Saturday, February 21, 2015
$280 Million “Rainy Day” Fund, The Shirking Partner Fund
Sinking funds used by government are generally misused. That the funds are generally not used for emergency purposes or the purpose originally intended. Rather the fund is used to cover up extravagant expenditures or failed government endeavors. - Book Five, An Inquiry Into Nature and Causes of the Wealth of Nations, Adam Smith, 1776 (1)
How does a political taxing authority accumulate $280 million? What is the mechanism? How can they do it?
To figure out the process one’s first stop is at the proposition of: Government produces nothing. One should consider that government produces nothing that would not have otherwise been produced in the private sector, absent tax. Meaning, with tax, the basket of goods and services produced is made up government and private. Absent tax, the basket of goods and services is all private. Hence the government produces nothing, merely the privately produced revenue is “taxed” with the resulting tax moved from private to public.
One’s next consideration is that somebody or some entity produced income that was then coercively taken away, as tax. Since the tax was extracted from somebody or some entity that produced and owned the income at some point in the process, then such extracted income (tax levied) is being set aside unspent. Meaning the basket of goods and services morphs into: government - government unspent + private. (2)
Consider the process another way. Political taxing authority G taxes James and Jane Goodfellow at tax rate T + PPA, with T being taxes spent on services provided by G, PPA being a premium paid above T that renders no services from G, yet produces a rainy day fund for G. -Or- political taxing authority G taxes James and Jane at tax rate T - SF with SF representing services forgone that otherwise would have been produced at tax rate T.
The rainy day fund, in essence, comes into existence due to a premium paid above services rendered, services provided below taxes rendered or a combination of both phenomena.
Ponder for a moment that the stratagem of premium paid above services rendered, services provided below taxes rendered or a combination of both phenomena, the mechanism thereof, is not being deployed to pay down deficits or debt. Nay, nay! The process is rendered to build a fund for G. Meaning G now possesses a fund that represents a premium paid above services rendered, services provided below taxes rendered and/or a combination of both phenomena.
The next step is to put the process into an action phase. G now buys a basket of government services. The basket is either over priced (premium paid) and/or the basket is shorted (services not rendered). The result being G ends (Eureka!) with a “shirking partner fund”. Very nice indeed!
In the first case of premium paid above services rendered, one would then consider that all taxpayers to G, of all the varying taxes paid to G, need reimbursed. In the second case of services provided below taxes rendered, then all citizens are due services paid for, but not rendered.
A question to ponder is exactly who’s money is the $280 million? Who has claim? Can’t be society’s claim as society is an abstract entity. Is it the past, current and future politicos of G’s claim, due to some mumbo-jumbo legislation (legislation by and for politicos)enacted by another set of politicos representing a greater political taxing authority bestowing authority, the very, very fuzzy concept of political authority, upon G and its ilk? Is it bureaucrats claim so they can increase scope and authority? Or is the claim of the many? The many, many that are not being served?
Beyond the likely misguided consequentialist account of political authority and its coercive nature, even this view of political authority and coercion takes the view of: “It [state] may not take a little extra to buy itself something nice”. (3)
(1) An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith, 1776
(2) Applied Economics, Thinking Beyond Stage One, pgs. 11-14, Thomas Sowell, 2004
(3) The Problem of Political Authority: An Examination of the Right to Coerce and the Duty to Obey, pg. 95, Michael Huemer, 2012
Labels: “Rainy Day” Fund, Politicos through the mechanism of government, services provided below taxes rendered, sinking funds, the plans of the few
BS Economics, cum laude, Private and Public Sectors, 1979, West Virginia University, Morgantown, WV. Undergraduate Minor in General Insurance. Chartered Life Underwriter (CLU), Huebner School of Economics, American College, 1992, Bryn Mawr, PA. Life Underwriter Training Fellow (LUTCF), 1986, National Association of Life Underwriters, Washington D.C.. Currently enrolled and completed one half of Chartered Property and Casualty Underwriter (CPCU) from the American College. 38 years insurance industry experience.