TCS Daily


How to Reform the Individual Income Tax

By Jon N. Hall - October 30, 2007 12:00 AM

It was once thought that only a handful of folks really understood the Theory of Relativity. No one, however, entirely understands the U.S. Tax Code; it is complexity run riot, complexity on wheels. Even IRS agents give conflicting answers to the same tax questions.

But before Congress junks the U.S. Tax Code and the IRS for some untested replacement like the FairTax, Congress should first try real reform: radical simplification of the Code. Congress made a stab at simplification back in 1986, but it didn't stick. Complexity soon crept back into the Code, and continues to do so.

There are two main reasons for the complexity of the Individual Income Tax (other than the corruption of Congress). The first concerns figuring your total income. (This we can accept.) The second concerns figuring your taxable income and applying your tax credits; i.e., reducing your tax liability, so you won't have to pay as much. This second reason is where simplification must be focused. But fear not, read on.

If ALL the complexities involved in reducing one's tax liability were stripped out of the Code, folks would be paying higher taxes, right? Therefore, simplification demands a tax rate cut, so folks won't get hosed. And if done correctly, a rate cut will make simplification revenue-neutral.

Here's the fair way to figure the new tax rates: For each income bracket, divide the sum of what everyone actually paid in income taxes by the sum of everyone's total income. (To put it another way: Divide each income bracket's aggregate income tax revenue by the bracket's aggregate total income.)

Example: For those whose taxable income is more than a $1 million, the current rate is 35%. But, if our formula above shows that that cohort, on average, pays 30% of their total income to the IRS as income taxes, then 30% would be their new rate. One could think of the new rate as being the old real rate.

With the new rates, some would be paying more, and some less, but the average tax load would be the same as with the old statutory rates. Is that revenue-neutral enough for you? It's even possible that if some of a bracket's taxpayers had been taking large enough reductions, the bracket's majority would pay less under the new rates. In any event, everyone in a bracket would be treated the same, paying at the same rate. Fair enough? Perhaps we should call this reform "The Multi-bracket Flat Tax".

Of course, this has been an over-simplification of simplification; simplification is actually a bit more complex than this. The remaining complexity involves the lower rungs of the income ladder, where reducing one's tax liability is much more critical. It is there that unintended consequences could be particularly hurtful. If there is anyplace where reductions must be retained, it is the lower income brackets.

So, simplification would start at the top, with the top bracket. Confining simplification to the top bracket will, as some of the more recent data suggests, only capture about 1% of the taxpayers. Applying simplification to the lower brackets—the 99% of us—would be phased in only after we see how well it works at the top. Simplification in the lower brackets may not be as pure as at the top; these folks need their reductions in tax liability. Perhaps the purer simplification advocated above should only be applied to those with total incomes exceeding $250,000, which is still well under the top 5%.

For 2006, the top tax rate (35%) began with incomes over $336,550. This bracket—if that's what you want to call it—covers far and away the largest range of incomes of any of the brackets, as it has no upper limit. Those making tens of millions in income pay at the same rate as those at the bottom of the bracket. To apply our formula to the entire bracket could expose those at the bottom to a tax hike. Therefore, this huge bracket should be broken up into several brackets, perhaps 10 or more. And then we'd just plug our formula into each of these smaller new brackets to find their tax rates.

The IRS could insert simplification into Form 1040 with the addition of a single question. On Line 22, where you report your total income, add this test: If your total income is greater than $336,550, go to the chart on page such and such. The chart would line up your total income with your tax rate, you'd multiple your total income by that rate, and then you'd be directed to go to Line 57 and enter your tax there, bypassing 35 lines, as well as all the forms and publications associated with those 35 lines. Or, perhaps, the IRS could devise a new form for the rich, an alternate Form 1040EZ. In any event, if you're a high earner, just multiply your total income by your rate and be done with it.

Such tax simplification would simplify the lives of the well to do, enabling them to concentrate on the intrinsic worthiness of their investments and charities, not how they affect their tax situation. If some VIPs resent the loss of their pet write-offs, they should consider the resentment of the other taxpayers who've been making up for them. For whenever one taxpayer gets a tax break, the other taxpayers making up for that lost revenue become subsidizers of that tax break. And what's worse, the tax break may be for something the other taxpayers strongly disapprove of.

But simplification isn't just for the taxpayer; it's for the IRS, too. Simplification of the Individual Income Tax would free up manpower at the IRS. But it needn't cause a rise in unemployment amongst the ranks of CPAs. For instead of checking whether folks were entitled to their deductions, exemptions, write-offs, loopholes, credits, adjustments, and such, these fellows could be tasked with collecting the billions of dollars of income taxes that go unreported and uncollected. They'd be concentrating on Lines 7 through 21 of Form 1040. And they could also work on capturing the lost revenue from the underground economy, adding a little spice to the life of your average IRS auditor.

Of course, Congress will always be tempted to pack complexity back into the Code, granting favors, picking winners and losers, pitting taxpayer against taxpayer. However, Congressmen who want to reform the U.S. Tax Code need just one word—simplification.

Jon Hall is a mainframe programmer/analyst from Kansas City.

Categories:

36 Comments

Briefly...
The various branches of government tax the bejesus out of our economy. Each and every one of us, too. They need the money to sustain their own agendas and this will continue...so we can put the idea out of our minds that simplifying taxes will make any of that change or that "fairness" will do anything more than to move the burden around among us...but only some.

With a complicated tax code there always seems to be some possibility that we might actually be able to "game the system" and shelter our incomes in an unfair (but legal) manner. Because it is so complex there should be opportunities for many of us that only the "big guys" know about. Our tax preparation professionals encourage this sort of wishful thinking.

Further, anyone who has been worked over by the IRS knows that, in the end, they simply make stuff up, declare a "finding" and take more money away from you.

Rules?...Schmules!

I'm with Forest
It can't be tinkered, like some 'spec' (I say that deliberately given the author's technical background).
It has to be junked.

The Feds should return to indirect taxation. A 2% land tax (not a tax on the property improvements on the land), a 2% gross receipts tax on business activity and a POS consumption tax on services as well as goods around a 10% rate, with a FairTax-type 'prebate' paid out to everyone so the poor do not get burdened by it should do nicely. Taxes on landfills and pollution should be hiked as well.

Of course, will never happen. Not until some outside competitive issue forces us to (like lowering the uncompetitive corporate income tax is currently an issue).

We need a Second American Revolution. Bar that, I'd settle for the Federal tax code to strip away deductions for state income and property taxes. Watch the peasants with the pitchforks storm Sacramento and Albany when that happens.

Fair Tax
The only fair tax is an equal tax. The next best is a flat tax.

you don't get it...
The income tax is a form of legalized theft. No matter how you tinker with it, reform it, or flatten it, it is still an immoral way to tax. All of the deductions and exemptions are only an attempt to modify the income tax to approximate something like a consumption tax. Let's just get rid of the whole thing. Currently, politicians use the Code to provide favors for their constituents. This must stop.

A consumption tax is the only way to have a tax that approximates fairness. It also incorporates choice. If you don't want to pay the tax, then you don't buy the item. Furthermore, the Fair Tax widens the tax base.

If the Fair Tax were adopted, the GDP would grow like never before.

It's time to quite fooling around and get a tax system for the 21st century.

A service tax is the most appropriate and just (way of funding GOVAGs)
GOVAGs (definition at the end) – with one very crucial difference - are like any other group (of persons) that provides the services that are paid for by the consumers of such services.

The service GOVAGs provide is securing the Rights of the innocents and the (Aristotelian) essence of GOVAGs is the moral sanction they enjoy to deprive the Rights’ violators of their Liberty (even Life, in some cases).

The practical realization of this (moral sanction granted to the GOVAGs) is by giving them legal monopoly on threatening and on carrying out the threats.

And the most direct way of paying for such services is to collect a fee for each transaction that people enter into.

GOVAG : noun : Acronym for GOVernment AGent. Any of the millions of people directly employed by local, provincial/state and/or central/federal Governments.

There you go again. Continuation of our earlier argument (why do YOU do it Forest? To what END?)
I know you responded to this question (in the feedback section of “So You Want to be a Masonomist” by Arnold Kling). But your response does not answer my question.

If all that we non-GOVAGs can do is just "game the system", then there is no point in mentioning it in any of your posts. You just do it (“game the system”). One doesn’t game a system openly as the system operators will wise up to that fact and change the system.

If you are so fatalistic about the futility of changing the behavior of the GOVAGs, then what is it that you hope to accomplish by harping on the inevitability of living with whatever is dished out by the GOVAGs? To what end are your posts directed?

As far as the “In the long run, we're all dead”... quote of John Maynard Keynes is concerned, it IS an accurate statement.

I just told you that John Maynard Keynes gave that statement because he could not answer his critics about the long term affects of his policies.

OK...
Near No Ad,

Thanks for asking...because there is a reason.

Many of us who think about this stuff are of the opinion that we can change the nature of sovereign government if we complain enough about it in the open dialogue we are encouraged to enjoy here in America and if we then vote for some politician who "swears to God" he will do something about it "if elected".

My entire point is that the institution of sovereign government has a specific behavior as a human group entity and that it is not possible for a strong central government, such as ours, to do the things we ask of it or to even enforce many of its own laws.

If we need something different to occur in our society then we are going to need to look elsewhere. The central government has certain appropriate tasks that it must be very good at. But this does not mean the politicians will be good at everything we need someone to do for us.

For example, the railroad train is not going to drop me off at my house and be there sitting outside to take me to work tomorrow morning. For that I needed the automobile to be invented.

We could go on listing examples where a technology or a methodology has been downsized to become more effective at the personal or the local level...where some goods or services have become commoditized through a fundamental breakthrough that delivered a "better, faster and cheaper" outcome.

We need this with government, with banking and with our corporations.

The business of sovereign government is in decline because the underlying mission to provide security from foreign invasion is fast becoming a universally available service...a commodity. Like food, clothing and shelter. Air and fresh water. Such security can be relatively inexpensive if we go live in a country that simply lets America, for example, do the heavy lifting.

The magic of banking is not an American franchise any longer. Other nations have hard currencies and responsible Central Banks. The ability to create liquidity in support of competitive economic development can now be in the hands of a small bank in a developing nation.

There are lots of ways that financial capitalism might be engaged to create wealth. Not only the American way. Not only with political democracy (or some pretense of it).

Near No AD, my friend, I want to discuss the next generation of economic and social entities that will compete with the corporations, charter their own banks and operate inside the laws of whichever jurisdictions seem the most appropriate to their purposes.

Large enough to be fully functional and competitive in the global arena and small enough to govern themselves by mutual consensus. Commonwealth partnerships incorporated as social and economic entities into perpetuity without being diminished by the death of individuals or issues regarding inheritance.

Our current economic structures are inefficent, wasteful and risky. Our government is being asked to do things for us that we should be doing for ourselves. We put ourselves and our families at the financial mercy of banks and insurance companies. We depend on universites for the education to secure a job and on corporate entities to have such a job waiting for us. We hope to have enough money at the end of all this to live with dignity after we cannot work another day. We have nothing to leave behind but some dim memory of who we were to our children when they left home at the age of 20 and when we were only 50. Here in America, at least, we seldom see our own grandchildren. We live next door to strangers in a house that is more of a portfolio investment than a home. The rest of the world will not be living like this 100 years from now. We should not be living like this, as rich as we are.

Near No Ad...we need to start thinking differently and we need to stop looking to the government to change who they are or to evolve our society so as to marginalize their impact on our private lives. The government is clearly running us all into the wall regarding such simple matters as Health Care products and services.

Now they are tapping our phones and torturing prisoners. We need to stay away from these people. This goes way beyond political libertarianism or democracy. This goes to the heart of the self-perpetuating nature of the entity of sovereign government itself. It has a life of its own. It does not matter who the government workers or the elected official are. They simply do their jobs, the government has a culture of behavior all its own and we are its human resources. The stronger it is then the more dangerous it becomes. They are building a damn wall on the entire border with Mexico, forchristsake. We are not becoming a more free and open society. We are becoming a police state. And it costs a lot of our money to be put upon this way.

Again, my friend, thanks for asking.

Good luck
You've got a great message, forest, and I'd love to see it spread among the progressives. However, I lay odds of that at 1 chance for to 99 against.

The reason for this is simple: Progressives dogmatically believe that (1) there shall be no other good but the common good, and the state is its exclusive and infallible agent; (2) there shall be no associations of men pursuing some good in conflict with the state or the common good; (3) men shall labor five days, and the state shall take the product of that labor as it deems necessary to implement the common good ("We're going to take things away from you on behalf of the common good"); (4) the sate and the common good shall be honored, so that it goes well with men all of their days; (5) the state shall lie, murder, steal, adulterate the common good for its own good, bear false witness against and destroy the reputations of any who gainsay it, and covet everything it has not yet seized, all in the name of the common good.

Armed with these Five Commandments, evangelical progressives seek to press us all into the willing or unwilling service of the state and the common good. Your message of peace and hope for mankind stands in stark contrast to their maniacal teachings. I hope your message prevails - for the sake of the common good.

keep the amt
There's something to be said for keeping the AMT. The high exemption means that most wage earners won't pay anything. Three rates, including the zero rate, make it modestly progressive. No deductions or credits means that it doesn't attempt any social engineering. The siimplicity of the AMT means the public won't need to hire an army of tax accountants and lawyers. If the function of taxation is just to raise revenue for government operations, the AMT would be ideal. We probably ought to scrap the exisitng multi-million word tax code we have now and just use the AMT.

First step: repeal 16 th Amendment
There can be no discussion of any real tax simplification until the 16th Amendment is repealed.

It was done for booze, why not for money?

Repeal the 16th
The fundamental problem is that the Fed extracts taxes directly from the citizens. The Federal budget is determined and set by represenatives from each State. Therefore, each State should be responsible for supplying the Fed Budget based on that State's representation in Congress (the folks that created the budget in the first place). Then each State can figure out its own way to raise its share of the Fed Budget. No one system is the "right" system. Instead, we do as in the economy, we allow "competition" to do its work. The result is the Fed budget will be cut to the bone. States will have to tackle "raising money" vs reducting the Fed Budget.

more on taxes
Generally, the more direct the "tax" to the "service" provided, the "fairer" the tax. Our current "income tax" is the most perverted and "unfair" tax. There is no "nexus" between a person's income and the benefits they derive from the government.

The gasoline tax is an example with a strong nexus to the service provided. Assuming that gas taxes are used to build and improve roads, then the folks that pay the gas tax are the same folks that consume roads.

Property taxes to pay for schools is an example of a poor to zero nexus between the tax and the benefit. Property owners were just a convinent target to collect taxes. In some cases they might have kids going to the schools, but in many there kids may go to private school, or they don't have school age kids. These folks have little to no incentive to pay property taxes. Hence the reason we get the perversions of Urban flight. Or another interesting area are communities with large retires (Florida).

The other area of major distortion is that politicians love to use surrogates to tax "their people". Memo: rich folks, businessmen and business "don't pay taxes". They merely collect it from the sources (us common folks) of their income and pass it on to the government. Thus the politicians get to claim they are taxing one group and giving the benefits to another. Just not true. How many folks even know the amount of their pay taken out of their paycheck and paid over to the government every two weeks. None. How many people know their "net paycheck", pretty much everyone. If common folk actually wrote a check to the government every two weeks, the government would not collect anything, and the politicians (especially the pro-taxers) would be run out of office.

Sovereign governments are not required for societal existence
Humans have found other ways before and will find better ways in future.

Hope for the species...
We are creative problem solvers. When we finally ask this question correctly...and drop certain assumptions out of our current model...then a fresh social paradigm and a progressive economic breakthrough will seem possible.

Of course, nothing is so compelling as actually seeing something operate. All the talk in the world will not replace doing it.

The progressives...
Robert,

Of course, we have been over much of this same ground before...you and I...

I tell all my closest associates...I am trying to do the impossible.

Bet against me...

It's happening as we speak
Ever hear of the USA or the EU?

Is France or Germany really sovereign?

How about Texas?

'Citizens' of certain countries can live just about anywhere in the world.

Some US cities want to give non-citzens voting 'rights'.

Betting
The only time I've won sports bets is when I bet against the team I wanted to win. But in your case, I'll make an exception.

Sovereignty and Agreements
Before any agreements between sovereign nations, sovereign nations may disagree about all things. After such agreements, however, sovereign nations may still disagree, but their disagreements will be bounded by their agreements. Given that entering into such agreements is an act of sovereignty, how can they limit sovereignty unless they are placed in the hands of arbiters with the authority to expand them?

This is what happened with the US Constitution, the Treaty of Rome, and what will happen with LOST. Eliminate the arbiters with the authority to expand the agreements, and I see no loss of sovereignty via the same.

You gotta start from the start, Forest.
If mankind cannot get America back to square and flush with reality, then only the few will be able to go after your vision (which I do, also, find excellent).

Perhaps it's time for us to awaken to a REAL "natural law" of mankind: the Genius of the Few.

The Few. The Proud. The Having-Brains.

Repeal of 16th A...
is not really necessary. All the Amendment does is permit income taxation. It does not require it. If the Fair Tax is implemented, it would require the abolition of the implementation of the income tax. If the 16th amendment were still present and we had the Fair Tax, Congress could re-institute the income tax, but if it did so, they would automatically repeal the Fair Tax, due to a provision in the legislation. I do not think that, if the Fair Tax were implemented, we would ever go back to the income tax.

"disagreements will be bounded by their agreements. "
Why?

Chavez or Castro some other 'sovereign' can completely disregard previous agreements.

Then what? Rule of the jungle?

Is there no reason this same concept can be driven down to lower levels?

Individuals agree to get along. Those who refuse are 'exiled' from those who agree.

Who or what is sovereign is this case?

Maybe you just said the same thing and I didn't get it?

No politician would eliminate a tax if he wasn't forced to.
A new consumption tax will be quickly approved as long as the income tax can be retained.

No
The bill for the Fair Tax requires that, if passed, the 16th Amendment will not be used to tax incomes. If Congress passes the bill and it becomes law, re-instituting the income tax would automatically prevent the Fair Tax. Congress must choose one of the two alternatives.

And you trust Congress?

reforming income tax
Here's even a better idea, especially on moral grounds. They should scrap the IRS and not have any income tax at all. In addition to being more moral because you're not threatening a violent death, it would also mean that all those snivveling beaurocrats could get proper production real jobs, as well as all the legions of tax lawyer and bean counters etc. That stupid sytem is a huge wealth draining system on the economy. I know some of you will object because if there were no income taxes they couldn't affort the POst office, or FEMA paying rich guys to rebuild their houses, or paying all the cops to have coffee and donuts and flirt to waitresses.

Robert...
Thank you.

Great...
And, thank you, my friend.

Some US cities want to give non-citzens voting 'rights'...
I like that...I really like that.

Enforceability...
In the end sovereign agreements or laws are only statements of political purpose if they cannot be effectively and efficiently enforced.

When the central government creates such an unmanageable structure then the leadership mechanisms of smaller social entities must either step up to the job (regarding enforcement) or simply ignore (and perhaps resist) the government.

And, in fact, that is precisely what happens all the time.

Good point
I should have written, "... disagreements will be bounded by their agreements, or not."

The purpose of agreements between sovereigns is to enable them to transcend the Law of the Jungle, but the Law of the Jungle is always a fall-back position, and is indeed the enforcement position as well.

The loss of sovereignty occurs when sovereigns appoint a "neutral" arbiter to enforce agreements. This is why the US constitution describes a well-checked and balanced federal government on paper but not in practice. Ditto the EU (EEC & EEA), every other international tribunal (except the WPO), and the putative LOST.

I'm all for agreements between sovereigns but not for arbiters to enforce them. President Andrew Jackson defied the Supreme Court, F.D.R. threatened to pack it, and Stalin asked how many divisions the Pope had. All three tyrants flashed us the sharp end of power, red in tooth and claw, so none of us can decry the soft, incremental undermining of our liberty at their hands. This we can say of no "neutral" arbiter.

The Groove
This is precisely what I groove on. HillyBilly recently declared that issuing illegal immigrants driving licenses was necessary to "fill the gaps". But "the gaps" don't necessarily need filling by the gubmint, and often are not, in deed. But her assumption otherwise betrays her fantastical assessment of the utility, purpose and ultimate value of power, which in my mind disqualifies her from obtaining it.

Truly independent arbiters
In the real world, arbitration agencies exist.

Independent arbitration agencies can exist to which sovereign individuals can take their disagreements.

These are typically written into the agrement.

Enforcement could also be private.

The only reason nation states were created was to marshal the forces required to attack or defend.

We now have asymetrical methods with which one person can bring nations to collapse.

So why do we need nation states if a hacker could shut down a country? ('Live Free or Die Hard')




forced to eliminate
They don't ever WANT to reduce taxes even, but sometimes they are shamed into it. Even now we notice that many countries are starting to copy the winner countries that usually had low taxes. We've seen how Ireland, and the Baltic states, lately some slavic ones are doing it too. So it shames some politicians and then they belatedly want to do it too. I've just read that even that socialist nanny welfare state Canada, has just anounced that they're also lowering taxes so that they'll be more competitive. Let's hope the US will do it too. But the socialist out there will say; 'what would happen if everybody does it'? The answer is that then everybody will be better off for it.

Even socialists must compete.
When pressed, even socialists submit to the free market.

That's why they must impose socialism globally.

A single candle can defeat the darkness.

Where will you go Forest?
I mean, you wrote “Now they are tapping our phones and torturing prisoners. We need to stay away from these people.”


Where will you go Forest? To China, whose GOVAGs’ modus operandi you seem to admire? But less than half-a-century ago, Chinese GOVAGs killed (or facilitated the death of) nearly 50 million of their own citizens. And even today, they control far more aspects of their citizens’ life (and in far more brutal ways) than do the US GOVAGs.

No matter in which era you are in and in which place, there is no escape from the necessity of making judgments of Right and Wrong Forest.

And you are still NOT answering the question. What is that you propose to accomplish by repeating that we non-GOVAGs can NOT do anything to change the behavior of GOVAGs?

For example, I use the term GOVAGs in place of Government to remind the readers that Government is NOT a disembodied machine which they (non-GOVAGs) can manipulate like any other machine. My purpose is to tell them that they CAN change the behavior of the so-called Government machine by focusing on the people who run it. Remember, I never wrote anywhere that it is easy.

But, you keep telling your readers that that is not possible. Then WHY repeat it? That is what you either can’t answer or won’t answer.

You also keep repeating - a canard, if I may say so – that a Group (ANY group) has a behavior of its own over and above the combined behavior of its members.

But the point you either ignore, or are ignorant of, is that the behavior of ANY Group is controlled by only a few members, the leaders, either de facto or de jure.

The Group that goes by the name of US Government once rejected a measly $15,000 ($15 Million in today’s dollars, if we assume an inflation of 1000 times since then) for treatment of mentally ill patients. I am talking of the veto in 1854 by President Franklin Pierce of a popular appropriation to assist the mentally ill.

You wrote “If we need something different to occur in our society then we are going to need to look elsewhere”.

But how can you ignore the Institution of Government (whose Aristotelian essence is the monopoly (either granted or taken) on violence), wherever you go?

And then there is this gem of a contradiction.

You wrote “The business of sovereign government is in decline because the underlying mission to provide security from foreign invasion is fast becoming a universally available service...a commodity. Like food, clothing and shelter. Air and fresh water. Such security can be relatively inexpensive if we go live in a country that simply lets America, for example, do the heavy lifting.”

Apart from the fact that there aren’t many countries in the world which are worth living in, from the point of the total needs of a human being (Man is not JUST an economic being, as seems to be your view from the emphasis you lay on “economic efficiency”, “financial capitalism”, “better, faster and cheaper” and your obvious admiration for China for its recent economic success. He has other needs also, including such spiritual needs as freedom), what if America refuses to do the heavy lifting? What then happens to your “Such security can be relatively inexpensive”?

And now for your “The magic of banking”.

As so many of us demonstrated to you in the other thread, Banks do NOT CREATE Money. Money, which could be anything that has certain properties, is a convenient Medium for exchange of tangible goods and services created by individuals. Banks just facilitate the transfer of such goods and services. Nothing else. There is no magic.

You wrote “..the next generation of economic and social entities large enough to be fully functional and competitive in the global arena and small enough to govern themselves by mutual consensus. Commonwealth partnerships incorporated as social and economic entities into perpetuity without being diminished by the death of individuals or issues regarding inheritance.”

But it is already happening, as you yourself wrote in some other thread, if I recall correctly. What are the offices we are working in, you and I? All who work in any entity govern themselves by mutual consensus, though such consensus does NOT involve voting on every single concrete detail of running such an entity. But what happens if such entities have a disagreement?

You see, what you want is to WISH AWAY a fact of (human) nature. But that is impossible. Nature is independent of anybody’s wishes. Disagreements are bound to occur and ways to resolve such disagreements must be devised and implemented. And the ULTIMATE way to resolve ANY dispute is to unleash violence. GOVAGs, with either explicitly ceded or forcibly taken monopoly on violence, is the mechanism that has evolved to decide when the ULITIMATE is reached and how (and what kind of) violence is to be unleashed. There is no escape from this.

You wrote “Our government is being asked to do things for us that we should be doing for ourselves.”

So, “we” tell “ourselves” not to ask our GOVAGs to do so many things. “We” tell “ourselves” that it is WRONG and BENEATH our dignity to take others’ money by force for our needs. “We” instill in “ourselves”, since “we” are kids, the virtues of self-reliance, Rights of Man and such other philosophical concepts.

But that is not what you are doing. “You” are telling “ourselves” that nothing can be done. “You” are telling “ourselves” that there aren’t (or shouldn’t be) any philosophical principles involved in economic transactions. You said this in another thread.

As for our dependency on corporations for our livelihood, how is the new generation of social and economic entities you tout any different? If you want to have many things, you HAVE to depend on others to produce them. There are only 24 Hours or 1440 Minutes or 86400 seconds in a day and there is only so much each man can do himself. That is why we have division of labor and specialization.

You can’t have your cake (faster, better and cheaper goods of hundreds of types, for example) and eat it (spend time with our grand children, for example) too.

Didn’t you mention (approvingly, I think) of the Amish? When they can do it, anybody can. It is ALWAYS a question of wanting to do. Lot of things can be done in present day US. All that is needed (and missing in most cases) is the WILL. You can ALWAYS drop out of the rat race, if you really want to.

Near No Ad...
Finally someone is paying attention. You have pulled together, from the various threads, many of the points I have been trying to get across.

Group behavior. Individual humans are social actors...in the sense that virtually everything we do is valued within the context of one group or the other. However, the culture of behavior within any such group itself is independent of which individuals take up the various roles. Of course, this "staying with the program" for the individual player is more rigorous when the group is larger and when its role in the society has been firmly established over time.

Reasonable expectations regarding individual behavior by people inside each group and by those on the outside who interact with those groups place each such entity into a role within the larger culture. This is why I say that the group behavior takes on a life of its own...and it does not matter very much which individuals are actually group members. If they are successful in that task environment then they might stay and become promoted within its social hierarchy. If not...then the less successful individuals switch out of the group. Go find something else to do with their time.

The group itself exists because the larger society has work for it and such tasks are assembled into roles. The language and the technology of the work resolves itself into a culture of behavior that is transferred across the generations of group members into perpetuity. The group will continue to exist as long as society assigns some of its labor to that group. If the group exists then (by definition) people will be in that group. The society validates the group and its internal ethics regarding the tasks that it performs.

Current developments in Behavior Biology (at Stanford, for example) speak to such issues. In one sense there is no such thing as individual human behavior at all. Only group behavior. This is good basic science, it helps us understand certain flaws in our attempts at "social engineering" and those studies need to be expanded on.

Sovereign government has a well established culture of behavior. The state evolved out of its (military) role in society as the entity that secured the physical integrity of each nation from foreign subjugation. The government was either successful at that job or the nation itself was annexed and incorporated under the flag of a more capable state.

Civilian populations are only the "human resource" factors of production for the country to sustain itself and to generate a surplus (to create wealth) that might be taxed by the sovereign to underwrite his own activities. Disruption to this economic process threatens the ability of the state to sustain itself and to compete in the international arena. Without treasure and manpower the sovereign cannot field an army.

We should understand that all other considerations must be subordinated to this primary role of the sovereign. Including civil freedoms. And they are.

Nevertheless, each government relies on its own GDP to generate the wealth to be taxed. In our own very large, slow growing and mature economy the largest corporate entities dominate financial capitalism...and the government must protect those economic interests...second only to its own. And, once again, they are very good at this.

When the entire labor pool of the United States was mobilized into individual-household, worker units after World War II one key structural advantage we had over the Soviet system was banking.

The generation of my parents gave up their home towns and their extended families to go wherever in America that the industrial companies needed them to be. But the Soviets were also very good. They ruthlessly mobilized their own capable workforce and they were genuinely competitive in spite of the beating their infrastructure took at the hands of the Germans.

However, without the mechanisms of financial capitalism...eventually their successful business could not be leveraged into competitive global industries. They did not even have a hard currency. They did not have the "magic of banking" to create working capital.

Until the Communists failed, however, the social philosophers of the world said nice things about the role of the sovereign government regarding social services. It became an assumption that the state "should" get into the business of "taking care of" citizens who would normally have been attended to by their own extended families. Of course, such extended families had been pulled apart here in America as we deployed our workers during the 45 years of the Cold War. Now we are all rugged individualists living in homogeneous neighborhoods next door to strangers in houses that are more investments (that must be liquidated to underwrite our retirements) than homes.

This is very wrong. And unnatural. We have not be at it so long that we cannot stop this foolishness. People in the rest of the world live among their own relatives and enjoy a certain tribalism (even if they are poor). We need to demobilize back into our villages and we need to stop allowing the government to reach so deeply into our private lives.

We are rich. Our social entities might also be economic entities.

One example of an economic entity that is also a social entity is the corporation. We work there to create wealth and we enjoy a social environment of work groups interacting according to each company's own culture of behavior.

Direct contact with outsiders, including agents of the government are remarkably limited during our 8 hour work days. The company itself interacts with outside entities (customers, vendors, banks, investors, the press, government agencies) and individuals are protected, in this regard, by the strength of the corporation.

Another example is the University. In this case most of the people who belong to the University (including students, professors and administrative staff) actually live on campus. They create a mutual culture of reasonable behavior that is so compelling that many of the more successful academics enter that world as students and stay forever as professors. The Universities have actually, now it seems, evolved from social entities into economic entities with almost too much financial strength in our society.

The Amish retreated back into the past and into the fringe. The Universities stepped up into the future and into the mainstream.

The Amish own land and produce low margin commodities. The Universities made their educational services expensive and they made their role in global society indispensible.

Insofar as the Amish, the Universities, the industrial companies and the professional partnerships (of lawyers, accountants, architects and consultants) do not permit agents of the government to enter onto their properties (to "serve and protect" them) then such agencies have less work to do than they might otherwise.

In this sense, we all need to stay away from the government as much as possible if we have any inclination toward a more libertarian society (with less government).

Let them operate their sovereign states. Let them work out the eternal balance of power within the international arena.

Vote for your leaders and (hell) go work for them yourself, if you like. But keep them away from the women and children.

They are not nice people.




TCS Daily Archives