login about faq
4
1

Since taxation is out of the question, what moral ways are there to fund government?

asked Sep 19 '10 at 19:52

JJMcVey's gravatar image

JJMcVey ♦
630211

John McVey's comments are excellent. I took the time to compile a series of arguments in a clear and concise form, and put them into an essay form for voluntary financing in a free society: http://paintyourbrain.squarespace.com/politics/2010/7/7/government-financing-in-a-free-society.html

That should be comprehensive enough for most individuals.

(Sep 20 '10 at 07:31) capitalistswine ♦ capitalistswine's gravatar image

I've been thinking about this issue lately and was considering the idea of the government setting up investment funds in which money donated to the government was handled by a private investment firm to create a return and therby an incentive to invest in the government. As far as I can tell, there are no moral issues with this scenario and it would create incentive. If anyone has any thoughts or could tell me if I've missed anything on the legal or moral angles of this idea, I'd be glad to hear it.

(Sep 20 '10 at 15:56) Damian Damian's gravatar image
1

The problem I see with that is that this fund would be large and investing it into any one business would mean a huge amount of money for that one business and that effect and its repercussions could create a power that could be misused. Blind investment in the whole market might work though.

My biggest problem with this is that I don't really think I want the government to be monetarily self-sufficient... I want them to have to rely on the good will of the people. I want regular citizens to hold the purse strings so that government doesn't get into the habit of spending money at will.

(Sep 21 '10 at 09:29) Martin Gasser ♦ Martin%20Gasser's gravatar image
1

Government isn't properly in the business of making returns, so where is the investment? They're consumers, not producers. Governments would merely be spending the returns generated by that endowment fund, so there's nothing in it for other investors specifically in the form of an 'investment.'

I also agree with Martin - no major endowment funds for governments, just cash reserves for spending between revenue intakes so they don't have to borrow.

(Sep 21 '10 at 10:57) JJMcVey ♦ JJMcVey's gravatar image

I've given this a lot of thought and have come up with the following answers (so far...)

1) Voluntary Donations

2) Federal Lottery

3) Incorporation Insurance

Number 3 requires explanation. Incorporation allows individuals to voluntarily create a corporate citizen which serves as an insurance mechanism to prevent catastrophic loss of personal wealth. The government could charge a constitutionally specified 1% revenue fee to provide this service.

(Sep 23 '10 at 11:40) Scott ♦ Scott's gravatar image

My mind immediately goes to the fact that compulsory income tax wasn't instituted until 1913. I want to look up how the government was funded prior to that, and were there other compulsory taxes in place prior to the institution of the income tax.

(Sep 25 '10 at 10:14) Earl3d ♦ Earl3d's gravatar image
showing 2 of 6 show all

Ayn Rand had her own thoughts on this topic in the essay "Govenment financing in a free society," available in The Virtue of Selfishness. To begin with, after noting that this topic is part of the science of the philosophy of law rather than philosophy itself, she pointed out that any answer that can be given has to be judged in light of the context of the particular institutions of the society in question. Different societies may find different concrete methods agreeable to them and consistent with their own particular social institutions, which is perfectly acceptable so long as the principles of justice and laissez-faire are adhered to and that the concretes are instances of those principles.

For example, given that the modern society is highly contractually-based, one of her suggestions is a kind of insurance premium on the value of the credit component of contracts. Only those who had paid the insurance premium could then initiate a civil case arising from a dispute with other parties to that contract. Given both the sheer amount of money involved in these contracts, and that in a free society there would be far less occasion for disputes that need court involvement, it is not hard to imagine a court system ending up with more money than it needs even were only a small fraction of contracts insured in this manner. She even seriously wondered if this revenue stream alone would be sufficient to cover the whole of legitimate government expenses. She also noted, though, that such a scheme would not be without its difficulties, both of a principles and technicalities nature. These are what the individuals in society of the day have to sort out for themselves.

Another possibility is to make greater use of what is already done in some countries: impose the court costs on those who were actually wrong-doers. This could, and in some places already does, include puntive fines intended to fund a system of restitution to victims of crime. This could easily be expanded to cover payments made to those who voluntarily take up jury service. However, prudence would strongly suggest that punitive fines not be used to support any of the mechanics of government itself, particularly not police and prosecutors, lest an incentive to improper prosecutorial behaviour be generated.

And of course, simple direct donation to government is not to be discounted, either. Today there are already pledge drives for various worthy causes that the rational and selfish man can and does get involved in and contribute to, and again it is not hard to imagine that this could be applied to government services (particularly police and military defence) that it is clearly in the interests of people with values at stake to support. In a society populated by a majority of free and rational people, without taxation, there would be far more money available for these efforts than today. For an encore, businessmen of all kinds could then be authorised to indicate how much they have paid, and so customers could include consideration for this in determination of whom to give their custom to. That principle could be extended quite a number of ways, too, and which would render the "free rider problem" as a total non-issue - but again such a system should not become inconsistent with the principles of morality and justice behind rational social institutions.

In the end, Ayn Rand is right. Under a free society the bulk of men would be rational enough to recognise that voluntary systems are in their own interest, and would happily support them. The real problems are finding concrete systems that are consistent with both the moral principles applicable to all men and which are consistent with the particular institutions of each society, and also that governments are likely to end up having more money than they need and so men have include means to hold back the big spenders in their funding and oversight institutions.

answered Sep 19 '10 at 22:00

JJMcVey's gravatar image

JJMcVey ♦
630211

edited Sep 21 '10 at 11:00

I've been thinking about this issue lately and was considering the idea of the government setting up investment funds in which money donated to the government was handled by a private investment firm to create a return and therby an incentive to invest in the government. As far as I can tell, there are no moral issues with this scenario and it would create incentive. If anyone has any thoughts or could tell me if I've missed anything on the law or moral angles of this idea, I'd be glad to hear it.

(Sep 20 '10 at 14:14) Damian Damian's gravatar image

"In the end, Ayn Rand is right. Under a free society the bulk of men would be rational enough to recognise that voluntary systems are in their own interest, and would happily support them. " Not sure I can agree with this. Is there an empirical basis for this statement?

(Sep 23 '10 at 12:43) Carl Caveman Carl%20Caveman's gravatar image

It's an issue of individual self-respect arising from people putting their money where their mouths are. The honest and rational man does not seek to get away with being a free rider. On top of that, men are likely to discuss with each other what they think and they have done in regards to this issue, with the force of sanction strengthening the practice.

As to empirical basis, observe how so few of us Objectivists can regularly fund the ARI to the tune of several million a year.

(Sep 24 '10 at 23:11) JJMcVey ♦ JJMcVey's gravatar image

@Damian: The problem I have with government-held investment funds is that it seems like a huge violation of the principle of separation of government and economics. Who would choose the private investment firm? How would the particular investments be selected? These two problems alone instantly politicize the whole thing.

Although you present a relatively benign scenario in your description of this idea, I envision the whole thing turning into a massive disaster along the lines of today's Fannie Mae and Freddie Mac bureaucracies.

(Sep 25 '10 at 10:19) Earl3d ♦ Earl3d's gravatar image
showing 2 of 4 show all

Follow this question

By Email:

Once you sign in you will be able to subscribe for any updates here

By RSS:

Answers

Answers and Comments

Share This Page:

Tags:

×154
×17
×9

Asked: Sep 19 '10 at 19:52

Seen: 3,063 times

Last updated: Sep 25 '10 at 10:19