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How Much Government Do We Need?

28 October 2008 Comments Written by: Andrew S.

Yesterday I was talking with my girlfriend about our world, specifically about our expectations about the way it works. Unfortunately, the viewpoint of “history as progress” seems to be prevalent in our society today. One logical offshoot of that theory shows its weakness. To adhere to this view you have to accept the way things are now, because that is the way they were destined to be. It is natural to have public schools but private healthcare? Our world is complicated, but it’s combination of fiat currencies, sugar substitutes, nylon stockings and compact fluorescent light bulbs must be the best there’s ever been, right? There couldn’t have been any other way, or if there was we stopped doing it that way for a good reason. The error of this viewpoint is that there has been an awful lot of manipulation and control over the years and it hasn’t all been progress.

Nolan chart, 2d political spectrum. Diagonal l...

Image via Wikipedia

I believe it’s largely ignorance of history and unfamiliarity of how other alternatives work. I support a free market with individual liberty. Throughout American history this group has been known as the Liberals, the Conservatives and most recently, the Libertarians. Try not to get caught up in the terminology as it changes over time.

I’ll admit that while the Libertarians have some great ideas, their greatest weakness is explaining to others how the alternative system would work. Many people wonder if Libertarians are opposed to all government projects, or just up to a certain point, but it seems most of us have trouble articulating these ideas clearly.

Some common questions I hear are these:

  • You’re opposed to public schools? How will our children learn?
  • What’s wrong with the Federal Reserve? I learned in school that they smooth out the business cycle and stimulate the economy during recessions. Don’t you want the economy to be stable?
  • A world without public fire departments? How would we put out fires?!
  • Private coinage? But wouldn’t there be counterfeit problems?
    United States Postal Service

    Image via Wikipedia

  • We need the federal government to organize and run the mail system. How could we send letters and packages safely and securely without the U.S. Postal Service?

A brief answer to the above would be as follows:

  • Your children should be able to learn what you want them to learn. After all, they’re yours, not the government’s. Also, as studied by John Taylor Gatto in Dumbing Us Down, schools were better before compulsory education and in some cases literacy rates were even higher.
    Book cover of

    Book cover via Amazon

  • Money should be value, not debt. Under a gold standard, the value of money is the value of the gold that backs it. In our current system, most of the money in existence is debt and has no value of its own. Look at a “dollar bill” in your pocket and notice that it is actually a “Federal Reserve Note” - a.k.a. an IOU. It just represents a debt that gets passed around like a sick game of hot potato. It has no intrinsic value of its own, and if you’re the one that get’s caught holding it, you’re screwed. Just ask someone that lives in Argentina what fractional reserve banking did to them. Check out Money as Debt on Google Video.
  • Some people have put out theories on how private fire departments would work. I’m not entirely convinced, but it’s certainly possible that competition would work well for some areas of the country. After all, ambulance companies and tow trucks are private in many instances, and they are able to respond to emergencies very quickly. Non-profit fire departments are also in existence in certain parts of the country.
  • Private coinage would work the way any other private industry does and actually helps guarantee our freedom. Right now everyone is forced to use federal reserve notes and prohibited from using just about anything else. Ideally, the government would still put out its money but people would have the option of using whatever they wanted. A full explanation is in this article on private coinage.
    Coin of Alexander the Great, with a depiction ...

    Image via Wikipedia

  • Ask a business owner how they ship their packages and you’ll get many responses: FedEx, UPS, DHL…

There are many other similar questions that follow, but the important part that liberty advocates need to realize is this: People have misconceptions not because they’re ignorant or they love big government, but because they’ve heard no alternative system proposed. Many areas of our lives have lots of government intervention and many areas have none. Are the areas where government involvement exists better off for it? Perhaps there are areas that aren’t regulated that could use regulations?

We should not take the world the way it is presented to us as a given. As humans that reach for the stars and try to better our lives and the lives of those around us, we need to consider the alternatives - if they exist. The profit mechanism has been demonized in our society as a corrupting force, but ask yourself this: can’t government regulation be even more corrupting? Depending on who gets to set the regulation and who get’s to enforce it, government regulation can actually increase the corruption level of a country. Think about it: the Soviet Union had a command economy with total regulation, but there was also a lot of corruption. Some of this corruption, such as bribe-taking, is result of perverse incentives to go around the system instead of through it.

Soviet Union administrative divisions, 1989

Image via Wikipedia

There are also other sectors that have become privatized that maybe should not have been. One example that comes to mind is the prison system. Many of the firms in the prison industry have been lobbying congress for tougher sentences on crimes all across the board. This is wrong on the face of it, but perhaps we should seek to vilify the ability to lobby in this way.

I come to no significant conclusion in this post, except that I hope this discussion challenges you to think critically about the world around you. Is it the way it is for a reason?

How much government do we need in our lives?

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Viewing 12 Comments

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    It must be understood that government creates many of the problems to then offer the solution to those very same problems, which entails more government and more centralization of power. With this comes this evisceration of more freedoms. This is the Hegelian Dialectic at work. We must ask ourselves who most benefits from this. The people who run this system use SOCIALISM to consolidate power and control, while using carefully-crafted propaganda to mislead the public into believing it's for their benefit. We are lead to believe that government is the solution to many of the problems we see, when those problems were created by government intervention in the first place.

    --Matt from Greece
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    Thanks Matt, it's true. One of my International Relations Professor's favorite quotes is "The Sicilian Mafia is in the same business as the government: It sells protection from itself." - That's from a famous professor, but I forget his name. I think we may be reading his article and I'll try to write something about it.
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    Yes but when the people refuse to rise up against this it tells the government that their actions are fine
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    Nice article Andrew, I think your approach here is much more effective in getting us to think than some of your other articles, which I've been more critical of. I would be eager to see you go into some specific issues, in depth, using economic concepts to explain alternatives or to justify how current solutions work.

    I remember back in public finance looking into the topic of public schools for instance. If my memory is correct, we determined that there were both public and private aspects at play in the public school system; I was initially quite surprised by this conclusion. It was drawn as follows: Funding for public schooling is largely drawn from local sources (town property taxes). Most people working in Monroe County have a fair level of mobility, with cars or public transit you don't have to live in the same town you work in. Different towns within Monroe County have different budgets for schooling, you can choose to live in a town that reflects your preferences for funding of education.

    http://www.monroecounty.gov/property-taxrates.php

    All other variables aside now, does it seem astonishing that kids from the Brighton, Pittsford suburbs get a better education than kids in your average city school?

    As for curriculum, this is something that tends to be more regulated. New York state sets standard requirements for a diploma and these standards are the same across the entire state. I went to a good public school and remember some of my regents courses being pitifully easy, yet these were the state's high standards. Should I, could I have benefitted from a more rigorous curiculum? Probably.
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    Well if you won't come to a conclusion I will. Liberty is far better than the alternative, the coercive force of government. Government in any form should be strictly limited. As history has shown us, government will grow and expand when left unchecked. Government is just a collection of individuals and when given the power to make decisions for you they will. If you don't want your neighbor making decisions for you, why would you want the government to?
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    I do agree with you Ethan. I ended the article on a rhetorical note because it gets people to think more critically. I also don't claim to know the right answers and hope that if more people ask these questions we can find them together.
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    With money though why would you want to subject your monetary supply to strictly coins like gold? Since gold is so scarce it can be taken up much faster by international bankers and central banks as seen with Fort Knox back in the 1970's. Fiat money is not bad for the economy of america if you can make it by your country as debt free and interest free on the sole agreement of trade or consent given by the people. Also paper is very plentiful and nowadays as opposed to the 1800's and 1700's can be recycled furthering more usage otherwise. Think of this. The money masters producer Bill Still speaks of this very same notion.
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    • v
    The people need to do more of the debating than the actual candidates running for president. For this creates more honest candidates and ones with greater integrity which goes along with governments being unchecked. Although I agree with you but I think that the people have fallen behind greatly when it comes to caring for their government and what it has been able to do without care. For instance a CFR and Federal Reserve would never have been able to come about if the people were more adamant about criminals in our land or of skeptical forces out to aid in the destruction of both our sovereignty and of our economic freedom. Much of the fault is on us as well remember that.
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    • v
    I don't know where to begin to tell you how wrong you are.

    Let's start with your brief answers:

    1) A compulsory educational system ensures children learn scientific facts that have been tested and categorized. Once you have a basic knowledge, you can then branch out and do the "liberal" thing of pursuing your own education. To use the classic metaphor, when you don't know you're in a cave, you'll just be teaching yourself that your world is dark and damp.

    2) A gold standard, or any other standard, is no less arbitrary than a note held by the faith of the backing entity. To create money, the ratio of $1 to some amount of gold was just adjusted to increase or decrease the money supply.

    3) Non-profit governmental goods ensure we prevent agency-principal issues, such as when we entrust the fire department to prevent fires, but they instead set fires in order to be paid to quench them.

    4) You are not forced to use US currency. You are in fact free to use any type of currency or trade good you wish to use. However, the most EFFICIENT system of transaction is based upon a common type of currency. I'm certain some amount of gold dust can buy you milk at any grocery store.

    5) The US Postal System is a quasi-governmental entity, and you are free to not use it. However, if you enjoy cheap mailings, I would suggest using them.

    The government's purpose, as defined by the Constitution, is to establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity.

    When you can find a profitable way of doing all those things, please get back to me.
    • ^
    • v
    Let's debunk your debunking:

    1) How do you defend compulsory anything in a country that is supposed to be free? No, a compulsory educational system ensures that the youth learns what their government wants them to learn. Period.

    2) Did you know the first economic treatise ever written viewed debasing the money as a mortal sin? What is the moral basis for changing the value of money? Gold isn't arbitrary because the money supply can't contract, nor can it be expanded too quickly.

    3) Why not just have the government make everything? After all, the computer company could break your computer to sell you a new one.

    4) You are forced to use it. That's why it's called legal tender. You have to accept dollars for payments of debts.

    5) Sure, it's not free to use it, but it's also not free to not use it. How is that fair?

    Liberty? I don't think you have the slightest idea what that means. You can't have personal liberty without economic liberty.
    • ^
    • v
    Round 2:

    1) You present two arguments: compulsory education and freedom.

    a) The educational system is not compulsory. You are free to home school. If you so choose, you are free to inject yourself with monkey semen as a method of education.

    b) Freedom - I agree that there are freedoms. No real contentions here.

    2) http://www.econlib.org/library/Enc/GoldStandard...
    Again, this is how the gold standard worked. An arbitrary fixed conversion ratio was set. Don't believe me, read that. Don't believe that, you can make up your own history.

    3) The government should be involved in services that can not provide economic profits fairly and/or for the general welfare of society. Hence, roads, fire departments, and snow plows. You can do all those privately if you choose, but it sure costs a lot more.

    4) I quote from my dollar bill: "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS PUBLIC AND PRIVATE". No where does it say you HAVE to accept it. You can choose not to. Just like how there are places that won't take credit cards or checks.

    5) I don't understand your comment, although I think you're making my point. What I care about is efficiency. The gov'ts running of many of these functions creates the greatest net effect with the least cost due to economies of scale. If you choose not to use the economies of scale, you will pay more. This of course, is your choice.

    Finally, on your topic of liberty, let's not confuse the issue. The gov't has created an efficient method through which economic liberty can be achieved, but you choose not to. Well you can. The fact that others won't accept your form of currency is also THEIR choice.
    • ^
    • v
    "LEGAL TENDER" means you must use it. Try paying your taxes in cattle or tobacco or even gold.

    The gold standard is simply setting a rate of convertibility to a paper money. Yes it is true that if a government wanted to steal from it's citizens it could change the ratio for redemption or debase the currency, and this is in fact what has been done in the United States. The underlying value of the gold, however, will not change, it is as near a constant as possible. The only thing that has changed is the value of the paper money. Thus the argument for a FIXED gold standard not corruptible by government fiat. They only thing that could change the value of money in a fixed gold standard would be the destruction or creation of gold. To create gold requires real work not a printing press, therefore gold itself represents physical labor. Money after all, in any form, is simply used for exchange. You are paid money in exchange for your work and that could be in almost any form. Gold is perfect for this since it is real and much smaller than say, a cow or a bushel of wheat. and it is easily used for exchange. And gold can not be arbitrarily created the way paper money is.

    To comment on your view that the government is efficient, since when? They government is the most wasteful spender in the nation. The reason being, that those working within the government are not spending their own money and have no reason to use it in any semblance of an efficient manner.

    To quote Milton Friedman, Nobel prize winning economist:
    "The bureaucrats spend someone else's money on someone else. Only human kindness, not the much stronger and more dependable spur of self-interest, assures that they will spend the money in the way most beneficial to the recipients. Hence the wastefulness and ineffectiveness of the spending."

    "Voluntary gifts aside, you can spend someone else's money only by taking it away as government does. The use of force is therefore at the very heart of the welfare state--a bad means that tends to corrupt the good ends. That is also the reason why the welfare state threatens our freedom so seriously."

    May I suggest some reading for you, Milton and Rose Friedman's book Free to Choose. It is a comprehensive look at the role of government in our society, the problems with that role, and solutions to it.
 

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