Keep Taxes Coming

My PolicyMic colleague Robert Taylor has argued there are certian issues which are a reflection of a broader anti-government movement that is rapidly spreading across today's youth, becoming a greater influence. Taylor's argument focuses mostly on President Barack Obama's proposal to invest in infrastructure spending, but his criticisms are more broadly focused on the illegitimacy of government spending, or revenue collection in general. Specifically, Taylor suggests that the government's "tornado of taxation, inflationary money printing, and crippling debt" is morally "equivalent to a thief stealing your money."

The idea that taxation is theft is not new. It has been around for centuries, and continues to permeate the anti-government movement because of its intuitive pull. It is, however, the result of an equivocation: An attempt to conflate two ideas or acts that are similar in a respect, but have relevant differences. Taxation is only theft if you accept that individuals have property rights over their entire income, i.e. if they have no obligation to pay for services such as defense, law enforcement, or the criminal justice system. I could argue that imprisoning murderers is kidnapping, and you may agree, but only if you have already accepted that government does not have the right to imprison murderers. To those of us who accept that government has legitimate coercive force, the argument is both question-begging and unconvincing.

Taylor also tries to convince us that those such as Obama, who want to develop infrastructure in the U.S., are guilty of the "broken window fallacy." But, I disagree with his reading of Bastiat. The parable of the broken window is about a young boy who throws a rock through a shopkeeper's window. The shopkeeper is upset because he has to pay to fix the window and consequently has less money to spend on other goods, while others in the community argue that the broken window will provide work for glaziers. The moral of the story is that, despite our intuitions, we should not view destruction as economically beneficial, though it may enhance the welfare of some.

Is this analogous to investing in infrastructure? Certainly, it is not. Infrastructure investments such as roads, highways, and railways, are not broken windows; they are public goods. Infrastructure is different from broken windows because it is not a result of intentional destruction. Investments either replace wear-and-tear from usage, or provide an increase in capacity. Providing public goods, such as a national defense and a criminal justice system, is a primary function of the government because private firms cannot typically recover the costs of producing such goods. Either they cannot exclude non-payers from consuming them (the free-rider problem), or they would not profit from doing so. The government overcomes this problem because it can levy taxes. It is typically far more efficient for governments to provide public goods, so long as the benefits outweigh the costs.

To be sure, there are good criticisms of infrastructure investments based on thorough cost-benefit analyses, but I did not find any in Taylor’s article.

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