Government and the Economy
John T. Tetley
[Reprinted from The Gargoyle, December 1975]
At a discussion group consisting of men and women I supplied to each
person a sheet of paper and announced I would display one word. I
requested each person to write on the paper a word or a few words
indicating what the word I displayed brought to their mind. Several
persons wrote "Taxes", one person wrote "Social
Security." The word I displayed was Government.
This, I think is rather interesting. My purpose was to briefly
discuss the four principal levels of government local, county, State
and Federal and their functions and source of revenue. However, the
idea that Government was associated immediately with Social Security,
I think, is far more than just amusing. That it is associated with "taxes"
was not surprising. And, in a sense this is about what I wanted to
bring out in asking the question.
To those of us who have gone beneath surface thinking in economics
and understand the role government plays in the production and
distribution of wealth, there is a vast opportunity to enlighten many
people on what is the role of government.
To illustrate, let our concept of Economics be the science which
treats of the production and distribution of wealth.
We follow: human energy, applied to natural resources, using tools
and machinery, results in a product -- a material thing. To convert to
economic terms: Labor applied to Land, using Capital, produces Wealth.
Wealth is Distributed among the owners of the factors of production
-- the owner of labor, the Laborer; the owner of Land, the Landowner;
and the owner of Capital, the Capitalist.
Since Government is not a factor of production, it therefore has no
claim for a share of the product -- wealth. It is quite necessary that
we have some government. Some organization to administer the
allocation of natural resources and to protect infringement upon such
allocations is needed. For this administration revenue must be
provided. At present it is provided by a system known as taxation,
whereby a portion of the receipts -- distribution of wealth -- are
coercively taken from the laborer, the landowner, and the capitalist.
If a comparative simple change were to be made in our land tenure
system, and our system of compensation for severance value of other
natural resources, the revenue to administer minimum government thus
collected, conceivably could be far more than is required.
Another factor would be to remove from government most all regulation
and control of production and distribution of wealth. This would
greatly decrease the revenue required for administration of necessary
and desirable functions.
Thus might come about a true free enterprise economy, the
establishment of Justice and equality of opportunity.
It will be noted that the medium of exchange and credit functions
necessary to efficient conduct of the production and distribution of
wealth have been omitted. These might well be performed by private
enterprise entirely without interference of government.
By opening up the opportunity of unlimited production it is
conceivable that involuntary poverty may be over come. Concurrent with
this would be employment for all who wished it -- no need for public
Of course not all problems would be thus solved. However the solution
of government, social and economic problems should then be much
As our government, social and economic system operates today and
reform after reform is proposed, tried, abandoned and retried -- the
ultimate result is to delay the basic readjustment -- land tenure.
The present system of land tenure is the underlying cause of
malfunction of the production and distribution of wealth.
We need and must have a simple and efficient government -- as near
perfect as may be devised monetary system. However, given both of
these -- the land tenure system remaining as is -- the result would be
still higher land prices and more and greater, land speculation -
continued recurrence of business recessions with unemployment,
poverty, slums, crime and other social maladjustments compounding. An
economic system complying with natural law brings harmony -- one which
interferes with natural law -brings chaos and disaster.