The Problem with Trading

By Dave Scotese

The problem with trading is theft. If you find an object that is common, which can be easily replaced with something else if you lose the one you found, like a rock, for example, or a stick, it isn’t worth much. However, if you put some work into it, perhaps sharpening the end of the stick to a point, or breaking the rock to create a sharp cutting edge, then it becomes a bit more valuable. As you put more work into making your found object into something useful, you will develop a feeling of ownership. If it is destroyed or taken from you, you will feel sad at the loss even though you can easily find another such object and work on it to make it as useful as the previous one.

This object, then, is something that I will call your “property” because you put your work into it to make it useful to you. If it is also useful to me, perhaps as something to dangle from a string around my neck to make myself attractive, or from my earlobe, or perhaps as a tool to cut parts of plants that I like to eat, then I might offer you something I consider as my own “property” in trade. You may refuse to give me the one you have, but offer to make another one for me, to trade for the thing I have. If and when we both feel that we are getting more out of our proposed trade than we are giving up, we will make the trade.

Multiply this by six or seven billion and you have the economy of today’s Earth. However, there are some important deviations from this pattern.

One such important deviation is the introduction of coercion. If we have agreed to meet at a certain place and trade our property with each other (say I’ll give you a sharp stick, and you’ll give me a sharp rock), it might happen that someone else wants your rock. They may approach us where we meet and threaten to injure one or both of us if we don’t hand over the rock. At this point, it doesn’t matter whether you have my stick, or I have my stick, the fact is that this third party is committing theft. If you disagree with this use of the word theft, substitute in some other word to characterize what the third party is doing. I will use the word theft.

There are a number of alterations to this scenario which do not affect the nature of the thief’s act. First, let us agree that what you’re bringing is not a rock but some money. When a thief steals, it is still theft no matter what he steals, as long as there is a natural presumption that it is owned by someone else.

Next, let us agree that the thief can make all manner of promises about how he will use the proceeds of the theft without changing the nature of his act. Keeping one’s promises does not affect the nature of one’s previous criminal act. While it can be a way to mitigate its negative effects, a crime has nevertheless been committed and the criminal is guilty of it. When the promises are made as a part of the crime, they serve to make the crime more insidious.

Let us now agree that the thief can represent a group of people who have decided that your money will help them accomplish some kind of goal, whether or not it’s a goal with which you agree. Whether or not this is theft still depends on your ability to control what happens. If the representative explains that your unwillingness to contribute will cause them to take part of your pay from your employer, or to lock you in a cage, and you pay the money in order to avoid these things, it is still theft.

Finally, let’s assume that the group represented has been legitimately elected by a sufficiently large number of people. Through this mechanism of election, what has been theft up to this point is transformed for some people from theft into something more honorable. For such people, when enough voters agree that some part of what you earn shouldn’t be yours any more, they justify taking it by electing people who will put it in writing and call it law. For those people, a majority of voters can override our right to barter rocks for sticks or to exchange money for goods and services of others.

Whether you call this new election-backed behavior “taxation” or “theft”, the results are the same, and it is the results of a behavior that give it its meaning. Let’s examine the results and determine whether or not a significant difference is introduced by the election process.

You will no longer have direct control over who gets the money. It certainly won’t come to me in trade for my sharp stick. Most of the other people and companies that might provide you with goods and services for that money won’t see any of it. The few that do will not favor you with the goods and services they offer in return for it. These things all remain true regardless of the election process.

When a thief takes your money, you may appeal to the authorities to make an attempt to recover your loss. The chances of success for this strategy are usually pretty low because the authorities have no vested interest in or contractual obligation to seek the return of your property. However, if the thief has set up some kind of mechanism through which you can register your preference as to how your stolen money should be spent, you will have a small amount of control, though the choices may have little to do with the purchases you would have made had you retained control of your earnings. The same situation exists with taxation except that the election process allows your preferences to be registered if you participate, though the choices still have little to do with the purchases you would have made had you retained control of your earnings.

Additionally, taxation is worse than thievery because the authorities themselves are in on the take. They will use the private thief as an excuse to provide everyone with more (mostly ineffective) protection. They will use any resistance to being robbed through taxation as an excuse to provide everyone with “more security” through enforcement of tax laws and “closing loopholes”, as if being robbed through taxation is a benefit. So again, we see no significant difference even for those who vote, and none at all for those who do not, except that for both kinds of people, the election process co-opts the authorities and thus makes taxation worse than thievery.

Perhaps the best expression of the results of our discussion is that taxation and theft are different mostly because of their semantics, but an examination of their results makes them largely equivalent. However, taxation is even worse on several counts. The amount taken through taxation is much greater. The authorities, rather than working to rectify it, encourage it. Those who benefit the most from taxation make the crime more insidious by burying it in promises to spend the proceeds helping to make things better. So if taxation is not to be called theft, let us agree that it is something worse – maybe something like slavery!

[This article was prepared for the essay contest “How Do You Explain To People that Taxation is Theft?”. Dave Scotese is webmaster for and a freelance computer contractor.]

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