Benefit Versus Ability to Pay

I wrote on the question of Taxation based on ability to Pay or Fee for Service in 2015. It laid out the role of Edwin R.A. Seligman (1861-1939) who was a young disciple of Henry George. This subject comes up again as the question of "Benefit versus ability to Pay" that is the subject of this piece. This piece is a follow on the last post on

Nature's Tax Collectors

Who I identify with Pirates

In that piece I noted that according to the author, taxes should be:

• Taxes are a duty of citizenship.
• Taxes should be proportionate to the "faculty" or ability to pay of taxpayers.

Nature's Tax Collectors or Oligarchs?

What I didn't completely understand when I wrote the previous post in 2015 was the role of rent seeking, privilege, or the privateering that goes into the income of the wealthy and connected. Fortunately a number of my friends and a great man and his disciples, Henry George, Edwin Seligman and Thomas G. Shearman captured the extreme peril of not taxing privilege.

If you don't regulate or tax unearned income from privilege, then you get corruption, bad economic outcomes and oligarchs.

The Benefit of Unearned Income

People have been conditioned into embracing bogus ideas. There is a strong effort to forget the former and embrace the following pseudo-principles, that aren't really as old as they are argued to be. "Classical Economics" never really taught them. And Neo-liberalism teaches them, but they are propaganda:

1. Those who benefit from a thing should pay for it.
2. No one should pay for another person's benefits.
3. A person earns whatever he gains, however he gains.
4. The exception is the poor, who never deserve to keep what they earn.
5. Taxation is the government stealing from the privileged.
6. Taxation should be a "fee for service," and no more.

But guess what, rent seeking means that:

1. The wealthy benefit from a well fed, healthy and prosperous customers, renters and employees.
2. Almost everyone is paying for the benefits of the wealthy.
3. Unearned income means unearned. Income derived from privileges and properties like land, corporate, contract or monopoly is only partly early earned. But for the most part is almost entirely unearned. Most great wealth earn money from money, debt or ownership instruments. Pirates and privateers don't always deserve to keep what they took.
4. The people who deserve to keep their income are those who labor, sell, and work for a living.
   And those who are poor, ill, young or aged, deserve our support.
5. Privateering rent seekers are essentially stealing from government. Hence me calling them pirates.
6. Taxation is about regulating excessive issues of private money and privilege not just a "fee for service."

Benefit Versus Ability to Pay or Taxing Unearned Income

Related to the tax shiftability concern [See Progressive Versus Regressive] is the debate over whether the Single Tax was based on the “benefit theory of taxation,” where one is taxed on the benefits received from holding a land parcel vs. the “faculty” or “ability to pay theory,” where a tax on land gains is only collected when the taxpayer can easily pay the tax (without losing his land or going into debt to pay the tax). But that question is resolved when sees this as a tax on privilege and for regulating money.

The tax needs to be based on ability to pay. And it has to provide enough revenue to prevent inflation and regulate the money supply [see Money Privilege and Loot] The 1890 Plank says:

"To carry out these principles we are in favor of raising all public revenues for national, state, county and municipal purposes by a single tax upon land values, irrespective of Improvements, and of the abolition of all forms of direct and Indirect taxation." [Georgist Constitution]

Although many Georgists believe the Single Tax to be a form of property taxation, Henry George objected to property taxes because they targeted both land use (i.e., labor) and land ownership (i.e., potential ground rents) at the same time. George was concerned that, because a property tax is a direct tax on all aspects of land use and ownership, and demands a tax whether or not the landowner has access to the gain and is able to pay, that the tax would end up being falling on labor/wages. Any tax that can be shifted to ordinary people is not very progressive or fair and just. Thus what George was talking about was:

"not a tax on land, and therefore would not fall on the use of land and become a tax on labor."

Not a tax on land but on the:

"premium which the user of land must pay to the owner, either in purchase money or rent, for permission to use valuable land."

Which means that it was intended as a tax on what we now call capital gains. Thus anyone arguing over ability to pay/facility" versus paying for benefits, is missing the point. Taxation is also for the sake of regulating privilege. And also for making sure that such taxes were not shifted to consumers, workers or rent payers. More importantly, that such taxes weren't grabbed by Tongue eating Trolls.

Sources and Further reading

https://www.cooperative-individualism.org/george-henry-page.htm

https://en.wikipedia.org/wiki/Pollock_v._Farmers%27_Loan_%26_Trust_Co.

For those with Facebook:

Rick's pages:

https://www.facebook.com/notes/common-wealth-tax/doc-120-the-1890-georgist-constitution/813168725462939/?hc_location=ufi

http://holtesthoughts.blogspot.com/2015/08/the-georgist-constitution.html

https://www.facebook.com/notes/common-wealth-tax/doc-161-poverty-is-caused-by-regressive-taxes-and-prevented-by-progressive-taxes/1498599096919895/

https://holtesthoughts.blogspot.com/2015/09/taxation-ability-to-pay-fee-or-taxing.html

Cooperative Individualism webpage [https://www.cooperative-individualism.org/george-henry-page.htm]]

Georgist Constitution

His copy is on facebook:

https://www.facebook.com/notes/common-wealth-tax/doc-120-the-1890-georgist-constitution/813168725462939/?hc_location=ufi

Where he explains the tax is on unearned economic rent:

https://www.facebook.com/notes/common-wealth-tax/doc-133-henry-georges-single-tax-a-tax-on-land-values-a-tax-on-economic-rent-a-t/918244508288693/

Natures Tax Collectors or Rent Seekers?

Nature's Tax Collectors

As noted Henry George put considerable effort working out principles of taxation. He wrote an opus about tax reform and gathered a huge following of progressives under the populist wing of the Democratic Party. Two of those were scholars and lawyers who would go on to support his movement after he died in 1897. After Henry George died in 1897 Shearman and Seligman went their separate ways. Though both articulated clear Gerogist Principles. They differed on some particulars.

"Henry George’s lawyer, Thomas G. Shearman, in “Natural Taxation” (1898) [referred to] certain kinds of people (rent-seekers)" as “nature’s tax collectors,”

A Grossly Unfair Tax system taxes unearned takings

Shearman noted that:

"if government failed to heavily tax (really, retrieve or reclaim) their unearned takings (while leaving their wages untaxed), a grossly unfair tax system would result."

It should be noted that the word rent and the word tax were once pretty much the same thing. The ability to collect rent was once a feudal right associated with barons, counts, dukes and kings. Economic rent is a privilege. Private collection of economic rent is privateering. During the late middle ages, sovereigns began to farm out taxation to "tax farmers" who collected taxes (rent) in return for a cut. There is a case to be made that tax farming was one of the reasons for the French Revolution. But that is another essay for another day.

Privateering

That term applies because it is private persons performing government functions. Privateers were originally pirates authorized to wage war on an enemy by stealing from them on the high seas. But as I explain in a series of articles on the East India Companies took privateering to a whole new level by privatizing war and colonialization in the East Indias. One of their first acts was to usurp the Mogul ability to tax people in the province of Bengal (now Bangladesh and neighboring provinces in India). Pirates and wealthy adventurers (legal pirates) are after loot.

Economic Rent

The easiest way to loot is to get the government to put property into their greedy little hands. The technical term for this is Rent seeking. Economic rent is the premium owners of vital public property charge for using vital public goods. Such people set themselves up with the privilege to provide a monopoly service that rewards themselves heavily. They are like the tongue lice that eat a fish's tongue, except they "eat" and acquire or usurp governmental powers. Sitting pretty such people live on economic rent.

Examples of Shearman’s concept that rent-seekers are “nature’s tax collectors:”

"Part of the rent a tenant pays to a landlord is a tax, and is really intended for the government so it can provide for the health, education, training, retirement, etc. of the tenant, but the tax is shifted onto the tenant if not collected by government from the landlord."

Of Course landlords and other rentiers don't see any mutual responsible to tenants, labor or those paying them economic rent.

An Ideology of Loot

My Friend Rick DiMare writes:

"Under neoliberal theory we’ve been duped into believing that rent-seekers (i.e., landlords, lenders, employers and speculators) are entitled to keep most or all their income, whether earned as a wage, or taken as unearned income.... We’re taught that government is terribly inefficient and inept when it comes to providing social services."

The con of Neoliberalism

This is a bait and switch argument, as the rentiers and their shills who make this argument don't feel any need to provide social services efficiently or at all. But it is the kind of deflection and distraction that pays people to shill for them. Part of economic rent is used to buy an ideology that justifies privateering. This ideology is rightly named neoliberalism. Although a more accurate term would be "faux liberalism" because it isn't intended to work as a body of policies and theory. It is just intended to justify the accumulation of loot by the privateers. The real justification for neoliberal policies is simply the Nietzchean "Will to Power" and unadulterated Darwinism sometimes justified by grossly heterodox theologies. [Ironically these are usually some of the same people who preach against Darwin].

For the Public Good becomes for Private Loot

Examples:

Land Property Power

"Part of the capital/land gain paid for an inflated land parcel by a land buyer"... ought to be "a tax which belongs to government for the benefit of the public at large, and ... not intended for the landlord or land speculator, so tax unfairness ... result[s when] ... land gain is not collected from the landlord by government."

That is just one example,

Banking Money Power:

"Part of the interest a borrower pays to a lender is a tax paid by the borrower to the government, but is intercepted or privatized by the lender if the government fails to collect the lender’s net unearned income.

Natures Bounty belongs to all of us

natural resources in private hands such as oil, trees, etc... all have a component that by natural right belongs to the public at large, or at the very least to the people who work to extract those resources, process, move and sell them. The ideology of privateering shields owners from any social responsibility. The ideology demonizes any public benefit as "socialism" and thus distracts people from even appreciating that they have a right to any reward beyond the peanuts thrown to them by monopolists or employers under their control. Nature's bounty should belong to all of us. But privateers covet and covet such properties in order to extract value from them they can convert to loot.

There are beautiful mansions in Britain that belong to people who using the British East India Company as their vehicle, systematically looted India. Castles and Mansions, world wide are built with loot gained from taking a good idea and building it into a vast and gargantuan fortunes. Much of that wealth is turned into treasure and unavailable to anyone. Pirates literally would bury their treasure. Modern looters bury their treasure in offshore banks.

Shifting Taxes to Rent

An unfair tax system is setup so that even taxes ostensibly intended to punish or control excessive wealth get shifted from the pirate captains to the crew. Avoiding that becomes difficult because of the armies of shills the wealthy will hire to gaslight the subject. But also because most people, even many Georgist, don't really understand the progressive principles behind taxing unearned rent, making taxes affordable and the principle of Shiftability. Sometimes what is intended as a luxury tax or punishment for bad behavior becomes ineffective at stopping the behavior but oppresses labor and capital instead. Moreover, much of what makes some people phenomenally rich is hidden private taxation. Rick notes:

"in addition to actual (overt) taxes on wages paid by an employee, an employee also pays a hidden (covert) tax whenever forced to accept a low or unfair wage for work performed (because of the employer’s monopoly advantage over land, corporate privilege, capital, etc.). Of course, the employer is entitled to a wage, which may be substantially higher than that of employees, but the employer should not be allowed to keep unearned net income or profits produced, nor should the employer be allowed to pay the net income to shareholders in the form of dividends. If this unearned income is not taxed or reclaimed by government, the tax system will be unfair, and the tax will have been shifted onto to ordinary consumers and the poor. A general “inflation tax” is shifted onto ordinary consumers if Congress does’t tax income received in Federal Reserve notes using highly progressive tax rates (under the currency-regulating Springer income tax)."

The only taxes that are not shiftable are:

1. Taxes on unearned income, i.e., Henry George’s “single tax,” which includes taxes on net rental income, net interest income, dividends, net corporate profits, capital/land gains, gambling winnings, etc.
2. Taxes on luxury goods
3. Taxes on estates, prior to 1916 known as legacy, succession or inheritance taxes

Further Reading

https://www.cooperative-individualism.org/george-henry-page.htm

https://en.wikipedia.org/wiki/Pollock_v._Farmers%27_Loan_%26_Trust_Co.

For those with Facebook:

Rick's pages:

https://www.facebook.com/notes/common-wealth-tax/doc-120-the-1890-georgist-constitution/813168725462939/?hc_location=ufi

http://holtesthoughts.blogspot.com/2015/08/the-georgist-constitution.html

https://www.facebook.com/notes/common-wealth-tax/doc-161-poverty-is-caused-by-regressive-taxes-and-prevented-by-progressive-taxes/1498599096919895/

Genuine Tax Reform I: Principles

Principles of fairness in Taxation

We just saw a parody of tax "reform" in the Republican's Tax bill in 2017. Anyone can call anything "reform." But to be actual reform one has to be applying strategies that minimize public misery and optimize the public good. If we want to avoid corruption, we need to define what the parameters (boundaries & rules) of tax reform are about.

• Taxes should encourage actual capital investment*,
• Facility or Ability to Pay, be affordable to the ones paying them,
• regulate behavior, (encourage beneficial spending/discourage waste, fraud and harmful behavior)
• not hurt people.

Additionally Taxation must take into account:

• Progressive Versus Regressive taxes
• Shiftability and Incidence, who ultimately pays a tax.
• Earned versus unearned income
• Privilege versus Compensation
• Wealth Versus Actual Capital
• Ability to Pay versus Fee For Service
• Natures Tax Collectors or Rent Seekers

If they meet those criteria then one can say they are fair. Once we understand these principles we can debate the details and come up with a tax system that is fair and sustainable. When taxes don't meet those criteria they are oppressive.

Sources and Further Readings

Unearned Wealth

Disambiguating Actual Capital From Simple Wealth and The Trouble with Capitalism

http://holtesthoughts.blogspot.com/2016/01/the-trouble-with-capitalism.html

Critiquing PikettyCapital Versus Unearned Wealth

http://holtesthoughts.blogspot.com/2015/11/piketty-capital-versus-unearned-wealth.html

Facility Versus Ability to Pay

http://holtesthoughts.blogspot.com/2017/12/benefit-versus-ability-to-pay.html

Henry George Quotes:

https://www.cooperative-individualism.org/george-henry-page.htm

https://en.wikipedia.org/wiki/Pollock_v._Farmers%27_Loan_%26_Trust_Co.

For those with Facebook:

Rick's pages:

https://www.facebook.com/notes/common-wealth-tax/doc-120-the-1890-georgist-constitution/813168725462939/?hc_location=ufi

http://holtesthoughts.blogspot.com/2015/08/the-georgist-constitution.html

https://www.facebook.com/notes/common-wealth-tax/doc-161-poverty-is-caused-by-regressive-taxes-and-prevented-by-progressive-taxes/1498599096919895/

Progressive Versus Regressive Taxation

Marginal Taxes

Progressive taxation is a tax burden that increases as the taxable amount increases and reflects the taxpayer's ability to pay the tax. Progressive taxation is also referred to as marginal taxation.

For example if there are three tax brackets and a person is wealthy. Example Say:

• first bracket is from 0-15,000$ @ zero tax,
• the second from 15,000$ to 30,000$ @ 5% tax
• the third is from 30,000$ to 100,000$ at 10% tax.

Example

If I make 100,000$, then I pay zero on my first 15,000.00. 5% x 15,000 or 750$ on my next 15,000 and $7000.00 on the third bracket. My total tax burden would be 7750.00$. That is called "marginal taxation".

Shiftability and Incidence

But that is not the only feature of progressivity. My friend Rick explains:

"Whether a tax is “progressive” or “regressive” is" [also] "related to the tax shiftability issue.... Stated differently, a regressive tax is one that can be shifted onto ordinary consumers and the poor, and a progressive tax is one that stays put when levied on a taker of unearned income."

The reformer economist Henry George and his disciples laid out basic principles of fair taxation, starting with the issue of Shiftability. He believed that government should avoid taxes which could be shifted onto consumers and wage earners.

"His main goal with his Single Tax (on unearned income only) was to avoid taxes which could be shifted unto consumers and wage-earners, except that he condoned a tax on consumers of luxury goods and services, because if the tax targeted only luxury items, it would not be shifted onto ordinary consumers."

The most obvious example of this:

"a general sales tax on grocery items would be shifted onto ordinary consumers and the poor, whereas a restaurant or meal-preparation tax would likely not." [Rick DiMare]

Another Example:

For example, a 50-cent per gallon tax on gasoline will not detract from the net profits or dividend pay-outs of oil companies, but WILL be passed on or “shifted to” the consumer. In other words, the incidence of the tax, or who ultimately pays the tax, is the consumer and the poor. The same goes for sales taxes, property taxes, tariffs, imposts, duties, excise taxes, and one of the U.S. income taxes (the Springer income tax which targets wages).

The general principle is that when a tax can be shifted to others, it may be collected by a grocer or landlord, but it is the renter or person buying groceries who is paying it. George died in 1897 and his disciples sometimes argued over details, but all were seeking to implement his principles. His disciple, and tax scholar Edwin Seligman:

"referred to George’s tax shiftability concerns as the “tax incidence,” and if you’re interested in exploring further, he well-explained the concept in “The Shifting and Incidence of Taxation” (1899)."

Note

Because George referred to all of Nature's bounty as "land." I agree that what he meant by the Single Tax is as my colleague Rick DiMare Calls it:

"The most accurate modern meaning of “Single Tax” would refer to a single global uniform tax on unearned income, broadly interpreted to include all forms of income that are unearned, but would not refer to any tax on wages." [...or actual capital]

Sources and Further Readings

https://www.cooperative-individualism.org/george-henry-page.htm

https://en.wikipedia.org/wiki/Pollock_v._Farmers%27_Loan_%26_Trust_Co.

For those with Facebook:

Rick's pages:

https://www.facebook.com/notes/common-wealth-tax/doc-120-the-1890-georgist-constitution/813168725462939/?hc_location=ufi

http://holtesthoughts.blogspot.com/2015/08/the-georgist-constitution.html

https://www.facebook.com/notes/common-wealth-tax/doc-161-poverty-is-caused-by-regressive-taxes-and-prevented-by-progressive-taxes/1498599096919895/

https://www.facebook.com/notes/common-wealth-tax/doc-159-updating-henry-georges-meaning-of-single-tax/1470776836368788/?hc_location=ufi

Abusive Contracts and Privateering

Incomplete Contracts And Large Scale Swindles

I've been using the theme of piracy and privateering to describe our current economic system This is because at the heart of modern dysfunction is elitism and a "privateering spirit." There are people who actually normalize the swindling but it is a sick ideology whether you call it "neoliberalism", "conservatism" or "libertarianism." At heart these people are pirates. But they are a special kind of pirate. They use privilege to Grift, make themselves oligarchs and legalize theft and contract abuse, privateering.

I started this post back last September but I wanted to examine a bit of history and read the Nobel prize winning research on contract theory, and digest what I was reading.

An Ideology of Piratical Banking

Accounting Money, Piracy and Credit

The theme of piracy and privateering describes our current economic system, both as a humorous metaphor and verifiable fact.  I've been referring to the GOP as the Grifters, Oligarchs and Pirates party for a reason. And that reason is that they've become, over time an ideology of legalized piracy.

Propaganda and Totalitarianism, Kakistocracy and Kleptocracy

This Tax Bill is a naked exercise in plutocracy. It's passage was ugly. Uglier was today's televised Cabinet meeting. Cabinet members praising Trump, making up non existent progress and genuflecting to their King. Things are bizaare right now. And at the basis of it is Trump and his movement are following the dictators handbook. Today they are pretending that this tax bill doesn't add 1.5 trillion to our debt and promises to cut earned services for the vast majority of people of this country.

What Trump is Doing

Trump and his minions use propaganda pretty openly, systematically. The GOP thinks that they can get away with it because they are gaslighting, conditioning and bullying people into submitting to their power and influence.

Gaslighting:

These methods condition people through gaslighting which is the employment of:

• Denial
• Misdirection
• Contradiction
• Lying

Conditioning

People are conditioned to believe propaganda by negative or positive reinforcement. Trolls, authorities and others echo the messages and make it unpleasant to disagree with the lies or point out contradiction. Violence, administrative punishment, are all forms of negative reinforcement. And at the same time people are praised or rewarded for going along with the program. Conditioning also exploits peoples desires and fears. It is easy to condition a person to hate foreigners or minorities because they are already primed for that at a primitive level of the mind.

Normalizing

Nobody gets away with gaslighting propaganda without help from otherwise trustworthy authorities. Everytime a news presenter gives credence to lies, he is normalizing them and reinforcing their hold on people's minds.

Trump's tweets:

His tweets have four basic purposes:

• Pre-emptive Framing -- Trump comes out with his gaslighting before the news hits on his crimes with;
• Diversion
• Deflection
• Trial Balloon

Gaslighting the Tax bill

The tax bill is being sold via gaslighting and propaganda. Trump is pretending that this bill will benefit people it won't benefit. It will give people some tax breaks, but it takes from them more than it gives them. I'll update with links later because explaining how they are lying about this would take from the prime lesson, that they are lying to you.

Further Reading

Roger Stone:

https://italkyoubored.wordpress.com/2014/02/05/roger-stone-pretty-reckless-is-going-straight-to-hell-part-six/

Republican Money

Who is Sovereign Over our Economy?

We are being told that the government doesn't have enough money for the things people need and that the only sane alternative is austerity for the common folks. Of course the people telling this are granting themselves privileges and additional control over the money supply and economic resources. We are told our taxes are onerous in order to pay for those things. But then their tax cutting proposals involve austerity and hurt 98% of us while enabling them to pocket more money, buy back stock and maybe buy an extra Yacht without paying taxes. They are obviously lying, but even beyond that dishonest hypocrisy. The premise is a lie. Economists have known since Alfred Maynard Keynes, (at least) that austerity hurts the economy and that government spending stimulates it.

A Sovereign Republic

In A Republic, the economy is "our thing" [see: Definitions], Res-Publica. In a Republic, Supreme power is held by the people through their representatives. Therefore because the money power, which in any state belongs to the sovereign therefore theoretically must belong to the people.

Sovereignty

We are supposed to be sovereign over our own currency. Unfortunately, ever since the realization that there is never enough Gold or silver in the world to inflate an economy, countries have relied on borrowing for their money. The result is that few societies are in fact sovereign over their own money supply. In some cases it is because banks control the money supply and not the national treasury. In others it is because external countries do.

There are all sorts of theoretical movements that would change this. But most are confusing because they confuse how things actually are with how they should be. But the first step is to decouple money from privateering. The people of a region need to have some control over their money supply. Balancing Budgets is not responsible behavior, but printing money recklessly isn't either. So what should we do?

Irresponsible Money

A considerable body of theory has developed over time that demonstrates fallacies in how the money supply is created and used. Ignoring any part of that body of experience leads to disaster. Let me summarize some of that body:

• Commodity Money is unstable and leads to treasure accumulation and hoarding. Gresham's law states that "bad money" drives out good money." But it only applies to money as a commodity with some intrinsic value. People seek to save treasure for use in hard times. Money as Treasure tends to wind up in treasure chests and looted and buried by pirates. Gold and Silver Standards fail to stabilize for that reason.
• Money as Private Debt not only is equally unstable but when accompanied with interest it drives wealth into the hands of those who are owed and increases inequality. Private note money started as banknotes backed by gold or silver coin. The bankers would usually print more notes than the Gold or Silver they had in their vaults. The result was periodic "panics" followed by depressions as folks didn't have any money. Debt money results in people owing more than they can pay back. It bankrupts individuals and whole countries. Governments need to be able to count on people being able to pay their taxes. For that reason interest free debt should be part of government funding. Interest bearing notes only make sense for investments that generate revenue directly.
• Printing money without some sort of backing leads to inflation. Horrid examples like the Weimar Republic show what happens when one tries to inflate ones way out of private debt.

The Best Money is Sovereign Money

The conclusion from these observations is that money as notes issued by a treasury for the benefit of the people as a whole, is probably the best money,...

The Economy has to balance

But there are caveats. The government can't just print money in any quantity without consequence. Money has to be backed by economic activity. It is an investment in the economy by the Government. Benjamin Franklin suggested that notes be printed backed by real estate. But he didn't really understand that notes that are used in one place have to have similar value elsewhere.

Money has to be a unit of account backed by the ability to buy things and pay bills and taxes. That means it has to be "legal tender" for all debts public and private, and of a universal and fixed value.

The people have to be sovereign over its value. When money is issued to pay for bridges and roads, to keep farmers farming and merchants selling, it benefits the whole economy. But whenever the Government spends money into existence it is creating privilege, so that privilege has to either be taxed back or it will be leverage into more privilege and power.

Private Debt Money is Disaster Money

Studies show that private debt drives the business cycle more than public debt. Worse, private debt is driven up when money is scarce and wealth is concentrated. When people can no longer borrow, they can no longer buy, invest and they lose wealth they earned previously due to debt. Thus whenever we are using note money we have to use taxation to tax back excess money and reduce hoarding and to reduce the depredations created by inequality. That implies progressive taxation.

When whole nations are treated like scofflaw debtors, that drives austerity. Austerity creates degrading spirals of dysfunction. Nations need to ensure that money, created, goes into actual capital and actual labor. The value of the money in a country reflects the prosperity of that country and all its people. It also drives it.

No Need for fear of Deficits

If a Republic does not control its own money supply, then something is wrong with that Republic. It has become a tyranny run for "private separate advantage." In our current times, there is a degree of tyranny in much of the world, due to this being the case. We are so used to it we take it for granted. Those who have the strongest opinions about this feel jealousy, personalize and miscast the nature of this tyranny. It is not personal, it is a systemic problem. We could eliminate sovereign and individual debt issues worldwide by the simple expedient of allowing a part (or all) of national and state debt, everywhere, to be floated via the money supply rather than converted into bonds. Let the money float the economy, then tax back some of the benefits.

The Money Power should not be delegated

If a republic lacks power over its money supply then it is not fully Sovereign. However, Republics, all through history have not had power over their money supply, either because merchants would only accept gold or silver as payment, or because those who controlled the Gold or Silver had leant them money that was owed and the money they used was little better than IOU notes backed by debt owned by the State's Oligarchs or King. The use of commodity money and debt money is a drag on the world's economy. Debt is useful as an instrument for saving, but the money supply should be as sovereign as the term "all debts private and public" implies. Budgets should balance over the long term - a balance of non-interest bearing notes outstanding that is necessary to drive the economy.

Of course for Money to be fully Republican, the republicans have to be democratic republicans not Plutocratic ones.

Related Posts:

https://holtesthoughts.blogspot.com/2017/11/the-rights-dirty-little-secret.html

https://holtesthoughts.blogspot.com/2017/12/the-money-privilege-and-loot.html

https://holtesthoughts.blogspot.com/2017/07/greshams-law-as-tool-of-regulation.html

https://holtesthoughts.blogspot.com/2017/04/general-grant-and-mark-twain-greenbacks.html

https://holtesthoughts.blogspot.com/2015/02/satans-usury-john-turmel-and-some-basic.html

Related:

The Collective in the Federalist Papers

http://holtesthoughts.blogspot.com/2015/01/the-collective-in-federalist-papers.html

Definitions

https://holtesthoughts.blogspot.com/2012/08/definitions-related-to-democratic.html

http://holtesthoughts.blogspot.com/2015/01/the-collective-in-federalist-papers.html

Von Mises:

http://holtesthoughts.blogspot.com/2013/10/faulty-assumptions-and-verification.html

http://holtesthoughts.blogspot.com/2014/07/an-ideology-of-privateering.html

http://holtesthoughts.blogspot.com/2017/06/pirates-and-privateers-of-americas.html

http://holtesthoughts.blogspot.com/2017/06/franklin-as-modern-money-advocate.html

http://holtesthoughts.blogspot.com/2017/08/pirates-loot-and-east-india-company.html

http://holtesthoughts.blogspot.com/2015/02/two-generations-of-pirates.html

http://holtesthoughts.blogspot.com/2015/07/hamilton-on-money.html

https://holtesthoughts.blogspot.com/2014/03/corrupt-court-and-undue-influence-and.html

https://holtesthoughts.blogspot.com/2015/09/whigs-and-tories-guelphs-and.html

https://holtesthoughts.blogspot.com/2015/03/hamiltons-bank-plan-from-1781.html

Definitions:

https://www.henrygeorgefoundation.org/the-science-of-economics/economic-rent.html

The Money Privilege and loot

There are three kinds of property that determine society's prosperity. These are Land, Capital and labor.

• Land

“The entire material universe exclusive of people and their products.”

• Capital

“Wealth used in the process of production, which includes wealth in the course of exchange.”

• Labor

“All human exertion in the production of wealth and services.”

http://www.henrygeorge.org/def2.htm

These are the kinds of property that produce wealth.

Wealth and Treasure

However, for individuals, especially Westerners, what seems to be important is portable wealth. The more portable the better. The acquisitiveness of western people's is world in-famous. Tales of indigenous people pouring molten gold down the throats of captured conquistadors illustrate how others sometimes reacted to European adventurers seeking gold.

Treasure and Loot

Treasure acquired by theft, usurpation, conversion or warfare is also known as loot. Piracy and warfare, in search of exchange goods, led to colonialization, creation of factories for growing trade goods, and later to factories for automated production. All this was designed to create loot for the pirate captains. The west coined a word for legalized piracy, it was called privateering. It is said that if you scratch the history of almost any family, you find pirates and crooks as the founders. If English speaking people look down on Mafia, it's not because we never had our own. It was known as the English Aristocracy, and later, the brotherhood of the coast. The first Navies for both the Brits and the USA were pirate fleets. Spanish & Portuguese power was driven by privateering. It was called colonialism, but it was really an outgrowth of piracy. The Spanish had no claim to America, they came in to loot it. The Dutch and other European Powers all sailed the world in search of riches. When they engaged in labor or capital expenditure, it was after loot, not the greater good.

Security Versus Loot

People derive their sustenance and prosperity from a combination of ownership/rule and labor. Lincoln noted that capital comes from mixing labor with items taken from nature's bounty. "Labor is prior to Capital." Wealth is produced by such labor. Wealth is fixed to land; houses, buildings, improvements to property in general and put back into producing things. Wealth devoted to production is capital. When people own their own tools and property the result is widely spread modest prosperity. A society with a large middle class is secure and prosperous. There is room for wealthy people in a healthy society.

Wealth versus Greed

Wealth that is portable and exchangeable is known as "treasure". It may be used as capital, exchanged for consumable goods, or used to buy land properties. Henry George conceded that those who create wealth through capital have a right to enjoy the fruits of their labor. He considered the fruits of exertion or capital to be "earned income." Economic rent is unearned income. When people monopolize property and then charge rent to use it, that too is mostly unearned. Wealth acquired by fraud, usurpation or theft is also unearned. Indeed it is unmerited.

Yet vast wealth comes from lending, either directly or through investment. Accounting wealth involves the creation of theoretical instruments that produce fixed amounts of returns, "interest". Sometimes that wealth has nothing to do with reality except as a demand on others. When individuals do it, it's called usury, when States do it, it's called war, embargoes, or invasion. In any case, it's bad news, and has been known as such for centuries:

Aristotle is attributed to explaining it:

“The most hated sort, and with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural object of it. For money was intended to be used in exchange, but not to increase at interest. And this term interest, which means the birth of money from money, is applied to the breeding of money because the offspring resembles the parent. Wherefore of any modes of getting wealth this is the most unnatural.” [Quantum of Power]

Privateering

Pioneers in Economics laid out the benefits of a well governed economic system years ago. But people prefer to fight, play king of the hill, and lord it over others. A well governed system under Democratic, Republican and Commonwealth principles is boring compared to one where people are always fighting. So there are always folks who prefer to be pirates and have it all, manipulate crews to fight for them, then bury the loot because they don't know what to do with it otherwise. Private people acting as government are privateers. Privateers are like the Tongue Eating Louse that eats the tongue of a fish and then takes a bite out of everything the fish tries to eat. Privateers create corporations that tried to rule the world: Rhodes in Rhodesia, the East India Company, J. P. Morgan. They become oligarchs because they are rarely competent to rule a country. They want loot, they don't really want the common-wealth of a country, the common business of a republic or a federation, or the annoyances of democracy.

Now the privateers of the United States are trying to implement oligarchy by dominating the GOP and raising one of their number to the Presidency.

I've got a lot more to say, but that's enough for this post.

http://holtesthoughts.blogspot.com/2014/07/an-ideology-of-privateering.html

http://holtesthoughts.blogspot.com/2017/06/pirates-and-privateers-of-americas.html

http://holtesthoughts.blogspot.com/2017/06/franklin-as-modern-money-advocate.html

http://holtesthoughts.blogspot.com/2017/08/pirates-loot-and-east-india-company.html

http://holtesthoughts.blogspot.com/2015/02/two-generations-of-pirates.html

http://holtesthoughts.blogspot.com/2015/07/hamilton-on-money.html

https://holtesthoughts.blogspot.com/2014/03/corrupt-court-and-undue-influence-and.html

https://holtesthoughts.blogspot.com/2015/09/whigs-and-tories-guelphs-and.html

https://holtesthoughts.blogspot.com/2015/03/hamiltons-bank-plan-from-1781.html

Definitions:

https://www.henrygeorgefoundation.org/the-science-of-economics/economic-rent.html