Sunday, November 18, 2007

Bargains for taxes

The author of this opinion piece attempts to itemize the private sector costs for all the goods and services provided by his local and state government and concludes that the services he receives from the government are a bargain at the prices he's paying through taxes.

Several commenters to that piece pointed out various fallacies in his arguments, including his false belief that his total tax bill is only $9,000. He failed to calculate his true tax burden comprised of hidden taxes and fees tacked onto just about in every aspect of his life, ie. fuel taxes, tolls, license, franchise, travel and accommodation fees, etc.

But one of the biggest flaws in his argument is the comparison of services provided by the government vs. those available through the private sector. For instance, he estimates that a private security guard would cost him the guard's full wages for 24/7 protection, without acknowledging that he doesn't have 24/7 protection, nor a 1:1 officer-citizen ratio now under his tax-funded sheriff's department.

Furthermore, since the vast majority of the public summon law enforcement for assistance after incidents have occurred, whether it's a burglary or an auto accident, their "protection" against these incidents is non-existent. These law enforcement first responders on the scene primarily serve to establish an official record of the incident to be used by others (insurance companies, traffic court, investigative units of the police department, etc).

You could achieve very much the same response from a private security company who would be notified immediately via whatever electronic security system you've contracted to have with them. Now what happens when you decide that these private security personnel serve your needs perfectly with superior response times, cordial treatment throughout any ordeal, and full cooperation from them when your time in court rolls around? You're essentially closer to having your own personal body guard with only your interests in mind with a private security firm than you are with a stranger dispatched from your sheriff's department who hasn't the faintest idea what kind of life you live or any other background on the situation to which he's called to respond.

And you are still required by law to fund this public sector security system with your taxes even if you choose never to use them. Why should you be forced to fund an inferior system while also paying for the quality service you've chosen to contract with?

Suppose the author lives in a gated community with its own security personnel. His security costs are incorporated into his mortgage, home owners association fees or his rent, but he still pays taxes for public security while receiving no services from them at all. This is ludicrous.

I'm not an advocate of "privatization" in the sense that people still pay taxes to the government and the government contracts with individual private firms to provide services exclusively. That kind of system is more fascist than anything. I do strongly advocate free market choices, provided the choices to opt out of one service in lieu of another are maintained across the board.

Let's say a new company moves in that has an innovative way to process household garbage such that landfills are not necessary, and begins offering pickup services at reasonable rates. When comparing these rates to the available public sector service, it is important to take into account secondary costs such as landfill management and runoff control. Would you then choose to pay $200 a year freely to this company if indeed their rates were much lower taking into account the secondary costs of standard public waste services? Would you pay it while still paying taxes for the public waste services? If you choose to use the innovative company, or another one who has an even better way to manage trash, why should you be forced to pay for both by virtue of forced taxation?

In a free market approach with a truly competitive environment, private companies have to earn your trust, and then keep it by providing exceptional services or risk losing your business to the competition. This is the ultimate efficiency mechanism that keeps service quality high and prices low. Contrast that with public sector service personnel who get paid regardless of job performance. Where is their incentive to treat you with respect by providing prompt friendly service while keeping your costs low? There is none. Zero. Zilch. In fact governments have more incentives to fail because it is government's nature to throw more tax money into problems that never seem to go away. Take the war on poverty for example. We're the wealthiest nation in the world with untold billions of dollars at our government's disposal and yet poverty continues to grow. It's a vicious cycle that constantly repeats: we have more people in poverty so we need more government money to address it. Failure is almost always rewarded with more funding. There is absolutely no incentive for government to actually succeed in eliminating any problem in society.

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