The People’s Property and Income in the Hands of Bureaucrats

The only way to bring public spending back in line with citizens’ interests is to introduce reforms that anchor public finances more firmly in local communities and governments.

BY DAVID THUNDER

View original article at Brownstone.org.

Trump’s new cost-cutting department DOGE (“Department of Government Efficiency”), spearheaded by Elon Musk, has really put the cat among the pigeons with its exposure of a number of taxpayer-funded programmes of rather questionable public utility. For example, several USAID (United States Agency for International Development) projects have been sharply criticised by by US Press Secretary Karoline Leavitt: “$1.5 million to advance DEI (Diversity, Equity, and Inclusion) in Serbia’s workplaces, $70,000 for a production of a DEI musical in Ireland, $47,000 for a transgender opera in Columbia, $32,000 for a transgender comic book in Peru.”

Assuming Ms. Leavitt is correct – and to my knowledge, these figures have not been disputed – we can assume these “creative” uses of taxpayer money are just the tip of the iceberg. The amounts in question – $1.5 million, $70,000, etc. – are, of course, a drop in the ocean compared with the total budget of the US government. Nonetheless, if a bit of investigation can uncover public funds diverted to the promotion of highly controversial and partisan ideological causes like “DEI musicals” and “transgender comic books,” then this suggests that the spending priorities of the US federal government deviate dramatically from anything the average US taxpayer would consider to be a good use of his money.

We should resist the temptation to dismiss these revelations as mere colourful outliers. On the contrary, they should serve as a much-needed wake-up call to taxpayers: we are permanently vulnerable to those who exercise broad discretion in raising public debt, setting tax levels, and spending citizens’ hard-earned money. Let us not forget that the American Revolution was sparked by a British tax that was perceived as arbitrary and tyrannical.

When people think about the threat modern governments pose to citizens’ liberty, their minds may automatically turn to the power to regulate their conduct, fine them, or put them in prison. But one of the most profound ways governments impinge upon citizens’ freedom is by determining, with the backing of coercive force, how their property and income are utilised.

For property, though an instrumental good, is an extremely important and indispensable one, which forms the basis not only for our survival but also for our ability to make plans, engage in cooperative ventures, and advance the common good of the communities we participate in. How much money government siphons away from our paychecks, for example, may determine the type of education we can give our children, the extent of our recreational opportunities, and whether we can support a charitable venture in our community.

In theory, the determination of our tax contributions is made “democratically” through a transparent political process, but in practice, individual voters have very limited say over how much tax they pay, how their taxes are spent, or what limits are placed on the raising of public debt, especially if this process occurs on a national level.

In practice, a select body of citizens, such as government ministers, presidents, and bureaucrats with discretionary powers, play an outsized role in deciding how taxpayers’ money is used and for which purposes public debt is raised. This has serious repercussions for citizens’ freedom and opportunities, since people who know very little about them are deciding how a significant portion of their income, and that of their children and children’s children, is to be spent.

Now, if taxes were consistently set at a reasonable level and devoted exclusively to the sorts of public-interest projects that citizens can identify with or recognise as legitimate, e.g., the construction of highways or reasonable investment in a national defence infrastructure, then they might not pose any serious threat to citizens’ freedom. Indeed, it could be argued that the coercive extraction of taxes is a fair price for citizens to pay for necessary public goods like highways and defence in order to solve the notorious “free-rider problem” – the fact that some people, if left to their own devices, would accept the benefits of public spending without paying their fair share of it.

The problem is, taxation systems often do not even come close to this ideal picture, and even if they happen to work in this way for a time, citizens have little protection against incompetent, extravagant, or arbitary uses of their money, many of which may not even make it into the public consciousness. For example, had it not been for the recent change of administration in the United States, we would almost certainly not be hearing about the bizarre “Diversity, Equity, and Inclusion” projects that American taxpayers’ money has been spent on by the United States Agency for International Development.

The problem is, how do you rein in government spending or bring it more closely into line with citizens’ interests? One way is to dramatically shut down entire government departments, as Javier Milei has done in Argentina and as Trump is trying to do with his Department of Government Efficiency (DOGE). But this attempt to cut back government spending via executive order is essentially a form of “shock therapy,” not a sustainable method for making public spending truly accountable and responsive to citizens’ interests for the foreseeable future.

So, if “shock therapy” is not an adequate answer to expansive and arbitrary government spending, what is?

Unfortunately, there is no foolproof solution for the problem of excessive and arbitrary uses of taxpayers’ money and public debt. As long as we accept the need to raise public finances and tax citizens, there will always be a substantial risk of reckless, incompetent, and wasteful uses of public funds. The most we can hope for is to introduce mechanisms that mitigate such risks and give some real power back to citizens over the decisions about how their hard-earned money is spent.

There are a number of mechanisms that could help, and are not yet being implemented sufficiently, if at all, in most modern States: first, tax voucher schemes could be implemented, giving citizens a tax credit that they can then apply to a service provider of their choice, whether for garbage collection, education, health insurance, or pensions. This allows the citizen to direct his own resources intelligently and harness the benefits of a competitive market rather than just finding himself at the mercy of the whims of public officials.

Second, you can impose constitutional limitations on public spending to ensure that governments do not run up an unsustainable level of public debt. Given the incentives politicians have to borrow from future generations to keep their present voters happy, strict constitutional limits on public spending are probably not just desirable but indispensable.

A third reform that would undoubtedly help reduce wasteful and ideologically partisan spending is to reduce the flow of taxes to national governments and allow a proportionately larger chunk of taxes to flow to local governments. This would give citizens more leeway to influence public spending and would give them greater incentives to investigate how their money is being spent, since the effects of public spending, as well as its costs, would be more vividly felt at the local level.

Trump’s new Department of Government Efficiency, though controversial in its methods, has shone a light on a major disconnect between what US citizens care about and how their money is being spent by government agencies. This disconnect is by no means unique to the United States. European governments, for example, have been imposing significant energy costs on their citizens in the name of “saving the environment,” in spite of significant public opposition to such policies. The recent disastrous performance of green parties across Europe suggests that many citizens do not share these priorities or view them as aligned with their interests.

The only way to bring public spending back in line with citizens’ interests and ensure it is not hijacked by the pet projects of bureaucrats and politicians is to introduce far-reaching constitutional and structural reforms that hold public finances on a tighter leash and anchor them more firmly in local communities and governments. Until that happens, our property and income will remain far more exposed than they need to be to the whims of politicians and bureaucrats.

Republished from the author’s Substack

---

More articles

Donate