Libertarianism is one of the more popular utopian schemes to emerge in the last twenty years. My rather simple understanding of it boils down to one phrase: the free market cures all ills. Suggestions to the contrary tend to garner immediate and vehement (Hi, Denis!) reaction.
I have lots of reasons to have more faith in the government than I do in corporations. One is that government is meant to represent us all, while corporations don't have to answer to anyone but their stockholders. Another is that government -- at least those that pretend to follow democratic ideals -- can be changed with every election until the people find themselves with representation that satisfies them. With businesses, your only hope is either to find another corporation that doesn't follow the same business practices or go without.
I ran across a very useful site that pulls no punches in critiquing the libertarian mindset, and offers some very interesting responses to Libertarian evangelism. I'm posting it here so I can refer back to it again when the need arises.
As I'm sure it will.
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17 comments:
Fish: "Hi, Denis!"
Hi, Fish!
Fish: "With businesses, your only hope is either to find another corporation that doesn't follow the same business practices or go without."
Wrogn!
With business, your hope is (1) to find another corporation that does the things you're looking for, or (2) start your own company which does.
With government, no such luck. Don't like the way things are done in the U.S.? Hah, well, you can try to emigrate! It will cost you 30% of your net worth if it's over 500,000 (that's an actual emigration tax I'm talking about), plus you are still considered liable to pay taxes to the U.S. for the next 10 years of your life, plus they still reserve the right to draft you. And yes, that's after you've even renounced U.S. citizenship and given back your passport!
So that's how much the U.S. loves governmental competition! I'm sure there are some shoddy big businesses out there, but how many of them get away with that, heh? Mind you, especially without you having to sign an actual agreement that gives them these rights.
Sorry, Fish. But you're partly right - it's not like the free market cures all evils, or anything. For example, it doesn't make people less stupid.
Most of the points in the Anti-Libertarian FAQ address the philosophical arguments made in favor or against libertarianism. The author pretty much takes the stance that, well, things are what they are, the majority has decided for you, you can take it or you can leave it, and the coercion is justified because that's how it is. That's neither here nor there, as far as I'm concerned. The same arguments that this author makes could be made in favor of communism, or even in favor of fascism. But hey, what if fascism and communism weren't bad? What if forcing society's will on everyone had not turned out such a bad idea? What if fascism and communism actually did create a heaven on Earth, by using coercion to remake man, as they intended? We know it failed, and we know it's still failing where it's still tried. But if it was a success, would the coercion had been justified? Would we be worrying about whether the coercion was justified? Would people miss their freedoms more than they would value the prosperity supposedly brought on by the coercive system?
For me personally, I have a decidedly axiomatic instinct that says it is wrong to coerce other people, because I myself do not like it when I'm coerced. I personally see coercion as a considerable source of misery, in and of itself, and I think it is inhuman, even savage, for a society to practice coercion pervasively, even in the case that it would bring small benefits.
That being said, the author of the FAQ does commit some lies. As I mentioned previously, the federal government imposes substantial obstacles to exiting the United States. They are pretty hostile to people leaving, and that makes the U.S. "different" from the noble country of North Korea only in degree, not kind.
Finally, the author of the FAQ doesn't even try to take on what I think are the best arguments for free markets. They work. There's plenty of evidence for this, and I encourage you to read the books I enumerated in one of my previous comments to learn how they do.
I'd start with Basic Economics and this one. Happy reading.
BTW, the Anti-Libertarian FAQ also contains serious lies about the U.S. constitution. It starts out by saying that "the founders of the USA were a contentious lot", and then goes on to imply that, well, this must obviously mean that they signed a document with no coherent reason and with no concern about what its interpretation might be. But the reality is, which is evident both from the founding fathers' writings as well as from ratification proceedings conducted by the states, that lots of things in the constitution had very specific meanings, and that the people who voted to ratify the constitution in the states relied on those very specific meanings for their decision to ratify. In 33 Questions, Thomas E. Woods does a good job of showing both what the constitution originally meant, and how its interpretation became increasingly distorted over time.
Now, as the Non-Libertarian FAQ would have you believe, those changes in interpretation, especially as sanctioned by the Supreme Court, are a fact which needs to be accepted in addition to the constitution itself, and is just as valid. But this ignores the fact that the intention of the constitution was to limit the power of the federal government, and that the Supreme Court is part of this same federal government.
These distortions have now come so far that: "in 1990s the Supreme Court justice Antonin Scalia asked Bill Clinton's solicitor general if he could name a single activity on which the Congress might choose to legislate that in his view would go beyond its legitimate powers under the Constitution. He could not." (Woods)
It is my personal belief that when you have a constitution for originally limited government, and its meaning has been stretched so far over time as to allow the government to do pretty much anything under the Sun, then you might as well not have a constitution. You might as well throw it in the garbage and recognize the fed's power to decide everything for you, as they do now. But hey, that would be just my own personal preference.
I recommend reading Thomas Woods's book. The chapters are article-size, and seem well written and well researched.
Denis: With business, your hope is (1) to find another corporation that does the things you're looking for, or (2) start your own company which does.
Well, that's a relief. I can start my own business that offers fair banking/medicine/chemical/automotive/industrial/electronic services at affordable prices. Why didn't I think of that?
Denis: Don't like the way things are done in the U.S.? Hah, well, you can try to emigrate!
Wrong!
You can try to emigrate (it's a shame I don't have a net worth over $5, let alone $500,000) or you can become involved and try to change things. I'm betting on my chances to make a difference in government long before I can become a stockholder and make a difference in every corporation I discover is screwing me over.
Denis: The same arguments that this author makes could be made in favor of communism, or even in favor of fascism.
Ah, the old strawman of equating all government to communism or fascism. As Churchill pointed out, "Democracy is the worst form of government except all others that have been tried."
So what does a free market society offer that government doesn't? No government oversight. That's it. Your rights and privileges are in direct proportion to your ability to pay. Someone screws you over? Take 'em to court. Can't afford it? Well, I guess you're SOL. Have you contracted a debilitating disease that keeps you largely bedridden? Too bad; if you were wealthy enough to afford insurance, those benefits will run out long before the disease does. Don't have millions of dollars to pay for your continued care? There's always charity...if you can find one that likes you, since they're not obligated to take care of anyone.
A society with reduced government involvement may seem more free on paper, but only if you have the means to pay for it.
Denis: For me personally, I have a decidedly axiomatic instinct that says it is wrong to coerce other people, because I myself do not like it when I'm coerced. I personally see coercion as a considerable source of misery, in and of itself, and I think it is inhuman, even savage, for a society to practice coercion pervasively, even in the case that it would bring small benefits.
So what are you going to with someone who breaches a business contract? Maybe an act of God happened and they're physically capable of fulfilling their contract. Maybe they found it more profitable to breach it, or maybe they just don't feel like it. What are you going to do then? Your choices are to eat your losses, or try to enforce it. Enforcement implies coercion.
"But, a contract is something entered by two parties of their own free will! No one is coercing them into it!"
Unless, of course, that contract is for an essential service, like food, water, or shelter. Maybe I run a business that requires a piece of software that performs a specific task. Maybe there's only one company that can do it, and they have a habit of blackballing any developer that tries to horn in on their action. Maybe they've got enough money and legal resources to defend against accusations of anti-competitive behavior.
Or maybe I've entered into a contract with a company in good faith, but the company didn't. So suddenly I'm being bled dry by hidden fees and late payments. Suddenly, we're back to the original scenario: I can eat my losses or try to coerce them (if I have the resources to do it).
I suppose it's easy to take the moral high ground when you're dealing in utopian terms.
Denis: Finally, the author of the FAQ doesn't even try to take on what I think are the best arguments for free markets. They work.
Sure they work; they work for the people with the talent and resources to take advantage of them. For everyone else, not so much. There's no equalizing factor in a free market. People get screwed over, and if they're smart enough to realize it they've got to come up with the means to do something about it. Generally, this means that the people are screwed, since in this utopian society the government has no right to advocate on behalf of the people. So yes, free markets work fantastically for the people with the resources to make it work. For the majority, the free market leaves them cold, hungry and oppressed. You think the child labor laws were a result of free market correction? Think again.
Denis: BTW, the Anti-Libertarian FAQ also contains serious lies about the U.S. constitution. It starts out by saying that "the founders of the USA were a contentious lot", and then goes on to imply that, well, this must obviously mean that they signed a document with no coherent reason and with no concern about what its interpretation might be.
Um, no. As a student of political history and American political history in particular, the author is correct: the Founders were a contentious lot. That doesn't mean they produced a document with no coherent reason or thought for future interpretation. Nor does the author imply this, although I can see why you'd want to interpret it that way. What the Founders did was compromise, a skill in desperately short supply in the modern world. They omitted much they wanted to add, so the document wasn't as complete as they all would have liked. But they added provisions for the document to be modified in the form of amendments in case future generations found a way to agree to the things they themselves couldn't hammer out.
FAQ: The founders of the USA were a contentious lot, who hardly agreed on any one thing, let alone libertarian notions. It is well documented that the Constitution and Bill of Rights are compromises amongst them: few agreed wholeheartedly with any particular part. Thus, looking to the founders for "original intent" is silly: it will vary amongst them. Not to mention that "original intent" (or original understanding) is just as open to interpretation as the Constitution itself because while there is lots of explicit data, it is from many contradictory sources.
(Emphasis mine)
Denis: It is my personal belief that when you have a constitution for originally limited government, and its meaning has been stretched so far over time as to allow the government to do pretty much anything under the Sun, then you might as well not have a constitution.
That's your interpretation, and you're welcome to it. I'm afraid I don't agree with you. Perhaps the concept of government and its role in society has evolved, and perhaps the ability of government to participate in society has likewise evolved. Generally speaking, the people make demands of the government when it becomes clear to them that the free market isn't interested in filling that gap. Mostly, the people make demands of government when it becomes clear to them that the free market is abusing their power to take advantage of consumers, and require an advocate to deal with them. That's how government regulation began, and while that role may have become perverted as businesses adapted to the new rules that doesn't mean we can't change that role back.
It would be wonderful if I didn't perceive a need for someone to step in as a champion of the people against the abuses of the free market, but I do. It would be likewise wonderful if I could find an advocate other than the government to stand up for the people, but I don't. Nor do I have the means or the incentive to create such an entity. Therefore I will use the tools I have available to me, and that means getting the government involved. The free market has repeatedly failed to correct itself, and thus I will use any and all means to address that problem.
You see the free market as the cure to all ills. I see the free market as a means to an end, and that end is rarely a cure for anything. Without a watchdog to make sure the participants in the market behave themselves, I wouldn't trust them if they told me the sky was blue. That's how I see it, and everything I've read and learned since has spectacularly failed to convince me otherwise.
Fish: "Well, that's a relief. I can start my own business that offers fair banking/medicine/chemical/automotive/industrial/electronic services at affordable prices. Why didn't I think of that?"
Yes, you can! It is a relief, isn't it?
As to why you didn't think of it, I'm not sure. Perhaps it's because governments keep throwing barriers at people, discouraging them from forming their own businesses.
Whenever an industry is being run by current players inefficiently, i.e. below potential, there is room for someone new to come along and to revolutionize the industry. In fact, in a free economy, that regularly happens. And when it does, the people in the existing, stagnant companies scream to the government for protection against the unfair competition provided by the new entrant, who has the chutzpah to bring new efficiencies to the industry. Imagine the layoffs! What will we do if we're fired? Gosh, we'll have to find new jobs! It would be for the best if productivity does not increase and things just stay like they are, and everyone gets to keep their positions. Heck, let's just all go back to farming!
Now, it could be that you are mocking my proposition above because you are an unimaginative peasant working class type, or it might be because you actually see no market opportunity for someone to run a banking, medicine, chemical, automotive, industrial, or electronic services company more efficiently. I dunno, maybe you don't see the opportunity because you're blind, but then again, if you don't see the opportunity, it means that the existing players are doing their jobs the way they are supposed to. If there is no opportunity, then the market is 100% efficient. That surely cannot be the case. Or is it?
If you see no market niche to fit into, that means that the existing companies have all the angles covered, which means that your complaints against them are zero and nil. It's a contradiction. You can't simultaneously complain about how the big companies do business, and then claim that there is no niche in which to start your own company. If they don't do business right, then there's a niche! And if there is no niche, then they are properly conducting their business!
Fish: "You can try to emigrate (it's a shame I don't have a net worth over $5, let alone $500,000) or you can become involved and try to change things."
Your probability assessment module is malfunctioning. While I laud people trying to improve their governments, the facts of the matter are that even at 30% exit taxes, it is a lot easier to emigrate and make your money somewhere where you're welcome, than to change things politically. See, the exit tax is 30%, but the probability of me convincing you that white is white and black is black is pretty near 0%.
Realistically, the two behaviors that make egoistic sense are (1) stay and pay and mind your business, (2) pay and go and mind your business, and (3) try to change things. Good luck with #3. Though I applaud people who actually strive for the better - rather than for the worse, like you do - trying to change things is an altruistic effort. Even though I myself would like to be one to help make things better - otherwise I would not be here writing this stuff - I have no misconceptions that it is a fool's errand, which it makes sense to pursue perhaps for the fun of it, but not because there's any realistic payoff.
Changing things is a long shot. You don't so much change things, as provide a channel for existing will to manifest itself. But then, hmm... That's true in politics as much as in business.
Denis: "The same arguments that this author makes could be made in favor of communism, or even in favor of fascism."
Fish: "Ah, the old strawman of equating all government to communism or fascism. As Churchill pointed out, 'Democracy is the worst form of government except all others that have been tried.'"
Your interpretation module has malfunctioned. I did not equate all government with communism or fascism. The current U.S. government is fascist, but that doesn't mean all governments are. I am in favor of a government, but a small and well-defined one, not one that spreads and grows like a cancer.
Fish: "Someone screws you over? Take 'em to court. Can't afford it? Well, I guess you're SOL."
That's a defect of the American system, not of the free market! What, you think that costly courts are an intrinsic property of the free market? That's a malfunctioning society you have there, the lack of rule of law, the inability of the government to perform one of its most basic tasks - enforcing order and contracts. That's not a vulnerability of the free market!
Fish: "Have you contracted a debilitating disease that keeps you largely bedridden? Too bad; if you were wealthy enough to afford insurance, those benefits will run out long before the disease does."
The price of medical care in the U.S. is astronomical partly because your government makes it so. It doesn't have to be that way. Compare the price of commercial health services performed at near-American standards by U.S.-educated doctors in India, compared to the price of health services performed by India-educated doctors in the U.S. The Indian prices are 5-10 times lower, and that's for medical tourists, who are not funded by the Indian state in any way!
Your government provides a framework where liability is a huge ingredient in the cost of medical care because you cannot just walk into a doctor's office and sign a waiver that you won't sue after the procedure regardless of what happens. Medical procedures are inherently risky and doctors need to buy expensive insurance because people sue (and win!) for anything.
If that were resolved, the cost of medical care in the U.S. would go down substantially. You could then opt to buy insurance in case the medical procedure fails, but you couldn't sue the doctor.
Now, if even then you had complaints that medical care is too expensive, then you need to understand that medical care is a scarce resource, and pretending that it's not will not make it less scarce. Medicine is expensive. If you place a high value on medical care, you'll buy sufficient insurance. If you're careless, you won't. It's your problem if you don't.
Fish: "A society with reduced government involvement may seem more free on paper, but only if you have the means to pay for it."
Well, duh!
Why do you think we put animals down if they so much as contract the flu? Because the animals can't provide anything of value in exchange for their treatment.
There are only so many goods that are produced in any economy. The presence of a large government tends to reduce, rather than increase, the number of goods produced. It also tends to retard, rather than speed, the growth of goods production.
The pace at which we are producing goods is way higher than 100 years ago - we have drastically more production than we did back then, and this is thanks to science (liberty of mind) the free markets (economic liberty). Productivity growth is not due to large redistributing socialistic governments, or else you need to quote me an example where high taxes stimulate growth, as opposed to plenty and consistent examples that the reverse is true, which I can quote you fast and easily if you would like me to. Or you could just search my blog (denisbider.blogspot.com) for "low tax" and find some examples.
Even if you are poor, the mere fact that you were born into this productive economy means that today you need to do much less to meet the needs of mere survival, than you needed to do back in 1850. Real wages grow just like productivity grows, which means that purchasing power grows, which is why most poor American households today have air conditioning! Imagine that in 1950. There is no falling standard for poor househoulds, the standard is increasing, those like you just fail to see the obvious.
Now, is it too much if we kindly request that those who wish to benefit from all this productivity, would kindly contribute whatever the market requests in exchange for their consumed economic output?
Is that really too much to ask?
Fish: "So what are you going to with someone who breaches a business contract? Maybe an act of God happened and they're physically capable of fulfilling their contract. Maybe they found it more profitable to breach it, or maybe they just don't feel like it. What are you going to do then? Your choices are to eat your losses, or try to enforce it. Enforcement implies coercion."
Again, you are missing the very obvious idea that libertarianism calls for a small but efficient state which provides essential services, such as coercion for people who fail to abide by contracts which they voluntarily entered.
The distinction whether to have a government that's small and well-defined and which does exactly what it's supposed to; not whether we should have any government at all.
Fish: "Or maybe I've entered into a contract with a company in good faith, but the company didn't. So suddenly I'm being bled dry by hidden fees and late payments. Suddenly, we're back to the original scenario: I can eat my losses or try to coerce them (if I have the resources to do it)."
Again, the dysfunctionality of the American court system is a symptom of your existing government, not a libertarian and functioning one.
Fish: "Sure they work; they work for the people with the talent and resources to take advantage of them. For everyone else, not so much."
Nonsense. Increased welfare is due to productivity increases, not due to government redistribution.
Imagine a government at the beginning of the industrial revolution, redistributing income like the governments today do. There are 990 poor people and 10 rich guys. Each poor person eats one chicken per week, while the rich guy eats an expensive turkey every day. So the total goods being produced and consumed are, per week, 990 chickens and 70 turkeys. You consider the situation unfair and you redistribute so that everyone gets the same. Now each person gets 99% of a chicken and 7% of a turkey per day. Improvement, huh?!
Look, the government can redistribute two things: (1) money that rich people would otherwise spend on consumption, and (2) money that rich people would otherwise spend on investment.
The effect of redistributing the money rich people spend is minimal, because (1) a rich person cannot stay rich unless they reinvest most of their income, so the proportion of money they spend on personal consumption must be small!, and (2) rich people are few, so even if they consume a lot, once you redistribute this over everyone, effects are minimal.
Now, on the other hand, the adverse effect of redistributing the money that rich people would have spent on reinvestment is huge. Investment is what drives productivity growth! What income tax does is mainly capturing a large portion of the money that would have been spent on investment, and spending it on immediate consumption instead. The result is less investment, and thus less productivity growth. Furthermore, innovative and producing behavior is discouraged as the process is made bureaucratically more burdensome and the proceeds of this activity are taxed more. So, instead of the economy growing like this:
Year 1: 1.04
Year 2: 1.08
Year 5: 1.22
Year 10: 1.48
Year 15: 1.80
Year 20: 2.19
it grows like this:
Year 1: 1.02
Year 2: 1.04
Year 5: 1.10
Year 10: 1.22
Year 15: 1.35
Year 20: 1.49
What I'm comparing here is real growth of actual wages.
Now you tell me, what helps the poor person more: 7% more turkey immediately and every year, or a more than 2x increase in purchasing power every two decades?
I think this is by far the strongest argument in favor of free markets. The retarding effect of redistribution on growth has been shown empirically, over and over again, and can hardly be refuted. Because redistribution feeds from the very thing that drives productivity growth, its damage grows exponentially with time, and in a few decades the damage exceeds whatever short term gains poor people might have enjoyed from the redistribution.
Ghoti, I'm going to propose something I hope you're going to agree to.
Go on and keep your social security programs, your government healthcare, your safety nets, your food stamps. Go on and keep programs that try to help people who are down on their luck, or other. Go on and keep those programs.
But do not starve the goose that lays the golden eggs. Do not feed these programs by taking money that would otherwise be spent on investment. Take money that would have been spent on consumption. Do not make investment difficult. Do not punish people for investing smart. Do not wrap entrepreneurs in red tape.
Instead, fund those programs by taxing consumption - because that's what the money that you take will be spent on. Take the money that was intended for consumption anyway. For all it's worth, go ahead, tax consumption progressively. Make the rich people pay more on what they spend.
But do not tax investment. Do not kill the productivity growth that has provided well-being for millions of Americans today. A well-being that exists today not because some of your ancestors took and spent the money of others, but because they invested into new production processes which made possible the great varieties of goods in the unprecedented quantities we see today.
Exactly that is what's proposed by FairTax. It proposes to keep the existing government spending structure, keep all the existing programmes, including Social Security, including Medicare, including Medicaid, including even food stamps. It would even tax consumption progressively, taxing the consumption at poor people at 0%, and then increasingly more for people who earn and consume larger amounts. A median American would pay an effective consumption tax of 15.5% (inclusive) rather than 17.3% on income that they pay today. Only the rich who consume most would pay an effective tax on consumption asymptotically close to 23%.
Go ahead and keep your government programmes. But do not keep strangling the goose that fucking lays the golden eggs!
Fish, do me a favor. If you're anything like me, I'm betting you spend on the order of 30 minutes or more writing any response here.
Do me a favor and watch the first 10-20 minutes of this recording.
Tell me, then, if you still trust the government. :-) A democratically elected one, to boot.
You may have noticed, Putin's party was just recently elected "democratically" in Russia, too... They gathered 99.5% of the vote in Chechnya. Indeed. The power of democracy. :)
Duh. The link.
Denis: Now, it could be that you are mocking my proposition above because you are an unimaginative peasant working class type, or it might be because you actually see no market opportunity for someone to run a banking, medicine, chemical, automotive, industrial, or electronic services company more efficiently. I dunno, maybe you don't see the opportunity because you're blind, but then again, if you don't see the opportunity, it means that the existing players are doing their jobs the way they are supposed to. If there is no opportunity, then the market is 100% efficient. That surely cannot be the case. Or is it?
Well, you were half right, anyway. How about this concept: not everyone is suited to start or run a business. Here's a corollary: not everyone suited to start or run a business can obtain the means to do so. Here's another one: not everyone suited for and with the means to start their own business will be able to overcome the barriers to entry.
Government regulations aside, the market creates its own barriers to participation. The game is slanted toward existing players, not the newcomers, even if they have the talent for it. The market is set up this way because the existing players have the resources to maintain their status quo. We are long past the days when an unknown entity can rise up to challenge existing industry leaders in obscurity. The government has little to do with this: the industries themselves are policing their own.
One of my favorite examples is the old Microsoft vs. Netscape browser war. Microsoft put Netscape out of business by sheer dint of contract arrangements (one of the hallmarks of a liberterian society) and market dominance. They didn't need to bring the government into it. All they had to do was bundle their software into their base operating system and refuse to do business with any vendor who cooperated with Netscape. Eventually they were taken to court in a class action suit for anti-trust, something that wouldn't be allowed in your utopian scheme. Then a pro-business government came to power and stepped in to make the problem go away.
Welcome to life in a libertarian society.
I have much, much more to say, but I haven't the time. I'll follow up with the other tidbits of comedy later.
My take on that is that Microsoft were entitled to do what they did, and that the Netscape example as generally presented is a preposterous fallacy. I've written about this in this article and in my long replies to comments under it.
Oh - one correction: to the extent that Netscape was elbowed out of the market using coercive anti-competitive anti-bundling agreements, they indeed had grounds to call for immediate and effective government intervention, which in such a case should happen.
Breaking up cartels is one of the purposes a libertarian government should serve, in my opinion.
See also my conversation with Amos on his blog, where we discussed similar topics recently.
Essentially, all government is coercion, but a libertarian government would restrict its use of coercion only to prevent others from using coercion.
An economically damaging cartel can be seen as a form of coercion.
Yet another correction: the link above to Amos's blog should have been this one.
While I have all sorts of creativity in mind for responding to each of your points in hand, it occurs to me that I can probably sum up my problem with libertarianism fairly succinctly.
A truly free market would have to be stagnant or offer unlimited resources to all entrants in to remain a free market.
The utopian ideal of the free market presupposes everyone has equal access to money, resources, information and advertising. We have never seen such a society, nor will we ever. Someone is always going to have the advantage in one or more of these aspects. The moment inequality is introduced into the free market, people will begin to abuse it. With the government hamstrung in its ability to regulate markets (let alone society), that abuse will only continue as the ones who get ahead will cement their standing and protect the status quo. Market corrections, when they happen, will either be carefully managed by the industry elites or be catastrophic events that shake the foundation of society.
Ultimately, what it means for the common people who aren't prepared to throw themselves into this dog-eat-dog environment, is that they'll have to beg for scraps from those who are successful with no hope of improving their own situation. Enforcement of the status quo will see to that.
We see this trend in modern society. You blame the government for creating it. I blame the government for allowing it, and the business world for creating it. In this, we are not going to agree. We'll just have to vote against each other in every election.
Basically you are arguing that a completely free market would tend to become an assortment of cartels that would band together to prevent progress, and that it is the responsibility of government to break up such cartels and ensure that there is healthy competition in major industries.
Well - I agree. I agree completely.
I just don't see how this justifies policies like the income tax, which acts to divert funds from investment, research and development, and into immediate consumption, thereby reducing productivity growth, thereby making everyone poorer.
I can see how a consumption tax would be justified to finance equalization schemes like education vouchers for all children. I can even see how a progressive consumption tax is reasonable, i.e. a poor guy pays 0% tax on his basic necessities, while I pay a full 30% tax on the fuel for my private plane.
But what I don't see is how taxing investment and imposing huge bureaucratic burdens on entrepreneurs, which is what the income tax does, is progressive. That's not progressive. That's regressive. It retards growth, and that hurts everyone.
The immediate problem with a consumption tax? Imports. We import the majority of the goods we consume these days. Anything that would truly generate sufficient tax income for government services is most likely to be imported to begin with. So what's to stop people who can afford it to buy their goods from the company/country exporting it to the US? It'll likely be cheaper for them, and they get to avoid US consumption taxes. Thus, the burden falls back on the lower economic classes who have a harder time affording both the tax and the cost of buying direct from the importer.
It's a lovely idea, it really is, but I don't see a lot of equity coming from libertarian ideals. Keep pitchin', and we'll see if we can't find something to compromise on.
Imports would be taxed. From the FairTax FAQ:
"And at last, imports and domestic production are on a level playing field. Exported goods are not subject to the FairTax, since they are not consumed in the U.S.; but imported goods sold in the U.S. are subject to the FairTax because these products are consumed domestically."
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