Jump to content
Objectivism Online Forum

The "Government makes people produce more" argument

Rate this topic


Recommended Posts

I heard this odd leftist argument on some other forums, and wonder what Objectivist Online folks would answer it with:

~

Government makes people produce more. You have to produce enough for you to live off of, and then produce more for the government to steal from you.

In a totally free market, you would only have to produce enough for you to satisfy your wants. With the government in the picture, you have to produce extra ie., to satisfy your wants, plus the government's share.

In this way, governments stimulate economies. That is, they force people to produce more than they normally would.

Link to post
Share on other sites

I heard this odd leftist argument on some other forums, and wonder what Objectivist Online folks would answer it with:

~

Government makes people produce more. You have to produce enough for you to live off of, and then produce more for the government to steal from you.

In a totally free market, you would only have to produce enough for you to satisfy your wants. With the government in the picture, you have to produce extra ie., to satisfy your wants, plus the government's share.

In this way, governments stimulate economies. That is, they force people to produce more than they normally would.

When a person knows that working harder will only mean that more will be taken away from them, it seems to me the opposite will happen: people will feel compelled to avoid working harder.

Link to post
Share on other sites

Taxes take away the incentive to produce more because it reduces the benefit. Also, welfare reduces the incentive to work. Also, the government diverts capital and labour to unproductive or less productive projects. Also, less is reinvested into capital goods and labour, which leads to less capital and lower wages, which leads to a lower productivity of labour, working harder for less, and less being produced.

Slaves produce a lot more than they consume, so slave-drivers stimulate the economy!

Edited by DerekN
Link to post
Share on other sites

I heard this odd leftist argument on some other forums, and wonder what Objectivist Online folks would answer it with:

~

Government makes people produce more. You have to produce enough for you to live off of, and then produce more for the government to steal from you.

In a totally free market, you would only have to produce enough for you to satisfy your wants. With the government in the picture, you have to produce extra ie., to satisfy your wants, plus the government's share.

In this way, governments stimulate economies. That is, they force people to produce more than they normally would.

In a government regulated "market", you dont even have to produce enough to live off of, ie Welfare, Food Stamps etc. In a totally "free market", you only have to produce enough to receive in return the goods or services that you want. The fact is that in a free market people often enjoy having an excess of either goods, services or some form of money. Therefore they produce more than they need at one time to either barter or sell. In a government controlled economy, since no one would be receiving an excess based on their own personal production, people would have no incentive to find ways to be efficient.

Link to post
Share on other sites

I've rarely heard of contemporary socialists with any kind of education advocating completely eliminating market freedom. Socialists generally wish to compromise between the economic efficiency of capitalism and what they call necessary social duty. After the historic events of the 20th century its downright ignorant to suggest that controlled markets out compete free markets. Even the Chinese government recognizes the benefit of free market interaction and allows U.S. companies to seek a profit within its borders. Its an economic and historical absurdity to claim that coercive regulations promote industrial growth.

Psychologically most people have directly experienced the effectiveness of threats to wage workers. You can scare people to work hard enough not to get fired, but you can't scare them enough to work harder than their peers. Peer pressure would further support stagnation and poor performance without the profit motive.

Of course the regulation is morally wrong - but because its immoral its impractical. If you're immoral to people they'll respond negatively in principle. It doesn't matter if you do it with the windows open or closed or if the weather is good on a given day. The perceived benefits of irrationality pale in comparison to the legitimate benefits gained by acting rationally.

Edited by Q.E.D.
Link to post
Share on other sites

I heard this odd leftist argument on some other forums, and wonder what Objectivist Online folks would answer it with:

~

Government makes people produce more. You have to produce enough for you to live off of, and then produce more for the government to steal from you.

In a totally free market, you would only have to produce enough for you to satisfy your wants. With the government in the picture, you have to produce extra ie., to satisfy your wants, plus the government's share.

In this way, governments stimulate economies. That is, they force people to produce more than they normally would.

This is a nice example of the primacy of consumption fallacy. Their premise is that there is a certain amount that each of us wants to consume, and we'll work just hard enough to get the amount we want. In reality, people aim at maximizing their wealth, and everybody will produce as much as he can (especially if production is not taxed); the factor that constrains the size of the economy is not how much people desire to consume, but how much they are able to produce.

Link to post
Share on other sites

This is a nice example of the primacy of consumption fallacy. Their premise is that there is a certain amount that each of us wants to consume, and we'll work just hard enough to get the amount we want. In reality, people aim at maximizing their wealth, and everybody will produce as much as he can (especially if production is not taxed); the factor that constrains the size of the economy is not how much people desire to consume, but how much they are able to produce.

The question is one of marginal benefit of an activity. All activities tend to have an initial positive rate of marginal benefit, followed at some point, by a negative rate of marginal benefit. For instance, if you want to play golf, practicing for one hour a year has very little marginal benefit per hour. The second hour of practice has an increasing marginal benefit as it starts providing an increasing skill level and enjoyment. As you increase the amount of time devoted to the game, your marginal benefit per hour increases for a time, but as it puts more strain on other activities and produces less marginal results, its marginal benefit begins decreasing until it reaches zero. At that point, you stop putting additional hours into it.

Production is no different. The effect of tax is a decrease in the amount of income per hour worked. So taxation decreases the dollar income of additional work, but the fact that it has decreased the amount of income on previous hours worked tends to increase the marginal value of additional work because the marginal value of income is greater at lower income levels. If a man earns only $400 a year, then the marginal value of an additional $100 is far, far greater than the marginal value of that same $100 if he earned $100,000 a year. In fact, it is greater than the marginal value of $25,000 (a proportional equivalent) to the man making $100,000 a year. The difference between $400 and $500 is life vs. death, the difference between $100,000 and $125,000 is Lexus vs. Toyota or 3 vs. 2 baths.

So there is a balance, between the additional marginal value of additional work caused by a decrease in overall income, and the decreased additional marginal value of additional work, caused by the tax on that additional work. At some point, the decrease in the marginal value of an additional hour worked is greater than the increase in marginal value of the income due to decreased overall income. Up to that point, taxation increases production, beyond that point, taxation decreases production. That point is different for each person, so it is impossible to say in absolute terms what the effect is, which provides cover to those making the argument.

Perversely, the gov't tends to install progressive taxes, which have the effect of increasing revenues, which is the real goal of taxation. Progressive taxes decrease production by putting a higher negative benefit on those people for whom the marginal benefit of additional hours worked is least, to themselves; but greatest, in terms of additional production to the economy.

Edited by agrippa1
Link to post
Share on other sites

I heard this odd leftist argument on some other forums, and wonder what Objectivist Online folks would answer it with:

~

Government makes people produce more. You have to produce enough for you to live off of, and then produce more for the government to steal from you.

In a totally free market, you would only have to produce enough for you to satisfy your wants. With the government in the picture, you have to produce extra ie., to satisfy your wants, plus the government's share.

In this way, governments stimulate economies. That is, they force people to produce more than they normally would.

I think the fallacy is obvious: "In a totally free market, you would only have to produce enough for you to satisfy your wants." You would but you never will; you will produce more than enough for you to satisfy your wants, unless your wants are flexible. Your logical construction will work only in the theoretical world where everyone stops producing as only she reaches the level of basic needs.

Link to post
Share on other sites
  • 5 weeks later...

Thanks for the link CS, but I don't see how the broken window fallacy would apply to this. The broken window is about the idea that the act of spending is the cause of economic expansion, not a result of increased efficiency and production. This ("government makes you produce more by stealing") is different, it is just honest and clear theft. "We're going to take a scientifically established portion of your income just enough to make you produce more. Therefore it stimulates the economy (by stimulating actual production.)"

I am having a hard time articulating it, but I think the error lies in the fact that it is not true that people produce a static quantity, and if a portion is taken, then they will produce again to replenish up to that static quantity, adding more to production than otherwise; because theft or violent intervention does not add to production, but deduct from it.

Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
  • Recently Browsing   0 members

    No registered users viewing this page.

×
×
  • Create New...