Wednesday, December 21, 2011

Lupis42's Critique of Pragmatarianism


Lupis42 offered the following really great critique on my entry...A Taxpayer Division of Labor
I've been reading a bunch of your stuff over the last couple of days, because while I wanted to like it, I keep coming back to a series of fundamental problems: 
1st - Complexity. Imagine for a moment that, in a moment of sanity, Congress passes this measure for the 2012 tax year on. Because of the way congressional accounting currently works, allocating your tax dollars would be immeasurably difficult. For example, if a farmer allocates his money to farm subsidies, effectively lowering the taxes he should have paid in, does he get a refund check? What about all those people who, through deductions and credits, would pay effectively no income tax - do they need to allocate the income tax they pay to those credits then receive it back at the end of the year? Also, how granular can they get? Can they pick and chose (for example) which military projects get backed?
At anytime throughout the year people would pay their taxes directly to the various government organizations (GOs) of their choice.  They would receive a receipt and the GO would automatically send a receipt to the IRS.  The IRS would just make sure that everybody had paid the proper amount of taxes for the previous year.

It's pretty straightforward that if the government is just wasting your taxes...then everybody would want a refund.  Kind of along the same vein...if you're a pacifist and the government is spending your money on war then...chances are good that you'd want a refund.  Now...I'm not quite sure what happens to the refund concept when people are directly responsible for funding GOs that they value.  Do we see people asking for refunds from non-profit organizations?  Would an environmentalist ask for a refund from the EPA?  Why directly allocate your taxes in the first place if you're just going to want a refund?  If somebody wanted a refund then wouldn't they just give their taxes to the IRS as normal?

The granularity issue would be between the GOs and their supporters.  Well...perhaps it is primarily an issue with the military.  My mother was very much against the war...but as I was her only child...she definitely would have wanted to allocate her taxes...and then some...to try and ensure that my unit had adequate funding to purchase kevlar plates and the such.  In this case, the military would have received funding that it wouldn't have otherwise received.  So I guess we can imagine that the families of soldiers would actively try to ensure that the units that their loved ones were in had adequate funding.

For the people who don't have family members in the military, yet still value national defense, would they be inclined to allocate taxes to the Marines rather than the Army?  Or would they just allocate their taxes to the DoD?  This is an issue that the DoD would have to try and figure out...how it could maximize revenue without compromising its effectiveness.

The military projects issue is an interesting one.  I remember liberals criticizing the government for doing absolutely nothing to stop the genocide in Darfur.  But what if we had a non-profit peace keeping force that was capable of stopping genocide and/or ethnic cleansing?  Kind of like the A-Team but more substantial.  In other words...it would have a heart, brains...and muscle.  An army of liberals.  Personally, I could see myself donating to such an organization.  What would happen if more and more people donated their money to this non-profit while less and less people allocated their taxes to the DoD?
2nd - Inequality. Right now, around 50% of the populace pays income tax, and the top 10% pays more than 40% of the incoming revenue. Economics will encourage them to divert all of it to programs that, in one way or another, directly benefit their firms (i.e. Raytheons CEO will direct money to military programs that involve Raytheon projects, Solyndra's CEO will send his money to the line item "loan to Solyndra", etc.) 
If self-interest promotes the general interest in the private sector...then why wouldn't self-interest promote the general interest in the public sector?  Why do corporations engage in philanthropy?  Is it philanthropy if a company that sells products to the Red Cross makes a donation to the Red Cross?  Does doing so guarantee that the Red Cross will continue to purchase products from that same company in the future?

Here's a passage from my very first poli-sci textbook...A Delicate Balance by Paul Light...
Roughly one out of every six Americans currently works for a private firm that receives federal contracts. Roughly two-thirds of those contracts came from the Department of Defense, which accounted for over $120 billion in 1997, and roughly two-thirds of those defense dollars went to just five firms: Lockheed Martin (airplanes), McDonnel Douglas (airplanes), Northrup Grumann (airplanes), General Motors (tanks and trucks), and Ratheon (weapons systems). 
The textbook was published in 1999...so...feel free to come up with updated stats if you feel they are pertinent.  The point is...who would complain if Lockheed Martin or McDonnel Douglas or Northrup Grumann or General Motors or Ratheon allocated their taxes to the DoD?  Surely none of their employees would complain.  Surely none of the people who valued national defense would complain...well...unless they believed that those corporations were somehow overcharging the DoD.

How would it help the environmentalists to complain that the DoD was "overfunded"?  How would criticizing the DoD help people understand the value and importance of the EPA?  The same concept applies to people who value public education, public healthcare, infrastructure, etc.

What about tax repatriation holidays?  If it would be economically sound for corporations to allocate their taxes to the GOs that they directly benefit from...then what incentives would they have to hide their profits overseas?
3rd - Choice. Whoever (Congresscritters, I assume) is responsible for determining what line items are available for taxpayer choice, and how they are worded will have a huge amount of power. Previously, the way a Congresscritter got a pork project funded was to agree to support another Congresscritter's project. Now all they have to do is write good copy.
Right now you have 0% control over how your taxes are spent.  We'll always disagree with how other people spend their taxes...but at the end of the day we'll have to recognize that other people will disagree with how we spend our taxes.  This is the essence of political tolerance.  Clearly though you can't be the only one to define something as a "public good".  Sure..I could make the argument that it's a "public good" for me to take a vacation to Madagascar...but the positive externalities are negligible.  For the most part I've said that voters would determine the functions of government and taxpayers would determine which functions to fund.
4th - Law Enforcement. Theoretically, the public can now defund unacceptable forms of law enforcement (e.g. the war on drugs), but this does nothing for the actual criminality of the laws on the books. This will lead to highly selective enforcement, which is even worse than consistent enforcement because it allows corrupt, bigoted, or agenda driven targeting of people. Even more problematically, if the taxpayers were to defund prisons while funding enforcement, for example, it would be impossible for even fair-minded, honest, diligent enforcement officers to actually apply the law. If some programs are made contingent on 'end-to-end' funding, then we're back at problem 3, but with more of a vengeance.
When I was pulled over for my speeding ticket...(see my post on the Opportunity Costs of Public Transportation) I asked the officer if it was a coincidence that I always drive the same speed in my old Toyota Tundra...and have had cops right behind me several times...but I end up getting a ticket the one time I borrowed my friend's Mercedes.  Heh...like the cop would admit that he pulled me over because I was driving a Mercedes.  I also asked him why he didn't give everybody who was driving over the speed limit a ticket.  He literally passed people who were breaking the law to give me a ticket.  Here in Los Angeles nearly everybody drives over 65 mph on the freeway.

If people want to pass a law...then they should have to put their money where their mouths are.  It's not enough for people to say that something should be illegal...they need to understand that if they want something to be illegal...then they will be the ones responsible for ensuring that the law is enforced.  As I mentioned in my post...it's a sign of maturity to accept responsibility for one's decisions.  If people aren't mature enough to accept responsibility for the laws that they voted for...then it's not a bad thing if those laws are not properly enforced.

This of course ties into the opportunity cost concept.  If you want people to purchase your product...then it's your responsibility to convince them to forgo the other products that they value.  If you want other people to pay for your law to be enforced...then you should have to convince them to forgo the other public goods that they value.  This is how we ensure the best possible use of scarce resources.

What you're saying in essence is that...the current method of dealing with crime is the best method of dealing with crime.  How could anybody truly know that?  What you're doing is blocking heterogeneous approaches to crime.  Personally, I believe that an ounce of prevention is worth two of cure.  My grandfather was always fond of saying that idle minds are the devil's workshop.  Or something like that.  If I only have a limited amount of money to spend on the problem of crime...which is certainly the case...then I'd spend it on sponsoring activities that offer at-risk youth with more choices besides joining a gang.  Is this the best approach?  Again, I can't know that.  What I do know is that the only way we can truly discover the best approach is if we allow people to support multiple approaches.

Is there a demand to solve the problem of crime?  Yes.  Should organizations have to compete for the  resources to solve this problem?  Yes.
The rest aren't a per se objection to Pragmatarianism wholesale, because they could be applied to our current systems too, but they are relevant when considering it as an alternative to Libertarianism. 
5th - Rate Setting. There's still no good feedback mechanism on what the size of government should be, just it's role. Fundamentally, your objection to Liberals and Libertarians is that each claims to know the optimal size of government, which you want to let the market decide, but unless you propose to allow taxpayers to allocate up to 100% of their taxes to their own tax rebates, Pragmatarianism offers no alternative but to elect either Liberals or Libertarians to set the tax rates.
If I'm an environmentalist...and I want people to allocate more of their taxes to the EPA...does raising the tax rate mean that non-environmentalists will somehow become environmentalists?  Probably not...it just means that I end up paying more of my own money to the EPA.  If I want other people to allocate more of their taxes to the EPA then I have to convince them of the value of the EPA.
6th - Rights. There's nothing in here that addresses the ability of, say, congress interfere in other ways, e.g. criminilaizing activities that have no non-consenting victim (drug use, gambling, prostitution, home-brewing, prayer, free speech, etc. 
True.  Coming from libertarianism...I have my own views regarding rights...and those views won't change if a pragmatarian system was implemented.  Pragmatarianism is all about KISS....Keep it Simple Stupid.  By keeping it completely nonpartisan...it helps to focus the debate.
Ultimately, I like the general idea and it makes a lot of sense in conjunction with a smaller, more limited government, but I have a hard time seeing it work without a much more Libertarian state than we have now.
As a web programmer I spend a lot of time looking for bugs in the code.  It's really frustrating when something should work...but it's just not working.  I'm always like...hmmm...why isn't this working?   To find the bug in the code I have to test each portion of the code separately.  This allows me to narrow down the search.

If you take a look on my page on libertarianism you'll see I created a timeline of prominent libertarians' perspectives on the scope of government.  All those guys were/are brilliant...so why aren't their arguments working?

Pragmatarianism is a method of debugging libertarianism.  It removes the debate over the tax rate and it removes the debate over whether something is a genuine "public good" or not.  The only thing remaining is whether congress can allocate public goods more efficiently than taxpayers can.  It is my firm opinion that this is where the bug is located.

Can resources truly be efficiently allocated by proxy?  Well...parents purchase things for their kids.  That's one or two adults representing the interests of one or two kids.  Well...what about Christmas?  Santa Claus is responsible for giving gifts to all the kids of the world...right?  Well...what about Jesus?  Jesus died for all of our sins...right?  Well...what about congress?  Can 538 congresspeople truly represent the public interests of 300,000,000 people?  Well...as I argued in my post on the divine disparity...it's certainly progress in comparison to having one king represent the public interests of all his subjects.

Kids want to believe in Santa Claus?  Fine...no problem.  People want to believe in God?  Again...no problem.  People want to believe in congress?  Sure...no problem...as long as they respect my beliefs and allow me to directly allocate my taxes.

In other words...the bug in the political system is intolerance.  Why haven't more people come to the same conclusion?  As I argued in my post on the The Devil's Advocate for Public Goods...we think we are all "civilized" aka "all grown up" but we're really not...we're always in the process of growing up.
When I was a child, I spake as a child, I understood as a child, I thought as a child: but when I became a man, I put away childish things. - 1 Corinthians 13:11
Tradition, thou art for suckling children,
Thou art the enlivening milk for babes;
But no meat for men is in thee.
Then --
But, alas, we all are babes. - Stephen Crane
It might be a mistake to implement pragmatarianism...and it might be a mistake not to implement pragmatarianism...but I'm pretty sure it's a mistake not to seriously consider the idea.  So... kudos for seriously considering the idea!

15 comments:

  1. "The IRS would just make sure that everybody had paid the proper amount of taxes for the previous year."

    Finally you said the one thing that allows me to back your plan! Since the only "proper amount of taxes" is zero, I can fully support Pragmatarianism now!

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  2. Thanks for the detailed response!

    I'm still putting together my thoughts, but I wanted to address this one first:

    "At anytime throughout the year people would pay their taxes directly to the various government organizations (GOs) of their choice. They would receive a receipt and the GO would automatically send a receipt to the IRS. The IRS would just make sure that everybody had paid the proper amount of taxes for the previous year.

    It's pretty straightforward that if the government is just wasting your taxes...then everybody would want a refund. Kind of along the same vein...if you're a pacifist and the government is spending your money on war then...chances are good that you'd want a refund. Now...I'm not quite sure what happens to the refund concept when people are directly responsible for funding GOs that they value. "

    My concern has to do with what constitutes a GO/Program being a little vague - for example, do I have to pay taxes, then allocate my taxes to the Homeowner tax break, or do I just not pay them in the first place? How about farming subsidies? And how could the IRS track it all to determine that I paid the correct amount? This is not to say that it couldn't work, but it seems like there would need to be a major corresponding shift in how the government is organized, or the tax code would become even more byzantine and hard to fathom than it is now.

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  3. "If self-interest promotes the general interest in the private sector...then why wouldn't self-interest promote the general interest in the public sector? Why do corporations engage in philanthropy?"

    I don't disagree here, my concern is that the ability to decide which GOs/Programs are available to get your money will make the amount of influence congresscritters have at least similar in value to what it is today, while public choice will make it harder to hold them accountable for misallocating tax dollars.

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  4. Moving down a little ways:

    "If people aren't mature enough to accept responsibility for the laws that they voted for...then it's not a bad thing if those laws are not properly enforced. "

    In my experience, a law that is not consistently enforced is substantially worse than a law that is consistently enforced, for a couple of reasons:
    1) Corruption of enforcement - if the law is poorly enforced, the individual enforcers prejudices and corruptibility determines who suffers, rather than the quality of the law. A bad police officer can find an excuse to throw someone in jail because he doesn't like them.
    2) Unpredictability - citizens will not be able to be confident that they have nothing to hide, which means people are less able to speak out against bad government.
    3) Reduced pressure to fix bad laws - if a law is rarely enforced, there's little pressure to fix it, even though people break it regularly.

    "What you're saying in essence is that...the current method of dealing with crime is the best method of dealing with crime. "
    That's very much not what I'm saying. All of the things I've identified are serious problems with the way laws are enforced in this country right now. My concern is that separating the writing of the laws from funding the enforcement will exacerbate, not mitigate, these problems.

    "Is there a demand to solve the problem of crime? Yes. Should organizations have to compete for the resources to solve this problem? Yes."
    No argument here.

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  5. "True. Coming from libertarianism...I have my own views regarding rights...and those views won't change if a pragmatarian system was implemented. Pragmatarianism is all about KISS....Keep it Simple Stupid. By keeping it completely nonpartisan...it helps to focus the debate."

    "If you take a look on my page on libertarianism you'll see I created a timeline of prominent libertarians' perspectives on the scope of government. All those guys were/are brilliant...so why aren't their arguments working?"

    One major problem that libertarians have traditionally encountered is that most libertarians are really really bad salesman. In any voter-based government, the voting population rewards the idea that is most effectively sold to them, and they have little incentive to do their own research about it first.
    See Bryan Caplan's excellent book http://www.amazon.com/Myth-Rational-Voter-Democracies-Policies/dp/0691129428 for a perspective on why.

    Incidentally, I'm not trying to claim that the average voter is too stupid to choose libertarianism, there are plenty of smart people who simply have different value systems. Rather I'm suggesting that the average voter has little incentive to take the time to be informed at all. In that regard, Pragmanitarianism would be a huge help.

    "Pragmatarianism is a method of debugging libertarianism. It removes the debate over the tax rate and it removes the debate over whether something is a genuine "public good" or not. The only thing remaining is whether congress can allocate public goods more efficiently than taxpayers can. It is my firm opinion that this is where the bug is located. "

    I would not at all agree that Pragmanitarianism removes debate over the tax rate, it merely kicks that can down the road, as it were. It does nothing to address the question of where the ideal tax rate is, whether that tax rate should be flat or progressive, and whether deductions should be offered, either for basic needs or for social engineering.
    It does move the debate over what qualifies as a public good from the political arena to the marketplace, which I would be in favor of, and I certainly agree that taxpayers can much more efficiently allocate public goods than congress.

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  6. "It might be a mistake to implement pragmatarianism...and it might be a mistake not to implement pragmatarianism...but I'm pretty sure it's a mistake not to seriously consider the idea. So... kudos for seriously considering the idea!"

    It would definitely be a mistake not to seriously consider it, and I'd like to think that any libertarians that acknowledge the need for some level of taxation and the existence of some GOs would agree that this would be an excellent check on those orgs.

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  7. Xero
    ".... or do I just not pay them in the first place? How about farming subsidies? And how could the IRS track it all to determine that I paid the correct amount?"

    This is the root issue that Lupuis highlights here.

    Why bother with the charade?

    If I get to chose where to spend my money, why do I have to give it to you first, then tell you where to spend my money?

    Why don't I just keep and spend it the way I want anyway?

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  8. Lupius

    "...any libertarians that acknowledge the need for some level of taxes..."

    No.

    Some may, but they are contradicting themselves.

    You cannot champion Liberty AND champion Taxation.

    The latter exists as an affront TO Liberty... taxation is force and coercion and involuntary - all the opposite features of Liberty.

    This is why Libertarians will not achieve much political clout - it's like claiming your a Catholic Nun while you earn a living as prostitute. Just because they avoid not participating in prostitution on Sunday does not make them a Nun.

    Just because Libertarians want others to avoid using force on them, they still are not much different every other day, for they agree to using force on others to get what they want....

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  9. Xero
    "It might be a mistake to implement pragmatarianism...and it might be a mistake not to implement pragmatarianism...but I'm pretty sure it's a mistake not to seriously consider the idea"

    Yep, that I agree.
    Kudo's to you too!

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  10. Black Flag

    It's not contradictory to hold that liberty should be maximized within certain constraints - hence, there's a spectrum of libertarians, from those who believe that taxes should be essentially non-existent, or nominal and directly tied to a voice in government (i.e. poll taxes), through those who accept the idea that the free-rider problem means some goods must be provided through taxation for a society to survive (typically the defense of the community is the first and easiest example), to those who accept, to some degree, a Jeffersonian or "ordered liberty" model where individuals are assumed to have a number of specific negative liberties, which may interact in complex ways, and the apparatus of government exists to protect these negative liberties, and allow consistent and relatively peaceful resolution of disputes when they appear to overlap.

    The belief that all taxation is not merely evil but unjustifiable at any level is extreme even among Libertarians.

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  11. It seems to me that you have just one problem with libertarianism, the free rider problem. In order to solve these problems you have decided to raise the required taxes and hope that people will allocate their money to these causes.

    This may, or may not, work depending on what the people choose to do with their money. Either way, you are forcing people to give their money to causes which would not be their preference with out the required taxes. In addition, the government will probably be less equipped at performing it's true purpose, to prevent aggression between people, as a result of these other tasks.

    You say that a failure of the libertarian system results in the free rider problem. That is true. It might also be true that your system does a better job at dealing with this problem. However, "pragmatarianism" has failures of it's own, a few of which I have stated above.

    It all comes down to the question of which system, libertarianism or pramatarianism, results in the larger failures. Obviously, I believe Libertarianism has fewer and smaller failures, but I couldn't prove that here. I talk more about failures and The Logic Behind the Libertarian System in my blog.

    Overall though, you have very interesting ideas and a nice blog.

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  12. Lupius,

    It is quite contradictory to claim liberty is maximized by reducing it.

    (....but we better agree on what 'Liberty' means...it is not "Liberty" to kill or steal from another, for example...)

    To state that there are men who contradict themselves, and then hide their contradictions behind rationalizations does not refute the contradictions - it merely shows that some men are hypocritical.

    The argument that there are some men who feel that some goods must be provided through taxation is a fallacy.

    No goods are necessarily provided from taxation. Government produces nothing of its own - it must take from a producer somewhere first.

    Thus, the producer himself could provide what ever goods without government - including defense.

    Defense of the nation does NOT require government - the first defense militias were formed, funded, and supplied by volunteers and patrons, not government.

    What is more the case is merely a matter of tradeoffs, and status quo.

    Since few have actually endeavored to THINK, they fall to a default of understanding delivered to them by rote from someone they believe is an authority - parents/teachers/mentors and, of course, the propaganda of government itself.

    Few work at all to think for themselves.

    On top of that, most are more afraid of the local thug then the greatest mass murderer in history, government.

    They would rather trade away the local, rare, decentralized, disorganized, unpredictable, minor but personal violence of a thug for a remote, constant, centralized, organized, massive but predictable and generalized violence of government.

    It the predictable and generalized nature of violence of government that most prefer, even though the unpredictable violence of the thug is rare - and quite personal.

    The irony, the trade off is a lose/lose as government does not eliminate the thug anyway and the thug remains just as unpredictable and just as personal. It merely makes the thug slightly less common.

    It is not a belief that all taxation is evil. It is a fact by definition.

    It is theft - the taking by coercion the goods and property of another by someone who did not earn it.

    As all theft is evil, all taxation is evil.

    There exists no such thing as a good or fair tax. It is always a coercive taking from someone and a giving to another who did not earn it.

    It not extreme position to see evil for what it is but it is radical.

    Most people love evil because most people are short-time preference people.

    They cannot or do not evaluate the long term consequences of their actions, and more desire the immediacy of the gain.

    "The End justifies the Means" dominates many people's thinking - they do not understand that if the means of achievement is evil, they pollute their Ends to be evil. It is because they focus on what the see as a short term benefit, and race to die before the consequences of their evil impacts them.

    They do not consider that if the consequences of their evil actions does not impact them, it will impact upon the innocent.

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  13. All "free rider" problems are actually confused thinking or misunderstanding of economic calculation.

    The person who claims that free riders "get the goods for free, at the cost of another person" misses the economic concept of VALUE.

    The person who pays does so because they see value in the good/service they bought.

    The evaluation of such a transaction starts and stops between the seller and the buyer. NO ONE ELSE IS NECESSARY OR NEEDS TO BE CONSIDERED, including your "free rider".

    Should the outcome of such a transaction create such as service that extends to others DOES NOT MATTER. The buyer and seller have successfully completed their transaction, and that is all one needs to review.

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  14. Black Flag,

    You have a lot there, and I have relatively little time to respond, so I'm going to stick to one key point: If the only thing you value is liberty, above everything else, than you are absolutely correct - the free-rider problem is irrelevant.

    The world, however, is full of people who do not value liberty above all else, and the free rider problem is one of the most basic and sound examples of a way in which a free market will fail to achieve the economically efficient result.

    I am much more of a consequentialist than a deontologist, in that although I consider taxation to be a violation of people's right to property, and therefore an inherently bad thing, I am also prepared to accept the possibility that there are other things which are equally bad, or worse, such as being conquered by foreign invaders. If using taxation to prevent that results in the smallest net harm, or largest net good, I'm not going to rule it out.

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  15. Lupius,

    "...If the only thing you value is liberty, above everything else...."

    It is not the only thing of value.

    It is merely the most important thing of value.

    Without freedom, nothing else matters.



    "... the free rider problem is one of the most basic and sound examples of a way in which a free market will fail to achieve the economically efficient result...."

    But that is a contradiction.

    If you believe in the free market, then the "free rider" problem simply does not exist.

    The free market is voluntary trade.

    There is a buyer and there is a seller, and they trade value for value.

    What this has to do with YOU - as you are neither party - is ...zero.

    You are neither the buyer nor the seller.

    At the end of their trade, both are satisfied, or else they would have declined the trade.

    When they end the trade - their transaction is over. End.

    If after all of this, society on the whole benefits "for free" is of no concern for either the buyer or the seller - they have been satisfied remember ... or else they would not have traded!

    SO to jump back in hindsight and claim "no, they were not satisfied because so-and-so also gained a side-benefit" is counterfactual.

    Only in a non-free trade economy, where envy has a right to use violence to sooth itself does "free rider" issues ... not because of any economics, but because of envy and jealously ... and the gun of government.


    "....If using taxation to prevent that results in the smallest net harm, or largest net good, I'm not going to rule it out...."

    Then you do not believe in free trade.

    IF you think not being invaded is important ... you will buy the means to guard against it... so why do you insist on theft to accomplish this goal?

    Everything else people believe is important -from food and shelter to clothes and home heating and transportation.... so on and so forth .... is bought .... why suddenly something you think is important suddenly and for no reason no be something people would buy...if it is so important???

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