Report Accepting Government Funds in Ethics Posted May 14, 2005 I have not taken the position that it is immoral to accept funds from the government under any circumstances. My only point here is to question why receiving a government handout can be legitimate in one case but not in the other. I have shown that the unemployment tax is ultimately a coercive wealth redistribution scheme, no different in principle than taxing the population to provide income for artists. Yes, the unemployment tax is ultimately a wealth redistribution scheme. However, it is also different from general taxation in that it is essentially an insurance premium (or a user fee) paid to participate in the unemployment insurance system. Is it taken at the point of a gun? Sure it is. However, one pays the premium to receive a specific benefit in the event of a specific occurrence (the loss of employment). If you don’t work and pay a dedicated tax that funds the unemployment insurance system, you can’t collect unemployment benefits. Also, if you’re self-employed, you still pay income tax but likely do not pay the unemployment tax. In that case you can’t receive unemployment benefits. We’re talking about a specific system set up for employed persons who pay a specific tax to support certain benefits, not a general tax being used for whatever the politicians choose. Nevertheless, I suppose that in some ways taking these benefits is only different from looting the general tax fund (through NEA grants and Stadium Subsidies) by a matter of degree and not principal. However, the issue of the degree of evil is important here. This gets back to a point I made earlier, which is that with the size and scope of our current government, one could hardly step outside and drive down the street without being the beneficiary of a government wealth distribution scheme. Are we all tainted by the current system of taxation and wealth redistribution? Hell yes, it’s impossible to not be tainted. On the other hand, there are some important distinctions to be made between unemployment insurance and auto insurance. First of all, the auto policyholder makes a contract with a private sector agency. Yes, states do force drivers to carry insurance, but no state forces anyone to go into the insurance business. Auto insurance premiums are based on one’s driving record. Unlike the worker who frequently loses his job but pays the same FUTA rate as everybody else, poor drivers pay rates many times those of good drivers -- and some are not able to find anyone to insure them at any rate. So it is far from clear that auto insurance constitutes a form of socialistic wealth transfer. The distinctions may not be that great. Of course nobody is forced to go into the auto insurance business. However, we are forced to pay auto premiums if we drive, the same way we are forced to pay unemployment insurance premiums if we work. Also, the insurance business is heavily regulated in most states. In Michigan, there are all sorts of controls on the companies operating in our market. This isn’t an important point, but I believe that the ins. companies are forced to offer minimum policies at regulated premiums to every driver. So your point that the premium is based on your driving record is true only to a degree. Bad drivers who couldn’t get any policy in an unregulated market are able to get minimum policies in Michigan. Although the coverage on these minimum policies is bad, the effect is still the same. The good drivers are subsidizing the bad the same way people who lose their jobs often are subsidizing those of us who remain employed. But let us suppose, for the sake of argument, that auto insurance is just as coercive and unjust as unemployment insurance. We still have not arrived at a reason why a victim of past government taxation should not avail himself of a government subsidy. If the principle is that one should be able to take out what he has put in, then there is nothing that can be said against the subsidized artist or baseball team owner. Again I come back to the fact that we’re all tainted by the current system, so it really does become something of a matter of degree. In the case of unemployment, I’m taking money from a system that is admittedly redistributionist, however, I also paid directly for those benefits. By my calculations, the NEA receives approximately .005% of the total amount of the current $2.7 trillion federal budget. Therefore, an artist paying $50,000 per year (which would be a lot for an artist) in Federal Income Tax would have paid all of about $2.50 toward the NEA’s budget. If the artist pays taxes for the next 10,000 years, he’ll have contributed enough into the system to take out a $25,000 NEA grant. This clearly isn’t a principled argument that I’m making, but it is a practical one in a system where we’ve turned everyone into a thief.