States’ Rights: The Issue for 2012 and Beyond

In Ameritopia, Mark Levin shows that Plato, More, Hobbes, and Marx and Engels’ thoughts about the best possible governments are utopian and point toward government with as few rulers and as many subjects possible. Those who would attempt to do so purport to be above the people in wisdom and goodness. Tyrannical power is insufficient to bring these ideas to reality. They have a better knowledge of the important facts than we do. They are above the greed and selfishness that characterizes everyone else. Bringing these ideas fully into reality requires a power greater than any tyranny we have seen: any move from the citizens that does not pass through the rulers’ calculations runs a high risk of derailing the system to some extent: eating more than one has been allotted, buying a product one is not allowed to have, disparaging the ruler to other citizens.

After decades of sliding away from Constitutional government, a presidential term of shocking erosion of our inalienable rights has reawakened many Americans to the importance of our first principles. Government’s bold and public having an affair with big business and raping the healthcare system has aroused a deep concern for our country. How can America pass laws against the will of a great number of the people?[1] Many American politicians act like Philosopher Kings, not representatives.

In Disquisition on Government, John Calhoun notes that man feels more intensely his own needs, desires, passions, and will than others’. That is natural and morally acceptable, but government ought to disallow behavior which causes harm to others, regardless of whether the offender intentionally sacrifices others for his own benefit or does so accidentally through misperception.

The fundamental problem in America is clear: an increasingly centralized government with its several Government Geniuses suffers from the same problem as an anarchical society: human nature. They are using the force of government bestowed on them to oppress us. They are managing and altering the value of our money more than ever and limiting more of our choices.

The most important issue of the coming election for officials at all levels must be regaining the respect for states’ rights. This is true for more than the following three reasons: (1) there would be more accountability of the leaders to their smaller constituency—every dollar spent on the broader scope of responsibilities a state would be taking back on itself would either be raised by taxes within the state or debt by the state, (2) the states would compete for human and economic capital—it is easier to move out of a state than the United States—think Levin and the need for as many subjects as possible under a utopian society, and (3) decentralization would surely lead to fewer bailouts and the like—which states would have individually bailed out Wall Street, big banks, and car manufacturers?

A return to the limiting Constitution, especially the Tenth Amendment, ought to be our most important goal in 2012 and the foreseeable future. This is the only way to deal with the myriad of problems that threaten our existence as the best and freest country in the world.

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[1] http://kff.org/kaiserpolls/upload/8058-C.pdf

Anti-Wealth, Barbara Boxer's Senate Speech

Yesterday, United States Senator Barbara Boxer, D-California, said in her speech that, ‘Since 1985, the wealthiest 400 Americans have seen their taxes fall by 40%, while their average incomes quadrupled.’ This statement suggests that Senator Boxer is not only concerned about the middle class and the poor, but also that a certain very small section of Americans are extremely wealthy. In this speech, she 1) ignores the possibility that the wealthy Americans’ lower tax percentage partly caused their incomes to quadruple, 2) dismisses that tax revenue is increased when revenue quadruples and taxes are reduced by 40% (as long as the current tax rate for the average top 400 Americans is above 15%), and 3) implicitly rejects the free market implications of people who produce four times as many dollars as they did twenty-six years ago.

First, Boxer’s statement is meant to produce a feeling that this the two facts reinforce the repugnance of each other. These rich people—they got their tax rates lowered, contributing less to society, plus they were getting richer anyway! How unfair! However, we should consider whether the lower taxes allowed them to produce higher incomes.

Second, as long as the current rate for these wealthy people is above 15% now, we have increased revenue from these Americans. There is more money available to give to the poor, give to the middle class, give tax breaks to small businesses, throw down the environmental-energy drain, etc. One is not a good Senator when one complains about increased revenue. Perhaps if Senator Boxer realized the common sense understanding that, when people have more money at their disposal, they can create more wealth, she would not see these facts as conflicting but see the lower taxes as wealth-producing—and tax-revenue-producing.

Third, she does not fully grasp the capitalistic system. When people interact economically in a system of free (or freeish) trade, resources are used more efficiently. The traders are mutually benefited. The ability of these richest 400 Americans to quadruple their wealth is a sign that they are producing wealth, and this does not simply mean that are bringing in more income; their extra cash is a sign that they are producing marketable, useful goods and services. They are creating wealth for themselves and for others.

These three things suggest that Barbara Boxer is anti-wealth and anti-tax-revenue, regardless of whether she realizes it. Perhaps she stands against people becoming ‘too’ wealthy because she believes that one man cannot get rich except by taking that money from the poor man, but we know that’s not true.

Against the Fair Tax

Against the Fair Tax

The Fair Tax, as I understand, is pretty simple. All federal taxes would be collected exclusively through a sales tax. To ensure that no one pays taxes on the essentials, each family would be issued the amount they would have spent in taxes if they spent all the money made below the poverty line on taxable items.

The Fair Tax is not fair.

First, it increases incentive to become wealthy (taxing the poor at a higher rate) and/or decreases incentive to create wealth (taxing the rich at a higher rate). There is an inherent desire to gain wealth in all of us. Rich people can buy nice things and tour the world. That characteristic of property is just the result of ownership and non-coercive trading.

The Way Things Work -- In a relatively free market, lessening natural incentive to create wealth is detrimental. In such an economic environment, two or more parties decide to interact in ways that each party feels benefits them. The bigger the perceived benefit of the goods or services provided, the higher the price can be. The higher the perceived need relative to the availability for these goods or services, the higher the price can be. Therefore, in such a market, people are rewarded for their goods or services—the more the product is needed and the more useful it is, the more the producer is rewarded. This encourages people to be most productive, in order to receive payment.

Fair taxes neither substantially lessen incentives nor increase incentives to accumulating wealth.

Taxing the rich at a higher rate because they make more money is government-created lessening of incentive to create value. It lessens the incentive to do valuable work or create valuable things. If this results in fewer people doing valuable work or creating valuable things, prices will rise. If people only want to do useful thing X at their current rate of pay, they will stop doing it if their pay decreases. This makes it more difficult for everyone, especially the poor. The Fair Tax claims to avoid this because it uses the same sales tax for everyone, some say 23%.

On the other hand, government-added incentive to accumulate wealth is also unfair. The only way government treatment can add incentive to creating a higher amount of wealth is if the rich people’s treatment (not status, not economic position) is preferable, preferable over and above those creating less wealth. This is what the Fair Tax does, and this is part of why it is unfair. A 2011 family whose income is $35,000, for example, and spends all their money on taxed items (used items are not taxed) will be taxed on $12,750, the money spent above the poverty line. Another 2011 family, who brings in $100,000 can spend $50,000 and be taxed on $27,250, and save the other $50,000 without being taxed on that. And there are ways of making money with money, without buying anything. So it favors the rich, those who can afford to earn money with money. It adds incentive to become rich. This is not the worst thing imaginable, because it encourages good investment, savings, charity—untaxed activities—though it is still unfair and objectionable. Further, it encourages international vacations when Americans spend money in other countries, sending funds to other places. Instead of the British Pound being 1.6 dollars to 1 pound, the effective rate would be 1.33 dollars per pound because spending money in America has an added cost. It promotes other economies and creates disincentive to spend money here, in our own economy.

The Fair Tax not only affects classes differently, but it also affects markets unevenly. All taxes affect the market, obviously, because money is being moved around during taxation. But the Fair Tax changes the shapes of the markets differently, relative to each other, and it changes the levels of supply and demand. Gary Johnson, former Governor of New Mexico and 2012 presidential candidate, is one of the promoters of the Fair Tax. August 24^th, Gary Johnson mentioned that used cars would not be taxed. This shows an important feature of the Fair Tax. Only new cars would produce federal tax revenue. (This feature of the fair tax changes the shapes and levels of different markets differently because, e.g., all yams sold are new yams, so the fact that used products are not taxed does not affect the yams market, but it does affect the car market.) The Fair Tax would also change supply and demand, discouraging people from buying new cars. Remember this is a big sales tax, over 20%. If cars A and B are equally desirable, worth $20,000, but car A is new and car B is used, what does the Fair Tax do? It would make the seller of Car A earn less than the seller of Car B. Car A would have to be priced lower, while Car B could be priced at $20,000. Car A could disappear from the market. Cars could become scarcer, because fewer may be produced. Future used cars would probably be negatively affected by the need to produce the cars more cheaply than they are produced right now. Used cars could become more valuable because they are more cheaply made, and they could become too expensive for some who could afford them under a less disruptive tax system. The Fair Tax affects the markets in this undesirable way.

Finally, this is a nation where each person’s life and rights are to be equally respected, where there is justice for all! We all benefit from a good government and a good country. Government should not favor the wealthy in the tax system, and it should not substantially favor the poor. There is a financial burden that comes with the institution of government, and everyone benefits. President Obama expressed his disapproval of ‘free riders’ of the health insurance system. What about the free riders of government—who still benefit from the system (unlike free riders of the health insurance system)? In a tax system so complicated, it is nice to be able to know one thing for sure—it is not fair now. So what’s the answer?

A flat income tax is fairer than the Fair Tax. We can implement the same consideration for the poor as the Fair Tax by not taxing the first X amount of money each household makes per year, making sure that it is a sufficiently low amount. The flat tax would leave everyone with basically the same relative wealth. This tax could also be lower because all income is taxed, not just certain transactions. Jim the millionaire would have 75% of his earnings, and the Tim the sandwich artist would have 75% of his earnings. The value of money and the value of things would not be noticeably affected. A $2 Coke in the parallel universe without taxes (a world of angels) would be the equivalent price of that in the Flat Tax universe, $1.50. Everyone’s wealth and everything’s cost would move down the same, relative to each other. While the Fair Tax changes the shapes and levels of the markets in different ways, the Flat Tax changes the level of the economy as a whole—changing the level of each market in the same degree—and leaves the shapes of each market virtually the same as they would be without taxes. Thus, it involves lesser government preference for various groups in society.

Under the Flat Tax, (1) there would be virtually no adjustment to the natural incentives to create wealth. (2) Car companies and other such companies could run naturally. There would be (2a) no unnatural inflation in the cost of new products, (2b) no added pressure to create lower-quality goods, (2c) no increase in the profitability of selling used cars, and (2d) no future lessening of the quality of used goods. (3) There would not be added incentive to spend money overseas, taking money away from our economy. And there would be no disincentive for foreigners to spend their money here, adding to our economy, as there would be under the Fair Tax, (unless measures were taken to allow the reimbursement of taxes for visitors, and we are not going to put up with tourists turning in their receipts for gum and sodas at the airports, so it would have to be limited to bigger purchases).

A flat tax would much simpler—all income is taxable at one rate (above the poverty level). Tax evasion would be more difficult—there would be no legal loopholes, and the only way to evade paying the taxes would be to hide income. This is a great start to a truly fair tax system.

What is Capitalism?

Here are what I think are the fundamental tenets of capitalism.

Individuals -- Individual persons are important.

Rights -- Individuals have rights that are not the proper subject are infringement. Regardless of whether one or many think that their diminution would be better for the majority or would result in fairer ways of doing business, it is wrong to impede on them.

Property Rights -- Property rights are the most important rights to be considered when thinking about capitalism. You have certain things. I have certain things. You own a shoe polishing kit. I own a tractor.

Freedom -- Freedom is precious. The ability to do as we please with our property as long as we do not infringe on others' rights to do as they wish with their property should be upheld.

How It Works -- Now for the economics, trading side. People and their properties interact. The people are in control of their own property. We all have needs and desires. You need a tractor to farm your land. I want my shoes polished, and I want to avoid polishing them myself. The genius (although not abstract or complicated) is that people generally know their situations and desires and needs better than others. I am in a better position to decide whether I want to accept your offer of 200 shoe polishing sessions for my tractor than anyone else. Beyond that, I am in a better position to decide whether I want to accept that offer, decline, or counteroffer. It is my tractor, and I ought to be allowed to decide what I want to do. I am not harming you by declining your offer because you have no right to my tractor. You have a similar right, the right to your shoe shining kit and your labor. You and I can work it out, or not. You can go find someone else who values his or her tractor less than I do or who values your shoe shining labor more than I do.

Best Match of Supply and Demand -- Capitalism leads to the true matching of supply and demand. The alternative is some form of coercion. Government intervention is the biggest target of capitalism. Regulation limits the ways in which people can get what they need and want at the best prices. Regulation creates static in the supply and demand. It increases costs of production, or increases revenue for services and products that are not valuable enough to survive in their present form on their own, or increases cost of products.

I may be missing something important to capitalism. Let me know if you think of something. Thanks.

Distinguishing Between Tax Projects

As a Libertarian, I believe in small government and limited regulation. I believe that taxation is acceptable for wars and criminal justice. I oppose taxation for social medical care, medical care given to all in need, paid for by taxpayers. Of course, some try to justify taxation for wars, criminal justice, and social medical care on the basis that these protect citizens. In order to have a principled reason to reject taxation for social medical care, we cannot accept a justification merely on the ground that it protects citizens from harm.

The answer is that wars and criminal justice systems are necessary for the existence of democratic governments to continue. A crucial distinction between medical care and wars is that social medical care’s enemy will not overpower a country and take control of the government or damage the country’s foundation to any substantial degree. Just wars are at least often characterized by action against a country which intends harm or is harming the first country. Just wars defend at least one country against at least one other. War is justified in relation to its necessity to defend the country; without such a war, the democratic government would be in danger.

Criminal justice is a worthy recipient of taxpayer funding because it is necessary for a democratic government. Modern democracy is based on equality between individuals. It would be inconsistent for a government to proclaim that each person is equal to another and that each (adult) deserves a vote, without having some sort of criminal justice system to proclaim that the equality it espouses also requires that it step in to punish those who act unequal by unjustifiably harming others. A government does not affirm equality simply by allowing everyone cast a vote. Since equality is an idea about the relations between individuals, the government must publicly disapprove of and prosecute all substantial infractions of equality. This is done by laws focusing on the declaration of superiority of some individuals over others and by the prosecution of the offenders.

If we are to embrace any real idea of property, we cannot fit social medical care into the lines of thought applied to war and criminal justice above. One might jump on the idea of equality and rights in an attempt to justify social medical care. However, this falls short due to the nature of equality. A ‘right to social medical care’ is not about equality. This in fact requires an instance of inequality. If the government pays for (taxpayers pay for) social medical care, this does have to do with the relation of individuals to each other, and it means that one is required to surrender his property for the good of another.

Additionally, it is quite the challenge to justify social medical care funded by the taxpayers based on equality, understood as saying something about the relation of individuals. This ‘right to social medical care’ is something that all people could possess or be granted, but so is a ‘non-right to social medical care’. One cannot justify ‘right to medical care’ based on equality simply because all can equally hold it. In the case where we have a sick person and a well person, these people have the same rights. The one who is well does not have a right to be well—he is just well. He is not being granted a privilege or right another is being rejected. He just has a different situation.

Simply letting each person appear at a balloting box and cast a vote is insufficient to recognizing equality. Without some sort of criminal justice system, a class of people would develop who would gain control through the voting apparatus by prohibiting those who would vote against them from voting.

Lex Talionis and Blame

Andrew Von Hirsch suggests that a main reason we punish is to show disapproval of a particular action. If this is an important part of the punishment, then it is important to blame in a proportional way across sentences. It would be wrong to blame someone who stole as much as someone else who murdered. Proportional sentencing does not prescribe a level of punishment, but it does say that greater punishment should be given for crimes of more blame.

The communication of this blame to the convicted and the public is important as well. It is not enough for the state to blame a convicted person if the offender or the public do not know that the convicted is blamed, or how much he is blamed. At the very least, the offender ought to have an idea of the blame the state is placing on him.

There is research suggesting widespread ignorance and an inaccurate sense of punishment levels for different crimes. It is then a reasonable guess that they will not understand a set of punishments non-equivalent mapping of crimes ranked according to blame levels—even if they are proportional. When the level of blame of a punishment can only be understood in the context of other punishments for other crimes, it is unlikely that an offender, or even the public, will grasp the level of blame his punishment is meant to convey.

There is a natural sort of relationship between a punishment and a level of blame. There is the equivalent relation between 1) harm caused and one’s culpability and 2) harm inflicted on the offender as punishment. Lots of pain equals lots of blame. In a scaled system of blame to pain, a little pain could equal significant blame, and this is something von Hirsch seems to favor. But it is reasonable to be concerned that the offender and others will be unaware of the blame conveyed, or what is actually only the blame meant to be conveyed. However, a punishment of ten lashes has a certain universal understanding. People know that is a really substantial penalty and represents a substantial amount of blame.

Equality: Harmful and Helpful Behavior

Equality is an important concept in America. If equality can be respected and actualized to any degree across a country, it cannot mean equality of circumstances. Without someone being in control (and above other members in society—inequality), citizens will receive different pay for different jobs, experience different climates, interact with different people, be subject to different crimes, etc. Inequality of circumstance is a matter of degree; equality of circumstances is all or nothing.

Equality of status can be respected by a government in actuality. Since human actions can be at least conceptually divided into the categories of ‘harmful’ or ‘helpful’, these categories can aid an understanding of equality and liberty. First, instigating harmful behavior is unjustified. People do not own each other. Instigating harm against another is acting as if one has more value than another or as if another is one’s property. This is directly against democratic principles.

Most Americans would agree with that, but what equality says about helpful behavior is more controversial. Equality does not forbid helpful actions or charitable causes, but it disallows forcing others to perform any given positive action for the good of another. Just as two people cannot justifiably demand that someone give $500 to a charitable organization, so too a whole country cannot justifiably demand a humanitarian ‘donation’. It is wrongheaded to think that the statuses of individuals in groups are tallied and weighed against the status(es) of the targeted individual(s) to determine whether the desired coercion is acceptable. The prohibition of instigating harm precludes taxation to promote ‘charitable’ goals. Money is a good, and taking it away to give to others is harmful.

One can consistently hold that one person is morally obligated to be charitable to others whenever possible and that government has no right to demand people’s money for humanitarian causes (for our citizens or nations across the world). Demanding money for an admittedly good cause surely requires the government coercion respect equality. Many Americans seem satisfied that they support the cause without being concerned about unjustifiable government force.

Many who support government-run projects giving aid to unfortunate people stress the interconnectedness of individuals in a society as a justification for such a government program. “No man is an island,” they say. This is true, but it does not support their conclusion: we can justifiably impose taxes on citizens, especially the rich, to pay for good causes, i.e., efforts to help fellow citizens. The rich “can afford to give a bit more back,” as Obama recently stated. In the same sense, the rich can more afford for their cars to be blown up because they will be able to purchase another. “Afford” suggests choice, and none is found here. More accurately, their justification is, “The rich have more money than they need, and we want some of it."

In what universe is that equal?