The United States was founded on a revolutionary ideology that displaced the hierarchical pattern of Europe with a more egalitarian one. More importantly, the ideology of the American revolution was liberal, Lockean, and based on the principle that the state derives limited rights from the direct consent of the governed. Locke did not doubt that there is a right to revolution when the state exceeds the bounds that individuals have set. If one individual feels that the state has exceeded its bounds, he is deterred from revolution by the fact that he will fail unless a majority of his compatriots agree with him. Thus, Locke does not argue that we ever give up the right to revolution but that there are practical reasons to avoid pursuing it recklessly. Thus, Jefferson's claim that there needs to be a revolution every twenty years was tempered by his calling his own election to the presidency in 1800 a revolution. By then, Jefferson had acceded to most of the Federalists' principles, so he had reduced the definition of revolution considerably.
The process by which taxes are set in the United States is less democratic and reflective of popular will than it was in colonial America just prior to the Revolutionary War. Before 1730 the colonies were with exceptions independent of British rule, but beginning in the 1730s Parliament passed the Molasses, Hat and Iron Acts and, more seriously, after 1763 imposed several taxes, such as the Sugar Act, the Stamp Act and the Quartering Act which they had the right to do, followed by the Townshend Acts (1767) and the Coercive or Intolerable Acts (1774). The colonists objected to the process by which the taxes were set, and this led to the Revolutionary War.
Today, the process by which taxes are set depends on a government that purports to represent over 300 million Americans (about 128 million or 61% of whom vote for President). In colonial times, there were about three million Americans. In colonial times the ratio of the number of Congressional representatives to population was 3,000 to one. Today it is 500,000 to one. In colonial times, a disaffected American could follow Roger Williams and leave his colony to found a new one. Today, land is held by the federal government or the people. There is nowhere else to go to escape factional tyranny.
The founders did not believe in unrestrained democracy because they feared that it would breach the liberal principles on which the nation was founded. The Progressives, whom historians such as Gabriel Kolko, William Appleman Williams, James Weinstein and Murray Rothbard have argued represented the interests of big business while claiming to represent "democracy", argued against liberal constraints on democracy. Since the Progressive era, there has been increasing tyranny of special interests, specifically the very big business interests whom the Progressives laughably believed they controlled through the Sherman Anti-trust Act and the Federal Trade Commission.
Thus, America today is characterized by much greater tyranny than it was in the colonial era. This is compounded by the rejection of liberalism by America's other-directed elites and their willingness to unrestrainedly abuse state power to extract hard-earned earnings from ordinary Americans in the interests of incompetently conceived and inevitably corrupt government projects.
There is little doubt that Americans can morally bear arms against the current government in Washington. There are practical reasons why they may not. However, it is a consideration that individualists need to begin considering. This is not a government that represents me. I do not believe that the taxes I pay go for any purpose that I can support. The federal government is suppressive and immoral, as is the state government. Things have not yet gotten bad enough that a sufficiently large percentage of the nation will agree (the tipping point is probably 30 or 40 percent), but I think that there is a good chance, given current Federal Reserve and government attitudes and policies, that this can become a reality.
Sunday, January 25, 2009
Saturday, January 24, 2009
Montesquieu on Infrastructure Improvement
"The public revenues are a portion that each subject gives of his property, in order to secure or enjoy the remainder.
"To fix these revenues in a proper manner, regard should be had both to the necessities of the state and to those of the subject. The real wants of the people ought never to give way to the imaginary wants of the state.
"Imaginary wants are those which flow from the passions and the weakness of the governors, from the vain conceit of some extraordinary project, from the inordinate desire of glory, and from a certain impotence of mind incapable of withstanding the impulse of fancy. Often have ministers of a restless disposition imagined that the want of their own mean and ignoble souls were those of the state.
"Nothing requires more wisdom and prudence that the regulation of that portion of which the subject is deprived, and that which he is suffered to retain.
"The public revenues should not be measured by the people's ability to give, but by what they ought to give; and if they are measured by their abilities to give, it should be considered what they are able to give for a constancy."
--Charles de Secondat, Baron de Montesquieu, Spirit of Laws, Book XIII, "Of the Relation Which the Levying of Taxes and the Greatness of the Public Revenues Bear to Liberty".
"To fix these revenues in a proper manner, regard should be had both to the necessities of the state and to those of the subject. The real wants of the people ought never to give way to the imaginary wants of the state.
"Imaginary wants are those which flow from the passions and the weakness of the governors, from the vain conceit of some extraordinary project, from the inordinate desire of glory, and from a certain impotence of mind incapable of withstanding the impulse of fancy. Often have ministers of a restless disposition imagined that the want of their own mean and ignoble souls were those of the state.
"Nothing requires more wisdom and prudence that the regulation of that portion of which the subject is deprived, and that which he is suffered to retain.
"The public revenues should not be measured by the people's ability to give, but by what they ought to give; and if they are measured by their abilities to give, it should be considered what they are able to give for a constancy."
--Charles de Secondat, Baron de Montesquieu, Spirit of Laws, Book XIII, "Of the Relation Which the Levying of Taxes and the Greatness of the Public Revenues Bear to Liberty".
Friday, January 23, 2009
The Banking System Has Caused Economic Slowdown
The consensus argument (which is often wrong) is that the banking system has caused the current economic malaise. In general, recessions and depressions are monetary. The Great Depression was a monetary phenomenon. This time, the Fed has ballooned money supply yet the slowdown continues. Of course, it is likely that there is a lag, and in a month, two or three there will be a turnaround. The stock market, however, continues to fall. This may have to do with continued media publicity. If the lag or media publicity arguments do not turn out to hold, the culprit is the banking system itself, which is what I keep hearing.
Not that money supply is independent of the banking system. Much of the money supply is created by the banks. But if the money supply is the reason for depressions and recessions, there is an argument to maintain the current banking system--the Fed can counter panics and so fractional reserve banking's chief problem (the threat of runs) can be countered. But not if the banking system itself is faulty. Then the argument for the current fractional reserve system is attenuated. Then, fractional reserve banking is in part responsible for misallocation and slowdowns, and money supply (itself a product of fractional reserve banking) is only partly to blame. In that case, a clear thinking public (sans the New York Times, pro-bank "liberals" and the like) ought to ask why the the banking is perpetuated given its dismal performance.
Fractional reserve banking is a form of fraud and need not be legal. Bankers lend out more money than they have on reserve. For every one dollar deposit, banks lend out up to six additional dollars. These dollars are covered by incoming new deposits. The system is not far from a Ponzi scheme. New investment covers old loans. It works if borrowers come and go with regularity. The problem until the days of the New Deal was that they frequently did not. There would be "runs", banks would falter and depressions would result.
Without fractional reserve banking there would be more savings and less economic activity. The economic activity that occurred would be more rational than it is with fractional reserve banking. Over time, better projects would be built and there would be more innovation because investors would be more focused on rational investments. This would stabilize economic outcomes over time, as more good ideas were implemented as were fewer bad ones. There would be less reckless depredation of the environment as unnecessary housing and manufacturing would be cut back. Higher unemployment levels over the intermediate and perhaps long term could be subsidized through relief, just as it is now. Interest rates would be higher and more people would save. There would be less or no inflation (and perhaps deflation) so people planning for retirement would not need to rely on the stock market. Savings would generate adequate returns for retirement. Better investment would be made, so that statistical economic growth might be slower but substantive economic growth would be much faster. The difference to which I'm alluding, satistical versus substantive economic growth, is that statistical growth includes garbage investment like sub-prime housing and public schools that do not produce value. Substantive economic growth would include private schools that do produce value and housing that people really want.
Banks need not be permitted to lend more money than they have. The argument for doing so is economic growth. But the argument against it is the rape of America's retirees; and the stifling of innovation caused by the misallocation of credit and irrational turns in the economy due to banking panics--on the part of bankers themselves.
Not that money supply is independent of the banking system. Much of the money supply is created by the banks. But if the money supply is the reason for depressions and recessions, there is an argument to maintain the current banking system--the Fed can counter panics and so fractional reserve banking's chief problem (the threat of runs) can be countered. But not if the banking system itself is faulty. Then the argument for the current fractional reserve system is attenuated. Then, fractional reserve banking is in part responsible for misallocation and slowdowns, and money supply (itself a product of fractional reserve banking) is only partly to blame. In that case, a clear thinking public (sans the New York Times, pro-bank "liberals" and the like) ought to ask why the the banking is perpetuated given its dismal performance.
Fractional reserve banking is a form of fraud and need not be legal. Bankers lend out more money than they have on reserve. For every one dollar deposit, banks lend out up to six additional dollars. These dollars are covered by incoming new deposits. The system is not far from a Ponzi scheme. New investment covers old loans. It works if borrowers come and go with regularity. The problem until the days of the New Deal was that they frequently did not. There would be "runs", banks would falter and depressions would result.
Without fractional reserve banking there would be more savings and less economic activity. The economic activity that occurred would be more rational than it is with fractional reserve banking. Over time, better projects would be built and there would be more innovation because investors would be more focused on rational investments. This would stabilize economic outcomes over time, as more good ideas were implemented as were fewer bad ones. There would be less reckless depredation of the environment as unnecessary housing and manufacturing would be cut back. Higher unemployment levels over the intermediate and perhaps long term could be subsidized through relief, just as it is now. Interest rates would be higher and more people would save. There would be less or no inflation (and perhaps deflation) so people planning for retirement would not need to rely on the stock market. Savings would generate adequate returns for retirement. Better investment would be made, so that statistical economic growth might be slower but substantive economic growth would be much faster. The difference to which I'm alluding, satistical versus substantive economic growth, is that statistical growth includes garbage investment like sub-prime housing and public schools that do not produce value. Substantive economic growth would include private schools that do produce value and housing that people really want.
Banks need not be permitted to lend more money than they have. The argument for doing so is economic growth. But the argument against it is the rape of America's retirees; and the stifling of innovation caused by the misallocation of credit and irrational turns in the economy due to banking panics--on the part of bankers themselves.
A Taxing Question--New Yorkers ARE INSANE
How much do you pay in taxes? And what's the payback? I recently spoke with someone at the gym. In my neighborhood leftists reign supreme, and this guy was no exception. He told me that the school in Phoenicia, New York is terrible, so he sends his two kids to a private school in Stone Ridge, New York for $8,000 apiece. When I said to him, "It's terrible that we pay all these school taxes and you can't send your kids to public school," he replied, "I believe in taxes."
This individual was somewhat status conscious and self-conscious of his own status-consciousness. It is not a bad thing to "keep up with the Joneses" but enforced "liberalism" is different. He told me that he was brought up in a large house in Scarsdale and that he could afford an apartment in Manhattan as well as private school and a house here. It did not occur to him that while paying several thousand dollars in school taxes did not prevent him from sending his own children to private school, taxes likely prevent many local residents from being able to afford private schools. So, unlike my rich "liberal" friend who loves taxes and sends his children to private school, others whose children's education the taxes harm are not so rich or so lucky.
The question is: what does someone in New York pay in taxes? First off, there's Social Security. The rate in 2008 was 6.2% for employees and 6.2% for employers. Most economists agree that the employer's portion is largely a deduction from wages, so let's say the total is 10%. Medicare is another 1.45% for employee and employer, so let's call that 2.0%. In 2005, the mean household earnings for a 45-54 year old was $74,446, according to a Boston College study, so let's say the individual earns $80,000. The New York State income tax would be $4,686, or 5.8%. The federal income taxes are about $12,000, or 15%, including deductions. As well, the sales tax around here is about 8%. Also, there are premium and similar kinds of consumption taxes. Let's say 2% of income goes into sales tax. As well, property taxes are easily $4,000 for local property tax (5%) and $2,000 for school tax (2.5%) I'm not counting higher prices due to corporate taxes (corporate taxes are passed on to consumers), capital gains, license and DMV fees, tolls. So if we add up the tax bill for the average household: 10% (Social Security) + 2% (Medicare) + 5.8% (State income) + 15% (Federal income) + 2% (sales) + 5% (property) + 2.5% (sales) = 42.3%.
New Yorkers are INSANE! For 42.3% of their income they get:
Terrible schools + badly paved roads + ?
The only good thing is the snow plowing, I'll give them that. But if I spent 42.3% of my income on something and got back snow plowing, I would sue for fraud. But New Yorkers keep electing the same politicians, over and over, who keep trying to raise taxes even more.
They are INSANE!
This individual was somewhat status conscious and self-conscious of his own status-consciousness. It is not a bad thing to "keep up with the Joneses" but enforced "liberalism" is different. He told me that he was brought up in a large house in Scarsdale and that he could afford an apartment in Manhattan as well as private school and a house here. It did not occur to him that while paying several thousand dollars in school taxes did not prevent him from sending his own children to private school, taxes likely prevent many local residents from being able to afford private schools. So, unlike my rich "liberal" friend who loves taxes and sends his children to private school, others whose children's education the taxes harm are not so rich or so lucky.
The question is: what does someone in New York pay in taxes? First off, there's Social Security. The rate in 2008 was 6.2% for employees and 6.2% for employers. Most economists agree that the employer's portion is largely a deduction from wages, so let's say the total is 10%. Medicare is another 1.45% for employee and employer, so let's call that 2.0%. In 2005, the mean household earnings for a 45-54 year old was $74,446, according to a Boston College study, so let's say the individual earns $80,000. The New York State income tax would be $4,686, or 5.8%. The federal income taxes are about $12,000, or 15%, including deductions. As well, the sales tax around here is about 8%. Also, there are premium and similar kinds of consumption taxes. Let's say 2% of income goes into sales tax. As well, property taxes are easily $4,000 for local property tax (5%) and $2,000 for school tax (2.5%) I'm not counting higher prices due to corporate taxes (corporate taxes are passed on to consumers), capital gains, license and DMV fees, tolls. So if we add up the tax bill for the average household: 10% (Social Security) + 2% (Medicare) + 5.8% (State income) + 15% (Federal income) + 2% (sales) + 5% (property) + 2.5% (sales) = 42.3%.
New Yorkers are INSANE! For 42.3% of their income they get:
Terrible schools + badly paved roads + ?
The only good thing is the snow plowing, I'll give them that. But if I spent 42.3% of my income on something and got back snow plowing, I would sue for fraud. But New Yorkers keep electing the same politicians, over and over, who keep trying to raise taxes even more.
They are INSANE!
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