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Wednesday, August 06, 2008
Walter E. Williams :: Townhall.com Columnist
A Nation of Thieves
by Walter E. Williams
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Will Congress pass Obamacare by the end of the year?

Edgar K. Browning, professor of economics at Texas A&M University, has a new book aptly titled "Stealing from Each Other." Its subtitle, "How the Welfare State Robs Americans of Money and Spirit," goes to the heart of what the book is about. The rise of equalitarian ideology has driven Americans to steal from one another. Browning explains that certain kinds of equality have been a cherished value in America. Equality under the law and, within reason, equality of opportunity is consistent with a free society. Equality of results is an anathema to a free society and within it lie the seeds of tyranny.

Browning entertains a discussion about when inequalities are just or unjust. For example, college graduates earn income higher than high-school dropouts. Some people prefer to work many hours and earn more than others who prefer to work fewer. Students who spend 25 or more hours a week on classroom preparation earn higher grades than students who spend five hours. Most would agree that these inequalities are just. There are other sources of inequalities that are unjust, such as: when incomes result from fraud, corruption, stealing, exploitation, oppression and the like. Such sources of inequality play an insignificant role in producing income inequality in America. Most economists agree that income is closely related to productivity.

Much of the justification for the welfare state is to reduce income inequality by making income transfers to the poor. Browning provides some statistics that might help us to evaluate the sincerity and truthfulness of this claim. In 2005, total federal, state and local government expenditures on 85 welfare programs were $620 billion. That's larger than national defense ($495 billion) or public education ($472 billion). The 2005 official poverty count was 37 million persons. That means welfare expenditures per poor person were $16,750, or $67,000 for a poor family of four.

Those figures understate poverty expenditures because poor people are recipients of non-welfare programs such as Social Security, Medicare, private charity and uncompensated medical care. The question that naturally arises is if we're spending enough to lift everyone out of poverty, why is there still poverty? The obvious answer is poor people are not receiving all the money being spent in their name. Non-poor people are getting the bulk of it.

Browning's concluding chapter tells us what the welfare state costs us. He acknowledges the non-economic costs such as infringements on liberty and strains on the political process, but focuses on the quantitative economic costs. The disincentive effects of Social Security have reduced the GDP by 10 percent, the federal income tax (as opposed to a proportional tax) by 9 percent and past deficits by 3.5 percent for a total of 22.5 percent. He guesses that welfare programs have reduced GDP by 2.5 percent. The overall effect of redistributionist policies has created incentives that have reduced GDP by a total of 25 percent. Without those, our GDP would be close to $18 trillion instead of $14 trillion.

So what's Browning's solution? First, he reminds us of the biblical admonition "Thou shalt not steal." Government income redistribution programs produce the same result as theft. In fact, that's what a thief does; he redistributes income. The difference between government and thievery is mostly a matter of legality. Browning's solution is captured in the title of his last chapter, "Just Say No," where he proposes, "The federal government shall not adopt any policies that transfer income (resources) from some Americans to other Americans." He agrees with James Madison, the father of our Constitution, who said, "I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents."

For years I've used Professor Browning's and his colleague Mark A. Zupan's excellent textbook "Microeconomics: Price Theory and Applications" in my intermediate microeconomics class. "Stealing from Each Other" is a continuation of his academic excellence.

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About The Author
Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of More Liberty Means Less Government: Our Founders Knew This Well.
 
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Lawyers also play Robin Hood
Lets not forget the even more offensive form of stealing that takes place with everyone suing each other. Business owners are continually robbed blind by lawyers and the thieves whom they enable.

aman -- Public vs Private Costs
“the cost of Congress and the IRS would not change in any material way if there was no Medicare.”

Consider it an "opportunity cost." Without Medicare, the costs of Congress and the IRS can be put to better uses. Spending money on Medicare means we lose the opportunity to spend that money on things that are both more important and more Constitutional.



“I don't mean to sound like I think the public sector is generally more efficient than the private sector, only that each has its strengths and weaknesses and we should be exploiting the strengths of each.”

There is only one real “strength” to a public organization, and that is the inability for anyone to “opt out.”

E.g., do we want people “opting out” of National Defense? No. The entire nation benefits from protection against invasion, terrorists, etc. So the government should be in charge of the Army and Navy, and at local levels, the Police.

There is precious little else we need government for.
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