Say you're a human being, in a society of human beings. You folks get together during the day to find food, and at night gather around the fire because there's lots of things that'll eat you. Then you invent agriculture, settle down, get better at the whole thing, start producing surplus which you have to store and keep track of, and ultimately you invent civilization.
The civilization gig is pretty handy, providing some order and predictability you might not have had wandering around looking for nuts and berries, and even allowing for some division of labor. As your civilization grows, you enjoy some economies of scale and can start tackling some big, complex projects through coordination and management, but that takes some people away from directly producing food.
That's cool because some of the public works projects, like irrigation canals and whatnot, can help produce more food or contribute to safety. Sure there are boondoggles like pyramids, but people also dig looking at cool things and they're certainly an expression of human nature. Anyway, you gotta feed the workers, so the managers look for contributions from society at large.
Thus the Taxman is invented.
Okay, I'm being a bit glib, but I think Oliver Wendell Holmes, Jr, was right about taxes and civilization. We have it pretty good being a part of society, and everybody's got to ante up and kick in to make it work. Nice to see that President Obama generally thinks so, too:
We recognize that no matter how responsibly we live our lives, hard times or bad luck, a crippling illness or a layoff, may strike any one of us. “There but for the grace of God go I,” we say to ourselves, and so we contribute to programs like Medicare and Social Security, which guarantee us health care and a measure of basic income after a lifetime of hard work; unemployment insurance, which protects us against unexpected job loss; and Medicaid, which provides care for millions of seniors in nursing homes, poor children, and those with disabilities. We are a better country because of these commitments. I’ll go further – we would not be a great country without those commitments.
For much of the last century, our nation found a way to afford these investments and priorities with the taxes paid by its citizens. As a country that values fairness, wealthier individuals have traditionally born a greater share of this burden than the middle class or those less fortunate. This is not because we begrudge those who’ve done well – we rightly celebrate their success. Rather, it is a basic reflection of our belief that those who have benefitted most from our way of life can afford to give a bit more back.
Also channeling a bit of Teddy Roosevelt today:
The man of great wealth owes a peculiar obligation to the State, because he derives special advantages from the mere existence of government. Not only should he recognize this obligation in the way he leads his daily life and in the way he earns and spends his money, but it should also be recognized by the way in which he pays for the protection the State gives him.
Now that wild-eyed communist, Adam Smith, observed (slightly bloggified for easier reading):
According to the system of natural liberty, the sovereign has only three duties to attend to; three duties of great importance, indeed, but plain and intelligible to common understandings:
- first, the duty of protecting the society from the violence and invasion of other independent societies;
- secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice;
- and, thirdly, the duty of erecting and maintaining certain public works, and certain public institutions, which it can never be for the interest of any individual, or small number of individuals to erect and maintain; because the profit could never repay the expense to any individual, or small number of individuals, though it may frequently do much more than repay it to a great society.
Most anti-government, pro-free market fairy types have boiled Smith's masterwork of five tomes down to the Invisible Handjob and like to pretend he was completely laissez faire and all about unfettered individual liberty being the best for society. Of course that's not entirely true, and those folks tend to ignore vast swaths of text that are a bit more sophisticated and subtle than a blanket love for the marketplace.
One can certainly squint at The Wealth of Nations, cherry picking and interpreting however one wishes to prove a point just as one can the Bible or the Constitution. If we were left with the three duties of government enumerated above, one might argue that everything Obama mentioned today goes well beyond Smith's vision. However, he further expanded on these basic objects with specific examples:
- Sterling marks on plate and stamps on linen and woollen cloth (WN138–9); – consumer protection!
- obligations to build party walls to prevent the spread of fire (WN324); – building codes!
- ‘Premiums and other encouragements to advance the linen and woollen industries’ (TMS185); – government subsidies!
- ensuring the ‘cheapness or plenty [of provisions]’ (LJ6; 331); – price controls and busting monopolies (“as goods are a conveniency to the society, the society lives less happy when only the few can possess them”).
- erecting and maintaining certain public works and public institutions intended to facilitate commerce (roads, bridges, canals and harbours) (WN723); – but certainly not electricity, telephones and broadband Internet, right?
- regulation of institutions, such as company structures (joint- stock companies, co-partneries, regulated companies and so on) (WN731–58); – how dare the government interfere!
- education of youth (‘village schools’, curriculum design and so on) (WN758–89); – did that inspireVermont's framers?
- education of people of all ages (tythes or land tax) (WN788); – wait, higher education, too?
- encouragement of ‘the frequency and gaiety of publick diversions’(WN796); – just noMapplethorpe. for Christ's sake.
- the prevention of ‘leprosy or any other loathsome and offensive disease’ from spreading among the population (WN787–88); – yeah, like healthcare is a public good or something.
- government restrictions on interest for borrowing (usury laws) to overcome investor ‘stupidity’ (WN356–7); – weird the banksters never mention this.
That's just a subset of Smith's list which I've stolen from Canadian economist, Jacob Viner, with the help of this site (or vice versa), and briefly annotated. The point is that many things conservatives decry as being government intrusions on the genius of the market are actually part and parcel of government duty.
In fact, Smith also noted in his Lectures:
[T]he government in a civilized country is much more expensive than in a barbarous one; and when we say that one government is more expensive than another, it is the same as if we said that the one country is farther advanced in improvement than another. To say that the government is expensive and the people not oppressed is to say that the people are rich. There are many expenses necessary in a civilized country for which there is no occasion in one that is barbarous.
That jibes with what Adolf Wagner postulated the following century: The advent of modern industrial society will result in increasing political pressure for social progress and increased allowance for social consideration by industry.
A brief background of Wagner's Law:
Wagner offered three reasons in support of his hypothesis. Firstly, as nations develop they experience increased complexity of legal relationships and communications, as a result of the immense division of labour that accrues with industrialization. Because of this, Wagner envisaged an enlarged role for the state in the form of public, regulatory and protective activity. Further, increased urbanization and population density would lead to greater public expenditure on law and order, and economic regulation due to the associated risk of more conflict in densely populated urban communities.
Because of the substitution of private for public activity, the administrative and protective functions of the state would expand. Thus, as nations become more advanced the number and/or magnitude of market failures would force the state to become more regulatory in nature, thereby expanding its role and this would inevitably involve higher public expenditures.
Wagner predicted the expansion of ‘cultural and welfare’ expenditures based on the presumption that as income rises, society would demand more education, entertainment, a more equitable distribution of wealth and income, and generally more public services. Public Services were seen as normal goods, that is, their income elasticities of demand exceeded unity. Wagner cited education and culture as areas in which collective producers were more efficient than private producers.
I think we've reached a critical point, though, where we've collectively come to rely on the services of civilization without expecting to pay full price. The orgy of tax cuts since Reagan slashed the top marginal rates (though he did raise taxes 7 times in 6 years to mitigate the tumbling economy and deficit, people only remember the reductions) has created an imbalance in our accounts, briefly corrected during the Clinton Era and pushed out of control by Bush.
Eexacerbating this is the incredible economic inequality that's developed in the United States over the last few decades. When the richest of the rich dominate our policy decisions and electoral processes, we end up with the discordant sounds we hear in Wisconsin and Ohio, and in Washington, DC: cries of “we're broke” as all the progressive gains we made since before the Depression are wantonly destroyed to pad the wallets of uberwealthy corporatists.
Sadly, we hear similar refrains in enlightened Vermont from our Democratic governor, who won't brook raising taxes on the top earners but brags about making deep cuts in spending. We've even got folks who view taxation to support vital services and human rights as slavery. Which is weird because that Smith guy (again!) observed: Every tax, however, is, to the person who pays it, a badge, not of slavery, but of liberty.
Indeed, as Alexander Hamilton said just before the American Revolution: Civil liberty is only natural liberty, modified and secured by the sanctions of civil society.
And civil society requires a little investment:
The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.
What's more, to help protect all the services that an advanced nation requires:
It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
So raise taxes on the rich at the Federal level. Patriotic rich folks won't mind! And raise taxes on the rich at the state level. Again, patriotic rich folks won't mind! Our civilization demands it.
ntodd