Normal commercial life today offers so many opportunities to be charitable. Cashiers remind you to be kind to others at every checkout. It’s pretty great, actually, to see commercial capitalism evolve into a font of philanthropy at the point of exchange.
What if the government had imposed a $5 tax on haircuts?
Jim O’Shaughnessy: Revisting The Ideas Buried In The Graveyard
ValueWalk's Raul Panganiban interviews Jim O’Shaughnessy, Chairman, Co-chief Investment Officer, and Portfolio Manager at O'Shaughnessy Asset Management. In this part, Jim discusses revisting the ideas that got buried in the research graveyard and his favorite books. Q1 2020 hedge fund letters, conferences and more Oh, man. Yeah, for the the research graveyard, do you ever Read More
For example, I got a haircut yesterday. While paying, the stylist asked if I would like bring an ice cream treat to a poor child in a hospital. How could I say no to an invitation that pushed every single button in my heart and soul? So I gave an extra $5 and felt good about myself. My good fortune allows me to help others.
A Tax On Haircuts
But it got me thinking. What if the government had imposed a $5 tax on haircuts? The objective fact would be exactly the same. I would be out $5. The difference is that a tax would have left me no choice but to make a contribution. No one likes to be forced to be nice.
I would be livid about a tax on haircuts. There would be mass outrage. Barbers and stylists would be furious and take a huge hit to their business. People would be walking around with longer hair, claiming to be unable to afford a haircut. Home hair cutting would become the norm.
But tap into human choice and a sense of love for others, and you can end up collecting money even as people walk away completely thrilled. Same wealth transfer, different result.
This reminded me of the great lesson of economics: whether people are happy with an institutional arrangement is not so much about the objective conditions but rather the extent to which human mind believes that volition is involved.
Turn the charitable impulse into a tax and you flip the entire aesthetic of giving to others. Instead of making people feel good about themselves, taxes make people mad at the government and others they believe are responsible for bad policy.
In other words, the problem isn’t redistribution of wealth as such; it’s the use of force by the state to take from some to give to others.
Mad, Madder, Maddest
The more the system alienates the payers from the receivers, the more anger you feel.
However, there are degrees of being mad. There is a huge difference between being annoyed at taxes, being rubbed wrong by taxes, and feeling revolutionary anger at taxes.
How does the low burn evolve into the hot fire?
The answer is found in how I felt about giving $5 for ice cream for children. For whatever reason, I felt a sense of connection. I was happy to help a cause to which I felt a close sense of identity.
It’s true with taxes too. If you feel that your taxes are serving a great cause, helping people in ways you want people to be helped, you are more likely to tolerate them, or at least not feel a seething pain at being forced to support causes you oppose. The more the system alienates the payers from the receivers, the more anger you feel. At some point, the whole thing begins to feel like a racket. This is at the point that taxpayers feel themselves being robbed to back people and activities that stand contrary to everything you value in life.
The Collapse of the Center Left
If you understand what I just wrote, you can begin to understand that the massive loss of social democracy at the polls is inevitable.
As I’ve written before, there is a choice to make between demographic diversity and the welfare state. Welfare states are tolerable for people if the payers imagine that they are assisting people like themselves, which is to say causes with which they identify. But if governments start spreading largesse among groups whose demographics are radically different from the paying class, you massively destabilize the entire system.
The center left in Europe just experienced its biggest electoral losses since World War II.
All the welfare systems of Europe are at maximum entrenchment in the daily lives of Europeans at the exact same time as the refugee crisis and the massive diversification of the religious, ethnic, and linguistic demographics of the population. The center left likes to imagine that it favors both generous redistribution as well as diversity, but the two are in tension. Too much of a clash leads to political instability and eventual extremism such as we are seeing.
It is an ominous sign that the center left in Europe just experienced its biggest electoral losses since World War II. People are not going to stand for it anymore. The tension is going to doom this political model. Good riddance, so far as I’m concerned. The problem is: what is going to replace it? As much as I would like to see traditional liberalism (no welfare benefits plus immigration tolerance), that option doesn’t seem to be on the table.
People love giving to causes they believe in. They dislike being forced to give to anything.
What’s actually emerging are varieties of socialism that revolve around the idea of homogeneity: the gradual conversion of tax-funded welfare systems into “help-your-neighbor-but-not-the-other” policies. In other words, the rise of immigration combined with the welfare state is creating of political ethos of exclusion, nativism, and bigotry. This is everything the center left is against, and yet their own policies are creating it.
A Society of Choice
People love giving to causes they believe in. They dislike being forced to give to anything. But if they are being forced, it had better be for a cause with which they feel a connection.
The ideal system of social organization is one in which we give of our property only for things of our choosing. Any step away from that leads to danger and destabilization, even revolutionary hatred.
The advances in technology are showing that a society of choice is more viable and practical than ever before. Just ask my barbershop.
Jeffrey Tucker is Director of Content for the Foundation for Economic Education. He is also Chief Liberty Officer and founder of Liberty.me, Distinguished Honorary Member of Mises Brazil, research fellow at the Acton Institute, policy adviser of the Heartland Institute, founder of the CryptoCurrency Conference, member of the editorial board of the Molinari Review, an advisor to the blockchain application builder Factom, and author of five books, most recently Right-Wing Collectivism: The Other Threat to Liberty, with a preface by Deirdre McCloskey (FEE 2017). He has written 150 introductions to books and many thousands of articles appearing in the scholarly and popular press.
This article was originally published on FEE.org. Read the original article.