FT139: “The political debate has evolved from no taxation without representation to representation without taxation.” —Old Pithy

Posted by PITHOCRATES - October 12th, 2012

Fundamental Truth

Because the Romans debased their Silver Coin they Required the People to Pay their Taxes in Gold or in Kind

High government spending caused the fall of the Roman Empire.  When the Roman Empire no longer expanded through military conquest it could no longer use the spoils of war to pay for the cost of empire.  Which presented some fiscal problems.  As the empire was never bigger.  Covering most of the civilized world.  Which they needed to protect with a vast army.  And governed through a vast bureaucracy.  Both of which cost lots of money.  Lots and lots of money.

So how did they replace the spoils of war?  Taxes, of course.  Starting small.  And growing lager.  To pay for the cost of the expanding state.  Government bureaucrats.  City improvements.  Food for the poor.  Food for the army.  And, of course, the mighty Roman legions.  Later, as citizens avoided serving in the Roman legions, the Romans turned to hired mercenaries to guard the frontier.  And the problem with sprawling empires?  They have very long borders to protect.  And that ain’t cheap.

To help pay for all of this the Romans turned to some bad monetary policy.  In addition to taxation.  Because their tax revenue just wasn’t enough.  So they started debasing their silver coins.  Putting more and more lead into the coins.  And less and less silver.  But this caused another problem.  Inflation.  As the currency became worth less it took more of it to buy anything.  So prices rose.  Making the silver coin pretty much worthless for taxes.  So the Romans required that people to pay their taxes in gold.  Or in kind.  If you grew wheat you gave a percentage of your harvest to the state.  If you made shoes you gave a percentage of all the shoes you manufactured to the state.

A King ruled over the Landed Aristocracy who Lived the Good Life as long as they were Loyal to their King and paid their Taxes

As the tax burden grew small business declined.  Small farmers and manufacturers said enough was enough.  They were working more for the state than for themselves.  So they quit their businesses and worked for someone else.  Because it was easier.  But this caused another problem for the Romans.  No one was making the stuff the Roman Empire needed anymore.  Food and manufactured goods were becoming scarce.  Which made it difficult to maintain their armies on the frontier.  And to provide the massive welfare state in the cities.  So the Romans addressed this problem with new laws.

If you didn’t like working your farm or your business and giving all the proceeds to the state, tough.  You no longer had a choice.  And neither did your children.  If you made shoes you were going to continue to make shoes.  And when you no longer could make shoes your children would continue in the trade.  Those working on farms became attached to the land.  And could never leave.  Regardless of who owned the farm.  If you farmed you would forever farm.  As would your children born on that land.  Allowing the landowners to raise their crops.  And pay their taxes.

So this led to a few rich landowners.  And impoverished masses working the land.  Sound familiar?  This would evolve into European feudalism.  Medieval manors.  The landed aristocracy (the few).  Peasantry (the many).  And, of course, kings (the one).  The basis of medieval governance.  Lasting thousands of years.  Where a king would rise to rule over the landed aristocracy.  Who he allowed to live the good life as long as they were loyal to their king.  And paid their taxes.  The nobility received certain privileges for this arrangement.  While the peasantry considered themselves lucky if they didn’t die from hunger.  And everyone lived happily ever after.  If you were lucky enough to be the one.  Or the few.

Representation without Taxation allows Government to Spend as Irresponsibly as They Please

Up until the 1200s a lot of France belonged to England.  Or, rather, the English nobility.  The barons.  But King John changed all of that.  For he liked to do what kings are wont to do.  Conquer.  And he tried to conquer a lot.  Only he wasn’t very good at it.  He blew a lot of the nobility’s taxes on failed adventures.  And lost a large chunk of France in the process.  So the taxpayers, the ones bearing the brunt of the king’s follies, reigned in King John’s powers.  The barons made John place his great seal on Magna Carta at Runnymede in 1215.  Which didn’t do a whole lot at the time.  But it ushered in the era of representative government.  And taxation only with representation.

England would become a constitutional monarchy with Parliament to limit the power of the king.  To sit in Parliament you had to have skin in the game.  That is, you had to be a taxpayer.  For this was taxation with representation.  Where those paying the taxes had a say in how the government spent those taxes.  And only those who paid the taxes.  To keep governments from irresponsibly spending those taxes.  A new system of governance that changed the world.  One that once people experienced they demanded for themselves.  As the American colonists demanded.  When Great Britain wanted to tax the Americans even though they had no say in how the British government spent that money.  Something very un-English.  And something that would become very un-American (which led to American independence).

For awhile, at least.  For soon governments found a way to return to their dictatorial ways.  By getting around that annoying taxation only with representation.  Which governments found insulting to their privileged status.  For it galled them that they had to let these taxpayers limit their powers.  But what choice did they have?  Governments must take money from others to establish their nobility.  As it was no longer their divine right to take what they wanted.  Thanks to those barons in 1215.  And Magna Carta.  Which opened the sluice gates to a lot of limitations on absolute power.  But two can play at that game they found.

Their answer?  Representation without taxation.  Allow people to vote who have no skin in the game.  To help the government take what they want.  And to spend it as they wish.  By simply giving those who don’t pay taxes government benefits.  Who will always vote for those who promise to give them more government benefits.  And if you get enough people on these government benefits you can overcome any limitations the taxpayers try to enforce on you.  Currently in the U.S about half of the population pays no income taxes.  While the top 10% of all earners pay approximately 70% of all federal income taxes.  So you have approximately 50% of the population who pay no taxes voting on tax policy for the 10% who pay most of the taxes.  Allowing government to spend as irresponsibly as they please.  Like in pre-Magna Carta days.  Thanks to representation without taxation.

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FT124: “Liberals use the courts to give them what the people won’t.” -Old Pithy

Posted by PITHOCRATES - June 29th, 2012

Fundamental Truth

Magna Carta led to Constitutional Monarchy and Representative Government

Medieval kings liked doing as they pleased.  From living well.  To expanding their kingdoms by force.  Or trying to.  As kingdoms got larger, though, this was more difficult to do.  Because the larger the kingdom got the more food they had to produce.  And kings didn’t feed their kingdoms from their castle vegetable gardens.  They needed the wealthy and powerful landowners.  Who owned the land.  Grew the food.  And provided the kingdom’s wealth.

These landowners made land valuable.  By growing food on it.  As famine was no stranger during the Middle Ages there was nothing more important than growing food.  Those who did became wealthy.  And their estates became mini kingdoms.  With lots of peasants working the fields.  And lots of soldiers to defend their land.  And to fight for their king in times of war.  Kings needed to maintain good relationships with these wealthy landowners.  To keep them supporting their kingdoms.  And to prevent any one of them from rising up and challenging the king for his throne.

King John of England was hurting his relationships with the wealthy landowners.  He fought a lot of expensive wars across the English Channel in France.  Which required high taxes on the English landowners.  The barons.  Worse, King John lost a lot of his battles in France.  Losing the barons some of their Normandy lands.  So the barons were becoming a little disgruntled with their king.  And they rebelled.  Eventually forcing the king to place his Great Seal on Magna Carta.  Limiting his powers.  It didn’t change things much at the time.  But it would lead to constitutional monarchy.  And representative government.

The Patriots of 1776 were none too keen on Creating a New Central Power

Kings don’t like limits on their power.  King John would go on to renounce Magna Carta.  And got the Pope’s approval to not honor the promises he made with the barons.  But these barons sowed the seeds of representative government in England.  And the Western World.  Greatly influencing the Founding Fathers in America.  Whose Constitution placed great limits on the government’s power.

The Americans were having some problems with their Articles of Confederation.  The sovereign states were taking care of themselves.  Sometimes at the expense of the other states.  Or the new nation.  And the new nation wasn’t making much progress in the international community.  A bit of a laughing stock to other nations.  Who were all sure it was only a matter of time before the American colonies would be British again.  For once the war was over there was little united about the states anymore.  So James Madison urged a meeting of the several states to revise the Articles of Confederation.  To help make a more perfect union.  And to move the new nation forward.  They met in Philadelphia in 1787.  And caused a firestorm.  For they didn’t revise the Articles.  They threw them away.  And wrote a brand new Constitution.

This inflamed a lot of the Patriots of 1776.  Who had voted to sever the bonds from a distant central power about a decade earlier.  And they were none too keen on creating a new central power to replace the one they just banished.  It took awhile but with the presence of George Washington and some words from Benjamin Franklin, two of the most trusted and experienced Americans who sacrificed a lot in securing their independence, they completed their task.  It wasn’t a perfect document.  But it was the best they were ever going to produce considering the sectional differences in the country.  And they sent it to the states for ratification.  James Madison, Alexander Hamilton and John Jay helped to secure ratification by writing a series of articles that we know today as the Federalist Papers.  Some of the finest Constitutional scholarship ever written.

As Few as Five People in Black Robes can Fundamentally Change the Nation

Key to the Constitution was the separation of powers that restricted the power of the new federal government that no one trusted.  There was a legislature to write law.  An executive branch to enforce law.  And a judicial branch to interpret law.  To make sure that the other two branches did not violate the Constitution.  Such a system would have really crimped King John’s style.  For the law was above all the people.  Including the executive.  He could only do the things the laws allowed him to do.  And the things the laws allowed him to do he could only do if the legislature agreed to pay for them.  It was a system of checks and balances that helped the nation to grow while maintaining personal liberty.

King John would have been particularly irked by the legislature.  Made up by representatives of the people.  Who enacted legislation that was in the best interest of the people.  Not him.  Fast forward to modern times and you find history littered with people who wanted to expand their power only to have that representative body of the people foil them.  Ruling elites.  Modern aristocrats.  Those who feel an entitlement due to a superior education.  A superior bloodline.  Or simply like-minded people who would rather have the days of unlimited power like they had in Medieval Europe.  Before the barons had to muck up the works with Magna Carta.

Over time they learned how to bring back some of the old ways.  The easiest way was just to get people to vote for them.  And they did this by giving them a lot of free stuff.  But there were some things that they just couldn’t bribe out of the people.  So they turned to the courts.  And did a little legislating with activist judges.  Sometimes bringing a suit all the way to the Supreme Court to create a law where there was no law.  Abortion is now legal even though there was never any federal legislation addressing it.  While there was plenty of state legislation forbidding it.  Until seven men in black robes overruled the will of the people in those states.

The Supreme Court is powerful.  For as few as five people in black robes can fundamentally change the nation.  Which is why presidential elections are so important.  Because presidents nominate judges to the Supreme Court.  And those on the Left depend on the timely deaths and/or retirements of Supreme Court judges so they can nominate activist judges.  To get a majority on the high court to rule in their favor on bad law.  Such as Obamacare.  An unpopular law.  A law the majority of the people want repealed.  A law that became law only with subterfuge (the mandate is not a tax).  A law that clearly violated the Constitution (forcing people to buy something).  Yet five people in black robes just fundamentally changed the nation by voting that Obamacare was Constitutional (the mandate is a tax).  Which just goes to show you that where there is a will there is a way.  A way to rule like a king.  Against the will of the people.

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Jobs and Unemployment, Taxpayers and Tax Consumers

Posted by PITHOCRATES - March 19th, 2012

Economics 101

The Privileged Class enjoys the Good Life Today by Buying Votes with Government Benefits

Jobs are everything.  They pay your bills.  They pay the government’s bills.  And they pay for all those government benefits.  Especially those government benefits.  Which are little more than a pyramid scheme.  Where the few collecting those benefits are at the top of the pyramid.  And those with the jobs paying the taxes to fund those benefits are at the bottom.  And every good pyramid scheme needs to do one thing.  To keep the base growing at a greater rate than the top grows.

Why do politicians do this?  Give out so many benefits?  Simple.  For votes.  Specifically, to buy votes.  We’ve come a long way from the Founding Fathers’ America.  Adam Smith’s invisible hand and free market capitalism.  Representative government.  The things that let all people enjoy life.  Not just the noble class.  This change began in England.  Ironically with the noble class.  Who presented Magna Carta (1215) to King John.  Saying they paid the taxes.  So they were going to have a say in how the king spent those taxes.  As well as protect their privileges and liberties.  And Parliament was born.  Changing England forever.  The American Founding Fathers built on this.  And improved on England’s form of government.  The constitutional monarchy.  By getting rid of it.  Along with heredity power.  And the nobility.  The Founding Fathers had put an end to privilege.  Pity it didn’t last.

There has always been a privileged class.  And there will always be one.  There will always be a small elite group trying to live a privileged life.  Once we called them the aristocratic landowners.  Today we call them politicians and government workers.  Who are a little craftier than their landowning forbears.  For they just can’t have the right last name.  Or marry a good last name.  Because, technically, there is no aristocracy these days.  No.  They need the taxpayers to vote them this good life.  And fund it.  By paying higher taxes.  Which means the taxpayers will live less of a good life to give the politicians and government workers their privileged life.  Hence the government benefits.  And the buying of votes.  Because no taxpayer in their right mind will sacrifice their good life to support a privileged class.  The nobility wouldn’t do it for King John in 1215.  And taxpayers won’t do it now.  So the privileged class buys votes with these benefits.  Particularly from those who don’t pay taxes.

Jobs Matter because the Taxes of the Taxpayers have to balance the Consumption of the Tax Consumers

There are two types of people in the world.  Those who like high taxes.  And those who don’t.  Those who like them are the politicians and government workers who live a privileged life.  And, of course, those who don’t pay taxes but receive government benefits (another steadily growing group).  These are the tax consumers.  Then you have those who don’t like high taxes.  Those with real jobs in the private sector.  The taxpayers.  As government grew from our Founding so did the number of tax consumers.  Which, of course, required more taxes.  And higher tax rates.  On the shrinking group of people with jobs paying the taxes.  To support the growing group of politicians, government workers and recipients of those government benefits consuming those taxes.

This complicates the pyramid scheme.  As you have fewer people supporting more people each taxpayer has to pay a larger and larger share of the tax burden to support the tax consumers.  Meaning you have to increase tax rates further.  Which isn’t easy to do.  Worse, as workers pay more in taxes they have less to spend in the economy.  Thus reducing economic activity.  Businesses hire fewer workers.  As more businesses go through this the unemployment rate begins to rise.  Which means, of course, the number of taxpayers begins to fall.  Making it harder to provide the taxes for the tax consumers.  A group that continues to grow even when the unemployment rate rises.  Because government is like a bacteria.  It takes on a life of its own and grows simply by splitting and creating new bureaucracies.  A growth that never stops.  And soon the rate of that growth overtakes the growth rate of the taxpayers.  Violating the one cardinal rule of pyramid schemes.  Keeping the base growing at a greater rate than the top grows.

This is why jobs matter.  For everyone.  The taxpayers.  And tax consumers.  Because the taxes of the taxpayers have to balance the consumption of the tax consumers.  A fact lost on many voters.  Who don’t understand (or don’t care) that the freer their ride the less free the life of the taxpayer.  Who believe these government benefits can keep coming no matter how many people are working.  They are perfectly all right with the unemployment rate going to 100%.  And having the government provide everything free of charge.  But government can’t do this.  Even with the power of the printing press to print money and give it away.  Because if no one works who is going to build the houses we buy with that free government money? 

Taxpayers voting on How the Government Spends their Money ensures Responsible Government Spending

Someone has to work.  Because houses (and the other things we buy) don’t spontaneously appear.  So who will build them?  Would you labor to build something when the government gives you money?  Even if you don’t have to work?  Probably not.  The only reason we work is for a paycheck to buy the things we want.  The more things we want the harder we work.  That’s incentive.  Take it away and no one will work.  Just as if you tax someone too much you’ll take away their incentive to work harder.  And to vote to raise taxes.  Which is why jobs matter.  Because they pay the bills.  They pay your bills.  They pay the government’s bills.  And they pay the bill for all those government benefits.

Politicians can buy votes by giving away more government benefits.  Converting taxpayers into tax consumers.  Preserving their privileged life.  However, there is a limit to this.  Because as you convert taxpayers into tax consumers you reduce the tax revenue to pay for those benefits.  Especially during periods of high unemployment.  And if they raise tax rates to make up for the reduction in taxpayers this will increase both the rate and duration of unemployment.  By increasing the cost of doing business.  And leaving workers with less money to spend.  Both of which reduce sales revenue.  And the need for workers.  Over time this combination of high spending obligations and low tax revenue can have dire consequences.  And can bankrupt cities.  States.  Even countries.

This is why the nobles met King John on the field of Runnymede.  And presented him Magna Carta.  The nobles were paying a lot of taxes for the king’s wars on the Continent.  If the king continued he could have bankrupted them.  So by making the king apply his Great Seal to Magna Carta they were forcing him to, among other things, spend responsibly.  As they, the taxpayers, now had a say in how the king spent their taxes.  The only way to ensure responsible government spending.  And when politicians and government workers maintain their privilege by having those who don’t pay taxes vote to raise taxes on those who do it removes all responsibility from government spending.  So they spend.  And they tax.  To pay for that spending.  Hurting job creation in the process.  Which is a very big problem.  For jobs are everything.

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Magna Carta, Provisions of Oxford, House of Lords, House of Commons, Houses of Parliament and Constitutional Monarchy

Posted by PITHOCRATES - January 19th, 2012

Politics 101

King John renounced, and Pope Innocent III annulled, Magna Carta

England had been more French than English following the Norman Conquest.  The ruling class spoke French.  And had stronger connections to France than they did to England.  The Kingdom of England did, after all, extend across the English Channel into France.  The English nobility, on the other hand, were more English than French.  This caused friction between the land owners (the barons) and the king.  Because even though the king had official power the barons paid the taxes.  Which meant the king could do anything he wanted with his power as long as the barons agreed to pay for it.  And provided his armies.  For the king had no standing armies.  Which proved to be a bit of a restraint on being king.

The barons, though, felt the king was abusing them.  The king was spending a lot of money on many losing military campaigns and stepping on the barons’ privileges.   They presented Magna Carta to King John.  Which put in writing limitations on the king’s powers.  And the requirement that the king shall consult Parliament (common counsel of the realm including the clergy higher-ups and the more powerful barons) before raising new taxes.  Something no king would willingly submit to.  Unless it was a way to stall for time.  So King John applied his Great Seal to Magna Carta.  Making it the law of the land.  But with his fingers crossed behind his back.  Figuratively, of course.

Well, King John renounced the Great Charter once the barons had left London.  And Pope Innocent III annulled it.  Because of that divine rights of kings thing.  Kings could do whatever they wanted because God gave them that right.  While the Church made sure he didn’t abuse this power.  Anyway, long story short, the king refused to honor his agreement.  Which resulted in the First Barons’ War.  It lasted a couple of years.  The barons invited Prince Louis, son and heir apparent of the French king, to join them in their fight against King John.  Something any French Royal would be glad to do.  Then King John died and the barons became worried about Prince Louis.  Some fighting and sieges later, Louis got some money and went back to France.  King John’s son Henry was then crowned King Henry III.  He was 9 years old.  Until he came of age his royal keepers ruled in his stead.  And brought back Magna Carta.  With some changes.

The House of Lords and the House of Commons formed the Houses of Parliament

Well, all’s well that ends well, yes?  No.  For when the new king came of age he wanted to restore absolute monarchy.  Like they had (and he admired) in France.  He married a French woman.  And brought a lot of his French relatives into high positions in his realm.  Highly religious, he supported the papal invasion of Sicily.  Which was a disaster.  Well, you can guess where this led to.  More fighting with the barons over Magna Carta.  To remind him there were limits on his powers.  Which the barons hammered home in the Provisions of Oxford.

The Provisions of Oxford is considered England’s first written constitution.  The barons wrote it.  In English.  The new language of the ruling class.  No more of that French nonsense.  And presented it to King Henry III.  Placing power into the hands of a council.  Not the king.  There would be 24 members in this council.  Half chosen by the king.  Half chosen by the barons.  Parliament would oversee the council.  And meet 3 times a year.  Power was now with Parliament.  Not the king.  Which was huge for its day.

The king summoned the nobility and senior clergy to advise him.  When he needed money he summoned knights and burgesses, too.  Representatives of the common people.  These common people met alone in 1341.  And the upper and lower houses of Parliament were born.  The House of Lords (nobility and clergy).  And the House of Commons (knights and burgesses).  Together they were the Houses of Parliament.

The Many, the Few and the One

Governing by the consent of the governed was here.  But the journey wasn’t over yet.  There would be many more bumps in the road ahead.  Including the English Civil War.  With lots of English-French issues to resolve.  And a lot of Catholic-Protestant issues, too.  Not to mention the Welsh, Scottish and Irish issues.  But the general shape of things to come was here.  For England.  Great Britain.  And the United Kingdom.  Absolute monarchy was out.  Constitutional monarchy was in.  Representative government.  Where all had a say.  The commons.  The nobility.  And the king.  The many, the few and the one.

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Charlemagne, Christian Kingdoms, Holy Roman Empire, Divine Right of Kings, Magna Carta and English Parliament

Posted by PITHOCRATES - January 12th, 2012

Politics 101

The Divine Right of Kings gave Kings Absolute Earthly Authority

With the collapse of the Western Roman Empire there was chaos.  Anarchy.  It was a free for all when it came to power.  Until, that is, a strong regional king came along.  Who could unite the manors and the nobles.  Usually in the face of a superior enemy.  One of the greatest post-Roman kings was Charlemagne.  King of the Franks (modern day France).  Who united most of Europe.  Then converted to Christianity.  Something that impressed the Pope.  Who did Charlemagne one better.  And anointed him emperor of the Holy Roman Empire.

The Holy Roman Empire had little to do with the old Roman Empire.  It wasn’t even centered on the Mediterranean.  It was up there in the land of the barbarians.  Northern Europe.  In and around modern day France and Germany.  Where many Christian kings ruled many Christian kingdoms.  But the emperor of the Holy Roman Empire was the Pope’s choice to rule them all.

The key here is a religious authority anointing someone to make him king.  Not necessarily a new concept.  For Samuel anointed Saul as the first king of Israel.  With the Pope doing it in post-Roman Europe he was bringing back the concept.  The Pope being God’s representative on earth meant that his appointment was God’s appointment.  And hence the divine right of kings.  Which basically gave the king absolute earthly authority.  Who answers to no one but God.  And, of course, the Pope.

The Magna Carta changed History by curtailing Absolute Monarchial Powers

Well that was all well and good but the kings earthly powers came from the nobility.  The landed aristocracy.  Who owned the manors and produced the food.  That gave rise to the cities that produced the other necessities of a kingdom.  Not to mention all the soldiers the king needed to expand his power.  Or maintain his power.  Which the nobility raised from those towns and manors.  And picked up the bill to arm them as well.  So, yes, the king had absolute authority.  But his power came from the nobles.  And the armies they raised could be turned against him just as easily as on his enemies.

And an English king would learn this lesson.  Around 1215.  King John.  When King John became king the English Kingdom extended through much of France.  John then lost these French lands.  And spent a fortune trying to recapture them.  A fortune which, of course, he took from his nobility.  His barons.  His tenants-in-chief.   Who revolted.  Then came to terms.  When King John placed his seal on a list of their demands.  The Magna Carta.  It didn’t change much at the time.  But the days of absolute monarchy were numbered.  At least in England.

The Magna Carta may not have changed much in 1215.  But it changed history.  Soon there was an English Parliament.  And it began to curtail absolute monarchial powers.  Especially on that very testy issue of taxes.  Soon the power of the purse belonged to Parliament.  Not the king.  Which really put a dent in kingly ambitions.

In the English Parliament Government ruled at the Consent of the Governed

William the Conqueror introduced feudalism to England in 1066.  After the Battle of Hastings.  And the Norman Conquest.  Which changed England forever.  Giving rise to the landed aristocracy.  Among other things.  And a strong central government.  The impetus to absolute monarchy.  Only to have his great-great-grandson, King John, introduce the beginning of the end of absolute monarchy.  Against his will, of course.  Which took us to a novel new idea of government.  Embodied in Parliament.  Where government ruled at the consent of the governed.  Which would cause a lot of turmoil in England.  And influence a lot people to come.

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Code of Hammurabi and the Magna Carta

Posted by PITHOCRATES - November 22nd, 2011

History 101

The Code of Hammurabi was a Precursor to a Modern Criminal Justice System

The first civilization was Sumer.  Along the fertile river valleys of the Euphrates and Tigris rivers.  In modern day Iraq.  Prime real estate in the early civilized world.  Good for growing food.  With established city-states throughout.  This land was attractive.  So attractive that many have conquered it.

Here are some who possessed this land.  The Akkadians.  Guitans.  Elamites.  Amorites.  And, of course, the Sumerians.  Who took it back a time or two.  It wasn’t a neat linear transition.  There were many bumps along the way.  And by bumps I mean power changes.  I.e., wars.  But eventually the Amorite Empire founded the city-state of Babylon.  Which brings us to the sixth king of Babylon.  Hammurabi.  And when he expanded his kingdom by conquering other city-states he became the first king of the Babylonian Empire.  And he did something spectacular in 1780 BC.  He gave us the Code of Hammurabi.  One of the first written codes of law in history.   Providing a giant leap forward for the civilized world.

Everyone has heard of “an eye for an eye, a tooth for a tooth.”  That goes back to the Code of Hammurabi.  A precursor to a modern criminal justice system.  Including trials and the presumption of innocence.  It delved into civil law.  And contract law.  Clearly setting the rules of the game for marriage, divorce, inheritance and economic exchange.  It also included rules for the government.  Sort of like a constitution.  And this was all happening in the second millennium BC.

The Magna Carta exploded the Rule of Law, Personal Liberty and Economic Development

Establishing rules for government is rarely easy.  For few welcome restraints on their power.  But there is a problem all despots have who enjoy wielding absolute power.  They are only one person.  They need others.  For food.  And for money.  Because despots like to fight wars.  Which takes a lot of soldiers.  A lot of food.  And a lot of taxes.  All of which the despot has to depend on others to provide.

King John in 13th century England was one such despot.  He fought a lot of costly wars.  Requiring a lot of taxes.  And the people supplying the soldiers and taxes for these wars were the nobility.  His Barons.    And they were getting tired of the King’s behavior as it was proving very costly.  Not to mention that he was pissing off the French who were planning to invade England.  And there were a whole host of oppressive acts against his subjects.   As well as a feud with the Pope.  Suffice it to say something had to be done.  Without having a suitable candidate ready to replace the king, the Barons instead tried to limit the king’s arbitrary power.  In writing.  What history calls the Magna Carta.

The Magna Carta did not make sweeping change at the time.  But it had a profound impact in the English speaking world.  And the development of constitutional law.  It exploded the Rule of Law.  Personal liberty.  And economic development.  It is what allowed the British Empire.  And the Industrial Revolution.  It influenced the United States Constitution.  Under which America became the leader of the free world.  Because the law ruled supreme.  Allowing no man above the law.  Even a king.  Like on the fields of Runnymede.  When King John affixed his Great Seal to the Magna Carta.

The Rule of Law gave us Property Rights and Contract Law which provided Incentive and Security

The British Empire dominated the world in the 18th century.  Her greatness was only surpassed by the United States.  Thanks to the Rule of Law.  Which unleashed human capital.  Allowing people to create great things.  Because there were property rights.  And contract law.  Giving them both incentive.  And security.

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FUNDAMENTAL TRUTH #83: “Those who don’t pay taxes will always approve higher tax rates on those who do.” -Old Pithy

Posted by PITHOCRATES - September 13th, 2011

The Allies were Commanded by an American because they had the Greatest Skin in the Game

During World War II, SHAEF stood for the Supreme Headquarters, Allied Expeditionary Forces. This was the top command of the Allies fighting on the Western Front during World War II. In the European Theater of Operations (ETO). The Soviet Union fought on the Eastern Front. Neither front was subordinate to the other in the command structure.

The supreme allied commander of SHAEF was General Eisenhower. An American. Why? Well the Nazis conquered France early in the war. Thanks to blitzkrieg. Which the Allies weren’t ready yet to battle. So the SHAEF commander wasn’t French. But the British were in the war from the beginning. They and their commonwealth put some 11 million into the field of battle. And suffered about a million killed and wounded. But the SHAEF commander wasn’t British either. Even though we couldn’t have defeated Nazi Germany without the British.

No, the SHAEF commander was an American because they put some 16 million into the field of battle. So excluding the Soviets, the Americans had the greatest skin in the game. Literally. And figuratively. It was the American Arsenal of Democracy that furnished the implements of war. Financed by the American taxpayer. Via bonds. Rationing. And inflation.

Those who Risk their Wealth should have a Say in How it is Risked

There were a lot of service flags hanging in American windows during World War II. And far too many of them had gold stars on them. One gold star represented the loss of a son or daughter in the war. There were about 417,000 gold stars in American windows. Not quite as many as the approximately 580,000 British dead. And a long way from the approximately 8,600,000 Soviet dead. But as America entered the war, the sheer numbers of man and material America provided made it America’s war. Which is why there was an American commanding SHAEF. Because even though Nazi Germany didn’t attack America, it was her blood and treasure leading the war against Nazi Germany.

So an American general would lead the Allies. Because the Americans had the most skin in the game. They were now bearing the greatest costs for the war. So they had the ultimate say in how the Allies waged war. I mean, no one would expect a Belgian general to command those 16 million Americans. No offense to the Belgians. I mean, I like their waffles and all. It’s just that Belgium wasn’t America. They didn’t have the resources. Nor the distance from the Third Reich.

Risk and wealth. Those who risk their wealth should have a say in how it is risked. Because it takes wealth (blood and treasure) to wage war. And this goes back to the birth of limited government. The Magna Carta. When the feudal barons of England met King John on the fields of Runnymede. And said, “Look, yeah you’re king and all but that doesn’t give you the right to do as you bloody well please.” I’m paraphrasing, of course. You see, the king was being rather oppressive. And fighting a lot of wars. Costly wars. And the funny thing about kings? They don’t have wealth. They get it from the landowners. The landed aristocracy. Those feudal barons. The men and material to fight wars, and the money to pay for them, came from them. So these barons were saying, “In the future, you clear things with us first, okay?” And constitutional monarchy was born.

Thanks to the Magna Carta those Paying the Taxes would have a Say in How the King Spent those Taxes

In the days of feudalism we defined wealth by land holdings. Because back then the most important industry was growing food. To prevent famine. And you needed land to grow food. So wealth concentrated to the land owners. The landed aristocracy. Who provided the food for the realm. Soldiers. And taxes.

Thanks to the Magna Carta, things changed. Those paying the taxes would have a say in how the king spent those taxes. He couldn’t wage endless war anymore. Or spend it all on royal accouterments. No. From then on, spending would have to be responsible. We take it for granted in the West today. And call it taxation with representation. But it was a BIG deal back then. And mostly only in England. France had an absolute monarchy. And the king did whatever he bloody well pleased. And you see how well that turned out for King Louis XVI. Ask Marie Antoinette. Of course you can’t. Because they were both executed by the people during the French Revolution.

The British took their representative government to the New World. And after the American Revolution, that was one of the British things the Americans kept. At the heart of the American populace was a hatred of taxation. And arbitrary rule. So they kept a tight grip on the government. And their wealth. There were no kings in the new United States of America. But there was still government. And a strong distrust of government power. So they were going to write their constitutions very carefully. And restrict the vote only to those who had skin in the game. Land owners. Who were paying the taxes.

Figuring out how to Amass Power despite the Inconvenience of Elections

Of course this changed over time. Nowadays, people who pay no taxes whatsoever can vote. We’ve come a long way from Runnymede. And returned a lot of power to government. In America, about half of all people pay no federal income tax. Yet they can vote. And they do. For the party that promises them more free stuff. By taxing ‘the rich’ to pay for it. And you know what these non-taxpayers say? “Raise tax rates? Absolutely. I mean, what do I care? It’s not like I’m paying them.” I’m paraphrasing, of course. But you can see the problem.

They have no skin in the game. And the only reason they don’t is because ‘the rich’ have been keeping them down. At least that’s what they believe. Because those in power told them this. So they can keep raising taxes. And keep increasing the power of government.

It’s nothing new. There are those who just want power. Kings often took power by force. When it was clear that the rich barons were more important to the king than the king was to them, though, things changed. There were limits on absolute power. So those who coveted power had to be creative. And figure out how to amass power despite the inconvenience of elections.

Politics Today: Buy Votes with State Benefits and scare the Bejesus out of Old People

The answer was the welfare state. And class warfare. Buy votes. And demonize ‘the rich’. Get the people dependent on government. And anytime there is political opposition, tell the people that the opposition wants to cut your state benefits. To scare the people into voting for you.

We call Social Security and Medicare third-rail issues in America. Because if you threaten to cut them (i.e., touch them), you will die politically. As you would die if you touched the electrified third rail in the subway. Because the recipients of those programs live in fear of losing their benefits. And will always vote for the candidate who promises not to cut them.

And this is how you amass power when saddled with the inconvenience of elections. Buy votes with state benefits. And scare the bejesus out of old people. Telling them the political opposition wants to take your benefits away. Attack the rich. And tax them. To pay for the ever bloating welfare state.

And if at least half of the people pay no taxes, you’re golden. Because when that many people have no skin in the game, you can get away with just about anything you want.

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FUNDAMENTAL TRUTH #32: “America is great but it can’t make bad ideology good.” -Old Pithy

Posted by PITHOCRATES - September 21st, 2010

We’ve Always Done Things This Way

The Old World was set in her ways.  Change didn’t come easy.  When it came it often spanned centuries.  But not always.  As the Roman Empire incorporated new territories into the empire, she modernized those new territories.  Roads.  Fresh water.  Sanitation.  Rule of law.  Markets.  The things that made cites better.  Civilizations better.  But as a civilization grows, so does its government.  And as government grows, taxes inevitably become more onerous.

A sprawling empire required a sprawling bureaucracy to control it.  And a huge standing army to protect it from without.  And to police it from within.  When you expand and conquer new territory, the spoils of conquest can fund your empire.  When your borders are relatively static, though, you have to use alternative sources of funding.  Taxation.  As the tax burden grew, dissatisfaction grew.  Fewer citizens volunteered to serve in Rome’s legions.  So Rome relied more and more on hired armies.  This increased the cost of empire.  And it increased taxation.  The tax burden grew so great that people gave up their small farms and worked for the bigger farms.  Worked for the rich landowners.  Some tried to quit farming all together.  This caused problems in trying to feed Rome’s legions.  And her bureaucracy.  The food supply became so critical that the Romans wrote new laws forbidding people to leave their farms.  Farmers were bound to the land.  They could never leave.  If you were born on the land you would farm the land.  Forever.

During the decline of the Western Roman Empire you saw the rise of the economic system that would dominate the Middle Ages.  Feudalism.  As the Western Empire declined, the power began to shift to the rich landowners.  As did loyalties.  As the empire further disintegrated, the power of Rome could no longer protect you.  Or feed you.  And thus food and protection became the foundation of feudalism.  Land owners, the nobles (i.e., lords), would let you work their lands.  The bulk of the proceeds went to the landlord.  But you also had a portion of the manor to farm for yourself.  In exchange for the use of a lord’s land you provided military service to the lord.  When needed to protect the lord and his lands.  Property rights allowed the lord’s sons to inherit the estate upon his death.  So property ownership became hereditary.  As did the nobility.   And so it would be for centuries.

England Leads the Way

From the nobles arose one.  A dominant one.  A ruler of nobles.  A king.  A king consolidated the many nobles’ estates into a kingdom.  A country.  And the king became sovereign.  The supreme authority.  The nobles pledged their loyalty to the king.  Provided for the king.  And fought for him when necessary.  Thus the few, the many and the one.  The masses (the many) served the lords and worked on their estates.  The lords (the few) were the wealthy land owners who served the king.  The king (the one) ruled the kingdom.

Thus the European monarchy was born.  In France it was absolute.  In England, in 1215, the nobles met King John on the meadow at Runnymede.  And the king reluctantly set his seal to the Magna Carta.  In England, there would be limits to the sovereign’s power.  The king may be king, but the nobles held the wealth.  And with it a lot of power.  Sometimes they saw things differently.  And the little people, the masses, often saw things differently than did the king and lords.  These different interests were reconciled, in time, by king and Parliament, a two-house or bicameral legislature (comprised of the House of Commons and the House of Lords). 

England was the place to be.  Rule of law.  Bill of rights.  Commerce.  Banking.  Capitalism.  Liberty.  Food.  Security.  Your common everyday Englishman had a better quality of life than your common everyday [insert any other European national here].  As transoceanic trade took off, the great European powers collided with each other.  Fought for that lucrative trade.  In the Old World.  And in the New World.  These wars became very expensive.  And some lasted for years.  Like the Seven Years War.  Which the British won.  And took many French possessions throughout the world.  But at a huge cost.  She incurred a great debt.  Especially in securing one of her colonies.  British North America.

Tea Anyone?

So England taxed her British American subjects.  Only problem was, these English subjects had no representation in Parliament.  And this was very un-English.  Taxation without representation.  This caused tension.  Also, Great Britain’s mercantilist policies were also rubbing the colonists the wrong way.  America was growing.  And she wanted free trade.  But that was impossible when the home country maintained a favorable balance of trade at your expense.  And had the Royal Navy to enforce it.  As a colony, everything had to ship to/from England ports on English ships so England could accumulate bullion.  The British protected their industries.  Her colonies fed raw materials to these industries.  And that’s all they did.

Trouble brewed for a while.  When Great Britain legislated what type of tea they could drink (only British East Indian tea), the American colonists had had enough.   There was a tea party in Boston, a revolution and formal independence.  And then a new nation.  With a bicameral legislation.  An executive.  And a judiciary.  It wasn’t quite Parliament, but was very similar in function.  The president was the one.  The Senate was the few.  And the House of Representatives were the many.  But there were key differences.  There was no king.  No hereditary nobility.  And there would be no mercantilism.  Despite Alexander Hamilton’s best efforts.

Let’s Just Agree to Disagree

Getting the colonies to come together to declare their independence was not easy.  It helped that there was already a shooting war going on.  Lexington and Concord.  Bunker Hill.  The coastal towns the British burnt and left in ruins.  They were already fighting a rebellion.  The declaration was almost a moot point.  But it was important.  And, after some arm twisting, they voted for independence and posted their Declaration of Independence.  But that was then.  After the Revolutionary War, there was no such unifying force.  Everyone was back to looking out for number one.  Well, most. 

Locked in a Philadelphia hall during a sweltering summer thick with horseflies, a collection of America’s finest worked to create a new government.  George Washington, Ben Franklin, Alexander Hamilton, James Madison, to name just a few, could hardly agree on anything.  The Constitution they created was not great in their eyes.  But it was probably the best that they could do.  So acknowledged, they sent it to the states for ratification.  The odds were against them.  It would take some persuading.  And persuading they did.  Hamilton and Madison (and John Jay) wrote a series of essays appearing in newspapers to make the case for ratification.  They addressed and answered all arguments against ratification.  (You can read these today in the Federalist Papers.)  And this effort was successful.  The states ratified the constitution.  There was now a nation known as the United States of America.

Our first Secretary of the Treasury was Alexander Hamilton.  A capitalist genius.  And a great admirer of the British Empire.  Being a recent transplant to the American Colonies, he had no deep-seated resentment of the former mother country.  In fact, he wanted to emulate her.  She was the greatest empire in the world.  She was obviously doing something right.  But he pushed too far.  His mercantilist plans were a bit much for some.  Especially the ‘simple’ farmers of the South.  The planter elite.  Led by Thomas Jefferson (covertly) and James Madison (overtly), they fought Hamilton tooth and nail and did everything to destroy him.  (After seeing his plans Madison switched to the opposition.)    And ultimately, did.  When Aaron Burr shot him in a duel on the field of honor at Weehawken, New Jersey, across the Hudson from New York City.  All because Hamilton tried everything within his power to keep him from becoming president of the United States and governor of New York.  Because he was on unprincipled man.  Burr took offense to that.  And, well, the scoundrel challenged him to a duel and killed him.  But I digress.

The American Ideology

The American ideology is simple.  It includes things that have been proven to work.  And excludes things that have been proven not to.  A large, diverse people make up America.  So at the heart of our ideology is that we agree to disagree. 

We don’t have kings or nobility.  We don’t have an entitled class.  No hereditary rights.  Here, it doesn’t matter who your father was.  Or what group you belong to (religious, societal, etc.).  No one person is better than another. 

We have property rights and live under the rule of law.  We honor legal contracts.  We built our nation on laissez faire capitalism.  Free markets.  With a minimum of government interference.  We do what we want and respect that others do what they want.  And we are free to do this as long as we play by the rule of law.

It was a long road getting here.  We took the best history had to offer.  And rejected the worst that history included.  Nations who did likewise went on to greatness, too (like the United Kingdom and Northern Ireland, Canada, Australia, etc.).  Those who didn’t have been repositories of great suffering and human bondage (North Korea, Cuba, The People’s Republic of China, the Soviet Union, etc.).  Of the latter nations, please note that life is getting much better in China and the former Soviet Union with the introduction of capitalism and free markets.  And it’s not in North Korea and Cuba where these governments stubbornly cling to failed policies to keep their governments in power.  Whatever the cost is to their people.

It’s the Ideology, Stupid

Good ideology makes good nations.  Bad ideology makes bad nations.  A good nation can NOT take bad ideology and make it good.  A good nation that implements bad ideology will only make that good nation bad.  All people have the capacity for greatness.  And that greatness will shine through if the government doesn’t suppress it.   To see this all we have to do is look to history.  It’s all there.  The good.  The bad.  And the ugly.

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