Paul Krugman wrote today, poking fun at prestidigitators in the financial sector. As the most public advocate of forcible redistribution, I thought it was appropriate to poke back.

The understanding that we obtain from reading the predictions of the financial sector, is limited to what these people are thinking, and how they will act because of it.

The understanding that we obtain from reading the predictions of public intellectuals, is limited to what these people are thinking, and how they will act because of it.

The understanding that we obtain from listening to business leaders who risk their capital, is limited to what these people are thinking, and how they will act because of it.

The understanding that we obtain from listening to the predictions of common people, is limited to what these people are thinking, and how they will act because of it.

The understanding we obtain from the opinions of all of these groups of people,is the understanding of how these same people react to what they hear, and what actions that they will pursue accordingly.

There is no future determined in advance, only the future that people make because of the information at their disposal, that they can employ to project that future, and the resulting actions that they take in daily life in comparing their needs, obligations, resources, prices, and their anticipation of coordinating the optimum among them.

But when we distort the financial system through credit money, or distort entrepreneurial activity through taxation, or distort public opinion through consensus building in order to gain political control over the levers of power, we distort the evidence that these people use to cooperate in their daily lives, and to build a stable, prosperous economy, especially when a prosperous economy is entirely driven by the willingness of it’s members to take risks in anticipation of reward for doing so.

While it seems that our transition from the theocratic and religious public debate about the will of god to that of the Civic Republican moral debate about the pragmatism of laws and human character, to that of the economic debate about the material benefit of citizens, has been toward practical rationality, and material reward, it also appears, that under all three public debates, only the preservation and development of our institutions of truth, contract, property rights, accounting and division of labor, has had any material impact on our quality of life – and that the ongoing pubic debate, the use of taxation, and the use of monetary policy has done more to distort the information systems people use to build these institutions, and habits, and trade, and division of labor, than has the debate and political policy over these previous religious and moral traditions — because we are not debating the subject at hand, but debating who should obtain power to manipulate the levers of tax, law, and money.

We are, in this public forum, debating power over spoils, not the productivity and prosperity that results from cooperation and trade under our institutions.

Most of our technologies evolve by accident of compounding fractal patterns that increase our ability to cooperate in larger numbers:

  1. Restraining the use of violence creates the institution of property.

  2. The institution of objective truth and fidelity of contract creates complex trade.

  3. The institution of money creates the technology of human calculability and cross-categorical comparison.

  4. The volume of trade creates the establishment of prices subject to sufficient stickiness that they become forecastable.

  5. Sticky Prices create the ability to lay expectations, and forecast complex uses of property.

  6. Credit creates intergenerational cooperation, and the pairing of older wisdom with younger effort.

  7. Fiat Money and Credit Money create insurance allowing more risk mitigation at the cost of socializing losses and privatizing wins.

Conversely:

  1. General liquidity distorts the pricing system. And people are informed by those prices to pursue unproductive, but price-ballooning ends.

  2. Taxes distort entrepreneurial activity, and in particular, distort the accounting process, and distort banking, credit, investment, and employment, to the detriment of each, while entrepreneurial skill, the most valuable asset of any economy, is directed to tax reduction, rather than productivity gains.

Since calculability is the means by which we cooperate:

The state should collect and redistribute interest, not issue taxes. A state based upon interest collected is the only method of political and social calculability currently available to man. The state’s job is as a lender, who redistributes profits to citizens.

Taxes should be accelerating and flat, on those people who collect and coordinate interest, when their balance sheets make them financially independent, and therefore living upon credit and interest, not upon entrepreneurs who take personal risk, and who are penalized by taxation for having done so.

The citizenry should not be enslaved for decades by the use of intergenerational theft and enslavement by involuntary debt.

Class warfare should not be fomented, between classes but cooperation and respect encouraged by a process that rewards politicians not to gain from spoils, but to gain from borrowing from the average person, and returning to him his investments. Under this method a politician can be held accountable but material and calculable methods of measurement.

The state should not be able to enslave it’s citizens through taxation and justify it by moral argument, any more than it should justify it by the will of god, or justify it by ti’s capacity for violence. These are all forms of slavery. Taxation is a product of slave society. If we are indeed rational beings capable of democracy, or capable of independent commercial action, then we have exited slave society. Ownership by an individual or ownership by the state are insignificant differences.

The polibical debate should not be over who controls the levers, but that the only lever should it should use is lending, and the only purpose of the state is to borrow risk from the population and use it to increase production, and thereby distribute teh spoils justly earned by all parties.

In this manner we change the public debate from that of class warfare and the power to conduct class warfare, and distributing the spoils, to the civic republican tradition of generating prosperity.

Law and taxes are products of slave societies.

“Credit and Interest are the ties that binds us. Law and taxes are the thefts that divide us.”

Change the public debate. We have been debating the wrong problem for a century. We should be debating how to make a society free from theft and coercion between classes, and to one of cooperation between them through mutual self interest.

This is “Capitalism v3.” But it remains to be seen how long before it takes hold – or fails to.