"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
National Defense on the Free Market
Exclusive to STR
With one notable exception, all of my libertarian and Libertarian acquaintances steadfastly hold to the belief that, while the bureaucrats do most things quite poorly, governmental financing and provision of national defense is both legitimate and desirable. These individuals typically resort to the standard “public goods” argument to substantiate the correctness of this view. “If a system of national defense exists,” they claim, “then all who live within the area covered by that system benefit from its existence.” OK. “One’s derivation of this benefit is not contingent on one’s willingness or ability to pay.” Sounds good. “Therefore, if the government does not tax its constituents to realize the income necessary to maintain a national defense system, no one will voluntarily pay for it.” Huh?
The problem with the reasoning of my fellow libertarians, many of whom are economists, is their addiction to the ceteris paribus assumption. That is, when endeavoring to envision a society in which national defense is provided on the market, they seldom consider the vastly different institutions that would likely exist in such a society.
The purpose of a national defense system is, by definition, to defend a nation-state. In a society without government, or a society without a “state,” the permanent residents of a given geographical area would have to voluntarily pay for a defense system responsible for that area’s protection. The revenues would go to private organizations responsible for defense. It is conceivable that one firm would provide all defense services. It is also possible that one firm would be responsible for air-based, another responsible for sea-based, and yet another responsible for land-based defense. Or perhaps responsibilities would be distributed among multiple firms in some other manner.
Under such a system, who would pay for defense services? It is fathomable that Billy Bob may conclude that he’d like to continue benefiting from defense services, but that he’d prefer not to pay for them. He stops sending his monthly check to the defense company, and his fellow citizens consequently pay higher prices to compensate for his refusal to pay. But hey, at the end of the day Billy Bob is enjoying all the benefits associated with the existence of a defense system without any of the costs. Bad for society, good for Billy, and even better for the power mongers fixated on establishing a government. “This,” the latter group preaches, “is why our society needs government!”
This is indeed a fathomable scenario. It is not likely to occur, however, in a society without government. One must consider that the institutional framework that governs human interaction will indubitably be quite unlike the current one. What kinds of penalties might Billy Bob expect to suffer if he acts in such a manner? There are no legal penalties, after all, as all services in our hypothetical society are provided through trade. If he does not want to pay for defense, no one is going to force him to pay for defense. However, his fellow citizens can make the conditions of his life so uncomfortable that he finally acquiesces and resumes paying.
The market could conceivably give rise to practical methods of shunning those who refuse to pay for defense. Perhaps a chain of stores will require that all customers present a receipt from the defense company upon entering. Perhaps universities will require that all students, before enrolling, must present proof of payment for defense services, much like they now require proof of vaccinations. Maybe, upon returning on a plane from a trip abroad, you will be required by the airline to demonstrate that you pay for defense services, much like you are now required to present your passport. Chains, universities, and airlines that engaged in such practices would be praised and accepted. Those that did not would be shunned, just like individuals. Pressure from family, friends, and various organizations may further serve to incentivize Billy Bob to keep paying. The dynamics of institutional development may be such that an individual who refuses to pay for defense will be effectively unable to lead a decent life in society. Payment is, in other words, voluntary, but nonpayment is excruciatingly uncomfortable.
Such a system would also function as a check on the ambitions of the defense agency. If the agency decides to engage in an unpopular war in Iraq, many people will stop sending their payment to the defense firms. Due to the unpopularity of the military adventure, these nonpaying individuals will not be shunned by businesses and their friends and families. If it is becomes unpopular enough, the defense agencies will find that they simply do not have the resources to continue the imperialist extravaganza and will end the campaign. Contrast this to the present system in which the government directs more resources to a conflict as conditions worsen and as the effort becomes increasingly unpopular.
“Defense” of the United States currently consists, among other things, of waging two senseless wars and maintaining a vast global empire at the expense of the exploited taxpayer. Military overstretch has proven to be a contributing factor in the downfall of myriad civilizations throughout history. Our government, of which the Department of Defense is a part, has demonstrated that it is either unable or unwilling to respect our founding principles and remain limited. Perhaps we should consider abolishing it before the United States’ formal commitment to self-government, enshrined in the Constitution, becomes an even greater mockery.