Tithing and taxes

This little gem found its way into my Facebook news feed recently:

I'm all for a flat tax. Everyone above the poverty level pays 10% of their total income. It sounds pretty damn fair to me. Yes, this includes corporations too. 10% is good enough for God, it should be good enough for our government. If it's not, then why does our government need more money than God?

Well, gee; it's not much of a flat tax if some are excluded from it, now is it? Taxes are nothing more than a way to transfer wealth from one group to another. Even this proposed system would do exactly that.

That's not the point I wanted to make, though.

What I want to make clear is that tithes and/or charity (in God's name) and taxes should never be conflated or confused with each other. Taxes are involuntarily expropriated via the threat of government force. God, on the other hand, makes no such threats against person or property for failing to give. Not only that, but He doesn't even require that you give to a middle man. Whether you buy a meal for someone in need or give to a church that does, it's the same.

I'm certainly no theologian or saint, so take the following for what it's worth: Our (Christian) salvation is gained through the sacrifice that Christ made by dying on the cross and our belief in what He said about Himself, namely that He is Christ. Paul explains this in Ephesians 2:8-9, saying:

⁸ For it is by grace you have been saved, through faith—and this is not from yourselves, it is the gift of God— ⁹ not by works, so that no one can boast.

I say this to make the point that our salvation is not dependent upon our charity, and thus there is no "donate or go to hell"-type threat looming over Christians. Now, certainly, those who are saved will, by virtue of their salvation, by and large be found to be donating (time, money, etc.) to the church and/or charity as God has instructed them. However, given what Paul said, I find it hard to believe that failure to do works (i.e. give to charity) invalidates salvation. After all, "all have sinned and fall short of the glory of God" (Romans 3:23).

There are volumes that could be written about these subjects, and I'm not qualified to write them, although I did find this article instructive. In short, tithing and charity are voluntary; taxes are enforced through violence and/or the threat thereof. Never confuse the two.

Taxes for thee but not for me

David Axelrod was on Fox News Sunday this past weekend and was asked about President Obama's taxes which were released this past week. I found the exchange over the Obamas' taxes very interesting and telling:

(CHRIS) WALLACE: It turns out that he [President Obama] paid a tax rate of 20.5 percent, which is a lot less than the 30 percent he talks about and yes, it is lower than what his secretary pays.

AXELROD: It is.

WALLACE: And the president has -- if I may, David, the question I have for you is: if the president feels so strongly about tax fairness, is he going to he contribute money to the Treasury and they have a special department just for this, to help with the deficit?

AXELROD: Listen, Chris, first of all, the reason that his tax rate was so low was in part because 22 percent of his income was donated to charity, mostly to these Fisher Houses around veteran hospitals. So --

At this point Wallace interrupted Axelrod to point out that Mitt Romney also contributes to charity. Axelrod agreed and then began to point out the differences between President Obama's tax proposal/plan and Governor Romney's. Wallace eventually returned to the original question:

WALLACE: I take it that he's [President Obama] not going to contribute money to the Treasury to help with the deficit.

AXELROD: Listen, well, that's not the way we operate our tax system, OK? We don't run bake sales. It's not about volunteerism. We all kick in according to the system. And the system allows that -- look, the fact that Mitt Romney pays 14 percent on $20 million income is not the issue. The issue is that the system permits it and he would perpetuate that and he would enhance it.

On the one hand, let me say, "good on Obama". If, as libertarians, we believe that taxes are theft, then we ought to commend any attempt to avoid paying them just as we would any defense against other criminal actions. On the other hand, it seems disingenuous of the president to call for the rich (millionaires, specifically) to pay 30% or more of their income in taxes while conspicuously failing to do so himself because the "system" allows it. Perhaps, it would have been wise for Mr. Axelrod to raise the point that the Obamas did not earn over a million dollars last year, and therefore, would not be subject to the president's proposal(s). But he didn't. In fact, he went on to defend the president's use of the system to lower his tax rate -- he's just following the rules. Nevermind that those rules permit him to contribute more.

There are a number of points raised by this story, all of which deserve a post of their own, but I don't have the time or energy to delve into each so deeply. Here they are, briefly and in no particular order:

• Taxes are not voluntary and are collected at the end of a government gun.
  
  Axelrod admits as much when he says [emphasis mine], "that's not the way we operate our tax system, OK? We don't run bake sales. It's not about volunteerism. We all kick in according to the system." The only issue I take with his description is the use of the phrase "kick in". Stop enforcing tax laws; only then can we truly know how "voluntary" taxes really are.


• No person should ever pay more than the "system" requires, the criminality of the system itself, notwithstanding.
  
  Obama's actions and Axelrod's defense of them (see the quote under the previous point) bear this out.


• It's hypocritical to call out Mitt Romney for paying "only" 15% of his income in taxes.
  
  Governor Romney lives under the same tax system that President Obama does. Why is it okay for Obama to "kick in according the system" while Romney is vilified for doing exactly the same thing?


• President Obama, himself, doesn't believe in his own tax proposal(s).
  
  As the Fox News story points out, Obama paid less in taxes, percentage-wise, than did his secretary. If he believes that a system in which this kind of "inequity" is allowed is "unfair", why wait for the system to change? Nothing is preventing him from correcting this particular injustice right now. Thus, we can infer that correcting this problem is less important to him than keeping his own money.


• Why are taxes proportional to income but not other things, too?
  
  If taxes are what we pay for government goods and services, why don't rich people pay more for everyday goods and services like groceries and carwashes?


• War is a racket.
  
  I note that the overwhelming majority of the Obamas' donations went to the Fisher House Foundation. It's been funny (interesting, not ha-ha) for me to see people on the political right who hate Obama with a passion turn around and lavish praise on him for donating money to this organization. Their love of war and support of those who fight it seemingly knows no bounds.
  
  The politics obscures the absurdity of it all. Why does the government pay for war and the private sector pay for cleaning up the messes left by it?
  

Distinction without difference

I've seen a lot of commentary over the last few days about the so-called "individual mandate" in the Affordable Care Act (ACA) that discusses how the mandate is beyond the power(s) of the U.S. federal government and that the Supreme Court would be right to strike it down. Those same commentaries, however, then concede that the same federal government does have the authority to raise taxes and then use that money to provide health care, a la Social Security.

Two thoughts immediately come to mind:

1. If the commentary, as described above, is correct, why is there such an uproar about the mandate? If the federal government really does have the authority--assuming it does so via the "proper" means--to force health care on every person within its jurisdiction, wouldn't it be far less injurious to individual liberty to allow people to choose from which provider they will get their insurance and the terms of that insurance? Furthermore, wouldn't it be far more economically efficient if individuals purchased insurance for themselves, saving the cost--both monetary and bureaucratic--of the government having to hire more IRS agents to collect the money and more functionaries to manage it?


2. Isn't the real problem that the U.S. Constitution is all but worthless at this point? That is, if the mandate is such an affront to individual liberty, but the constitution allows the government to achieve the same ends via different means, what good is it as a protector of that liberty?

Unjust laws

For some reason, today, the quote alongside the picture of Martin Luther King, Jr. got me thinking. The phrase "unjust laws", in particular, struck me. What is an unjust law? Who makes the determination?

King's quote is not new. It was said before by Aquinas who was in turn drawing on Augustine, quoted as saying, "an unjust law is no law at all". I tend to agree with the sentiment, as I imagine most people would, but the rub occurs, of course, when trying to determine exactly which laws are "unjust". Based solely on this quote, it seems that King is suggesting that humans have the ability to determine for themselves what is just and what is unjust. If this is the case, then we can infer that laws are completely unnecessary in the first place. For if a law is unjust, then no one is obligated to follow it. If, on the other hand, it is just, then there was no need for the law in the first place because people would have acted accordingly on their own.

This latter point is predicated on the idea that humans are, by and large, innately interested in living in a peaceful and just society. I believe this to be true simply because society exists at all, because

no social system, whether anarchist or statist, can work at all unless most people are "good" in the sense that they are not all hell-bent upon assaulting and robbing their neighbors. If everyone were so disposed, no amount of protection, whether state or private, could succeed in staving off chaos.

The idea of no laws probably conjures images in people's minds of masked marauders throwing Molotov cocktails in the streets. I'll make the leap of suggesting that this is objectively unjust. (I'm skipping ahead with that assumption, but we'll circle back.) In order to right this injustice, we need to haul the perpetrators into court and try them. Without laws, however, the court--whether by judge or jury--is helpless to judge the actions of the defendants. In fact, any judgment against them should probably be tossed on the grounds that it would be based on the imposition of an ex post facto standard. Since the law didn't exist before the "crime" was committed, no one can be convicted of having broken it.

But, look. We've tossed the conviction based on the idea of ex post facto laws being unjust, an idea clearly introduced into our theoretical justice system ex post facto. Clearly, we need laws, if only to codify what is (believed to be) just. Whether these laws must be promulgated by a single authority, the state, or whether society can adopt them on its own is the subject of another article. Instead, this article is concerned with the idea of (un)just laws.

Aquinas doesn't leave us hanging, fortunately. He lists three things, all of which must be true, in order for the law to be "just":

1. The law is created for the "common good".
2. The law does not exceed the authority of the lawmaker.
3. The law burdens all equally.

For the sake of completeness, Aquinas also describes a law as being unjust if it is opposed to the "divine good". In this way, he is adding a fourth requirement that for a law to be just it must not oppose the "divine good" as dictated by Aquinas' particular religion. This point violates the third point if we wish to allow for the possibility of the existence of other religions or even the right of individuals to choose not to observe any religion. Therefore, this requirement must be rejected.

Let us now consider the remaining requirements. First, the "common good". The phrase, itself, suggests that this "good" can be objectively known and that there is some good or end to which all people subscribe. The only end to which we can confidently assert that all people are working toward is the preservation of their own lives. We know this because any who are not working toward this end presumably would have killed themselves. Thus, any remaining people can objectively be said to value life over death. Therefore, all just laws must be made in the pursuance of the preservation of life.

Second, we consider the authority of the lawmaker. This must start by determining from where this authority comes in the first place. The simplest way to do this is to conduct a thought experiment in which one person and subsequently two people exist in isolation from anyone else. This has been covered before. The conclusion of this experiment is that each person exclusively controls his/her body. If one of these two people is to become the lawmaker, he or she can only assume that role with the consent of the other. That is, a lawmaker's authority extends no further than that which is given by those who would be subject to it.

Given this, we can now determine the extent of that authority. In practice, the lawmaker can have no more authority than any individual, for an individual cannot grant authority that he himself does not possess. It is worth noting that the logical extension of this is that two individuals have no more authority than one; nor four more than two; etc. In order to determine the limits of individual authority, we return to the thought experiment in which we've already concluded that each person has the exclusive right to control his or her body. In order to maintain this right, it is necessary that neither person engage in aggressive (as opposed to defensive) force against the other. This simple rule--the golden rule--is all that is necessary to maintain that status quo. Thus, the authority of the lawmaker is limited to the prevention of the violation of the exclusive control of bodies--the use of aggressive force--between a person or people against another person or people.

Finally, there is the idea that the law, to the extent that it burdens any, must burden all equally. Given the narrow constraints on the law created by the first two requirements, equal burden of the law is not a topic that requires much, if any, investigation except to say that the law must apply to all, including the lawmaker. Failure to apply the law equally, such as it may be under the first two requirements, would be to allow an individual or individuals to act contrary to Aquinas' second provision, and as already discussed, this authority cannot properly be granted by anyone. If the discussion had turned to taxes, a debate could be had on the equality of burden created by progressive vs. flat tax systems, but the imposition of taxes by the law again falls outside of, at least, the second of Aquinas' first two requirements.

To sum up, we find under Aquinas' "modified" requirements (remember, the fourth was dropped), that just laws must be enacted to preserve life; that the scope of these laws is limited to the prevention of the use of aggressive force between persons or peoples; and that all must be subject equally to said laws. (Having arrived at these requirements through the objective observations of human actions, we can now return to the earlier statement that the masked marauders throwing Molotov cocktails were acting "unjustly". To the extent that these actions are against people, they are objectively unjust. A discussion of the propriety of such actions with respect to "property" is purposely excluded from this article.) Given these limitations on the law, we are led to the (perhaps, not so) startling conclusion that nearly all laws on the books today are "unjust".

Bruce Schneier <3's TSA

Yesterday, Bruce Schneier wrote a blog post about abolishing the Department of Homeland Security. It was based, in large part, on a CATO report calling for the same citing that

DHS has too many subdivisions in too many disparate fields to operate effectively. Agencies with responsibilities for counterfeiting investigations, border security, disaster preparedness, federal law enforcement training, biological warfare defense, and computer incident response find themselves under the same cabinet official. This arrangement has not enhanced the government's competence. Americans are not safer because the head of DHS is simultaneously responsible for airport security and governmental efforts to counter potential flu epidemics.

Schneier agrees, citing his own writing from 2003:

Our nation may actually be less secure if the Department of Homeland Security eventually takes over the responsibilities of existing agencies. [...] Security is the responsibility of everyone in government. We won't defeat terrorism by finding a single thing that works all the time. We'll defeat terrorism when every little thing works in its own way, and together provides an immune system for our society. Unless the DHS distributes security responsibility even as it centralizes coordination, it won't improve our nation's security.

But Schneier takes issue with CATO's suggestion, later in the above linked report, that the TSA should abolished. Instead, he believes

abolishing the TSA isn't a good idea. Airport security should be rolled back to pre-9/11 levels, but someone is going to have to be in charge of it. Putting the airlines in charge of it doesn't make sense; their incentives are going to be passenger service rather than security. Some government agency either has to hire the screeners and staff the checkpoints, or make and enforce rules for contractor-staffed checkpoints to follow.

It would be very easy, at this point, to attack Schneier on the basis that the TSA is a colossal failure. However, that TSA is not a failure of epic proportions is not what he is arguing. In fact, Schneier himself is the progenitor of the idea that exactly "two things have made flying safer: the reinforcement of cockpit doors, and the fact that passengers know now to resist hijackers". Furthermore, just this week, he penned an article calling the TSA irrelevant. So, let's look at exactly what he did say: that airline security should return to pre-9/11 levels with the government being in charge of it, either directly (government-hired goons staffing the checkpoints) or indirectly (private contractors acting under government regulation). If we hearken back to the pre-9/11 days, we find that his statement is redundant. Prior to 9/11, the government via the FAA was in charge of airline security, and what Schneier is suggesting is exactly how we arrived -- ignoring the reason(s) for the attacks themselves -- at 9/11 in the first place.

Before addressing Schneier's claim that putting the airlines in charge of airport security doesn't make sense, let's start with why his own solution doesn't make sense. First, there is the empirical evidence. As I just pointed out, 9/11 happened on the government's watch. While I agree that airline security should be rolled back to pre-9/11 levels, putting/leaving the government in charge of it is ludicrous, and the reason for that is that the government's interests do not align with that of the traveling public. Ostensibly, both care about flight safety. But in reality, as Schneier himself points out relentlessly, the TSA fails to provide this on any level. Just last month, a Vanity Fair writer explained how Schneier helped him circumvent TSA security to meet Schneier at the gate when his flight arrived. Then there's my own personal experience: after leaving the screening area (without being screened), the TSA demanded that I return because they feared that I may have an explosive device on my person. Why would they usher me back to the most crowed area of the airport if they feared that I had explosives? In reality, the government's interest(s) lie in an ever increasing role in security. This provides, not an actual increase in security, but an ever increasing ability to funnel money to favored contractors and further ratchet up the police state apparatus for the same reason.

The other reason that having the government in charge of airline security doesn't make sense is the same reason that letting the airlines manage their own security does: the profit and loss test. The basic idea is that when a business produces a product that consumers want at a cost that is less than what consumers are willing to pay, then the business profits. If any of these conditions are not met, the business suffers a loss. If the business does not change, then it goes out of business, government intervention notwithstanding.

Let's apply this test to the government's handling of airline security. It is producing a product that consumers want, namely, security. It is producing it at a cost of approximately $8.8 billion per year according to the federal government's 2011 budget. But this is where the profit and loss test ends for the TSA or any government entity. The profit and loss test requires that consumers of a product voluntarily pay or not pay for it. The government is funded via compulsory taxation. Therefore, the government need not concern itself with whether or not it is producing a product that people want or, more importantly, in a way that they want. That the government acts in exactly this way is borne out by reality. The TSA's budget during its first full year of funding in 2003 was $4.8 billion. It's current budget, only 8 years on, is a near 100% increase from that initial budget. This comes despite repeated TSA bungles including sleeping on the job, physically harassing passengers, allowing criminal activity to bypass security, stealing from passengers... the list goes on and on. If the TSA was a private corporation, consumers would have put it out of business almost 10 years ago. Instead, its costs are higher than ever and rising with no end in sight. In fact, the TSA's only measurable goal is total security, something that requires an absolute police state. Despite the desire on the part of the traveling public for total security, I'd wager that none would actually want to pay for it in terms of money or liberty required to implement said police state.

Now we can return to Schneier's claim that putting airline security in the hands of the airlines makes no sense. He believes this because he thinks that the airlines' focus will be on passenger service instead of security. Somebody didn't think through his rationale, completely. Tsk, tsk. Security is part and parcel of the service provided by the airlines. No passenger is going to be concerned about a glass of soda and a bag of peanuts or that he didn't get a blanket and a fluffy pillow if his plane is commandeered or blown up by a terrorist. Not only that, but the loss of a plane costs an airline hugely. There is of course the capital loss of the plane and the fuel, but more than that, if the airline wants to stay in business it's not only going to have to beef up its security, but it is going to have to figure out how to prove to passengers that it had changed its ways so that they'd be willing to fly again. We see then, that the airlines' interests, unlike the government's, align perfectly with the traveling public. In addition, airlines carry insurance for their operations. This means that airlines want their operations to be safe and secure because they don't want their premiums to rise in the event of an accident, and the airlines' insurance companies have every incentive to pressure the airlines to keep their operations safe and secure lest the insurance company have to pay out a multi-million, possibly billion, dollar claim.

"We can't trust the airlines", I hear you scream. "They're greedy capitalists!" Indeed they are, and that's exactly why the system would work. The airlines, unlike the government, cannot just take consumers' money to fund their operations. They must induce consumers to voluntarily give money to them. Thus, the airlines are subject to the profit and loss test described earlier. If the airlines provide too little security, passengers won't be willing to fly. The airlines will have saved some money by skimping on security, but the lack of income will ultimately result in losses. If they provide too much security, either the costs will drive ticket prices to a level that consumers are unwilling to pay, or consumers will find alternate means of travel because they find the security required by the airlines too onerous. In either event, the airlines will again find themselves losing money. In order to make money, the airlines will have to provide enough security to satisfy their passengers' desire for safety and their insurance companies' risk tolerance while not imposing so much security that passengers seek other airlines or other modes of travel entirely to avoid the costs and hassles.

Astonishingly, a self-correcting and self-policing system like this hasn't taken hold. Part of the reason for this is human nature. Humans have demonstrated a surprising inability to correlate events with the likelihood of their occurrence. For example, very few people are concerned about choking to death on their own vomit. However, it turns out that one is 9 times more likely to die by this method than via an act of terrorism. This is a topic that Bruce Schneier has also written about repeatedly. Because of this, people always demand ever more security in the event of some kind of accident or attack. Normally, the costs of these demands would temper them somewhat, but this doesn't happen because of government involvement. This is the other reason that a free market system has not taken hold: the government provides moral hazard. The airlines prefer that the government be involved because by using government provided security and/or standards, responsibility for security failures falls on the government, not the airlines. When something tragic occurs, the airlines can point to the government as the failure. Insurance companies are likewise not terribly worried about having to pay airline claims because the government has proven willing to bail them out. Even consumers are unwitting accomplices in this system because the costs of security have been separated from the cost of a ticket. Instead, these costs are (or would normally be) imposed as taxes, but even if one went looking for them, they would be difficult to find as the government has taken to inflating the currency in order to finance its operations. The increased costs of security are found in the rising prices of everyday items like milk, rent, electricity, and gasoline.

The government's involvement in airline security is not only an abject failure but an impediment to allowing a free(d) market to discover what the people really want when it comes to airline security. Bruce Schneier is a smart guy, and he's one of the TSA's harshest critics. He's written extensively about security and the trade-offs made in its name; he's no stranger to economics, especially when it comes to security. In light of this, I can only conclude from his desire to keep the government involved in airline security that he secretly loves the TSA.

Where's the beef (with capitalism)?

Over at Arm Your Mind for Liberty, a recent article takes issue with capitalism. I read this article with great interest because (I assume) it grew out of a discussion between myself and the author as well as some others regarding capitalism. When I read it, though, I couldn't find that the "beef" is really with capitalism at all. Before going too much further, we should probably start with a (common) definition of capitalism, but I'm not going to attempt to define capitalism in great detail. It seems that if you ask ten different people, you'll get ten different answers about what capitalism means to them as the linked article states:

‘Capitalism’ is a funny word. It means so many different things to so many different people, that it’s become entirely useless as a basis for any kind of rational or constructive communication. [...] Some will mention wage labor, others exploitation and yet others will talk of free trade. But I think the defining feature is the ability to accumulate lots and lots and lots of stuff (capital).

Fair enough. The ability to accumulate lots (and lots and lots) of stuff, or capital, is most assuredly a characteristic of capitalism and, as we will see, the article's main problem with it, so let's focus our attention there. Before we do so, the original article takes a slight detour:

And then, most importantly, [a characteristic of capitalism is] to have a third party protect your ability to control that stuff even when you’re not using it. That third party, of course, is the state (the government). [...] Without this ability to accumulate and have your title to said stuff protected at little to no cost to yourself, things like wage labor, exploitation and managed trade could not happen. These all depend on the power imbalances that stem from the state protecting capitalists’ control of their property.

Whoa, wait just a minute! Now, we're not talking about capitalism any more. We're talking about a state-directed ("managed trade") and state-enforced ("stuff protected at little or no cost to yourself", presumably via taxation on the whole population and "power imbalances" in the form of state-chartered police and enforcement mechanisms) economic system, our current system, what many call crony-capitalism. So, we can already see that the author's problem is not with capitalism, per se, but with crony-capitalism and the state enforcement of it. The author continues by stating that he doesn't "think capitalism would survive without the state".

But we're not talking about capitalism any more. We're talking about the state. The author offers no evidence or theories as to why capitalism cannot or will not exist without a state other than to say, "I don’t think a non-aggressive organization will go to the same lengths as the state to protect property". This is demonstrably false, however:

Just think for a moment about the following:

• Who is responsible for protecting you at most major shopping centers? Ever see a private mall cop? I bet you have.
• How about casinos? Almost all casinos have private armed security.
• What about at the dance club? Ever see a bouncer throw out a belligerent drunk?
• What about at the university? You’d be hard pressed to tell the difference between a public safety officer and a cop. Many universities have private police forces.
• How about warehouses, ports and apartment complexes? It is not uncommon to have private security guards protecting all of those. My apartment complex has its own security.
• Airports used to be entirely protected by private security – and guess what? No one was complaining about being molested. Further, after 9/11, it was the airlines who made real improvements to security by putting in steel cockpit doors and arming the pilots.
• Banks? - Almost all bank cash transfers are dealt with by way of private armored car, and many banks have private armed security as well.

Now I've been drawn into a digression about capitalism on a larger scale. Let's return to the accumulation of stuff in the original article and look at an example provided by the author describing his issue with it: "if someone fences off 1,000 acres of land but consistently uses only 2, I don’t consider that legitimate". This situation draws its basis from the Lockean idea of homesteading, that one becomes an owner of land by "mixing" his labor with it. I'm not going to argue whether fencing 1,000 acres constitutes a mixing of labor. A debate on such a matter is not likely easily resolved.

Instead, what if we arrived at this situation differently, voluntarily? Let's assume two people and call them A and B. Each of them own 501 acres (via legal means, homesteading or otherwise) and farm the entirety of their respective plots. A and B both consume only what they need to survive and sell the rest of their produce into the marketplace. A saves the proceeds from his sales under his mattress while B spends his money on vacations and house keepers and other consumable goods and services. (One has to wonder, at this point, if B has a claim to A's money since storage under A's mattress is not "productive" use in B's mind.) At some point, bad weather conditions befall A and B. A, having saved his money, is able to buy what he needs from the marketplace, but B has nothing. Seeing B's plight, A offers to use some of the rest of his savings to buy 499 acres of B's land. B, needing to feed himself and his family, reluctantly agrees. Now A owns 1,000 acres, and B owns 2. We've arrived at the evil capitalist situation described by the author in the original article, but we've arrived by completely legal and voluntary means.

Let's assume that A, having just bought the land and exhausting much of his savings, does not have the capacity to expand his farming operations into his newly acquired 499 acres. When the weather improves, does B have a legal right to reacquire the land, via homesteading? What if B had kept the land but sold his farming equipment to A to pay for his food? Now that B is incapable of farming his land (and has no reasonable prospects for doing so since he has no farming equipment and no savings with which to buy any), can A also freely acquire B's land under the homesteading principle?

The author of the original article seems to think so: "If someone needed land and had a solid intention to use it to sustain his life, I would support that person in any attempt to homestead a reasonable parcel out of the 1,000 acres". B, in our example, has every "intention to use [the land] to sustain his life" as well as others'. The author goes so far as to suggest that force is an appropriate means to affect this outcome:

In a stateless society, people would be freer to rise up against people who attempt to control more property than they actually use. Acting in concert, great numbers of people could, in the worst case, purchase arms, form a defense force and fight capitalists on a more level playing field. Squatters, worker-owned cooperatives and similar direct actors would take control of more of the capitalists’ property. In the process, their power would be eaten away.

In fact, A has saved B's life as well as his family's, and in return B should have the right to use violent force to take back from A what was voluntarily given/traded (by B himself!) to A? What the author is suggesting is either a clear violation of the non-aggression principle or will require a state, with a legal monopoly on the use of violence, to forcibly give A's land to B.

The only other argument in favor of what the original author is suggesting hinges on the word "reasonable". Perhaps 1,000 acres is an "unreasonable" amount. Much like the hypothetical debate about homesteading to which I alluded earlier, a common definition of what is "reasonable" is not easily resolved. As an example, here are a bunch of pro-gun people on a pro-gun forum disagreeing about what "reasonable" gun laws would look like. At any rate, the example I gave above works with any sized parcel of land. In fact it becomes even more difficult to reason out on a smaller scale. Consider if A and B each owned two acres and A bought 1 acre from B. A is in a much better position to farm an additional 1 acre than he is an additional 499. What if A incrementally continues the process, voluntarily acquiring parcels from C, D, E, etc. in a similar manner? When does the amount of land that A owns become "unreasonable"? Does the situation change if A rents the land back to B, C, D, E, etc.? Who makes that decision and who enforces it? What authority does this entity have when A can show that his property was acquired legally? None, according to the author of the original article: "If a person prospers legitimately, I have no basis to challenge any accumulation of wealth." Wait, what? Does B have a claim to A's legitimate accumulation of wealth (in the form land) or not?

In short, capitalism, true capitalism, is not an economic system that is imposed on anyone. It is an economic system that arises from, or rather is the result of, voluntary interactions in a truly free society. In fact, the economic system proposed in the original article is not only incoherent but, in the author's own words, requires violent enforcement. I suggest that the author's "beef" is not with capitalism but with a free and voluntary society.

Is the state a criminal conspiracy?

Murray Rothbard famously called the state "a bandit gang writ large", or as it is more commonly rephrased, "a gang of thieves writ large". I have to admit that the first time I read this I was quite taken aback. I think I was first exposed to this idea early on after becoming a libertarian, and I wrote it off, in large part, to fiery rhetoric intended to get readers' attentions. Fortunately, it didn't scare me off, and as I read more and more, I came to understand the logic behind the assertion. As it usually goes for me, I have trouble seeing the forest for the trees right away.

This assertion -- government as a criminal gang -- often accompanies, or occurs during, a discussion of taxes. In fact, I had a discussion with someone just this past weekend during which I said that taxes were theft because I had never consented to them. Invariably, this leads (as it did in this case) into discussion about helping the poor, benefits of services paid for by tax revenue, and "civic duty" and what it means to be a "good citizen". The argument goes: taxes are fine and good as long as we put them to "good" use; to be against taxes is to be against the good that taxes provide. Don't get me wrong. I believe in helping the poor; I drive my car on roads; and I'm all for peaceful cooperation and being a productive member of society. I simply differ from the bulk of the population on how these ends should be achieved.

Since I'm likely in agreement with most about what can be achieved with the proper use of tax revenue (assuming the "proper" use could really be known), let's back up a bit and look at taxes themselves. A tax is simply a financial charge imposed by a state (or functionally equivalent "legal" entity), the payment of which is enforced under penalty of law. This is a somewhat euphemistic definition, though. A tax "is not a voluntary payment or donation, but an enforced contribution, exacted pursuant to legislative authority" according to Black's Law Dictionary. With that definition in mind, we begin to see now the shape of the criminal gang metaphor. The state imposes a financial charge on its subjects and enforces the payment of said charge with force. In less civilized societies, failure to pay may be immediately met with the state's armed enforcers stopping by to collect the charges. In more civilized societies, one might first be given a trial in a state-run court, after which failure to pay will be met by the state's armed enforcers. The result is always the same, though. Taxes are ultimately, always collected by force be it through property confiscation or (the threat of) incarceration. (A discussion of the equality of the threat and actual use of force is omitted.)

When a criminal gang takes money by force, it is theft. When the state does it, it is taxation. The difference is curious, to say the least. Looking back at Black's definition of taxation, note that taxes are "exacted pursuant to legislative authority". So, despite all outward appearances, taking money from someone against their will is not always a crime; the legality of the act depends on who is doing the taking. The state is empowered by "legislative authority" while the "criminal" gang has no such authority. So, let's step further back and examine from where the state derives this authority.

Imagine, for a second, a person living alone on an island. For all intents and purposes, this person owns the island and everything on it, if for no other reason than there is no one else contending for ownership. Now let's add a second person into the mix. There are myriad ways for the two to decide how to divide up the land and coexist, but they all begin with the question of the proper ownership of each person's body. The simplest, most common sense solution to this question is that each person is the exclusive owner of his or her body. After all, it doesn't make sense for each person to own the other's body but not his or her own. Nor does it make any sense for the two to own both bodies jointly. These latter solutions would only produce conflict as the two would never be able to agree on how best to use their bodies. Indeed, the only viable solution is for each person to be the exclusive owner of his or her own body.

If we accept this premise, then it follows that the initiation of force/violence against another (without this other's consent) is never justified as it constitutes a violation of the person's ownership of his or her body and sole discretion as to how that body should be used. It further follows that if a person does not have the authority to initiate violence against another, he or she cannot contract this authority out to a third party, namely, the state. That is, one cannot grant power or authority to another that one does not have in the first place. Thus, we arrive at the conclusion that the initiation of force/violence by the state is never justified, and since all state actions are predicated on the use of force, we must further conclude that all state actions are without proper authority, at a minimum, with respect to those who do not consent to violence against them.

By now, it should be clear that there is little difference between the actions of a "criminal gang" and the state in terms of their authority to commit those actions. The only place where the two may differ is in the fact that, occasionally, the state may use its ill-gotten gains to help the public in the form of welfare, roads, etc. But the state is no Robin Hood. It steals from the rich, the middle class, and the poor, alike. Not only that, but it pays its bureaucrats first and then uses what's left to pay for these services. So, even when the state does good, the taxpayers are forced to overpay for these services since they can be provided by and found in the private sector -- often the state ends up contracting with private sector businesses -- with less bureaucracy and the added benefit of market competition to keep prices down. We must also note that money left, after paying bureaucrats, is further reduced by the state's spending on warfare and all that that entails. Taxpayers really aren't getting a good bang, no pun intended, for their buck.

All of this talk about how the state spends money, though, is simply a giant misdirection intended to confuse the issue. After all, we don't tolerate crime when the proceeds are used for ostensibly "good" purposes. Nor would we tolerate it if the criminal offered to give us a partial say -- a vote if you will -- in how he or she might use the proceeds. The criminal act must be addressed first and foremost, and this should be no different when it applies to the state. When there are different rules for the state and for the subject/citizen, what we have is most definitely not the rule of law.

The state is indeed criminal in its actions; the next step is to establish conspiracy. Strictly speaking, a conspiracy is "an agreement by two or more persons to commit a crime, fraud,or other wrongful act". Under this definition, a conviction of the state is all but certain. This isn't exactly what I have in mind, when I say conspiracy, however. Conspiracy, in reference to the state, implies to me some larger goal: not only to keep power but to further and further enhance and centralize it. It also implies that the state is always working toward this goal as an end unto itself. Now, I won't argue that this isn't what happens, in practice; however, I have a hard time believing that the state, at all levels, is always and everywhere conspiring toward this end for one simple reason. Again, Murray Rothbard:

[I]n a profound sense, no social system, whether anarchist or statist, can work at all unless most people are "good" in the sense that they are not all hell-bent upon assaulting and robbing their neighbors. If everyone were so disposed, no amount of protection, whether state or private, could succeed in staving off chaos.

If Mr. Rothbard is correct, which I believe him to be, that most people are "good", then we must conclude that either a significant number of people working for the state are "good" or that by some sort of social malfunction the state exclusively employs the "bad" people in society. There is certainly a good argument to be made for the latter possibility, but I'm a believer in the former.

If I am correct in that belief, then there only remains the question of why the state continues to exist. I believe there are two, related reasons: 1.) people do not understand the nature of the state, and 2.) people believe that they are not responsible for the actions of the state. I've addressed the former in this post; I'll try to address the latter in the next.

The legitimacy of voting

With Ron Paul running for president again, much is being made about the legitimacy of voting. In fact, my wife asked me the other day if I would vote for Ron Paul either in the primary or in the general election, should he succeed in getting the Republican nomination. I honestly wasn't sure how to answer. I oppose voting on the grounds that 1.) participation in the system may be (mis)construed as consent to or legitimization of the system, and 2.) voting is the attempt to impose one's own will on another.

Tom Woods addressed the first objection in a blog post the other day:

If you were stuck in a prison camp, and the guards let you vote on whether you were to have gruel or prime rib for dinner, would you be “consenting to the system” to vote for prime rib, or would you simply be doing the best you could under the circumstances to improve your material condition?

His question implies that the two options -- consenting to the system or doing the best you could to improve your material condition -- are mutually exclusive. They are not. Can you vote for the prime rib (or the gruel, for that matter) and still oppose the system? Absolutely. Will your captors acknowledge this distinction? Doubtful.

The problem with these types of thought experiments is that they are directed at the wrong audience. The title of Mr. Woods' blog post is "Why Even an Anarchist Should Vote for Ron Paul". The content is clearly directed at anarchists of various stripes who have made a conscious decision not to vote for whatever reason. They, typically, understand the nuances of voting but not consenting. That is not to say that statists don't also understand that nuance. However, whether they understand it or not, they will not acknowledge it.

When one is born into this world, he or she cannot be said to have consented to any government. In fact, even adhering to the laws of any particular government cannot be said to constitute consent. A person breaking the law often enough would quickly find himself in a situation akin to the prison camp described by Mr. Woods. Therefore, the only position we can reasonably ascribe to such a person is a desire to avoid the government force threatened when the law is broken. The same applies to paying taxes. Paying taxes also cannot be said to serve as consent because, again, government force is threatened if taxes are not paid. While adhering to the laws and paying taxes are sometimes used as a measure of consent, even the most ardent government supporter cannot claim that these are completely free choices made by an individual.

How then can we measure whether a person consents to his government? It can only be by an affirmative participation with government in which a person can freely choose whether or not to participate. This participation must also not be predicated on some prior interaction with the government. An example of this latter condition is the acceptance of a government benefit by a taxpayer. The taxes were appropriated (for the sake of argument) without the consent of the person, and the courts refuse to hear any case in which taxes are purported to be theft. Therefore, the only recourse for the taxpayer to try to recoup his lost property is by accepting some kind of government benefit, be it through the use of public roads or schools or accepting payments from programs like Social Security. (This ultimately leads to the problem described by libertarian class analysis, namely that there exists net tax payers and net tax beneficiaries, but that is another topic entirely.)

What we are left with to determine consent is voting. (Technically, voluntary military service could also serve in this role, but this is applicable to a very low percentage of the population and therefore not suitable for this discussion.) Again, it is possible to vote and not consent; it is even possible to make the argument that voting for lower taxes (or against higher ones) is a form of action predicated on a prior government action: theft via taxation. However, voting is the "most free" interaction with government allowed, and as described previously, those in government and those who support it will construe voting as consent. Sure, one can disagree with the outcome, but one still consented to it. In this way, voting for a candidate who most favors libertarian ideals -- who outright wants to abolish government -- could be the most damning act of all (in a statist's eyes) because one will vote most earnestly and without reservation to give his candidate the power of government, even if the goal is ultimately to turn that power against itself.

To illustrate my second objection to voting, let me alter Mr. Woods' example slightly:

Let's assume again that you are stuck in a prison camp, this time with two others. The prison guards again offer a choice of gruel or prime rib. One of the others becomes violently ill when eating red meat, and one is tired of eating gruel to the point of violence.

Do you vote for the prime rib, forcing the one who will become ill to go without? Do you vote for the gruel risking the possibility that the other one will become violent and hurt either you or the allergic one? Do you work out some kind of system in which you vote for prime rib sometimes and gruel other times leaving the allergic one without food on occasion?

It's very easy to look at a situation like that proposed by Tom Woods and assume that there is nothing wrong with voting because the situations presented are such that no one would oppose them. Roderick Long, in an article I highly recommend, makes the same leap by analogizing that it would be right for Lana Lang to take control of Lex Luthor's Juggernaut Beast and prevent the destruction of Smallville -- you really have to read the article. (Long eventually shoots his own argument in the foot by saying that there is nothing wrong with a libertarian wielding government power so long as he doesn't use it for "evil". Why isn't the same true of Lex Luthor? Lex has not aggressed against anyone merely by flying around in his Juggernaut Beast, at least not any more so than the mere existence of government constitutes aggression.) Real life is never so cut and dried. The choices required in voting are more often like the example of the prison camp that I described.

In summary, voting is not, in and of itself, an immoral or aggressive act. Furthermore, it is possible to vote for (or against) something and still object to the system within which the vote takes place. However, no matter how one rationalizes his act of voting or not voting, he must be aware of how that action will be perceived (particularly by those with whom he disagrees) and if/how that action will affect others.

Why democracy?

Over the last month or so, people have been throwing off, or trying to throw off, the shackles of their oppressive governments. It started in Tunsia, spread to Egypt, then Yemen, Bahrain, and now Libya. In every instance, though, the protestors have been calling for democracy. I suppose that's understandable; the grass on democracy's side of the fence probably looks and probably is a lot greener than that on the dictatorial side. I'm probably underselling democracy with that statement. After all, democracy is often held out as the gold standard for (good) government. Winston Churchill endorsed it, saying, "democracy is the worst form of government except all the others". Despite the actual wording, when reading or hearing Churchill's statement, people often "hear" that democracy is the best form of government. In reality, we can rightly infer from the statement that all forms of government are terrible. In Churchill's opinion, democracy is just the least terrible.

Democracy is often referred to as "tyranny of the majority" and Lysander Spooner explained, very eloquently, why:

[O]ther men practise this tyranny over him by the use of the ballot. He sees further, that, if he will but use the ballot himself, he has some chance of relieving himself from this tyranny of others, by subjecting them to his own. In short, he finds himself, without his consent, so situated that, if he use the ballot, he may become a master; if he does not use it, he must become a slave. And he has no other alternative than these two.

Democracy is a very seductive mistress because it promises the people control of the government. It gives the illusion of self-governance and individual rights. It implies that no injustice can be done so long as the "will of the people" is done. It provides nothing of the sort, though. As explained, when the people vote, a majority may and does impose its will upon the minority. "Will of the people" is rightly replaced with "will of the majority". This can be seen most prominently in the struggle in the U.S. for gay rights, and more specifically, gay marriage. In California, in 2008, 52% of the population denied gay people the right to marry. Proposition 19 last year, also in California, is another example where barely more than half of the population (53.5%) used their majority position to deny the use of marijuana -- the actual use of which affects no one other than the user -- to the rest.

There is also the problem that democracy doesn't scale. The founders knew this when they set up the U.S. House of Representatives. That is, it is not practical to hold a vote among the entire population for every matter to come before the U.S. federal government, so instead the population elects representatives to act in their stead. These representatives then practice democracy amongst themselves. This is even worse, though. Each representative currently represents just under 700,000 people. How can one person adequately represent the diverse views of almost three quarters of a million people?

Choosing between two candidates is analogous [to] going to Walmart and being presented with two shopping carts already filled with items. Everyone will leave the store with the same cart of goods. Each cart contains products that a person may want and products that one wouldn't choose to have, but the voter is not able to take anything out of either cart.

Not only that, but:

[E]ven though the voters are promised a particular set of goods in the shopping cart that won the election, that doesn't mean that the voters will receive that set of goods. The candidate could promise to deliver a specific set of policies, but after the election, the office holder is free to deliver a different set of policies to the voters, either because the candidate changed his position on some issues or because he was being deceitful during the campaign in order to gain political support.

The same can be said at other levels of government, even down to the city level, where a handful of elected officials make decisions on behalf of hundreds of thousands, if not millions of people. So, the question should not be "why democracy", but "why government". At the federal level, we have things like  TSA body scanners, highway checkpoints, the PATRIOT Act, warrantless wiretaps, extra-judicial assassinations, and indefinite detentions. At the state level, we have the aforementioned denial of gay rights and marijuana use, prohibitive gun laws, and smoking bans. At the city level, we've got Happy Meal "bans" and watering limits and landscaping restrictions. And at all levels, we have taxes and police. You may be inclined to agree with some or all of these items, but that's not the point. The point is that some person or group who you may or may not have voted for or even heard of is, in one way or another controlling you. So, perhaps the question should really be, "why do people choose to be ruled".

Whether they know it or not, most people are Hobbesians, by which I mean that they believe or are fearful that the natural state of humanity is "war of all against all". They may very well be right, and in order to protect themselves from this "war", people institute governments and cede the use of force to said government, presumably to prevent the use of force amongst the people themselves. Locke argued that people do not even have the ability to cede this power in the first place, but nevertheless, ceding this power to a government presents a clear contradiction. If all people by their very nature would war with all others, why would anyone cede to anyone else the legal use of violence? James Madison touched on this idea in The Federalist, No. 51 when he said that if men were angels, there would be no need for government. He argued further that because men are not angels, pitting them against each other within government was the best that we could do. Men, competing with each other, from different branches of government, would restrain each other.

But what kind of person runs for public office? Madison failed to foresee that even the so-called "separation of powers" could not restrain men forever. Entry into politics does not require any particular skill or morality. It simply requires some combination of money, connections, personality, and a desire to rule others, particularly the last one. In fact, that last reason is probably the main reason that anyone runs for office. The idea that the world would be a better place if <insert your name here> was in charge is probably not foreign to anyone. To succeed in government, however, involves backroom deals and "compromises" ensuring that only the least moral and most willing to deal away their principles will rise to the top. Thus, government will ultimately be populated with the worst people in society, and it is only a matter of time before they decide to work together to turn their legal authority to use force on the people themselves. It turns out that government is really a sort of Faustian bargain. Government is instituted to protect people from those in society who would do harm, but how much worse is it when those who would do harm wield the power of the state?

The people of the revolting Middle Eastern and African nations now have a rare opportunity to truly be free. I fear, though, that like many before them, they will make the mistake of putting in place a government that will ultimately betray them and once again oppress them. If they are lucky, it will be to a lesser degree.

Democrats flee Wisconsin

The Democrats have fled the Wisconsin capital to avoid an upcoming vote to deny collective bargaining rights to government workers. I think the Democrats are right but probably for a different reason. The first amendment (supposedly) protects free speech and the right of the people to peaceably assemble. A union is, at its core, a group of people exercising those rights. The fourteenth amendment applies the first to the states -- really, the Supreme Court applied the first to the states, but that's another discussion -- so in my mind, an attempt by the government to bar unions is unconstitutional (keep in mind that I'm no lawyer).

In the particular case of Wisconsin, and really governments in general right now, government incomes are falling (unemployment) and expenses are rising (healthcare, welfare, etc.). Like a business, they need to cut costs, raise revenues, or declare bankruptcy. The latter two are politically untenable, which leaves cost cutting. Hence, the governor wants to cut workers' salaries and benefits. The union is simply trying to prevent that. I'll let you draw your own conclusion about whether or not the union is in the right.

I'm willing to give the Democrats the benefit of the doubt and assume that part of their reasoning in leaving the state was defending constitutionally protected freedoms, as I described above, but I believe much of it to be predicated on the pro-worker position(s) of the Democratic party and the idea that the government workers in question deserve "fair" compensation. The idea of "fair" compensation is murky, at best, when dealing with governments, though. There's a tendency to compare government salaries to private sector salaries and assume that they should be similar (at least) in the cases where the job functions are the same. If government salaries are too low as compared to those in the private sector, government can raise taxes to raise its workers' salaries. This would likely have a negative effect on private sector workers, though, as they would see less "take-home" pay, and employers may even begin to pay less as well. As private sector salaries decreased, government could lower its workers' salaries and, in turn, taxes. In theory, this would reach equilibrium at some point, and we could all claim that "the market works". (Also, keep in mind that I'm no economist.)

In reality, this would probably never actually happen because the union would fight tooth and nail to prevent the government from lowering its workers' salaries, much like what is happening now. The other problem is that it's not the market at work. In a truly free market, people would determine the workers' salaries indirectly by voluntarily paying for the product produced by the workers. The government isn't subject to market forces, though, because its revenues come in the form of taxes. People, in general, don't pay their taxes because they want a product that the government produces; they pay them because the alternative is prison.

I don't mean to sound anti-union; I'm not against them, per se. Like anything else, they can be good, and they can be bad. For interested readers, Henry Hazlitt gives a much fuller and better treatment of the subject.

What's wrong with this picture

Yesterday, I received my Social Security statement in the mail. It looks something like this. I just assume that the country will be bankrupt by the time I reach retirement age, so I don't pay much attention to these things. I did notice a sort of Frequently Asked Questions insert that came with the statement, though. I was especially intrigued and infuriated by the question in the green box in the middle of the page. It asks the hypothetical question of whether or not Social Security will still be around when I retire. It then answers the question by saying that even though the whole enterprise will be insolvent, the current estimate is that Social Security will pay 76 cents on the dollar of promised benefits. (The website is apparently out of date.)

Let's put some real numbers behind this. Let's say Mr. Smith, a 30 year old man, makes $100,000 per year, or rather, let's say that his salary over the time for which we works, averages to $100,00 per year. Let's further assume that Social Security taxes stand at 7.65%, which is where they currently stand. They tend to increase over time, but let's try to keep this simple. Finally, let's assume Mr. Smith starts working out of college, at age 22, and works to his full Social Security retirement at 67. In this example, Mr. Smith will have worked for 45 years, earned $4.5 million and paid $688,500 (with his employer's matching contribution) into the Social Security "trust fund". Assuming that the entire $4.5 million is taxable for Social Security purposes, Mr. Smith is entitled to $2,659 per month. At this rate Mr. Smith could live for almost 22 years (to age 87) before he would exhaust the money he paid into the system.

Before we get ahead of ourselves, let's also look at the case of Mr. Jones, also aged 30 years. He makes closer to the median of $50,000 per year. At retirement, Mr. Jones will have earned $2.25 million and paid $344,250 in Social Security taxes. In retirement, using the same parameters as above, Social Security estimates that it will pay him $2,015 per month. Mr. Jones could live for 14 more years (to age 81) before his money would be exhausted.

What's wrong with this picture? In spite of the common arguments that people are living longer and fewer people are paying into the system than are drawing upon it, the government should be running a huge surplus given that the average life expectancy in the U.S. is currently 78 years. This is what truly makes this a Ponzi-scheme. People aren't even living long enough to exhaust their own benefits, and Social Security is still insolvent. This is almost certainly due to inflation, and Social Security benefits with it, rising faster than wages. I touch on the inflation and benefits portion of the problem later. First, let's look at the money that is paid into the system.

Social Security trust fund

You may have heard of the so-called Social Security Trust Fund. The idea most people have is that the money that is paid into Social Security by workers and employers is socked away somewhere in a bank quietly earning interest. Instead, the money paid into Social Security is invested in U.S. government treasury bonds. The actual money is then spent by the government to pay for other things (perhaps even existing retirees). In fact, there is no trust fund. What actually exists is $2.5 trillion of debt that the government owes to itself, plus interest. The money that the fictional Mr. Smith and Mr. Jones paid into Social Security has already been spent. Their retirement money rests solely on the government's ability (or possibly even willingness to) pay its debts.

Inflation

Inflation is defined as "a rise in the general level of prices of goods and services in an economy over a period of time." Let me make a distinction, though. When corn prices rise because farmers had a bad season, that is not inflation. Instead when I say inflation, I'm referring to the existence of an excess amount of money in the economy contributing to the devaluing of all money. To demonstrate this phenomenon, though, here are a few charts:

This first chart is of the "consumer price index". The CPI refers to the price of a group of common goods bought by consumers. The dark line shows the relative price of those goods over time. The red line shows the year over year change in the price of those goods. Since the red line is almost always in positive territory, over time the darker line has to go up.

This chart is another way of conceptualizing what is shown in the CPI chart. Relative to the value of the goods that one would purchase with a dollar, the value of that dollar is falling. Stated differently, today's dollar is capable of purchasing 1/20th (or less) of a good that it was capable of purchasing one of in 1913.

This chart should drive home the point about excess money in the economy. You can see that things really went awry (in all three charts) around 1970, which coincidentally is when the U.S. finally severed all ties to a gold standard.

What does this have to do with Social Security? The federal government has two options with regard to Social Security: default or pay. I don't believe that there is the political willpower to default, which means that the government will attempt repayment (assuming the economy lasts long enough). The government can only raise money via taxes or inflation, and raising taxes is going to be politically difficult for the foreseeable future. That leaves inflation. The point of all of these charts then is to demonstrate that by creating inflation, the government will necessarily have to destroy the dollar. The worst part is that inflation begets inflation. In order to protect those on Social Security, the government raises their benefits through COLA. In order to raise their benefits, it has to print more money. By printing more money, it creates more inflation. Creating inflation is a very dangerous game, though. It can very quickly lead to hyperinflation, which some argue is not far away; and even if hyperinflation never occurs, the inflation tax is still levied on everyone.

What's wrong with this picture, indeed

I mentioned earlier that I was infuriated by the question in the insert with my Social Security statement. What infuriated me so much is that I was enrolled into the Social Security program without my consent and given no way in which to opt out of it. Assume that I got over that, though. Great, so I pay into a system that promises to pay me X amount at retirement (ignoring for a second whether or not I get the full benefit of the amount that I paid in). Suddenly, I get word that the rules have changed. I continue to pay in the same amount, but now I receive reduced benefits. If anyone but the government did this, it would be illegal. I believe the technical term is fraud.

Here's my favorite part, though. John Boehner has suggested that those with "substantial non-Social Security income" when retired should receive reduced or no benefits at all. From each according to his ability (via the progressive tax regime), to each according to his need (no benefits for those who don't need it). Who's the Socialist now, Mr. Boehner? Who would put their money into a system that guarantees a 100% loss before the first dollar is even invested? Nobody, that is, except by the coercion of law.

My solution

Here's is what I propose: If the government will release me from the Social Security system, now, I will forgive the money I've already paid into it and promise not to attempt to draw on it later. Sound fair?

Just... hold on a second

I came across a number of weird/wacky news stories this morning, and since I didn't really feel like writing very much, I was going to just post a few links with some commentary to accompany them. Then a friend of mine posted a link to an opinion piece entitled "Just Stop" over on the Mesa Democratic Club's website. Well, I loves me some politics, so I went over to read it. The article started out well enough (read: I agreed with it), but then it lost me. Since this friend of mine and I have agreed not to discuss politics over our social network of choice, I decided to write this post.

The article starts out pointing out that Sarah Palin is not a "political outsider", that the Tea Party is not an independent group, and that John McCain no longer has any discernible political positions outside of whatever it takes to get elected. These are all excellent points with which I could not agree more. It's at this point that our respective positions diverge.

Stop pretending that the deficit we’re all facing is the fault of President Obama and the Democratic Congress. During the Bush administration, we went from a surplus to a massive deficit, largely thanks to two wars that were never (until Obama) added to the federal budget—wars, in other words, fought entirely on credit. We compounded the problem with tax cuts that largely benefited the wealthy, and a huge Medicare increase, and all those were also on credit. When the economy tanked in fall 2008, Bush quickly pushed through the TARP bailout, adding to the deficit (but pulling the economy back from the cliff).

President Obama is not entirely responsible for the deficit. He is quickly adding to it, though. Yes, Obama added the wars to the federal budget, but that does not change the fact that they (along with the much of the rest of the budget) are still paid for on credit. And while Bush may have pulled the economy back from the cliff, he did not change it's direction; it is still headed that way under Obama.

Stop pretending that the near-ruinous economic crash that we’re still reeling from was Obama’s fault, too. The root causes stretch back decades, to a continued process of deregulating financial institutions, allowing them ever more leeway to prey on the vulnerable, to sell mortgages to people who couldn’t afford them, and to manipulate financial products that were ultimately guaranteed to fall apart.

And stop pretending that Obama and the current Congress should have been able to fix the two above problems in 18 months, when it took eight years to create the first one and literally decades of foxes guarding financial henhouses to create the second.

Again, the author is correct that the economic crash was not caused by Obama, and that it is unrealistic to think that the government would be able to fix it (I would argue, in any amount of time). The author implicitly places the blame on the private sector, however, when he talks about mortgages and financial products. Those mortgages that people couldn't afford were promoted and backed by the government in the form of Fannie and Freddie and FHA and VA loans. Obama has continued this process with the homebuyer tax credit and the HAFA and HAMP programs. For non-mortgage related financial instruments, look no further than the Federal Reserve serving as the "lender of last resort". Even though the Fed is nominally a private entity, it's ludicrous to think that they really are, and when banks get into trouble, the Fed bails them out via the power of "printing" money, a power that Congress abdicated to it long ago.

Stop pretending that saying “No” is the same as governing. We pay our legislators good money to go to Washington and make difficult decisions that keep the country moving. By voting “No” on every bill, by refusing to negotiate in good faith, by deciding that short-term political advantage was more important than the everyday lives of Americans, the Republicans set back our recovery, made needed reforms fall short, and put our lives and our economy at unnecessary risk.

I hate the idea that governing means "doing something". Saying "no" is a legitimate act, one in which all politicians engage because nobody can agree on the exact role of government. In this way, saying "no" is doing something. That is not to say that Republicans are not being obstructionist for political gains; however, the author would be better advised to point out Republican hypocrisy on things like expanding Medicare under Bush but railing against the PPACA, now.

Stop pretending that the economy is magic. You can’t continue to give millionaires and billionaires huge tax cuts, make tiny, cosmetic cuts at the margins of things, and still reduce the deficit. You can’t create jobs without spending money. Tax cuts for millionaires and up are not stimulative because those people don’t spend the money from the cut—it’s not like you’re giving them a wad of cash and sending them to the store. When you put an unemployed person to work or give a tax cut to a poor or middle class family, that’s exactly what it’s like—they go buy things they need and those dollars flow through the economy, creating jobs and wealth everywhere they go.

I'm not sure anyone is pretending that the economy is magic; however it is far more complex than most imagine. Not only that, but the government via regulation or the Fed often arbitrarily moves the market in ways that could only be predicted by magic. The author is correct that tax cuts (to anyone) won't balance the budget. He is mistaken, though, if he thinks that tax increases will do the job, either. Federal spending is out of control, and the only way to save this country's economy, over the long term, is to start cutting Social Security, Medicare, the military, everything.

And stop talking about stimulus. It's too bad that people believe that Keynesian economics preaches deficit spending. Keynes, mistaken as I believe his theories to be, spoke of stimulative spending out of savings. Yes, it takes money to create jobs, but it also takes money to keep those jobs. To think that the government (or anyone) can throw a one-time bucket of cash at the economy to "unstick" it is ridiculous. It will only lead to the government having to throw ever increasing amounts of money at the economy. It's amazing to me that most people agree that easy credit was the proximate cause of the economic conditions in which we all now live and at the same time believe that if the government just borrows more from China that that will fix the problem. We will end up back in this very situation again, only it will be much, much worse.

The things that Pelosi and Reid have supported these past 18 months have been programs that will help America move into the 21st century. Health care reform, in spite of great efforts at pretending, is not a “government takeover” of health care—it institutionalizes, in law, the presence of the health insurance industry, and gives that industry millions of new clients.

Whoa! Stop right there! Did you catch that? The government, under Democratic control, via the coercion of law, just delivered millions of customers to the health insurance industry. It's not just the Republicans that are in bed with big business.

It will, in the long run, reduce the deficit and create a healthier nation, by allowing more people to get preventive care and long-term care and keeping the sick and impoverished from turning to emergency rooms when there’s a crisis.

This entire problem was created by the government in the first place, though.

Stop pretending that “lifelong politician” is some kind of curse. Most people who hold public office do so because they genuinely want to help people, they genuinely want to make government responsive to the needs of their fellow Americans, and they’re willing to put themselves on the line every few years to get the chance to do so.

Here's a thought experiment: If "most" people who hold public office genuinely want to help people and make government better, why hasn't it happened?

Stop pretending that “big government” is the problem. When’s the last time you were seriously inconvenienced or injured by something that big government did?

Gay rights, TSA body scanners, highway checkpoints, the PATRIOT Act, warrantless wiretaps, extra-judicial assassinations, indefinite detentions, inflation, etc. Don't tell me that (some of) these don't affect me. When one person's rights are trampled, everybody's are, and that's just at the federal level. Not only that, but all of this ignores the fact that every year I have to fill out a number of forms figuring out, on the government's behalf, how much money they want from me, and then send them that amount under the threat of force if I either figure wrong or don't send the right amount.

Stop pretending that anybody’s going to come and take your guns away. [...] There’s no truth to it, there’s never been any truth to it, and if you actually believe it, you just might be so simple-minded that you shouldn’t be trusted with a firearm.

They may not be trying to take them away, per se, but the laws (at least in CA) are clearly not conducive to gun purchases or ownership. One must wait 10 days to purchase any gun, even if one already owns one or one hundred of them. AB962, once in effect, will make the mail-ordering of handgun ammunition illegal and require fingerprints be taken of law-abiding citizens when they do purchase ammunition. It is illegal to actually carry one's gun in a manner that would actually allow it to be used effectively in self-defense, and many counties around the state deny CCW applications to all but the wealthy and connected.

Perhaps the author can explain to me why the BATFE and the state of CA keep records of gun sales if not to retain the possibility of rounding up guns in the future. I realize that that has a bit of a "tin foil hat" sound to it, but it is a legitimate question.

The author goes off the rails at this point with a lot of name calling. He tries to bring it home at the end, though.

Finally, stop pretending that voting doesn’t matter, and don’t let the 2010 Class of Crazy take office and convince you otherwise.

A variation on the previous thought experiment I proposed is apropos here: If voting mattered, why is government the way that it is? Perhaps it's because we've gotten the very government for which we voted. Voting doesn't matter and arguably does more harm than good. A voter is statistically more likely to be killed going to or coming from his/her polling place than to cast the deciding vote in an election. I refer the reader my previous posts on voting and the nature of government.

Government bailout turns a profit

According to Bloomberg news:

The U.S. government’s bailout of financial firms through the Troubled Asset Relief Program provided taxpayers with higher returns than they could have made buying 30-year Treasury bonds

I'll be honest; my first reaction to this was, "Oh no, I'm going to be forced to admit that the government did something right". Indeed, according to the article, the government invested $309 billion in Wall Street bailouts via the so-called TARP program, of which, about $200 billion has been repaid. Not only that, though. The government has also earned $25 billion on its investment. What's not to like?

How about the fact that the bailouts didn't actually work? Unemployment actually skyrocketed while the government was supposedly making this profit. These unemployment numbers are "official" ones, by the way. "Real" unemployment is actually nearly twice as high, and even that number doesn't paint a totally accurate picture of the economy. It fails to account for falling wages, part time workers who had and/or want full time work, and those who simply are no longer looking.

Here's the real reason to be upset about the bailout, though, and Bloomberg, to its credit, points it out.

One of those subsidies [to the banks] is the $350 billion that savers forgo each year because the Fed keeps interest rates near zero, according to Petzel’s calculations. While banks can borrow at close to zero from the Fed, they lend to consumers and corporations at almost 5 percent, or to the Treasury at 2.5 percent, and they get to keep the difference.

Take a second to do the math. The American taxpayers have given up over $700 billion (so far). That is more than double what the government originally invested and gained via that investment. So, we have the taxpayers, the government, and the banks. Government comes out $25 billion ahead. Banks come out $700 billion ahead. (This is debatable since the banks also took losses. However, those losses are mitigated by this $700 billion). Taxpayers come out $700 billion behind plus the wrecked economy.

It doesn't end there, though.

According to Prins’s tally, the money plowed into the financial system to prop it up peaked at $19.4 trillion. Banks have benefited from that cash, which helped keep prices of mortgage securities, house prices and other assets overvalued, Prins said in an interview. Even though some of the support has been withdrawn, part of it will likely be lost, such as the hundreds of billions of dollars put into Fannie Mae and Freddie Mac, she said.

"These are all indirect subsidies the banks got," Prins said. "So the TARP gains touted by the Treasury are only true if you ignore all the other costs."

Keep these other costs in mind the next time someone tries to tell you that the bailouts worked or that the government (and supposedly, by extension, the taxpayers) actually made money on the deal.