Wouldn't It Be Nice?
Part Two: Living Off the Interest
By L. Neil Smith
© Copyright JPFO. Inc
Wouldn't it be nice if we could wake up
In the morning when the day is new?
... Maybe if we think and wish and hope and pray ...
There wouldn't be a single thing we couldn't do.
-- The Beach Boys
Music by Brian Wilson
Lyrics by Tony Asher
Depending on who you happen to listen to, some two-thirds, or three-fourths, or nine-tenths of the United States government is illegal -- meaning that what it is and what it does it falls outside the limits prescribed by Article I, Section VIII of the Constitution, listing the powers of Congress and, therefore, of the government as a whole.
(Understand that when the Constitution was written, the Executive branch existed only to humbly and abjectly carry out the orders of the duly-elected representatives of the people. That's us. How times have changed.)
Today, almost any agency or activity you can point to at the federal level -- ATF, BLM, CIA, DEA, EPA, FBI, GAO (to start with just the first seven letters of the alphabet) out of thousands of such entities -- is completely unauthorized by the highest law of the land, and therefore a violation of that law. The politicians and bureaucrats who created all those illegal agencies to begin with, as well as the personnel who pursue those illegal activities are, each and every one, criminals.
Although regaining control of the government and eliminating these illegal agencies and activities is absolutely essential to becoming free individuals in a free country once again, and whole volumes could be written about how to do it, this essay will concentrate on some of the practical consequences if we were to succeed. What if we managed to eliminate the two-thirds or three-fourths or nine-tenths of the federal government that are illegal, and along with it, the taxes that support them and the regulatory interference that they inflict on our lives?
I want to keep the arithmetic as simple as possible, so I'm going to begin by assuming that we've somehow eliminated all taxes, and all economic regulation, and that a similar peaceful revolution has occurred at the state, county, and municipal levels, as well. If, for some perverse reason, you personally desire more government, you may feel perfectly free to adjust your percentages accordingly. As the great libertarian teacher Robert LeFevre put it, "Aim at zero -- if you discover that you've accidentally abolished the entire government, well, you can always have it back by next week with a couple of phone calls."
The first thing Americans should know is that between the federal, state, and local governments, about half of what they earn every year is taken away from them in the form of taxation. (As usual, you will find that different sources offer have different opinions about this -- the Tax Foundation tells me it's "only" 32.7 percent -- I got my original information personallly, from LeFevre, and have since been able to confirm it on other websites.) What this all means is that if you paid no taxes at all, you'd have twice as much money to save or spend.
Similarly, every individual or company from whom you buy goods or services pays about the same percentage of their income out in taxes, one way or another. However here it's just considered a cost of doing business, a cost that gets built into the prices you and I pay for everything, doubling what everything would actually cost in a tax-free society.
Without all these taxes, competition would soon drive prices down to half their current level, which means that your money (which, if you'll recall, you have twice as much of) would buy twice what it does now -- that's an effective quadrupling of what's called your "real wealth".
And now for a little surprise. Back in the early 70s, when I first began exploring this idea, I needed an estimate of how badly economic regulation drives prices up. At that time, 3M corporation had built and photographed an entire meandering garden wall constructed from the boxes of paperwork they had to fill out every year. They said that complying with that sort of regulation comprised one third of their overhead.
At the same time, interstate truckers were the victims of all kinds of scams. One, in Iowa, I believe, had them paying taxes on the gasoline they should have bought crossing the state. If they filled up in Illinois or Nebraska and made it across Iowa without needing more fuel, that was just too bad -- they had to pay the Iowa gas tax anyway.
The federal government was even worse. Truckers were forced to "deadhead" -- that is, if they took a truckload of candy bars from Pennsylvania to Oregon, they were forbidden to find another load to carry back, and were compelled instead to return to Pennsylvania empty, effectively doubling the price of transporting the candy bars.
In 1972, when I attended his seminar in Wichita, LeFevre estimated that there were fifteen million federal laws, and who knows how many regulations generated to support them, plus laws and regulations at the state and local level. (Ignorance of the law, he always reminded us, is no excuse.) So, I estimated that regulation doubles the price of everything we buy. Much later on, I was gratified to see -- I forget whether it was in Trashing the Planet or Environmental Overkill -- that Dixy Lee Ray and Lou Guzzo used the same ballpark figure.
Which means that each of your already-doubled dollars would go four times as far in a tax-free, regulation-free environment. You and I (and everybody else) would be effectively eight times as rich as we are now. To give people an idea of what that means, when I ran for the Colorado State House of Representatives in 1978, my campaign speeches consisted mostly of going through the Wednesday grocery shopping sections of the local newspaper, and dividing the prices there by eight.
I'll leave that exercise for you, now, but I'll point out that a car that costs $40,000 would cost $5000 in a tax-free, regulation-free environment -- and maybe less than that, when the government isn't allowed to meddle in automotive design or fuel formulation. Take the price of anything -- a home, appliances, a college education -- and divide it by eight. What more would you buy if you had eight times the wealth? Only you can answer that, and that's the whole point: making life-changing economic decisions for yourself, instead of somebody stealing seven-eights of what you ought to have and making them for you.
Make mine the FN-FAL rifle I have always wanted, for $132.63.*
But, as they say in Ron Popeil's infomercials, that's not all! As you (and 300 million other Americans) decide what to do with your long-lost, newly-recovered wealth, somebody will have to work -- and be paid -- to fulfill your wishes. If you decide, for example, you want high-definition plasma televisions in every room of the house, somebody will have to make them, ship them, sell them, and deliver them.
Contrary to what the government and corporations may believe, there is not an unlimited supply of "somebodies". The majority of individuals manufacturing the new HDTV for your bathroom will be individuals who are unemployed now, or underemployed, with crummy jobs. But the new tax-free, regulation-free environment will be hungry for workers and eager to train them to meet new levels of demand. And all those new workers will want to buy things with their new-found wealth.
It is the nature of an unregulated economy -- where companies with political pull can't use the government to drive their competitors out of the market -- that prices steadily fall as quality steadily improves. That's why pocket calculators -- a relatively unregulated part of the market -- went from $400 in the 1970s to as little as $4 now.
If everyone is eight times as wealthy, and there are more and more individuals added to increase demand even further, there will be a revolution, not only is what's affordable to the average individual, but in new technology. Everything we've seen happen in electronics over the past generation (because it all happened faster than the politicians could interfere with it) will happen all over again in areas as diverse as air conditioning, automotive design, and household plumbing.
The other day, I was on the website of a famous British newspaper -- a socialist one -- where a friend of mine had just had an article published. Among the enormous volume of reader comments that followed, many writers -- apparently completely unaware that the past twenty years have happened -- scolded my friend for failing to understand that Adam Smith (to them, the personification of capitalism) had failed.
Most people don't know that Smith's famous Wealth of Nations was not a tract for capitalism, but a bitter attack on something that they called "mercantilism" back then, and that is now correctly defined as "fascism", a system under which certain companies climb into bed with the government -- Halliburton and Blackwater come to mind, along with every defense corporation on the continent -- and never seem to climb out again. They get special favors and sweetheart deals, politicians get campaign contributions, lavish vacations, and eventually comfy places on the boards of directors, and the Productive Class gets the bill.
And the Purple Shaft.
Capitalism -- private capitalism -- is something else altogether. It's a system under which individuals and corporations compete with one another by trying to turn out the highest quality goods and services at the lowest prices. It's a system that has enabled humanity to leap from the Middle Ages to the Space Age in an astonishingly short number of centuries, and which has lengthened human life expectancy at birth from 20 years to 75. It's they system that easily houses, feeds, and clothes more human beings, more equitably, than any other system in history, and could house, feed, and clothe every one of them if slimy politicians and tinpot generals would get out of the way.
That's all very easy to miss, when a country like the United States is held back and artificially impoverished by taxation and regulation. Getting rid of those parasitic elements would restore the proper contrast between a free economy and an unfree economy, so that letters like the ones I read would never show up in any newspaper ever again.
Along the way it would establish a New Renaissance.
In early 19th century Britain, there was almost no taxation. The same taxes that sparked a revolution here in America had generated a rebellion there, as well. One of the results -- the Reform Acts -- had, among other things, eliminated about a third of all government regulation.
This gave rise to the phenomenon of "living off the interest", meaning that if a proper sum of money were put away, it could earn its owner enough to live on forever afterward, without touching the principal. People saved their money to accumulate such a sum, others inherited it. None of it was taxed, and one of the results -- just one of them -- was a great leap forward in science. Most of the asteroids, for example, were discovered by amateurs with their own telescopes, "living off the interest", and devoting their time to studying the heavens.
Almost all science was carried out privately in the same way. Who knows what leaps could be made once the sciences and other disciplines were freed from the tax-supported, politically correct straitjacket they're confined in today, and put back into private hands where they belong?
It might even be possible that someday we'll discover that it's better (and more fun) to buy from and sell to other people than kill them, eliminating government's biggest excuse -- war -- for looting us.
Most people have no idea what goverment really costs. The words "billion" and "trillion", repeated over and over, become gibberish. They come to mean roughly the same thing when they are heard or read, and it all sounds like somebody else's play money. But what's actually being spent here -- what's being shredded and cast into the wind -- is your future and mine, and any future that we wish our children to enjoy.
We can estimate the dollar amount that unconstitutional government costs us, but -- just as we can't know which of the millions of men and women whose lives were expended in World War II, Korea, Vietnam, Afghanistan, or Iraq, might have found a cure for Alzheimer's or cancer -- we can't estimate the lost opportunities in our ravaged future.
If we ever hope to stop the growth of parasitic government, if we ever hope to reduce its size and appetite, in short, if we ever hope for good to triumph over evil, we must show individuals -- in terms that actually mean something to them -- not only what government costs them, but what they stand to gain if they manage to "alter or abolish it".
"Government makes stuff cost eight times as much as it should," seems like a good place to start.
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* See more of this thinking at http://lneilsmith.org/utopian.html
A fifty-year veteran of the libertarian movement, L. Neil Smith is the Author of 33 books including The Probability Broach, Ceres, Sweeter Than Wine, And Down With Power: libertarian Policy In A Time Of Crisis. He is also the Publisher of The Libertarian Enterprise, now in its 17th year online.
Visit the Neil Smith archive on JPFO.
© Copyright Jews for the Preservation of Firearms Ownership 2012.
