Showing posts with label Detroit. Show all posts
Showing posts with label Detroit. Show all posts

Monday, January 13, 2014

Not Yours To Give: Unconstitutionality and Injustice of Redistribution

Think back to 2005. It was a year in which catastrophe hit one of America's cities. We all remember it. Hurricane Katrina devastated New Orleans. In the weeks and months to come, President Bush was consistently blamed for his failure to act to help out the city of New Orleans.

It has become clear in recent years that when trouble occurs somewhere in the country (i.e. Katrina hits New Orleans, Detroit's economy sinks, etc.), America expects that its federal government should swoop in to save those in distress. But is this really the purpose of the federal government? 

Samuel Adams wrote, 
"The Utopian schemes of leveling, and a community of goods, are as visionary and impractical, as those which vest all property in the Crown, are arbitrary, despotic, and in our government unconstitutional."

What Samuel Adams was saying here is that trying to equalize wealth among all levels of society is not a proper function of government. It is not too much of a stretch to conclude that helping out certain cities at the expense of others is based on the same concept.

This may seem like a ridiculous notion, but when we examine some certain principles of government and taxation, it comes together as an obvious function of limited and beneficial governance.

The money that the government uses to perform any of its services will ultimately come through us. Obviously, inflation and debt are other sources of "revenue" for the federal government, but they too will ultimately influence the wallets of taxpayers.

Why is this important? In "Not Yours to Give," Davy Crockett explains how he came to a particular vote he made while serving in the US House of Representatives. When asked about this vote, he tells a story of a different bill he had previously voted for and how a simple farmer named Horatio Bunce showed his folly in that area.

The bill Colonel Crockett supported provided $20,000 of aid to those recovering from a fire in Georgetown. It was considered a success for the federal government to have helped the residents of Georgetown. But when Crockett went out electioneering for votes the next summer, he found himself in a conversation with a simple farmer named Horatio Bunce. Believing that Davy Crockett had unconstitutionally voted for this bill, Mr. Bunce refused to vote for him.

Crockett gives us our usual excuses and reasoning for voting for the bill: people were suffering, America has extra revenue, and $20,000 is such a small amount of money, considering the circumstances.

Bunce responds in brilliant form,
"The power of collecting and disbursing money at pleasure is the most dangerous power that can be intrusted [sic] to man, particularly under our system of collecting revenue by a tariff, which reaches every man in the country, no matter how poor he may be... So you see, that while you are contributing to relieve one, you are drawing it from thousands who are even worse off than he. If you had the right to give anything, the amount was simply a matter of discretion with you, and you had as much right to give $20,000,000 as $20,000. If you have the right to give to one, you have the right to give to all; and, as the Constitution neither defines charity nor stipulates the amount, you are at liberty to give to any and everything which you may believe, or profess to believe, is a charity, and to any amount you may think proper. You will very easily perceive what a wide door this would open for fraud and corruption and favoritism, on the one hand, and for robbing the people on the other. No, Colonel, Congress has no right to give charity. Individual members may give as much of their own money as they please, but they have no right to touch a dollar of the public money for that purpose. If twice as many houses had been burned in this county as in Georgetown , neither you nor any other member of Congress would have thought of appropriating a dollar for our relief. There are about two hundred and forty members of Congress. If they had shown their sympathy for the sufferers by contributing each one week’s pay, it would have made over $13,000. There are plenty of wealthy men in and around Washington who could have given $20,000 without depriving themselves of even a luxury of life. The congressmen chose to keep their own money, which, if reports be true, some of them spend not very creditably; and the people about Washington , no doubt, applauded you for relieving them from the necessity of giving by giving what was not yours to give. The people have delegated to Congress, by the Constitution, the power to do certain things. To do these, it is authorized to collect and pay moneys, and for nothing else. Everything beyond this is usurpation, and a violation of the Constitution."

We fund it for a specific purpose, and anything beyond that purpose is a misuse of the funds we provide for the government. When we hire a business to put in a home security system, we would be much annoyed to say the least if we heard the company had decided instead to use our money to redecorate our house, as they considered that a more wise use of our money. That is ultimately what the federal government is doing when it uses our money for catastrophe recovery.

Obviously, there still needs to be action taken when disaster strikes, but as Horatio Bunce indicates, there are plenty of private institutions and individuals who should be responsible for charity. It is amazing how many private institutions supported the Philippines when typhoon fever hit them last year. It seems that we could expect similar support for New Orleans and Detroit. However, I do not believe that is the only option for assistance in this area. County and state governments, with their more localized jurisdiction have the authority to assist failing communities should disaster strike.

So why is it that we always ask for federal interference when crises like Katrina hit? I have no answer, but it is a phenomenon that needs to stop.

Monday, December 9, 2013

A Bailout by Any Other Name

I love Rand Paul. His beliefs entirely embody mine in many ways. In fact, I was beginning to wonder whether I was dreaming up this perfect politician, but that is no longer a concern (not that I still don't like him, just that now I know he's not perfect).

Last week, Rand Paul unveiled his "free market" solution for a Detroit recovery. His plan entails that Detroit (and other "struggling" cities) will be given "Economic freedom zones," where the federal government will end interference in local economies, specifically mentioning a decrease in federal corporate income taxes. The idea is to attract companies back into Detroit to boost its economy. It is presented as a more free market approach than a direct bailout. Although it is definitely more likely to be beneficial in Detroit than a traditional bailout, its linkage to the free market is questionable.

Bailouts are considered wrong because they distort the market by redistributing wealth as a form of charity. (For information as to why redistribution is wrong, I recommend Davy Crockett's "Not Yours to Give.") These tax cuts do the exact same thing, just with a disguise. Rather than being bestowed money by the federal government, you get to simply keep money that you normally would be required to give to the federal government.

This wouldn't be a problem (and in fact would be quite advantageous) if it was an across the board cut for all cities, but as it stands in the proposal to cut taxes only for struggling cities, it is nothing more than taking money from one city and handing it to another. (Yes, I understand we're talking about corporate income taxes here, but these companies are being diverted from investing in other cities. Thus, the point stands that money is being redirected.)

Using the tax system to redistribute funds is nothing new. For about 100 years, America has used the progressive income tax to redistribute wealth from person to person. Now, politicians want to use our tax system to redistribute income from city to city.

Worse than just being a bailout, Senator Paul's proposal saves struggling economies at the expense of other cities - cities that might not be much better off than the city being saved. This is not a free market solution; it is a distortion of the market that has the possibility of harming more economies than it could ever save.

Despite Mr. Paul's good intentions, this proposal seems destined for disaster should it be passed. It is one stumbling block on an otherwise spotless record for Senator Rand Paul.