We propose a thought experiment. Close your eyes—well, read this first, then close them—and pretend you live in a mansion worth approximately $8,427,888. It’s a nice place. Your annual income is above $2,000,000, so don’t worry, you can handle the payments. Your feet, in silk slippers, are double cosseted by the Persian rug under your feet. It was woven in 1870 or so and set you back about $500k. But people always comment on it at your parties. As you like to do every day, you are taking a few moments to view your most prized painting. It’s a scene of cowboys set in the grandeur of snow-capped mountains, painted by a name anyone acquainted with art would know. When you first saw it, it stirred memories of your childhood trips to Sun Valley. So you bid on it, and kept bidding, even as the price moved above a million. Now it’s yours. It was worth it. Nothing you own feels so much like a treasure. Nonetheless, you have other things that are costly and that others covet. We’ll let you paint in the details of the cars in the garage, the speedboat rocking against the dock, the home entertainment system…

That was fun, wasn’t it?

Now, imagine that we are reforming government along the lines of zero-based budgeting. In other words, at the end of each year, all services and taxes are returned to zero. No income tax, no sales tax, no property tax. Unless we decide to require them this year. No trash collection, no highway maintenance, no record keeping. Unless we decide to pay for them this year. Nothing carries over. Past assumptions are dead.

Now, how much would you pay for police protection? [Read more…]