Should a Libertarian Accept Government Lockdown Assistance?

In a recent column in The Spectator entitled I have herd immunity, author Lionel Shriver wrote about herself:

I am a type. I don’t like groups. I maintain few memberships. I question and resist authority, especially enforcement of rules for the rules’ sake. I’m leery of orthodoxy. I hold back from shared cultural enthusiasms.

The same is true of me. I believe in the sovereignty of the individual - that every human being has the rights to life and liberty and to pursue their own fulfilment to the fullest extent that is consistent with everyone else enjoying the same rights. I believe the legitimate role of the state is solely the protection of these limited rights.

The Covid-19 lockdown has provided a dilemma for people like me who don't believe in government welfare assistance. My business is suffering - my revenue this month will be significantly down - and it qualifies for the New Zealand Government's Covid-19 wage subsidy. I have never received a government welfare payment and never envisioned doing so, and therefore I was very reluctant to apply for the Covid-19 business assistance. There are two considerations I took into account in making the decision on whether to accept the Government's handout. 

The first is philosophical, and to address that I looked to Ayn Rand for guidance. Rand was categorically opposed to government welfare assistance on the basis that it was immoral to forcibly take the product of one individual's work and give it to another. She believed that the needs of one person, no matter how pressing, do not create a moral claim on the product of the life of another. Rand's critics claim that she was hypocritical because she accepted US Social Security later in life. Onkar Ghate at the Ayn Rand Institute confirms this but points to the fact that she saw no conflict between opposing state redistribution programmes in principle and accepting what she saw as restitution for the theft of one's wealth in the first place. She likened it to accepting compensation from the proceeds seized from a robber who had stolen from you.

The other consideration I took into account was that the Government ordered this lockdown and (as I have said in earlier posts) if it is necessary that is only because of the Government's earlier inactions. So in effect, I regard the wage subsidy as fair compensation for the negligent damage the Government did to my business.

One other factor that finally convinced me to accept the Government's financial assistance is that my company and its shareholder-employees have large tax bills due at this time, for which the Government isn't offering any grace (other than some vague suggestions they may waive "use of money interest" and penalties). Our cash flow has been significantly impacted by the lockdown order, affecting our ability to meet the tax demands, so in the end we had no qualms about taking the assistance and applying it to the Government's legalised theft.

It does stick in my craw that even the most self-reliant of us have all become dependent on the state. I can't help thinking that this is seen by those in power as a useful by-product of their Covid-19 response. The metaphysical basis of almost all political belief today is social, cultural and economic collectivism. We are all just part of one big, global village, and, as in any village, every person should be concerned with everyone else's business. Self-reliance is seen as selfishness and is not to be tolerated, and if you think you know what is best for your own life, you simply don't know what is good for you.

I am not an anarchist. I believe that governments are necessary to solve human problems such as defeating an invading enemy and stopping highly infectious diseases. But governments have a long history of turning reasonable and necessary collective actions into enduring tyrannies. I fear that accepting the government's largesse may make me complicit in doing exactly that.

Later on today we will learn the New Zealand Government's decision on whether we will be allowed some relief from the universal house arrest we have endured over the last four weeks. Perhaps a positive decision will provide some comfort.

Capitalism is about trust

I was listening to Canadian psychologist Jordan Peterson's podcast the other day and he touched on a subject I found really interesting - the importance of trust networks in business transactions. He was talking about eBay (and it is equally true of New Zealand's equivalent, TradeMe) which, when it started out, had third party agents who would guarantee delivery of the goods people had purchased and payment to the seller. Very quickly those agents became redundant for the simple reason that the vast majority of people trading on the site were honest, often scrupulously so. This has been my personal experience - in fact, I have never had a trade in which I wasn't largely satisfied with the result.

eBay works on reputation, which it has formalised in its feedback ratings, but even without a track record of good ratings, the buyers and sellers tend to deal with each other with honesty and trust. I am not sure why people would be surprised by this as it is the common experience of most people in business. Even in the second decade of the 21st Century, many business deals are still sealed with nothing more than a handshake or, at most, emails of offer and acceptance, and in the vast majority of cases there is never a dispute that can't be resolved with a telephone call. I have had my own consulting business for about twenty years and incredibly I have never not been paid for services delivered (although sometimes I have needed to chase payment) and I have never had a dispute over the quality of the services I have delivered. I accept that the nature of my business is one that is especially dependent on personal relationships but I am sure most businesspeople, at least in civilised Western nations, could cite similar experience.

The popular impression of those not in business is that capitalism is dog-eat-dog and everyone is out to rip off everyone else. In my experience this couldn't be further from the truth. Businesspeople are generally incredibly ethical. This shouldn't be a surprise because capitalism by definition is all about voluntary relationships between people and no one wants to engage with another person they do not trust, particularly when there is a financial cost. A free market very quickly exposes fraudulent, shoddy and inadequate products and services, particularly in these days of social media and rating websites like Yelp. A restaurant that gives its customers poor service or a roofer who leaves a home owner with a leaky roof is likely to be exposed online very quickly. On the flip side, good quality products and services are extolled to the world.

The exception is in markets where there is a government imposed monopoly or cartel. Obvious examples of this are the airline industry and health sector, which are so regulated and controlled that you could hardly call them free markets. We endure appalling service in both industries, largely without complaint because complaining would be futile. The other sector where poor service is uncomplainingly accepted is government itself. We often put up with appalling treatment by government agencies and accept that we have no alternative or even the right not to use the services offered.

Government also undermines the trust we see in free markets indirectly through welfare and income redistribution policies. When you get something for nothing through state welfare, you don't need those trust networks that business people rely on. The idea of a fair exchange is corrupted because the state promotes a sense of entitlement - that poor people have a natural right to the earnings of taxpayers - which undermines the integrity of people on both sides of the transfer. There is not even the sense of generosity and gratitude that results from acts of charity. Welfare debases human relationships, which is, I think, the reason why crimes like child abuse are so high amongst welfare dependents, even compared with working people with the same income (see for example this report [PDF]).

Capitalism, perhaps ironically in view of many, brings out the best of human nature.

Left's defence of Turei is remarkably shortsighted

A few weeks ago I wrote about the admission by Metiria Turei, the co-leader of the New Zealand Green Party, that she committed welfare fraud when she was younger. I had intended to leave the matter alone but have found myself drawn back to it, much as one is drawn to the sight of a rotting corpse - it is deeply unpleasant but fascinating nevertheless. More interesting than Turei's admission has been the reaction to it. An opinion poll shows nearly three-quarters of New Zealanders believe that her fraud is unacceptable but, as I said on Lindsay Mitchell's blog, it is discouraging that half of Green Party supporters, and even a significant proportion of National Party voters, think Turei did nothing wrong.

Turei defended her actions by saying it was a choice between feeding her child and complying with the law. A number of commentators have pointed out that her claim doesn't hold water, that she was living with the partner of her child and with her mother at the time she claimed a sole parent benefit. She has said she will not seek a cabinet position if the Greens are part of the government after next month's election but has refused to resign either as co-leader or as an MP. Her attitude compares with the resignation from Parliament of ACT Party MP, David Garrett, for passport fraud, which at least had the mitigation of not benefiting him financially.

This week two Green MPs, Kennedy Graham and David Clendon, resigned in protest against Turei's refusal to step down. It is reassuring to know that there are still some people with integrity in a party in which half of its supporters support benefit fraud. 

The worst thing about Turei's admission is the fact that the political left-wing have rallied behind her rather than condemning her actions. Her Green Party co-leader, James Shaw, has defended her and the new leader of the larger centre-left Labour Party has said she will work in coalition with a Turei-led Green Party. Left-wing bloggers have also defended her. 

I think the left's defence of Turei shows a remarkable lack of judgement. Do they not realise that the whole taxation-welfare state they so defend is completely dependent on the pretence that it is legally and morally right? The redistributionist system relies on the acquiescence of taxpayers because if enough people decided they did not want to pay their taxes, there is no way the state could enforce it notwithstanding the draconian sanctions available to the tax authorities. Does the left really want us to believe that defrauding the system is acceptable? It is, of course, a double-edged sword and those who are on the receiving end of the redistribution have everything to lose. 

A libertarian like me might look at all this as a good thing - anything that hastens the collapse of the system is to be encouraged. Unfortunately, the end of that road is what we see in Venezuela today and no one who loves freedom and individual self-determination wants to see that in their country.

Let the beggars be

There has been a fair bit of publicity recently about people begging on the streets of our major cities. This may seem odd to overseas readers because beggars are a constant fact of life in most cities internationally but in New Zealand they are a fairly recent phenomenon. The fact that the growth of begging has been at a time when the New Zealand economy has been enjoying relatively strong growth and the Government has been increasing welfare benefits suggests the problem is not primarily an economic one.

Retailers have observed that the beggars who station themselves outside their shops appear to be highly organised, with prime spots allocated on a rotational basis and 'rent' charged by minders who manage the territory. Many of the beggars do not appear to be impoverished and most of them will be receiving state welfare benefits and not declaring the income they 'earn' from begging.

Wellington property investor Bob Jones has called for them to be banned. The libertarian in me says that would be an unnecessary state intrusion into what should be a free interaction between the panhandlers and those who are happy to give to them. I suppose my view is influenced by the fact that in my youth I found myself literally penniless on the streets of a foreign city and was faced with the prospect of having to beg to survive. It would be a heartless and oppressive society indeed that forbid people from asking others for help.

I draw the line at the point the beggars become a nuisance or adopt threatening tactics to obtain alms and I don't think taxpayers should be paying them welfare benefits when they are topping up their incomes (quite generously in my observation) from begging. But mostly they are harmless and we should let them be.

Green leader acknowledges fraudulent basis of left-wing beliefs

Lindsay Mitchell reports that the Green Party co-leader, Metiria Turei, has announced the party's new welfare policy, which coming from New Zealand's Watermelons is entirely unsurprising, but this policy seems remarkably short-sighted even for the Greens. They propose removing all sanctions and obligations from beneficiaries, a policy that is an invitation to indolence and fraud. 

The current government has been reasonably successful in reducing long-term welfare dependency and encouraging beneficiaries to take responsibility for their lives - getting beneficiaries back into work, discouraging young women from having babies when they can't provide for them and targeting social investment at those in highest need. All the evidence points to the fact that when people take responsibility for their own lives their outcomes and that of their children are much better. 

The worst detail of Metiria Turei's reported announcement is the admission that she personally defrauded the welfare system by failing to declare that she took in flatmates while on a benefit. This explains much about the basis for her party's policy. The political left-wing likes to claim the moral high ground so perhaps we should salute Turei for her confession because it acknowledges that her policy is based on lies. Of course, the entire left-wing political philosophy is based on the fraud that is Marxism so it is refreshing to see a chink in the wall of propaganda that would have us believe there is some moral basis to it all.

This policy announcement is good in one other respect - it will guarantee electoral oblivion for the Green Party. New Zealanders like to give people a fair go but like most people they don't like to be ripped off. The Americans who voted for Trump and the British with Brexit had had enough of political lies and I believe New Zealanders will similarly punish the Greens for their dishonesty and conceit.

The Answer is Simple - Don't Pay Beneficiaries Cash

A recent article in the New Zealand media about Social Development Minister Anne Tolley's plans to crack down on mobile truck shops caught my eye and I discussed it with my wife, who has worked for many years in the social services sector. My wife confirmed the essential facts of the story - that some mobile shop operators were charging high prices and high rates of interest and were targeting customers in poor areas, with the result that some customers were getting into financial difficulty (or greater financial difficulty than they already were). Interestingly, she gave the same example of the $30 packet of cornflakes that is given in the article (without having read the article), suggesting that this is more of a meme than a real example.

Unusually for our invariably one-sided, scandal-mongering media, the article does include comments from the 'executive chairman' of the largest mobile shopping company, Home Direct, who appears happy to disclose his interest rates and fees, suggesting he has no nefarious practices to hide. And it is to Anne Tolley's credit, perhaps, that she is not planning to introduce new laws specifically to deal with this perceived problem but rather to use existing laws. However, I think this article, and Anne Tolley's response to it, is inherently dishonest about the true nature of the problem.

If, as the article alleges, poor people (and let us assume they are state welfare beneficiaries because almost all people on low incomes in New Zealand are entitled to welfare benefits) are being ripped off by unscrupulous mobile shop operators, this can be for only one of two reasons. Either the mobile shop operators are committing fraud (e.g. by misrepresenting their pricing or interest rates) or the poor customers are so desperate or foolish they knowingly pay above the odds. If it is the former, then it is simply a matter for the police. If it is the latter (and the article and Anne Tolley's response suggest they think it is) then the problem is a bit more fundamental.

In New Zealand generally we pay welfare benefits to people in cash and leave it up to them to decide how best to spend the money. Welfare workers like my wife will tell you that this situation provides the opportunity for gross abuse. For example it is commonplace in communities reliant on welfare for absentee male ex-partners to turn up on welfare pay day to threaten and abuse solo mothers to obtain what they see as being their share of the woman's welfare payment. It is also the day that the TAB (the government-owned betting chain), the poker machine halls, the public bars and the Lotto shops in these areas do the most business. It is not unusual for welfare recipients to have exhausted their entire two week payment within a few days of having received it, leaving them with no other means of feeding and clothing their children and paying their rent until the next pay day. It is not surprising therefore, that they buy from mobile shops that offer credit, even when this is at exorbitant rates.

The answer to all these problems is the same - don't pay beneficiaries cash, pay them in kind. Give them food, rent, transport, medicines and any other necessities of life for them and their children, but don't give them the cash that provides the opportunity for them to be ripped off. Unless, of course, you believe they are entirely capable of looking after their own finances, in which case they don't need state welfare at all.

Labour's cynical election bribe just more legalised theft

The New Zealand Labour Party has announced that if it becomes the government later this year it will introduce a new welfare payment of $60 for babies born to families earning under $150,000 per year for the first year and continuing payments for families with lower incomes. This is on top of the Working for Families scheme that Labour introduced when last in power, which extended welfare to families on incomes of well over $100,000 per year, and other existing welfare benefits. 

As welfare commentator Lindsay Mitchell points out on her blog here, this means that a first time mother in Auckland on welfare will receive $672 per week and a further $124 for every child after that. The median New Zealand full-time wage (June 2013) is $844 per week. An individual taxpayer will pay about 15% tax on their income so will receive about $720 in the hand. Beneficiaries get additional entitlements such as lower cost government services and discounts from many private sector organisations, so you would have to conclude that most young, single women would be better off having babies than working for a living.

The inequity of this situation, and even the fact that all the evidence says that encouraging welfare dependency produces poor social outcomes, are not my primary objections to this policy. It is the cynical opportunism of it that gets to me. No one can seriously argue that New Zealanders incomes of up to $150,000 need welfare, so this policy is not about need. As with Working for Families, it is about making more and more New Zealand families dependent on, and grateful for, the largesse of a Labour Government. Elections are won and lost on the votes of the middle class and these policies bring almost all of the middle class into the welfare system. 

All taxation is, by definition, legalised theft (OED defines theft as to 'take another person’s property without permission'). Most people justify the taxation and welfare system because it enables government to provide for the needy in society. Labour's new policy doesn't even have that merit. As Lindsay Mitchell points out again here, the most commonly used measurement which counts children in households below 60 percent of the median household after-housing-costs income, has fallen from 37 percent in 2001 to 21 percent in 2012. No one needs this policy, least of all higher income earners. Where is the morality in taxing a young school leaver earning the minimum wage ($13.75 per hour) so the government can give money to someone earning say $145,000 per year?

Fortunately I think most New Zealanders will see this policy for what it is - a cynical election year bribe. However, between Labour and its fellow-traveller Green Party, they may muster enough votes to out poll the governing National Party and implement their dishonest policies.

The Morality of Welfare

This blog incorporates the comments I posted on Karl du Fresne's blog this week. Karl posted about a documentary that aired on TV3 during the last week of the New Zealand general election campaign (and of course TV3's timing was not coincidental - it was just part of their on-going pro-Labour, pro-Greens editorial campaign). I didn't see the documentary but in Karl's view it was "very one-sided", presenting the "message...that the welfare state has failed our poor."

This sort of overtly left-wing polemic always tries to cast the rest of us (i.e. those other than the 'deserving poor') as uncaring and immoral. How could we in good conscience possibly let one child anywhere go hungry? It never asks the same question of the parents and extended families of such children, assuming that they must be victims of circumstances like their children.

Those who oppose further extension to the already ubiquitous welfare state, and who oppose further taxation increases to pay for it, are often put on the back foot by such arguments. They seldom challenge the de facto position that there is no moral argument that could possibly be put forward to justify less state intervention in the welfare of poor children.

Well, I am not afraid of entering the moral debate on the side of the oppressed taxpayer. My comments on Karl's blog follow.

I guess you could call the welfare state 'compulsory altruism', if that is not too much of an oxymoron. The system of taxation and redistribution through welfare is enforced by the state's exclusive legal mandate to use violence (and if you don't believe this, then let's make taxation voluntary tomorrow and see what happens).

So, the moral argument in regards to welfare is whether it is right for the state to threaten and use violence against some people to force them to support others (whether such people are deserving or not may change the weight of the argument but not the principle).

I believe that a rational, moral society is one where families and communities look after those less fortunate than themselves. I also believe that a rational, moral society is one where no man or woman is forced to work for the benefit of another (or another's children).

I don't believe these two things are mutually exclusive, but so long as the taxation and welfare system is based on the threat of violence, it will lack any real moral mandate in my view, no matter how many heart-rending documentaries appear on TV.

Forcing people to work for someone else's benefit is slavery. The needs of others do not justify this slavery no matter how compelling that need. The only choice we have is to submit to the slavery or join the ranks of those benefiting from the corrupt welfare system. The system may make most New Zealanders feel like they are part of a 'caring society' but we should not pretend it is anything other than extortion based on the threat of violence. It is certainly not moral.