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Economy and Ideology and Taxes and Freedom

I once got into a disagreement with someone about the nature of communism.  My sin apparently had been that I had issued a series like this… “Freedom and Democracy, Tyranny and Communism…”  The objection was that the three preceding terms have to do with polity and governance while communism was merely an economic system.  As such, it was said it did not belong in the series.

Frankly, given the course of history and its clear testimony linking communism with tyranny and piles of dead, I find the notion that communism is ‘only’ an economic system to be absurd.  Similarly, with the close connection between capitalism, freedom, and democracy, I would resist the assertion that capitalism is merely an economic system, too.  It is not my purpose to expound on the above.  It is my purpose here to make the point that economics cannot be separated from ideology.  If one wishes to insist that pure economics certainly can, I won’t belabor it.  But can you have ‘pure economics’?

I think it is clear that you cannot.  I don’t for a minute believe that capitalism is without its problems but the last century provides a testing ground that generates iron clad results.  Capitalism tends to produce or facilitate free societies.  Communism runs pell mell into tyranny, death, slavery, famine, purges, and oppression.  These are simply historical facts.  Evidently, there is a link between economic systems and morality, ideology, politics, values, and beliefs.  Deny it if you like:  to your own peril.

So where is the connection?  Obviously, there is probably more than one.  It is not the goal of this post to explore it.  The goal of this post is to insist that there is a connection, there are connections.  In other words,  you can’t have a political or economic system in a vacuum.  Such systems will have, by the sheer force of nature, effects on the human condition and the societies they form.

Begin with a small example such as the increase in the cigarette tax that Obama recently passed.  Obama vowed to cut taxes for 95% of the American public.  Should we suppose that this ‘bottom’ 95% are the least likely to smoke cigarettes?   If you believe that, I have a bridge…  The first point, then, is that whatever tax cut that Obama thinks he delivered, for various segments of the population he raised taxes at a rate of 60 cents a pack.   This segment happens to belong to the group Obama ostensibly aimed to help.

Consider:  the collecting of a cigarette tax and gasoline tax takes dollars out of a person’s pocket and affects their overall budget.   Between the price for the item itself and the additional taxes, eventually a point is reached where a person is not… free… to take the item.  The ‘choice’ is removed from them by virtue of a person being unable to afford the item in relation to other things they need or prefer to buy.

In short, a tax of any amount impacts choice to some degree, and free choice is the foundation for freedom.  Hence, it is impossible to issue a tax without affecting, at least to a degree, the freedom of the people taxed.  To return to the cigarette tax, if the cost of the cigarettes are so high that people won’t buy them then that is indistinguishable from a law forbidding their sale.  The net effect of both is a decrease in freedom.  Even if many can still pay the tax, and choose to do so, there will be some for whom the cost is high enough that the net effect is the same as actually outlawing it outright.

It appears to be freedom, but it isn’t.  No law prohibiting smoking was passed, no one was thrown in jail, but for some portion of the population the effect is just as though there were.

Now, I pointed out that this tax is most likely more burdensome to the lower and middle classes than the rich because it helps see that the group of people most likely to have their freedom impacted first from such policies are the very people who often believe that their government is helping them.  If your paycheck goes up $3 each week from a generous ‘tax cut’ but you spend an additional $30 in other taxes and fees (a fee is a tax by another name) your situation hasn’t improved and there has been a decrease in your freedom.  It may seem imperceptible, but it is real, and if it happens long enough and often enough one will find themselves forced by the nature of their available dollars to make changes.  The poorer you are, the more freedom you have at risk from taxation.

As you can see from this simple illustration, there is a close connection between one’s wealth and their degree of freedom.  Obviously, a more wealthy person has more choice and hence more freedom.  That is obvious, though even they are not immune.   Some economic systems are more likely to allow someone to accumulate that wealth and hence increase their freedom.  Other systems are obstacles to that.  Hear me clearly:  no system is neutral.

It would be at this point, if I hadn’t written so much already, that I would segue into larger illustrations such as socialized medicine and other feel good ventures that in the final analysis actually produce a decrease in freedom.  For now, just remember the frog in the slowly boiling water.  If you want to be cooked, fine.  But if you have something against having your medical decisions made for you, etc, then the time to wake up is now.

“First they came for the smokers, but I wasn’t a smoker so I did not act…”


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