Taking Government Money – Heads They Win, Tails You Lose

by Anders Mikkelsen
by Anders Mikkelsen

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Walter Block and Chris Arakaky published a few months ago an exchange Taking Government Money for Grad School? Chris Arakaky was about to attend college but uncomfortable with the idea of taking Government money to do so. Walter Block took the contrary position. The exchange revealed the difficult moral position which the state puts us in. We can see this because of the very good reasons for both positions.

It is worth re-reading the exchange on taking government money. Basically Chris Arakaky feels that taking money that is clearly stolen is wrong. However he knows his family has paid a lot in taxes over the years. Walter Block points out you use state resources all the time, and there is nothing wrong with appropriating them. Chris Arakaky understands using roads and schools is okay, but still feels uncomfortable with the idea of being a state beneficiary and accepting expropriated wealth. Didn’t Ron Paul’s kids not accept government money?

Walter Block points that one wouldn’t reject tax refunds or social security, and roads are built with expropriated wealth. Chris Arakaky points out that he doesn’t need the money, and his accepting it will give the government an excuse/need to grab more money from the rest of us. "How can you complain about welfare and yet take welfare yourself?"

So what do you do? What principles do you use to make your decision?

The question of taking government money is a tough one. It is an important question because it shows the insidious nature of the state, whose social function, as Voltaire said, is to move resources from one set of pockets to another. Either you take money which the state has seized from everyone, or you lose tax money your family paid in. Accepting stolen property is wrong, but not if the property was stolen from you and your family. Appropriating state funds or any other commons is not wrong. When accepting State funds, there is no way to calculate what is rightfully yours. The idea that whatever you can get your hands on is rightfully yours is naturally troubling. Instead of you knowing what is yours, you get whatever the State decides. This is another way that the state keeps people from being responsible.

This is very similar to the situation with inflation. Inflation causes entrepreneurs to fly blind – they lose the ability to calculate, creating a boom and bust cycle. By using the newly printed inflationary dollars they steal from everyone else. By not using them they lose growth opportunities. Both options are traps. Taking state money can be seen as another example of flying blind as well. It is not clear how to determine what is rightfully yours as it comes from a common pool.

State benefits are a trap to make people dependent. The trap of state inflation and ensuing financial chaos leads to government intervention. The trap of entitlements leads to high taxes which lead to calls for entitlements. It is hard to get through college without state support. People with little sense of history or economics might assume that without the state they’d never have an opportunity to attend college. This increases the legitimacy and power of the state.

The state creates a dilemma. Heads you lose your tax dollars, tails the state wins with an excuse to tax or inflate. The state creates a situation beyond the rules of justice and right. The point of the libertarian system is that it creates a system of justice – you trade what is rightfully yours in a mutually beneficial exchange.

While Professor Block disagrees, this is a great example of how there is no "right answer." All options are unsatisfying thanks to the state. This insidious moral dilemma is another good example of why we should abolish the state.

August 19, 2008

Anders Mikkelsen [send him mail] is a cost management consultant in New York City.

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