Critique of Modern Monetary Theory (M.M.T.) in Regard to the National Debt and Other Topics (Incomplete)

Table of Contents

1. First Introduction: Paying Off the Debt vs. M.M.T.

2. Second Introduction: Basics of Modern Monetary Theory

3. My Plan to Pay Off the National Debt

4. My Plan is to Create a Surplus Without Raising Taxes

5. Removing Money from the Economy, and Private Issuance of Currency

6. What Does a "Private Sector Surplus" Really Mean, Anyway?

7. Do Deficits Really Pay for Imports? (Including Thoughts on China)

[more sections to come at a later date]

Content

1. First Introduction: Paying Off the Debt vs. M.M.T.

     I am currently running for the U.S. House of Representatives, on an independent platform which has, as its most important plank, a plan to pay off the U.S. national debt by 2047.

     Between April 20^th and 30^th, 2020, I was involved in an argument on Twitter regarding my plan to pay off the national debt.

     That plan would involve generating a trillion-dollar annual federal budget surplus as soon as possible, paying that trillion dollars directly into the hands of the federal government's creditors, and then doing that again each year until the debt is fully paid off. Since the national debt is currently above $23 trillion, this task will take at least 23 years to implement, so I have estimated that it could be completed as early as some time between 2044 and 2047.

     The argument began when a proponent of Modern Monetary Theory criticized my claim that I have a serious plan to pay off the national debt (saying that there is no such thing as a serious plan to pay off the national debt). That Twitter user, who calls himself “Bill”, later told me that my plan to create a federal government surplus (as opposed to the deficits that we're used to) would create problems which he worries I have not anticipated.

2. Second Introduction: Basics of Modern Monetary Theory

     In order to better understand the argument I had with “Bill” - and in order to understand why someone would want to criticize a plan to pay off the national debt in the first place - it will first be necessary to understand a few basic things about Modern Monetary Theory.

     Modern Monetary Theory (initialized as M.M.T.) is a school of economics which is an offshoot of the Keynesian school (founded by mid-20th-century British economist John Maynard Keynes).

“Bill” urged me to watch a video by M.M.T. economist Rohan Grey, titled “What is Modern Monetary Theory?”. That video was posted to the YouTube channel “Michabo Sustainable Harmony” in July 2019, and can be viewed at the following link: http://youtu.be/gr1PxeW5yWw

     In the video, Grey said the phrase “Modern Monetary Theory” originated in Keynes's explanation that the state has authority to enforce contracts, and also to enforce what sort of things can be used to make payments.

     Keynesianism and M.M.T. both hold that debt, deficit spending, and inflating the money supply in order to make up for shortfalls in the budgets, are essentially not serious problems, and perhaps not even problems at all. Certainly not as important, anyway, as goals such as keeping inflation under control, and preventing too much money from being saved rather than spent. M.M.T. proponents and      Keynesians tend to view paying off the national debt as undesirable and probably also impossible.

Economists who associate with free-market, conservative, and Austrian school strains of thought, on the other hand, reject that view completely. They argue that government debt is a bad thing, that it should be avoided if possible, and that it must be paid back.

     Many such critics of M.M.T. also believe that their goals of keeping inflation under control and preventing too much savings, are not as important as the goals which could be pursued by abandoning monetary policies influenced by Keynesian and M.M.T. thinking. Such goals include ensuring high or even full employment, and achieving a stable currency which has a slowly rising purchasing power because it's backed by balanced budgets. The tendency of M.M.T. proponents has been to criticize, minimize, or even dismiss these concerns.

     I have written the following article in order to explain what objections I have to Modern Monetary Theory, with particular regard to M.M.T. as presented by economist Rohan Grey in the video “What is Modern Monetary Theory?”, and also as presented by the proponent of M.M.T. who criticized my plan to pay off the national debt on Twitter (“Bill”).

3. My Plan to Pay Off the National Debt

     Before continuing, it will be necessary for the reader to understand several things about my proposal to pay off the national debt:

     1) Spending two trillion annually while taking in three trillion annually, would require decreasing both spending and revenue (and that's why it's my preferred solution as to how to generate a trillion-dollar surplus);

     2) I would hope to achieve this by reducing military spending not essential to our national defense; localizing Medicare, Medicaid, and Social Security; and passing reforms which would achieve price relief in health goods and other goods;

     3) Three trillion in revenue and two trillion in spending is not the only way to achieve a trillion-dollar surplus; there are numerous other possibilities which will, though (such as taking in four trillion while spending three trillion, taking in two trillion while spending one trillion, taking in one trillion while spending and doing nothing, etc.); and
     4) It's probably possible to finish paying off the debt earlier than between 2044 and 2047. If legislators begin to see early that the reforms are working, then they will be able to plan future spending and taxation in accordance with the limitations I have outlined.

     I tweeted to “Bill” the following: “Suppose we started taking in $3 trillion a year, and reduced our spending to $2 trillion.” I continued: “Say we did that every year, and paid the leftover trillion directly to our creditors. And we did it for 25 years until the debt got down to zero. Are you saying that would be: A) impossible; B) undesirable; or C) both?”

     “Bill” responded “both”, specifying that he was answering in terms of whether it would benefit the American economy and benefit the status of the U.S. Dollar as the world reserve currency. He added, “Economics is about distribution of real production and resources. Money is the tool we use to do that. Removing money from the economy makes distribution of real stuff more difficult. No reason to do this... ever.” He also said, “A federal surplus is literally a non-federal deficit. This is a reduction in the net money supply.”

     I initially responded by saying that my proposal would not take U.S. Dollars out of the economy. However, “Bill” responded by saying that studying fiscal flows will show that private sector savings and wealth are decreased when the government runs a surplus budget. As “Bill” put it, “a federal surplus means a deficit for everybody else” (i.e., for the private sector and for the foreign economy.

     Basically, “Bill”'s argument was the following: 1) it would be both impossible and undesirable to try to pay off the national debt; and 2) a surplus should not be created, because that would remove money from the economy, and make it harder for people in the private and foreign sectors to spend enough money in a way that distributes resources effectively.

     I suppose that "Bill" was trying to point out that if the federal government wants to create a surplus, then it will have to raise taxes in order to cover the current budget shortfall, and that will require taking more from the private sector and from personal and household wealth, causing unemployment and stagnation.

     “Bill” also explained that there is a private sector surplus whenever the government runs a deficit (which is because the government is not taxing the private sector as much as it would have to in order to balance the budget). “Bill”'s analysis of this concept was that “Basically federal deficits 'pay for' imports and private sector savings.”

4. My Plan is to Create a Surplus Without Raising Taxes

     What “Bill” neglected to notice, is that my proposal does not call for raising taxes. What I mean is that - while it may call for tax rates to be raised on certain activities - the total amount of revenue which the government would take in as federal tax receipts, would not be any higher than it is now; in fact, it would be much lower.

     I want the federal government to spend $2 trillion per year, while it currently spends about $4 trillion per year. This means that I am calling for approximately a two-trillion-dollar reduction in the total amount spent by the federal government annually. I am calling for balancing the budget while reducing total spending; I am not calling for balancing the budget through raising the amount expected to be generated through tax revenues.

     Moreover, I am not only calling for paying off the debt and serious budgetary reform; I am also proposing that governments change the sources of their tax revenue to something more efficient. In 2014, Georgist economist Scott Baker told RussiaToday (RT) that taxing the unimproved value of land (land value taxation) could yield $7 trillion in annual revenue. In 2014, $7 trillion was also roughly the same amount of money spent by all governments in the United States combined (at all levels). That means that replacing all current forms of government revenue with taxes on the unimproved value of land, could pay for all government services.

     I have certainly called for creating a surplus, but creating a surplus does not necessarily require raising taxes. People only think it does, because we have never tried to reduce the debt through requiring balanced budgets, making taxes more efficient, and making spending more efficient too, all at the same time.

     The goal of Georgist taxation is to tax land in order to make taxation on labor and capital unnecessary. Adopting Georgist and geo-libertarian policies on taxes will help achieve that increase in tax efficiency for which we are looking, as well as help simplify taxes while making them avoidable and (to the extent possible) voluntary.

     Once land is the only thing taxed, the need for income taxes, sales taxes, and taxes on home value will disappear. That's because taxing unimproved value would involve taxing the waste and hoarding of land, and land speculation (key causes of high land prices), which will help bring about cheaper prices for capital and labor (because they would be untaxed, and because their prices would be reduced because the land upon which they rest will have declined in price).

     Once Georgist taxation is in place, the price of owning land as private property will be high, but only for the sake of compensating the community for recognizing and protecting that property claim. Also, the price of tending land (and of building and dwelling and producing upon it) will be low. What this all means is that nobody will be discouraged from building, nor from producing, due to the imposition of taxes (in which a large portion of their earnings are confiscated through an act of legalized extortion). Nobody will be discouraged from building upon the land they tend, for fear that increasing their property value will increase their property taxes. Only actual ownership of the land should be taxed; not the rental of a housing unit on the land, nor productivity upon the land.

     Once nobody is too afraid of high tax rates, to build and produce to their full potential – and once they're free to keep all of what they produce – none of the “unemployment and stagnation” which we usually see with tax increases, will be seen as the result of switching to a more efficient system of tax revenue sourcing. Most of the dozen Pittsburgh-area communities which experimented with land value taxation and split-rate taxation saw decreases in not only unemployment, but also rent and average household taxes.

     In short, increasing unemployment and causing economic stagnation are problems which are typically associated with increasing taxes, but my proposal would not increase taxes; I would instead solve the budget deficit and create a surplus by making taxes more efficient (by switching to Land Value Taxation as our primary – maybe even our only – source of tax revenue).

     In the process, I would also like to localize as many government services as possible to states and communities, and repeal any laws which interfere with the natural freedom of locomotion. I believe that these measures will help accomplish three important goals: 1) Stop trusting the federal government with large amounts of money; 2) Stop trusting the federal government with the authority to regulate environmental, health, and land issues; and 3) Leave people free to travel to any community they please, and free to transact with any Community Land Trust they please.

     Goal #2 is important for two reasons: A) because each locality is directly affected by the set of unique health and environmental factors in that region, and B) because those issues were never specifically delegated to the national government in the Enumerated Powers in the first place.

     If we learn to live within our means, do more with the money we're already taking in, and avoid antagonizing production with the taxes we levy going forward, then the national debt will go from “unsolvable, but not a problem” to “a problem, but easily solvable (given enough time)”.

5. Removing Money from the Economy, and Private Issuance of Currency

     I told “Bill” the following: “It's not a problem that money will be removed from the economy, as long as: 1) the money comes from the taxation of the wealthiest who reap the most from government handouts (i.e., land speculators and land hoarders, corporate polluters, etc.); and/or 2) people are sick of the fiat USD (U.S. Dollar) and want real money.”

     By “real money”, I meant that the U.S. Dollar is partially backed by debt, and that this constitutes usury, vacating all responsibility to ensure that transactions do not take place unless all assets are fully possessed (rather than existing due to debt, inflation, deficit spending, leverage, and speculation).

     “Bill” responded “There is no 'real money'”, adding that” You can combine a liability with a material of your choice, but there is no need to conflate financial assets with real assets.” I find it odd that he said that, because I don't think I am conflating “financial assets with real assets”, as much as I am criticizing the conflation of financial assets (i.e., the face value of the dollar) with real assets (i.e., the real savings and real revenue which back-up, and form a basis for, the ability to finance. I'm saying that proponents of the dollar are “conflating financial assets with real assets”, by taking dollars at their face value, and neglecting to consider that they are backed by fiat (that is, government say-so).

     I agree with “Bill” that it is possible to “combine a liability with a material of your choice” in order to try to make a currency or money which is more solvent than the U.S. Dollar. However, there is a difference between saying “you can”, and saying “you can, if you can get away with it”. What “Bill” neglected to mention is that, in the United States, you can be charged with a crime, and put in prison, for issuing your own currency.

     That is what happened to Bernard von NotHaus, who issued .999-purity silver coins (and certificates redeemable for precious metals, and other forms of tender) as “American Liberty Dollars” (ALD). Von NotHaus never claimed his coins to be official United States currency; despite this fact, he was charged with manufacturing coins which bear similarity to American money. Von NotHaus was charged with “making, possessing and selling his own coins”, was ordered to pay the government $7 million, and now faces 15 years in prison.

     “Bill” was correct to point out to me that it's possible and legal to exchange your U.S. Dollars for things like tickets, coupons, and money created by stores (such as Chuck E. Cheese tokens and Disney Dollars). However, it needs to be both possible and legal to create your own currency, not just to exchange your dollars for tokens created by legally operating businesses (which are incorporated, licensed, and regulated by the same government that creates the dollars). Right now it is possible, but not legal, to create your own currency without the permission of the federal government (that is, if you want it to be made of gold or silver).

     We deserve a free economy. A person should not have to worry about being kidnapped by police, cuffed, and put into a cage, just because he pressed some gold or silver into disc shapes (unless he lied about what they're made of and how much).

     Considering the fact that the U.S. Dollar has lost some 98-99% of its purchasing power since 1913, it's safe to say that nearly any currency which is issued by a private citizen, is likely to be more solvent than the dollar is. So why not arrest the people at the Federal Reserve, instead of arresting people like Bernard von NotHaus and marking him a counterfeiter for life?

     After all, von NotHaus never tried to use physical force, nor threats, to get people to use his currency (in the way that the government does). Is the possibility that he committed a form of fraud, really as bad as the sort of violent crimes which are committed overseas in the name of "opening foreign markets to American products and the dollar", that von NotHaus should be treated like a violent criminal and have his "freedom" taken away?

     The fact that private issuers of currencies backed by precious metals have to live in fear of being thrown in prison, and the fact that they cannot confiscate people's property and wealth, means that private issuers of currency are difficult to compare to issuers of currency which have strong ties to the public sector. That's because those private issuers are effectively captive to public currency issuers' interests and control.

     It's not only difficult to compete against a legal monopoly, it's illegal. To say "you can combine a liability with a material of your choice", is to leave out a lot of important information about how, if that material is silver or gold, and you're in "the land of the free", and subject to the laws of the United States of America, your body might be put into a cage.

     To say "you can" do something that's sometimes illegal, is to dare people who want a more just society with fairer laws, to put themselves in cages, supposedly for the sake of proving the point that it's better to work with the government you have than to live in a lawless society (even if that government is tyrannical and flouts the law on a daily basis).

6. What Does a "Private Sector Surplus" Really Mean, Anyway?

     “Bill” said there is a private sector surplus whenever there is a federal government deficit. That is why, according to “Bill”, it would be bad to create a federal government surplus; that is, because it would create deficits in the private sector and the foreign sector.

     When the federal government runs a deficit (that is, when it takes in less than it spends in a given year), the private sector considers this government deficit to be a surplus for itself. That's because the government isn't taking enough in revenues from the private sector as would be necessary to cover the hole in the budget, so the private sector considers the funds which are not taxed away, to be more money for themselves (i.e., a “surplus”).

     However, I have to take issue with “Bill”'s position that “Basically federal deficits 'pay for' imports and private sector savings”. To me, the fact that “Bill” put the phrase “pay for” in quotes, suggests that “Bill” might be twisting logic to fit his own “truth”.

     It's true that when there is a federal deficit, there is more money available to be saved in the private sector, because it has not been taxed. However, the fact that the private sector considers it a surplus that there's more money for itself than it expected there to be, does not necessarily make it so.

     A “surplus” (which I am proposing the federal government create) is when you take in more money than you spend. Having more money left over at the end of the year, because the government didn't tax you as much as you expected it to, is not exactly the same thing as running a surplus. True; each results in having money left over.

     But a federal government surplus and a private sector surplus are fundamentally different things, because the private sector has much less power than the federal government (part of the public sector) to legally confiscate people's wealth. Government does this in several ways: 1) through taxation; 2) through inflation of the currency in a way that devalues the money in people's pockets; and 3) through legal means (such as levying liens against landed properties, homes, and other assets).

     Government has the ability to order people to purchase products. Because it has the military and armed bureaucrats on its side, the government has the ability to enforce the laws which provide for the expenditure of the taxable portions of people's transactions, on particular spending items (such as health insurance and government identification).

     Although the government is very often subject to capture by the interests of private sector entities, the opposite is also true, as private entities abide by government laws even when it goes against their interests. Unless the private-sector entity in question is a military, or a private army, a private sector entity generally cannot simply conquer people's land, nor compel people to do business with it (without the government to help make that happen).

     It is this unique power which sets government apart from the private sector.

     However, the fact that this is a unique power, vested in the government, should not be construed to mean, that government deserves this unique power, nor that it can or should be trusted with it. Nor ought we conclude that the public sector is “special” simply because it has the power to confiscate people's property and wealth at will. This power is neither “unique” nor “special”. What it is, is evil.

     If you think about it, what we are doing by describing “the private sector being taxed an amount lower than was expected” as “a private surplus”, is giving in to the idea that the government can and should confiscate as much property and wealth as it pleases. The mere fact that the federal government has the authority to raise tax rates, should not be construed to mean that it should raise tax rates.

     If a business operates within its means, and the government declines to tax the business (or declines to tax it at a high enough rate, for whatever reason), are we to assume that the “surplus” which would be generated, would be generated through the action of the business, or through the action of the government?

     Whose actual action and productivity caused that surplus? Did the government actually produce something by performing the very passive “act” of declining to tax away the funds in question? Probably not, because the government doesn't produce anything. But did the company produce something, or act in a way that directly caused that surplus? Arguably, yes it did. But what if the company made its money through destruction; like through war profiteering, or through polluting land?

     We must not treat destruction as if it were production, in the way we describe them and tax them. With a taxation system influenced by Georgism, we will tax the destruction and degradation of land, not the labor and capital which are mixed on top of it. This means that businesses will be taxed without regard to how much they produce and how much income they reap; that is, unless they reap that income through polluting, wasting, hoarding, or destroying land. Businesses would be taxed to the extent that they engage in those behaviors.

     Many people are aware that everything the government has was legally extorted from private people and entities; and that just because the government balanced its budgets or created a surplus, it doesn't necessarily mean that the government deserved all of the money it took in through taxes to achieve those goals, nor did the government produce anything in order to acquire those funds.

     But we need to understand that the private sector is capable of acquiring funds without producing, in exactly the same way that the government is. And the government and the private sector both have long track records of destroying and polluting for the sake of producing and acquiring funds.

     The fact that private businesses and the public government appear to be the only entities fighting over these funds which could be taxed, does not necessarily mean that either of them produced that wealth, nor does it mean that either of them deserves it, nor that one or the other knows how to spend it wisely.

     What is being fought over, was created by neither government nor the private sector, and it belongs to neither of them. The government's position is that that wealth should be spent and saved by government. The private sector's position is that that wealth should be spent and saved by private entities. This is a disagreement, but only in part; they each agree that the wealth should be spent and saved by someone. The only disagreements lie in who should do the saving and spending, and how much should be spent vs. how much should be saved.

     The fact that they agree to an extent, suggests that there is wider agreement that that wealth be spent or saved, than there is agreement about who ought to spend or save it. So why not allow that wealth to be spent and saved by the sectors of the economy other than the public government sector and the private business sector?

     The simple answer is that most people have forgotten that other sectors of the economy even exist. But the foreign sector, the non-profit (voluntary / charity) sector, private-public partnerships, cooperatives, the commons, and clubs and club goods, each have distinct characteristics which arguably could merit them being considered sectors of the economy unto themselves (distinct from the public and private spheres).

     With Georgism and Land Value Taxation, each community would have a Community Land Trust, a non-state entity which would not necessarily operate for profit. The more non-state non-profits there are, the easier it will be to survive, for a person who wishes to boycott the coercive state and the unsustainable short-term profits which are enabled by the state's excesses. The more non-state non-profits there are, the larger the “voluntary sector” (also called the “charity sector”, the “non-profit sector”, or the “third sector”) can grow.

     The private sector promises that, if they are allowed to keep their money, they will spend it on their employees, and on creating new businesses and new jobs, and on things that will reduce the costs of needed goods and services, so that people can afford them more easily. The government promises that, if they are allowed to tax more money from the private sector, the government will spend the money on its citizens, and on creating new government job programs and bureaucrat positions, and on legislative measures that will reduce the costs of needed goods, and on a retirement program that will allow them to put money away for later.

     If the government and the private sector are so determined that the money will get spent on (or saved for) the neediest people – to help them save, and afford, and work, etc. - then the neediest people should be the ones who spend the money directly, in order to make sure that happens (as government and business claim to want it to). [Ideally, the neediest people should also be the ones who acquire the funds directly from whomever possesses them (whether that's the government or private owners).]

     The money should be saved or spent by the voluntary sector (and by enterprises operating on voluntary bases, such as Community Land Trusts); not by the private sector nor the public sector.

Why isn't anyone concerned about the non-profit sector's deficit?

7. Do Deficits Really Pay for Imports? (Including Thoughts on China)

     “Bill” stated that “Basically federal deficits 'pay for' imports and private sector savings”.

     I have already explained that “Bill” believes that federal government budget deficits “pay for” savings in/by the private sector, in the following manner: businesses would be left with more money (i.e., what could arguably be called a surplus) – money which they can save - because those businesses would be taxed out of less money than they expected.

     But now we must continue, to the issue of whether deficits, in any sense, “pay for” savings in the private sector.

     Admittedly, I was unfamiliar with the idea that “deficits pay for private sector savings” until “Bill” brought it up. But after thinking about the issue in the context of financial relations with China, it started to make sense.

     What I figure “Bill” is trying to say, is this: When the federal government agrees to generate a deficit, it goes further into debt. Allowing itself to go into debt, allows American consumers to “profit” through America's relationship with its creditor nation China; that is, debt supposedly helps Americans purchase imported goods at prices which are relatively cheap. They are relatively cheap because of the close financial and trade relationship between the two countries, with China loaning to the United States, and the United States investing in Chinese goods in return. But more importantly, these goods are relatively cheap, because while America is buying Chinese products, it's buying them with a U.S. dollar that's partially backed by Chinese loans.

     And don't get me wrong; that sounds like an amazing deal for the United States! That's because it means that China is essentially paying us to buy their products. Several years ago, Senator Rand Paul stated something to the effect of “we are borrowing from China to pay China”. But we should take pause: we should think, “If it sounds too good to be true, then it probably is too good to be true.”

     Think about it: If a seller is so desperate to unload his product that he is willing to pay you to buy his product, then that could mean that: 1) the product is bad; 2) the money is worthless; or 3) both 1 and 2. We ought to ask, “You want to pay me to buy it? It sounds too good to be true. What's wrong with it?”

     Is the appeal of massive savings through importing cheap goods from China, really worth the risks associated with importing large amounts of products, which could be faulty, feature safety hazards, and/or be made from low-cost material that's carcinogenic? We must not use the allure of cheap products from China to justify continuing to enable the U.S. federal government's cycle of addiction to debt to foreign nations.

     I want free markets and a free economy; not captive markets and a rigged economy. To avoid captive markets and the rigging of markets, we must avoid borrowing from countries from which we purchase massive amounts of goods.

     If we buy a lot of goods from one country, then we should look to other countries for loans. If we notice ourselves depending too much upon one country for loans, then we should try to avoid buying too much from that country, and import goods from different countries instead.

     On the other hand, if we don't do that, and instead we buy most of our goods from one country, and borrow from that country more than we borrow from any other country, then that is a recipe for disaster. That's because so much money would be flowing from the United States to that country, from both its public sector and its private sector. If it became necessary to consider consciously decreasing the flow of money from the U.S. to that country, then resorting to legal methods could only solve half of the problem at best, while working outside of government in the private sector could only solve half of the problem just the same.
     It would cause U.S. markets to become subject to rigging of markets in favor of that creditor nation / chief trading partner. It would be a market captive to China. We must not allow ourselves to be lulled into such a "false sense of economic security"; especially not if China's goals are dependence on Chinese products, and seeing the Yuan replace the Dollar as the world reserve currency.

     My point is not that we literally can't borrow from China in order to spend money on imported goods from China. The issue is that the fact that we can, doesn't necessarily mean that we should.
     We must not risk depending too much upon China (nor upon any other country which could potentially become simultaneously our primary creditor nation and our primary trading partner). Depending too much on one country, for both goods and loans, is a recipe for economic ruin for the debtor nation (in this case, the United States).

     To answer the question posed in the title of this section - "Do deficits really pay for imports?" - the answer is no.

     We in the United States might like to think that they do, but that is a flight of fancy and an oversimplification. We suppose, from the mere fact that we are borrowing from China at the same time that we are buying lots of its products, that these loans from China are "paying for" the products we're buying.

     But we are wrong; first, because money is fungible. Money from China can be spent on anything. Although we do "borrow from China to buy from China" in the sense of trade (and also in the sense that some of the money from Chinese loans goes towards repaying our debt to China), some of what the money from Chinese loans is spent on, has absolutely nothing to do with China, and doesn't go to China. They are spent on other federal budget items; domestic, military, etc..

     Second, it's not as if the money from Chinese purchases of U.S. federal government debt are being funneled directly back to the Chinese government, to buy Chinese products. Although the Chinese government provides assistance to the state-owned enterprise Cosco (the shipping company), America's national government is not, in any real or literal way, directly spending China's money on Chinese goods. Especially not, considering that many of the firms "exporting" "Chinese" goods to the United States, are actually American-owned firms.

     Although it, perhaps, seems logical that borrowing money is the only realistic way we're going to get as many products into America as we need, and cheaply, that is not the truth.

     Here is the truth: Deficits and debt are bad. Spending more money than you take in, is bad. You don't buy products with deficits and deficit spending and borrowing; you buy products with money. You don't buy things with negative money; you don't buy things with no money; you buy things with positive money. Money that you have, or can have in your possession, so that you know it actually exists.

     Why should I feel like an idiot for believing that, if we want to buy products from China, we should use money instead of debt? Is the United States trying to pretend like it doesn't want to go into debt, so that it can get away with acting as if it's doing China a favor by allowing China to take a trillion dollars in debt off of the U.S. federal government's hands? That's hardly a way to be grateful to the country that's bailing you out more than any other country is.

     Let us not be mistaken; it is not necessarily a privilege to loan to America.

     If America's best days are ahead of it, then it is certainly a privilege. But certainly not if America is on its way out, like if production will never return. If that is the case, then the fact that the United States will owe China money, will not matter, because the U.S. will have no feasible way to repay that debt.

     We are certainly on track for that to happen now, considering the large number of Keynesian, M.M.T., and other economists who believe that the national debt is not only not a problem, but also that paying it off would be undesirable and probably even impossible. My position is that resolving to pay off the debt, and talking about it as if it were both desirable and possible (because it is), will help reassure our creditors (most importantly China) that we are on track to pay that debt off.

     Don't get me wrong; being a major trading partner of China is not undesirable. We just shouldn't depend on them any more than other countries. And we should stop acting as if debt were an asset, no different from “positive money” and currencies and goods, that you can have in front of you, and see and touch and feel.

     Perhaps that is why we treat China as if it is privileged to buy our debt (i.e., lend to us); as if we were doing China a favor by selling our debt to them (as opposed to some other country, perhaps). Again, lending to the United States is only a privilege if the U.S. eventually pays back its debts.

     I'd like to clarify something. America is borrowing money from China, not the other way around. The investment which the United States makes in China, is not a purchase of their debt; it is not a loan to China. The investment which the U.S. makes in China, is the purchase of its goods (and also, the establishment of U.S.-owned firms in that country). America is importing goods which were exported from China after being manufactured in China.

     We are not loaning money to China. We are borrowing from them, while buying a lot of their products (and employing some of their people). China is loaning America a lot more money than the U.S. is buying from China. So China is, by no means, in the inferior position. Certainly not in its lending position. It is worth noting that the U.S. now trades with China at a surplus, so China's status in trade has declined relative to the U.S. - especially considering that U.S. debt service has been increasing for the last two decades - but China's position relative to the U.S. is still superior overall (for now).

     We must do away with the notion that borrowing from China allows China to invest in the United States. Chinese market actors have always been able to invest in the United States; it's possible for them to do so without the U.S. doing any borrowing from China at all.

     We would be foolish to go on acting as if owing this money to China provides only an opportunity to invest in the U.S. by selling us cheap goods; it also provides an opportunity for China to exploit America's need for Chinese products and Chinese loans.

     Have we allowed ourselves to become so deluded, as to believe that the fact that we're supposed to pay China back, means that China is owed all of this money, and that that's supposed to be as good as having that money?

     Ostensibly, the U.S. is borrowing from China in order to do four things: 1) be able to more cheaply afford imports from China; 2) fix a hole in its budget; and 3) use some Chinese loan funds to fund programs aimed towards increasing jobs and productivity here in the United States. The goal of #3 is to help-along goal #4) to generate taxable revenues from those jobs, to fund government, while (eventually) decreasing dependency upon China for loans.

     And again, that sounds like it makes perfect sense! But once again, all it really means is that we're borrowing from China... in order to avoid borrowing from China.

     When we treat debt as if it were currency or money, and trade it and spend it as such, we risk turning debt, and the temptation of credit and loans, into currencies in their own rights.

     That is to say, we risk monetizing debt as a matter of regular course, and we risk turning debt and I.O.U.s into something which is just as acceptable – and valuable – as a mode of payment, as are real, tangible, physical, hard assets (such as precious metals).

     When there are not strong anti-usury (and anti- fractional reserve) measures in place, we risk setting the value of some good, equal to the value of another object which claims to represent it. If a promise to pay is every bit as acceptable as a payment, then the value of a promise is likely to decrease. People who make promises will be less likely to be believed, because there will be a perverse incentive to borrow and receive without giving back as one has promised.

     The negative consequences of usury are, thus, not only economic and financial, but also social and moral. The fact that the government can aggress against people, and coerce them without consequences, should not be construed to excuse the government from the responsibility to act as any sane, civil individual would: 1) live within your means; 2) don't force anyone to buy from you or sell to you (or use your currency); 3) don't threaten or harm people unless they do the same to you first; and 4) keep your promises.

     After all, the government's authority rests on the will of the governed, and its duties are imposed by the individuals who constitute that government, who have duly delegated their own powers to the government for the purposes of protecting their liberties. The government should have every responsibility to behave as it would expect any of its law-abiding citizens to; because the government is comprised of those citizens.

[the remainder of this article will appear here at a later time]

Written on April 29th and 30th, and May 1st, 2020

Originally Published on May 1st, 2020

Updated on May 4th, 2020

Thirteen Virtues of Sound Money

1. Ability to serve as a medium of exchange (which includes fungibility; that units of it can be substituted for one another, and are interchangeable with one another)

2. Portable (and thus, also, light-weight, because currency being light-weight helps it be portable)

3. Physically durable (i.e., made out of a material which is difficult to destroy)

4. Ease of ability to serve as a unit of accounting (This includes ease of divisibility. Ideally, the currency should be easily divisible, both in a physical sense, and in the sense of doing mental math while using it. For example, Spanish pieces of eight were easily physically divisible, while U.S. Dollars are rarely if ever accepted when they are torn in half)

5. Difficulty to counterfeit, duplicate, or imitate

6. That creating the currency took considerable effort and labor

7. Rarity, and being in limited supply

8. Acceptability (ability to be widely or universally used and accepted as currency)

9. Having stable value (and, ideally, rising value, also also having a high purchasing power), especially as compared to other currencies

10. Potential to have transactions using it, tracked and traced, in a manner which is transparent and open and verifiable to its users (as in Blockchain)

11. Ability to represent a real store of value

12. Redeemability in real assets (ideally the currency would represent real assets because it represents value in a full-reserve banking system, as opposed to a fractional-reserve system)

13. Ability to not only represent a real store of value, but also to serve as a real item of value which has a real use (rendering representation unnecessary, and rendering redeemability somewhat less necessary)

     I have noticed that there are potential conflicts between several sets of these virtues of sound money. Those potential conflicts lie between Virtues #3 and #4; Virtues #7 and #8; Virtues #11, #12, and #13.

     Regarding #3 (durable and difficult to destroy) and #4 (easily divisible): The potential conflict lies in finding a material which is both difficult to destroy and easy to divide. This is easy to reconcile, however, given the number of durable materials (such as precious metals) which are used as currency.

     Regarding #7 (rarity, and being in limited supply) and #8 (acceptability, and universal or wide acceptation): The potential conflict lies in finding a currency which can be accessed and possessed by nearly everyone, while the supply of it must also not be too high so that the currency loses value because everyone would have so much of it (and thus it would be in low demand, leading to decreases in the valuation of the currency).

     Regarding #11 (representation of a real store of value), #12 (redeemability in real assets), and #13 (ability to serve as a real item of value with a real use): The potential conflict lies between deciding whether we want to have real money that is something of value, or a whether we want a currency that represents something of value. As long as a currency can be redeemed for real physical assets, then there is no conflict. But the bank doing that redeeming, must be transparent about their bookkeeping, and practice full-reserve banking, for redeemability to be reliable.

Based on notes taken in spring 2018

Written on November 3rd, 2019

Published on November 3rd, 2019

Rent, Profit, Interest, Usury, and Taxing Monopolies

Table of Contents

1. Introduction: Purpose of This Article
2. Rent
3. Profit
4. Wages
5. Wage-Theft is Real
6. Interest on Capital
7. Interest on Money
8. Usury and the Currency Monopoly

9. Usury = Rent x Profit x Interest

10. Exclusive vs. Semi-Exclusive Rent Collection Privileges

11. Conclusion
12. Post-Script: Taxation and Monopolies
13. Links and Additional Reading

Content

1. Introduction: Purpose of This Article

     The purpose of this article is to explain why rent, profit, and interest – and why the ownership of land, labor, and capital – are the results of laws and state-upheld monopolies.

     Herein I contend – as the anarchists, Mutualists, Georgists, Tuckerites, and others have contended – that: 1) excess rent is the result of monopolies on land and housing; 2) profit and wage-theft are results of monopolies on labor; and 3) interest and usury are the results of monopolies on capital, credit, currency, and money.

     They are the results of legally granted privileges to collect the various forms of economic rent; i.e., rent on land, profit off of labor, and interest off of capital (and loans, and money).

     I have already explained, in my March 2019 article “Why Rent is Theft: Against Economic Rents and Monopolies”, why this is so. Readers wishing to better understand my thoughts on these related topics can read that article for more information. The focus of the article is to explain why “rent is theft” from the perspective of some socialists, in addition to taxation being theft from the perspective of the Libertarians.

     For those who don't plan on reading that article, it will suffice to say that “rent is theft” because economic rent is theft. This is to say that rent, profit, and interest – which are all forms of economic rent – are either stolen, or else otherwise unjustly acquired, whether through semi-legal or extralegal means, or, if in the absence of law, then through violence, force, coercion, extortion, and manipulation.

     If and when the state registers and recognizes the legal ownership of all land, labor, and capital - and allows ownership of them only through permission - then all land, labor, and capital which is legally and legitimately owned, is owned only if and when the state and its enforcers agree to protect those ownership titles.

     In the act of enforcing exclusive claims to land, labor, and capital, those enforcers come to exercise some degree of the state's unique, exclusive privilege to wield a credible monopoly on the legitimate use of force within the territory. Thus, they exert the power traditionally wielded by the state, both in custom, and in definition (especially in the definition of the state which was developed and popularized by sociologist Max Weber).

     These facts have prompted the anarchists, Mutualists (etc.) to conclude that private property (inasmuch as it is protected by the state, and/or by violence) cannot, and could not, exist, without the threat of violence being levied against anyone and everyone who

     These facts, most importantly, have prompted the anarchists and Mutualists (etc.) to ask: “How could private property exist, then, without the state to recognize it and protect it? In a stateless or consent-based society, how could anyone wield monopoly over land (etc.) when everyone else is absolutely free to question and challenge the property claims of everybody else?

     “And with no ability to legally challenge property claims, and no ability to legally challenge occupancy-and-use norms in state courts (i.e., because there would be no state courts), how could a property claimant continue to exclude others from his property, without resorting to force? Without a legal privilege to commit acts of violence in order to protect property claims, how could ”

     The remainder of this article does not answer all of those questions, but it should help to provide some foundation questioning the legitimacy of ownership of labor, capital, and currency (in addition to landed property). I ask that my readers try, on their own, to ask the same questions of just ownership of labor, capital, and money, which I have previously asked about how land can be justly owned without the state.

     Readers seeking answers to the above mentioned questions, should read my March 2019 article “Private Law and Anarchism: Is Privatization a Solution to the State's Monopolies on Legal Services?”, and also read the works of Murray Rothbard, Hans-Hermann Hoppe, Stefan Molyneux, Walter Block, Roderick Long, etc..

     Of course, my answers will be much more critical of private property than the answers provided by these thinkers, save for perhaps Roderick Long. This is owing, in part, to the fact that I have spent so much attention to the various manners in which the rights of public and common actors (but not state actors) are unjustly ignored during the creation of most or all private property.

2. Rent

     Rent is the return to land. Rent is levied upon, and extracted from, buildings, and the land on which buildings sit. Landlords are granted exclusive monopoly rights (really, privileges) to collect rent on the lands which they own.

     This grant of privilege is performed by the state, through its unique (and self-granted) power to recognize and register landed property claims. The state registers landed property claims through apparati such as county Recorders of Deeds' offices. Thus, the ownership of land, under capitalists states, is not retained according to the active protection of the owner; on the contrary, it is a function of law, and of the force of the state.

     Excess rent (that is, “super-rent”) is landlordism, plantation slavery, and indentured servitude. Excess rent is therefore theft, if kept by the landlord, not reinvested into the community and/or its markets, and not reinvested into the tenants and their residences.

3. Profit

     Profit is the “return to management”. Profit is extracted from laborers, who work either in buildings which rest upon the land, or work directly upon the land (or even beneath it, as in mining operations).

     Profit is the “return to management” only because it is “returned” to management from labor. This is to say that profit is stolen wages, which are kept by management, instead of being returned to the laborers.

     Excess profit (that is, “super-profit”, “surplus profit”, or “excess surplus value”; extra-Mehrwert in Marx's and Engels's German) is the withholding of wages, benefits, and improvements in conditions, by management, from labor.

     Excess profit, stolen from labor and kept by management, is therefore theft, when it is not reinvested into the community and/or its markets, and not reinvested into workers.

     This reinvestment should be done chiefly for the purpose of: 1) improving the workers' benefits and conditions, including pay, and safety and health conditions; 2) helping workers to own their own tools, and to own shares of the means of their productivity and livelihood; and 3) allowing workers a realistic chance of buying-out the owner, and of creating a new (and, hopefully, self-managed, and more egalitarian) franchise, of the original firm, or perhaps even an entirely new company which has the full ability to freely compete against the original firm.

4. Wages

     Wages are the return to labor. They are the return of compensation to the laborer or worker, rather than to management.

     All wages, not returned to the laborer, are possessed mainly by either management, owners, or outside investors. Outside investors have little or no stake in the firm's long-term success, and management and owners have more stake but also a more realistic chance of thriving financially if they leave the firm as compared to workers.

     Wages are funds not reinvested into the firm in a way that directly benefits workers and their families, and are “returned to” managers, owners, and investors (whom cannot truthfully claim that those funds are actually returned to them, because they never possessed nor earned those funds in the first place). This is to say that all funds not stolen from workers and kept by others, and not reinvested into the community and/or its markets, are excess profit (superprofit), not wages.

     But those funds should be wages, and they should be returned – from management, owners, and investors – to the workers, so that the workers can spend those funds in the community and/or its markets.

     Wages are earned income, appropriately distributed and allocated; that is, wages are earned by workers, as compensation for performing labor. The idea that the worker's labor, is done chiefly for the benefit of himself and his family (and to a lesser extent, the community and its markets in which they will be spending those wages), stands in direct opposition to the notion that the laborer works chiefly for the benefit of managers, owners, and investors.

     Thus, the notion that labor entitles all that it produces, stands in direct opposition to the practice of profiteering from labor.

5. Wage-Theft is Real

     There may be some argument that “wage theft” does not exist, because while the laborer is a renter of capital, the capitalist is, just the same, a renter of labor. This is to say that owners and managers employ laborers, by “renting-out their hands” or renting-out their time.

     But the capitalists' “rent” of workers' time, talent, and physical effort, is never fully paid, and it never can be. That's because managers never compensate workers for the opportunity costs, and other indirect costs, which the workers bear before and outside employment.

     This is to say that few firms compensate new hires for all of the costs they undertook while seeking employment; few firms allow new hires to deduct, as work expenses, costs like the identification documents, clothing, sanitary items, paper and ink, printing costs, postage stamps, phone calls, and bus tickets, which they buy in order to apply for jobs and travel to job interviews.

     This occurs because, evidently, managers and owners feel that those costs are the workers' problems, and have nothing to do with the everyday operation of the firms, and especially nothing to do with the owners. But they could not be more wrong. A new hire – especially one who struggled for a long time before finally finding employment – will often spend months and months, even years, paying off debts and budgetary deficiencies created by those expenses.

     And the more a worker is thinking about where his next meal will come from, where he will sleep next, how his family will make ends meet, and what will happen if he gets sick or injured on the job, the less productive the worker (and, in turn, the firm) becomes. And thus, the less profitable it becomes to “rent” workers.

     So, in many ways, labor is not getting the full return from its effort, and wage-theft is real. Unless you believe that a worker is supposed to only earn as much as is necessary to keep him working another day, with nothing left over to develop himself, either through skills or education, even if he becomes more productive because of it.

     That increased production will only cause him to become self-sustaining, and independent; and thus less dependent upon others for what he needs to survive. Thus, increased self-management of workers, is not in the interest of managers because it puts them out of a job, and is not in the interest of owners because it makes workers less dependent upon owners, and more reliant upon themselves.

6. Interest on Capital

     Interest is the return to capital. Interest is extracted from capital investments, loans, and currency or money (which are not the same thing).

     Capitalists – that is, capital investors, lenders (and, less importantly for the purposes of this section, owners of labor, i.e., employers) – are granted exclusive monopoly rights to collect interest upon those loans and capital investments.

     Capitalists' ownership of those loans and capital investments, are secured through the state's legal recognition of the contracts which capitalists make. These include contracts wherein: 1) capitalists agree to employ laborers; and wherein 2) capitalists agree to rent and occupy buildings and/or land owned by others, and pay rent to those owners (and/or fees or taxes to state owners of land and buildings) for the privilege of occupying some of those lands and developments.

     Additionally, the continued ownership of capital assets, is secured (and securitized) to the owner – on either a temporary or permanent basis - through the state's power to grant L.L.C. status. L.L.C. grants allow owners of firms, and individual workers within them, to become both financially and legally irresponsible for their criminal actions. This is done through distributing and deferring the risk of financial culpability for lawsuits involving the firm.

     That these practices are acceptable, rests upon the premise of the “right of increase”, i.e., the right to acquire unlimited profits from investments, in perpetuity, forever. Most terrifyingly, the “right of increase” ethos now embodies itself in the pretended right of multinational corporations to sue national governments for passing laws which “limit their right to profit”, even when those laws are passed in order to protect workers, civilians, plant resources, and the ecology from being exploited by those firms.

     These capital investments, and loans, are further secured to their owners with the help of the state, through the various forms of wage-theft (and deprivation of improvements of benefits and conditions) which make workers more dependent upon loans, and upon employment by capitalists chiefly for the benefit of other people, than they otherwise would be (if they were independent, self-employed owners of their own means of production).

7. Interest on Money

     Leaving aside the issues of interest on capital investments, interest on physical capital, and loans to entities besides treasuries, and focusing only on interest on loans and currency (i.e., financial capital):

     For all intents and purposes, interest functions as a form of debt, when it is built-into currencies. Through inflation – whether accidental, or as a result of intentional “quantitative easing” of the monetary supply through the issuance of newly minted currencies – currency is imbued with interest, and with some measure of debt.

     The presence of this debt, causes the value of the currency issued, to be constantly decreasing. When done intentionally, the intent is that depletion of the value of the currency will lead its possessor to spend it earlier, and/or more quickly, than he otherwise would. This assures a prompt return to all those who invest in currency (i.e., bond-holders).

8. Usury and the Currency Monopoly

     Excess interest (that is, “super-interest”) is usury. Usury exists because of the exploitation of the demand for money, in order to increase the value of monetary assets already possessed by owners of money and currency.

     That the demand for money and currency is being exploited – and, at that, officially – should be obvious. Currency - which is not itself money, nor value, but a representation of value and money, and to some extent a representation of work – is created by the state. Through the state's self-granting of the legal privilege to designate an official currency, and to coin moneys and regulate their values, few transactions can be made without the use of the state currency to mediate the exchange.

     Thus, the state is able to cite these privileges – and also the supposed need to levy taxes upon potentially all transactions – in order to monopolize the creation and issuance of currency. This increases public demand for money and currency – that is, state-issued moneys and currencies – in order to perform most any and all of the tasks necessary to survive (i.e., labor, trading, etc.).

     If there were no monopolistic state to choose an official currency, regulate its value, and compel us to pay taxes on as many transactions as the state wants us to, then it would be difficult for most of us to imagine how useful such a medium of exchange could be for a free people.

     That's because free people would, more likely, use the value of labor, and human need, as more important indicators of the value of the compensation that someone is offering in exchange for work or items. Free people would not accept a currency with debt (that is, interest) built into it, unless they understood why, and under what circumstances, that debt is helpful (i.e., when that debt causes currency to be returned to a publicly-held issuer of currency or credit).

     Excess interest (i.e., usury) is bankerism, capital misallocation, and pernicious predatory lending. Excess interest is theft, whenever interest (and debt, and excess monetary value) are kept by the lender or the investor of capital.

     Whenever lenders do not allow borrowers to pay some of what they owe into a security reimbursement fund, for emergency purposes - and whenever the returns from investment and lending are not reinvested into the market and/or community, and into making loans available for those same borrowers as well as others – then a theft has occurred.

     This is no less “theft” simply because it does not appear violent on its surface. The dependence of the borrower upon the lender, only exists without challenge, when the lender is free to change the terms of the lending contract at will, without review by the lender. Each the state's recognition of the legitimacy of the contract while it changes, and lack of transparency into the justice of contracts on the part of community agencies or voluntary associations, can lead to borrowers being dependent upon lenders.

     And, of course, in the presence of the state and its official currency, few transactions (loans included) can be conducted without the state's approval, without using the state's official tool of oppression (i.e., its currency), and without paying taxes upon those transactions (in that official currency).

9. Usury = Rent x Profit x Interest

     While in the previous several sections, I have used the word “usury” to denote “excessive interest” (especially on capital and loans), usury possesses characteristics unique among the various types of economic rent. As such, “excessive interest” alone, does not constitute usury at its fullest and most pernicious extent.

     While interest on capital and loans is popularly referred to as “usury” when it is excessive, excessive interest on currency is a different animal altogether. That's because currency – the medium of exchange through which loans and capital investments are made – possesses characteristics more strongly associated with rent and profit than with interest.

Meme created by the author on November 30th, 2017;

first published here on May 22nd, 2019

     Think about it: the act of profiting off of the state issuance of official currency, results in misappropriation (that is, theft) of all three major types of economic rent: 1) interest; 2) rent; and 3) profit.

     First (and most obviously): profiting from currency results in excessive interest, because the debt which inflation imbues in our currency, results in pernicious levels of interest, because of the artificial, state-created, unnaturally high demand for acceptable media of exchange.

     Second (and second most obviously): profiting from currency results in excessive profit, through profiteering from the lending of that currency, and for the same purposes just described, pertaining to interest.

     Third (and least obvious of all): profiting from currency results in excessive rent, because in a way, users of currency (as well as those who borrow in official currency) are paying a rent on the currency they possess and use. This rent is levied upon bearers and users of currency, through – you guessed it – the imbuing of the currency with debt (caused by inflation).
     To summarize, to reap usury on money is to profit off of the rental of money at interest. It is to take maximum advantage possible of the artificial need for money; artificial, because it is compelled by the state, through the state's granting of a legal monopoly on currency to itself.

     Thus, usury is that most destructive and deadly of economic rents, because it is the best example of an economic rent, and the best example of how economic rents overlap and become almost indistinguishable. Especially when a monopoly currency, and monopolies on financial capital, are combined with a system wherein land, labor, and physical capital are owned according to the recognition and dictates of the state.

     If the above is an accurate assessment, then it may perhaps be fair to conclude that we must measure – and multiply together – all three economic rents (rent, profit, and interest), if we desire to come up with accurate measurements of the degree of “usury” (in its fullest sense) existing within an economic system.

10. Exclusive vs. Semi-Exclusive Rent Collection Privileges, and a Note on Emergency Funds

     If what I have said above, and also what the anarchists say on these topics, is correct, then in state-capitalist and protectionistic economies (forms of economic governance which feature monopolies heavily), to claim property ownership, and to get it recognized in a manner which is monopolistic, monolithic, unquestionable, unchallengeable, and final, requires a lot.

     It requires either: 1) the state and its violence to uphold the claim and keep people out; 2) the use of violence, to do the same, without the use of the state; or else 3) 100% approval by the remainder of society, that a person deserves and earned what he claims as his property.
     Furthermore, to claim ownership (in these economies) entails making a claim to an exclusive and exclusionary right (or privilege) to access and make use of certain lands, buildings, or other assets (even including, unfortunately, other people's labor).

     The tangible outcome of the practice of exclusive and exclusionary private property ownership, is that people are met with violence, for attempting to “squat” on a property (“engage in adverse possession”, in fancier terms), even if they pose no threat of physical harm to the property's claimant(s).

     But must we suffer this? Can we suffer this? Absolutely not.

     We cannot survive much longer if, every time we try to use one of what we thought were our own possessions, we are obligated to pay that possession's actual owner (from whom we are merely borrowing, renting, or accessing and using the things which we possess but don't own). We cannot survive much longer, if we are not allowed to fully own any of the things that we use every day; if we have to pay and ask permission every time we want to use one of “our own” possessions.

     Although, in a sense, for everyone to be able to fully own their possessions, constitutes universal, ubiquitous ownership of private property; this would not grant those owners “private property” in the same sense in which the anarchists, Marxists (etc.) have traditionally conceived of private property.

     This is to say that private property owned for the sake of owning and using, is fundamentally different in purpose, from private property owned solely for the sake of producing more value therefrom. For everyone to own property - and for everyone to be able to acquire it through their own efforts and defense - would not result in depending upon others to acquire property; for precisely the reason that if everyone had property, nobody would have to please anyone else (through paying or begging) in order to acquire property.

     I do not wish to give the impression, through this essay, that all forms of rent, profit, and interest, result from perfectly exclusive ownership of property, nor from grants of total rights to exclude others from accessing property.

     The returns of rent, profit, and interest, are, however, certainly, greatly increased, the more exclusive, exclusionary, and monopolistic that ownership gets. For example, if a renter has no realistic opportunity to buy his residence from his landlord, then the renter will pay rent for a much longer period of time than he otherwise would.

     Likewise, if a laborer has no realistic opportunity to own his tools and a share of the company, and no opportunity to buy-out his company and start a new franchise, then the laborer will end up working for a much longer period of time than he otherwise would. And, to repeat, if a borrower has no chance of recouping any sort of emergency funds paid to the lender, because the lender kept them, then the borrower will end up owing the lender for a much longer period of time than he otherwise would.

     This means that – through trust, mutual obligations, and a mutual desire for all parties involved to be prosperous and eventually own property – it is possible to lessen the exploitative effects caused by legal recognition of ownership titles to land, labor, and capital.
     Such exploitative effects could additionally be lessened through increasing the prevalence, and variety of form, of emergency security disbursement funds - for not only the lender/borrower relationship, but for the landlord/tenant and employer/worker relationships as well. Security deposits on housing rent could be paid into a fund which is held in a neutral territory, which landlord or renter may only access upon absolute verification and agreement that the landlord's and/or tenant's expenses justify the expenditure of part or all of the security deposit. Such funds would be subject to total transparency, and this could be done with the help of blockchain technology, or through any number of practices involving multiple forms of verification.
     Setting up more worker-managed firms, or allowing communities to offer tax incentives to businesses in order to transition their model of private ownership into a collective one - for example, E.L.M.F.s (Egalitarian Labor-Managed Firms), or W.S.D.E.s (Workers Self-Directed Enterprise) - will also help increase the number of firms that have funds set up for their employees in emergency situations.
     Additional solutions to the lack of emergency funds of all of these borrowers, may be found through firms offering E.S.O.P.s (Employee Stock Ownership Plans). U.S. Senators Bernie Sanders and Kristin Gillibrand have supported proposals requiring the establishment of E.S.O.P.s in large companies. Sanders has additionally called for corporations to seat workers on their boards.
     Proposed and adopted programs similar to E.S.O.P.s and so-called "funds socialism" include: 1) the Meidner Plan in Sweden, calling for the establishment of "wage-earner funds"; 2) the American Solidarity Fund, proposed by the People's Policy Project; 3) the Norwegian G.P.F.G. (Government Pension Fund Global); 4) the U.K. Labour Party's proposed "Inclusive Ownership Funds"; and 5) the NSW Generation Fund in New South Wales, Australia.
     More solutions may be found through modifying Disaster Relief Emergency Grants, retainer fees, or emergency corporate legal funds and insurance plans, to something which is mutually acceptable to all parties to contracts involving financial trust.
     Emergency funds - whether accessible by all parties to a contract, or to none - should be set up for all borrowers. They should be set up for people who borrow land, labor, and capital alike. That's because the people of the proletariat, lacking land and capital, sell their labor. They own  nothing else, and thus have nothing else to sell. It should not be ignored, that, in selling their labor, they are selling the last thing they have, and thus have nothing else, save for what little compensation they receive from work. The security of that compensation should, at the very least, be transparent to the worker.

     What I am recommending, in general, is diminution and lessening of the monopolistic, exclusive, and exclusionary characteristics of property ownership. Thus, monopolist property owners would be turned into oligopolists.

     The propertyless become property owners, and the monopolists become oligopolists, at the very moment when renters, borrowers, and workers begin to receive sufficient amounts of exclusive property (and sufficient rights to that property) as compensation. That is, as compensation in exchange for the efforts they put into their relationships of financial trust with landlords, lenders, and employers.

     Once the privateers of the bourgeoisie (that is, the government, landlords, land speculators, lenders of physical and financial capital, and employers of labor) come to wield oligopolies on possession, instead of outright monopolies on ownership, then renters, borrowers, and workers (i.e., the proletariat) can increase their “market-share” of possessed assets, and increase its value relative to the value possessed by those who desire to be monopolists.

     Thus, through increasing their market-share of property, and the degree of their control over their property, the proletariat can lessen the degree of their exploitation, and lessen the monopolists' degree of control over their property claims; and in so doing, they make it easier for workers to work for shorter periods of time, in order to acquire their own slices of property.

     But – again – for proletarians to own such property, can only be rightfully described as the result of violence, if no constraints whatsoever are placed upon the owner's (landlord, boss, lender, etc.) ability to exclude others; upon the owner's ability to unfairly estop people from fulfilling their obligations (i.e., by buying the residence, buying the workplace, repaying loans, etc.).

     If those constraints exist, then the property is not fully private, because the exclusivity is not total, and, in effect, not fully exercised. And those constraints, by the way, do not even need need not be imposed by the state, but can be accepted as a matter of mutually beneficial contract; between the owners, and the workers and their associations.

     Finally, I must add that, to turn monopolists into oligopolists, would, by no means, result in universal property ownership by itself.

     It is not enough to resign ourselves to allowing “property ownership” to increase, simply by allowing current owners sub-contract and sub-let all their properties out to others. This is not ownership, but renting-out what's already being rented. It is rent upon rent; that is, compound rent. Creating hundreds of shell corporations within one-another, while the original firm gets all the profit - or sub-letting-out smaller and smaller portions of a residence, while the tenant is increasingly boxed-in – don't have anything to do with either anarchism, or a just conception of property rights that desires for all people the realistic potential to become owners.

     What is necessary – in addition to the practical opportunity to acquire property without either the hindrance or assistance of a state – is for workers to struggle.

     Not suffer, mind you, but struggle. Not work too hard, nor work their fingers to the bone, nor work themselves half to death. By “struggle”, I mean that workers – after they are freed from the legal constraints placed on their ability to acquire property justly – must also free themselves from the economic and social constraints which hinder them from acquiring property.

     What, exactly, it means to “free oneself from economic and social constraints on acquiring property justly”, is beyond the scope of this essay, so I will allow my readers to form their own ideas about what this means, and how it could be achieved.

11. Conclusion

     I hope I have made it clear, in the above, why I believe that rent, profit, interest, and usury all result, and thrive, due to monopolistic as well as oligopolistic ownership of property.

     Additionally, due to monopolistic and oligopolistic control of property rights; for example, through hiring privatized security forces to protect property claims, and through hiring lobbyists who petition the government for property laws which are favorable to people who already own property.

     If it weren't for the state, and its self-granted privilege to recognize exclusive title to land, then monopolies on labor and capital (which rest on that monopolized land) would not exist. It is because of the state's self-granted privilege – to recognize the monopoly privileges of all of its other favored marketplace actors – that other monopolies exist.

     If not for the state's recognition of the privilege of the owner to exclude, the privilege of the landlord to evict, the privilege of the boss to fire, and the privilege of the lender to collect – the vast majority of these privileges being completely unchecked by any agency other than those of the state – then people would acquire property and find work according to their own efforts, and according to what all parties to a contract believe is a fair (not just adequate) amount of compensation, in a manner which is beneficial to the mutual long-term interests of all parties involved.

     Finally, it behooves me to note that the above mentioned problems, are precisely why the state cannot be trusted to perform either its antitrust or its anti-usury functions. Because, as I have stated so many times in the past, the state creates monopolies, and thus cannot be trusted to do away with them. The state creates currencies, and all but compels people to use them (when they'd rather use money, which is backed by real value, unlike currency), and thus no other currency has a chance to compete against the state's “money monopoly”.

     Granted, firms which generate profit should be taxed at a higher rate than those which reinvest all would-be profits or generate no profit at all. [Note: This is to say that non-profit, cooperative, and egalitarian firms should not be taxed, provided that they don't receive any privileges to wield exclusive monopolies.] Moreover, firms which do not generate profit, should probably not pay taxes at all. But the only reason they should be taxed, is because the funds being taxed away were “earned” (acquired) thanks to the assistance of the state's monopoly powers.

     The reason, however, to tax those profits, should not be construed to imply that the state should collect those taxes. Granted, the state is the only entity which we perceive of as capable of collecting all those taxes in the first place (at least right now). But being theoretically capable of performing this task, does not make it morally deserving of the task, nor does it guarantee that the government will collect as much taxes as it intends to, nor that it will collect solely those taxes which are duly imposed for the privilege of financially benefiting off of the state's monopoly protections (which can even include extorting funds from taxpayers in order to provide privileges, subsidies, and bailouts for firms that are supposedly “struggling”).

     What will be necessary - and appropriate, and moral - for the collection of taxes upon the funds gained from wielding monopoly privileges, will be for a non-monopolistic, or less monopolistic, form of economic governance, to emerge. The monopolistic nature of the state, just like the monopolistic nature of exclusive and exclusionary property rights, can be lessened. This can be done through decentralization, localization, and strict delineation of spheres of policy influence across the various levels of government. One example would be for community associations to levy taxes on profits, rather than for the state or federal government to do it.

     Readers desiring to know more about my ideas about how our government could be made “less statist” (which is to say, less monopolistic), can read my July 2013 article “On Max Weber's Definition of the State”.

     All legal and economic monopolies must be destroyed.

     We will destroy monopolies by making them into oligopolies, and gradually into polyopolies. The final form of our economy should be a polyopoly-polyopsony, a state of many sellers, many buyers.

     Without legal titles, any de facto, monopoly which is perceived of as “natural” (except for land, the monopoly on which is natural, at least in a limited, local sense) will not last as a monopoly for very long, given the total freedom of all others to enter into competition with it, and to challenge its right to exclude. (Note: Land would likely prove to be the easiest monopoly to abolish, because of the vast amount of it which exists; however, many people have yet to be convinced of this fact. Once land proves abundant, then the cost of mixing labor and capital upon the land will plummet.)

     Without the state, people would have the unlimited right to challenge a company's privilege to “exclude” some people; especially if it forcibly includes them at the same time. Firms with significant financial privileges and/or legal immunities often exclude workers and customers from benefiting sufficiently from the company, while at the same time compelling them (as well as taxpayers), to pay the company through taxes (due to the privileges, subsidies, and bailouts for which those taxes pay). Thus, the taxpayers, workers, clients, and consumers have little to no recourse with which to free themselves from this benefit-free obligation, save for hiring a lobbyist to change the law, so as to allow them to fully boycott the company, by removing all of those privileges and favors which help keep the company afloat.

     However, the anarchists, of course, would object to such lobbying, and rightfully so, since lobbying the state to change its laws, requires the legitimized use of violence. Unless, however, if in the process the state ceases becoming a state as we know it - like by shedding all of its monopolistic aspects and abdicating all of its power to rule and enforce with finality - then a change in the law is just what we need. Especially if only those contracts and agreements which are both mutually beneficial and voluntary, come to be accepted.

     Only by establishing “O&U norms” (that is, occupancy-and-use norms) can we avoid depending upon the state, and its legitimized violence, for a resolution to our property disputes.

     It's time to say “R.I.P.” (“rest in peace”) to “R.I.P.” (rent, interest and profit). And, with them, usury, the most complex and pernicious form of economic rent and excess return.

12. Post-Script: Taxation and Monopolies

     While I have explained at length why monopolies deserve to be taxed, and alluded to an answer as to whom ought to tax them, I have yet to explain the issues of whether taxation is a monopoly, and whether taxation has to be done in a monopolistic fashion.
     I believe that taxation is currently a virtual monopoly, at least in the United States. I say this because federal government expenditures constitute about 25% of the G.D.P., while state and local government expenditures constitute 15%, while other expenditures constitute the remaining 60%. Since 1789, the federal government has certainly demonstrated its ability to suck whole sectors of the economy into its legislative purview. And with it, a much higher percentage of the economy is taxed-away by the federal government; both in comparison to state and local governments, and in comparison to the level of taxation which Americans enjoyed 100 years ago.
     Having the state and local governments spend more than the federal government - or, to put it a better way, having the federal government spend less than state and local governments - will help reduce the federal government's monopoly over the legislative and judicial functions related to taxation, and thus enable state and local governments to take-over any federal functions which they can handle.
     [Note: The executive function of taxation, has already been sub-contracted-out to our employers, whom are obliged to collect taxes from our paychecks. What would our country be like if those taxes were retained in a mutually accessible fund, or would only be paid to the government on April 15th if both employers and workers agreed that the government had done a good job the previous year? It simply cannot be, that we "can't afford" to have a basic level of financial transparency in all transactions; it should be financial transparency which dictates what is affordable, rather than the amount of wealth thought possessed.]

     Because the only morally just goal of taxation (in my opinion) is for the purpose of diminishing the influence of monopolies, taxation cannot and should not be performed by a single institution, nor by any agency affiliated with the state (which I contend is an intrinsically monopolistic institution).
    As I explained earlier, if community associations were to levy taxes, instead of the state or federal government, then it would be a less monopolistic way of doing things. Other agencies which could perform the task of taxation in a stateless society, aside from the most local governments possible, which would also lead to the diminution of the monopolistic enforcement and characteristics of taxation, could include:
     1) voluntary associations;
     2) Georgist C.L.T.s (Community Land Trusts);
     3) mutual public banks; and
     4) private (though non-state-affiliated) security agencies (and other types of firms) which charge dues based on one's ability to pay, or based on the value of the property being protected (such as the libertarian activists who protected portions of Detroit, Michigan following the 2007-08 financial crisis).
     But more importantly than one's ability to pay, however, is the issue of to what degree one's wealth was acquired because they helped the state extort people in exchange for land, labor, and capital.

     Taxation does not have to be performed by an agency wielding any monopoly powers, nor even privileges to make any decisions bearing any sort of finality whatsoever. Decentralized governments, and non-state-affiliated nonprofit organizations can levy taxes.
     Community Land Trusts can be set up, which levy "taxes" (although Georgists call them dues and fees) in a decentralized manner, for the benefit of the community. But that community need not exist with territorial limitations, however; if nobody can be stopped from joining, and nobody can be excluded, without unanimous or consensus-based agreement of just cause, then the community is not a state, because it is neither monopolistic, exclusive, nor exclusionary.
     Additionally, it is possible to fund an entire government solely through charitable contributions, without punishing people for refusing to pay (save for social ostracism). We know this from the experiences of the Jewish people who lived in the Holy Land (i.e., Israel-Palestine) in the 1930s and 1940s; they set up charitable funds which were spent on building Israeli government buildings and bringing the land back to life.
     Any tax which a person can be convinced to pay, is voluntary (unless he is tricked or defrauded, or otherwise unjustly deprived of the freedom to choose other viable forms of taxation). Any tax which is agreeable to all people, is voluntary. Taxation systems based on voluntary payment of dues (for as long as one wishes to receive benefits), and fee-for-service models, could and should replace compulsory taxation.
     I mean, we have to do something. People should not get shot to death on their front lawns for refusing to pay their taxes. Harsh punishments for tax evasion are only warranted if the tax is just and unanimous, and people enthusiastically sign up to be shot if they refuse to pay. Only the very insane, and the very suicidal, would do such a thing. Or, perhaps, the very confident.

     Finally, I would be remiss if I neglected to mention the following: While it is very good to tax monopolies, governments would have no need to do so, if they did not create those monopolies in the first place.
     And a government which consciously reduces the monopolistic characteristics of all of its functions - legislative, executive, and judicial functions - is less likely to have enough power to create imbue firms with monopolistic privileges and rights to exclude.

13. Links and Additional Reading

     As promised, I will hereafter include links to additional readings about the topics of why most monopolies are state-created; as well as how to tax profits without the state (as solutions have been offered by left-anarchists and right-anarchists).

Articles about the taxation of monopolies, written by various authors:

http://www.jstor.org/stable/1008701?seq=1#metadata_info_tab_contents
http://www.economicsdiscussion.net/monopoly/effect-of-taxes-on-monopoly-equilibrium-with-diagram/17081

http://mnmeconomics.wordpress.com/2011/09/29/taxing-a-monopoly-firm/



Articles by Left-Anarchists / Anti-Propertarians / Anideotists:

- introduction to anarchist economics (no state, no private property):
http://en.wikipedia.org/wiki/Anarchist_economics

- Jeff Smith, student of Henry George, on replacing taxes with Land Value Dues:
http://www.wealthandwant.com/themes/Land_Dues.html

- website about Georgist student Ralph Borsodi (look for the articles about Community Land Trusts):

http://www.schoolofliving.org/borsodi

- explanation of Community Land Trusts:
http://en.wikipedia.org/wiki/Community_land_trust

- Pierre-Joseph Proudhon's “The Misery of Philosophy”, on monopoly and property:
http://www.marxists.org/reference/subject/economics/proudhon/philosophy/ch06.htm

- Benjamin Tucker's “Four Monopolies” (land, money, patents, and tariffs):
http://attackthesystem.com/2011/06/03/benjamin-tuckers-four-monopolies/

- Roderick T. Long and Charles W. Johnson on “the many monopolies”:
Long: http://fee.org/articles/the-many-monopolies/
Johnson: http://praxeology.net/cjohnson-state-monopolies.pdf

- Gary Chartier on redistribution without the state:
http://bleedingheartlibertarians.com/2011/04/bleeding-heart-libertarians-for-redistribution/

- on Spencer Heath, Heathian anarchism, proprietary communities, and multi-tenant properties:
http://ipfs.io/ipfs/QmXoypizjW3WknFiJnKLwHCnL72vedxjQkDDP1mXWo6uco/wiki/Heathian_anarchism.html
http://www.explorersfoundation.org/glyphery/280.html
http://attackthesystem.com/spencer-maccallum-interviewed-by-wayne-john-sturgeon/
http://fee.org/articles/introduction-to-proprietary-cities/Articles by Right-Anarchists / Propertarians / Ideotists

- Walter Block's support of Rothbard's criticism of Henry George:
http://www.lewrockwell.com/lrc-blog/henry-george-weak-economics-example-rothbard-rule/

- Hans-Hermann Hoppe on different types of property:
http://www.youtube.com/watch?v=nNTDqAunbCc

- Robert P. Murphy's Chaos Theory (read the section on security, especially the parts which address the issue of how people could secure property claims in the absence of the state):
http://mises-media.s3.amazonaws.com/Chaos%20Theory_2.pdf

- Robert P. Murphy's “The Economics of the Stateless Society”
http://www.youtube.com/watch?v=yoJF_psh8AI

- Stefan Kinsella's criticism of Occupancy and Use norms:
http://mises.org/wire/critique-mutualist-occupancy

- Linda and Morris Tannehill's “The Market for Liberty”:
http://mises-media.s3.amazonaws.com/The%20Market%20for%20Liberty_2.pdf
See also: articles by Joe Kopsick on related topics:

- Joe Kopsick on the taxation and securitization of property:
http://aquarianagrarian.blogspot.com/2014/11/panarchist-securitization-and-taxation.html

- Joe Kopsick on private alternatives to the state:
http://aquarianagrarian.blogspot.com/2019/03/privatization-or-anarchism-providing.html

- Joe Kopsick's “Why Rent is Theft”, criticizing economic rents (rent, profit, and interest):

http://aquarianagrarian.blogspot.com/2019/03/why-rent-is-theft-against-economic.html

- Joe Kopsick on Max Weber's definition of the state, and how to make government less monopolistic:
http://aquarianagrarian.blogspot.com/2013/07/on-max-webers-definition-of-state.html

- Joe Kopsick on Geolibertarianism (a description of how to turn a system based on rent and taxation, into a system based on the collection of dues from vacant land):
http://www.lclp.org/articles/geolibertarianism/

- Joe Kopsick on why Libertarians should be interested in Georgist Land Value Taxation:
http://aquarianagrarian.blogspot.com/2017/01/what-is-geolibertarianism.html

- Joe Kopsick on how prisons could be privatized without risking corruption by the profit incentive:
http://aquarianagrarian.blogspot.com/2019/05/how-to-fully-privatize-prisons-without.htmlSee also: a free-market perspective from in the middle:

- “Property is Only Another Name for Monopoly”, by Eric A. Posner and E. Glen Weyl:
http://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=12668&context=journal_articles





See also: taxation without the state among Jews in Palestine in the 1930s-1940s
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1983331




See also: descriptions of private dispute resolution in a stateless society:

- traditional definition of a private dispute resolution organization:
http://en.wiktionary.org/wiki/dispute_resolution_organization

- more detailed definition: http://en.wikipedia.org/wiki/Dispute_resolution

- Stefan Molyneux on Dispute Resolution Organizations (D.R.O.s) as an alternative to the state:
http://www.youtube.com/watch?v=1B-5Lbpk_3Y

- David D. Friedman on medieval Iceland's justice system:
http://notendur.hi.is/bthru/friedman.htm (link within leads nowhere)
http://www.daviddfriedman.com/Academic/Course_Pages/Legal_Systems_Very_Different_13/Book_Draft/Systems/SagaPeriodIceland.htm
http://www.daviddfriedman.com/Academic/Iceland/Iceland.html
http://praxeology.net/libertariannation/a/f13l1.html

- Roderick Long on dispute resolution without the state:
http://en.wikipedia.org/wiki/Icelandic_Commonwealth#Legacy
http://www.lewrockwell.com/2002/06/roderick-t-long/the-vikings-were-libertarians/

- other authors on dispute resolution without the state:
http://libertarianism.fandom.com/wiki/Dispute_resolution_organizationSee also: links regarding the management of firms by labor:

- Richard Wolff on worker self-management and Workers Self-Directed Enterprise (W.S.D.E.s):
http://www.geo.coop/content/richard-d-wolff-worker-co-op-solution
http://www.jacobinmag.com/2016/03/workers-control-coops-wright-wolff-alperovitz/
http://www.rdwolff.com/crispy/legislative_package_introduced_to_encourage_employee_owned_companies

- Richard Wolff on WSDEs:

http://www.rdwolff.com/faq_worker_coops_wdes

- the labor-managed firm (or Egalitarian Labor-Managed Firm; E.L.M.F.):
http://www.tandfonline.com/doi/full/10.1080/00213624.2017.1391592

- articles about workers' savings funds:
http://www.peoplespolicyproject.org/2019/05/29/bernie-sanders-gives-the-nod-to-funds-socialism/

- Occupancy and Use norms:
http://c4ss.org/content/41421http://www.reddit.com/r/DebateAnarchism/comments/1rf2ly/what_is_the_occupancy_and_use_theory_of_property/

Based on notes taken in April 2019, and May 19^th, 2019

Written on May 21^st and 22^nd, 2019

Edited and Expanded on May 27th and 31st, 2019
Edited on October 30th, 2019

First image created in May 2019
and re-created on September 8th, 2021
and added on September 8th, 2021

Originally Published on May 22^nd, 2019

Author's Post-Script written on May 22nd, 2019

Additional Links Added on May 31st, 2019