I’m frequently confronted with arguments like “cutting spending would deprive us of basic government services” and “we need to fund the FAA, police and firefighters.”

In order to put things in perspective and hopefully shame the people who make these silly arguments I put together a simple infographic.

Of course, police, fire fighters, roads and schools are all part of state and local budgets and have nothing to do with a debate on federal spending. Shame on you if use this as a rhetorical device as it is inaccurate, cheap and misleading. I couldn’t find reliable information on just how much it costs to build and maintain roads in America. That information is fairly dispersed but if you know a good source for that info please let me know. I used the FAA as an example of a “basic” service.

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In this climate of economic non-recovery and strife there are endless debates about where the jobs are, why unemployment is so high and why the $4.5 Trillion in government stimulus money hasn’t gotten us out of this quagmire. I continue to hear cries about what the government should force companies to do in order to create a recovery and make life suck less for all of us. These cries are accompanied by a few fallacious but full throated assertions from the middle of the road milquetoast hacks that populate the talk show punditry. Assertion 1) corporations are created by the state and 2) because the state grants corporations the right to exist they owe the state/society something in return.

Having created and run a corporation I know firsthand what it is I was creating and exactly what I was entering into. What is important to distinguish however was that in no part of the process was “the state” creating something new. The corporation has a name and an EIN (employer identification number) but that is merely a documentation referring to the agreement entered into by the founders of the corporation. The state was merely making a public record of such an agreement and keeping said record stored and available as evidence that our arrangement was entered into. It also treats this arrangement within a specific legal system, one with different rules and practices from the general law governing the person on the street who, by themselves is not entered into a legal agreement with anybody else.

Entering into contractual obligations with others is useless if there is no record of such agreements. So it would seem that the need for separate legal entities as well as public documentation of agreements and incorporation being entered into arises from the need for a clear, documented and voluntary dispute resolution system. Nowhere yet in this outline of corporate legal theory has the question of what the corporation does or who it exists to benefit arisen. Nor should it have. And whether this legal system is established by a legislative act, codification of common law, judicial precedent or anarcho-spontaneity is meaningless with regards to the question of what the corporation will do or make and for whom. The law exists to set boundaries between entities, not coerce entities to pursue specific ends. In other words, the law deals with means, not ends.

Fair enough you say, but what if the law did force legal entities to pursue certain ends out of a sense of moral superiority? That has now become a completely separate issue and question to be answered in separate realms. The moment you pervert the law to achieve personal ends you have changed the meaning of the law. The law would then cease to be a transparent, predictable framework in which people voluntarily interact with one another. It would become a mere political instrument, the ethical equivalent of holding a person’s livelihood hostage in exchange for compliance.

Because corporations pay a fee to incorporate and they take on their own private debts, the tax payer does not have any relevant ethical claim to be able to determine how the corporation runs its business. Yes, but the corporation may possibly use the publicly provided court system to resolve private legal conflicts! Then tax all corporations enough to cover possible expenses incurred by the tax payer. That still would not give other people the right to determine what the corporation made or did. In fact, at this point in the argument the matter of what the corporation makes or does has still not come up, because from a legal standpoint it doesn’t matter. It does not matter to the law whether a corporation makes widget A or widget B, whether it hired worker A or worker B. As long as the corporation is within the same transparent, predictable and unbiased legal framework as every other economic actor it makes no difference what they make or how. If a corporation wanted to pay people to smash rocks all day it could, and they would be well within their rights to do so.

At no point does the corporation exist to serve the needs of the state, or taxpayers, it is just another entity (like the state and taxpayers) that exists within a legal framework. Unless a person legally comes into ownership of a corporation they cannot make any decision for that corporation regarding what that corporation makes and for whom. For the same reason that a corporation cannot determine which corporations consumers buy products from. The legal principle that prevents you from controlling a corporation you do not own is the same one that prevents a corporation from forcing you to buy their products or pay for their services; private property.

The principle of private property rights states that as long as you acquired the property ethically, without stealing it, then you are free to do whatever you want with it. This is the only ethical principle that matters and it precedes every other type of “right” you can imagine. Upending the principle of private property rights to achieve your personal political ends is a foolish endeavor and one that threatens to upend the property rights of everyone. Local churches, homeless shelters, union workers, teachers; everyone relies on private property to protect themselves from the advances of the selfish.

A recent Reason article posted some rather astounding numbers related to imprisonment and death row in the state of California. The state has to spend much more to keep death row inmates in prison due to higher legal fees and heightened security. It turns out that the state has spent about “$4 billion on death penalty expenses, with 13 prisoners executed since the reinstatement of the state death penalty in 1978.” Which amounts to the asinine annual expenditure of $178 million per prisoner executed! A large amount of crime in the US is the result of the war on drugs and the conditions that make that crime possible are related to poor urban planning, state dependency and a host of other moral hazards. Why is there less violent crime in other countries and what does it say about our particular mix of public policy?

The LA Times ran down some of the numbers on the various options that the state of California has:

“fully preserve capital punishment with about $85 million more in funding for courts and lawyers each year; reduce the number of death penalty-eligible crimes for an annual savings of $55 million; or abolish capital punishment and save taxpayers about $1 billion every five or six years.”

The fiscally sensible option is the humane one. All signs point to doing away with the death penalty.

So are prisons an example of the fundamental deficiency of state monopoly? If the state is allowed to run every aspect of a persons life how would it turn out? Aren’t prisons a good incubator for such an experiment? If the state has a disastrous record of running prisons, what else might it be bad at? Stephen Cox discusses that briefly here:

If you are interested in some further thinking into the history of imprisonment and central planning I recommend this fascinating talk between Dan D’Amico and Jeffrey Tucker:

On a somewhat related note, the author of the adult children’s book that went viral last week, Go The Fuck To Sleep, is planning on publishing a new book crticizing the war on drugs.