Magnus

Yes, the personal income tax is a true income tax (for the 43% of the population that actually pays income tax), whereas the "corporate income tax" is a really a "corporate profit tax." So, corporate income taxation creates an incentive to reduce corporate profit, and the easiest way to do that is to increase the corporation's expenses. Running household expenses through a corporation is a fairly universal practice. Every small-business employer I ever worked for had the owners' entire family on the payroll as ghost employees, at a level that saved the company taxes on the salaries they were paid, but low enough to keep from triggering much in the way of personal income tax for them. Cars, food, trips ... everything they could think of was paid by the corporation.

My favorite Onion piece about the absurdity of the economy and the government is this one -- the Money Hole.

The (Marxist) value of labor is calculated as whatever the current price of labor is, plus each laborer's portion of the seized-and-redistributed wealth and income derived from that most eeeevil of sources -- profit. For some reason, they think that the owners are in no way entitled to compensation for risking their savings, identifying a desired product, or organizing all the factors of production and distribution. These tasks take care of themselves, somehow.

One of the things that really opened my eyes about money was learning about the true meanings of the words "dollar" and "value." They actually have simple and concrete meanings that have been lost through centuries of abstraction and obfuscation. A dollar is, literally, a quantity of silver. You can't stamp a gold coin and call it $30. A dollar is just X grams of silver. It comes from the German word "Thaler," which is from the word "mountain," which is where popular silver high quality coins were made. A dollar bill is just a paper receipt used to claim a dollar from its safe storage custodian. It's easier to just trade the bill rather than carry the metal around. "Value" means the literal, physical, chemical content of a metal. It's a binary measurement -- mass and purity. Because metallic currencies are elements, their mass can be determined very precisely, if it's 100% pure. So, with a given specimen of an elemental metal, one can actually count the number of molecules of that element that are present. All you have to do is weigh it, and assess its purity. That process is called "assaying" a coin (or brick, or whatever), and the resulting conclusion is a determination of its "value." Value is not the exchange rate in the marketplace. The value of a coin is its actual, physical content. With this in mind, it's clear that coinage (and bills as their proxy) cannot, in a sane monetary system, ever lose value. They are what they are. X grams of Y metal will always be exactly that. A government cannot declare their value, any more than they can declare that a kilogram shall henceforth weigh 8 pounds, or that a gallon shall now have only 6 pints. That's why the Coinage Clause of the US Constitution is is the same paragraph as the section on weights and measures. That's what money used to be -- a physical, objectively determined quantity of something.

My position on the subject is this -- if people want to participate in fractional reserve banking, they should be able to do so, by choice. But there needs to be proper disclosure, which is the antidote to fraud. The fraud arises when a bank issues far more "money" in its banknotes than it actually has in reserve. Whether the fraction is 1%, 10% or 90%, the point is that the fractional reserve bank does not have the ability to honor all of its notes on demand, at the same time, even though every note is purportedly a demand note. So, my thought is to fix this problem by simply stating the minimum fraction that the issuer holds in reserve on the face of the note. If it's a note issued from a 10% reserve fund , then the note itself should say so. The fund itself should also be stated -- gold, silver, copper, chickens, tires, iron ore, monkeys, etc. You'd have a "10% Reserve Gold Note" or "50% Reserve Silver Note" or "100% Reserve Platinum Note" or whatever. A bank could issue multiple types of notes, from different funds, and depositors could make deposits into any fund they choose. Fractional reserve funds would pay interest to the depositor, whereas a 100% reserve deposit would likely cost the depositor a fee. That way, the 100% reserve notes could circulate in the economy, trading against each other. In some places, for some people, and at some times, everyone might want 100% Gold Notes. In other times, and for other transactions, a 50% Silver Note from a good bank will be equally valuable. At other times, the fractional note would trade at a discount off the most valuable type of note. Any note that is a fractional reserve note will be payable on demand up to that fraction, with the remainder payable at the bank's option over time (say, a week, a month, etc.). But the amount payable ON DEMAND would always be available, even if there were a bank run, because the fraction in reserve would never fall below the stated percentage (unless a bank wants to commit an outright fraud and be shut down). In other words, the bank should not purport that all its notes are payable on demand, when clearly that's impossible with a fractional reserve. By admitting the fraction on the face of the note itself, the holder of the fractional note is aware of the risk.

The video cited above is a narrated version of Murray Rothbard's book on the history of money. Another great short book of his on the subject is What Has Government Done to Our Money?

That's really funny, in an awful and demented sort of way, but I can't believe you actually WATCHED the beastly thing!

I don't normally read National Review Online, but a quote came into my field of vision from Kevin Williamson (otherwise unknown to me) that summed up the nature of the State of the Union address. I love a good adjective, and thought some FDR friends might enjoy this passage:

Austrian economic theories are not difficult at all to corroborate through empirical data, testing and observation. The problem is that economies are so complex and condition-sensitive that empirical test results are of limited significance. It's like the parable of the four blind men touching different parts of an elephant and describing four wildly different qualities. Complex processes have so many facts to examine, and so many causes to trace, that it's ripe for people seeing only what they want to see. Dogmatic empiricist economists always seem like they're perpetually taking a Rorschach test. Unless you can derive an explanation from reasoning, it's painfully obvious that you're just describing your own perceptions and assumptions, not reality.

Planners control the location and configuration of every type of structure and business, and thus the size, type and location of all the roads between and around them. It's not a market or property-based process.Planners don't have to prohibit biking or walking. They just discourage them by putting the residences a few miles away from the businesses. And they encourage cars by the forced subsidization of car-friendly road systems.A truly market-driven urban space would most likely resemble the quaint, walkable, quasi-medieval neighborhoods that still exist in tiny remnants here and there. Cars would exist, but be far less prominent.The suburban shopping mega-mall is essentially a synthetic facsimile of the age-old walkable shopping district, with small shops lining footpaths (but with a cover on top and air conditioning added, and the above-shop apartments removed, and the whole site moved to a spot far away from people's homes, and surrounded by parking lots).

There's an awesomely awkward video on YouTube of Jan Helfeld interviewing Nancy Pelosi on this issue. She clearly had no idea he'd be asking those kinds of questions. She kicked him out of her office. Called security and everything. Helfeld was a lot nicer about it than I would have been, I think.

It's sort of like how the State mandated racial discrimination, right before it prohibited it. Towns that were built before the age of State planning (and managed to survive (in some small way) until today) are the places that people save for their whole lives to visit on vacation.

Could such art be a way of processing dysfunction?

Army, no, police, yes. It may be possible to reduce violence to a point that the security is all but invisible, most of the time. A designated, uniformed police force is a relatively new invention, actually. Since people always accuse me of being utopian, I've learned to front-load a disclaimer that, in practice, there will never be a 100% free society. There will always be murder and theft. So, I usually resort to couching my position as aiming at a "freer" society, rather than a "free" one. The "utopian" allegation arises, I believe, whenever any proposal challenges the system as a whole, as opposed to one that seeks to work within the existing system. People are deeply brainwashed into assuming the system is what stands between them and a Mad Max lifestyle.

I don't disagree with any of that. Yes, production of things will always be necessary, so that we have food, clothes, shelter, coffee, computers, notebooks, coffee, refrigerators, coffee, etc. The capacity for manufacturing has grown tremendously, not only since 1750, but since 2005. Will people find ways to increase wealth, despite the vast increase in material output and its efficiency? Sure. Machines are just media -- extensions of man. They enable people to do things we do. They are not laborers -- they are labor-magnifiers. They do not ACT, in the Misesian economic sense of the word, i.e., in the sense of making choices about how to behave in order to pursue the fulfillment of one's goals. For example, designing the things that the machines make is a service, but also a form of economic production. Making fine art is a form of economic production, even if it's just writing an e-book or singing a song or speaking a role in a play, which have almost no durable, tangible manifestation at all. These things improve lives to the extent that people want them, and they're willing to forego something else to get it. "Growing" or "improving" the economy is a matter of increasing the coordination of production with consumption. It's not a matter of the volume of stuff produced, or the number of dollars circulated by transfer agents, or the number of barrels of petroleum pumped or burned. It's the degree of coordination between producers and consumers (and we all play both roles, at different points throughout the day). It's the degree to which people are doing things that other people are willing to trade for. So, economic improvement will always be possible, even if the growth areas of the economy consist mostly of finding new or better ways to provide desired services, while the physical production of things becomes easier, and thus less and less of a limiting factor.

That doesn't really answer the question. "Production" includes both products and services. Manufacturing widgets is a kind of service. Although objects are sold on a per unit basis, and the buyer never meets the maker, the distinction between product and service is largely imaginary. What improves the quality of life is subjective -- the satisfaction of desires. If that means paying for the temporary use of things rather than permanent ownership of them, then so be it. Sometimes use is all that's desired.

Here is an excerpt from von Mises on the topic of the rationality of economic action. He argues that since the value we place on our goals is entirely subjective, it makes no sense to call those goals (or "ends") either rational or irrational. The only area where rationality matters is the degree to which one's means (i.e., actions) are well-calculated to achieve those goals, since some of actions are better at achieving one's goals than others. A great deal of what Statists mean when they say "irrational consumer" is "people who don't share my values." Or, they mean something like "imperfect information." (As though the State has access to better information.) Either way, it's entirely false to claim that free-market economics depends on an assumed "rational actor." The entire field, assuming von Mises counts as a free-market economist, relies on the assumption that there is no such thing as rational action, as the critics mean it. They openly disclaim that such a thing can exist.

I came across an interesting short article/blog post over at Popehat. (I can't tell if the writers are religious, or mocking religion.) My favorite part: This same writer once tweeted: Good stuff.

Once upon a time, having access to a water source was synonymous with wealth. Then arable land was synonymous with wealth. Then coinage was synonymous with wealth. Then manufacturing capacity was synonymous with wealth. At the moment, wealth is the rate at which electronic blips get passed between people. As long as the quality of life can be improved by doing certain things instead of other things, there will always be an economy.

It was over for me when, despite his having failed to articulate any principles, deductions, arguments or instances, he declared himself the winner, as though we were having some kind of debate. The chess metaphor was a nice touch, though.

Yes. That's an intractable problem. In order to get thoughtfulness and rationality to appeal to large numbers of people, one must abandon the thoughtfulness and rationality you are trying to promote. Individuals are capable of rationality. It's actually fairly rare, like a capacity for abstraction in general. In large numbers, however, the motivators of behavior are reduced (like a lowest common denominator operation) to a cluster of various emotions -- principally the drive for acceptance, to increase (or at least maintaining) social status, and the fear of loss and/or rejection.

The "savings" would only materialize if "Utah" actually stopped spending the $16k on police and jails. They won't. The $11k for an apartment and social worker (which will actually be quadruple that amount) will simply be added to the cop/prison expenses, which will never go away. Plus, like the auto-refilling horn of plenty that Thor tried unsuccessfully to empty in a single gulp, homelessness can't be ended by giving houses to homeless people because the policy will help create new homeless people. First, the people on the margin will want other people to pay for their apartment, then out-of-state people will move there to get one.

Your comment addresses 2 different things -- (1) how to improve economic reality and (2) how to make anarchism more popular. As for improving economic reality, the statists' laws on poverty are clearly not designed to end poverty, but to regulate and normalize it. Their main purpose and function is to ensure the poors stay on their side of town and fight amongst themselves. The effect (long term) is to extend and perpetuate poverty. The War on Drugs also helps keep them in a state of constant submission. If everyone had the same access to security against violations of person and property, most poverty would end in 1-2 generations (about 20-30 years). As a matter of how best to promote the popularity of anarchism, we should do what propagandists have always done -- promote the lifestyle, the ethos, the context for anarchism, not anarchism itself. You show how cool, positive, successful, interesting and moral anarchists are. They didn't sell Apple Macintosh computers by showing commercials that explained the computers. They did it by hiring Ridley Scott to shoot a slick commercial depicting a colorful female athlete in a colorless androgynous dystopia, running in and smashing the face of Big Brother with a sledgehammer, thereby liberating the enslaved masses from conformity (i.e., IBM). We should do videos (and graphics) showing attractive people living exciting, fun, cool, creative lifestyles, then mention at the end that anarchism is how to be a part of it. We probably need a new label, too.

You didn't ask what I was willing to do. You asked what I had the right to do (or to refuse to do), or what I could be forcibly compelled to do. What I am willing to do is an entirely different question. As for a more righteous world, the level of righteousness in a society is not defined by its wealth distribution, but by the process by which wealth is created, destroyed and transferred -- i.e., the degree to which every person is free from aggression, particularly aggression that prevents them from pursuing businesses, freely engaging in commercial trades, confiscation of their property, and other forms of economic aggression. Some people are vastly more economically valuable than others. Some people want material wealth more than others. I don't care about wealth. I care about freedom from aggression. I stand 100% in favor of everyone being free to express his productivity and talent. I 100% oppose the many violent ways that the governments of the world prevent people from doing that. I'll pay whatever I choose to pay for shoes, depending on what's offered to me. I have no say in the matter as to where they are made, unless I am the one making them, which I'm not. Please explain exactly how the price I pay for Chinese-made shoes, the making of which I have no influence or control, is altered in any way by the property I may or may not have inherited from my father, or may or may not leave to my son in my will.

Yes. No one is entitled to take another person's productivity.