Print Story Taxation as theft: hardcore edition
By gzt (Mon May 20, 2013 at 09:16:54 PM EST) gzt, k-means, failure, classes, doctor hurt, alien, libertarian, property is theft (all tags)
Now, I don't really have a complete axiomatic politics system, as I'm a pragmatist who thinks any system will involve throwing some bodies under the rug. The question is, whose bodies is your system built on? I think axiomatic approaches are self-delusions because you can't get anything a priori, so I don't believe in natural law as such. Revealed truths about government don't tell us we have rights, either, they tell us we have duties and then tell us that politics involve killing people, unfortunately, and there is no just political system, so that's not helpful, either, for the axiomatically inclined, particularly those who make a big fuss about "rights" and "liberties".

So I encountered a guy in some religious discussion who was very hardcore into the idea that taxation is theft. I didn't really have the time or desire to debate him, but I also didn't want the conversation in there to be entirely steamrolled by that narrative, as I don't want lurking readers to get the impression that his sort of thought is normal in these religious circles. So I dashed out a quick response something like this when he asked why I thought taxation was awesome:

Largely because I acknowledge the existence of public goods, externalities that cause market failures, the need to actually pay for the system that enforces and adjudicates law, and the extent to which those who do use their skill to make large amounts of money are dependent on the existence of such a system. The existence of a basic orderly state where even somebody born to poverty isn't going to starve and doesn't have to worry too much about getting shot by raving bands of thugs and where any reasonable contract has a reasonable chance of being enforced is a necessary precondition for civilization, but those things aren't free and poor people can't possibly pay for it on their own. That's a short and quick argument.

And then he went off on statist strawmen and accused me of being extremely violent and imposing my "feelings" on people because I think I know what's best for them. So I said something like:

Well, that's certainly your opinion, and I really don't have the time or wish to make the effort to go into a protracted argument with somebody starting from such radically different premises as me. I don't believe most of the premises, including non-aggression, that lead you to the conclusion that taxation is theft, just as you don't believe the premises that lead me to conclude the opposite. I have of course proven nothing, I stated a few premises that lead me to reject the notion that taxation is theft. Principles can't be proven a priori and attempts at rational discourse without substantial agreement on the basis of discourse are rarely useful, so the most productive course is simple to inform on what basis we disagree. Which I have done and am now finished doing. Hope that helps.

Response: more of the same accusations of violence, statism, whatever, so I responded with a quick reassertion that we have little basis for discussion and a quick recap of the gist of the argument that his notions of property rights are also violent and coercive as they depend on violence, either of the state or of private actors, for their enforcement. Further, property itself is a form of theft because we are on a planet of finite resources where none of us agreed to the original terms of distribution of, viz, land. By what right does somebody own a particular piece of land? In the theoretical construct that most libertarians use to justify property rights, it's by the violent exclusion of others from that land. I didn't agree to this system, and it, too, depends on coercive violence. Anyway.

Anyway, long story short, the real point of this is that, as a result of this, I found a rather good web-log about this sort of crap:

The market is a distortion
How to think about government distribution, benefits, etc.
Corporations as intellectual property rentiers
Nozick buzzsawing other libertarian frameworks

There are a bunch more skewing other libertarian arguments, he's a fairly bright kid. Most valuable for discussing property rights and theories of the origin of property rights. He's put a lot of thought into it.

Here is his argument that's most important to me: How environmentalism poses a problem for libertarian ideology. Namely, it is completely incapable of dealing with pollution, especially the sort causing global warming. Unfortunately, regular governments don't seem to be up to the task, either.

Other news:

Second day in row there was a tornado warning in the county, though today's was a couple miles further away so they didn't set off the sirens. For yesterday's, we went down in the basement when the sirens went off even though the radar clearly indicated that there was no way what they were seeing would come this way and there was nothing else developing. Still, as a matter of principle, storm warnings are heeded. Thanks Obamacare.

Not sure how the qualifying exam went. I missed a few stupid ones - forgetting to square something for a Cramer-Rao Lower Bound, mucking up something on a negative binomial, flubbing a simple question about the ratio of two exponential functions, using the Type III instead of the Type II sum of squares on one problem... But I got quite a bit.

At the last minute, they put me on a half-time appointment TAing for what is essentially a one-stop probability and statistics for scientists and engineers methods class for grad students. Since it's summer, this means two labs instead of only one each week. Apparently I have complete free reign, which has me mildly worried. How am I going to fill two hours twice per week with very little guidance? Q&A, working slowly through example problems, showing them how to do the computing stuff, I don't know. There was one guy asking about SAS, I could show how to do some stuff in SAS if there's interest, I guess.

Also, tomorrow I will drop in to see the professor and start up on my project, which is a continuation of the class project. Namely, trying to turn this k-means compression into something vaguely interesting. Or something.

Game of Thrones: still plodding along, more entertaining than most TV, Tyrion + Sansa is still a better love story than Twilight.

Doctor Who: it's turning from the cheap campy sci-fi I like into the sort of cheap campy sci-fi I don't like. However, Doctor Hurt seems cool.

Alien: we watched Alien last night as a tribute to Hurt.

Une femme est une femme: we also watched this yesterday because it's French Movie Sunday. Enjoyable, but not too deep.

EDIT: Oh man, something reminded me of the delightful Onion AV Club "newbie" reviews of Game of Thrones. Basically, somebody who hasn't read the books and is completely unspoiled is reviewing the episodes as they come out. Here's a delightful quote: " I know that what we’re seeing is the first half of the third book, and I’m more and more afraid that there isn’t going to be quite as devastating a closing punch as there was in the last two seasons, because we’re going to be closing on the middle of a book." AH HA H A HA HA HA HA HA. AAAAAAAAH HA HA HA.

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Taxation as theft: hardcore edition | 14 comments (14 topical, 0 hidden)
The guy lost me with this by riceowlguy (2.00 / 0) #1 Tue May 21, 2013 at 11:18:14 AM EST
"From the answer to that question, we can decide whether a distortion is good or bad by determining whether it ensures that individuals are given what they are due."

That is precisely the kind of thinking that libertarian economists are afraid of.  We're collectively terrible at deciding anything.  Why should we trust some select group of elites to decide what you, I, or anybody else are "due"?

Which article was that in? by gzt (2.00 / 0) #2 Tue May 21, 2013 at 12:12:27 PM EST
Yes, that is one flaw.

[ Parent ]
The market is a distortion by riceowlguy (2.00 / 0) #3 Tue May 21, 2013 at 01:27:20 PM EST
Upon a second reading there's several other issues I have with that one:
  1. First of, I think he's trying to make the claim that the very fundamental conditions that make it possible to have a market in the first place (e.g. property rights, and a system of contract law/courts/police/prisons to back them up), are in and of themselves a distortion of reality.  And perhaps, therefore, that since it took a government to create the market it the first place, it's therefore okay/proper/beneficial for that same government to do anything else that might cause that market not to work as efficiently.
  2. A lot of the article brings up the arguments made by "conservative" (by which I think he means Republican Party) politicians and commentators.  To that extent, I believe he's right that the Republican Party has co-opted the language and the rhetoric of economic libertarianism for their own nefarious goals (which, for any politician, really only boil down to one thing: getting elected).  For example, he correctly points out that almost no conservative politician is arguing against the mortgage interest deduction, but they do argue against labor unions.  (It's not hard to understand why - arguing against the mortgage interest deduction would be a huge political loser for ANY politician, and given how much labor unions give to Democrats I can't really blame Republicans for going after them so hard).
However, politicians have also co-opted the language and rhetoric of religion, much to the chagrin of most true believers in those faiths as well.

For what it's worth, I think that the mortgage interest deduction does create a huge distortion of the housing market, and think it should be eliminated.  It would probably hurt me in the wallet pretty hard, though (I'm not thinking so much about the additional taxes I'd have to pay, but more the drop in my home value that would likely occur, since so many stupid people say they only buy houses so they can "get a tax break".  Yeah, paying $10k a year to the bank so you can get $2k back from the IRS, real smart.)

3. The article says something like "you can't just say 'this is a market distortion' and then walk away like you've won the argument."  Of course you can't.  You also can't say "this will hurt unions" and walk away like you've won the argument either, unless you're speaking to a room full of union members.  Everything gets reduced to sound bites in today's discourse.  Nobody gets to make a full, starting-from-scratch argument about why their policy ideas should be supported - not in the national media, anyway.

[ Parent ]
yes, this article was in the context of a dialog.. by gzt (2.00 / 0) #4 Tue May 21, 2013 at 02:19:26 PM EST
...of sorts going on in the econo-web-log-sphere, so some points are dangling. I'll try to ferret out a little more context later this evening, because point one looks worse when "dangling" than otherwise, and point two sorely deserves context.

[ Parent ]
I know conservatives who argue the mortgage by georgeha (2.00 / 0) #5 Tue May 21, 2013 at 02:35:40 PM EST
interest deduction isn't a handout, they get to keep more of their money, and liberals like George want the government to have everything.

[ Parent ]
but what a dumb way to do it. by garlic (4.00 / 0) #6 Tue May 21, 2013 at 03:42:07 PM EST
why not let everyone keep their money, instead of just homeowners?

[ Parent ]
But how does that help the banks, real estate by georgeha (2.00 / 0) #7 Tue May 21, 2013 at 03:46:34 PM EST
agencies and home builders?

[ Parent ]
Mortgage Deduction by FlightTest (4.00 / 0) #8 Tue May 21, 2013 at 05:49:42 PM EST
For the record, although I benefit from it, I'd like to see it scrapped in an complete overhaul and simplification of the tax code.  

That said "paying $10k a year to the bank so you can get $2k back from the IRS, real smart" ignores completely that the $10K is not an optional expense.  Rent here pretty much tracks mortgage payments, and amazingly, exceeds them in some places.  So, I'm either paying $10K a year to the bank and getting the $2K back, or I'm paying $10K a year to the landlord and getting nothing back (while he gets the $2K back).  Buying a house here to get the tax break does in fact make sense, the landlord isn't going to lose money on his property (well, not for very long).  And since housing is insanely expensive here, it really adds up (it's WAY more than $10K/year).

[ Parent ]
As the recent real estate crash shows by lm (4.00 / 1) #11 Wed May 22, 2013 at 06:00:47 AM EST
One can lose more than more than you pay when buying a home. For example, someone buys for 250k, market crashes and now this person wants to take a job across the country, ends up to selling for less than 200k.

Moreover, one of the reasons that home ownership is so great for the economy is that there are a lot of costs associated with it that most people in apartments don't have: buying lawnmowers, etc. (An apartment complex doesn't need to own as many lawnmowers as the same number of people that own their own home, each of which end up owning a lawnmower.)

Buying a home for financial reasons is speculation. It can be well informed speculation. And in some places it does pay off. But it does not pay off universally.

That said, I wouldn't be sad if the mortgage interest deduction went away.

Kindness is an act of rebellion.
[ Parent ]
context and discussion. by gzt (2.00 / 0) #9 Tue May 21, 2013 at 10:40:46 PM EST
First, "Ways to think..." is prior to and therefore perhaps context for the later discussion about "The market is a distortion". Apologies for linking in the wrong order.

"From the answer to that question, we can decide whether a distortion is good or bad by determining whether it ensures that individuals are given what they are due."

That is precisely the kind of thinking that libertarian economists are afraid of.  We're collectively terrible at deciding anything.  Why should we trust some select group of elites to decide what you, I, or anybody else are "due"?

In a world with no real default - contra libertarian economists who make the "laissez-faire" a default - there is no avoiding a collective decision about distribution because the "laissez-faire" solution of the libertarians is also a decision about what people are due. Libertarian economists are not avoiding making such a decision, they are a group of elites deciding what you, I, and everybody else are due. There is no escape.
  1. It is not so much that they are distortions of "reality", but that creating and supporting markets is just as much an intervention as taxing income or anything else. "Distortionary government policies are necessary to generate markets in the first place" - in the sense that your intervention drastically changes the market that would be there without it. I don't think it justifies "anything else that might cause that market to not work efficiently", but rather questions why, if there isn't anything "natural" about free and open markets but rather that we're making certain expenditures and distributional presumptions in favor a "free market", could we not instead do something else? I think that's the general line of the argument.
  2. I think he gets into dialogue a lot with both actual libertarian economists and current politics, so there may be some conflating and mixing, since he discusses actual policy recommendations of congressional Republicans and crazy pie-in-the-sky anarcho-capitalists.
  3. Yes, that's certainly true. Does he do this? However, I think he makes a good point that simply saying, "This is a market distortion," isn't good enough, it's only a couple more lines to make a case for why it's bad.
Anyway, just as an aside, I haven't really run the numbers, but how much do you think the mortgage interest deduction props up the price of typical middle class homes? I figure the typical middle class married filing joint family is going to have only on the order of $1-2K in tax savings per year if it's really good, which is okay, but not awesome. That would, I don't know, boost home value maybe 10-20K tops, which is, again, okay, but not tons on a 250K home (which is the figure I used to ballpark this).

[ Parent ]
House prices by riceowlguy (2.00 / 0) #12 Wed May 22, 2013 at 12:22:23 PM EST
The mortgage interest deduction probably should not prop up house prices much based on your analysis, but I suspect that there are a number of people who would be on the fence about the rent vs. buy decision, and in thinking "do I really want to be paying all that interest to a bank?" hear somebody say "but it's all tax deductible!" and that pushes them over the edge to enter the housing market.  Fewer buyers chasing individual homes would mean lower prices.  How much, I have no idea.  I could also be completely wrong about how many people are pushed into homeownership based on the taxes argument.

[ Parent ]
Realtors would always bring it up when we were by georgeha (2.00 / 0) #13 Wed May 22, 2013 at 12:29:18 PM EST
house hunting. Sure, the combined mortgage payment looks higher than renting, but you get to deduct these taxes, and this interest rate, making it cheaper than renting.

[ Parent ]
true fact, perception is the reality by lm (2.00 / 0) #14 Wed May 22, 2013 at 07:50:48 PM EST
Few people crunch the numbers and calculate how much the deduction will save them. Many people hear 'and the interest is tax deductible so you'll be saving even more money.'

There is a whole governmental-financial-industrial complex focused on driving home the point that renting is "throwing away your money." The tax deduction is just a small part of that complex.

Kindness is an act of rebellion.
[ Parent ]
JOB CREATORS by ammoniacal (2.00 / 0) #10 Tue May 21, 2013 at 11:25:23 PM EST

"To this day that was the most bullshit caesar salad I have every experienced..." - triggerfinger

Taxation as theft: hardcore edition | 14 comments (14 topical, 0 hidden)