The Missing Link Revisited

In a recent post, we discussed the fact that only individuals can act and supposed “government action” often shields government actors from responsibility of their actions. There is another way that individuals are frequently missed when government is discussed: funding.

Property rights are necessary to mitigate the potential for conflict over scarce resources. As a result, property rights can only be recognized at an individual level and, therefore, only individuals can own property. This doesn’t preclude a group of people from combining their property and jointly “owning” it, but it does preclude any group of people, appointed, elected, or otherwise constituted, from claiming ownership of property other than that which they own themselves. In other words, governments cannot own property, at least not in any ethical sense.

When referring to funding, it is common to hear it referred to as either private or government. Since only individuals can own property, all funding must originate with individuals. Therefore, while government spends money (property), it is always the money of individuals. This is rarely pointed out when proponents of government intervention describe the process of administering what they consider socially beneficial. However, by ignoring this point, we cannot possibly understand the benefit of any government spending. Since all government actions start with the expropriation of the property of individuals, any benefit calculation has to start in the red.

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Hidden Inflation

Inflation of the money supply is one of the more insidious means of theft available to the state. Rather than borrowing or taxing, each of which are a more overt and generally understood means of paying off debt, states will often print money as a means of financing debt. Expanding the available money supply can be done in a myriad of ways. One way is through Federal Reserve purchase of government bonds, today called “quantitative easing,” using money that is printed out of thin air. Another is through fractional reserve banking.

Banks are encouraged to lend money as a means of raising capital. Based on existing regulations, banks are only required to keep a small fraction of cash on hand relative to their deposits. For example, if a person deposits one thousand dollars in a bank, the bank can then lend nearly all of that out so someone else. The effect of this is to increase the money supply by the amount loaned out. While none of this money physically exists, it still represents an increase in the money supply and therefore diminishes the value of existing money.

To keep this Ponzi scheme afloat, the Federal Reserve stands at the ready to purchase bad debt (e.g. withdrawals exceeding a bank’s reserves) by printing reserve notes as the master counterfeiter. Over time, this inflation is reflected in prices as the value of money diminishes.

Theft

During Ron Paul’s 2012 campaign, I decided that the best way to help his cause was to buy t-shirts. This way, the campaign got both cash and advertising. I’ve since kept up with the t-shirts, compiling a small wardrobe of shirts relaying a variety of libertarian messages.

Today I wore my “taxation is theft” shirt. As should be clear, I oppose taxation because it is theft; any instance where a person is compelled to unwillingly contribute money constitutes theft. Since I oppose theft in all instances, I certainly oppose it in this instance.

Of course, advocates of taxation will assert that I receive something in return for my “contribution.” By this argument, anyone can take my money by force if they provide something in return. The typical response to this is to point out some democratic activity to identify the few people permitted to forcibly take from me. However, neither collective will nor democratic action removes from taxation the threat of violence for non-compliance.

There are those who claim to willingly pay their taxes. To them I say, “have at it.” However, willing contributors are typically engaged in charity or subsidy, neither of which requires theft or the force of law. I applaud any voluntary contributions even if they are to the government. As soon as they aren’t voluntary, they constitute theft and should be opposed in every case.