Lies, Damn Lies and Statistics

Remember that stupid “We Are the 53%” campaign? Were you hoping you’d seen the last of it? Sorry to disappoint you, but it’s back. This time it’s being resurrected in an even more monstrous form by Stephan Kinsella — a libertarian attorney who, when not writing stuff like this, is actually one of the most incisive critics of “intellectual property” around.

Kinsella has had a love-hate relationship with left-libertarianism for some time now. And evidently one of the things about us that sticks in his craw — especially those of us at Center for a Stateless Society and Alliance of the Libertarian Left — is our predominant view of the rich as a parasitic class who derive most of their wealth from state intervention in the economy rather than productive activity. To counter this view of things, he cites a passage from a five-year-old US News article (Rick Newman, “How the Government is Swallowing the Economy,” Nov. 9, 2009):

Economist Gary Shilling has calculated that 58 percent of the population is dependent on the government for “major parts of their income,” including teachers, soldiers, bureaucrats, and other government employees; welfare and Social Security recipients; government pensioners; public housing beneficiaries; and people who work for government contractors. By 2018, Shilling estimates, an astounding 67 percent of Americans could be dependent on the government for their livelihood.

This means, Kinsella argues on his Facebook page, that the bottom 58% (or the extrapolated 67%) of the population are “parasites” who live off the wealth produced by some other segment of the population. Never mind that Shilling never actually specified the actual income levels of members of that 58% who get money from the government, so Kinsella has no reason for jumping to the conclusion that it’s the bottom 58% in income; we’ll just stipulate for the sake of argument that it really is the bottom 58%.

In the course of this diatribe Kinsella conflates, blurs or ignores so many distinctions that the result is a big hot mess. The original “53% vs. 47%” slogan, originally created by Erick Erickson of in 2011 as a counter-meme to Occupy Wall Street’s “We are the 99%” and then inadvertently revived by Mitt Romney during his presidential campaign, conflated payment of taxes with economic productivity (I wrote about it here, here and here).

Kinsella, somewhat similarly, conflates the receipt of direct government spending as any portion of one’s income with being a net productive drain on society, and living entirely on the production of those who don’t receive direct monetary aid from the government. To emphasize the point, he telescopes the entire bottom 58% (or 67%) from Shilling’s statistics into a category of “lowlifes” living on “WIC cheese.” Further down in the comments below his original post he explicitly states that “[t]he dregs clearly do not produce [the wealth],” and that “the bottom 2/3 produce nothing.”

But treating either the payment of taxes or receipt of government money as a proxy for where one stands on the Producer-Parasite spectrum is ridiculous. Commenter Kirsten Tynan points out the sheer absurdity of asserting that the bottom two-thirds of society literally produce nothing and live entirely on the output of the rest:

I’m still trying to understand if by “the bottom 2/3” produces nothing, we mean that people like timber workers, truck drivers, miners, construction workers, warehouse employees, electronics assemblers, etc. could just disappear and the world would go on pretty much as normal. If all of those people suddenly disappeared, how would an Apple or Microsoft campus get built? How would its products get built? How would they get delivered? But they should if the bottom 2/3 really produces nothing, right?

It would be amusing indeed to see how a Galt’s Gulch society would organize all the logging, truck driving, mining, construction, etc., without that parasitic 67% holding back the geniuses on Wall Street and in the C-suites. The assertion that the 67% “produce nothing” is as pig-brained stupid as the claim three years ago that the 47% “pay no taxes.” As I wrote back then, the poor pay lots of taxes — they just take the form of payments to nominally private monopolists.

…[D]on’t be fooled by the fact that some of us aren’t paying any income taxes. We pay lots of taxes — to rich takers who live off our largesse. The portion of your rent or mortgage that results from the enormous tracts of vacant and unimproved land held out of use through artificial property rights is a tax to the landlord. The 95% of the price of drugs under patent, or Bill Gates’s software, is a tax you pay to the owners of “intellectual property” monopolies. So is the portion of the price you pay for manufactured goods, over and above actual materials and labor, that results from embedded rents on patents and enormous brand-name markups on (for example) Nike sneakers over and above the few bucks a pair the sweatshops contract to make them for. So is the estimated 20% oligopoly price markup for industries where a few corporations control half or more of output.

The great bulk of state-enabled parasitism takes the form, not of checks paid directly out of the US Treasury, but of nominally “private” transactions: paychecks to that 67% of timber workers, truck drivers, miners, construction workers, warehouse employees and electronics assemblers that amount to less than the value they produce, or checks from customer for inflated prices far above the actual cost of providing the goods and services they’re purchasing, that result from corporations, landlords, etc. being put into a privileged monopoly position by the state. Most of the taxes that most of us pay aren’t in the form of checks made out to the IRS. They’re made out to nominally private businesses that are actually branches of the state.

And as C4SS Fellow Erick Vasconcelos mentioned:

In Soviet Russia, over 95% of citizens depended on the government for most of their income. I suppose they were just a bunch of parasites exploiting the hardworking Randian heroes in the Politburo.

But what we’ve discussed so far isn’t the only example of sloppy thinking in Kinsella’s post. Take another look at the composition of that “bottom 67%” in Kinsella’s US News quote:  …”teachers, soldiers, bureaucrats, and other government employees; welfare and Social Security recipients; government pensioners; public housing beneficiaries; and people who work for government contractors…”

Let’s break that down. First of all, welfare recipients are the category that at first glance looks most like a prima facie case of parasitically living off government largesse funded by others. But as above, it’s conflating the payment of taxes to the nominal state and the receipt of nominally public funds with the real degree of exploitation or parasitism.  I have repeatedly argued, in column after column at C4SS, that most of the upper class’s extraction of wealth from society comes not from direct government transfer payments, but from corporations’ and landlords’ “private” gouging of the public in their roles of worker, consumer and tenant. The privileged classes transfer wealth upward from the producing classes to themselves, through “private” taxation in the form of state-enabled monopoly rents, with a front-end loader. When the resulting polarization of wealth becomes too economically and politically destabilizing, the state transfers a tiny fraction of it back downwards with a teaspoon to the most destitute of the exploited, to increase aggregate demand somewhat and keep outright homelessness and starvation from reaching sufficient levels to bring the system down.

Programs like welfare and food stamps — which by themselves are a small minority of total human services spending — amount to the capitalists using their state to clean up a problem they themselves created, acting through their state, in the first place. By Kinsella’s standard, it’s “parasitism” when government buys crutches for people, even though it worked in tandem with business to break their legs in the first place — and then adds insult to injury by subsidizing the crutch industry in the process.

Second, including Social Security — which may well constitute a majority of total government payments to the “67%” — is especially disingenuous, because Social Security is an entitlement funded entirely by payroll taxes on the recipients’ own wage income over their working lifetime.

What’s more, under the terms of Reagan’s Social Security “reform,” the revenue from the payroll tax increase was used over a period of about twenty years to offset the lost revenue from tax cuts for the rich. And nothing remained of the actual increased payroll tax payments but a stack of government bonds in the “trust fund.” That means that, over a twenty year period — in the name of “keeping Social Security solvent” — a major part of the tax burden was shifted directly from the super-rich to payroll taxes on working people.

Third, a good many of the categories in that list are taxpayer-funded positive externalities to big business.These are all examples of the phenomenon James O’Connor described in The Fiscal Crisis of the State, of big business remaining artificially profitable only because it can externalize a growing share of its operating costs and inputs on the taxpayer. The state is being driven to larger deficits and a growing debt precisely because it takes an ever-increasing amount of direct and indirect subsidies to keep corporate capitalism profitable.

The main function of teachers is to impart the skills and attitudes that will transform their budding human raw material into useful, compliant “human resources” for their employers. The first state public school systems were created in the mid-19th century when factories needed workers who would show up on time, obey orders, and line up to eat and piss at the sound of a bell. The public educationist literature from the turn of the 20th century is full of explicit statements that the public schoolsl exist to fit children into their niche in the social hierarchy. If you don’t believe it, look at the role of Bill and Melinda Gates and other billionaires in promoting charter schools, Core Curriculum and the like.

Soldiers? Whose interests do you think are served by the wars they fight in? Remember the old Vietnam-era joke about General Mills, General Electric and General Motors? Have you noticed that every country defeated by the US gets a new government that rubber-stamps the latest so-called “Free Trade Agreement,” starts taking orders from the World Bank and IMF, and auctions off its economy to global corporations? How much of US security policy is dedicated to maintaining US access to the Persian Gulf and Caspian Sea oil basins, keeping the sea lanes open for oil tankers, and otherwise guaranteeing “clean, safe and abundant energy” to the American corporate economy?

And of course the government contractors building all those subsidized highways that make giant corporations with large market areas artificially profitable against smaller, more efficient producers serving local markets, or promote urban sprawl and real estate interests at the expense of poor people whose neighborhoods were destroyed by freeways.

Stephan Kinsella should be fully aware of what my positions, and those of other libertarian leftists, actually are. I suspect he is fully aware that we believe looting and exploitation by the rich takes the form of monopoly rents and other forms of nominally private exchange, and not direct government transfer of revenue from poor to rich. No doubt he disagrees with that. If so, he should argue against our actual position — not disingenuously pretend that some idiotic statistic about the “67%” is a response to what we actually believe.

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The Anatomy of Escape
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