Millions of Americans are hustling to file their income tax returns before the deadline. Perhaps you owe more money to the government. Perhaps you are due a refund. Perhaps youre paying nothing or actually getting money, on net. Regardless, someone is paying for the leviathan we call government. What are we paying for? And is it even necessary?
At a conference last year, I picked up two books published by the Independent Institute, for whom I now serve as a Research Fellow: Housing America and Anarchy and the Law. As I perused Housing America, I reflected on the disastrous consequences of government involvement in the housing market. As I perused Anarchy and the Law, I reflected on the fact that most of the popular and plausible justifications for government are undermined by theory and evidence. The reality is that a lot of the things governments doeven those things we think only government can do, like deal with market failures and provide public goodsare wasteful, superfluous or destructive.
There are some good things that governments probably do, but we cannot tell whether these are worthwhile because they take place outside the realm of voluntary cooperation. Some of our favorite places in Memphis (the zoo, public parks, and the public library) are underwritten or aided by various levels of government. Because taxes and redistribution are compulsory rather than voluntary, there is no way to know whether the resources that produce these amenities are being used wisely or wasted.
Voluntary exchange can provide public goods and internalize externalities. It might not work in theory, there are numerous examples of it working in the real world. Many government programs are purely redistributions from taxpayers to tax-consuming special interests, and they are inefficient transfers at that.
Consider education. While there are spillover benefits to basic literacy and numeracy, there probably arent any spillover benefits beyond this. In private markets, people are likely to acquire levels of education beyond basic literacy and numeracy, so the amount of education that would emerge in the market is probably that for which the marginal benefit is equal to the marginal cost. Education subsidies, therefore, waste resources that could be better used elsewhere, particularly when education is provided by a veritable monopoly.
What about the poor? There are people who genuinely need help, but even if we could use the government to make some people better off, doing so is still of questionable virtue because it requires violence. As George Washington said, government is neither poetry nor beauty. It is force. Is it a virtuous act if you are willing to threaten others with violence if they do not do what you want? Or is it barbaric? Do your noble ends justify violent means?
Suppose I help myself to the contents of my neighbors pantry. I have stolen his property and committed a crime. My plans for the food Ive purloined are irrelevant to the fact that I have taken something that does not belong to me. Even if I identify myself as the government and can show I was elected to do such things, it does not change the fact that I have robbed my neighbor.
The case against government is robust even on practical grounds. The prosperity we enjoy today suggests that the poor are helped most meaningfully by economic progressprogress that we are forsaking in order to redistribute wealth ostensibly on their behalf and to fight wars of questionable merit and constitutionality. Even where the case for government is most plausible, the political process will give us a distorted version of what we really want. The sweetheart deals and perversions of reason that emerged in the health care debate are cases in point.
As Ive written before (1, 2, 3), economists have demonstrated that it is very difficult to redistribute resources in a way that actually helps the people we want to help. Thats because their incentives have changed. People who expect handouts will use their valuable time and treasure trying to acquire them. Imagine how people would react if the government offered free pizza and beer to everyone. Other handouts accomplish the same thing.
Republicans were swept into office on enthusiasm for lower spending, and indeed it is the total amount of spending rather than taxes that represents the governments burden on the economy. While there are excellent cases to be made for eliminating subsidies for public broadcasting and Planned Parenthood and while it is true that every little bit helps, we need to keep in mind that these arent the programs that are busting the budget.
Tax season is coming to a close just as we are adding intervention in Libya to our list of foreign wars, and if day one was any indication, this is going to be a very expensive undertaking. In a recent essay, the economist David R. Henderson offers an open plea to libertarians and conservatives to recognize that war is a government program. As he writes, [1]ibertarians and conservatives should bring the same skepticism to war that they bring to other government programs. Were fond of pointing out that good intentions do not always translate into good outcomes. For example, the worthy goal of helping the poor will not help us avoid the unintended consequences of the minimum wage. We should apply the same critical eye and hard-headed analysis to wars with lofty and worthy goals.
In his book After War: The Political Economy of Exporting Democracy and in a related and ongoing book project, the economist Christopher J. Coyne offers a sober and critical analysis of the proposition that liberal democratic institutions can be forced on foreign countries. He argues that before we start talking about whether we should spread freedom and democracy around the world, we should have a serious discussion about whether we can.
No taxation without representation was a rallying cry of the American Revolution. We now have ample evidence that even with representation,the process of taxation and the governments that those taxes support are unnecessary evils. Political battles over the distribution of tax burdens and benefits ignore the larger issue of whether any of this is even necessary, to say nothing of the fact that taxes will almost certainly increase if the government keeps incurring debt. Perhaps its time we shorten the slogan and make it simpler: No Taxation.