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Other People's Money

The spending of other people's money is one of the great problems of modern life. Money and property are the fruit of one's labor, and the ownership rights attendant therein is the root of freedom and prosperity. As such the ownership rights of money are a perpetual battleground between man and the state.

Money is a form of capital, a concentrated form of previously performed labor. Who owns it and who dispenses of it are an issue of contention between man and the state. If the owner of money dispenses of it, in whatever fashion, spending, burying, saving, or trusting it to a proxy it is consonant with natural property rights. A proxy example would be a savings account in a savings and loan, or buying a stock or a bond. The capital ownership has been retained, but the usage right has been transferred on a temporary and contractually agreed upon basis. In this sense it is not the spending of other's people money since this right has been transferred knowledgeably and with permission of the owner.

Taxation is a forcible taking of private property, usually money, by the state. It is covered under the legalistic façade of societal law, but is not a natural property right since the state has no natural rights as it is not an individual.

Inflation is unlegislated taxation by the state central bank (all countries have a fiat currency and a central bank that inflates and thus benefit from this unlegislated tax). The money supply increases arbitrarily while the goods and services produced by the economy (private individuals) have not, and thus prices must increase. The benefit accrues to the state through its central bank since they have taken ownership of the private capital with this dilution. A secondary benefit accrues to the first-order friends of the government through which this money flows: bankers, military suppliers and all sorts of federal supplicants that get at the head of this line where priority is determined politically and not by the market. Thus they spend dollars that depreciate less than those held by the public at large. This is the reason all central banks inflate, albeit some worse than others (compare Switzerland and the United States).

Taxation and inflation represent the dysfunctional spending of Other People's Money since it is a violation of property rights by those charged with securing them, the state. Private disposition is functional spending since no property rights have been violated since the exchanges are voluntary.

The perceptive reader might argue that taxation is an approved form of spending since it is a direct result of a plebiscite and actions by our elected officials. However, it is my own opinion that our bi-partisan political process is really just a rhetorical battle between the two factions of the ruling party the socialists/democrats and the fascists/republicans. They only disagree on how the lucre is to be disposed of, not on the hows and why with which it is obtained is. This all covered in a legalistic façade. It is legalistic in that it is covered in a blizzard of laws and regulation that no single human being has any hope of penetrating, understanding and opposing, purely on the volume involved and the limited lifespan of people thus imposing a cost barrier too high while maintaining the illusion of the rule of law. It is a faade because it obscures what is really going on, the usurpation of individual and states rights as guaranteed by the Constitution.

Ultimately this is what the War of Northern Aggression (a.k.a. Civil War and slavery was a peripheral issue in the dialog) was fought over. Sociologist Charles Murray has put this very eloquently: "Law that is sufficiently complex is indistinguishable from no law at all." The Federal Register grows by thousands of pages each and every day Congress is in session, and we are clearly at the point of complexity he delineates.

Contemporary law is fungible at the hands of the wealthy and well connected, and no longer locked in the moral canons of the electorate as the original laws circa the 18th century were.

The evils perpetrated on mankind in the twentieth century can all be traced to forcible property taking; the dysfunctional spending of Other People's Money led to World War I and II, the Korean War and Vietnam Wars, the War in Iraq, all of which popular opinion in opinion poles and the electoral plebiscite opposed. Wilson was elected on a pledge for the US to remain neutral. Stalin and Mao's purges, the famines, and all the local civil wars have been funded by forcible property taking by taxation, inflation, war bonds, and outright confiscation at gunpoint. This has all been a violation of the natural property rights of man. The greatest good attendant upon mankind would be to put this to an end once and for all time, as Ludwig von Mises has demonstrated with his unassailable deductive logic in multiple books.

I find it very educational to read the words of President George Washington in his farewell address. He is speaking not to 1796, but to us, here, today. Warning of the dangers we now face daily. He was prescient.

The world will return to its natural state of peace and harmony between people and nations once this tyranny of the modern world by state-controlled media, banking and strong central government ends. The result of this will be acceleration in the spread of material prosperity and in upwelling of rate of human progress.

July 11, 2006

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