Friday, October 14, 2011
From Fat Tax to Accountability: The Failure of Choice
In last Friday’s post about The Fat Tax, I commented on a Danish citizen’s concern that taxes designed to influence behavior raise the specter of government becoming “big brother” by pointing out that the private sector is a “big brother” orders of magnitude beyond anything government can construct. I asked “whether the cameras, the information collection, and the laws should be imposed by a non-accountable private sector oligarchy or by a government accountable through the ballot box.”
Joe Kristan over at Tax Update Blog, though accepting of my position on the fat tax, took issue, in Just Try and Fire the IRS, with my suggestion that the private sector is non-accountable and the government is accountable. Though quoting the entire paragraph, including my claim that the private sector engages in more information collection, more regulation, and more camera installations than government, it does not appear that Joe is contesting my assertion that the private sector collects far more data than does the government.
Joe rests his disagreement on two propositions. First, if he is unhappy with what a private sector enterprise or actor is doing, he can take his business elsewhere. Second, his vote is diluted because he is one of hundreds of thousands or millions, and might even live in a jurisdiction where his vote is meaningless because he is outnumbered by those who vote in the opposite way than he does.
Joe’s proposition with respect to the private sector reflects the theory of a free market but not the reality of the market in practice. Joe gives as an example his ability to take his coffee purchasing activities to Java Joes or Timbuktuu if he becomes dissatisfied with Starbucks. From what I can determine, Java Joes and Timbuktuu are local businesses in Des Moines. How long until they are purchased or run out of business by Starbucks? The notion that businesses thrive by providing good service and go under if the service is bad may be true in some instances for short periods of time, but too many good, small, local businesses have gone under while unaccountable international conglomerates foist bad quality on the market place because of predatory and other questionable practices by the giants. For all the complaints that taxes and regulations kill small businesses, which tend to be of a higher quality, what kills small businesses is the overbearing size and activities of the international giants. Joe’s other example, involving grocery stores, will soon be history. During the last five years in my area, one grocery chain bought out another, another went bankrupt, and a third is scaling back in what many would agree is the first step in its disappearance. The big box conglomerates are killing not only small business but even the larger regional outfits. The danger of an oligarchy is that it stands poised on the edge of a monarchy. The choices may exist, but they are diminishing. The trend isn’t very promising.
But aside from the occasional instances of local choice, there remains the practical effect of monopolistic practice. For example, though I have the theoretical opportunity to use an operating system and software other than Microsoft’s, the insistence of those with whom I interact to receive documents in a Microsoft format means that to exercise my theoretical right to use another operating system I must invest time and money in applications to convert things into Microsoft format. Not that Microsoft products are superior, as the tidal wave of complaints about Microsoft software failures, security breaches, and other problems indicate, yet Microsoft dominates the industry. Why? Because it has managed to persuade government to back off from its antitrust responsibilities. How? Money talks.
Yes, there are private sector organizations that do a good job, even a superb job, with the quality of the product and the quality of the service. But their number is few. And, as I’ve noted, they’re likely to be snatched up by an inefficient corporate mega-monster looking to pounce on every money-maker in sight. Unfortunately, the market is riddled with private sector companies that deliver failure after failure, causing death, injury, and destruction. The private sector delivers not only Pintos, some of whose owners never had the information and opportunity to seek and select a safer alternative, but also things like bad pet food, moldy wall board, unsafe environmental impacts, repeated Blackberry service outages, spotty Internet access, and hundreds and thousands of other bad products and flawed services. Interestingly, far more of this comes from the international companies than from the local, hometown businesses, probably because the latter have a more personal relationship with customers and clients and thus see their revenue sources as people and not anonymous numbers.
Joe’s proposition with respect to the government sector rests on the observation that he is one of hundreds of thousands or one of millions. But that’s true for Joe in the private sector as well. His one vote matters, because of its value when combined with other votes. His walking out of Starbucks because of bad service or poor quality coffee is one decision that matters, because of its value when combined with other similar decisions. Just as Joe can leave Starbucks, he can move from Des Moines, he can move within Des Moines to a different district, he can move out of Iowa. If he’s sufficiently unhappy, he can move out of the country, and as extreme as that choice may be, if Joe can find a country whose government is more to his liking, then he has that option. I doubt we will be waving goodbye to Joe anytime soon.
Joe’s proposition with respect to the government sector suggests that government services are worse than those provided by the private sector. In some instances that’s true. But in other instances it’s far from true. Knock on wood, but I’ve never had a problem with Pennsylvania’s Department of Transportation in terms of licensing and vehicle registration. I can’t say that about the insurance companies. I’ve never had a problem with township-provided, tax-funded trash and recycling pick-up, but I cannot say that about the private contractors with whom I dealt when I lived in townships that went with private collection. When I have had difficulties with government services, in most instances it was a consequence of a government law, regulation, or policy adopted at the behest of a large private sector enterprise or actor with the money to wield influence over the government legislature or agency in question.
And that brings me back full circle to the notion that government somehow is a failure. For every failure of government service, there are disproportionately far more failures in the private sector. When government does fail to respond to the needs of the electorate, it’s often because the private sector organizations are devoting too many resources into owning government and insufficient resources into providing quality products and services. That government-imposed monopoly that Joe mentions as the exception to his free market choice model is the product of the private sector co-opting government. The solution is not to punish the captive government but to put the oligarchs and monopolists out of the vote-buying business.
I maintain my position that those who fear governmental big brother are worrying about a threat that is miniscule compared to the threat of corporate big brother. I maintain my opinion that government is accountable through the ballot box in a way that the private sector is not. Joe can leave Starbucks but he cannot vote out its officers or board, and when he wakes up tomorrow and finds that Starbucks bought out Java Joe’s and Timbuktuu, he cannot run for office as he might if he wakes up to find that a candidate not of his liking was elected.
In theory, a free market working as it should requires a small government to protect that market. In reality, we have a market that is free only for those with money to be free to do what they want, and an oversized government trying to keep up with protection of those afflicted by the abuses of the market place, but hamstrung by the opposition to regulation advocated by those who have the most to lose if they were required to obey the rules of a truly free market. When all is said and done, the lack of transparency and accountability in the private sector makes the government look downright benevolent in that regard. It’s not, of course, but when compelled to choose between two things that are broken, it’s best to put one’s repair skills to work on the thing that’s easiest to fix and whose repaired condition will make it easier to fix the other broken item. A repaired government can fix the broken free market. A repaired free market cannot repair the government.
Joe Kristan over at Tax Update Blog, though accepting of my position on the fat tax, took issue, in Just Try and Fire the IRS, with my suggestion that the private sector is non-accountable and the government is accountable. Though quoting the entire paragraph, including my claim that the private sector engages in more information collection, more regulation, and more camera installations than government, it does not appear that Joe is contesting my assertion that the private sector collects far more data than does the government.
Joe rests his disagreement on two propositions. First, if he is unhappy with what a private sector enterprise or actor is doing, he can take his business elsewhere. Second, his vote is diluted because he is one of hundreds of thousands or millions, and might even live in a jurisdiction where his vote is meaningless because he is outnumbered by those who vote in the opposite way than he does.
Joe’s proposition with respect to the private sector reflects the theory of a free market but not the reality of the market in practice. Joe gives as an example his ability to take his coffee purchasing activities to Java Joes or Timbuktuu if he becomes dissatisfied with Starbucks. From what I can determine, Java Joes and Timbuktuu are local businesses in Des Moines. How long until they are purchased or run out of business by Starbucks? The notion that businesses thrive by providing good service and go under if the service is bad may be true in some instances for short periods of time, but too many good, small, local businesses have gone under while unaccountable international conglomerates foist bad quality on the market place because of predatory and other questionable practices by the giants. For all the complaints that taxes and regulations kill small businesses, which tend to be of a higher quality, what kills small businesses is the overbearing size and activities of the international giants. Joe’s other example, involving grocery stores, will soon be history. During the last five years in my area, one grocery chain bought out another, another went bankrupt, and a third is scaling back in what many would agree is the first step in its disappearance. The big box conglomerates are killing not only small business but even the larger regional outfits. The danger of an oligarchy is that it stands poised on the edge of a monarchy. The choices may exist, but they are diminishing. The trend isn’t very promising.
But aside from the occasional instances of local choice, there remains the practical effect of monopolistic practice. For example, though I have the theoretical opportunity to use an operating system and software other than Microsoft’s, the insistence of those with whom I interact to receive documents in a Microsoft format means that to exercise my theoretical right to use another operating system I must invest time and money in applications to convert things into Microsoft format. Not that Microsoft products are superior, as the tidal wave of complaints about Microsoft software failures, security breaches, and other problems indicate, yet Microsoft dominates the industry. Why? Because it has managed to persuade government to back off from its antitrust responsibilities. How? Money talks.
Yes, there are private sector organizations that do a good job, even a superb job, with the quality of the product and the quality of the service. But their number is few. And, as I’ve noted, they’re likely to be snatched up by an inefficient corporate mega-monster looking to pounce on every money-maker in sight. Unfortunately, the market is riddled with private sector companies that deliver failure after failure, causing death, injury, and destruction. The private sector delivers not only Pintos, some of whose owners never had the information and opportunity to seek and select a safer alternative, but also things like bad pet food, moldy wall board, unsafe environmental impacts, repeated Blackberry service outages, spotty Internet access, and hundreds and thousands of other bad products and flawed services. Interestingly, far more of this comes from the international companies than from the local, hometown businesses, probably because the latter have a more personal relationship with customers and clients and thus see their revenue sources as people and not anonymous numbers.
Joe’s proposition with respect to the government sector rests on the observation that he is one of hundreds of thousands or one of millions. But that’s true for Joe in the private sector as well. His one vote matters, because of its value when combined with other votes. His walking out of Starbucks because of bad service or poor quality coffee is one decision that matters, because of its value when combined with other similar decisions. Just as Joe can leave Starbucks, he can move from Des Moines, he can move within Des Moines to a different district, he can move out of Iowa. If he’s sufficiently unhappy, he can move out of the country, and as extreme as that choice may be, if Joe can find a country whose government is more to his liking, then he has that option. I doubt we will be waving goodbye to Joe anytime soon.
Joe’s proposition with respect to the government sector suggests that government services are worse than those provided by the private sector. In some instances that’s true. But in other instances it’s far from true. Knock on wood, but I’ve never had a problem with Pennsylvania’s Department of Transportation in terms of licensing and vehicle registration. I can’t say that about the insurance companies. I’ve never had a problem with township-provided, tax-funded trash and recycling pick-up, but I cannot say that about the private contractors with whom I dealt when I lived in townships that went with private collection. When I have had difficulties with government services, in most instances it was a consequence of a government law, regulation, or policy adopted at the behest of a large private sector enterprise or actor with the money to wield influence over the government legislature or agency in question.
And that brings me back full circle to the notion that government somehow is a failure. For every failure of government service, there are disproportionately far more failures in the private sector. When government does fail to respond to the needs of the electorate, it’s often because the private sector organizations are devoting too many resources into owning government and insufficient resources into providing quality products and services. That government-imposed monopoly that Joe mentions as the exception to his free market choice model is the product of the private sector co-opting government. The solution is not to punish the captive government but to put the oligarchs and monopolists out of the vote-buying business.
I maintain my position that those who fear governmental big brother are worrying about a threat that is miniscule compared to the threat of corporate big brother. I maintain my opinion that government is accountable through the ballot box in a way that the private sector is not. Joe can leave Starbucks but he cannot vote out its officers or board, and when he wakes up tomorrow and finds that Starbucks bought out Java Joe’s and Timbuktuu, he cannot run for office as he might if he wakes up to find that a candidate not of his liking was elected.
In theory, a free market working as it should requires a small government to protect that market. In reality, we have a market that is free only for those with money to be free to do what they want, and an oversized government trying to keep up with protection of those afflicted by the abuses of the market place, but hamstrung by the opposition to regulation advocated by those who have the most to lose if they were required to obey the rules of a truly free market. When all is said and done, the lack of transparency and accountability in the private sector makes the government look downright benevolent in that regard. It’s not, of course, but when compelled to choose between two things that are broken, it’s best to put one’s repair skills to work on the thing that’s easiest to fix and whose repaired condition will make it easier to fix the other broken item. A repaired government can fix the broken free market. A repaired free market cannot repair the government.
