Voluntary Government Funding
I am happy to report that I have completed four chapters for my next sci-fi story called, “The Makers’ Stone.” It takes place on a Terran colony not too far from Earth and is aptly named, “Terran Secundus.” Part of my process in writing sci-fi stories is to devise interesting social paradigms made possible with technology. I wondered…could technology make it easier to implement the minimalist, limited, and voluntary type of governance that some Austrian and Mises economists espouse? In the process of answering this question, I wrestled with the mechanics of money and how a voluntary government could collect revenue…voluntarily. This is what I came up with and some of the rationale behind it. It actually surprised me and I realized, “Hey, we have the technology to do this today.”
A cornerstone of a prospering society is the ability to securely and efficiently exchange money for goods and services, so I decided that would be the key service for this “futuristic” and voluntary government. In the case of Terran Secundus, electronic currency is backed 100% by precious commodities that can be exchanged at the government’s Treasury. But is that the only service a minimalistic, voluntary government should provide? I considered adding other services, such as a military to protect the vaults of precious commodities, provide secure electronic monetary transactions, and defend its members from external aggression. How about arbitration services to resolve claims of civil aggression, property damage, or contractual issues? Do we need prisons in the future? I could go on, but I had to remind myself of the goal—a minimalist government, with the expectation that advanced technologies and services developed by free market competition would provide all other services. So I devised a “bare-bones” list of services for the voluntary government of Terran Secundus:
- General Government (Treasury, Courts, Legislative, and Executive)
- Prisons for sociopathic criminals
The next issue I decided to tackle—how to voluntarily pay for these services? I personally dislike the word TAX. So I thought, how about a fee for electronic monetary transactions? How much needs to be charged to fund the “bare-bones” services? So I used data from the Federal Reserve (www.frbatlanta.com), the US government (usgovernmentspending.com), and the US Census (census.gov) to explore further. This is what I found.
In 2015, US federal, state, and local governments spent over 1 Trillion USD to provide the services identified above.
- Defense: 798.7 Billion USD
- General Government (Executive, Legislative & Courts): 168.4 Billion USD
- Prisons: 85.4 Billion USD
- Public Order (no police or fire): 11.5 Billion USD
- Total: 1.064 Trillion USD
Considering the huge amount of domestic and worldwide policing by the federal government, the high number of people incarcerated for victimless crimes (about 86% of the federal prison population), and the bloated nature of the executive and legislative branches—I figured an annual budget of at least 25% less than the above total should be ample. Let’s say 750 Billion USD.
Next step. What level of an electronic monetary transaction fee is needed to fund this type of government? According to the latest Federal Reserve Payments Study done in 2012, the total number of non-cash payments was $79 Trillion USD. It’s probably higher for 2013-2015, but the Federal Reserve hasn’t released an updated study, which they do every three years.
Let’s try 1%? That would provide 790 Billion USD in revenue. That works and provides a 40 Billion USD budget surplus (good to have in case of defense emergencies like alien invasions…this is a sci-fi story after-all) and no tax forms to fill out ever! And while we are at it, let’s lower that even more. Let’s say that the sender and receiver (or buyer and seller) split the fee. Now we are down to 0.5% per person for each transaction.
Another benefit of a transaction fee is that it’s completely voluntary. If you don’t want to pay this “convenience” fee, use another form of money: coins/cash, bartering, or other free market currencies like bit coin. What a great incentive for this type of government to provide the most safe, effective, and convenient form of money.
Last step. Let’s compare the Terran Secundus system to what the US has today. Well…actually I have to use 2014 numbers as that is the latest dataset the US census has published for average income per person.According to the US government web site, the average revenue collected by all levels of governments in 2014, per person was $19,073. Now here comes the crazy part.
According to the US census, in 2014 the average income per person was $28,555. That’s a difference of $9,482 (that’s what you have left to live on) and an average tax rate of 66.79%. How is that possible? The magic of deficit spending and progressive income tax.
If you have been following so far, I think you have guessed that the average member of the minimal, voluntary government is paying considerably less than the average US citizen, provided they have the same average income. How much? If they never saved, spent all their income electronically (worst case scenario), the average payment a member of the Terran Secundus minimalist government would be $142.76 per year ($28,555 x 0.5%).
Sure, they will be getting less services from their government. For example there is no government welfare, regulation, social security, police, or fire. But maybe you could afford to buy that from private companies (especially if there is competition to keep prices low). I plan on exploring that in the background of The Makers’ Stone, while in the foreground present the exciting adventures of the Neman family introduced in my short story, Escape from the Emerald A.I., available in most stores as an e-book.
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