The Moral Status of Government Contractors

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The Colorado Freedom

The Moral Status of Government Contractors

by Philip Sagstetter and Ari Armstrong

Philip Sagstetter, May 5

I am honored to rate as a line-item in your newsletter.

Concerning the voucher debate, if you want to place companies that do government-contract work in a third category, neither private nor government, I don't object. I work for such a company. I know of one project manager who was subpoenaed to testify under oath before a subcommittee of congress about the necessity for some large cost overruns. Admittedly, that is not your average barber shop.

It seems that our primary difference in viewpoint is that you seem to equate government contract funds as being tainted like Mafia money, and any company that would take such money must be a co-conspirator.

I see tax collection and government spending as two separate issues. Whether the tax rate is 1% or 100%, there are benefits to government contracting. Competitive bidding and the semi-private sector will produce more bang for the buck.

How much the government should spend and where it should be spent are separate issues to me. After all, regardless of how corrupt the government may be, we do not yet have a king and we do have elections. There is a certain element of taxpayer representation. I just want to reduce taxes by spending money efficiently, and I believe government contracting promotes freedom more than government monopoly.

As an example, think of some government services that most people support. For instance, the local fire department, the police anti-burglary squad, and county public health. If a policeman gets injured, a fireman gets burned, or a health worker gets infected, they need medical care. Each unit of government could staff their own clinic with dedicated government agents. But it is usually more efficient to bid medical services out to a local hospital.

Whether we want more government services like federal Drug Enforcement and billion-dollar B-2 Bombers are a separate policy issue to me.

Thank you,
Philip Sagstetter

Ari Armstrong, May 12

My previous argument was intended to demonstrate that government contractors are fundamentally part of the government, not part of the free market or a "privatized" system. It would seem that Sagstetter basically agrees with my view.

I was not discussing the moral status of government contractors. I'll do that now. Sagstetter is quite correct that the moral status of government contractors is a different issue than the one about how such contractors are classified.

Some libertarians (a minority) believe that governmental services can and should be provided exclusively by the free market. Obviously, sub-contracting would not be a point of debate within such a system.

All libertarians, I think, support the view that all governmental services should be funded voluntarily, rather than through coercively collected taxes, if possible. For example, Ayn Rand railed against the so-called "anarchists," though she supported the view that the minimal state (one that holds a monopoly of power within a given geographic region) should be supported by something like a lottery or user fees. Again, contracting with such a government poses no special problem for libertarians.

The problem arises when the government collects its revenue by force. Then, as I argued previously, government contractors are also collecting their revenue by force, though indirectly. This, however, says nothing about whether government contractors are morally justified in accepting the money.

In "The Question of Scholarships" (reprinted in The Voice of Reason,) Rand argues that there are two basic justifications for accepting government money. First, by taking the money, one is recovering some portion of the money that was taken, by force, by the government in the first place. Second, if government intervention in the economy destroys the market for some particular industry (such as K-12 education), one has little choice but to accept government money in order to work in that field. Rand adds a qualification: to morally accept government money in these cases, one must oppose the government intervention. For example, "Those who advocate public scholarships have no right to them; those who oppose them have. If this sounds like a paradox, the fault lies in the moral contradictions of welfare statism, not in its victims" (page 42). Further, Rand argues accepting a government job (or, by extension, a government contract) is wrong if it entails propagandizing "in support of welfare statism" or the enforcement of "improper, non-objective laws" (44). I think Rand's analysis is square-on.

There is one potential problem with Rand's analysis, however. In the case of scholarships, there is a direct link between the money people pay in taxes, and the money they (or their children) get back in scholarships. Thus, the argument concerning restitution holds. However, Rand also mentions social security (43), for which the dynamics are different. We must not reify the state. By contrast, if Al steals $10 from Ben, Ben may properly collect $10 (plus damages and legal expenses) from Al as compensation. This is analogous to the situation with scholarships. However, with social security, a recipient is not getting back this money directly from the government. Instead, the government steals $10 (we'll say as a simplified example) from Al, then steals $10 from Ben to compensate Al, then steals $10 from Carl to compensate Ben, and so forth. In other words, there is no singular entity named "government" from which we are collecting restitution, in the case of social security.

When we accept social security payments, we are not simply getting back the money we gave to the government. What happens instead is that the government takes money from current taxpayers to pay off the recipient of social security. To again use a simplified example, let's say the government is a dictatorship headed by Gus. In the case of a scholarship, Gus steals $10 from Al, then offers Al $5 for a scholarship. That's partial restitution. But in the case of social security, Gus steals $10 from Al, then, if Al collects social security, Gus steals $10 from Ben to pay Al. In today's world, what actually happens is that the government borrows more money to pay for additional social security expenses, and this borrowed money becomes a tax on a future taxpayer. (Social security currently is running a surplus, true, but this surplus goes to finance other government programs. So if more people draw social security, the government borrows more money to pay for those programs.)

Of course, those who have children can justify taking social security on the grounds that they're receiving compensation on behalf of their kids. The same applies to anyone who can find a "sponsor." Rand is exactly right when she points out, "It is a hard problem, and there are many situations so ambiguous and so complex that no one can determine what is the right course of action. That is one of the evils of welfare statism: its fundamental irrationality and immorality force men into contradictions where no course of action is right" (45).

John Berntson, April 28

[Editor's note: Berntson's letter didn't fit anywhere else, so I included it here with Sagstetter's letter.]


Liked your article on TABOR. My only quibble would be with "RINO Brad Young."

Based on the actions of the Grand Old Party to date, Brad Young is a full-fledged Republican. It is Ron Paul and Doug Bruce who are the true RINOs.

Let's stop helping Republican politicians pretend that they are defenders of small government.


The Colorado Freedom