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Taxes: Government Financing In A Free Society

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It certainly is proportional. All (legitimate) crimes are morally equivalent to murder.
The only thing that crimes have in common is that they involve a violation of the rights of another. Proportional justice does not mean that any violation of rights is met with the death penalty. Indeed, breach of contract is also a violation of a person's rights, and your equation would demand the death penalty for contract violations; the same with torts. Justice is an application of the Trader Principle in the sphere of rights: you get exactly what you deserve, not more, and not less.
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I know there's not much interest in the specific how of government funding, but it seems to me that contingent contributions might have some potential. The idea is that contributions are pledged

It certainly is proportional. All (legitimate) crimes are morally equivalent to murder. Consider this:

Let's say I make $10/hour (I'm choosing nice round numbers so I can do the math in my head more easily). Let's say also that someone comes in and steals, say, a loaf of bread from me that cost $2.00. That's 12 minutes of my life that has been just rendered null and void. How is that any different than if, instead of stealing the bread, the thief had just killed me twelve minutes before I would otherwise have died?

How are the two cases different? In one case, the criminal knew he was taking a loaf of bread. In the other case, he knew he was taking your life (and he could not possibly know, no one can possibly know, the exact moment at which you have only 12 minutes left to live.) The two acts are not morally equivalent.

Petty theft and murder are not equivalent crimes any more than a one month jail sentence and the death penalty are equivalent punishments.

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Donations.

One problem with donations is that they lead to favortism. Say one citizen donates 1 million dollars anually to the government and another donates nothing. Which will the police be more apt to protect? Moreover, by Objectivist philosophy, the police should protect the benefactor more, because it is in their interest to defend those who pay their salary over those who don't. Donations turn into service fees that unless you pay them, you get no protection, and if you do donate, you get protection in proportion to your donation. Why not just privatize the police?

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Why not just privatize the police?

Government is government. Private organizations are private organizations. If government is privatized, it is not government. Please use the debate forum to root for positions that are clearly the opposite of Objectivism. If you have questions about an Objectivist position, that's fine in a general sub-forum.

Also, read this earlier thread.

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Why not just privatize the police?
One reason is that this leads to competition where you can have different companies covering the same territory. This is okay when you are dealing with shoes and water, for example, because water companies and shoemakers do not use force, and you can always decline the services of this company or that. The essence of what the police do, OTOH, is to use force -- to point guns at people in order to get them to do what they are told to. This leads to an obvious conflict of interest: my protection company would have to follow my instructions (to confiscate your car) and your protection company would have to follow your orders to shoot at my police guys. And thus the war begins. Objectivism holds that the one proper function of government is to employ defensive and retailatory force, and that such force is properly under the exclusive objective control of the government.

In addition, your solution of privatizing the police does nothing to address the question of some people not paying as much as others.

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Okay, I understand that having competing governments will not work and I understand that privatizing police is of the same vein. I have read Miss Rand's essay about the Nature of Government. I understand (I think) that taxation is an initiation of force. Economic freedom (ie Laissez-faire capitalism) and political freedom is essential to O'ism. Political freedom means that in the eyes of the state every man is the same and should be treated as such. This is the opposite of the "Aristocracy of Pull" we are familiar with in Atlas Shrugged. However, I am not convinced that a government based on donations rather than taxes would not lead to the degradation of this political equality. I think it would be fairly easy for someone to blackmail the government by withholding a particularly large donation. For instance, what if Bill Gates for example, didn't want to go to war with Iraq? The government would have to choose. The mere fact that the government has to consciously choose means that Bill Gates has much more political pull than, say, I (if I were eighteen) do.

There is no other viable alternative: either taxation (initiation force) or donation (degradation of political equality). Thus we have a contradiction.

Now, checking my premises, there is two places I see where I might have gone wrong. One is that political equality is not a right. (This is a major one that deserves more thought than I have time for at the moment). Two is that the donation method doesn't lead to the "Aristocracy of Pull".

It would be very helpful if someone would help me try to resolve this issue. I have thought about it quite a bit, and I can't see where I am wrong. If you think government funded by donation would work, please try to explain to me why.

Thanks alot guys!

Zak

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Zak,

The example you take is a good one: what if the rich people do not want to fund a war? I think you'd benefit by exploring the assumed context of the example. Instead of asking: "what if the rich people do not want to fund a war?", ask yourself: "in a context where people are funding the government voluntarily, what types of wars would they want to fund and what types would they not want to fund?" Would they, for instance, be more in favor of a half-hearted war, against an indirect enemy that mires them down for decades, or a war that has less concern for "what the world thinks of us" and is more rational in choosing its target and its means of execution?

Do you also share the "plutocracy concern" in areas like policing? In a political system funded by donations, do you fear that a typical judge will almost invariably decide a case between a rich man and a poor man in favor of the rich man? Yes, there will always be corrupt judges; what I'd like to understand is if you fear that such corruption will be the norm.

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Now, checking my premises, there is two places I see where I might have gone wrong. One is that political equality is not a right. (This is a major one that deserves more thought than I have time for at the moment). Two is that the donation method doesn't lead to the "Aristocracy of Pull".

Another premise you might check is that there are only two ways to voluntarily fund the government. In the end of VOS (Chapter 15 - Government Financing in a Free Society), Ayn Rand talks of the "Insurance" and/or the "contract" concepts of funding. Some of this was discussed early in this thread.

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I think it would be fairly easy for someone to blackmail the government by withholding a particularly large donation. For instance, what if Bill Gates for example, didn't want to go to war with Iraq? The government would have to choose.
The government would have to chose anyhow. The mistake you're making is assuming that the government is almost completely unprincipled, adhering only to the rule "we do whatever brings in the most money". That is the antithesis of a proper Objectivist government. Such a government -- and we have to be assuming an Objectivist government to be talking seriously about government funding that doesn't rely on the initiation of force -- puts the fundamental principle of rights-protection first. That means that if Bill Gates doesn't want to contribute to defending the nation against attack by North Korea, then that is his right, but it would also be a highly irrational choice on his part because he would be one of the first people killed by the invading armies, were they to prevail. I would agree with his decision to not support the invasion of Zimbabwe, because while I personally loathe the current government and would make personal contributions to a workable effort to dislodge Mugabe and his cronies, Zimbabwe is simply not a threat to the United States. So were the US government to get it into its head that Mugabe must be removed from office militarily, I see nothing at all wrong or irrational with Gates not wanting to put his money into such a project.

It would be highly irrational for Gates to refuse to make any contributions to the government simply because he disagrees with one aspect of US policy. But still, he should put his personal values first, whatever they may be. The government should put its primary values first, as well: and the purpose of government is to protect the rights of citizens -- not to create capital for its use. If it is right for the government to go to war against another nation in order to protect our rights, then they should do it, whether or not influential people have an irrational opposition to being protected. If there are enough irrational people that the government cannot perform its function, then society will have decayed to the point that a government founded on Objectivist principles is no longer tenable.

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That means that if Bill Gates doesn't want to contribute to defending the nation against attack by North Korea, then that is his right, but it would also be a highly irrational choice

Why would it be irrational? Assuming that the minimum amount required to protect the country will be donated regardless of whether he personally contributes, then its in his best interest not to pay anything. The same applies to everyone else, which is why the free-rider issue is a real problem.

The idea of donations and contract fees being able to sufficient to cover even a highly reduced Federal budget strikes me as highly implausible, and I'd like to see some kind of evidence that it would work.

Edited by Hal
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Why would it be irrational? Assuming that the minimum amount required to protect the country will be donated regardless of whether he personally contributes,
Why would anyone make such an assumption?

then its in his best interest not to pay anything. The same applies to everyone else, which is why the free-rider issue is a real problem.
But if everyone did make that assumption, it would quickly become clear that the assumption is false, i.e. it would quickly become clear that not enough money is being donated. At that point, rational people would choose to donate more, within the constraints of their finances. So why is there a free rider problem?

It is one thing to assert that people might be so pacifist as to not care about being invaded and conquered. However, it is quite another thing to assert that even though people want to remain free, they will allow themselves to be conquered -- all in an effort to avoid the costs of defense. That notion has never made sense to me.

The idea of donations and contract fees being able to sufficient to cover even a highly reduced Federal budget strikes me as highly implausible, and I'd like to see some kind of evidence that it would work.
What would you consider "evidence that it would work"? Rational people pay for what they need. What justifies the assumption that they would not pay for the proper functions of government?
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Why would it be irrational?
I'm operating on the assumption that he plans to continue living in the US and doing business in the US. On that assumption, he could easily be imprisoned and have his property taken from him. I'm confused at how you think that being invaded by North Korea is anything but bad. So to let evil destroy you without doing anything to stop it is irrational.
Assuming that the minimum amount required to protect the country will be donated regardless of whether he personally contributes, then its in his best interest not to pay anything. The same applies to everyone else, which is why the free-rider issue is a real problem.
Which is one reason why the free-rider issue is not a real problem. A rational person would understand that acting as a leech, depending on the handout of others for your existence, is not in your self-interest. Rational self interest is not simply about amassing the largest pile of cash that you can get. A rational person would realise that evading reality in this manner is just a form of temporary morgue-avoidance, which isn't what life is about. He would realise that national defense is not going to be paid for by Skid Row bums generously giving up a half a bottle of plonk a day in order to be secure: it will be paid for by people who have a significant personal stake in the continuance of a free economy.
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I will add that saying that the "free-rider issue" is not a problem does not imply that zero free-riders will exist. They will, as will criminals.

However, work back to the context of the question. The context starts by saying: suppose we have a situation where people in this group want to contribute to a common cause. Then, the question switches and says: what would happen if none of them actually contribute? Well, if they don't, they don't. Now, change the question to something like this: a group of people want to contribute to a particular cause and reach some type of informal agreement that they will do so. However, when it comes to actually contributing, some of them refuse. How can we prevent that? or deal with that? or live with that? Asking the question that way, retains the original context of general willingness, and one can begin addressing the question of procedures and agreements. This is not a unique problem, and it has been solved before.

The idea of police favoring rich donors is one where the questioner is asking: some policemen will always be corrupt, so why not tell the whole force to sell out? The right question is: since some people in the police will be corrupt, as will be the case in any group of people, what kinds of checks and controls should be in place to prevent that? If everyone wants a corrupt police force, then that's what they'll get.

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The idea of police favoring rich donors is one where the questioner is asking: some policemen will always be corrupt, so why not tell the whole force to sell out? The right question is: since some people in the police will be corrupt, as will be the case in any group of people, what kinds of checks and controls should be in place to prevent that? If everyone wants a corrupt police force, then that's what they'll get.
Yes, that is my question. What checks will keep the whole police force- the whole government, for that matter- from selling out?

Mr. Odden, you said:

If it is right for the government to go to war against another nation in order to protect our rights, then they should do it, whether or not influential people have an irrational opposition to being protected. If there are enough irrational people that the government cannot perform its function, then society will have decayed to the point that a government founded on Objectivist principles is no longer tenable.
This is very illuminating. I agree with you thus far. But I have a few questions.

How would the original founders know if the society they were to create a government for was rational enough to handle a government based on Objectivist principles? That seems to me like it would be almost impossible to determine.

Okay, I know there were more, but I can't remember them right now. <_< I'll let you know if I think of them.

One other thing, I was just using the Bill Gates war thing as an example. Maybe something more along the lines of Bill Gates is charged with a crime and tries to pay his way out of it would better suit our discussion.

Thanks for the responses!

Zak

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Donations turn into service fees that unless you pay them, you get no protection, and if you do donate, you get protection in proportion to your donation.

I think MNR makes a valid point here.

The idea behind user-fees for government services is that there will be two classes of services. Class (A) is provided to everyone, presumably because it is essential to the existence of a civil society, and/or difficult to exclude non-payers from. Let's say that Class (A) includes such things as murder investigations, and Class ( B) includes divorce and alimony cases.

Now, class ( B) is provided only to those who pay for them. But both services are a exclusive monopoly of the state. Being a monopoly, they are not optional – they are required to engage in a whole class of transaction that they would presumably protect. We know that class ( B) services will be valuable because income for enforcement must cover the cost of providing both class (A) and ( B) services. The government will therefore have an incentive to increase the demand for class ( B) services sufficiently to pay the expenses of (A) and ( B) . It can only do this by expanding the range of services provided under (B.) Furthermore, it will have a strong incentive to do so, since it is a bureaucratic monopoly, which faces no competitive threat, but does have limited funds.

Ultimately, this means two things: that class ( B) services will be essential in daily life, and that there will be a strong incentive for the state to expand the range of class ( B) services at the expense of free class (A) service. What this means is that the funding for the state will not be fully voluntary to begin with, and will get less and less voluntary with time. We can argue that there will constitutional protections, but the best made plans are useless if they go against human nature (see socialism), and besides, the boundary between class A and B cannot be fixed both because the distinction is itself somewhat arbitrary, and because the funding need will naturally vary.

Edited by GreedyCapitalist
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Yes, that is my question. What checks will keep the whole police force- the whole government, for that matter- from selling out?
In many ways, I don't think the checks will be very different from the checks that are in place today to guard against corruption.

To set the context, the bedrock is the culture and political system. If corruption is widespread and commonplace, no rules will work great. I've bribed cops at least three times that I remember, but always in a country where it was the accepted practice. Not once did I feel any guilt; frankly, the cops were very businesslike in each instance as well. Almost as if they had a price and would extort no more than the average. (This too is subtle evidence for the human need for a rule of law.) However, even in those countries where corruption is rampant, most of those government employees aren't really happy about what they do. Their attitude is more one of: this is how the system works. Most would rather see a less corrupt system, if they only knew how.

There are many practical reasons why the incentive to be corrupt would be lower in a good political system. The first reason would be the lack of opportunity. My dad ran a business in India. There were so many rules and restrictions and so much scope for arbitrary decision-making by government employees, that anyone unwilling to bribe government officials routinely would be stupid to start a business. One even had to bribe the government employees who worked for the state-monopoly electricity company and the government-monopoly phone company; else you'd find that strange outages taking place, and you'd somehow be on the bottom of the repair-crew's priority list. The less that the government is involved in day to day life, the less corruption is the norm. Most corruption is around money (not getting relatives off the hook). So, ceteris paribus, smaller government spending leads to less corruption.

Within the government department's that are required, there will still be temptations. Despite the culture, their will still be some individuals who are tempted. Many of the checks and controls would be similar to those that are used today: elected officials in key positions, appellate courts and other appeal processes, juries, ombudsmen, rational "freedom of information" laws and other laws that ensure "transparency" in government, anti-corruption and oversight departments. Then, there is the "stick": the laws that will punish corrupt officials. Many of these are the same things that act as controls and checks on corruption today.

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How would the original founders know if the society they were to create a government for was rational enough to handle a government based on Objectivist principles? That seems to me like it would be almost impossible to determine.
The question doesn't have to go back to any founders. The founders could be Washington, Jefferson, Adams, Madison and others: the foundation that at least allows a government run on Objectivist principles is there right now, it's just buried beneath mountains of dreck. There is no structural impediment to having a government of Objectivists only passing Objectivist legislation today (well, it's late in the day, so tomorrow). Except, that is, the fact that governments are determined by popular elections, and the majority of citizens would currently rather vote for a Demopublican because they promise to create manna out of nothing, or by only making the rich suffer. So, such a government getting elected is one good sign that society has undergone the required sea change. Even electing a small handful of politicians who overtly espouse and practice Objectivism would be a sign of significant philosophical change.

The interesting case would be if there were a bare majority of Objectivist senators and representatives. It's hard to imagine the universe where Ohio could elect Dennis Kucinich and Mike Dewine as representative and senator but also (let's see, two longshot candidates) C. Bradley Thompson and me as well. In this bizarre universe, we could instantly end all government welfare programs and reduce taxation to just that level needed to fund the one proper function of government, the protection of rights. I don't think it would be that hard to tell whether society had advanced to the point that there isn't massive rioting in the streets when the welfare state hacked to the bone.

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I think MNR makes a valid point here.

Aren't you making the practical case why a government must have a high proportion of donation-based funding rather than relying overly on use-fees?

Further, why would citizens vote to allow the increase of such fees? Why would they vote to increase the range of government services? More importantly, if there is such an inexorable inevitability to the gathering of government power, can you explain why most countries in the world are moving toward ever smaller governments?

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Aren't you making the practical case why a government must have a high proportion of donation-based funding rather than relying overly on use-fees?

I am explaining why “voluntary” user fees are not really voluntary. Donations are one alternative, though they come with other problems, which have been discussed already.

Further, why would citizens vote to allow the increase of such fees? Why would they vote to increase the range of government services?

I said no such things.

What I said that there is a strong incentive to shift from class A (universal) services to class B (fee) services. So citizens would not be voting to “increase fees” – they would be voting to “make free riders pay for services they are already using” – a much more politically palatable option. Of course, the more services the government provides, the more money it will need, but this will be masked by the fact that they are providing a wider range of services to more people.

You bring up two other issues:

First, price controls for the “fees” will be impractical in the long term, since the actual cost of services varies with time and location. In fact, the variation is an upward cost driver itself, as governments are well known for raising taxes in emergencies and keeping them high afterwards. People have always been aware of this danger, but political reality and human nature cannot be counteracted by good intentions alone.

More importantly, if there is such an inexorable inevitability to the gathering of government power, can you explain why most countries in the world are moving toward ever smaller governments?

Well, this is a whole other issue, proper for another thread. Governments grow and shrink for a variety of simple and complex reasons, but one constant is that once politicians and bureaucrats get their hands on money or power, they are reluctant to let go. Another is that there is nothing “inevitable” about human society, other than human nature.

Edited by GreedyCapitalist
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I'm operating on the assumption that he plans to continue living in the US and doing business in the US. On that assumption, he could easily be imprisoned and have his property taken from him. I'm confused at how you think that being invaded by North Korea is anything but bad.
Being invaded by North Korea would be bad. But in the case of an invasion, no one person's defence contribution is going to make much different; the military will be just as strong whether I choose to pay or not. My $1000 means absolutely nothing from the point of view of the military budget. Even in the case of someone like Bill Gates, the money which he would contribute is just going to be a drop in the bucket.

So to let evil destroy you without doing anything to stop it is irrational.Which is one reason why the free-rider issue is not a real problem. A rational person would understand that acting as a leech, depending on the handout of others for your existence, is not in your self-interest. Rational self interest is not simply about amassing the largest pile of cash that you can get.
Why is being a free-rider not in my self interest? If I pay money, then I am protected by the military. If I dont pay money, I am still protected but I have more money. You are correct that amassing money is not the most important thing in life, but when all other things are equal, having more money is normally a benefit. Its not clear what I would actually be gaining if I paid (or sacrificing if I free-rode) in this case.

A rational person would realise that evading reality in this manner is just a form of temporary morgue-avoidance, which isn't what life is about. He would realise that national defense is not going to be paid for by Skid Row bums generously giving up a half a bottle of plonk a day in order to be secure: it will be paid for by people who have a significant personal stake in the continuance of a free economy.

This reminds me of an argument often used by communists: "Communism would work because under communism people would be very different from what they are now. Obviously the man of today isnt suited for this type of society. But that only means that humanity must be improved". And they are right - if humans were completely different, then communism would be viable. And if humans were completely different, the free-rider problem would not exist. But I think that both of these arguments are invalid for the same reason.

Again, the problem isnt that some people might not pay (softwarenerd: "free-riders will always exist; as will criminals"). Its that there is no obvious reason to think that anyone will pay (or at least, no more than a small minority).

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My $1000 means absolutely nothing from the point of view of the military budget.
You mean $100. You mistakenly think that the cost of government won't go down when it is reduced to its essentials?
Why is being a free-rider not in my self interest? If I pay money, then I am protected by the military.
I don't see why that would be so, if there is no military to protect you (which there wouldn't be, if there are enough people like you who hope to get something for nothing).
You are correct that amassing money is not the most important thing in life, but when all other things are equal, having more money is normally a benefit. Its not clear what I would actually be gaining if I paid (or sacrificing if I free-rode) in this case.
To make the depravity complete, for your scenario, I'd suggest that you call on the prudent free-riding predator: the guy who steals all of his money and doesn't pay for his own defense. The guy is being utterly immoral. Such beings can exist: and I don't see how that has a shred of significance. The free-rider is immoral and the prudent predator is immoral. But the nature of society is not to be determined by possibility of free riders and prudent predators.
And if humans were completely different, the free-rider problem would not exist. But I think that both of these arguments are invalid for the same reason.
You have misidentified the free-rider problem. The existence of free-riders is not a problem. The problem is, if the majority of members of society are leeches hoping to live off of the charity of others, such a society would never consent to a government which operates on free-market principles. In a nutshell, the whole free-rider problem is invalid because it contradictorily supposes that society is rational enough to have a government based on Objectivist principles, and that it is so irrational that it will not do what it necessary to sustain its life. The reason to act in defense of your life is pretty obvious.
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This reminds me of an argument often used by communists: "Communism would work because under communism people would be very different from what they are now. ...
Excellent point, and any one who believes that Objectivism will work only if people are different from what they are now is sadly mistaken. Fortunately, if you take "being moral" to mean "attempting to live by what you think is a right morality" (as opposed to actually living by the best morality), then the bulk of humans being are moral. Indeed, this is the reason why some of them feel guilty when they feel selfish.
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You mean $100. You mistakenly think that the cost of government won't go down when it is reduced to its essentials?
It would drop a lot, but its still going to be fairly high. Military spending runs into hundreds of billions, and unless you want the US to default on its national debt, youve got 8 trillion sitting there that requires interest payments every year ($352 billion in 2005).

I don't see why that would be so, if there is no military to protect you (which there wouldn't be, if there are enough people like you who hope to get something for nothing).
If theres enough people who wouldnt pay, then it makes no difference whether I pay or not - I still wont be protected.

To make the depravity complete, for your scenario, I'd suggest that you call on the prudent free-riding predator: the guy who steals all of his money and doesn't pay for his own defense. The guy is being utterly immoral.
An action is only immoral if its not in a person's self-interest. There are good reasons why living your life as a theif is detrimental in the long term, but there do not seem to be any reasons why an individual person benefits from donating money to the government. Its a simple case of the Prisoner's Dilemma - if everyone else donates then I'm protected anyway so theres no point in me paying. If noone else donates then I'm not protected so theres no point in me paying. Edited by Hal
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An action is only immoral if its not in a person's self-interest. There are good reasons why living your life as a theif is detrimental in the long term, but there do not seem to be any reasons why an individual person benefits from donating money to the government. Its a simple case of the Prisoner's Dilemma - if everyone else donates then I'm protected anyway so theres no point in me paying. If noone else donates then I'm not protected so theres no point in me paying.
Being a leech is immoral, because the standard of morality is man's life, not the affect an action has on your checking account balance.
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