Taxes, The Beatles and Adam Smith

A friend, Dr. Amado “Bong” Mendoza of the UP Political Science Department, posted his poem in his fb wall today….

Taxing to death
A septon on political economy

Taxation is the purest of political games
The process determines
Who gets what, where, and when

Smith (Adam, that is) warned
If taxes were onerous
Mobile capital can frustrate the avaricious prince

Taxes are as sure as death
Lennon and McCartney crooned
Dead men should declare the pennies in their eyes.

© 2014 All rights reserved

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I like it, so I added a stanza from The Beatles’ song, “Taxman”,

Let me tell you how it will be
Just one for you nineteen for me
Cause I'm the taxman, yeah I'm the taxman…
And you're working for no one, but me.

On top of taxes (from income tax to death/inheritance tax), there are also "non-tax revenues" aka mandatory fees. They come from cradle to grave: birth certificate fee (at city hall LCR or NSO), marriage certificate fee (NSO), death certificate fee. In between, there are passport fee, driver's license fee, terminal fee, NBI clearance fee,...

And on top of taxes and fees...mandatory or forced contributions: SSS, PhilHealth, PagIBIG. The first two are rising starting this month.

And on top of taxes, fees, mandatory contributions, there are royalties for certain industries and companies, mostly in energy, mining, quarrying sectors.

To a large extent, government mainly exists for itself, an end in itself. Provision of certain services are just gravy and alibi to justify those taxes, fees, forced contributions, royalties. Many people are retreating to self-contained villages and condos where peace and order, garbage collection, roads/drainage construction and maintenance, street lighting, education, healthcare, parks and mini forest, etc. are ALL private provided. And they pay big amount to enjoy those privately-provided services. And still, they pay taxes, fees, etc. to the government even if they hardly use or benefit from those.

Lennon-McCartney in their younger years could be libertarians. They disliked high/big taxes and hence, big government. They disliked revolution, violence, central planning, and advocate more personal responsibility. From the song Revolution: 

You say you'll change the constitution

Well, you know,

We all want to change your head.

You tell me it's the institution

Well, you know,

 You better free you mind instead...

There is a continuing debate between libertarian anarchists (zero government advocacy) and libertarian minarchists (limited, minimal government). I belong to the latter. The former want zero taxes, zero fees, etc.; the latter recognize the need for some taxes to finance limited government functions like ensuring the rule of law, justice administration, limited infra. (most infra can be done by the private sector via tollroads). Classical social contract thinkers Thomas Hobbes, John Locke, Jean Jacques Rousseau, believed that the “social contract” was limited to rule of law function of government, in justice administration. They did not or hardly mentione about infrastructures as core government function.

Adam Smith believed in limited government too. He wrote,

According to the system of natural liberty, the sovereign has only three duties to attend to, three duties of great importance, indeed, but plain and intelligible to common understandings:

first the duty of protecting the society from violence and invasion of other independent states;

secondly, the duty of protecting…every member of society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice;

and thirdly, the duty of erecting and maintaining certain public works and certain public infrastructure which it can never be in the interest of any individual or small number of individuals to erect and maintain.

-- The Wealth of Nations, IV.ix.51.

If a particular government will follow Adam Smith's three main functions of government, there would be only two branches of government needed: Executive and Judiciary. The Executive will be composed of (a) Office of the President or Prime Minister, (b) Foreign Affairs, (c) National Defense, (d) Interior and Police, (e) Public Works, (f) Health, (g) Edcation, and (i) Finance and Taxmen.

(b) and (c) will do function 1, protect society from violence and invasion of other states.
(d) and the Judiciary will do function 2, ensure the rule of law and justice administration; and
(e) will do function 3, erecting and maintaining public works and hard infrastructures,

(f) and (g) will also do function 3 for “soft” infra; limited to infectious diseases, people with physical and mental problems,

(a) will monitor and supervise the implementation of the 3 functions, and

(i) will collect the money for all of the above.

I can support this limited or minimal government. 

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See also: 

Pol. Ideology 18: John Lennon and Liberty, Purpose of the Law, December 15, 2010 

Liberty Rock 1: 50 Years of The Beatles, June 05, 2012 

Pol. Ideology 46: Misunderstanding Adam Smith, July 14, 2013

Liberty Rock 1: 50 Years of The Beatles

In my younger years, especially at the university, rock n roll music was paramount in my head. I would say that the rock bands then were really great compared to today's rock groups and songs. Oh well, I'm listening less to rock music now.

I'm starting a new thread in this blog, rock n roll bands who played songs which deliberately or not, touched on liberty and freedom, individual freedom especially. I will start with the premier rock band of course, The Beatles.

This year, The Beatles comprising the popular four some Lennon-McCartney-Harrison-Starr would turn 50 years old. The Beatles were actually formed in 1960 but two of their original members have left the band in 1961 and 62, Ringo Starr joined in 1962, and that's where they started a really phenomenal career in rock music.

Two of their songs were explicitly political in nature, and they hit the statists and those advocating violence. Here they go.

1. Revolution (1968, album: Past Masters Vol 2) You say you want a revolution Well, you know We all want to change the world You tell me that it's evolution Well, you know We all want to change the world But when you talk about destruction Don't you know that you can count me out Don't you know it's gonna be all right All right, all right You say you got a real solution Well, you know We'd all love to see the plan You ask me for a contribution Well, you know We're doing what we can But when you want money For people with minds that hate All I can tell is brother you have to wait Don't you know it's gonna be all right All right, all right Ah, ah, ah, ah, ah... You say you'll change the constitution Well, you know We all want to change your head You tell me it's the institution Well, you know You better free you mind instead But if you go carrying pictures of chairman Mao You ain't going to make it with anyone anyhow Don't you know it's gonna be all right All right, all right, All right, all right, All right, all right, all right, all right.

2. Taxman (1966, album: Revolver) Let me tell you how it will be There's one for you, nineteen for me 'Cause I'm the taxman, yeah, I'm the taxman Should five per cent appear too small Be thankful I don't take it all 'Cause I'm the taxman, yeah I'm the taxman If you drive a car, I'll tax the street, If you try to sit, I'll tax your seat. If you get too cold I'll tax the heat, If you take a walk, I'll tax your feet. Don't ask me what I want it for If you don't want to pay some more 'Cause I'm the taxman, yeah, I'm the taxman Now my advice for those who die Declare the pennies on your eyes 'Cause I'm the taxman, yeah, I'm the taxman And you're working for no one but me

RIP, John Lennon (1940-80) and George Harrison (1943-2001).

* See also Pol. Ideology 18: John Lennon and Liberty, Purpose of the Law, December 15, 2010

Pol. Ideology 18: John Lennon and Liberty, Purpose of the Law

John Lennon, one of the greatest musicians of this planet, I'm a fan of him -- and The Beatles -- until now. His 30th death anniversary was last week, December 8. This post is overdue then, but I'm still posting it. Because he's my idol.

John is not a libertarian. But there are a few songs he wrote where liberty and peace are highlighted. I chose 3 of them here and posted portions of those songs.

Where there is individual freedom, where there is little or no external coercion, there is peace, peace in diversity and non-uniformity.

1. Imagine

...Imagine there's no countries
It isn't hard to do
Nothing to kill or die for
And no religion too
Imagine all the people
Living life in peace...


2. Revolution

...We all want to change the world
But when you talk about destruction
Don't you know you can count me out
Don't you know it's gonna be alright

...You ask me for a contribution
Well you know
We're doing what we can
But when you want money for people with minds that hate
All I can tell you is brother you have to wait
Don't you know it's gonna be alright...

...You tell me it's the institution
Well you know
You better free your mind instead
But if you go carrying pictures of Chairman Mao
You ain't going to make it with anyone anyhow
Don't you know know it's gonna be alright
Alright, Alright.

3. Happy Christmas (War is Over)

And so this is Xmas
For weak and for strong
For rich and the poor ones
The world is so wrong
And so happy Xmas
For black and for white
For yellow and red ones
Let's stop all the fight

A very Merry Xmas
And a happy New Year
Let's hope it's a good one
Without any fear


Merry Christmas, John and all.
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Posting two related papers here.

(1) Purpose of the Law

(A guest post by a friend who prefers to call himself as "FMG". Thanks buddy!)

Some say the law should also be used to provide more for those with less in life (Ramon Magsaysay Sr.).

I think, at the end of the day, laws are unavoidably made to control human behavior at varying degrees.

The question is: to what end do we craft our laws? Some like Ramon Magsaysay want to use the law to impose obligations on one group to another (more on this later). As a libertarian I believe we should maximize individual freedom.

Whenever I say this I'm sometimes accused of being an anarchist; encouraging chaos and lawlessness. But this is untrue. I too, believe in law and that the restrictions of law can and does in fact increase individual freedom.

As Nonoy said, there are laws against killing and stealing. And I support these laws because they support my values of maximizing individual freedom. We are all made freer if we all give up the freedom/right to wantonly kill and steal from each other. It allows to plan our future with less uncertainty which leads to increases in productivity and higher standards of living. This allows us to afford greater material security and freedom from hunger, deprivation, poverty, etc.

Going back to Ramon Magsaysay's penchant for using law to increase positive freedoms, notice that I emphasized all in my previous paragraph. This is another value I have: the law ought to be blind and non-discriminatory applying to all. Like Hayek, I believe when you craft laws to "help" a "disadvantaged" group, you cannot help but be discriminatory. You cannot help but provide exclusive/unique rights to one group not given to other groups.

Thus in this case, the purpose of the law is no longer to benefit the whole of society but to lobby as many privileges as one possibly can for one's group and to hell with other groups. I don't think I have to elaborate on the negative effects this has on the incentives for productive work other than: "why work if you can get paid by political fiat?"

However genuinely disadvantaged one group is, it is generally a bad idea to use the law to help them. Why? Because you create perverse incentives that attract the greedy and selfish to tilt the system in their favor (e.g. professional squatters, US farm subsidies meant to help ordinary farmers now benefit huge corporations). Eventually the process legislation becomes a sickening exercise of grabbing as many entitlements possible.

So to repeat, what sort of values do we have as a society you think we should have? One of individual freedom and equality or whatever the heck we have right now?

(2) Unity vs. Diversity of Social Vision

November 04, 2010

A senator friend, Sen. Kiko Pangilinan, posted this reflection in his facebook status:

It has been said that for lack of a vision, a nation will perish. We, as a nation and as a people, need to talk about where we want to bring this country in the next 6, 12, 18 and 20 plus years and more importantly what we ought to do, what we must focus on to get there. A vision for our nation.

It's a good reflection by the Senator. I commented in his fb status that it is natural that people and groups have various and competing visions. Some want a socialist vision, some want a populist but non-socialist vision, others want a less government, free market vision. The entity that should popularize and continiously redefine such visions will be the political parties and their respective think tanks.

The LP for instance, where the Senator belongs, should define and redefine its concept of what is liberal. LP is for liberal politics, not socialist or nationalist/monopolist and anti-globalization politics.

Modern and dynamic societies thrive on diversity, in differences and uniqueness of people. If we will have a "unified" society, most likely it will be a socialist one, where the collective will pounce upon the individual. Individual excellence will be penalized (lots of taxes and regulations) while individual irresponsibility and laziness will be subsidized, in order to have a unified and equal society.

Another friend, Joe Battad, made this well-argued comment:

What's holding down progress? - the backwardness of the socio-political system? My view is that the dominant force in society - warlordism/gang politics, is what's holding down genuine economic and political progress. Free enterprise need...s three components to surge forward - rule of law, property rights and individual freedom - all three are curtailed by the warlord/gang dominated society that the country is now in. Establish a society where free enterprise can operate properly - get rid of or minimize the influence of the warlords and the gangs in the political system. Only at the end of that stage will true democratic political parties emerge. The issues will then become the role of government in enhancing/regulating free enterprise and the lives of individuals. Right now, no political party can carry these issues because free enterprise still cannot break free from the clutches of warlordism.

Great points by Joe. Yes, just 3 important functions of the government: promulgate the rule of law (especially the law against ki, private property rights, and individual freedom. Which means govt should divest itself from so many concerns and interests (running banks, universities, casino, drugstores, forest corp., etc. etc.), or at least drastically cut its involvement on those sectors, and focus on promulgating the rule of law.

Stealing is stealing; killing is killing; no left turn is no left turn. Promulgate and implement the penalties. Government should not be the first to break laws (see this picture of Philippine highway policemen blocking the free flow of vehicles in EDSA so that some insecure high police and government officials can easily pass).

People should fear the law, and there will be very little criminals and thieves. And we will have peace of mind to focus on what we should be doing -- make money for our family, for our community, for our less privileged countrymen.

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See also:

Pol. Ideology 12: Lao Tzu, Cooperative Individualism, February 07, 2009

Pol. Ideology 13: Liberty and Liberty Forum, the LP, March 19, 2009 
Pol. Ideology 14: Liberalism, Democratism and Coercion, January 18, 2010

Pol. Ideology 15: Socialism, Conservatism and Liberalism, March 08, 2010

Pol. Ideology 16: Liberalism and Social Opportunity, July 29, 2010

Pol. Ideology 17: The LP and the Philippine President, November 03, 2010