Why Your Dog Doesn’t Own Your Entire House, and the Government Doesn’t, Either
By Robert Higgs • Friday January 6, 2012 4:04 PM PDT • 28 Comments
I wrote recently about some views expressed by Elizabeth Warren and certain politicos of a previous era to the effect that the government has every right to take at least a big chunk of your earnings and, in some expressions, even your entire earnings for purposes the rulers stipulate.
Nearly ten years ago, the great political philosopher Anthony de Jasay wrote a charming little essay related to this matter called “Your Dog Owns Your House.” There, he spells out some of the ways in which such sweeping claims—by your dog or the rulers—are incoherent, absurd, and indefensible, and he sketches how to think more sensibly about the issue.
One sees upon even a small amount of reflection that the kind of reasoning advanced by Warren and her predecessors proves too much. Yes, if your dog did not ward off burglars, you might have lost all your household possessions; hence your dog’s diligence in some sense accounts for everything you have. Likewise, à la Warren and her ilk, if the fire department did not keep your town from burning to the ground, you would have earned nothing; hence your (government) fire department in some sense accounts for everything you have. And so forth for the police force, the army, the water department, the public health department, and all the others who provide an input without which your earnings would be zero—in the worst case, because you’d be dead. Because each such provider is essential to everything you produce, each has a claim to everything you produce. So the reasoning goes, at least.
Set aside for the moment the not-inconsiderable difficulty that if each has a just claim on everything you earn, all together they have a claim on a large multiple of everything you earn. For present purposes, however, let’s forget about Fido and lump all of the others together, again à la Warren and Co., as the “government,” whose contribution to your earnings is essential and therefore warrants a claim on everything you earn.
Even with this generous concession, a major difficulty remains: absent your effort, your earnings would also have been zero, notwithstanding the government’s contribution of all the infrastructure and protective services emphasized by Warren and others. No work, no product, no earnings. And you did, after all, do the work.
The error here is an old one in economics. It once plagued economists in their attempts to explain the distribution of the social product between suppliers of the various factors of production—land, labor, capital, and so forth, depending on the precise specification of factors. The puzzle was finally solved, more or less, by something known as the marginal productivity theory of distribution.
The operative word is marginal. Here, as in so many other places where erroneous economic reasoning crops up, the mistake comes from all-or-nothing thinking. In our case, no dog, no house; no fire department, no earnings; no police force, no earnings; and so forth, including, please recall, no work, no earnings. To make headway one must recognize that many inputs of services contribute jointly to the production of a good or service. But it is absurd to suppose that because each of them is essential—in the sense that if it were completely withdrawn, no product would be produced—each of them has a valid claim to the entire output.
The marginal productivity theory of distribution maintains that if each factor supplier is paid the value of the marginal product of the factor service provided, each will be rewarded in accordance with a coherent concept of the extent to which his factor supply accounts for the output, and together the rewards received by all factor suppliers will add up to exactly the amount of the output produced by the joint efforts of all. (This theory work perfectly only under the assumption of a particular production technology, known as constant returns to scale, but that difficulty does not invalidate completely the basic idea the theory expresses, especially in regard to marginal productivity as the key concept.)
This sort of explanation is known in economics as imputation theory. Among other things, it explains why factor values depend on (are “imputed” from) consumer valuations of final outputs, not vice versa, as the classical labor theory of value and other theories maintain.
In any event, an understanding of marginal productivity and imputation theory undermines the sort of facile claims made by Elizabeth Warren, leading politicos associated with the New Deal, and all too many others, both inside and outside the political apparatus. Of course, if the rulers can’t claim that they deserve everything you’ve earned by using this sort of bogus reasoning, they’ll surely come up with another equally bogus reason for doing what all rulers and their stooges seek to do—to plunder you to the fullest feasible extent.
Tags: Economics, Politics, Power, Property Rights, Taxation, The State 
Along these lines, how would you extend your argument to show that we owe the government nothing (a la anarcho-capitalism)?
A Country Farmer | Jan 6, 2012 | Reply
Great post! Very informative!
It strikes me that one could also critique Warren’s position by pointing out that the government would have no resources with which to supply all of its benefactions without the indispensable labors of the individual taxpayer. Therefore–according to her logic–wouldn’t the individual taxpayer have the right of seizure over the government?
RSS Ronald Reagan | Jan 6, 2012 | Reply
This issue reminds me of the confusion created in so many minds by the lack of market pricing when government provides goods and services.
After all, if, for example, roads were privately built and maintained, it would be obvious that their cost was just another part of the businessman’s cost structure which he has already paid for in full.
This fact only gets obscured when governments claim a coercive monopoly over these functions and economic calculation goes out the window.
D. Saul Weiner | Jan 7, 2012 | Reply
There is no point pretending that sensible, rational arguments are what is needed to counter what is, at the end of the day, simply bullshit (in the HG Frankfurt sense of the word).
Harry Frankfurt’s “On Bullshit” – which can be found in PDF and downloaded (the original is only 16 pages) – is required reading for anybody who thinks that the State is REMOTELY interested in rational argument (the same goes for State minions).
Elizabeth Warren has decided to join the political parasite class. That undoes ALL the sensible things she said in the famous 2008 YouTube talk about the collapse of the middle class. (Leave aside that for anyone with a lick of sense, the collapse of the middle class is the natural outcome of the US cronyist system – it is DESIGNED to funnel wealth upwards).
Anyhow: having made the decision to join the parasitic class, EVERYTHING that Elizabeth Warren says (from now until she repudiates that class), is bullshit in the Frankfurt sense. That is, she says what she says without any regard for whether it’s true or not: the truth is irrelevant; all that matters (to her) is whether what she says advances her agenda and/or her position within her new class.
Think “Hope and Change” or “Yes We Can”. Think “We know where the WMD are”. Think “mushroom cloud”. Think “Mission Accomplished”.
The political guinea worms who uttered each of those statements did not give a fuck whether or not the statements were true: only whether saying hem advanced their agenda.
I’m fortunate (in a sense) in that even as a kid I understood that those who seek political power don’t do so from noble motives. My Dad drummed into me at an early age, that one had always to look for the hole in any narrative that seemed inherently plausible but led to an increase in others’ power over you. He inculcated sensible skepticism and contrarianism, and I am grateful for that.
Face it, folks: this ends one way. Violently. Not ‘serried ranks’ violence (that would be idiocy given the death-tech superiority of the State and its apparently endless supply of armed sociopaths)... dead-of-night violence against the State’s goons, in their own homes. Citizen-run “no knock’ raids, if you will, against the roided-out vermin who kill on command. Undermine the State’s violence apparatus, and it falls apart. Egypt taught us that (although the new Boss is only slightly less oppressive than the old: there will be a few iterations), as did Tunisia.
GT | Jan 7, 2012 | Reply
@GT...so those of us who serve in the military, police etc are all just “armed sociopaths”, “roided out vermin who kill on command”?
I’m sure that is not what you think, but like you say, those seeking power (even on a comments board) will say anything to advance their agenda!
The truth is not so black and white in the real military and real world. In fact, most military personnel do not conform to any political party per se, but have a set of internal values they judge the world by.
It is your right to slander us, but our honor to defend that right for you.
cb | Jan 9, 2012 | Reply
Fantastic column, thanks.
Speedmaster | Jan 9, 2012 | Reply
Georgists would maintain that the “community” has a claim on unearned profits that accrue in land values as a result of community investments in infrastructure. In a free society the users of an airport would be billed for the airport’s services but so too should land owners who have gained via increased land values. If communities fail to capture this economic cream and reinvest it in infrastructure (instead letting it fall into private hands that made no investments) they must impose all kinds of unfair and economically damaging taxes.
AC | Jan 9, 2012 | Reply
“Citizen-run, no-knock raids” is about the only concept, in these posts, that I completely comprehended and agreed with. You folks must be out of the ultra-intelligent group, Mensa. Right over my average intelligence quota. Kudos to you all!
God bless
Senior65gal | Jan 9, 2012 | Reply
Regarding:
“We know where the WMDs are”. This was not a B___ S____ comment made for self serving purposes. Every major intelligence agency believed this, and it was also based on the surprising advance Iraq had made in WMDs found out after the first Gulf War.
“Mission Accomplished”. Again, the author of this comment is a victim of the media. That banner was put up there by the ship’s crew as they were nearing the end of the cruise. Yes, it was in the background behind Bush, and he read it in support of the ship’s crew, not as a statement on the Iraq War.
Regarding your prediction of door to door violence, go ahead and cast your vote for Ron Paul.
Joe Siegel | Jan 9, 2012 | Reply
But perfect competition does not hold (let alone perfect information in negotiating wages), and even if it did it would only establish a tendency towards constant returns to scale over time, not its constant presence.
If wages are set at marginal product (MP) while firms operate under both economies and diseconomies, then everyone will be being rewarded in varying proportion to their average product (AP).
This means that the concept by which workers are judged to have accounted for output (AP::MP) will be completely incoherent across workers. Some will be undercompensated (diseconomy), some overcompensated (economy), and some compensated ‘just right’ (constant economy).
So in fact the marginal theory of distribution, removed of its rarefied and fanciful assumptions, tells us that there is no coherent concept of distribution operating across wage earners which we could infer by looking at their AP::MP at any given point in time. Rather, we can only infer incoherence.
With enough random variation for each individual over time, we could, with high confidence, assume an equal, average proportion of AP::MP across individuals in the long run.
Without sufficient random variation in AP::MP across individuals, wage distributions are simply incoherent.
So wage distributions would, at best, be incoherent at any given moment but coherent in the long run.
At best.
GiT | Jan 10, 2012 | Reply
I agree with D. Saul Weiner on this one. If ‘essential’ services were provided competitively through the market, there would be no confusion about the ownership of one’s own production. A market price sets the value of the provided service correctly, without reference to what the service consumer is producing in his own right.
Ironist | Jan 10, 2012 | Reply
Oh Please! Like so many discussions, Warren is pushing her anti-American agenda and hoping that no one notices a fundamental disconnect. We citizens owe NOTHING to the government. It is ours, it is us, we voted it in, we employ it, we pay for it, we demand it perform its work and abide by the law. We do not elect and employ RULERS and ROYALTY. From top to bottom, all of government are CIVIL SERVANTS. By the slow process of a representative republic and the passing of laws, we direct how they are to be employed, what they are to do, and how they shall be compensated through taxing ourselves.
Michael Richardson | Jan 10, 2012 | Reply
In as few words as possible, people who work in government are employees of the private sector. Contributing to the overall success of the business does not entitle an employee to own the business. In fact, if he fails to contribute he is not worthy to receive anything and should be replaced.
Ron | Jan 10, 2012 | Reply
The dog argument and the Warren argument depend on “but for” causation (but for X, no Y). The problem with “but for causation” is that the number of “but for” causes in a person’s life is enormous and unascertainable. If each actor has a but-for claim to Y’s success, Y would have nothing left. But Y has but-for claims on everyone else that can’t logically be cut off. It’s just an endless circle of claims on claims on claims that either leads to pure communism or is meaningless.
The Warren / dog argument assert that Individual Outcomes are a function of Public Goods. They are, but not solely. The argument provides no basis for quantifying the relative contribution of Public Goods vs other factors or for justifying any one quantification vs another. I suggest that a more honest and insightful way to look at it is to see that
1) Individual Outcomes are a function of Public Goods and Non-Public Factors.
2) Differences in Individual Outcomes are thus a function of differences in Public Goods and/or Non-Public Factors.
3) As Public Goods are by hypothesis available without differentiation, then any variation in individual outcomes must be attributed solely to differences in Non-Public Goods- the very opposite of what the dog/Warren argument contend.
mark | Jan 10, 2012 | Reply
Government is simply a way to achieve economies of scale for services that are useful for all of us. Rather than government providing police and fire protection, each individual could purchase their own protection from an independent party. Mobsters in Italy are known to force such transactions upon their paying customers. Rather than viewing government as another competitor in the game of life, it should be viewed as the referee. If many economists are to be believed, referees do not and cannot exist, as all humans seek personal benefits and will surely be corrupted by one of the competitors on the field. Sports would not exist if referees were thought by fans to be corrupt and biased. Sports and government are both part of systems that can be designed in such a way as to minimize corruption of the officials involved. Just because the government in the US is broken, doesn’t mean that it is not possible to create one that works.
Mark | Jan 10, 2012 | Reply
The question is really who owns your life. Politicians and bureaucrats – regardless of party or philosophy – do what they do because they believe that the “state” actually does OWN the individual.
Those of us who reject the state are self owners. It doesn’t matter what that state may claim to do for us.
Individual self owners need a “state” like an alligator needs shoes. Shoes made from his own hide.
MamaLiberty | Jan 11, 2012 | Reply
Here via Sonic Charmer.
It may be that your argument – while clearly and obviously correct – is overly complex. Consider your dog:
He doesn’t have a job.
He sleeps all day.
He eats food provided by someone else.
He poops wherever, and someone else cleans it up.
In short, your dog is part of #Occupy_YourHouse. Probably would vote for Pelosi, too, if you weren’t such a racist (err, “specieist”) and demanded proof of citizenship. What, do you think you can actually *own* other beings inhabiting this country?
See? Simpler.
Borepatch | Jan 12, 2012 | Reply
This article make thinking about the actual situation and government’s services. I’ll send to my friends for make their read. Thanks
security companies
brian | Jun 12, 2012 | Reply
Actually, we don’t owe the government anything. We create governments, and pay for them with our taxes, in order to secure our right to life, liberty and property. The government is a paid service provider; not our owner or ruler.
Mike | Jan 8, 2013 | Reply
well if these people the firemen, the gov the whomever own a part of my stuff then let them help me pay for my stuff, they can pay part of my mortgage, my eletric bill, my food bill and give me some support so I can keep working to keep earning so they have something to take. they can give me a check each month to offset these bills after all with ownership comes responsiblity to pay for it. if they don’t own it then taking by force is theft, while govenmenet has right to get paid for basic services the constitution said it was to be decided by apportionment, not based on how much you have or made.
roberta | Mar 19, 2013 | Reply