Thursday, November 10, 2016

Principled Free-Marketers Vs. Fiscal Tightwads: Assumed to Be the Same Because They Want 'Cuts in Tax Funding' But They're Fundamentally Different

Stuart K. Hayashi

There are two types of people generally considered to be part of the political Right -- especially in the United States -- who are thought of as being in the same category. This is due to a superficial similarity. Yet they are fundamentally different in philosophy. This is not a mere difference in degree that many on the Left assume it to be. It is a difference in kind.

The two types are thought to be in the category of: mean-spirited right-winger who wants to cut tax funding to government programs.

Here, there are two wholly different groups of people who are slapped together into this package deal: principled free-marketers versus fiscal tightwads.

The Free Market Is Necessarily Ideological -- And That’s Good
A genuine free-marketer is a principled ideologist -- what normally gets denigrated as an ideologue. In fact, Napoleon Bonaparte coined the term ideologue to disparage free-marketers who opposed him, namely the Enlightenment philosophe Antoine-Louis-Claude Destutt de Tracy. Tracy described his own philosophic approach as ideology, and there was nothing pejorative about it. It meant “the science of ideas.” Napoleon was the first to say that if you had a philosophy based on consistently applicable principles, it meant you were just some fanatic applying dogma deduced from arbitrary premises. The next big historical figure to attach derisive connotations to ideology was Karl Marx, of all people.

Principled Free-Marketers
Anyhow, the principled free-marketer has a specific endgame in mind: he wants a government limited only to retaliating to the initiation of the use of physical force, which means that the government’s duties are limited mostly to the police, military, and the courts. There might also be some government functions limited to helping people define private property rights as new technologies are developed. Rather than Herbert Hoover’s approach with the FCC, for instance, a principled free-market government would have helped define private property rights with respect to which party owned which part of the electromagnetic spectrum at which to broadcast. A free-market government would also help define intellectual property rights clearly, such as in the case of the U.S. Department of Agriculture recognizing intellectual property in sexually produced plants with Plant Variety Protections. (And no, abolishing intellectual property rights is not the true freedom position, but that’s a topic I have tackled elsewhere.)

The principled free-marketer’s endgame is the sort of constitutional liberal republican Night Watchman State that Auberon Herbert championed. Principled free-marketers care staunchly about this because they comprehend that “taxation is theft” is not mere political rhetoric or hyperbole; it is literally true, and therefore they want to do what it takes to minimize such violent threats. In the end, to achieve this minimization requires a constitutional liberal republican Night Watchman State.

Principled free-marketers understand, though, that there is no way to achieve this overnight. Contrary to what some people might fantasize about, there will be no disaster that allows us to wipe the slate clean and start over with a constitutional liberal republican Night Watchman utopia (the notion that principled free-marketers would rejoice at this prospect is one of Naomi Klein’s many delusions). But though we cannot obtain this dream overnight, we use this end goal as a standard by which we measure our progress. We know that we cannot privatize Social Security in the course of a day, but, because we have a good idea of what perfection looks like, we know that legislation that expands Social Security is bad, whereas legislation is good if it respects the liabilities owed to elderly people who already paid into the system while the legislation simultaneously allowing young workers to opt out and seek private retirement accounts.

Principled free-marketers do make moral judgments but they recognize that, in peacetime, there is no good reason for the law to discriminate against people based on arbitrary distinctions. They understand that if it is wrong to pay tax money to the foreign-born for their health care, then it is no better to pay tax money to the native-born for their health care.

Principled free-marketers very much want to cut government funding for many services that people now believe, mistakenly, can only be provided by the government. For instance, principled free-marketers say that there should not be tax-funded municipal libraries. At this, many people react in horror; their assumption is that if the municipal government does not use tax money to maintain libraries, there will be no public libraries. To this, principled free-marketers point out that public libraries were actually invented by private entrepreneurs like Benjamin Franklin. What happened was that a group of people pooled their money together to purchase many books and store the books in one location. If you paid a periodic fee, you could check out books when you wished.

Principled free-marketers also point out how private entrepreneurs invented firefighting departments, and of how it was not due to the inadequacy of privatization, but of changes in liability laws that misunderstood property rights, that eventually misled officials to conclude that firefighting could be done adequately only by municipal governments. In any case, whereas the straw-man depiction of principled free-marketers is of those trying to leave you in the jungle, bereft of libraries and roads and schools, the principled free-marketers simply point out that any enterprise that can succeed in the absence of threatening violence can succeed in the absence of direct government involvement. Principled free-marketers thus explain that private individuals, peaceably cooperating on their own accord, can provide public goods that are falsely assumed to be the rightful exclusive province of the State.

That is a very different approach to that of the fiscal tightwads with which the principled free-marketers are lumped.

Fiscal Tightwads
Whatever lip service fiscal tightwads might give to the rhetoric of principled free-marketers like Ayn Rand and Auberon Herbert, the fiscal tightwads agree with welfare-state leftists, at least on an implicit level, that all assets that exist actually rightfully belong to “Society as a Whole,” and that the objects you believe to be your absolute private property are merely objects you are borrowing from  "society." They therefore hold no qualms about the welfare state in principle. They have other reasons for wanting to reduce tax funding for various government services.

Unlike many of their more radical, more explicitly left-wing counterparts, the fiscal tightwads recognize that there is necessarily a limit to how much wealth the government can spend. The fiscal tightwads, unlike those farther to the political Left, understand that government coffers can run out. Therefore, when the government is heading toward bankruptcy, the fiscal tightwads sound the alarm and say, “Yes, as painful as it is to admit, we have to make cuts.” Mind you that the fiscal tightwads do not acknowledge that this tax spending is wrong in principle -- they do not cohere, deep down, that taxation is theft. Instead, they believe that the government has merely gone overboard in spending tax money on the welfare state, and therefore the government should exercise more restraint in the spending -- so that there will still be some units of tax money left over to spend in the long-term future. That is, they do not disapprove morally of tax spending on supposedly peaceful enterprises -- they merely think that the government should be more conservative in how it disperses the tax money, another reason why the word conservative is associated with cuts in tax spending. They believe that being conservative with tax spending is the way to be a responsible steward of what is the collective heritage rightfully collectively belonging to society.

Moreover, fiscal tightwads are similar to the radical Left in wanting to apply the altruistic ethic, but they have a different interpretation of how this should be applied. Fiscal tightwads believe in the Puritans’ application of altruism.

How the Far Left and the Fiscal Tightwads Try to Impose Altruism Differently
Suppose that you are wealthy and I am not; I am needy. The radical Left says that morality requires that the State takes that money from you by force and then gives it to me. Then the radical Left tells you that you, as a rich person, ought to accept that. Your accepting that would be a most unselfish and therefore moral gesture; your acceptance of this policy would help you be honorable by practicing the virtue of self-sacrifice. If you, as a rich person, balk at this, you commit the sin of selfishness.

By contrast, the fiscal tightwads flip this around, accusing the other side of being too selfish. In a more Puritanical sort of tradition, the fiscal tightwads believe that virtue is found in suffering from privation. They believe that if I go through a period of material want and get through it, learning to scrimp by on scraps, that builds character. Therefore, if I ask the State to take money from a rich person like you and give it to me, I am the one being selfish.

As an example, Lawrence W. Reed of the Foundation for Economic Education (FEE) told John Stossel that in the Bible, Luke 12: 13–15, Jesus reproached a man for desiring coercive wealth redistribution for being selfish: "And one of the company said unto him, Master [Jesus], speak to my brother, that he divide the inheritance with me. And He [Jesus] said unto him, Man, who made me a judge or a divider over you? And He [Jesus] said unto them, Take heed, and beware of covetousness: for a man's life consisteth not in the abundance of the things which he possesseth." Jesus even goes as far as declaring to anyone desirous of wealth redistribution, "And He [Jesus] said unto His disciples, Therefore I say unto you, Take no thought for your life, what ye shall eat; neither for the body, what ye shall put on. [ . . . ] And seek not ye what ye shall eat, or what ye shall drink, neither be ye of doubtful mind" (Luke 12: 22–29).

Indeed, say the fiscal tightwads, if the government provides for everyone in poverty so that people are no longer in poverty, that makes them decadent and spoiled and soft and lazy -- all these material comforts are manifestations of the selfishness of the persons receiving these benefits. If I receive these amenities from the State, the State is depriving me of the opportunity to practice the virtue of . . . austerity.  This idea is the reason why, when European governments finally began to cut funding for services that never should have received tax funding in the first place, these measures were given the misleading label of austerity -- the assumption being that you will necessarily be poor and Spartan simply if you don’t have the State giving you stuff.

Why Fiscal Tightwads Are Nonobjective About What Needs Cutting
Thus, we find that one major reason why the fiscal tightwads want to reduce funding for various government programs is that they think “too much money” in general is spent by the State. They also object that the State spends tax money on particular enterprises rather than others. For example, when he was mayor of New York City, Rudolph Giuliani expressed outrage that tax money was spent on such a hideous and offensive and sacrilegious artwork as “Holy Virgin Mary.” However, he had no objection to the idea of tax money being spent on what he deemed genuinely tasteful and inoffensive (maybe even beautiful) art, such as, say, a more Grecian-style depiction of idealized naked human bodies. Fiscal tightwads will often wail that too much tax money is dispersed to highly unionized government schools and not enough to charter schools that have more autonomy from the unions.

Thus, the fiscal tightwads say (1) that “too much tax money is spent” in general and (2) that “too much tax money is spent” on unworthy social services instead of on worthy social services. They do not give a lot of thought to the considerations (A) the very institution of compulsory taxation is at least as morally problematic as any other form of extortion, or (B) that the institution of private property should be recognized as consistent, an absolute, which means that when it comes to anything other than defense against violence, there is no “common good” that justifies pooling everyone’s money together and deeming it public property. Note that because they do not have a well-thought-out principle in mind, they have no objective definition for what constitutes “too much spending.”

They have no objective criterion for saying that, say, federal welfare spending as 14 percent of GDP is too much whereas federal welfare spending as 0.014 percent of GDP is ideal. Nor they do have objective criteria for judging which nonviolent enterprises are deserving of tax funding and which are not. Fiscal tightwads have no qualms about how Dick Cheney’s wife had a job at the National Endowment for the Humanities transferring funds to relatively inoffensive art; they only squawk at sacrilegious material. The idea that everyone should be free to keep her own money or spend it on whatever art she likes -- beautiful or ugly, sacrilegious or not -- is hardly a consideration; that is more a concern of ideologues in the principled free-marketer camp. It is also the fiscal tightwads who keep saying that immigration should be curbed because immigrants getting taxpayer funding deprives citizens who are native-born -- and somehow therefore necessarily more deserving -- of that same tax funding. Such people are not objecting to the taxpayer funding on principle, and the New York Times is right to refer to this rather arbitrary distinction as “welfare chauvinism.”

Principled free-marketers and fiscal tightwads both talk about how they want tax expenditures reduced, and therefore the Left assumes they are all the same, and that differences between these people are differences merely in degree. They think of Ayn Rand as simply a more extreme version of Robert Taft. Indeed, almost every famous politician of the twentieth century who has been denounced as a laissez-faireist ideologue was merely a fiscal tightwad who finagled with the left-wing radicals over how national tax spending should be increased only by 7 percent and not 30 percent. Definitely we principled free-marketers consider a spending increase of 7 percent to be less severe than that of 30 percent, but it does not follow that we are actually in fundamental philosophic agreement with the fiscal tightwads. Probably the twentieth-century president who was most consistent in reducing spending was Calvin Coolidge, but he, too, was a fiscal tightwad who simply was more effective at being tight-waddish than all other U.S. Presidents of the twentieth century, especially Ronald Reagan; he was actually a Progressive who voiced mitigated support for the regulatory-entitlement state policies that Theodore Roosevelt championed.

Ever since Ayn Rand became well-known, some people have seemed to overlap in the two categories. Some people call themselves libertarians for natural rights and yet they fall back on saying the State should curb immigration so that tax money will focus on native-born citizens instead of on immigrants. What category a person is in is determined more by his actions than by any vague lip service he gives to natural rights. If someone claims to agree with Ayn Rand and Auberon Herbert but then falls back on “welfare chauvinist” talking points about native-born citizens deserving the tax spending that would otherwise go to grubby immigrants, that person is not being a principled free-marketer in this capacity.

Of special note are the "libertarians"(?) who say that a universal guaranteed [sic] minimum income, paid for through tax money, should "replace [sic] the welfare state." To say that a guaranteed income "replaces" welfare is disingenuous; a taxpayer-funded guaranteed income is welfare. What these libertarians mean, though, is that they would favor having a guaranteed income instituted if it meant that the other presently existing welfare programs, such as Social Security, Medicaid, and Temporary Assistance for Needy Families (TANF), be repealed.  They proclaim that the advantage of this is that it would result in a net reduction in taxation and government spending.

A net reduction in spending, by itself, would not be objectionable, but principled free-marketers are far from impressed by these libertarians' (?) concession to the Left's assumption that everyone's money is ultimately public property and that every possession in your custody is merely a gift from the social collective.  Those who say that the guaranteed income is somehow fiscally responsible simply because it would waste less money than do other welfare programs, are definitely not principled free-marketers.  That position is, at best, more in line with that of the fiscal tightwads (and even to put such advocates in that classification is to be generous).

They All Just Want to Cut Tax Funding? The Difference
Here is the difference. Fiscal tightwads want a cut in taxpayer spending for the following reasons:
  • Taxes are annoying
  • Taxes disincentivize economic productivity, which will result in a net loss in economic productivity for society as a whole
  • Taxpayer funding makes you decadent and lazy and therefore selfish, depriving you of the opportunity to undergo some humbling privation and learn the virtues of unselfish austerity
  • Too much spending will drain the coffers and there will be no tax money left to spend in the long run
  • This tax money is going to something morally debased when it should go to a loftier state-sponsored enterprise

This is the principled free-marketer’s concern:

  • Morality requires that you be free to live peaceably without other people threatening violence to control you. Government spending involves compulsory taxation, and compulsory taxation is a form of extortion and violent control over you, as violence on the part of the State is the recrimination against you if you do not hand over your wealth. Compulsory taxation therefore ought to be driven to the minimum. Period.

On January 17, 2017, I added to this post the mention of Lawrence Reed's citation of verses from Luke 12 in the Bible.