“At a Loss for Words: Conversation in an Age of Rage” (Random House Canada, 2024) caught my eye because I was hoping to gain insight into how to have rational conversations with people who disagree. Instead of such advice, the book’s underlying theme is a defense of wealth re-distribution (for which I use the shorthand ‘the welfare state’). Carol Off, the author and long-time journalist with the Canadian public broadcaster, laments in six dedicated chapters how key words characterizing the welfare state have been hijacked and distorted by the extreme right and now threaten it and liberal democracy in general.

The author’s chosen key words are freedom, truth, democracy, woke, choice, and taxes. The last one Off considers the most important, because taxes make a civilized society – by which she means the welfare state – possible. Her paraphrased quote from the U.S. Supreme Court justice Oliver Wendell Holmes in the early 20^th century: “Taxes are the price we pay for civilization,” prompted my post. I wanted to challenge the premise that the tax-funded welfare state is the ideal civilized society.  The focus here, therefore, is on the chapter about taxes.

Off sets up her defense of the welfare state with a false alternative: either we have a welfare state or a libertarian anarchy (which she equates with capitalism). She argues that the welfare state is ideal as the only social system that can achieve equality of outcomes for all, with the government collecting taxes from the productive and “redistributing” them to the less productive through various subsidies and programs.

The only alternative to the welfare state funded by taxes, Off suggests is a libertarian anarchy where there is no government and no rule of law, and where everyone must fend for themselves, resorting to vigilante justice for self-defense and to physical coercion to get what one wants. But this alternative between the welfare state and anarchy is false, because the two systems share an essential feature: physical coercion. The welfare state uses coercive taxation to achieve its aims. In anarchy, all forms of physical force and fraud by everyone against all are the rule, which makes it a nightmarish survival-of-the-fittest scenario that we must dismiss as anti-civilization.

But is the tax-funded welfare state an ideal civilized society? I argue ‘no’– because it relies on government coercion and therefore diminishes human welfare.

According to Ayn Rand, a civilized society is one in which physical force is banned from social relationships and can only be used to retaliate against those who initiate it. Why is this principle of non-initiation of physical force so important to human welfare, and what does it imply for organizing society and the role of government?

To maximize welfare, for humans truly to flourish, we must be free: to think and to act accordingly, to acquire knowledge and skills, to create products and services, and to trade with others. Initiating physical force to any degree diminishes freedom and hinders our ability to survive and thrive, to create wealth and sustain prosperity. Taxation in the welfare state is not voluntary. It uses physical force – the government punishes non-compliance by confiscation of property or imprisonment – that restricts individuals’ freedom to create, produce and trade, and reduces prosperity for all.

The alternative social system that bars physical force from social relationships and makes a civilized – truly free –society possible is capitalism (which, despite Off’s beliefs, is not synonymous with anarchy). In capitalism, the government does not create and maintain a welfare state and fund it through taxation. Instead, it has only one but crucial role: protection of individual freedom against physical force. This includes retaliation against initiators of force, through the police, the law courts, and the military.

A capitalist government itself cannot initiate force, including imposing taxes on its citizens. It must fund its operations through voluntary means only (such as lotteries or fees for court protection of contracts). All other services in a civilized society under capitalism, such as education, health care and health insurance, and cultural institutions are privately funded and offered at different price points by private companies in free markets.

A pure capitalist system is obviously not the reality today, but it has been approximated in countries where political and economic freedom are the greatest, such as Ireland, Switzerland and Estonia (and historically, America, based on its founding documents). These countries are characterized by higher economic prosperity, smaller governments (measured by government spending/GDP), lower taxes, a strong rule of law and respect for property rights, and higher life satisfaction than their peer countries in the OECD. They show that it is possible to shrink the welfare state and increase liberty – to move towards a truly civilized society.

Taxes are not the price we pay for civilization. In a civilized society, there would be none. Those doing productive work recognize that government protection of their freedom from coercion is a value that allows them to live in peace and to prosper through voluntary interactions with others – for which they would be willing to pay.

If we want a true civilization, we must advocate for barring physical force from social relationships – for freedom from force.

Photo by Julia Taubitz on Unsplash

The evidence that personal freedom and free markets lead to most prosperity and human flourishing is undeniable. Everywhere you look today and in history, the freest countries are and have been the most prosperous, making flourishing for their people possible. Singapore, Switzerland, Ireland, Luxembourg, Estonia (since being liberated from the Soviet oppression), America (especially in the 19^th and early 20^th centuries), and England after the Industrial Revolution make a striking contrast to the autocratic regimes from North Korea to Cuba to Mao’s China and various African dictatorships where people starve or live in utter poverty.

Despite elements of capitalism in the freest countries, none of them have achieved full, laissez-faire capitalism where all property is privately owned and the government’s only role is to protect individual rights. Why?

Voters generally prefer a mixed economy that combines elements of capitalism and the socialist welfare state because they don’t like the inequality of capitalism. (Autocrats prefer socialism for the state ownership of property and the opportunities for kleptocracy it provides). Indeed, prosperity in capitalism is unequal: the most productive get rewarded the most. But this is not a flaw but a benefit because everybody prospers more in capitalism than in any other system.

The fundamental reason for not having full capitalism is its conflict with the prevailing moral code, altruism, that motivates voters’ preferences. Altruism imposes a duty to place others’ interests first and sacrifice our own, whereas capitalism protects freedom to pursue self-interest and trade voluntarily with others. Since altruism is widely considered the only (acceptable) moral code, many people are adverse to acknowledging self-interest as moral (as manifested, for example, in my discussions with business students over many years of teaching).

But altruism is an anti-life morality that – if followed consistently as a moral code – makes everyone a loser. Those who sacrifice their own life and interests lose, but so do the recipients of sacrifice who claim greater needs and a “have-not” status to receive benefits paid by the more productive, the “haves.” The recipients of sacrifice become dependents without a productive purpose and eventually exhaust the producers who become “have-nots” themselves unless they escape. Witness the flight of producers from the more oppressive welfare states to freer countries, or the equal misery of everybody (save the ruling elites and their proteges) in autocracies.

Capitalism is a social system that makes everyone a winner – capitalists, workers, and consumers alike, because it is based on the recognition of the primary requirement of a successful human life: the use of reason for survival and flourishing.

Capitalism incentivizes using reason and creates the conditions that make it possible. The government under capitalism protects everyone’s freedom to think and act against those who initiate physical force, whether common criminals, terrorists or foreign invaders and retaliates on your behalf. The only means to deal with others capitalism permits is persuasion. If others don’t want to help or trade with you, coercion is not an option. You need to seek out others that do. There are no duties in capitalism except the obligation to respect the equal freedom of others and abstain from using physical force.

Altruism and capitalism are inherently in conflict because altruism curtails freedom and enslaves individuals to serve others and sacrifice their own interests. According to prominent altruist philosophers, such as John Stuart Mill and Peter Singer, we must cut spending on personal enjoyment and dedicate the savings to helping others, until we have only the basic necessities to keep on giving.

Why is altruism the dominant moral code, despite being anti-self-interest? Regardless professions of altruism, most of us don’t engage in self-sacrifice – if we did, we could not survive and flourish – but pursue our interests and happiness daily. We work to have a productive purpose and to support ourselves and our families; we buy food, shelter, clothing, and other goods; we look after our health; we engage in social relationships. We do all this, not to maintain ourselves for the purpose of self-sacrifice but to survive, thrive, and enjoy life.

Yet, many embrace altruism as the unquestioned moral code, because that is what we have been taught, thanks to religion and philosophy that have shaped today’s culture. In this teaching, whether at home, church, or school, altruism is often camouflaged as generosity, kindness, and benevolence that facilitate harmonious co-existence. This is more palatable than the explicit duty to self-sacrifice for the “common good” that altruism actually prescribes. Self-sacrifice is required in socialism and the mixed economy where the needs of the “have-nots” are met through the productive efforts of the “haves.” Taxes and other private property confiscations are not voluntary or optional.

To achieve capitalism, we need a different moral code that aligns with the human requirements of reason and freedom from physical force. That code is rational self-interest, or egoism, whose moral guidance is based on the recognition of these factual requirements. Egoism was developed by Ayn Rand on the Aristotelean foundation, as part of her philosophy of Objectivism that she called “a philosophy for living on earth.” It entails living in harmony with others, dealing with them by voluntary consent only as traders of values for mutual benefit – which no other social system but capitalism sanctions and protects.

We will not achieve capitalism unless or until we accept and embrace the fact-based, pro-human-life morality of egoism. Therein lies the challenge, given the millennia of religious and philosophic teaching and continued cultural dominance of altruism. But the factual requirements of human life and happiness are aligned with egoism and capitalism, which is observable to all who want to see it and think for themselves.

Photo by Nikita Godunov on Unsplash

After my last post, a reader wrote that capitalism is scary to many people because they fail to recognize its essential benefit: the freedom to pursue, and achieve, your happiness. That prompted this post.

Capitalism can indeed feel intimidating. Life is rife with uncertainty: we don’t know if we will lose our jobs or business,  go bankrupt, fall ill, get injured, become disabled, or not.  While we want to succeed, failures, illness and accidents are possible, often for reasons beyond our control.

In a mixed economy, the government provides taxpayer-funded social security, unemployment benefits, “free” health care, and other welfare functions to protect us against such vicissitudes. Most people understand capitalism to be a free-market system where the government does not perform any welfare functions. Because of the possibility of failures, accidents or illness, not having a social safety net – the government taking care of us – can feel scary, particularly if you are supporting family or other dependents.

The fundamental reason for being intimidated by capitalism is that it is poorly understood. Most of us live in a mixed economy and take the welfare state aspects of it for granted. If it weren’t for the government, who would provide us health care and health insurance, old age security, and other benefits? Who would take care of the poor and the destitute?

Most people have never learned about capitalism and have been exposed only to distortions about it through education and the media. Some of these are: capitalism is system of the survival of the fittest;  it exploits workers and consumers; it makes the rich richer and the poor poorer and is ruled by ruthless dog-eat-dog competition.

As a consequence, most don’t know the benefits of capitalism: the freedom to pursue, gain and keep your values, and achieve happiness that can ensue only from such freedom. They settle for the government-provided safety net that saddles them to be their brothers’ keepers through taxation and curtails their freedom to choose how to live their own lives, earn their living, and spend their earnings.

It would be one thing if taxes were voluntary. In Canada, according to a recent Fraser Institute study, an average family spends more of its income on taxes (about 42%) than the necessities of food, shelter and clothing. That severely limits the ability to choose other values to pursue.

It is true that capitalism is a system of competition where production and innovation are rewarded. Those who produce the most prosper the most. But their prosperity is not taken from others. On the contrary, it is created through innovation and productiveness encouraged and made possible by freedom. Such innovation and productiveness also benefit others, through more jobs and better pay for workers, better and cheaper products and services for consumers, and through more business for suppliers. This allows others to prosper also and gives them more opportunities to pursue their values.

To remedy being intimidated by capitalism, we must understand what capitalism is and what it requires of individuals to succeed.

In contrast to a mixed economy of relatively free markets and government controls, capitalism is, as Ayn Rand defines it, “a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.”

In such a system, the government’s only role is to protect individual freedom of action against initiation of force by others. The government does this by protecting individuals’ rights to life, liberty, property, and the pursuit of happiness through the police, the military, and the law courts. In capitalism, the government does not provide welfare programs, health care, unemployment benefits, education, or any other entitlements.

In a system where there is no social safety net, we are guaranteed only one thing: freedom from physical coercion (unless we initiate such coercion, in which case the government must retaliate on the victims’ behalf).

To protect ourselves against uncertainty and possible misfortune in capitalism, we must develop our knowledge and skills so that we can produce values and trade with others, whether by working for someone else or for ourselves. Either way, we must learn to think and solve problems to support ourselves. Cultivating such abilities would have the added benefit of having the self-confidence in our ability to deal with whatever life deals us.

Productive work also yields savings that can be invested to provide extra cushioning against life’s vicissitudes. Taking private insurance against accidents, illness and disability adds extra protection.  (Those who are truly unable to support themselves, save, and afford insurance, must rely on private charity – that historical evidence has shown to flourish in the conditions of freedom and the absence of government welfare programs).

The above protections and understanding the true nature of capitalism would enable us to embrace and advocate for it. Eventually, we would gain the freedom to pursue and achieve our chosen values – instead of the government choosing for us. Happiness would be the reward, only fully possible in the conditions of freedom and capitalism.

Photo by Juan Mayobre on Unsplash

Wesley Hilliard, reporting for AppleInsider last week:

A report from Irish Independent detailed the European Commission’s response to Apple’s new business terms for the EU. They share that they welcome the changes and will monitor Apple’s implementation of the terms.

Here is the EC’s full statement:

“The Commission welcomes Apple’s changes to their business terms, which follow a close dialogue between the Commission and Apple after the Commission issued a non-compliance decision related to Apple’s steering terms as well as preliminary findings related to alternative app distribution, both in April 2025,” the spokesperson said.

“Following today’s announcement, the Commission will monitor Apple’s effective implementation of the new terms. Under the DMA, users in the EU have a right to full and effective choice of alternative app distribution channels.”

The point of the DMA was to open up competition and choice for developers, which the EC seems to believe Apple’s terms have accomplished.

I don’t think that was ever the point of the DMA. It’s what a lot of developers who themselves wanted more competition and choice — and freedom — on iOS presumed was the point of the DMA. The European Commission paid lip service to these ideals, which encouraged people to think these ideals were the point of the DMA. But what I’ve consistently argued is that the only actual point of the DMA is for the European Commission to impose unnecessary bureaucracy and inconvenience into major markets where it previously had no footprint. They had no noble goal. They just wanted to erect a bureaucratic structure that clearly shows “The European Commission was here and did something.” Impose copious fines on Apple, Google, Microsoft, and Meta; inconvenience those companies and their users in the EU; all to show that something has been done. (And to cash the checks from the fines they eventually collect.)

That’s why the text of the DMA itself is so hard to read and understand. There is no clear intent of “opening up competition and choice” hidden in the murky, impenetrable prose of the DMA. The murky impenetrableness of the law is a reflection of its actual intent: murky impenetrable bureaucracy.

Here’s a commenter on Hacker News (via Michael Tsai’s roundup) who can’t believe it:

This is bonkers, I can’t believe the EU Commission agreed to it. The main issue that the DMA was about still remains: Apple retains ultimate control over app developers’ dealings with users.

The status quo that the EU should have pushed for, and which Article 6(7) of the DMA requires, is one where a developer can distribute iOS apps to users without ever entering into any contractual relationship with Apple. The OS APIs that most apps use are already paid-for by the user when they buy the device. Apple wants to double-dip and charge developers for the value that the users already have by virtue of owning their iDevices with all the necessary iOS paraphernalia in them.

If you believed that the point of the DMA was to open up competition, choice, and freedom for developers, yeah, I bet it does seem bonkers that the European Commission has signed off on compliance where Apple charges 15 percent commissions on links to the web from apps distributed on the App Store, and that Apple will collect a 5 percent Core Technology Commission even for apps distributed on third-party app marketplaces, using third-party payment processing. But if you believe, as I do, that the point of the DMA is to impose obvious regulatory burdens and bureaucracy upon Apple (and Google, and Microsoft) — and upon the EU citizens who use those companies’ “gatekeeping” platforms — then it is completely unsurprising that the European Commission “welcomed” these changes. The Commission has gotten everything it wanted from Apple:

• Third-party app marketplaces (no matter if almost no one uses them).
• A growing list of features withheld from the EU, like iPhone Mirroring and Siri AI (this shows that the DMA “works” and they’ve done something).
• A bunch of fines.

I’m sure some of you think I’m all wet in my argument that the point of the DMA was merely to impose ongoing bureaucratic complexity. But my view jibes with the reality of how it’s worked out. Compare and contrast with the Mobile Software Competition Act in Japan. Apple complied with the clearly stated requirements of the MSCA with no drama, Japanese users aren’t missing out on features like iPhone Mirroring, and the only delay for Siri AI in Japan is language support. Japanese iOS users get all the “good parts” of Apple’s regulatory compliance that EU users do, with none of the rather severe hindrances.

Chloe Swarbrick: 'Yes, I alone will decide how much profit you will make. Or not.'

"One of the most valuable inheritances from Roman law is the prohibition on retroactive legislation; the principle that what is lawful today cannot be declared unlawful tomorrow and punished after the fact. Civilisation depends on this. Without it, citizens cannot plan, cannot trust the law, and cannot defend themselves against the State. The rule of law collapses into rule by law — law as a weapon. ...

"The Green Party’s supermarket policy is a textbook example of how modern ideological movements drift toward retroactive punishment. Their proposal to penalise 'excessive profit' or 'price gouging' sounds simple until you ask the only question that matters: excessive according to what standard?

"So far, no standard exists.

"Chlöe Swarbrick has been unable to articulate: 

• how “excessive profit” would be defined, 
• what baseline would be used, 
• whether the metric would be tied to past behaviour, 
• or how businesses could know in advance whether they were compliant.

"Without a clear, objective, forward‑looking definition, the policy becomes retroactive by default. It allows the State to declare, after the fact, that last year’s lawful profit was actually this year’s unlawful 'gouging.' That is not regulation; it is ex post facto punishment disguised as economic justice.

"This is precisely the danger Roman jurists warned about. Law must be knowable before action, not invented after action."

~ Colinxy from his post 'Retroactive Law: When the Past Becomes Illegal'

Mark Carney “now leads the west,” tweeted Anthony Scaramucci the other day. It was a reaction to the Canadian prime minister’s decision to pull out of trade talks with the United States at the last minute on Friday night — “something that few other world leaders before him have dared to do,” as The New York Times’ Matina Stevis-Gridneff put it. “We’re at a juncture where other countries may be very closely watching how this plays out as they also are becoming increasingly frustrated with the demands the U.S. is placing on them in these largely one-sided trade agreements,” was how one trade expert put it to The Washington Post.

Prime Minister Carney has certainly been keen to fill the role of global head of the resistance to the Trump administration. A Wall Street Journal story last month highlighted the degree that Carney has been pressing Europe’s leaders behind the scenes to accept the premise that “the old America isn’t coming back” and adopt a less conciliatory stance towards the White House in response.

Carney, I do think, dislikes the United States quite deeply, both philosophically and personally, and holds an ideology that posits Europe and England as morally superior civilizations and better allies for Canadian interests. I think there’s plenty of takers for this worldview, in Canada, Europe, and even America itself, and to the degree Carney is seen as the man embodying a pivot away from a repulsive, belligerent United States and towards some new alliance of calm and principled western powers who treat each other with respect and fairness, Carney’s international standing will continue to rise.

Yet as I wrote previously about his Davos’ speech, Carney is also a Canadian politician who has to operate within the confines of Canadian domestic politics. There is a tension between these two roles he seeks to occupy simultaneously — the grandness of being a leader of a principled liberal world order, championing transnational interconnectedness, and the smallness of being a Canadian politician, captive to the petty hangups of an often deeply insecure, parochial country and all its assorted taboos, shibboleths, and mythologies.

Carney spoke to the Canadian public on Saturday, offering three reasons why his government walked away from trade talks with the US administration. Two of the three were broadly sympathetic by objective standards: Trump apparently insisted on keeping tariffs on certain types of Canadian-made trucks even as automobile tariffs were lowered on other makes, and evidently wanted “language” in the Canada-US deal that would “restrict our ability to have other trade deals” with other countries, presumably by locking Canada into a so-called “fortress North America” continental tariff regime. But Carney’s third reason for walking away was odd, and has been subject to considerably less media and political scrutiny precisely because it’s so odd.

Here is how the prime minister put it:

I’ll give you a third. Continual efforts, always resisted, as I said in my remarks, and always will be resisted, efforts to restrict our protections of our language, our culture, and in effect our sovereignty.

The “as I said in my remarks” refers to a statement earlier in his press conference where he said (translated from French):1

We were not prepared to compromise on our sovereignty, the protection of the French language, and our culture. To our American colleagues, let us be clear: for my government and for Canada, these issues were never on the table, even though the United States tried until the very last minute.

Later on, Carney spoke of the Americans trying to “influence our cultural support and language protections,” and characterized this as the poison pill that ended the talks once and for all (again, in French):

We were ready and close to having a comprehensive agreement that would be fair to both countries. We were close to that happening, and it seemed that we were close to reaching a comprehensive and fair agreement with the United States. But they made changes, including threats on the French language and Quebec culture and Canadian culture. That is not acceptable. That would never be acceptable, and for that reason, that marked the end of the stage of negotiations. [emphasis added]

Asked for more specifics, this exchange ensued (again in French):

Q: You talked about compromises on our sovereignty, the French language and culture and key sectors. What specific concessions were you not prepared to make?

CARNEY: Well, for example, there were suggestions about discoverability online involving Canadian culture and French media. That’s one example. As well as subsidies and support for our culture and the French language, and even information provided on Canadian products. So there are a number of examples. And it was unacceptable right from the start. But the Americans kept trying and trying and we said no. Ultimately it’s simple. That was never on the table for Canada. And it would not have been acceptable to Canadians.

Carney must provide greater clarity to Canadians about what exactly he means by all this. While Canadians might tell pollsters they agree in the abstract with the need to “protect Canadian culture,” Carney’s sticking points appear to be extremely narrow, interest group-driven things — particularly Quebec interest group driven things — that I can’t imagine most Canadians expect to be beyond the realm of compromise in a multi-billion dollar treaty with Canada’s largest trade partner.

Ottawa spends millions every year subsidizing what is euphemistically called the Canadian “cultural sector,” including movies and TV shows few Canadians watch, magazines few Canadians read, and radio stations few Canadians listen to. In 2023, the Trudeau government passed Bill C-11, the Online Streaming Act, which promises to boost the discoverability of government-certified “Canadian content” on streaming platforms in ways that have yet to be fully decided. And Ottawa of course legally mandates French-English bilingual packaging for all goods sold across Canada, including goods imported from other countries.

Some of these policies are reasonable things for American trade negotiators to oppose. Complaining about Canadian cultural subsidies seems a bit irrelevant, just given it’s hard to argue American cultural products are in any way failing to compete in the Canadian marketplace. But the Online Streaming Act, which I have long opposed, very explicitly seeks to discriminate against American content by putting Ottawa’s finger on discoverability algorithms in a way that will harm the interests of American creators seeking to build a Canadian audience through platforms like Netflix and YouTube. Bilingual packaging is likewise a burdensome obligation Canada imposes on American goods of which no comparable ask exists in the opposite direction.

Despite Carney’s grand language, it is exceedingly difficult to believe it “would not have been acceptable to Canadians” if he moderated government policy in some of these realms of contention — say, by repealing C-11 (which he’s already significantly watered down anyway), agreeing to cuts in cultural subsidies, and introducing a quota or something for imports of goods in English-only packaging. The hardline stance he actually took, by contrast, the idea that it was this particular bundle of issues that “marked the end of the stage of negotiations,” (a “red line” as an unnamed aide would later put it) only makes sense in the context of Canadian domestic politics, particularly the disproportionately large role the province of Quebec plays dictating the priorities of the Liberal Party.

A large portion of Quebec’s French-Canadian majority believe themselves to be a severely endangered people on the brink of cultural extinction. Massive federal subsidies to Quebec cultural industries are one of the few perceived cures, along with an uncompromising insistence that the French language be used in any realm of life where the federal government holds even the slightest whiff of jurisdiction. Carney’s Liberals won 44 of Quebec’s 77 seats in last year’s election — a quarter of his parliamentary caucus. It is very difficult to understand why Carney does anything he does without understanding his reliance on Quebec votes, as well as his insecurity that the province may not fully trust him, an English-Canadian Anglophile with shaky French skills and no personal connection to the province, as an avatar of their interests. It is the same reason why the prime minister has been so dogmatically unwilling to compromise in trade talks on the one issue in which Canada is unambiguously in the wrong — the country’s hideously protectionist dairy industry, based in Quebec.2

In the hours since Carney’s decision to abandon trade negotiations with the Trump administration was announced, Canadian pundits have applauded in unison that “no deal is better than a bad one.” Carney’s high poll numbers ensures the public largely defers to his judgment about what’s good or bad, but a higher standard of proof should be demanded.

If Carney was prepared to walk away from a flawed but better-than-nothing trade deal — one comparable to what the Europeans, Japanese, South Koreans, and British have already secured — it is appropriate to expect him to reveal what exactly made this deal so much worse, ideally by proving that Trump expressed a level of greed and meanness towards the Canadians that was appalling even for him. But if it was merely a standard Trump deal that Carney opposed for basically domestic political reasons, to pander to Quebec voters and lean into his anti-American tendencies that are popular elsewhere, then the prime minister has revealed himself to be a much smaller man than the world thinks.