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From: @ucbopal.BERKELEY.EDU
Newsgroups: net.politics.theory
Subject: Re: Role of the state in the economy
Message-ID: <72@ucbjade.BERKELEY.EDU>
Date: Sat, 5-Oct-85 19:32:19 EDT
Article-I.D.: ucbjade.72
Posted: Sat Oct  5 19:32:19 1985
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References: <1674@dciem.UUCP> <28200103@inmet.UUCP> <1351@teddy.UUCP> <205@gargoyle.UUCP>
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Reply-To: mwm@ucbopal.UUCP (Mike (I'll be mellow when I'm dead) Meyer)
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In article <205@gargoyle.UUCP> carnes@gargoyle.UUCP (Richard Carnes) writes

his usual insightful commentary. In this case, we have:

>By
>"the state" I mean here an organization that has a comparative
>advantage in violence and which extends over a geographic area
>determined by its power to tax.  Its comparative advantage in
>violence enables it to specify and enforce property rights.

The last sentence is an important fact.  This fact needs to be addressed by
those libertarians who favor a collection of private police forces, a
marketplace of governments, or anything without some supreme authority to
define and enforce property rights.

>What the state does is to
>provide the basic rules of the game, almost any set of which is
>better than no rules.

Also true. However, what we have in reality is that the state can
- and does - change the rules at will. For example, when the state decided
that the oil companies were making to much money under the current rules, we
added a new rule called "Windfall Profits Tax." Given this, it is no longer
so clear that any set of rules is better than no rules. After all, the rules
could - and do - change to a set that is not better than no rules.

A free market is not "no rules" (assuming you have property rights
enforced), it is merely one of the sets of rules, with the advantage that it
is a fixed set. Any set of rules that allows the state to set the tax rate
does not have that advantage; the tax rate can be changed so that optimal
strategies also change (and I'm *not* going to venture into what the
strategies are optimizing :-). As a final note, a progressive tax structure
plus control of the monetary supply amounts to an ability to change the tax
rate via bracket creep.