Longtime readers of this blog may not be surprised to find that, after three posts explaining in detail why significant reforms are impossible in the current American political system, I propose to spend several more posts talking about significant reforms that might be part of a functional response to the crisis of our time. I freely grant that there’s irony involved, but proposing useful changes that won’t be enacted right away is by no means as pointless as it may seem in an age of just-in-time ordering and instant gratification.
It’s a safe bet that if something can’t last, it won’t, and the political situation in the United States today may just turn into a poster child for that old but by no means outworn maxim. Most of the world’s nations have replaced one political system with another at least once in the course of the last century; the process can certainly be traumatic, and it doesn’t always solve the problems that forced the change in the first place, but it isn’t the end of the world. Whatever crises drive the existing order into its final implosion, and whatever national traumas supervene until some degree of stability returns, there will be a place for new policies when the future government of the United States, or the regional governments that succeed it, get to work picking up the pieces. Nor, of course, is this blog only read by Americans; and for all I know, some of the ideas I plan on discussing here might strike a responsive chord elsewhere.
One word of caution, though: readers expecting me to offer them a ticket to Utopia are going to be disappointed. There’s a common notion that everything that’s wrong in the world is the fault of the institutions or personalities officially in charge, and can be fixed by replacing them with some other set of institutions or personalities. That notion has been tested more thoroughly by history than any other hypothesis I can think of in the social sciences, and it’s failed abjectly every time. Maybe we should finally get around to admitting that people will not behave like angels no matter how (or whether) they are governed, or who (if anyone) does the governing; and, in the process, admit that human beings are incurably human – that is, capable of the full spectrum of good and evil all by themselves – rather than moral puppets who can be expected to dance on command to the tune of a good or evil system.
It’s easy to come up with a perfect system of human society, so long as it doesn’t have to work in the real world, and it’s very easy to compare a perfect system on paper to the failings of a system in the real world, to the latter’s detriment. Nearly always, though, what John Kenneth Galbraith said about innovation in finance is just as true of innovation in political and social institutions: what gets ballyhooed as new and revolutionary thinking is normally the repetition of a fairly small set of fallacies that worked very poorly the last dozen or so times they were tried, and will work just as poorly this time, too. Those systems that function at all are fairly few in number, though there are a lot of minor variations on the basic themes, and the ones we’ve got now – representative democracy in politics, a market system in economics – have certain advantages. Though the current examples are troubled, corrupt, and at very high risk of being overwhelmed by the consequences of some very bad decisions made over the last few decades, the basic systems are noticeably less dysfunctional most of the time than most of the alternatives.
Thus I’m not going to present a grandiose plan for the complete transformation of everything, of the sort that have been in vogue among social reformers for so many years. Instead, I’m going to suggest a handful of limited, tightly focused changes that I think have a real chance, if they were to be implemented, of canceling out some of the self-defeating habits of the current system and replacing them with effective incentives toward the sort of habits our society needs to establish. I could start in any number of places, but the one I’ve chosen for this week is the seemingly unpromising field of tax policy.
That’s a subject on which a great deal of nonsense abounds just now. While at the public library here in Cumberland the other day, I found a book titled The End of Prosperity. This – I was about to describe it as meretricious, but that would be unfair to honest prostitutes – this pointless waste of inoffensive trees, then, claims that if the US government raised taxes to a level that might just actually pay for the services it provides, the result would be, well, the end of prosperity. Somehow the authors managed to ignore the fact that in the 1950s, when American prosperity was by many measures at its all-time peak, people in the upper tax brackets paid well over 2/3 of their income to Uncle Sam, and that the country has by most measures become less prosperous, not more, as those tax rates have been lowered.
There’s a reason for that, and it ties back into the distinction I made in several earlier posts about the differences among the primary, secondary, and tertiary economies. The primary economy, which is nature, and the secondary economy, which is the production of goods and services by human labor, are subject to negative feedback loops that tend to hold them in balance. The tertiary economy, which is the exchange of money and other forms of abstract wealth, is subject to positive feedback loops that drive it out of balance in ways that unbalance the other two economies as well.
The core of those feedback loops is the way that accumulations of paper wealth multiply in value, and so anything that drains those accumulations and puts them in the pockets of people who spend their money on groceries, instead of more paper, tends to stabilize the economy. That’s what the high tax rates of the Fifties did, and it’s not accidental that the more drastically tax rates have been cut in the last three decades, and the more tertiary wealth has been shielded from taxes by special capital-gains tax rates and the like, the more drastically the tertiary economy has manifested its usual tendency to run to extremes and blow itself up in the process.
Still, there are arguably less scattershot ways to drain off excesses from the tertiary economy, and the tax code also meshes very poorly with the primary economy, with its emerging reality of scarce resources and overburdened natural cycles. In a world where the accelerating exploitation of natural resources and the accumulation of paper wealth are major sources of problems, while the human labor at the core of the secondary economy is the most renewable resource we’ve got, we arguably tax the wrong things.
At the risk of veering off entirely into fantasy, then, let’s imagine a new tax code that taxes the right things instead. In this imaginary code there are no sales taxes, and no taxes on income from wages, salaries, dividends, and rents – that is, no taxes on the secondary economy at all. Instead, there are two classes of taxation. The first, affecting the primary economy, is on natural goods and services; the second, affecting the tertiary economy, is on interest income, capital gains, and all other forms of money made by money.
The taxes on natural goods and services follow the same rough line of logic as property taxes do at present. The federal government, as trustee for the American people, already effectively owns all the real estate within its borders – when you buy property, what you’re buying is the right to use that property within the limits of the laws and the national interest, which is why China can’t just contract with private landowners to buy a couple of disused fishing harbors on our west coast as bases for its navy. The same principle could reasonably apply to every other resource in the country. When you pump oil from the ground, you’re depleting part of the patrimony of the American people, and you should have to pay the government for that privilege. When you dump smoke out of a tailpipe, equally, you’re using the nation’s atmosphere as the gaseous equivalent of a landfill, and once again you should have to pay to do that. Every natural resource of every kind would be subject to the same sort of tax.
Now of course this would mean that the prices of many goods and services would go up considerably. Since everyone would have the money they wouldn’t have to spend on income and sales taxes, this may be a little less of a burden; but the crucial point is that people can avoid resource taxes by their personal choices. If you buy a hybrid car, you’re going to pay a lot less in petroleum tax, and a lot less in tailpipe tax as well – though the extraction taxes for the rare earth minerals in the batteries and electronics may set you back a bit, as they should. If you don’t own a car at all, you laugh all the way to the bank. Similarly, the price of a product made from metal mined from the earth includes the extraction tax for the mining, but the price of a product made from recycled material doesn’t; thus the manufacturer has a big incentive to use the recycled material and undercut the competition.
The second set of new taxes targets a different problem, one discussed already in this post. Right now, with the tax laws we have, it’s to the economic advantage of businesses to pull their money out of producing goods and services, and put it into blowing bubbles in the tertiary economy of paper wealth. That’s why General Motors manufactured more financial paperwork than cars for quite a few years, until it got into a head-on collision with bubble economics. From a broader perspective, that’s why America produces so few goods and services nowadays, and so much in the way of essentially hallucinatory paper wealth. Taxing financial income, but not earned income, does a fair amount to reverse that equation. If putting your money into bonds or derivatives means any profit you make suffers a significant tax bite, while putting your money into producing goods and services means you pocket the profits tax free, those derivatives and bonds will look a lot less inviting.
Notice also how these two kinds of tax work together to take an even larger bite out of one of the most mistaken economic priorities of our time, the replacement of human labor by machines. In case you haven’t noticed, the US has an unemployment problem; even before the most recent bubble burst, good working class jobs were very hard to come by. There are plenty of reasons why that happened, but tax policy that makes employers pay half again or more of the cost of a worker’s wages in order to hire that worker certainly haven’t helped. Eliminate those taxes, and place taxes on energy and natural raw materials instead, and in a good many cases a worker instead of a machine becomes the most cost-effective way to do the job.
Other arrangements could easily be devised to accomplish the same ends. The point I want to make with this extended exercise in nonfinancial speculation, though, is that some of the ways Americans do business, and pay (or don’t pay) for government services, simply don’t fit the realities of an age of ecological limits. A tax code that burdens the secondary economy – which is the economy that actually produces goods and services, remember – while encouraging the wasteful plundering of nature and the bubble-blowing antics of the tertiary economy is not going to help us weather the storms of the near future. A tax code, any tax code, that does the opposite – that makes it more profitable to employ human labor to meet human needs, and less profitable to disrupt the natural cycles that undergird our survival or to feed speculative excesses that pump imbalances into an already troubled economy – could be a very helpful asset in a time of crisis, and could be put in place tolerably easily, without having to tear an entire society to pieces and rebuild it from the ground up.
Would such a new tax code solve all our problems? Of course not. To my mind, though, it’s exactly the attitude that insists that we have to find a single solution that deals with all our problems that helps put any constructive response to those problems out of reach. If we’re to face the difficult future ahead of us with any sort of grace, that worthwhile achievement is much more likely to happen as a result of the tentative, uncertain coping mechanisms sketched out in Warren Johnson’s useful little book Muddling Toward Frugality than it is to unfold from some grandiose plan to reach a perfect world in a single leap. Monkeying with the tax code so that it rewards the economic behaviors that might help us get things of value through the approaching troubles, rather than rewarding the economic behaviors that will only make things worse, is one example of this sort of muddling; others will be brought up for discussion in the weeks to come.
Really? That's quite a statement. The current system of resource allocation according to purchasing power - rather than need - results in the premature deaths of 30,000 children a day. That's not a one-off accident or some aberration; it arises from core features of the market and it's been going on for years and years and years. I'm not a proponent of Marxist-Leninism or Maoism or Feudalism but unless we dramatically devalue the deaths of the poor - those deaths that happen far from TV cameras and which, incidentally, help to maintain our comfort - it's hard to be sure that the market really is that much better. We live in a world system largely under the control of democratic-free market societies but - amongst other problems - we (i) tolerate death on an astonishing scale and (ii) are unable to prevent running full tilt at ecological catastrophe. I don't expect another social system to be perfect but I'm not at all sure that we can blithely write off the alternatives.
12/30/09, 9:16 PM
Red Neck Girl said...
It wouldn't bother me in the least to be growing my own veggies, having goats, chickens and maybe a couple of Dexter house cows on my own property! All while breeding and training good stock horses and stock dogs to take the place of all those nasty, noisy quads and dirt bikes in moving range cows down to the railhead for market!
At least in the interim I believe that old fashioned cattle drives, (at least for a few decades) will be back in fashion. And good horses will always be in demand.
12/30/09, 9:51 PM
John Michael Greer said...
12/30/09, 9:59 PM
I never knew until now that US businesses had to pay a tax based on how many employees they had. That is just utterly insane, to my way of thinking. But then again, I'm more of a (Western European type) socialist, so I tend to get all sentimental about it when ordinary people get screwed over en masse. Silly me. Aren't I just terrible?
12/30/09, 10:11 PM
While I still reflect on if, when and how these type of tax (and other) reforms will get implemented in the US and anywhere else, and how these tendencies might find their reflection in the country in which I live , somewhat I feel that we still need a few more economic and cultural crashes and a more visible decline of complexity, before more minds open up sufficiently to discuss all these interesting proposals that are around for societal reorganization, (for example the tax question you discuss) -
Of course, tax incrementations can be established and used that and that way... Here in Mexico they increased taxes significantly over the last few years (and will do it again next year) to somewhat compensate for collapsing petro-incomes, nevertheless they are destined to maintain the inflated bureaucracy and government, military systems, drug wars, etc...
... descent is just so different from ascent ...
I wonder how long it will take and what has to happen, until our dominant cultural stories of growth are sufficiently shattered to start thinking differently. The completely mediated environment of the current information storm we´re in, certainly doesn´t help much in this process.
Staying at a certain distance to mass media (which includes self-limiting internet use at least a little bit...), also gardening, producing some of your food and other things you and your community need, designing productive landscapes & ecosystems may help a lot more (at least it does in my case), but I wonder if some of your druid practices may also offer support to stay lucid and awake in these quite interesting but somewhat intense times. You are a good example of this possibility.
12/31/09, 6:17 AM
John Bray said...
But high-flyers in the tertiary economy are well-adapted to getting round obstacles that stand in the way of their wealth.
Not that I don't agree it would be a good idea - it has a certain Robin Hood appeal to it and would be a popular one.
12/31/09, 6:22 AM
On a seperate note, I was reading somebody else's blog about their disagreements with you on global warming. Seeing as that is a subject I am currently studying, and that I enjoy your blog, and that you seem to offer due repect to the scientific process, I wonder - the science of greenhouse gas absorption of infrared radiation and its affect on temperatures is, I would have thought, basic and well accepted. Where do you stand on this?
12/31/09, 6:33 AM
John Michael Greer said...
Loveandlight, employers in the US pay half of social security tax, plus several additional taxes, on a per worker basis. That's far from the only reason we've been hemorrhaging jobs, but it's certainly one.
Tierramor, granted, it'll take a good deal more in the way of crisis before people move from complacency to panic, and change becomes more of an option.
John, of course there will still be plenty of tax cheats among the rich. My concern here is simply to encourage them to shelter their money in places that will do the wider economy less harm.
12/31/09, 6:54 AM
Actually, your idea of taxing the primary economy of raw materials is very similar to the carbon tax that many of us have been advocating as a more honest and direct alternative to the proposed cap and trade proposal to reduce carbon emissions. Imagine taxing gasoline so that the price per gallon in the USA is similar to the price Europeans pay. If we did that, we might see a lot of innovation in terms of new and improved public transit, bicycle lanes, walkable neighborhoods, and improved passenger rail. Not to mention reduced exhaust and noise pollution.
By the way, and off topic for this post, I finally located that article asserting that we're in for a climate shift of geological proportions, although I was wrong about 10-15 degrees; it's actually four degrees. That still would make earth warmer than it's been in about 30 MY, according to the article. Here it is: http://www.ipsnews.net/news.asp?idnews=48791
12/31/09, 7:53 AM
I was excited to see your current post on taxing the 'primary' economy. Although this may never happen, it is such a good idea. I would like to recommend that you check out Henry George. He also had some very good ideas on this subject.
12/31/09, 8:03 AM
That's really interesting. Such a tax code never occurred to me (but then, it's not as if I spend an awful lot of time thinking about taxes), but it does make sense on the face of it.
Still, I think that some extra provisions might be useful. For example, you might still want to tax the very high wages. I say that partly because I simply don't like the idea of some people earning 100 times more than the average guy does (as is the case now), and partly to avoid cheating/loopholes. I mean, if corporations can be 'persons,' then surely opening the envelope and reading the letter that tells you how much interest you earned counts as labor... (I'm exaggerating a bit, but you get the idea.)
The second thing I'd like to see is taxation of long working hours as an (among other things) unemployment-reducing measure. So no taxes if your employees are working up to 40hrs/week, a little bit of taxation for a little bit of overtime, but above (say) 50hrs/week, tax any additional hours like crazy. You don't want Joe to work 60hrs/week while Bob is sitting there jobless, hungry, and cold.
As for what you said (and Gerontion quoted) about representative democracy in politics and market system in economics... Now, didn't you say that societies with such systems are not very likely to fare very well in the world of shrinking pies? What I got from your last week's post is that representative democracies are incapable of functioning once the pie starts shrinking because no group will stand for having its share cut. Did I misread you?...
12/31/09, 8:16 AM
The major advantage that springs to mind is that to people who grow food, whether it be farmers, gardeners, or home-owners with edible landscapes, etc. And then further advantages to those who are protecting their micro-watersheds by capturing the runoff and holding it on-site for use as drinking, household, and landscape uses (and then back again via grey-water systems).
Many farmer's would be forced out of the commodity markets and back to growing food sensibly by building topsoil, healing erosion and growing foods people actually eat (and need! like nutritious vegetables and fruits!).
We would probably see an enormous surge in the number of small farms (100 acres and less) which means many more jobs in the form of human labor.
Really, a brilliant idea.
12/31/09, 8:33 AM
Democracies in the US and Europe seem increasingly dysfunctional as mass media marketing techniques reduce elections to policy disputes as meaningful as "Tastes great-Less filling!". And as you pointed out, the responsiveness of democracies to special interests dilutes the possibility of meaningful reform.
So I "rashly" predict that the age of the democracy as the ideal national form is likely to be replaced by desire for effective technocratic dictatorships, like China and Singapore. At some point joe6pac is simply going to say "I don't care if he has called off the election, he made the electricity stay on."
I believe that Heinlein said "The most efficient government is a dictatorship you agree with". He of course was a fascist, and the problem, as always, is what happens when you stop agreeing...
12/31/09, 8:56 AM
Seaweed Shark said...
12/31/09, 9:02 AM
However, since the tax revolts might soon start, that might be tough going. When people get in that frame of mind it's difficult to make the case that a change one is proposing is good for them. The reaction might just be, "Don't even try to talk to me about changing taxes. I'm not paying them any more!"
On the other hand, in many ways, a tax revolt might just be the only way to get the message to the political class that deficit spending has gotten out of control. In the conversation that ensues ("Well, what are _you_ suggesting we do to run common services?") new ideas might just get a hearing.
12/31/09, 9:09 AM
Irrational Athiest said...
Why is that? Is there going to be a die-off in cowboys?
It's an intriguing statement. Is there something out there I can read about cattle drives?
12/31/09, 9:12 AM
John Michael Greer said...
As for climate change, I've posted about that at length already. The short form is that, as usual, my viewpoint falls in between the two extremes. Anthropogenic CO2 is almost certainly causing the global climate to go wonky; there may also be other, natural factors involved; the IPCC estimates are badly flawed because they assume we can keep increasing fossil fuel production through 2100, which we can't, due to hard limits on supply; still, there'll be enough to mess things up good and proper.
Don, of course it won't be enacted any time soon. When the Diggers in the English Civil War era proposed that every adult man and woman ought to be able to elect members of Parliament, everyone agreed that it was a preposterous idea. Thanks for the link, also!
Susana, reading those books together ought to be a bit of a trip, though it'll give you some idea of the wider background of these posts. Thanks for the suggestion; I'll check George out.
Isis, there will doubtless be all sorts of tweaks and fixes to any tax plan. Still, abolishing the income tax on earned income, while taxing interest and investment income, has an interesting effect: the rich have to do something with their money -- it won't all fit in the mattress -- and if they can't keep it in bank accounts, bonds, derivatives, etc., without paying steep taxes on the earnings, they're better off spending it (and creating jobs) or investing it in factories and the like (and creating jobs). One way or another it goes back into the secondary economy where it belongs.
As for the viability of representative democracy, keep in mind that the specific examples we have right now are constrained by their history, and in particular by a lot of bad decisions made in recent decades. That's what will make it impossible for them, as presently constituted, to respond to the impending crises. My hope is that when the dust settles, people won't just give up on democracy altogether and settle for some nice cozy homegrown dictator.
Mark, thank you. I wouldn't have come up with these ideas myself if I hadn't read E.F. Schumacher and started thinking through the implications of his distinction between primary and secondary wealth -- arguably the most lucid economic idea of the last century, that one.
Marku, yes, I'll be discussing that in a post down the road a bit. Democracies have a long and ugly track record of turning into dictatorships; it doesn't always happen, and it doesn't have to happen, but a lot of the advance symptoms are already showing themselves in the current case.
Shark, good question. I don't know of one.
Aangel, true enough. My thought is that after the dust settles, and the new government realizes that somebody has to pay the garbage collectors to pick up the trash, alternative ideas about taxation might get a hearing.
Irrational, not at all -- it's just that there aren't enough of them any more to handle cattle drives on the scale that would be necessary to replace the current petroleum-intensive delivery system.
12/31/09, 9:40 AM
Here's an example of how it might work. Not far from my house, several acres of wooded area adjacent to the Interstate and also adjacent to a Columbus metropolitan park were recently cleared for a Target store and its requisite paved parking. Target already had a store in the vicinity, but it was in a declining retail area (as the sprawl moved inexorably farther out from the urban center). If Target had had to pay, say, the tax equivalent of even a percentage of the value of the displaced woodland for its lumber, its water absorption capability, its erosion and soil protection, not to mention its enhancement of the ecological and habitat value of the Metropark, they might well have thought twice about relocating their store. And we'd all be far better off seeing the old retail center revived instead of the new one built.
Fascinating, fascinating idea. Maybe something like this will have a chance once the politicians are no longer able to deny reality with impunity.
12/31/09, 9:43 AM
Ana's Daughter said...
Say you start a business and hire two employees. You pay them each $10/hr. Per federal regulations, you also match their FICA (Social Security) deduction, which is around 12-15%. Per state regulations, which vary from state to state, you pay a tax on either the number of hours your employee works or on your employee's salary in order to fund worker's comp programs. Sometimes this is a matching tax to an amount deducted from the employee's paycheck; sometimes it's just a tax on you as the employer. Then there's the tax on their wages or hours worked that you have to pay to fund the state unemployment program; it may also be shared, but shared or not you have to pay part of it out of your pocket. Sometimes there are other taxes, too, and they can be quite peculiar; one state where I worked had a tax on payroll costs which was used to pay for road and bridge repair and public transit in the most heavily populated county in the state, so businesses paid a tax on their payroll taxes to repair municipal streets and run municipal buses hundreds of miles away.
By this time you're up to 20-30% of your employee's wages just in state and federal taxes, so instead of costing you $10/hr per employee it's costing you $12-$13/hr. Now factor in paid holidays, if you give them any, and paid sick days, if you give them any, and paid benefits, if you give them any, and the costs of your overhead rise rapidly to 50% or more of their wages. Now it costs you at least $15/hr to have these two people work for you.
One store I worked for offered one to three weeks of paid vacation and seven paid sick days per year, plus paid medical, dental, and vision coverage, to all full-time employees. It cost them 220% of the wages paid to each employee to cover their overhead for that employee. I made $14/hr there, so I cost them $30.80 per hour to employ. Fortunately, the store was well run and was in an industry which made a suitable profit margin available, so they could afford that kind of costs. Many small businesses (which this one was) can't; they don't make enough profit margin, or their owners are entrepreneurs but have no head for finance. In my next two jobs after that one, the store owners themselves didn't get paid sick time or vacations, let alone medical insurance, because they didn't have the cash flow.
Hence JMG's point, I think.
12/31/09, 12:08 PM
Ecologically, I don't think this is a bad idea. Farmers can't just indefinitely wring the life out of the soil without negative long-term consequences. Taxing the use of pesticides, chemical fertilizers, etc. would be appropriate under your proposed system. Perhaps using sustainable methods like composting and grass-based livestock could qualify a farmer for tax credits that would offset the penalties he'd otherwise have to pay for using the land. Without that, farming looks like a losing proposition, just as much as logging, mining, or fishing. Factories that produce highly-processed foods would not be taxed, but those who grow fresh produce would be.
Of course, none of this is to suggest that your proposal isn't still a good one overall; just that when policy makers get around to tweaking it, they should give some thought as to how to protect the environment without protecting it so perfectly that farmers are encouraged to quit growing food in favor of taking jobs in the secondary economy.
Question: What did you mean by "dividends" where you were talking in the 10th paragraph about the kinds of income that would not be taxed? I thought dividends fell squarely under the category of "money made by money." If you're talking about dividends paid to someone who invests in a share of a factory, I guess that makes sense, but it seems to straddle the line between secondary and tertiary. Wasn't it stock speculation that drove us into the first Great Depression? Or does it not become a problem until we add other layers of speculation (securities, etc.) on top of the anticipated gain from stock trading?
12/31/09, 2:04 PM
sv koho said...
12/31/09, 5:28 PM
There is a central European proverb that goes like this: If fish grew in ovens, we would not need a pond.
And if the elites were interested in profound and sensible policy changes, we would not need to spin wishful visions in the blogosphere. As it is, however, it has become painfully clear that the elites have no such interests. Why not stick with stuff that is doable for us?
12/31/09, 5:49 PM
John Michael Greer said...
Ana's Daughter, yes, that's not far from it. In most states the tax and paperwork costs for hiring a new employee are high enough that it makes a lot more economic sense to load overtime onto existing staff; that's another thing that would change with a primary and tertiary economy tax system.
Gaelan, farmers would pay a land use tax, but then they pay property tax anyway. As long as their farming methods didn't degrade the soil or clear previously wild land, there wouldn't be additional taxes for farming -- of course pesticides would come loaded with taxes, because using them puts a burden on the water supply.
As for dividends, one of these days I need to do a post on the difference between investment and speculation. In a market economy, dividends are the bribe we give people with money -- not just the rich, either; until speculation eclipsed investment, a lot of people owned common stock for the dividends -- to entice them to put their money back into the secondary economy. Dividends in nonfinancial companies -- I should have specified that -- reflect production in the secondary economy and so would be tax exempt along with salaries and wages.
Koho, my guess is that by the time the Great Recession drags to an end, the people now infesting Goldman Sachs et al. will be nowhere in sight. They had a lot of status in 1929 and 1930, too. One of the curious things about power that comes from ownership of money is that it can go away very, very suddenly, since it depends on a highly unstable set of abstractions.
Vera, I've spent a lot of posts here talking about things that individuals can do, and I'll be spending a lot more on the same subject down the road, too, because that's where the future will be built. Still, I think there's a point in talking about measures that could be taken on a broader scale, too, so humor me for the time being.
12/31/09, 6:24 PM
12/31/09, 8:05 PM
Your suppositions provoke the grey cells. My limited brain capacity desires to fathom the impact that a primary economic tax would have on the three plus billion world citizens that live on a couple of U.S. Fiats a day or less. Although, many of said peoples seem to flourish spiritually and culturally, I cannot say as much for the U.S. A regression to the mean will be an arduous road. Happy New Year.
12/31/09, 8:38 PM
With respect to your second set of taxes, consider the issue of inflation. If you deposit $10,000 in a bank and receive interest such that you had $20,000 several years later--but that in terms of purchasing power it could buy less than the $10,000 when you put it in the bank--why should you be taxed at all (let alone heavily as you suggest)?
12/31/09, 9:55 PM
(i) Only a tiny subset of the proposed replacements to democracy/free markets have been tried. I'm not sure how much mileage there is in justifying democratic capitalism based on a juxtaposition with the historical failures of Soviet and Chinese Communism.
(ii) Of those replacements for democratic capitalism which have been tried, it's highly debatable whether they have actually tolerated death on a larger scale than has democracy/capitalism. Yes, Stalin and Mao knowingly sent tremendous numbers to their deaths but the really huge numbers come from the famines. Well, if famines which are caused by state-organised resource allocation are a black mark against Communism, famines originating in market allocation are similarly a black mark against capitalism. And whilst it's true that democratic capitalist states rarely send their own populations to the gulags, they have demonstrated an extremely high willingness to kill - either directly or by sub-contracting the work to third parties - in far way countries.
(iii) Yes, Soviet Russia was guilty of tremendous ecological crimes but let's not forget that China became everyone's eco-villain when it began to transform itself into a capitalist economy and that the more it becomes a capitalist economy, the more it becomes an eco-villain. For the Soviets, well, they have Chernobyl, and American capitalism has Bhopal. Who's the winner? I can't tell.
(iv) A better system doesn't have to save all 30,000 lives; it has to save one (and hence my comment "I don't expect another social system to be perfect".)
(v) It's your blog, so you're free to use it as you wish but throwing around petty insults doesn't do your arguments justice.
12/31/09, 10:48 PM
I thought you might be amused to see how much your comments on tax here appear to chime with those of the head of Britain's Financial Services Authority in today's Guardian! A City regulator in accord with an archdruid is an auspicious start to the year.
"If we have to raise taxes – and we will to some extent – we can deliberately design those to tax bad environmental things, like overuse of fossil fuels, rather than good welfare-enhancing things, like employment for people.
"There is therefore a very strong argument whenever one is in the environment of tax rises for trying to make them skewed as much as possible to things that make sense in the long-term.
"If you spend your time thinking that the most important objective of public policy is to get growth up from 1.9% to 2% and even better 2.1% we're pursuing a sort of false god."
1/1/10, 3:04 AM
Call me a pessimist, but I believe that this will not happen. The system will not be reformed and it will break as soon as hard limits become unsurmountable.
A more realistic proposal, I think, lies in phylosophy. Let me explain.
There seems to be a collective agreement that having more material wealth is a good thing. Even working class ideologies, when getting enough sustenance for a decent life tend do insist in asking for more (more salary, I mean).
I think it is time to start suggesting that after a certain level of material wealth (which middle classes in the western world clearly have attained) other things should become priority. Other things such as job and health security, FREE time, a liveable environment and OTHERS also having employment/something to live by.
Notice how some of this objectives are self-reinforceable: If you need less, then you work less, have more free time and OTHERS will not be unemployed. Of course, you also consume less, thus destroying less of the earth mother.
This idea that working for that neat iPod is a much worse idea (for many reasons) than spending some quality time with your kids playing an old fashioned game of cards (mabe even made by your own hands).
I will imagine that you can say that in the future, with a smaller energy allowance, hard work will be really needed again. Even if so, the idea that a certain level of material wealth is enough while sharing the dwindiling resources will help us a lot in avoiding in-fighting.
If in the fifties and onwards we had stopped "working hard" and instead started sharing the work and invested in free time, I think we would be better off now.
Then again, you Americans seem to fetichize hard-work above all else ;)
1/1/10, 6:41 AM
Lance Michael Foster said...
This last race I figured 2009,2010,2011,20012 would be a bad scene, so I voted for Obama figuring there was a 10% chance he could save a little bacon and not turn dictator if TSHTF, whereas I figured McCain/Palin would go the psycho-Cheney route for a 0% chance of improvement/stability. 10 is better than 0, but it ain't all that great of odds either, so I'm not so surprised or shocked Obama hasn't been all he promised. Oh, well sort of like gambling in a casino I guess.
But unless something great happens (ha), there is a real chance that as things unwind further, whoever is elected President in 2012 will make some final steps in the direction of Caesar-hood, dues to increasing instability at home and abroad.
Freedom is a risky thing inherently. But people are so insecure, what with economics, war, unemployment, terrorism, I think there's a good chance the next president could evolve into Something Very Bad.
1/1/10, 8:51 AM
I thinks it’s rather amusing that you and some others think that by using neutral-sounding terms like “market system” we might overlook that what you really mean is capitalism. It has taken me a while but now I think I see where you are coming from. Your “useful changes” are designed to preserve a system that possesses as innate qualities social, economic and environmental exploitation and injustice. Under your tax plan these harsh edges would be blunted; big deal!
Speaking of utopia: Your tax reform ideas themselves are utopian. Good luck trying to slip your plan past that the capitalist power structure. I am guessing that they will fight bitterly anything that they perceive will threaten their self interest.
By following your unconvincing and in my view unsubstantiated ideas of diffuse power perhaps your tax plan might fly. As you say one must understand the workings of the real world. As far as diffused power goes I believe that economic and social data demonstrate the opposite. Power is becoming consolidated into the hands of a smaller and smaller economic strata.
As far as “shredding” Genron’s post I was unimpressed. Apparently somebody must be making a death and destruction tally between the “market system” and what some folks refer to as the communist system. Communism -350 million dead and 10 major environmental disasters. Market System - 275 million dead and 8 environmental disasters. Of course because communism has basically been defeated outside of some small holdouts, the market system is likely to win the death and destruction contest after all. I don’t recall you explaining to any of us why property forms based on state ownership of the basic means of production inherently leads to death and destruction on a massive scale. Your clever ploy about the 30,000 dead children didn’t fly with me. I guess if I said that millions of American children have food risk issues that would be rhetoric as well. I am looking forward the shredding that probably I deserve.
1/1/10, 10:52 AM
John Michael Greer said...
Chad, we've got nearly seven billion people on a planet that can support maybe two billion over the long term. One way or another, the regression to the mean is going to be pretty grim. My proposals, here and elsewhere, won't change that; they may make things a little better on the way down, but in a real sense, that's as much as we can hope for.
Pasttense, with regard to the first set of taxes, any product imported from overseas would pay equivalent resource taxes to those that would have been applied to a domestic product, of course. With regard to the second, you're missing the point, which is providing an incentive not to keep money in the tertiary economy. The whole point is to make it unattractive to keep wealth locked up in paper forms.
Gerontion, I'd point out that many alternatives to representative democracy and market economy have been tried over the years, from plebiscitary democracies intended to reflect Rousseau's "general will," through fascist command economies, to a wide range of socialist and Communist systems. They've all proven to have problems even worse than those of the system we've got now; of course the current system has been abused, and will be abused again, but on the scale of Robespierre, Hitler, Stalin or Pol Pot? Please.
There are plenty of proposals that haven't been tried yet, of course, and it's always possible to insist that one of those might produce a better society than the one we've got; but those that I've examined share the same essential flaws as the systems that have crashed and burned so spectacularly in the last two centuries or so, and it may also be worth noting that their chances of being put to the test any time soon are pretty slim.
Gavin, thanks for the reference! This is good news; now if they can just take the next step, and tax the tertiary activities that unbalance the economy, that could help things out noticeably.
Tiago, I grant that philosophy is a crucial resource just now, and more reliable than the sort of proposals I'm discussing, since it can be put to use by the individual. Still, philosophers have been making exactly the case you've made here since Plato's time; it would be nice if more people started to listen to them, but I don't find that very likely just now.
1/1/10, 11:36 AM
1/1/10, 11:40 AM
John Michael Greer said...
RJ, every political and economic system, without exception, has political and economic exploitation as essential features. Those systems that claim to eliminate these things simply transfer the benefits of exploitation from one group of people to another. If you put the means of production in the hands of the state, you simply transfer the benefits of exploitation to the commissars who manage them -- in the name of the people, doubtless.
It's an interesting question why governments that abolish private ownership of the means of production so often go in for mass murder on a grand scale. Certainly, though, they have a tolerably well documented habit of doing so, from Stalin to Mao to the sizable roster of their Third World epigones. My guess is that Lord Acton was right; when you concentrate all political and economic power in a single, wholly unchecked state apparatus, corruption among the leadership is impossible to prevent. Still, that's only a guess.
1/1/10, 11:51 AM
I did not explain myself correctly.
When I say philosophy, I don't mean (at all) profissional philosphy. But "philosophy of life".
The current consensus is for "more material". The underlying assumption of 90%+ of the population (irrespective of political, religious, whatever background) is more consumption/wealth is better.
Convince a large ammount of people that after a certain level of material confort there are other things more important than acquiring wealth and many problems will be solved.
For instance, if people accept that after a certain material threshold there are other priorities, you can more easily convince them to accept higher taxes (as taxation above a certain limit becomes more acceptable).
If the objective in life is "more material wealth", then the answer is systems based on greed and exploitation. Change the objective and the best answer also changes.
That is why I do have some doubts that your point of view is the most useful: you stress resource limits. It almost seems as if the world was infinite, unlimited consumption is the best path to happiness (I know it is not what you mean).
I personally prefer to stress out options of life (philosophy of life if you will): There might be more fullfilling objectives in life than having the last iPhone.
For me, the less painful solution (even to resource depletion) will have some level of redefinition of the concept of happiness from material to more humane/natural based.
I hope this explains better my concept of "philosophy" of life.
1/1/10, 12:42 PM
My first time to your blog and thank you for a refreshingly articulate take on the current 'state of the world'. As a bonus you've also sent me to the dictionary three times in two articles and that's very encouraging.
I gave many talks on Peak Oil a few years back and always said that "I don't think democracy as it's currently constructed will survive PO". It's nice (or a bit self-congratulatory perhaps) to see you writing the same thoughts.
You have a thoughtful group of commentators too and I like the way you engage with as many of them as possible.
I look forward to reading your other posts and maybe adding some thoughts of my own with a little more depth in future!
1/1/10, 2:58 PM
Greg T. Jeffers said...
I must, however, disagree with your conclusions about taxes and prosperity in the U.S. in the immediate aftermath of WWII (1948 - 1960).
The higher tax environment was not responsible for America's prosperity at that time - a far more likely culprit would be the fact that America had little competition (the rest of the industrial world was in ruins with little capacity) - and the government rightly or wrongly enacted a "windfall profit's tax" of sorts.
In the current environment there is no surer way to be first in the race to the bottom than to increase income taxes to 1950's levels.
But you won't have to take my word for it... my bet is much higher taxes are on the way, and the proof will be "in the pudding".
1/1/10, 3:40 PM
Carw Gwynt said...
"Similarly, the price of a product made from metal mined from the earth includes the extraction tax for the mining, but the price of a product made from recycled material doesn’t; thus the manufacturer has a big incentive to use the recycled material and undercut the competition."
Would not the price of both materials (newly refined vs. recycled) need to include the cost of the energy needed for refining/recycling the materials?
I would expect that the material that would not need to be taxed would be material that was re-used, rather than material that was recycled.
1/1/10, 5:19 PM
1/1/10, 6:13 PM
John Michael Greer said...
Tiago, actually, I understood that you were talking about philosophy of life. My point still stands; people have been trying to convince the masses that wisdom is better than material possessions for a good many thousand years now; those who are willing to listen are never very many, though it's excellent advice and well worth taking. I don't disagree with your advocacy of it by any means; it's simply that I don't see much hope that any larger percentage of the population will listen to it now as at any time since Plato said it.
Kilted, thank you. I agree that the current system is basically circling the drain; I suspect that what follows it will be a good deal worse, and my hope is that it will be possible to restore some form of representative democracy again once the rubble stops bouncing.
Greg, the postwar prosperity of the US certainly had many factors, but for the reasons I've discussed earlier -- primarily the tendency of money to pool in the tertiary economy and cause economic disruption, instead of flowing back into the secondary economy to feed the production of goods and services -- I think the substantial top-end tax rates had a good deal to do with it. Still, as I also mentioned, there are other ways of doing the job that are less scattershot and, at least potentially, more effective.
Carw, take another look at the passage you quoted. I said that recycled goods wouldn't have to pay the extraction tax for raw materials; of course it would have to pay carbon tax on any fossil fuels used in manufacture, or other taxes on energy sources that place a burden on the environment, but that's another tax. If the recycled goods were made entirely by hand labor, or some other form of wholly sustainable energy, they'd be exempt from that tax as well.
Glenn, it's not meant as a copout, for heaven's sake. The fact that a program for reform isn't viable at the moment doesn't make it a waste of time to discuss it. Again, when the Diggers in the 1650s proposed universal adult suffrage, they had zero chance of making that happen in their own time; the fact that they proposed it, though, arguably started the chain of events that led to that becoming the law of the land -- not only in Britain, but in many other countries -- more than two and a half centuries later. Even the most Utopian fantasies can be a good thing, as long as nobody tries to force them into being at gunpoint, or insists that we can expect them to show up in the real world any day now.
1/1/10, 6:32 PM
Sincere thanks for providing a blog where I can at least attempt to think outside the box we are boxed in. Your sheer originality is refreshing and inspires me to keep trying at least another week. Thanks again for all you do.
1/1/10, 6:39 PM
Sorry, didn't mean that as a severe criticism. I know that it can be quite as useful to discuss the unlikely as the likely. I was trying to tell my fellow readers that you had given them fair warning and were quite aware of the likelihood or not of these ideas actually being used.
1/1/10, 7:18 PM
Democracy is based on the assumption that a million men are wiser than one man. How's that again? I missed something.
Autocracy is based on the assumption that one man is wiser than a million men. Let's play that over again, too. Who decides?
There is another quote which is similar to what you say in Friday (it, however, discusses how easy it is to outwit the system in a "well-run" autocracy - the praise is somewhat ironic in intent, since the character saying it is a professional lawbreaker), but Heinlein showed over and over again that he preferred to question systems than to throw his belief to any one of them. This is most obvious in the scenes of government-building in The Moon Is A Harsh Mistress. The idea that he was a "fascist" is widely repeated (usually with reference only to Starship Troopers), but doesn't bear out very well in his actual writings.
1/1/10, 8:04 PM
All we need to do it vote in a philosopher king who will be incorruptible, change the materialist mind set of the entire nation (wait make that planet), perfect radical new technologies that will allow us infinite energy while producing zero waste and solve population problems by making mass migration off planet a reality.
There you go, problem solved. Now we can avoid this ridiculous and unworkable tax proposal of yours ::eye roll::
1/1/10, 8:07 PM
John Michael Greer said...
Glenn, thanks for the clarification! Of course you're quite right.
Faoladh, it's always a challenge to interpret a writer's political views from their fiction, and Heinlein more so than many, as he explored quite a few political schemes in his novels and stories. Nor does it help that the word "fascist" has been stripped of all meaning except "I don't like that" these days -- actually, that was already true in 1946; George Orwell in that year, in a brilliant essay, commented that "The word FascismM has now no meaning except in so far as it signifies 'something not desirable.'" Thus it gets applied to Heinlein as a convenient way of saying "I don't like what he says."
Tristan, thank you. I needed that.
1/1/10, 8:45 PM
1/1/10, 8:58 PM
By coincidence a lot of people also _preferred_ to commute by bike and public transport.
There is a deep philosophical option underlying the current consumption culture. It is nothing more than a option, not a fate. A few large scale examples exist to support this.
I would argue the other way around: it is probably easier to change the mind first and only then to change the policy.
Anyway: I think we agree that we disagree.
And I don't like to be put in the same sentence as Plato. I take that as offensive (OK, not offensive, but it is surely very far away from my stance).
The likes of Plato, Lenin, Hitler, Ayn Rand and such are not appreciated around here.
1/2/10, 5:55 AM
Before people can even make better choices, they have to have a good understanding of the current state of affairs, and what their options even are. The first requires the ability to identify the right source of information? How do we do that? How do we know who to trust in the first place?
The second requires some sense of how one's own choices interact with the choices of others, which to some extent requires that you trust other people to do their part, to honestly commit to group action for the benefit of the group (as a collection of individuals, not as an ideal).
People are not prone to trust. We know too well that we are too easily tempted by the easy choices to lie and betray. And yet it also seems people trust too easily leaders who claim to share their interests.
But there is no agreement anymore about who understands the way the world is, what the options are, or who to trust to make the right choices about what to do with our wealth, how to spend money, how to work, or just generally how to set our priorities.
There is just too much misinformation. But how do we distinguish between good facts and bad ones? We need to entrust someone to help us. But we can't agree on who to trust, nor even that there's an issue about what's true and what's false and what's undecided.
Is it any wonder that those who can do so prefer to make short-term decisions in their own interest? Even if it's a long shot? In a world dominated by clashing cultures, the only sane choice for many is to focus on near-term gains, whatever the cost in the long term, since there's no one we can trust to make reliable long-term predictions or decisions in a world of disagreement and uncertainty. In fact, whether people expect the future to be rosy or bleak, there's almost no motivation to do anything except be selfish. If it turns out fine, well, OK, but if it turns out badly, it's going to be everyone for themselves, so might as well get used to it.
The future looks bleak because a sufficient majority of those whose opinion matters have decided it's going to be bleak. And for it to be otherwise, they'd have to first believe it could be better and then find the conviction, as a group, to do what it takes to make it so. In short, they'd have to find some common ground for action, in addition to an accurate understanding of the real state of things now, and also agree who to trust to act on their behalf. None of those requirements seems to be forthcoming.
It would be funny if it weren't so tragic.
1/2/10, 7:40 AM
wylde otse said...
It seems to me that the hijacking of the American Government and its Constitution by off-shore mega-corps (rival-states) has so changed the parameters of conventional economics as to make it meaningless, as presented in universities.
The amazing thing is that so few see beyond the corp-controlled mainstream media.
CoasttocoastAM.com (on which you appeared - and did so well last year) claims a radio audience of 5 million. Last night was exceptional in that 4 separate presenters laid bare the massive frauds perpetrated on the American People by the mega-corporations. (I don't know if you had a chance to hear it...some eye-opening insights - the pharmaceuticals and 'health'-corps grabbing the new national system)
Two other areas of corp. initiative: repeal of bankrupcy protections (to perpetually enslave people around the world), and private armies for the mega-corp states (already here) to supplement partially hijacked police, and the conventional army control through a thoroughly bribed "elected" senate/congress, and officials directing corp-cartel policy. (next, Constitutional overturn of private right to bear arms ? :o)
btw, how are the chickens?
1/3/10, 5:02 PM
I have been discussing a similar topic (focusing on carbon/energy taxes) with quite a few "conservative" friends lately and they just can't seem to understand it. My point has been that it is not about how much you tax but WHAT you tax that is most important. They of course can't see any change as anything more than a liberal plot to control people's lives.
I am increasingly realizing that there are plenty of possible policies that could go a long way towards helping our current predicament. Unfortunately the odds of any of them being implemented in any meaningful way within our current fragmented and confrontational political climate are vanishingly small.
1/4/10, 10:01 AM
I am just surprised you have not tied up your proposals on taxation with some of the necessary spiritual transformations you hinted at in such essays as "Toward Ecosophy". To quote Thomas Berry:
"As our final observation we note that the greatest danger to the human community may be loss of its will to carry on the cosmic and numinous intentions within itself. The danger is the loss of internal vitality and a cooling down of life energies. It is precisely at this time that these energies are needed in a new vigor of expression. This can be done only by a new infusion of the life and ideals that animated this institution at its earliest foundation and that derive ultimately from the realization of the numinous goals toward which human effort has aimed from the beginning. If in the necessarily heroic course of the institution these ideals are set aside as incompatible with the hard facts of life — with what are called "political realities" or "economic urgencies" - this would be like destroying the sails or the power system of a great ship and expecting to paddle it to its designated port. Little wonder that the human effort would soon be exhausted. The real skill is to raise the sails and to catch the power of the wind as it passes by."
1/4/10, 10:25 AM
From the north of the island you can see Albania a few kilometers away... though it looks like it is on a different planet, since it is barren scrub, while Corfu is verdant with olive, cypress, and biodiversity galore.
The difference is due to one specific policy decision, made several hundred years ago.
In Corfu, the ruling Venetians paid the locals for every olive tree they planted. The Greeks -- being as quick with self-interest as any of us -- planted 3 million olive trees, motivated by the payouts. As a consequence, their descendents lived off of the olive harvest for centuries... of course the Venetian aristocracy also made out like the bandits they were, skimming a percentage based on their control of the olive trade.
Across the water, Albania was under Turkish rule for much of this time, and they did not happen to have the same policy. No 'trees for money' policy, therefore no trees, and therefore 400 years later two entirely different landscapes.
JMG and many of the commenters are rightfully dubious about social engineering, but done right, with a win-win distribution of benefits, and a balance between immediate rewards and long-term good, it clearly can work brilliantly.
1/4/10, 1:49 PM
das monde said...
How diffused are the powers controlling taxation?
1/8/10, 1:11 AM
If you don't believe in Satan, but don't have an alternative explanation for the existence of bad things, you will have to keep using that explanation and cast an understudy for the role of Satan. Authority figures and subversive elements seem to fill it equally well.
If bad things come from many sources, however, and if those same sources can also produce good things given the right conditions, this calls for a very different approach. What story could we tell that expresses this perspective?
1/11/10, 8:08 PM
2/2/10, 6:28 PM
Tom Schmidt said...
8/12/15, 12:09 PM