Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.3 4.3bsd-beta 6/6/85; site ucbjade.BERKELEY.EDU Path: utzoo!watmath!clyde!burl!ulysses!ucbvax!ucbjade! 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 Date-Received: Sun, 6-Oct-85 06:36:34 EDT References: <1674@dciem.UUCP> <28200103@inmet.UUCP> <1351@teddy.UUCP> <205@gargoyle.UUCP> Sender: network@ucbjade.BERKELEY.EDU Reply-To: mwm@ucbopal.UUCP (Mike (I'll be mellow when I'm dead) Meyer) Organization: Missionaria Phonibalonica Lines: 41 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.