by Caleb Nelson
Chapter 22:Government Funding in a Free Society
One of the first questions that is often asked of an advocate of a rights-respecting government and free economy is, “How is a proper government to be funded in a fully free society?” The implication here is that a free society sounds great in theory, but is impossible to practice. While this is often one of the first questions asked, it properly belongs as one of the last, and this is why we left this question until the end of this book. It belongs in this place for two reasons:
· A proper understanding of the principles of freedom is necessary to understand the question and the answer;
· The question is only practically relevant near the end of a long road to implement the principles of capitalism in society.
There are many milestones which must be reached before this in the journey toward a free society. People must be educated about the moral rightness of freedom. Government spending on illegitimate programs must be cut, and government must confine itself to only those spheres of activity which protect rights. The question of proper government funding is the last step in the transition to a fully rights-respecting society. Voluntary funding is only practicable in a fully free society that has been constitutionally reduced to its proper elements. It would not work today or for many years to come. But, it is important to be able to articulate the endgame and describe how government would be funded in a free society.
Let us remember why we do need government. We need it because not everyone respects rights in trying to get what they want, so we need to delegate our right to the retaliatory use of force to a government so we can go about living our lives. There are also foreign aggressors who desire to kill or coerce us, and we need a government to engage in our defense. Lastly, we need a rights-respecting government to arbitrate disputes among good people. Such a government would consist primarily of a police force, a military, and an objective court system.
The 2014 U.S. spending budget was as follows:
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The vast majority of the U.S. budget is spent on welfare and entitlement programs. As we can see, if government can be confined to its proper roles, even with the bloated budgets of today’s programs (which would also be drastically reduced in a rights-respecting government), it would only need about 20% of what it currently spends, less than 5% of the national GDP!
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Of course, cutting out fraud, waste, duplication, and mismanagement would also make a huge dent. Senator Coburn says the government throws away at least $200 billion a year on projects such as $5 million in crystal stemware for the State Department, $300 thousand to study angry wives, $1 million to promote romance novels with The Popular Romance Project, and $297 million for an overweight Army blimp that only flew once. $670 thousand to study the relationship between obesity and sexual orientation. And at long last, “the U.S. Embassy building in Islamabad, Pakistan won’t have to get by without a 500-pound statue of a camel looking at a needle, because U.S. taxpayers are spending $400,000 to buy it one.”
[444] In an effort to wind down the wars in the Middle East, the military has decided to simply destroy $7 billion worth of equipment rather than sell it or ship it back home.
“Camel Contemplating a Needle” by John Baldessari
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A proper government, one that only engages in activities that protect its citizens against the initiation of force against their lives, liberties, and properties, would, by nature, be much smaller in size and scope than the governments we see today. At a fraction of the bloated size of today’s bureaucracies, the government would need a fraction of the funds. The current size of government is part of what makes the question of voluntary funding one for the distant future—a future after the widespread restriction of government to its proper functions. A program of voluntary government funding would adequately pay for the legitimate functions of government.
As a nation, we must come to recognize that government is the servant, not the ruler, of the citizens. This servant should not do its work gratis, as has come to be expected. It must be regarded by the people as a paid servant who does not dispense something for nothing. A servant does not coerce or extort payment from his employer. The employer voluntarily hires the servant to perform services.
The proper services of a government are clearly needed by every citizen and corporation, who would voluntarily pay for these services because they value their life, liberty, and pursuit of happiness, just as they recognize the value of and pay for other private services such as insurance. People buy health, auto, renters, and pet insurance. They purchase smoke detectors, security systems, and even bodyguards. They buy guns and take self-defense classes. Corporations buy liability insurance and key employee insurance, and hire law firms and advisors. All of this is evidence that people value their lives, their homes, their property, their businesses, their profits, their employees, and their happiness. Many proper government functions can be seen as a form of insurance. As writer Craig Biddle points out, the question of whether people would voluntarily fund a rights-protecting government is actually the question of whether people value the protection of their rights to life, liberty, property, and the pursuit of happiness.
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We will not use these pages to expound the elaborate details of free society funding. Such is not our aim, nor is it relevant any time in the near future. The question of implementing specific voluntary government financing is complex and belongs in the field of the philosophy of law. The philosophy of politics, on the other hand, is concerned with identifying the principles involved and proving their practicality and morality. Whether we can conceive of how a rights-protecting government would be funded or not, it is moral, and therefore practical once certain conditions are met such as education of the populace and the restriction of improper government programs.
There are many ways to fund a government that don’t require taxation (not to mention the ways no one has thought of yet). The following are examples only and are not meant to imply that these policies should be advocated in today’s political climate:
Lottery—This is a viable way to raise large amounts of money without initiating force. These can range in size and purpose from a special War Lottery, to a local police force lottery, to a statewide interstate highway maintenance lottery. (This example of funding roads is an intermediary step before their eventual privatization.)
Contract fees—One of the proper roles of government is the use of the court system to arbitrate and enforce contracts and property rights. Contracts range from personal rental agreements to credit card contracts to estate wills and trusts. For a legally fixed fee, your contract could be kept on file with the government. The fee could act as legal insurance in the event of a hearing or trial. Such a fee could be a fixed rate, or a percentage of the sums involved in the contract. It would not be compulsory, and those who do not wish to pay for the government insurance are free to make verbal agreements and uninsured contracts. They do so, however, with the knowledge that if they need to seek legal redress in the future, the cost will be higher, etc. Even a small percentage of all the credit transactions that occur every day would pay for many functions of government.
[446] (It should be noted that in such examples, the amount of an individual’s voluntary government financing would be in direct proportion to the amount of his economic activity and interests. The poor would pay little to none, while it would be in the best interest of the rich as well as corporations and businesses to pay the most to insure protection of their contracts and adequate protection from criminals.)
Donations, fundraising, and volunteer work—Many functions of government may be filled with a combination of these. Americans are notoriously generous. How much more so would they be if they could retain their entire income tax-free and were able to decide where to send their donations—police, military, charities, etc.? It would be even easier if such donations could be set up as automatic withdrawals from paychecks as taxes are now,
giving an amount to local police, judicial, legislative, or military funding. There are constantly new ideas on how to raise money. How about a Kickstarter campaign for your city’s new fire truck or street maintenance? There would most likely be patriotic businesses that would set, as a voluntary condition of working at their company, the policy that a certain percentage of their employees’ paychecks be devoted to “taxes.” With a truly free-market there would be even more independently wealthy individuals than there are now, who would be willing, as were many Founders, to serve their country gratis.
(Isabel Paterson noted that, “Generally speaking, up to the Civil War any man seeking political honors expected to do so at some financial loss to himself, he lived by his private means. It is only when this condition prevails that men of intelligence, integrity, and good-taste—the productive character—will be inclined to enter public life.”)
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The widespread lobbying and influencing of legislative and executive officials would also dry up and essentially disappear. Why pay to influence a legislator when he is chained down by a principled Constitution and has no real power to grant favors? (How would our world be different if the billions of dollars spent on lobbying—$3.5 billion in 2010
[448] —were spent productively? What goods and services would we have that we do not now and how much cheaper would they be?)
What about free riders? Are those who would refuse to pay taxes and “ride for free” really a problem? (Keep in mind that a full 46% or more of Americans do not currently pay any income tax.)
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In The Little Red Hen, the hen finds a grain of wheat, and asks for help from the other farmyard animals to plant it. However, no animal will volunteer to help her. At each further stage (harvest, threshing, milling the wheat into flour, and baking the flour into bread), the hen again asks for help from the other animals, but again she gets no assistance. Finally, the hen has completed her task, and asks who will help her eat the bread. This time, everyone eagerly volunteers. However, she declines their help, stating that no one aided her in the preparation work, and eats it with her chicks, leaving none for anyone else.
We can see from this story that the refusal to help does not constitute a violation of anyone else’s rights. While they can assuredly be considered unwise, the other animals at no time attempted to stop the hen from her productive work—no force was initiated against her.
Those who would refuse to voluntarily support the government, for whatever reason, would not be a problem and may even have good reasons. Students, for example, may rightly refrain from doing so while earning money for school. Others may irrationally choose not to help because “the rest of the suckers will do it.” Either way, neither group is violating anyone’s rights because no one is forced to support them, and no one is stopping the self-interested from acting rationally to protect their own rights.
Craig Biddle offered an insightful idea that deserves to be considered at length. He called it Government Support Receipts (GSRs), and explained it this way:
“Under a system of voluntary financing, the government’s budget department would periodically (perhaps annually) issue reports specifying how much money the government needs to fund its proper functions. Private individuals and watchdog agencies would scrutinize these numbers in great detail and offer their own related reports and analyses, as they do today when the government issues a budget.
“Upon reading the reports and analyses, individuals, businesses, and corporations would scrutinize the numbers, do the math, and determine, all things considered, how much money they reasonably think they should contribute. Socially acceptable standards would likely arise, but individuals and companies would be free to abide by or ignore them. Everyone would be free to act on their own judgment, with respect to their own values and their own context. For instance, an individual who barely uses the court system might decide that his contributions should reflect this fact. A large corporation that uses the court system heavily and regularly might tailor its contributions accordingly. Everyone would decide for themselves whether to contribute and, if so, how much.
“When an individual, business, or corporation contributed funds to the government, the government would issue a receipt—call it a Government Support Receipt.
“GSRs would have profound value in the marketplace. Those who held them would have evidence that they financially support a rights-protecting government and thus a civilized society. Those who did not hold GSRs would have no such evidence. Consider what this would mean.
“Suppose McDonald’s wanted to establish a long-term contract with a beef supplier. Would McDonald’s care whether the supplier was a rights-supporting, government-contributing corporation? Would McDonald’s care whether the supplier contributed a contextually reasonable amount of money to ensure the continuation of rule of law, civilized society, and protection of contracts? The smart money says that McDonald’s would care and that, given the existence of alternative suppliers, the company would choose to work with a vendor other than the free rider. (McDonald’s might even put a clause in its contracts stipulating that its suppliers must contribute some percentage of their annual sales to support the rights-protecting government.) But even if McDonald’s didn’t care and opted to do business with the free-riding supplier, McDonald’s would face the problem that a great many of its customers and potential customers would care—and that Burger King, Wendy’s, Carl’s, and the like might see a golden, patriotic advertising angle in the mix. Similar examples can be multiplied end over end.
“In a free society, large corporations would generally see great value not only in holding GSRs, but also in holding very large ones and making that fact known. Rational patriotism sells.
“GSRs would not likely come into play on small transactions, say, when someone purchases a cup of coffee at Starbucks. But they would certainly come into play on many major corporate transactions, and they might well come into play on lesser transactions, such as employment contracts, vacation rental agreements, and the like.
“Rational people and rational businessmen care about the protection of rights, and, by and large, they act in accordance with that concern—both in their personal lives and in the marketplace. In a fully free society, GSRs would be in high demand, and irrational free riders would discover that “riding for free” costs them much more than supporting the government would.”
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We hope to have demonstrated that while not currently possible, the financing of a free society is desirable and would certainly be plausible as the final hurdle for free men to cross on their journey to a fully rights-respecting society.
Review
Q1: What are some important principles to understand about voluntary government funding?
Q2: What are some ways it could be accomplished? Can you think of any that we didn’t mention?
Q3: Would you volunteer to fund a rights-respecting government?
Afterword: What Now?
“Be the change that you wish to see in the world”- Anonymous, misattributed to Gandhi
The problems and upheavals in the world will persist so long as governments (and the individuals who support them) claim moral sanction to initiate force. Governments will continue to act immorally until citizens learn true principles of freedom and prosperity and work to move away from statism.
The world sometimes seems pretty bleak and hopeless. The minuscule minority of politicians who understand principles are mostly ignored and dismissed. Economic stability continues to worsen, governmental power continues to expand, the U.S. continues to take on unfunded obligations and debt that over the coming decades amount to many times more than the GDP of the entire planet, and the Constitution continues to be disregarded and misinterpreted. The abandonment of a sound monetary system will make the coming crash more devastating than we have ever seen. It will almost certainly get worse before it gets better. It is unlikely that we will live to see America, or any other country, decide
to protect individual rights fully. The combined effects of all the global statist policies, if left unchecked, will one day come crashing down in utter ruin. The world will certainly change.
“The true source of our suffering has been our timidity. We have been afraid to think . . . . Let us dare to read, think, speak, and write . . .”
[451] – John Adams
Now that we have the tools necessary to understand and discover truth in the world around us, the question remains, “What now?”
The answer is going to be different for everyone, but some guidelines may be helpful. The best advice now is to strive for the best, prepare for the worst.
Striving for the best includes the following:
Continue education for self, family, children, and friends;
· Work to change politics locally and nationally, by training current and future leaders and representatives to pursue the correct reason for the existence of government—the protection of individual rights;
· Love your life and follow your rational, life-centered values;
· Seek to spread the philosophy of freedom, the value of reason, the ethics of self-interest, and the politics of capitalism;
· Work to become an independent steward and producer. No one who is dependent on the government for subsistence will be effective in pursuing freedom;
· Seek to be a better person. For things to get better, you must get better; for things to change, you must change. Build and use the lost virtues of love, dignity, and respect—even as an answer to hate, bad manners, and no self-control.