Sep 20

On September 15th, like many Americans, I made my third-quarter estimated state and federal income tax payments.   I spent about an hour figuring out how much money I needed to send in, and about another hour driving to and from, and dealing with, the post office.    I can’t get those two hours back.   But it wasn’t the large checks that really got me steamed, as much as the thought of how the money would be spent.

Imagine a scenario where a genuine solution to a long-time affliction against humanity could be reached simply by raising a large sum of money, but at the same time, there were no income taxes.   Say it was going to cost, in the form of a one-time payment, 10% of your annual income, to cure cancer.   To truly cure it.  To be able to relegate it to the proverbial dustbins of history.   Who wouldn’t gladly write the check?

By tremendous contrast, what form of government spending produces such a feeling?    I believe it is exactly this contrast that gets to the root of the anger we see today about a government running itself seemingly out of control.   There is a gut-feeling that much of our tax money, much of the costs of government, much of the regulatory barriers to whatever, much of the debt we’re incurring, just amounts to so much waste.

September 12, 2009 Washington DC protests

Try to think for a moment of the specific things that you think the government should be charged with doing.    Beyond the important but abstract things like enforcing the rule of law, most of us would consent to pay for some specific services, such as a national defense or even a public highway system.   But it’s tough for any one person to come up with a long list of things.     The framers of the US Constitution thought about such things and came up with their own list.   It’s very short, and it’s spelled out largely in Article I, section 8 This, of course only deals with the federal level, and notably, the tenth Amendment ascribes all other powers to the states.   Almost none of the issues that occupy today’s headlines remotely fit the list, and as of 2004 the Federal Register had nearly 80,000 pages. It’s safe to say there are more today.

So have we cured cancer?  Or hunger?   Or homelessness?  Is there a chicken in every pot?  How about an iPod? Can government succeed in such efforts?

To suggest that it can not is not to be pessimistic, or unpatriotic, or even anarchistic.    To suggest that it can not does not mean that individuals should not try on their own, or even in groups both big and small, to do what they can.  It boils down to a question of who decides. Who decides what problems should be tackled?   Who decides what should be spent on them?  Who decides what level of service or result is appropriate, and at what cost?

Are there incentives in place for government to succeed?   What happens when it fails?   In the private sector, capital is raised through voluntary means based on a  service provider’s potential to meet some need.   Often, but not always, there is a rate of return for the capital provider.   When the service provider succeeds it is rewarded with more capital.  If it should fail, capital providers look elsewhere.    No such feedback mechanism exists with government.  It’s worse than that, because with government, the capital raising process is involuntary.

Getting back to writing that one-time check,  I believe most of us would write it because most of us have a sense of genuine charity.  Faced with a genuine need and the distinct possibility of making a difference, we rally to the cause. Indeed, all of the major religions call upon us to be charitable.  And there’s the rub:  taxation, directed by politics, even when the proceeds are to be used for supposedly noble goals, is not charity.

What do you think?

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