Profit Is Not Plunder

Frédéric Bastiat in his book The Law distinguishes between profit and plunder. Profit is financial gain earned through industrious behavior. Business owners make a profit by selling products at a greater amount than what it costs to produce that product. Plunder, by contrast, is the theft of property through nonvoluntary means, such as theft, coercion, or fraud. Bastiat noted that while most plunder is illegal, there remains one major exception: the state.

All plunder is an act of aggression against someone else’s natural rights, hence why it is morally wrong. Regular plunder is a tough business, even for delinquent thieves. There is risk involved in robbing or defrauding someone, leading to no return on the effort of the thief. There is also the issue of the victim or potential victims of plunder being more aware of and resistant to future attempts at plunder. Despite the inclinations of a few thieves toward high-risk, high-reward plunder, most thieves prey upon the vulnerable. Further, if a thief’s activities are discovered, he is socially excluded from the rest of the population. In addition to plunder being vilified, there are natural constraints based on the nature of plunder that heavily discourage attempted theft. However, our world today consists of legalized plunder in addition to illegal plunder.

The policies of states across the world amount to no less than institutionalized plunder. Bastiat wrote that plunder tends to occur when it is less burdensome than labor. States, by virtue of having a monopoly on the legitimate force of violence within their territory, are in a prime position to benefit immensely from plunder. An example of institutionalized plunder is taxes. Taxes are a mandatory contribution to state revenue by individual citizens and businesses. One cannot opt out of paying taxes to a state, making them involuntary and an aggression on the natural rights of citizens. In most countries, the penalty for not paying taxes ranges from the seizure of assets to imprisonment. In this way, the state operates in a similar way to a gang would. You either have to pay up or have violence unleashed against you.

States, however, have realized that they cannot plunder endlessly. Hans-Hermann Hoppe in Democracy: The God That Failed makes the case that historically, monarchies would not plunder to the extent that the value of their estates would drop. While modern democracies do not have this constraint, a feature that Hoppe argues causes them to be a worse form of governance, they are constrained by potential resistance from the population. A tyrannical government that sets a tax rate of 100 percent would almost instantly be overthrown.

Thus, the need to creatively disguise the true effects of taxes comes into being. Examples are redistribution schemes, public goods funding, and national security achievements. While the intentions of some of these policies may seem noble, they weren’t funded voluntarily, signaling that plunder was employed in the fulfillment of these goals. Money is redirected away from the preference of the worker or business owner to the preference of a bureaucrat. As a result, states impoverish the societies they control rather than benefit them.

Both institutionalized plunder and illegal plunder harm society, but profit does not. Despite the qualms of many socialists, the voluntary nature of profit means that business owners benefit society by creating supply for what their consumers wish to buy. This is a symbiotic relationship between producer and consumer as opposed to the parasitic relationship between state and taxpayer. Therefore, prosperity is a result of voluntary exchanges between consenting parties. Expanding the role and power of the state is antithetical to striving for a prosperous society.

Bastiat presented three options for how a society structures its laws. The first is where the few plunder the many. The second is where all plunder all. The last one is a society where none plunders none. It is clear that our current economic woes are in some part caused by being a society increasingly based upon plunder.

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