Modest Proposals

[claylc]

http://groups.google.com/group/misc...60eb76?hl=en&lnk=st&q=tc5526#e037243d0460eb76
is the source for the following:

In my opinion, there are some major policy changes which would have to accompany the monetization of the US federal debt. “Sin no more” - a Constitutional amendment to :
a) Deny the government the power to *issue* debt instruments, including “money”. 1997CRH1901 implies that “money” is already out of the hands of treasury and firmly in the grip of the federal reserve anyway. Notice that this would also require a budget surplus to stay ahead of the current account or a large government reserve of past surpluses, preferably both. Notice that I said *issue* not *hold*. Implicit in the notion of a reserve is the right of the government to command a transfer of value from one party to another through an exchange of debt instruments (held by the government) for goods or services.
b) Deny the government the right to *guarantee* compensation of one party when another party fails to honor a debt obligation. Notice that I said *guarantee* not *enforce*. The objective is to avoid nonsense such as the savings and loan bailout. Deep pockets Uncle Sam is no more. Let business judgment be based upon close scrutiny by both parties in any financial transaction.
c) Define the qualifying characteristics of “money”, by which I mean any debt instrument for which *enforcement* of debt obligations is guaranteed. Rather than specifying a commodity of intrinsic value (such as gold standard etc.) this might be a specification of how the issuer of a debt instrument must own and control a commodity reserve backing the value of any debt instruments issued. The “commodity” might be anything from fresh water (think about California and Arizona) to computing resources (think about internet file server dynamic loads). Have I beaten the horse to death with my examples ? If not, then one more time around the mulberry bush. As I see it the role of the government should be enforcement of the implied exchange contract as the “money” changes hands (moving through the economy) rather than any judgment of the intrinsic value of the commodity reserve. In a broad heterogeneous market the various “brands” of “money” will compete in a manner similar to the international money markets today. The transition phase from “funny” money to new money is the tricky part. No doubt there are thousands of economists and millions of lawyers eager to suggest ways and means, not to mention the folks at the fed.
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Based upon prior experience my notions regarding taxation and representation go over like a lead balloon, but I will give it a whirl and depend upon the courtesy of the long suffering public to ignore what they consider beneath 
contempt. T A X A T I O N (first published Jan 20 1992 in “PD News”)

Proposition 1 :
1) The survival of the nation is desirable and depends upon its wealth.
2) The wealth of the nation always needs to be increased in competition with other nations, who in turn seek to gain advantage.
3) The wealth of the nation is the cumulative result of economic activity, with economic activity determining the rate at which wealth increases.
4) Anything which directly inhibits economic activity reduces the rate at which the wealth of the nation increases, ultimately threatening its survival.
5) Economic activity is inhibited by increased costs.
6) Sales taxes and income taxes directly tax economic activity, increasing the cost of the product and production labor cost etc. which ultimately threatens the survival of the nation.
( Let me add a 1997 economics translation of 5-6. The opportunity cost for a seller is the sum of
a) the basic overhead and capital equipment costs amortized over units produced plus
b) the basic materials cost per unit plus
c) the basic labor cost per unit. Draw a bar on the left hand side of the page representing the seller’s value range based upon competitive market conditions and volume sold. Now draw another bar beside it starting higher and extending further upward to represent the value range after adding in all effects of regulation and taxation - the government mandated revised cost. On the right hand side of the page draw a bar in the appropriate position to represent the opportunity cost for a buyer to exchange money or something else of value for the seller’s product as a function of volume sold. Better yet, show the bars as a set of curves. When the buyer will not purchase the product at the government mandated revised cost for a given volume then there is a market dislocation - nothing gets sold unless the seller is willing to perform the unnatural and irrational act of selling at a loss below unit cost. For example consider the possibility of an absolutely enforceable luxury tax on a product placed at ten times the price at which the most eager customer would be willing to purchase the product.
Due to business debt costs, regulation, taxation, and government mandated overhead mature businesses in the US suffer from an excessive component a) above even when components b) revised and c) revised do not bankrupt them. They cannot compete with new foreign businesses producing the same products unless product distribution and tariff barriers make the government mandated revised opportunity costs equal. The death of a company and industry may be slow but it will surely come. As I pointed out above, taking a loss on unit sales is an unnatural and irrational act. This is economics 101 as I learned it in 74-75. Perhaps someone will post a note on this thread giving URL and book references for those unable to follow my explanation. A scruffy stumblebum like me cannot convince those who require a string of credentials to validate an opinion. )
Proposition 2 :
1) Everyone wants wealth, whether great or merely sufficient for survival.
2) Holders of wealth want to keep it. This requires a secure environment.
3) Government provides security to the citizens and businesses of the nation through its laws, personnel, and possessions. One which does not will fail.
4) Those who derive a benefit from a system should pay in proportion to the benefit they receive. If they do not, then the system is inequitable and will ultimately fail in competition with other systems which are equitable.
5) So the government should support itself through direct taxation of wealth and user fees for the services it provides.

:m1:

Lonnie Courtney Clay

 

[claylc]

I had to chop the first post due to length. This continues where it left off....

I reckon the howling starts at 4) and rises to a screech at 5). Let me add 1997 perspective.
1) Taxation without representation is theft. A citizen has an obligation to the *nation* of citizenship, but no obligation to support a tyrannical *government* - see The Declaration of Independence “For imposing Taxes on us without our Consent” among other notable (and familiar) offenses. I reject the notion that I have a *unilateral* and *irrevocable* duty to the *government*, but accept the responsibilities of citizenship in the *nation*. If you cannot recall the words of the “Pledge of Allegiance” then I suggest you look it up. The definition of “Republic” may also give you some helpful insights into my point of view. Prohibition was repealed due to popular demand. If the American *nation* yells loud enough then just possibly Congress can be taught the economic facts of life. My personal opinion is that we have the technology to run continuous referendums, and the cost of adding this direct feedback is far less than the cost of economic ruin. Let the American people vote on anything, and I will abide by the judgment of the *majority of American citizens*. It is interesting to note that the federal government demands that its employees (particularly the military) swear to uphold and defend the Constitution (and by implication the government) but so far as I know (correct me if I am wrong) does NOT encourage them to make any oath of obligation to the American *nation*. They salute the flag but their lips are sealed.
2) Representation implies accountability to those “represented” by the incumbent of a legislative office. Regardless of theory, practical experience shows that an incumbent who *runs* for reelection is almost certain to be reelected. Furthermore (regardless of theory) the only opportunity available for the vast majority of constituents to affect the voting of those legislators occurs at fixed term elections, and we all know the value of campaign promises. Due to the “party” system of politics (somebody should add a URL link to this thread telling how much the founding fathers despised political parties) the choice of “representatives” is limited to Tweedledum or Tweedledee. Since voters usually do not want to vote *for* someone, they stay home on election day. Representation by geographical district (rather than at-large) practically guarantees that the “representative” will actually represent a constituent minority. Somebody please add a graph showing total votes received by the elected members of each Congress over the past 100 years superimposed over the census bureau data for citizens entitled to vote.
3) From 2) above and the problems noted in the current debate over campaign finance reform, it should be obvious that a revision to make America a representative democracy is needed. If you eliminate the campaign financing then the problem of bribery/influence may be reduced to a manageable level *if* legislators are made subject to the penalties of RICO. If you eliminate the campaigns then there is no need for financing at all. If you eliminate the elections then there is no need for campaigns. You can eliminate elections by converting to a system of representation by proxy similar to what is used in corporate stockholder meetings. Every citizen of voting age has one vote and can allocate that 
vote (at his or her option) by assigning a proxy to a person trusted to represent the interests of that citizen. Eliminate geographical allocation and periodic elections. A proxy can be changed to a different person at any time, with no upper limit on the number of legislators. It might be a good idea to put an *upper* limit on the number of proxies which a single representative legislator can vote. If you keep the fixed term election system of government, try adding “None Of The Above” as a choice in the ballot box. That will bring the voters into the polls! By the way, this form of legislature is something I read in a book in 1980. Ask a Libertarian familiar with science fiction to tell you the name of the book. I am confident that the American people can come up with some better legislative system than what we have now. I am confident that when (not if) another “recession” a.k.a. depression hits there will be a serious effort to call a Constitutional Convention. We Baby Boomers can solve these problems if Depression Generation just cannot muster the energy and intellect to clean up its act. Move over gramps, you sorry old sad sack.....
4) Suppose we had a proxy representation system as outlined above. The legislative representatives actually represent 100 percent of the voting age constituents. One proxy one vote is used to pass policy legislation (*NOT* one representative one vote). There is still a problem with 1) taxation without representation because about one percent of the proxies are held as representative of just about all the wealth of the nation. The legislators need to have two faces - for policy purposes one proxy one vote, but for *allocation* purposes one *tax dollar* voted equals one revenue dollar allocated. The tax dollars paid to the government by the constituent go into a government managed account to be dispensed at the discretion of the proxy holder of that constituent. No tax dollars paid equals no money in account. A million paid minus 100,000 voted/dispensed equals 900,000 in the account. Is there anybody in the world too stupid 
to understand that ? Okay, around the Mulberry bush again. As an example 99 percent of the proxies held by legislators vote to give a loaf of bread and a ticket to the circus to the citizens every day at a cost of 200 billion dollars. The representatives follow up on this nonsense by voting as one tax dollar one vote, pass the hat and collect 2 million. All watch with interest to see how fairly the proceeds are distributed while bakers and clowns riot to protest lost revenue opportunities.

:hide:

Lonnie Courtney Clay

 

[claylc]

3 of 3:

5) I do not think that anyone should be *forced* to receive the “benefits” of government simply because they happen to be a citizen of the nation managed by that government. Proposition 2 item 4) and conclusion 5) should make it clear that I also do not think anyone (notice that I did not say “citizen” here) should receive a benefit of government unless there is a fair exchange of value resulting in an equitable distribution of benefits. I think that most of the “benefits” of government should be divested into the private sector where more rational management will occur. The remaining fall into two categories - those whose use can be denied to an individual and those which cannot. Offhand I would say that about the only thing which cannot be denied on an individual basis is national defense. It is just not practical to tell an invader that he can shoot Curly but not Moe. The benefits which can be denied fall into two groups - those where access to the benefit can be denied, and those which are community wide and not noticed until you need them. If access can be denied then a fee should be collected on a subscription basis or at point of usage. All the remaining "benefits” should be funded by a ***voluntary*** wealth tax whose proceeds go into the government accounts voted by the proxy representatives. Recall the presumption that proxy representatives really and truly represent the constituents and you will notice that “benefits” get funded only to the extent that they are desired.
6) How do you persuade the population to pay a *voluntary* wealth tax ? A couple of simple statements of constitutional law should just about cover it. No doubt the experts can suggest more elegant wording, but here is my suggestion. “Value shall have legal standing in civil law only to the extent that applicable fees and taxes have been paid. Value shall have legal standing in criminal law according to applicable statutes and schedules.” In other words, if you pay a wealth tax declaring that your home insured for 100000 has a value to you of 20000 dollars and your home burns down, then the insurance company is only obliged to pay the legal value of 20000 rather than the policy face value of 100000. You have no legal recourse to recover the other 80000 in civil court. From my college days I recall an insurance business which had a big sign across the building face “What if YOU had a fire tonight ?”. Somehow I think that 
people would pay those “applicable fees and taxes”. For the remainder who just cannot remember until too late - “Think of it as evolution in action”.
7) Recall that “fair exchange of value resulting in an equitable distribution of benefits” in 5) above ? That covers the case of unproductive/unemployed persons. Some provision needs to be made to allow *any* person to exchange value with the government in order to earn benefits. I will leave the specification of such programs to liberals and others concerned with such agendas. No doubt whenever the hat gets passed for their favorites they will empty their cash boxes. The “fair exchange” is booty swapped for the doubtless indescribable warm and fuzzy feeling resulting from giving money away.
8) Recall “no upper limit on the number of legislators” ? Let all legislative business be transacted on-line in the light of day. If somebody wants to hobnob face-to-face then he/she should make suitable arrangements and pay own expenses. So much for the smoke filled rooms of past generations, which we are told causes cancer on a secondhand basis anyway. It would probably be a good idea to put in a time delay on effective date after vote tallies to give constituents a chance to jerk proxies away from misbehaving legislators.
9) It would probably be a good idea for the new legislature to acknowledge facts of life from its inception. Provide a mechanism for auctioning dollar transfers from the accounts representing affluent taxpayers in exchange for proxy vote agreements in the accounts representing less affluent legislators. Anybody who buys influence using any other procedure gets his/her head chopped off, or whatever may seem appropriate to the constituents affected.

:m16:

Lonnie Courtney Clay