IS COLLECTIVISM OK IF LIMITED
TO ESSENTIAL SERVICES?
© 2005 by G. Edward Griffin. Updated December 20
A new Freedom Force member in Australia writes:
Henry George [A 19th Century proponent of a "Single Tax" on land] believes that, through the efforts of collective financial contributions, bus fares (public transport), water, electricity, and other services could best be provided through the collective. I realize George lived in a different time; but, with a land tax and overall individualist policies, water, transport, and other basic essentials could be free or heavily subsidized. This would get more people out of cars and promote a more efficient, prosperous economy. If the majority agreed they wanted basic infrastructure to be very cheap, subsidized, or even free, aren’t they free to do that? Isn’t that freedom in action? ... Playing a little devil’s advocate here. I would like to be clear in my mind on this so I send others the right message. Any comments would be greatly appreciated.
This is my reply:
These are good points and, fortunately, they are easy to answer. All that is needed to clear out the cobwebs is to stop looking only at the benefit side of the equation and look also at the price side. Every benefit has a price. We often become so enamored with the benefit that we forget the price. That is the trick of collectivist proposals. They want us to look only at the good that can be done for such-and-such a group. Never mind the cost or the impact on everyone else.
ECONOMICS IN ONE LESSON
There are two prices that need to be brought into any equation for social justice before we can fairly judge its merit: economic price and personal price. Henry Hazlitt’s book, Economics in One Lesson, (available at www.realityzone.com/economics.html) shows that an economic benefit, such as cheap or free public transportation, can be provided for some citizens only by working an economic hardship (taxes) on everyone else. When that price is brought into the equation and multiplied by all the people paying it, even though it is relatively small for each of them, the total cost adds up to more than the total benefit. That’s because, in addition to merely shifting costs from the small group to the large group, we also have the additional cost of government administration.
If taxicab service were provided by cities the same as bus service, the cost of operation would be far in excess of what it now costs private companies – and the increase would be covered by higher taxes, which everyone would pay whether they use taxis or not. If taxi fares were lower because they were subsidized by taxes, more people would take cabs instead of busses, and the cost of taxi service would skyrocket. Meanwhile, the busses, with fewer paying passengers (they're now taking taxis), would run even deeper into red ink than before. This, too, would be passed on to everyone through taxes.
Services always cost more when provided by government than by private enterprise because of the political overhead and also because there is no motivation to cut expenses, while there is strong motivation to expand them. In the end, even those in lower-income brackets who supposedly benefit from subsidized services end up paying more for them through taxes. If they do not pay income taxes, they still have to pay higher prices for everything they buy, because those prices must include the taxes paid by manufacturers, distributors, and retailers. All business taxes are passed on to consumers in the form of higher prices. Therefore, corporations do not pay taxes. Only people pay taxes. There is no free lunch, and there is no free bus service.
THE PERSONAL PRICE
In addition to economic price, there is the personal price. One of the most desirable qualities of citizenship is confidence that we will be treated fairly, with no preference given to another person or class. We call that equality under law. However, under collectivism, there are always a thousand social objectives that are offered as justification for politically-correct favoritism. Every one of them requires that some citizens will be benefitted at the expense of other citizens, and that is a direct violation of equality under law.
The case of a subsidized water supply would seem, at first, to be an exception. Our first impression is that everyone uses water, and no one can drink or bath significantly more than anyone else; so why not have a government-operated water system? The answer, as explained in The Chasm, is that there is nothing wrong with it so long as the cost is fairly apportioned among users in proportion to the amount of water they use. That means it can never be subsidized. If it were, we would be right back into collectivism using the coercive power of taxation to redistribute wealth from one group to another.
By analogy, it would be ideal if public roads were maintained solely by gasoline taxes so that users pay in proportion to how much they actually use the roads. Nothing could be more fair than that. The problem arises when politicians replace the fair-use doctrine with the collectivist doctrine and decide that certain blocks of voters are more worthy than others. Typically, they raid the gas-tax fund to pay for schools or airports or welfare programs – whatever is the current hot topic on the campaign trail. Providing free water would have the effect of raiding other taxes (perhaps including the gas tax) to cover the service. However, if there were no meters at residences or businesses, and water was FREEE, just imagine the upsurge in water use. There would be no motivation for conservation, and leaky washers would become pandemic. Urban lawns would become wetlands.
The collectivist replies that we would have to have a government agency and water police to monitor usage to make sure that the privilege of free water is not abused. Of course. And there must be fines and penalties for those who fail to obey. Of course. And those who exceed their quota because they cannot afford to replace their leaky pipes will receive tax subsidies to pay for re-plumbing. Of course. And we would have to make sure that businesses pay for their water anyway. Of course. And farmers would have to be monitored to make sure they don't use more than their quota, based on acreage and crops. Of course. In the end, the cost of providing free water would be greater than any other method of delivery, the common man would pay for every drop of it, and one more segment of our lives would fall under government regimentation.
FREEDOM IS MORE IMPORTANT THAN ECONOMIC BENEFIT
Individualists believe that the personal price is more important than the economic price. Even if it could be shown that it is possible to benefit some without working a hardship on others – even if it were true that collectivism could produce economic advantages to society as a whole – we still would oppose it, because the personal price is too high. That price is freedom. Once we agree that it is correct to use coercion against our fellow citizens to force them to subsidize public transportation or water or health care or meals or clothing or education or recreation or anything else not related to the protection of life, liberty, or property – once we agree to that, we have signed our contract for bondage. Once that fatal principle is accepted, there is no way to prevent it from being extended further and further into every aspect of human activity. We must not be tricked into selling our freedom for economic benefit.
Fearful that I might have overly challenged the views of this young man, I was greatly relieved when, the following day, I received this reply:
Thank you for such a precise and detailed reply. I'm sure it will benefit many people with the remains of collectivist cobwebs still in the deep recesses of the brain. I have read Hazlitt (got it at The Reality Zone) and I do agree with the reasoning and common sense of the simple principles set forth. So many holes in my education that I'm filling rapidly now, and your reply brought me back on track. Nothing is more valuable than freedom. Nothing should be defended more than the right to be free from even the most well meaning collectivist tyranny. One day I will initiate or support the creation of a school and will I have fun as a part of the team creating the curriculum. Long live individualism!
Printed on 31 July 14 at 20:43