Government and the Economy

John T. Tetley

[Reprinted from The Gargoyle, December 1975]

At a discussion group consisting of men and women I supplied to each person a sheet of paper and announced I would display one word. I requested each person to write on the paper a word or a few words indicating what the word I displayed brought to their mind. Several persons wrote "Taxes", one person wrote "Social Security." The word I displayed was Government.

This, I think is rather interesting. My purpose was to briefly discuss the four principal levels of government local, county, State and Federal and their functions and source of revenue. However, the idea that Government was associated immediately with Social Security, I think, is far more than just amusing. That it is associated with "taxes" was not surprising. And, in a sense this is about what I wanted to bring out in asking the question.

To those of us who have gone beneath surface thinking in economics and understand the role government plays in the production and distribution of wealth, there is a vast opportunity to enlighten many people on what is the role of government.

To illustrate, let our concept of Economics be the science which treats of the production and distribution of wealth.

We follow: human energy, applied to natural resources, using tools and machinery, results in a product -- a material thing. To convert to economic terms: Labor applied to Land, using Capital, produces Wealth.

Wealth is Distributed among the owners of the factors of production -- the owner of labor, the Laborer; the owner of Land, the Landowner; and the owner of Capital, the Capitalist.

Since Government is not a factor of production, it therefore has no claim for a share of the product -- wealth. It is quite necessary that we have some government. Some organization to administer the allocation of natural resources and to protect infringement upon such allocations is needed. For this administration revenue must be provided. At present it is provided by a system known as taxation, whereby a portion of the receipts -- distribution of wealth -- are coercively taken from the laborer, the landowner, and the capitalist.

If a comparative simple change were to be made in our land tenure system, and our system of compensation for severance value of other natural resources, the revenue to administer minimum government thus collected, conceivably could be far more than is required.

Another factor would be to remove from government most all regulation and control of production and distribution of wealth. This would greatly decrease the revenue required for administration of necessary and desirable functions.

Thus might come about a true free enterprise economy, the establishment of Justice and equality of opportunity.

It will be noted that the medium of exchange and credit functions necessary to efficient conduct of the production and distribution of wealth have been omitted. These might well be performed by private enterprise entirely without interference of government.

By opening up the opportunity of unlimited production it is conceivable that involuntary poverty may be over come. Concurrent with this would be employment for all who wished it -- no need for public welfare.

Of course not all problems would be thus solved. However the solution of government, social and economic problems should then be much simpler.

As our government, social and economic system operates today and reform after reform is proposed, tried, abandoned and retried -- the ultimate result is to delay the basic readjustment -- land tenure.

The present system of land tenure is the underlying cause of malfunction of the production and distribution of wealth.

We need and must have a simple and efficient government -- as near perfect as may be devised monetary system. However, given both of these -- the land tenure system remaining as is -- the result would be still higher land prices and more and greater, land speculation - continued recurrence of business recessions with unemployment, poverty, slums, crime and other social maladjustments compounding. An economic system complying with natural law brings harmony -- one which interferes with natural law -brings chaos and disaster.