Wednesday, 20 April 2011

Rents and the social nexus

I postponed grad econometrics by a year to take James Buchanan's Constitutional Political Economy course. Buchanan there argued* that taxation is legitimate because any income above that which would accrue in the state of nature can be seen as a rent stemming from participation in the social nexus that would have been impossible absent the state. So taxation and redistribution wasn't theft.

Leaving aside problems of how to accrue the gains where the sum of marginal products is greater than one, I asked Professor Buchanan instead whether we could similarly argue for forced live kidney donations by folks over the age of 35 or so. Life expectancy beyond that which would have accrued in the state of nature could similarly be viewed as a rent. Buchanan favoured somewhat egalitarian income redistributions but not somewhat egalitarian kidney redistributions; I don't recall any particular reason why the one was acceptable but the other wasn't.

I'm reminded of this because Blunt Object points to Megan McArdle's similar drawing of parallels:
John Quiggin complains that what the classic essay I, Pencil actually shows is the wonders of a mixed economy, not the market. The essay traces all the amazing transactions that need to occur for a simple pencil to be made, pointing out that not one of the people involved could make a pencil by themselves, and most of them don't even know that they're involved in producing a pencil. But what about the US Forestry Service? Rail rights of way? The education system?

This is an argument to which the left-wing has a great deal of recourse whenever anyone suggests that people have a right to keep what they earn from voluntary transactions. You can only make money in the context of society, and so society has a right to regulate your transactions, and seize the proceeds, in any way that society sees fit.

And yet, the argument applies just as well to our sex lives or our political beliefs: they take place in the context of all sorts of government protections, from rape prosecutions to whistleblower laws. Without markets and the government, the "anything between two consenting adults" morality to which the majority of the elite subscribes would be impossible; the closest substitute for these things is family, and families have a very clear, deep, and persistent interest in regulating the sexual behavior of their members.
I'd expect that Kings could also thereby have justified Droit du Seigneur.

The argument goes farther than Megan thinks. If we only had a life expectancy of about 35 years back in the state of nature, then every year of life beyond that is a rent subject to appropriation or redistribution. So is every year of life for someone who would have died in infancy in the state of nature.

Quod nimis probat, nihil probat.

* Alas, all my notes are in my still-red-stickered office, so I can't double check.


  1. "I asked Professor Buchanan instead whether we could similarly argue for forced live kidney donations by folks over the age of 35 or so."
    We kind of do already. Health, food and shelter make up most of our budgets. Rich people live a lot longer than poor people. When we redistribute income, we effectively redistribute life expectancy (and quality). Taking your liver would be double taxation.

  2. Since when does Government == society?

  3. And some folks explicitly call for income redistribution as a way of equalizing life expectancy. But surely it's no more double taxing than is paying a consumption tax after having paid an income tax.

  4. @Simon: Indeed. But those on the other side would say that society collapses into bad anarchy absent the State.