# Think Tank > Austrian Economics / Economic Theory >  Income Inequality: Non-Solutions to a Non-Problem

## Occam's Banana

If you haven't seen it yet, check out Tom Woods' redesigned website: https://www.tomwoods.com
(Among other things, each episode of The Tom Woods Show now has extensive "show notes" ...)

*Ep. 298 Income Inequality: Non-Solutions to a Non-Problem*
http://tomwoods.com/podcast/ep-298-i...a-non-problem/
_Tom Woods (04 December 2014)_

Everyones talking about income inequality, and I thought this article by Robert Higgs  Nineteen Neglected Consequences of Income Redistribution  was worth an episodes worth of commentary.

https://www.youtube.com/watch?v=kloxU54kums




Here are the resources for todays episode:

*Books Mentioned*

Frederick Bastiat, _The Law_. At this link you can get a free e-book edition or buy the print version.

David Beito, _From Mutual Aid to the Welfare State_.

Connor Boyack, _The Tuttle Twins Learn About The Law_. This is a childrens book that conveys the ideas of Bastiats classic work.

Charles Murray, _In Pursuit: Of Happiness and Good Government_.

Thomas Woods, _Rollback_.

*Previous Episodes Mentioned*

Ep. 286: Who Creates Jobs? (George Reisman)
Ep. 256: The Truth About the Fast-Food Protests (Diana Furchtgott-Roth)
Ep. 237: Why Are We So Rich? (Deirdre McCloskey)
Ep. 150: Teaching Liberty to Kids (Connor Boyack)
Ep. 53: Before the Welfare State? (David Beito)

*Episodes on Health Care*

Ep. 254: Whats Wrong with Health Care (Colin Gunn)
Ep. 193: Affordable Health Care in the Age of Obamacare (Sean Parnell)
Ep. 191: Market Medicine (Charles Sauer)
Ep. 147: Obamacare and Medicare: A Physicians View (Jane Orient)

*Special Offers*

 If you enjoy the Tom Woods Show, my new book  _Real Dissent: A Libertarian Sets Fire to the Index Card of Allowable Opinion_  is for you. Check it out! And get a free copy of the audiobook version, with me reading it, at TomWoodsAudio.com.

Im designing courses for Ron Pauls homeschool curriculum. Here are 26 reasons to adopt this program today (and 4 not to). If you do sign up, do so through this link and Ill send you a *FREE 10-lesson bonus course* on the foundations of liberty, in time for the 2015-2016 academic year! Just drop me a line  once youve signed up and Ill get it to you. (And if youd like my  courses a la carte, without joining the Ron Paul program, you can get  them at TomWoodsHomeschool.com.)

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## febo

Kind of irrelevant/straw-man really - Woods is avoiding the problem of inequality by focussing on income. Inequality today derives from capital gains - specifically, the unearned increment (aka ripping off the productive members of the economy) - not income.
At the moment the Mises Inst is trying to pretend that the 1%-99% meme is false. I can't think of a better way to invite ridicule.

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## Henry Rogue

> Kind of irrelevant/straw-man really - Woods is avoiding the problem of inequality by focussing on income. Inequality today derives from capital gains - specifically, the unearned increment (aka ripping off the productive members of the economy) - not income.
> At the moment the Mises Inst is trying to pretend that the 1%-99% meme is false. I can't think of a better way to invite ridicule.


In a system of perpetual inflation  (The Federal Reserve System) capital gains is the only way to protect the fruits of ones labor. Get on board with ending the Fed, then we'll talk LVT.

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## helmuth_hubener

> then we'll talk LVT.


Apparently he wants not only a Land Value Tax, but also a Capital Value Tax.  You have capital?  You're ripping febo off!  Built a factory?  You didn't build that.  Have some machinery in your garage?  You stole it from your neighbors.  Saved up $100,000 in a retirement account by hard work and careful budgeting for decades?  You parasite!

All those dirty people with capital.  Wrecking society.  If only we could get rid of them and their capital.  Then we could.....





dig in the mud with sticks.

And wouldn't that be fun?!

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## helmuth_hubener

Whee!  Fun galore!

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## Occam's Banana

> All those dirty people with capital.  Wrecking society.  If only we could get rid of them and their capital.  Then we could.....
> 
> dig in the mud with sticks.
> 
> And wouldn't that be fun?!


But don't you see? Once we finally got to that point, we would repeal all the other taxes and just get by with a Mud Tax and a Stick Tax ... (which, of course, would be paid with mud and sticks ...)

Simple. Elegant. Brilliant!

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## febo

> Apparently he wants not only a Land Value Tax, but also a Capital Value Tax.  You have capital?  You're ripping febo off!  Built a factory?  You didn't build that.  Have some machinery in your garage?  You stole it from your neighbors.  Saved up $100,000 in a retirement account by hard work and careful budgeting for decades?  You parasite!
> 
> All those dirty people with capital.  Wrecking society.  If only we could get rid of them and their capital.  Then we could.....
> dig in the mud with sticks.
> 
> And wouldn't that be fun?!


I like the single tax - no taxes on labour or capital, all tax on the unearned increment of land, the commons. That shrinks the state, kills off the rentier sector and liberates workers and entrepeneurs, makes capital and workers the allies they really are.
Don't you be confusing the capitalist and the rentier, supported by his co-rentier and protector the state, they are completely different.

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## febo

> In a system of perpetual inflation  (The Federal Reserve System) capital gains is the only way to protect the fruits of ones labor. Get on board with ending the Fed, then we'll talk LVT.


LVT/the single tax comes first. The single tax is about the real economy, real work and innovation. The FED is part of the virtual world of credit and is therefore secondary (credit depends on work, work does not depend on credit). The FED's role, as part of the rentier-state is to protect the rentier sector (aka FIRE - finance.insurance.real-estate - sector). If we brought in the single tax it would kill off the rentier sector, so the FED would be effectively abolished.

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## helmuth_hubener

> Don't you be confusing the capitalist and the rentier, supported by his co-rentier and protector the state, they are completely different.


Are they really so different?  I don't think so.  If you want an LVT, why not have a CVT?

Objection #1:  The land is already there, while the factory, allegedly, isn't.

But it is. It's already there. It's already been built. The factory's existence is a fact of life. It's a done deal. The same efficiency argument applies to it as to the land: it's there anyway, so let's tax whoever owns it to force them into increased efficiency. Taxing the factory doesn't make the factory disappear, any more than taxing land makes it disappear. It just gets run more efficiently. In fact, remember, if the factory were to be abandoned, it eventually would become philosophically land. In Will Smith's "I Am Legend" New York, (leaving aside the property rights of the zombies) all the skyscrapers, the cars, the gasoline, the canned food... these are all "land" for him. They are all just provided to him by nature as far as from an ethical or economic point of view. So why wait for it to be abandoned? Tax it now!

Now taxing factory owners does provide a disincentive going forward to build *more* factories, but so does taxing the Universe provide a disincentive going forward to open up more parts and resources of the Universe to productive use. And while land and factories may be metaphysically unable to disappear, yet you tax them too much and even the existing land and factories will be abandoned, and crumble or go fallow. They will cease to exist in the economy. This goes back to what I keep saying: the amount of land in the economy can increase or decrease, and does all the time. It's not fixed at all!

Feel free to add more objections for me to knock into oblivion!

Objection#2: .......

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## febo

One taxes land so one does not have to tax capital and labour. A side effect of taxing land may be that it gets used more efficiently, but that's not the reason for taxing it.

One taxes land to reduce the state - the rentier state came into existence to tax labour and capital and to give the rentier and other cronies a free ride. No more free riders but no penalties for working and creating.

The rentier as rentier is non-productive. The rentier as rentier builds nothing, merely extracts wealth. All wealth is created through labour aided by capital. Thus, taxes should be removed from labour and capital.

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## helmuth_hubener

> One taxes land so one does not have to tax capital and labour.


 One taxes gas so one doesn't have to tax carbon and vehicle sales.  One taxes salt so one doesn't have to have a poll tax and an import tax.

Wait a second.....

None of these things are related to each other at all!  There's no logical connection.  The only connection?  They are all different, interesting methods of stealing.  We don't need to steal _at all!_  We don't need to tax at all!

Let's graduate from kindergarten as a species.  We don't need to steal.  There are big-boy ways to accomplish goals and solve problems that don't involve stealing.  

Let's be big boys.

Next!

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## febo

All tax is theft - stop hiding behind a meaningless catchphrase. If you want to get to a society where there is no tax you have to be asking - how do we get there? Or does asking that question take you out of your comfort zone?

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## helmuth_hubener

> All tax is theft


 Bingo!  You got it!  You agree, then?




> - stop hiding behind a meaningless catchphrase.


 Oh, I would never do that.  Please discuss whatever you want regarding this issue, and I will fearlessly discuss it back.  Since I have no idea in what sense you think I am "hiding," and since I certainly don't _feel_ like I'm hiding, I will just ignore your suggestion as it is based upon inaccurate info. 




> If you want to get to a society where there is no tax you have to be asking - how do we Or does asking that question take you out of your comfort zone?


 Yes, I do want to get to such a society.  Yes, I have and do spend significant amounts of time thinking about just that -- how to get there.  I do not know what you mean by comfort zone, but presumably it is meant to be insulting somehow, so I'll just ignore that comment as useless.

I have one highly relevant question for you:

Do _you_?  Do you want to get to a society where there is no tax?

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## febo

Tax can be voluntary. All tax is theft implies that tax can never be anything other than theft, which is nonsense and stops libertarians from thinking about tax completely (funny how no one who believes that tax is theft protests by stopping payment...). This denies the history of libertarianism, which is steeped in the notion of using tax reform to curtail the state, free the market and end the domination of the rentier.
On top of that, there's the trifling matter that you cannot be a libertarian if you are not also a single taxer of some kind. Self ownership and non aggression are impossible without land reform.

But there I've done it again - I've alienated when I want to persaude.... maybe i'm just a hypocrit troll who stumbled on Henry George and is using him to make myself look clever.

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## Occam's Banana

> Tax can be voluntary.


If it is voluntary, it is not a tax - it is a price.




> All tax is theft implies that tax can never be anything other than theft, which is nonsense and stops libertarians from thinking about tax completely (funny how no one who believes that tax is theft protests by stopping payment...).


Bull$#@!. Go tell it to Irwin Schiff, Edward and Elaine Brown, etc., etc. etc. - including RPF's very own phill4paul.

So I guess anyone who lets an armed robber take his wallet must therefore think that armed robbery is okay ...  




> On top of that, there's the trifling matter that you cannot be a libertarian if you are not also a single taxer of some kind.


What are you smoking and where can I get some?




> But there I've done it again - I've alienated when I want to persaude.... maybe i'm just a hypocrit troll who stumbled on Henry George and is using him to make myself look clever.


Yeah, that's pretty much the conclusion I've arrived at, too ...

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## helmuth_hubener

> Tax can be voluntary.


Here is the definition of theft, as I see it:

Theft: taking the property of other people without their permission.

I ask myself, when someone engages in taxation, do they take the property of other people without their permission?  Yes, I answer myself, yes they do.

Thus, it seems very, very obvious to me that taxation is a form of theft.

But since you are very sure that taxation can be voluntary, would you just explain to me, in as much detail as possible, exactly what such a voluntary would look like?  How would it operate, how would it be collected, etc.  Thanks.

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## Henry Rogue

> LVT/the single tax comes first. The single tax is about the real economy, real work and innovation. The FED is part of the virtual world of credit and is therefore secondary (credit depends on work, work does not depend on credit). The FED's role, as part of the rentier-state is to protect the rentier sector (aka FIRE - finance.insurance.real-estate - sector). If we brought in the single tax it would kill off the rentier sector, so the FED would be effectively abolished.


Since the Fed's currency is both fiat and debt created and its partner in crime is the state, I am in effect paying rent for every dollar that i earn and again for every dollar i save. To say LVT will end this arrangement is a non sequitur.  What's more, the state is nothing but rentiers in all its endeavors and LVT is merely trading private rentiers for public rentiers. I have but one axiom and one overriding desire. The axiom: The state solution is always the worst solution. My overriding desire, the desire that trumps all others is Freedom. Freedom even trumps the desire for equality, for i know, no form equality can happen absent  Freedom.

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## febo

> Since the Fed's currency is both fiat and debt created and its partner in crime is the state, I am in effect paying rent for every dollar that i earn and again for every dollar i save. To say LVT will end this arrangement is a non sequitur.  What's more, the state is nothing but rentiers in all its endeavors and LVT is merely trading private rentiers for public rentiers. I have but one axiom and one overriding desire. The axiom: The state solution is always the worst solution. My overriding desire, the desire that trumps all others is Freedom. Freedom even trumps the desire for equality, for i know, no form equality can happen absent  Freedom.


OK - land reformers agree with monetry reform, so what is the next step? I say the single tax is the most doable reform and I have evidence - we came very near to a revulution exactly a century ago when Henry George's ideas were running rampant.

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## febo

> What are you smoking and where can I get some?


It's true, private monopoly of land is antithetical to self ownership, free association and non-agression. You cannot be a libertarian if you accept private monopoly of land.

The early libertarians all knew this.
Then the rentier state sent a generation of Liberals, libertarians, Progressives, socialists of all kinds - all different but united against the rentier - to war and buried them and the evidence in the land they wanted an equal share in.

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## helmuth_hubener

> It's true, private monopoly of land is antithetical to self ownership, free association and non-agression. You cannot be a libertarian if you accept private monopoly of land.


Can one be a libertarian and accept private monopoly of chain saws?

Also, still would love an illustration and explanation of a voluntary tax.  I can't imagine such a thing.  You can!  Help me out, here.

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## Occam's Banana

> Originally Posted by Occam's Banana
> 
> 
> 
> 
> 
> 
> 
>  Originally Posted by febo
> ...


So you're not gonna tell me. I haz teh disappoint ...

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## febo

Get the book - Libertarian Party at Sea on Land, by Harold Kyriazi. It's $5 at schalkenbach .org

If someone started to extract the oxygen from the air to sell back to us would that be justified? No and the same applies to land.

Read this
http://geolib.com/essays/sullivan.dan/royallib.html


> So you're not gonna tell me. I haz teh disappoint ...


Watch this:

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## helmuth_hubener

> It's true, private monopoly of land is antithetical to self ownership, free association and non-agression. You cannot be a libertarian if you accept private monopoly of land.


Can one be a libertarian and accept private monopoly of chain saws?

Also, still would love an illustration and explanation of a voluntary tax.  I can't imagine such a thing.  You can!  Help me out, here.

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## febo

> Can one be a libertarian and accept private monopoly of chain saws?
> 
> Also, still would love an illustration and explanation of a voluntary tax.  I can't imagine such a thing.  You can!  Help me out, here.


A monopoly of chainsaws would be caused by 1 manufacturer producing a markedly superior product - in a free market. But nothing would be preventing competition.
Land, however, is in fixed supply - thus if someone owned all of the land - freedom would be impossible.

A voluntary tax is probably not a tax by your definition - we don't need to get into semantics do we? All I'm saying is that payment for public goods can be voluntary.

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## helmuth_hubener

> if someone owned all of the land - freedom would be impossible.


 This is probably true, actually.  Though not necessarily for the reason you think.

Having a monopoly state which taxes land makes them the ultimate owner of all the land that falls within their monopoly.  Were there to be a one-world state covering all of humanity's domains, this would indeed be a disaster for freedom and for the human race -- right up there with large-scale thermonuclear war.

I prefer to make society evolve in the opposite direction.




> A voluntary tax is probably not a tax by your definition - we don't need to get into semantics do we? All I'm saying is that payment for public goods can be voluntary.


Well you seemed to think it was very important at the time.  A critical point you needed to make.  A crucial and monumental difference of opinion you thought you had with me.  Instead, it sounds like we agree.  "Public goods" (whatever they are!), and indeed any good, _can_ be provided and paid for in a non-monopolistic and non-aggressive, voluntary way.

And that's how all goods _should_ be handled.  Any problem we need to solve, any service we long to benefit from, no matter what it is, we do not need to resort to theft and violence to do so.  There's just no need.  That's not the way big boys solve their problems.  Agreed?

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## febo

> Having a monopoly state which taxes land


Land taxes can be local, you don't need an overarching state.

Ref the rest of what you say - I think you and Fred Foldvary could agree on some stuff:

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## helmuth_hubener

> Land taxes can be local, you don't need an overarching state.


 And the smaller the locality, the closer your thing starts resembling private property an-cap an awful lot.

What's the difference between a 200-acre "state" and a two-hundred-acre privately owned plot under an-cap?




> Ref the rest of what you say - I think you and Fred Foldvary could agree on some stuff


 Maybe, febo, but I don't have the half-hour of time or energy to agree with him.  Especially since you can't even be on-the-level with me and answer fair, honest questions.

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## febo

> And the smaller the locality, the closer your thing starts resembling private property an-cap an awful lot.
> 
> What's the difference between a 200-acre "state" and a two-hundred-acre privately owned plot under an-cap?
> 
>  Maybe, febo, but I don't have the half-hour of time or energy to agree with him.  Especially since you can't even be on-the-level with me and answer fair, honest questions.


What questions have I missed?
Watch the Foldvary video - you will learn a lot - I hear something new every time I listen to it.
I don't care what you call it - call in an-Cap if you want, but find me an An-Capist who explicitly advocates the equal distribution of land rents - Lew Rockwell explicitly rejects the idea.

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## Occam's Banana

> What questions have I missed?


..



> What are you smoking and where can I get some?

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## The Gold Standard

> Inequality today derives from capital gains - specifically, the unearned increment (aka ripping off the productive members of the economy) - not income.


This is correct. But you do know where that comes from, right? Where has the Fed been pumping trillions of dollars over the last however many years? Real estate, stocks, and bonds. The market wanted to correct the imbalance, but they wouldn't let it. Let consumer prices fall, stocks, bonds, and real estate fall to market levels and see whose life is more improved.

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## ThePaleoLibertarian

This thread has gone in a different direction, but I do think income inequality is a bigger problem than a lot of liberty-minded people would like to admit. The vast concentrations of wealth we see in the modern US is largely protected by state interests, whether through direct subsidy or protection from competition. I think a real free market would have a much more flat distribution of income, as profit eliminates itself as the Austrians have pointed out.

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## Zippyjuan

The money which used to be used to go to workers in those "good paying jobs" we have been losing now goes in greater amounts to those who own the companies rather than the workers.  But some have argued that huge profits are great and that companies should pay as low of wages as the market will allow.

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## The Gold Standard

I wonder what the income disparity between executives and employees looks like in government subsidized companies vs. completely private companies.

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## Zippyjuan

Like WalMart which has four of the ten richest people in the country as its main owners while paying among the lowest wages?

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## The Gold Standard

> Like WalMart which has four of the ten richest people in the country as its main owners while paying among the lowest wages?


Good, you are making a list? You've got a lot more to get to. I'll leave you to it.

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## Acala

Inequality of wealth is inevitable.  If I could wave a magic wand and establish an absolutely equal distribution of all the valuable goods on the planet amongst all the people, by sunrise tomorrow significant inequality would exist due to people trading.  And within a few years that inequality would be vast.  It could only be prevented by essentially outlawing all trade of goods or services.  Then we would all starve to death.

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## Acala

> This thread has gone in a different direction, but I do think income inequality is a bigger problem than a lot of liberty-minded people would like to admit. The vast concentrations of wealth we see in the modern US is largely protected by state interests, whether through direct subsidy or protection from competition. I think a real free market would have a much more flat distribution of income, as profit eliminates itself as the Austrians have pointed out.


Agreed.  When people say "income inequality" our response should always be "crony-capitalism".

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## ThePaleoLibertarian

> Agreed.  When people say "income inequality" our response should always be "crony-capitalism".


To a point, but inequality in itself is an inevitable and indeed desirable condition in a free society. It's all well and good to point out how Apple and Microsoft insulated themselves from competition through IP laws, but we shouldn't go so far that we concede to the progressive that inequality is an evil to end in itself. I am very suspicious of bleeding heart and "left-libertarians" who basically think that free market means are the way to reach socialist ends. When confronted with the fact that isn't the case, I think they will be our allies no longer.

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## HVACTech

> To a point, but inequality in itself is an inevitable and indeed desirable condition in a free society. It's all well and good to point out how Apple and Microsoft insulated themselves from competition through IP laws, but we shouldn't go so far that we concede to the progressive that inequality is an evil to end in itself. I am very suspicious of bleeding heart and "left-libertarians" who basically think that free market means are the way to reach socialist ends. When confronted with the fact that isn't the case, I think they will be our allies no longer.





> who basically think that free market means are the way to reach socialist ends. When confronted with the fact that isn't the case, I think they will be our allies no longer.



yeah, 



> (please tear my statement apart, it is purely intended as a Devils Advocate response and I do not actually believe what is stated)


that is what I was thinking..

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## ThePaleoLibertarian

> yeah, 
> 
> that is what I was thinking..


What a facile non-post.

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## Acala

> To a point, but inequality in itself is an inevitable and indeed desirable condition in a free society. It's all well and good to point out how Apple and Microsoft insulated themselves from competition through IP laws, but we shouldn't go so far that we concede to the progressive that inequality is an evil to end in itself. I am very suspicious of bleeding heart and "left-libertarians" who basically think that free market means are the way to reach socialist ends. When confronted with the fact that isn't the case, I think they will be our allies no longer.


At the moment I am much more concerned with bringing factions together where we can agree on major issues than I am about "schooling" anyone on the fine points of their economic ignorance.  It is a more effective way to move forward.  As another example, I don't argue with global warming alarmists about the science.  Instead I say "You know who is the largest single consumer of fossil fuel?  The US Department of Defense!  Let's close all our foreign bases, bring all of our troops home, mothball most of the Navy, and stop trying to police the world.  That will make a huge impact on carbon emissions AND do lots of other wonderful things!"  Yay!  We agree! Win-win.

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## DamianTV

I think the real problem isnt the Redistribution.  The real problem comes from the fact that those at the top literally have the power to "Print Money", which somehow doesnt count as "Income".

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## paleocon1

Extreme rent seeking among the 1% is not addressed.

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## kcchiefs6465

> To a point, but inequality in itself is an inevitable and indeed desirable condition in a free society. It's all well and good to point out how Apple and Microsoft insulated themselves from competition through IP laws, but we shouldn't go so far that we concede to the progressive that inequality is an evil to end in itself. I am very suspicious of bleeding heart and "left-libertarians" who basically think that free market means are the way to reach socialist ends. When confronted with the fact that isn't the case, I think they will be our allies no longer.


What do you mean by, "socialist ends"?

Simply 'utopian' need from want?

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## ThePaleoLibertarian

> What do you mean by, "socialist ends"?
> 
> Simply 'utopian' need from want?


I posed the following question to self-described "left-libertarians": I asked them what they would do if it was proven to them that a truly free market society would lead to a wealth-based aristocracy, consisting mostly of white people. All of them said - though they didn't think such a thing would occur - that they would have to reconsider their free market advocacy. One even said it might be enough to "turn him pink". As such it can be inferred that their advocacy of free markets is because they think they lead to socialist ends; egalitarianism, parity among the races and the sexes, non hierarchical organization etc. Though I do think certain things will become "flatter", I also think human organization has an inherent hierarchy and natural aristocracy. If I'm right and this truth is revealed through market competition, these libertarian-leftists will be our allies no longer.

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