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Previously published on LewRockwell.com

Income Taxes, Obesity, and Other Maladies of Nanny Statism

by Eric Englund

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. ~ Sixteenth Amendment

Popular suffrage is in itself no guarantee of freedom. People can vote themselves into slavery. ~ Frank Chodorov

After reading Frank Chodorov’s wonderful book The Income Tax: Root of all Evil, I have gained a better understanding as to why America has devolved from a republic to a social democracy (i.e., a nanny state). After all, a nanny state cannot grow unless it is constantly fed the fruit of our labor – mostly in the form of personal income taxes. As the state grows, one’s sense of self-ownership is destroyed, liberty is traded for "security," the human spirit diminishes, rates of time preference increase, and the citizenry increasingly thinks and behaves like dependent children. Quite frankly, the evils of the income tax have manifested themselves into the absurd collective belief that everyone can live at the expense of everyone else (as if we have an ownership stake in one another – collectivized slavery). Such an absurd mindset, unfortunately, results in bizarre human behavior. To regain our senses, our humanity, and our self-ownership, it is imperative that we repeal the Sixteenth Amendment.

Let’s delve a little deeper as to how life in these United States has become so absurd and surreal. No, I’m not seeing melting clocks dangling from tree limbs. What I do see, wherever I go, are people who have become disembodied. For instance, many people who are obese claim no responsibility for their own bodies. Those who lost money when the NASDAQ bubble burst, aren’t responsible for their own losses – so join a class-action lawsuit against the big brokerage firms. Individuals, approaching retirement age, express angst about Social Security’s problems because they didn’t bother to save up and build a nest egg of their own. When having conversations, I have found that people (regardless of age) display their "enlightenment" by having adopted politically-correct speech code. To me, this is the sort of person who has taken about as much personal responsibility for mental development as a ventriloquist’s dummy. Metaphorically speaking, it is as if Americans have become nothing more than characters in a video game. Someone else is pushing the buttons, manipulating the joystick and thus feeding "us" too many calories, causing us to make foolish investments, preventing us from saving, and feeding idiotic/PC words into "our" mouths. Something pernicious has driven Americans to eschew personal responsibility, to abdicate the right to self-ownership, and to lead such hollow, disembodied, and surreal lives (lives which seem to be made bearable by impulsive consumption and mindless entertainment). As mentioned above, the culprit about which I speak is the social-democratic nanny state as fed by income taxes.

Under nanny statism, America has become a society dominated by a high-time-preference populace. What is meant by high time preference is that a person prefers present satisfaction over future satisfaction. For example, let’s say that two people are interested in purchasing a $5,000 high-definition TV. A person with a high rate of time preference would prefer "present satisfaction" and purchase the TV using a credit card and pay off the debt over time. A person with a low rate of time preference would save the money over time and purchase the TV once enough money had been saved. Hence, a person who has a high rate of time preference is present oriented while a person with a low rate of time preference is future oriented and typically has a better personal financial condition.

An easy way to support the assertion, that high time preference is a dominant characteristic of American society today, is to look at the $50+ trillion of unfunded federal liabilities being passed on to future generations. In other words, let’s party today (via intergenerational, nanny-statist wealth redistribution) and let the kids and grandkids suffer the financial hangover. To shackle future generations, with such monstrous debt and liabilities, is tantamount to selling them into tax slavery. In my mind, this defines a populace with a high rate of time preference – which is consuming instead of producing capital. Of course, this means that decivilization is well under way.

In Hans-Hermann Hoppe’s fabulous book Democracy: The God That Failed, Dr. Hoppe describes what happens to a populace living under nanny statism. He describes how the decivilizing nature of social democracy

…has led to permanently rising taxes, debts, and public employment. It has led to the destruction of the gold standard, unparalleled paper-money inflation, and increased protectionism and migration controls. Even the most fundamental private law provisions have been perverted by an unabating flood of legislation and regulation. Simultaneously, as regards civil society, the institutions of marriage and family have been increasingly weakened, the number of children has declined, and the rates of divorce, illegitimacy, single parenthood, singledom, and abortion have increased…In comparison to the nineteenth century, the cognitive prowess of the political and intellectual elites and the quality of public education have declined. And the rates of crime, structural unemployment, welfare dependency, parasitism, negligence, recklessness, incivility, pyschopathy, and hedonism have increased.

I would add to this list a rising propensity for Americans to become obese. It stands to reason that an individual, with a high rate of time preference, fails to correlate poor eating and exercise habits with future health risks. Such a person is not willing to invest the time necessary to learn how to cook healthy meals nor to take the time needed to exercise and burn off excess calories. In fact, the University of Munich’s Department of Economics has published a discussion paper titled Obesity and the Rate of Time Preference: Is there a Connection? It makes for interesting reading. I would add that no matter how much the nanny state implores for its subjects to lead healthier lifestyles, the exact opposite will occur. After all, nanny statism leads to nonself-ownership which often results in one’s own physical neglect and thus higher incidences of obesity. Indeed, I assert that there is a connection between obesity and a high rate of time preference.

Dr. Hoppe (as quoted above) has hit on something quite important, and that is taxes. It is the income tax (which feeds America’s obese nanny state) that leads to high rates of time preference. Murray Rothbard explains the connection, between high rates of time preference and income taxes, in his magnum opus Man, Economy, and State. To wit:

There is another, unheralded reason why an income tax will particularly penalize saving and investment as against consumption. It might be thought that since the income tax confiscates a certain portion of a man’s income and leaves him free to allocate the rest between consumption and investment, and since time preference schedules remain given, the proportion of consumption to saving will remain unchanged. But this ignores the fact that the taxpayer’s real income and the real value of his monetary assets have been lowered by paying the tax. We have seen…that, given a man’s time-preference schedule, the lower the level of his real monetary assets, the higher his time-preference rate will be, and therefore the higher the proportion of his consumption to investment.

What magnificent analysis by Dr. Rothbard. It is axiomatic that income taxes result in higher rates of time preference. Moreover, he completely discredits those advocates of income tax reform who want to change Uncle Sam’s tax code because it currently favors consumption over savings. Income taxes will always negatively impact savings (a future-oriented endeavor) and thus favor consumption. To be sure, one could even state that income taxes contribute to America’s obesity problem – another unforeseen consequence of the Sixteenth Amendment.

For a free and productive society to reemerge, the Sixteenth Amendment must be repealed – thereby abolishing the income tax. If we do not, then high-time-preference Americans will foolishly continue to consume capital and will leave the nation impoverished. Naturally, there will be naysayers claiming that we will descend into chaos as centralized government is benevolent and uses its power to give our lives, and hence society, structure. This is patently untrue as, for many decades, American citizens managed to save, to build productive capital, and to increase standards of living without having to pay an income tax. Such a society can arise again, under capitalism, in which liberty is the mother of spontaneous, productive, and peaceful order.

Regrettably, by looking at the United States’ massive trade deficit, it is crystal clear that we have become a nation dominated by consumers, not producers. To a large extent, Americans have lost interest in production-related jobs. So can we count on our tax-bloated nanny state to cure our country’s production-deficit disorder? Of course not. In The Income Tax: Root of all Evil, Frank Chodorov argues, as follows, that continuing to feed income taxes to our federal Leviathan is the road to decivilization and ultimate ruin:

When faced with this circumstance, does the State abdicate? It does not. The general lack of interest in production threatens its own existence, but it still cannot divest itself of its inner urge for power. It turns to the use of force to stimulate the production from which it derives taxes. It confiscates and tries to run the entire economy by rules, regulations, controls, and compulsion; the nation becomes a slave-labor camp. But the output of an economy that rests on force rather than on self-interest is meager. More important than lack of production is the slave psychology that such an environment induces. Men lose their capacity for self-improvement along with their sense of individual dignity. Thus civilization disintegrates and becomes an historical or archaeological curio. The State, of course, collapses with the civilization.

Sadly enough, we mindlessly continue to waddle down the path of decivilization thinking the state will always be there to protect us – undeniably, liberty and self-ownership have been exchanged for "security." Ah, now it is clearer as to the nature of our collective disembodiment. Americans have become little more than characters in a surreal Hansel and Gretel video game. Americans seek the security of the gingerbread house, get fattened up by what appears to be a kindly nanny, and then end up being sold into slavery by what turns out to be an evil witch. It is amazing how destructive the income tax is. So what shall we be; chattel or free? We must choose soon.

January 28, 2005

 


The Hyperinflation Survival Guide, Published by Eric Englund.