Saturday, August 30, 2008

The Public-Private Distinction

Libertarians invest a lot of intellectual capital in, what I call, the public-private distinction, which requires drawing a philosophically defensible line of demarcation between public ownership and private ownership. All libertarians favor private ownership and are at least skeptical of public ownership. Of course, a lot here depends on how we define the basic terms public and private. In an earlier blog I suggested that it is based on ownership, however, the more fundamental difference lies in how it is intitially acquired and subsequently funded. Anything that is acquired by a public entity (local, state, or federal government) is paid for with tax money extracted from the general public. Invariably, any system of voluntary taxation will lead to empty tax coffers. Although you might argue that leaders could acculturate followers to pay their taxes as a matter of duty, and eventually abandon monitoring and enforcement of tax law, I think that's idealistic nonsense. But we might explore that option in another blog. In so far as taxation requires coercion, it violates our property rights. In other words, taxation is tantamount to legalized theft, or forced labor. (About 33.33% of my wages are extracted from me via taxation!) Now some libertarians are willing to condone legalized theft for the greater good. Most notably, some of us are willing grudgingly allow governments to collect taxes in order to pay for self-defense; namely to fund an army and a criminal justice system. However, a few libertarians would even privatize those services. Here's why. The argument against public armies (and police forces) is that when there is a large sum of money sitting in a bank, there is no incentive for public officials to be thrifty. After all, they are not spending their own money. They are spending ours! Worldwide military expenditures tend to increase exponentially with little if any concern for "bang for the buck." And the more powerful the army, the more likely a government will use it. Military action becomes not only defensive but also preemptive. As tax rates increase the demand for public services tend to increase because we all want to "get something" in return for our lost wages. Politicians call it :"bringing home the bacon." Therefore, leaders tend to expand the public sphere by funding: sports stadiums, zoos, orchestras, etc. Of course, the more governments fund via public coffers, the higher tax rates. Expansion of the public sphere also tends to discourage private investment in those areas, even though government's rarely do a very good job. For example, public schools are gradually putting private schools out of business, not because they do a good job, but because they have unlimited funding. If current trends continue, eventually, all private colleges will be put out of business by public colleges (even Harvard!), which will leave behind a state run monopoly in higher education. That same pattern will be replicated for sports stadiums, zoos, and orchestras. In other words, there seems to be a natural tendency to expand the public sphere. Most European governments have already socialized retirement pensions, health care, and mass transit. As a result, those countries have very high levels of taxation. At a bare minimum, libertarians stand firmly against the unlimited proliferation of public monopolies and the public sphere. Why? Public monopolies have infinite resources, and therefore have an unfair advantage over competitors in the private sector. The most obvious exception is the U.S. Postal Service. Over the years, the Post Office has done such a poor job delivering packages that most of us now would rather pay more for a private delivery service than take a chance on the U.S. Postal Service. Most of us no longer rely on the P.O. to deliver our letters, our bills, or payments. I don't know about you, but about all I ever get in my mailbox are advertisements, and most of them are political advertisements.

Freedom's Philosopher

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