"When you pay social security taxes, you are in no way making provision for your own retirement. You are paying the pensions of those who are already retired. Once you understand this, you see that whether you will get the benefits you are counting on when you retire depends on whether Congress will levy enough taxes, borrow enough, or print enough money...." ~ Allen Wallis
Jesus Wants Your Money
On September 9, Alabamians will go to the polls to vote on a proposed tax increase. Like a 21st-century Son of Sam, Governor Bob Riley has claimed that his support for the measure is based on instructions from Jesus. Obviously Riley, despite his much-advertised regular Bible study sessions, never got as far as Exodus 20: 15, let alone I Samuel 8: 4-20. (But I wonder why enacting tax hikes in response to divine dictates doesn't run afoul of the separation of church and state?) Supporters of the plan say that Alabama's poor are overtaxed while its rich are undertaxed. It's certainly true that the poor are overtaxed. But what could it mean to say that the rich are undertaxed? From the standpoint of justice, theft is, as Aristotle notes (Nicomachean Ethics II. 6), one of those acts for which there is no 'mean,' or moderate quantity, but rather any amount is too much. And from the standpoint of utility, how could it ever be advantageous to transfer more resources from the competitive economic marketplace to the bureaucratic and corrupt political marketplace? Supporters of Gov. Riley's theocratic tax plan point out, correctly, that Alabama state services are pitifully underfunded. But the solution to Alabama's funding woes does not lie in a tax increase. The state government of Alabama is a monopoly, legally insulated from market competition. On the basis of this fact we can confidently predict that the amount of money needed to fund Alabama state services is far less than what the state currently spends. There are two reasons for this. First, the state government does not have as much incentive to economise costs as a competitive enterprise would have, because, unlike a competitive enterprise, the state government runs no risk of losing customers to a competitor. No matter how far taxes exceed necessary costs, Alabama's customers cannot withdraw their patronage except by physically relocating to another state. By contrast, if Office Max were to start charging more than Office Depot for the same service, its customers could easily switch to the competitor. Second, even if (let's imagine) state officials were all saintly folks who could be counted on to make their best effort to economise regardless of incentives, in the absence of competition they could have no way of knowing how efficient their methods are. Unless different ways of providing these services are allowed to compete for customers, how can the providers determine whether the particular method they have adopted is the best available? As Ludwig von Mises painstakingly demonstrated during the last century, efficient utilisation of resources is possible only in a competitive market context. Entrusting vital services to a government monopoly ensures that resources will be wasted and misallocated. Such results naturally hurt the poor more than anyone. Those who value the welfare of Alabama's poor will aid them better if, rather than diverting further productive resources into the political sinkpit of Montgomery, they work to strip the Alabama state government of its monopoly status and institute a competitive market in those services that Alabama's rulers presently arrogate to themselves. If you want justice, work for anarchy.