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@ Michael Snoyman
2025-02-07 05:25:58
How much does the government cost? Focusing just on the US, we could talk in terms of US dollars spent on the budget each year. But those numbers are so large we can’t really conceptualize them. A more relatable way of talking about this is what percentage of your income goes to the government. Or, even better, what percentage of your productive output is funneled to the government?
A first pass answer would be to look at income tax. If income tax is 30%, you work 30% of the year for the government and 70% for yourself. The problem is that income tax isn’t the only tax. There’s property tax, sales tax, payroll tax (i.e. another income tax), and who knows how many others. In other words, income tax only covers one (large) portion of our taxed income.
But it doesn’t stop there. We can’t forget inflation, the hidden, silent tax that not only erodes your earnings, but destroys your savings. It pulls off the amazing feat of not only taxing you today, but *historically* taxing you. It punishes you for being a prudent person and saving your money. (Which, side note, is why we love saving in Bitcoin.)
You might think we’re done. We’ve covered all the ways the government funds itself: direct taxation and inflation (via money printing). And that part is true. But we haven’t finished looking at the cost. You see, economically speaking, every time you put a tax into a system, you create inefficiencies. The market can no longer perform as well as it did previously. So we have yet another hidden cost: all productive capability in the economy gets worse, because the government needs to push its way in. An easy way to see this is all the tax games companies play to fall into different deductions and exemptions.
It doesn’t stop there either. Now that we’re talking about government-caused inefficiency, we can of course get to regulation. Regulation directly makes things more expensive (by forcing companies to spend time on compliance). It also indirectly makes things more expensive by presenting a barrier to entry for new providers, reducing competition and further hurting consumers.
Surely that’s the end, right? Nope. The government is sucking capital out of the private sector to put into public sector projects. That means the private sector has less capital for investment. People are incentivized not to save due to inflation, which encourages high-time-preference consumerism. This means we get less investment by companies for the future, which defeats the natural tendency of industry to become more efficient over time and pass on the savings to the consumer (via technology-driven deflation, for instance).
I knew all of that two weeks ago, and it hasn’t changed.
There’s one final piece to this puzzle. Many of us suspected it. With the news coming out about USAID and the programs it laundered money to, we’re starting to get even more concrete proof. The government steals our money, inflates it, takes all of that productive capacity we sweated and toiled for… and gives it to people who are actively trying to hurt us, yet again furthering the cost of government.
The cost of government isn’t one number. It’s not quantifiable. The cost of government is losing out on the world where everything becomes better, safer, cheaper, faster, healthier, and more enjoyable, and replacing it with a decaying, eroding society, where the most morally bankrupt people can fleece the rest of us for their livelihoods.
I’m praying that the exposure and toppling of USAID is a major accomplishment, but just one of many more to come. To quote The Two Towers, I hope it “will be like the falling of small stones that starts an avalanche.”