Is the Tax Allocation Disparity Divine or Delusional?

Apparently, then, the legislators and the organizers have received from Heaven an intelligence and virtue that place them beyond and above mankind; if so, let them show their titles to this superiority. - Frédéric Bastiat, The Law  (1850)

Too much fun.  It's kind of really dawning on me just how many people implicitly trust the allocation decisions of congress.  Their trust is completely irrational...and nearly universal in scope.  It's nearly universal in scope because it's fundamentally primitive stuff that's been etched into our collective psyche.

Primitive cultures would sacrifice animals to deities and pray for favorable outcomes.  Sacrifice is basically the act of giving up something that you would rather keep.  By giving to a deity people entered into a type of supernatural quid pro quo arrangement.  It shouldn't take much of a stretch to understand that taxes are nothing more than the modern day expression of ritualistic sacrifice.

Since the beginning of recorded history the line between rulers and gods has been blurred...but as rulers became more "rational" they recognized that they could accomplish more with gold rather than with blood tributes.

Around 2000 years ago Jesus said to "Render unto Caesar the things which are Caesar’s, and unto God the things that are God’s".  Trust Caesar with your taxes just like you trust God with your tithe.  Caesar will spend your taxes as wisely as god will spend your tithe.  Don't even try and second guess  the outcomes...Caesar and god both move in mysterious ways.  Trusting in god or Caesar requires faith.  Faith is of course the "... substance of things hoped for, the evidence of things not seen."  (Hebrews 11:1)

It wasn't until around the 1200s that the Magna Carta was signed.  The Magna Carta directly limited the power of kings.  Then 600 years passed before Herbert Spencer wrote...

"When that "divinity" which "doth hedge a king," and which in our day has left a glamour around the body inheriting his power, has quite died away - when it begins to be seen clearly that, in a popularly-governed nation, the government is simply a committee of management; it will also be seen that this committee of management has no intrinsic authority. The inevitable conclusion will be that its authority is given by those appointing it; and has just such bounds as they choose to impose. Along with this will go the further conclusion that the laws it passes are not in themselves sacred; but that whatever sacredness they have, is entirely due to the ethical sanction - an ethical sanction which, as we find, is derivable from the laws of human life as carried on under social conditions. And there will come the corollary that when they have not this ethical sanction they have no sacredness, and may be rightly challenged.

The function of Liberalism in the past was that of putting a limit to the powers of kings. The function of true Liberalism in the future will be that of putting a limit to the powers of Parliaments"  - Contemporary review, Volume 46...(1884)

People have obviously projected their expectations of divinity onto congress.  We can see this because people implicitly trust that congress's tax allocation decisions will be "divinely superior" to their own collective tax allocation decisions.  Taxpayers have more faith in congress than they do in the invisible hand...despite the existence of overwhelming evidence that planners fail at efficiently allocating resources.

On one hand we could follow a market approach where the funding for a government organization (GO) would be directly determined by taxpayers.  This would result in a perfectly efficient allocation of public goods.  On the other hand we could follow a planned approach where funding for a GO would be directly determined by congress.  This would result in a perfectly "moral" or "divinely inspired" allocation of public goods.

The market approach to public goods, aka pragmatarianism, would result in the best possible use of limited resources...while the planned approach relies on "divine intervention" and statistics to determine a "better than the best" possible use of limited resources.  We're supposed to have a separation of church and state but maybe each congressperson offers a silent prayer before they decide how to allocate taxes.

With the market approach...perhaps society would only allocate $5 billion dollars to the war on drugs...which would accurately reflect exactly how much society valued the war on drugs...relative to other public goods.  The current planned approach allocates $15 billion to the war on drugs.  We can think of this disparity between the two allocations as a "divine disparity".  It certainly requires copious amounts of faith to trust that this "divine disparity" will produce outcomes that are more favorable than any we could ever hope to imagine...or ever hope to explain.

Personally I grew up in a fairly religious family.  We regularly read the bible...we attended church once a week and we always prayed before meals.  We would even pray before we cut open a watermelon.  My grandfather and I were huge fans of watermelon (as in Ode to the Watermelon by Pablo Neruda) so it kind of made some sense that we prayed before cutting open the watermelon.  Our prayers always started with expressing gratitude and ended with humble requests for some divine intervention that we might be particularly blessed from partaking in the watermelon.

My grandfather was quite eloquent at indirectly asking that the watermelon be a good one but I always felt awkward and self-conscious at asking that god divinely intervene to ensure that our watermelon was a good one.  It seemed so trivial...plus it would be impossible to even discern whether a minor miracle had actually taken place.  My faith was never that strong.

When I was very young I never doubted the authenticity of any of the fantastic stories in the bible...but as far back as I can remember I was always more interested in reading the Zoobook magazines that my mother ordered for me as well as the National Geographic magazines that she ordered for the both of us.

There were so many neat and unusual animals and insects that I'd never even heard of...it was extremely fascinating and enjoyable to learn about new ones.  Not exactly sure when I first ran across the theory of evolution...but I vaguely remember seeing the extinct prehistoric ancestors of present day animals in the Zoobooks magazines.  Perhaps when I was 10 or 11 I started to realize that the evidence for evolution easily surpassed the evidence for religion.

By the time I hit my teens I was pretty much an atheist but still read the bible with my family and attended church when I had to.  And when it was my turn to pray over the watermelon...I self-consciously prayed that the watermelon would be a good one...all the while appreciating the absurdity of doing so.

It's been years now since I read the bible with my family but I still remember quite a few of the stories.  Recently I've been revisiting some of these bible stories with renewed interest in order to try and better understand how ritualistic sacrifice has evolved into taxes.

When Adam and Eve were in the Garden of Eden they were not required to offer up any sacrifices to god.  But then Eve ate from the Tree of the Knowledge of Good and Evil and they were expelled from the garden.

Perhaps somewhat incidentally...Erich Fromm offered a really interesting perspective on this story.  His thoughts were that when Eve ate from the tree of the knowledge of good and evil it represented when humanity first developed conscious self-awareness.  Adam and Eve became aware that they were naked and were then expelled from the garden...which represented being alienated from a harmonious coexistence with nature.

Maybe...perhaps Eve's sin (and the first sin in the world) was for her to think for herself...which meant to question the rules of god.  After Adam and Eve were expelled from the garden it then became necessary for them to offer regular sacrifices to god.  It was the only way that they could understand and attempt to change the harsh realities of the natural world.

Not quite sure if Cain and Abel's sacrifice was the first to be mentioned in the bible...but Cain offered fruits and vegetables while Abel offered a lamb.  For some reason god favored Abel's offering over Cain's offering.  Perhaps this was because Abel had some of that "divinity which doth hedge a king".  If so, then it was divine inspiration... facilitated by a strong connection with god... which led him to allocate a lamb to god rather than selecting fruits and vegetables as his brother had done.  The more you know somebody the more likely it will be that you'll pick an appropriate gift for them.

Google'd a bit to try and find other possible explanations for god rejecting Cain's sacrifice and found this passage somewhat useful in understanding the dynamic between god and his subjects...

We must come to grips with one thing: God, as Creator, is sovereign over His creation. While there are proximate reasons for God’s decrees, what ultimately makes “right” right and “wrong” wrong? God’s sovereign choice. This does not mean God is capricious or arbitrary; God is always reasonable because He is the creator of reason. If God’s actions seem to conflict with or transcend man’s sense of “reason,” that doesn’t mean God is wrong; it means His thoughts are not our thoughts, and His ways are not our ways (Isaiah 55:8). He respects one offering and rejects another, ultimately, for His own reasons and pleasure—and isn’t that the Creator’s prerogative? Again, this isn’t to say He is arbitrary; His Word gives us all the knowledge of Him and the reasoning we need to understand and obey.  - Why Didn’t God Respect Cain’s Offering?

Does this remind you of anything?  Hopefully a few of you were reminded of Adam Smith's "duties of the sovereign".

The next biblical story of sacrifice which comes to mind is that of Abraham.  His willingness to sacrifice his son Issac demonstrated that he implicitly trusted that the outcome would be favorable in ways that he couldn't even begin to fathom.  Abraham had incredible faith.  His story foretold how god would send his son Jesus down to earth to be sacrificed for all of our sins.

The story of Elijah versus the prophets of Baal, like the story of Cain and Abel, also concerned a sacrificial competition of sorts.  Unlike with Cain and Abel though, the sacrifices of Elijah and the prophets of Baal were exactly alike but were offered to completely different gods.   What's also different in this story is that there was a desired  outcome which was established early in the story...an end to a severe famine.  The prophets of Baal were unable to solicit any response from their gods even after they cut themselves and mixed their blood on their alter.  When it was Elijah's turn his god clearly accepted his offering...rain immediately followed...the Israelites' trust in god was reestablished....and all the prophets of Baal were quickly killed.

That cycle of faith being lost and then reestablished can be seen today in how voters alternatively lose and then reestablish faith in the Democratic and Republican Parties.  Primitive societies switched deities in order to try and identify which deity offered the best possible return on their sacrifices just like voters elect different parties in order to try and discover which party offers the best possible return on their taxes.  This return on investment (sacrifice/taxes) can also be thought of as a "blessing".

The problem is that congress adds absolutely no value to the tax allocation process.  In fact, they subtract considerable value from the process by misdirecting the flow of taxes.   Anything other than the best possible use of limited public resources will produce distortions with numerous unintended negative consequences...both of an economic and social nature.

At what point in history will a tipping point be reached where there are enough voters that realize that the current "divine disparity" is actually delusional and damaging?  When will they realize that there is nothing better than the best possible use of limited public resources?   When will they accept that the only objective way of discovering the best possible use of limited public resources is to allow taxpayers to directly allocate their taxes themselves?

And Stephen Crane replies...

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.

Can You Spot the Absurdity?

Stephen Crane is most well known for his book...The Red Badge of Courage...but he also wrote poetry as well.  Here's one of his poems...

I saw a man pursuing the horizon;
Round and round they sped.
I was disturbed at this;
I accosted the man.
"It is futile," I said,
"You can never — "

"You lie," he cried,
And ran on.

Kinda reminds me of Albert Einstein's definition of insanity..."doing the same thing over and over again and expecting different results".  Here's another poem by Crane...

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.

Do you ever find yourself in the middle of a tradition when...WHAM...you're suddenly struck full force with the absurdity of it?  How many traditions are the equivalent of vestigial traits?  Of course, it's utter folly to try and completely remove a vestigial trait without first being absolutely certain that the trait is indeed unnecessary.

Every tradition depends on followers...just like, when it comes to government, every function depends on supporters.  How absurd would it be if we had to follow traditions that we thought were absurd?  Does that question sound familiar?  It should...it's the very same question that led people to this country in the first place.

Right now both the Democrats and the Republicans appreciate that we need to make some cuts to our budget.  The question is...where to cut?  Doctors spend years learning about where to cut but there is absolutely no educational requirement to be a politician.  Why is that?  It's because when it comes to the budget...cuts are largely subjective and value based.

Republicans say..."let's cut public welfare...can't you see it's making the problem even worse?"  Democrats say..."let's cut unnecessary wars...can't you see they promote a vicious cycle?"

We can go round and round pursuing the horizon...or we can let taxpayers decide for themselves where to cut.  Errrr...except, taxpayers wouldn't be able to use their taxes to cut anything.  Rather than worrying about "cutting" functions they would worry about "funding" functions.  Ah, that's the beauty right there.  Taxpayers would turn into donors.  This transmutation will be the subject of my next entry.

If you can spot the absurdity then you're qualified to use your taxes to support the functions you consider absolutely essential.  If you can't spot any absurdity then you would still have the option to give your taxes to congress.

The whole is greater than the sum of its parts.  The aggregate of each taxpayer deciding where to fund would produce far greater results than the aggregate of each congressperson deciding where to fund/cut.  Even if you just barely grasp the concept of the invisible hand it should be fairly straightforward to understand that the visible hand (congress) could never allocate resources as efficiently as the invisible hand (taxpayers).  If the visible hand was even remotely successful at allocating resources then there would be at least one example of a successful command economy.

In terms of absurd-spotting, Herbert Spencer, wrote by far the most entertaining passage on the subject.  Admittedly, it's a very looooooong passage....but, it so wonderfully conveys the idea behind allowing individual taxpayer to decide on their own what is, or isn't, absurd.

From...Social Statics by Herbert Spencer...

To the assertion that the boundary line of State-duty as above drawn is at the wrong place, the obvious rejoinder is— show us where it should be drawn. This appeal the expediency-philosophers have never yet been able to answer. Their alleged definitions are no definitions at all. As was proved at the outset, to say that government ought to do that which is "expedient," or to do that which will tend to produce the "greatest happiness," or to do that which will subserve the "general good," is to say just nothing; for there are countless disagreements respecting the natures of these desiderata.  A definition of which the terms are indefinite is an absurdity. Whilst the practical interpretation of "expediency" remains a matter of opinion, to say that a government should do that which is "expedient," is to say that it should do, what we think it should do!

Still then our demand is—a definition. Between the two extremes of its possible action, where lies the proper limitation?  Shall it extend its interference to the fixing of creeds, as in the old times; or to overlooking modes of manufacture, farming operations, and domestic affairs, as it once did; or to commerce, as of late—to popular education, as now—to public health, as already—to dress, as in China—to literature, as in Austria—to charity, to manners, to amusements?  If not to all of them, to which of them?  Should the perplexed inquirer seek refuge in authority, he will find precedents not only for these but for many more such interferences.  If, like those who disapprove of master-tailors having their work done off the premises, or like those who want to prevent the produce of industrial prisons displacing that of the artizans, or like those who would restrain charity-school children from competing with seamstresses, he thinks it desirable to meddle with trade-arrangements, there are plenty of exemplars for him.  There is the law of Henry VII., which directed people at what fairs they should sell their goods; and that of Edward VI., which enacted a fine of £100 for a usurious bargain; and that of James I., which prescribed the quantity of ale to be sold for a penny; and that of Henry VIII., which made it penal to sell any pins but such as are "double headed, and their head soldered fast to the shank, and well smoothed; the shank well shaven; the point well and round-filed and sharpened."  He has the countenance, too, of those enactments which fixed the wages of labour; and of those which dictated to farmers, as in 1533, when the sowing of hemp and flax was made compulsory; and of those which forbade the use of certain materials, as that now largely-consumed article, logwood, was forbidden in 1597.  If he approves of so extended a superintendence, perhaps he would adopt M. Louis Blanc's idea that "government should be considered as the supreme regulator of production;" and having adopted it, push State-control as far as it was once carried in France, when manufacturers were pilloried for defects in the materials they employed, and in the textures of their fabrics; when some were fined for weaving of worsted a kind of cloth which the law said should be made of mohair, and others because their camlets were not of the specified width; and when a man was not at liberty to choose the place for his establishment, nor to work at all seasons, nor to work for everybody.  Is this considered too detailed an interference?  Then, perhaps, greater favour will be shown to those German regulations by which a shoemaker is prevented from following his craft until an inspecting jury has certified his competence; which disable a man who has chosen one calling from ever adopting another; and which forbid any foreign tradesman from settling in a German town without a licence. And if work is to be regulated, is it not proper that work should be provided, and the idle compelled to perform a due amount of it?  In which case how shall we deal with our vagrant population?  Shall we take a hint from Fletcher of Saltoun, who warmly advocated the establishment of slavery in Scotland as a boon to "so many thousands of our people who are at this day dying for want of bread"? or shall we adopt the analogous suggestion of Mr. Carlyle, who would remedy the distresses of Ireland by organizing its people into drilled regiments of diggers?  The hours of labour too—what must be done about these?  Having acceded to the petition of the factory-workers, ought we not to entertain that of the journeyman-bakers? and if that of the journeyman bakers, why not, as Mr. Oobden asks, consider the cases of the glass-blowers, the nightmen, the iron-founders, the Sheffield knife-grinders, and indeed all other classes, including the hardworked M.P.'s themselves?  And when employment has been provided, and the hours of labour fixed, and trade-regulations settled, we must decide how far the State ought to look after people's minds, and morals, and health.  There is this education question: having satisfied the prevalent wish for "government schools with tax-paid teachers, and adopted Mr. Ewart's plan for town-libraries and museums, should we not canvass the supplementary proposal to have national lecturers? and if this proposal is assented to, would it not be well to carry out the scheme of Sir David Brewster, who desired to have "men ordained by the State to the undivided functions of science"—"an intellectual priesthood," " to develop the glorious truths which time and space embosom*"? Then having established "an intellectual priesthood" to keep company with our religious one, a priesthood of physic, such as is advocated by certain feeless medical men, and of which we have already the germ in our union doctors, would nicely complete the trio. And when it had been agreed to put the sick under the care of public officials, consistency would of course demand the adoption of Mr. G. A. Walker's system of government funerals, under which "those in authority" are "to take especial care" that "the poorest of our brethren" shall have "an appropriate and solemn transmission" to the grave, and are to grant in certain cases "gratuitous means of interment."  Having carried out thus far the communist plan of doing everything for everybody, should we not consider the peoples' amusements, and, taking example from the opera-subsidy in France, establish public ball-rooms, and gratis concerts, and cheap theatres, with State-paid actors, musicians, and masters of the ceremonies: using care at the same time duly to regulate the popular taste, as indeed, in the case of the Art-Union subscribers, our present Government proposed to do?  Speaking of taste naturally reminds us of dress, in which sundry improvements might be enforced; for instance—the abolition of hats: we should have good precedents either in Edward IV., who find those wearing "any gown or mantell" not according to specification, and who limited the superfluity of peoples' boot-toes, or in Charles II., who prescribed the material for his subjects' grave-clothes. The matter of health, too, would need attending to; and, in dealing with this, might we not profitably reconsider those ancient statutes which protected peoples' stomachs by restricting the expenses of their tables; or, remembering how injurious are our fashionable late hours, might we not advantageously take a hint from the old Norman practice, and (otherwise prompted) fix the time at which people should put out their fires and go to bed; or might we not with benefit act upon the opinion of M. Beausobre, a statesman who said it was "proper to watch during the fruit season, lest the people eat that which is not ripe"? And then, by way of making the superintendence complete, would it not be well to follow the example of the Danish king who gave directions to his subjects how they should scour their floors, and polish their furniture?

* See Address to the British Association at Edinburgh, in 1850.

Power and Control

Politics is all about power and control...which is why we need checks and balances.

Frank Herbert -  "He who controls the spice, controls the universe!" - Dune

Pragmatarianism would transfer some control of taxes from congress to taxpayers.  The amount of control transfered would be determined by taxpayers themselves and would reflect their confidence in congress.  This check on the power of congress would have been supported by Herbert Spencer.

Herbert Spencer 

     When that "divinity" which "doth hedge a king," and which in our day has left a glamour around the body inheriting his power, has quite died away - when it begins to be seen clearly that, in a popularly-governed nation, the government is simply a committee of management; it will also be seen that this committee of management has no intrinsic authority. The inevitable conclusion will be that its authority is given by those appointing it; and has just such bounds as they choose to impose. Along with this will go the further conclusion that the laws it passes are not in themselves sacred; but that whatever sacredness they have, is entirely due to the ethical sanction - an ethical sanction which, as we find, is derivable from the laws of human life as carried on under social conditions. And there will come the corollary that when they have not this ethical sanction they have no sacredness, and may be rightly challenged.

     The function of Liberalism in the past was that of putting a limit to the powers of kings. The function of true Liberalism in the future will be that of putting a limit to the powers of Parliaments - Contemporary review, Volume 46

For a few weeks now a Marxist concept that I learned while studying International Development at UCLA has been on my mind but the word wasn't even on the tip of my tongue.  Surprisingly, I just remembered it..."comprador bourgeoisie".  Basically, they were well-connected, upper class, middlemen in developing countries.  A multinational corporation (MNC) would go into a developing country and deal with the local comprador bourgeoisie...who would help "facilitate" the MNC's exploitation of local resources.  The MNCs and the comprador bourgeoisie would get rich and very little, if any, money would trickle down to the proletariat.

Is it a bit much to think of congress as comprador bourgeoisie?  Perhaps...but, in a pragmatarian system, that would be up to each taxpayer to decide.  I kind of just wanted to write it down in case I forgot it again.

Another term that I struggled to remember was "moral hazard".  I'll just be lazy and grab this one from Wikipedia...

Moral hazard also arises in a principal-agent problem, where one party, called an agent, acts on behalf of another party, called the principal. The agent usually has more information about his or her actions or intentions than the principal does, because the principal usually cannot completely monitor the agent. The agent may have an incentive to act inappropriately (from the viewpoint of the principal) if the interests of the agent and the principal are not aligned.

It's straightforward to see that the interests of congress (the agent) and taxpayers (the principle) are not completely aligned.  The primary goal of politicians is to be (re)elected so their interests are strongly aligned with whoever will finance their campaign.

Guido Calabresi 

In a market regime, some are made richer and some made poorer; in a command structure, some have greater authority and some less. It is equally clear that, in an all-market regime, wealth constitutes authority, and that, in an all-command structure, authority results in wealth. Also true, but perhaps less plain, is the fact that in mixed systems like ours people will use their distributional advantage in one medium to overcome their distributional disadvantage in the other by 'altering' or 'corrupting' that other medium. The use of money to influence or 'corrupt' those in authority is easy enough to understand, whether through bribes or campaign contributions.- The Origins of Law and Economics: Essays by the Founding Fathers

This is also know as rent-seeking behavior...when special interest groups and big business attempt to influence congress.

Some decades before Herbert Spencer was worrying about how the power of parliament would be limited...Alexis de Tocqueville was worrying about tyranny of the majority.  

Alexis de Tocqueville

Again, it may be objected that the poor are never invested with the sole power of making the laws; but I reply, that wherever universal suffrage has been established the majority of the community unquestionably exercises the legislative authority; and if it be proved that the poor always constitute the majority, it may be added, with perfect truth, that in the countries in which they possess the elective franchise they possess the sole power of making laws. But it is certain that in all the nations of the world the greater number has always consisted of those persons who hold no property, or of those whose property is insufficient to exempt them from the necessity of working in order to procure an easy subsistence. Universal suffrage does therefore, in point of fact, invest the poor with the government of society. - Democracy in America

As I pointed out in my entry on taxpayers, taxpayers are better educated than the general public.  Therefore, pragmatarianism would help function as a check against any possible tyranny of the majority.

To review, pragmatarianism would...

1. help check the power of congress
2. help check tyranny of the majority
3. result in an optimal division of labor between the private and public sector
4. ensure that public goods would be produced with maximum efficiency
5. ensure levels of all public goods would accurately reflect society's values
6. provide greater freedom
7. allow taxpayers to joyfully contribute to public goods 

Libertarianism

Simple

Libertarians are socially liberal and economically conservative. Social freedoms can be represented by the bedroom and economic freedoms can be represented by the boardroom.

• Libertarians = keep government out of both the bedroom and boardroom 
• Liberals = keep government out of the bedroom but in the boardroom 
• Conservatives = keep government in the bedroom but out of the boardroom 
• ??? = keep government in both the bedroom and the boardroom. 

Another simple way of thinking about libertarianism is that, to paraphrase Oliver Wendell Holmes Jr... the freedom to swing your fist ends where somebody else's nose begins. This concept is specifically referred to as J.S. Mill's Harm Principle.

Less Simple

Libertarianism is an ideology of limited government. Why should the government be limited? There are two main theoretical justifications...consequentialist (results) and deontological (rights).

The consequentialist theory is that, for most goods, the invisible hand is more efficient at allocating resources than the visible hand (planners - congress). Therefore, the state should be limited to producing goods that society values but, due to lack of financial incentive, the market largely fails to produce.

The deontological theory is that property rights trump "most" market failures. The exceptions are those public goods that deal with protecting your property. Therefore, the state should be limited to providing goods that help protect your property from others.

Practical

Libertarians want to move welfare, education, healthcare and numerous other public goods over to the private sector. These goods can be thought of as Pseudo Public Goods (PPGs) because they only loosely match the economic criteria of a public good. From the consequentialist perspective it's generally assumed/believed that the private sector will produce comparable (if not greater) levels of PPGs as the public sector. From the deontological perspective, given that property rights trump PPGs, it's irrelevant whether the private sector will produce the same levels of PPGs as the public sector.

Criticism

The free-rider problem is by far the strongest argument for not moving PPGs over to the private sector. If people had a choice whether or not to fund PPGs it's very likely that funding for PPGs would decrease significantly.

On the off-chance you manage to convince a libertarian that the private sector will under-produce PPGs they can always fall back on the deontological argument. It's their ace in the hole.

Trying to attack the deontological justification for libertarianism is as useless as trying to attack the 10 Commandments. Everybody has different value systems...they are all subjective and as such cannot be proved wrong.

Recently though I was pleasantly surprised when a member of the Libertarian Party on facebook shared a link to Jeffrey Miron's blog where he acknowledges that the free-rider problem isn't just applicable to national defense...Libertarianism and Anti-Poverty Programs *

Solutions

Libertarians, liberals and conservatives all have different value systems. It's fairly reasonable that people do not have the choice whether they pay taxes but it's very unreasonable that people are forced to fund public goods that they do not value. Tax payers should have the liberty to use their tax dollars to directly fund the public goods that they believe government should be responsible for providing. This is the pragmatarian approach.

The pragmatarian approach would allow the invisible hand to decide whether the public or private sector is better at producing a "public" good. The result would be...

1. an optimal division of labor between the private and public sector
2. public goods would be produced with maximum efficiency
3. levels of all public goods would accurately reflect society's values
4. everybody would have more freedom
5. government would have less power
6. taxpayers would transform into donors...and they would feel a "warm glow" when they made their "donations" to public goods.

The question then becomes...is it easier for liberals or libertarians to fully appreciate the pragmatarian solution? Pragmatarianism provides more freedom then we currently have...so libertarians should easily recognize it as being a far superior option when compared to the current system. However, some might refuse to concede that the free-rider problem is a legitimate problem. Liberals on the other hand might not sufficiently "grasp" the invisible hand to realize how much benefit they would derive from the pragmatarian approach.

So in other words, we can say that pragmatarians are either libertarians that understand the free-rider problem or liberals who understand the invisible hand.

To conclude here are a bunch of quotes. The first set establishes the connection between classical liberalism and libertarianism. The second set establishes who the most prominent libertarians were/are and the last set establishes what they thought/think about the scope of government.

Classical Liberalism and Libertarianism

• The word liberal has an odd history. It comes from the same root as liberty, and originally it simply meant "free." In that broad sense, the United States as a whole is a liberal country, and all popular American ideologies are variants of liberalism. In a more restricted definition, a liberal was a person who believed in limited government and who opposed religion in politics. A hundred years ago, liberalism referred to a philosophy that in some ways resembeled modern-day libertarianism. For that reason, many libertarians today refer to themselves as classical liberals. - American Government and Politics Today 2008: The Essentials
• The classical liberal movements of the eighteenth and nineteenth centuries are, of course, the forebears of contemporary libertarian thought. - Total freedom: toward a dialectical libertarianism
• Contemporary libertarians believe, with some legitimacy, that the greatest threat to liberty is an expanding government with a monopoly on state power. Their answer: limit government, protect a basic skein of fundamental rights, and the rest will work itself out. In this respect, libertarians are true heirs of the classical liberal tradition. - The Political Centrist
• Libertarianism has been more an intellectual than popular movement since its ancestor, classical liberalism, was first articulated by John Locke. William Maddox and Stuart Lillie identified six tenets of classical liberalism to which American libertarians subscribe in a modified form today: individualism, an instrumental view of the state, limited government, individual rights, legal equality, and representative government. These six tenets cluster around two domestic policy questions - the proper role of government and the prescriptions for apparent social inequalities. - Hostile takeover: the House Republican Party, 1980-1995
• Scalet and Schmidtz quite correctly identify the classical liberal contribution to political theory as its focus on limited government, rather than (as classical liberals are often accused of preferring) "weak" government. The size of government is not the primary concern of classical liberals; its limits are. Limited governments tend to be small relative to unlimited governments. They also note that "classical liberals have been champions of democracy." The two issues - limited government and democracy - have traditionally been linked together in classical liberal thought by the theory of constitutionalism, which limits the powers of majorities no less than of minorities. - Realizing freedom: libertarian theory, history, and practice

Most Prominent/Influential Libertarians

This source establishes the prominence of Jefferson, Tocqueville, Adam Smith, John Stuart Mill, Ludwig von Mises, Friedrich von Hayek and Ayn Rand...

Libertarians cite as progenitors Jefferson, Tocqueville, Adam Smith, and John Stuart Mill as well as economists of the Austrian school Ludwig von Mises and Friedrich von Hayek, author of The Road to Serfdom (1944). But most Republican libertarians were first inspired not by these classical liberals but by the author of The Fountainhead and Atlas Shrugged. - New York Magazine Mar 4, 1996

This source establishes the prominence of John Stuart Mill and Herbert Spencer...

John Stuart Mill, the great and generous theorist of liberalism, and Herbert Spencer, a major exponent of laissez-faire individualism, whose writings appealed immensely to the Spanish anarchists, can be - and have been - rightly designated as 'libertarians' - Anarchist seeds beneath the snow

This source establishes the prominence of John Stuart Mill...

In contemporary times, libertarians have positioned themselves as the heirs to J. S. Mill and his defense of individual liberty. Their ideas have grown increasingly influential. Contemporary libertarians embrace Mill's On Liberty because it "sounds important libertarian themes: that individuals should be free to live as they choose so long as they don't harm others and that the power of government should be strictly limited." - Putting ideas to work: a practical introduction to political thought

This source establishes the prominence of Robert Nozick...

With thirty years' distance on its publication, one can safely assert that Robert Nozick's Anarchy, State, and Utopia (1974) has achieved the status of a classic. It is not only the central text for all contemporary academic discussions of libertarianism; together with John Rawls's A Theory of Justice (1971), it arguably framed the landscape of academic political philosophy in the last decades of the twentieth century. - Natural rights liberalism from Locke to Nozick, Part 1

This source establishes the prominence of John Stuart Mill, Ludwig von Mises, Friedrich Hayek and Ayn Rand...

This political philosophy has a long pedigree. It has roots in the classical liberalism of eighteenth- and nineteenth- century British thinkers such as John Stuart Mill, and, more recently, in the Austrian school of economics represented more powerfully in the United States by Ludwig von Mises and Friedrich Hayek. On a more popular level, the novelists Ayn Rand and Robert Heinlein proved effective propagators of a radical anti-statist, individualist ethos, and according to historian Brian Doherty, more than half of the earliest Libertarians cited one of those two authors as their primary ideological influence. - Encyclopedia of American political history

Libertarians on the Scope of Government

1776 - Adam Smith (Michael Howard)

Although Smith was against governmental interference with the market, he had a a theory of government sometimes known as the "duties of the sovereign". The system of natural liberty required the sovereign to perform three duties; defense, the exact administration of justice, and the erection and maintenance of public works. Even though he was a libertarian, Smith realized that the market could not provide certain public goods which were too expensive for provision by private individuals. - Public Sector Economics for Developing Countries

1848 - Frederic Bastiat

For ourselves, we consider that Government is and ought to be nothing whatever but the united power of the people, organized, not to be an instrument of oppression and mutual plunder among citizens; but, on the the contrary, to secure to every one his own, and to cause justice and security to reign. - Government

1865 - John Stuart Mill

That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. - On Liberty

1865 - Herbert Spencer

And now mark that whether we consider government from this point of view, or from that previously occupied, our conclusions respecting it are in essence identical. For when government fulfils the function here assigned it, of retaining men in the circumstances to which they are to be adapted, it fulfils the function which we on other grounds assigned it — that of protector. To administer justice, — to mount guard over men's rights, — is simply to render society possible. And seeing that the two definitions are thus at root the same, we shall be prepared for the fact that, in whichever way we specify its duty, the State cannot exceed that duty without defeating itself. For, if regarded as a protector, we find that the moment it does anything more than protect, it becomes an aggressor instead of a protector; and, if regarded as a help to adaptation, we find that when it does anything more than sustain the social state, it retards adaptation instead of hastening it. - Social statics

1884 - Herbert Spencer (Tom G. Palmer)

The challenge facing Americans today in defending constitutionally limited government was succinctly stated by the English libertarian Herbert Spencer in 1884: "The function of Liberalism in the past was that of putting a limit to the powers of kings. The function of true Liberalism in the future will be that of putting a limit to the powers of Parliaments." - Realizing freedom: libertarian theory, history, and practice

1944 - Ludwig von Mises

Liberalism differs radically from anarchism. It has nothing in common with the absurd illusions of the anarchists. We must emphasize this point because etatists sometimes try to discover a similarity. Liberalism is not so foolish as to aim at the abolition of the state. Liberals fully recognize that no social coöperation and no civilization could exist without some amount of compulsion and coercion. It is the task of government to protect the social system against the attacks of those who plan actions detrimental to its maintenance and operation. - Omnipotent Government

1962 - Milton Friedman

First, the scope of government must be limited. Its major functions must be to protect our freedom both from the enemies outside our gates and from our fellow-citizens: to preserve law and order, to enforce private contracts, to foster competitive markets. Beyond this major function, government may enable us at times to accomplish jointly what we would find it more difficult or expensive to accomplish severally. However, any such use of government is fraught with danger. We should not and cannot avoid using government this way. But there should be a clear and large balance of advantages before we do. By relying primarily on voluntary co-operation and private enterprise, in both economic and other activities, we can insure that the private sector is a check on the powers of the governmental sector and an effective protection of freedom of speech, of religion, and of thought. - Capitalism and freedom

1963 - Ayn Rand

The proper functions of a government fall into three broad categories, all of them involving the issues of physical force and the protection of men’s rights: the police, to protect men from criminals—the armed services, to protect men from foreign invaders—the law courts, to settle disputes among men according to objective laws. - The Nature of Government

1973 - Friedrich Hayek (Alan O. Ebenstein)

These words were even more significant because of the government services to which he applied them - "without exception to all those services of which government possesses a legal monopoly, with the only exception of maintaining and enforcing the law and maintaining for this purpose an armed force, i.e. all those from education to transport and communications, including post, telegraph, telephone and broadcasting services, all the so-called 'public utilities,' the various 'social' insurances and, above all, the issue of money." In the last pages of Law, Legislation and Liberty, published in 1979, Hayek the classical liberal became Hayek the libertarian. - Friedrich Hayek: a biography

1974 - Robert Nozick

Our main conclusions about the state are that a minimal state, limited to the narrow functions of protection against force, theft, fraud, enforcement of contracts, and so on, is justified; that any more extensive state will violate persons' rights not to be forced to do certain things, and is unjustified; and that the minimal state is inspiring as well as right. Two noteworthy implications are that the state may not use its coercive apparatus for the purpose of getting some citizens to aid others, or in order to prohibit activities to people for their own good or protection. - The Political Theory of Robert Nozick

1995 - Richard A. Epstein

This basic insight - law must control the most lawless - lies behind the strong insistence on the basic rules of ordinary society. It also explains the libertarian's constant theoretical emphasis that the function of government is to control the use of force and fraud against the person and property of others. - Forbidden Grounds: The Case Against Employment Discrimination Laws

1996 - Dick Armey (Jacob Weisberg)

While one can reject this notion of a stripped-down state, libertarianism is a principled and coherent worldview. It provides an answer to every question. Police departments and the army - yes. Just about everything else - no. Ask most politicians, from Gingrich to Clinton, what the role of the federal government is, and you'll get a stream of mush. Poke a libertarian and you'll get a response like the one Dick Armey gave shortly after becoming majority leader: "Defend our shores, build a system of justice, and construct some infrastructure. Gee, I'm running out of other suggestions." - New York Magazine Mar 4, 1996

1998 - David Boaz

Libertarians argue that we can and should move a long way toward minimal government; outside of the protection of our rights by police, courts, and national defense, it's hard to think of goods and services that could be produced more efficiently by a government bureaucracy than in the competitive marketplace. Libertarianism: A Primer

2004 - James Walsh

Libertarians accept the need for a limited state - if only to provide basic levels of safety and security. Their focus is keeping the state limited to a disciplined - and small - number of activities. Anarchists still want to smash the mechanisms of state. As I've noted, anarchy is an emotional system. - Liberty in Troubled Times: A Libertarian Guide to Laws, Politics and Society in a Terrorized World

*[Update - 29 Oct 2011]