My Own Pie

Libertarian Thoughts from Renaissance Guy

An Answer for Scott Erb

with one comment

     Commenter Scott Erb recently brought up the idea that people do not earn their money in isolation but depend upon the benefits of the state in order to earn it. 

     Scott wrote:  “They are able to make that amount of money because of an infrastructure provided by the state, because of a court system that protects investments and contracts, because of an education system that creates skilled workers, and a whole myriad of different things paid for collectively.”

     Here are three things to consider: 

     First, the most glaring problem with your reasoning is that all those things were paid for by the people who benefit from them, especially the wealthy citizens.  Since the poor are paying no tax, and the middle class are paying relatively little, it falls to the wealthy to pay for those things through the heavy taxation forced upon them.  They paid for them, so they should benefit from them.  As you well know, there is no magic money-making machine in Washington, D. C., that the state can use to fund these things.  

     Second, without people earning money, none of those things could ever have existed.  The state would have no resources for financing them.  Therefore, the situation is the reverse of how you paint it.  The government depends upon wage earners, businessmen, and investors in order to have revenue for those projects.  

     Third, many Libertarians would rather the state did not pay for most of those things.   They know that private companies and individuals could do a more efficient job of providing some, most, or even all of them.  (Which, would result in more employment, also.)   However, as long as the state is sponsoring those things, people should take advantage of them–especially the people whose taxes paid for them.

     Scott also wrote, “Moreover, a stable monetary system is necessary, which is done through federal reserve notes (dollars) that are trusted world wide. ”

     People would have even more trust in a dollar whose value was continually increasing as wealth is produced by the people of our country.

     Scott also wrote, “Frankly, I think people would earn far, far less even with no taxes if they gave up what taxes provide, especially if they gave up using the federal reserve notes. ”

     Are you suggesting that if the state did not build roads, people would just do without them?  If the state did not operate schools, people would just let their kids grow up uneducated?

     He also wrote:  ” Besides that, part of the stability rests on avoiding social unrest. Since private assistance won’t be enough (never has been historically) to deal with poverty, you’re more likely to get a revolt of some sort if there aren’t state efforts to deal with problems of income distribution.”

     Surprisingly you do seem to be operating under the myth of the money-making machine, as if some entity called “the government” somehow produces money and distributes it to the people in equal or unequal shares.  The possibility of the people revolting is worth considering; however, you seem to be admitting that the alternative is for the producers to simply pacify the non-producers by giving them just enough to live on.  That’s not a pretty picture.

     I would rather the non-producers have an incentive, such as their own survival, to become producers.  Those who literally will not work,  have no <i>right</i> to demand, much less to extract by force, money from those who are producing wealth.  They can ask, and the request can be denied.  Those who cannot work should depend on their families, their neighbors, and private charities to help them.  I am sure that there are plenty of movie stars, sports players, and fancy lawyers to help those with legitimate needs.

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Written by ambrosianideas

November 1, 2009 at 2:40 pm

Posted in Libertarianism

Tagged with , , ,

One Response

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  1. Thanks for a personal reply post!

    On the state creating the capacity for wealth generation. Yes, most taxes are paid by those who make the most money and thus benefit the most from the state’s ability to create stable markets and a strong legal system. I agree there.

    Your third point is one that you’d have to convince of. I’ve seen people argue ‘theoretically’ that given certain assumptions the private sector could do these things. I’ve seen no real world evidence supporting such a claim, usually when states are weakened or non-existent, things fall apart into decay and organized crime.

    As to the value of the dollar: relative to other states its value is increased or decreased in part based on economic output. The currency market is truly a market — people pay what they think a currency is worth. I think the dollar is in trouble (and I assume here you’d agree) because high debt and deficits cause many to doubt the dollar’s ability to sustain its value.

    Also: Yes, I’m suggesting that the state takes the initiative on things like roads. In fact, I’d argue that people willfully create the state and give it power in order to have an institution that can deal with that kind of issue.

    I’m not sure about your last point, except to note that the masses can rise up whether one thinks they should or should note. It was fear of revolt that caused the growth of social welfare programs. It was the excesses of free markets in “libertarian” early industrial era England that helped lead to the creation of and strength of communism. Often these are people who are willing to work, but not willing to let others (as they see it) get rich off their labor. The biggest mistake of both socialists and libertarians is to over determine economic factors. The economy rests on a foundation laid by the culture, society, and how it is governed (currently through a sovereign state). Economics does not run on objective laws or processes, but on ones nuanced in part by cultural norms and traditions.

    Scott Erb

    November 2, 2009 at 8:42 pm


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