Private government is really nothing new.
And I don’t mean some arrangement between coercive government and “private” companies that make their money from government contracts.
That arrangement actually produces the inequality that people blame on free markets.
Notice how everyone is taxed. Yet the government spends the money enriching the government defense contractors, handing out subsidies to already rich oil companies, bailing out sub-par automakers and predatory bankers…
In contrast, private government is not coercive.
No one forces you to live in a neighborhood that charges a “tax” like a homeowners’ association fee. But when a government monopolized all the land, you have no choice but to pay the taxes they demand.
And under the private model of paying for government-like services voluntarily, the money flows from the rich to the rest of society.
So coercive government is actually used as a tool to further enrich the protected classes intertwined with government. This isn’t all rich people, it is just the ones who got rich from cozying up to politicians instead of providing goods or services that the public voluntarily pays for.
I’m actually writing this from a private community in Puerto Rico. There are roads, security, trash pickup, and even servers to bring you drinks on the beach.
The difference is that you pay for all of it, either a la carte, as with drinks on the beach, or through the HOA fees, as with the security and roads.
And I can’t afford it. I’m just lucky to have a friend generous enough to let me stay for a week.
Most people can’t afford to live in entirely private communities like this. And that is the main criticism people have for private government.
The rich can afford the best government money can buy… and the poor will live in the slums, they say.
And how it is now?
The rich can afford the best government money can buy… and the poor live in the slums.
The difference? Under a coercive government–the way things are now–the poor help pay for the rich people’s accommodations.
I helped pay for the Wall Street bailouts, and for the most expensive military ever that still can’t win a war. I also helped bail out General Motors, despite never having bought a GMC, Caddy, or Buick.
In this private community in Puerto Rico, costs rest entirely on the shoulders of the people who live here.
There’s no socialized police force that protects the rich neighborhoods better than the poor ones.
No upward transfers of wealth from taxing everyone to pay for benefits that disproportionately help the rich who have friends in the Senate.
On the other hand, the wealth definitely trickles down.
The community employees hundreds if not 1,000 plus workers, and has created countless jobs through the influx of wealth in the surrounding communities.
And these are not all bottom of the barrel jobs.
Supervisors, managers, and directors can make $40-$60,000 per year working in this community, according to glassdoor.com.
Staff like front desk workers, concierge, and reservations agents make $12-$13 per hour–well above minimum wage. Reviews from employees rate the work experience a 4.6 on glassdoor, with great benefits, and good hourly wages.
Already 20% of the food at the resort is locally sourced, which they plan to bring up to 50%.
This community also happens to be a destination for people taking advantage of Acts 20 and 22. These Puerto Rican laws enable companies which export services to relocate to the island and pay a 4% corporate tax rate (Act 20) and pay 0% on capital gains which accrue after moving to the island (Act 22).
Now, this might sound like another case of the rich paying less than the poor. But there are a couple things to keep in mind:
1. Four percent of $1 million is a lot more than 4% of $0.
This attracts wealth that would not otherwise come to the island. And the real benefits to the island aren’t even the tax revenue, it’s the injection of capital in other areas of the economy. So the rich people living in this private community really are helping Puerto Ricans earn money.
2. You don’t exactly get much in return for Puerto Rican taxes…
Think of the typical person who lives in this private community… What government services do they use?
The roads they use daily are private, and their security is private (because government security is terrible). There’s a helipad… so they don’t even have to use the (crappy) government roads to get here from the airport.
But on the mainland USA, it costs only a few hundred grand worth of lobbying to get a half a billion dollar government contract–AKA an upward redistribution of wealth from the taxpayers to the already rich people who can afford to lobby.
The rich living off the corporate government collusion are net takers of tax dollars. The rich living in this community are net givers to Puerto Rican tax revenue, but more importantly, the Puerto Rican economy.
Okay, but what about the people who can’t afford to live in a private community?
Many of the employees make enough that they can afford to live in buildings or communities with private security, alarms, and cameras.
Despite the tax dollars paying for police and courts, it still falls on the individuals to make sure they are safe…
Take away the taxes and even more people could afford to live in private communities.
Stop redistributing money to bloated bureaucratic politically connected government contractors, and watch how efficiently infrastructure is built.
Case in point is what we talked about the other day, how FEMA handles Puerto Rico recovery money. The contractors are doing great… but somehow not so much of that money gets back to the Puerto Rican people who need it.
Meanwhile, this community bounced back with the help of local labor–good jobs to have especially in the wake of Hurricane Maria. That poured yet more money into the local economy.
They even replanted hundreds of thousands of native plants that were destroyed in the hurricane.
Good for the economy. Good for the local people. Good for the environment. And all voluntarily funded.
So to recap:
“Tax havens” like Singapore and Hong Kong have discovered the benefits attracting wealth.
And go figure… these places have the best infrastructure benefits everyone living there and in the surrounding areas, not just the rich.
In relatively free, low tax jurisdictions, the wealthy truly do pay for the structure of society.
But in the USA, it is the poor and middle class that are shaken down to pay for the terrible infrastructure and bad services. We pay the government connected rich to build the roads, to make the military equipment, to print the money, and to build cars no one wants.
Everyone would be better off in places with a private government, or as close as we can get right now. Everyone except… the government connected rich folks who are raking in your tax dollars.
As I said, I can’t afford this place. And I would still take private government any day.
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