Category: Economics, Finance, and Political Economy

Q&A: –“CURT: WHAT ARE YOUR THOUGHTS ON TAXATION?”–

(important post)

GREAT QUESTION:

I’m going to answer this set of questions in a different order from the one they were asked:

–“Have you spent much time on taxation and it’s various forms? Perhaps you could do a post on your thoughts about how such a treasury would function and it’s relations to taxation. “–

Of course. I think it’s a national preoccupation. I’m not alone.

–“What is your position on taxation?”—

Well, my position is that under rule of law – meaning if we possess liberty in fact, not fiction – that there exists no discretion in the use funds. That’s the purpose of rule of law: the elimination of discretion. If there is no discretion involved we are not in fact ruled by men, but by law: we govern ourselves by contract.

Once we eliminate discretion we eliminate what we call corruption and, assuming we require truthful speech in the commons – not only in advertising and marketing, and warranty, but in ethical, moral, and political speech – we eliminate almost all of what we consider politics.

Now another property of rule of law, if we are to prevent discretion, is ‘calculability’ or what we tend to call ‘operationalism’ in science and ‘specific use, or use of funds’ in contract law. Meaning that any fund collected must go to the purpose it was intended, or be refunded.

Rule Of Law = Contractualism. Period. Discretion != Rule of Law.

However, we must understand, that Rule of Law = Meritocracy, and many people living cannot prosper, compete, or survive on their merits. There are a limited number of strategies for preserving liberty, rule of law, and meritocracy: (i)limit the size of the bottom classes through control of reproduction and culling; (ii) limit their damage by paying them not to reproduce, and (iii) make use of them through involuntary organization of production (maintenance of the commons).

This is one of the reasons for taxation: paying for the cost of suppression of reproduction of those who cannot prosper, compete, or survive in meritocracy. Just as the problem external orders (military defense and constructive offense), and internal orders (the judiciary and police).

If we negotiate such contracts between groups and classes, and there is no means under natural common judge-discovered law, by which we can object to those contracts, then we have created a market for the construction of commons, in addition to the market for the construction of goods and services. Those are not taxes but installment payments, and enforceable like any other contract.

If those taxes are used to make the evolutionarily competitive results of liberty possible, and if it’s not possible otherwise, then taxes for this purpose are simply the market price for the production of a condition of liberty under which we can produce the results of liberty: necessary commons, competitive commons, and desirable private goods and services .

The problem then is not taxation per se, but the use of taxes. If we are paying contractually agreed to prices for goods and services obtained through under rule of law, and free of discretion, refunded if paid for, then that is merely contractual payment.

Now, there is no reason to argue against either for income or consumption ‘commissions’ (taxes), on the production of goods and services in the voluntary construction of production distribution and trade we call capitalism, since that order is itself a good that is bought and paid for by shareholders, with both personal, normative, and material costs.

And furthermore, there is no reason to argue against progressive taxation (commissions) on income or price, either. The question is ownership: In ancient societies order was created by force at substantial risk and expense. And it is probably the most important service we create. In modern societies, almost everyone is enfranchised (a shareholder). And if the shareholders can determine the use of funds by economic voting (proportional voting by contribution), or if they can determine the use of funds by share voting (voting their share of the tax pool), then we preserve operational rule of law and eliminate discretion.

The inverse question is whether it is possible to produce a condition of liberty, meritocracy, and prosperity, that has been so rewarding in the ancient and modern worlds. And the answer is that familial, local, social, economic, political, and military orders exist in competition for people(consumers), human capital(skills and knowledge), business and industry, wealth, and leadership (the advocacy for the organization of normative, economic, political, and military capital). So people flee to regions that produce wealth and flee from regions that don’t. Which is a significant problem if they’re imposing a long-term genetic cost on the absorbing market. And this is the problem we face with immigration of underclasses and the rate of underclass reproduction vs middle and upper-class reproduction.

The answer to the problem of creating an order in people of diverse abilities is not to choose either a monopoly capitalist market(voluntary organization of labor) or a monopoly socialist market (involuntary organization of labor), but to make use of both markets: one for the production of innovative consumer goods, and one for the production of ‘simple’ common goods: cleanliness, order, construction of bulidings, parks, and monuments, roads, sidewalks, and in general, beauty.

—“Let’s assume a treasury issues currency and that through the treasury citizens can borrow money interest-free for consumption. Now the treasury needs to be funded through taxation, whether voluntary or otherwise is superfluous for arguments sake.”—

Well, first, let’s clarify: the treasury can be funded through the sale of assets (minerals, territory, etc), inflation, taxation, fees, profits(returns on investments not possible otherwise – the Panama and Suez canals for example. Some of the great dams. Many projects cannot be ‘insured’ by an insurer of last resort other than the shareholders themselves). And hopefully we would fund the treasury in the opposite order: 1) profit, 2) fees, 3) taxation, 4) inflation, 5) sale of assets.

In practice, if it cannot be achieved through profit or fees, it would suggest a political failure. Taxation and inflation are debt instruments. And sale of assets is a form of liquidation.

Members of Nations(extended relations) do not squabble about taxes the way oligarchies and empires do.

—“hrough the treasury citizens can borrow money interest-free for consumption”—

I think that this is the great economic question of our time: why should distributors (banks) earn interest on money borrowed from ourselves for the purchase of consumption, when the data says that they perform no function not equally provisible by purely statistical analysis of data produced in extraordinary quality by actuaries.

There isn’t any reason. None. There is no reason that we do not borrow to some percentage of the maximum of our statistical repayment ability from the treasury, and then when the economy slows, that money is equally distributed to those same accounts facilitating further consumption. Other than under democracy people would vote to increase such distributions by various schemes untili we were again bankrupt.

But the financial sector is disproportionately rewarding given that it’s basically trivial clerical work that privatizes wins and socializes losses.

There is no reason we don’t treat lending the public monies just as we do licenses of Lawyer’s, CPA’s and Series 7 holders. These individuals could have public records, and must retain certain scores in order to maintain their licenses. In exchange they can obtain a small percentage of each customer’s accounts that they manage from the treasury. And they would have no protection against suits that is afforded to our bureaucrats.

Now aside form the misappropriation of profits by the financial sector, why is it that we charge interest on consumption? That makes no sense at all really. Why do we charge interest on production? Because that’s the only way we can judge whether intertemporal lending as increased productivity by compression of time.

So my recommendation is to professionalize lending from the treasury (regional offices of central banks), and interest on consumption entirely (imagine the effect it would have on housing if the maximum period of a home loan using any treasury funds was 15 years, and at zero interest?) And to issue liquidity directly to consumers, on regular (yearly) basis. And to constitutionally eliminate the state manipulation of these funds for any purpose (preserving rule of law by preserving the probhition on discretion.)

From what I can see ih the behavior of most countries, if yo have a small homogenous people they will be hightly redistributive voluntarily, and heterogeneity radically decreases willingness to both redistribute or to contribute in any way to tthe commons.

Just to stay on message, and continue to falsify rothbardian libertinism: What separates libertarianism (anglo saxon) from libertinism (jewish) is that libertarians want to do no harm to the commons, and libertines want to do no good to it.

Curt Doolittle

The Philosophy of Aristocracy

The Propertarian Institute

(I have no idea where I am right now) 🙂