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Tuesday, January 08, 2013

On The Economic Calculation Of "Fair Share"

When one speaks of a concept it is important that it is properly qualified so as to be correctly understood. Failure to accomplish that makes impossible for either the problem to be identified or a desired solution to be found. Perhaps this is why politicians have a tendency to speak of ill-defined and oft muddled concepts, like “social justice,” “a living wage” or “fair share.” These concepts are impossible to define in a way consistent with how they are represented, since their proponents represent them as definite, rather than abstract matters. In our time the demand for “the rich” to pay their “fair share” through higher taxes has become a standard war cry broadcast from every public and crony source of media. Yet, there is no objective means of defining either what constitutes “the rich” or “fair share.” Politicians and demagogues alike may debate these issues for as long or as short as they may desire, but whatever level they agree on is sure to be arbitrary, save for the only objective conclusion that such concepts are impossible to quantify.

Given a communistic ownership of schools, roads, streets, parks, healthcare institutions, libraries, schools and universities, how is one to be able to calculate each person’s use - “fair share” - of each? What share of a road belongs to a particular taxpayer? What usage is “fair share”? How many books in any given library belong to a specific person and which specific books? Who owns the walls and who owns the library’s carpets? Does the person paying more in taxes own more of the roads, libraries or schools than the person who pays less? What of the person who pays no tax at all? What of the person who desires to use his claim on a gymnasium, and of nothing else? Does the state university graduate owe a particular service to the taxpayer that subsidized or paid for the operation of the university? A typical example of who “fair share” proponents see the world is given to us by US Sen. Elizabeth Warren:
There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for.

As communistic concepts go, the idea of the “fair share” is simply a reiteration of the “from each according to his abilities, to each according to his needs” idea. The first question that poses itself is who is “the rest of us,” and how much did each of “the rest of us” contribute to the end of providing the goods and services Warren talks about? Furthermore, how are we to know that “the rest of us” get a market return on their investment in the public roads, schools, police and firefighting forces? In presenting the issue like that, we discover that we are unable to perform the critical task of economic calculation.
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