Voluntarily funded government

[fletch]

After cursory contemplation, my answer to your questions is no, primarily because the examples you have cited are not great vehicles for government fund raising. All of these entrepreneurial ventures would involve significant investments in infrastructure, personnel and resource procurement.

I agree. These investments could only come from those funds reserved for the proper functions of government, thereby unnecessarily depleting those funds. Plus, you would be expecting government to do that which government does worst--outdo private industry. When the government shoe store closes because it puts out shoddy, inferior shoes, what then? Who would decide which boondoggle should be pursued next? And at what cost? Risks should be left to the entrepreneurs, not the state. As for lotteries, where gambling is not regulated or prohibited by the state, I wonder just how much interest there would be in state run lotteries anyway.

[DarkWaters]

As for lotteries, where gambling is not regulated or prohibited by the state, I wonder just how much interest there would be in state run lotteries anyway.

Analogous to how a school or a church bake sale does not intend to compete with local bakeries, I think a government financing lottery would (and should) not seek to compete with the gambling industry. Thus, the participants in such a lottery would not be primarily motivated from enthusiasm for gambling but from interest in donating more money for a (hopefully legitimate) government venture.

Edited December 8, 2007 by DarkWaters

[DavidOdden]

Needless to say, I see the principle you are driving towards.

What do you think?

The obvious answer is a combination of voluntary contributions and recovery from violators (i.e. asset seizure from rights-violators). As far as investment, management and infrastructurial issues go, a realistic version of a state lottery involves substantial infrastructure, unless tickets are only sold in the State Lottery Office downtown. There are substantial insurance, ticket creation and distribution issues that aren't free (and are necessary because of the fraud problem and the need to insure against erroneously selling 1,000 winning numbers). So I'm not sure that running a lottery is cheaper than selling milk.

I'm trying to identify the essential principle regarding the proper means of government financing. Obvious being voluntary is a sine qua non. The principle which I would offer is that government should not compete with private business, that the proper spheres of government and the free market do not overlap, which is because of the nature of government (the nature of government is entirely different from the nature of free trade). The alternative, whereby government is allowed to compete with business, seems to me to make government just be a special case of business: it's a business which in addition to ordinary free trade activities, has a monopoly right to the use of force in protection of rights.

This can lead to some major problems of conflict of interest; the government is entering into voluntary business contracts with individuals, but at the same time is also charged with the obligation to make decisions as to what those contracts require. You surely wouldn't enter into a contract with a company if the company had the sole discretion to interpret and enforce the terms of the contract. So that would mean, to extend that principle to adjudication of governmental profit-making contracts, that there should be an objective government within a government which enforces contracts. That's rather messy, and these problems do not arise if we recognise that the nature of governemnt is entirely different from the nature of business, and that government should not compete with business for goods and services at all.

[DragonMaci]

DarkWaters, what makes a government run lottery different from any other government run business?

[progressiveman1]

The obvious answer is a combination of voluntary contributions and recovery from violators (i.e. asset seizure from rights-violators).

...government should not compete with business for goods and services at all.

If the gov't seizes assets from rights-violators, do you think the gov't should sell those assets? If so, wouldn't that be taking part in business for goods and services?

[fletch]

If the gov't seizes assets from rights-violators, do you think the gov't should sell those assets? If so, wouldn't that be taking part in business for goods and services?

But the state would not be involved in the manufacture and production of new products, just the sale of used/like new products. It would be the equivalent of an estate sale. While that may pose some sort of competition to, say, the neighborhood Walmart, it is not the same as opening a Govmart to engage Walmart in direct competition.

[Rourke]

I was just wondering how Objectivism takes in to account the economic free rider problem when it comes to a voluntary funded government.

Wikipedia link to refresher on what a free rider is

http://en.wikipedia.org/wiki/Free_rider_problem

[DavidOdden]

I was just wondering how Objectivism takes in to account the economic free rider problem when it comes to a voluntary funded government.

I haven't seen a clearly Objectivist discussion of the matter, but I don't see that it's a problem. What if we rename it the "free rider possibility"? Does that help?

[DarkWaters]

DarkWaters, what makes a government run lottery different from any other government run business?

Please see my answer here.

The obvious answer is a combination of voluntary contributions and recovery from violators (i.e. asset seizure from rights-violators). As far as investment, management and infrastructurial issues go, a realistic version of a state lottery involves substantial infrastructure, unless tickets are only sold in the State Lottery Office downtown. There are substantial insurance, ticket creation and distribution issues that aren't free (and are necessary because of the fraud problem and the need to insure against erroneously selling 1,000 winning numbers). So I'm not sure that running a lottery is cheaper than selling milk.

I'm trying to identify the essential principle regarding the proper means of government financing. Obvious being voluntary is a sine qua non. The principle which I would offer is that government should not compete with private business, that the proper spheres of government and the free market do not overlap, which is because of the nature of government (the nature of government is entirely different from the nature of free trade). The alternative, whereby government is allowed to compete with business, seems to me to make government just be a special case of business: it's a business which in addition to ordinary free trade activities, has a monopoly right to the use of force in protection of rights.

This can lead to some major problems of conflict of interest; the government is entering into voluntary business contracts with individuals, but at the same time is also charged with the obligation to make decisions as to what those contracts require. You surely wouldn't enter into a contract with a company if the company had the sole discretion to interpret and enforce the terms of the contract. So that would mean, to extend that principle to adjudication of governmental profit-making contracts, that there should be an objective government within a government which enforces contracts. That's rather messy, and these problems do not arise if we recognise that the nature of governemnt is entirely different from the nature of business, and that government should not compete with business for goods and services at all.

There are two important issues in your post that I would like to explore. First, how cheap is it to have a state-run lottery? Second, and more importantly, does a state-run lottery truly compete with the private lottery market?

I am not really sure how to answer the first question. Although it was just a side comment, I would surmise that running a lottery for the purpose of raising voluntary funds is cheaper and less risky on a per capita basis than being a vertically integrated producer and distributor of milk. Milk production involves significant investments in both land and livestock. The cost of each are highly dependent on several other sectors of the agricultural market. For example corn, as it is a significant component to cattle feed. It also involves bulk transportation of a commodity with specific refridgeration requirements (thus, special transportation containers are required) as well as significant inventory planning as milk is highly perishable. Finally, given the serious threat of milk supply-chains being tainted with botulinum toxin, the cost of milk is most likely going to increase from homeland security precautions. But I digress for no great reason.

I am not really sure how to answer the second question either. If a school offers a bake sale as a fundraiser, does it necessarily compete with local bakeries? My guess is no, mainly because the customers who purchase baked goods from a school bake sale are not primarily there to purchase pastries but instead want to help the school. The pastry is just a side benefit. Analogously, my perception of a state-run lottery is not meant to appeal to citizens who primarily want to buy lottery tickets but instead to those who just want to contribute to the government.

Does this make it clear that a state-run lottery is permissable under laissez-faire capitalism? Certainly not to me. I am still exploring this idea. It still seems as if this system would always be less moral than a system where funds were raised without the use of a lottery.

If I remember correctly, in Ayn Rand's essay Government Financing in a Free Society, Ms. Rand expresses that a lottery would be an acceptable way to raise government funds. I assume that when she wrote this she had an idea how this could be done without violating anyone's rights. Needless to say, I am not trying to advance an argument from authority. Instead, I am just citing my motivation for wanting to explore this idea further.

I was just wondering how Objectivism takes in to account the economic free rider problem when it comes to a voluntary funded government.

If there is good reason to believe that individuals are "free riding" under laissez-faire capitalism, perhaps the amount of each individual's contribution could be made publically available? Individuals who would try "free riding", that is contribute less than the monetary equivalent value of maintaining a government actually is to them, might otherwise be less inclined to undercontribute if others could see the level of their donations.

Needless to say, this is another example of why ethics is a more fundamental branch of philosophy than politics. Voluntary financing of government will not work if most individuals think it is morally acceptable to unconditionally receive government protection at someone else's expense.

Edited December 10, 2007 by DarkWaters

[Clawg]

I was just wondering how Objectivism takes in to account the economic free rider problem when it comes to a voluntary funded government.

Wikipedia link to refresher on what a free rider is

<a href="http://en.wikipedia.org/wiki/Free_rider_problem" target="_blank">http://en.wikipedia.org/wiki/Free_rider_problem</a>

Freerider problem will not apply if all parties agree that the government holds the monopoly of using force.

Not everyone profits equally from a voluntarily funded government, companies with a large business volume profit more from a properly funded government than the rest.

The more income a company has, the more transactions it will do, the more property it owns, the larger is the incentive to donate in order to have a functioning government. The larger the company is, the more it is dependent on voluntary trade, i.e. it can't start openly using force or violate the agreement that the government holds the monopoly of using force.

This of course applies only to proper governments which do not redistribute the money but instead invest it in the three branches of government. When, through a democratic process, the government decides to spend the money on some other things, the donations will decrease.

Edited December 10, 2007 by Clawg

[DarkWaters]

Freerider problem will not apply if all parties agree that the government holds the monopoly of using force.

Perhaps I am mistaken, but I believe the question was along the lines of how a laissez-faire capitalist state would handle individuals who depend on the government for protection but refuse to donate to sustain it.

[Rourke]

If there is good reason to believe that individuals are "free riding" under laissez-faire capitalism, perhaps the amount of each individual's contribution could be made publically available? Individuals who would try "free riding", that is contribute less than the monetary equivalent value of maintaining a government actually is to them, might otherwise be less inclined to undercontribute if others could see the level of their donations.

Needless to say, this is another example of why ethics is a more fundamental branch of philosophy than politics. Voluntary financing of government will not work if most individuals think it is morally acceptable to unconditionally receive government protection at someone else's expense.

The social ostracism method. I would think this might work on a local level, in smaller communities, but I think it is possible for the accepted "normal" government contribution to vary over larger regions around the country. It would depend on the ability for people, or groups of people. to rationalize their behavior. And most important of all, it would depend on full public disclosure of your income in order to know whether someone's contribution was adequate.

[progressiveman1]

But the state would not be involved in the manufacture and production of new products, just the sale of used/like new products.

Lots of businesses don't manufacture their own products. They acquire other people's products. The only difference from that and gov't selling those seized items is the way they are acquired.

Maybe DavidOdden would be kind enough to explain to me why selling assets that the gov't seized from rights-violators isn't an act of competition with business for goods and services. Pretty please.

[progressiveman1]

There are two important issues in your post that I would like to explore. First, how cheap is it to have a state-run lottery? Second, and more importantly, does a state-run lottery truly compete with the private lottery market?

1. I would surmise that running a lottery for the purpose of raising voluntary funds is cheaper and less risky on a per capita basis than being a vertically integrated producer and distributor of milk.

2. my perception of a state-run lottery is not meant to appeal to citizens who primarily want to buy lottery tickets but instead to those who just want to contribute to the government. (Little competition to private businesses)

Does this make it clear that a state-run lottery is permissable under laissez-faire capitalism? Certainly not to me. I am still exploring this idea. It still seems as if this system would always be less moral than a system where funds were raised without the use of a lottery.

Before exploring the detailed details, the first and foremost thing you need to figure out is a rational principle that a govt run lottery would be based upon. The principles you have implied so far are, 1)if the govt business costs X and projected sales are X, 2)if the govt business doesn't cause much competition for private businesses. Those obviously are not sound because other govt businesses could easily be created on those same principles, which would just cause the laissez-faire society to become non-existent.

[DavidOdden]

Maybe DavidOdden would be kind enough to explain to me why selling assets that the gov't seized from rights-violators isn't an act of competition with business for goods and services.

There's no business of "seizing and selling goods".

[progressiveman1]

There's no business of "seizing and selling goods".

Well what exactly is the best definition for 'business?' I'm searching around but I'm having a hard time piecing that together.

[DarkWaters]

Before exploring the detailed details, the first and foremost thing you need to figure out is a rational principle that a govt run lottery would be based upon.

The principle is that in a laissez-faire society, government funding should be voluntary. The issue is if voluntary funding that takes place in the form of a charity lottery is a moral mechanism for collecting such funding.

The principles you have implied so far are, 1)if the govt business costs X and projected sales are X, 2)if the govt business doesn't cause much competition for private businesses. Those obviously are not sound because other govt businesses could easily be created on those same principles, which would just cause the laissez-faire society to become non-existent.

These are not principles and they were not implied by me. Besides, you are dropping the context that this is intended to be a charitable lottery, not any arbitrary business venture.

Perhaps there is legitimate confusion on this thread because different individuals have different perspectives on what a state-run lottery for the purposes of fund-raising implies. I can try to clarify this in a future post.

Edited December 10, 2007 by DarkWaters

[DarkWaters]

And most important of all, it would depend on full public disclosure of your income in order to know whether someone's contribution was adequate.

This could be true. If so, then full disclosure of contributions would not work as an individual's income is his own private matter. I think the real solution to the free rider problem under laissez-faire capitalism is a wide acceptance of the Objectivist ethics. Individuals should not want a free ride in such a society.

[progressiveman1]

The principle is that in a laissez-faire society, government funding should be voluntary. The issue is if voluntary funding that takes place in the form of a charity lottery is a moral mechanism for collecting such funding.

Oh, I see. I've just started studying these terms, so sorry for the wrongful use. The latter would be considered a derivative then, right?

These are not principles and they were not implied by me. Besides, you are dropping the context that this is intended to be a charitable lottery, not any arbitrary business venture.

My point was that if the gov't can run a lottery on those terms, then that would be grounds for other gov't businesses to be created. Do you agree?

[agrippa1]

There's no business of "seizing and selling goods".

True, but if you break that down into its primitives, "seizing" and "selling," you see that the seizing part is not competitive; the selling part is.

Not that I disagree with the concept, or see any downside to having the government compete *on an equal footing* with private businesses. (Or am I missing something?)

How do you all feel about the idea that a monetary system is crucial for the effective exchange of value. Would it be in keeping with objectivist tenets to see the availability of standard, trustworthy money as providing value to the exchangers, and that it is proper to pay for that value, in the form of exchange taxes?

Since any exchange on the market involves a mutual benefit, due in large part to the free method of exchange, is it morally defensible to tax a portion of that benefit in exchange for the proper government roles that make that stable money possible (including enforcement of individual rights and defense against foreign aggressors)?

Of course this opens up further questions, like is it reasonable for a government to be given the sole authority for providing stable money (in addition to using force)?

[mrocktor]

Not that I (...) see any downside to having the government compete *on an equal footing* with private businesses. (Or am I missing something?)

What you are missing is that to compete on an equal footing, a government would have to cease acting like a government (i.e. not wield force). At that point it becomes only a business with incredibly high fixed costs - since you are trying to finance the actual government out of the same profits your competitors pocket and reinvest.

[agrippa1]

What you are missing is that to compete on an equal footing, a government would have to cease acting like a government (i.e. not wield force). At that point it becomes only a business with incredibly high fixed costs - since you are trying to finance the actual government out of the same profits your competitors pocket and reinvest.

That's what I was implying by "equal footing": no force against private competitors. Government could probably make a go at competing in this case, because their fixed costs would in fact be very low - staff to seize, staff to sell, no production costs - so most of the price would go to gov't "profit."

[progressiveman1]

Well what exactly is the best definition for 'business?'

Buying, selling, or trading goods or services on a continuous basis as a means for gain/profit. Does anyone see anything wrong with this definition?

[fletch]

How about the dictionary definition: A commercial, industrial or professional enterprise or establishment.

[DarkWaters]

My point was that if the gov't can run a lottery on those terms, then that would be grounds for other gov't businesses to be created. Do you agree?

If your question is:

"If the state is permitted to run a lottery at a sure profit for the sole purpose of raising funds and that it did not compete with any private enterprises, would that make any state-run, not-for-profit venture morally permissible so long as profitability was almost certain?"

Then my answer is absolutely not. Even if a state-run lottery is acceptable (I am still ruminating over it myself), that does not give the government a blank check to do whatever it can to maximize its revenue. A state-run lottery would presumably (in a quasi laissez-faire society) be to fund a proper function of government. Government should not be expanded just because it can.