Free Market

Socialism in Utah: Subsidies and the Chains of Fiscal Coercion

Part Two in the “Dollars and Nonsense” Series. Click here for part one.

In part one of this series we brought to your attention the state appropriations process and the expenditure of state funds in the form of earmarks to subsidize various activities across the state. In this second part we will discuss the inappropriateness of these subsidization activities as violative of liberty because they socialize costs using the coercion of government force.

A recent audit of the Utah State Fair Corporation calls into question the level of state funding that has subsidized the fair since 2004. This comes after legislation in 1995 that required the fair to work toward self-sufficiency as a non-profit corporation. Driven by the publication of this particular audit, the media has covered the topic moderately. We, however, have been paying attention to more than just the level of subsidization for the state fair. While the audit recommends that the fair should seek revenue sources or reduce costs in order “to reduce or eliminate the need for government subsidies,” the same could be said for a host of other programs that receive state subsidies as well. Our previous article and data sheet in this series covered some of the programs that received earmarked subsidies from state budget appropriations this past legislative session. Subsidized programs ranged from funds for “economic development” to funds for music and museums. We feel public subsidies in general are problematic.

Depending on your views—and access to the taxation trough—public subsidies are either wonderful or awful. While some love government subsidized film festivals and museums, others might prefer subsidies for corporations and local employers. Meanwhile, many might decry subsidies that transfer dollars to the economically disadvantaged while others oppose the transfer of dollars to chosen industries or particular energy sources. The reason people both love and hate subsidies are actually quite simple.

On the one hand, people are rational economic actors and love to obtain more value from a transaction than they have to give in return; simply put, people love free stuff and take advantage of a good deal. On the other hand, people hate to be ripped off and dislike getting less value from a transaction than they give in return. In the case of public subsidization, people generally support such subsidies when they work to their favor and dislike them when they don’t. What is perplexing is how the principle at play for all subsidies is the same, and yet that same principle which creates a favorable outcome for one creates an unfavorable outcome for others. Some might say that the principle at play is socialism. At their heart, subsidies are a form of socialism. But is socialism the principle that engenders disdain for subsidies and redistribution?

Socialism means to combine or share something among a collective group of people, as in a society. This is in contrast to individualism where people act in isolation from one another. Thus, the concept of socialism is one in which people cooperate, as in a society, for a collective purpose or with collective resources. As an economic system in contrast to capitalism, socialism means the collective ownership of the “capital” or means of production. This is typically accomplished at the direction of the state via central planning to various degrees.

Socialism exists in society in many forms. Churches, as an association, typically collectivize resources or efforts for a common spiritual or philanthropic purpose. Fraternal organizations also use their association in order to accomplish a common benefit for all members. Society has many examples of people who associate collectively and cooperate on many levels. The difference between this natural socialism that is often the inevitable result of human interaction in a society, and the political or economic “socialism” that so many abhor, can be expressed by one word: coercion.

We do not oppose the voluntary collectivization or socialization of costs or other efforts—we oppose coercion. Coercion is antithetical to liberty. Coercion is the use of force which constrains the natural liberty of man as he is oppressed under duress to comply with the will of another—in this case, the will of the supposed collective. Of course, it is not the will of the collective at all. Rather, it is the actions of government, typically through a faceless bureaucracy, that claims to act on the behalf of society. This government coercion employs armed and authorized agents to use compulsion by physical force if necessary (and in many cases even when it’s not necessary).

This leads us to another critical point. When government acts by coercion to trample the liberty of man, it can only do so legitimately when it acts on the bona fide delegation of authority from people in the society and only for legitimate purposes. In other words, government can only do that which man, under his natural rights, can do to another devoid of government action. For example, anyone can use force in self defense of their rights; therefore, people can delegate to government the authority to use force in protection of those same rights. The problem with government coercion in the context of socialism is that man has no natural right to coerce his neighbor to cooperate in a collective goal that socializes, or shares, the burden of accomplishing the goal. I may be authorized to use force to resist your physical assault, but I cannot force you to pay for a portion of my attendance at the state fair.

English philosopher John Stuart Mill articulated this principle well in his essay “On Liberty” where he stated:

The object of this Essay is to assert one very simple principle, as entitled to govern absolutely the dealings of society with the individual in the way of compulsion and control, whether the means used be physical force in the form of legal penalties, or the moral coercion of public opinion. That principle is, that the sole end for which mankind are warranted, individually or collectively in interfering with the liberty of action of any of their number, is self-protection. That the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others. His own good, either physical or moral, is not a sufficient warrant. He cannot rightfully be compelled to do or forbear because it will be better for him to do so, because it will make him happier, because, in the opinions of others, to do so would be wise, or even right. These are good reasons for remonstrating with him, or reasoning with him, or persuading him, or entreating him, but not for compelling him, or visiting him with any evil, in case he do otherwise. To justify that, the conduct from which it is desired to deter him must be calculated to produce evil to someone else. The only part of the conduct of any one, for which he is amenable to society, is that which concerns others. In the part which merely concerns himself, his independence is, of right, absolute. Over himself, over his own body and mind, the individual is sovereign.

Mill made it clear that the legitimate power of government to use coercion is constrained to the protection of fundamental rights. Government cannot rightfully compel you because it believes it will bring about happiness, wisdom, and even physical or moral good. Thus, when socialism, or sharing of burdens, is executed by government coercion it is illegitimate.

The only legitimate socialism is voluntary or persuasive socialism. The words “cooperate” and “share” pre-suppose willful and voluntary actions. One cannot be coerced to share. Such sharing is more appropriately termed theft, seizure, or extortion. One cannot be forced to cooperate. Such cooperation is more accurately compulsion. When government spends a single dollar of taxpayer money, each of those dollars have been seized by coercion. Thus, when government spends seized property in pursuit of illegitimate ends outside the scope of its proper role, it is socializing, or spreading and sharing, the costs and burden of such pursuits by coercion—not persuasion of voluntary action.

As Jean-Jacques Rousseau observed, “man is born free, and everywhere he is in chains.” The modern state of civil society and government largesse is one in which freedom and liberty—the protection of which should be the aim of civil government and is the natural birthright of humanity—is so repressed by the practicalities and whims of government that mankind finds himself bound by figurative, and often literal, chains. In the case of government policies that confiscate property by coercive taxation for the lofty aims of the collective good, such policies create fiscal chains. Fiscal chains are just as real because they represent government’s claim to your property—a claim executed by the threat of physical force.

To the founders it was clear that an assault on property was an assault on liberty. As James Madison explained in his essay on property, “as a man is said to have a right to his property, he may be equally said to have a property in his rights. Where an excess of power prevails, property of no sort is duly respected. No man is safe in his opinions, his person, his faculties, or his possessions.” Government coercion is this excess of power and when such excesses exist no person’s liberty is safe.

It is not the concept of socialism that so stirs the passions of those who oppose government subsidization and redistribution. Rather, it is the natural yearnings of the human spirit to be free that fundamentally reject the assault of coercive central planning. Insofar as government expenditures on philanthropic, recreational, or economic development programs are accomplished by coercive socialism instead of persuasive voluntary contributions, we will always point them out for the violations of liberty that they in fact are.