March 23, 2019

The Three Types of Government Spending

U.S._federal_government_spending,_2010-2014Any objection whatsoever to some new, tax-funded government program elicits a consistent response from liberals or progressives. “You just don’t want to pay your fair share,” or “I guess we won’t see you driving on any of those government roads or calling the government police or fire departments.” The underlying assumption is that taxation is an all or nothing proposition. Either there is nothing that the government can collect taxes for or there is nothing that the government cannot collect taxes for. There are no principles upon which to base an answer to the question, “Is this a legitimate function of government?”

While there are probably thousands of different services that governments spend money on, they can generally be divided into three broad categories: security, public services, and wealth redistribution. Libertarians[1] argue that the only legitimate government spending is on security. Conservatives generally approve of security and some public services with their rhetoric while engaging in all three types of spending when in public office. Liberals generally endorse all three types of spending with both their rhetoric and their actions while in public office.

“Security” includes all government functions which attempt to defend citizens from aggression against their rights by other human beings. These would include the military, various police forces, and the civil and criminal courts. These are the functions of government whose purpose is to secure the individual rights of life, liberty, property, etc.

It is important to remember that even if these are legitimate functions of government, it does not mean that they cannot be abused. For example, a small suburban village in a low-crime area may not need more than the county sheriff for a police force, but may instead bear a tax burden of village, town, county, state, and even federal police forces. However, these debates revolve around how efficiently the services are being provided, not whether they should be provided by the government at all.

“Public services” generally refers to services provided to all members of society. What makes a service a “public service” is that it can be reasonably assumed that every member of the society has an equal opportunity to utilize it. Examples include roads, bridges, public libraries, garbage collection services, and fire departments. Libertarians argue that these are goods and services that the private sector can provide. Their objection to providing them with tax dollars is that those who do not consent to purchase them are still forced to pay. While this is also true of security services, libertarians acquiesce to those on the assumption that it would be impossible to exercise property rights without a government in place to defend them.

Certainly, a bridge between a new suburb and the city may improve commerce for the entire city. However, it is not necessary to protect anyone’s rights. Therefore, libertarians argue that those who want to build the bridge should provide the capital for it themselves and are perfectly within their rights to charge a fee to those who wish to use the bridge. Conservatives have traditionally argued that these services can be funded by the government and provided by private corporations under government contracts. Liberals generally support public services as well, although they sometimes object to them being provided by private firms.

Like security services, public services are prone to abuse and corruption, even if one accepts that they are legitimate functions of government. Public funds are often wasted on services that are not needed or services that are poorly rendered because they are provided by politically-connected government employees or private firms, rather than by the most qualified. Consider the “bridges to nowhere,” the roadwork construction projects that never end, or the multitude of scandals where it was discovered that $500 was spent on a single nail or some other gross abuse of public funds occurred.

The third category of government spending is wealth redistribution. Wealth redistribution collects taxes from one group of people in order to provide services to another group. What makes this type of government spending different from public services is the fact that the goods or services provided do not benefit all members of society equally. For example, health benefits under Medicaid are paid for by all taxpayers but are only available to people whose income is under a defined eligibility level. Thus, those funds are literally taken from one group and redistributed to another. Both libertarians and conservatives argue that this is nothing more than legalized theft, although conservatives have often led or acquiesced to expansion of this type of spending once in office. President Bush’s expansion of Medicare is one of the most recent examples. Liberals and progressives generally support this type of spending, arguing that it is each person’s moral responsibility to “contribute.”

In order to have an informed debate about a new government program, one must identify which category the proposed program belongs in. Too often the distinctions between these categories are blurred by both critics and proponents. Most often, a program that would properly be categorized as wealth redistribution is represented as a public service in an effort to persuade those that must pay for it that it is their civic duty to do so.

Read the rest at Euro Pacific Capital…

 

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

Make Obama Watch Ghostbusters

Ghostbusters_coverIt’s now clear neither economics nor historical precedent will prevent our government from embarking on another expensive, disastrous program. While debate on government destruction of the health care industry continues in the Senate, President Obama prepares to make a trip to Copenhagen. There, he and other elite “experts” will cook up a new assault on free enterprise – under the tired pretense of “saving the environment.” Since intellectual, scholarly attempts to convince our rulers of the error of their ways have failed, I humbly suggest a simpler solution: make President Obama and the U.S. Senate watch the 80’s classic, Ghostbusters. Everything they need to know about government’s role in the environment is there. It is presented simply enough that even a career politician can understand it.

The Ghostbusters story begins with three university professors who decide to try their hand in the private sector. They start a going concern with their own money to investigate paranormal activity. They face hard times early on, spending “the last of the petty cash” on Chinese food. They have a dearth of customers and face the same fate as the majority of new businesses in their first year: bankruptcy. There is no suggestion the government will bail them out. The market has seemingly determined there was not sufficient need for their services and they will have to figure out some other product to offer in order to make a living.

At that moment, a disturbance occurs in a local hotel and their first paying customer places an order. The Ghostbusters successfully capture the offending spirit and collect their fee. The incident results in some publicity for the young firm and business booms. Soon, the Ghostbusters are running their own commercials and have more business than they can handle. They bring on a fourth Ghostbuster to keep up with the demand.

So far, the story has been a happy one for all parties concerned. The Ghostbusters have achieved success and have become enriched. Why? They have earned their money by making New York City safer (more “ghost-free”) and have created jobs in the process. Most importantly, all of this has occurred through private, voluntary exchange. Customers pay their fees happily because the Ghostbusters offer them a service they deem worthy of the price.

But a story without a major conflict is no story at all. Ghostbusters is a superior story in that it correctly recognizes the source of all human conflict: government. Instead of the rather mundane epilogue the story would have had at this point, where competing firms enter the ghostbusting market, prices fall, and soon all of society can afford to have a paranormal housecleaning, the government rears its ugly head. A representative of the EPA knocks on the Ghostbusters’ door. What happens next couldn’t be more analogous to the real world.

The EPA agent Walter Peck is played to perfection by vastly underrated William Atherton. What is abundantly clear from his limited time onscreen is that, as a low-level federal agent, his primary motivation is not protecting the environment, but rather lording it over any individual or business that fails to immediately submit to his absolute authority. Under the pretense of protecting the environment, he attacks a private enterprise that has harmed no one, has helped the community, and has created jobs.

Having obtained legal authority to invade the Ghostbusters’ facility, despite the lack of evidence of any crime, Peck discovers what he deems to be a threat to the environment in the Ghostbusters’ ghost storage equipment. Of course, sophisticated equipment that could pose a threat to the environment is ubiquitous in a developed, industrial nation. But thus far in the story, the Ghostbusters have managed their equipment safely and responsibly. They have done so both out of respect for their own safety and the safety of others and because their livelihood would be jeopardized if the ghosts they had captured were to escape and return to re-haunt the premises of their customers.

Despite pleas from the Ghostbusters, the EPA agent shuts off their ghost storage machine and chaos ensues. Remember that up until this point, no environmental disaster had occurred. But by violating the liberty and property rights of the Ghostbusters under the pretense of a false threat to the environment, the government has created a real environmental disaster that now threatens everyone’s lives. In fact, the entire world is now threatened because of this government intervention.

Consider how closely this story recreates the real world, ghosts and goblins notwithstanding. The government’s record on protecting the environment has followed this pattern  since the moment activists got the idea the government could save the world. Among the sparkling achievements of government environmentalism has been the banning of DDT, a safe and effective insecticide that was vilified and ultimately banned because of its supposed threat to the environment. Subsequently, farmers were forced to employ less effective insecticides that really do harm the environment, while a later study showed DDT could actually be eaten by humans over an extended period of time with no adverse health effects.

In another historic blunder, the government decided to employ its ability to coercively override private decisions in order to encourage the production and distribution of ethanol, the fuel additive made from corn. This had the unintended consequence of causing food shortages and skyrocketing prices while failing to significantly affect America’s dependence on fossil fuels. The crowning achievement of this boondoggle was the revelation that the production of ethanol actually consumes more fossil fuel than it produces and is a net positive in carbon emissions. Had property rights been protected, instead of destroyed by the government, none of this would have happened.

Most recently, the government decided it would address two problems at once by “stimulating the economy” with its Cash for Clunkers program. Not only would this supposedly help the economy, but because those trading in their clunkers would have to buy “greener” cars (with other people’s money), it would also help the environment. Of course, the result was perfectly good used cars were destroyed while their owners took out loans for new ones, resulting in a decrease in wealth and an increase in debt for society as whole. In addition, it turned out the owners of the clunkers had previously been limiting their driving due to either concerns about breakdowns or the general lack of pleasure inherent in driving their clunkers. Once provided with new cars by the government, they began driving far more than they previously had, producing more exhaust and consuming more fossil fuels. Another government disaster funded by legal plunder.

As in the movie, every attempt by government to use its coercive power to protect the environment not only fails, but actually creates the very problems it purports to try to solve. In most cases, the problem does not even exist until the government undertakes to solve it. What is the government’s solution? Always it is to attack private property and free enterprise.

It never ceases to amaze me that the American public at large exhibits absolutely no skepticism towards the politically connected segment of the environmental movement. For 100 years, members of a certain political movement claimed private property and free enterprise would destroy society. The 20th century proved them absolutely wrong. Those societies which did away with private property and free enterprise were destroyed themselves, while those which (for the most part) retained property rights flourished. Subsequently, the members of this same political movement suddenly became activists for the environment, studied the problem, and concluded there was only one way to save the earth from environmental disaster: by abolishing private property and free enterprise. Does no one find this conclusion – by these people – an odd coincidence? Does no one even suspect their motives? Are we a nation of fools?

President Obama, please watch the movie. Appoint a “Ghostbusters Czar” to ensure every legislator in the federal government watches it as well. When you have had time to reflect upon its profound message, please declare the environmental war on private property over. If you are looking for wise stewards of the land, you will not find them within the ten square miles you presently inhabit. However, there are some 300 million people who can do a better job just outside of town.

*This article originally appeared on the Campaign for Liberty website.

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and A Return to Common Sense: Reawakening Liberty in the Inhabitants of America.

>Is the Freedom Movement Really Ready for Freedom?

>Ron Paul’s campaign for the Republican presidential nomination has ignited a revolution. For the first time in a century, a real movement against the entrenched system in Washington has arisen, and it is a movement of capable people who don’t just complain – they get things done. After a complete debacle for the neo-cons in Nevada, the Republican Party has actually had to mobilize itself in several states to prevent Ron Paul supporters from taking over state conventions and voting in their own delegates. They have resorted to breaking their own rules to prevent a party takeover. This is a sign that their political days are numbered.

Almost universally, Ron Paul supporters oppose the Iraq war. Whether conservative, liberal, moderate, or independent, Ron Paul has brought together a coalition that recognizes that the United States government had no right to invade Iraq. Regardless of their positions on other issues, people of all parties in this movement deserve high marks for taking a stand against the Iraq war.

Similarly, we are almost universally in agreement in our opposition to the expansion of executive powers, especially insofar as they have allowed the government to compromise our privacy and to threaten habeas corpus. These are direct attacks on our lives, and we have been right to defend ourselves against them. It is truly the good fight, and we will win.

So, we are certainly united in what we are against, but are we united in what we are for? Are we all really for free markets, for truly limited government, and for individual liberty? Do we all really understand what that means, and what responsibility that places upon us? Are we really ready to live in a truly free country?

Certainly the first inclination is to answer “yes” to all of the above. However, I wonder if the majority of the freedom movement is really ready for life without big government.

Are we ready to live without Medicare and Medicaid, and depend on the free market to determine the distribution of medical care? Supporting the programs means taking the money for them at gunpoint from our fellow citizens, so the moral question is easily answered. Sound economic theory as well as historical evidence indicates that the poor and elderly would have more access and higher quality care without these programs. Are we ready to trust the free market and private charities with medical care for the poor and elderly?

Are we ready to live life without a “safety net?” Like medical care, the benefits of traditional welfare are also funded by the coercive extortion of money. Similar appeals to economic theory and history prove that the poor would be less numerous and would again experience an improving quality of life without these programs. However, are we ready to admit that no one has the right to even the basic necessities of life?

Are we ready to take full responsibility to support ourselves for our entire lives? Despite the government’s official fairy tale, there is no “trust fund” for social security. The money collected from taxpayers today goes directly to pay today’s beneficiaries. While the program actually runs a surplus (although it will soon become insolvent), the government spends 100% of that surplus on other budget items, as it always has. At the end of the day, social security is just another government redistribution program funded by extorted money. Any financial analysis would show that the money collected from working Americans for social security would be better invested almost anywhere else. Are we ready to admit that no one has the right to retirement benefits, and enter our golden years without social security?

Here is one that even I have trouble overriding my own programming on. Are we ready to get government completely out of education? Are we ready to admit that, like medical care or any other good or service that is produced by somebody else, that no one has a right to education? Are we ready to trust the free market for this as well?

To the average American, the questions I have asked would sound like complete lunacy. However, to someone who understands and accepts the principles of liberty and wishes to live by them, I argue that the answer to every one of those questions must be “yes.” Reason, history, and economics all tell us that these programs are immoral and destructive, not only to society as a whole, but even to the recipients of the benefits. Only our conditioned fear tells us that we cannot live without them. Are we ready to overcome that fear?

There are certainly many more intrusions by the federal government into our private lives, but I have chosen these programs because this is where the money is. Despite what we are led to believe, the Iraq and Afghanistan wars amount to only 5% of the $3 trillion budget. Ending the wars in Iraq and Afghanistan would eliminate less than half of this year’s deficit. The entire military budget makes up only 20%, and some of that would still be necessary even if we brought our troops home from all 130 countries that they are stationed in.

By contrast, Medicare, Medicaid, Social Security, Welfare, and the Department of Education combine for over 55% of our $3 trillion budget (The Department of Education is only 2%, but after that no other expenditure has a significant percentage at all). Without them, there would be no deficit. Without these programs we could eliminate the income tax and begin paying down the national debt at the same time. The financial benefits to our country would be staggering.
I am interested in the answers that CDR members would give to the questions I’ve posed. Can you answer every one of them yes? If not, I would like to hear your arguments supporting why you cannot, and specifically how you would reconcile the programs with the principles of individual liberty, property rights, and the proper limits of government. In a free society, how does government derive the right to seize the funding for these programs from its citizens? Can we ever really be free while they exist?

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