Category Archives: Big government is the problem

On Voluntaryism, Stateless Societies and Contract Slavery

Recently I got involved an interesting philosophical discussion on Facebook (where else!) concerning taxation and the proposition that if you don’t pay your taxes men with guns will come and take you to jail or kill you (all true). One participant brought some focus to the conversation by distilling down the core argument to one of a) should we have government (b) how shall we pay for it (c) constitutions are like contracts. All good points, however embedded in each one is either a false choice or a fallacious assumption. So below I will reproduce his post and then my follow up as I address some of the main fallacies. 

here is the quoted content from the post I will be responding to:

This conversation, and every conversation about the scope of govt comes back to the same place. The first division is you are either an anarchist or you want some kind of law. The moment you say you want some kind of law, you are agreeing that at some point in the process of enforcing the law, a dude from the govt with a gun will come take you away. And I am okay with that – no point in pretending we have laws if they are not going to be enforced.I am willing to listen to discussion, but anarchy is probably not for me, or most of us. So then it’s like the old joke about the prostitute – we’ve already established what you are (pro-govt of some kind), now we’re just haggling over price. Where is the line in the sand as far as your philosophy of the proper scope of the law?I would suggest that the only useful argument by a libertarian about government is that it ought only exist to prevent one adult from using force or fraud to gain from another adult – whether that gain is via money or to forward an agenda. Situations involving children and the mentally impaired are naturally given to tighter governance.So to me, the idea that we’re arguing over whether or not you must / ought pay federal taxes so the govt can fund its activities is a little pointless. The only real argument for strict Constitutionalists or libertarians ought to be about the USE of the money, not the government’s right to take it. The law of tooth and claw was used to appropriate the land upon which I sit and afterward to create the govt that exists here – the RIGHT is almost irrelevant. Were I to be successful in dissolving this (formerly) useful govt, it is most likely a worse govt would take its place. There is no perfect freedom on this side of heaven, so the notion that no entity can curb my inclinations or bind my freedom is almost childish.We can get into a lot of philosophical discussions about man being created free and whatnot, but the fact is that there will be some govt, and we enter into “contracts” (the Constitution, say) with other free people to create these govts that will enforce our individual rights to property and to secure freedom from invasion, etc. With our ancestors having agreed to some form of these contracts, and most of us agreeing that they ought to exist in one form or another, we should be focused on the quality of the contracts, not the terms of enforcement.

Here is my response:

Your points I think have helped to focus the discussion, however the underlying assumptions simply reinforce the false dichotomous choice that is beaten into us from day one (by our educators, our literature and the state media) – namely that one has a choice of either being ruled by others (in the form of this thing we call government) OR absolute and total chaos with no laws or order whatsoever. Obviously with a choice like that who would pick the latter? And to an extent I think part of the failure for the proper alternative being made understood falls at the feat of us libertarians – we (or some of us) throw the word “anarchy” around and do not explain at all what is intended by the use of that phrase. I personally prefer “voluntaryism” – it’s enough of a neologism that it carries none of the associated emotional baggage of “anarchy”. We want the freedom of choice. Not the freedom to state our choice and have it vetoed by a “majority”, but to actually be allowed to execute our choice.


When we libertarians speak of “freedom from government” we do not intend a lawless, chaotic, anything goes sort of wild west world. Far from it. We want government. We want order. It’s just that we want to pick our own government to associate with. And we do not believe that simply because I happen to live next door to you and you want to associate with a government that establishes rules that promote Ideology A and I want to associate with one that promotes Ideology B, your choice should have any bearing on my choice. 

Think about it for a minute. I’m proposing something no more controversial than what we currently practice today – freedom of religion. If I’m Catholic and I live in a town full of Baptists it would seem ludicrous to anyone to suggest that “well since a majority of people who live here are Baptist, well, you have to be Baptist too, or at the least you have to do all the things the Baptists require” – and that if I didn’t comply I would be throw in jail. That’s insane – and rightly so, and everyone would agree that that would be insane. And so it is no different with government. This type of governance is not unknown. It is sometimes referred to as a “clan” system. In more “primitive” stateless societies families had a self-interest in protecting each other. They came to each other’s defense and helped each other in times of need. In time it became customary for non-family members to join a family or clan for such protection purposes (voluntarily paying or contributing something in return – i.e. truly voluntary “taxation”). However all members of the clan were responsible for the behavior of its members. If one member injured someone in another clan then all members must make restitution. They then obviously had a self-interest in preventing such behavior from those they knew to be the most troublesome. Eventually if a member behaved badly enough consistently enough they were thrown out of the clan and thus had no protection of any kind from any group. They were an “outlaw” – which meant that anyone could kill them, rob them whatever without any consequence whatsoever. That’s a pretty big incentive to not become an outlaw and behave as directed by the customs and laws of your clan. (For a brief discussion of this system in Ireland please see this interview with Gerard Casey by Tom Woods ). In order for all clans to get along they tended to adopt the same basic “common laws” against violence, theft, rape, etc. So in this way we can see how “law” can exist without an over arching state. Everybody is against rape and murder. But not everyone might be for space exploration, or green energy, etc. Essentially each clan is a government, the only difference being they did not have specific geographical boundaries. Members of multiple clans could all live in the same city and get along just fine. There is no reason such a system could not operate today on a larger scale, one where entities very similar to insurance carriers took the place of the role of government in dispute resolution, restitution, crime mitigation (less crime, less to pay out in losses). If such an entity does not provide what people want, they will go elsewhere. Without a barrier to entry imposed by outside regulations no one could ever “take over” such an industry, the market would always be providing those that could do it better, faster, cheaper, etc.

This has gotten a lot longer than I intended, but let me just touch on another point you made. The one of contracts is germane, however you again accept the “party line” that the fact that our ancestors freely entered into a contract (the Constitution) somehow morally binds us to that same contractual obligation in perpetuity. How can it? Are we bound by the contracts our parents sign? If your parents had a huge amount of debt and then died would you want to suddenly be saddled with that? What if I could vote myself out of the contract, but my siblings wanted to remain party to it, and thus I was then bound by their vote – why should I be bound by their choice? There really is no difference between that and the idea that we are all still adhering (or pretending to adhere) to a contractual document signed by people that have all been dead for nearly 200 years. I talk about this idea of contractual slavery more here

The Magic of Democracy

Jon Stewart (The Daily Show) had a humorous take on the recent IRS scandals (see clip here) however what I found most interesting in his monologue is what I believe may be the most succinct summation of the core belief system of all progressives/socialists:

“I believe…that good government has the power to improve people’s lives and that the people have the power to restrain its excesses.”

Within this statement are two fallacies. Let’s deal with the first one. Although government can in theory improve people’s lives, the fallacy is in the unspoken assumption that government is the only agent in society that can accomplish such goals. Using government to improve people’s lives is like using a hammer to drive in a screw – it can get the job done eventually but there are far more efficient ways to accomplish the task.

The second half of the statement, however, yields the much more interesting and widely held fallacy. It embodies the fatal naiveté of those who believe democracy is the most perfect form of government. Democracy provides us with the comfortable illusion of self-determination and control while in reality providing no such thing. As we ride the majority wave we delude ourselves into thinking we control the wave, but we do not. One second we are high on the surf, the next we are plunging downward as we are pulled out to sea against our will. We do not control the mob, the mob controls us.

No system is perfect but monopoly governance short circuits the natural feedback mechanisms that would otherwise eliminate abuses. To naively believe “reform” can fix our present woes is to ignore man’s basic instinct to obtain more with less effort. When this instinct is set loose in monopoly government the result is cronyism, when set loose in the market the result is innovations and efficiency improvements.

Some believe the government feedback is not broken, that it is the polling booth that provides this check on abuse. This does seem plausible – “vote the bums out” as they say. Unfortunately, this feedback fails to effect change as long as only a minority is abused. The minority can never garner enough votes to “change” things and everyone else is indifferent as long as they are not being affected. The majority is pandered to by promises of favoritism at the expense of the minority. And so nothing changes. If businesses were run like government (wherein employees voted for the boss that promised them the biggest pay increase) is it not obvious such selfish self-interest would eventually lead to financial collapse? The size and scope of government debt serves as testament to the accumulation of just such abuse. A private entity could never have accumulated so much debt and would have been extinguished long ago.

Voting on who runs the government makes about as much sense as voting on who should run Publix. Publix sells us goods and services and so does government – why does Publix have to compete for our dollars but government does not? Why do we vote for government leaders but not Publix leaders? One word: taxes. Taxes are compulsory. Voting mollifies the masses into the delusion that they have chosen this compulsory state in much the same way a corralled animal chooses its path. A leashed animal is restless and fights the leash. But, remove the leash and allow it to roam free on fenced pasture and it will cease all resistance. The illusion of freedom is quite powerful.

The Truth Emerges…

What are the lessons from the recent IRS scandal surrounding the targeting of conservatively named groups for heightened levels of tax status scrutiny? Is it that there is a vast left-wing conspiracy in this country and this is just the tip of the iceberg? Is it that Obama is the fiendish mastermind behind these directives? Although neither is impossible, the likelihood of either scenario is dubious at best. Conspiracy theories that involve the government are a peculiar sort. They are often germinated by those who assert on one hand that government is as effective in its stated goals as a flopping fish but then on the other hand claim that when it comes to the conspiratorial acts it possess the organizational acumen of a stealthy ninja.

This scandal demonstrates not the intent of a scheming mind but rather is a mockery of the hubris of those who believe “we” or anyone can “control” an entity as large as government. From the complexity of such large entities there emerges certain properties that are neither predictable nor directed (in biology known as “emergent properties”). The emergent property we are seeing here is “selective enforcement.” We tend to think of government as this monolithic entity acting with a singular will. This interpretation turns a blind eye to the obvious truth that “government” is composed of freely acting individuals who can, and often do, whatever they wish. They act with impunity, reaching out from behind the collective government shield that protects them. Occasionally the shield is pierced, as with the IRS scandal, and we are allowed for a brief moment to bear full witness to the results of granting our agent (government) absolute autonomy over ourselves.

The fact that the outrage around this scandal is so misdirected is a testament to how inured we have become to government intrusions. The scandal should not be that these rules were selectively enforced but rather that such rules exist at all! Abstractly the scandal can be as summarized as follows: the rules say everybody that wants a cupcake must have their knees smashed with a baseball bat. But that takes too much time and energy, so they just started smashing in the knees of people they didn’t particularly like. Then people got upset because it was unfair they weren’t bashing in everybody’s knees. We’ve been beaten down so long it seems almost “crazy” for someone to suggest perhaps the beatings should stop (yes – I mean this metaphorically people.)

But, what can we expect when we have granted fallible, petty, capricious human beings nearly unlimited power over other fallible, petty, capricious human beings. How does slapping the label “government” on one group magically change their nature? It doesn’t, and that’s the problem.

 

 

 

Perverse Incentives Promote Disasters

In the wake of any industrial accident there follows a predictable chorus of pundits lamenting “market failure” in order to justify further interference of the state into every facet of business function. On the surface this might sound plausible, surely we need Big Brother looking over our employer’s shoulder to make sure everything is safe, right? The only problem with this narrative is that the pundits tend to conveniently omit the crucial fact that such disasters happened on the watch of government. There is no place in the world immune to at least some level of government oversight related to safety. Even in Bangladesh where there has been a recent spate of factory fires and building collapses they at least had building codes even if they weren’t followed. And there in lies the rub. The people entrust their government with the task of ensuring their safety (a dubious decision at best) but when that same government fails to adequately carry out that mandate and such failure is the proximate cause of some disaster oddly blame is 100% shouldered by the regulated entity rather than the regulator. If you had a jail in your community that routinely had prisoners escaping and killing people it seems like at some point the people running the prison should share in the culpability.

So whether it is financial misdeeds on Wallstreet, a factory explosion in West Texas, or a building collapse in Bangladesh, we see the same failure of the state regulators to do their job. But the regulators are just employees, they can’t be held personally liable. And their employer is the state, and the state can’t be held liable. So where does that leave us? No one is responsible. What is the solution? Rub some bacon on it – err I mean throw some more money at it.

If regulators fail, then they just get more money and scribble down yet more regulations based on their clairvoyant 20/20 hindsight; more words on paper that will be ignored by more regulators in the future. The perverse incentive of this system should be obvious and yet it continues. The perverse incentive is that (a) failure is rewarded with (b) more resources; therefore failure is what is incentivized. Now that is not to say that all the regulators individually are these evil monsters failing on purpose in hopes of one day obtaining a raise. But what it does mean is that the system itself cannot cure itself. A market system is self-regulating in that failing firms (assuming they are not bailed out by the government) disappear into the graveyard of failed businesses. In a market based regulatory system failure means you lose all your money and go out of business. Success means you make money and you stay in business. Competition among the successful firms drives further improvements. There is no competition in the monopolistic government run regulatory system; Soviet style stagnation reigns supreme. A successful private regulator (e.g. Underwriter’s Laboratories, Consumer Reports, etc) prevents harm and is rewarded for successfully doing so. Government can’t go “out of business” and so the same old failing system stays in place, at least until we vote in illusory “change” only to discover nothing has changed at all.

Monsanto Protection Act

Whether you are anti-GMO, pro-GMO, or couldn’t-care-less-about-GMO you should be angered and frightened not only by the content of what lawmakers slipped into the unremarkably named “H.R. 933: Consolidated and Further Continuing Appropriations Act, 2013” last week, but the manner in which they did so.

Why should you care? The inserted language sets a dangerous precedent. It does so by carving out an exception in which a regulatory agency (the USDA in this case) may become answerable to no one. Traditionally such agencies fall under the purview of judicial review, meaning their practices, policies, or actions may be halted either temporarily or permanently upon a judge or judges finding issue with their actions. The judiciary in this case acts as the only mechanism the people have to prevent such agencies simply doing whatsoever their heart desires. This bill inserts language that allows the USDA to simply ignore judicial opinion and proceed under their own unbound and unchecked authority. Even laws passed by Congress may be nullified by judicial review, but no such limitation would exist for certain decisions of the USDA.

What exactly is being permitted? For the full gory details please see Title VII, Section 735. In layman’s terms it says this: if a decision of the USDA is found to be invalid (by a court) with respect to USDA’s approval of a particular plant cultivation, then if a farmer, grower, farm operator or producer requests a “temporary” (“temporary” being defined no where in the statute) permit to cultivate said plant anyway then the Secretary of Agriculture is empowered to grant such a permit, i.e. completely ignoring any court finding to the contrary. Since this language was specifically inserted with the knowledge of the very real prospect of a court eventually overturning USDA’s approval of certain GMO-seeds (principally produced by Monsanto) it has been dubbed the “Monsanto Protection Act”. Monsanto need no longer worry about some meddlesome activist judge interfering with USDA approval of the planting of their seeds. This is just another example of crony capitalism at its most blatant. Big business helps lawmakers get elected and they in turn pass laws that benefit those same big businesses. I will pause for a moment while the irony that President Obama actually signed this piece of legislation into law sinks in. To those that believed Obama was all about the “little guy” and was going to stick to “big business” – I rest my case.

How did this even happen? The truly scary part is that this not at all unusual. These types of unrelated “riders” are routinely inserted into bills (recall the “rum rebates” in the fiscal cliff bill earlier this year?). In this case, perhaps anticipating the firestorm that would erupt, it was inserted anonymously. That’s right, our wonderful system of governance allows random bits of text to mysteriously appear in bills without any accountability. Even better they show up at the last minute so no one even knows they are in there (so I guess Nancy Pelosi was right after all, we really do have to pass a bill to find out what’s in it).

Some may say this was just an unfortunate breakdown of the “system” and is simply a sign that we have gotten “off track” and must “reform” or otherwise “fix” the system. That is a fool’s errand. The system does not, has not, and can never work. As long as a handful of people have the legal authority to hand out lucrative favors that everyone else must pay for or comply with then the whole system is doomed to go over a much larger cliff.

State Marriage Benefits Betray State Intrusions

Last week the Supreme Court heard oral arguments concerning two different cases that relate to the constitutionality of the Defense of Marriage Act (DOMA). DOMA was signed into law in 1996 in order to delegitimize any attempt by the states to legalize homogender marriage by disqualifying members of such unions from receiving certain federal “benefits.” So even if a state did legalize and recognize such marriages they would always remain somehow second-class in terms of government-mandated benefits. However DOMA proved to be an irrelevant impediment and several states have since enacted laws recognizing homogender marriage. So, once again the question of federalism falls before the court: wherever federal and state law conflict, which shall take precedence? The constitution was written in such a way that state law supersedes in all cases except where the constitution has expressly delegated such authority to the federal government. Progressives typically fall into the category of those who believe the constitution to be a “living document” insofar as they routinely discover new “expressly delegated” authority that tends to align with their worldview. Conservatives however view the document more through an “original intent” lens. Oddly enough though the rolls are reversed with respect to DOMA. Now it is the progressives insisting that the constitution does not give Congress any implied authority to regulate marriage and it is the conservatives claiming there is clearly an unwritten mandate in the constitution to defend “pillars of our society” such as marriage. My, my, it seems the constitution can be all things to all people when it suits their partisan purpose.

The more compelling message of DOMA, which both sides and the media have managed to ignore, is the idea that there even exists such a thing as “federal benefits”. Every so-called benefit is connected in some way to some illegitimate intrusion of government in our lives. Government takes away our liberties and intrudes on our rights and then graciously metes them back out piecemeal as “benefits” for those that play nice and follow their rules. Consider the following contested benefits: Tax benefits (income and estate tax are immoral confiscation of productivity), insurance benefits (employers should have no role in providing insurance of any kind), Social Security benefits (Social Security is a fraudulent compulsive quasi disability/ponzi scheme that should not exist in a free society), immigration benefits (there should be no limits on immigration).

But the biggest intrusion of all: Marriage itself – the government, neither at the federal nor state level has any business whatsoever in regulating, validating or approving of marriage. Marriage (for legal purposes) is simply the voluntary association of one or more individuals for a specified or unspecified length of time. Advocates of marriage regulation base their argument on an appeal to the concept of government playing a role in maintaining the structure of society. There is only one problem with that argument: government has no such role. Churches may play that role for some and to the extent people freely associate with those churches and abide by those teachings that is entirely legitimate. But the state has no role in embodying in law the teachings of certain religious institutions.

Remember, democracy is a dangerous weapon as it cuts both ways. For example a law passed last year (by majority) in Denmark forces churches there to marry gay couples by some representative of that church. Using government to either require or forbid some action is equally wrong no matter who does it. All sides should join together in dismantling the ability of government to intrude on our rights. Government is a powerful weapon. We need to stop using that weapon against each other.

Theft by any other name

“The state is a gang of thieves writ large.” Murray Rothbard

It is curious that this simple fact is not more widely accepted, however given that the state itself has mastered the magician’s art of misdirection (via state apologists given a platform in the public media coupled with the indoctrination of our children into venerating the state) it should perhaps not be all that surprising. We remain as blissfully unaware of our cage as fish are to the invisible boundaries of their aquarium. But sometimes cracks develop in those transparent walls revealing the deceit that has been there all along. A case in point is the recent EU-IMF bailout of Cyprus’ troubled banks this weekend. For those whose eyes glaze over at the prospect of a discussion of Eurozone financial policy I will spare you the gory details. In fact, skipping the details and looking at the big picture makes the crime occurring all the more clear. The bottom line is that the Cypriot government is confiscating between 6.5% – 10% of all money on deposit in Cypriot banks (more precisely they are being forced to buy an equivalent amount of bank stock). The short narrative is this: Cypriot banks gambled away depositors’ money on bad financial bets, then turned to the government to bail them out, who on their behalf went before the EU & IMF with hat in hand begging for a loan lest all their banks go bankrupt. The IMF agreed to a loan based bailout only upon condition the Cypriot government could prove it had the tyrannical cojones to take what it wanted from the people thus assuring the IMF of the loan’s solvency (insofar as the solvency rests on the ability of the government to confiscate and repay). This is simply gang initiation at the state level. It is crony capitalism at its worst and most blatant.

However it is as Barack Obama would say “a teachable moment.” What the Cypriot government has done is no different than what our government did with the TARP and other bailouts of our banks in 2008-9. The only difference is form, the result is identical, namely theft of the citizen’s money in order to benefit the banking elite. The countries that use the Euro cannot simply print up more to their heart’s content as we can with the US dollar. Therefore the only way to obtain needed euros is to a) borrow them or b) take them. The US government has a third funding source, which is c) inflate them (which is just a variant of (b)). Of course no government is honest enough to say “we’re taking your money” – no, this is a “one time tax.” So while the Cypriot government will simply take what it wants from depositors through the front door, our government comes in through the backdoor and through the inflation tax chips away at the value of the money on deposit. Naturally the whole scheme was justified on “greater good” grounds in that had they not gotten the bailout then the whole banking system might have collapsed and all depositors might have lost their money. Yes, the whole “you might benefit if we help these other people, therefore you must provide us with the means to help them” argument (put forth by every persuasion of statist, from the so-called conservative that supports publicly funded schooling to the super progressive advocating socialized medicine) is forever the justification for any and all types of state sponsored intrusion into the lives of individuals.

So for anyone taking solace in the notion that such bank account confiscation could never happen here please realize that it already has in the form of inflation sponsored bailouts. As long as we maintain a system of fractional reserve lending, legal tender laws, a central bank (Federal Reserve) and government “monetary policy” we will never rid ourselves of the gang of thieves bailing out their big banking friends with our money.

The Debate that Never Happened

I was recently involved in the “Debate that Never Happened” at UGA through the Phi Kappa literary society where the question “Is full employment possible under capitalism?” was the topic. Unfortunately the audio is a bit low… if you turn it all the way up and sit in a quiet room I think you can just about make out what I’m saying. I guess if I get to do something like this again I’ll be sure to shout into the microphone 😉

The Debate That Never Happened from Phi Kappa Literary Society on Vimeo.

False Alarm

It seems that can our government kicked down the road back on January 1 is upon us in the form of the looming March 1 “sequestration” cliff. One can both admire and be sickened by the hyperbole employed by politicians when discussing these impending “cuts”. President Obama in his 2013 State of the Union address  described them and their effects as “harsh” and “devastat(ing)” to our “priorities” as well as “jeopardizing” military readiness. Really? So a 5% cut is going to jeopardize essential government operations? That’s funny, because the governments own Congressional Budget Office report states that “If no additional appropriations are provided by then, nonessential functions of the government will have to cease operations.” The operative word there being “non-essential.” If all the things the President pointed out are truly “priorities” then there should be nothing to worry about as only non-essential items will be cut. Of course this begs the question as to why these “non-essential” things were funded in the first place. Isn’t government only supposed to do what is essential by definition? Claiming that essential programs will be devastated by a 5% cut is to claim that the government lacks the common sense of any citizen. If your ability to spend is reduced do you immediately cut back on your food budget in order to keep paying your cable bill? No, you prioritize. Those things valued most highly are paid for first, those things valued least are paid last or cut. It’s the same ruse they used during the debt-ceiling crisis in 2011 that precipitated this whole mess. At that time they suggested grandma wouldn’t get her social security check. Yes, that’s right, let’s pick the thing everyone values the most and claim it will be the first thing to be cut. That makes so much sense. I mean, how stupid do they think we are? (Don’t answer that.)

But I have to hand it to Obama, somehow he deftly managed to imply that everyone’s oft paraded and favored government employees (teachers, police, and firefighters) would be laid off if sequestration takes place. It’s really more of an assertion as it has no basis in fact whatsoever. They are funded at the local level and would not be in any way affected by sequestration. This is just another scare tactic that the dishonest use to mislead the uninformed.

So, if a 5% cut is devastating then I don’t know how this country survived a mere 10 years ago when the federal budget was about 50% smaller than it is today! Even adjusting for the ratio of budget to GDP, the Clinton years should have been a time of societal and defensive collapse with a mere 18% federal budget burden to GDP. Today it is over 22% and cuts that might bring it to 23% are impugned as bringing about the end of civilization as we know it. Wait, 23% is not down from 22% is it? Read on.

Federal outlays are projected to be $47 trillion from 2014-2023 and these cuts amount to removing $1.2 trillion from that total or a 2% decline in overall federal spending. But even this is not a true decrease. Even if the 2014 projected budget were frozen for 10 years the total outlay would be $36.2 trillion. So even with these “cuts” total federal outlays will increase by 27% which is still an increase from 22% to 23% of GDP. Repeat after me. There are no cuts. There are no cuts. There are no cuts.

Obama and his ilk are simply trying to sell us the government diet. That’s the diet where you gain 10 pounds but claim you lost 5 lbs because you “projected” you were going to gain 15 lbs.

A tax by any other name

And so it has come to pass – nearly 100 years since the post office ceased Sunday mail delivery (dropped in 1912 primarily due to religious and workers rights reasons) the United States Postal Service will cease Saturday mail delivery later this year. This time the reasons are financial rather than ecclesiastical. The Postal Service expects this change to save $2 billion a year – although this barely scratches the surface of a $15.9 billion loss in 2012 (although $11.1 billion of that loss was the result of a Congressional mandate forcing it to pre-fund future retiree health benefits – something it requires of no other federal agency). The Postal Service is a quasi-private entity. It technically receives no funding from Congress, however it’s ability to operate is tightly controlled by Congressional whim. But one area where it does benefit from its governmental relationship is with respect to the “Private Express Statutes”. These are a set of statutes that confer on the US Postal Service a legal monopoly of letter delivery. This monopoly is enforced by a mandate that any entity delivering “letters” must charge at least 6 times the current rate for the first ounce of a single piece First-Class mail letter. Fortunately “parcels” do not fall under that mandate; otherwise FedEx and UPS would be nothing but big “What ifs”.

Although Congress is specifically authorized in the Constitution (Article 1, Section 8) to  “establish Post Offices”, such authorization does not on its face imply that the federal government is the ONLY entity permitted to do so, merely that this is one thing it MUST do. The reasoning behind establishing a monopoly position in the marketplace was the concern that private business would simply come in and “poach” business away from the more profitable mail routes. This would then mean either prices would have to rise on the less profitable (rural) routes or tax dollars would need to be employed to subsidize costs along these less profitable routes. Gee, with a justification for monopoly like that I don’t understand why we don’t establish a monopoly within each sector of the economy. Why not give Publix a monopoly on groceries in this country? Then they wouldn’t have to waste money on competing or advertising and could provide “affordable” food prices for everyone by subsidizing less profitable stores with the receipts from the more profitable stores.

Mandated monopolies, whether in private industry (e.g. utilities), or in government (Postal Service) make no economic sense. Consider the argument here: private mail delivery companies would out compete the Postal Service by charging less thereby depriving the Postal Service of income. So instead of overcharging some customers in order to subsidize the undercharging of other customers it would be necessary to overtax some people in order to provide a net benefit to some other people. How are the two processes different exactly? Both involve individuals in Group A paying more than necessary in order that individuals in Group B pay less than necessary. So if the worst outcome (raising taxes) is equivalent to what you are doing right now, then there is nothing to lose in trying the alternate approach. Best case it is a zero sum game (the money people save is simply taxed away to fund the Postal Service losses). The more probable outcome is that there is a net benefit to society when multiple entities compete for the customer’s dollar. Perhaps private competitors might be so efficient that they could provide mail service to even the “unprofitable” areas at an “affordable” price (which is what I believe UPS and FedEx currently do in the area of package shipments).

Congress should eliminate the monopoly provisions on mail delivery, let the chips fall where they may and let the market solve this problem. In the age of $20 cell phones somehow I doubt there will be an issue in providing “affordable” delivery of folded pieces of paper.