Thursday, December 29, 2005

Mao Tse-Tung on Political Power

Not posting on the PRC today.

"Political power grows out of the barrel of a gun."

Thus Mao Tse Tung was quoted, and how true it is. I am amazed, however, by how many people look at that and say, "Well, that's not true. There are a lot of ways to achieve political power." We've been living in a representative/majoritarian republic for so long now many people simply can't imagine what power means. Lysander Spooner in "No Treason" referred to the ballot as, "a mere substitute for a bullet." People have forgotten this.

One fellow said argument and "power plays" are alternate routes to political power. I would love to see other examples of ways political power are established other than force, the threat of force, or fraud. The kind that is genuinely based upon the consent on those ruled can evaporate rather quickly--a few bad decisions, and people stop listening to you. Favor trading is a way to accumulate influence, but like in The Godfather, it's the threat of what will happen if the other party doesn't honor a favor owned that ultimately does the job. People are probably more honorable than some might think, but in a system with no penalty for dishonesty, the dishonest do get ahead.

No, political power is ultimately the power to confiscate property, to imprison people, to kill people who don't go along with what you say. One can make reasoned arguments, indebt people to oneself morally and economically, or keep one's reputation clean when everybody else is mired in corruption. Ultimately, however, one's power is based in the compliance of those who have the ability to enforce one's will upon others. There are many countries in which the military rules, because the military is an entity unto itself, and the military has the guns.

This is why the ability of the People at large to keep and bear arms is so important to a system of distributed power (ie. democracy). In a system where the general public is not considered to have a right to arms, there are two groups of people who hold the real power: police, and criminals. One's life is regulated largely by whichever element is closest to home, and on the border, one must walk a fine line between the Laws of the State, and the Law of the Streets. Each side encroaches on the freedoms of the "ordinary citizens," one side through theft and extortion, the other through more direct means.

When everybody has access to weapons, crime becomes a much riskier occupation. The chances of getting shot during a robbery go up considerably. The chances of getting shot while attempting to extort people go up considerably. And the government can never be sure which of their more oppressive policies will result in a few, or perhaps even many, people deciding to fall back on their guns, rather than just putting up with encroachments.

Mao was right. Power does flow from the barrel of a gun. And only a people that has guns has power.

Saturday, December 24, 2005

The Environmental Benefits of the PRC

I figured this was a necessary first-touch, since at first glance, this seems to appeal more to socialist types than to environmentalist types. Indeed, the "sell the national forests" tone that would be enabled via phase 1 of the process of creating the PRC would likely offend most, if not all, environmentalist types. This is unfortunate. I believe that, in the long run, the PRC would be the most environmentally friendly initiative ever made. In this article, I will detail why I believe this.

Let's look at the short-term benefits of this first. Yes, it would create a great incentive for the Federal Government to sell off its parks and forests. The downside of this is that we wouldn't have an agency of force preventing clear-cutting, strip-mining, and other environmental no-no's. The upshot is that we would no longer having an agency of force allowing them for dirt-cheap rents to their political contributors when the environmental movement was looking the other way. There would also be great economic incentives to manage the land well.

Say a timber company bought up a parcel of national forest land. If the government was smart about it (and I'm not saying they would be, but you can bet the next owner would be), it would sell the land at the highest price it could get--which would be a price that accounted for the presence of good timber on the land. Suppose they clear-cut it. They would make profits on the timber they'd cut. Suppose they then tried to sell the land off, now that it was worthless for their purposes. They would probably have to sell it at a loss, due to the fact that there is no longer good timber on the land. Not only that, but if they held onto the land, they would likely be subject to lawsuits from "downstream" communities, if all that timber they cut was previously preventing erosion and flash-floods. Very likely, said timber company would end up going out of business. The land would then be bought by someone else--perhaps a more environmentally responsible timber company.

Not only that, but the amount they managed to sell it for would impact the "land only" value of the area around it (since we would have an actual "land only" value to go by). This would lower the rent payments made by their competitors... increasing the dire circumstances for the environmentally unfriendly timber company. And these natural economic laws (as opposed to avoidable human laws) go for each and every harvesting operation that could commence on previously govenment-held lands.

Now, these arguments would hold even if we sold the land outright. But the benefits go even further than that, from the point the PRC takes posession of roadways onward.

The average person owning the average home in the day the PRC completes its purchase program would likely not pay anything to the PRC. The amount they owed in ground-rent and the amount they were owed in dividends would roughly balance out. However, the people managing the roads they used to get around would also be paying rents to the PRC. Assuming the roads were paid for by the people that actually drove on them (the ground-rent costs to governments owning road systems--and the presence of a corporation willing to buy it at whatever they will charge--would be a powerful incentive for them to relinquish control to groups that could find a way to charge based upon use) the homeowner would also be indirectly paying the ground-rent for the transportation system. The farther they commute, the more they pay, which would be a powerful economic incentive for more efficient urban development, and a disincentive to the suburban sprawl we see today. In addition, I am willing to bet that, with transportion systems no longer insulated from actual market forces by the government, alternative, more efficient modes of transportation would arise. Light-rail is only the beginning...

Additionally, from the very beginning (assuming the interstate system was granted to the PRC from the beginning), the additional cost in ground-rent to maintaining road systems would be an economic disincentive to the continued development of road-pork. Many road-building decisions are made based upon a legislator's desire to shift federal tax dollars into his state's construction industry (earning him votes of gratitude from construction workers and others who would otherwise be paid less or be unemployed). With every roadbuilding appropration having to include ground-rents paid to the PRC, it would be more difficult to push road-pork through Congress.

And to those naysayers who see the decay of our road system as the beginning of economic ruin, I remind them that the transition from our current system to the PRC system would be a gradual process. It won't happen in a day. Heck, it probably wouldn't even happen over the course of fifty years. The market would have plenty of time to adjust to the new paradigm, and I think it will be in even better shape once the transition is complete.

Then there is consumption of fossil fuels. Petrolium reserves could be sold off to companies, giving them an exclusive right to drill for oil in a given area. (The government could continue to hold onto ANWAR as long as you can keep them doing it, so long as the ground-rent could be paid through taxes.) However, they would have to pay rent based upon the market value of said reserves, and given how lucrative oil drilling is, they would pay a fairly high price. This would raise the price of the oil when it reached the market, which would cut consumption. This, in turn, would cut pollution.

Very simply put, when the two issues (economics and ecology) cease to be insulated from one another by government subsidies, the list of environmental benefits are endless. I'm sure there are more than I have listed here. This is an issue I am really looking forward to getting into a good argument with environmentalists on. Post your critiques; I shall answer them.

Saturday, December 17, 2005

The Public Resources Corporation

Heh, after writing last week's blog, I find myself wanting to describe the same concept from a different perspective.

The Public Resources Corporation would be chartered by the federal government. It's shareholders would consist of all adult citizens at the time of its inception. Each citizen would be granted a single share in this corporation. Once every citizen (child or adult) at the time of the chartering had his single share, the shares would be fixed. No new shares could be issued for sale, or to grant to any individual for any reason. Share numbers would be adjusted from time to time, but this would only be to make accounting easier (multiplying shares to make fractional shares whole--see below), not to rearrange the ownership.

All land owned by the federal government would be transferred to the PRC. The government would retain rights to said land, but would start having to pay rent to the PRC for control of this land (see below). The government would also retain the authority to sell their rights to any individual. The PRC would retain ownership of the land, but the rent would now be paid for by the new rights-holder.

What the PRC would do

The PRC would retain ownership of all the natural resources in its possession--it would never sell it to anyone. However, it would register rights to control natural resources, and charge rent for that right. Once a parcel of land (or band of electromagnetic spectrum, or rights to below-ground resources, or whatever other beneficial natural resource monopoly could be thought up) was purchased, the rights to that natural resource could not be transferred to a new rights-holder except with permission of the rights-holder. In return for absolute control over the given natural resource, the individual would pay a percentage of the market value of that resource to the PRC as rent, on a yearly basis. The PRC would own only natural resources, ie. things not created through human effort. Capital improvements (buildings, etc.) would belong to the individuals that created them, or those to whom they sold them. No rent would be charged based upon improvements to a parcel of land; only the land itself could be the basis of resource value calculations. How the calculations could be done will be the subject of a future article.

The only time a rights-holder could be deprived of his rights is in the event that he could not pay the rent, in which case just enough of the resource would be removed from his possession to cover the bill. Upon being without a proper owner, the resource would be open to public use, the precise rules for which would be decided by the board of directors, elected in the usual fashion (one vote per share). An example I would suggest is that unallocated land could be traveled upon or harvested from (food, timber, minerals, etc), so long as no harvesting tools or transportation equipment (vehicles) that use a non-living source of energy are used (ie no chainsaws, no cars, no tractors; only human or animal muscle). The construction of an enclosure (fence, building, etc), the claiming of the rights to decide what can and cannot be done on a plot of land, or the use of powered equipment would constitute a claim on the land, and the individual doing so would then be subject to rent costs for the area utilized for that year. An individual could disavow their claim to escape the following year's rent, though it would likely be more profitable for them to sell it to someone else who wants it.

Note that this entity would be separate from the government. As such, even the government would have to pay rent to maintain their facilities on public land. This would include any and all land the federal government maintains roads on (the interstate system, but again, they would be charged only for the space, not for the space plus the construction on top of the space). It should also be noted that any property taxes charged by the government would be collected from the rights holder, not from the PRC..

The PRC would have only three things it was allowed by its charter do with the money. The first thing would be administrative costs--the costs of collecting and disbursing the rent on natural resource monopolies. The board of directors would decide how much of the revenues is needed to accomplish this. The second would be direct payment of dividends to shareholders. The third would be the funding of a program to purchase additional, privately held land, until such time as all the natural resources of the country were owned by the PRC. The revenues remaining after administrative costs would be divided between these two purposes according to the percentage of the country's known natural resources owned by the PRC; if the PRC owns x percent of the country's known natural resources, x percent would go to the shareholders; the remainder would go to the purchase program. Obviously, once the PRC owned 100%, 100% would go to the shareholders.

The purpose of all this is to ensure that wealth goes only to those that deserve it, not those that merely inherit wealth. Wealth acquired through labor is obviously deserved. Wealth acquired through investment of capital (itself a valuable kind of labor) is also deserved; it takes brains to invest wisely, and capital growth benefits all. An unworthy heir of capital will typically end up spending more than he earns, and thus the undeserved wealth ends up in the hands of others. But the person who's wealth comes from exclusive control of natural resources--land deeds, etc.--can simply sit back and watch his wealth grow (as land goes up in value with population density), collect rent from those that use his land, and buy more with the profits, until this effect results in inequalities that are not only dangerous, but unjust as well. By making landholders pay rent to everybody else for their control, you prevent this from occurring

Allocating the Next Generation's Shares

When a child is born, that child would become instantly entitled to 1/x + 1/y shares from his biological father and mother, regardless of whether the father or mother was married, or even possessed custody of the child. x is the number of children fathered by the child's biological father plus one (for the father), while y is the number of children born by the mother plus one (for the mother). That share would be removed from the shares possessed by the father or mother, and until the time of the child's majority (reaching 18 years or otherwise emancipated from the family), the person having custody of the child would receive the dividens paid by The PRC.

As the adult continued to have children, the shares would be adjusted accordingly, so that each individual in a given family unit (the biological parent plus all biological children) would always have 1/x shares. Upon reaching 18 years of age (or otherwise emancipated), the child would gain possession of those shares outright. The birth of further children to a parent would no longer affect the number of shares the former child possessed.

Here are some examples to illustrate this principle.

Suppose you have a married couple with an only child. Each brought a single share into the marriage. Upon having the child, the child now has a single share--one-half of each parent's share. Each parent now has a half-share. When he reaches his majority, he will go into life with that single share, and the parents will go on with their half-shares--a single share between them.

If they had three children, each child would now have a half-share--two quarter-shares from each parent, while each parent would have a quarter-share. In a four-child family, each child's share would be two-fifths, each parent's one-fifth, and so on. Next, I'll illustrate a more complicated situation.

Suppose some jerk goes and knocks up some girl. Each of them has a single share to themselves. When the child was born, he would posses a single share--one half of each parent's shares. Assuming the father goes on his way, and does not stay to raise the child, he will go on with his half-share, and the mother would have her half-share, plus the whole share of her baby, for one and one half shares.

If she subsequently marries someone else, and has a child by her new husband (who has a single share and no children of his own), the first child would have a new share value. He would retain his half from his father, but the portion from his mother would be reduced to 1/3, making the child's total now 1/2+1/3=5/6. The mother's portion would now be 1/3. Her new child's portion would be 1/3 from the mother + 1/2 from his father (her husband), meaning he would also have 5/6. The father's share would be 1/2. The family total would be 1/3(mother)+1/2(father)+5/6(Child1)+5/6(Child2)=2 1/2 shares--one from husband, one from wife, and one-half from the jerk that knocked her up. The jerk's shares would never be reduced further due to her having more children by another man.

Suppose, instead, that the jerk wised up and ended up getting married himself (his wife coming in with a single share), while the girl continued to raise her baby and had no more. Suppose he then had two more children. His first child's share would now be 1/2(Mother)+1/4(father)=3/4. The single mother's total shares would be 1/2(her)+3/4(her child's)=1 1/4 to help her raise her baby alone. Meanwhile each of the former jerk's children each have 1/4(father)+1/3(mother)=7/12 of a share (a little over a half), while father's share would be 1/4, and mother's 1/3. Total for the family: 1/4+1/3+7/12+7/12=21/12=1 3/4

Now, suppose the young, single mother gave her baby up for adoption instead of trying to raise him herself. The baby would come with that single share (which would decrease as his parents had more children), and the revenues would go to the adoptive parent, or to the orphanage.

Every now and then, to simplify accounting, the stock would be split in whatever manner necessary to bring all people's share values into integer values. Supposing you've got a bunch of people who's shares are measured in 1/12ths, everybody would get more shares so that the person with 5/12 would now have 5 shares, the person with 1/2 would now have 6 shares, and the person with 2/3 would now have 8 shares.

When a person died, his share would be divided between his offspring. If he outlived any of his offspring, but they had offspring, that child's share would be divided evenly among the grandchildren. If he had no surviving descendents, his shares would be reabsorbed by the PRC.

You'll notice some interesting features in this system of inheritance. First, the children end up with more shares individually than either parent. This serves as a financial incentive for parents to actually raise their children, since the person that has custody has control over the child's share of the dividends. It also serves as a discouragement for accidental pregnancy, since the man that knocks up a girl and runs has much to lose from it. Given how easy it is to prove paternity these days, I doubt many would pass up the opportunity to claim their child's share.

You'll also notice that when they reach adulthood, the children come away with larger shares than their parents'. Hopefully, by the time their children are grown up, parents have developed skills and/or accumulated capital with which they can continue on without quite as much of a share of the public resources. (If the only skill they have is childrearing, foster parenting could be an option, as well.) The children, on the other hand, probably need extra money starting out. This enables them to continue their education, or acquire a loan to start a business, or even start their own families earlier (assuming they believe they'll be financially ready when their own children grow up).

Finally, upon reaching middle age, people would start inheriting their parents' shares, which would be helpful in retirement.

By fixing the shares at the inception of the corporation, and using the inheritance scheme rather than just giving every new adult a share, you provide an economic disincentive to out-of-control population expansion. A large family, once split up, would provide each individual with a smaller share of the public resources than a smaller family. To earn the same amount of wealth, they would have to perform more valuable labor (I consider capital investment to be a legitimate form of labor).

Finally, this could answer the issue of immigrants impacting public services. Because this new "welfare" would go only to shareholders, immigrants would not have access to it. Even their children, who would become citizens if born on American soil, would not also become shareholders. The only way to get their children a share of the resources would be to marry a shareholder--essentially, to marry into an American family. In the event that this results in a large underclass of immigrant families from a neighboring country being exploited by a shareholding minority, perhaps negotiations could be made to get the neighboring country to adopt a similar plan, and eventually merge the two PRCs.

In this way, the corporation could also extend into other countries some day. In return for a grant of all unallocated and/or government owned lands in that country, and the right to purchase more at market value, a median amount shares could be issued to each citizen of that country. Or, if another country had a PRC of its own, the two sides could negotiate terms for a merger, particularly if both had shareholders living on the other side of the border/ocean/whatever.

Thursday, December 15, 2005

Extranational Property Corporation: Introduction

Lately, I've been exploring what are called Geo-Libertarian ideas. The basic idea is that, while all men are entitled to the fruits of their labor, natural resources, such as land, water rights, broadcast spectrum, rights-of-way, and so on, are not created by men, and as such cannot be considered to be owned absolutely by any individual. It is a good thing to allow individuals a monopoly over the use of a particular resource (plot of land, radio band, etc.) since the activities that result are very good. However, the benefits of this, under a system of absolute ownership, are concentrated in the hands of the landowners. The result is generally a system in which a small class of wealthy landowners dominate a much larger class of landless peasants and serfs.

The solution proposed is that the only legitimate tax is one which taxes the value of land (and other natural resources) before improvements. So if you own a plot of land with a house on it, you pay taxes on the value the plot would have if there were no house on it. If you own a farm, you pay taxes on the value of the land were the fields not cultivated, and your equipment not there. What do do with the tax is where Georgists divide. Some say distribute it right back to the people directly, others say use it to pay for services (treat it like any other tax).

While these ideas are neat, I have what I think would be an even better idea. It would be very difficult to implement on existing property, but as we're constantly discovering new natural resources that can be monopolized to the benefit of mankind in general, it would be pretty cool to establish a principle by which newly allocated property was subject to this new system, and old property could be added to the common pool voluntarily.

The concept is this: Where natural resource monopolies do not exist, all people live in the state all aboriginal peoples live: not filthy rich, but not dirt poor, either. The creation of natural resource monopolies results in many becoming better off than their ancestors, but many end up worse off, as well. Thus, we should decide that any *new* natural resource monopolies created (on resources, the value of which has either been only recently discovered, or is as yet undiscovered) will be part of a common pool. While the rules of this pool will be set up that nobody is deprived of previously established privelages without their consent, rent will be paid for the maintenance of said privelages.

To this end, I shall introduce the Extranational Property Corporation!