The Price of Civilization?

By: October 24, 2011

Many years ago, Columbia economist Jeff Sachs did me a personal favor. We had both just graduated from Harvard, and I was moving from a dorm room in one of the residential houses down by the Charles River to a very sparse apartment in Somerville. The floors in the apartment were covered by some form of linoleum and badly in need of a rug. Another friend offered to give me a rug if I would take it out of his apartment. It was about 8 feet by 10 feet long, and one person alone couldn’t handle the job. The catch was, I had to get it that night.

I couldn’t find anyone to help me, and as I wandered through Harvard Yard that evening, I bumped into Jeff, who even at that young age had quite a reputation as an economics genius. I knew Jeff, but not well, and after chatting a moment, he told me I looked like I was in a hurry. I explained the situation, and he offered to help.  I was quite surprised by his generous offer.

So we headed up to one apartment, picked up the rug, and the two of us walked about a mile with it, carrying it over our shoulders as if we were a couple of stevedores–which we obviously weren’t–to my new apartment.

I doubt that Professor Sachs even remembers the incident, but I mention it here to demonstrate that he’s a genuinely nice, altruistic person.

Which brings us to a few brief observations about his new book, The Price of Civilization. The title comes from the quote from Supreme Court Justice Oliver Wendell Holmes, Jr., who famously said “taxes are the price we pay for civilization.” Professor Sachs wholeheartedly agrees, and argues that our problem is that we just aren’t paying enough in taxes these days. The wealthy, in particular, aren’t paying “their fair share” of taxes. It’s a familiar, predictable, and uninspiring argument.

I note that Professor Sachs pays homage to Keynesian economic objectives such as “efficiency” and “fairness,” but gives short shrift to the Constitution. Indeed, he makes only one mention of it in his entire book. He criticizes the Founders for being so short sighted as to hold elections for the House of Representatives every two years. In 1789, biennial elections for legislative bodies was considered a worthy reform. In 2011, it’s apparently hopelessly outdated. (Professor Sachs is welcome to launch an amendment campaign to change this, if he wishes.)

Here’s a key point Professor Sachs missed in his book. Holmes issued his famous quote back in 1904, during the 142 year period between 1789 and 1931 when peace time federal spending as a percentage of GDP never exceeded 4 percent. I note today that under policies Professor Sachs supports, federal spending as a percentage of GDP–at 24 percent– is now six times greater than it was during Justice Holmes’ prime.

When Justice Holmes delivered that famous quote, I’m pretty sure he didn’t have the current level of taxation in mind as the “price” of civilization. At 24 percent of GDP, we’re dramatically overpaying for civilization.

Professor Sachs makes the same mistake many well intentioned altruists make when it comes to public policy. They substitute their own ideas of “equity” and “fairness” for Constitutionally valid solutions. The implication is that their altruism–because it’s good and noble–trumps our notions of Constitutionality.

As an economist, Professor Sachs understands the difference between the concepts of “price” and “cost.” 4 percent of the GDP may be the “price” of civilization, but 24 percent of the GDP sounds more like the “cost” of tyranny.

Michael Patrick Leahy is the editor of the Voices of the Tea Party e-book series and co-founder of Top Conservatives on Twitter and the Nationwide Tea Party Coalition. His new  e-book, I, Light Bulb: A Death Row Testimonial, was published in July. His new book, Covenant of Liberty: The Ideological Origins of the Tea Party Movement, will be published by Broadside Books in spring, 2012. He can be reached on Twitter at @michaelpleahy .

26 Responses to The Price of Civilization?

  1. Boyd says:

    “24 percent of the GDP sounds more like the “cost” of tyranny.”

    And trying to get some sense on this seems impossible. Leftist and Libertarian calls for cuts have been with us for decades. Unfortunately these are joined by the crowd that rolls in the latest Washington Monument ruse that any cuts can only come at the cost of ripping prosthetic limbs off of war heroes.

    Anyone who has lived near a military base has heard the stories of incredible waste that goes on. There is lots of room for cuts if we can get past the plunder that so many want a part of. But that’s just not going to happen.

    • richard40 says:

      “Leftist and Libertarian calls for cuts ” ???
      Is that a typo? Libertarians calling for cuts yes, but leftists? I have never heard of a leftist calling for cuts in anything, except possibly the defense budget. Did you mean to say Conservative and Libertarian calls? Even conservatives are not reliable on controlling the size of gov, as the Bush years proved. Libertarians are the only ones that have consistently called for cuts in all areas of gov.

      Your line aobut the Washington monument being cut first is on target though. Ever notice that in CA, anytime the leftists are denied a tax hike, they will gut police and fire, while letting thousands of completely useless misc agencies continue to exist. The same thing happens on the fed level. If we can waste money on solyndra, and $16 muffins, dont tell me there isn’t room to cut anything.

    • richard40 says:

      Even for necessary items like civilization, there comes a point when the price increases beyond the point where the value is worth the price, and we need to shop around for new providers. Right now we are paying Fillet Mignon prices for hamburger, and all too often the hamburger is tainted to the point where not eating it would be better. I am definitely willing to pay 10% of gdp for civilization, but definitely not more than 20%, points in between are negociable, depending on how much extra civilization I get for the money. Right now we are up to an unprecedented 24%, completely unacceptable.

      On more taxes, if they ever get spending, for a current FY, back down to a reasonable level, below 20% of gdp, and we still have a deficit, then and only then will I consider a “balanced” approach to mix tax hikes with spending cuts. Doing it now will just ensure the taxes are all spent, and the promissed spending cuts never arrive.

  2. Richard says:

    You know, I am actually more offended by the lack of civilization. My street is covered in litter, there are potholes in front of my house. the neighbors are smoking drugs openly, and when I get broken into, half the time, the police don’t even bother coming down. I do however, get summons in the mail for not shoveling my walk in the winter….even when I have….

    It also seems to me, the more we pay off the various “agents of civilization”, the teachers, police officers and government wonks, the less we get, in total. Not just paying more and more, for less gains, but less at all. and it is reaching the point that I think the anarchy might not be any worse….

    Rick

    • SuzyQ says:

      Richard, you think your streets look bad now, see what happens when your proposed cuts of teachers and police become reality. Without schools, and the teachers who are virtually raising today’s kids, what would groups of bored, unsupervised adolescents do with their days? Without the police, what protection would you have against the proliferation of gangs that would result?

  3. Eduardo says:

    Maybe we are becoming more and more civilized ?

  4. TomatoPundit says:

    Maybe there’s a “civilization bubble”, but I sure hope not…

  5. RC says:

    “24 percent of GDP”

    Sounds like price gouging to me.

  6. Bob says:

    I don’t mind paying the price, I just wish we were getting a little civilization for it.

  7. tim maguire says:

    I fail to see how an example of his being nice to a friend in a face to face encounter means he’s a “genuinely nice, altruistic person.” What is clear is that he didn’t take a logic class at Harvard. Taxes may well be the price of civilization, but that statement is irrelevant to any discussion on the appropriate level of taxes. It tells you nothing, it is, as any lawyer could tell you, “non-responsive.”

  8. TallDave says:

    Your estimate is only for federal government. The total for all gov’t — fed, state, and local — is closer to 40%.

    http://www.usgovernmentspending.com/downchart_gs.php?year=1903_2010&view=1&expand=&units=p&fy=fy11&chart=F0-total&bar=0&stack=1&size=l&title=US Government Spending As Percent Of GDP&state=US&color=c&local=s

  9. Shamus says:

    Fairness is an issue, but so is financial collapse.

    In order to avoid financial collapse it will be necessary to raise taxes on everyone. Greenspan says we need to let the Bush tax cuts expire next year, and I think he’s right. It will depress the economy, but not nearly as much as sovereign bankruptcy.

    My feeling is that the resort to fairness is really an appeal to magical thinking, as raising taxes on the rich is simply not meaningful. By all means, raise taxes on the rich, but also raise taxes on everyone else and cut spending. The United States will be bankrupt by the end of the decade unless our elected representatives begin to act responsibly.

    • Forbes says:

      I’m not certain why the fear of so-called financial collapse, and need for the measures to avoid it. We’re already there. With a zero interest rate, the dollar is basically worthless. The unrecognized liabilities associated with Medicare, Social Security, etc., are around $100 trillion. The never-ending belief that the government is the source of all wisdom, and the answers to our problems, rather than the cause, mystifies me. This administration and the Federal Reserve continue worthless efforts to prop up prices, be it housing or the value of fixed income and equity securities or bank balance sheets… These efforts only serve to cause further distortions in the allocation of capital and savings and labor.

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  11. bingobill says:

    Civilization is not measured in dollars and cents but in the depth of human achievement and the ability of average people to live their lives unencumbered by third parties. That being said, the government of the United States is the most oppresive obstacle facing the American people. How is it that felony charges are filed against individuals for actions affecting birds, bugs and fish when this same government finds abortion, the deliberate killing of unborn children to be a civil right?

  12. TheAbstractor says:

    Joseph Tainter, call you office.

  13. Panamared says:

    I fail to see how the increased size of government over the last century has improved the civilization of the USA. Most of the increase in the size of government is extra-constitutional and therefor illegal. Until we either elect a true conservative super majority, or we have a solid conservative majority in the Supreme Court, the true reduction of government is a great idea with little chance of implementation.

    The real tax problem is that income-tax is immoral and should still be illegal.

  14. John Stephens says:

    I want my money back.

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  18. OneDay says:

    All systems that produce or concentrate wealth grow parasites. We’re smart enough to see that it is happening; are we smart enough to develop methods to reject or at least limit the growth of the parasites? The Byzantine empire did fairly successfully, although it too gradually decayed to the point where it was uncompetitive.

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  20. FedUp says:

    The problem is that we are paying not only for civilization, but uncivil behavior. Subsidizing children having children, providing housing for unmotivated drug abusers, and fueling a vicitim mentality helps no one. In fact, it may very well be the undoing of civilization as we know it.

  21. Ezrha Jean Black says:

    Your “broadside” or blog-post is hardly a critique of Professor Sachs’ book, but simply an occasion for rhetorical posturing at its most facile and fatuous. It’s no coincidence that your view of the U.S. Constitution parallels your view of civilization. You are entitled to your viewpoint, of course; but don’t expect most civilized American – your fellow Tea Partiers included – to necessarily go along with it. The Constitution is a vital and living legal architecture, no less than civilization is itself a living organism – composed of its history, its societies, their institutions, their cultures, and arts, sciences and technologies. It necessarily grows more complex as it advances. Similarly, the ‘strictest’ or most ‘original’ of the ‘strict constructionists’ amongst the Supreme Court justices and federal judiciary or constitutional scholars are not about to dismiss the 200 years of jurisprudence that are the best proof of the Constitution’s relevance and vitality.

    If, as Justice Holmes wisely pointed out in 1904, “taxes are the price we pay for civilization,” I would argue that higher taxes – well-justified simply on the basis of the greater size, scope and complexity of American society and the world as a whole – are the price we pay for a more advanced and more democratized civilization. Yes – more democratized. Got a problem with that? J.P. Morgan had no problem advancing civilization on a magnificent, but private, scale with a splendid house, library, and art collection – which he chose ultimately to share with New York and the world. Andrew Carnegie was in many ways a brutal capitalist, but his ‘gospel of wealth’ was to a large extent about extending civilization to the citizenry at large — through his libraries, his foundation, and that other jewel in New York’s cultural crown, Carnegie Hall. (It will be interesting to see if the barons of what has become America’s second Gilded Age are comparably munificent in their public legacies.)

    No one would discount those magnificent gifts to society and civilization. But in a very real sense, they amounted to an arbitrary self-taxation, in that, privileged by the leverage of their wealth, and sheltered to one degree or another by tax codes (or no taxes at all), they were able to choose with some exactitude how their ‘self-taxed’ wealth would be spent. In substantial part, they chose wisely. But “middle-“ (if we can call it that – as the middle class continues to shrink to Third World proportions) and lower-income individuals do not have that luxury. Of that 24 percent of GDP consumed by taxation, I doubt whether most Americans would support the 5 or 6 percent which goes to Defense spending, to say nothing of the trillions spent on military misadventures in Iraq and elsewhere and CIA malice and mischief spread far and wide. But they have no choice how those dollars are apportioned. The vast majority of them do, however, favor good public education, viable infrastructure and handsome civic and public space, decent basic medical care available to all citizens and especially its most vulnerable, and Social Security at a minimum – especially as private guaranteed pensions all but disappear from the private sector.

    This has nothing to do with “trumping Constitutionality” (a meaningless phrase) or “tyranny” (also meaningless in this context – especially given the choices of an overwhelming majority of the electorate), but the fundamental philosophical and ethical principles upon which the Constitution is based: the social contract – specifically as enunciated in the Preamble, to “insure domestic tranquility, … promote the general welfare, … and secure the blessings of Liberty to ourselves and our Posterity….” I wouldn’t call that tyranny.

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