The Principle Concepts of Libertarian Economics - Feedback Requested

[Danan]

@Xerographica

If I go into your house with a gun in my hand and force you to give me all your money, but, being the good person that I am, allowing you to chose whether I would spend that money on an extremely poor school I force your kids to attend, or on a brutal police force, that treats you like shit (and, how practical, continues this type of theft for me in the future), or on welfare programs, that do nothing but to make the poor even poorer, would you seriously consider that a function of the free market? That's just insane.

If you are assuming that by this technique the least bad branch of government is going to be relatively better funded than the worst branch, than this might actually be true (assuming for the sake of the argument that all taxpayers have similar preferences on what's good and what's bad). But this doesn't explain why having taxation in the first place would be better than having no taxation at all.

Also, with no government at all, or if you are a minarchist, with just as much government needed to guarantee for a functioning market place, why couldn't people freely fund organizations their products they like even better than under your desired system? What does the concept of taking some of their money coercively add? Also, how would you decide how much one must pay and what the available options are at all?

And in regards to the "sound money" discussion, I guess you don't get the point of it. If there's still a central bank and legal tender laws, etc., what stops any branch of government that loses funds under your system (because tax payers aren't satisfied any longer) from simply issuing bonds, knowing they get bought up by their friends at the central bank at the cost of all the "money users" (inflation)?

[Xerographica]

We know that a choice was made for something. What we do not know is whether or to what extent the choice for NOTHING would have been made. And that information is critical to know the optimal level of funding for ANYTHING.

If you are assuming that by this technique the least bad branch of government is going to be relatively better funded than the worst branch, than this might actually be true (assuming for the sake of the argument that all taxpayers have similar preferences on what's good and what's bad). But this doesn't explain why having taxation in the first place would be better than having no taxation at all.

If we got rid of taxes then the distribution of resources would be pareto optimal. Assuming, of course, that a central government is NOT the only thing that stands between us and tribalism. I am not willing to make that assumption.

The thing is...there's absolutely no need to take that leap of faith. If getting rid of taxes is pareto optimal...then why wouldn't applying the invisible hand to the public sector lead to the pareto optimal allocation? Why would the invisible hand in the public sector lead us away from a pareto optimal solution?

To review, if any government organization does not receive any taxes...the scope of government would narrow and the tax rate would decrease accordingly.

(assuming for the sake of the argument that all taxpayers have similar preferences on what's good and what's bad)

It doesn't have to be "bad"...in most cases the government organization would simply just be made redundant. Or the reverse would happen and a government organization would make one or more private organizations redundant. I don't care which happens...as long as it's the outcome of taxpayers deciding how to spend their own money.

[Steven Douglas]

If getting rid of taxes is pareto optimal...then why wouldn't applying the invisible hand to the public sector lead to the pareto optimal allocation?

Let's ignore for the moment that simply getting rid of taxes makes everything pareto optimal (there's much more to it than that). The invisible hand is nothing more than the idea that markets automatically channel self-interests toward socially desirable ends. That isn't something you "apply". It is an automatic theoretical result of self-interested transactions in a free and perfectly competitive market. What you are describing sounds like you are claiming that the so-called invisible hand applies equally to government, in a public sector 'market' that is neither free nor perfectly competitive (e.g., monopolies, oligopolies, legal tender laws, debasement of the currency, etc.,), and will tend to produce ends that are also "socially desirable". I might agree, but only provided we could identify which special "societies" found it to be "desirable". Anytime you artificially choose winners and losers there will be a contingent that finds it HIGHLY desirable. That doesn't mean it is socially desirable on the whole, or to everyone.

Why would the invisible hand in the public sector lead us away from a pareto optimal solution?

Firstly, I don't buy that the invisible hand really is at work in the public sector under the regime you are prescribing, and for the reasons I have already stated repeatedly, but which you have not addressed.

To review, if any government organization does not receive any taxes...the scope of government would narrow and the tax rate would decrease accordingly.

To review? To review what? What does that mean? Is that code for "To restate the premise as if I had indeed established it as fact..."? Once again, you have made a blanket assertion without the slightest hint of an explanation as to why that assertion would be true. ZERO. NOTHING.

The "tax rate would decrease accordingly"? HOW? BY WHOM, FOR WHAT REASON, AND BY WHAT MECHANISM? WHO, PRECISELY, WOULD MAKE THAT DETERMINATION? You have answered NONE of these questions, except to imply that Congress would somehow find it logical or something. This is completely contrary to your proposal, as you have already stated that taxes paid would only shift from one government entity to another. There is NO mechanism proposed by you that would cause the overall rate to diminish. That part you have ASSUMED, with no explanation.

[Xerographica]

The invisible hand is nothing more than the idea that markets automatically channel self-interests toward socially desirable ends. That isn't something you "apply". It is an automatic theoretical result of self-interested transactions in a free and perfectly competitive market.

Apply? Allow? Enable? Whatever word you want to use...we would benefit by replacing the visible hand with the invisible hand in the public sector. We'd be replacing the decisions of 538 congresspeople with the decisions of 150 million taxpayers. Now, you really want to shrug this off as if it's no big deal. Fine, if it's no big deal then let's just allow 538 congresspeople to decide how the rest of our money is spent in the private sector as well.

Here's your argument...the invisible hand wouldn't work in the public sector because we only have a few crappy choices. Errr...you've got it backwards. We only have a few crappy choices in the public sector for the very reason that we don't allow the invisible hand to work in the public sector. The only reason we have so many choices in the private sector is because we allow the invisible hand to work in the private sector. The outcome of every socialist experiment has always been extremely limited options. In other words...socialism leads to less freedom.

Regarding the tax rate...how is it not logical that congress would want to decrease the tax rate as the scope of government narrowed? Would it be logical for congress to increase the tax rate as the scope of government narrowed? Again, taxpayers would be responsible for funding congress. If you aren't happy with how congress is doing its job...then you wouldn't give them your taxes. If enough people did the same thing then congresspeople would be out of a job. Who wants to be out of a job?

If taxpayers want to spend more money in the public sector then they'll have no problem with congress raising the tax rate. If, on the other hand, they want to spend more money in the private sector then they will have a big problem with congress raising the tax rate. If taxpayers have a big problem with any government organization then they'll have the freedom to withhold their taxes from that organization. Take that freedom away and it's not the invisible hand and it's not pragmatarianism.

[Steven Douglas]

Here's your argument...the invisible hand wouldn't work in the public sector because we only have a few crappy choices.

That is the best straw man argument you could erect on my behalf?

The invisible hand wouldn't apply, not because we would only have a few crappy choices, but rather because we would be forced to make at least one choice. All these pages and you haven't gotten that yet?

The rest of your response shows continued ignorance of what has been repeatedly addressed, as well as ignorance of how government actually works, so I'm off this carousel.


For the record, I am very Jeffersonian when it comes to taxes. There should be no direct taxation on Citizens in the first place, and we should have reached this point long ago. And since We The Individuals are the only ones with political power, I am in favor of voting Citizens having direct control over the allocation purse strings...for taxes that are collected, but which none of them paid. In other words, stop calling Citizens taxpayers as if they were synonymous. They are not.

The LOWLY TAXPAYER-NOT-A-CITIZEN is not our customer. The public sector IS NOT A FIRM, and those who do pay taxes (privileged entities, fictitious persons, foreigners, etc.,) would not be "purchasing" anything from the public sector beyond the privilege of existing and competing amongst us. So those foreigners and fictitious persons that do pay a tax, but don't like that this money is going to military, or to strengthen tax enforcement against them - can kiss our individual and collective asses. They are NOT buying our services. They are renting highly conditional privileges only, and as such are our servants. What we do with those fees is our concern only, and the invisible hand would exist on the Citizen demand side only. It wouldn't matter to me if they all voted to have to RENT payments from privileged entities go to the military, welfare, education, or even paid out as direct dividends to the Citizenry. That is because the Citizens, ideally, are the OWNER BENEFICIARIES, NOT THE PAYERS.

[acptulsa]

The rest of your response shows continued ignorance of what has been repeatedly addressed, as well as ignorance of how government actually works, so I'm off this carousel.

He came up with what he thought was a nifty idea, but he didn't think it through far enough. We have ideas that will do what he wants to achieve, and they actually will work; so selling the notion to us isn't panning out too well for him.

Let him get over his denial, realize the facts, and nurse his heartbreak. He doesn't need our help for that.

[Steven Douglas]

He came up with what he thought was a nifty idea, but he didn't think it through far enough. We have ideas that will do what he wants to achieve, and they actually will work; so selling the notion to us isn't panning out too well for him.

Let him get over his denial, realize the facts, and nurse his heartbreak. He doesn't need our help for that.

"You must spread some Reputation around before giving it to acptulsa again."


The spirit of the general idea is fine, I think. Several years ago I thought this through on a general level, albeit from a very different perspective. At a casual glance, the overall concept seems to have some merit...if you are the one paying the taxes, why shouldn't you have more of a say in how -- and even if -- they are paid, let alone allocated.

There is certainly a 'tyranny of the majority' aspect to this that has never been fully addressed, politically or economically. Democracies can and often do evolve into socialistic kleptocracies -- in fully parasitic economies. Alexander Tytler spoke the truth when he wrote that "A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury."

In its most simplistic form, if you are against either the welfare or the warfare state, why should you be forced, in a winner-controls-all political arena, to give monetary support to something that you as an individual find utterly worthless, offensive, or conscientiously objectionable? That, however, is a strictly political argument that requires no economics argument, with efficiency and 'optimal' funding levels for any government agency being an incidental effect, comparable to the invisible hand only when there is the option to withhold funding altogether.

The invisible hand works with revenue-maximizing non-profit organizations only to the extent that they are no parasites with guaranteed public sector funding. The fact that everyone can refuse to support ANY organization in the free market is what makes the invisible hand work. With all firms, for-profit and non-profit organizations alike, NOBODY is guaranteed any funding at all. We cannot pretend that an invisible hand is at work, but only after The Very Visible Hand has forced, at gunpoint, an extraction of wealth, the only question being how a collectivized "pie", one that is guaranteed to exist, will get divvied up by competing organizations.

Any attempt to guarantee funding to anything or anyone at all, public or private, is corruption at the foundation.

I also have a problem with the convenient blindness on the part of economists and economic schools of thought, to politics, and especially when market participants are conflated as if they were all the same, when they are anything but--politically or economically.

Xero talks about public sector competition for revenues, but fails to realize that most tax revenues are not "trades", or market transactions, in the usual sense. The public sector is also not a marketplace in the usual sense, any more than its organizations are 'firms' in the usual sense. That is ONLY because there are artificial economic advantages that completely defy, and can run counter to, the dynamics of natural market economics. The public sector and its organizations (including its favored or protected private arms) are not just market participants. They are also rule makers. They really can steal. They really can and do establish monopolies and oligopolies. They can erect barriers to entry for virtually anything, as they can AND ROUTINELY DO tax and regulate competing interests completely out of existence. Thus, there is no ceteris paribus involved, as NOTHING, not even itself, is equal or held constant.

Xero also fails to realize the import of the reality that just as not all market participants are real and natural Citizens with unalienable rights, likewise not all 'taxpayers' exist and behave as such, and not all are created equal. That strikes at the heart of where the entire paradigm falls apart. Only Citizens can be said to 'own' their government. And not one of those real, natural individuals, to the extent that they exist and behave as a matter of unalienable right, and not privilege, should have ever been a source of government revenue to begin with, or insulted with the lowly label of "taxpayer".

"...there is reasonable ground of confidence that we may now safely dispense with all the internal taxes." - Thomas Jefferson

I believe that the public really can allocate funding more JUDICIOUSLY than can Congress. But there is another thing that Xero fails to realize, and it's a WHOPPER.

We'd be replacing the decisions of 538 congresspeople with the decisions of 150 million taxpayers.

Setting aside the conflation of VOTER as being synonymous with TAXPAYER (there are literally BILLIONS of 'taxpayers' to the US on the Earth):

The reality is that 538 congresspeople are not making the decisions in the first place. Only the simple majority of them are, in all cases. The rest are NOT REPRESENTED AT ALL, in our winner-take-all allocation insanity regime. That's where the allocation purse-strings of Congress got fucked up in the first place, with an invisible hand that could have existed even at that level -- HAD EACH CONGRESSIONAL ALLOCATION VOTE ACTUALLY COUNTED. That is the only thing that would make both political and economic sense, and would allow Congress to get many different things done.

In other words, anyone can pass a proposal for funding, but that doesn't mean that it's funded yet. That's a different vote, and never winner-take-all. Thus, it wouldn't matter (IN A GIVEN YEAR) that 51% of Congress supported one thing but opposed another, while 49% held the opposite view. You would always have a horse in the race. 51% is only 51% of the funding allocation, even as 49% is allocated DIFFERENTLY. THAT would be the invisible hand finally at work, even in Congress. As it is now, there is no taxation with representation for ANY MINORITY -- and we are economically and politically polarized and MANIC as a result.

[Xerographica]

The invisible hand wouldn't apply, not because we would only have a few crappy choices, but rather because we would be forced to make at least one choice. All these pages and you haven't gotten that yet?

If people are hungry then they'll be forced to make at least one choice. If people are sick then they'll be forced to make at least one choice. If taxpayers want public goods then they'll be forced to make at least one choice. Even a few liberals superficially grasp this concept...Forced to Choose: Capitalism as Existentialism. Unfortunately, they don't grasp the value of choices.

What happens if we give taxpayers the freedom to spend their taxes in the public sector? They'll be exchanging their own taxes for public goods. Will this trade be profitable? If it is...then taxpayers won't want taxes to be optional. If it's not profitable then taxpayers will feel like they are being ripped off. That's when you could get them to lobby for taxes to be optional.

See...I think deep down you believe that taxpayers are truly getting their taxes' worth of public goods. This would explain your reluctance to allow them to do their own shopping in the public sector. Personally...I'm absolutely certain that they are not getting their taxes' worth of public goods. So why do you believe that they are getting their money's worth in the public sector?

[Xerographica]

He came up with what he thought was a nifty idea, but he didn't think it through far enough. We have ideas that will do what he wants to achieve, and they actually will work; so selling the notion to us isn't panning out too well for him.

Let him get over his denial, realize the facts, and nurse his heartbreak. He doesn't need our help for that.

Let's consider your logic: government planners can know the optimal level of funding for defense, the courts and the police...but they can't know the optimal level of funding for education, environmental protection, and public healthcare.

[Steven Douglas]

If people are hungry then they'll be forced to make at least one choice. If people are sick then they'll be forced to make at least one choice.

Xero, if you decide to hold your breath, you'll be forced to make at least one choice. That is not a profound concept. Not in the slightest. It is so obvious, in fact, that you would have to have a pathetically low IQ to consider that profound. If you hold your breath because I am forcing your head underwater, you'll also be forced to make at least one choice. That is also not a profound concept, even though the 'forced to choose' elements are not comparable to one another.

If taxpayers want public goods then they'll be forced to make at least one choice. Even a few liberals superficially grasp this concept...Forced to Choose: Capitalism as Existentialism. Unfortunately, they don't grasp the value of choices.

Unfortunately, contrary to your assertion, neither do you. You believe in artificially taking away the option/choice NOT to choose--TO ABSTAIN FROM CHOOSING--and you honestly believe that an ARTIFICIALLY FORCED CHOICE is somehow comparable to natural forces (like hunger, pain, etc.,) that exist already.

Now for a concept that you might actually find so profound that you may not grasp it:

Those particular taxpayers you mentioned, that "want public goods", so much that they are willing to pay for them, ARE NOT FORCED to choose, by definition (in that they actually WANTED, and were WILLING to pay). But those taxpayers are THE ONLY willing participants. All the rest, who you did not mention, including those WHO DO NOT WANT those public goods, AND ARE UNWILLING to pay for any of them, are actually FORCED (artificially, not naturally) to make a choice.

Will this trade be profitable? If it is...then taxpayers won't want taxes to be optional.

Oh, well, of course the free market works exactly like that, doesn't it? I thought that the 1st Gen iPad I bought was such a great deal that naturally I didn't want that purchase OR my next to be optional. So of course I told the Apple store that I was so happy with my purchase that if I didn't stand in line for the new model when it came out they could just levy my bank account, and send armed Apple employees over to shake me down. No head-scratcher there, because who in their right-thinking mind would ever want any transaction to be optional?!

Are you for real?

If it's not profitable then taxpayers will feel like they are being ripped off. That's when you could get them to lobby for taxes to be optional.

That's where your version of the invisible hand gets absolutely downright creepy. Let's say that Charles Schwab STEALS money from my bank account and invests for it for me, for a fee. But they try to make the investment profitable, and will return profits to me if it is. If it's not profitable, am I going to feel like I'm being ripped off? NO. I was already fucking ripped off!! Someone has already stolen my money and is out there taking no-risk chances with it. It does not matter if it is profitable or not, AS THE CHOICE WAS NOT MINE. That is money that I MIGHT OR MIGHT NOT have chosen to invest WITH ANYONE, let alone with Charles Schwab. I might have wanted to keep it safe; I might have wanted to blow it on a whole bunch of things that are nobody's business save me and those in the economy and my family that I CHOOSE TO BLESS.

See...I think deep down you believe that taxpayers are truly getting their taxes' worth of public goods.

See...I think deep down and on the surface you are off your rocker and don't know who you are talking to, what I think, or what you are even talking about, with your notion of "getting their taxes' worth".

If I had the magic wand, all internal taxes on individual Citizens (including all invisible inflationary taxes) would disappear overnight, and the US credit cards would be cut into a trillion little pieces. INSTANTLY. Government AND BANK DEBTS would not be defaulted on, but because most are odius, they would be paid off in hyperinflated currency, caused by Thiers Law as hard currencies began VERY QUICKLY to circulate.

Meanwhile, the unproductive HALF of the nation would go into a severe but very temporary depression, while the productive HALF would be the fastest to make hay, even in the throes of fiat currency withdrawals, now that the Public Sector Monkeys are completely off their backs and the Sound Money Sun was finally shining. The productive half would, in turn, provide private employment opportunities for the formerly unproductive half that was wondering who moved all their guaranteed Manna From SocialistFascist Parasite Heaven, and caused them to temporarily scratch shit with the chickens.

Does that sound to you like someone who believes, even deep down inside, that so-called taxpayers are "getting their taxes' worth" in the public sector?

HINT: Just so that you can orient your mind, you are not talking to a collectivist or statist from the left or the right.