| 6 mins read
Over many years I have participated in seminars, conferences and events organised by libertarian organisations. By and large I have enjoyed these occasions, not least because libertarians genuinely believe in the power of political ideas. Indeed, this is one of their more attractive qualities. But long exposure has sensitised me to the fallacies and faulty assumptions that are built into the libertarian view of the world. Since we in the UK have recently had foisted on us an avowedly and ardently libertarian government, now, more than ever, it is important to understand the scale and character of libertarian errors. For it is one thing to criticise policies, but, unless we understand the deep structure of thought behind those policies, our criticisms will be less than thorough. In that spirit, in the next few weeks, I will set out and discuss some of the fallacies that libertarians embrace.
It does not take long to learn that libertarians think that taxation takes away the money that rightly belongs to those who earn it. The view was pungently expressed by Robert Nozick in Anarchy, State and Utopia, where he wrote that taxation of earnings from labour ‘is on a par with forced labor’ (p. 169). But the same view recurs in different forms in libertarian propaganda. Take the Adam Smith Institute’s ‘tax-freedom day’ with its claim that ‘Brits spend over 40% of the year working for the taxman’.
Against this background of ideas, it is no wonder that Kwasi Kwarteng says that he wants ‘to see, over the next year, people retain more of their income’ or that Liz Truss thinks it fair that the rich who pay more tax should be the greater beneficiaries from tax cuts.
Now, it is certainly true that anyone looking at their pay slip at the end of the month and comparing the figure in the top left with the figure in the bottom right might think that money is being taken off them. But this would only be true if the services provided by government did not create the essential conditions in which they could earn their money in the first place. Taxes are the dues we pay so that these conditions are provided. How else are they supposed to be provided? By the fairy godmother?
To see how this works, consider the parable of the market trader. Suppose a local council provides and maintains a market square and buildings within which people can set up their stalls for a fee, the fees covering the cost of providing the market place. Suppose also that, for reasons of administrative convenience, the council collects money from the traders at the end of their working day. Imagine someone looking at their takings and realising that ten percent will be needed for the fees. That person might well think that they could have packed up a couple of hours earlier and still be in pocket. But that is just an illusion. They would not have had the market opportunity in the first were it not for the facilities that the council provides. Since those facilities have to be paid for, the dues are not the trader’s own money that is being taken away, but the required deduction for the cost of the public good.
The parable assumes, of course, that governments provide services. Not all governments do. There are corrupt and kleptocratic regimes around the world. But there is a clear difference between a government lawfully collecting taxes to pay for the services that it provides and a bunch of bandits who have managed to gain political power in order to grab money for themselves. Governments that fall into the second category do not make their societies prosper.
You can of course question whether the balance of services that your government supplies are the right ones. I certainly do, thinking that too much is spent on roads and government public relations and not enough on bus services and classical music. But that is quite a different matter from saying that my taxes are confiscated from the earnings that my labour has produced.
What should we call the fallacy involved in the claim that in taxing you your government must be taking away what is yours? It is probably best called the fallacy of selective perception, a special case of the fallacy of insufficient statistics or not taking into account sufficient data when coming to a judgement. Instead of looking at the costs and the benefits, you only look at the costs. It is a fallacy that brings many other false assumptions in its train – that public goods are unproductive, that individual freedom is compromised by the duty of social contribution, that the law is always coercive, and others. Libertarianism is a nest of fallacies, as we shall see in future weeks.
Oh, and by the way, in 1989 Nozick repented of his earlier libertarian views, writing in The Examined Life (p. 287) that there ‘are some things we choose to do together through government in solemn marking of our human solidarity’.
