Letter: We are on the verge of indentured servitude

Most think slavery is an unjust institution because it deprives slaves of the fruits of their labor and is often inherited at birth. Slavery upsets us because it prevents people from benefiting in proportion to the value they generate for others, and because they become enslaved based on their demographics rather than their actions.

Slavery is almost never complete, in the sense that a slave may still have a few minutes of free time, and it is very costly if not impossible to appropriate literally all of the goods and services a person produces -- a slave might cook his own meal or sing to himself while working. Thus, in principle, any involuntary transaction you are forced to take part in because of heritable characteristics which takes from you more than you get in return is a form of slavery.

Slavery is unconstitutional as per the 13th amendment, "Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction."

Taxation is inherited and involuntary — if you are born a citizen in the United States, you are forced to pay taxes according to laws created before you were born, regardless of how you vote. Any form of taxation which takes from you a greater value than the utility you derive from the goods and services you receive in return is essentially theft, and therefore a form of slavery. Thus, one could interpret certain patterns of spending and taxation by the government as unconstitutional.

To be fair, we can all expect and maybe even tolerate a small amount of "slavery" through taxation. Just as economists say that frictional and structural unemployment is "natural," some might say the same for the bureaucratic inefficiency of government. If government is a necessary evil as the founding fathers of America often espoused, then maybe a small amount of slavery arising from the inherent folly of government should be tolerated. Considering the public goods created by having a federal government (infrastructure, national security, etc), it is debatable whether a fiscally responsible government even "enslaves" anyone in the first place.

What shouldn't be tolerated is the indentured servitude created by government debt. It's a fact that some people and firms have benefited disproportionally from the latest round of deficit spending. Unless taxes are levied in direct proportion to how much each citizen benefited from the spending, the debt can only ever be paid off in part or in full through the effective enslavement of those who benefited less from the deficit spending to those who benefited more.

Unfortunately, proportional taxation is unlikely, as no one cares to engage in the data mining and number crunching required to figure out to whom all the TARP and ARRA money ultimately went. Considering the political near-impossibility of cutting spending and raising the income tax enough to pay off approximately $40K (and rising!) debt per citizen, the main options still on the table are the following: default, value-added tax, or inflation.

Trying to inflate our way out of debt will essentially constitute a flat tax, as the depreciation of currency hits everyone equally. If you take into account that well-off individuals are better able to protect their wealth by investing in hard assets, as well as the diminishing marginal utility of wealth, Inflation begins to look like a regressive tax.

A value-added tax is no better. Even if it's levied disproportionally in a way designed to reduce pollution or other negative externalities, it still raises the cost of living, hurting poor people more thanks to the diminishing marginal utility of wealth.

Because proportional taxation is unrealistic and our other options (income tax, VAT, inflation) essentially amount to enslavement, one might conclude that the only "fair" and constitutional solution to our current predicament is to (A) cut government spending drastically, or (B) default on the debt, and ensure to the greatest extent possible that the resulting economic and political fallout is placed squarely on the shoulders of those who willfully ran up trillions of dollars in unnecessary debt.

Scramble tooth and nail away from the verge of indentured servitude, or give up and be dragged into the abyss? Sooner or later, we will have to decide for ourselves.