I have just returned from a trip to the Gulf Coast. Members of my church organized relief supplies and formed a cavalcade of trucks carrying food, water, and clothing. We initially went to help a small church in Bayou LaBatrie, a church whose congregation had been involved in the relief effort almost as soon as Katrina had passed. Finding our help was more desperately needed in Biloxie, we formed up with a similar group that had come down from Michigan and proceeded on to some of the worst hit parts of the three-state area. The scope of the devastation is simply beyond human imagination and I came back to Georgia despondent and pessimistic. The realistic hope to rebuild the Gulf Coast in our lifetime seemed beyond the bounds of the possible. However, I had a long conversation with my long-time libertarian nephew, who had an ingenious suggestion.
The Gulf Coast should be declared a tax-free and regulation-free zone, at least for a limited period of time. Period. It is a simple idea, but like many simple ideas, it has profound implications, some of which I would like to explore. In the first place, the “limited period of time” would have to be defined. I would prefer it to be indefinite, but to expect that the government would forego their tax and regulatory power forever is simply unrealistic. I suggest that 10 years would be a realistic period. It would allow a reasonable period of time for those who wished to move into the area (I do not limit these people only to those who left, but to those who would want to live there under the conditions proposed). The area would be a tax-free zone. The miniscule amount of funds needed to provide police protection would be provided by user fees. This freedom from taxation must be absolute. There would be no federal, state, or local taxes whatsoever. There would be no Social Security taxes withheld from paychecks, no Medicare taxes, no capital gains or unemployment taxes paid by businesses (nor any other business tax, for that matter), no property taxes, special assessments for neighborhood improvements, sales taxes, inheritance taxes, fees paid for business licenses, and so on. And the miniscule amount of revenue raised by user fees would go toward the provision of police protection of person and property, and the enforcement of voluntarily agreed upon contracts. Yes, I know that many anarcho-libertarians such as myself believe that protection could best be provided by private agencies. But I think that is too big a leap right now for the average American to even consider. What of all the “services” that government now provides? All would be provided by the private sector, that is, by entrepreneurs seeking to make a profit by providing for human needs as demonstrated by the process of the free market, supply and demand and the adjustment of prices that demonstrates consumer preferences. Schooling? It would be expected that many parents would home school, but I expect that many private schools would spring up. The success or failure of any such enterprise would be determined solely by how well consumer needs are met. Fire protection? Private companies, volunteer organizations, insurance cooperatives organized by businesses, who knows what the private market would do or how the system would evolve? And I leave it to a possible future article to explore the ramifications of no government regulation whatsoever. But natural law, rather than administrative law, would prevail. That is, murder, theft, rape, fraud, and all crimes that violate the inviolability of one’s sovereignty over one’s body and the fruits of one’s labor would be absolutely prohibited (unlike in the present system).
What of those receiving government subsidies? There would be none. Anyone who chose to live in the affected area would forego any and all government handouts, at least until they chose to leave the area or the grace period expired. This would be an attraction to those who might be receiving some assistance now but who might be attracted by the idea of true liberty and the chance to improve their standard of living without any government interference whatsoever. The attraction to dynamic and flexible businesses to move in and to conduct their affairs so as to operate in the most efficient manner and without the incredible burden of complicity with the endless amount of government regulation, would be undeniable. Likewise, the prospect to potential employees to take home all the fruits of their labor would act as a strong inducement to bring back productive people into the area. It is estimated that up to 50% of our income is now confiscated in one way or another, and that regulatory costs drive up the cost of living perhaps by 50%. Even if nominal wages were to lower, because of the absence of minimum-wage laws, for example, real wages and standard of living would be higher because of increased purchasing power. What would this increased purchasing power buy? Some with high time preferences might choose to spend it all on present goods. Others might choose to save a significant portion, perhaps to invest in the affected area so as to continually improve their standard of living. But whatever would be done, would be done without any government coercion whatsoever. Each person would be free to live his or her life as he or she saw fit. But government involvement with their lives would be virtually absent.
Who would choose to live under those conditions? They would tend to be the most self-reliant, independent, adaptive, and productive. That in itself argues for an industrious and hardy population of people who would resettle the area. A major attraction to the American taxpayer is that virtually no tax funds would be involved in the rebuilding effort. The foregone taxes are already lost, as the area is consuming tax funds now and won’t be a tax provider for the foreseeable future. The displaced persons who are the recipients of tax relief now are going to be receiving tax relief under the present system whether the Gulf Coast is rebuilt or not. Certainly the immediate relief efforts are needed and the various private relief organizations I observed are doing a superb job and should be encouraged and supported (but not by government). But to expect that the government is going to rebuild New Orleans and the rest of the Gulf Coast is to have faith in an institution that long since broke faith with the American people and continually shows its ineptitude, on a larger and larger scale as time goes by. It does one thing, and does it very well…it “eats out our sustenance” and exerts more power over us day by day. It can’t improve things, but it can always make things worse. The only way New Orleans and the rest of the Gulf Coast is going to recover from this unprecedented disaster is to allow the free enterprise system to do what it does best, create wealth, satisfy human needs, and improve the standard of living for all.
September 13, 2005