Sunday, August 21, 2011

Designing A Moral Government, Part 4 - Taxation

Taxation is important. The American Revolution was fought over tax issues; in particular, that they were being taxed without having representation in Parliament.  I agree with the sentiment, both that taxes are necessary, and that it is immoral to tax someone if he has no say in whether a particular tax should exist or whether a service that a tax pays for should exist. So let's talk about taxes. What is are the characteristics of a moral tax code?

The Morality of Taxation
Let's ask first whether it is moral to tax. Anthony, over at the Dream Lounge, has on many occasions written that an income tax is a violation of man's right to life; that by virtue of government forcing one to pay taxes by threat of violence, government is subjecting man to coercive force. It's an interesting premise, because on the surface it seems pretty logical. Choice is the means by which we preserve our life, so restrictions on choice are bad since we take life as our standard of value; a premise that I have put forth in this post. In the case of taxation, forcing someone to pay tax by threat to life is an example of a restriction on choice. Makes sense, no?

Here's the problem with that logic: one exercised his right to choose when he chose to live in a particular country. His living in that country is a tacit acceptance of a contract with his government. Violating that contract is a threat of force against that government; in the case of taxation, not paying taxes is stealing. One had passively agreed to the terms of the law by residing in the country, and then he consciously disobeyed the law. To be more specific, the contract he violated states that he gets protected by his government's army and police force, gets to drive on public roads, an option for free schooling, etc; but in return he must adhere to these rules, one of which includes paying taxes. Not holding up his end of the contract is a form of stealing his government's services. The only time that force can be used is as a defense against the initiation of force by another party. Stealing is an initiation of force, so his government is free to respond with force in the form of bringing him to jail at gunpoint.

Creating A Moral Tax
Hopefully the above point is clear and agreeable. If not, feel free to comment, but for the purpose of the rest of this post, we are going to accept that taxation is moral. Of course, whether taxation is moral is a different question from whether taxation on income is moral. We'll get there. But let's first talk a little about the process of creating a moral tax.

Taxation Axiom #1: First you justify the expense, then you come up with the money. If there were no market failures, there would be no need for government. Since there are market failures created as a result of life being of infinite value, government needs to be as big as is required to smooth out these failures. Government seeks to maximize GDP, which means keeping as much money in the pockets of individuals as possible while maintaining efficient markets. This means that government cannot tax first and figure out how to spend money later. It must identify the market failure, come up with a solution, and only then should it figure out how to pay for the agreed upon solution.

Taxation Axiom #2: The most effective tax is one that varies as a positive function of the market inefficiency. For example, you tax alcohol in a way that causes the revenues from alcohol use to pay for mitigation of the externalities (like accidents as a result of drunk driving) associated with alcohol use. The idea being that if some independent factor causes an increased incidence of the behavior (drinking), then the revenues should increase with that increase in behavior such that they cover the cost of regulation incurred by government.

Taxation Axiom #3: Tax policy during times of fiscal deficit require different policy from times of budgeting balance. In times of budget balance/surplus, the singular purpose of government is to maximize long term GDP. There are times when taking on debt is necessary to this end, and in such times, there may be occasions when the long term maximization of GDP requires a short term decrease. These are the times of budget deficit.

Applied Taxation Theory
Taxation is simple enough when the budget is in balance or surplus. You tax in order to cover the expenses of government, and leave the rest of the money in the market. If this were actually followed, there would never be a situation during which we would find a deficit that continuously grows every year with no specific long term GDP purpose.

As it stands in the United States, though, we have dug ourselves quite a hole. We spent and still spend money that we do not have, and don't really have a plan to fix it any time soon. I've heard various figures quoted with regards to how big the national debt will get before we again balance the budget at our current spending levels, but they are all upwards of four times the current national debt.

The question of spending is not particularly relevant to this post, but suffice it to say that there are some easy ways to stop spending so freaking much, like ending our wars, legalizing drugs and prostitution, getting rid of all agricultural and energy subsidies across the board. The question of revenue is relevant though. One party in particular has taken the idea that taxes should never be raised to the point of it being a religious idea. The reason for the confusion is simple; there is no understanding of the "why" in the conversation. Since government is supposed to be long term GDP maximizing, there are times when it may be advantageous for a government to be temporarily profit maximizing. This then becomes a rational discussion, specifically "what does the Laffer Curve look like" and where do we currently lie on it? That, my friends, is a debate for economists to discuss, not politicians.

Sunday, August 14, 2011

Designing A Moral Government, Part 3 - Local vs. Central

When the United States was founded, the word "state" had a very different meaning. Unlike today, where a state is closer to a subsection of a country than a country in and of itself, back then, an independent entity is exactly what it was. So the United States of America was actually more like what the Euro Zone is today than its own modern incarnation.

At the time, there was a massive debate between Alexander Hamilton and Thomas Jefferson about the topic of localization versus centralization of government. Hamilton favored centralization, while Jefferson, who was from Virginia, feared northerners controlling him since the lifestyles were so very different, and as such favored localization. The compromise that they came to was nothing short of genius, in my opinion. That said, it was designed for a specific world as a result of specific circumstances, and our world is very clearly orders of magnitude different from the world for which it was designed.

Let's take a step back for a second and talk about the advantages of each. Since the role of government; as a monopoly on force; is to maximize market efficiency, centralization makes sense in many ways. There are economies of scale associated with more centralized governments, so market inefficiencies that are universal across the country will be better served in general to be regulated at the federal level. It is efficient to have a universal currency, a drivers license that works in every state, large social safety net initiatives being managed at a federal level, etc. That said, there are issues with centralization, which is where localization has its role. Large governing bodies can take a while to get things done. There is bureaucracy to deal with, a lack of focus, and at times an inability to understand how local culture effects a particular situation.

These pros and cons will always be around, but as the world changes, so too does the weight of each. In 1776 when the Declaration of Independence was signed, getting from Boston to Richmond was not an eight hour drive or a one hour plane ride. We couldn't call someone on a cell phone and have a real time conversation, or video chat in real time over Skype. Clearly in such a world, localization is of the utmost importance in most aspects of life. The primary reason for the uniting of the states was the economies of scale associated with a federal army, but in few other things would it be advantageous. However, since this question is so dependent on transportation and communication, as these improve, government needs to change, with the trend moving toward more centralization to continue to take advantage of economies of scale.

Just 100 years after the signing of the Declaration, the world was much different. Telegraph communication could get a message across the country at the speed of electricity, the invention of the steam engine allowed for trains and ships that could carry massive loads across great distances quickly. With the effective size of the world dramatically diminished, is it any wonder that we would want to correct for this change with the biggest expansion of federal powers ever, the 14th amendment?

This question of federal versus states rights comes up all the time in modern day politics, and certainly much more than it should. The intent of the debate was the one discussed earlier, but a strict reading of the text as opposed to the intent of the text results in trying to frame modern issues with an 18th century mindset, which is akin to ignoring 200 years of technological development;. to ignore that I can access just about any information I could ever ask for from a 5oz device in my pocket; to ignore that I can buy a plane ticket in New York from a laptop in my bed at noon and be partying in Miami by six. Imagine a world in which we have an elaborate transportation system built on teleportation technology, where one could get from New York to Dubai in less than half a second. In that world, how does the question of localization versus centralization of government change? How does the definition of a "country" change?

Politicians (or at least their campaign managers) are not stupid. Disingenuous, yes. Stupid, no. When a political figure attempts to make an argument for a particular law or right to be relegated to the state, the vast majority of the time this is his way of finding a loophole in the law, rather than standing up for what he actually believes in and outright saying that this right should be allowed. Politicians are too afraid of the "do-gooders" who take altruism and self sacrifice as their standard of value to ever say this outright. Of course, if the question is actually about states rights, then the debate is very different. It's numbers, it's intellectual. How effective is regulating X at the state level versus at the federal level, based on the evidence? How cost-efficient is regulating X at the state level versus at the federal level, based on the evidence? Agreement on the facts results in agreement on the policy.

And that's the point. That is why we desperately need a rational basis amendment in this country. Our country was founded on a morality of indivualism; on a morality based on the inalienable rights of "life, liberty and the pursuit of happiness" (might remind you of something). That's why this blog exists. So the adults can talk. This blog exists to reframe the debate in terms of reason. Disagree with me if you choose, but disagree with me on the facts in the context of an intellectual debate. The constitution is a living document, the legal code is a living document. It is outlets like this where we can discuss what the laws should be, not what they are or how difficult it would be to modify them.

Sunday, August 7, 2011

A Real Life Ellsworth Toohey

A friend of mine from work sent me this article that was reposted on Deadspin though originally ran in The Nation magazine. At first glance, I actually thought I agreed with where the article was going. Dividing the world into "jocks" and "pukes" reminded me a lot of the distinction between "producers" and "looters" made in Atlas Shrugged. A couple paragraphs in things started to feel a little off, but it wasn't until paragraph six; in which the author says in an aside, "Obviously, I am for de-emphasizing early competition and redistributing athletic resources so that everyone, throughout their lives, has access to sports. But then, I am also for world peace;" that I officially wanted to choke Robert Lipsyte, the article's author.

His basic premise is that growing up playing sports makes you competitive, ambitious, greedy, amoral, and submissive to authority (with illusions toward this being a Republican ideal), and that in our enlightened post-feminist world, we can finally start to question some of these foundations in order to move past them. Also that we should, of course, because greed is bad, bullying is bad, and competition is obviously bad. Now to be sure, I am not trying to defend "jock culture;" I think there are some major problems with it that need to be addressed; however, this article cannot stand unanswered, because it is the most vile, immoral, senseless piece of propaganda I have read since Elsworth Toohey's speech in The Fountainhead (text version here) on how to rule the world, and the fact that it is trying to pass itself off as taking the moral high ground is at the root of everything that is wrong with America, and to a larger extent, the world.

First, I want to address this idea that a "willingness to subordinate [oneself] to authority" is a necessary part of athletics or achievement, or even jock culture for that matter. I can see where Lipsyte got this idea from, but it is a total perversion of reality. Among athletes, as is the case with all producers, respect is earned. An athlete may take on the role of a student, seeking knowledge, trying things that on his own he would not have done; but he chooses to do so because he trusts the authority figure telling him to do it. He has made this evaluation of trustworthiness based on the judgment of his own mind, not based on a blind sense of supplication.

Do great players actually submit to authority? I mean, Derek Jeter is known as one of the classiest individuals in sports, and for good reason. I do not recall a single incident between Jeter and a Yankees manager during his 15 year career (though that's not to say that they didn't happen). It's quite a stretch to call this "blind loyalty" or supplication, though. Jeter has had two managers over the course of his career. The first was Joe Torre, who led Jeter and company to win four championships in five years. If that is not an example of someone who has earned the respect of even the biggest stars, I don't know what is. His second manager, of course, was Joe Girardi, who played on three of the four championship teams, and managed the Yanks to one world series as well. This is another guy who commands respect from everyone, even the Derek Jeters and Alex Rodriguez's of the world.

Let's talk about Michael Jordan. We all know and love Jordan. I remember being a Knicks fan during Jordan's second run of three championships; if he was on the team, that team was unstoppable, period. He left the league to go try to play professional baseball, and without him, the team went no where. Then when he came back in the league, which was when I was a fan, reinserting him into the starting five was all that it took to put the Bulls back on top. When Jordan was inducted to the hall of fame, he gave this speech, and it was people like Lipsyte who criticized it.

Jordan is the ultimate competitor. He achieved what every athlete wishes he could, and that is why he is who he is. The perfect combination of natural ability and commitment. Few people in the history of the world have done any single thing as well as Jordan played basketball. This realization of the ideal basketball player, as personified in Michael Jordan, was not as a result of submission to authority. When he was coming back from an ankle injury and was told he could only play 10 minutes, he walked into the owner's office and demanded that he get more time. He had a love of the game clause in his contract which stated that he could play anytime he wanted, even in the off season at the risk of injuring himself. So bringing it back full circle, are the "pukes" really the only ones that are capable of independent thought and questioning authority? Decidedly NO.
At a critical time when masculinity is being redefined, or at least re-examined seriously, this sports system has become more economically, culturally, and emotionally important than ever. More at service to the empire. More dangerous to the common good.
Great, here comes "the common good." Now we are really starting to delve into some Toohey speak. This is straight out of the playbook of the virtue of selfessness. We shouldn't build a stadium for a football team in Texas at the benefit of only the jocks. We should redistribute this money to the education of the children. Nevermind that it was the football program that raised that money in the first place, and the stadium will pay for itself many times over, bringing money back into the school. Granted, this is Lipsyte quoting someone else, but this is his point throughout the article, in particular in the aside that I mentioned earlier.
Jock culture is a distortion of sports. It can be physically and mentally unhealthy, driving people apart instead of together. It is fueled by greed and desperate competition. At its most grotesque, think killer dodgeball for prize money, the Super Bowl.
You have the cause and effect wrong there, bud. Competition and self interest are at the core of human nature. It is our biological imperative to stay alive, and we have evolved these characteristics because they provided us a survival advantage. We take life as our standard of value, and since we long ago realized that not finding an outlet for this competitive nature creates problems, we have created a competitive outlet for ourselves that adds value to the world. Try for a second to imagine how many people would be out of a job if we decided that the Super Bowl should no longer exist. I'll wait.

Lipsyte is suggesting that we get rid of not only the Super Bowl, but if I'm extrapolating correctly from the words "think killer dodgeball," it would seem the sport of football as well. He is asking athletes to sacrifice their happiness for his virtue of selflessness. He is asking hundreds of millions of fans to sacrifice their happiness for his virtue of selflessness. He is asking tens if not hundreds of thousands of people around the world to sacrifice their living for his virtue of selflessness. This is not moral. This is not GOOD. This stops here.

The false sense of virtue based on altruistic behavior and the "common good" is propagated by the weak in an attempt to control strong. "Pukes" like Lipsyte still resent the jocks who picked on them throughout their school years, and attempt to use guilt as a tool by which they can control others. They carry a chip on their shoulder throughout their lives, just like Jordan did about getting cut from his high school basketball team. But instead of using this chip as motivation to create value and self-actualize like Jordan did, the Lipsytes of the world use it to try to rule; to amass power and respect; to try to bring great people down to their level of mediocrity.

Tuesday, August 2, 2011

Designing A Moral Government, Part 2 - Social Safety Net

Under the first post in this series, we established how important it is that a moral government protect the life of its poorest and weakest citizens from a theoretical perspective, since the parents we are born to is the result of a figurative genetic lottery. In this post, I want to talk about the social safety net again and in more detail, but this time from a more practical perspective. The short version of this argument is that by not having any form of social safety net, you actually create more threats of force and right to life violations than by having one, at least up to a point.

As we know, government's primary role is efficiency of markets. One tool in our toolbox is to start by looking at the most extreme forms of government in order to establish where the appropriate middle ground is. So let's talk anarchy; does anarchy create efficient markets? Decidedly no. If one owns a store, he has to allocate a large proportion of his resources to hiring security to protect his store when there is no central government to protect against theft. In fact, in high crime areas where the police presence is insufficient to provide a deterrent or the quality of life is so low that people don't care, buying protection from the nearest mobster is not an uncommon practice. In this example, the mob actually serves as a de facto government, but clearly not a moral one, since the mob, by definition, is a criminal organization.

So the first thing that we need to understand about government is that it doesn't have to be moral. People are willing to submit to an immoral government long before they are willing to choose anarchy. That said, if a government is too oppressive, history shows that people are also willing to revolt. We grant a particular government the power to rule by force by passively choosing to abide by it's laws, and if your government's power gets out of reach, the options are to leave or fight back.

The Case for a Social Safety Net
The above discussion is related to the healthy person who doesn't want to die. However, it's important that we look at it from the opposite side as well. What about the person who is unhealthy and wants to be saved? His incentives are very different, but still need to be accommodated by a moral government.

Because we define life as our standard of value, most if not all of these market failures result from the value of life being infinitely large. When you look at it from this perspective, it is understandable that someone would be willing to spend every cent that he can get his hands on in order to pay for life saving medical treatment. That he would be willing to rob a bank in order to obtain healthcare, or take a hospital hostage in order to get his son a heart transplant, likewise makes perfect sense (that second one is fictional, but I can't imagine anyone watching that movie without feeling that John was justified in doing so). Stated more broadly, that someone would be willing to risk his life in order to save his life is not in any way surprising.

As we have already established, there are times when it is moral to take what would normally be immoral action. The two above examples illustrate this pretty clearly. But the question is, should it be punished? Rather than answering this question directly, allow me to answer this question with a question: would punishing this behavior prevent it? Obviously no, those people's lives are already in jeopardy, so they are willing to risk their lives in order to possibly save themselves. So punishing the behavior does not deter it, but is there another way to prevent it?

This is where the social safety net comes in. This is not the first time we have run into a problem where a threat to one's life is not a sufficient deterrent against immoral behavior. Similar things can be said about drugs, prostitution, alcohol during prohibition, etc. Sometimes restricting behavior with threat of force is just not the right way to solve the problem of the externality it places on society. Regulating and taxing seems to have solved the problems with prohibition. Similarly, a social safety net prevents the starving or the sick etc. from robbing people just to get by.

A moral social safety net is one that provides a bare minimum standard of living and absolutely no more. Any amount above the bare minimum to get by acts as a disincentive to become self sufficient. A moral social safety net provides a public option for all of the essentials. These absolutely include food and healthcare, and there are cases to be made for things like shelter, transportation and education as well. This bare minimum social safety net will obviously not prevent everyone from committing crimes, but it will prevent moral people from doing so.

As someone who values his life, a moral actor will choose to sustain himself in this bare minimum standard of living only as long as he has to, and will never infringe on another's right to life so long as he has this basic level of sustenance. Those who still commit crimes despite their life not being in danger, well, those are the immoral actors, and should be punished accordingly.