#Taxation is Theft

No, Ancaps Are Not the Problem

In a recent article on beinglibertarian.com, it was asserted the anarcho-capitalist (ancap) version of libertarianism is a threat to the liberty movement because of its radical purism.  This purism drives more moderate individuals away from the Libertarian Party, and either the anarchists need to get on board with a more pragmatic political agenda, or the Libertarian Party needs to excommunicate these radicals.

All of the anarchists problems stem from their goal for the abolishing of taxation.   The author correctly realizes, if taxation were abolished, the United States would default on its debt causing a horrible economic depression, destruction of the dollar as a unit of currency, and not only would the U.S. default on its debt, but all public spending would come to a halt too.  This would cause unimaginable chaos because all government schools, welfare payments, courts, etc. would cease to operate.

The author does recognize the ancap’s belief that all public goods could be provided on the free market with private competition of courts, police, and schools with welfare being taken over by private charity.  However he believes this is a real world impossibility because without the government their can be no laws, and nobody would respect anybody’s natural rights.  The author states,” [E]ven if you had judges, you would have no laws for them to enforce, for in the absence of government there is no codification of natural rights”.  After this the article ends with a section declaring this to just be the surface problems of anarcho-capitalism.

That was a short summary of the article.  There are many fallacies in the article.  I believe the author does not have a full understanding of anarcho-capitalist theory, but there is something I would like to say myself.

Firstly, I would say that anarcho-capitalism was a terrible name for our movement because it has done much more harm than good.  As soon as someone hears the word anarchy their desire to listen is instantly shut off, and the anarchist is branded a lunatic.  I have written on this topic elsewhere.

Secondly, I do not think it is necessarily the ancap’s message which turns people away, but how the anarchist goes about delivering that message.  As soon as an anarchist says, “The State needs to be abolished,” most people stop listening.  The anarchist needs to put more of a nuance on his message in order to show people that anarcho-capitalism has a deep intellectual tradition rooted in Western Culture.

With that being said, I would like to turn back to critiquing  the article, but I would like to go backwards by first describing the production of law in an ancap society, and then handling the economics question.

Yes, there would be law in an anarcho-capitalist society.  The laws are not derived from any government; they are derived from man’s inherent nature.  These natural laws existed before governments, and they exist even when governments deny these immutable laws.

In the Rothbardian tradition the laws are deduced through a rational system of natural law.  These laws are discovered by man’s reason as he introspects about himself because man, as a specific creature born in a universe of fixed laws, has a certain fixed nature.  For the anarchist the basic realizations about man’s nature are that man has a free will and can determine for himself what he will do with his body, because man must satisfy his needs through labor and natural resources, man has the right to own any natural resource with which he mixes his labor if he is the first user of those natural resources, and he has the right to own any products he makes through the process of production.  Finally, man has the right to freely exchange any of his products for the products of others.  Any aggression or direct threat of aggression against a person or their property is a violation of man’s natural law.

It is from this basic framework that all ancap law is derived.  The next question of course is how would these laws be enforced in an anarchist society.  The author does acknowledge the ancap position that a court system can be provided on a private market, but he thinks this is unrealistic because 1) there is no law to be enforced, and 2) he does not see how the courts would gain legitimacy.

The answer to point one was answered above.  In the ancap society the courts pledge to uphold natural law.  The second question seems more tricky, but upon further inspection it is not.  Why do government courts have legitimacy?  It is because public opinion gives them legitimacy.  If government courts have legitimacy in a statist world why would private courts not have legitimacy in a completely privatized world?  In the ancap society any court or judge who followed a process that is deemed by the customers of the court system to be appropriate, and has a reputation of knowledgeably of the law and fairness,  would be considered legitimate by society.  This is best seen today with private arbitrators.

The anarchist society is not a pacifist society; there is still coercion, but coercion is only against those who have violated natural law and never against the innocent.  The coercion that is used in a society is legitimized because public opinion legitimizes it whether it is a system of public or private courts.

The anarchist is not against rules, but they are against the State; anarcho-capitalist are most against the State’s monopoly privileges of the courts.  Instead anarchists want to eliminate this monopolistic privilege and open up the courts to competition in upholding natural law.  Just like with any other product, abolishing this monopoly will lower the price and increase the quality of justice.

With a basic legal framework in mind we can now tackle the economic problems.  In the article, it is claimed that an ancap society would never reach the levels of prosperity that current American society has reached.  I believe the author says this because he assumes protection of private property would be impossible.  But we have seen above that there would be law, and private courts and police forces would be legitimized because of public opinion.  With private property rights protected there is no reason to believe that an ancap society would not be able to reach the current level of prosperity and even to exceed it.

Another concern is that all public spending would cease including roads, schools, welfare, etc. But there is no reason to expect these functions not to be preformed by entrepreneurs.  The roads and schools in a community do not simply disappear without a government, so why could these public goods not be privatized and run more efficiently?

Finally, the author mentions the U.S. debt problem by stating it would be impossible for the United States to pay off their 20 trillion dollar debt if there were no taxation.  This default on the debt would cause a terrible economic depression and the destruction of the dollar as a currency.

I do agree the repudiation of the debt would bring economic hardship because the massive U.S. debt bubble would pop, but this is an event that many economist already agree will happen.  In any case the politicians will not do anything about the debt until it finally come crashing down.  Either way the solution to the debt problem is not more debt.

Furthermore, the popping of the debt bubble is necessary since it will liquidate previous malinvestments due to earlier central bank policies, and this will allow for a more efficient allocation of resources and higher standards of living.  The adjustment phase (depression) would be relatively short in the absence of government since prices would be allowed to fluctuate freely and resources would go to their highest demand just as during the depression of 1920-21.

And what of the dollar, where does this come into play?  While it may be true the dollar could be destroyed in the ancap society, this should be celebrated not feared.  No anarchist wants to see the dollar continue to be used as a unit of currency because it is a fiat currency manipulated by the Federal Reserve.  In fact, in the anarchist society, once legal tender laws are repealed, the dollar would probably lose its standing as a major currency anyway.  The massive inflation this author predicts would only accelerate this trend as the population moved toward a more stable currencies like precious metals or cyrptocurrencies.

Adopting a stable currency has positive economic side effects.  It eliminates national currencies manipulated by central banks allowing for a universal commodity money to expand across the globe making economic calculation more efficient, and hard monies under a system of free money are more difficult to inflate eliminating the cycle of boom and bust we see in our modern economies.

At the end of the article it is claimed anarcho-capitalism is utopian just like Marxist Socialism.  Anarcho-capitalism though is actually the complete opposite of utopian.  No ancap has ever claimed that crime would vanish under an ancap social system.  What makes the Marxist a utopian is his belief that in order for the socialist paradise to be achieved the nature of man has to change which is impossible.  Ancaps do not make this argument.  The ancap society is the only society which takes man’s nature and builds a legal code on this nature and a series of institutions to uphold that legal code.

In fact, libertarians that want limited government are the utopians.  Most politicians attempt to limit governments with constitutions, but how can a constitution limit government when the government is given sole power to interpret its powers?  Also the State is in control of its own limitations through the court system.  This system of constitutions generally inhibits the minority in power from exercising the checks on government.

Finally, I will say a few words about the purism of anarcho-capitalism.  Purism is what the ancap community needs because it is a purist ideal which keeps the ideology on a straight and consistent path.  Yes, it is good to be pragmatic in the sense of delivering our message to the masses in a calm and rational way that , and by being pragmatic by working with other groups to push the idea of secession to create an independent ancap society.

Yet this is not the pragmatism pushed for in the article.  The author wants a more Beltway Libertarianism of working within the federal government to get minor tax cuts and other little reprieves from the State.  That would be nice if it would actually work.  This “Fabian” strategy only works for increasing the State not repealing it.  The author claims the ancap takeover of libertarianism was relatively recent.  If that were so why did Libertarian pragmatism not make any progresses before the ancaps took over?

To conclude, there is one point where the author and I agree.  We both see the need for a seperation between mainstream libertarianism and anarcho-capitalism.  Whereas he sees the libertarian movement being taken over by the ancaps; most ancaps believe that the libertarian movement is being taken over by leftist statist.  A split between the two factions would allow for our movement to not be fettered to the growing statist dominance of the Beltway Libertarians.



Taxation is not Compassionate

The public’s view on taxation over the last several centuries has changed very radically.  Once upon a time, people viewed taxation as an invasion of private property and as an aggression against the individual.  This can still be seen today with the slogan Taxation is Theft used by many libertarian groups, but this is a view held by a small proportion of the population.  It is much more common these days for people to say that paying taxes are an act of compassion by contributing one’s fair share to society, and that many in society, especially the rich, need to pay more in taxes.  Anyone who protests is simply heartless and evil.

To show how radical the shift of popular opinion has been, people once revolted when governments tried to enact higher taxes, but now a great portion of the public actively cheers for more taxation, as we saw with the Occupy Wall Street crowd.  How did this come about?

First of all, we have to keep in mind that those who want higher taxes , most of them do not actually expect to pay the higher taxes.  They want higher taxes, but they only want higher tax rates for those who make more money than them.  Once the tax money is confiscated, the high tax crowd expects the funds to be redistributed to them and their friends.  This is how those on the Left plan to fund their myriad of programs such as single payer healthcare and government funded education.

This policy of taxing the rich has a broad appeal for many reasons.  There is of course the human emotion of envy, which Ludwig von Mises covered in depth in his The Anti Capitalistic Mentality.  Of course many people believe they should have a better life, and they believe that taxation and redistribution is a good consequence free way to have a more prosperous life.

Then there are those who advocate high taxation on philosophical and economic grounds.  The two largest groups in this category are the Marxists and the Keynesians.  The Marxists believe that the rich have systematically oppressed the poor and therefore their wealth should be seized and redistributed to its rightful owners which is the poor, and the Keynesians believe that taxation helps to regulate the “excesses” of capitalism and can mitigate business cycles.

There is however one group of people, who may or may not be associated with the Marxists, who believe that taxation is a form of philanthropy.  This group wants to use government welfare to either supplement or replace private charity.  We may call them the misguided philanthropists.  It is possible that their philanthropic sentiments is simply a cover for their envy to have another’s material goods, but we will take their claim at face value, and in this post demonstrate that taxation is anything but compassionate, and that private charity is more efficient than government welfare.

The main reason why taxes cannot be considered compassionate is because taxes are not voluntary payments.  Despite the beliefs of many, taxes are not freely given; they are taken by force.  What happens if one decides not to pay their taxes?  Their assets will be seized, their bank accounts frozen, a ban is placed on their passport so they may not leave, and the person may even end up in jail.  What person would support a charity which says, “Give us your money, or we will take it from you by seizing your assets!”?  This is in effect what government does to the extent government can actually be considered a charity.

If we were to continue on with our private charity example, when the person being molested into giving money says “No, I will not give you my money.  If I choose to support your charity it will be by voluntary means”, would it be appropriate for a hoard of voices to scream, “How can you be so heartless?  We believe this charity may now take funds from you by force due to your lack of compassion for the plight of the poor, and we will shame you until you repent and join us.”  This is the typical response of those who believe taxation is compassion, but if no charity may coerce funds from the public then why may the government coerce funds for supposedly charitable ends?

There are those who say the motto Taxation is Theft trivializes actual theft.  This is not true because taxation really is theft violating individuals, and it is actually worse than petty theft because while theft by private persons is sporadic and condemned by almost everybody, taxation is systematic, constant, and has a plethora of defenders being accepted as valid almost universally.  As stated above taxation is theft precisely because the individual has the choice to either pay the tax or be severely punished.  What is the difference between that and being held up at gunpoint by a mugger?  Sure the government provides me with roads and education, both of which can be provided for much more efficiently and justly on the free market, but would we really be content if, say, the mugger bought me a hamburger with the money he took from me and pocketed the rest?

Taxation actually retards the natural process by which the market allows people to express their compassion for those less fortunate.  True compassion is shown by one giving to those less fortunate through their own free will.  In order for someone to give to others they must have their own needs satisfied.  The market allows for the greatest satiation of needs by being the most efficient production structure and producing the greatest number of goods.  This allows for more of the product to be given as a gift to charities which can then help the poor.  Taxation has a negative effect on the economy, and hinders people’s ability to give either goods in kind or money.  This means less poor people can be helped, and those who are helped are helped in a less efficient way.

Government itself is not compassionate.  Not only is the means it uses to fund itself theft and hurts people’s ability to help the poor on their own, but government is much less efficient than private charity in two ways.  First, much of what the government collects for social welfare goes to the government in overhead costs.  This number is close to 70% is eaten up by government bureaucracy.  This is contrasted to only 25% by private charities.

Secondly, government gives a certain crowding out effect to local charity by taking over many of the duties that local communities used to preform.  Since the federal government took over these duties it gives many people the idea that there is nothing more to do.  “The government takes care of it why should I?”, the common man asks himself.  Also when there is a charity collecting money for the unemployed many ask, “Don’t I pay taxes to help the man looking for work?”.

Finally, private charity has a more personal touch that government cannot.  A local charity is going to understand the needs of the community and can tailor its approach to the problem.  Government on the other hand, being far removed from the community and not knowing its local problems or history, must institute a one size fits all policy.  The incentives for private charities and government welfare is also quite perverse.  Governments have the incentive to keep people on the dole since handouts from the government equal votes.  The more goodies you promise people the more votes and loyalty the government accrues, and since the government is funded through taxation there is no hurry to get people off the dole since there is no immediate need to worry about funds; they will simply be taken from productive population.  Private charities on the other hand have to show results by getting people on their feet.  What person would support a charity which does not actually show progress to some stated goal?

Private charities also make the important, although currently unpopular, distinction between the deserving and undeserving poor.  Most people will agree there is a difference between the man who is down on his luck but is trying to get on his feet, and the man who just wants to live parasitically off his neighbors.  Charities have an interest in supporting the former because these people, the deserving poor, because they are trying to better themselves, and they are trying to become productive members of society rather than living off others like the undeserving poor.  Government, in practice at least, tends not to make a distinction, and it is not in the government’s best interest to make a distinction because of the above mentioned points e.g. voting.

In conclusion, taxation is theft not compassion.  It is theft because payments to the government are extracted by force, under no stretch of the imagination can they be called voluntary contributions.  Since taxation is not compassionate, the institution funded by taxation i.e. government cannot be compassionate.  We have seen this in the fact that governments crowd out and replace local personalized charities who serve the poor more efficiently.  Government replaces these local charities with one size fits all solutions and the stone cold touch of bureaucracy with all the inefficiencies that entails.  There is nothing stopping the misguided philanthropist from paying more taxes to Uncle Sam, and better yet there is nothing stopping them from forming their own charities to help the poor in their communities.  It is the propertarian notion of voluntary private charity, with its emphases on just property rights and by uplifting the poor instead of giving them handouts, which is truly compassionate.