I’ve once heard an analogy that government rot is similar to software rot: Eventually, you reach a point where refactoring (or creating new laws) just doesn’t work anymore, and you need to start tossing things out.

At least in software, there are competitive pressures coming from competitors. I don’t think that there’s enough competition between governments in order to encourage the “weeding out” process; in fact, they often like to form cartels and collude with each other!

Thanks for your comment.

There will be injustice no matter what system we used. Communism and socialism is rife with a huge gap between the have and have not. We just don’t get to see it because the information is repressed.

I believe strongly in the good of people. All the thousands of people that I volunteered with over the years are my basis for the belief. My board members and I have gone as far as pledging our homes as collateral to get money from banks to feed poor seniors when the government withheld funding for our Meals on Wheels program. Mind you, their portion is only $.30/ per dollar of costs. We fund the rest of out of donations from the community.

The gaping chasm between poor and rich has to do with education. I work with thousands of blue and white collar workers because we manage their 401K plans. I can’t even begin to list the sheer amount of people who ignore our free advice and took money out (not because of need) but because of family recommendations or to spend on a want. We educate them but you can’t force someone to learn or listen.

I spent 2 hrs recently to counsel a young man from stripping his entire retirement (every single accounts, Roth, IRA, 401K) to use as a downpayment on a house. He will be left with less than $400 after escrow closing. He ignored me. It’s not my fault that he choose to be dumb.

Why do you think it’s fair that I work 18 hrs a day to pay my employees and to generate jobs but I also have to give more of my earning to someone who chooses to work less and therefore has less assets than I do.

I love what I do but there are days when you are so overwhelmed with all the regs and paperwork and stress especially if you have employees. If we move more to distribution of wealth, I’ll gladly not work anymore and just have someone hand out money to me to make sure that I get a fair distribution of their efforts.

It’s easier for me to fire everyone and just do enough to support my family or retire next year when the last kid is out of college. I could cut my cost dramatically and go pay per piece for service. The reason why I choose the harder road is because of pride in doing the job well instead of just so so.

America would not be the country of innovation if we had not had capitalism. China is moving to our model because theirs has not worked for 50 years. They’re scratching their heads right now wondering why the US is going backwards on everything and copying failed systems instead of forging new paths like we used to.

Next, you suggest that “if the governments voted in by the people execute an even distribution of wealth for everyone’s basic well being then people can worry less about survival and more about succeeding and flourishing.” If you study human behavior you will see this isn’t the case at all. If you remove the potential reward for success, there is no point in working hard to succeed. The people that want to work hard and succeed will move somewhere they can be rewarded for their work.

Finally, if you want more of your money to go to the poor, there is no need to wait for the government to take it. You are welcome to give it to them freely at any time.

As you said yourself, no man (save for Robinson Crusoe) is an island unto himself. Everyone must exchange and trade with others in order to acquire the goods and services that he needs. There are only two types of exchanges:

* Voluntary exchanges with informed consent.
* Everything else.

The free market is nothing more than the set of all exchanges of the first type. Everything else does not belong to the free market, since the exchange is not free by definition.

So, what is the free market? Going to the store and buying parts for your computer is the free market. Giving to charity is the free market. Going to Cambodia and building houses for poor villagers is the free market.

Now there are two assertions that you made: One that the free market widens the rich/poor gap (I understand this to mean that you believe that the poor are worse off under free markets). I recommend you watch this TED talk to see just how much humanity has benefited from the idea of specialization and trade (again, the free market): http://thebizoflife.blogspot.com/2010/08/matt-ridley-how-ideas-have-sex.html
I won’t go into more detail here, but in sum, the poor are far better off today than they have been at any time in society. You and me are “poor” compared to Bill Gates, but we are filthy rich. Even people working at minimum wage are filthy rich, when you consider the amazing access to technology that we have today. China is most certainly not a free society, but the standards of living over there have tremendously improved since they started liberalising the market place. It was only a few decades ago when tens of millions of Chinese were dying due to famine and starvation. I’m sure nobody would argue against the idea that Hong Kong has been a much better place to live than mainland China; well, guess what the reason for that was: A free economy and good rules and law. That was China’s inspiration, to show them that there is a better way.

Now the second assertion that you made: Monsanto. Monsanto is an example of fascism, not the free market. I am of the view that patents are illegitimate, but I am especially of the view that patents on nature are a gross violation. Who in their right mind supports the idea that if some seeds blow onto your land, you are now forced to pay money to a corporation? This is corporatism and can even be considered fascism, but it is clearly an involuntary exchange.

About Sweden: Haven’t lived there or done too much research, so I am unfortunately ignorant on the situation. They are, however, “mostly free” according to this index: http://www.heritage.org/index/Ranking.aspx

The free market is not about “radical individualism” or “every man for himself” and has nothing to do with that. This is simply a confusion of a TV definition of the free market with the idea of voluntary and involuntary exchange. Under a free market, people are perfectly free to engage in charity or voluntary communism, or whatever else they prefer!

Finally, let’s do a thought experiment. We are all bloggers, and we all make various amounts of money, right? Well, let’s say I make $100,000 a year, and you make $1 a year. There would be a 100,000:1 income disparity between us. Now, is there anything wrong with that? You alluded to a gap between the “rich and the poor”.

Now, you have two choices: You can learn from me on how I am so successful, so that you can increase your own income, or you can just take my income to make us more equal. Would it be OK for you to ask me to simply hand over 40% of my income so as to reduce our gap to 3:2 from 100,000:1? Well, actually, it is OK for you to ask me, but what if I refuse? Is it then OK for you to get a third party to force me to do it? This, in essence, is what socialism is all about. It is a violation of the whole concept of voluntary exchange by placing an imposition on everyone to give up. The only real benefit that can come out of that is that you will be less envious of my success, because it’s now been taken from me. I, in turn, will feel resentment, and you will feel entitled. Some societies can handle it due to homogeneity and culture and where most people support it (hey, it’s voluntary in that case), but otherwise, that is what leads to the rot of society at large.

Were the barriers to movement to be much more fluid in the future, I would be more OK with this. If someone doesn’t like it, it would be easy for them to move to another place. However, I don’t think it’s entirely OK since it’s still legal discrimination by one group against another. Just because it’s not Germans against Jews anymore doesn’t mean it’s perfectly OK.

I recognize that you don’t like to see a big gap between the rich and poor. I place more emphasis on absolute poverty, myself, and my heart really goes out when I see how living conditions are in some countries. The poorest of us in the rich countries are spoiled rotten compared to some of these places… but the world isn’t going to change in one day. I recommend you look at this: http://athousandnations.com/about/ to see a way in which we can improve government all around, since poverty is really about bad rules. Improve the rules, the most important being protection of life and property, and you greatly improve the ability of people to get out of poverty. Read it some, and let me know what you think.

Thanks for the good discussions, Forest.

I still really think left to our own devices we would not look after each other like we should.

Free markets and capitalism seem to widen the rich/poor gap and give ultimate power to the people who already have the money (I understand that is not the goal but it is the reality). Just look at the state of USA when it comes to the ruling of the corporations…. Freedom has actually given them control (think about Monsanto).

As for more control, it’s weird because from my experience it brings more freedom. Take Sweden…. They have a very socialist and in many ways controlled society. Yet they have the smallest rich/poor gap in the world, accomplished social services and in general are doing just fine…. Oh and they are not involved in any silly wars (to my knowledge). The same goes for Germany who seem to even be recovering from the mess left behind by the recent Euro crash and woes of Greece.

I’m not for all out communism or complete equality designated through govermental control. But if the governments voted in by the people execute an even distribution of wealth for everyone’s basic well being then people can worry less about survival and more about succeeding and flourishing within an already stable society.

The every man for himself/lone ranger (even if that man helps a few others along the way) mantra seems to create too many losers from my observations.

Khaleef from KNSfinancial sent me over with his roundup.

What a great post and a wonderful story. I was wondering where you were leading.

I agree with Mike about forced giving.

One of the issues that many people don’t realize about government programs is that we have so many that are unused or improperly used that our tax money is wasted. For example, I’ve worked with small businesses for over 25 years and know most of the programs out there in details.

I can tell you that many are gathering dust while people clamor for more money for more programs. The funds for the original programs in the meantime gets diverted to the government general fund because there is no need or usage. Other programs are so badly misused because our government officials in DC don’t understand how businesses are run and don’t listen to the local offices.

I think people would be even more upset if they realized that their tax dollars are being increased unnecessarily in a lot of cases.

Unfortunately, we do not live in an ideal world and never will. With that out of the way, as much as I care about the others, I do not believe in a totally socialist system where most of my money is taken by the government. What’s the point of studying and working hard? I’ll take on an easy job and get subsidized!

I think sales taxes should be increased to thwart any tax evasion by businesses and it’s fair since if you can afford a high priced item you can afford the taxes. With that, simplifying personal income tax is the best way for a fair taxation system.

Living out here in Quebec I am so sick of paying taxes especially when the government is in deficit year in year out. Sorry for the rant

Are you also in Akismet spam hell, like me?

If anyone remembers elementary school and high school, then they know that ostracism and other social pressures can be even more powerful than physical force. Just look at the recent move by billionaires to appear generous.

On the other hand, if you have to twist someone’s hand to get them to help, why do you even want their help? Aid that is not freely given is no longer aid; it’s extortion.

Nobody begrudges Aladdin for stealing a loaf of bread, since he needed to do that to survive. In today’s world however, we steal all of the time from our neighbours, not just to survive, but to have our cake and eat it too. It’s this kind of thinking that leads to resentment, entitlement, and things blowing up in our faces!

Like you, I also see injustice in our world; however, giving some people the power to rule over others will never lead to greater justice. Men are not angels, and I don’t believe that some men are “more deserving” than others, nor do I believe that some men have the right to control the lives of others.

Even if men were angels, they still could not redistribute wealth in a more efficient method than the individual actions of players. Why not? Because they wouldn’t know how to spend the money. They wouldn’t know if people needed more fridges, if they needed more schooling, more housing, or what. Only each individual actor can possibly know his/her own subjective values, and only through free and voluntary interaction with others do we arrive at trade and exchange that benefits all parties involved. The political process, in retrospect, can only help one group by hurting another.

The strongest requirements to a just and prosperous society is a society where people are treated equally; where everyone has the equal opportunity to succeed (or fail), and where everyone’s rights are protected. When people have varying sets of rights (as with all political systems today to a varying degree), or when their rights are not protected, then justice suffers as a result.

As for war, it is much easier to wage war when you have a strong centralization of power and a high level of coercion in the society.

Here are some of the many powers that strong states have that make it easier for them to conduct war:

* Draft soldiers; force civilians to participate in the effort.
* Steal value from the populace by inflating the currency.
* Force the civilians to contribute by collecting taxes.

If you want to invade other countries, it will be much more difficult to do so without these government monopoly powers.

I laud some of the end goals of socialism (end of war, end of poverty, etc…) but the means are mistaken. Giving some people more privilege over others by fiat does not improve justice for all, and even if men were angels, there are still problems of knowledge. Conversely, those areas of the world with the best and fairest rules and law, and those that respect human rights, are those that improve the human condition the most. This might be interesting for you: http://athousandnations.com/about/

Thanks for your comment!

On the other hand though if you eliminated government giving then it’s quite simple that people would not give enough out of pure willingness to help others and the rich/poor gap would become a gaping chasm…. As it is in many countries where Government assistance to the poor is not a priority.

In short, I have no idea what the solution should be but I do think that the government as to keep stealing our cash to stop things going way out of control. I just wish there was no war and more hospital building!