Government: Club or Prison?
Does government function as a club or a prison? In particular, are local taxing districts — local governmental entities — simply clubs where residents voluntarily pay fees set by an elected board? Or, are these districts nothing more than prisons, so to speak, where the governing body extracts fines and penalties from land and labor? First, let us look at unions and monopolies.
It is customary to characterize traditional labor-union policies as monopolistic schemes aiming at the substitution of monopoly wage rates for competitive wage rates. However, as a rule labor unions do not aim at monopoly wage rates. A union is intent upon restricting competition on its own sector of the labor market in order to raise its wage rates. But restriction of competition and monopoly price policy must not be confused.
In the quote above, Mises distinguishes the union from the monopoly. While both seek to obtain advantages in the market, the monopoly is concerned with each good, whether sold or unsold. The union, on the other hand, cares only about members covered by its contract. Those unemployed are not its concern whatsoever. In other words, both unions and monopolies seek to reduce supply in order to reap a higher price, but only the monopoly cares about the supply foregone.
The monopolist is concerned with the employment of the whole stock available. He is equally interested in every fraction of this stock. If a part of it remains unused, it is his loss. Nonetheless he chooses to have a part unused because under the prevailing configuration of demand it is more advantageous for him to proceed in this way. It is the peculiar state of the market that motivates his decision.
The monopoly seeks to reduce supply and increase the price in order to obtain a monopoly profit. Therefore, the monopoly considers each widget withdrawn from the market when developing its business plan. The monopoly will only withhold a widget if, by withholding the widget, the monopoly reaps a greater profit. Contrast that with the union.
The prevailing labor-union policies are restrictive and not monopoly price policies. The unions are intent upon restricting the supply of labor in their field without bothering about the fare of those excluded.
The union has no concern with the marginal employee; the first one cut off from union membership. The union only concerns itself with those holding a union card.
Those not admitted must go into less remunerative jobs or must remain unemployed. The unions are not interested in the fate of these people.
The leadership of a union may weigh the benefit of adding union members when it considers the amount of union dues foregone. But the adding or subtracting of union members still leaves the greater majority of workers outside the union, and outside the concern of the union.
The key here is that a monopoly faced with a warehouse full of widgets or acres of underutilized capital has to account for each widget withdrawn from the market. The union faced with billions of laborers does not have to account for those denied union membership — withdrawn, so to speak, from the union-control sector of the economy.
OK, let us look at local taxing districts.
In order to generate additional tax revenue, local school districts in Ohio must place operating levies on the ballot.[1] School districts can tax land, income, and sales — under special arrangement with their county government. Once approved by 50% + 1, these taxes are paid by all residents subject to the tax.
The school district has options for taxing income. A school district can construct its income tax levy to garner votes from certain residents by exempting those very same residents from the tax, or from the full brunt of the tax.
In addition, state law exempts senior citizens and others from a portion of their property bill. The school district's partner in crime — the state — reimburses the school district for lost property taxes out of revenue generated by state-wide taxes and fees. Of course, nonexempt residents and businesses throughout the state pay the property tax exemptions — the state only has what it steals
Regardless, all exemptions assist the school district with its efforts to garnering support for a new levy. This is done through the creation of a pool of voters who are not subject to the tax they are being asked to approve — redistribution of sorts at the local level.
Just like a local taxing district, a club can raise its fees. Depending on the structure of the club, the fees can be raised by the governing body or through a vote of the majority of members, or by any means granted in its charter. And, just like the school district, the club can create fee structures that benefit some over the rest.
So, on the surface, the club and the local taxing district function the same with regard to their respective fees and taxes. However, we have to look just a little deeper.
Since the school district is only concerned with garnering a majority of votes, the district has no concern for the no voters should the levy pass. Those folks must pay the new tax regardless of their vote or belief.
Not so with the club. The club must concern itself with every individual since the club stands to lose if members leave. In this sense, the club is the monopoly balancing its increased fee against the number of members — and their dues — that may leave should the fee increase.
The school district, on the other hand, acts similar to the union: the district is not concerned that residents may leave in the face of a new tax levy. In Ohio anyway, the property tax rate for a levy adjusts so that any tax revenue lost due to reduced property values is levied on the remaining properties. In other words, if residents begin putting their homes up for sale, causing property values to fall, or businesses dismantle and relocate capital, the remaining residents and businesses must pay additional taxes in order to keep the school district whole.
This protection from property values provides an incentive for school officials to propose the largest levy that will win approval of the majority of voters, no matter how small the majority.
Is government a club or a prison? It is certainly not a club, but is it a prison? Some will argue that government is not a prison at the local level since residents can vote with their feet. However, for those who want to keep their current property, government creates a prison housing the innocent who must continually plead guilty and pay all fines or penalties handed down.
Notes
[1] I am using local school districts since they are the largest local taxing districts in Ohio. What follows is an oversimplified review of Ohio school district tax laws.
Comments (9)
David Spellman
When I was a kid, we lived in an unincorporated area with a volunteer fire department. This functioned perfectly well, but later Houston annexed us and imposed their city fire department on us.
Of course, the new city services were much more expensive and in the opinion of many people much less efficient. Nevertheless, people go along with the system and mumble about not being able to fight city hall.
There was a time in American history when people believed they could fight the government and they did. Even the State glorifies the great revolutionary war to give itself legitimacy in a kind of reverse guilt by association.
When we have enough people willing to pledge their lives, their fortunes, and their sacred honor to the cause of liberty, we will have freedom once more. Until then, make sure you render unto Caesar that which is billed.
Published: January 5, 2009 7:07 PM
Miraj Patel
David Spellman: That is a great comment and I completely agree. As a nation of people we need to realize that we have the power to change things and that every single person has a voice that matters. There are far too many people who have lost hope in the idea that they could make a difference, but just look at the American Revolution or the ideas of our founding fathers and it is evident that this is not the case. It should be our duty as citizens to keep the government in check and to make sure that we keep our liberties.
Published: January 5, 2009 7:51 PM
Gil
Nope - a club. The government (local, state or federal) has no real monopoly they compete against each other and people for fees - which sounds like a club to me. If people complain they "can't their house with them" they should get a RV. In a private landowning world the landtenants have no claim to the land that is under them either. And it would consider vile criminal behaviour if some landtenants killed landowners and divied the land up according to which plot the landtenant happened to be occupying. Heck, they'd have probably done a Marxist 'property is theft' to justify to themselves the landowners' rights were non-existent before killing them!
Published: January 6, 2009 1:52 AM
Inquisitor
It is a monopoly of jurisdiction between itself and those under it. One cannot "unsubscribe" from it to subscribe to another provider of defence services. So sorry, it isn't a club. It has no independent ownership of the land under it - it just claims to. What is the basis of its claim? So yes, the "government" can be dissected, blown to bits, torn apart etc., and it'll be perfectly just. If a landowning association or club lack legitimate title to their holdings, the same goes for them...
Published: January 6, 2009 3:01 AM
Gil
Huh? A true landowner is a sovereign landowner and has monopoly right to the land and gets to make the rules to which any tenant would adhere to if he/she was renting. So I don't get what you're talking about. A privatised landowning system would require landtenants to 'love it or leave it' not depose the landowner because they don't like him/her. Please be more specific.
Published: January 6, 2009 5:08 AM
john
Congress is the ultimate club. Not only do they run the country to their own liking, they also control who gets booted out. Witness the current problems with the appointee from Illinois.If they were to be ousted based on their integrity, most if not all would go.
Published: January 6, 2009 8:29 AM
Inquisitor
"A true landowner is a sovereign landowner and has monopoly right to the land and gets to make the rules to which any tenant would adhere to if he/she was renting. So I don't get what you're talking about. A privatised landowning system would require landtenants to 'love it or leave it' not depose the landowner because they don't like him/her. Please be more specific."
I was. What has the government done to earn title to the land it presumes itself sovereign over? Has it homesteaded it? No. In most cases it's done precisely nothing. So it is disanalogous to private landownership. Moreover, it butts in between private individuals and arrogates itself the position of third party arbitrator of last resort in all cases, as well as arbitrator between conflicts between itself and its subjects. How can this ridiculous state of affairs be taken on analogy with private landownership? Plainly, it cannot.
Published: January 6, 2009 9:41 AM
Inquisitor
"A true landowner is a sovereign landowner and has monopoly right to the land and gets to make the rules to which any tenant would adhere to if he/she was renting. So I don't get what you're talking about. A privatised landowning system would require landtenants to 'love it or leave it' not depose the landowner because they don't like him/her. Please be more specific."
I was. What has the government done to earn title to the land it presumes itself sovereign over? Has it homesteaded it? No. In most cases it's done precisely nothing. So it is disanalogous to private landownership. Moreover, it butts in between private individuals and arrogates itself the position of third party arbitrator of last resort in all cases, as well as arbitrator between conflicts between itself and its subjects. How can this ridiculous state of affairs be taken on analogy with private landownership? Plainly, it cannot.
Published: January 6, 2009 9:42 AM
Gil
Why does dickering over who 'homesteaded' what really make a difference other than presuming the 'rightful' owner would be a just and noble king (e.g. Prince John vs King Richard)? In a privatised system the 'final forceful arbitrator is the actual landowner butting into what the landtenant(s) are doing against his rules. Let' s say a landowner rents a parcel of land to a tenant and finds out the tenant is sub-renting someone else and this is forbidden by the landowner. The landowner isn't a 'third party nitpicking do-gooder' rather he's enforcing his own property rights. Or alternatively a landtenant is converting the land into a farm against the landowner's wishes? A 'butting-in third party' is analogous to one nation-state bossing around (declaring war? speading Democracy?) with two other nation-states just the because the do-gooding nation-state doesn't approve of what the two nation-states are doing. Or if the 'third party' has no right to any authoritah whatsoever then the analogy is that of the U.N. telling nation-states what they can and can't do (or worse presuming the U.N. Constitution overrides the nation-states' constitutions).
Alternatively does claiming the government has no rights to its land because it collect rents hands out more rules give a person right to deny the sovereignty and declare themselves the 'true' landowner and sovereign because they have been living on the land and improving it any more legitimate than a tenant arguing they now legimately own their apartment because they can't remember a time when the landlord did anything other than collect rent and occasionally drop in and declare some new restriction while the tenant has been the one doing the upkeep even to the point of doing essential repairs that are supposed to be the landlord's problem? *pauses to breath* The usual answer is the ol' 'love it or leave it' and go and rent another apartment not send the letter saying "It's my apartment" and shooting the landlord in the backside if he's try to argue otherwise. But unfortunately the equivalent analogy is to say "well if you don't like that nation-state then emigrate but to dig in and repel government enforcement is to reassign personal property rights on a personal whim and borders on Marxism and presumes ownership should go to the workers not those who actually have the title to the land". *stops to breath again*
Published: January 7, 2009 6:31 AM