Rent
Le us imagine a few businesses, in which one party supplies the labor, another the capital, and a third access to land.
Imagine a farmer on someone else's land (a historically common enough phenomenon). He supplies the labor, both his own, and those of his laborers. The owner of the land supplies access to his land. The bank loans to the farmer every spring for capital expenses throughout the year (seed, tools, parts, wages for his laborers, etc). At the end of the year, the harvest occurs, is sold at market (or, in more primative economies, divided directly), and the proceeds are divided between the farmer, the banker, and the landowner.
Or imagine a shop run on someone else's lot (also a common enough phenomenon). The shopkeeper provides the labor. The bank supplies money for stocking, building repairs, advance wages, etc. The landowner supplies access to his land. The shopkeeper hopefully manages to make enough of a profit on his goods that he can afford to pay back the bank, pay the rent on the land, and hopefully still has enough left over to make it worth his while.
In both of these examples, I have clearly delineated the three components of an economy defined by classical economics: land, labor, and capital. The interaction of the three is how wealth is created. The posession of the three determines how wealth is distributed. To the landowner goes the rent. To the banker goes interest on any capital loans. Whatever is leftover is what goes into wages. If it isn't enough. the business fails.
Of course, each of those businesses could be configured differently, by combining roles. The farmer, for example, could have in past years saved enough that he now acts as his own banker, getting to keep that which would have otherwise gone into interest on loans (and possibly making interest on the money while it waits in the bank). Or, he could be the owner of the land, getting to keep that which would otherwise be paid in rent to another landowner. Or, the farmer could theoretically "own" the land, on the condition that he pays his mortgage--principal and interest; thus the bank can be thought of as the landowner (becoming such literally should the business fail). Or, we could be talking about a subsistance-farming agrarian society, in which all roles are contained in a single individual or family. If you (the reader) can think of any other combinations that introduce a fourth economic component (other than land, labor, and capital), please tell me about it.
The thing to examine is that the wealth resulting from economic activity can be thought of as being divided into three discrete streams: rent (for landowners), wages (for laborers), and interest (for bankers). The question I examine here is: do all three of these compensate individuals for productive activity, thus providing an incentive for productive activity? For the worker, the answer is obvious: yes, it does. The worker earns his wages, whether he be a blue-collar grunt on the factory floor, or the boss making all the hard decisions (and dying of a heart-attack by fifty-years of age?). What about the other two?
The thing to recognize about the banker (at least, the honest banker--today's government "banking system" is not honest) is that he, too, is a sort of laborer. People save money at his institution rather than under their floorboard (for example), and he can make that money available for others while the owner doesn't need it. He has to keep accurate accounts. He has to gather the information necessary to make decisions as to whom should be lent money, what rate to charge (to compensate him for his efforts, as well as to compensate his account holders for making their stored wages--and rent--available to others). He has to correctly discern the level of risk a borrower presents. All of this requires time and effort. Of course, his account holders profit from the labor of others (to a degree directly proportional to the size of their account), but by making funds available, production that would otherwise not occur does occur.
Thus, I conclude that interest does provide an incentive to behavior that increases productivity. In addition, as savings rise relative to productivity, the price of access to savings--the interest rate--drops. It's a simple matter of supply and demand: the greater the supply of money for borrowing, the lower the price of access is going to be. A high interest rate stimulates a greater rate of savings, which ultimately lowers the interest rate, which decreases the savings rate, increasing the rate of consumption, which creates new opporunities for investment (demand for products), which raises the interest rate...
Land is another matter. Leaving aside the matter of how the land was obtained (assuming, for example, it was inherited), the landowner contributes absolutely nothing to economic activities. If the farmer did not exist, obviously farming would not get done. The farmer could certainly survive without the banker (the one that provides capital only, and not land by mortgage), but access to capital enables him not only to survive, but to thrive. (Note that the plight of the farmer who spends his life in the pocket of the banker is the result either of bad decision-making on the part of the farmer (got greedy, took out an unwise loan, and thus deserves to fall), or the result of the banker also acting the part of landowner.) But not only would the farmer do just fine without the landowner (either he or the community owns the land), the farmer would do far better in that he could reinvest more of his proceeds, or just enjoy a higher standard of living.
The same goes for the shopkeeper--though capital is certainly more vital for him than for the farmer (his stock IS capital). If the shopkeeper did not have to pay rent, either he could keep more of his profits, or he could lower his prices--thus the customer is also better off without the landowner.
In fact, the only reason rent expenses even exist is because access to land, like everything else, is scarce, but necessary: everybody needs it, since no economic activity can occur without it. And unlike the market for capital, in which the price goes down as productivity rises, the price of land rises with productivity. For while capital increases with quantity as people save, land is a fixed quantity. As the number of people and dollars chasing land goes up (demand for land), the supply remains constant, and can never be increased. Technological developments can open up new frontiers, but this only opens land resources previously unexploited, or underexploited relative to the new technology. It does not create new land for new people to own; instead, barring conquest, the old owners own both the old potential and the new potential.
So what is land? Take a look at any wealth generating system. Separate first out the day-to-day efforts of the people involved: that is labor. Separate out anything created with human hands (or machines): that is capital. What is left is land: the uncreated, natural potential of the earth (and beyond). It includes the right of the farmer to plant and harvest where another cannot; it does not include the crops, fences, tractor, barn, etc. It includes the city lot a store or a house exists where another cannot; it does not include the building itself, the landscaping, the electrical system, the plumbing, or anything else of that nature. It includes the right-of-way where a road, a cable, or a track exists and another cannot; it does not include the asphault or the necessary maintenance, the cable, the tracks, the ties, or anything like that. It includes bandwidth in the electromagnetic spectrum in a given area where one can broadcast, but another cannot; it does not include the broadcast equipment or the content of the broadcast. It includes the potential of an aquatic system where one can fish but another cannot (the waters having already been fished); it does not include the boats or the actual fish. It includes the limited orbital space where one sattelite can exist and another cannot (to try would result in a collision); it does not include the satellite or the costs of launching it.
Another thing about land, unlike labor and capital, is that unlike the other two, exclusive personal ownership of land, always and everywhere, originates in conquest. Men are always and everywhere recognized as free agents where their own labor is concerned--slavery is required to make man into a commodity. A laborer who saves his wages (creating a store of capital) is naturally the owner of such, whether he be a hunter-gatherer who took the time to pick a rock off the ground and chip it into an arrowhead, a merchant who purchased something one place and took the time to transport it somewhere it was needed more, or an industrial laborer saving a nest egg he hopes to invest into a business of his own. However, land, always and everywhere, is owned either by nobody, or by the community, until such time as it is seized by force. Individual land ownership in Europe began with Roman conquests--land was seized from communities, and distributed individually among the victors. Individual land rights in Amerca was a Roman tradition brought across the sea, and established by conquest, as well.
Consider your dinner. Someone took the time to transform raw food into dinner. They bought that food from a grocery store, who had it shipped there and stored it until you needed it. The bought it from someone else, ultimately leading back to the farmer, who sowed, watered, weeded, and reaped.
However, your lot is different. You bought it from someone, who bought it from someone else, who bought it from someone else. Trace it back far enough, and if you be an American, the original owner probably bought it from the government. The government acquired it by declaration: "This land belongs to us, and anyone who disagrees will die." Things are a little more complicated in Europe, I'd imagine, though it all probably goes back either to some Roman senator who stole it from the original inhabitants, or some Germanic raider who settled down and worked out territorial arrangements with some other Germanic raiders (though it was many, many years--generations--before even that arrangement went from being a public defense committment under a king, to being a personal domain devoid of public responsibility).
Thus, rent is a nonproductive drain of wealth (where wages and interest are productive drains), that results from a dishonest practice. It is a drain that takes a larger slice of production the more economically developed a place is. And unlike theft and fraud, it is not something that could theoretically be done away with if everybody suddenly became honest: rent is the natural result of the simple fact that, to maximize productivity, you need some way to distribute land intelligently among people, and rent is the result. However, where the land is owned (and the rent collected) by the community, it is spent on public works in times of peace, on public defense in times of war. Where it is owned (and the rent collected) by individuals, it subsidizes a parasitic aristocracy, who typically spend it distorting the economy to their advantage, weakening society, until it either breaks from within (as the enslaved masses revolt) or from without (as enemies prey upon the weakened nation).
All of this might seem rather remote to the average person. After all, we no longer have highly visible landowners in our society (at least in America). The modern innovation that hides the phenomenon of Rent is the joint stock corporation. With the exception of homeowners who have finally paid off their mortgages, and the few sole proprietors who are lucky enough to own the land their business stand on, nobody owns land directly any more. People own stocks, or own mutual funds through which they own stocks, in corporations. It is the corporations that own the majority of the land. So instead of a clearly delineated set of classes defined by their ownership of land or the lack therof, we have a spectrum, with people who own enormous amounts of stock at the top, moving somewhat gradually down the line through people who own only that which is in their 401k, down to those who own no stock, whatsoever.
However, it is no less the case today than in the past that the rich get richer while the poor get poorer, and through the exact same phenomenon: rent. The businesses are bigger and more complex, but their revenue streams can still be conceptually categorized in terms of wages, interest, and rent. The corporation (particularly the bigger, older ones) typically owns its land. If it does not, it still has to pay rent to someone that does (typically, another corporation). If it does not have to pay rent, that money is pure profit, to be reinvested (increasing the value of the stock) or paid out as profits. It certainly is not paid out as wages, since the market value of labor takes into account the rent costs all businesses must take into account. A company that diverted rent costs to their workers rather than their investors would be vulnerable to a competitor that did pay to their investors.
And that is Part 3. The next part will discuss the way I think these drains could be dealt with, and even a method by which we could get to there from here!
Sunday, April 08, 2007
Monday, April 02, 2007
Broken Window Fallacy Fallacy
In an indirect fashion, I'll be discussing the third unproductive drain in today's entry. I will discuss the Parable of the Broken Window, which economists of the Austrian School refer to as the "Broken Window Fallacy." In considering the school of thought named for Henry George, I have come to the conclusion that labeling the Parable of the Broken Window a "fallacy" may well be a fallacy, as well.
A brief description of the parable: When something is broken (such as a window), the automatic assumption is that this is a bad thing. Upon further reflection, however, one can observe that the broken window provides employment for others: the one that make the glass, the one that forms it into a pane, and the one that fits it in place. They can, in turn, spend the money they made on the broken window elsewhere, including, of course, the place where the window was broken in the first place. This, goes the parable, everybody benefits. Destruction is an economic benefactor, extending all the way from acts of petty vandalism to war itself. War is good for the economy!
Austrian economists rightly point out that, had the owner of the window not spent that money on the window, he would have spent it on something else. He might have eaten out a few more times than otherwise, providing employment to cooks and waiters. He might buy a new piece of furniture, providing employment in the furniture trade. Nobody loses anything because of intact windows; money that is not spent there will be spent elsewhere. Certainly, money not spent on bombs and bullets by one side, and on a total rebuilding by the other, could be better spent!
However, there is something the Austrians overlook. While the man of unbroken windows can spend it on nice dinners, new cars, furniture, improvements to his house, better food than he could otherwise afford, or what have you, there are a few other things he could spend it on. He could buy stock in a bank, buying his way up the monetary pyrimid as described in Unproductive Drains Part 2. He can also buy land, whether in the form of a rental property, a vacation home, or indirectly by purchasing stock. The stock is probably the least offensive of purchases, since at least some of that money goes toward capital improvements, and therefore jobs, whether in the creation or the utilization (though some of it also goes to bid up the price of land, as well...). The other two, however, do little more than bid up the price of land--the price of access to both living space and work. If you've been reading this blog for a while, you know what I'm trying to say here. If not, look forward to Unproductive Drains Part 3.
With the broken window (or the exploded bomb), there is no question: the money spent is going to be spent in a manner that profits a tradesmen of some sort in some way. With the unbroken window (and the peace economy), that money could be spent in a manner that profits someone else. However, it also could be spent in a manner that raises the individual's position on the pyramid of "legitimate" dishonest gain.
Thus, the Fallacy of the Broken Window is only half fallacy. It shouldn't be economically beneficial, but because of all the institutional distortions our half-free economy has, it is. It not only diverts money that would otherwise be spent on something that would benefit the community around them (as well as the individual spending it); it also diverts money that would otherwise be "invested" into the unjust distortions to bend them to the individual's favor.
A brief description of the parable: When something is broken (such as a window), the automatic assumption is that this is a bad thing. Upon further reflection, however, one can observe that the broken window provides employment for others: the one that make the glass, the one that forms it into a pane, and the one that fits it in place. They can, in turn, spend the money they made on the broken window elsewhere, including, of course, the place where the window was broken in the first place. This, goes the parable, everybody benefits. Destruction is an economic benefactor, extending all the way from acts of petty vandalism to war itself. War is good for the economy!
Austrian economists rightly point out that, had the owner of the window not spent that money on the window, he would have spent it on something else. He might have eaten out a few more times than otherwise, providing employment to cooks and waiters. He might buy a new piece of furniture, providing employment in the furniture trade. Nobody loses anything because of intact windows; money that is not spent there will be spent elsewhere. Certainly, money not spent on bombs and bullets by one side, and on a total rebuilding by the other, could be better spent!
However, there is something the Austrians overlook. While the man of unbroken windows can spend it on nice dinners, new cars, furniture, improvements to his house, better food than he could otherwise afford, or what have you, there are a few other things he could spend it on. He could buy stock in a bank, buying his way up the monetary pyrimid as described in Unproductive Drains Part 2. He can also buy land, whether in the form of a rental property, a vacation home, or indirectly by purchasing stock. The stock is probably the least offensive of purchases, since at least some of that money goes toward capital improvements, and therefore jobs, whether in the creation or the utilization (though some of it also goes to bid up the price of land, as well...). The other two, however, do little more than bid up the price of land--the price of access to both living space and work. If you've been reading this blog for a while, you know what I'm trying to say here. If not, look forward to Unproductive Drains Part 3.
With the broken window (or the exploded bomb), there is no question: the money spent is going to be spent in a manner that profits a tradesmen of some sort in some way. With the unbroken window (and the peace economy), that money could be spent in a manner that profits someone else. However, it also could be spent in a manner that raises the individual's position on the pyramid of "legitimate" dishonest gain.
Thus, the Fallacy of the Broken Window is only half fallacy. It shouldn't be economically beneficial, but because of all the institutional distortions our half-free economy has, it is. It not only diverts money that would otherwise be spent on something that would benefit the community around them (as well as the individual spending it); it also diverts money that would otherwise be "invested" into the unjust distortions to bend them to the individual's favor.
Saturday, March 17, 2007
Three Unproductive Drains of Value: Part 2
It looks like it's been considerably more than a week since my last post. Sorry about that. This is a long one, so here's a summary. I start by talking about coins, their original purpose, and the mutually dishonest practices of coin-clipping on the one hand, and debasement by the issuer on the other. I then move from metal to paper, talking about the dishonest practices of counterfeiting and fractional reserve banking, and the pyramidal wealth transfer system fractional reserve baking establishes. I then talk about how the effects of fractional reserve banking have been intensified and unified under the Federal Reserve system. Finally, I talk about how the system might be reduced, if not eliminated.
Currency Debasement
This is a more recent phenomenon. People have been stealing from each other for time immemorial, but monetary inflation--or rather, deliberate monetary inflation, while still an old practice, is comparatively new, mainly because standardized currency is a historical phenomenon. Our current monetary system is so removed from historical monetary systems that this is a phenomenon people are unlikely to recognize, or understand if pointed out to them, however it is no less dishonest and economically damaging than plain theft. The last remaining link between our currency systems and previous ones is coinage, so that is where I shall begin.
The original purpose of coinage was to make trading in gold and silver more convenient than it had previously been. Gold already had the advantage of being a metal that does not tarnish, was rare enough that a great deal of value could be represented by a small, portable amount of gold, and it was easy enough to verify the purity. Coinage was an attempt to make it easier. The people that made the coins basically made an easily recognizable package with a standardized content of the metal. The difference between accepting raw metal and accepting a coin was like the difference between buying a scoop of sugar from the bulk bin at the grocery store, and buying a standard five pound bag of sugar that has been certified both to be exactly five pounds, and be pure sugar, by the FDA.
Like anything that improves convenience at the expense of vigilance, coins introduce a number of methods for dishonest gain, and, like theft, the illegitimate methods used by individual criminals, and the "legitimate" methods used by governments are treated differently.
First, there's coin clipping. That's where a person shaves a small amount of metal off the coin. To use the earlier analogy, that's the equivalent of the grocery store buying those certified five pound bags of sugar, opening each one and removing a quarter pound of sugar and resealing them, and proceeding to sell them as five pound bags, while selling the rest as bulk sugar... a clearly fraudulent practice.
However, individuals are not the only ones that debase currency. The very governments that issue the coins can also debase them at the source. For example, they can simply lower the gold content in the coin, but issuing them as if they had the same purity as the previous, more pure coins. Merchants still think in terms of trading in gold, but actually they are trading something else. It's the equivalent of the factory that bags the sugar using the same five-pound label as before, but actually increasing the weight of the bag (or mixing in something else that is cheaper than sugar), and reducing the weight of the sugar. Cocaine offers another analogy: a dealer acquires five ounces of pure cocaine, mixes it with some other white powder, and then sells ten ounces of "pure" cocaine.
Now, the contamination of the coins may not initially seem to be as great a crime as the contamination of sugar. After all, there is no "consumer" where money is concerned, and thus there is nobody eating cake which has sand in it along with sugar, or running out before they should. The gold is just a trade medium, something you accept because someone else will in turn accept it from you. The act of passing an ounce of 90% pure gold as 95% pure gold (100% being too soft to retain coin form), while clearly fraudulent, just doesn't seem to harm the fooled in the same manner theft does.
The problem, however, is that markets respond to increases in supply by reducing the value of the coin. When less is presented as more, people eventually figure out that there is "more" gold out there than there was previously. Every body's money loses value. It's as if the debaser, rather than stealing from an individual, stole a little bit from every person in the community. The biggest losers are the people who are living off savings (like those among the elderly who saved for their retirement). Their money simply ends up running out faster than expected.
Today, of course, we don't really use coins any more. Heck, we don't even use paper for most transactions any more, but I'll move on to the history of paper.
The legend goes that paper money began as little more than receipts given by bankers indicating that the holder of the paper had gold stored at the bank. People started trading in the receipts rather than the gold itself, which lent itself to all new ways of debasing currency.
The criminal method, of course, is what we call counterfeiting. Basically, an individual who is not the bank (or the government, in the case of government-issued notes) prints his own notes and passes them as if they were genuine. This is considerably more economical for the private debaser than coin-clipping was, since paper is much cheaper than the coins. The result, once again, is that people start trading the metal as if there is more than there actually is. Assuming the counterfeits pass into circulation unchecked, no individual is stolen from, but rather the whole community is. This lasts until people realize there are more notes than there is gold on deposit, and everybody scrambles to get to the bank first. The slow ones lose, as their paper becomes worthless--all their money disappears.
Of course, banks did their own "counterfeiting," although it isn't called that, rather it is called "fracional reserve banking." The bank accepts gold and issues notes in its place. They then turn around and issue more notes, lending them out at interest. So long as there isn't a run on the bank, the bank turns a profit, very likely passing some of that onto their depositors. However, the impact on the general market for the metal is the same as it is when counterfeiters are passing their notes: people behave as if there is more gold in the system than there actually is, and thus prices rise.
However, the effect goes beyond that. Fractional reserve banking creates a pyramid of dishonest wealth transfer. At the top of the heap are the bankers themselves, who not only profit off the interest paid on loans, but likely maintain their own reserves, on which they earn interest like any other depositors. The next tier is the depositors, depending on how much they have on deposit. Whoever has more money in the bank is earning more interest; the rich get richer while the middle class does not. And in an unstable banking system, it is probably the richer depositors who get the news of an impending collapse earliest. At the bottom of this system is the debtors. They are the ones paying the interest that profits the people above them. The rich get richer; the poor get poorer.
The lower on the pyramid a person is, the worse position they are in. If they're not socially tied to the top, they are likely to be the ones that end up with nothing when a collapse happens. However, any money they do not store in the bank does not earn interest, and thus they are fully exposed to inflation.
The greatest coup for the banking industry, however, is the present state of affairs. Understand that the Federal Reserve System is not a government-owned central bank, but rather a government-sanctioned cartel of private bankers. The road to today's unbacked fiat currency was a long and gradual one. First came the setting of a government standard conversion rate between paper and gold. The next was to periodically stop conversions into gold during wartime, enabling the government to pay for war expenses in unbacked certificates. Third was to stop conversions altogether for private citizens, while a gold standard was maintained in international currency trading. The final step, realized during the Nixon administration, was to sever that last link. Today, the dollar has no guaranteed value whatsoever, and its value continually drops against the goods and services we are expected to exchange them for.
So, if dollars are not created through the deposit of actual objects of value, how are they created? Does it even occur to anyone to ask?
Very simply put, they are created by loan. The Federal Reserve Banks have the authority to create dollars out of thin air, which they loan out to other banks at the rate specified by the Federal Open Market Committee. The FOMC is a group of twelve men, consisting of of the seven members of the Board of Governors for the Federal Reserve System, and five of the twelve presidents of the Federal Reserve Banks, one of which is always the president of the New York branch. And that's it. All the money in the economy represents somebody else's debt, plus the interest. Where does the interest go?
The bank that loaned it to the individual or corporation takes a part of it. Part of that is used to cover the expenses of the banks. Buildings need to be maintained, staff needs to be paid. The rest is profit, given to the owners of the bank. This profit does not serve as reward for the wise management of financial capital, resulting in the creation of jobs, goods, or services, but rather is a reward for buying oneself a place in the pyramid.
The other part goes to the Federal Reserve Bank that loaned the money to the bank that loaned the money to you. Their profits go into the U.S. Treasury.
So what has occurred is that the prior system of multiple competing unstable pyramid's has been stabilized. The Federal Reserve System ensures that banks no longer fail. The elimination of convertibility into gold removes any remaining limitation on the creation of new dollars. The pyramid has been unified, with the federal government benefiting and protecting it, and the owners of banks also benefiting, far more than they did before the Federal Reserve was established. The rich get richer via interest payments. The poor get poorer via inflation (at the very least). Value is thus extracted from the economy in an unjust fashion, being continually siphoned upward.
What is the solution to this? One thing we can be sure of is that the government is not going to come to our rescue on this. Congress benefits directly from the interest paid to the Federal Reserve System, and those with money to offer for elections benefit from the system as well, to a degree directly proportional to how much they have to offer. The monetary pyramid results in a political pyramid. Politics cannot be the answer.
What can work is if people are educated as to the nature of our monetary system, and begin to seek an alternative system... begin to use money other than Federal Reserve Notes (aka U.S. Dollars). There are a few competing potential models out there already. My preference is the Liberty Dollar, which have been around since 1998. It's the only alternative currency I am aware of, based upon a standardized weight and purity of a precious metal (silver, in this case), that attempts to emulate the dollar quite so completely, having both paper certificates (100% silver backed--no fractional reserve here!) and a digital currency (also 100% backed; for every non-silver Liberty Dollar in circulation, there is silver stored in their warehouse), they will also ship the base coin at any time (not too long ago, I was carrying around a half-ounce silver coin stamped with a suggested value of $10.00. I spent it as part payment on Aikido lessons).
The primary base coin is one ounce of .999 pure silver. When the price of silver rises (and it must over time, given inflation), the price of the base coin also rises. They issue a recall of the dollars, reminting the coins with the new suggested price, replacing the bills and digital currency with more new bills and electronic currency. For example, suppose in 2004, I acquired a $10/1 oz certificate. Due to the rising price of silver, the base was switched from $10 to $20 on Nov 24, 2005. I could have sent the $10 certificate in, and received a $20 certificate in return. The attempt to follow the U.S. dollar means the company has to do this (if they didn't folks would be selling their $10 1 ounce coins for approximately $12 on the open market today, rather than circulating them at their stamped value), and the holders of Liberty Dollars are protected from inflation.
There are a few other models. Several local currencies circulate in various towns and cities (such as the Ithica Hour, one of the more successful ones since there is actually a bank that accepts them). There is also e-gold, a company that enables their customers to trade with each other in gold, either by weight or in its current estimated value in any currency worldwide. However, it is for online transactions only, and gold is of such high value that it isn't suited for everyday transactions... at least not in quantities you can hold in your hand. Indeed, competing currency systems is probably the only real way to blunt the pyramidal wealth transfer scheme that is the U.S. Dollar.
If people got used to trying these alternative currencies out, the competition alone could even improve the U.S. Dollar, since its benefactors would not want to see the dollar lose against these new currencies. Less value would be extracted unjustly; the worker would get his wages in full, assuming something can be done about the other two unjust drains of value.
Note: I now realize that the mechanism of money creation I described above isn't the actual method used to create money. It has something to do with the Fed buying Treasury bonds. The money they use to do so is still created out of nothing, but the system is different from what I thought.
Currency Debasement
This is a more recent phenomenon. People have been stealing from each other for time immemorial, but monetary inflation--or rather, deliberate monetary inflation, while still an old practice, is comparatively new, mainly because standardized currency is a historical phenomenon. Our current monetary system is so removed from historical monetary systems that this is a phenomenon people are unlikely to recognize, or understand if pointed out to them, however it is no less dishonest and economically damaging than plain theft. The last remaining link between our currency systems and previous ones is coinage, so that is where I shall begin.
The original purpose of coinage was to make trading in gold and silver more convenient than it had previously been. Gold already had the advantage of being a metal that does not tarnish, was rare enough that a great deal of value could be represented by a small, portable amount of gold, and it was easy enough to verify the purity. Coinage was an attempt to make it easier. The people that made the coins basically made an easily recognizable package with a standardized content of the metal. The difference between accepting raw metal and accepting a coin was like the difference between buying a scoop of sugar from the bulk bin at the grocery store, and buying a standard five pound bag of sugar that has been certified both to be exactly five pounds, and be pure sugar, by the FDA.
Like anything that improves convenience at the expense of vigilance, coins introduce a number of methods for dishonest gain, and, like theft, the illegitimate methods used by individual criminals, and the "legitimate" methods used by governments are treated differently.
First, there's coin clipping. That's where a person shaves a small amount of metal off the coin. To use the earlier analogy, that's the equivalent of the grocery store buying those certified five pound bags of sugar, opening each one and removing a quarter pound of sugar and resealing them, and proceeding to sell them as five pound bags, while selling the rest as bulk sugar... a clearly fraudulent practice.
However, individuals are not the only ones that debase currency. The very governments that issue the coins can also debase them at the source. For example, they can simply lower the gold content in the coin, but issuing them as if they had the same purity as the previous, more pure coins. Merchants still think in terms of trading in gold, but actually they are trading something else. It's the equivalent of the factory that bags the sugar using the same five-pound label as before, but actually increasing the weight of the bag (or mixing in something else that is cheaper than sugar), and reducing the weight of the sugar. Cocaine offers another analogy: a dealer acquires five ounces of pure cocaine, mixes it with some other white powder, and then sells ten ounces of "pure" cocaine.
Now, the contamination of the coins may not initially seem to be as great a crime as the contamination of sugar. After all, there is no "consumer" where money is concerned, and thus there is nobody eating cake which has sand in it along with sugar, or running out before they should. The gold is just a trade medium, something you accept because someone else will in turn accept it from you. The act of passing an ounce of 90% pure gold as 95% pure gold (100% being too soft to retain coin form), while clearly fraudulent, just doesn't seem to harm the fooled in the same manner theft does.
The problem, however, is that markets respond to increases in supply by reducing the value of the coin. When less is presented as more, people eventually figure out that there is "more" gold out there than there was previously. Every body's money loses value. It's as if the debaser, rather than stealing from an individual, stole a little bit from every person in the community. The biggest losers are the people who are living off savings (like those among the elderly who saved for their retirement). Their money simply ends up running out faster than expected.
Today, of course, we don't really use coins any more. Heck, we don't even use paper for most transactions any more, but I'll move on to the history of paper.
The legend goes that paper money began as little more than receipts given by bankers indicating that the holder of the paper had gold stored at the bank. People started trading in the receipts rather than the gold itself, which lent itself to all new ways of debasing currency.
The criminal method, of course, is what we call counterfeiting. Basically, an individual who is not the bank (or the government, in the case of government-issued notes) prints his own notes and passes them as if they were genuine. This is considerably more economical for the private debaser than coin-clipping was, since paper is much cheaper than the coins. The result, once again, is that people start trading the metal as if there is more than there actually is. Assuming the counterfeits pass into circulation unchecked, no individual is stolen from, but rather the whole community is. This lasts until people realize there are more notes than there is gold on deposit, and everybody scrambles to get to the bank first. The slow ones lose, as their paper becomes worthless--all their money disappears.
Of course, banks did their own "counterfeiting," although it isn't called that, rather it is called "fracional reserve banking." The bank accepts gold and issues notes in its place. They then turn around and issue more notes, lending them out at interest. So long as there isn't a run on the bank, the bank turns a profit, very likely passing some of that onto their depositors. However, the impact on the general market for the metal is the same as it is when counterfeiters are passing their notes: people behave as if there is more gold in the system than there actually is, and thus prices rise.
However, the effect goes beyond that. Fractional reserve banking creates a pyramid of dishonest wealth transfer. At the top of the heap are the bankers themselves, who not only profit off the interest paid on loans, but likely maintain their own reserves, on which they earn interest like any other depositors. The next tier is the depositors, depending on how much they have on deposit. Whoever has more money in the bank is earning more interest; the rich get richer while the middle class does not. And in an unstable banking system, it is probably the richer depositors who get the news of an impending collapse earliest. At the bottom of this system is the debtors. They are the ones paying the interest that profits the people above them. The rich get richer; the poor get poorer.
The lower on the pyramid a person is, the worse position they are in. If they're not socially tied to the top, they are likely to be the ones that end up with nothing when a collapse happens. However, any money they do not store in the bank does not earn interest, and thus they are fully exposed to inflation.
The greatest coup for the banking industry, however, is the present state of affairs. Understand that the Federal Reserve System is not a government-owned central bank, but rather a government-sanctioned cartel of private bankers. The road to today's unbacked fiat currency was a long and gradual one. First came the setting of a government standard conversion rate between paper and gold. The next was to periodically stop conversions into gold during wartime, enabling the government to pay for war expenses in unbacked certificates. Third was to stop conversions altogether for private citizens, while a gold standard was maintained in international currency trading. The final step, realized during the Nixon administration, was to sever that last link. Today, the dollar has no guaranteed value whatsoever, and its value continually drops against the goods and services we are expected to exchange them for.
So, if dollars are not created through the deposit of actual objects of value, how are they created? Does it even occur to anyone to ask?
Very simply put, they are created by loan. The Federal Reserve Banks have the authority to create dollars out of thin air, which they loan out to other banks at the rate specified by the Federal Open Market Committee. The FOMC is a group of twelve men, consisting of of the seven members of the Board of Governors for the Federal Reserve System, and five of the twelve presidents of the Federal Reserve Banks, one of which is always the president of the New York branch. And that's it. All the money in the economy represents somebody else's debt, plus the interest. Where does the interest go?
The bank that loaned it to the individual or corporation takes a part of it. Part of that is used to cover the expenses of the banks. Buildings need to be maintained, staff needs to be paid. The rest is profit, given to the owners of the bank. This profit does not serve as reward for the wise management of financial capital, resulting in the creation of jobs, goods, or services, but rather is a reward for buying oneself a place in the pyramid.
The other part goes to the Federal Reserve Bank that loaned the money to the bank that loaned the money to you. Their profits go into the U.S. Treasury.
So what has occurred is that the prior system of multiple competing unstable pyramid's has been stabilized. The Federal Reserve System ensures that banks no longer fail. The elimination of convertibility into gold removes any remaining limitation on the creation of new dollars. The pyramid has been unified, with the federal government benefiting and protecting it, and the owners of banks also benefiting, far more than they did before the Federal Reserve was established. The rich get richer via interest payments. The poor get poorer via inflation (at the very least). Value is thus extracted from the economy in an unjust fashion, being continually siphoned upward.
What is the solution to this? One thing we can be sure of is that the government is not going to come to our rescue on this. Congress benefits directly from the interest paid to the Federal Reserve System, and those with money to offer for elections benefit from the system as well, to a degree directly proportional to how much they have to offer. The monetary pyramid results in a political pyramid. Politics cannot be the answer.
What can work is if people are educated as to the nature of our monetary system, and begin to seek an alternative system... begin to use money other than Federal Reserve Notes (aka U.S. Dollars). There are a few competing potential models out there already. My preference is the Liberty Dollar, which have been around since 1998. It's the only alternative currency I am aware of, based upon a standardized weight and purity of a precious metal (silver, in this case), that attempts to emulate the dollar quite so completely, having both paper certificates (100% silver backed--no fractional reserve here!) and a digital currency (also 100% backed; for every non-silver Liberty Dollar in circulation, there is silver stored in their warehouse), they will also ship the base coin at any time (not too long ago, I was carrying around a half-ounce silver coin stamped with a suggested value of $10.00. I spent it as part payment on Aikido lessons).
The primary base coin is one ounce of .999 pure silver. When the price of silver rises (and it must over time, given inflation), the price of the base coin also rises. They issue a recall of the dollars, reminting the coins with the new suggested price, replacing the bills and digital currency with more new bills and electronic currency. For example, suppose in 2004, I acquired a $10/1 oz certificate. Due to the rising price of silver, the base was switched from $10 to $20 on Nov 24, 2005. I could have sent the $10 certificate in, and received a $20 certificate in return. The attempt to follow the U.S. dollar means the company has to do this (if they didn't folks would be selling their $10 1 ounce coins for approximately $12 on the open market today, rather than circulating them at their stamped value), and the holders of Liberty Dollars are protected from inflation.
There are a few other models. Several local currencies circulate in various towns and cities (such as the Ithica Hour, one of the more successful ones since there is actually a bank that accepts them). There is also e-gold, a company that enables their customers to trade with each other in gold, either by weight or in its current estimated value in any currency worldwide. However, it is for online transactions only, and gold is of such high value that it isn't suited for everyday transactions... at least not in quantities you can hold in your hand. Indeed, competing currency systems is probably the only real way to blunt the pyramidal wealth transfer scheme that is the U.S. Dollar.
If people got used to trying these alternative currencies out, the competition alone could even improve the U.S. Dollar, since its benefactors would not want to see the dollar lose against these new currencies. Less value would be extracted unjustly; the worker would get his wages in full, assuming something can be done about the other two unjust drains of value.
Note: I now realize that the mechanism of money creation I described above isn't the actual method used to create money. It has something to do with the Fed buying Treasury bonds. The money they use to do so is still created out of nothing, but the system is different from what I thought.
Monday, February 19, 2007
Three Unproductive Drains of Value: Part 1
There are, in our economy, three ways in which value is drained, in which wealth is stolen, from the people who have rightfully earned it, or would rightfully earn it if the futility institutional theft introduces into people's attitudes and activities was not there. I believe these three could be reduced to one, to the benefit of all. Over the next few weeks, I'll introduce the three different value drains, starting from the most obvious and moving to the most insidious. After that, I'll talk about how two out of the three can be eliminated.
Theft
The most obvious form of theft is, well, regular old theft. Theft, in this context, is the direct siezing of wealth by guile, fraud, force, or the threat therof. It's when a pickpocket removes someone's wallet without their awareness, when a burgler does the same when someone isn't home, when a mugger knocks someone down and takes their stuff, when a gang of thugs demands money and threatens violence if it is not given, or when a confidence man offers service in exchange for payment, receives payment, and then gives nothing in return. It is when the wealth of the productive is transfered to the unproductive against the will of the productive.
The impact this has on economic activity doesn't take much thought to imagine. A person living in a neighborhood in which theft is common and largely unpunished is unlikely to engage in any more than he must in order to survive. Why work harder for additional comforts, when it is likely to get stolen anyway? Want a new TV? Get a better job, save up enough (or buy it on credit and pay it off)... and then have it stolen. Want to make your house look nice? Get some paint, spend a weekend cleaning and painting and repairing... and then have it vandalized. The only real way out of this situation, assuming there is not a revival of law in this area, is to move to another area.
Of course, lawbreakers are not the only ones stealing. Those that make the laws steal, as well. (Most) Individuals do not pay the government voluntarily for the services they claim to offer. Like an archtypical protection racket, they offer protection from theives and murderers, and it's truly an offer you cannot refuse. The government has ways of making people pay: they threaten to jail those who decline their services, and we all know what happens to someone who is determined neither to do as they're told nor to go to jail. In short, the justification for taxation is thus: the government needs money. You will give it to them. Or else. The government is a thief.
Of course, we have representatives who consent to this, so theoretically, the majority are paying willingly, under the idea that in return, the government provides protection from other sorts of criminals. However, in realty, most of the money collected goes to pay off the supporters of elected officials, so the government is, in this scenario, also a confidence man. It offers services in exchange for payment, but delivers far less than would justify the degree of payment. Even a mob boss couldn't get away with this for long. A mobster must compete with other mobsters, and any resources that do not go toward the protection of his domain potentially leave him vulnerable to his competitors. The government, however, is, almost by definition, the only game in town.
Of course systematic government theft does have the advantage that it is, for the most part, predictable... so long as you keep your tax liabilities limited to the particular part of the tax code you are familiar with. For most people, despite the amount of money taken out of their check, state and federal withholding are not a burden that keeps them from coming to work every day, and trying to increase the value of their labor. It's not like the person in a crime-ridden ghetto who could have his whole stash taken in a single day. You can plan around institutionalized theft.
However, it does keep them locked into the role of a wage earner. To step even slightly out of that role into that of an entrepreneur requires that one learn a whole new section of the tax code, and the more one deviates from forms of economic activity that can be anticipated by the writers of the tax code, the more likely it is that the tax man will descend upon one's business, quoting obscure regulations that have been broken, and ruin said business. It doesn't even matter whether the laws actually apply or not; litigation alone is prohibitively expensive. It becomes more like the crime filled ghetto. And I am sure that there are lots of folks who are intimidated out of utilizing their creativity on behalf of society by the state of things, and even more who are conditioned by the system to be unable to even imagine being an economic innovater. Jobs that would otherwise be are not, wages are lower than they could be, while others are completely jobless.
However, even if one could devise a perfectly flexible and predictable tax system that did not have that dampening effect upon innovation, there is still the issue that wealth that could be used improving people's lives is instead squandered at best, used horrifically at worst. I firmly believe that the vast majority of the government's resources are spent either on unproductive projects that enrich a few at the expense of the many, or on maintaining and extending its global hegemony in a manner that enriches a few at an extraordinary expense that can be measured not only in wealth, but in lives.
And it can be no other way, for wealth that is gained in an unproductive fashion is most likely to be utilized in an unproductive, even destructive, fashion. There is no accountability link between how the money is acquired and how it is spent. It is as if we live in the city of the heir to the mob boss that completely obliterated his rivals. Having no competition, he spends his protection money on himself and his cronies, offers little protection to the people whose lives he lays claim to. Only the mob boss is an elected legislature and executive, and in their voting patterns reveal the truth in Frederic Bastiat's statement, "The state is that great fiction by which everyone tries to live at the expense of everyone else."
Now, I do not deny that some sort of institution is required to punish those that would steal on their own accord. Remove the big thief, and all you end up with is a whole lot of little theives. But let us, for a moment, imagine that there are ways to finance such an operation, other than by doing the very thing the institution is meant to prevent. I said earlier that there is a way to reduce the number of unproductive wealth drains from three to one--not to zero. So I hope you'll keep an open mind as the weeks go by.
Theft
The most obvious form of theft is, well, regular old theft. Theft, in this context, is the direct siezing of wealth by guile, fraud, force, or the threat therof. It's when a pickpocket removes someone's wallet without their awareness, when a burgler does the same when someone isn't home, when a mugger knocks someone down and takes their stuff, when a gang of thugs demands money and threatens violence if it is not given, or when a confidence man offers service in exchange for payment, receives payment, and then gives nothing in return. It is when the wealth of the productive is transfered to the unproductive against the will of the productive.
The impact this has on economic activity doesn't take much thought to imagine. A person living in a neighborhood in which theft is common and largely unpunished is unlikely to engage in any more than he must in order to survive. Why work harder for additional comforts, when it is likely to get stolen anyway? Want a new TV? Get a better job, save up enough (or buy it on credit and pay it off)... and then have it stolen. Want to make your house look nice? Get some paint, spend a weekend cleaning and painting and repairing... and then have it vandalized. The only real way out of this situation, assuming there is not a revival of law in this area, is to move to another area.
Of course, lawbreakers are not the only ones stealing. Those that make the laws steal, as well. (Most) Individuals do not pay the government voluntarily for the services they claim to offer. Like an archtypical protection racket, they offer protection from theives and murderers, and it's truly an offer you cannot refuse. The government has ways of making people pay: they threaten to jail those who decline their services, and we all know what happens to someone who is determined neither to do as they're told nor to go to jail. In short, the justification for taxation is thus: the government needs money. You will give it to them. Or else. The government is a thief.
Of course, we have representatives who consent to this, so theoretically, the majority are paying willingly, under the idea that in return, the government provides protection from other sorts of criminals. However, in realty, most of the money collected goes to pay off the supporters of elected officials, so the government is, in this scenario, also a confidence man. It offers services in exchange for payment, but delivers far less than would justify the degree of payment. Even a mob boss couldn't get away with this for long. A mobster must compete with other mobsters, and any resources that do not go toward the protection of his domain potentially leave him vulnerable to his competitors. The government, however, is, almost by definition, the only game in town.
Of course systematic government theft does have the advantage that it is, for the most part, predictable... so long as you keep your tax liabilities limited to the particular part of the tax code you are familiar with. For most people, despite the amount of money taken out of their check, state and federal withholding are not a burden that keeps them from coming to work every day, and trying to increase the value of their labor. It's not like the person in a crime-ridden ghetto who could have his whole stash taken in a single day. You can plan around institutionalized theft.
However, it does keep them locked into the role of a wage earner. To step even slightly out of that role into that of an entrepreneur requires that one learn a whole new section of the tax code, and the more one deviates from forms of economic activity that can be anticipated by the writers of the tax code, the more likely it is that the tax man will descend upon one's business, quoting obscure regulations that have been broken, and ruin said business. It doesn't even matter whether the laws actually apply or not; litigation alone is prohibitively expensive. It becomes more like the crime filled ghetto. And I am sure that there are lots of folks who are intimidated out of utilizing their creativity on behalf of society by the state of things, and even more who are conditioned by the system to be unable to even imagine being an economic innovater. Jobs that would otherwise be are not, wages are lower than they could be, while others are completely jobless.
However, even if one could devise a perfectly flexible and predictable tax system that did not have that dampening effect upon innovation, there is still the issue that wealth that could be used improving people's lives is instead squandered at best, used horrifically at worst. I firmly believe that the vast majority of the government's resources are spent either on unproductive projects that enrich a few at the expense of the many, or on maintaining and extending its global hegemony in a manner that enriches a few at an extraordinary expense that can be measured not only in wealth, but in lives.
And it can be no other way, for wealth that is gained in an unproductive fashion is most likely to be utilized in an unproductive, even destructive, fashion. There is no accountability link between how the money is acquired and how it is spent. It is as if we live in the city of the heir to the mob boss that completely obliterated his rivals. Having no competition, he spends his protection money on himself and his cronies, offers little protection to the people whose lives he lays claim to. Only the mob boss is an elected legislature and executive, and in their voting patterns reveal the truth in Frederic Bastiat's statement, "The state is that great fiction by which everyone tries to live at the expense of everyone else."
Now, I do not deny that some sort of institution is required to punish those that would steal on their own accord. Remove the big thief, and all you end up with is a whole lot of little theives. But let us, for a moment, imagine that there are ways to finance such an operation, other than by doing the very thing the institution is meant to prevent. I said earlier that there is a way to reduce the number of unproductive wealth drains from three to one--not to zero. So I hope you'll keep an open mind as the weeks go by.
Thursday, February 15, 2007
Liberalism
I just read an article which dealt with German politics, where the word "liberals" was used. The author, for the benefit of his American readers, appended "(classical)" to the description, though a German would not need that clarification.
I am the son of a self-identified "conservative," and as such, there was a time in my life when I was hostile to "liberals" and "liberalism." I regarded them as the enemies of traditional American freedom. I considered them just one step sort of Communists. I grew up thinking I would be a Republican. I was aware of a time when "Liberal" referred to American heroes, like Thomas Jefferson, Thomas Paine, and so on. So far as I (and most Americans) knew, that word ceased to mean anything worthwhile, being more synonymous with "socialist" in the present age. And so it has been, in America.
As a citizen of the Internet, I am now aware that Other Countries Exist. Not only that, but they have people in them! And those people have political dynamics that differ from the dynamics I am accustomed to. One thing I long ago discovered is that people in other countries still use the word "Liberal" in the "classical" sense. What I have only recently fully appreciated is that The United States is the ONLY place in the world where the word "Liberal" has been so fully corrupted.
Take Gun Control, as an example. In the US, a liberal favors gun control. The British people I have met regard gun control as something a liberal would oppose. American liberals seem to have contempt for the idea of free enterprise. The Liberal Party in Australia regards free enterprise as an unmitigated good. An "ultra-liberal" in France is a proponent of lassiz-faire capitalism. In the US, the party regarded as the original party of Classical Liberalism, the Democratic Party, mutated into America's exponent of left-wing socialism. In Austria, the Freedom Party, the closest thing to a Liberal political party I could find on Wikipedia, is said to have mutated into an exponent of right-wing populism. In short, Liberalism is synonymous with Socialism in America, only.
I think I know why. America is unique in the broad base of support Liberal ideas had at the time Socialism was becming popular in Europe, and unique in the degree of popular opposition Socialism had in the U.S. In Europe and elsewhere, "Socialist" is not a dirty word, and "Liberal" is not a worship word. It is only in the United States that proponents of socialism--that is, economic totalitarianism--found the greatest advantage corrupting the word "liberal." Everywhere else, they can simply call themselves "socalists" and win elections under that name. And I suspect "conservatives" willingly gave up that word because the freedom they valued, enshrined in the U.S. Constitution, the Declaration of Independence, and other documents of traditional Americana, could be covered under the word "conservatism," and by abandoning the word "liberal" they could also continue to practice another tradition of theirs Liberalism has always been opposed to (even as it gave birth to it): racism.
I am heartened by the fact that many American so-called liberals are now calling themselves by another name: Progressives. Progressivism, in it's heyday in the early twentieth century, was always a nexus of authoritarianism, elitism, racism, eugenics--basically an American version of the disease that swept Europe at around the same time, admired by such people as Adolf Hitler (though most Americans aren't aware of this). Should they relinquish the term Liberal, it may be much easier for people like myself, who believe in both equality and economic liberty, to reclaim the word that is rightfully ours. Given that the rest of the world already accepts this conception of Liberalism, it might be easier than most Americans might think.
I am the son of a self-identified "conservative," and as such, there was a time in my life when I was hostile to "liberals" and "liberalism." I regarded them as the enemies of traditional American freedom. I considered them just one step sort of Communists. I grew up thinking I would be a Republican. I was aware of a time when "Liberal" referred to American heroes, like Thomas Jefferson, Thomas Paine, and so on. So far as I (and most Americans) knew, that word ceased to mean anything worthwhile, being more synonymous with "socialist" in the present age. And so it has been, in America.
As a citizen of the Internet, I am now aware that Other Countries Exist. Not only that, but they have people in them! And those people have political dynamics that differ from the dynamics I am accustomed to. One thing I long ago discovered is that people in other countries still use the word "Liberal" in the "classical" sense. What I have only recently fully appreciated is that The United States is the ONLY place in the world where the word "Liberal" has been so fully corrupted.
Take Gun Control, as an example. In the US, a liberal favors gun control. The British people I have met regard gun control as something a liberal would oppose. American liberals seem to have contempt for the idea of free enterprise. The Liberal Party in Australia regards free enterprise as an unmitigated good. An "ultra-liberal" in France is a proponent of lassiz-faire capitalism. In the US, the party regarded as the original party of Classical Liberalism, the Democratic Party, mutated into America's exponent of left-wing socialism. In Austria, the Freedom Party, the closest thing to a Liberal political party I could find on Wikipedia, is said to have mutated into an exponent of right-wing populism. In short, Liberalism is synonymous with Socialism in America, only.
I think I know why. America is unique in the broad base of support Liberal ideas had at the time Socialism was becming popular in Europe, and unique in the degree of popular opposition Socialism had in the U.S. In Europe and elsewhere, "Socialist" is not a dirty word, and "Liberal" is not a worship word. It is only in the United States that proponents of socialism--that is, economic totalitarianism--found the greatest advantage corrupting the word "liberal." Everywhere else, they can simply call themselves "socalists" and win elections under that name. And I suspect "conservatives" willingly gave up that word because the freedom they valued, enshrined in the U.S. Constitution, the Declaration of Independence, and other documents of traditional Americana, could be covered under the word "conservatism," and by abandoning the word "liberal" they could also continue to practice another tradition of theirs Liberalism has always been opposed to (even as it gave birth to it): racism.
I am heartened by the fact that many American so-called liberals are now calling themselves by another name: Progressives. Progressivism, in it's heyday in the early twentieth century, was always a nexus of authoritarianism, elitism, racism, eugenics--basically an American version of the disease that swept Europe at around the same time, admired by such people as Adolf Hitler (though most Americans aren't aware of this). Should they relinquish the term Liberal, it may be much easier for people like myself, who believe in both equality and economic liberty, to reclaim the word that is rightfully ours. Given that the rest of the world already accepts this conception of Liberalism, it might be easier than most Americans might think.
Friday, February 09, 2007
Crimes Against the Peace
Do you know what I would love to see? I would love to see the American people unite behind a dark-horse cantidate who is genuinely dedicated to peace and liberty. I would then love to see said president, upon being sworn-in, turn around and place the entire Bush administration under arrest, to be tried for Crimes Against The Peace and Crimes Against Humanity at The Hague. >:)
Monday, January 22, 2007
Saturday, January 20, 2007
What would you do?
Imagine the following scenario.
A month remains before the elections in 2008. An explosion goes off in the halls of Congress, killing fifteen senators and wounding many others. Another explosion goes off simultaneously in the oval office, and President Bush is killed. A third goes off in a crowded area of a major U.S. city, killing seventy and wounding hundreds more. A government investigation reveals that islamic suicide bombers were behind the attacks. All evidence is classified; none is released to the public. There are largely discredited rumors coming out by way of non-mainstream "news" outlets that the evidence was hardly conclusive.
With George W Bush dead, Dick Cheney assumes the Presidency, and declares a state of national emergency. He declares that the elections are to be suspended until after the emergency has passed. A congressional resolution passes endorsing this. Here is the question:
What do you think would happen? What would you do?
A month remains before the elections in 2008. An explosion goes off in the halls of Congress, killing fifteen senators and wounding many others. Another explosion goes off simultaneously in the oval office, and President Bush is killed. A third goes off in a crowded area of a major U.S. city, killing seventy and wounding hundreds more. A government investigation reveals that islamic suicide bombers were behind the attacks. All evidence is classified; none is released to the public. There are largely discredited rumors coming out by way of non-mainstream "news" outlets that the evidence was hardly conclusive.
With George W Bush dead, Dick Cheney assumes the Presidency, and declares a state of national emergency. He declares that the elections are to be suspended until after the emergency has passed. A congressional resolution passes endorsing this. Here is the question:
What do you think would happen? What would you do?
Saturday, January 06, 2007
Money: What does it represent?
Recently, an idea of money that explains inflation as a natural phenomenon inherent to money in general, and not the result of fiendish collaboration between government and bankers, came to mind.
Lots of people on the side of the debate I generally find myself on look to the history of American money as the history of All Money, degenerating from the era of Gold, The Perfect Money, to the nefarious "fiat" money that is obviously so amazingly horrible because it loses value as time goes by. Now, I'm hardly an expert on the history of money, but I am aware that there are many things throughout history that have been used as money. The common features I see in historical forms of money are that they are durable, easily recognizable, sufficiently rare, and require a predictable amount of labor to introduce into the economy.
Gold generally (though not always) satisfies these requirements best. Being a metal that does not oxidize, it never rusts away. It is not difficult to know gold from other materials (though there are a few that can fool the uninitiated). It is sufficiently rare that an extrordinary amount of value can be represented by a very small amount (a single ounce goes for at least $600 right now, and that's in an economy where people aren't using it as money). Generally, gold enters the economy at a predictable rate, and a more productive economy can afford more gold miners. One historical example of a major devaluation of gold is when the gold supply in Europe increased drastically due to a sudden influx of booty by Spanish conquistadors. Silver has similar qualities, though I the supply of silver is a little more variable than gold.
I have read that Native Americans of the Rocky Mountains onced use shells from the Pacific coast as a sort of currency, and upon reflection, I can see why. While shells certainly aren't as durable as gold, they are still quite durable. It probably isn't that difficult to distinguish an ocean shell from a river shell. These shells could enter the economy no faster than the trade links between the Rockies and the Pacific coast could move them, and simply could not be gathered in the local area. For all these reasons, ocean shells could well have served as an excellent trade medium for the time in which it was used. Of course, the introduction of the horse alone undermines this entire system.
Wampum was the "currency" of the natives of the eastern seaboard. It has been suggested "clovis points" were used as a form of currency. I once read in an issue of The Lighthouse about an island culture that used massive, specially carved rocks as a form of currency. All of these shared certain features. I don't know how durable wampum is, but certainly an oversized stylistic arrowhead is like a coin, and those massive rocks last for generations. They all require--in a technologically stagnant setting--a predictable expenditure of labor to create. They are all highly stylistic in form, making them easily recognizable. Given the amount of labor necessary simply to collect enough food to survive, let along make additional luxaries, the labor involved in making them ensured their rarity. The demise of "clovis points" is prehistoric, though both wampum and those big rocks were undermined with western machinery.
Imagine for a moment we live in a "Star Trek" universe. Gold would have long ago ceased to be "money," given replicator technology would have long ago undermined the value of gold. For non-trekkies, a "replicator" is a device that can transform raw energy into any form of matter, including food (though it never tastes as good as the "real thing") and including gold.
History is no more the determiner of great monetary devices than it is of great technological devices, and it was while considering what money is actually used for that I realized monetary inflation is not necessarily a horrible thing that must be avoided like a plague.
The "base case" for an economy is your basic agrarian barter economy, the only level where barter can be used exclusively, I think. Producers travel to a central location to trade their produce. You might have a wheat grower, a vegetable farmer, a grower of tree fruits, a blacksmith, a potter, someone from the nearby mine, etc. They hope to give what they produce in exchange for things they need that others produce. The miner brings raw iron, the blacksmith brings finished iron work, the potter brings, pots, the vegetable grower brings vegetables, etc. The miner might need a pot, but the potmaker has no need for raw iron. Either the potmaker needs to accept iron, and then find trade iron for something he needs from the blacksmith, or the the miner has to trade iron for something the potter needs, and then trade that for the pot. It's not that difficult at this scale.
However, as the divisions of labor get more complex, this process becomes increasingly cmbersome. The introduction of some sort of medium of trade, something that all will accept in trade, is an innovation of extraordinary value, and the thing that makes our modern economy possible. However, one thing to note is that money has not replaced the things that they were previously trading; rather, it simply facilitates the trade, itself. And this money HAS to lose value as time goes by. Why? Because the things the money represents lose value as time goes by!
Think about the produce of the vegetable grower. Today, even in my modern refrigerator, I know well that I HAVE to eat my bag of organic salad leaves within a week. Many of the leaves don't even last that long. You think a 40% loss in the value of your trade goods over fifteen years is bad? Imagine a total loss over the course of fifteen days!
Each producer's goods depreciate at varying rates. The blacksmith's goods will last for many, many ears, possibly even generations, properly cared for. Of course, part of that care is repairs. And rust happens. Pots break. Even jewelry wears, requiring occasional tooling. And the food has to be consumed soon, or it will spoil, wasted. Now, I can't communicate a good, solid logical connection right now, but I can't help but think that money must reflect in some fashion the average of the economic properties of the goods it is meant to substitue for in trade. Sure, the depreciation of money isn't as simple as taking an average of the depreciation rates of all goods, but surely some depreciation is a natural feature.
The only thing that keeps a currency increasing in value is economic growth that is faster than monetary growth. The lettuce made last year is certainly compost by now if it wasn't purchased and eaten, but provided enough people were wanting to buy lettuce, there may well be two lettuce farms where previously there was one; and thus, the money is worth more now than it was before. However, if a culture has reached the point where it has reached an economic equalibrium with its local ecology and technological progress has hit a wall, I can't help but think it would be natural for a currency to depreciate at a rate comparable to the actual goods that can be purchased with it.
Lots of people on the side of the debate I generally find myself on look to the history of American money as the history of All Money, degenerating from the era of Gold, The Perfect Money, to the nefarious "fiat" money that is obviously so amazingly horrible because it loses value as time goes by. Now, I'm hardly an expert on the history of money, but I am aware that there are many things throughout history that have been used as money. The common features I see in historical forms of money are that they are durable, easily recognizable, sufficiently rare, and require a predictable amount of labor to introduce into the economy.
Gold generally (though not always) satisfies these requirements best. Being a metal that does not oxidize, it never rusts away. It is not difficult to know gold from other materials (though there are a few that can fool the uninitiated). It is sufficiently rare that an extrordinary amount of value can be represented by a very small amount (a single ounce goes for at least $600 right now, and that's in an economy where people aren't using it as money). Generally, gold enters the economy at a predictable rate, and a more productive economy can afford more gold miners. One historical example of a major devaluation of gold is when the gold supply in Europe increased drastically due to a sudden influx of booty by Spanish conquistadors. Silver has similar qualities, though I the supply of silver is a little more variable than gold.
I have read that Native Americans of the Rocky Mountains onced use shells from the Pacific coast as a sort of currency, and upon reflection, I can see why. While shells certainly aren't as durable as gold, they are still quite durable. It probably isn't that difficult to distinguish an ocean shell from a river shell. These shells could enter the economy no faster than the trade links between the Rockies and the Pacific coast could move them, and simply could not be gathered in the local area. For all these reasons, ocean shells could well have served as an excellent trade medium for the time in which it was used. Of course, the introduction of the horse alone undermines this entire system.
Wampum was the "currency" of the natives of the eastern seaboard. It has been suggested "clovis points" were used as a form of currency. I once read in an issue of The Lighthouse about an island culture that used massive, specially carved rocks as a form of currency. All of these shared certain features. I don't know how durable wampum is, but certainly an oversized stylistic arrowhead is like a coin, and those massive rocks last for generations. They all require--in a technologically stagnant setting--a predictable expenditure of labor to create. They are all highly stylistic in form, making them easily recognizable. Given the amount of labor necessary simply to collect enough food to survive, let along make additional luxaries, the labor involved in making them ensured their rarity. The demise of "clovis points" is prehistoric, though both wampum and those big rocks were undermined with western machinery.
Imagine for a moment we live in a "Star Trek" universe. Gold would have long ago ceased to be "money," given replicator technology would have long ago undermined the value of gold. For non-trekkies, a "replicator" is a device that can transform raw energy into any form of matter, including food (though it never tastes as good as the "real thing") and including gold.
History is no more the determiner of great monetary devices than it is of great technological devices, and it was while considering what money is actually used for that I realized monetary inflation is not necessarily a horrible thing that must be avoided like a plague.
The "base case" for an economy is your basic agrarian barter economy, the only level where barter can be used exclusively, I think. Producers travel to a central location to trade their produce. You might have a wheat grower, a vegetable farmer, a grower of tree fruits, a blacksmith, a potter, someone from the nearby mine, etc. They hope to give what they produce in exchange for things they need that others produce. The miner brings raw iron, the blacksmith brings finished iron work, the potter brings, pots, the vegetable grower brings vegetables, etc. The miner might need a pot, but the potmaker has no need for raw iron. Either the potmaker needs to accept iron, and then find trade iron for something he needs from the blacksmith, or the the miner has to trade iron for something the potter needs, and then trade that for the pot. It's not that difficult at this scale.
However, as the divisions of labor get more complex, this process becomes increasingly cmbersome. The introduction of some sort of medium of trade, something that all will accept in trade, is an innovation of extraordinary value, and the thing that makes our modern economy possible. However, one thing to note is that money has not replaced the things that they were previously trading; rather, it simply facilitates the trade, itself. And this money HAS to lose value as time goes by. Why? Because the things the money represents lose value as time goes by!
Think about the produce of the vegetable grower. Today, even in my modern refrigerator, I know well that I HAVE to eat my bag of organic salad leaves within a week. Many of the leaves don't even last that long. You think a 40% loss in the value of your trade goods over fifteen years is bad? Imagine a total loss over the course of fifteen days!
Each producer's goods depreciate at varying rates. The blacksmith's goods will last for many, many ears, possibly even generations, properly cared for. Of course, part of that care is repairs. And rust happens. Pots break. Even jewelry wears, requiring occasional tooling. And the food has to be consumed soon, or it will spoil, wasted. Now, I can't communicate a good, solid logical connection right now, but I can't help but think that money must reflect in some fashion the average of the economic properties of the goods it is meant to substitue for in trade. Sure, the depreciation of money isn't as simple as taking an average of the depreciation rates of all goods, but surely some depreciation is a natural feature.
The only thing that keeps a currency increasing in value is economic growth that is faster than monetary growth. The lettuce made last year is certainly compost by now if it wasn't purchased and eaten, but provided enough people were wanting to buy lettuce, there may well be two lettuce farms where previously there was one; and thus, the money is worth more now than it was before. However, if a culture has reached the point where it has reached an economic equalibrium with its local ecology and technological progress has hit a wall, I can't help but think it would be natural for a currency to depreciate at a rate comparable to the actual goods that can be purchased with it.
Friday, December 29, 2006
The Scapegoat
Today, I will take you into a flight of unserious and pointless (though amusing) word-association, something that makes sense only if you lend credence to a link between ancient ritual and modern practice.
In Christianity, one of the names for Jesus is the Lamb of God. This is a reference to the yearly rite the ancient Israelites were supposed to practice to purge Israel of its sins. A lamb, pure and without defect, was sacrificed to atone for the sins of the people of Israel. Then the high priest would enter the Holy of Holies (an inner part of the Temple where even he was not allowed on any other day for any other purpose), and do something that would somehow get God to forgive His People. Jesus death on the cross is supposed to be the reality that the yearly sacrifice of the lamb was meant to symbolize. I'd provide references, but I just don't feel like it. :p
Many people refer to The Lamb without realizing there is a second animal involved in the ritual: a goat. A goat was chosen, and the sins of Israel were metaphorically placed upon this goat. This goat was then driven out into the wilderness, and called the "escaped goat" or "scapegoat." If Jesus is the Lamb of God, who, then, is the Scapegoat of God? Some people answer "Satan," but who the hell is Satan? Where is he? Is he here? Is he there? Is he anywhere? Jesus was a man, who came, went, and--some say--came again. He is an identifiable historical figure, and his followers, who sometimes refer to their brotherhood as "the body of Christ," are here with us today. "Satan" is nothing but a mythical figure who shows up in some stories that are so ancient we can hardly lend them literal credence. He certainly didn't show up in the New Testament, except possibly when Jesus went wandering in the desert. He simply isn't historical enough to be placed on the same field as Jesus. So who is the Scapegoat?
Irony of ironies: Who is identified by every conspiracy theorist who posits an identity to "Them?" When "They" are the cause of all the woes in the world, who are "They" in the rare instance a conspiracy theorist attempts to put a name beyond some faceless mass like "The Government?" We all know who they are: The Jews.
Irony of ironies: Judeism and Christianity came to the Temple together. First, Jesus was killed. Shortly afterward, the Jews were driven from Judea, and the temple destroyed, by the Romans. Or perhaps: First, the Lamb was sacrificed. Shortly afterward, the Scapegoat was driven out into the wilderness. People have been blaming and persecuting The Jews for everything ever since--the Ultimate Scapegoat.
Probably not much to this. I thought it up about ten minutes ago, found it amusing, and decided to post it. I accept no responsibility for idiots who find this an excuse to persecute their fellow man, Jew or otherwise.
Oh, and if you take this seriously, realize one thing. The yearly lamb, when sacrificed, was dead. Those lambs did not come back to life. The Lamb, however, did, according to the story, anyway. If the Lamb that was sacrificed can rise again, perhaps there will come a day when The Scapegoat will no longer be held guilty of the world's sins.
In Christianity, one of the names for Jesus is the Lamb of God. This is a reference to the yearly rite the ancient Israelites were supposed to practice to purge Israel of its sins. A lamb, pure and without defect, was sacrificed to atone for the sins of the people of Israel. Then the high priest would enter the Holy of Holies (an inner part of the Temple where even he was not allowed on any other day for any other purpose), and do something that would somehow get God to forgive His People. Jesus death on the cross is supposed to be the reality that the yearly sacrifice of the lamb was meant to symbolize. I'd provide references, but I just don't feel like it. :p
Many people refer to The Lamb without realizing there is a second animal involved in the ritual: a goat. A goat was chosen, and the sins of Israel were metaphorically placed upon this goat. This goat was then driven out into the wilderness, and called the "escaped goat" or "scapegoat." If Jesus is the Lamb of God, who, then, is the Scapegoat of God? Some people answer "Satan," but who the hell is Satan? Where is he? Is he here? Is he there? Is he anywhere? Jesus was a man, who came, went, and--some say--came again. He is an identifiable historical figure, and his followers, who sometimes refer to their brotherhood as "the body of Christ," are here with us today. "Satan" is nothing but a mythical figure who shows up in some stories that are so ancient we can hardly lend them literal credence. He certainly didn't show up in the New Testament, except possibly when Jesus went wandering in the desert. He simply isn't historical enough to be placed on the same field as Jesus. So who is the Scapegoat?
Irony of ironies: Who is identified by every conspiracy theorist who posits an identity to "Them?" When "They" are the cause of all the woes in the world, who are "They" in the rare instance a conspiracy theorist attempts to put a name beyond some faceless mass like "The Government?" We all know who they are: The Jews.
Irony of ironies: Judeism and Christianity came to the Temple together. First, Jesus was killed. Shortly afterward, the Jews were driven from Judea, and the temple destroyed, by the Romans. Or perhaps: First, the Lamb was sacrificed. Shortly afterward, the Scapegoat was driven out into the wilderness. People have been blaming and persecuting The Jews for everything ever since--the Ultimate Scapegoat.
Probably not much to this. I thought it up about ten minutes ago, found it amusing, and decided to post it. I accept no responsibility for idiots who find this an excuse to persecute their fellow man, Jew or otherwise.
Oh, and if you take this seriously, realize one thing. The yearly lamb, when sacrificed, was dead. Those lambs did not come back to life. The Lamb, however, did, according to the story, anyway. If the Lamb that was sacrificed can rise again, perhaps there will come a day when The Scapegoat will no longer be held guilty of the world's sins.
Monday, December 18, 2006
On Readiness for War
I've been writing about peace, writing against the administration, writing against the war, writing my belief that it would be better for both America and Iraq if we lost this war. I've been writing this so much that one might come to the conclusion that I am either against all war, or simply biased against America in favor of everybody else. I feel the need to write something less timely, something that will indicate this is simply not the case.
Actually, there is a part of me that IS against all war, that part of me that is influenced largely by biblical teaching. While I am aware that God ordered the Israelites into war from time to time, the impression I get from the new testament--particularly the gospels--is that it is no longer a time for war. "If a man strikes you on the cheak, offer him the other. If a man takes your coat, give him also your cloak. If a man forces you to march a mile with him, go with him two." This, to me, is the clearest statement ever given in the Bible regarding how followers of Christ are to react to violence. Jesus demonstrated this ideal by willingly going to the cross. I really fail to see how people, calling themselves Christians, manage to justify war, and even fight in them.
However, it is but a part of me that feels this way. I am not a churchgoer. I do not think totally according to what I read in the Bible. There are times when I wonder if I might resolve this internal inconsistancy, but for now, that is not my way.
War happens. There are always those who believe their desires might be fulfilled through the deaths of others. This conflict can be seen in the non-human world, as various organisms have evolved either the strength to frighten off predators (like the elephant, or the bison), or the appearance of strength (like the puffer fish). It is no different among men, except that we often regard one another as beings of another species: we often prey upon one another.
For this reason, individuals, communities, and states must be prepared for war. If they posess strength, or at least the appearance of strength, the expense of war goes up for any that might attack them, therefore the profit of war goes down, meaning that, at the very least, those who go to war based upon economic calculation (whether concious or otherwise) would avoid it. Those who go to war foolishly can be eliminated.
It is also good for individuals, communities, and states who are committed to peace to ally with one another for mutual defense, not necessarily formally, but in principle. This decreases the amount of preparation necessary to maintain that optimal appearance of strength against those that would attack them, a larger force being available in the event of war. All of this decreases the profitability of war for those who make war for profit, deterring them. It also makes it more likely that those that make war for the sheer hell of it will, first off, have fewer allies (the raiders having been deterred), and second off, be utterly destroyed should they decide to fight anyway.
One must remember that any armed group has the potential to be every bit as criminal as those other groups. Indeed, the traditional model for the state, in claiming for itself the privelage of seizing anything it "lawfully" comes to the decision to seize, is nothing more than a criminal organization large enough to end the competition between criminal organizations. In a democracy, "lawful decision making" means a majority of voters approves it, which can at times degenerate into the democracy of three wolves and a sheep, voting about what they should have for dinner...
I fully agree America needs to be prepared for war, and willing to fight it to the finish when it is necessary to do so. However, we are placing all of our military might under the control of very few men... and I believe this is extraordinarily dangerous. It doesn't take long for the enemies of peace to figure out how to play the new game, gaining control of our armies and the power to tax... and, once again, we break up into feuding, warring powers, each seeking to seize as much as they can in the name of "self defense;" only this time, we war against each other at the ballot box, using the tax collector as our mercenary. I believe most people agree that it would be better if taxes were lower and government were smaller, but a minority that profits from this game use our fear of each other and of people abroad to continually increase their own power.
Currently, there seems to be a focus on how big and scary we can look, in an attempt to deter others. This works for animals. The best way to deal with a hungry bear is to appear as large and threatening as you can. The bear just wants a meal, and wants the easiest meal he can get. Bears engage in violence in respond to what might be called an "economic calculation;" they want to meet their dietary needs with the least risk and caloric expense. If you look big and scary, predators will generally not attack.
People are different. If something simply looks strong, we will avoid messing with it, but if it looks really scary, we arm ourselves and kill it before it can kill us. Anything that not only secures its own safety, but also appears to threaten our own safety, we will attack, and this is as true in human interactions as it is in human-animal interactions.
In other words, our big scary army actually reduces our security, from more than one angle. It frightens people in other countries, thus people who would otherwise ignore us constantly scheme for a way to bring us down... and the more actively we use that army, the more people we turn to this endevor. With so many minds dedicated to the cause of bringing us down, it is only a matter of time until someone figures out how to do it... assuming that isn't what's happening right now.
The second threat, however, is from the minority that controls the machinery of the state using that power to cow their own people. There was a time when, if taxes were raised too high or rights were infringed, there was the threat of civil war, forcing politicians to restrain themselves somewhat in the name of civil order. Indeed, both of the rebellions that have occured in this country were essentially tax revolts. The "whisky rebellion," a far more important conflict than our textbooks lead us to believe, was over a tax that benefited the eastern seaborad at the expense of westerners. The Civil War, though we are told it was about Slavery (and was, indeed, toward the end), but it started not over slavery, but over the Tarrif of Abominations, a tax that benefited the industrial North at the expense of the agricultural South. Seek to advance the interests of the one at the expense of another, and this is what you risk.
That is no longer the case, since everybody knows you can't fight City Hall, let alone Washington D.C. Control over this resource is extremely valuable; lack of control is extremely dangerous. And so, we battle for control, with no reguard for truth or justice.
I firmly believe security is best established by a balance between individual readiness, communal readiness, and state readiness. No arms should be denied to individuals. Communities should maintain forces just large enough both to give their judicial systems teeth, and to act as a first line of defense against larger invaders. The state should maintain a force just large enough both to prevent communities from subjugating one another, and to act as a first line of defense in war, giving communal and individual forces time to organize under its banner.
If there is no balance of force, the monopolist of force inevitably ends up being used immorally to fulfill to desires of those who wish to profit by violence. Only if there is a balance of forces does violence cease to be a profitable alternative, allowing people the freedom to get down to living free.
Action points: Shrink the federal military. Release the national guard from federal authority. End arms control in all forms, with the possible exception of weapons capable of destroying entire communities in a single blast.
And to those that serve in our current military in the belief that it is your role to do so to defend our country, while I question your judgement, I do not question your honor, just as I do not question those that attempt to educate children in the only manner it is currently legal to do so. We all have a way in which we are to serve society, and I do not envy the position of those whose domain is currently monopolized by the government.
And, to the Christians: You're already on the right side of the Resurrection, so why risk your salvation by participating in the wars of pagans, atheists, and psuedo-christian charletans? (I probably answered my question with that last item.) You may die in battle, and then hear the words "I do now know you." Did not Paul say it was better to suffer wrong, than to commit it?
Actually, there is a part of me that IS against all war, that part of me that is influenced largely by biblical teaching. While I am aware that God ordered the Israelites into war from time to time, the impression I get from the new testament--particularly the gospels--is that it is no longer a time for war. "If a man strikes you on the cheak, offer him the other. If a man takes your coat, give him also your cloak. If a man forces you to march a mile with him, go with him two." This, to me, is the clearest statement ever given in the Bible regarding how followers of Christ are to react to violence. Jesus demonstrated this ideal by willingly going to the cross. I really fail to see how people, calling themselves Christians, manage to justify war, and even fight in them.
However, it is but a part of me that feels this way. I am not a churchgoer. I do not think totally according to what I read in the Bible. There are times when I wonder if I might resolve this internal inconsistancy, but for now, that is not my way.
War happens. There are always those who believe their desires might be fulfilled through the deaths of others. This conflict can be seen in the non-human world, as various organisms have evolved either the strength to frighten off predators (like the elephant, or the bison), or the appearance of strength (like the puffer fish). It is no different among men, except that we often regard one another as beings of another species: we often prey upon one another.
For this reason, individuals, communities, and states must be prepared for war. If they posess strength, or at least the appearance of strength, the expense of war goes up for any that might attack them, therefore the profit of war goes down, meaning that, at the very least, those who go to war based upon economic calculation (whether concious or otherwise) would avoid it. Those who go to war foolishly can be eliminated.
It is also good for individuals, communities, and states who are committed to peace to ally with one another for mutual defense, not necessarily formally, but in principle. This decreases the amount of preparation necessary to maintain that optimal appearance of strength against those that would attack them, a larger force being available in the event of war. All of this decreases the profitability of war for those who make war for profit, deterring them. It also makes it more likely that those that make war for the sheer hell of it will, first off, have fewer allies (the raiders having been deterred), and second off, be utterly destroyed should they decide to fight anyway.
One must remember that any armed group has the potential to be every bit as criminal as those other groups. Indeed, the traditional model for the state, in claiming for itself the privelage of seizing anything it "lawfully" comes to the decision to seize, is nothing more than a criminal organization large enough to end the competition between criminal organizations. In a democracy, "lawful decision making" means a majority of voters approves it, which can at times degenerate into the democracy of three wolves and a sheep, voting about what they should have for dinner...
I fully agree America needs to be prepared for war, and willing to fight it to the finish when it is necessary to do so. However, we are placing all of our military might under the control of very few men... and I believe this is extraordinarily dangerous. It doesn't take long for the enemies of peace to figure out how to play the new game, gaining control of our armies and the power to tax... and, once again, we break up into feuding, warring powers, each seeking to seize as much as they can in the name of "self defense;" only this time, we war against each other at the ballot box, using the tax collector as our mercenary. I believe most people agree that it would be better if taxes were lower and government were smaller, but a minority that profits from this game use our fear of each other and of people abroad to continually increase their own power.
Currently, there seems to be a focus on how big and scary we can look, in an attempt to deter others. This works for animals. The best way to deal with a hungry bear is to appear as large and threatening as you can. The bear just wants a meal, and wants the easiest meal he can get. Bears engage in violence in respond to what might be called an "economic calculation;" they want to meet their dietary needs with the least risk and caloric expense. If you look big and scary, predators will generally not attack.
People are different. If something simply looks strong, we will avoid messing with it, but if it looks really scary, we arm ourselves and kill it before it can kill us. Anything that not only secures its own safety, but also appears to threaten our own safety, we will attack, and this is as true in human interactions as it is in human-animal interactions.
In other words, our big scary army actually reduces our security, from more than one angle. It frightens people in other countries, thus people who would otherwise ignore us constantly scheme for a way to bring us down... and the more actively we use that army, the more people we turn to this endevor. With so many minds dedicated to the cause of bringing us down, it is only a matter of time until someone figures out how to do it... assuming that isn't what's happening right now.
The second threat, however, is from the minority that controls the machinery of the state using that power to cow their own people. There was a time when, if taxes were raised too high or rights were infringed, there was the threat of civil war, forcing politicians to restrain themselves somewhat in the name of civil order. Indeed, both of the rebellions that have occured in this country were essentially tax revolts. The "whisky rebellion," a far more important conflict than our textbooks lead us to believe, was over a tax that benefited the eastern seaborad at the expense of westerners. The Civil War, though we are told it was about Slavery (and was, indeed, toward the end), but it started not over slavery, but over the Tarrif of Abominations, a tax that benefited the industrial North at the expense of the agricultural South. Seek to advance the interests of the one at the expense of another, and this is what you risk.
That is no longer the case, since everybody knows you can't fight City Hall, let alone Washington D.C. Control over this resource is extremely valuable; lack of control is extremely dangerous. And so, we battle for control, with no reguard for truth or justice.
I firmly believe security is best established by a balance between individual readiness, communal readiness, and state readiness. No arms should be denied to individuals. Communities should maintain forces just large enough both to give their judicial systems teeth, and to act as a first line of defense against larger invaders. The state should maintain a force just large enough both to prevent communities from subjugating one another, and to act as a first line of defense in war, giving communal and individual forces time to organize under its banner.
If there is no balance of force, the monopolist of force inevitably ends up being used immorally to fulfill to desires of those who wish to profit by violence. Only if there is a balance of forces does violence cease to be a profitable alternative, allowing people the freedom to get down to living free.
Action points: Shrink the federal military. Release the national guard from federal authority. End arms control in all forms, with the possible exception of weapons capable of destroying entire communities in a single blast.
And to those that serve in our current military in the belief that it is your role to do so to defend our country, while I question your judgement, I do not question your honor, just as I do not question those that attempt to educate children in the only manner it is currently legal to do so. We all have a way in which we are to serve society, and I do not envy the position of those whose domain is currently monopolized by the government.
And, to the Christians: You're already on the right side of the Resurrection, so why risk your salvation by participating in the wars of pagans, atheists, and psuedo-christian charletans? (I probably answered my question with that last item.) You may die in battle, and then hear the words "I do now know you." Did not Paul say it was better to suffer wrong, than to commit it?
Wednesday, November 22, 2006
Rent and Consumer Good Prices
A few weeks ago, I spent some time manning a snack bar on behalf of my mother. The prices were outrageous... which gave much inspiration to this ramble.
When we think about Rent, the concept that generally comes to mind is the money we pay for the place we live. Some might take it a step further and realize that businesses must pay rent, as well, but may not realize the consequences of this. Those consequences are experienced quite intimately whenever we attend a sporting event, a county fair, or go to an amusement park.
Try to buy a hot dog outside the park; you'll likely not pay more than $1.50 for the hot dog... maybe $2.00 if it is somehow REALLY special. I know we charged $3.50 for a regular old misnamed "jumbo" hot dog at the football game. How about a little bag of peanut M&Ms? Probably you pay no more than $.75 at a store. If you buy it from a kid's fund raiser, you might pay a dollar. At the stadium, we charged $3.00. At a mini-mart, you'll pay maybe $.80 to $1.00 for a 24 oz soda; at the stadium, we charged at least $3.00. This is a fact of life, few people question it. I think about these things; what causes prices in the stadium (or at the fair, or Magic Mountain, or inside the movie theater...) to be so much higher than just outside?
The answer, of course, is Rent. There is a massive number of people inside the stadium, crowding around the field to see the game. Their ticket price, of course, contains an element of Rent; they are paying for the privilege of seeing the game up close, without having to push and shove to get a good view. The fact that the stadium was not full shows the effects of Speculation; seats that might otherwise be full remain empty, potential spectators being driven away by a price set according to an overestimated demand.
However, the food prices also contain a large element of rent, as well. With that crowd there, the right to sell food in proximity to the crowd, rather than someone else, is highly valuable. The food prices are inflated by the price one has to pay to the stadium owners in order to do business at that location. People are generally willing to pay these prices because the sort that can afford to attend a sporting event can generally afford to pay outrageous prices (though I recall, when growing up, that my parents absolutely refused to buy food inside Disneyland).
A general increase in rent is like a whole country becoming like the stadium, except instead of football players, you have a society's technical elite. Instead of stadium owners, you have a society's landed elite. Instead of people who are unable to afford the stadium food prices and have the option of buying outside the stadium, you have the desperately poor, who sacrifice much just to afford the basic necessities. And instead of people who have the choice to watch from outside the stadium (or not to watch at all), you have the homeless, who, unable to afford a "ticket" for one reason or another, stand at the edges of society, outcast.
That is Rent.
When we think about Rent, the concept that generally comes to mind is the money we pay for the place we live. Some might take it a step further and realize that businesses must pay rent, as well, but may not realize the consequences of this. Those consequences are experienced quite intimately whenever we attend a sporting event, a county fair, or go to an amusement park.
Try to buy a hot dog outside the park; you'll likely not pay more than $1.50 for the hot dog... maybe $2.00 if it is somehow REALLY special. I know we charged $3.50 for a regular old misnamed "jumbo" hot dog at the football game. How about a little bag of peanut M&Ms? Probably you pay no more than $.75 at a store. If you buy it from a kid's fund raiser, you might pay a dollar. At the stadium, we charged $3.00. At a mini-mart, you'll pay maybe $.80 to $1.00 for a 24 oz soda; at the stadium, we charged at least $3.00. This is a fact of life, few people question it. I think about these things; what causes prices in the stadium (or at the fair, or Magic Mountain, or inside the movie theater...) to be so much higher than just outside?
The answer, of course, is Rent. There is a massive number of people inside the stadium, crowding around the field to see the game. Their ticket price, of course, contains an element of Rent; they are paying for the privilege of seeing the game up close, without having to push and shove to get a good view. The fact that the stadium was not full shows the effects of Speculation; seats that might otherwise be full remain empty, potential spectators being driven away by a price set according to an overestimated demand.
However, the food prices also contain a large element of rent, as well. With that crowd there, the right to sell food in proximity to the crowd, rather than someone else, is highly valuable. The food prices are inflated by the price one has to pay to the stadium owners in order to do business at that location. People are generally willing to pay these prices because the sort that can afford to attend a sporting event can generally afford to pay outrageous prices (though I recall, when growing up, that my parents absolutely refused to buy food inside Disneyland).
A general increase in rent is like a whole country becoming like the stadium, except instead of football players, you have a society's technical elite. Instead of stadium owners, you have a society's landed elite. Instead of people who are unable to afford the stadium food prices and have the option of buying outside the stadium, you have the desperately poor, who sacrifice much just to afford the basic necessities. And instead of people who have the choice to watch from outside the stadium (or not to watch at all), you have the homeless, who, unable to afford a "ticket" for one reason or another, stand at the edges of society, outcast.
That is Rent.
Thursday, November 16, 2006
PRC: The "Something for Nothing" problem:
Georgism, so far as I can tell, begins with the public collection and distribution of rent, by way of a high tax on the rental value of land. How that money is distributed, what is done with it, who makes the decisions as to what shall be done with it, is where the many divisions within Georgism begin, such as Geo-Socialism, Geo-Anarchism, etc.
I have, in the past, discussed the Geo-Libertarian idea of the public collection and distribution of rent. Very simply put, the tax, rather than going to fund the usual functions of today's government, would simply be paid out as a "citizen's dividend" on a per-capita basis. The idea behind this is that individual motivations are superior to political motivations when it comes to deciding how money should be spent. Under a system in which the collecting entity (government, or PRC) simply redistributes land rent, rather than deciding how it should be spent, the benefits of Anarcho-Capitalism would be within reach of not only the upper classes of society (which would be limited by the tax), but rather would be accessible to everybody. Everybody would have the ability to pay for, for example, private police services.
Now, while I have issues with Anarcho-Capitalism in general, my main discomfort with this program has always been the simple fact that this would give to people "something for nothing." Where would be the incentive to work, under this system? What would prevent it from simply collapsing under the weight of masses of moochers? What is the difference between this idea, and massive wealth transfer programs in general? I've been thinking about it lately, and I think I may actually have an answer.
One aspect is the nature of the tax itself. While most taxes act as a punishment for wealth production (income taxes hit those with high labor values, in addition to the idle rich; sales taxes penalize people for distributing goods; excise taxes target the production of specific kinds of wealth; etc.), a tax on Land rental value is a penalty not for production, but on the monopolization of natural potential. One person who is making far better use of a piece of land than his neighbors is taxed no more than the person who is simply allowing his land to lie unused. The only relation between taxation and production would be the case of a highly productive community in which the natural potential of the Land is proximity to highly productive people... A good place to open up a store, for example. In this case, the tax would simply ensure that such valuable land not be held purely for the increasing value of the area, but rather would be continually available for use.
The fact that the dividend is distributed on a per capita basis, rather than in a means-tested fashion, means that, at the very least, the dividend does not act as a disincentive to productivity. I have been personally acquainted with a disabled man who wished to go back to school and earn the credits he needed to start teaching, but feared to leave the public dole, which he would have to do if he attempted to work again. The impact of welfare programs in discouraging people from starting to work again is well documented.
However, even if a large number of people should start mooching off the productivity of a few, those people are likely not busy driving up the value of Land. The effect is that Land value would remain low; therefore, the Land tax would remain low. In the event that, despite the low level of taxes being redistributed on a per capita basis, people still have the ability to live off the dividend alone (or the dividend plus something they enjoy doing, anyway), we would simply have reached an era of Star Trekonomics, the point where technology enables a few to be so productive that they can literally provide for the needs of thousands of others, and do so by choice. (In Star Trek, it is generally assumed that, despite everybody being provided for, The Federation's economy is still productive enough to support, not only a socialist paradise, but also a substantial fleet of starships.)
In the event that we're simply not there yet, a moocher class would still result in declining Land values, followed closely by declining Land taxes, followed by the dividend being unable to support an individual, followed by individuals increasing their productivity to supplement their dividend income, in a potentially increasing cycle. There would be no penalty for working; no portion of the dividend would be lost. However, as productivity increased, land value would increase, thus the dividend would increase. In the meantime, those who remain productive despite the apparent opportunity to live without being so would not be penalized a bit for remaining productive (and, indeed, would pay decreasing taxes until the economy hit the point where productivity could go down no further).
Personally, I think certain types of things would still need to be funded by what I am going to call the Land Corporation (as opposed to government, since its power to tax would be limited to the power to charge rent for the monopolization of land owned by the community via this corporation, and not a general ability to tax anything and everything it can achieve a majority in favor of). The tendency of people to fully utilize land when not discouraged from doing so may necessitate the public support of certain kinds of recreational areas, such as nature preserves. In the situation where there is a fairly continuous threat for a hostile foreign country, a military may be necessary, or at least a publicly funded deterrant nuclear arsenal. (In the situation where international neighbors are either neutral towards us or powerless, a publicly funded military may well be unnecessary.) Publicly funded police organizations may be necessary to keep mafia-like organizations from filling the gap. There may be other things I am not thinking of.
However, my conclusion is that, if all land were owned by a corporation which had all citizens as shareholders (one share per citizen), which distributed its entire profits as a dividend to its shareholders, the result would not be unmitigated economic disaster, or even a general malaise. The result may well be superior to what we have today.
I have, in the past, discussed the Geo-Libertarian idea of the public collection and distribution of rent. Very simply put, the tax, rather than going to fund the usual functions of today's government, would simply be paid out as a "citizen's dividend" on a per-capita basis. The idea behind this is that individual motivations are superior to political motivations when it comes to deciding how money should be spent. Under a system in which the collecting entity (government, or PRC) simply redistributes land rent, rather than deciding how it should be spent, the benefits of Anarcho-Capitalism would be within reach of not only the upper classes of society (which would be limited by the tax), but rather would be accessible to everybody. Everybody would have the ability to pay for, for example, private police services.
Now, while I have issues with Anarcho-Capitalism in general, my main discomfort with this program has always been the simple fact that this would give to people "something for nothing." Where would be the incentive to work, under this system? What would prevent it from simply collapsing under the weight of masses of moochers? What is the difference between this idea, and massive wealth transfer programs in general? I've been thinking about it lately, and I think I may actually have an answer.
One aspect is the nature of the tax itself. While most taxes act as a punishment for wealth production (income taxes hit those with high labor values, in addition to the idle rich; sales taxes penalize people for distributing goods; excise taxes target the production of specific kinds of wealth; etc.), a tax on Land rental value is a penalty not for production, but on the monopolization of natural potential. One person who is making far better use of a piece of land than his neighbors is taxed no more than the person who is simply allowing his land to lie unused. The only relation between taxation and production would be the case of a highly productive community in which the natural potential of the Land is proximity to highly productive people... A good place to open up a store, for example. In this case, the tax would simply ensure that such valuable land not be held purely for the increasing value of the area, but rather would be continually available for use.
The fact that the dividend is distributed on a per capita basis, rather than in a means-tested fashion, means that, at the very least, the dividend does not act as a disincentive to productivity. I have been personally acquainted with a disabled man who wished to go back to school and earn the credits he needed to start teaching, but feared to leave the public dole, which he would have to do if he attempted to work again. The impact of welfare programs in discouraging people from starting to work again is well documented.
However, even if a large number of people should start mooching off the productivity of a few, those people are likely not busy driving up the value of Land. The effect is that Land value would remain low; therefore, the Land tax would remain low. In the event that, despite the low level of taxes being redistributed on a per capita basis, people still have the ability to live off the dividend alone (or the dividend plus something they enjoy doing, anyway), we would simply have reached an era of Star Trekonomics, the point where technology enables a few to be so productive that they can literally provide for the needs of thousands of others, and do so by choice. (In Star Trek, it is generally assumed that, despite everybody being provided for, The Federation's economy is still productive enough to support, not only a socialist paradise, but also a substantial fleet of starships.)
In the event that we're simply not there yet, a moocher class would still result in declining Land values, followed closely by declining Land taxes, followed by the dividend being unable to support an individual, followed by individuals increasing their productivity to supplement their dividend income, in a potentially increasing cycle. There would be no penalty for working; no portion of the dividend would be lost. However, as productivity increased, land value would increase, thus the dividend would increase. In the meantime, those who remain productive despite the apparent opportunity to live without being so would not be penalized a bit for remaining productive (and, indeed, would pay decreasing taxes until the economy hit the point where productivity could go down no further).
Personally, I think certain types of things would still need to be funded by what I am going to call the Land Corporation (as opposed to government, since its power to tax would be limited to the power to charge rent for the monopolization of land owned by the community via this corporation, and not a general ability to tax anything and everything it can achieve a majority in favor of). The tendency of people to fully utilize land when not discouraged from doing so may necessitate the public support of certain kinds of recreational areas, such as nature preserves. In the situation where there is a fairly continuous threat for a hostile foreign country, a military may be necessary, or at least a publicly funded deterrant nuclear arsenal. (In the situation where international neighbors are either neutral towards us or powerless, a publicly funded military may well be unnecessary.) Publicly funded police organizations may be necessary to keep mafia-like organizations from filling the gap. There may be other things I am not thinking of.
However, my conclusion is that, if all land were owned by a corporation which had all citizens as shareholders (one share per citizen), which distributed its entire profits as a dividend to its shareholders, the result would not be unmitigated economic disaster, or even a general malaise. The result may well be superior to what we have today.
Friday, November 03, 2006
California Propositions: Continued
Sorry about the lateness of this post. I've been extremely busy lately, and the closer the election gets, the less and less I want to think about politics.
Proposition 85: NO.
I could almost vote in favor of Proposition 85. My instinct is generally to favor parental authority over child liberty. But I prefer for that authority take shape in a state of political and economic freedom for both parties, the natural result of a child's dependence on his parents, and not the result of government mandate.
Another problem is that this proposition furthers the bueraeucratic regulatory model in which the assumption is made that professionals are guilty until proven innocent. I can understand requiring a doctor to notify the parents. I can understand futher the notion that this requirement can be delayed until after the abortion if the doctor notes in her records that to delay would be life threatening. But the doctor would also have to submit notice to a state regulatory board of any and all abortions performed on minors.
Why? What purpose does this serve? If a doctor is going to fudge his records in order to hide an illegal abortion, he's hardly going to submit the paperwork. No, this is nothing more than the continuation of our society's shift from a judicial model in which people are presumed innocent until proven guilty, to a bueraeucratic model in which people are presumed guilty until proven innocent. It would be sufficient to allow parents to take the doctor to court, and each party can provide whatever evidence they have. There is no need to subject the medical community to yet more pointless paperwork.
I sincerely doubt we are in the midst of any kind of minor abortion "crisis" as a result of the absence of this particular law (except insofar as one might consider permitting any abortions whatsoever a crisis). This being the case, I cannot recommend voting in favor of this proposition.
Proposition 86: NO.
This proposition is wrong on many levels.
First off, it would benefit organized crime enormously. Organized crime and terrorist organizations already benefit enormously from the opportunity to smuggle cigarettes across state lines. This proposition would raise cigarette prices by $2.16 a pack. That raises the price by over a third, assuming $4.00 a pack is a good estimate of the current price. That is a massive smuggling opportunity.
In other words, instead of honest businessmen profiting off the few people who don't care about the widely known health risks of smoking, we have cutthroats and killers profitting off this. Very likely, any gains made through the funding of hospitals and clinics would be at least offset by the extra that would have to be spent on law enforcement, not to mention the midnight gunshot wound in the emergency room. And lets not forget terrorists... you know, those guys that want to blow us up just to make a point? (Yes, for those of you who follow this blog, I do believe the exist. I just happen to believe current policies, such as this one, empower them further.)
It is also morally wrong. It amounts to the targeting of an unpopular minority as a revenue tap.
I really don't want to see this one pass.
Proposition 87: NO
As I have said earlier, I am not generally opposed to excise taxes on fossil fuels. I happen to think this the best way to reduce both the consumption of fossil fules (and thefore the production of fossil fuel wastes), as well as potentially the levels of other taxes. However, this proposition does much more than just tax fuel and throw the proceeds into the general fund. It immediately turns around to spend it, potentially in a manner counterproductive to its stated goals.
The basic idea is that the money will be funneled into a bueraucracy that will attempt to encourage the development of alternative energy sources. Now, I'm all for alternative energy sources (indeed, I can be quite enthusiastic), but I happen to think the public funding of the development of such things is ultimately counterproductive. At best, it subverts the process by favoring political connections, rather than technologies. The two can coincide, but there is hardly a guarantee of this.
At worst, it could be used by the oil industry to stifle the development of alternative energy technologies. It is political appointees who would make the decisions regarding who gets funded and who doesn't, and while elected officials make the ultimate decisons as to who get appointements, well funded lobbies exert great influence over the process... particularly in this heavily gerrymandered state. Such lobbies include the oil industry. Given that oil producers would have great interest in the activities of such an authority, it can be expected that they would seek to influence this authority. If they are successful enough, then when it wasn't sponsoring the efforts of the oil companies themselves, it could well be funding the least promising technologies.
All in all, this initiative is yet another extremely bad idea. I'm not even sure it's well intentioned, though I'm sure the intentions of many of the dupes that will vote for this on election day are good.
Proposition 88: NO
Unfortunately, I don't have too much to say about this measure I think will appeal to many. Sure, there is the issue regarding the imposition of a statewide property tax (property taxes traditionally being the purview of counties), and I don't like having more than one level of government tax anything... it can only undermine the lower level, in the long run. Then there is the matter of how the funding would probably go more to bueraucracy than to actual education... but that's a given where public education is concerned. No, my opposition to this measure is rooted in my opposition to public education in general. Such a discussion goes beyond the scope of this ramble, thus I will leave it for another time.
Proposition 89: NO
Campaign funding is such a huge, messy topic I am tempted to throw up my hands on this one and just say I'm voting no by default. There are, however, a few things I would like to say about this.
First off, for those of you thinking this is a great way to get third party cantidates a large war chest, remember that nothing comes without a cost. This proposition is a Trojan Horse. Sure, it'll start out as just a grant of money to a cantidate for public office, but money given never stays that way. Remember that the main way the federal government violates the separation of powers between itself and state governments is by way of funding specific programs. It always starts out as funding for a particular purpose, and then the rules start piling on. The danger is the same.
Secondly, do you really want a cantidate that can't raise enough money from his own supporters to have a huge amount granted by the government? I sure don't. I'm sure the sorts of campaigns we'd see would result in an outcry for new rules and regulations as to what cantidates can do with the money. Imagine if a porn star got the Libertarian nomination, for example.
Finally, all the new regulations as to who can give what to who in what form and all that would accomplish nothing. I am convinced that attempting to patch a basic flaw in our political system doesn't fix it, it merely covers it up. Shady election practices would still exist, they'd just be driven further underground, even more hidden than before. Meanwhile, perfectly legitimate interests would be prevented from having their say.
The new taxes, of course, strike at the worst possible point. Corporate taxes reduce employment. Heck, I don't even know how big a corporation would have to be in order to qualify for the increased tax rate. I know for a fact that higher taxes assessed against the company I work for would probably reduce my chances at getting a raise.
If we really want more competative elections, the thing to do is to require that election districts conform to community boundaries as much as possible. The influence of "special interests" would be much less if our districts were formed on the basis of community, and not on the basis of what's "safe" for the incumbants.
Proposition 90: NO!
I am extremely disappointed that the good version of eminant domain protection did not make the ballot. It's not surprising, though; it didn't have anything in there that would act as a payout to anyone who already has money, so it couldn't possibly get the necessary support. This one, however, does. It has a truly massive payout for its financial backers.
Basically, in addition to outlawing takings for transfer to private parties for whatver reason, it also makes it possible to sue the state for any change in regulation that a property owner can make a case that the regulation damaged the market value of the property. For example, if a zoning change reduces the value of a parcel of land, the owner could sue. If we did away with ag subsidies (something I am very much in favor of), farmers all over the state could sue on the basis of a lower market value for farmland. If a new environmental regulation made it more difficult to do business, the owner could sue. Any change in the tax code could trigger a lawsuit.
Basically, this legislation made the ballot precisely because it is broken. Either developers get a new class of lawsuit that specifically favors them, or the legislation gets rejected. It's a win-win situation, for them. Hopefully, this issue won't just die. This initiative must be rejected, but we can't just forget that eminent domain reform is needed.
Proposition 85: NO.
I could almost vote in favor of Proposition 85. My instinct is generally to favor parental authority over child liberty. But I prefer for that authority take shape in a state of political and economic freedom for both parties, the natural result of a child's dependence on his parents, and not the result of government mandate.
Another problem is that this proposition furthers the bueraeucratic regulatory model in which the assumption is made that professionals are guilty until proven innocent. I can understand requiring a doctor to notify the parents. I can understand futher the notion that this requirement can be delayed until after the abortion if the doctor notes in her records that to delay would be life threatening. But the doctor would also have to submit notice to a state regulatory board of any and all abortions performed on minors.
Why? What purpose does this serve? If a doctor is going to fudge his records in order to hide an illegal abortion, he's hardly going to submit the paperwork. No, this is nothing more than the continuation of our society's shift from a judicial model in which people are presumed innocent until proven guilty, to a bueraeucratic model in which people are presumed guilty until proven innocent. It would be sufficient to allow parents to take the doctor to court, and each party can provide whatever evidence they have. There is no need to subject the medical community to yet more pointless paperwork.
I sincerely doubt we are in the midst of any kind of minor abortion "crisis" as a result of the absence of this particular law (except insofar as one might consider permitting any abortions whatsoever a crisis). This being the case, I cannot recommend voting in favor of this proposition.
Proposition 86: NO.
This proposition is wrong on many levels.
First off, it would benefit organized crime enormously. Organized crime and terrorist organizations already benefit enormously from the opportunity to smuggle cigarettes across state lines. This proposition would raise cigarette prices by $2.16 a pack. That raises the price by over a third, assuming $4.00 a pack is a good estimate of the current price. That is a massive smuggling opportunity.
In other words, instead of honest businessmen profiting off the few people who don't care about the widely known health risks of smoking, we have cutthroats and killers profitting off this. Very likely, any gains made through the funding of hospitals and clinics would be at least offset by the extra that would have to be spent on law enforcement, not to mention the midnight gunshot wound in the emergency room. And lets not forget terrorists... you know, those guys that want to blow us up just to make a point? (Yes, for those of you who follow this blog, I do believe the exist. I just happen to believe current policies, such as this one, empower them further.)
It is also morally wrong. It amounts to the targeting of an unpopular minority as a revenue tap.
I really don't want to see this one pass.
Proposition 87: NO
As I have said earlier, I am not generally opposed to excise taxes on fossil fuels. I happen to think this the best way to reduce both the consumption of fossil fules (and thefore the production of fossil fuel wastes), as well as potentially the levels of other taxes. However, this proposition does much more than just tax fuel and throw the proceeds into the general fund. It immediately turns around to spend it, potentially in a manner counterproductive to its stated goals.
The basic idea is that the money will be funneled into a bueraucracy that will attempt to encourage the development of alternative energy sources. Now, I'm all for alternative energy sources (indeed, I can be quite enthusiastic), but I happen to think the public funding of the development of such things is ultimately counterproductive. At best, it subverts the process by favoring political connections, rather than technologies. The two can coincide, but there is hardly a guarantee of this.
At worst, it could be used by the oil industry to stifle the development of alternative energy technologies. It is political appointees who would make the decisions regarding who gets funded and who doesn't, and while elected officials make the ultimate decisons as to who get appointements, well funded lobbies exert great influence over the process... particularly in this heavily gerrymandered state. Such lobbies include the oil industry. Given that oil producers would have great interest in the activities of such an authority, it can be expected that they would seek to influence this authority. If they are successful enough, then when it wasn't sponsoring the efforts of the oil companies themselves, it could well be funding the least promising technologies.
All in all, this initiative is yet another extremely bad idea. I'm not even sure it's well intentioned, though I'm sure the intentions of many of the dupes that will vote for this on election day are good.
Proposition 88: NO
Unfortunately, I don't have too much to say about this measure I think will appeal to many. Sure, there is the issue regarding the imposition of a statewide property tax (property taxes traditionally being the purview of counties), and I don't like having more than one level of government tax anything... it can only undermine the lower level, in the long run. Then there is the matter of how the funding would probably go more to bueraucracy than to actual education... but that's a given where public education is concerned. No, my opposition to this measure is rooted in my opposition to public education in general. Such a discussion goes beyond the scope of this ramble, thus I will leave it for another time.
Proposition 89: NO
Campaign funding is such a huge, messy topic I am tempted to throw up my hands on this one and just say I'm voting no by default. There are, however, a few things I would like to say about this.
First off, for those of you thinking this is a great way to get third party cantidates a large war chest, remember that nothing comes without a cost. This proposition is a Trojan Horse. Sure, it'll start out as just a grant of money to a cantidate for public office, but money given never stays that way. Remember that the main way the federal government violates the separation of powers between itself and state governments is by way of funding specific programs. It always starts out as funding for a particular purpose, and then the rules start piling on. The danger is the same.
Secondly, do you really want a cantidate that can't raise enough money from his own supporters to have a huge amount granted by the government? I sure don't. I'm sure the sorts of campaigns we'd see would result in an outcry for new rules and regulations as to what cantidates can do with the money. Imagine if a porn star got the Libertarian nomination, for example.
Finally, all the new regulations as to who can give what to who in what form and all that would accomplish nothing. I am convinced that attempting to patch a basic flaw in our political system doesn't fix it, it merely covers it up. Shady election practices would still exist, they'd just be driven further underground, even more hidden than before. Meanwhile, perfectly legitimate interests would be prevented from having their say.
The new taxes, of course, strike at the worst possible point. Corporate taxes reduce employment. Heck, I don't even know how big a corporation would have to be in order to qualify for the increased tax rate. I know for a fact that higher taxes assessed against the company I work for would probably reduce my chances at getting a raise.
If we really want more competative elections, the thing to do is to require that election districts conform to community boundaries as much as possible. The influence of "special interests" would be much less if our districts were formed on the basis of community, and not on the basis of what's "safe" for the incumbants.
Proposition 90: NO!
I am extremely disappointed that the good version of eminant domain protection did not make the ballot. It's not surprising, though; it didn't have anything in there that would act as a payout to anyone who already has money, so it couldn't possibly get the necessary support. This one, however, does. It has a truly massive payout for its financial backers.
Basically, in addition to outlawing takings for transfer to private parties for whatver reason, it also makes it possible to sue the state for any change in regulation that a property owner can make a case that the regulation damaged the market value of the property. For example, if a zoning change reduces the value of a parcel of land, the owner could sue. If we did away with ag subsidies (something I am very much in favor of), farmers all over the state could sue on the basis of a lower market value for farmland. If a new environmental regulation made it more difficult to do business, the owner could sue. Any change in the tax code could trigger a lawsuit.
Basically, this legislation made the ballot precisely because it is broken. Either developers get a new class of lawsuit that specifically favors them, or the legislation gets rejected. It's a win-win situation, for them. Hopefully, this issue won't just die. This initiative must be rejected, but we can't just forget that eminent domain reform is needed.
Wednesday, October 18, 2006
California Propositions
I figured it's about time for me to post my opinions on the various ballot propositions. But before I get into specifics, let me state my first principle of ballot propositions: Vote "no" by default. In general, a proposition means another law, and probably another set of bonds. Almost universally, new laws are unnecessary, and more public debt is just plain wrong. If you don't know how you're going to vote, do yourself a favor and show up just to vote "no" on every single proposition... yes, that includes the ones I intend to vote "yes" on. Generally, it is more important for a bad proposition to be voted down than for a good one to be voted in. If it's really that important, that fact will be more evident next year, or the legislature will get themselves in gear and do their job, or some entrepreneur will solve the problem before anyone even has a chance to re-float the proposition.
So if you don't want to even think about this, just go and vote "no," and preserve your own freedom. That said, let me move onto the individual propositions.
Propositions 1B, 1C, 1D, 1E, and 84:
These, collectively, shall be known as the "Taxation of Your Children Initiatives" or the "Direct Wealth Transfer from Middle Class to Rich Acts". I don't care what wonderful things the authors claim will be accomplished by these acts. First off, whether or not these things will actually occur is a crapshot; the language could well contain loopholes that allow bueraeucrats to divert spending to other purposes--most particularly to the financial backers of the proposition. Secondly, even if the language is bullet proof, we still have the issue of potentially incompetant bueraeucrats misspending the money. Either way, it's most likely a waste.
Still it may--or may not--be a good use of money. However, one thing it is guaranteed to do is bolster the continuing program of transfering wealth from the middle class and working poor to the upper class. Here's how it works. The government offers bonds for sale on the market. People who already have lots of money buy these bonds... instead of buying stock or lending money to people who are actually trying to improve our quality of life through the production of goods and services. Once they have them, our government is obligated to pay them interest on those bonds, and do you know where the money to pay that interest comes from? Tax revenues, that's where, and the majority of tax revenues come from the middle class. So, in authorizing bonds, what you're really doing is authorizing a regressive wealth transfer.
Personally, I think the ending of public debt would go much further to restore equality in this country than all the progressive taxes in the world.
Again, if something is really that important, the state legislature should set aside money from existing tax revenues... not set up an annuity for the country's wealthiest.
Proposition 1A: Maybe = No
At first glance, I thought I'd be voting in favor of this proposition. On its face, the notion that the purpose of gas taxes is to fund transportation infrastructure seems good, and--even better--the notion of hobbling the state government sounds good to me, as well.
On further reflection, I realized that I don't really believe in funding infrastructure with gas taxes. If we really want a just funding of infrastructure, a far better idea would be to charge people directly for road use in congested areas at certain times of the day. I would go so far as to charge as much as we possibly could charge while still keeping the roads at full usage--if the road usage goes down, obviously, too much is being charged. In addition to being a more justly direct charge for the use of public roads, it would have the effect of reducing congestion at certain times of the day, as well as providing a certain measure of where more infrastructure is needed: wherever the most money is brought in, that is where more infrastructure is needed (and building it would drive down the price). Of course, if we're going to go that far to mimic market incentives, I don't see why we shouldn't go all the way... but I'm just saying.
In addition, there is a second, better justification for gas taxes (if there be justification for any taxes): a charge, not for the disproportionate use of public roads, but the disproportionate use of public air. That there is currently a "tragedy of the commons" under way where the use of oxygen for combustion and the use of airspace as a dumping ground for byproducts is concerned cannot be denied... whether or not Global Warming is real. While, if we're going to go that route, I would prefer a tax that hits all fossil fuels based upon pollutant content (this much for carbon, this much for mercury, etc.) charged at the point where it enters the economy (ports of entry, wellheads, mineshafts, etc.). As a matter of fact, I'd love to see that replace some more universally applied tax, to cut down on the bureaucratic costs and invasions of privacy associated with other taxes.
Basically, the arguments in favor at least balance with arguments against, and when in doubt, I vote no.
Proposition 83: No
If there's one issue where people are more likely to vote with their emotions rather than their brains, this is it. There is truly nothing more vile than a sexual predator. There may be others that are worse; people who deliberately profit from the extermination of hundreds of thousands come to mind. But the deaths of hundreds of thousands is a statistic; the violation of a single child is a tragedy.
However, I do not believe Proposition 83 is the answer to the problem. I believe the opponents of this proposition when they say the GPS monitoring would be a waste of money, that the blanket coverage of misdemeanor offenders would be both unjust and wasteful, and that the residency requirments, applied to so many people, would have undesirable unintended consequences. We already have laws against the truly vile offenders... laws that already failed to protect Jessica Lunsford. I fail to see how tightening the law will stop people who are going to ignore the law anyway. Perhaps lifelong GPS monitoring would be good for felony offendors... but not misdemeanor offenders.
Personally, I think we should just brand them. When I saw "brand," I am referring to the procedure of heating an iron with a distinctive design upon it until it is red hot, then applying that iron to the skin of the offender--no anestheisa. Apply it to their cheek and their off hand. It'd be much cheaper, and people could detect the mark at a glance without the aid of expensive equipment... not to mention the procedure is painful. Children could be trained to run screaming from (or hurl eggs at) people who bear the mark. Threaten any doctor who surgically removes the scarring with a similar branding, and I think we'd pretty well have it covered: viscerally satisfying protection from sexual predators, on the cheap!
Other propositions will be covered at a later date.
So if you don't want to even think about this, just go and vote "no," and preserve your own freedom. That said, let me move onto the individual propositions.
Propositions 1B, 1C, 1D, 1E, and 84:
These, collectively, shall be known as the "Taxation of Your Children Initiatives" or the "Direct Wealth Transfer from Middle Class to Rich Acts". I don't care what wonderful things the authors claim will be accomplished by these acts. First off, whether or not these things will actually occur is a crapshot; the language could well contain loopholes that allow bueraeucrats to divert spending to other purposes--most particularly to the financial backers of the proposition. Secondly, even if the language is bullet proof, we still have the issue of potentially incompetant bueraeucrats misspending the money. Either way, it's most likely a waste.
Still it may--or may not--be a good use of money. However, one thing it is guaranteed to do is bolster the continuing program of transfering wealth from the middle class and working poor to the upper class. Here's how it works. The government offers bonds for sale on the market. People who already have lots of money buy these bonds... instead of buying stock or lending money to people who are actually trying to improve our quality of life through the production of goods and services. Once they have them, our government is obligated to pay them interest on those bonds, and do you know where the money to pay that interest comes from? Tax revenues, that's where, and the majority of tax revenues come from the middle class. So, in authorizing bonds, what you're really doing is authorizing a regressive wealth transfer.
Personally, I think the ending of public debt would go much further to restore equality in this country than all the progressive taxes in the world.
Again, if something is really that important, the state legislature should set aside money from existing tax revenues... not set up an annuity for the country's wealthiest.
Proposition 1A: Maybe = No
At first glance, I thought I'd be voting in favor of this proposition. On its face, the notion that the purpose of gas taxes is to fund transportation infrastructure seems good, and--even better--the notion of hobbling the state government sounds good to me, as well.
On further reflection, I realized that I don't really believe in funding infrastructure with gas taxes. If we really want a just funding of infrastructure, a far better idea would be to charge people directly for road use in congested areas at certain times of the day. I would go so far as to charge as much as we possibly could charge while still keeping the roads at full usage--if the road usage goes down, obviously, too much is being charged. In addition to being a more justly direct charge for the use of public roads, it would have the effect of reducing congestion at certain times of the day, as well as providing a certain measure of where more infrastructure is needed: wherever the most money is brought in, that is where more infrastructure is needed (and building it would drive down the price). Of course, if we're going to go that far to mimic market incentives, I don't see why we shouldn't go all the way... but I'm just saying.
In addition, there is a second, better justification for gas taxes (if there be justification for any taxes): a charge, not for the disproportionate use of public roads, but the disproportionate use of public air. That there is currently a "tragedy of the commons" under way where the use of oxygen for combustion and the use of airspace as a dumping ground for byproducts is concerned cannot be denied... whether or not Global Warming is real. While, if we're going to go that route, I would prefer a tax that hits all fossil fuels based upon pollutant content (this much for carbon, this much for mercury, etc.) charged at the point where it enters the economy (ports of entry, wellheads, mineshafts, etc.). As a matter of fact, I'd love to see that replace some more universally applied tax, to cut down on the bureaucratic costs and invasions of privacy associated with other taxes.
Basically, the arguments in favor at least balance with arguments against, and when in doubt, I vote no.
Proposition 83: No
If there's one issue where people are more likely to vote with their emotions rather than their brains, this is it. There is truly nothing more vile than a sexual predator. There may be others that are worse; people who deliberately profit from the extermination of hundreds of thousands come to mind. But the deaths of hundreds of thousands is a statistic; the violation of a single child is a tragedy.
However, I do not believe Proposition 83 is the answer to the problem. I believe the opponents of this proposition when they say the GPS monitoring would be a waste of money, that the blanket coverage of misdemeanor offenders would be both unjust and wasteful, and that the residency requirments, applied to so many people, would have undesirable unintended consequences. We already have laws against the truly vile offenders... laws that already failed to protect Jessica Lunsford. I fail to see how tightening the law will stop people who are going to ignore the law anyway. Perhaps lifelong GPS monitoring would be good for felony offendors... but not misdemeanor offenders.
Personally, I think we should just brand them. When I saw "brand," I am referring to the procedure of heating an iron with a distinctive design upon it until it is red hot, then applying that iron to the skin of the offender--no anestheisa. Apply it to their cheek and their off hand. It'd be much cheaper, and people could detect the mark at a glance without the aid of expensive equipment... not to mention the procedure is painful. Children could be trained to run screaming from (or hurl eggs at) people who bear the mark. Threaten any doctor who surgically removes the scarring with a similar branding, and I think we'd pretty well have it covered: viscerally satisfying protection from sexual predators, on the cheap!
Other propositions will be covered at a later date.
Monday, October 16, 2006
Why We Want to Lose
There can be no doubt that there is an element in this country that does not want us to win in Iraq and Afghanistan. Such people typically crow words along the lines of "I told you so," at every piece of bad news (well, bad for "us") that comes out of those places. We scoff in disbelief at official announcements of progress or optimism as to the outcomes of those conflicts.
Typically, confronted with an accusation of wanting our forces to lose, such a person will bluster defensively. "Of course I don't want us to lose. I support the troops! I just don't think we're doing the right thing out there." or "I'd like to see the goverment succeed at its publicly stated goals. I just don't think we can, and I don't think those are their actual goals."
Let me just say that I am among those that want to see us lose Iraq and Afghanistan. I want that uprising to get so big, so powerful, so cohesive (or chaotic), that our forces are literally driven from their shores. Mind you, it would be far better for us to get out before that happens (assuming it isn't already happening... and I fully support those troops who decide to get out despite orders to the contrary), but I want to see our forces exit in defeat. I want to see the current administration's policies thouroughly repudiated... every bit as thouroughly as Stalinism was when the Afghans routed the Russians.
Part of the reason for this is fear. Should the government succeed in its crusade against "Anti-Americanism" abroad, I have no doubt it would then turn its power inward, toward "Anti-Americanists" at home--such as Geo-Anarchists like myself. I wonder: could I be prosecuted for treason for opposing the government's policies? I'm probably toeing a line when I encourage soldiers to go AWOL (though I do think mass defection would be good for the country). Would prosecution even be necessary, if the President were to get everything the current adminstration wants in the way of authority to arrest and hold without charges?
Typically, confronted with an accusation of wanting our forces to lose, such a person will bluster defensively. "Of course I don't want us to lose. I support the troops! I just don't think we're doing the right thing out there." or "I'd like to see the goverment succeed at its publicly stated goals. I just don't think we can, and I don't think those are their actual goals."
Let me just say that I am among those that want to see us lose Iraq and Afghanistan. I want that uprising to get so big, so powerful, so cohesive (or chaotic), that our forces are literally driven from their shores. Mind you, it would be far better for us to get out before that happens (assuming it isn't already happening... and I fully support those troops who decide to get out despite orders to the contrary), but I want to see our forces exit in defeat. I want to see the current administration's policies thouroughly repudiated... every bit as thouroughly as Stalinism was when the Afghans routed the Russians.
Part of the reason for this is fear. Should the government succeed in its crusade against "Anti-Americanism" abroad, I have no doubt it would then turn its power inward, toward "Anti-Americanists" at home--such as Geo-Anarchists like myself. I wonder: could I be prosecuted for treason for opposing the government's policies? I'm probably toeing a line when I encourage soldiers to go AWOL (though I do think mass defection would be good for the country). Would prosecution even be necessary, if the President were to get everything the current adminstration wants in the way of authority to arrest and hold without charges?
Sunday, October 08, 2006
RE: Broken Law
This is a response to one of Cranky Weasel's latest, a presentation of two characters: a home-growing pot smoker who keeps his weed to himself, and a CEO who buys up a rival corporation and eliminates jobs in the interests of efficiency, showing that the law treats them in the exact opposite manner than they should be treated. Head over and read his blog, then come back to mine. My response follows:
Well, I would argue that neither Frank nor the CEO have done anything wrong. Frank isn't hurting anyone, and certainly should not be arrested for his activities. But then again, neither has the CEO, and let me tell you why. (Note that there is a flaw in the argument... before you stop reading in disgust of a capitalist fallacy, at least try to reach the second part.)
Certainly, when he removes inefficiencies from the new business conglomerate, some people lose their jobs. However, other people do better, and those people who lost their jobs don't necessarily do worse.
Think of the stockholders. Certainly, some of them are fatcats who hardly need any more, but a good many of them are likely people whose primary retirement fund includes shares of this company in their 401(k). For those who are likely to spend that money more immediately, what are they likely to spend it on? Maybe they'll go to resteraunts more often, or buy a fancy car, or go to Disneyland more regularly, or do one of many things that both require money to do, as well as employees... thus, it is very likely that, though some jobs are lost, more are generated in the process.
Now lets look at the facilities that are "liquidated" in the process. We're talking office buildings, or manufacturing facilities, or other types of commercial or industrial real estate. If they're not being used they could be sold to someone else, providing an opportunity for others to go into business for themselves. Some of the layoffs might benefit from this factor directly, while the rest likely have marketable skills; given a healthy economy, they can find other jobs... particularly considering that more jobs have been created.
Now, this argument is a classical Capitalist argument, and it would not only make sense, but would be nearly unassailable, were there not an alternate scenario that, if it's not more likely, at least does enough damage in the long run to eliminate the gains created when the previous scenario is the case. Most "liberals" would simply point out the obvious fact of poverty and class power without bothering to explore the question of why. In the following paragraphs, I will explore the question, why doesn't this scenario actually work?
The other thing the shareholders could do with their money is buy land they have no intention of using. They could buy a summer home in the mountains or on the coast, thus eliminating an opportunity for someone else to make a living there, and raising the cost of living for everyone else that's already there. They could buy some land that could be developed sooner (providing both additional housing and/or jobs, commercial, industrial, and construction), holding it and keeping it out of use in anticipation of future gain. Unlike actual capital goods--for which a demand only stimulates greater production--the demand for "investment land" does no such thing, since land is, truly, a finite resource.
Then there's the unused facilities that go with laid off workers. While the corporation could sell it off right away, it is unlikely to do so. They can count it as collateral to get better leverage when taking out loans, and, of course, as the economy develops, the value of the land will go up, making holding it alone a good opportunity, even as the community in the immediate vicinity of the property blights. The people that used to work there no longer do, and nobody else is allowed to move into the derelict facilities, renovate them, and employ people there, until the corporation is good and ready, likely at an extortionate rate.
There is no need to create onerous bueraucratic regulations to keep this scenario from happening. All that needs to be done is for existing taxes (particularly income and sales) to be replaced with a Georgist Land Tax. The result of this, to both the corporation and the wealthier beneficiaries of the takeover, is that it would be very expensive to hold land they had no intention of using. The average person would not be harmed, since what they would pay in land taxes would probably not exceed what they had already been paying in sales and income taxes (not to mention the opportunity costs of forbidding anyone from going into business who can neither deal with tax laws nor afford the services of a CPA).
The summer-homers and blight-holders, however, would have to pay a great amount to hold land out of use. The corporation would be very likely to unload the unused facilities on much more generous terms (an opportunity for others to do their own business in that location) in order to avoid paying the taxes The wealthier beneficiaries would be much more likely to spend their vacation time in hotels or rentals (providing tourism jobs or, at the very least, leaving the spot open for others at other times of the year) than to purchase a tract of land they intend to use only a few weeks out of a year.
The result would be more, better paying jobs for everyone. As Hentry George put it in his Progress and Poverty, with all that land freed up for use, "For into the labor market would have entered the greatest of all competitors for the employment of labor, a competitor whose demand cannot be satisfied until want is satisfied—the demand of labor itself."
Capitalism does work, as two-hundred years of progress clearly shows. The problem isn't Capital, it is Land--as it always has been. The creation of the "Sturdy English Poor," for example, did not begin with the Industrial Age, which employed millions, but rather with the Enclosure Movement, which booted those millions off their traditional lands in the first place. The grandest deception ever put over the world was when people started counting Land as just another kind of Capital.
It is not.
Well, I would argue that neither Frank nor the CEO have done anything wrong. Frank isn't hurting anyone, and certainly should not be arrested for his activities. But then again, neither has the CEO, and let me tell you why. (Note that there is a flaw in the argument... before you stop reading in disgust of a capitalist fallacy, at least try to reach the second part.)
Certainly, when he removes inefficiencies from the new business conglomerate, some people lose their jobs. However, other people do better, and those people who lost their jobs don't necessarily do worse.
Think of the stockholders. Certainly, some of them are fatcats who hardly need any more, but a good many of them are likely people whose primary retirement fund includes shares of this company in their 401(k). For those who are likely to spend that money more immediately, what are they likely to spend it on? Maybe they'll go to resteraunts more often, or buy a fancy car, or go to Disneyland more regularly, or do one of many things that both require money to do, as well as employees... thus, it is very likely that, though some jobs are lost, more are generated in the process.
Now lets look at the facilities that are "liquidated" in the process. We're talking office buildings, or manufacturing facilities, or other types of commercial or industrial real estate. If they're not being used they could be sold to someone else, providing an opportunity for others to go into business for themselves. Some of the layoffs might benefit from this factor directly, while the rest likely have marketable skills; given a healthy economy, they can find other jobs... particularly considering that more jobs have been created.
Now, this argument is a classical Capitalist argument, and it would not only make sense, but would be nearly unassailable, were there not an alternate scenario that, if it's not more likely, at least does enough damage in the long run to eliminate the gains created when the previous scenario is the case. Most "liberals" would simply point out the obvious fact of poverty and class power without bothering to explore the question of why. In the following paragraphs, I will explore the question, why doesn't this scenario actually work?
The other thing the shareholders could do with their money is buy land they have no intention of using. They could buy a summer home in the mountains or on the coast, thus eliminating an opportunity for someone else to make a living there, and raising the cost of living for everyone else that's already there. They could buy some land that could be developed sooner (providing both additional housing and/or jobs, commercial, industrial, and construction), holding it and keeping it out of use in anticipation of future gain. Unlike actual capital goods--for which a demand only stimulates greater production--the demand for "investment land" does no such thing, since land is, truly, a finite resource.
Then there's the unused facilities that go with laid off workers. While the corporation could sell it off right away, it is unlikely to do so. They can count it as collateral to get better leverage when taking out loans, and, of course, as the economy develops, the value of the land will go up, making holding it alone a good opportunity, even as the community in the immediate vicinity of the property blights. The people that used to work there no longer do, and nobody else is allowed to move into the derelict facilities, renovate them, and employ people there, until the corporation is good and ready, likely at an extortionate rate.
There is no need to create onerous bueraucratic regulations to keep this scenario from happening. All that needs to be done is for existing taxes (particularly income and sales) to be replaced with a Georgist Land Tax. The result of this, to both the corporation and the wealthier beneficiaries of the takeover, is that it would be very expensive to hold land they had no intention of using. The average person would not be harmed, since what they would pay in land taxes would probably not exceed what they had already been paying in sales and income taxes (not to mention the opportunity costs of forbidding anyone from going into business who can neither deal with tax laws nor afford the services of a CPA).
The summer-homers and blight-holders, however, would have to pay a great amount to hold land out of use. The corporation would be very likely to unload the unused facilities on much more generous terms (an opportunity for others to do their own business in that location) in order to avoid paying the taxes The wealthier beneficiaries would be much more likely to spend their vacation time in hotels or rentals (providing tourism jobs or, at the very least, leaving the spot open for others at other times of the year) than to purchase a tract of land they intend to use only a few weeks out of a year.
The result would be more, better paying jobs for everyone. As Hentry George put it in his Progress and Poverty, with all that land freed up for use, "For into the labor market would have entered the greatest of all competitors for the employment of labor, a competitor whose demand cannot be satisfied until want is satisfied—the demand of labor itself."
Capitalism does work, as two-hundred years of progress clearly shows. The problem isn't Capital, it is Land--as it always has been. The creation of the "Sturdy English Poor," for example, did not begin with the Industrial Age, which employed millions, but rather with the Enclosure Movement, which booted those millions off their traditional lands in the first place. The grandest deception ever put over the world was when people started counting Land as just another kind of Capital.
It is not.
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