What are Taxes Worth?

In my post on A Wife Swapping Economy...I predicted that Peter Boettke would be the first economist to fully endorse pragmatarianism.  Here's my extended response to his blog entry...Don Boudreaux on Ludwig Lachmann...

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In the comments, Tom Palmer shared his favorite essay by Lachmann, "The Market Economy and the Distribution of Wealth".  I read it twice and found lots of great clues.  Here's one..

Moreover, what is a resource today may cease to be one tomorrow, while what is a valueless object today may become valuable tomorrow. The resource status of material objects is therefore always problematical and depends to some extent on foresight. An object constitutes wealth only if it is a source of an income stream. The value of the object to the owner, actual or potential, reflects at any moment its expected income-yielding capacity. This, in its turn, will depend on the uses to which the object can be turned. The mere ownership of objects, therefore, does not necessarily confer wealth; it is their successful use which confers it. Not ownership but use of resources is the source of income and wealth. - Lachmann, The Market Economy and the Distribution of Wealth

...which you can compare to this clue that Bastiat offered before Lachmann was even born...

If the socialists mean that under extraordinary circumstances, for urgent cases, the state should set aside some resources to assist certain unfortunate people, to help them adjust to changing conditions, we will, of course, agree. This is done now; we desire that it be done better. There is, however, a point on this road that must not be passed; it is the point where governmental foresight would step in to replace individual foresight and thus destroy it. It is quite evident that organized charity would, in this case, do much more permanent harm than temporary good. - Bastiat, Justice and Fraternity

...which you can compare to this clue that Turgot offered before Bastiat was even born...

There is no need to prove that each individual is the only competent judge of this most advantageous use of his lands and of his labor. He alone has the particular knowledge without which the most enlightened man could only argue blindly. He alone has an experience which is all the more reliable since it is limited to a single object. He learns by repeated trials, by his successes, by his losses, and he acquires a feeling for it which is much more ingenious than the theoretical knowledge of the indifferent observer because it is stimulated by want. - Turgot, The Turgot Collection

Our most valuable resource isn't any of our material resources...it's our individual "foresight"...our own "particular knowledge"...which I've taken to refer to as our unique perspectives...Perspective Matters - Economics in One Lesson.  Our unique perspectives allow us to see how limited resources might be used in new, valuable and productive ways.

Yet, for the past 300 years the people who have understood the value of perspectives have argued to limit the scope of government and reduce taxes.  Why didn't they see the value of millions and millions of taxpayers, each with their own unique perspective, having the freedom to use their taxes, the symbolic representation of their own countless sacrifices, to determine the proper scope of government?  Why didn't Turgot or Bastiat or Lachmann or Hayek or Friedman or Buchanan or Boettke or Kling or Rizzo or Caplan or Boudreaux see the value of allowing millions and millions of our most productive perspectives to use their taxes to reveal exactly what the government does that is worth their countless individual sacrifices?

You guys have the power to fundamentally change the debate with liberals.  Why not switch tactics on them?  Why not simultaneously prove that Einstein's definition of insanity doesn't apply to you guys?  Why not try an Aikido move by letting liberals have their taxes in exchange for individual foresight?  Would it be worth it to give up one thing you value in exchange for another thing that you value even more?  That is, of course, the very definition of sacrifice.

Why not have this discussion with liberals?  Discussion is simply free-trade.  It's where two or more people freely exchange their perspectives with each other.  We all value our perspectives... so wouldn't we all stand to benefit by freely trading our perspectives on perspectives?

How would liberals respond to our offering?  Is Paul Krugman really going to argue that his perspective does not matter?  Is Jeffrey Sachs really going to argue that the combined perspectives of 538 congresspeople are more valuable than the combined perspectives of 150 million of our most productive citizens?  Would Krugman and Sachs really argue that, from their perspectives, one use of a limited resource is as good as any?  Would they really argue that, from their perspectives, economics does not matter?  Let's find out!

Aikido, Dune and Taxes

On some forum an anarcho-capitalist asked me how to get rid of taxes. This was my reply...

People say the only two certainties in life are death and taxes. Taxes have probably been around for a lot longer than 2000 years. By trying to fight taxes you're pretty much going up against an immortal. You are not going to defeat this opponent by tackling it head on.

Aikido is a pretty good martial art if you want to go up against an opponent that is far bigger than yourself. It teaches you how to use your opponent's size and strength against them.

Pragmatarianism is the political equivalent of Aikido. It's the only way that you're going to be able to defeat taxes.

The first move in pragmatarianism is by far the hardest. It is to completely embrace the tax rate. This will feel totally unnatural for conservatives, libertarians and anarcho-capitalists. But you most not fear. Because fear is the little-death that will bring total obliteration. You must face your fear. You must permit it to pass over you and through you. And when it has gone past you will turn the inner eye to see its path. Where the fear has gone there will be nothing. Only you will remain.*

If you don't face your fear then you'll never get close enough to your opponent in order to apply the invisible hand technique. This is the second move...taxpayers will directly allocate their taxes among the various government organizations at anytime throughout the year.

Once you apply the invisible hand to government then people's spending decisions in the private sector will determine their spending decisions in the public sector. This is the key concept. If the Red Cross is more effective and efficient than FEMA then people who value disaster relief might not allocate any of their taxes to FEMA. If FEMA loses all funding then the scope of government will narrow. As we already know, narrowing the scope of government will lower the tax rate.

At this point your opponent will be off balance. To utterly destroy your opponent you'll need to ensure that there are private organizations that make every single government organization completely redundant. Not only that but these private organizations must provide more bang for taxpayers' bucks than the government organizations.

The beauty of this concept is that, the more you try and defeat taxes the more we all benefit from the increased competition between the two sectors. Government organizations will either operate efficiently or they will be replaced by efficient private organizations. Either way we win.

Not only that but there's no logical reason for liberals to oppose this system. Everything is evidence based. No leap of faith is required.  The majority of taxpayers won't care whether an organization is public or private...they'll just spend their money on whatever organizations produce the best results at the lowest costs.

In reality though...I wonder which is more unlikely...libertarians accepting taxes or liberals accepting the invisible hand?

*Dune