RoR: Forum

Mr. Younkins, I agree with the ideas you present in this article, but how would the government deal with the issue of freeloaders who choose not pay user fees for military and police protection? Would such people be protected anyway in the process of protecting paying citizens, or would they be left to defend themselves as they may? Would they be turned away from voting booths if they choose to refuse to purchase government services?

I know that the freeloader issue is one I have to face whenever I suggest to non-libertarians that taxation be eliminated and replaced with voluntary fees, and I want to know what you think of the free rider issue.

Post 1

Tuesday, July 13, 2004 - 7:00am

Right on the money as usual Ed!

I too am interested in the free loader problem...presumably they would benefit from national defence in war as there is no way to single out particular homes in order to not protect them from invaders, but I imagine there would be ways of denying police services to them?

MH

Post 2

Tuesday, July 13, 2004 - 10:21am

Even beyond those, I see other problems with fee-based police forces...namely, emergency situations. In some emergency situations, the police may not have time to check if a victim (or potential victim) is a "subscriber," so to speak. For example, if the crime is out on the street, or, perhaps, they're dealing with a hostage situation in which the hostages may not be identified (or, perhaps, they're a mix of paying customers and others) they can't just run a check on the address. They need to respond without the information. How, exactly, would that be handled?

The police organization is such a thing that the spill-over benefits are enormous. Ditto on the military.

On the other hand, doctors are always willing to act on an emergency without checking the patient's insurance. Would the police be run the same way in these situations?

Post 3

Tuesday, July 13, 2004 - 10:29am

Ed (or others), I'm "green" in this arena and seeking to expand my personal understanding toward a more global understanding of moral government financing. Please respond to the additional - but not mutually-exclusive to user fees - options below (first 3 from importanceofphilosophy.com; next 2 from yours truly):

1) Trust Fund

"Existing governments could create a large trust fund from their current assets. All government land and supplies which are not needed for police, military, or the courts can be sold. The real money, however, comes from selling intangible assets which are currently 'publicly owned'."

2) Donations

"Americans donate billions to charity each year, a cause such as the military for national defense is surely as worthy as any other cause. One aspect to note about this is that individuals will tend to donate more depending on how much they benefit. Bill Gates, for example, has a lot to lose if this country gets overrun by some enemy, so a few million donation for him would be in his interest to help insure his fortune. If individuals feel that the country is inadequately defended and they are at jeopardy, the marginal beneficiaries will donate more."

3) Flat Citizen Fees

"Citizenship could be optional for all residents of a country, with a flat yearly citizenship fee. Citizenship would have such advantages as the right to vote and the right to run for public office. These fees would go to further finance portions of government without specific beneficiaries, such as the costs of unsuccessful criminal prosecutions."

4) Flat 5% Universal Sales Tax (10% to exceed minarchy)

(note: this one is from me and it's counter-intuitive - so please don't hold back on criticizing this one! I could really benefit from someone showing me that this idea - which would solve the "economic" problem of funding government - is, at its root, inherently dishonest or immoral!)

5) Lottery

(note: again from me, and I've never seen it formally debunked - though the word on the street is that there is a tenable counter-argument to it. Would somebody please do me the honors and attempt to debunk it right here, right now, in front of my own reasoning mind, please? Thanks!)

Last question: What (besides statist corruption!) prevents us from a 6-mode (user fees + above), 5-10 year, sliding time-scale, implementation of these options? I don't see how any of these excludes any others (remember, I'm "green" here!).

Thanks in advance for any feedback!

Ed Thompson

Post 4

Tuesday, July 13, 2004 - 12:18pm

Ed: FYI, there are innumerable post on the OWL board on the subject of how to fund governments.

Cheers

Sam

Post 5

Tuesday, July 13, 2004 - 7:07pm

Great article!

I have one question about the difference between public and private goods.

If the government is allowed to provide private goods in some cases (like arbitration), would it also be allowed to provide private goods like education, if and only if everyone who attends a "government" school must pay the costs, but no one else is forced to?

How would this idea compare with, say, Milton Friedman's suggestion to give vouchers to families who wish to seek a private or home-schooling environment? I've read that Ayn Rand would have offered straight-up tax exemptions for those who do not wish to attend a "public" school. But Rand also seemed to see this as a transitional stage. If all taxes are done away with, would it be possible to have these "user fees" for government schools instead? Since the exchange is voluntary, would it also be possible for some wealthy private party to give the government money to develop a product, say, a pencil, and sell it to get revenue? If no compulsion is employed toward any citizens, and the government has no power to restrict competition, would this be a workable idea?

C

Post 6

Tuesday, July 13, 2004 - 8:45pm

It's interesting how this subject raises an underlying problem with the concept of a "limited" government - i.e. one with monopoly powers over security and justice services.

Yes, what to do about freeloaders?

This is a pertinent question - because I'd be one. I would not want to deal with a monopoly provider of any colour, as monopolies always produce lousy service at higher and higher costs.

I mean, just how effective is any government police force in protecting you from violence and robbery? Sure, they turn up AFTER the event - and will attempt to catch the perpetrator, but as for protecting - forget it!

So, as a freeloader, I'd want to be able to arrange for my own protective security - and want the freedom to associate and do business with whomever I chose. But of course, under a limited government with monopoly powers over such services - I would be prohibited from contracting out my own security needs. Why? Because such competing services would be outlawed by the monopoly provider.

Personally, I think the insurance industry is the natural provider of all security and justice services - because it is they who are in the current business of insuring property, and therefore have an interest in also protecting it.

Post 7

Wednesday, July 14, 2004 - 5:56am

David MacGregor raises an interesting point about the government as a monopoly provider of military defense and police protection: without competition, what incentive does Uncle Sam have to do his job well? However, if Mr. MacGregor intends to decline the government's protection in favor of making arrangements with private security providers, then I would not call him a freeloader as he would not be depending on government protection and then refusing to pay for it. Is a mother who home-schools her child a "free-loader" because she doesn't depend on government schools?

Post 8

Wednesday, July 14, 2004 - 8:25am

David would still benefit from the ring of steel provided by the army, and would therefore be a freeloader.

You can't defend against organised foreign invasion and grand banditry on a localised opt-in-and-pay basis. This is especially true of the modern world but also equally true for past eras - e.g. there are good arguments that it was the English and the Free Companies that drove the French into maintaining a standing army and accepting a centralising government.

I don't like paying tax, and I don't like big government. However, I can think of only two historical examples where there was effectively a free market in military protection and civil policing, and neither of these resulted in long term freedom.

Iceland had a complex tradition of private justice and arbritation, but was beset with bloody feuds, and eventually, through disunity, succumbed to a more centralised foreign power.

In Early Medieval France, the breakdown of the Carolingian administration opened the way for a free market in security, but this quickly evolved into Feudalism as great men established dynasties and then fought eachother for local power (e.g. Fulk Nerra of Anjou).

If we lived in Greek-style city states, there'd always be the option of walking away if you didn't like the by laws and the citizenship fees, and your fellow citizens could expell you if you didn't chip in. But in this modern world, there's nowhere else to go. So what's the answer?

Post 9

Wednesday, July 14, 2004 - 9:29am

I would be prohibited from contracting out my own security needs.

No you wouldn't. This is the same old anarcho argument I hear all the time. I dont understand this point at all. Even in today's government people can hire private detectives, install security alarm systems, private body guards, and private security guards. So then, how does this necessarily follow?

Post 10

Wednesday, July 14, 2004 - 1:44pm

Marnee is right about the fact that a minarchist government would not outlaw private protection services. As was pointed out, our current monopoly government does not even do such a thing. The problem of course would come when David wants to go beyond merely protecting his property in a defensive manner and wants to actually prosecute someone for past wrongs. For example, suppose that David was defrauded, and he wanted to force the perpetrator to pay restitution. If the defrauder was a client of the government, then David's protection agency would have to work out some kind of deal with the State. But since the government is the largest and most powerful protection agency in the land, David's agency would be at a competitive disadvantage and would end up having to pay some kind of court fee in order to get the government to adjudicate the dispute. The same thing would happen in a so called "anarcho-capitalist" society. The only difference would be that David would have to pay a fee to the "arbitration board" that is set up to adjudicate disputes between his agency and the perpetrators agency. Either way he would still have to pay "someone" to deal with the dispute, and who that "someone" was would NOT be entirely of his choosing.

--------------------------Tom Blackstone

http://tomsphilosophy.tripod.com

Post 11

Wednesday, July 14, 2004 - 4:20pm

Thanks for all the great ideas!!!!

I certainly do not have a solution to the free-rider problem but here are two of Tibor R. Machan's articles that these ideas originally came from. I have not read them since I wrote this little essay a few tears ago.

"Dissolving the Problem of Public Goods: Financing Government without Coercive Measures" from The Libertarian Alternative (just type the first few words of the title in your search engine and it should pop up).

"What's the Worst Thing About Taxation and What Can Take Its Place?" found as a working paper at www.mises.org

Ed

(Edited by Ed Younkins on 7/14, 4:21pm)

(Edited by Ed Younkins on 7/14, 4:22pm)

Post 12

Thursday, July 15, 2004 - 1:41am

Marnee, however, is wrong as soon as you get to the level of security threat for which you need an army. You could you have several competing military organisations, but would this be effective?

Post 13

Thursday, July 15, 2004 - 9:21pm

Thanks for treating my proposal seriously. It isn't original, though, since Rand had suggested it a long time ago. What I add is a discussion of the public goods/free ride problem, a discussion where I draw on some work by Richard Tuck who disputes the view that this problem is severe. Sure, some folks might free ride but actually few will--just as for example, few simply listen to "listener supported" radio but send it support even though they could.

Post 14

Thursday, July 15, 2004 - 10:02pm

Ed, regarding lotteries,

Government wouldn't make any money off of lotteries unless it outlawed private companies holding their own lotteries. This is merely making money off of a government monopoly, and seems no more moral than government outlawing the private sale of alcohol and making money off that or outlawing the private extraction and sale of oil, or anything else. Seems a bit arbitrary, except for that is what's already going on in so many states. (All?)

- Jeff

Post 15

Saturday, July 17, 2004 - 2:32pm

Thanks Jeff.

I have to admit, I had a little trouble with your explanation at first. My counter-argumentative chain of thought ran as follows:

1. Gov'ts must have a monopoly on force.

2. Taxation is one such monopoly (but it is highly immoral).

3. A national lottery - due to the inherent personal choice to participate - is a MORE MORAL monopoly than taxation is (monopoly + a choice).

4. A national lottery would efficiently fund gov't at less moral cost (though imperfect, it is infinitely better than income tax).

Jeff, I do see how "pragmatic" this is now (pragmatism = ignoring first principles and final ends). I admit that I now agree with you - but not without gritting my teeth!

Ed

Post 16

Saturday, July 17, 2004 - 4:29pm

Yes, but as I said, government wouldn't make any money off of lotteries unless they outlaw private companies from holding lotteries, which is an initiation of force. So the choice between lotteries and straight out taxation is just a choice between two different forms of initiation of force. Except with taxation, you could have private lotteries, that individuals could enjoy much more than inferior government lotteries. Also taxation is in a sense more "honest". "Your money or your life" is more straightforward than the secondary unseen effects of government enforced monopolies. I would prefer taxation on the same principle that I would prefer government to present each individual with a tax bill at the end of the year rather than doing semi-transparent witholdings. Though there is some ability to opt-out of government run lotteries, they wouldn't be able to make enough, and without taxation, would soon have to nationalize many other industries and sectors in order to keep the socialist state afloat, and I think it's pretty clear that the straightforward drain of taxation is better than letting corrupt politicians into all sorts of aspects of the economy.

Sorry for the rambling...

Post 17

Friday, September 24, 2004 - 12:23pm

A few points to Mr. Thompson:

First, about donations as a form of funding government:
There are relatively few people like Bill Gates in the country, and even if they each gave a few million, the donations would pale in comparison to the money raised by taxation. In order to be along the same lines of taxation in terms of funding, each potential taxpayer would need to donate almost as much as they would typically pay in taxes, and very very few people would ever willingly give as much in donation as they feel is stolen from them through taxation.

About citizenship fees:
You mentioned that one advantage of citizenship would be the right to vote. We already have that right free of charge, and very few people take advantage of it. What makes you think that people will bother to pay for something they have no use for? Perhaps we could get one of those infomercial guys to sell voting rights to the public; those guys are the masters of selling people things they don't want!

And about the lottery:
Although taxation is immoral, no one can argue with its dependability. With forced taxation, there is no gamble. The money will be taken from the people. Lotteries, on the other hand, would be as much a gamble to the government as they are to the players. If for some reason people decide not to play the lottery, the government is doomed. There is no way to rationally depend on a lottery for funding. Besides, if we get rid of taxation, what empty promises would politicians be able to make in election years? :)

These are just the problems I foresee with these suggestions, but I could be wrong. Maybe these ideas could work. I'm just throwing my $0.02 USD into the pot. Hey I know! If we actually charge the public $0.02 for each opinion they hold, we could easily fund any government. :)

Post 18

Thursday, August 16, 2007 - 3:59pm

I've always had a problem with the term, "government" referring to a minimal, libertarian state. While the term is theoretically accurate, it doesn't reflect the spirit of the authority.

Government: — the continuous exercise of authority over and the performance of functions for a political unit

Govern: — to control and direct the making and administration of policy.

Because the function of the agency in a minimal libertarian state is to protect individual rights I would suggest either the term, "RightsPro" or "Protectorate." Even though the latter has a different, formal, meaning I think it reflects the function properly.

Protectorate: — the relationship of superior authority assumed by one power or state over a dependent one or the dependent political unit or territory in such a relationship.

Sam

Post 19

Thursday, January 10, 2008 - 11:54am