catallaxy files

catallaxy in technical exile

The statist quo trick

with 15 comments

There are many ingenious (and not so ingenious) arguments mounted by conservative socialist defenders of the current size of government. One popular trick which is basically a variation of the tu quoque is one I dub ‘the statist quo trick’. It is popular because it is simple and involves labelling one’s opponent as a hypocrite. A recent example of it can be found in this comment by Peter Whiteford on Andrew Norton’s blog. Note that I am not singling out Peter for any particular reason other than I happened to read the exchange this morning. Also, to be fair he has a whole armoury of arguments, some of which are pretty strong and are logically independent of the ‘statist quo trick’. Nonetheless the statist quo trick forms part of his armoury. The debate is over family welfare payments and the example of the statist quo trick is the following:

More generally, there is one universal fact of human existence (to date) – everyone who is now an adult was once a child. So all living adults brought up in Australia have already benefited from family assistance, health care, the education system etc. From this perpective what would be horizontally inequitable is if the system was “shut down” by people who had already benefited as children themselves.

This argument proves too much. Taking the logic of this argument to its inevitable conclusion, no government spending program can be shut down at all if almost everyone or lots of the population has ‘benefited’ from it, regardless of how inefficient it may be, even if this benefit was obtained in the most roundabout manner by sloshing money through countless channels while various front-men for Bloodsucker Central took their cut. The ‘horizontally inequitable’ tag nonetheless adds the right touch of moral force to this tactic, sufficient in some cases to shame the proponent of spending cuts into withdrawing his or her proposal.

Another example from a perhaps more chronic offender is blogger Paul Watson’s constant refrain that ‘Those baby boomers benefited from free education and therefore have no right to argue for full fees at university’.

This kind of tactic is popular because it has lots of applications. Bloodsucker Central has its tentacles all over the place, subsidising every nook and cranny even against our will or in some cases our knowledge even if it involves deadweight losses and the crowding out of private market alternatives that may be more efficiently delivered.

Almost everyone who lives in modern societies today has been the recipient of some explicit or implicit subsidy whether it is delivered through transfer payments or special tax loopholes and deductions or barriers to entry imposed by regulations which increase the value of incumbent businesses. Thus no one who advances libertarian ideas can be immune to this implicit charge of hypocrisy or ‘horizontal inequity’.

(Of course it is really irrelevant whether or not the proponent of a spending cut has consciously benefited from or taken advantage of a subsidy or loophole. If you are having your money squeezed out of you, you would be a darned fool not to get value for money, making the best of the situation. Unless the proponent were consciously refusing on principle to accept the subsidy in order to make a political point, I would be if anything less rather than more inclined to treat seriously the views of someone who was foolish and inept enough not to take advantage of whatever obvious opportunities were available to redeem their taxes and not in effect pick up whatever dollar bills were scattered on the sidewalk.)

But if this statist quo trick is taken seriously, inefficient programs will never be rolled back, Bloodsucker Central advances it frontiers further, crowding out more private alternatives, and drawing more and more of the population into its complicity and therefore rendering even more of them vulnerable to the statist quo trick.

Of course the proper response is not to take this trick seriously. It is simply irrelevant to the cost benefit analysis of a particular government program. What could be argued is that if there are currently members of society who have formed legitimate expectations about the continuance of a particular government program and adjusted their own plans accordingly and to their disadvantage if this program were to be immediately discontinued (e.g. by not making their own saving plans on the expectation that manna continues to fall from heaven) then there might be a legitimate case for ‘grandfathering’ the program and phasing in reforms transparently, giving due warning to the next generation of taxpayers. Think of this as a ‘regulatory estoppel‘ test.

Written by Admin

November 15, 2006 at 7:25 pm

Posted in Uncategorized

15 Responses

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  1. Homer will pop in here hoping everyone’s discussing his second-favourite rock band. (Hush being his all-time faves).

    Yes, the trick is a pretty shallow argument and the concluding solution is perfectly reasonable.


    November 15, 2006 at 7:51 pm

  2. Let me re-edit that if I can CL, hoping you don’t mind of course.

    Homer will pop in here hoping everyone’s discussing his favourite people in the world who he loves more than himself…. Keating and Clinton.

    The rest is fine.


    November 15, 2006 at 8:19 pm

  3. No, Homer will pop in here and leave a pun… unless he’s decided to save those for the Ashes thread.


    November 15, 2006 at 9:31 pm

  4. Jason

    I think you are being a bit naughty. At the end of the post I specifically said “My conclusion is that redistribution to families is not unfair and is also not regressive – but this does not mean that precisely what is done now is the right approach.”

    What I was adressing was the statement that assistance for families is unfair in principle. This is not the same as saying that therefore you can’t redesign the system.

    Peter Whiteford

    November 15, 2006 at 9:31 pm

  5. Peter
    I am aware of what you concluded, Nonetheless that particular component of your set of arguments still makes the claim that proponents of a dismantling a system that have been beneficiaries of the system have to account for an alleged ‘fairness’ constraint in dismantling what they got a benefit from.

    The net result of your employment of that argument is therefore still aimed at creating a presumption for maintenance of some system of benefits even though you acknowledge the case for some reform.

    Anyway it wasn’t my purpose to even get into the specifics of your exchange which was why I noted you had other stronger arguments which were logically independent of this particular one. That sentence of yours I reproduced just happened to be a good example of the kind of argument I was criticising.

    Jason Soon

    November 15, 2006 at 9:39 pm

  6. Again what I was saying was against the argument that assisting families is unfair to people who don’t have children. That is the context of my use of unfair.

    As has been pointed out, you could shift all the family benefits into the tax system, so apparently reducing “blood sucker central”, as has been advocated by CIS Peter Saunders and Barry Maley. I’m not sure whether you would think that was an improvement, but the argument I was addressing would conclude that such a system was still unfair, and all Iwas arguing was that in my view it is not.

    Peter Whiteford

    November 15, 2006 at 10:23 pm

  7. Jason,

    Sometimes the argument is put as: if you oppose the subsidy then you (or your children) should not receive it. That’s a nice way to limit government subsidies to those with the approved, left-wing views. Any dissent is penalised..

    Grumpy Old Economist

    November 16, 2006 at 12:22 am

  8. Jason and Grumpy, you do have to admit that there is a bit of “what have the Romans ever done for us?” about arguments for libertarian reform. Plus a little “kicking away the ladder”. 🙂

    Jason, you say “even if this benefit was obtained in the most roundabout manner by sloshing money through countless channels while various front-men for Bloodsucker Central took their cut.”

    Then is there really a net benefit? I thought one of the libertarians’ points was that deadweight losses arising from government actions reduced the net gain from a given amount of resources. I’d have thought you would peg such “sloshing” as an overall cost to society, and thus cannot be used as a horizontal equity counter-argument.

    OK, OK, I don’t really care. I’m just stirring things up because fatigue poisons are affecting my thinking.

    Grumpy, I wish there was a way to legitimately opt out of the tax-and-spend cycle, but it would not be feasible in effiency terms. Plus you would end up with what is happening with increasingly subsidised private education – those who benefit from opting out of the public system leave behind a poorer, worse-off scenario for everyone else, which has undesirable flow-on effects.


    November 16, 2006 at 12:47 am

  9. The upshot of this kind of thinking is that we become a moneyed aristocracy.

    If the only people allowed to comment on say, taxation are those who are net tax contributors rather than tax recipients, then nobody who earns under say $50,000pa would have the vote.

    Public servants would be automatically disenfranchised too.


    November 16, 2006 at 6:07 am

  10. Yobbo;

    I proposed taking the vote off public servants over at Troppo – it was wildly unpopular.

    Jacques Chester

    November 16, 2006 at 6:42 am

  11. Jacques

    I’m not surprised that your idea was unpopular over at Troppo; they are probably all public servants.


    It’s a bit rum putting the words conservative and socialist together. We Tories hate the large State even more than you Libertarian nancy-boys.


    The real kicking away of the ladder has been done by the baby-boomer lefties. They have ruined the public education system with their so-called “progressive” teaching methods. Yet they all benefitted enormously from the the system they have done os much to destroy.

    Rococo Liberal

    November 16, 2006 at 8:48 am

  12. On Yobbo’s and Jacques’ point we should expand on section 44 of the Constitution:

    44. Any person who–

    (iv. ) Holds any office of profit under the Crown, or any pension payable during the pleasure of the Crown out of any of the revenues of the Commonwealth: or

    (v. ) Has any direct or indirect pecuniary interest in any agreement with the Public Service of the Commonwealth otherwise than as a member and in common with the other members of an incorporated company consisting of more than twenty-five persons:

    shall be incapable of being chosen or of sitting as a senator or a member of the House of Representatives.

    Individuals who are incapable of standing for office, should also be ineligible to vote for office. This would include all public servants, and all individuals who are not net taxpayers. Of course, this would be very unpopular, but if we allow these people to vote, why prevent them from being MPs?

    Sinclair Davidson

    November 16, 2006 at 9:14 am

  13. Disenfranchising yourself Sinclair?

    Jason Soon

    November 16, 2006 at 9:15 am

  14. BTW doesn’t all this lead to the weird paradox that MPs as public servants aren’t able to vote or re-stand as MPs?

    Jason Soon

    November 16, 2006 at 9:29 am

  15. Disfranchisement doesn’t worry me too much. Although, I’m not sure if academic employment counts as public service (please insert all sorts of puns and comment here). On the MPs themselves, I think when Parliament is dissolved they are technically unemployed and so don’t hold the office.

    Sinclair Davidson

    November 16, 2006 at 12:57 pm

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