June 5, 2005

Tax This
Everett

Thanks Annatar and Faerlas. I appreciate the compliments. Maybe you'll come read my blog when it comes online within the next couple of weeks.

All right, if you don't want to read a rant about the inherent inferiority and evil of socialism, skip the next five paragraphs.

One thing I have never understood is the argument that the social responsibility of individuals requires confiscatory tax rates for the purpose of funding government social programs. Indeed, it seems to me that government-run social programs indicate an abdication of social responsibility because it both literally and figuratively passes the buck from the individual to the government. Furthermore, even if socialism is not an abdication of social responsibility on the part of the individual, I fail to see how it is to his credit if his supposed contributions to the welfare of society are to his moral credit if they are taken from him forcibly. This doesn't even begin to address the questions of the efficiency or sustainability of these programs over the long-term. Certainly, there's more to life than money, much more, and a life devoted purely to the pursuit of material gain is ultimately a life without purpose. However, most people need to make a living to support themselves and their families, and the most effective means of doing this is through a free market system because the freer a market is, the more efficiently the laws of supply and demand operate.

Now, I'm not talking about a pure laissez faire system because there has to be some oversight to secure the sanctity of contracts, guard against monopoly, and promote innovation through patent protection. But once you go beyond this (I'm talking about in the normal course of events. In cases of severe economic recession Keynesian economics posits a need for government intervention, but as Japan's current situation shows, excessive government intervention will ultimately stagnate an economy.) government meddling reduces economic efficiency and thus reduces economic growth. Furthermore, every consumer within a market has his own set of preferences, and the government cannot regulate the market so as to account for the tastes of every particular consumer. What's more, as the government tries to cater to narrower and narrower tastes more and more bureaucracy is needed to ensure this happens. This creates red tape, inefficiency, consumer dissatisfaction and increased cost. As a result, the government takes a larger share of economic output in taxes, making people more dependant on government, requiring the government to cater to the prefernces of more and more consumers, requiring more bureaucracy, increasing inefficiency and cost, resulting in the need to increase government revenues, etc., etc. This is what has happened in places like France and Germany, and what else has happened is that people have become so dependant upon the government that they aren't willing to see government programs cut because they have a personal stake in it.

Congratulations if you've made it this far without falling asleep or smashing your monitor. There's more.

The more control the government exercises over the minutiae of individuals' lives, the less responsibility these individuals have for the choices they make. A very prominent example of this is the problem of single motherhood (I'm not denigrating the noble efforts single mothers make to raise their children. I'm denigrating the initial choice they made to sleep with a guy when they had no legitimate reason to believe he would stick around.). Here in the States and in many countries in Europe, the state provides assistance for single mothers, whether through welfare or forcing the father to pay child support. Now, I don't mean to suggest that fathers shouldn't support their children. Indeed, my view of the role of the father is as the primary provider for and protecter of his family. However, this state intervention creates an environment where the parties involved can limit if not eliminate the negative consequences of their actions by passing the buck to society.

Essentially, a moral society is a society in which people take responsibility for their actions and accept the consequences of them. Prudence, moderation, courage, justice, and charity are also essential virtues, but to be truly moral these virtues must spring from the culture and traditions of society and be inculcated in the individuals who live in that society. They cannot reside primarily in the state because just as government governs with the consent of the governed, so does the state derive its virtues from the society it governs. If a society cedes its virtue entirely to the state, it is a morally bankrupt society, and the state must soon follow.

Now, in direct response to what you wrote, Annatar, there are a couple of points where I have to take issue with you.

The first is your assertion that capitalism makes people poor. Nothing could be further from the truth. Capitalism has done more to reduce poverty than any other economic system in human history. No one has ever been made poor by capitalism. Certainly people have gotten and do get raw deals, and investment entails risk, but that doesn't mean that the system makes people poor. The poor who get poorer tend to do so because they make foolish, irresponsible choices. Ultimately, a willingness to work hard and endeavoring to work well will lead to financial security. We won't all be millionaires (barring inflation not seen since Weimar), but we won't end up as paupers either. I will also allow that there are those who are in need of help, but it makes no sense to blame capitalism for their predicament because capitalism is only an economic system, and as you've pointed out, there's more to life than economics. In the final analysis, we are our brothers' keepers and should look to the well-being of others as we are able, but fulfilling that duty is not necessarily hindered by capitalism. If anything, the material and technological advances capitalism produces may well advance the fulfillment of our duty to our fellow man.

The second is your assertion that capitalism inherently favors those with money. This is too narrow a statement by half. Capitalism favors not so much those with money as it does those with ability and drive. American history is filled with examples of this. Some famous ones would include Ben Franklin, who started life in America with maybe a few pounds, two loaves of bread, and the clothes on his back; Andrew Carnegie, the steel baron, who, as a poor Scottish immigrant, got his start running messages for a railroad company; Bill Gates, founder Microsoft and one of the richest men in the world; Michael Dell, who dropped out of college because he found he could make a killing building and selling computers. I work for FedEx Ground, and my regional manager, John Roberts, got his start working on the dock in a terminal, basically doing what I do right now. Certainly having money can be an advantage, but it does not guarantee success.

Thirdly, you claim that quality of life is more important than simple quantity of money. This is undoubtedly true, but it does not follow that when weighing my various prefernces and considering what would give me a high quality of life, I'm going to reach the same conclusions you do. A 35 hour work week with the remaining 133 hours for various leisure activites (i.e. activities from which you do not derive income) may give you maximum happiness, but for me it may be a 40 or 50 hour week. Ultimately, quality of life is subject to the preferences of the individual. I can understand the drudgery of the daily grind, but the solution is not to declare that everyone's preferences should be thus and so when it comes to hours worked. That is an arrangement between employer and employee, and the state should not interfere.

Now, on to government influence on corporations. First off, I don't think it proper to think of corporations as entities with singular consciences. They are collections of individuals who come together to supply goods and services to demanding customers in exchange for monetary compensation. Hence, they exist to facilitate the exchange of goods and services to the benefit of customers and investors. The incentive for people to invest in a comapany is certainly to make money, but this can only happen if the above happens effectively (But what about companies like Enron? Well, as an Austrian economist once said, "The trouble with socialism is socialism. The trouble with capitalism is capitalists." Ultimately, human nature has to be taken into account, but the basic model still holds.). Labor adds another dimension to the equation, as the laborer provides the corporation with his services in exchange for, again, monetary compensation.

Now, I do not doubt that governments can exert pressure on companies. New York State Attorney General Elliot Spitzer has proven this time and again. However, it makes little sense for the United States government to try to pressure comapanies to avoid doing business with countries who don't support its foreign policy objectives. The reason these companies are doing business in these countries is because it is profitable for them to do so. Because it is profitable for them to do so, investors have incentive to invest in these companies. If the United States government were to start pressuring compaines to pull out of countries that didn't support its foreign policy objectives, that would introduce uncertainty into the market, and if companies had already invested a significant amount of capital in any of these countries, it could severely undermine their profits, removing incentive to invest. If companies' profits are threatened, and investment is cutailed as a result, this has the potential to undermine the performance of the United States' economy. So, the involvement of American companies in countries opposed to American interests is only curtailed when it is seen as a matter of national security (e.g. Cuba 40+ years ago, and Iraq in 1990-91).

Wow, that may have been my longest piece ever. It's certainly my longest this year. A hearty congratulations to anyone who made it to the finish. Holy crap. I was hoping this would be somewhat short. Oh well. I hope I wasn't redundant at any point because that would be completely unacceptable.

Anyway, Annatar, if you become Terran Emperor and my attempted Protoss insurrection fails, can I be minister of BS?

Also (This is really the last thing.), is anyone aware of what Professor Tolkien's views on economics were. I know he was an ardent critic of industrialism, and he would almost certainly object to a purely consumerist society, but has he written anything, particularly in his Middle Earth literature, that would indicate a preference for a particular flavor of economics?