Tax Payers and Tax Eaters

It is often argued that we need to have government intervention in economics and business because the rich will keep getting richer otherwise. On the face of it, this may seem to make sense, but the reality of it is far from true: the rich do not always get richer. In fact, the only scenario where the rich will always get richer is with government intervention. Only when the rich are subject to the same free market risks and rewards as everyone else can there be true equity. Lew Rockwell writes:

There can be no natural class conflict in society, since the free market harmonizes all economic interests. But in an interventionist system, there must be struggle between the caste that lives off the government and the rest of them.

The reason for this is quite simple: the caste system present in any interventionist system. Most readers will associate the word “caste” with India, and its traditional structure of society based on Hinduism. But every economic system not based primarily on free market principles also has at least two castes—what John C. Calhoun referred to as “tax payers” and “tax eaters.” The obvious difference between the two castes is that one looks for ways to pay less while the other looks for ways to eat more. And both, ironically, try to use the coercive power of government to get what they want. Rockwell continues:

One of the glories of America, and of the American free market, has always been our entrepreneurs. But especially since the days of the big railroads, there have always been some established businesses scheming to use government to reward themselves and punish their competitors. These traitors to free enterprise have been a major force in the growth of government, which is the horror story of our century…. If we do not understand, and help others understand, what the government and its associated special interests are trying to do to us, there’s no way we can fight them.

In other words, government not only rewards the unproductive, it punishes the productive.

The rich, in this case big business, has the means to influence and circumvent government regulations. This only serves to strangle the small business owner—who cannot afford to lobby government nor to abide every jot and tittle of its regulatory chaos (via the EPA, OSHA, FTC, CPSC, etc.). On the other end, the tax eater has nothing but time to lobby and angle for more and more tax money, leaving the tax payer caught in the middle in the unenviable position of footing the bill for both corporate and individual welfare.

Republicans and Democrats bicker back and forth about their own chosen flavor of government intervention, but it must be pointed out that both are sucking the life and capital out of the only true source of income: the middle class and small business. It is easy enough for most conservatives to recognize that individual welfare is detrimental and unproductive, but they have a more difficult time recognizing the problems with corporate welfare. When small business cannot effectively compete with large corporations due to government intervention and regulation, it serves as an artificial barrier to the marketplace. It cuts small business out of the picture before it ever had a chance to show what it was capable of achieving or producing.

There is, of course, nothing inherently wrong with the size or scope of a big corporation, but it is inherently wrong when they are allowed to stack the deck in their favor against the so-called little guy. A corporation that cannot beat its competitors with its abilities and products should not be propped up by the government anymore than an individual who refuses to use his abilities to be productive.