On the Other Hand...

by Jim Davies

Dog Bites Man


There's a town in which I lived for many years whose grossly expensive school system has been lavished with additional tax money every year for the last two dozen, whether the number of students enrolled rose or fell; and I noticed a newspaper report there recently, headlined "Speakers Support School Spending." There had, it seemed, been a Town Meeting at which that tax grab was increased another notch - with the consent of the victims.

Happily it's not so everywhere, but that headline in that town is a perfect example of the "Dog Bites Man" type of journalism.

What a massive shock would pass through the entire community if, one year the Town Meeting should actually reduce school spending! Its local paper would have to pull out its largest type and banner-headline the amazing fact that after all, sometimes Man Bites Dog.

"Public Choice"

Nobel Economics Prizewinner James Buchanan has done a deal of research on this strange but widespread phenomenon of how the victims of taxation like that do so often seem to go along with it. What has happened to America, the land born in the furnace of a tax rebellion; have we all become sheep?

Some think so, and there may be merit in the view, but Buchanan has developed a different explanation, called "Public Choice". The essence of it is that in a situation (such as we now have) where huge amounts of money are taken from us and spent by government, it's perfectly rational for everyone to go along and demand that more be spent where they, personally, can gain the most.

In other words, this perspective would not blame the pro-spending voters for being greedy or immoral, it would acknowledge that they are just acting in their own interests and that the fault lies in the system.

If we pause to think about it, this is really scary. It's perfectly possible for any of us enthusiastically to vote for candidates running on tax-cut platforms, while in the next breath calling for extra spending on some specific objective that matters close to home. And not only do we think ourselves consistent while doing these diametrically opposed things, we actually ARE consistent, within the constraints the system sets!

Now, since the above is true of everybody, it follows that taxes will rise inevitably for ever; that the vicious circle will go on turning until we destroy ourselves. That is the awful paradox of Public Choice. Until that vicious circle is broken, we shall never read the headline, "Man Bites Dog."  

Real Self-Interest

Before looking at a possible answer to the paradox, let's illustrate it a little further. Suppose you are displeased at the poor quality of the road past your house, and have the chance to attend a Town Meeting to vote for money to spend on its improvement. If the measure is approved, property taxes will rise by an average of $10 per household.

You have no doubts that the value to you of the improved road is at least $5,000; so it's clearly worth several hours of your time to attend the meeting and even publish flyers urging others to join you in voting for the improvement. Very likely, the flyer will focus on the "aesthetic improvement to the town..." which readers will translate into a claim that resurfacing your bit of road may enhance their own property values as well as yours.

Of course you take the time and trouble! You stand to gain a net $4,990!

And, if your argument is reasonably impassioned, your fellow townspeople will go along or, more likely, will not even bother to attend because it "only" costs them an extra $10 a year. For $10, who would leave the comfort of an evening by the fire and the TV? Perfectly rational to stay home.

So the tax ratchet goes up another notch, while everyone acts rationally.

Or, they think they do. But when we look around and see what's been going on, we see that we have been fooling ourselves. This interminable game of beggar-thy-neighbor actually leaves all of us Big Losers. While we each may gain big on one project (schools, roads) we lose big on 99 others. When the cost is all added up, we're a very, very long way out of pocket.

So clearly, the conclusion that operating within The System is to our advantage is an illusion; the system truly leaves us only with increasing damage. Since Buchanan has shown we cannot rationally live within the system and avoid ultimate loss, it follows that The System as we know it has to go. Our real self-interests will be served by radically changing the system.

That's heavy stuff, I know. But no other solution will do. Nothing else will stop the turning of the vicious circle!

The way the system has to be changed is drastically to reduce the set of things on which tax money can be spent. Those items that come off the list would then be bought individually using money no longer lost to the taxgatherer; and those that don't get bought, don't get bought. It's very simple, really: we start again to take responsibility for our own lives, like our great-grandparents did. We keep all our own money, and we make all our own purchases.

Since all regular politicians love dispensing power, such a radical change does mean we'll have to vote them all out, and replace them with others who swear credibly that they will preside over a 90%+ reduction in the size and scope of government and its taxes; but such candidates do exist. And we shall only be doing is what Jefferson intended: "When any... government becomes destructive of these ends, it is the right of the people to alter or abolish it."

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