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Posts Tagged ‘Murray N. Rothbard’

The Consumption Tax: A Critique

Posted by M. C. on June 27, 2022

The Alleged Superiority of the Income Tax

Murray N. Rothbard

tax burden

We were assured by one and all, at the time, that this new withholding tax was strictly limited to the wartime emergency, and would disappear at the arrival of peace. The rest, alas, is history. But the point is that no one can seriously maintain that an income tax deprived of withholding power could be collected at its present high levels.

The consumption tax, on the other hand, can only be regarded as a payment for permission-to-live. It implies that a man will not be allowed to advance or even sustain his own life unless he pays, off the top, a fee to the State for permission to do so. The consumption tax does not strike me, in its philosophical implications, as one whit more noble, or less presumptuous, than the income tax.

https://mises.org/library/consumption-tax-critique

Orthodox neoclassical economics has long maintained that, from the point of view of the taxed themselves, an income tax is “better than” an excise tax on a particular form of consumption, since, in addition to the total revenue extracted, which is assumed to be the same in both cases, the excise tax weights the levy heavily against a particular consumer good. In addition to the total amount levied, therefore, an excise tax skews and distorts spending and resources away from the consumers’ preferred consumption patterns. Indifference curves are trotted out with a flourish to lend the scientific patina of geometry to this demonstration.

As in many other cases when economists rush to judge various courses of action as “good,” “superior,” or “optimal,” however, the ceteris paribus assumptions underlying such judgments—in this case, for example, that total revenue remains the same—do not always hold up in real life. Thus, it is certainly possible, for political or other reasons, that one particular form of tax is not likely to result in the same total revenue as another. The nature of a particular tax might lead to less or more revenue than another tax. Suppose, for example, that all present taxes are abolished and that the same total is to be raised from a new capitation, or head, tax, which requires that every inhabitant of the United States pay an equal amount to the support of federal, state, and local government. This would mean that the existing total government revenue of the United States, which we estimate at $1.38 trillion—and here exact figures are not important—would have to be divided between an approximate total of 243 million people. Which would mean that every man, woman, and child in America would be required to pay to government each and every year, $5,680. Somehow, I don’t believe that anything like this large a sum could be collectible by the authorities, no matter how many enforcement powers are granted the IRS. A clear example where the ceteris paribus assumption flagrantly breaks down.

But a more important, if less dramatic, example is nearer at hand. Before World War II, Internal Revenue collected the full amount, in one lump sum, from every taxpayer, on March 15 of each year. (A month’s extension was later granted to the long-suffering taxpayers.) During World War II, in order to permit an easier and far-smoother collection of the far-higher tax rates for financing the war effort, the federal government instituted a plan conceived by the ubiquitous Beardsley Ruml of R.H. Macy & Co., and technically implemented by a bright young economist at the Treasury Department, Milton Friedman. This plan, as all of us know only too well, coerced every employer into the unpaid labor of withholding the tax each month from the employee’s paycheck and delivering it to the Treasury. As a result, there was no longer a need for the taxpayer to cough up the total amount in a lump sum each year. We were assured by one and all, at the time, that this new withholding tax was strictly limited to the wartime emergency, and would disappear at the arrival of peace. The rest, alas, is history. But the point is that no one can seriously maintain that an income tax deprived of withholding power could be collected at its present high levels.

One reason, therefore, that an economist cannot claim that the income tax, or any other tax, is better from the point of view of the taxed person, is that total revenue collected is often a function of the type of tax imposed. And it would seem that, from the point of view of the taxed person, the less extracted from him the better. Even indifference-curve analysis would have to confirm that conclusion. If someone wishes to claim that a taxed person is disappointed at how little tax he is asked to pay, that person is always free to make up the alleged deficiency by making a voluntary gift to the bewildered but happy taxing authorities.1

A second insuperable problem with an economist’s recommending any form of tax from the alleged point of view of the taxee, is that the taxpayer may well have particular subjective evaluations of the form of tax, apart from the total amount levied. Even if the total revenue extracted from him is the same for tax A and tax B, he may have very different subjective evaluations of the two taxing processes. Let us return, for example, to our case of the income as compared to an excise tax. Income taxes are collected in the course of a coercive and even brutal examination of virtually every aspect of every taxpayer’s life by the all-seeing, all-powerful Internal Revenue Service. Each taxpayer, furthermore, is obliged by law to keep accurate records of his income and deductions, and then, painstakingly and truthfully, to fill out and submit the very forms that will tend to incriminate him into tax liability. An excise tax, say on whiskey or on movie admissions, will intrude directly on no one’s life and income, but only into the sales of the movie theater or liquor store. I venture to judge that, in evaluating the “superiority” or “inferiority” of different modes of taxation, even the most determined imbiber or moviegoer would cheerfully pay far higher prices for whiskey or movies than neoclassical economists contemplate, in order to avoid the long arm of the IRS.2

The Forms of Consumption Tax

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Why Rothbard Trended on Twitter This Weekend | Mises Wire

Posted by M. C. on August 18, 2021

https://mises.org/wire/why-rothbard-trended-twitter-weekend

Jeff Deist

Jack Dorsey, Vipassanā meditation practitioner and billionaire CEO of Twitter, is known for cultivating an eclectic image as a guru and deep thinker. He is also well-known as a supporter of bitcoin, having a personal stake and speaking at conferences to dedicated hodlers. But over this past weekend he used his sizable Twitter account (5.6 million followers!) to go a step beyond simply questioning the currency regime and post a decidedly provocative link to mises.org: 

Dorsey1

By provocative we mean Dorsey linked not to some article on bitcoin or money, but to Murray N. Rothbard’s seminal 1974 essay “Anatomy of the State.” This short missive may well represent Rothbard’s most bracing and concise attack on government as an institution, and that’s saying something. This is Rothbard at his full-throated best, challenging the state per se as a predatory and malign force in society rather than a needed protector of rights or provider of order. As I wrote earlier this year

[“Anatomy of the State”] demands that readers understand the stark nature of government, without fairy tales or niceties. It applies the same lens to public and private criminality. It challenges every myth surrounding politics and statecraft, ranging from “the government is us” to judicial review. It explains how the state maintains legitimacy, how it expands, how it deals with other states, and ultimately how it works to prevent domestic threats to its power. And it still serves as the baseline analysis for understanding state power, nearly 50 years after Rothbard helped create a burgeoning anarcho-capitalist movement.

As always, Dorsey was cagey and a bit opaque in his Twitter habits. He offered no explanation or follow-up. But we can only assume he intended to plant a seed, and our analytics tell us many tens of thousands of new visitors to mises.org clicked through both to Rothbard’s essay and related links. 

But Dorsey wasn’t done, tweeting another cryptic message over the weekend about the fiftieth anniversary of Richard Nixon’s gold shock:

Dorsey2

The hashtag #wtfhappenedin1971, and its accompanying Twitter account, has been active throughout 2021 in explaining the end of gold redemption in America. Like it or not, social media is now where anyone can climb on their soapbox and attempt to advance a narrative. Subversive sites like wtfhappenedin1971.com use twitter to do just that, helping millions understand the tremendous harm caused by government issuance of money backed by nothing. They skillfully use shocking graphics to make the case against inflationism and monetary hedonism. And they help organizations like the Mises Institute in our broader mission to show how money has become entirely corrupted by politics and special interests at the expense of ordinary Americans. Thanks to #wtfhappenedin1971 and Mr. Dorsey’s missive, the term “Rothbard” trended on Twitter all weekend—after we seized the opportunity to promote what we consider the best and most accessible book on money ever written: Rothbard’s What Has Government Done to Our Money?

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Classical Natural Law and Libertarian Theory | Mises Institute

Posted by M. C. on July 8, 2021

I love philosophy up to the point where I start treading it.

https://mises.org/library/classical-natural-law-and-libertarian-theoryCarlo Lottieri

Carlo Lottieri

If libertarianism wishes to give up modern political categories, it has to think about law in a different way. Murray N. Rothbard, the most important exponent of the radical libertarian school, is right when he rejects the historicism and relativism of legal realism and when—for the same reasons—he criticizes Hayek and Leoni.

But unfortunately, he does not really grasp the function of the evolution into classic natural law. Furthermore, his idea of building a libertarian code is completely inconsistent with his frequent references to the Greek and Christian legal heritage.1

In For a New Liberty, Rothbard points out that the history of a changing and evolving law can be useful in order to find just rules: “since we have a body of common law principles to draw on, however, the task of reason in correcting and amending the common law would be far easier than trying to construct a body of systematic legal principles de novo out of the thin air.”2

But the relationship between common law and natural law must be seen differently. Common law is not only an interesting tool for discovering natural law: it has its specific role. Positive law needs to interact with natural law principles, but even the latter cannot be considered as self-sufficient.

Moreover, in his defense of rationality, Rothbard does not realize that law cannot be entirely read into the praxeological framework, which is axiomatic and deductive. The division of theory and history puts some disciplines into opposition with others, but above all it makes a distinction within any single field of study.

Economics, for instance, is a theoretical science if considered as political economics, but a historical and empiric activity if it analyzes what happened in the past.3 This is also true for legal studies, because they have a theoretical part but, at the same time, include many other aspects which, on the contrary, are historical and cannot be examined using logical and a priori methods.

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Author:

Carlo LottieriCarlo Lottieri is an Italian political philosopher with the University of Siena and Istituto Bruno Leoni whose main interests are in contemporary libertarian thought. Most recently he edited an anthology of writings by Bruno Leoni.

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EconomicPolicyJournal.com: The Government Shutdown and The Fallacy of the “Public Sector”

Posted by M. C. on January 22, 2019

http://www.economicpolicyjournal.com/2019/01/the-fallacy-of-public-sector.html#more

Below is a reprint of a Murray Rothbard essay particularly relevant at this time of the partial government shutdown. It was originally appeared in the New Individualist Review (Summer, 1961)

The Fallacy of the “Public Sector”
By Murray N. Rothbard

We have heard a great deal in recent years of the “public sector,” and solemn discussions abound through the land on whether or not the public sector should be increased vis-à-vis the “private sector.” The very terminology is redolent of pure science, and indeed it emerges from the supposedly scientific, if rather grubby, world of “national-income statistics.” But the concept is hardly wertfrei; in fact, it is fraught with grave, and questionable, implications.

In the first place, we may ask, “public sector” of what? Of something called the “national product.” But note the hidden assumptions: that the national product is something like a pie, consisting of several “sectors,” and that these sectors, public and private alike, are added to make the product of the economy as a whole. In this way, the assumption is smuggled into the analysis that the public and private sectors are equally productive, equally important, and on an equal footing altogether, and that “our” deciding on the proportions of public to private sector is about as innocuous as any individual’s decision on whether to eat cake or ice cream. The State is considered to be an amiable service agency, somewhat akin to the corner grocer, or rather to the neighborhood lodge, in which “we” get together to decide how much “our government” should do for (or to) us. Even those neoclassical economists who tend to favor the free market and free society often regard the State as a generally inefficient, but still amiable, organ of social service, mechanically registering “our” values and decisions.
One would not think it difficult for scholars and laymen alike to grasp the fact that government is not like the Rotarians or the Elks; that it differs profoundly from all other organs and institutions in society; namely, that it lives and acquires its revenues by coercion and not by voluntary payment. The late Joseph Schumpeter was never more astute than when he wrote, “The theory which construes taxes on the analogy of club dues or of the purchase of the services of, say, a doctor only proves how far removed this part of the social sciences is from scientific habits of mind.”1…

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The Freedom Crisis | Mises Wire

Posted by M. C. on November 18, 2018

https://mises.org/wire/freedom-crisis

The Freedom Crisis

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[This talk was delivered at the Mises Institute’s 2018 Ron Paul-Mises Circle In Lake Jackson, Texas.]

There is a crisis, and only you, and people like you, can get us out of it.

What is this crisis? On the one hand, the statist order is collapsing all around us. America is mired in a futile war in Afghanistan. A belligerent policy toward Iran threatens to bring about a new war in the Middle East. And let’s not forget about North Korea, where the danger of a nuclear war is by no means over.

On the domestic front, the Fed continues the manipulation of our economy which led to the 2008 crisis. Government debt is rising to an unprecedented level.

Thanks to the works of great thinkers and scholars like Ludwig von Mises and Murray N. Rothbard, we know the solution to the problems that the State causes. Freedom is the answer. Only a completely free market economy and a non–interventionist foreign policy can solve our problems.

And people want to hear our message. The magnificent success of Dr. Ron Paul inspires all of us. His books, including End the Fed and The Revolution: A Manifestoare best sellers.

Now we are in a position to understand the crisis I spoke about earlier. Freedom means the right to hold controversial, un-PC opinions, and to act on these opinions, so long as you don’t commit aggression. But today the lunatic left is trying to suppress those who hold opinions like ours. If they had their way, we would be completely silenced. Unfortunately, there are so-called left “libertarians” who have joined this campaign of suppression. They demand that libertarians embrace the complete PC agenda. It is because of this sad situation that we need to support alternative media.

Here is a sample of what we are up against. Jeremy Waldron is a well-known legal academic who has taught at Oxford and now teaches at NYU Law School. In The Harm in Hate Speech, he calls for suppression of so-called “hate speech,” which really means anything that is un-PC.

Hate speech, Waldron tells, us, consists of “publications which express profound disrespect, hatred, and vilification for the members of minority groups”

Why should we restrict hate speech? Waldron says it is like environmental pollution:

tiny impacts of millions of actions — each apparently inconsiderable in itself — can produce a large-scale toxic effect that, even at the mass level, operates insidiously as a sort of slow-acting poison, and that regulations have to be aimed at individual actions with that scale and that pace of causation in mind.

But why does contagion operate only with bad effects? Will not the cumulative effects of a series of individual encounters in which members of minority groups are treated with equal respect generate a positive atmosphere of assurance, in precisely the same way that Waldron postulates for the amassing of hate messages? Waldron assumes without argument a quasi–Gresham’s law of public opinion, in which bad opinion drives out good.

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How Our Freedom Developed – LewRockwell

Posted by M. C. on October 11, 2017

https://www.lewrockwell.com/2017/10/no_author/power-vs-freedom/

Murray N. Rothbard has infuriated me! I learned exponentially more from this text than from every American history class I have ever taken and every history text book I was forced to purchase – combined. I paid $4 American (in 2014 dollars) for this collection on eBook. When compared to the several thousand I spent in college courses and American History text books, this has to be the greatest value ever. If Rothbard had only expanded his scope to include math, physical science, and engineering…well, I could have gotten my entire undergraduate education for less than $20. How dare he stick to the social sciences! Read the rest of this entry »

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