Posts Tagged ‘redistribution’

Principle versus expediency: how to save the world

June 18, 2012 Leave a comment

Billions of poor people. Wars without end. Torture, disease, genocide, starving children. There are some major problems in the world. The question is, how do we do something about them? We have options. Some people say we need to take control of governments and force the changes rapidly. After all, people are dying now. This post will argue against hasty action.

We have become accustomed in the modern world to doing things fast. We want things now. This trend is reflected as much in activism as with everything else. How will we change everything? Revolution! Slow down. What kind of revolution? A revolution is a major event involving many people. It is impossible to predict the outcome of a revolution, and it is rarely (perhaps never) as the original revolutionaries envisaged. And the kind of revolution that takes place in the street inevitably means violence. Is an uprising, violent or non-violent, the best way to change the world? Let us continue with our options before deciding.

Another effect of wanting immediate results is a focus on elections. We need to field new candidates, ones that will do the right thing. Are there people like that? Look at the hopes of the Tea Party. After the Tea Party got some of its members elected on a small-government ticket, the newly elected voted for all the same big-government legislation as the other Congresspeople, and have even ended up with all the same campaign contributors. It turns out that a few new people could not make radical changes. One does not simply walk into Mordor.

How about putting pressure on existing politicians? That can work. As little hope as I see in the political process, enough letters or enough protesters can force the hands of the elected. But what is the political solution? Remember, government is based on force. Every law passed is an order. If one does not follow the law, one risks arrest and all the violence that it results in. What we want to force on others may not be the best thing for them.

When we consider working through the system of force, we want to use the existing tools to do so. The state system has two basic tools at its disposal: taxation, which could be used to redistribute wealth, and law, which could be used to force people to act right. I am opposed to the idea of using the state on moral grounds. And as I will demonstrate, morality is not only an end; it is a means.

As I write in greater detail elsewhere, a simple but powerful moral rule is the non-aggression principle (NAP). The NAP states that the initiation of force or violence, including the credible threat of violence, against unwilling adults who have not initiated force themselves is immoral. Laws force entire populations. If we could opt out of laws, we would be free, but we cannot. Laws based on the NAP are moral but laws regarding what we wear, eat, drink and smoke, for example, are not, because those things do not harm others. There should be no law regarding victimless pursuits. Taxation means forcing populations to pay for whatever the government decides on. But not everyone in the population has aggressed against another, or is being taxed commensurately to his or her aggression.

Many anarchists believe in the NAP on philosophical grounds. They argue that, whatever is done with the money raised by taxation, whatever someone’s idea of virtue that informs the wording of a law, it is wrong to force peaceful people. More importantly, however, force is a terrible tool for solving problems, and tends to cause far greater ones.

Do taxation and regulation lead to a redistribution of wealth? Yes: from the lower classes to the rich. The basic reason for that is that the lower classes, including the middle classes, have no power over the state. The state has power over them; and in every society, it becomes a vehicle for transferring wealth from the people who are outside it to the powerful people who control it. We have had social welfare policies for decades and poverty still exists. But why are they still poor? Welfare policies actually entrench poverty by making people dependent on the state.

The best cure for poverty is, in fact, a free market. The free market just means free people trading with each other out of mutual benefit, without force. Tearing down the endless regulations and taxes that are designed to benefit the wealthy would give opportunities to everyone else to work as they like. How we could do that by using the state I do not know, because, again, laws benefit the powerful and the powerful control the state. It is impractical to use the state to solve society’s problems.

Could we use laws to force virtue? It depends what is virtuous. I agree with Penn Jillette on this one.

It’s amazing to me how many people think that voting to have the government give poor people money is compassion. Helping poor and suffering people is compassion. Voting for our government to use guns to give money to help poor and suffering people is immoral, self-righteous, bullying laziness.

People need to be fed, medicated, educated, clothed, and sheltered, and if we’re compassionate we’ll help them, but you get no moral credit for forcing other people to do what you think is right. There is great joy in helping people, but no joy in doing it at gunpoint.

The other question is, can the state actually be reconfigured to work for the greater good? Can it be sustainable if done by force and not spread throughout the population as common values? I am inclined to say no. If people can be led to believe in taking care of each other and taking care of the poor, they will do so voluntarily, as of course many do already. If they cannot, forcing them to do so could lead to a backlash. Look, for example, at the plight of some of the people in the democratic world who are most vulnerable: immigrants. Immigrants are people like everyone else, so surely they should all be permitted the same rights and freedoms. Letting immigrants into the US, Europe and the rest of the rich world meant giving them a chance to help themselves and their sending countries. But anti-immigrant forces first controlled the discourse and then the relevant areas of the state, and 400,000 people were deported from the US in 2011 alone. People escaping horrible conditions in Africa are left to drown in the Mediterranean. I take the sum of these and similar actions and indifference toward them to mean the people are not ready to be forced to take care of everyone else.

The state may be a lost cause, but we are not out of options yet. The problem is that the more viable solutions are long term. They require patience, not quick fixes. I think there are two basic things we could do. The first is to educate people—particularly ourselves—on the issues and how to solve them. We can keep the real issues foremost in the minds of people, so that we are the media and the teachers. That doesn’t just mean Facebook, of course. It could mean street protest and symbolic action to raise awareness. This process is neverending, so it is incumbent on concerned people to educate to the extent that others become the media and the teachers as well. The main downside to this option is that not everyone will be interested. But that just means they have better things to do, and I do not blame them for that.

But not everyone has to join us. The second thing is to organise with like-minded people. That means being leaders, working together, helping each other and doing things ourselves. The revolution does not have to be violent. Look at what Occupy did. They were entirely voluntary, working on consensus, anticapitalism, mutual aid, equality and solving their own problems. They showed everyone that we can have a voluntary society, that we can build a new society, based on compassion and helping each other, out of the shell of the old. It is called prefigurative politics. These values also inform the philosophy of the sovereign community, meaning new communities outside the reach of the state. Voluntary institutions show not only the morality of the NAP, but also that we can solve the world’s problems without force.

Don’t fear the free market, part 3: Rich and poor

August 13, 2011 17 comments

Redistribute wealth?

“What’s ‘just’ has been debated for centuries but let me offer you my definition of social justice: I keep what I earn and you keep what you earn. Do you disagree? Well then tell me how much of what I earn ‘belongs’ to you – and why?” – Walter Williams

My neighbour has far more money than I do. Should I be allowed to go over there with a gun and force him to pay me? No. When I do that, it is called robbery. But why is it okay for the government to do so? Is it no longer robbery? No, because calling it “law” makes it legitimate. Is it altruistic to force others to give someone else their money? Does anyone else deserve that money? Is taking it from people who earned it justified? Is that the only way to help the poor?

The problem with many statist arguments is that they confuse the ideals of government, which vary depending on the person, but which may well include a perfect redistribution of wealth and opportunities, with the reality, which is that government does not make us more free, more wealthy, more educated or more equal. Government is the institutionalisation of thuggery. The desire to redistribute wealth is an excellent example of this flawed thinking. We need to take more from the rich and give it to the poor. But such policies do not make things much better for the poor.

If a man acquired his wealth ethically, which means that he provided goods and services that people were willing to pay for, then any so-called transfer or redistribution of that wealth is theft. It punishes the people who contribute most to the general prosperity and provides a disincentive to do more. Because it makes it harder for those people to do what they do best, which is create jobs, wealth, products and services, the argument that redistribution of wealth adds to social welfare falls on its face. It is giving a man a fish. Letting the captains of industry strengthen the economy raises social welfare. If people want to raise their individual welfare, they can upgrade their education, learn new skills and start their own businesses, provide what people want and get paid for it, relying on themselves rather than on force.

But a redistribution of wealth is not really a redistribution anyway. Even if you believe it is good to use violence to take money from people who have made it legitimately, most of that money does not go to the poor. It goes into the enormous pool of the government revenues, which pay for the generous salaries and pensions of politicians and bureaucrats, subsidies to large farms and airlines, and making war on weaker countries. Does any of it go to the poor? Sure. But not much of it. And the poor are still poor, even after decades of welfare.

Besides, along with their providing jobs, goods and services, wealthy people give to charity. Facts about who gives and how much can be difficult to come by, as many donate anonymously. Nonetheless, we know Bill Gates, who brought the world Windows and innovated the hell out of computer software, has given some $28b to charity. Warren Buffett, who has financed many successful companies, has given about $40b. The Waltons, the Dells and the Rockefellers have all given in the hundreds of millions. And if you get rich, probably making others rich in the process, you can too.

The rich do not want to keep the poor poor. They have not for at least a hundred years, when industrialists like Henry Ford and John D. Rockefeller began paying their employees more, in part so that they could buy from the corporations for which they worked. (Also because if they wanted the best workers, they needed to offer more. That is how the labour market works.) No one who is not simply cruel wants the poor to stay poor. The more buying power the people have, the better off the rich, as well as the poor, are.

Inequality of wealth is only a problem because of jealousy. It does indeed cause serious problems, such as, to an extent, the current riots in the UK. But taking from others is not the way to solve those problems. Government is not making the poor any richer. The poor are taxed, just like the rest of us; not necessarily through their income, but through taxes on food, housing, and cell phone plan activation fees to name a few. They are taxed by central bank policies that encourage inflation. Sometimes you need to save to buy assets. Inflation eats away at savings. People with weak skills are kept out of the labour market by minimum wages, which discourage hiring. They cannot start art stands at the side of the road without a permit and government stamps.

Instead of resenting the rich and using violence to take their property, we could either learn how to become rich ourselves, which would benefit everyone, or we could learn to move beyond our base emotion of envy and be content.

Protect us from the rich?

A lot of people believe that we need government to protect us from the rich and powerful. I think people who think that way do not understand the nature of government very well, and they have it backwards. The rich and powerful use government to become more rich and more powerful. Whatever party you vote for will be the powerful people of your country. They will have control of a big chunk of the money and the ability to make whatever laws they want. The rich will ally with them, they will take their share, as they always do, and the government will continue to protect them, as it always does; or else a new elite will emerge, as it did under communism. If you really believe that getting more people out to vote, or getting the right person in power is going to fundamentally change that, I think you are naïve. There is no reason to believe that the powerful become any less powerful for any meaningful length of time when there is a new government. And to think that the rich would be more powerful in an anarchic state I believe is wrong, because in fact they wouldn’t have any political power, and they wouldn’t have state protection. That means no more riot police protecting world government-G8-WTO-IMF-whatever-you-don’t-like meetings—there could be security guards, but the people at the meetings would have to pay for them out of their own pockets. In fact, no more of those billion-dollar photo ops at all. No government means no more lucrative insider no-bid government contracts. It means no subsidies for the well-connected, just the people deciding whom to give their money to. It means no government protection and bailouts for the corporations no one likes, only the whims of the market. It means no more police breaking into the wrong house and shooting the wrong man for suspecting him of selling drugs (the war on the poor). It means no more soldiers going to fight for private control of resources overseas (the war on Islam) and coming back in body bags, or coming back as nervous wrecks who do not get treatment. It means more money for the productive sector, which means more and better-paying jobs. And sure, it might mean the rich go to better schools and get better health care, but I think it is fair to say they already do now.

The rich would have the most to lose from an anarchic society, because they would no longer receive all the various handouts they get in the form of bailouts, subsidies, government contracts, and laws that create barriers to entry and monopolies. There would be no limited liability, so people would be accountable for what they do, rather than hiding behind a legal corporation. And though it’s a bit simplistic, it is basically true that managers of public corporations are legally bound to pursue profit. If there were no laws, that would not be necessary. If there is someone with power, which by definition is unaccountable, and he has the power to tax and pass laws, he will pass laws that favour rich people so that he can get some of that wealth for himself. The very existence of government is why the elites can concentrate both money and power in their hands and not have to listen to the voters on the bottom. If you are afraid of the rich, let us start cutting off by cutting off the money they make from taxpayers. How about eliminating bailouts and stimuluses that take trillions of dollars from the productive sector and hand it to any lobby group from failed banks to the wives of failed bankers?

The more wealth is concentrated in the hands of one person, the more others will attempt to rob that person. As such, he or she needs greater and greater security. At the moment, the rich outsource their security to the state, which means they get the taxpayers to pay for the defense of their property. (Find a more robust discussion of this topic here.) The police protect the rich and beat the poor, and yet everyone is paying for them.

Then there is this perpetual fear that anarchy would mean that the rich would have their own private militias to take from everyone else. Well, what do you think the government is? It is a tool of the elites to take from everyone else. But it is also a professional salesteam, selling the illusion that it works, or maybe that it can work, for the people, so that people keep showing up on election day, and the elites keep going to the bank. At least in a free market, rich people would need to pay for their own militias, instead of making you pay for them like now. But I do not know why they would want their own militias. Everyone can pay private security firms for protection, but obviously rich people would not need to use militias to steal from others if they already have money. Of course, voting for a party promising to redistribute wealth is similar to using a militia to steal from others. Left-wing government is a tool of the well-meaning but ignorant.

If you really resent the rich that much, don’t give them your business. It’s as simple as that. If Sam Walton is a bad person, don’t shop at Walmart. If Ray Kroc spends money to finance wars in South America, stop going to McDonald’s, and shame those who do.

Having no state, no concentrated political power, would mean a more egalitarian society, not less.

Save the poor?

“If there were no government, what would be done about poverty?” First, what is the government doing about poverty now? Governments have had anti-poverty policies for decades and poverty has not gone away. If anything, it has become entrenched. (Some data: most money going to welfare programs is wasted; most charitable giving is not.)

Second, welfare has existed before and beyond the welfare state. The welfare state as we know it emerged in the wake of World War Two. Governments wanted to maintain the massive spending they had begun, as reducing spending means reducing government power, and governments hate relinquishing an inch of territory they have grabbed. (A case in point: even after the wave of privatisation in the late 1990s, government spending continued to increase rather than decrease.)

Third, there are ways in which government can alleviate poverty, but simply channeling tax money to the poor is not one of them. Property rights and legal contracts help, though those things are part of the reciprocal nature of normal human trade and interaction, and a state that takes away your property through taxation and imprisonment is not a guarantor of it. (Does the state confiscate property and give it to the rich? Yes.) Businesses operating in a free market end poverty. Look at China, or any of the middle income Asian economies. Walmart alone has brought millions of people out of poverty. People complain about sweatshop labour, but how else do they think hundreds of millions of people could have sent their children to school? Conditions are terrible, but if they were better, they would be more expensive and the corporations would hire fewer workers, be less productive and have less profit to invest back into their operations.

Poverty is beaten with economic growth. That was true during Europe’s development, America’s development, the development of the Asian tigers, and it will hold anywhere. Economic growth means clean drinking water, better nutrition, reduced child mortality, more access to electricity (which replaces burning much dirtier coal, wood and dung), and the freedom to take care of yourself and do what you want with your life. But economic growth takes time. It is not something that the government can fix in a few months with stimulus packages, regulations, makework projects and redistribution of wealth. People need to be able to start their own businesses and operate them without knowing thousands of pages of regulations and tax codes. It takes many years of free enterprise for people to understand, adjust to and plan according to a set of rules, which cannot happen when the government keeps adding to and changing them.

Who are the poorest people in North America? Native North Americans. The indigenous people. Why is that? It is obviously not for lack of government assistance. In fact, it is because of government assistance, and other regulations (like Canada’s “Indian Act”), that they are poor. It is because handouts called “help” are not actually help. The US government spends an average of $7000 per native on healthcare, in contrast to $2000 for other Americans; and yet natives still do not get good healthcare. The problem is with the incentives. Natives who pull themselves up by their bootstraps do just as well as anyone else; those who remain under government stewardship are crippled by dependence. They do not own their resources, meaning they do not have property rights. As Hernando de Soto explains in The Mystery of Capital, property rights is a major factor in enabling people to increase their earning power, because if they own their land and house and other property, they can put it up as collateral for a loan, which means they have credit, which enables them to expand their farms or businesses and make more money off them. It is the same principle as that of microloans. Government bones do not help; property rights just might.

Poor people are simply better off where they have more economic freedom, not more government. In the US, poor people can start businesses (though they might be hampered by fees, forms and other red tape), they can use their property as collateral, they can provide goods and services on a relatively free market and end up surviving and sometimes prospering. We do not need laws for ownership. As Frederic Bastiat once said, “Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place.” Government, like religion, expropriated the laws of human nature and added to them unnecessarily, and has come to make everyone believe those laws could not exist without it. Let the poor climb out of poverty and many of them will.

If the people think something is a good idea, it will get done. And if they are not willing to pay for it, how could it be all right (or democratic) to force them to? That one is lost on me. But let’s say for the sake of argument that it is okay to force people to pay for schools, hospitals, roads and the fire department. I can understand that, although I still think people would pay for those things themselves, and save money by purchasing from a competitive market rather than a sclerotic public sector. I really do not see why they would not. We help those in need because we are sympathetic, we take time and money to improve our neighbourhoods because everybody gains, especially people who are recognised as putting their time and effort into doing so.

Why do you think that every culture and every religion has some tradition and institution for dealing with poverty? It is because the desire to help others is universal. Try it out some time: if you feel bad, do not try to get more for yourself; do something for others. Give something of yours away. Spread love to other people. As you shed your selfishness, you will feel better. It is a universal truth of human nature.