RoR: Forum

Post 0

Tuesday, May 22, 2007 - 2:01pm

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I have just reviewed a tape I made from Book TV (C-SPAN2) of a 2/4/05 Peter Schwartz discussion of Rand's "Virtue of Selfishness." He did a magnificent job of conveying her principles to a general audience but the question always comes up as to how to fund the minimal government that libertarians and Objectivists recognize a being desirable and necessary. Schwartz glossed over this with the usual comments about voluntary donations, contract fees and lotteries but it seems to me that the obvious answer has been, if not overlooked, at least relegated to a corner.

Even in today's semi-capitalistic society there are many men of great wealth who have philanthropic drives — the obvious ones are Bill and Melinda Gates, Warren Buffet, Ted Turner, and many others. While some of their programs may be anathema to Objectivists it demonstrates that there are benevolent men willing to step up to the plate and share their good fortune or well-earned profits.

To my way of thinking it isn't a great leap of faith to believe that in a libertarian/Objectivist society there would be no shortage of such men to donate large sums of money to sustain the government. I would also hazard a guess that there would be many more men of great fortune than there are today due to the enhanced investment climate. Furthermore, I think that it would become commonplace for individuals of more modest means to leave some of their assets to the government in their wills.

Why hasn't this been presented with more emphasis when the issue is brought up? When it isn't adequately addressed the whole idea of minimal government and non-coercion gets discredited.

Sam

Post 1

Tuesday, May 22, 2007 - 3:31pm

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It's a good point and it would be another potential revenue source. But how significant it would be is another question.

For fiscal year 2006 the U.S. federal goverment spent $2,654 billion. This doesn't include Social Security and Medicare. State and local government spending was roughly $1800 billion. Warren Buffet has assets of about $46 billion. The federal government spends that much in about one week! In a better world governments would spend a lot less, but it would still likely be many multiples of the potential donations from a few very wealthy philanthropists.

Another possible revenue source is natural resources on government-owned land. However, of course, with smaller government(s) and more land in the private sector, it would shrink that potential revenue source. As an aside, the income of the Saudi government is nearly all from oil and gas.

Furthermore, I think that it would become commonplace for individuals of more modest means to leave some of their assets to the government in their wills.

Governments already tap this source to a great extent via (involuntary) estate and inheritance taxes.

Post 2

Tuesday, May 22, 2007 - 4:14pm

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Well, it all depends on how you view human nature in a society where one would be endowed with much more abundance and freedom than we now experience. I believe that there would be a total turn-around in attitude toward government and instead of it being your enemy or a resource to milk for whatever you could get out of it, it would be regarded as supporting individual freedoms and rights. My personal reaction would be, even as one of limited means, to bequeath a significant amount to the government in my will.

In my view, the traditional Objectivist response of relying on voluntary contributions (on a yearly basis), lotteries, contracts, etc. are very weak arguments.

Sam

Post 3

Tuesday, May 22, 2007 - 5:21pm

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Sam, I see some problems with your noblesse oblige solution:

1. Free rider problem

2. You may not agree with me, but it seems like this solution is based on a variation of the same logic that leads to progressive taxation of higher income earners - "those with more should give more".

3. The notion that smaller government will make people like goverment more is at best an unproven hypothesis. It somewhat reminds me of the theory that communism in practice would eventually lead to the withering away of the state as people learned to live together and share things.

4. People with immense wealth would likely be faced with the temptation to use the government's dependence on them to court special favors in return (perhaps favorable court verdicts, protection from lawsuits, military action abroad to protect their personal business interests, etc).

Post 4

Tuesday, May 22, 2007 - 5:54pm

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Pete: You raise legitimate questions except:

I don't agree that the "free rider" is a problem. He is "free" of obligation and is the recipient of the principle of non-coercion. I don't condemn him at all.
...it seems like this solution is based on a variation of the same logic that leads to progressive taxation of higher income earners - "those with more should give more". In an Objectivist/libertarian state that attitude wouldn't be prevalent. The state wouldn't exist in the first place if it was.

The notion that smaller government will make people like government more is at best an unproven hypothesis. True.

People with immense wealth would likely be faced with the temptation to use the government's dependence on them to court special favors in return (perhaps favorable court verdicts, protection from lawsuits, military action abroad to protect their personal business interests, etc). True but it's the function of the government to prevent such influence, just as it is today — except with a much smaller government there would be less opportunity for all sorts of corruption.

It strikes me that your objections and those of Merlin are implying that there is no possibility of such a limited government.

Sam

Post 5

Tuesday, May 22, 2007 - 6:14pm

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Sam wrote:

It strikes me that your objections and those of Merlin are implying that there is no possibility of such a limited government.

No, I'm not saying that, unless you mean "all voluntarily-financed limited government." Financing one on all voluntary basis is a difficult problem. I even said you had a good point. I just questioned if it would bring enough money.

Post 6

Tuesday, May 22, 2007 - 6:23pm

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As Pete implies - buying the government, Sam??? Power corrupts - even in minimal governing - as it is the nature of the beast, and draws such beasts to that nature, like it or not.......

Post 7

Tuesday, May 22, 2007 - 7:48pm

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Yup, Robert, but what are you going to do? No government?

With any government, "Who's going to watch the watchers?" It's a fact of life and all anyone can do is to be alert and prosecute the evil-doers.

I'm interested in hearing why my comments do not add to the traditional arguments for funding limited government (if you agree that limited government is desirable and that the traditional arguments are valid.)

Sam

Post 8

Sunday, May 27, 2007 - 5:38am

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Sam:

I agree with your concern expressed here.   When libertarian leaning folks voted for Clark in '80, and the consequence that time was at least Reagan, we were all young and fringe and thought we could get away with the purity afforded by totally unsellable concepts.    The result of that, however, is living with the fact of two incoherent parties of power scientifically dividing the nation like Procter & Gamble dividing the market for soap.   They have got this marketing science down to the 3rd decimal place in our national elections.

I think a healthy dose of Hayek helps the perspective on this.   It's impossible to mix Rand and Hayek and conclude 'anarchy.'

Wherever 'totally voluntary contribution gov't' sits on the political spectrum, it is yet far from even 'Flat Tax', and in the current realpolitik, even 'Flat Tax' is barely fringe.   'totally voluntary contribution gov't' is way beyond the event horizon of the tribal black hole we find ourselve sin.

While wishfully aspiring even to 'Flat Tax', we and our predecessors have allowed the funding of common government by any means to itself become a far left wing political attack on freedom.   The justification for the current nearly 100 year old redistributive nonsense is purely religious (i.e., it is based purely on'what Socioligists believe...).   A common floor exemption and a common marginal rate above that floor is still a 'progressive' tax, both in terms of absolute dollars as well as rate, but the religious zealouts roll their eyes into the back of their heads and respond only that 'it is not progressive enough', whatever that means. Why? Because Socioligists believe...    I.e., based on purely religious grounds.

What do they believe? They believe that somehow members of quintiles sense the quintile distributon of income/wealth in theoretical populations, without understanding either income or wealth or the consequences of their faulty theories.    They believe that somehow, without explaining how it is possible, without the vast majority of folks even having the slightest idea what mythical quintile freight train they are riding in, nor with who, nor how that quintile freight train is faring in its percieved mythical race with other mythical quintile freight trains, that it is somehow exactly that -- the quintile distribution of wealth/incomes in America -- that is the foundation of our economies.    It is an effect, a consequence of behavior, not a cause, and yet we permit the soft scientist/cargo cultists running wild at the base of the tribal volcano to encourage politicians to point actual guns at actual individuals in the name of stimulating this cause.    They mistake 'forced misappropriation' for 'circulation' in our economies.    Circulation of value is an effect in healthy economies; it is not a cause.   'Forced misappropriation' is a killer of the cause of that circulation.

Especially, forced misappropriation by glad handing light-weight cronies running amok in a CronyFest on the Potomac, fed by O.P.M., doing The People's Work.     One day, we're paying folks to fairly and honorably paint the double yellow lines down the middle of public roads, and before you know it, they are 'Running The Country/World/Known Universe.'  What a mess.   It just has to break. But in the aftermath of the breaking, it is just as likely that the Beehivers, the Malthusian One Worlders, the Totalitarians for The Good of The People wannabees, ie, the Other Tribe, is going to get its political 15 minute shot at piling up corpses for the good of all at 10 million a clip.   That tribe is certainly getting enough help.

Because, on the average, we're average.

regards,
Fred

Post 9

Sunday, May 27, 2007 - 6:27am

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Pete:

People with immense wealth would likely be faced with the temptation to use the government's dependence on them to court special favors in return (perhaps favorable court verdicts, protection from lawsuits, military action abroad to protect their personal business interests, etc).

I think this points out severalfold why this concept will never reach the light of realpolitik day.

1] There just aren't enough people with immense wealth to fund the current CronyFest at its current levels. In a nation with AWI around $40K/yr, our gov't has to do what bankrobbers must do, and go to where the money is.    Draw a graph.   At the left end is the absolute $0.   AWI is somewhere around $40k-ish.    That isn't lots and lots of people earning 0 balanced by lots of people earning $80K ish or even more people earning $250K-ish. It corresponds to an actual hump in the distribution curve around $40K-ish, a pile of population income with a hump around $40K, tailing off rapidly to $0 to the left, and tailing off rapidly to the right as well(ironic, that.)   If you multiple population times income, you get a literal population distribution of taxable income, and that mountain 'o' available taxable income is clearly piled up around AWI.

2] Any sustainable tax scheme must be based on that income curve, not wealth.   They could only get away with a 'wealth' based taxation scheme once, it would kill the economies, while income is a yearly renewable tax source. You can only tax wealth once, unless they can dream up a purer tax on excess ability. "Kids, here are your SAT scores, and here is your lifelong tax bill as a consequence of those SAT scores. You there with the 1600(er...2400).   We made it simple. Yours just has one word on it: "More."

So, the current group of Procter&Gamble politicos variously play their 'soak the rich' or 'take the burden of the middle class' little soap operas, but they all know damn well where the finish line is in regards to funding the CronyFest.   It is squarely on the backs of folks doing their damndest to become people with if not immense at least more wealth and who while doing that very human activity are circulating value in the economies.

The politicos use Schdenfreude to politically convince the middle voting class to sell us all into serfdom to the state. "Look, in exchange for letting us raise your tax rates a modest amount(it's always a modest amount), we are going to 'really stick it' to a tiny handful of people who won't care anyway.    Someday it will once again be, surely, you can't complain about an increase of rate to 25% or 30% if folks making 10 million/yr are paying 70%?"

Tax that mountain 'o cash around AWI at a higher rate, or tax the tailing off fringe on the right at even 100%, which do you think is going to result in more area under that curve redirected to the CronyFest?   Plot the curve yourself, so you can 'see' where the money is, that is the renewable/taxable income pile that the gov't must target, all the while pretending to be 'soaking the rich' on our behalf.    Subtle little grabbers of O.P.M. that they are, they are also 'riding' the wave of that bulge from AWI to the right.    By just dragging their feet on rate normalization of their convoluted redistributive tables, they slowly every year shepherd more and more of the total population into those once 'redistributive' tax rates.

Why would any thinking person let them get away with this total nonsense?

regards,
Fred

Post 10

Wednesday, June 6, 2007 - 9:42am

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I just returned from several days vacation in Alaska.

Alaska is another case of a government getting most of its revenue from natural resources -- near 90% and oil in particular. Alaska has no state sales tax or personal income tax. (A few municipalities have a sales tax, and there is a state corporate income tax). Not only that, Alaskan residents are paid an annual dividend derived from the oil wealth. In recent years it has been about $1,000 per person. See: http://en.wikipedia.org/wiki/Alaska_Permanent_Fund

Funding an Objectivist Government