The Money Tree

Here is an interesting experiment to conduct. Go to the New York Times archive search page. Type in the string “government pays for.” As of the time I write this, from 1981 on there are 123 articles with that phrase, and there are 289 between 1851 and 1980. But “taxpayers pay for” shows up only 43 times after 1980, and only once before 1981.

The difference between those two phrases, and hence the implications of the difference of their frequency of use in America’s newspaper of record, is important. (I have replicated this disparity in Lexis/Nexis searches across many newspapers.) “Government pays for” is a phrase that suggests that there is a single, conscious, decision-making entity called “government” that can conjure up money at will to be devoted to this or that purpose. I call this unexamined premise the “money tree fallacy.”

It is a fallacy because of course there is no “government” in the sense I just used it. To suppose that “government” can spend money on this or that productive purpose is to commit what philosophers call a category error – the attribution of traits to an entity that it does not really possess, but some other type of entity with which it is being implicitly confused does. Governments do not spend money. Rather, individuals within the government make decisions, according to some set of institutional rules – voting rules, the bureaucratic discretion individuals employed by the government possess, etc. These decisions raise money from some individuals and transfer them to others. This is the fundamental truth of the matter, even if the laws that enable this transfer, and the people who debate them, speak in terms of groups – of subsidies to “farmers” or “college students” or “the poor,” of taxes on “the rich” or “small businesses,” etc.

In my judgment one of the most important habits I feel I must break in students, particularly in lower-division classes, is belief in the money-tree fallacy. “The government,” “big business” and “corporations” are in my experience the favorite targets of this type of thinking. In each case these abstractions are seen as large pots of idle cash to be tapped for some more valuable end. (The ease with which people resort to arguing that lower taxes on “the rich” are to blame for insufficient expenditure on government activities they value more than their fellow citizens, even if it is previous and increasingly burdensome government transfers that are most likely responsible, is another example.) To argue that “the government” should pay for something is to argue that your fellow citizens should, in proportion dictated by the often absurdly arbitrary tax code of the relevant jurisdiction (the federal tax code, for instance). To argue that “corporations” should is really to argue that certain individuals – shareholders, employees and customers – should, perhaps in unknown and certainly capricious proportions. It is to believe that higher consumer prices (and hence lower consumer standards of living), lower employee wages, fewer jobs and lower stock values are justifiable as a means of transferring value to the recipients of whatever government spending results. Is that worthwhile? Reasonable people can differ on that. But an informed citizenry making intelligent decisions in a consensually governed society requires seeing the problem for what it is. Government benefits flow to, and the cost to make them available is borne by, individuals with their own values, dreams and ambitions. There is no getting around it. There is no magic money tree.