Inflation & Taxation: A Consideration of the Validity of Certain Government Actions

It can be challenging to critique government action. Although anybody can proclaim that they disapprove of a piece of legislation, determining a basis upon which to judge the validity of government behavior can be difficult. After all, since government creates the law, unless it breaks its own rules, evaluating the legality of government action is unhelpful.*

Besides analyzing the legality of government action, however, are there higher laws that would establish the morality of government action? Specifically, what gives government moral justification to perform actions that are legally and morally discouraged at the individual level? This is a complex philosophical issue which is beyond the scope of this blogpost. However, in the remainder of this post, I want to use these questions to analyze a couple of actions that are illegal and immoral at the individual level, but generally accepted when performed by the government.

Does the fact that an action is being performed by the government rather than the individual make it morally permissible? If not, how does one make the distinction between moral and immoral government action? While I am not necessarily going to answer these questions in this post, think about them as you consider the rest of this discussion.

Notes:

*[Admittedly, the U.S. government routinely violates constitutional law and I’m sure other governments behave similarly at times. However, although that would be an interesting topic for another discussion, I did not attempt to analyze the issue of the legality of government action in this blogpost. I merely wanted to mention this matter to set up the rest of my post.]

Inflation

Inflation is a widely accepted negative inevitability. Nobody really likes inflation but at the same time, nobody is really motivated to get rid of it. It is generally expected that it will continue to exist and is often attributed to greedy business systematically raising their prices. However, as historian and economist, Murray Rothbard, notes, “If businessmen are so avaricious as to jack up prices 10 percent per year, why do they stop there? Why do they wait; why don’t they raise prices by 50 percent, or double or triple them immediately? What holds them back?” (“For a New Liberty” page 217). The answer to Rothbard’s final question is that consumers hold back businesses from operating in this way. After all, businesses (generally) cannot force consumers to buy their goods, regardless of the price being charged. Therefore, this is not a convincing explanation for the existence of inflation.

So what does cause inflation? Well, without getting into the technical intricacies of monetary policy, the simple answer is that the government causes inflation by increasing the supply of money. This increase in the supply of money causes the value of existing dollars to decrease. Additionally, the increase in the supply of money held by consumers relaxes their budgetary constraints, increasing their demand for goods. This increased demand causes the higher prices that are generally associated with inflation.

To look at it another way, imagine a world that has only ten units of currency and ten widgets. Each widget is then worth one unit of currency. If someone were to magically create ten additional units of currency and no additional widgets, then the relative price of the widgets would double since the ratio of units of currency to widgets increased. Note that the increased supply of currency was not at all associated with an increase in production.

At an individual level, the creation of currency is known as counterfeiting and is illegal and immoral. After all, by increasing the supply of money, the counterfeiter gains wealth at the expense of others. At its root, counterfeiting is a form of theft in the sense that it devalues the currency held by others. In terms of the immorality of stealing value from others, the Old Testament decries the act of using false weights on numerous occasions as an act of stealing value from others (Leviticus 19:35-36, Deuteronomy 25:13-16, Ezekiel 45:9-10, Hosea 12:7-8, etc.) and counterfeiting is similarly morally reprehensible.

So what gives government the right to do what is illegal and immoral at the individual level? You might say that government has the “greater good” in mind when exercising inflationary policy, but government uses inflation for the same reasons that individuals counterfeit: to increase their wealth at the expense of others. If you believe in human depravity you will likely sympathize with Rothbard’s analysis of the issue, “Since the interest of the counterfeiter is to print as much money as he can get away with, so too will the State print as much money as it can get away with, just as it will employ the power to tax in the same way: to extract as much money as it can without raising too many howls of protest” (“For a New Liberty” page 222). An increased supply of money gives the government an easy method for increasing spending without increasing more obvious taxes and creating these sorts of “howls of protest.”

Thus, inflation is a convenient tax on individuals that will often go unnoticed and will surely not be attributed to government policy by the majority of the population. However, its negative effects are numerous, ranging from decreased savings account values to higher prices. Author R.C. Sproul Jr. sums this topic up nicely, “For a private individual the practice of printing bogus, worthless paper and putting it in circulation is a criminal act, yet it is legal for governments to do it. The practice of inflating the money supply with fiat currency is an act of national theft” (“Biblical Economics” page 105).

Taxation

As an accountant at a public accounting firm, I regularly think about taxes. And based on my interactions with individuals regarding taxation, I want to make two initial observations. First, nobody really likes paying their taxes. It’s a bit ironic that the same people who assert the importance of “contributing to society” will actually complain about doing their part. Second, those affected by high tax rates are actual people, not merely abstract corporations. Seeing a person, with an actual name and a family and a life lose >30% of his/her income is sobering. I want to be clear that the negative effects of taxation on individuals are real, not mere theories or abstractions. (Let me now move beyond this initial appeal to emotion.)

Many of you are likely familiar with the common phrase “taxation is theft.” And although I tend to agree with the sentiments of this phrase, it is a concise but inadequate description of the ideas at hand, which, without further explanation, often causes confusion and/or frustration. That being said, let me explain my thoughts.

Imagine I am a mob boss. I come to your house and demand money from you. Of course (unless you were feeling generous), you would likely turn me away because I have no claim to your money. But I happen to disagree, pointing out that I am actually providing you with a service. In return for your money, I will provide protection and if I do not receive your money, you will “likely” undergo some sort of harm. You would describe this behavior as extortion since you did not ask for my protective services and will be punished for failing to accept and pay for these services. Thus, this type of forced payment is both illegal and immoral at the individual level.*

Nonetheless, this type of extortion is analogous to what government does through taxation. Now you might disagree with me and say that taxes are the cost of living in a free society.** Think of all the public services that one benefits from by paying taxes. However, similar to the situation in the previous paragraph, what if I do not want any of these public services? I still have to pay all of my taxes or face government punishment. What if I only appreciate some public services and would like to only support those services that I need? I still have to pay all of my taxes or face government punishment. Thus, taxation is coercive by definition. On this issue Rothbard notes, “Anyone who persists in thinking of taxation as in some sense a ‘voluntary’ payment can see what happens if he chooses not to pay” (“For a New Liberty” page 62).

(Beyond the blatant issue of the coercive nature of taxation, there are more specific problems with the current tax system. The income tax in and of itself provides a disincentive to work, as more labor leads to a higher tax bill. That’s not even considering the moral issues of taxing the same dollar over and over again. Furthermore, the tax collection process forces employers to act as unpaid tax collectors and forces individuals to work at no pay (or to pay accountants) to verify the correctness of their tax bills. You might not think to describe this process as involuntary servitude, but since millions of individuals are forced to provide labor without any corresponding compensation, it is difficult to accurately describe it otherwise.)

Notes:

*[Since extortion is very similar to theft, I would hope that you wouldn’t question the immorality of it. However, if you need specific examples of the Biblical condemnation of extortion, consider Ezekiel 22 where God denounces Israelites for committing extortion numerous times (vs. 7, 12, 29).]

**[Although, it is interesting to note that individuals do not choose what society they are born into. You might not want to live in a free society, and would prefer to live in a freer society where you don’t have to pay for services you don’t want. Ironically, this is the point where the free society becomes considerably less free and you are thrown into prison, which is quite the opposite of free.]

Conclusion

In the end, you might argue with the points laid out so far by saying that inflation and taxation are inherently different from individual theft because they are performed by the government. This statement would bring us back to one of the questions posed earlier: what gives government moral justification to perform actions that are legally and morally discouraged at the individual level? As science fiction writer Robert Heinlein asked, “Under what circumstances is it moral for a group to do that which is not moral for a member of that group to do alone?” (“Turn Neither to the Right Nor to the Left” page 159).

Without getting too deep into answering this question, it seems that if inflation and taxation are forms of theft, then justification of either of these government actions means affirming that theft is only wrong when performed by certain people. Now, you might dodge this issue by stating that without inflation or taxation, government would not have the funds to run properly. And, while that statement may be true, that is a utilitarian argument that ignores the underlying moral issues. Ultimately, we should not advocate “what works” if “what works” is clearly morally wrong.

//

Hopefully, I did not offend too many people with the radical ideas presented here. All in all, I am merely trying to think through many of these issues and formulate a consistent view of government and morality. If you heartily disagree with what I said or were intrigued by this new perspective, I’d love to hear your thoughts. Feel free to leave a comment or send me an email.

For further reading on these topics, check out “For a New Liberty” by Murray Rothbard,  “Biblical Economics” by R.C. Sproul Jr., and “Turn Neither to the Right Nor to the Left” by D. Eric Schansberg.

 

My Political Ideological Journey Part #2: Civil Disobedience

Another book that shaped my initial thoughts on government was “Civil Disobedience” by Henry David Thoreau. Now I definitely disagree with Thoreau on a number of points, but I appreciate the fact that he implies a higher standard of justice than human law.

“Must the citizen ever for a moment, or in the least degree, resign his conscience to the legislator? Why has every man a conscience then? I think that we should be men first, and subjects afterward. It is not desirable to cultivate a respect for the law, so much as for the right. The only obligation which I have a right to assume is to do at any time what I think right […] Law never made men a whit more just; and, by means of their respect for it, even the well-disposed are daily made agents of injustice” (Page 4).

While this quote could be taken as an argument for moral relativism (and maybe that was the intent?), I think it is helpful in noting that the law does not always equal justice and that there are higher standards (the conscience, according to Thoreau), which should enable us to critique the justice and validity of various laws.

In terms of the role of government, Thoreau practically argues “that government is best which governs least,” but ideally “that government is best which governs not at all” (Page 3). It’s unclear if Thoreau is legitimately advocating anarchy, but it seems clear that, at the least, he is advocating an extremely limited government. The more limited, the better, according to him.

Thoreau is also helpful in explaining that there is a point where citizens must be willing to resist and fight against government injustices. He writes, “Unjust laws exist: shall we be content to obey them, or shall we endeavor to amend them, and obey them until we have succeeded, or shall we transgress them at once? ” (Page 11). And while he would probably advocate a greater level civil disobedience than I would, I think this is an important issue to consider. Most principled individuals would say that if government did “X” or outlawed “Y,” they would have to disobey. It’s interesting, therefore, to think through where that line should be drawn and what level of injustice or tyranny would necessitate civil disobedience.

While I definitely don’t agree with Thoreau on every point, this book was helpful and formative in the process of my political ideological journey.

//

I’d love to hear your thoughts on Thoreau’s ideology and my interpretations of his ideas. As usual, leave a comment or send me an email, if you’d like. Thanks for reading!

The Frying Pan Fable: On Asking the Wrong Questions

Frying pans are really great for cooking things, after all, that is what they are designed for. From scrambled eggs to sautéed vegetables, there are numerous types of foods that can be prepared in a frying pan. However, besides this obvious use, a frying pan can be utilized for a variety of other tasks. If someone breaks into your house, a frying pan can be used as a self-defense tool. If you are concerned about small objects falling on your head, a frying pan could be used as a helmet.

Despite these alternative uses, frying pans are generally just used for cooking. Why is that? What prevents people from seeing frying pans as multipurpose tools and using frying pans for all sorts of tasks? Well, besides the fact that frying pans are not all that good at accomplishing these other tasks, people use frying pans for cooking because they were designed for that task. I could try to use my lawn mower as a fan or my shoes as soup bowls, but these items were not designed for those jobs and would do a poor job.

Economist Gene Callahan illustrates this idea that different tools have different roles and different levels of effectiveness, “Simply because a sledgehammer does a good job breaking up stones does not mean that it’s the right tool for slicing tomatoes” (“Economics For Real People” page 35)

The majority of fabricated items in this world were created with particular purposes in mind. That’s not to say there is no place for experimenting with alternative uses or making do with limited resources. However, I think I’m correct in saying that, generally, things work best when they are put to use according to their design. If I am holding a vacuum cleaner and wondering how to use it, I should ask for what it was designed for. On a bigger scale, if I am wondering how I should live, I should attempt to find out what I was created for.

This leads into the main purpose of this blog post, which is about how to evaluate government. I spent to preceding paragraphs making the point that things in life should (generally) be utilized according to their design. Why do we not apply this same framework to government? Why do we not spend more time considering the proper role of government? From handling education to regulating the food industry clearly government is capable of many things. But, like using the frying pan for self-defense, some of these tasks might be outside of the realm of its design. To evaluate government in terms of capability, or even its propensity to act according to my personal values is to ask the wrong questions. Rather, we should step back and attempt to determine the proper role and purpose of government. From there we can evaluate aspects of government action, such as effectiveness, from a more stable foundation.

When thinking about government involvement in healthcare, for example, I could start by thinking about the effectiveness of government regulated healthcare. Additionally, I might consider my personal feelings on the matter. However, if I don’t start by considering whether or not regulation of healthcare is within the realm of government’s role, I will have missed the fundamental issue.

I would challenge everybody reading this post to think hard about government’s role. Think through why government exists and what purposes it achieves. From there try to determine if the policies that you support agree with this foundational framework. Hopefully, this exercise will enable you to have a more consistent and thoughtful view of government.

//

As usual, I’d love to hear your thoughts on this topic. Feel free to leave a comment or shoot me an email. Thanks for reading!

Breaking Bad and Human Nature

[Note: the following post is intended for those who have seen “Breaking Bad.” It references characters and elements of the plot without necessarily explaining background information. It contains MAJOR SPOILERS. If you have not seen “Breaking Bad” but you plan to watch it, I would advise reading no further. Otherwise, enjoy!]

“Breaking Bad” is easily my favorite TV show and is the most well written show I’ve ever seen. Besides the stunning cinematography, complicated characters, and intriguing plot line, I appreciate “Breaking Bad” because it gives an accurate depiction of human nature. This picture is not always pretty – it actually is quite jarring, disturbing, and sobering. But it is realistic and offers many lessons for viewers to take away:

  1. Even the most normal, seemingly-moral individuals have the propensity for evil, given certain situations. “Breaking Bad” tells the story of Walter White, a high school chemistry teacher diagnosed with terminal cancer who begins making drugs in order to provide for his family. The writers go to extensive lengths to show just how law-abiding, and averse to violence Walter really is initially. When Walter’s DEA brother-in-law offers to let Walter hold his gun, Walter can barely handle it and looks obviously out of place. When Walter coerces high school dropout/druggy Jesse Pinkman to make meth with him, Jesse cannot believe that someone like Walter would ever do something like create and sell drugs. This example stands as a lesson for viewers that no individual, no matter how seemingly-moral, is beyond acting in terribly evil ways. All it took was a difficult life situation (being diagnosed with cancer) for Walter to justify this awful behavior. This leads right into the next lesson.
  2. The decline into habits of evil is often gradual and can involve a series of moral justifications. Walter decides to begin cooking meth by telling himself that when he dies, his family will need money to survive. While many people would have qualms with this decision, it could potentially be seen as at least somewhat moral. After all, taking care of one’s family is a good thing, and some might see that as the ultimate good in Walter’s situation. However, as the show progresses, Walter’s actions turn from “justifiable, but wrong” to “glaringly wrong.” Walter enters the drug industry with the idea that he can use his chemistry background to cook meth but not really get involved with the gritty, violent details of the drug industry. However, this fairytale is quickly crushed by the harsh realities of the inherent violence of professions in the drug industry. Once Jesse’s former partners attack Walter and try to get him to cook for them, Walter is forced to stand up for himself. He uses poisonous gas to kill one of the drug dealers but only incapacitates the other one. Walter takes this individual captive and wrestles with how to deal with him. Over a significant period of time, Walter goes back and forth between letting him free and killing him. At this point he has at least some sense of right and wrong and is bothered by having to take human life with his own hands. Ultimately, Walter discovers that this prisoner is planning to kill him and in a moment of self-preservation strangles his captive. This action is really the turning point, where, from then on, Walter freely kills, manipulates, and hurts people without much resignation. From making drugs to help his family to killing another to save himself, Walter demonstrates the ability justify almost any wrong action with his shifting, unsubstantial sense of morality.
  3. Justifications for evil often hide the true selfish motives. Walter begins his drug-creating life by telling himself that he is doing it for his family. And throughout almost the entirety of the show, he continues to tell himself (and others) this same thing, even when his actions clearly do not line up with this message. There are numerous points where Walter has accumulated unfathomable amounts of money and could easily stop cooking meth. But he continues which hints that he must be motivated by something other than provision of his family. The final episode makes it clear that Walter was motivated by pride and at some point began to cook meth because of the sense of purpose and power it gave him. During the final episode, tired of hearing his justifications for cooking meth and creating so much devastation, Walter’s wife says, “If I have to hear one more time that you did this for the family…” Walter interrupts and bluntly states the truth, “I did it for me. I liked it. I was good at it. And… I was really… I was alive.” Somewhere along the way Walter began to cook meth because of the pride and sense of purpose this craft gave him, rather than merely provision for his family.
  4. Acceptance is not the proper response to realization of the depth of human depravity. Jesse Pinkman, Walter’s sidekick, has an awful life throughout the course of this show. He makes numerous bad decisions, but he is also heavily manipulated by Walter. In one instance Walter convinces Jesse to kill another man (Gale, for those who have seen the show) in order to save Walter and Jesse from being killed. Jesse follows Walter’s orders but becomes terribly bothered and haunted by his actions. After a significant period of isolation and depression, Jesse begins attending a twelve-step group, where the leader of the group preaches a message of self-acceptance, regardless of one’s behavior. After some time, Jesse gets fed up and blurts out, “So I should stop ‘judging’ and accept? So no matter what I do… hooray for me because I’m a great guy? It’s all good? No matter how many dogs I kill, I just, what, do an inventory and accept? I mean you back your truck over your own kid and you like accept? What a load of crap.” Jesse understands that we can’t deal with evil by just accepting it. These wrong decisions have significant consequences that must be dealt with, which leads to the next lesson.
  5. There are consequences for evil, which culminate in punishment. Throughout the show Walter works crazily to accumulate money, however, he can never seem to get enough. At every turn, something comes up to thwart his plans, mess up his operation, and take his money. And as he desperately strives to provide for his family, his relationship with his wife falls apart when she learns of his evil actions. Thus, the very thing he supposedly works for is gradually destroyed because of his actions. And despite Walter’s carefully laid plans, in the end everything falls apart. His wife and son hate him, his brother-in-law gets killed because of him, and ultimately he dies. There is more than just a “crime doesn’t pay” moral to this story. Walt’s decline into a lifestyle of evil culminates in complete and utter ruin.

“Breaking Bad” is a sobering show and is difficult to watch at times. However, it is a good reminder of the extent of the brokenness and depravity of human nature and the terrible consequences of sin. These realities can be easy to forget or gloss over and this show does an exemplary job of acting as a reminder to its viewers. For further reading about the theological/philosophical messages of “Breaking Bad,” I would HIGHLY recommend this article. (Note: for those who will watch this show based on my recommendation, please be warned that there are a handful of inappropriate scenes throughout the series which you would be wise to avoid.)

//

Especially if you’ve seen “Breaking Bad,” I’d love to here what you have to say about. Even if you haven’t, feel free to leave a comment or shoot me an email. Thanks for reading!

Love and Faithfulness

Love is a challenging word to define. It doesn’t help that in the English language we use the same word to describe marital relationships (i.e. “I love my husband/wife”) that we use to describe feeling towards food (i.e. “I love bacon”). That being said, if I had to pick out one definitive characteristic of real love that I think sets it apart from “false love” (if that is even a term), I would choose faithfulness.

My favorite poem of all time, Shakespeare’s Sonnet 116, does an exemplary job of describing how love without faithfulness is not genuine.

“Let me not to the marriage of true minds
Admit impediments. Love is not love
Which alters when it alteration finds,
Or bends with the remover to remove:
O, no! it is an ever-fixed mark,
That looks on tempests and is never shaken;
It is the star to every wandering bark,
Whose worth’s unknown, although his height be taken.
Love ’s not Time’s fool, though rosy lips and cheeks
Within his bending sickle’s compass come;
Love alters not with his brief hours and weeks,
But bears it out even to the edge of doom.
If this be error, and upon me prov’d,
I never writ, nor no man ever lov’d.”

I really enjoy the powerful wording of this poem! Shakespeare argues that “Love is not love which alters when it alteration finds” (Lines 2-3). According to these lines, love does not change in the face of changing circumstances. Shakespeare calls love “an ever-fixed mark that looks on tempests and is never shaken, ” meaning that real love faces difficulties without wavering (Lines 5-6). Shakespeare notes that genuine love does not give way as time goes by when he writes “love’s not time’s fool,” and “love alters not with his brief hours and weeks but bears it out even to the edge of doom” (Lines 9, 11-12).

This poem provides comfort and encouragement for married couples who undoubtedly  face obstacles in their love for one another. Personally, this poem encourages me through its message that real love is marked by faithfulness. If I say that I love my wife, I show my love for her by remaining faithful to her.

On a different, but related note, if love is marked by faithfulness, then I can have confidence in God’s love because of his faithfulness. The Old Testament, among other things, tells the story of God remaining faithful to his people despite their failure to reciprocate. When I am tempted to doubt God’s love for me, I can find great comfort in the fact that God has a spotless track record of remaining faithful to his people and to his promises (Deuteronomy 7:9, 2 Thessalonians 3:3). I can trust that he loves me and will do what he says he will do because he has proven himself to be faithful.

I realize that there’s undoubtedly a lot more that can be said about this topic. This post has really just scratched the surface of a very weighty and interesting subject. If you have thoughts that expound upon what I said or disagree with what I said, I’d love to hear them. These were just some ideas that I’d been mulling over for a while and thought might be helpful to some.

//

As stated above leave a comment or send me an email if you have a reaction to this post. Thanks for reading!