Monday, January 28, 2013

comment: "government theft at the point of a gun"

comment reply:
You mean taxes?
I don't consider tax to be theft.
Therefore your overblown rhetoric strikes me as being completely irrelevant.


MY RESPONSE (to Mike Norman Economics Blog)

I don't think this response was to me, although Blogger thinks it was.

I also do not consider taxes to be theft, ESPECIALLY since Fed Govt *CREATES* Dollars in the first place.  Govt spending is a Tax Credit that must be created first, before taxes can be collected.

If Govt was collecting taxes in real goods like chickens or bushels of grain, that would not be true, but Govt collects taxes in Govt currency .... a currency which is a service that facilitates and speeds commerce.


FOR WHATEVER IT'S WORTH (this is long, no one is forcing anyone to read it, LOL) ....


Money creation --- yes, a centralized power, for better and worse --- could be seen as a curse/blessing.  But mostly a blessing for making commerce easy, easier than raw barter.  There are drawbacks to the centralization that goes along with modern civilization, but most people appreciate the benefits too, and would be lost or very upset if those many benefits were removed, unless replaced by something truly better.



An Austrian econ friend was complaining about "the loss of purchasing power of the Dollar over 100 years", then stated his calculation how everyone would be a billionaire if that "stealing" via "inflation" had not occurred, based only on interest payments on his/our savings.

Even before I discovered MMT, I recognized that this interest income would not exist, nor the quantity of surplus money that he thinks he would have saved, were it not for fiat currency.  Savers could command higher interest with "hard" or "sound" money --- that's the meaning of that term, sound money = scarce money that is more profitable for bankers to save and lend --- but hardly anyone would have any.  "All things being equal" ... things wouldn't be equal to today.


I do believe that Adam Smith was correct, that taxes on mere WAGES from WORK are immoral.  Smith approved of taxes on most profits vs salaries/wages.

I now understand that Progressive economists circa 1800s intended to refine Smith even more on taxation, by focusing tax policy RENT-seekers or RENT-gainers, in contrast to considering all business profits to be "rents", as Marxians would (roughly).  Ergo, abolish corporate or business tax, determine what constitutes "rents" and institute taxation on that, only.

In this way, a small/productive corporation would not be stuck paying the same or higher taxes than a larger or rent-gaining one.

MMT's point on Taxation is that for currency to maintain value via demand, SOMEONE must be forced to pay taxes in that currency. If US taxes were collected in Euros instead, the US Dollar would not stick around.  If taxes were not collected at all, or collected in real goods, the currency would lose value.


The fiat US Dollar can and should be seen as a SERVICE to overall commerce.  "Hard" money eliminates this "service", hurts commerce, favors savers and hoarders, i.e. bankers.

In a similar sense of eliminating the "money" service, libertarians would abolish govts from supplying clean drinking water and handling sewage, privatizing that, and abolish govt regulations.  This was tried in Argentina (Enron) and Bolivia (Bechtel), and also in Kentucky and elsewhere (AIG).  This was a DISASTER, especially for the ubiquitous poor who could not afford the new monopoly pricing rates, could not afford to drink water.  Bechtel, at least, got a contract such that it OWNED property rights to RAIN that falls from the sky, so residents collecting rain off their roofs (out of desperation) were guilty of stealing company property.  Riots ensued.

Bechtel finally quit, but not without forcing Govt (taxpayers) to pay them huge sums for breach of contract.  This is Libertopia in reality.

The main difference in PURE Libertopia is that instead of Govt sending out the army to crush protests and rebellions by force, Corporations would hire private armies to enforce their property rights and crush rebellions, without any "democratic" mitigation.  Rothbard or Mises revealed the nature of these plans with the explanation that privatizing streets and sidewalks would eliminate mass public protests, because events like that would be "trespassing", subject to arrest/violence.  Elimination of public protest by eliminating the public and the commons.  In such a situation, any degree of FORCE by owners against a protesting public would be justified as a response to initiation of force by the "mob".  Like NYC cops vs OCCUPY, but with less restraint.  Whose freedom?  Freedom for the Owners.  Even Madison did not bluntly state THAT degree of contempt for "mob rule", as much as Rothbard did, though this was implemented against protesters and strikers since the beginning.

In essence, and this is not too hidden, Mises/Rothbard WOULD have Governments or Government-like functions, to protect property owners, and protect the Corporatocracy ---- I saw severe inconsistency on declaring the invalidity of private property when that arises out of mixing private enterprise with govt power.


Kevin Carson made these arguments ---- as a pro-market ANTI-Capitalist Mutualist/Anarchist ---- but most Libertarians like Bob Roddis utterly HATE Carson's arguments, despite being usually logically-consistent with Rothbard's radical Lockean logic, but favoring radical working class self-rule and resistance to corporate control.

For example, Carson pointed to routine Libertarian contempt for Labor Unions and some of their "unsavory" tactics short of outright violence, etc., by pointing out that Walter Block wrote a book justifying blackmail and other similar crimes as legitimate commercial transactions.


The living situation in Libertopia would be *similar* to what we see now, with plenty of force still wielded by power elites to "maintain order", and some fraud would continue since "property rights" are determined subjectively in some cases.  The big change would be the elimination of ANY sense of democratic or egalitarian counter-force through "civil society" institutions.

This trends back to the olden days of Pinkertons, Wackenhut, Ludlow massacre, Matewan, etc. before "Liberalism" started meddling with the rights of owners to deal with and dispose of people as they wished.  Remember, Matewan arose because Sheriff Hatfield and the Mayor refused to enforce the demands of the mine owners without a legal eviction order by a judge, so they hired private "detectives" instead.

Big capitalists wanted Govt to do the dirty work for them, or assist them, under the aegis of "Rule of Law".  They were happy to have Govt bring out the Army to enforce order, enforce property rights with machine guns, but were also fine with arranging that under their own initiative --- the only limitation was when mass public outrage appeared in NYC or Cleveland, and that was a major PR problem.


J.P. Morgan and friends went to great lengths to fight diluting gold --- creating "funny money" --- by efforts to make it legal to pay debts in more plentiful silver, the very POPULIST struggle, w support from W.J. Bryan.  Banksters would have *never* supported ultra SOFT currency we have now, unless the proposals were at least somewhat rigged to grant advantages to the elite comparable to the Gold monopoly.


I've seen Rothbard a/o Rothbardians argue for Gold Standard and/or Gold Bullion (flakes or leaf?)

But in the hypothetical absence of Govt, that means Banks must issue 100% Gold-backed currency (we would have to trust banks to not issue more loans than capital base, meaning that some sort of Govt -- privatized "Govt" corporations -- would have to inspect and enforce that rule.

Other than that hypothetical 100% backing of currency by metal, the issuance of legal "money" per se would be abolished.  Trade would resume in unpriced Gold Bullion (we would still have to trust weight & fineness) and every transaction would need to depend on checking spot prices of metal, or haggling about same.  This is supposed to be an improvement?  In isolated ideology, only.

This hypothetical scenario would result in VERY HARD "money" --- hard to get any --- it would REDUCE the velocity of commerce, and it would be a major hassle for people to deal with.   People currently deal with store Gift Cards, even though they are technically losing money on the balance by lending money to the store sans interest.

Anarcho-Capitalists going insane about "inflation" usually don't grasp how DEflation is far more disruptive than INflation, especially considering Debt Overhang.  Instead of losing a bit of value on financial assets over time, MANY people were losing entire farms and businesses in the late 1800s for being unable to meet terms of debt repayment in the ubiquitous Depressions and money shocks.  This was an ongoing series of crises, arguably created by private banksters for nefarious reasons .... or simply systemic shortcomings.

Today, despite Soft currency, we are seeing the same situation as the pre-Fed and Gold Std "money shocks" because of insane "hard money" advocates in Congress and Economics (Pete Peterson helped abolish gold/FOREX with Nixon) who -- for no sound reason since we now know better our SHOULD know -- are fiercel fighting against using the power of Govt to restore the real economy.

Lysander Spooner explained, in language I had difficulty grasping today, that ONLY worthless fiat nominal-value money is moral and honest, because hard-linking a money value to a quantity of metal --- by fiat orders of Govt -- is a form of fraud or fiction.  Roddis seems to agree.

Hence, we're stuck with this trade-off.  We could favor PURE anarcho-capitalist money --- i.e. barter at spot prices on everything --- hyper Neoliberalism (read Paul Treanor on that insanity of pushing "markets" to extreme conclusions) --- with the result being that commercial flows aka velocity of money gets slow and sludgy, or we could favor the extreme opposite end of neoliberalism we have now, where $4 Trillion flows around the planet daily and controls against fraud are removed from financial markets (see Matt Taibbi article), with M->M profits on money chasing minor spreads in interest and exchange rates, OR we could point out these grotesque inequities and propose more balanced and democratic solutions and compromise.

I understand why Libertarian/Austrians have been called Marxists on the Right, for their common rigidity and clinging to Ideology without any relation to empirical reality, like a "religion".  Whereas Marx claimed that Scientific Socialism was only valid if it changed and adapted to reality as it emerged and became revealed, Miseans actually REJECT empiricism outright, preferring pure unchecked APRIORI assumptions.