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

The Right's Dirty Little Secret

"Free Things == Lower Taxes

The right wing in the United States have a number of dirty little secrets. But the biggest dirty secret, is that the wealthy are dependent on government welfare for their wealth and privilege. They love to talk about the mob "demanding Free Things", but it is all projection as it is our wealthy and connected who assume privilege and demand "free things" from Government. Case in point is the con about our Corporate taxes being "higher" than other countries. The truth is that:

1. Our effective tax rate is already among the lowest.

The cons point to the nominal rate, but the nominal rate is based on the principle of marginal taxation, which differentiates between actual capital, encourages it, and loot, which should be taxed. When they point to closing "loopholes" that is a distraction, as taxes should always be on net income after legitimate expenses and compensation, and most "loopholes" are legitimate except when they are purchased by corporate lobbyists.

2. The economy does better when the nominal rate is higher!

Our economy has done better when the nominal rate was even higher. Corporations do not hire people, pay higher compensation or any good deeds in any quantity, out of the goodness of their hearts. Lowering the rates means more stock buy backs, dividends and more money for the CEO, but almost none will "trickle down". The hucksters advancing this fraud are lying.

3. If you want higher pay for employees, then subsidize payroll and punish substandard wages.

Don't give more money to Oligarchs. It is a simple as that. If you want corporations to be better citizens, put it in the law and punish them financially when they break it. If you don't want them to cheat, hold cheaters liable, incentivize whistle blowers and auditors, and make it profitable to do the right thing. Simple things like a finder fee on reporting fraud. Of course our current corporate climate incentivizes bad behavior.

So the first dirty little secret is that the corporate culture in our country thinks they own the government and can loot the treasury with impunity.

Allying with Nasties

The second dirty little secret is that the business right allies with those who will distract the general public and let them loot with impunity. Thus they have traditionally supported hard right causes, sometimes because it is in the financial interest of the CEOs, but more often because economic power is easily converted to political power and political power buys more loot than productive capital does. After all actual capital has to be spent to produce any gains. A politician can be bought for a few thousand dollars. Imagine making a million dollars and only spending 1000$? It's no wonder that whenever we get oligarchic ownership of business we get oligarchic features in our government.

https://krugman.blogs.nytimes.com/2017/10/29/tax-cut-fraudulence-the-usual-suspects/

https://www.npr.org/2017/11/13/563420070/is-a-corporate-tax-cut-really-what-the-economy-needs-right-now

https://www.democracynow.org/2017/10/4/in_1898_white_supremacists_killed_60

Mafia State Patriarchs, Oligarchs, Poligarchs

Masha Gessen writes in the New Yorker, an Article titled:

"The Poligarchs, Oligarchs, and Stooges of the Paradise Papers":

The subtitle of which is:

“In Russia, Vladimir Putin has created a mafia state, with him as the patriarch.”

I liken these dictators and wannabe dictators to Pirate Captains, but Mafia Dons works as well. The analogy M. Gessen uses compares them to Mafia organizations, which makes sense, since the Sea Dogs of Britain, the Netherlands, France and Spain are the Mafioso of those lands. Gessen draws on the work of Bálint Magyar, who compares them to Mafioso. Marauding Invader's works as well. The analogies to Vandals and Goths might apply too, except these people are integrated into their societies and emerge from within.

A Hierarchy of Fear, Oppression and Tyranny

Gessen describes a hierarchy of Putin's Russia, with it's "Poligarchs", who always have a chief, an extended family. The chief is the patriarch, who provides unified direction and keeps the bloodthirsty "family" members from offing each other. A Poligarch is a political chief. Gessen writes:

"The word “poligarch” combines “political” and “oligarchy”; the poligarchs are first endowed with political power, which they use to procure material wealth."

But in the Polygarch Scheme, the oligarchs get their wealth and power from those with power, and in return must do as they are told. In Putin's Russia, Hitler's maxim of not nationalizing Industry, but nationalizing the Industrialists, has become a reality. Oligarchs either bend to Putin's rule, or they find themselves losing everything. Politicians can draw wealth and hidden power from the Oligarchs, and the Oligarchs exercise power from behind the scenes.

And Always the Stooges

And below them are the stooges. Always the Stooges.

He also writes on the Paradise Papers, which details the corrupt money relationships between Putin, his pet politicians "polygarchs", and oligarchs. All of whom are bound by secret stashes of money in Caribbean and Mediterranean Islands.

The point is that Trump wants that system for here.

For more on this read:

https://www.icij.org/investigations/paradise-papers/

https://www.newyorker.com/news/our-columnists/the-poligarchs-oligarchs-and-stooges-of-the-paradise-papers