Stealing You Blind

How Government Fat Cats Are Getting Rich Off of You

by George C. Leef

Frédéric Bastiat introduced one of the most important concepts in political economy: “legal plunder,” the government’s forcible extraction of wealth from the populace for the benefit of the ruling class. French monarchs in Bastiat’s time sent out tax collectors to plunder the people, most of whom understood perfectly that the king was robbing them to pay for his extravagances and follies.

As Bastiat well knew, democratic governments also engage in legal plunder, although it is obscured by the myth that elected representatives do whatever is in the “public interest.” Under democracy the people supposedly are the government and therefore all its actions are justified. You certainly can’t steal from yourself.

Not so, declares Iain Murray of the Competitive Enterprise Institute in his book Stealing You Blind. Democracy is rife with legal plunder, Murray writes, and it’s no more justified than if a gang of thugs were to rob you at gunpoint. Politicians long ago figured out how to use government power to line their pockets, and special interest groups long ago figured out that by backing the right politicians, they could get far more wealth out of the public treasury than they could get through production and trade. As a result, Americans are heavily taxed to support “a new leisure class” that produces little or no value. It’s like having a huge tapeworm in your gut, feeding parasitically off the food you work to buy.

Much of the book consists of recent and infuriating instances of legal plunder, and that is why it is so effective. The stories Murray tells are memorable because they make you angry. For example, consider Bell, California: The city manager of this small, poor town, along with his cronies, managed to stack the city council with their friends, who voted to give them astronomical salaries. The city manager, Robert Rizzo, was pulling in a salary of nearly $800,000 per year. Did he produce that much in value for the taxpayers? Of course not. He probably couldn’t have earned a tenth of that in voluntary exchange with people in Bell, but his ability to manipulate democracy enabled him to live like a king.

Murray quotes the defensive statements he and his highly paid subordinates made when they were caught. The arrogance will make you see red. After years of living it up at public expense, Rizzo and his comrades were arrested and charged with crimes including fraud and breach of fiduciary duty. No matter how that litigation turns out, the taxpayers won’t get much if any of their money back, although Rizzo’s city pension was reduced to a mere $100,000 annually.

Is Bell an anomaly? No. Murray shows that such plunder is widespread, although often less blatant. Some of the worst legal plunder is done by government employee unions. Union officials have mastered the art of electing compliant politicians who are indebted to them for their campaign support. So when it comes to bargaining over the terms of the contract, they are in effect in control of both sides of the table. As a result compensation for government workers is now significantly higher than for comparable workers in the private sector. That is contrary to the cultivated myth that when people go into “public service” they’re making a financial sacrifice.

Moreover the lofty compensation for government employees is only half the problem. As Murray shows, discipline is often lax in government work, so “workers” can get away with a lot of loafing.

Murray devotes considerable space to documenting how we are plundered by the government’s education establishment. Teachers are paid handsomely whether or not their students make any academic progress, and the gigantic mass of administrative personnel drives the cost far higher. Murray correctly says that “an astonishing amount of money in public education budgets doesn’t go to educators, it goes to turf-protecting bureaucrats. . . .” Decades of government profligacy have driven city and state budgets into the red, but administrators can be counted on to cut spending on things that have some actual educational benefit (music classes, libraries, and so on) while preserving every dollar for the bloated administration.

By the time you’ve gotten to Murray’s final chapter, you’ll be convinced that taxpayers are in fact being robbed blind. What is to be done? Murray offers a number of sensible, if well-known ideas, including abolishing many federal departments that are havens for legal plunder (Education, Labor, Energy), ending labor union privileges and corporate welfare, and privatizing government functions wherever possible. He also suggests some that aren’t so familiar, such as ending government research grants (many of which involve enormous waste) and instead offering prizes for results, though of course these would be tax-financed.

Nothing will happen, however, until the taxpayers realize how badly they’re being plundered and get angry. This book will do much in that regard.