It Is Dangerous to Be Right When the Government Is Wrong - Andrew P. Napolitano [133]
Additionally, the government’s choice of how to spend the money it takes will always be more inefficient than the market. Government spending must, in the long run, come from its citizens, citizens who could be spending it upon the projects which they value the most. By contrast, an out-of-touch government with little access to the information necessary to make prudent spending decisions, cannot allocate those resources in a manner which will maximize our welfare. Consider the recipients of New Deal spending, the most “lauded” spending project in American history: Unused roads, dams, and bridges, and white-collar beneficiaries and the unemployable. How could taxation possibly serve the public necessity if it strangles our economy?
Human history confirms these theoretical arguments. Americans experienced the greatest increase in living standards the world had ever seen during the period from the late nineteenth century up until the early twentieth century. While there was some government intervention in the economy during this time, the interventions absolutely paled in comparison to the interventionist policies which started in the early twentieth century and continue to the present day.
233
Starting in 1870, prices began to fall sharply in America as a result of a stable monetary supply combined with a massive increase in the American economy’s productive capacity. The government, shockingly, lowered the cost of living by withdrawing some of the Civil War greenbacks; and by 1879 the rest of the currency was convertible into gold. Lower prices meant that over time Americans’ earnings and savings were gaining purchasing power (the amount of goods that can be purchased per unit of currency) even if they maintained the same nominal value, and thus they were wealthier as a consequence. Since interventionist policies have gained hold, we have experienced lower rates of growth, and numerous financial crises.
In sum, many critics may point to the fact that there is still a shortage of truly necessary charitable donations as evidence that libertarianism doesn’t work. However, I think the fact that the government prefers to spend tax dollars on military aid to Egypt rather than provide decent health care for veterans is evidence that a social welfare state, financed by profligate taxation, doesn’t work. That taxes are somehow justified by the public necessity is clearly an outright lie which we, quite literally, cannot afford to believe.
I’ll Gladly Pay You Tuesday for a War Today
The government has a few more creative ways of paying for its initiatives, all of which still amount to theft. In this section, we focus our attention on government-issued debt. If the government chooses not to raise taxes in the present to pay for a program, it can issue a bond. In this transaction, someone agrees to give the government money now in exchange for repayment at a later date, plus an interest payment. The problem, however, is that eventually these obligations have to be paid for with taxation. A bond is therefore, as Chodorov notes, a claim on future production. It allows the government simply to defer taxation to a later date.
It is important to reflect briefly on some of the common but erroneous beliefs about public debt, held by both ends of the ideological spectrum. It is theft in the sense that it can only result in more taxation, and thus property will be taken away from you against your will. It is not, however, literally taking money from future generations; clearly, money cannot be “taken” from the future to pay for something today. It is simply reallocated from bondholders to the government, where it