.

[4]. Here is the verbatim argument from Hans-Hermann Hoppe, The Economics and Ethics of Private Property, pp. 383-384:

In light of widespread moral relativism, it is worthwhile to point out that this idea of original appropriation and private property as a solution to the problem of social order is in complete accordance with our moral “intuition,” Isn’t it simply absurd to claim that a person should not be the proper owner of his body and the places and goods that he originally, i.e., prior to anyone else, appropriates, uses and/or produces by means of his body? Who else, if not he, should be their owner? Isn’t it also obvious that the overwhelming majority of people, including children and primitives, act according to these rules, and do so unquestioningly and as a matter of course?

As important as it is, a moral intuition is not a proof. Yet there does exist proof that our moral intuition is correct.

The proof can be provided in a twofold manner. On the one hand, such proof can be provided by spelling out the consequences that follow if one were to deny the validity of the institution of original appropriation and private property: If a person A were not the owner of his own body and the places and goods originally appropriated and/or produced with this body as well as of the goods voluntarily (contractually) acquired from another previous owner, then only two alternatives exist. Either another person B must be recognized as the owner of A’s body as well as the places and goods appropriated, produced or acquired by A, or else all persons, A and B, must be considered equal co-owners of all bodies, places and goods.

In the first case, A would be reduced to the rank of B’s slave and object of exploitation, B is the owner of A’s body and all places and goods appropriated, produced, and acquired by A, but A in turn is not the owner of B’s body and the places and goods appropriated, produced and acquired by B. Hence, under this ruling two categorically distinct classes of persons are created—Untermenschen such as A and Ubermenschen such as B—to whom different “laws” apply, Accordingly, such a ruling must be discarded as a human ethic equally applicable to everyone qua human being (rational animal). From the very outset, any such ruling can be recognized as not universally acceptable and thus cannot claim to represent law. For a rule to aspire to the rank of a law—a just rule—it is necessary that such a rule apply equally and universally to everyone.

Alternatively, in the second case of universal and equal co-ownership, the requirement of equal law for everyone is fulfilled. However, this alternative suffers from another even more severe deficiency, for if it were applied, all of mankind would instantly perish. (And since every human ethic must permit the survival of mankind, this alternative must be rejected.) Every action of a person requires the use of some scarce means (at least the person’s body and its standing room), but if all goods were co-owned by everyone, then no one, at no time and no place, would be allowed to do anything unless he had previously secured every other co-owner’s consent to do so. However, how could anyone grant such consent if he were not the exclusive owner of his own body (including his vocal cords) by means of which his consent must be expressed? Indeed, he would first need others’ consent in order to be allowed to express his own, but these others cannot give their consent without having first his, etc.

Although it is not discussed in the body of the argument, the need for consent cited flows from the notion of ownership—the idea that control and the power of decision over property resides with the owner, i.e. this is definitional. Co-ownership therefore requires consent of all owners, first had and obtained.

Some will object to Hoppe’s assertion that mankind would “instantly perish”; I would agree that this is perhaps overkill, but it does convey the desired impression, i.e. the obvious impossibility of complying with the manifold requirements of consent in the everybody-owns-everybody scenario.

[5]. Narveson, Respecting Persons in Theory and Practice, p. 159.

[6]. Bankston, Carl L. III, “Social Justice, Cultural Origins of a Perspective and a Theory” in the Indepedent Review, Fall 2010.

[7] Galbraith’s main argument is that as society becomes relatively more affluent, so private business must “create” consumer demand through advertising, and while this generates artificial affluence through the production of commercial goods and services, the public sector becomes neglected.

[8] Bankston, “Social Justice…”, paraphrasing Georges Sorel in Reflexions sur la violence (1908).

[9]. Hoppe, Hans-Hermann in “The Economics and Sociology of Taxation”, The Economics and Ethics of Private Property, p. 35.
[10]. On-line Internet encyclopedia.

[11]. Some will immediately object that citizens commit a crime when they deprive someone of their liberty, as in kidnaping or detaining someone under false arrest; the state, they may say, deprives someone of liberty when they incarcerate him. The difference here is, of course, the matter of due process—the crime for the citizen is the arbitrary decision he has made. The state is entitled to do so providing due process requirements are met. The basic thrust of Bedrock Principle #1 is that the state should not be aggressing against its own innocent citizens, which it does in two cases in particular—income taxation and military conscription. Only those who have crossed the line and used some form of aggression (force, fear, or fraud) against others (i.e. are no longer ‘innocent’) should be the subjects of government compulsion. To do otherwise is a holdover from feudal or even pre-feudal times.

[12]. Hoppe, The Economics and Ethics of Private Property, p. 35.

[14]. Time preference pertains to how large a premium a consumer places on enjoyment nearer in time over more remote enjoyment. High time preference means you want goods or service in the near term, while low time preference allows for deferred gratification.

[15] Literally, this means “after this, therefore because of this”.

[16]. Hoppe, The Economics and Ethics of Private Property, p. ??

[17]. Murphy, Liam and Nagel, Thomas, The Myth of Ownership, p. 24.

[18]. Murphy, Liam and Nagel, Thomas, The Myth of Ownership, pp. 16-17.

[19]. Roosevelt said “I have told the Congress once more that all net individual incomes, after payment of all taxes, should be limited effectively by further taxation to a maximum net income of ($25,000) 25 thousand dollars a year. And it is equally important that corporate profits should not exceed a reasonable amount in any case. “ Fireside Chat No. 22 – September, 1942.
Furthermore, when Congress refused to act, FDR attempted to bypass them and establish his solution to “income inequality” by fiat, using Executive Order No. 9250!! The only reason we are not now living under this draconian principle is the Supreme Courts voiding of the order.

[20]. This means non-interference from both persons and institutions.

[21]. Narveson, Jan, The Libertarian Idea, pp. 22-23.

[22]. Narveson, Jan, The Libertarian Idea, p 13.

[23]. I am assuming here that at the 100% level, the taxpayer would probably receive in exchange a standard cash stipend of some sort representing a minimum level of sustenance and perhaps conditioned on need; this, in addition to a myriad of government “programs” tailored to specific situations regarding health and welfare.

[24]. We are not necessarily speaking here of long time periods, but rather that a person has a personal history with respect to ownership of property, i.e. that it did come into existence spontaneously.

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Zero-based Thinking

As this is written, the country is embroiled in the discussion over the so-called “fiscal cliff” set to occur in early 2013. The discussion, of course, involves both taxes and spending at the national level, with various proposals that talk about budgets over a period of ten (10!) years. Many people find this discussion unsatisfactory and difficult to follow.

Why is this? Well, the reason is that the federal budgeting process is predicated on something they call “baseline budgeting”.  This is the process that most entities (both business and government) honor and use, consisting of looking at the most recent history available for each budget category and then deciding what incremental percentage to use in increasing said annual budget for the coming year. Notice I said increasing, for it is almost never the case that such a process includes a decreased budget year over year. For the U.S. government, the budget process extends ten or more years into the future, and so when you hear of some sort of cut, you must, in most cases, mentally divide by 10 to get the yearly amount. What is worse, however, is that in the vast majority of cases, what politicians mean when they speak of a amount to be “cut” from a typical long-term baseline budget is that the amount in question is to be reduced from the increased amount already scheduled to be spent in that category. So, for example, if a cut is proposed to defense spending of, say, $ 600 billion, then that means only $60 billion per year against whatever the scheduled increase for that year was to have been. Say the base amount for year 1 is $ 750 billion, and the scheduled increase for year 1 is 9% ( = $ 67.5 billion), then the net result of the “cut” for that year is actually an increase in the budget of $ 7.5 billion to a new yearly total of $ 757.5 billion.

Given the above, I think it is safe to say that the average person listening to arguments about the fiscal cliff negotiations is at a severe disadvantage of not knowing how solid or valid are the numbers being bandied about, making a judgement about who is serious, and who is not very difficult. When you add this difficulty to the uncertainty over how much revenue is likely to result from any given tax increase or decrease, it becomes a fool’s game. On the revenue side, one can adopt either a “static” approach or a “dynamic”approach. Static, in this context, means that if your change tax rates, the new expected revenue is based on a simple projection of last year’s income figures in each bracket subjected to the newly revised rates, and summed up. The dynamic approach attempts to factor in expected changes in behavior by taxpayers that will almost certainly occur, e.g. raised rates result in increased tax avoidance strategies by taxpayers resulting further in revenue realized well below the amounts projected in the static approach,  while lowered rates can result ( and historically have definitely resulted ) in larger than expected increases in revenue, primarily due to increased economic activity. This is not just my opinion; it can be verified from numerous sources, and most any economist will tell you so. Economics is not cut-and-dried math, it is all about human actions, human behavior.

It seems to me that one lesson to be taken from the above is that you cannot necessarily believe any assertions that are made on such grossed-up numerical arguments where the details about the existing, scheduled baseline budget increases are not known or revealed. The uncritical acceptance of these kinds of assertions may very well have been a large factor in voters’ re-electing the Democratic candidate in the 2012 presidential election. In particular, the  insistence on what superficially sounds only reasonable—the idea of  a “balanced approach” involving both revenue increases and spending cuts is in fact prima facie a deception, it seems to me, if the so-called “cuts” are of the type described, i.e.  result in no net decrease in the yearly budget amounts ( or the entire 10-year budget) from their baseline values. To me this means that one party is being asked to accept tax rate increases without any serious concomitant spending cuts to achieve the so-called “balance”. One needs to expose all the details, but the supposed advocates of fiscal sanity refuse to descend from the most general level of detail in their discussions. It is my opinion that Republicans, who are supposed to represent opposition to fiscal imprudence, gave in to concerns some advisors offered about getting down to the details of a proposal, or as some have put it, getting into “the weeds”. There is a tremendous fear that the eyes of the audience will “glaze over” and its attention will be lost.

Instead, what should have been done, is that, immediately following a public discussion of the type described, Republicans should have followed up with one or more nationally broadcast paid “infomercials” lasting 10-15 minutes or more in prime time, laying out in detail, with good spokesmen ( e.g. Marco Rubio or Paul Ryan, or maybe even the eminent black economist Walter Williams) with good graphs, charts, and other such production values, showing why the Democratic proposals were flawed and even deceptive. This could even have been combined with a discussion of how the entitlement programs, if continued apace, will fail and when.

But, alas, the Republicans, as long as the establishment types are in charge, seem to be too wedded to the fears I have described above, or… it may actually be, are not really interested in educating their potential electorate because they only wish to convey the impression that they are the “fiscally prudent, small government” party, while actually wishing to carry on (political) business as usual…

Now there is another approach to budgeting, one which was developed in the private sector, called Zero-Based Budgeting (ZBB for short).  This approach is the very opposite in philosophy from Baseline Budgeting in that each and every budget category (and/or sub-category) starts with an assumed budget of ZERO DOLLARS! The budget analyst then proceeds to build up the total budget by examining the functions and justifications for each department and expenditure with the goal of arriving at a suitable, yet minimum cost value for each category or sub-category. This work is typically exhaustive and intensive and requires a significant dedication of intellectual resources to achieve such results on a regular annual basis; this, among other things, has led to criticism of ZBB, particularly when used in the public sector.

What is most important to me is the total difference in mind-set implied by the two budget methods: one assumes that costs increase every year, hence let’s base our new budget on the old budget plus some increment, which increment is the only thing seeming to need justification while on the other hand the ZBB forces you to go through the entire justification and prioritization process in arriving at your number. I ask you, which approach favors the wastrel and the spendthrift? Which approach is better adopted when using OPM (Other People’s Money), i.e. government?

Harking back to our earlier discussion about the fiscal cliff, and about the loyal opposition’s presentation of budgets in general, ZBB represents a golden opportunity to apply a sensible approach that makes use of the Constitution’s several enumerated powers as the basis for justifying either (a) the inclusion/exclusion of, or (b) serious reductions in, various branches and departments of government depending on the degree to which you could, even by stretching things a little, connect it with one or more of those enumerated powers.

Using a ZBB approach, the Federal Budget would accordingly start at zero, and build up from there. Each branch or department or function would then have to justify itself. For example, one could argue for the retention and at least partial funding of the Department of Transportation on the basis that at least the Constitution envisioned the building of “post roads” and mentions them by name. The army is one of the institutions enabled by the enumerated powers, but what about the Air Force? It is nowhere to be found in the Constitution, while the navy is also mentioned. Yet, a reasonable extension of the concept of national defense being authorized allows us to include the air force as one of the armed forces to be funded. So, you can see where I am going with this, I hope.

Under this kind of mental supervision, there are clearly entire departments and functions of our federal government which do not in any sense qualify to be included at all in our national budget. Some examples would include the following cabinet-level departments:

  • Housing and Urban Development
  • Education
  • Energy
  • Labor
  • Agriculture

Other departments which have functions which could conceivably be funded include:

  • Health and Human Services ( CDC comes to mind)
  • Veterans Affairs
  • Interior.

And so on….

I have no intention at this point of arguing for or against any particular function or agency; I am merely trying to illustrate the broader principle, namely, that one needs to adopt a Zero-based type of thinking about government. One needs to say, for each existing entity that is funded, what would be the impact if this entity were to go away completely? For many of us, its disappearance would actually remove something negative in our lives, some unnecessary infringement on liberty. Those who will object will be those who, having lobbied for the policies in question, stand to lose some sort of advantage they have managed to obtain over the rest of us, e. g. large corporate entities frequently encourage additional burdensome and unneeded regulations over their industries so that smaller firms are discouraged from entering ( or possibly even persisting)  as competitors, leaving the field to the larger, more prosperous companies, whose budgets can more easily cope with compliance issues.

One standard which is suggested by the ZBB approach rises almost to the level of a Bedrock Principle ( see my blog Page entitled Methodology). The principle is: if a function of government does not tend to benefit ( or at least provide a potential benefit) to all citizens generally, then its continuance should be in doubt. Examples of the functions which conform to this would be: national defense, Treasury Department, Federal Courts, the above-mentioned DOT and some agencies relating to infrastructure. Examples which most assuredly do not are the five departments mentioned above: HUD, Labor, Education, Agriculture and Energy.  When I say its continuance should be in doubt, I do not mean to foreclose it completely, but let us say that it already would have one strike against it.

Another principle, which might constitute a second strike, is whether or not the function involves what are benignly called “transfer payments”, the forced expropriation of resources from one person in order to transfer them to another. As I have said elsewhere, and will continue to say again whenever the opportunity presents itself: taxation itself is a legalized form of theft, but if we have to tolerate some level of taxation to protect ourselves, then surely we must draw a line in the sand between those functions which deliver protection ( and maybe some other services) equally to all, and those which simply involve taking from some in order to provide for others; the reason for this is that it violates a fundamental moral side constraint, namely, that it is morally unacceptable for some people to use and/or exploit others for their own advantage. This applies to government actions that are sanctioned by some majority vote just as much as it would apply to the acts of an individual. In fact, the government case is altogether more serious because of its tendency to affect the entire society. Please see my Posts on Justice and Fairness  for Robert Nozick’s discussion of moral side constraints.

Before continuing, I can already hear some of you out there saying, “but what about the General Welfare clause…” which is part of Article I, Section 8. Statists of all persuasions have made the argument that this language somehow overrides the enumeration of powers. There is not space here to deal with that assertion properly, but I will do so in good time.

*                                 *                               *                                  *

The ZBB idea can, and should be extended to other, non-monetary areas. One area that comes immediately to mind is regulation. The amount of regulation at the federal level alone is staggering—just see the volume of it which is published in the Congressional Register. I will not argue here why I believe that most, if not all, regulation could be dispensed with, so let us assume for this discussion that we might look at reducing the regulatory burden using ZBB concepts.

Conceptually, this would involve, I believe, taking each set of regulations for some given area of concern, and subjecting each regulation ( or related set of regulations) in turn to the same question I asked of the agency budgets, i.e. what would be the impact on people ( including both the regulated entities and everyone else as well) if said regulation ceased to exist? The authors of said regulations (usually bureaucrats of some sort) will jump up and down, saying each and every one must be preserved, they all had good reasons for coming into existence!  As with the case of monetary budgets, there is a certain brutality involved in the drastic trimming that will likely be required, and the bureaucrats must be forced to justify each and every one.

Unlike the case with budgets, one can deal with each set of regulations separately, e.g. one congressional committee can take, say,  environmental regulations and examine them over a period of time while allowing the existing regulations to stay in place while drafting an entirely new code from the bottom up in the ZBB manner. Congress could then repeal the agency’s authority, re-institute the agency in some form, and adopt the code of regulations as a body of law, which code could be changed legislatively from time to time.

The above-described procedure goes to the heart of the regulatory problem, namely that lawmakers restricted themselves to legislation which creates an agency and then empowers it to do rule-making, an undemocratic process which is both arbitrary and capricious; about the only remedy for bad rule-making is litigation, for which the issue of standing to sue is required and an enormous expense as well. In most, if not all, cases the agency which puts out drafts of proposed rule-making for public comment is under no obligation to make changes or rescind its rulings; the public hearings are simply window dressing for appearances’ sake.  It takes a veritable storm of protest to move regulators off their determined course.

The answer, as I see it, is never to simply give an agency a regulatory charter which includes rule-making ability; the rules need to be codified and then passed as law by the Congress. I do not accept the argument that this removes the flexibility necessary to the agency to respond quickly to new situations; if lawmakers had standing regulatory committees for those few areas where regulations might be justified, then it would constitute some justification for having a full-time legislature, and might stem the flow of all of the new and unnecessary, unconstitutional output from our representatives. Such standing committees could meet several times a year to revise things as needed. Legislative review is needed as a substitute for the more arduous judicial review; also it provides the opportunity ( although seldom exercised ) to remove legislators who perform poorly at this task, whereas it may not be possible to remove judges for the same reason.

In the final analysis, what makes the Zero-based Thinking idea appealing to me is that it illustrates the radical nature of the solutions we need to move forward—it cannot be the case that a budget, once passed, becomes the baseline for annual increases forevermore, or that a regulation, once promulgated, stays there forever unchallenged. It has to be the case that one has the ability to simply do away with things that cannot be adequately justified. Zero-based Thinking allows us to do that in a reasoned fashion.

So the next time you hear some politician, especially some Republican politician who claims to be for reducing regulations, find out if he has any plan even remotely resembling the above process, i.e. a complete re-examination of all that has gone before and putting everything under the magnifying glass for potential elimination. I don’t know of anyone who even comes ( or ever came) close, not Reagan, not anyone. Yet, we can no longer tolerate the regulatory burden which now exists; just promising to put the brakes on the regulatory process going forward is not enough.

 

 

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Can We ‘SAVE THE AMERICAN DREAM’ without transforming America?

The Heritage Foundation, a non-profit organization which alleges that it is against Progressivism and the programs of the Left, is promoting a “comprehensive plan to rescue our country from a disastrous decline, called Saving the American Dream”. Now, this plan and its positions are pretty much typical, I submit, of the response to statism by Republicans and other conservatives , and illustrates why, in my humble opinion, something much more radical is required.

Here, briefly,  is the Heritage program in outline:

  • Reform the existing tax code: a single rate for all, reduce both corporate and personal rates, eliminate the estate tax.
  • Cut the size of government: go back to 2008 spending levels, etc.
  •  Reform health care: repeal the Affordable Care Act and develop “positive” health care  reforms.
  •  Solve the entitlement spending crisis: revise the entitlement programs to put them on a sound financial footing, “reforms that will protect the system…”

Our current president said he wanted to “transform America” and he is certainly well on his way to doing so; given the kind of opposition  he faces from most Republicans and organizations like the Heritage Foundation, he will likely succeed. I agree that a transformation is needed, but the qualities and content of such a change are much more serious and must go deeper than anything so far proposed.  We need something more than warmed-over platitudes like “limited government” and “individual responsibility”; these have gotten us nowhere over time, even when supposedly anti-Leftist representatives, e.g Ronald Reagan, have been elected. For all their rhetoric, they have served only one function—putting their political finger, as it were, in the dike, stanching the flow, temporarily, of statist programs and proposals, holding the line on expenditures, only to have both the expenditure levels and number of statist programs resume their increase once they have left office.

You need to ask yourself: when, in recent memory, has the temporary ascendance of so-called conservative Republicans ever resulted in such permanent changes as:

  • Elimination of even one cabinet-level department;
  • A balanced federal budget for more than a year or two;
  • Any reduction whatsoever in the total national debt (even in the face of a nominal annual budget  surplus!);
  • The major overhaul of any government sponsored program or entity that was accompanied by an institutional reform (e.g. a Constitutional Amendment) that would ensure its permanency?

The answer is, of course, no you can’t. The reason, I assert, is that none of the “conservative” proposals are seriously focused on the fundamentals, either morally, or practically. (There’s that Moral and Practical business again!)  None of them goes to the root of the problems.
A real, honest-to-God, program that would fundamentally transform America and reverse the all-encompassing trend toward statism would include, at the minimum, the following:

(1) Complete elimination of the Internal Revenue Service and its Internal Revenue Code with both an amendment and mirroring legislation that would forever banish taxation of incomes, either personal or business, and replace it with a smaller, kinder, kind of tax—a national retail sales tax whose revenue stream would be designed ultimately to cover only the functions justified by the enumerated powers according to the Constitution. Emphatically not revenue neutral!

(2) Scaling back the powers and operations of the Federal Reserve Board so that it operates on a rule-based modality for monetary policy until such time that it can be completely eliminated and currency can be tied to some objective standard of value, or that we can return to “free banking” as it was practiced in earlier eras.

(3) An amendment to require a balanced federal budget, which would be enforced by presidential line item veto. Executive failure to enforce would be an impeachable offense.

(4) Rolling back of the Regulatory State: the entire Code of Federal Regulations would be made subject to expiration after a term certain; in the mean time, each category (environmental, financial, etc.) of regulations would be examined by congressional committees set up exclusively for that purpose, and standards, including cost-benefit rules, would be developed for justification of each and every regulation. All regs not justifiable by actual demonstrable harms prevented would be dropped.  All new regulations would be required to be in the form of statutes, with suitably detailed attention in congressional hearings ( no more rule-making by agencies, with “public comment periods” being the only remedy for bad policy).

(5) Repeal all statutes which force employers to recognize unions and to bargain collectively. This is not the same as banishing unions; see below.

These five measures constitute the minimum necessary to begin our return to a non-statist orientation toward governance. Note that items (1) – (3) above are basically identical to the concepts in my Three Plank Platform (q.v.).

In addition, but of somewhat lesser urgency, are the following:

(6) Reconsideration of Procedural ( Criminal ) Justice:

(a) Repealing and otherwise limiting the number and types of federal crimes to conform to the Constitution. The Founders never intended that the federal government should have a general “police power”.

(b) Focusing on the concept of restitution instead of “correction” or rehabilitation wherever possible.

(c) Restoring the historic role of the jury as a body which is entitled to judge both the law and the facts instead of the current notion of the jury only as the “trier of fact”.

(7) Deal with the damage done by years of judicial construction and interpretation of our Constitution; in particular, the ability to simply ignore the enumerated powers concept, the creation of new rights and other expanded legal concepts for which there is simply no basis either in the historical record or the document itself.

(8) Provide a mechanism allowing a way to move  from “government schools” to a fully private, free market supply of education.

All of the above issues I have presented in the most brief form, so as to provide an easily grasped overall idea of the scope of the problems needing solution. Below, I will expand on each of the first five topics, again not exhaustively, as each topic deserves a full-blown post of its own in good time.

( Those who know me know that I have omitted one topic that I feel strongly is of great importance, and have done so in order to avoid the risk of alienating my audience and deflecting it from the huge fiscal and monetary issues that beset us. In line with libertarian notions generally, I am against interventionism; here we deal with domestic intervention by the state  into the economy and life of the people—we also need to deal with our tendency to carry this interventionist mode forward in foreign relations. Sadly, many so-called conservatives who claim to abhor domestic intervention have no qualms whatsoever about intervention in our dealings with other countries. I will take this on in a major post at some future date.)

[ UPDATE NOTE: the future is Now! Latest post re: Libertarians and Conservatives at least begins the foreign policy discussion. Check it out.]

Moving on then, let us consider the positive results which would flow from each of the changes mentioned above.

Radical Measure No. 1 – Eliminating taxation of incomes and substituting a modest sales tax.  Abolishing the income tax and the 54,000 or so pages of the Internal Revenue Code would arguably be the most far-reaching fundamental change that could be made against statism; the benefits are manifold, and include:

●    Lowering by at least half the total amount of tax removed from the private sector and providing both individuals and firms a way to predict cash flows would allow for huge increases in capital formation and increase profits.  Every dollar that is removed from the private sector is a dollar that cannot be used to increase our standard of living. For Progressives, this sounds awful, because in their lexicon, profits are evil, whereas most conservatives and all classical liberals know that economic progress is only possible when there is a surplus created by economic activity and when that surplus can be re-invested. The name of that surplus is PROFIT.

●    All of the historic objections to the income tax and its voluminous code are dealt with including the marriage penalty, double taxation of corporate profits, high corporate tax rates vis-a-vis other countries, the progressive nature of the personal marginal tax rates, the need to consider tax consequences in tandem with or ahead of other investment considerations, income “creep” and the Alternative Minimum Tax scheme, the huge amount of personal and/or corporate record-keeping required, and the cost to hire an expert simply to file one’s taxes.

●    A major benefit is the elimination of tax preferences, the vehicle by which certain classes of taxpayers are benefited by having deductions or tax credits for which others do not qualify. This is one of the state’s principal ways to structure behavior in ways that it construes as beneficial, and a principal way to implement statist policies. This includes the well-known deduction for mortgage interest, which has propped up the housing industry for years, as well as dozens of tax credits for specific economic behaviors, each of which was intensively lobbied for by interests both within and without the government, for example, the following environmentally related tax credits:

Qualified Electric Vehicle Credit
Credit for Alcohol Used as Fuel
Credits for Residential Energy Savings ( IRC Sec, 25C, 25D)

Tax credits (which go directly against tax owed) fall into two categories—non-refundable  and refundable. The former reduces only a positive tax due balance while the latter is available to tax filers even if no tax is owed.

Non-refundable tax credits include:

Child and Dependent Care Credit
Education credits
Credit for the Elderly or Disabled
Child Tax Credit
Foreign Income Tax Credit
Residential Energy Credits
Retirement Savings Contribution Credit
First-Time Homebuyer Credit

Refundable tax credits include:

Earned Income Credit
Adoption Credit
Excess Social Security Credit
Additional Child Tax Credit
Health Coverage Tax Credit
American Opportunity Credit

There are at least twelve personal tax credits, and no fewer than 29 business tax credits which the state can use to program your economic behavior. Remember that tax credits, unlike tax deductions, reduce your final tax liability dollar-for-dollar.

The most egregious of these is the refundable Earned Income Credit, which is nothing more than an income redistribution scheme, a type of negative income tax.

All such credits, together with the hundreds of deductions against income that exist, are designed to structure our behavior in ways that the state favors. More important, the removal of these from consideration also removes the major temptation to corruption by elected officials in that they will no longer have something to sell, i.e. their influence over tax legislation to create credits and/or deductions favoring some special interest. A huge opportunity for abusive legislation is forever eliminated. Moreover, it is easy to see how this field of legislation is the most likely area for violations of the rule of law, which requires that the law be universal with respect to all people ( no exceptions or special cases).

●    Elimination of the IRS and the code also bring with it the elimination of income tax withholding as a concept, which concept surely implies that one really does not own his income if the government can intercept it and appropriate it before it ever even goes into your bank account. ( See my more extensive discussion about the claim that you do not own your pre-tax income made in the book entitled The Myth of Ownership in my post “Justice and Fairness, Part Two”)

●    Exchanging the income tax for a retail sales tax also reduces the compulsory nature of the tax, and gives individuals some leeway in adjusting the amount of tax they have to pay; it also eliminates the most ambitious and over the top enforcement agency we have, the IRS. Enforcement of the sales tax is largely an issue of auditing the retailers’ books.

●    Eliminating the IRS also eliminates all of the issues surrounding tax exempt organizations and in particular the abuses which have most recently surfaced regarding politically influenced withholding of approval for certain non-profit groups.

●    Without the IRS or something equally vicious, the Affordable Care Act’s enforcement mechanism is crippled or eliminated.

●    While there are legitimate objections to the sales tax concept, they pale in comparison to the benefits discussed above. And to many other benefits which exist, but due to space available, are not mentioned here. Yes, there would be an underground economy in which unaudited sales would take place and no tax would be collected. Yes, the rate required to duplicate today’s federal revenue would be excessive, perhaps in the 20-25% range. And there are others objections as well.

As with all truly radical proposals, opposition to this change in tax policy will be huge because far too many people’s oxen will be gored—special interests will not wish to lose their advantages and this includes many so-called conservatives and limited government advocates. It is time that everyone clarifies where he stands—Republicans and other “conservatives” who continue to insist on using the tax system to manipulate people and to benefit themselves as purveyors of special favors need to get out of the way. (This is the motivation, I believe, of the so-called “tea party” movement in its propensity to challenge sitting Republicans at the primary election stage, a strategy which causes the hackles to rise on establishment types. ) It is high time that people generally see that giving up something like a legislated special benefit is not a sacrifice if it means preserving and improving the free market approach, which, even while hobbled with controls, has been the basic cause for our prosperity for more than 200 years. Only by eliminating the ability to satisfy rent-seekers can we move in the direction of a fully unhampered free-market economy. That the establishment Republicans object to this is evidence enough to deny them our support. Having an “R” after your name has been shown, time and again, to not be a sufficient guarantee of proactive resistance to statism.

Radical Measure No. 2 – Reducing the role of, and eventually eliminating the Federal Reserve.

I experienced a serious internal debate over whether to place this measure as my No.1. The damage done to all of us by the Fed over time competes strongly with the tax code as something to be eliminated.

The existence of a central bank, with all of the powers to create new money and manage rates of interest serves only two masters—banking interests in their desire to be protected from the natural risks inherent in their operations, and the interests of the state in supporting and expanding the activities of government through low-cost borrowing instead of taxation. It serves no one else. And the consistent inflation which central bank policies usually foster robs the common people of their wealth through deterioration of the value over time of their savings and assets. Absent the activities of the central bank, there is no reason why inflation would be a continuous feature of the monetary system, and in fact, the more likely occurrence of moderate deflation would be infinitely preferable, to all except debtors, and in particular, mind you, the government, which wants perennially to operate on ever-expanding debt. Note that if debt increases were not so easily available, the state would have to raise taxes much more frequently, an action that draws attention to its profligacy and which statists overhwelmingly desire to avoid.

The Federal Reserve should be reduced to a role that can be administered out of a small office with a personal computer, namely, adjustment of interbank interest rates by a rule-based algorithm such as the one advocated by economist John Taylor of Stanford University. The regulatory powers1 of the Federal Reserve should be eliminated forthwith. Statutes should provide for a study of how best to phase out the entity in its entirety and migrate to a currency which  is backed by tangible commodities, and/or that we are able to return to some form of  “free banking” as once existed in this country.

Currently, the monetary policies pursued by the Fed have all but ruined the income prospects of any one who relies on fixed rate instruments ( savings, bonds, etc.) inasmuch as near-zero Fed rates bring down all rates in tandem: the long-time average2 annual passbook rate for savings of around 5% has been reduced to perhaps 0.25% if you are lucky, while CDs are around 1-3%. This has provided a perverse incentive to those holding cash to invest in equities and to create a stock market bubble as a result. It goes without saying that a stable monetary system based on naturally occurring unregulated interest rates will not give these kinds of results. Furthermore, the elimination of the Fed and its role as “lender of last resort” will end the moral hazard of taxpayer bailouts of failing institutions ( and many still-solvent, but stressed institutions).

Of course, the most damaging aspects of the Fed are (1) the policy of using open market operations3 that, in effect, creates money where before there was none in order to provide an economic “stimulus” and (2) the influence on market rates of the arbitrary setting of interest rates via the interbank lending rate. Beginning in 1913, these policies have resulted in numerous unjustified increases in investment which could not be sustained ( so-called bubbles), which then went bust causing extreme problems for everyone, not just the investors who were fooled into rampant malinvestment. The most notorious of these events was, of course, the Great Depression. The most recent of them was the aptly named Great Recession of 2008-9. One cannot too strongly emphasize that the huge damages caused by these events would not have occurred absent the central bank’s policies; recessions and depressions are not naturally occurring phenomena, as some economists would have you believe; the cause is invariably due to government policy, monetary or fiscal.

That there are literally scores of highly regarded economists, including virtually 100% of those who consult for the government, who both accept and encourage the central bank’s role as legitimate only demonstrates the degree to which even those regarded as experts can be wrong, and the extent to which economics, as a social science, has been perverted by scientism and by the philosophies of positivism and formalism.

Radical Measure No. 3 – Getting to an enforceable Balanced Federal Budget year after year.

Yes, I hear you. I hear you saying that under President Clinton from 1998 to about 2002, revenues exceeded spending, yielding a surplus. Oh, and Mr. Clinton was a Democrat! If this is your line of thinking, I suggest you consult the historical background of this short-lived surplus era and how it came about; it most certainly did not follow the paradigm ( even higher taxes and limited or no spending cuts) that our current White House occupant wants.

Did the “surplus” created in the years of the Clinton administration result in any reduction in the National Debt? No. The amount of debt increase in the years 1997-2003 ( the Clinton years) was $ 1.4 trillion.

The only way that debt reductions can occur is that surpluses are a common occurrence. The only way that is possible is if the general trend is toward a balanced budget, and the notion that deficits are at all acceptable is abolished in the public’s mind, and for that to occur the prohibition on deficits must be institutionalized, i.e. put in the form of a constitutional amendment.

There have been at least 18 varying proposals over the years for a Balanced Budget Amendment (BBA). My version differs from most of them in that it includes some special provisions: the president must go beyond just submitting a budget that is balanced— if Congress submits an unbalanced budget, he must use a newly minted line item veto power to trim items until the goal of balance is reached, and, moreover, I suggest that ignoring this requirement and failing to do so should be made an impeachable offense. My proposal (see the Three Plank Platform on this blog) also includes a cap on spending and a super-majority requirement to change the cap percentage, but these or similar provisions are included in other, earlier proposals.

Despite the often extreme opposition of a majority of economists to this idea, acceptance of the notion of not spending more than you take in is growing and the proposal may be the least radical of my three planks, inasmuch as 29 out of the required 34 state legislatures have petitioned for a constitutional convention to take up this matter. The normal path for a constitutional amendment is that a two-thirds congressional majority passes the amendment and it is subsequently approved by three-fourths of the states; the provision for initiation by the states themselves has never been used, but given the recalcitrance of Congress, it may yet happen.

Radical Measure No. 4 – Planned Rollback of the Regulatory State

Republicans and other conservatives rail against the mass of regulations that they insist, rightly, inhibit investment and confound the legitimate activities of most businesses, yet the thrust of this concern is almost never directed at regulations already imposed, nor is there any consideration of reforming the entire regulatory landscape, as a good radical solution would require.  Allowing the huge mass of regulations already promulgated to continue existing is not an option, except in the minds of the 70-80% of Republicans who are unwilling to challenge the status quo; this is yet another reason to challenge sitting Republicans at the primary election level.

The current bloat of federal regulations is the result of 50 or more years of legislation which has created new agencies of the federal government and has given them the charter to continuously generate new rules and regulations in various areas, e.g environment, financial institutions, transportation, food and drugs, and on and on. Every perceived problem has become the subject of a regulatory scheme. This trend has spawned a huge ongoing bureaucracy of overpaid career federal employees who continue in place from one administration to the next, so that, even if the new administration is not as statist-inclined as prior ones, the philosophy and impetus to still more regulations persists, inasmuch as the continuance of these people is not reviewed; only the highest level appointees may change, and the agency simply goes on as before.

The pernicious aspect of this is that the rule-making procedure has become almost totally removed from pushback by those affected. Once it is set up the typical regulatory agency is allowed rule-making powers that consist basically of propounding the rules behind closed doors and then allowing a brief “public comment period” before said rules are implemented and compliance by a whole sector of the economy in many cases is required. The concept of cost versus benefit is scarcely used, and is certainly not a requirement in most cases. More important, there is no necessity that the bureaucrats, having received the “public comments” pay any attention to them, much less provide a rebuttal or explanation as to why they may safely be ignored; the majority of them, the majority of the time are ignored on the march to implementation.

Now to my mind, we elect representatives to our legislative bodies to deal with rule-making, not just to consider the abstract concept of a broad need for regulation and give vast power and discretion to some new agency, an entity that will likely live on forever, and will continue to find new areas of concern to engender additional regs in order to justify its continuation. It is in the nature of such an organization to do so. So, I would propose that we roll back the situation to where the actual, detailed rules and regulations, to the extent they are actually needed , be considered by and voted on individually by our elected representatives, with full congressional hearings, as befitting actual publicly expressed concerns, not concerns manufactured by bureaucrats in their little hovels. Doing so might actually occupy the legislators to the extent that the volume of new legislation on mostly unconstitutional subjects would be reduced due to the needed attention to the details of whatever legitimate regulations were found to be appropriate. The end result would be similar to the current Code of Federal Regulations, but would be in the form of statutes. In many cases, regulatory agencies could be abolished and replaced by expert witnesses at congressional hearings; note that this (i.e. public hearings)  would give a much more viable opportunity for objections by the general public, and to get a sense of just how pervasive is the problem to be solved by the statute.

The beginning of this process would entail a complete re-consideration in the above-described manner of each major section of the Code by special committees of the Congress; given a time limit, each existing regulation should be scrutinized and testimony taken on its need and effectiveness. When the time limit has expired, the slate would be wiped clean and  only those regulations passing scrutiny would be retained; representatives feeling strongly about lost regs could sponsor new legislation to add them back. To repeat, all new regulations going forward should be in the form of a statute with full hearings.

Radical Measure No. 5 – Eliminate Forced Collective Bargaining

Trade unions have become a real problem in this country. The conventional wisdom is that unions came into being to counter the concentration of power and influence that firms and employers were able to wield in the contractual arrangement for employment, i.e. it was asserted that the employer has an innate advantage (greater bargaining power)  over employees when the encounter is one-on-one, and that this advantage is reduced or neutralized through the ability to bargain collectively.

Well, it would appear intuitive that this might be true; the only problem is that it may be true at some times and under some circumstances, but is hardly a general rule. The supply of labor, especially labor of a particular type, strongly influences the individual’s bargaining power in the transaction and the demand for, and/or supply of labor is constantly varying.

As someone who believes in liberty and freedom to contract, I submit that it is almost axiomatic that individuals have the right to band together and seek to bargain for wages as a group, and also to petition the employer regarding safety and working conditions. Many people assume that employers will ignore such employee associations and their requests, but in many situations, it is not in the employers’ best interest to do so. So, unions which are voluntary associations of individuals working at a particular firm are certainly an appropriate type of organization. What makes them inappropriate and damaging is (1) when the association is not voluntary (i.e. all employees are mandated to be in the union, or alternatively provide financial support to the union as if they were members) and (2) when the state mandates that the employer must bargain with the union and may not resort to individual employment contracts once a union has been formed.

No one who believes in liberty can object to people voluntarily joining an association like a union. Also the union should be able to strike, in other words to walk off the job as a group in order to impress upon the employer the intensity of their feelings regarding certain issues. What is not acceptable, and is an elemental violation of liberty is the notion, insisted upon by unionists, that the formation of such a voluntary organization automatically obliges the employer to recognize and bargain exclusively and collectively with it. Employers should be free at all times to replace, in a wholesale manner if desired, all the striking employees with new employees who are willing to engage in individual contracting. Also, liberty requires that no one is forced to join and/or support a union as a condition of employment at a firm.

Yet these issues are at the heart of contemporary labor law, and such mandates have been allowed to stand despite what to me, and libertarians generally, is a clear case of failure to abide by the Constitution’s respect for freedom of contract.

Now I am the first to admit that an examination of the history of labor law in both England and the early United States shows an inimical attitude toward trade unions, to the extent that unions were frequently convicted of conspiracies in restraint of trade, citing English Common Law among other things.4 So, initially, even the transitory existence of voluntary associations whose purpose included attempts to bargain collectively and to raise wages resulted in criminal penalties. This situation did, however, change over time, so that, by the 1870s, labor unions as such had achieved legislation that enabled their unfettered existence, and sanctioned strikes as a tolerable activity under the law. It would not be fair to say that liberty was well served by the attitude of the state up to that time, including numerous instances of the use of government force, inlcuding the military, to break up strikes, and that in many cases it was not civil disorder, or any other legitimate social problems that motivated this, but merely the desire of the state to co-operate with those who opposed the unions, i.e. business interests. So this is an example of reforms needed to rid the polity of what is today called “crony capitalism”, but then was more a product of mercantilist thinking, wherein one of the state’s purposes was the outright support and promotion of the interests of the merchant class.

But the evolution of the trade union from a virtual outlawed status to a tolerated one does not stop with having achieved recognition and that there is essentially nothing illegal per se in its existence or purposes. It has moved beyond that to a position of favoritism by the state which makes any discussion of unions providing a “level playing field” a laughing matter. Assuming there is a need for something to balance the supposed excessive power and influence that employers have, legislation currently in force so overbalances the situation that the tilt in favor of unionism is nearly vertical.

The turning point in this progression is in the National Labor Relations Act of 1935; this act enshrines the requirement that an employer must bargain collectively once the union has been created. It also created the National Labor Relations Board, which promulgates what is termed “fair labor practices” behaving in much the same manner as the regulatory agencies described above in this post, i.e. originates rules which are difficult or impossible to retract. To give you the flavor of the composition of this overarching Act, all of the original “unfair labor practices” cited in the Act were ascribed to the employer.

One can see the one-sidedness of the Act by this one quote describing its intended purpose:

It is declared to be the policy of the United States to eliminate the causes of certain substantial obstructions to the free flow of commerce and to mitigate and eliminate these obstructions when they have occurred by encouraging the practice and procedure of collective bargaining and by protecting the exercise by workers of full freedom of association, self- organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of their employment or other mutual aid or protection.

The other major piece of legislation which has changed the landscape of labor/management relations in these United States is the Federal Labor Relations Act of 1978, passed during the Carter administration. This Act enabled union organization of federal employees, and has led to the egregious situation regarding pay and pension benefits which is currently much discussed. It should be obvious that to create a collective bargaining agent (union) for a group of employees which is then able to make contributions to politicians who are ultimately responsible as the bargaining agents for “management”( i.e. the government) comprises an inherently corrupt situation and a built-in conflict of interest. Once again, a quote from the Act serves to show the attitudes involved:

In passing the act, Congress declared that it wished to encourage collective bargaining between federal employees and their employers. Congress declared that collective bargaining is “in the public interest” because, among other things, it “contributes to the effective conduct of public business” and “facilitates and encourages the amicable settlements of disputes between employees and their employers involving conditions of employment.”

In the many years since these acts were passed, the results show how ill-considered the actions were: (1) the membership in private sector unions has dropped precipitately, primarily, I suggest because the supposed beneficiaries of union activities, the members, have perceived that it is not basically in their interest to belong, and (2) public sector pay scales for jobs that compare favorably with similar private sector jobs is as much as 40% higher, and that the pension and benefits burden of public sector employees threatens eventual fiscal insolvency when combined with other egregious government over-spending.

The solution which goes to the root of this problem is to repeal the National Labor Relations Act and the Federal Labor Relations Act. Employers should once again be allowed to avoid mandatory collective bargaining, and all federal employees should contract individually for their employment contracts.

*                                                 *                                               *

So, looking around you, do you see anyone, from either of the major political parties who is advocating a program of this magnitude? Is there anyone who is talking about not just resisting additional moves toward statism, but actually rolling back, repealing or reducing the influence of the state on our lives? Yet, if we don’t do all these things, we move closer to the edge of the abyss—the point where personal freedom is gone, personal wealth is totally commandeered, inflation reduces asset values to a pittance, and the prospects for a vibrant economy are surrendered to the manipulations and interventions advocated by those economists and politicians whose only concern is to further aggrandize the state and its role as saviour.

Well, when I look around I see maybe one, maybe two individuals who are brave enough to advocate as I do.  It remains to see, however, whether they will forsake the safety of the status quo and do so.

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  1. The regulatory powers I refer to include the setting of reserve requirements, and the plethora of regulations regarding how banks (including investment banks) and even non-banking institutions ( like AIG, the insurance giant) are constrained to conduct their business. []
  2.   See the following URL for a chart showing historical passbook rates through 2005: http://www.bankrate.com/brm/publ/passbkchart.asp []
  3. Please refer to the following Wikipedia discussion of Open Market Operations: http://en.wikipedia.org/wiki/Open_market_operation ;  If nothing else, one should thoroughly ingest the following quote from this explanation: The process works because the central bank has the authority to bring money in and out of existence. They are the only point in the whole system with the unlimited ability to produce money. Another organization may be able to influence the open market for a period of time, but the central bank will always be able to overpower their influence with an infinite supply of money. []
  4. A decent summary of historical labor legislation can be found at: http://en.wikipedia.org/wiki/History_of_labor_law_in_the_United_States#cite_ref-Tomlins-p111_2-0 []

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Freedom Lovers, Bend Over Because You Are About To…

…get screwed again!  Republicans appear poised to nominate someone who is a certified “moderate”. Someone who absolutely will not do the seriously needed reformation, rollback and restoration that is needed. Someone who will allow the legislation and precedents created in the current administration to persist unopposed and increasingly become accepted as the norm.

I just finished reading the text of Ted Cruz’s speech announcing his candidacy (March 23,2015). A good portion of the speech was an attempt to objectify and promote identification by the audience with significant people in his life. This is a proven technique to sway the masses, but it appeals primarily to emotions as opposed to logical thinking.  His excuse for doing so was to focus on the so-called “promise of America” which these people supposedly exemplify.

Cruz speaks of “the incredible protections [for liberty] that we have in this country” and how the “purpose of the Constitution…is to serve as chains to bind the mischief of government”. These sentiments would be more believable if there were some concrete proposals to restore some the liberty lost since the time of, say, Woodrow Wilson and the “Revolution of 1913″, to wit, the advent of the Federal Reserve, the federal income tax, and the 17th Amendment.

Instead of inspiring personal stories, how about some discussion of SCOTUS decisions like Kelo1, the proliferation of asset forfeiture, the increase in federal prosecutorial overreach and misconduct with both corporations and individuals, the ubiquitous presence of administrative law substituting for conventional judicial procedures, and unelected government enforcement and enforcers becoming further and further removed  from any accountability and direct oversight.

How does candidate Cruz propose to actually reduce the regulatory state? The best his speech can say is that he will hold “government regulators and tax collectors at bay”. I regard this as a holding action, not a call for repeal or the needed drastic reforms.

All things considered, if Ted Cruz, who is considered by many as the most “extreme” of the Republican candidates, cannot articulate a more stringent and curative set of proposals, then what can we expect from the rest of the presidential wannabes? Any decent Republican candidate has to deal front and center with the notions that Hilary is going to push—including especially income inequality and “fairness”. Romney totally bailed on these in 2012. There are good and forceful arguments to be made, but Republicans usually manifest nothing but fear in this regard.

One of the principal aspects of liberty is the right to retain and use for one’s own purposes the fruits of one’s labor, the right not to have it appropriated for the use of others. How does Cruz stack up on this issue? How about the other putative Republican candidates?

Cruz, along with Steve Forbes and others, says he wants to abolish the IRS and implement a “simple flat tax that lets every American fill out his or her taxes on a postcard”. Statements like this reveal an astonishing ignorance of how things really work—one cannot abolish the IRS and still have an income tax, no matter how simple the forms are. Advocates of the so-called single rate or “flat” tax are appealing to the individual who works for wages or a salary, and whose deductions are limited; they are not thinking this through: the great bulk of the Internal Revenue Code regarding income taxation deals with how to determine net income, especially with respect to the different types of business entities ( corporations of several types, partnerships, LLCs, sole proprietors, etc.), in particular, a determination as to what can be deducted as expenses, mandated methods of accounting, what expenses must be depreciated over time, and on and on and on…

For example, I operate a small winery and we are required to mimic the accounting methods used by manufacturers—one cannot simply add up all one’s expenses and subtract them from total receipts to get the taxable profit. No, you have to “capitalize” that portion of your costs that relate to a specific product, and these costs are not to be recognized until units of that product are sold. Other costs not related to specific products (e.g. wines) are treated as overhead and can be deducted in the year spent. And, believe me,  the preceding explanation is grossly simplified for the reader. There ain’t gonna be no post-card-sized return for these guys. No, for there to be any simplification, we will have to scrap the whole IRC and IRS in one stroke and go to a national retail sales tax of some sort.

However, as tax plans go, the flat tax is infinitely superior to the recently announced Rubio-Lee plan, which re-casts the rate structure without really lowering rates that much. Worse, it exposes both single and married filers to lower thresholds than currently, e.g. the proposed top rate of 35% ( down precipitously from the current 39.6%! ) would apply to taxable incomes as low as  $75,000 and $150,000 respectively. Some reform.

And there are ( or will be ) other Republican plans for tax changes that emanate from Paul Ryan’s budget plan and from similar efforts by Dave Camp; both of these, plus the aforementioned flat tax plans suffer from the same problem—they are admittedly, even proudly, supposed to be revenue neutral.

There is a very good piece by Laurence M. Vance of the The Future of Freedom Foundation ( see it here), from which I cite his many objections to revenue neutrality using them as both quotes and bullet points:

1) “Revenue-neutral tax reform implies that the problem with the tax code is its length or complexity.” See my discussion regarding net income determination above.

2) “Revenue-neutral tax reform implies that the government has a claim to a certain percentage of one’s income.” That this is true one needs only to consider the fact of income tax withholding, i.e. the notion that some significant portion of earnings is transferred directly to a government account without ever being in your custody. Add to this the notion, promoted by some left-wing academics, that you do not have a vested private property interest in your pre-tax income; this is the central tenet of a book entitled: The Myth of Ownership (q.v.).2

Stop for a minute and consider that, if the state has a claim against your pre-tax income, that there is, as far as I know, no constraint, constitutional or otherwise, except perhaps some lame appeal to “reasonableness”, that would prevent the state from ultimately requiring you to surrender 100% of you pre-tax income and to then rebate some portion of it back to you later on, either in cash or in kind once it had made the determination of what were your actual “needs”. The determination of income tax policy is by simple majority; there are no other rules restraining it.  Do not think this is so far-fetched. It is implicit in both Soviet socialism and European-style democratic socialism.

3) “Revenue-neutral tax reform implies that government revenue should not be decreased. …advocates of tax reform — including conservative Republicans — consider it unthinkable that the government should have less money to spend than it did last year.”

4) “Revenue-neutral tax reform implies that there is such a thing as a fair amount of taxation.” For an in-depth discussion of fairness, please my posts on “Justice and Fairness” ( 3 parts).

5) “Revenue-neutral tax reform implies that taxation is not government theft.”

6) “Revenue-neutral tax reform implies that increased government revenue resulting from lower tax rates is a good thing.” Whenever tax cutting is discussed, the potential for increased government revenues is given as a justification. The real, economic fact is: every single dollar taken from the private sector is a dollar that cannot be used to create new wealth. Government is only an appropriator of wealth, not ever is it a creator. It is a dollar that is likely to be wasted, a dollar that adds to consumption. The so-called multiplier effect of government spending is a fiction.

7) “Revenue-neutral tax reform implies that congressional spending is not the fundamental problem.”

8) “Revenue-neutral tax reform implies that the income tax is necessary. There was no regular, permanent income tax in American history until 1913. If government spending were strictly limited to just what is constitutionally authorized, there would be no ‘need’ for an income tax in the first place.” As a start, we could use the Enumerated Power of the Constitution to develop a reduced set of budgets. Also, how about the concept of Zero-Based Budgeting ( see my blog post on this).

9) “Revenue-neutral tax reform implies that it entails no tax increases. But any revenue-neutral tax-reform scheme can, by definition, only shift taxes, not lower them.”

10) “Revenue-neutral tax reform implies that the income tax is the most burdensome tax.”
A moment’s reflection will remind you that the almost 50% of income tax filers pay no income tax but they do have the burden of the various payroll taxes.

11) “Revenue-neutral tax reform implies that there is a difference between Democrats and Republicans when it comes to taxation.”  Both parties want continued, high-level taxation; their differences hinge on what the revenue is to be used for, not the amounts. One simple dichotomy is Democrats spend on Welfare, Republicans spend on Warfare. And there are others.

Adding to the above is the fact that a goodly portion of the Code deals with various incentives which the state uses to control your behavior; the absence of a format for these would make it much more difficult for legislators to implement unconstitutional provisions due to the lack of a funding mechanism.

The author’s conclusion is:

“The tax burden doesn’t need to be shifted, the tax base doesn’t need to be broadened, tax loopholes don’t need to be closed, the “rich” or the “poor” don’t need to pay their “fair share,” and the tax code doesn’t need to be reformed, revised, or replaced — it needs to be repealed.”

This is the kind of conclusion I want to hear from any candidate I could support, but you won’t likely hear it in 2016 the way things are shaping up. Once again, I will be forced to choose between the “lesser of two evils”.

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  1. the Supreme Court decision which allowed eminent domain to be used to take a home so that a commercial developer could build a store, trashing the concept that eminent domain was only for public uses. []
  2. See The Myth of Ownership:Taxes and Justice by Thomas Nagel an Liam Murphy, 2004. []

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Getting Straight on the Constitution

For those needing an unequivocal public example to make a point, every once in a while opportunity knocks. In this case it comes in the form of a recent letter to my local paper which contains in its last paragraph a distilled essence of how and why our body politic is sick—a plurality of its potential voters apparently completely misunderstands our Constitution and the system in which it is embedded. The letter was about the Affordable Care Act and states:

“Health is part of the welfare the Constitution seeks to provide and is a right of and a necessity for an ethically functioning society.”

A similar example of blatantly ill-informed remarks is heard from none other than Nancy Pelosi: the ACA “fully realizes the promise of our Founders of life, liberty and the pursuit of happiness”1.

Aside from problems of finance(i.e. adequate revenue)  and putting on a unified face to other sovereign nations, the states of the Union were doing just fine under the Articles of Confederation; those who recognized the need for a somewhat stronger central government were also extremely concerned about limiting its extent and the powers to be exercised, hence the meta-law of the Constitution. It is first and foremost a document of RESTRAINT, not one that grants license or makes promises. It does not “seek to provide” welfare, and any such interpretation is both ignorant and perverse. This level of misunderstanding competes with the all-too-common notion that the Declaration’s mention of all men being created equal refers to equality of outcomes, not of opportunity or equality in the sight of the law.

These bogus interpretations of the Constitution can be foisted off on current generations of potential voters due to a fundamental lack of understanding of the history and purpose of the document. This in part can be laid to the failure of the government school system to impart basic constitutional concepts in an accurate, non-ideological manner. In fact, modern education, in civics and elsewhere, owes its inspiration from Progressive thinkers like John Dewey, who essentially turned the notions underlying the American founding on their head—instead of the government operating with the consent of, or at the behest of the people, the people are viewed as being operated on by the government: According to Dewey, “The state has the responsibility for creating institutions under which individuals can effectively realize the potentialities that are theirs. . . .”

On the Democratic side, the thrust of the 2008 and 2012 presidential campaigns was about the concept that government exists to help people. This concept suggests that if a person has a need, then government should seek to fulfill that need, and moreover, for a need like health care, he should have a positive right to that care. Is this not exactly what the letter writer’s paragraph asserts? That the Constitution and Declaration have completely different notions of individual rights is apparently not germane to Progressives holding these beliefs.

Again, if the founders are to be believed, government does not exist to help people; it exists primarily for their protection whilst they go about their business.

The letter writer profoundly misunderstands the concept of our constitutional rights: they are to be construed as guarantees against intervention and interference by the powers that be, not as guarantees to some sort of benefit. Even our current president realized this and, in a 2001 radio interview, expressed his great regret that the rights in the Constitution were all of this type, i.e. “negative rights”. A fundamental characteristic of any right is that it must be compatible with all other enforceable rights, and the notion of a positive right, e.g to old age security or health care, involves violating others rights in order to implement them. To realize the right to a government benefit one must forcibly take wealth from some who have it and transfer it to the recipients of the benefit; such a taking violates property rights. To realize such a right, you must make some people slaves; it is an odd way to put it, but what else is forcing someone to work for 40% of the time for someone else’s benefit anything but slavery, and a loss of liberty? Did these individuals do anything wrong to deserve such a fate? We have to face it, Progressives, with their advocacy of force and violence against innocent citizens, do not occupy the moral high ground; they are not entitled to lecture others on ethics.

To the contrary, it is absolutely crystal clear, both from reading the documents themselves and comments of the Founders in the Federalist Papers and elsewhere, that government’s intended function was to protect individuals from external dangers, and to recognize and protect naturally pre-existing rights to life, liberty and property which are fundamental to successful individual existence. They would have been scandalized by the current implementation of the welfare state.

Progressives have insisted that by virtue of their alleged concern for the downtrodden, they espouse a universally accepted moral position. I submit to you that no system can be moral which uses force to take wealth from one group whose only offense is to possess it, and use it to fund the benefits of programs for others with fewer resources. Initiating force is always wrong, and most every Progressive proposal or program involves the use of force and violence (or the threat of same) against innocents to enforce compliance. No, the Progressives are not entitled to lecture others on ethics.

Furthermore, if something is a right, it cannot conflict with other rights; forced re-distribution of property fails to meet this criterion. Please see my discussion of Justice and Fairness (Part Two) for a more detailed discussion of rights and the concept of compossibility of rights.

Bottom line here is that we are in this mess, this struggle over budgets and debt ceilings, etc., because those on the right side of the political spectrum, those who are charged with preventing and/or correcting such egregious misinterpretations as those cited here, have failed utterly in their responsibility. They refuse to challenge the ethical position staked out by Progressives. There are a precious few on the right, howling in the wilderness, who are not afraid to say that we have to roll back, scale back, and even eliminate aspects of the welfare state if we are to survive.

I am not saying let’s eliminate programs like Social Security and Medicare overnight, but for crying out loud, let’s not create yet another entitlement program such as the ACA. Let’s reject the nonsense about income inequality and social justice that currently holds sway as totally inauthentic expressions of our way of life and our Founders’ intentions. There are far too many Republicans who have given up on resisting ( or maybe never wanted to) and are going along to get along; these people need to be un-elected ASAP. Moreover, every potential office holder needs to be scrutinized as to his/her position on the moral validity of the welfare state.

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  1.   Please see the YouTube video at http://www.youtube.com/watch?v=P-6lYUQYIvg []

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