It isn’t your money

Greg Newburn brought to my attention this old piece from Will Wilkinson. In it Wilkinson argues against the Murphy-Nagel (and before them Hale, Proudhon, pieces of Hobbes, Rousseau, etc.) view that it is incoherent for someone to say some bit of money that is taxed is their money being taken.

Before making his point, Wilkinson quotes Murphy-Nagel in a helpful manner:

The question How much of “our money” may the government take in taxes? is logically incoherent, because the legal system, including the tax system, determines what “our money” is. The real moral issue is how the legal system that governs property rights should be designed, and with what goals. What kinds of markets will best promote investment and productivity? What goods, at what level, should be provided by collective public decision and which goods by private individual choice? Should all citizens be guaranteed a minimum level of economic protection? To what extent should equal opportunity be publicly supported? Are large social and economic inequalities morally objectionable, and if they are, what may legitimately be done to discourage them?

Then Wilkinson responds with a paragraph below it:

All these questions are excellent questions. But it’s just willful silliness to argue that questions about how much of “our money” the government can take is logically incoherent. I mean, really? If there are institutions that determine how much money you get, it’s not really your money you got? This somehow reminds me of the argument philosopher David Stove called “the Gem,” and crowned with thorns as the worst argument in the history of philosophy: If the mind has a nature, then we cannot know reality as it is. Compare: If you can make money at all, then it can’t really be yours.

The part I have bolded is confused, but very helpfully so. Wilkinson reads Murphy-Nagel as saying that “if there are institutions that determine how much money you got, it’s not really your money you got.” But it’s actually the exact opposite. Murphy-Nagel says that because institutions determine how much money you get, only the money you actually get under those institutions is “yours.”

What appears to be happening in Wilkinson’s mind when he approaches this argument is a bifurcation of our institutions. In one bucket, he has placed so-called market institutions (property, contract, corporations, securities, agency, partnerships, labor and employment law, etc.). Then, operating from the mental space that is only considering those institutions, he says “just because these are made up institutions, it doesn’t mean that the distribution that results from them isn’t yours; once we’ve made them up and implemented them, surely it is yours.”

In the other bucket, he has placed what we might call “public fiscal institutions” (taxes, transfers, social insurance, public infrastructure, etc.). He then imagines those institutions as invading the distribution that results from the first bucket. He imagines that Murphy-Nagel’s point is that this isn’t really an invasion that takes “your money” because the first bucket of institutions are all made up.

But Murphy-Nagel’s broader point is actually that, to be coherent, we must cram these two buckets together. It makes no sense to call “yours” whatever comes to you from the first bucket of institutions. If anything is “yours,” surely it is whatever comes to you from all of the institutions in concert.

Murphy-Nagel is saying is that what is “yours” is what you are entitled to under our institutions. What Wilkinson is implicitly saying (though he does not seem to be totally aware of this) is that what is “yours” is whatever you would receive in some hypothetical world where only the first bucket of institutions existed. Why the hypothetical distribution that would hypothetically result from a subset of our actual institutions is “yours” instead of the distribution that actually results from all of our actual institutions is not clear.

Example
The above is all a bit abstract. So an example might be clarifying.

In our existing set of economic institutions, many people become employees of employers and receive a paycheck for doing so. Also in our existing set of economic institutions, there are payroll taxes. For simplification, suppose that’s all there is. Now further suppose that you are a person in this world whose cited paycheck is $100, but after the 10% payroll taxes, it is only $90 dollars. Now ask yourself: what is “your money?” Is it $90 or is it $100?

If we take the view that “your money” is determined by our institutions, then it is clear that “your money” is $90. That is the amount of money that you are legally entitled to under our set of well-established institutions.

Wilkinson, it seems, wants to say “your money” is actually the $100. But why?

It can’t be because that is what our institutions have established to be the case. They haven’t. It can’t even be because you initially got $100 and then $10 was taken away from you. The $10 remitted in payroll taxes never even went to you. In addition to you never having an entitlement to the $10 under our institutions, you never even touched it. The employer sent it straight to the state!

So what then can make it “your money?” As I said above, what appears to make it “your money” is that it is what you would be entitled to under some other set of hypothetical institutions (bucket one from above) that aren’t our institutions, or, at best, are merely a subset of our institutions. Thus, someone who says that $100 is “your money” is someone who is saying that “your money” is not determined by our institutions. They are saying that “your money” is defined by some set of potential institutions that do not exist and never have.

One Last Point
In my treatment above, I go ahead and grant that it would be possible to have a hypothetical set of institutions that only consist of bucket one, and that the hypothetical distribution that would result from this set of institutions would be what people like Wilkinson generally categorize as “your money.” But that’s not actually true. All of the institutions contained in bucket one run on taxes. The courts, agencies, and police that constantly operate the levers of property and contract institutions (among all the others) don’t run without funding. This is why, for coherence purposes, you must cram bucket one and bucket two together as being just one total set of institutions. There is no bucket one by itself. There can’t be.