Tuesday, March 20, 2012

Libertarian Pudding Tastes Good!!

All pictures are not worth a thousand words.  Take, for example, these tax choice pictures that I created using MS PowerPoint...




































It's two versions of the same picture.  Which one do you like better?  Yeah yeah...I won't give up my day job!  If anybody thinks they can illustrate the concept better than I did...well...they are probably right.  But, I'd definitely like to see some proof!  Because, after all, the proof is in the pudding.  Feel free to post these images around and modify them however you like.

For a while now I've thought about trying to illustrate this concept...but what finally motivated me to do so was this epic debate between liberals and libertarians... Does The Libertarian Movement Embody The Worst of Human Traits?

As usual...the debate centered around the proper scope of government.  Why invest so much time and energy into debating the proper scope of government?  I get that liberals might want to argue over the proper scope of government...but what excuse do libertarians have?  It seems pretty clear that the large majority of libertarians do not understand that if an individual or a committee can truly know the proper scope of government then socialism is a viable concept.

Why isn't socialism a viable concept? Because it's impossible for a king...or a committee...to determine the optimal level of funding for an organization.  This is because funding can only be determined by demand. And what is demand? Demand is the aggregate of priorities.  For some reason people think that voting reveals their priorities.  The truth of the matter is that priorities can only be revealed when people spend their own time/money.

Therefore, in order to determine the proper scope of government (taste the pudding) we should just allow taxpayers to directly allocate their taxes...aka pragmatarianism.  For example, at anytime throughout the year you could visit the Environmental Protection Agency (EPA) website and submit a payment. The EPA would then notify the IRS that you had submitted a payment.

Consider tax choice from the perspective of Frédéric Bastiat...
It is quite true that often, nearly always if you will, the government official renders an equivalent service to James Goodfellow. In this case there is no loss on either side; there is only an exchange. Therefore, my argument is not in any way concerned with useful functions. I say this: If you wish to create a government office, prove its usefulness. Demonstrate that to James Goodfellow it is worth the equivalent of what it costs him by virtue of the services it renders him. - What Is Seen and What is Unseen
A useful function for one person might be a useless function for another person.  Which is why it's useless to debate the proper scope of government.  

One thing that libertarians tend to ask is how the tax rate would be determined.  Congress would still determine the tax rate but it seems reasonable to say that the tax rate would reflect the scope of government.  If taxpayers only decided to fund congress, the IRS and Dept of Defense...then it wouldn't make any sense for congress to set the tax rate at 50% or 75% or 100%.  So...the tax allocation decisions of millions and millions of utility maximing taxpayers would determine the scope of government...and the scope of government would determine the tax rate.  The more things the government does...the greater the justification for raising taxes.  The less things the government does...the greater the justification for lowering taxes.

This is all painfully obvious to me...but, unfortunately, I fail miserably at conveying this concept to others.  For example...consider this exchange that I had with a libertarian...

Xerographica

I didn't ask about lowering taxes...so your answer isn't quite clear. Let's try this another way. If you had to choose between A) allowing taxpayers to directly allocate their taxes and B) your form of libertarianism...then which would you choose?

RabidAlpaca

What kind of a stupid question is that? "Would you like my way, or yours?" Clearly I would prefer my way, where the tax rate is as low as possible, only high enough to fund the necessary services for the government to protect our natural rights. My original answer was perfectly clear as to how I stand.

If there are options as to where to allocate your taxes, as you suggest, then there is absolutely no reason that whatever the options are can't be accomplished by the free market. The government should only be there for common goals, such as national defense, the police, the fire department, and the judicial system, just as I stated before.

Xerographica

Naw, it wasn't a stupid question...you just failed to predict the follow up question. Which is...why wouldn't my way reveal the truth of your way? You say that the private sector is BETTER at accomplishing everything except for national defense, the fire dept and the judicial system...so why wouldn't the tax allocation decisions of 150 million self-interested, utility maximizing taxpayers (aka consumers) reflect the truth of your assessment? Why would they pay the government to do something that the private sector is CLEARLY better at doing?

If you truly understand how scarce resources are efficiently allocated...then you'd understand that my way is the "put your money where your mouth is" version of your way.

RabidAlpaca 

I see exactly what you're getting at, but it doesn't make any sense as to how it pertains to what I'm saying.

I see people keeping more of their paycheck as a way to best allocate funds, through the free market. People will spend money on what is dear to them. You seem to support some bastardized version where we all pay the substantial taxes into the government that we do now, but somehow directly vote as what to spend it on. This is not only inefficient, but also makes zero sense.

As to what Turtledude was replying to you:

"The state is the great fiction by which everybody seeks to live at the expense of everybody else." ~ Frederic Bastiat

Xerographica

I don't understand your response at all. You say that the private sector is clearly better at supplying cheese whiz. My response was to ask you why taxpayers would choose to spend any of their taxes on government cheese whiz. What's inefficient about this system? Do you think Bastiat would disprove? Why would he? In this system you would only be able to spend your own, individual taxes.

Why worry about the tax rate? The tax rate merely reflects exactly how many things the government does. In other words...the tax rate reflects the scope of government. If nobody purchases government cheese whiz...then the government would no longer supply cheese whiz. This would narrow the scope of government and the tax rate would decrease accordingly.

RabidAlpaca

I've answered you at least 3 times, in clear and plain english, and you continue to not understand. You seem to be trying to convince me of something, but doing a poor job of actually formulating it. There are certain government services, like the ones I mentioned, that are not optional, because they support every single citizen (for the fourth time: national defense, police and fire departments, and the justice system) This would require an extremely minimal tax rate. Everything else can be handled by the free market, to include cheese whiz. I've stated more than once that I don't like or understand the need for your a-la-carte tax system, and that's the last time I'll say it.

Xerographica

So...rather than allowing 150 million taxpayers to determine the proper scope of government...you'd prefer it if everybody just trusted that your perspective was correct. We are all just blind men touching different parts of an elephant...except for you. You're the only person that can see.
The problem is thus in no way solved if we can show that all the facts, if they were known to a single mind (as we hypothetically assume them to be given to the observing economist), would uniquely determine the solution; instead we must show how a solution is produced by the interactions of people each of whom possesses only partial knowledge. To assume all the knowledge to be given to a single mind in the same manner in which we assume it to be given to us as the explaining economists is to assume the problem away and to disregard everything that is important and significant in the real world. - Friedrich Hayek, The Use of Knowledge in Society
Evidently Hayek didn't know how exceptional you are. That makes sense though...because, like the rest of us blind people, he only had partial knowledge.

RabidAlpaca

Your'e an idiot if you think F. A. Hayek didn't support a free market, that was his baby. He argued very strongly against government control of the economy. I believe in a republic, not a democracy. "Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote." ~ Ben Franklin

In a democracy the majority can vote to take the rights from the minority. In a republic, everyone is protected equally under the law.

It's not my perspective, I'm a constitutionalist, it's the perspective of our forefathers, and what this country was founded on.

Xerographica

Oh, it's not your perspective...it's the perspective of a committee of government planners. Well...if a committee of government planners can truly know the proper scope of government then I don't know what possible objections you might have with socialism.

Of course I know that Hayek was a champion of free-markets. Do you think I just pulled that passage out of thin air? Hayek's partial knowledge concept and Bastiat's opportunity cost concept are the two economic justifications for allowing taxpayers to directly allocate their taxes.

According to Einstein...I'd have to be insane to try and promote the same type of libertarianism that has been promoted for the past couple hundred years. Nope...count me out...you go ahead. A while back I figured out that the same exact thing could be achieved by applying market principles to the public sector. Well...assuming that libertarians correctly guessed the proper scope of government.

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