My stepdaughter thought a great blog could be constructed around the similarities of the Santa Claus myth on the one hand, and the relationship between the “state” and its entitled subjects on the other.  At first I couldn’t see a “medical” twist on this comparison. Then I got some unsuspected help from Rex Smitherman, interim president and CEO of i2E Inc.  

Some background. i2E Inc., is a company that mentors many of the start up technology companies here in Oklahoma with tax dollars. Basically, if the folks at i2E think you’ve got a good idea for a tech start up, they’ll use state taxpayer dollars to fund your concept. This is bad enough, but they also “mentor” these same start up companies on how to grab federal tax dollars, as well.  In short, Oklahoma taxpayer’s bank accounts are raided by the Oklahoma Tax Commission in order to pay a “nonprofit” company (i2E) to help individuals better gain further access to your bank account using Uncle Sam as the intermediary.  Once these companies get off the ground, the individuals reap the benefit, not those who funded their enterprise (the taxpayers).

Here is Smitherman in the December 25th edition of “The Oklahoman:” “When the startups we’ve worked with for months or even years start hitting their milestones-when they sign that big contract with an all-important customer and accomplish the things that they and we believed they could-it feels like Christmas, no matter what time of the year it is.”  I’ll bet it does feel like Christmas when the pay offs for these techies appear under the tree, courtesy of the mysterious and forgotten taxpayer.  Magical!

“But these tech companies will bring high paying jobs to our state,” you say!  But what would have become of this money had taxpayers controlled the destiny of their own funds?  This is where Bastiat is so useful and important, to help us see “what is not seen.” Please understand that I consider Bastiat’s utilitarian argument against state theft as secondary and downstream of the primary argument  against state theft, that being that it is theft, after all, and as a violation of individual property rights, simply wrong on a moral level. 

Isn’t the advocacy of expanding Medicaid the same Santa Claus economics, where no thought is given to the source of the funding? I guess using this logic, “federal dollars” fall off trees and are there for anyone to pick up, the damage done extracting this money from private individuals mysteriously nonexistent?

“But the Medicaid money will be a boost to the economy,” you say!  The “boost” can be no greater than the equal amount of destruction of the economy rendered by this theft in the first place- and only a handful benefit at the expense of the many.  

Here’s what I say.  If you want to take personal risk and start a company, by all means do it.  I wish you the best.  Do it with your own money, though.  If you don’t have adequate funds, seek investors the way everyone else does.  Let private individuals risk their own wealth, not that of the unsuspecting taxpayer.

The idea that the market is somehow inadequate to identify worthy opportunities and that the “state” must favor this or that business is a recipe for mal-investment and failure, the perfect example of which is Solyndra. Even if these state-sponsored “businesses” are successful, we must account for the damage done by the initial robbery.

The way I see it, i2E is basically helping individuals buy lottery tickets with stolen bank notes.  When they pick a lucky number, it may feel like Christmas on their end, but feels like a mugging to all those whose bank accounts have been victimized, those taxpayers who not only purchased the tickets against their will, but are encouraged by Smitherman and others to cheer these fellows on as they run off with the winnings.

G. Keith Smith, M.D.