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by Neville Kennard,veteran preaching and practising capitalist

“The Tragedy of the Commons” is an expression well-known in economic circles. It was expressed first in 1968 by Hardin in Science Magazine referring to land that is not “owned” but is able to be used by many.

The “commons” can apply to land, to waterways (polluting and overuse), oceans (fishing), air (pollution).

Can it also apply to the “Tax Pool”, that pool of funds collected from the taxpayers and available for distribution to those with a claim to some of it?

There is no limit to those who would make claims on a bit of this Tax Pool Commons. There are politicians who seek to get (re)elected by dispensing favours and privileges. There are policy-making bureaucrats who seek to expand their power and influence by “programs”.

There are industry groups, trade unions, special-interest groups who seek some benefit by getting “grants” and handouts, or who promise electoral support if they get a benefit.

Imagine if a corporation were to have some of its capital “un-owned” — if some of its assets or funds, or shares were a “commons” available for anyone or any group to claim and use. Imagine the change in attitude to this “commons” part of the company’s assets in a time-preference sense. Where a company invests for years ahead, for decades often, decisions for use of company assets are made with a long horizon, a long-term time-preference. Compare this with governmental use of funds. Government departments have a short-term time-preference — use it this year or it will not be there (in our budget) next year. Saving and economising is not in the mind-set of a government department. And Parliaments have an electoral-cycle mind-set — spend it soon so we get elected next time. Or save it on this program and then we can spend it on that one with a better vote-catch.

No-one owns the un-owned pool of taxes. It is there for the taking by government departments and by governments. There is little incentive to use it carefully, to save it for tomorrow, to reduce the size and growth of it. In fact the incentive for the would-be users of the Tax Pool Commons to expand and enlarge the pool, to increase and expand the tax-take so there is more to take out. Many (but not all) of the Tax Pool Consumers are not Net Tax Contributors, but are Net Tax Consumers, so there is little incentive for them to reduce taxes or make the pool smaller.

There is ever-increased blurring of the line between Tax Consumers and Tax Producers. The government ensures that more Tax Producers are also to some extent Tax Consumers. And even for the Tax Pool Consumers who are in the private sector and who are Net Tax Producers, if they can get access to the Tax Pool they are benefitting at a cost of the Tax Rate — say 30 cents in the dollar. So if an Industry Group can gain for its members some bit of the Tax Pool they will gain a 70% advantage.

What to do about Privatising a Commons?

In the case of land, it is not hard to lease or sell the land so it is in private hands and no longer a “commons”. Waterways too can be privatised, or partially privatised or users can be charged fees. With oceans and fishing, this Commons is typically addressed to some extent with licensing where possible. Usage rights licenses are dispensed to limit over-use. Further partial privatisations will no doubt occur in the future in regard to “International Waters”.

But the Tax Pool Commons? How to privatise this obscurely-owned pot of funds?

Governments are very adept at obscuring any sense of ownership of this Tax Pool Commons. Taxes are diverse and complex and many. Many are small individually. The more centralised the government and the Tax Pool, and the more diverse and wide-spread the Taxes and the Tax Producers the less any sense of ownership.

The answer is really very easy — reduce the size of it. The funds in the Tax Pool Commons are really owned by the Tax-Payers; so the less the Tax Payers pay the more “private” are the funds that are kept out of the Pool. Funds kept out of the Tax Pool Commons get invested, saved, spent and are no longer available for politicians, bureaucrats, special-interest groups to seek to access. This reduction of the Tax Pool Commons can go on indefinitely until the Pool shrinks and shrinks. Isn’t this what Karl Marx called “the withering away of the state”? Except that it is happening under capitalism and not under communism.

So as with the privatising of other Commons, the Tax Pool Commons gets privatised by non-payment, non-contribution, by legalised reduction to the inflow into the pool. Thus the capital and savings of individuals and companies expands, investment improves, spending on consumer goods increases, and the Tragedy of the Commons gets progressively eliminated.

(in order of appearance on
  1. Welcome from Neville Kennard
  2. Think Tanks Don't Work
  3. "Market Failure": Just what the government ordered!
  4. The Tragedy of the Tax Pool Commons
  5. Corporate Welfare
  6. Citizenship for Sale?
  7. I Don't Vote
  8. Voting: Right or Privilege?
  9. Stockholm Syndrome and our Love-Hate Relationship with Government
  10. Civil Disobedience: The Rules of Engagement
  11. Should Respect for Law Extend to Bad Laws?
  12. Jaywalking as a Demonstration of Individuality
  13. Government Likes War
  14. Collusion is Our Right
  15. Why Not the Drug Olympics?
  16. Unconventional Wisdom
  17. Tiger Farming: An Alternative to Extinction
  18. Looking Backwards: Mont Pelerin Society Conference, Sydney, 2010
  19. Tax Avoidance is a Patriotic Duty
  20. Kennard Writes to IPA Review Editor
  21. Genocide by Welfare: A Tragedy from the Aboriginal Welfare Industry
  22. Separating Sport and State
  23. Your Home is Not an Investment
  24. Dick Smith, Celebrity Philanthropist
  25. A Libertarian's New Year's Resolution
  26. Extend Politicians' Holidays to Create Prosperity
  27. Entrepreneurs are Disruptive, and Bureaucrats Hate It
  28. What is a good Australian?
  29. Governments Like Employment But Hate Employers
  30. The Market Failure Industry
  31. Neville Kennard: The Tax Avoidance Imperative
  32. Wot if ...?
  33. The Tribal Chief and the Witch Doctor
  34. The Tannehills
  35. Democracy versus Property Rights and Prosperity
  36. Government Doesn't Work, and That's the Way They Like It
  37. Minarchy vs Anarchy
  38. Euthanasia and Self-Ownership
  39. The Right Policies to Fix a Depression
  40. Is Howard Our Best PM?
  41. Tax Producers vs Tax Consumers
  42. Where There's a Queue, There's a Business Opportunity
  43. Authoritarian Freedom
  44. Why Classical Liberals Should Debate Anarchocapitalists
  45. The Tyranny of the Majority
  46. If you could choose to whom you paid your tax
  47. Business Should Exploit Boat People
  48. The Immorality of Trade Unions
  49. "America" vs "The United States"
  50. Sweet Anarchy
  51. The Illusion of "Job Creation"
  52. Gold Is Money
  53. Guilty Capitalists
  54. Bureauphobia
  55. Prosperity vs Growth
  56. Capitalism vs Democracy
  57. More people = More fun
  58. Self-Ownership - the very idea!
  59. Government will murder Neville Kennard if he doesn't back away
  60. The Australian Dollar Has Been Cowardly and Criminally Devalued, Harming the Poor Particularly
  61. Is Taxation Theft and Government a Tax Cheat?
  62. My Journey to Anarchy:
    From political and economic agnostic to anarchocapitalist
  63. Government Needs Bad Guys –
    that's why they like wars
  64. What Is Obscene?
  65. Traffic Economics
  66. Wayne Swan stands on the shoulders of other intellectual pygmies
  67. Neville Kennard Obituary
  68. Neville Kennard in 1979 proposes new alliances to end penalty rates
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