Wednesday, May 9, 2007

Why I am a libertarian (small-l)


I probably will not be as comprehensive with this as I would like, but I wanted to at least briefly explain why I am a libertarian. First, it would be helpful for anyone reading this to actually read the wikipedia entry for a brief overview of libertarianism, so I don't have to go over all of it here and reinvent the wheel.

Astute observers of this blog may have noticed a link for Lew Rockwell's site, which is a libertarian site. I usually take a look there each day, though I don't read all the links and I don't necessarily agree with all of them, either. I should say I don't necessarily agree with any one particular camp of libertarian, either. Nor am I a supporter of the Libertarian political party, but then perhaps that is just because I see it as a lost cause, given our two-party political system.

So, to get back to the title of this post, Why am I a libertarian? To put it most simply, I'm a libertarian because I see the basic ecnomics underlying that to be the only economic system that actually works and that appeals to me in the practical sense. It also appeals to me because of it inherent underlying fairness of a system based on a mutually agreed, consensual exchange between parties. (There are also the civil liberties aspects of it).

If I go out and by my own labor produce something and then you want to buy it from me, the only fair price is the price we can both agree on. If we can't agree on a price, well, I can always try and find someone else to sell it to, and if no one wants to buy it for my price, then I am forced to lower it until it reaches a point where there is someone who would mutually agree with me on that price, and then we have an exchange. How else could you set the price on something without the use of force or coercion?

Note that I don't think that the US is a fully capitalist economy, and it certainly isn't libertarian. There are far too many subsidies, both in the form of tax breaks and outright patronage, of people (with things like welfare) right up to entire industries (corporate welfare). I'd get rid of ALL of it if I could. Also, the way corporations themselves are set up is also anti-capitalist - often the owners (i.e. stockholders) have very little idea what the governing boards are doing, executives often ignore the shareholders, and boards and CEOs are not independent of each other, so you have lots of backscratching going on, leading to things like the utterly ridiculous CEO pay we have now. Corporations need a lot more transparency, shareholder control, and accounting rules in order for them to really function, from my perspective. As it is, large corporations are as bad as big government in their inefficiency and in their patronage (where business is determined often not by what is the best deal, but with who your CEO golfing buddies are).

Some libertarians equate taxation with theft or confiscation, and I am sympathetic to that characterization for the simple fact that it is an accurate representation of what most taxation is. It is the government (a bunch of people with guns) telling you to give up your money or else they will come at you (guns drawn) and put you in prison and then take it anyway. Democracy doesn't change this. It is like if you went into a room with 100 people, and you happened to have on a nice pearl necklace worth $100,000, and the other people in the room decided they want it, so they just say, 'let's make it fair, we'll vote to see if you have to give up your necklace and share the proceeds with everyone in the room' and unsurprisingly, the vote is 99-1, and so the 99 advance on you, fists out, so you lose the necklace, but hey, you get a check for $1,000, and so does everyone else. Is that fair? Not really, particularly if you spent your whole life saving money, working hard, and finally scraped up the money to buy it, only to have people who did not work to earn it take it away from you with nothing more than a vote and a threat to enforce it.

Of course, not all taxes are like that. Toll roads, court filing fees, even sales taxes, are all based on taxing an activity, not the person, and so you can avoid the tax by avoiding the activity, though some are rather hard to avoid. At the very least you can control how much you are taxed by some of the choices you make. And those taxes actually pay for something you are getting - the use of the road, the use of the courts. With sales taxes, it is much more general, which is perhaps why some advocate using those over income taxes.

I don't have a problem with some level of taxation. I also would like to see it be progressive. I'd favor a flat income tax, for instance, with say an exemption of $50,000 for each person. That way no one pays any income tax on the first $50,000 of their income. It probably wouldn't work numbers wise given our bloated government (but that could be reduced as well...), but it is a good place to start the discussion.

And I just want to point out that libertarianism and capitalism (for me) isn't about greed and loving money, nor is it about exploiting the poor or living off of them. It is about fair and voluntary exchange. It is about living in a society where, if you want to increase your resources (money) then you figure out what it is people want (what is in demand) and then you try and provide it (like getting a degree, or becoming a Vet, or making the better mousetrap) and get your just compensation for doing so. In other words, you earn your way. If what you are currently doing isn't enough, you change and do something else. It is about choices. You could also chose to make less money but do something you enjoy, and then as part of that you chose to live a cheaper lifestyle.

I think this works because it is about self-motivation and providing for yourself. If you just give someone something, not only is it not as appreciated, it is a demotivator. Why should you work hard if you can just sit on your ass and have things handed to you? Why should those who do work hard have the fruits of their labor confiscated and given to people who chose not to work?

Now, this is not to generalize that everyone who has a lot of money worked hard to get it or that those who have little do not work hard. People are born into both camps. But with hard work, one can make a living. My parents were both born dirt poor. They clawed their way to the middle class, getting degrees, working hard. Now they are solidly middle class. I was born middle class. But then I had to work hard to stay there, going to school (on scholarships), working while doing so. I had the advantage of my parents helping me, so that I graduated undergrad with no debt (though also no money), and I paid for law school entirely myself (with a generous scholarship I earned).

Despite the problems with class mobility, I still don't see how you could do it any other way. Because again, if you give people something without them working for it, then you destroy and demotivate. I worked with some great people over the years who told me all sorts of interesting things about growing up poor. One woman I worked with grew up in a neighborhood (and still lives in it) where there were a lot of people on welfare. She had nothing but contempt for them and the way she described how they acted was horrible. They did nothing, they contributed nothing. They got paid for their children, but then did not really watch them and let them run wild in the street, trashing other's property, including this woman's home. She grew up in that but decided to get out of it, went to school, and then she got a job doing the same thing I was doing at the time, IT work. Welfare simply doesn't work. If I got a paycheck for sitting on my ass at home, why should I bother working? I like spending time at home. If I could do that and get paid while I do basically whatever I wanted, sounds like a good deal to me.

So as part of this, I think no one should have children unless they are both financially and emotionally ready for it. To do otherwise is irresponsible. If you can't afford kids, I don't think you should have any, and if you do, I'm not going to pay for them. That is your responsibility. If I did pay for them, why would you stop at just one? Why not have ten? I know I'd love to have ten kids, but I know that I could not reasonably care for them, even if I had the money, because that's just too many to keep track of and give the proper attention to. So I plan on having only two or three kids, at most.

I do think people deserve to be paid, at a minimum, a living wage. I think the reason employers get away with paying less is because of things like welfare. In a closed system, you would have no choice but to pay a living wage because if you didn't, well, then by definition, your workers would die, decreasing the supply of workers (thus increasing their price) until you reached a point where the cost of workers, due to their rarity, also pays a living wage, and then the supply stops going down. Of course, if society subsidizes the poor with food stamps and welfare, then you can pay below a living wage and the workers won't die off as a result, so in essence, you get to make a much larger profit by exploiting society's spending on welfare and food stamps and such. But if that welfare wasn't there, then wages would have to be higher - employers would have no choice. And those higher wages would not necessarily make things more expensive, because more money in more people's pockets means more spending, which means more profits, which can then pay for more wages.

Ok, this is a long and rambling post on a bunch of things regarding my thoughts about libertarianism and economics. I haven't even gotten to the civil liberties aspect of it, though that is also a big part of it. I guess I'll leave that for another post.

UPDATED: Ok, so I didn't wait. I wanted to add a few things. First, to show how I live in conformance to my economic view. I used to be in IT. I did that for years. But then jobs started drying up as they were sent to China and India and Brazil. I dispute the merits of outsourcing for many reasons. But the simple fact is, it is happening and IT jobs in America were drying up. I could have just sat there and watched my job evaporate around me, called for some form of protectionism, and so on. But then that wouldn't have been particularly helpful. When the world switches from horses to cars, buggy-whip makers better adapt or die. So instead of just sitting and whining, I retooled myself. I went back to school and got my law degree. I made myself a marketable commodity in a profession that is much harder to outsource for various reasons. Now, the market for lawyers in many places also isn't great, but it is better than IT. I will still have to compete and work hard for a good job. I have one now, but it won't be forever. I'll have to look again soon. Sure, it sucks when a job you spent a lot of time on goes away for reasons that are not your fault, but that is just a fact of life. You need to be flexible and adapt. We can't all just make a living making simple stone tools forever. You have to move on when the world moves on or be left behind.

I also want to talk about civil liberties. That is another HUGE reason I'm a libertarian. And I'm consistent across the board on that. I favor strong enforcement of ALL of the bill of rights, not just the parts of it that support left or right. That means I'm strongly for freedom of the press and freedom of religion (and FROM religion) and I'm also strongly for citizens being free to own guns (as opposed to it being a government monopoly). I favor strong fourth amendment enforcement, where not only should illegal searches be excluded, but I'd favor the police being prosecuted for executing an illegal search (absent innocent mistake). I'm for funding public defenders at the same level as prosecutors. I'm for eliminating plea deals with witnesses and overcharging by prosecutors. As far as I'm concerned, offering someone a lesser sentence for testifying is nothing but bribery, which incidentally, is illegal.

I'm a strong believer in the notion that so long as you don't hurt me or my property, I won't hurt you or your property. Live and let live. So I'm against laws against any sort of adult consensual behavior. Such laws tend to just corrupt the police and clog our justice system. Read this book (conveniently available in its entirety online) for an excellent treatise on why this is so. We have far too many laws on the books as it is, to the point where probably a police officer could find some excuse to arrest just about anyone at any time - a power I'd rather the police not have.

I'm in favor of small, limited government, of limited powers. I do recognize that there is a place for the government, I just think it is gone way beyond where it should be. I'm in favor of federalism, in the sense that there are a lot of things the Federal government is involved with that it simply should not be if we actually follow the Constitution. Though I am in favor of federal involvement in one area - forcing the States to respect our civil rights and enforcing the bill of rights. My mistrust of government and power extends to all levels, right down to the local.

Ok, now I've rambled a bit more.

Oh, and ONE FURTHER NOTE: I hope no one takes my talk about a living wage above to mean I favor letting poor people starve to death or die of exposure to increase wages. My point is that without subsidies, pay would have to be higher, because employers couldn't benefit from society picking up the tab.


nicole said...

Amen to all that. I used to be of the opinion that welfare was necessary for people who either really can't work (mentally disabled people or people with severe physical challenges) and I guess I still feel like as a society, we have a responsibility to take care of people who need it. Because it's just good luck that both my children were born healthy and my husband and I are healthy enough to work and earn a good living. But I don't think other people who were not so lucky should have to shoulder the burden alone if they have family members who need support for their entire lives.
That said, I have an upper-middle class friend who gets juice from her sister. Sister receives WIC or food stamps or something, and never drinks her allotted supply of juice. So I find it ridiculous that my friend who makes a very good living is benefiting from welfare instead of the sister just turning down the juice that she doesn't use. It's just plain old taking advantage of the system as far as I'm concerned.

Anonymous said...

A problem with sales tax is that it end up with the poor paying a much higher percentage than the rich. Since the poor usually spend the vast majority of their money buying things they will have to pay a large part of their annual wage on sales tax, which leads to them not being able to accumulate as much wealth as to move up classes. While the rich who do not spend the same amount of their annual budget on buying things end up paying a much lower percentage, and they are able to save up more money which allows them to accumulate great amounts of wealth. That is why i think a pure sales tax is not just. But I do believe that the current income tax system is broken and do like your idea of a starting price of income tax.

DBB said...

Yeah, if you have only a sales tax, it is regressive, and that is a problem.

cxx_guy said...

I would argue that a sales tax (especially one like the fair tax, which taxes both goods and services), is less regressive than an income tax. Many wealthy people do not have jobs. They live from capital gains and investments, which are taxes at a much lower rate than wages. The advantage of a sales tax is that it taxes consumption, rather than production. For society to punish those who produce those things it needs is absurd.

Also, a sales tax (if it is applied only to new goods, like the fair tax) is green. If there is a 28% sales tax (and no income, social security, death, or other taxation), then people have a 28% incentive to resell items which they no longer use, rather than throwing them away. This is generally a good thing.

Thirdly, somebody who makes money and never spends it is nearly always employing that money in a way which helps others. If they keep it in the bank, it is loaned to businesses and creates jobs. If they keep it in the stock market, it still finances the creation of jobs. The fair tax would not tax investments, but only consumption.

DBB said...

One could always make the argument that money not taxed is money that helps the economy in some way or another. But we do need to tax some money, and I think it just makes more sense to tax capital rather than labor - because then it encourages people to do labor (i.e. work and earn a paycheck) rather than sit back and just collect dividends, which is not actually a productive activity. And since those who earn money mostly on dividends tend to be the very well off, they can afford to pay taxes - in fact, the taxes they pay won't impact their consumption nearly as much as those who work, who tend to consume income as fast as they can earn it.

In the end, taxing only investments but not labor would mean that those who earn money on labor would have more money free to invest, and they won't mind losing some of their returns to taxes because it is unearned income anyway. I know that I always feel the tax bite out of my paycheck for working as much more painful than the taxes paid on my (modest) investment income - because I see the investment income as just icing on the cake, money I earn without doing anything at all.

I know the arguments - that taxing investment income reduces returns so people won't invest as much - but then, really, just where the hell else can they put their money but in investments? Put it in a bank account collecting 1% interest? I don't think so. And all those untaxed dollars going to those who actually work for a living will mean more spending by those who work for a living, which will increase the value of investments, perhaps offsetting the taxes.