Today in our Business Ethics class the professor briefly mentioned the two key and ancient Chinese philosophies. Although he couldn’t name them he went on to describe them. One maintains the idea that people are inherently evil and that they have to be controlled, while the opposite one maintains that people are not necessarily evil but generally strive for good and therefore should be left alone. In more complete terms, it was a matter of collectivism and individualism or as is more famously known in the West as the X and the Y theories. This immediately rang a bell to me; it reminded me of an article I had read from Rothbard some time ago.
I’ve heard free-market economists and even downright libertarians say that government borrowing is different from taxation and inflation in the sense that it is a voluntary means of extracting funds and thus can be considered legitimate. Even though it’s true that government borrowing (typically through the issuance of bonds) is a voluntary exchange, its successful application relies on the government’s use of the two other coercive methods of raising revenue; taxation and inflation. How is this so?