Thursday, July 7, 2011

COPYPASTA: 'Opting-Out' - How to Achieve a Libertarian Society in the Context of the State?

This post is a COPYPASTA that was originally published under my old pseudonym, 'Sentient Void', at the Ron Paul Forums Blog, on 07-07-2011.

Remember when Ron Paul (at CPAC) was suggesting the ability to 'Opt-Out' of the system? I understand he was talking primarily about federal income tax - but why not think about it in terms of Federal, State, and Local?

I was thinking deeply on this the other day, and it's theoretical implications.

First, I would think passing 'Opt-Out' legislation would be less offensive (and thus easier to legislate successfully) to most liberals than outright abolishing or privatizing elements of government services (social safety nets, police, fire, education, etc) that they want or value. This way, they could still exist, and those who want them can still fund them and be a part of them without much change at all (except perhaps have a database of those who have opted out so to know that they don't get 'discounted' or 'free' services like taxpayers do - obviously *I* know TANSTAAFL).

If you've opted out, then you'd be able to entirely keep the fruits of your labor (income) without any taxation at all (except perhaps consumption-based taxes, like gas tax for roads, sales taxes, etc). if opting-out is allowed on a local level (making it so you can't get 'free' local services such as fire, police, public education, etc), then one would also be able to opt out of property taxes. Of course, we could talk about how we would use that 'new money' that's not being taxed away (for saving, investments, retirement planning, starting a business, consumption, etc), but I don't want to get off the main point - and we all here pretty much already know how it would benefit us and the economy in numerous ways. The savings in opportunity costs would be quite significant, but I digress.

What I want to get at is what we would do in such a situation when we would (if ever, or rarely) need to utilize such existant government services. Of course, I'd think we should still be able to use them (this would probably be the case in the beginning), but we could just be billed for them when utilized at whatever rates the State deems are needed to pay for those services. Of course, if we are to be billed if/when we would need to use such services - while some people could of course pay for them when they get the bill, I'd be willing to bet that after a short enough period of time, insurance agencies start to expand into covering such potential risks and the subsequent bills as needing the fire department, police, courts, etc. This would probably take place, simply because it'd be very profitable to do so.

Over time, as more and more government services are covered by private insurance and/or the actual services themselves begin to be partially or completely replaced by private ones (especially since the different levels of government would probably charge whatever they wanted, likely excessively high prices as monopolies are used to, which would attract capital and investment for private competitors to form due to potentially high profits), more and more people would naturally wonder why they are paying sales taxes at all - and such things may eventually be called to also be abolished in the face of critical mass, as they won't be needed to fund these services any longer.

Of course, if you live in places like New Hampshire (no State Sales tax, income tax, capital gains tax, though it does have a high property tax), and some other states, with no sales taxes - then you'd be paying potentially *zero* taxes, whatsoever. Such states could much more quickly become *extremely* libertarian. More and more people may be inclined to move to such places.

Depending on your individual risk based on lifestyle, location/geography, job, and whatever other factors needed to calculate - our premiums would be higher or lower. The cost of such insurance premiums would basically be replacing the much more expensive tax rates we'd be paying - based on measurements of actual risks. Not only that, but with competing insurance agencies for us as customers, rates would be pushed as low as possible, and with people bearing the actual individual cost based on their lifestyles, location - etc, they would adjust their lifestyles and such factors accordingly (move to safer areas, etc) in order to lower their premiums to lower their ultimate costs of living through a minimization of exposure to such risks, or be willing to pay the higher premium.

Over more time, as insurance companies note that certain areas, police depts, fire depts, etc are more costly than others, and people wanting to minimize their costs - eventually more private police/security, fire depts, etc would pop up as private businesses to compete with the public versions (especially in towns where everyone has decided to 'opt-out', almost like libertarian enclaves). As these companies compete and become more effective at their jobs, and lower prices - insurance rates would also naturally come down, since the costs of the same level of risks would drop.

Mix this with the fact that as more people are opting-out, in order to maintain public services for those who use them - they would need to pay higher and higher tax rates for their continued (and inefficient) existence. Of course, while tax rates may not rise exponentially since less people are using them, thus pushing costs down a little - due to the nature of public entities, with less people paying into their existence - less and less people would need to bear the brunt of their costs, causing their tax rates to rise, thus making the option of 'opting-out' even more appealing and incentivizing.

Eventually, 'opting-out' itself could hit critical mass (with most people if not everyone seeing the much greater benefits of opting out and going full-on or mostly 'private'), or the public entities would require such absurd taxation in order to fund poor service in comparison to the much cheaper and more effective opted-out/private ones, that the public services would collapse due to insolvency and unsustainability, allowing private insurance and PDA's to easily fill the void left behind in their wake.

While all of this is going on - perhaps it would be more palatable to the masses to allow businesses to 'opt-out' of regulations, only as long as the businesses have to state in their advertising and on their property that they have 'opted-out' of regulations (minimum wage, public unemployment, state mandates, etc). This could be a road to eventual abolition of such regulations. Roles that the State filled that people demanded would probably be fulfilled through employer/employee contract, and private solutions in place of the older public solutions ('regulation', break times, unemployment benefits, etc).

Could the legal ability to 'opt-out' be perhaps the best, surest, quickest, and least-offensive way (to those who value and support such government agencies/services) to grow a libertarian society/economy within the context of the State, in order to eventually achieve a maximally libertarian / anarcho-capitalist society as perceived by Rothbard (et al) via private insurance agencies, defense agencies, etc?

I think if enough people support it, through political pressures, it is a possibility, though admittedly a remote one. It may not be politically viable right now - but in the future, it may be... and I think it should remain in people's heads as a way to convince people to allow others to opt out if they wish as a way to 'shut up them darn kooky libertarians'. Liberals and conservatives I'm sure would be all for it - and of course libertarians (for obvious reasons). The vast majority of people I've talked to (regardless of their political / ideological affiliation) would actually support allowing people to 'opt-out', on purely moral grounds, as well as due simply to frustration with me and other libertarians.

They of course think it would 'teach us a lesson' - and get people to appreciate the State more and for us to 'opt back in' eventually.

Naturally, I think otherwise.