Why Economic Patriotism Is Nonsense

As the 2014 midterm elections approach, Democratic candidates led on by President Barack Obama and U.S. Treasury Secretary Jack Lew are adopting rhetoric against corporate inversions, which they define as “the ability of American companies to avoid U.S. taxation by combining with a smaller foreign business and moving their tax domicile overseas.” In such rhetoric, Lew has called for “a new sense of economic patriotism, where we all rise or fall together.”

The phrase “economic patriotism” has been defined in many different ways by different politicians at different times, and some of these definitions contradict others. The current definition espoused by Obama and Lew appears to be something resembling “a duty to produce the greatest good for the greatest number of Americans, and the duty not to relocate the tax domicile of a corporation to pay less taxes.” Therefore, the best approach toward countering economic patriotism is to refute utilitarianism, show that paying higher corporate taxes is economically unsound, refute the idea that corporations should be loyal to the US government, and explain why economic cosmopolitanism, known more simply as free trade, is superior to economic patriotism.

I. Utilitarianism

The task of dispensing with utilitarianism, or “the greatest good for the greatest number,” is rather lengthy but not so difficult. Utilitarianism is a subset of consequentialism, which is the class of normative ethical theories which regard the consequences of an action as the basis for its rightness or wrongness. Therefore, if consequentialism is shown to be false, then utilitarianism fails a fortiori.

When people agree to engage in rational argumentation, they implicitly accept certain behavioral norms. Among these are that truth is universally preferable to falsehood, and that one will make an effort to persuade others to agree with one’s philosophical position. (This does not mean that all people at all times will behave as such; only that they should behave as such.) These norms must be accepted because to reject them is to leave one’s colleagues in argumentation with no reason to believe that one is making an honest effort toward creating valid arguments (and therefore every reason to believe that one is jesting, trolling, and/or lying).

Disproving consequentialism requires two steps. First, we must prove indeterminism. Determinism is the philosophical position that for every event, including human action, there exist conditions that could cause no other event. It logically follows from determinism that it is impossible to persuade others of one’s philosophical position, as strict determination of human actions (and therefore, a person’s philosophical position) would mean they were completely necessitated by past events beyond present control, and therefore not alterable by argumentation. But the effort to persuade others of one’s philosophical position is a condition of rational argumentation. Thus, to argue for determinism is to try to persuade someone to agree with the philosophical position that it is impossible to persuade someone to agree with one’s philosophical position, which is a performative contradiction. Therefore, indeterminism must be true.

Now, we can disprove consequentialism. Consider two people who find themselves in identical situations and who take identical actions. Because of indeterminism, the future is not directly knowable by extrapolating from the past. Thus, the consequences may play out differently in each case. Regardless of one’s criteria (or lack thereof) for distinguishing good consequences from evil consequences, the situations may play out with good consequences in one situation and with evil consequences in the other situation. This means that the same action taken under the same circumstances can be both good and evil. This is a contradiction, therefore consequentialism is false.

NB: There is a notable sidestep to the above argument. One could take the position that free will is not a prerequisite for rationality or for trying to change a person’s mind, which would be free from internal contradictions if one is determined to persuade someone of something, and the receiver of the argument is determined to accept it. But this position necessitates a lack of responsibility for one’s actions, as those involved in the argument would have no choice, and therefore no moral agency. Therefore, the end result is moral nihilism, which would also disprove consequentialism if correct.

II. Corporate Taxes

From a moral standpoint, any form of taxation is armed robbery, possessing/receiving/transporting stolen goods, slavery, trespassing, communicating threats, and conspiracy to commit the aforementioned crimes. But let us consider the economic aspect of corporate taxation in particular. The first thing to note is that there is really no such thing as corporate taxation. When a government levies taxes on a corporation, those who own the corporation will treat the taxes as a cost of doing business, which gets included in the prices of goods and services offered by the corporation. Thus, any tax upon corporations is ultimately a tax upon their customers, not upon those who own the corporation or invest in it. Secondly, any money that a business must pay in taxes is money that the business cannot use for any other purpose. This means that when businesses are taxed, they are discouraged from hiring more workers, paying higher wages, performing research and development, and offering better goods and services at lower costs to consumers. Even worse, these effects are hidden (and frequently ignored by government economists) because it is impossible to count jobs and products that were never created because government taxes prevented their creation.

III. Corporate Loyalty

A corporation is a legal fiction created by the state to shield business owners and investors from being fully responsible for their actions. A corporation does not exist in any physical sense; only the workers, buildings, trade goods, etc. actually exist. Corporations allow business owners and investors to keep profits for themselves and force their losses onto everyone else. This government-granted immunity from responsibility is antithetical to a free market and would necessarily be absent in a free society.

But let us deal with the world as it is, not as it should be. In some perverse sense, there is some truth to Mr. Lew’s argument that “[t]he firms involved in these transactions still expect to benefit from their business location in the United States, with our protection of intellectual property rights, our support for research and development, our investment climate and our infrastructure, all funded by various levels of government.” At first glance, the corporation owners and investors are receiving services, and should pay for those services. But this view is morally problematic, as intellectual property violates physical property rights and all of the aforementioned benefits are provided through state violence and threats thereof against taxpayers, as well as debasement of the currency that they are forced to accept under legal tender laws. After all, governments have no justly acquired purchasing power of their own. It is also philosophically invalid to treat taxation as a payment for services rendered because the recipient of the service generally must pay for the service whether or not one makes use of the service, and has no choice of whether or not to receive the service at all in some cases. Furthermore, governments frequently prohibit competition with infrastructure by granting monopolies to service providers, such as energy companies and water companies. Aside from the moral case, there is no logical reason why the owners of a corporation should be loyal to the U.S. government when they can find similar arrangements elsewhere, and it is logically inconsistent to attack business owners for moving their tax domicile elsewhere while continuing to do business in the U.S. while not attacking business owners for moving their tax domicile to the U.S. while continuing to do business elsewhere. Finally, Mr. Lew implies that the above amenities require government, a positive claim accompanied by a burden of proof. Like most statists, he never fulfills that burden of proof.

A step in the right direction would be for such unfair advantages to be discontinued, along with the immoral revenue-generating practices that fund said advantages, forcing wealthy CEOs and investors to play by the same rules as everyone else (and isn’t this what leftists usually claim to want?) Once that happens, the market will become more free and the correct ideas of the loyalty (to its customers) and duty (to its investors) of a business can become manifest.

IV. Free Trade

The opposite of patriotism is cosmopolitanism, or the lack of devotion to any government. It follows that the opposite of economic patriotism is economic cosmopolitanism, known more simply as free trade. Free trade is defined as trade in which no coercion or fraud is involved. All participants enter into the trade voluntarily and each participant benefits from the trade by their own subjective measures of value. This creates the most benefit for those involved because any amount of coercion or fraud present in a transaction increases the cost of doing business from what it is in the ideal state of free trade, resulting in lost opportunities. As shown above, economic patriotism necessarily involves coercion.

V. Conclusion

With the case made by President Obama and Secretary Lew so easily dismantled, why is there such a push for “economic patriotism?” Quite simply, they know that there are a significant number of voters who can be persuaded by such arguments because they are incapable of seeing through them. As always, politicians act in their own rational self-interest, which is to expand their political power. A “new sense of economic patriotism” is simply another means toward that end.

Why Robert Pittenger is essentially correct about discrimination

On Sept. 8, Rep. Robert Pittenger (R-NC) was asked by ThinkProgress’ Alice Ollstein after a town hall meeting in Ballantyne about whether he supported laws to protect gays in the workplace. He responded, “You need to respect the autonomy of somebody running their business. It’s like smoking bans. Do you ban smoking or do people have the right to private property? I think people have the right to private property. In public spaces, absolutely, we can have smoking bans. But we don’t want to micromanage people’s lives and businesses. If you have a business, do you want the government to come in and tell you you need to hire somebody? Why should government be there to impose on the freedoms we enjoy?”

This statement led to predictable outrage from leftist activists, bloggers, and newspaper editorial boards. “Rep. Pittenger’s ill-informed opinion is also not consistent with the fair-minded opinion of most Americans,” said David Stacy, government affairs director for the Human Rights Campaign, a gay rights organization. “The vast majority of Americans back commonsense workplace protections for LGBT Americans.”

Below, I will make the case that such an opinion is not ill-informed (even if ill-stated and ill-defended by Rep. Pittenger) and is consistent with libertarian philosophy.

The first order of business is to define what is meant by discrimination. The dictionary definition of discrimination is “the practice of unfairly treating a person or group of people differently from other people or groups of people.” The only problematic part of this definition is the word “unfairly,” which could be (and has been) used to twist the meaning of discrimination in an arbitrary fashion. After all, who decides what is fair or unfair? Those involved in an interaction, or someone outside the interaction? If the latter, then what gives them legitimacy to say what is fair or unfair? Ultimately, fairness is subjective because values and opinions are subjective. The only objective consideration concerning fairness in libertarian philosophy is whether an action is consistent with the non-aggression principle. Therefore, discrimination for the purpose of this essay will be defined as “the practice of treating a person or group of people differently from other people or groups of people without violating the non-aggression principle.”

The second task is to construct a logical framework for the right to discriminate. This is a rather straightforward task. The right to discriminate against any person for any reason is part and parcel of the right of freedom of association. In order to argue against freedom of association, one must exercise freedom of association toward the recipient(s) of one’s argument. Therefore, any argument against freedom of association contains a performative contradiction which falsifies the argument. As an idea which cannot have a valid argument against it must be true, freedom of association is a valid right which should not be violated.

The other right which comes into play when discussing discrimination is the right to private property. Private property is rightfully established by mixing one’s labor with unowned natural resources. This comes from being responsible for the consequences of one’s actions, which in turn comes from ownership of one’s physical body. In order to argue against ownership of one’s physical body, one must exercise exclusive control of one’s physical body (to write, speak, type, etc.), which only a rightful owner legitimately may do. Therefore, any argument against ownership of one’s physical body contains a performative contradiction which falsifies the argument. Thus, ownership of one’s physical body is a valid right which should not be violated, as are the corollaries thereof, such as private property rights.

So far, we have a logical case that no one, including an agent of the state, should interfere with private property or freedom of association. Effectively, this means that no one should initiate the use of force to prevent discrimination. (This, of course, does not equate to a case for why people should exercise their right to discriminate on the basis of sexual orientation, race, gender, age, or any other basis; it is only a case for why they should be allowed to do so.) But although discrimination is allowed under libertarian philosophy, it will be discouraged by market forces. In a free market, bigots are punished because they relinquish customers and employees who have the traits against which the bigot is prejudiced as well as customers and employees who are sufficiently offended by said prejudice to ostracize the bigot. This is more than a linear relationship, as those who cannot or will not obtain goods, services, and employment from the bigot will be likely to do so from other providers who are not bigoted rather than do without. This will not only impoverish the bigot, but enrich his competitors. The eventual result is that bigots cannot compete with those who are not bigoted, and must either renounce their bigotry or go out of business.

At this point, statists may protest that the above free market scenario has not played out, and that government intervention is therefore necessary to stop discrimination. Of course, this violates logically proven rights, but statists tend not to understand or care about this; otherwise, they would not be statists. The Charlotte Observer Editorial Board asked whether Rep. Pittenger would find it acceptable to fire an employee for being black, so let us consider the history of that case. Prior to the Civil Rights Movement, Jim Crow laws forced many business owners not to serve customers or hire employees whom they would have served or hired otherwise. Since that time, anti-discrimination laws have forced many business owners to serve customers and hire employees whom they would not have served or hired otherwise. In both cases, force has been used to interfere with the market to keep voluntary methods of dealing with bigotry from being tested. To claim that voluntary methods cannot work while supporting laws that prevent voluntary methods from having a chance to work is logically inconsistent.

One must also remember the role that government has played in indoctrinating children with racist beliefs. The racists who held political and business positions in the 1950s and 1960s would have been schoolchildren in the 1920s. Let us consider an example of what they were taught. This excerpt comes from Civic Biology (1914). (If the book sounds familiar, it is because it was used by John Scopes to teach evolution in Tennessee in 1925, leading to the Scopes “Monkey” Trial.)

“The Races of Man. — At the present time there exist upon the earth five races or varieties of man, each very different from the other in instincts, social customs, and, to an extent, in structure. These are the Ethiopian or negro type, originating in Africa; the Malay or brown race, from the islands of the Pacific; The American Indian; the Mongolian or yellow race, including the natives of China, Japan, and the Eskimos; and finally, the highest type of all, the Caucasians, represented by the civilized white inhabitants of Europe and America.”

With this sort of racism being taught to children in public schools, it is no wonder that a large number of them would grow up to be racists.

Another important aspect of government laws is that they frequently have unintended consequences that harm the people they are intended to help. For example, when an anti-discrimination law prohibits firing an employee for having a certain characteristic, an employer is less likely to hire people with that characteristic because it is too difficult and troublesome to fire such people if they are incompetent, as they can claim that they were fired for a legally prohibited reason and make trouble for an employer.

More generally, the belief that an action cannot be performed solely because it has yet to be performed constitutes a logical fallacy. The assertion that the free market cannot effectively deal with bigotry simply because there is not yet an empirical example of the exact outcome described above is such a fallacy (as well as an ipse dixit fallacy.)

The other criticism typically levied against libertarianism in this regard is that it is just a cover for bigotry. This criticism is easily dismissed. Libertarianism is a philosophical position on what constitutes the legitimate use of force. It says that initiatory force is never justifiable and defensive force is always justifiable. Libertarianism says nothing about bigotry one way or the other, as long as that bigotry does not involve initiatory force. To claim that a philosophy defends a certain position simply because it does not attack that position is a false dilemma fallacy. That being said, even if it were true that libertarianism is a cover for bigotry, this would actually produce good results. If bigots would become libertarians, then they would have to abide by the non-aggression principle. This means that they would stop initiating the use of force and advocating for politicians to do so on their behalf in order to advance pro-bigotry agendas. Therefore, bigots will do less damage to other people if they become libertarians.

It is thus clear that while Rep. Pittenger’s defense of his position was rather inept and his comparison between discrimination against LGBT people and discrimination against smokers is problematic, the opinion that discrimination should not be legally prohibited by the state is not ill-informed or illogical.