The Petulant State

Spoiled young children always want more. Because they don’t pay for anything themselves, or work, they don’t appreciate the idea of sacrifice or saving for the future.

Children don’t understand that resources are limited. Children believe that they should get what they want, when they want it—all the time. It takes a parent with character to say no. It’s hard to say no. But once a child is spoiled—used to getting his way all the time—it’s unlikely he can ever be unspoiled. Imagine a child that could force his parents to give him everything he wants. The child would be impossible, out of control, with the child’s parents being driven into bankruptcy. 

Government is like that spoiled child. It always wants more. It’s never satisfied. And because it can use force to get its way, it’s nearly always out of control. Like a child, state government whines that it needs more money—now. It says, “Just give me more money, and I’ll be good. I’ll do my chores.”

Right. That’ll last a little while, until taxpayers’ money has been wasted. Then government cries for more.

Because children haven’t fully developed their cognitive abilities, they don’t understand producing something with their time and talent, and then trading their production for the things they want. As UNLV economics professor Hans-Hermann Hoppe writes in Democracy: The God That Failed, “Children have an extremely high time-preference rate. Accordingly, present goods and immediate gratification are highly preferred to future goods and delayed gratification. Children live from day to day and from one immediate gratification to the next.” 

If government keeps its hands out of the pockets of business and taxpayers, incomes rise and the marginal utility of present money falls, relative to future money. This contributes to a lowering of time-preference. As businesses and individuals increase their savings, future incomes rise.

This decline of society’s time-preference, Professor Hoppe notes, is key to the process of civilization.  As he explains, “In generating a tendency toward a fall in the rate of time preference, [the saver-investor]—and everyone directly or indirectly connected to him through a network of exchanges—matures from childhood to adulthood and from barbarism to civilization.”

Time preferences will continue to decline so long as people can act unfettered in the marketplace. If people can produce and trade freely, individuals will save and invest, creating greater incomes for the future relative to present income.

This process stops when property rights are violated. When criminals steal from producers, the supply of goods is reduced and time-preferences go up. Crime also has the effect of reallocating resources into preventing crime—into walls, locks, guards, etc. This also serves to raise time-preference. Natural disasters—floods, storms and earthquakes—have the same effect, reallocating resources in preparation for future disasters.

When producers are allowed to defend themselves against criminals and prepare for natural disasters, over time the rate of time-preference will continue its fall.

But when government violates the producer’s property rights—taking money through taxation and forcing firms to reallocate resources through regulation—time-preference rises. The reason, as Hoppe writes, is that “taxation, the government’s provision of liquidity, and government regulations—unlike their criminal counterparts—are considered legitimate, and the victim of government interference—unlike the victim of a crime—is not entitled to physical defense and protection of his property.”

Government’s “legitimacy” leads to a continual, on-going reduction of future goods. Businesses and individuals are essentially defenseless in the face of government’s constant onslaught. This leads to a constant increase in time-preference—and the crumbling of society is the ultimate result. As government takes more and becomes more intrusive, Hoppe explains, “the natural tendency of humanity to build an expanding stock of capital and durable consumer goods and to become increasingly more farsighted and provide for ever-more distant goals may not only come to a standstill, but may be reversed by a tendency toward decivilization: formerly provident providers will be turned into drunks or daydreamers, adults into children, civilized men into barbarians, and producers into criminals.”   

Evidence for Hoppe’s thesis is everywhere. The common remedy prescribed by elected officials and government bureaucrats is always more government. But in fact that is the problems’ cause—too much government already. 

As our state government now stomps its feet, demanding more and more, like a petulant child, we must say: “No.”

It’s not just the dollars we lose to Carson City that are at stake. The essence of civilization itself is on the line. 

Doug French, executive vice president at a Southern Nevada bank, is a policy fellow of the Nevada Policy Research Institute.

Tag: Taxes