TCS Daily


Libertarianism and Poverty

By Arnold Kling - June 5, 2006 12:00 AM

"My son was in the best public middle school in San Francisco in the gifted program and I had to take him out and enroll him in an expensive private school which I can't afford...Why? Well it's folks like Mr. Kling who have funded and backed and argued for lessening the 'tax burden' so that the rest of us won't think of wealth as something 'redistributed.'

It isn't redistributed. Oh no, it's hoarded by the likes of Mr. Kling."
-- "c.r."

"there is truth to the notion that poverty has a lot to do with mental illness. There are very few poor people who are smart but lazy. But, there are a lot of poor people with low IQ's, mental illness, personality disorders, persistent drug addiction, or victims of violent or abusive childhoods. I know this because I grew up surrounded by these types of people."
-- "Susan"

(both of these comments were made on a blog post at the Economists View Weblog

This essay outlines a libertarian approach to poverty. No, it's not "Leave them in the gutter." It's an approach that tries to be pragmatic and compassionate. Even if -- especially if -- you are not a libertarian, you need to understand that when it comes to government doing something about poverty, "less is more." Further below, I even include a policy proposal -- something that is rare coming from a libertarian.

I describe myself as a pragmatic libertarian. If I had to give up a little bit of freedom in order to see a meaningful reduction in poverty, I would do so. My problem with government is that I see it doing harm on both counts.

What is the fundamental cause of poverty? The Class Oppression view, which is expressed by the first comment quoted above, is that rich people extract and hoard wealth, leaving everyone else poorer. The Pathology view, which is expressed by the second comment, is that poverty is part of a pathology.

Neither of these comments came from a libertarian. The first comment seems to reflect the common perception that what libertarians actually believe is the Class Oppression view, and that we are looking for ways to justify continued class oppression. Instead, my position is much closer to the Pathology view, and that leaves open the question of how well or how poorly government programs work to ameliorate the pathology of poverty.

I think that the Class Oppression view has some very deep-seated emotional appeal. I trace this back to the Biblical story of the Exodus, which centers on an oppressive Pharaoh whose riches are built on the backs of Jewish slaves.

As a description of reality today, I think that the Class Oppression view has some problems. As a thought experiment, what do you think would happen in America if we were to take the wealthiest 20 percent of our population and exile them -- er, us. As part of this exile, we would have to leave all our physical possessions and financial assets behind. Suppose that the 50 million of us are given a country of our own with enough space but no other tangible resources.

If you really believe the Class Oppression view, then you would think that without the 50 million hoarder-oppressors, everyone else would be better off, and in their new country the hoarder-oppressors would be in poverty. Instead, my guess is that in twenty years, American poverty would be worse. Meanwhile, in their new country, the hoarder-oppressors would be debating the problem of illegal immigration from other countries, including America.

Something resembling this thought-experiment has been occasionally tried with ethnic Chinese in parts of Asia or Jews in various countries. I believe that the lesson is that expelling wealthy groups tends to leave others worse off, not better off.

The strengths and weaknesses of the Pathology view are the opposite of those of the Class Oppression view. The Pathology view is as emotionally repugnant to most people as the Class Oppression view is appealing. But observation of reality tends to support the Pathology view. If people did not at some level believe the Pathology view, then why would there be social workers?

Perhaps one can combine the two views. Perhaps one can say that the pathology of poverty is something that emerged from generations of oppression. Certainly, African-American descendants of slaves can make a case along those lines. A problem with this view is the apparent anomaly that many of the pathologies in the African-American community have emerged since 1960 -- black families were stronger in the first half of the twentieth century than more recently. But that anomaly does not rule out the possibility that one might be able to trace current pathology to slavery and to subsequent racial discrimination. In my experience, ordinary African-Americans do not tend to trace the pathology of poverty back to slavery (perhaps it's not something they feel comfortable talking about with me). But the theory has at least some traction among academics of various races.

With the possible exception of African-Americans, I am skeptical of the historical version of the Class Oppression view. Moreover, even if the historical version is true, it would seem that going forward, to do anything about poverty one has to acknowledge the reality of the Pathology view.

The Government Record

Government has a mixed record in alleviating poverty. The GI bill seems to me to have been a success. Welfare seems to have been a failure -- by creating a culture of entitlement for unwed mothers, it exacerbated the very problem that it was supposed to cure. Social Security probably was a positive program when it began, but by now I believe it causes too much hardship for people of working age relative to the hardship that it relieves for the retired, and this tendency is going to get worse with each passing decade.

If the tendency of government were to expand on its successes and cut back on its failures, then I probably would not remain a libertarian. Imagine politicians saying, "Gosh, the GI bill worked, but for the children who need it most, public schools fail. So let's make K-12 education more like the GI bill, and switch from government-provided schools to vouchers."

Unfortunately, that thought-experiment has no basis in reality. Instead, politicians have been captured by the teachers' unions. Where I live, the teachers' union is by far the most powerful political force. No one has any hope of being elected to the school board or the County Council without first receiving the endorsement of the teacher's union's political action committee.

If the woman who found San Francisco public schools unsatisfactory for her child wants me to contribute to a fund that provides vouchers to parents like her, I am open to that concept. But if she thinks that getting me to pay more in taxes is going to help those San Francisco public schools serve students better, I am sorry, but I have to differ.

When I sold my business, I decided to go into volunteer teaching. At first, I considered going into the public schools, because the children are so needy. But instead I went into a private school. I think that private schools appreciate help much more, and they also have a portion of needy students. I would rather offer my time and effort through a private school than channel it through an institution of public schools that I regard as corrupted by politics and unable to give priority to the needs of students and their parents.

Government programs persist not because they help to alleviate social problems but because they develop political constituencies. Thus, we have a food stamp program, when the number one nutritional problem among the poor appears to be obesity. I am not saying that I don't think that poor people need help obtaining food. But a program that was focused on poor people rather than as an indirect way to aid the farming constituency would probably operate rather differently than our existing food stamp program. With government, political goals inevitably interfere with what from an idealistic perspective would be the "public good" intent of a program.

Of course, one can support government programs in spite of the inevitable political dysfunction. Just because it is not perfect does not mean that it is wrong. But I believe that we can do better with less government and more decentralized programs to address poverty.

The Role of the Family

If you have children who care about poverty, you should tell them that the most reliable thing they can do to fight poverty is to make a decent, honest living for themselves. Becoming poor or dependent is not going to help anyone.

My wife and I care a lot about the well-being of our own children. But my sense is that other parents among our peers do more for their children. They certainly push much harder than we do to have their children get into the college with the best possible reputation. We do not think it matters so much where our children attend college. I sometimes think that my peers treat the college that their kid gets into as if it affected their own status, but perhaps that is being unfair.

In any event, if some people err on the side of trying to do too much for their children, then that is probably better than erring on the opposite side. I think we are better off living in a society where families try to give their children the best possible head start than in a society where the state decides what is in the interests of children.

I think that there should be a lot of compassion within families. I think that relatives helping one another is better than having people live off of checks from the state.

When people care about their own children, there is bound to be some inequality. A friend of ours has worked in his parents' store since his early teens, and he probably has averaged over 80 hours a week working in the store for the past 30 years. Now he stands to inherit the store. If you want to create a society where that store instead becomes the property of the state, perhaps your society would be more egalitarian. But it will also be very unfree and very, very poor. And in practice, societies where the state controls wealth tend to have plenty of inequality -- it's just that the winners have skill sets more suited to political maneuvering than business entrepreneurship.

The Role of Charitable Organizations

Charitable organizations are better than government as a source of aid. First, it is easier for donors to hold charitable organizations accountable than it is for taxpayers to hold government accountable. A failed government program can go on forever. An ineffective charity has a more difficult time obtaining funding.

Charitable organizations tend to be more "hands-on" with the needy than are government organizations. For example, although I cannot say that I am particularly happy that my daughter volunteered to go on a project with this organization, it clearly is going to put her in direct contact with poor people, which is better than going on an international "mission" where you stay in 4-star hotels.

Those organizations that work directly with poor people stand a better chance of learning how to meet their needs than people who lobby in Washington on behalf of the poor. Nongovernmental organizations will tend to be more innovative. They can be leaner, and they can operate with what the military would call a high "tooth to tail" ratio.

Charitable organizations are better suited to dealing with the pathology of poverty. When people get checks from the government, they tend to think of this as an entitlement. They are getting money in exchange for doing nothing. They learn that this is how you get money -- you take it from others. Taking money from others is what criminals do. Productive people get money from other people by exchanging something of value.

Charities are in a position to demand something of value from their clients, even if that "something" is nothing more than a human "Thank you." Charities are also in a position to set the terms under which their clients receive aid and to cut off clients who fail to comply with those terms.

Charities can be flexible in how they handle individuals. One person may need transportation to a job. Another person may need drug rehabilitation. With hands-on involvement and with flexibility, charitable organizations are more likely to discover solutions to the pathologies of poverty.

Charitable organizations are flawed, to be sure. On average, I think that profitable companies are better managed than nonprofits. But every organization has its flaws, and charitable organizations are less flawed than government alternatives.

In fact, I think that one of the factors that inhibits the effectiveness of NGO's is that many of them are dependent on government grants for support. This forces the NGO to put much of its effort into satisfying the bureaucrats who provide the funding. That requires resources and skill sets that have nothing to do with solving the problems of people in need.

A Charitable Exemption?

Under our current tax system, donations to charity are a deduction from income. If your tax bracket is 25 percent and you give $1000 to charity, then this reduces your tax bill by $250, so that the donation only costs you $750 after taxes.

My proposal (which I suspect is not original) is that, on top of the current deduction for charitable contributions, we create a large charitable exemption, of, say $20,000. That would mean that you could donate up to $20,000 and have that amount taken off your taxes. Thus, the after-tax cost of your donation would be zero. For people whose annual tax obligation is less than $20,000, the income tax would essentially be optional. You could pay your taxes, or you could give an equivalent amount to charity.

A charitable exemption would have the effect of shifting resources from government to private charities. I believe that would be a net plus for people in need.

A charitable exemption would increase the proportion of money going to NGO's that comes from private donors rather than government. I think that the effect of this would be to reward NGO's more for effectiveness and less for their ability to work the system to obtain government funding.

In his book Good and Plenty, Tyler Cowen argues that tax-incented charitable gift-giving has been good for the arts in America, because support for the arts has been decentralized. The idea of the charitable exemption is to mobilize those sorts of decentralized solutions to address other needs.

In theory, people could give their charitable donations to organizations that do not serve the needy. For example, people might give money to elite private universities, which already have enormous endowments and mostly serve affluent students. I would be disappointed if that were the outcome, but it would not necessarily be a worse use of money than the average government spending program.

This was once a country in which Alexis de Tocqueville marveled at the spirit with which voluntary associations emerged to solve problems. A libertarian approach to poverty would seek to rekindle that spirit, rather than expand a government that sucks the oxygen out of families, private charities, and the very poor that it purports to help.

Arnold Kling is a TCS contributing editor and adjunct scholar at the Cato Institute. His most recent book, Crisis of Abundance, deals with economic issues in healthcare.

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231 Comments

False dichotomy
The choice is not between hate the rich and hate the poor.

The question is what government policies are effective in creating wealth for all. It's absolutely clear that prosperity depends on infrastructure, both capital goods (roads, etc) and human (education). Government has a vital role to play in making investments in these fields, and in basic research.

Society as a whole also has a vital interest in avoiding a situation where the nation is divided between a thin stratum of the ultrarich and vast numbers of poor people. To say this is not to say that being rich is evil or being poor is virtuous. It's simply to state an obvious truth, which anyone who goes to a country where inequality is great (Mexico) can instantly see for themselves.

Society also has an interest in preventing social pathology, rather than simply wagging a finger at it. And there are ways to work on this that work. The market does not have an interest or stake in achieving this, unless money is to be made doing it. Some government programs work better than other, but isolating government as a tool that doesn't work, that's always bogus, solves nothing.

If government would just stop putting poor people in jail for the things that they do it would be a
Self medication.

BTW Our local homeless shelter has some psychiatrists who get anti-psychotic and anti-depression medications for the homeless.

Is This A Good Comparison?
My ability to discuss/argue matters is based mostly on comparing my life to current situations. So I'm going to offer a description of my point of view and hope it gets accepted, not shredded.

I'm a housewife. If my husband left the picture I'd be left with only a moderate amount of life insurance, plus the liabilities of kids and a house and cars and bills. I'd be on the poverty line in short order. If I were disabled at the same time I'd end up in the same place as every other poor/disabled person.

The only thing I have to rely upon is my attitude.

If I take the victim's attitude and find a lot of sympathy, my further education will be in how to draw government benefits.

One of the hobbies of the poor people I know is criticizing the government because of how hard it is to get what you need when you're on welfare. These people are discouraged and lack the confidence in themselves to change their lives, so they seek extra reliance on their peers, and they stay where they are.

As it is, I'm a housewife and I make it my job to keep everyone healthy, clean and productive so that we don't have a lot of health bills, and I keep our expenses down. When our kids go to college I'll be needed to get a job/career because of that extra boost of cash we'll need. Like a poor person, I'm stressed by this prospect because I haven't worked for quite a few years and I'm in a passive mental state. But as in any case, my attitude is the thing.

If I go looking around for who's supposedly hoarding wealth, then that belies a belief in a reality that people do mean, irrational things and get rich. I don't want to live with a worldview like that.

So my ony choice is to take a hard look at what people do to make their income work for them, and then start doing it. If I were to get knocked out of where I am now, I'd have to endure pain, but the pain wouldn't last because I'd invest in myself and get a useful education. Nobody would stop me except my own attitude.

That's why I think this article is a good one. In the case of viewing poverty as a mental illness, I'd say it's a pathology based on what was once normal thought but became sick. I'd like to catch it in the stages where the thinking is still normal, when attitude is all it takes.

You should be able to get food in your stomach and clothes on your back, and shelter from the weather, and basic medical treatment--but giving poverty behavior too much pity is fostering it. That may sound mean but the energy spent on resentment is better channeled elsewhere.

Government helped to kill the mutual aid societies.


It is rational to get government to do maintenance of local roads (local roads BTW roads existed before government start to maintain them) along with most other traditionally commonly owned property like water ways and water fronts ground water and air.

The record of government schooling (education is not schooling , schooling is not education) is mixed to negative. Read “going broke by degree”. The function of schools is less education than testing. Testing helps those who do well relative to those who do bad. This testing leads to over consumption of degrees by business. BTW my grand parents went to school 1 year each and where educated. Some college grads today I would consider ignorant.



Better to be poor in the USA than to live in Honduras where most everyone is poor (or Cuba if you choose to believe that it has equality, I doubt that.). The relative poverty argument has very serious weaknesses. We do
not seem to care about relativity in other areas.

BTW we are society I give thousands each year to charities that help the poor. (Full disclosure: I also give to Religious organizations not primarily target at the poor. )

False Premise
Government policies can not create wealth for anyone, they can only destroy it.

Government policies can only create an environment in which individuals, through their initiative, create.

Markets do have a stake in a moral society. Fraud, theft and personal security are all conducive to a prosperous market. (That's what organized crime does, is it not, provide protection for a fee? But protection from organized crime. Sounds like government and taxes?)

Success
In Kurt Vonnegut's short story, "Harrison Bergeron", the government is successful in leveling all differences between people by physically handicapping those with superior capabilities. So, is that really success?

The problems with the idea of success are: who defines it, how is it measured and who measures it. Mr. Kling appears to have a collectivist notion of success; that is, the central government will define it. It's very much like Hillary Clinton's idea of the common good. This sort of idea eliminates individual decisions about what defines their own success in favor of collectivist propaganda. Mr. Kling is correct that, in adopting the collectivist idea of success, one is no longer a libertarian.

effective govt
All of the things mentioned by eric can and have been provided by the private sector. Usually at lower cost and better quality.

As to a society with a thin strata of super rich and everyone else poor. Every society that meets that criteria has a super strong govt.

Govt does not create wealth, govt at best distributes wealth from those who create it, to those who have the votes. More often, govt destroys wealth.

No shredding
Spot on about attitude.

"If I go looking around for who's supposedly hoarding wealth, then that belies a belief in a reality that people do mean, irrational things and get rich. I don't want to live with a worldview like that. "

People who believe the wealthy, at least in the USA, got that way by stomping on the poor is just plain wrong and is perpetuated by popular media.

You are right not to believe that and I encourage you to debunk that view whenever you can.

Dollar for dollar tax credits
Attached below is my idea -- close to the author's view but my emphasis is bypassing the politicians.

DOLLAR FOR DOLLAR TAX CREDITS:
A WAY TO GO FROM STATISM TO LIBERTY

Libertarians are often asked how we might dismantle the leviathan state and move toward a free society. "How do you get there?" is a reasonable question for the public to ask and failure to answer leaves an excuse for politicians either to do nothing or continue to move away from liberty.

The Problem

Social programs require a transfer from government to the private sector. Right now numerous social programs presently funded by government appear difficult to replace without serious disruptions. How can the transition from government funding to private sector initiatives be accomplished?

Two Principles

First, private/voluntary means are far superior to government/coercive methods in meeting society's needs. Unlike government bureaucracies, private organizations must be efficient. They cannot waste money without risking bankruptcy. They must be effective or else they don't get further contributions for their services. Finally, they must be responsive to the needs of those they purport to serve. Failure in any of these areas can put a private organization out of business. However, such deficiencies do not appear to hinder government at all. In fact, the more inefficient and bungling the bureaucracy the more tax dollars they appear to consume with no benefit to social needs.
Second, because ever-increasing government spending diverts resources from the private/voluntary sector to the government/coercive programs, both social progress and the economy will be destroyed, if this process is allowed to continue. Real social progress requires transition from government to private hands.

The Solution: Tax Credits & Tax Rate Freeze

We propose a 100% dollar for dollar tax credit for "contributions" to government services or private charitable organizations which provide services similar to those of government agencies. This plan allows taxpayersCnot politicians or special interest lobbyistsCto control where their money is directed.
In conjunction with a comprehensive freeze on taxes, the tax credit program will provide an efficient and responsive system to provide necessary services. Old, bloated bureaucracies will have to produce or lose public support to other organizations which better meet society's needs. This plan creates real democracy because it restores individual (taxpayer) choice of programs to support.
As private, voluntary organizations take over (or government organizations shape up!) the public will see that the enormous government spending on various services of society is unnecessary. In the long term the "frozen" tax rates can be reduced to very small or nonexistent levels. The result will be a voluntary society, freed from the constraints of government control, spending, and bureaucratic ineptitude. During the transition the truly needy members of society and useful services (government or otherwise) can be maintained by voluntary contributions.

What do you think about dollar for dollar tax credits?

In Liberty,

Len Flynn
lenflynn@wallnet.com
732-591-1328

$20,000 ... yeah right
Most Americans pay less thank $20k in taxes already. If our government could survive on $20k per person less, why shouldn't we just eliminate the tax altogether and let that money go where we want it, charity or not. Although, under this plan, I could see a boom in new charities whos goal is to benefit the donors.

Class Oppression
The appeal of this notion need not be traced to biblical times. Our government has yet to even apologise for slavery. We are sorry about Japanese internment but apparently not slavery. The calculation of the cost of slave labor in actual dollar terms is astounding. We stole an awesome amount of labor early on in our American economy. How about the creation of opium and gambling laws to stifle the Chinese in San Francisco. How about the ruling in Ozawa vs. US which served to deny the up and coming Japanese citizenship rights and landholding abilities. We have a rich history in class oppression. I suppose it is a recent reality for the oppressed and easily relegated to days of antiquity for those who enjoy privileged status. The face of class oppression today is a booming growth industry : Prisons.

This multibillion-dollar industry is dependant on continual increases in incarceration rates. The law enforcement side of the equation is big business as well. The corporations that profit directly from law enforcement and penal incarceration are numerous and well known to us. Americans trade stock in corporations that need incarceration increases to turn profits. American investors have a financial interest in oppressing our poor and our minorities through the penal system.

Roughly two thirds of our inmate population is incarcerated due to non-violent or drug offenses. (The assault charges they gain in prison which keep them incarcerated are the fault of our broken penal model.) Furthermore, many inmates are sent to prisons in remote locations denying them the ability to have friends and family visit. This results in a higher incidence of collect calls which are outrageously expensive and extremely effective at taxing the family of the incarcerated. It would be pertinent to know that phone companies such as Verizon exert great effort to monopolise these collect calls. Companies like Victoria's Secret have products made by prison labor for mere pennies. I understand there is an argument that it is beneficial to teach inmates a skill for use upon release. I argue that they can't make license plates in society, and they can't stitch panties unless they move to a third world country. California exceeds education spending with prison spending. Our prison wardens union is the most politically formidable lobby in California. With employment ability, towns are actually trying to lure the next prison constructions.

Our shift away from rehabilitation is driving recidivism. The violence and gang culture of prison is mandated by the rough reality. Being unaffiliated is very dangerous in most prisons. Since prison and society have a constant interchange of people, they inform each other as a dialectic. The prison culture is seen on the streets and vice versa. The horrific castles of gang rape, high Aids rates, shanks, stabbings, riots and the like, all serve to dehumanise our inmates and their dehumanization saturates the neighborhoods they hail from.

I argue that we are engaged in a very real oppression. We can think of these inmates a gangsters and violent animals but that is cognitive dissonance. A hungry dog is an angry dog. I could imagine the outcome of a scenario in which sons of elite lawmakers grew up in a place where they awoke to gunshots, there school was a non educational, decrepit health hazard and a great place to get beat up, their neighbors were constantly enslaved with drugs and alcohol(liquor store on every corner), and the only successful people they saw enjoying material goods like the "normal" people on TV were the people selling drugs. There is a reason drugs are called "work" in the ghetto.

I find it troubling that the people who are incarcerated for drugs and guns have little if anything to do with the production and importation of these things. Like the saying goes, "there are no Uzis made in Harlem. Not one of us owns a poppy field." The conduct of our war on drugs has been questionable at best, complicit at worst. The burden of drugs in the ghetto is yours and mine.

A true Libertarian in my opinion would see poverty for what it is. Lets bring liberty by taking uncle Sam's foot of the necks of our poorest and most misguided citizenry. Let us look objectively at healing criminality through education and opportunity. If we are able to drop this ignorant guise of "good and evil" which pervades debates such as this, perhaps we could see the atrocious nature of criminalizing our people in the interests of big business. Crime and poverty could be severely reduced if not eradicated if the motivation were shifted from profits and oppression to compassion and humanism.I would also argue that an educated and conformed lower class would be a great asset to our economy and society. The investment is prudent.

Thanks for the laugh guys
Nice one, 2 good examples of government haters in marjon and mark. Why do they hate it? They don't even know. They read the promotional brochures like they're the Bible. Just believe. And spread the Word.

"Government policies can not create wealth for anyone, they can only destroy it."

So how do you rectify the wealth created by massive pork spending? Even better, I wonder how much wealth has been created by the Iraq war. All those contractors, overbilling or not even doing the work they're being paid for. Does a privately hired soldier make more than an Army soldier? Thats interesting, I bet the people getting those contracts are already wealthy anyway. That makes sense considering who is running our government today. Its a government of the wealthy, for the wealthy, by the wealthy.

And for all those who think the private sector can do the same job cheaper than government, I have to ask if they consider profits in that analysis. Private enterprise is generally more efficient than government. But is a private company THAT MUCH more efficient that they can still be cheaper after tacking on their profits? I highly doubt it.

"Markets do have a stake in a moral society. Fraud, theft and personal security are all conducive to a prosperous market."
This is great. So we can know its a prosperous market when it has a good amount of fraud and theft. Now I see why you guys think the American economy is so perfectly awesome right now, with fraud like Enron what else would you think?

Don't take me wrong with this. I'm not a pro-government weirdo. I'm very critical and I agree with bits and pieces of what you guys promote. I'm more of a devil's advocate, especially when a position is taken and comments are made out of ideological ignorance. At the very least the government is making some pretty good wealth for our politicians.

Less government = more freedom = less poverty = a better society
Government did not provide universal 'public education' until after the Civil War. It did so because many people were concerned that church schools and homes were the primary source of education (especially Roman Catholic) and they were afraid their children would become papists.

Education was just fine without government, unless you believe there was no education of people from 1866 back to the founding of the country.

As to 'basic research', what is the definition of that? Certainly Edison did not have government funding for the development of the light bulb, phonograph, movies, etc. George Washington Carver had no government funding for his work with peanuts and other similar materials. Alexander Graham Bell had no government funding for the telephone development. Henry Ford had no government funding for his work in automotive, manufacturing, and materials research.

The only government 'basic research' funding mechanism after WWII was DARPA - which was specifically defense focused but whose results inadvertently spun off into the commercial sector.

So, there are plenty of foundations and companies that sponsor 'basic research' (think IBM, HP, RAND, Northrup, GM, Delphi, Siemens, Bosch, etc.) and many more who would if their tax burden was eliminated so they could invest in organic product development from which the highest margin products are derived.

The government does not need to be, and Constitutionally is forbidden from, tinkering in these areas.

I can't believe how many idiots there are out there
Wow. That statement is just staggering. This guy doesn't even realize that 5% of the country pays 55% of all taxes. They pay a lot more taxes per person than $20K.

Most people don't get math, which is sad. They don't realize that the distribution of wealth in this and any other country follows a power law probability distribution. It was "discovered" by Pareto a hundred years ago, yet you never, ever, ever, ever hear a mention of that in any public skool class you'll ever take. The fact of the matter is, in a free society, such as ours, there are smart people (IQ above 100) and there are dumb people (IQ below 100). There is a very long tail for the smart people (of course I'm leaving out other factors for simplicity), which means that one dude is going to end up with $100 billion for himself. People like John Kerry are going to complain that rich people are hoarding all the wealth.

Smart people tend to be more successful, and the only way to stop it from happening is to hold everybody down to the dumb person level. Our government excels at keeping people down. Liberals are even better at it. They choose ignorant people as their constituency, and then try to grow their constituency by making more people ignorant through a failing skool system. Its just criminal.

You completely missed the point
"So how do you rectify the wealth created by massive pork spending?"

This and the other examples you cite make marjon's point. Pork barrel spending takes wealth from those who created it, through taxes, and gives it to others who did not create it. However, in the process, some of that wealth gets "siphoned off" unproductively by the government process, causing the net loss of wealth.

"At the very least the government is making some pretty good wealth for our politicians."

Government steals the wealth from taxpayers and some of it ends up in the pockets of politicians. That is not making wealth, it is redistributing it (less overhead).

Typo
"Markets do have a stake in a moral society. Fraud, theft and personal security are all conducive to a prosperous market."

Meant to say:

NO Fraud, and NO theft and personal security are all conducive to a prosperous market.

"And for all those who think the private sector can do the same job cheaper than government, I have to ask if they consider profits in that analysis. Private enterprise is generally more efficient than government. But is a private company THAT MUCH more efficient that they can still be cheaper after tacking on their profits? I highly doubt it."

What incentive does a government agency have to reduce its cost? NONE.
Private enterprise has an incentive to do its job better, faster and cheaper if it can keep the savings.

typical liberal
lie and distort,

Let's see if I've got this straight, everyone who doesn't believe that govt is the answer to every problem, is a govt hater.

If you can't find the sarcasm in the above, your name is probably bob, or roy.

Pork doesn't create wealth, it moves it from one place to another, at best.

You've never made any statement that would lead me to believe that you are not a pro-govt weirdo.

I get the point, I just don't buy the extremity of it
So is it fair to say that everything the government does is redistribution? So everyone who pays taxes is having their income redistributed? Thats how I'm reading this. Taxes and redistribution are the exact same thing, according to the definition you're giving me. Makes sense. Its like you just created a new word for taxes to somehow cast the idea of taxes in a worse light.

Its not accurate to say wealth is taken from those who created it and given to others who did not create it, because those who did create it are getting a chunk of it too. Politicians for example. And every other government employee. And yes, even people on welfare or whatever who make so little money they don't pay taxes, they get a chunk of it, but they are not the whole pie, so your statement is not accurate, or only half accurate.

I'm curious too what you mean by this: "in the process, some of that wealth gets "siphoned off" unproductively by the government process". How is it "siphoned off" exactly? Are there guys in the counting room slipping bills in their pockets as they count? By paying government employees, is that the siphoning?

Maybe thats our real problem- employees. I mean, if a company didn't have to hire people they wouldn't have their revenue "siphoned off" to pay people. The employees didn't contribute to the revenue, so why should the company have to redistribute their revenue to them?
I know I'm being ridiculous. It must be easy to do with all this semantic speech being thrown around.

Will you only be satisfied when we have zero taxes? Or is there a level we can reach that being taxed is acceptable?

BobJones do know the difference between creating and transfering wealth?
BobJones wrote:

'So how do you rectify the wealth created by massive pork spending? Even better, I wonder how much wealth has been created by the Iraq war. All those contractors, overbilling or not even doing the work they're being paid for. Does a privately hired soldier make more than an Army soldier? Thats interesting, I bet the people getting those contracts are already wealthy anyway. That makes sense considering who is running our government today. Its a government of the wealthy, for the wealthy, by the wealthy.'

Do know the difference between creating and transfering wealth from one person to another? I thought that you would bring up the interstate highways etc. tuffer to debunk.


Good points

"What incentive does a government agency have to reduce its cost? NONE.
Private enterprise has an incentive to do its job better, faster and cheaper if it can keep the savings."

The government's incentive to reduce cost should come from the fact they're using taxpayer money. I'm in favor to transforming the government to operate more like a business. So they will take competitive bids for contracts and not just give checks to people that have connections. This is tough though, there may need to be much more incentive for government to actually reduce costs.

Your last statement is exactly right. However, private enterprise has to make a profit. Take away the profit and private enterprise easily could beat government in cost and efficiency. But is private enterprise so extremely more efficient that it will be cheaper even with profits included? I'm saying no. I believe there are examples of yes, but not in general.
Is this not a lesson we've learned from the Iraq invasion? Stories about contractors wasting money, overcharging, not doing the work, cutting corners. Its time to reconsider this idea that private enterprise will ALWAYS be more efficient than government.

Taxes
Return the federal government to the exercise of the powers enumerated for it in the Constitution; then, collect the taxes necessary to fund the execution of those powers.

Paper-pushing and red tape "siphon off" revenue moving through the government, consuming wealth without producing value.

"Its not accurate to say wealth is taken from those who created it and given to others who did not create it, because those who did create it are getting a chunk of it too. Politicians for example. And every other government employee. And yes, even people on welfare or whatever who make so little money they don't pay taxes, they get a chunk of it, but they are not the whole pie, so your statement is not accurate, or only half accurate."

Politicians, government employees and government dependents do not create wealth, they redistribute it and they consume it and they waste it. Wealth is created by those who provide products and services for profit. Part of that wealth is taken in taxes. Then the fun starts.

untypical liberal
Point out a lie or distortion I typed. I dare you.

"Let's see if I've got this straight, everyone who doesn't believe that govt is the answer to every problem, is a govt hater."

Nope, you're not straight Mark. People who make comments like you did are government haters. Its obvious from your comments.

"You've never made any statement that would lead me to believe that you are not a pro-govt weirdo."

Nice one. Thats a good point. I play devil's advocate an awful lot. How else are you going to learn WHY you think the things you do? Ideology is dope for dopes who buy it.

Spanish American War
Government agencies have NO incentive to be more efficient or reduce costs. If they do not spend ALL the money they have been allocated by SEP 30, they can't justify their current funding let alone ask for more funding.
Defense contractors are in the same situation only they usually have to spend the money by 31 DEC.
The issue of privatization is for the government to purchase the product or service and not micro-manage the operation or have cost plus contracts.
Oh, the Spanish American War tax on telephone service has been repealed I hear. That is government efficiency.

Wealth not equal to money.
Wealth is what is extracted from the ground: food, fiber or minerals.

Slavery
"Our government has yet to even apologise for slavery."

Emancipation Proclimation did a pretty good job. Affirmative action has done quite enough, too. When does personal responisbility take over? All blacks in the Carribean were once slaves yet they seem to do pretty well in the USA. Did they get an apology? Or how about the Liberians? They are doing great things there are they not?

"I find it troubling that the people who are incarcerated for drugs and guns have little if anything to do with the production and importation of these things. Like the saying goes, "there are no Uzis made in Harlem. Not one of us owns a poppy field." The conduct of our war on drugs has been questionable at best, complicit at worst. The burden of drugs in the ghetto is yours and mine. "

Who is forces people to buy Uzis or use drugs in Harlem or anywhere else? Where does individual responsibility for one's actions fit in?

"Crime and poverty could be severely reduced if not eradicated if the motivation were shifted from profits and oppression to compassion and humanism."

How are you going to motivate? The Pilgrims nearly starved because of communism.

Excellent description
This was an excellent description of why private organizations do a better, more effective job of helping the poor.

The problem with so much of the political discussion of economic issues today is the the two sides have a different approach to solve a common problem (how to help the poor); but only one side admits that both sides are trying to solve the problem.

Those on the left simply assume that those on the right don't care about the poor.

typical liberal
in addition to be criminally stupid, they don't read the posts they respond to.

I specifically pointed out that people like bob and roy would miss the sarcasm, and gues what, bob missed the sarcasm.

in bob's world
as long as the theif doesn't take everything, the theft can be justified.

Have you read any Marx?
"And for all those who think the private sector can do the same job cheaper than government, I have to ask if they consider profits in that analysis. Private enterprise is generally more efficient than government. But is a private company THAT MUCH more efficient that they can still be cheaper after tacking on their profits? I highly doubt it."

Your question begs the followup: have you read Marx?

Because that is exactly the line of reasoning that Marx followed. Socialism would *have* to be more efficient than capitalism because even if for-profit institutions tend to be more efficient, they eat up all the profits; socialism would have to be *so* inefficient as to waste *all* the profits. Obviously that wasn't going to be the case.

What you (and Marx) missed out is that it isn't only the static inefficiencies of a poorly run government program; you also have distorted incentives (accept welfare instead of working, work less to stay below a certain tax bracket, in socialist countries don't do the work as you'll be paid either way, use high cost materials to increase product worth and hence wages, etc etc etc); along with distorted incentives you have supply and demand distortions (government supplies something and reduces the chances for profit in the industry, reducing the entrants, raising the price - then government then must raise the taxes to pay for it, etc) and other market disruptions which distort price and in the extreme (in a completely socialist state) make calculation impossible as prices do not reflect supply and demand at all; which then makes production impossible as the elimination of the market made calculation on a national scale necessary as planning was required to replace the market.

Anyway, my basic point is this: yes, use of government is *so* inefficient that even after counting profits, we are better off with private enterprise for any given task (except those that law and order require government to do, such as perhaps military, courts, congress, etc)

In fact, profits have a very important function to play. This is seen with an analysis of why socialism doesn't work (including incentive structure, as above).

Profits induce entrants into a market. Entrants create competition. Competition induces innovation, reduction of costs and lowering of prices in order to compete. Lowering of prices in turn reduces profits until there are no new entrants.

So, profits aren't a waste or something that implies inefficiency or waste, they are an important component of the free market. And yes, the free market is far more efficient than government run institutions.

creating wealth
is what govt does when it transfers other people's money to bob.

LOL
I have to get moving, but I had to respond to this one. Beautiful.

No wonder I'm not wealthy, I'm not getting enough from the government!


I pay taxes biotch. I'm the middle class that Bush/Cheney Co. are trying to destroy with their tax schemes. Their redistribution schemes.

in bob's world
taking money from one person to give it to another is not redistribution.

But allowing a person to keep money that he earned is.

Glad you give
The fact remains that government didn't start getting into education because the education systems without it was working well. Nor into roads because private roads were working so well. Everyone in Hondurus isn't poor: some are extremely rich. I suggest you visit there & see how well that works out.

Heads I win, tails you lose argument
You've set up a situation by definition where anything good that happens has nothing to do with government.

>Government policies can only create an environment in which individuals, through their initiative, create.

Um, sure. Having government educate people, provide health care, fair and equitably enforced regulations, infrastructure and lots more does create an environment where people can create. All power to the creative people, but in lots of places government doesn't do this. Maybe you think in those places people aren't creative.

Local Government
"Anyway, my basic point is this: yes, use of government is *so* inefficient that even after counting profits, we are better off with private enterprise for any given task (except those that law and order require government to do, such as perhaps military, courts, congress, etc)"

Our Constitution was written with the idea that most government should be local.
A story about LA receiving our federal tax money to improve communications inspired this question: How many local law enforcement agencies operate in LA area? I could make an arguement that federal money should not be needed for them to improve communications, but why is there no central police force in LA county or why not a CA state police or a national police force for the entire country?

Wealth definition
>Wealth is what is extracted from the ground: food, fiber or minerals.

So I guess Microsoft is something imaginary, because it has never extracted food, fiber or anything else from the ground.

Whereas government contractors on cost-plus contracts
They charge what they say it costs them to do something, then add a percentage. Where's their incentive to reduce costs? The higher the costs, the greater their profit.

Every government expansion is a private sector failure
People didn't vote to have government get into areas like education, pollution control, highways, etc. because the private sector was succeeding so brilliantly.

All of these laws and program resulted from failures of markets to provide. Look up the history in each case. The debates took place, the people decided. Live with it.

Misguided utilitarian is what you are...
"I describe myself as a pragmatic libertarian. If I had to give up a little bit of freedom in order to see a meaningful reduction in poverty, I would do so."

Call it pragamatic if you will, but the truth is it is simply utilitarian nonsense--the notion that if at least someone whose marginal utility for the "essentials" is made better off and those hurt have a lower marginal utility for such, then hurting some of us is for the "greater good". Pure crap Kling.

The only practical means to to a reduction of poverty is an increase in liberty and a restoration of full property rights.

So everything is perfect as it is?
Your line of reasoning assumes that because we have a democracy, everything must be exactly perfect all the time because people voted for it.

Nobody could possibly have made a mistake.

It was "market failure" in healthcare that created medicare and created the NHS in England and the system in Canada; market failure in Canada prompted the regulations there on pharmaceuticals resulting in their production of less than 1% of the worlds new medicines, under 10% per capita of what the US creates.

It was market failure in Sweden that prompted their democratically elected choice to socialize healthcare, childcare, housing, to unionize 80% of industry, to redistribute so much income that wages are essentially flat and their top quintile earns the same as our middle quintile. Yes, that means that 40% of people in the US earn more than essentially anybody in Sweden earns.

But voters are omnipotent. They never make mistakes.

So I guess all those people who voted to create public education were deluded
For some reason, they didn't think that the existing system was working. If you look up illiteracy rates during this period, you'll see the reason they thought so.

Regarding government funded research: I admire Edison a lot. That said, almost all significant discoveries since WWII have involved government funding. You may have heard of this thing called the Internet. By all means file suit if you think government overreached by funding its development.

Markets go up and down
I think it must be that people have to be optimistic to live in a free market economy. People in the US get criticized for being optimistic and confident, but it works for us because we know that what goes up also comes down (except the value of the currency constantly goes down.)

Many on the Left in the US look to Sweden as a great role model. As a young person I thought it sounded great as well, but later came to appreciate the highs and lows of the US culture.

Our real problem-- employees
You're on a roll, bob. And right on the bean. Employers have known for some time that employees just exist to siphon off money that would otherwise be profit. That's why they've gotten rid of some thirty million full time workers* since downsizing was invented, at the start of the eighties. These jobs have gone overseas, where peasants working in the maquiladoras know the value of a dollar.

*I'm indebted to Louis Uchitelle for that bit of trivia, from his book The Disposable American.

Anyhow, once we've gotten rid of government by putting it out of business, and we've managed to fire the remainder of our workers we can just keep all the money for ourselves. Cool plan, huh?

Nice comment Marjon
Government creates the best environment for prosperity by establishing stable laws and regulations that are not subject to the passing whims and caprices of the mob. Government does not create basic infrastructure as effectively as private enterprise nor allocate resources as effectively. It is a bust at research and development as half a dozen reserahc projects funded in Europe demonstrate (and helped push Europe into the world's second rank). And industry creates solid jobs rtaher than government.

You presented an excellent analysis.

30 million jobs went overseas?
So that's what happened to all those substance farmers.

Surprise Bob, the MoveOn Devil's Advocate
Post a comment that shows support of the US, capitalism, government limits. family values. We all believe you're just being a Devil's advocate for MoveOn talking points-24/7.

Yeah, we're all so surprised.

Yup
In fact it's true. Globalisation has been a great boon to peasants from Mexico to China to India to half the countries on the globe. Next time you go to a clothing store, look at the labels in the back of the shirt collars. Honduras, the UAE, Yemen, even Mongolia.

And it has even been the case that most of those thirty million found new jobs. But what they lost was the lifetime positions that were the norm under the old rules. And the stability and benefits that came from that. So you can't say we as a nation have gained by moving into the new free for all world, where everyone's just a temp.

Welcome to Bob's world
One wonders where major corporations are run by the poor? One wonders what the difference is between contractors who get ricj in war or in peace? Does a privately hired teacher make more than a public one? In Bob's world the poor run the government?

I loved his complaint about private markets, that fraud and corruption exist. Grow up Bob they have been with always but not so much as in other forms of economy and thats what sticks in your large gullet doesn't it? That everyone knows it and that our form of economy is so much superior to the Marxist state you so adore.

We don't get you wrong Bob. Just because you look like, talk like, smell like, and walk like a Marxist weirdo no one here would mistake you for one. You forgot to put on you Che T-shirt, ah that's betterow you look the part.

Oh, we get it all right
Your sarcasm is hard to miss, Mark. You should find these public displays of bile embarrassing.

A bust at research and develpment??
You really out to check out this new thing called the Internet.

> is a bust at research and development as half a dozen reserahc projects funded in Europe demonstrate (and helped push Europe into the world's second rank)

Why in the world wouldn't Europe, with more people than the U.S. and a long tradition of government supported research be in the second rank, behind the U.S. The problem is, if anti-government loons keep screaming about government bad, the U.S will be in the fourth rank, behind Europe, China, India and maybe even the Russians.

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