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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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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LESSONS LEARNED #36: “Politicians oppose across the board tax cuts because they are not politically expedient.” -Old Pithy

Posted by PITHOCRATES - October 21st, 2010

No King Ever Ruled Without the Consent of Money

There were kings.  And there were wealthy landowners.  Kings may have been sovereign.  But the wealth lies with, as you may guess, the wealthy landowners.  Kings needed money.  Because doing king ‘things’ got expensive.  War, armies, navies, festivals, feasts, castles, palaces, churches, etc., were very expensive.  So kings taxed their subjects to raise the money they needed to be king.  And when it came to money, the vast majority (i.e., the peasants) had little.  It was the peasants’ landlords who had the money.  And it was they who paid the bulk of the taxes.

But it was a two-way street.  Because it was their money, they, the wealthy landowners, had a say in how the king spent that money.  This was a restraint on the king’s power.  There were laws to protect the property rights of these landlords.  Now.  And in the future.  Property owners could pass their property on to their heirs.  As well as their political standing with the king.  Thus the rich and landed aristocracy passed on both their property and their nobility through inheritance.  Thus kings and Nobility lived by the consent of the other.  And they each lived by the consent of money.

The Roman emperors spent so much money near the end of the Roman Empire that they brought their advanced civilization to an end.  The landed aristocracy survived, though.  They just served a different sovereign.  The masses (i.e., the poor peasants) still worked the land.  The landlords still held the wealth.  Kings would come and go but this way of life (feudalism) remained.  Kings ruled as long as the landed aristocracy didn’t object too much.  Which they did in England in 1215.  The landed aristocracy met King John on the field of Runnymede.  Seeing his power was not absolute, the king reluctantly set his seal to the Magna Charter.  Constitutional monarchy would reign in England.  And England would reign supreme in the Old World.  And in the New World.

No Taxation Without Representation

The constitutional monarchy that developed consisted of the Crown and a bicameral Parliament.  The two houses of Parliament represented the needs of the few (the House of Lords) and the many (the House of Commons).  Thus the needs of the one (the sovereign), the few (the rich) and the many (the not rich) were balanced against each other.  It was a pretty good system.  The best in its time.  An English citizen had a better and more comfortable life with greater liberty than citizens of most other countries.

This liberalism unleashed a flurry of economic activity.  It created an empire.  International trade exploded.  England became a leader in farming and agriculture.  This knowhow spread throughout her empire.  As did her representative government.  Which they established in their North American colonies.  Perhaps a bit too firmly.  With the costs of world war came the need for higher taxes.  The British had just defeated the French and took possession of all their possessions in North America.  Her English subjects there were now free from French aggression.  And Parliament wanted these subjects to pick up a large part of that war tab.

Well, this didn’t go over well in the colonies.  For they had no representation in Parliament.  They had their own representative governing bodies in the colonies.  But they were subject to royal governors appointed by Parliament.  Without a vote in Parliament, they had no say in matters of taxation.  This was very un-English.  For the English nobility consented to taxation in exchange for having a say in how the king would spend those taxes.  As the landed aristocracy protested in 1215, the Americans protested this taxation without representation.  Eight war years later and America left the mother country.  Another few years later they ratified the Constitution and created the United States of America.  Which came to be because a governing body violated the sacred covenant between a king and his subjects.  A king may only rule as those who pay the kingdom’s taxes approve.

Universal Suffrage Increases Our Suffering

Because the new American government taxed property owners, property ownership was a requirement to vote.  In other words, those with the most to lose (those paying the taxes) had a say in how the government spent their taxes.  It kept the government honest.   By limiting the vote to those who had ‘skin in the game’ it made it hard for government to build palaces for themselves.  Because there was a direct connection between the source of funding and what that funding was used for.  The government may persuade the tax-paying voter for the need for a national postal system.  But a palatial palace was a much harder sell to the one footing the bill.  Especially when that person would never enjoy its benefit.

Such a system led to responsible government.  It minimized political corruption.  And if there is anything a politician doesn’t like it’s this.  They like corruption.  They thrive on it.  It’s their raison d’être.  And this responsibility thing just didn’t cut it.  They need people to vote who have no skin in the game.  People they can buy.  So they can live the good life.  Like in days of old.  Enter universal suffrage.  Where a politician can promise people other people’s money.

Wait a minute, you mean I can have a say in how other people spend their money?  Sweet.  Gimme gimme gimme.  I me mine.  Tax the rich.  Health care is an entitlement.  I mean, as long as someone else is paying, I’m for sale.  Promise me whatever I want and I will vote for you.  And forget what Benjamin Franklin warned us about: 

When the people find they can vote themselves money, that will herald the end of the republic.

Money Talks; Egalitarianism Walks

It probably started with Martin Van Buren.  Creator of the Democrat Party.  He created the party machine.  Patronage.  Payoffs.  And buying votes.  Dirty, filthy politics began with him.  And the Democrat Party.  Beginning with the campaign for Andrew Jackson, politics have gotten worse ever since.

It’s about the money now more than ever.  With the power to tax, government has a near unlimited source of money.  And with it they can get power.  By promising money to people that don’t have money.  Lots of it.  Thanks to universal suffrage, they can bus as many poor, indigent and government-depended people to the polls as possible.  And the more of them the better.  For they will vote for whoever promises to give them the most free stuff.  And why not?  They have no skin in the game.

And by voting themselves a permanent entitlement, they will make themselves a permanent underclass.  Where they will remain poor, indigent and government-depended.  As government spending continues to grow unchecked, it will push people down the economic ladder until the middle class disappears.  There will be only the rich (the government and the government-connected).  And the poor.  Just like in days of old.  Which is the goal of our tax policy.  You see, across the board tax cuts do not enhance the dependency-power relationship.  But targeted tax cuts do.  That’s why Big Government favors a complicated tax code.  It enhances the dependency-power relationship.  That empowers Big Government.  Throws egalitarianism out the window.  And makes life good for the ruling elite.

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FUNDAMENTAL TRUTH #24: “You cannot lobby a politician unless he or she is for sale.” -Old Pithy

Posted by PITHOCRATES - July 27th, 2010

IT’S A PROFESSION as old as time.  Politics.  Prostitution, too.

Hooker:  Hey, baby, you got girlfriend Vietnam?

Joker:    Not just this minute.

Hooker:  Well, baby, me so horny. Me so horny. Me love you long time. You party?

Joker:    Yeah, we might party. How much?

Hooker:  Fifteen dolla.

Joker:    Fifteen dollars for both of us?

Hooker:  No. Each you fifteen dolla. Me love you long time. Me so horny.

Joker:    Fifteen dollar too boo-coo. Five dollars each.

Hooker:  Me suckee-suckee. Me love you too much.

Joker:    Five dollars is all my mom allows me to spend.

Hooker:  Okay! Ten dolla each.

Joker:    What do we get for ten dollars?

Hooker:  Every’ting you want.

Joker:    Everything?

Hooker:  Every’ting.

Joker:    Well, old buddy, feel like spending some of your hard-earned money?

(From the movie Full Metal Jacket, 1987.)

In the above scene from Full Metal Jacket, Private Joker (reporter for Stars and Stripes) and Private Rafterman (photographer for Stars and Stripes) are sitting at a table outside a cafe in Da Nang.  Minding their own business.  The hooker walks up to them.  She initiates the conversation.  She tells them that for a fee she’ll have sex with them.

Please note that it is the service provider that approached the two privates.  They did not go up to random women, offering them money in exchange for sex.  Why?  Because not all women are for sale.  They know this.  It would be a waste of their time to ask random women.   And it would be rather offensive to the laywoman in the street.  Now, Marines may be killers.  But they’re polite to the indigenous population.

When you’re selling favors, the onus is on the seller to find the buyers.  They have to put the word out that they are for sale (ultra-miniskirt, low-cut tops, high heels, heavy makeup, stand on a corner, flash their ‘wares’, etc.).  Or find someone who will broker these sales for them.  A pimp, if you will.  Or a brothel madam.  Or, mamasan, as she is called in Southeast Asia.  A prostitute must initiate the process with the ‘john’ (Hey, baby, you got girlfriend Vietnam?).  Or she goes to a place where other prostitutes ply their trade to a receptive clientele (such as a brothel).

A prostitute is often a victim of circumstance.  Few women seek this life.  They’re not shopping one day when a man walks up to them and says, “Wow.  I find you beautiful and would like to pay you to have sex with me.”   To which she replies, “okay” and leaves one life to start another.  It doesn’t happen like that.   Often it is some misfortune that forces them into the business.  And once there they have but one thing of value that they can sell for subsistence; a young attractive body.  For a limited time.

THEY WEREN’T PERFECT.  The Founding Fathers had their faults.  They knew the evils of a strong central government.  And they knew the dangers of a weak central government.  John Adams wanted to build ‘wooden walls’ (i.e., a navy) to protect America.  Jefferson opposed standing armies and expensive navies.  Washington was a nationalist.  Hamilton, too.  Madison and Jefferson were more states’ rights men.  Hamilton was a capitalist and wanted a national bank.  Jefferson hated capitalism, banks, cities and Hamilton.  It was a rocky start.  They had different views about what America should be.  But the administrations of the Founding Fathers (Washington, Adams, Jefferson, Madison and Munroe) were for the most part honest.  There was partisan fighting, but political corruption was still gestating.   Our first Democratic administration would give it real life.

Government was growing.  There were more federal jobs to hand out.  And with property ownership no longer a requirement to vote, more and more voters had no skin in the game.  People were now voting to have a say in how to spend other people’s money.  You put the two together and you get political patronage and spoils.  Those who help to ‘get out the vote’ to get Democrats elected were rewarded with federal jobs.  The more you helped the better the job.  And when Andrew Jackson won the election in 1828, federal job seekers overran Washington.

It may have started with the Democrats, but soon everyone was using the spoils of an election victory to repay their most loyal supporters.  And government continued to grow.  Back then, it was just politics.  Egregious, but just politics.  Patronage and spoils turned into graft and kickbacks.  And the bigger government got, the more money poured into and out of Washington.

Soon, congressmen, senators and presidents steered legislation and/or policy in exchange for sweetheart mortgage deals, vacation junkets, campaign contributions, legal defense funds, retirement of campaign debt, libraries, etc.  They were now offering services for a fee.  And for a lot more than subsistence.  During a limited time.  Due to the circumstance of holding public office.  Now, they’re not saying “me love you long time,” but they are taking money and someone is getting screwed.  And it’s a pretty sweet deal.  The prostitute has to earn her money the hard way.  She has to put out.  A politician, on the other hand, doesn’t.  They get rich the easy way.  While the public takes it up the pooper.

PEOPLE HATE LOBBYISTS.  They hate their influence.  They hate Big Pharma, Big Agra, Big Oil, Big Finance and the other ‘Bigs’ that lobby Big Government.  But these ‘johns’ only exist because politicians are more than willing (and make it known) that they are for sale.  You gotta pay to play in Washington. 

Are we to believe that politicians are as pure as the wind-driven snow until a lobbyist corrupts them?  Yeah, right.   If you believe that be wary of anyone trying to sell you a bridge.  It’s a game.  And they write the rules.  And if you don’t play nice, they can make it pretty unpleasant for you.  Anti-business legislation, justice department probes, attorney general investigations, public attacks by administration officials, etc.  Nasty things for a business.  And costly.  Often the cost of avoiding these (i.e., playing the game) is a cheaper option.  The business that does not lobby, then, may find themselves under assault by Big Government or at a disadvantage against their competitors who do.  So they enter the fray, hedging their bets by throwing large sums of money on both sides of the aisle. 

And even though the Republican Party is supposed to be the party of Big Business, have you seen who Big Business often contributes to?  More times than not they’re in bed with the Democrats.  Who did General Electric endorse in the 2008 election?  Obama.  Why?  You tell me.  For I have no idea.  They make MRIs.  And electricity-generating windmills.  I’m not sure how they could benefit by an administration that was going to reform health care and promote green energy.  It just baffles the mind.

THE CORRUPTION CONTAGION knows no party lines.  Unabashed greed is universal.  Especially with other people’s money.  Washington has become what the Founding Fathers feared.  Big, powerful and awash in cash.  Even during record deficits.  The days of disinterested public service are long gone.  Getting to Washington has become the objective.  Not what you do when you get there.  Because if you make it to Washington, you leave it rich.  And live comfortably ever after.

And now I must apologize to prostitutes everywhere.  For they truly earn their money.  It is unfair and unjust to compare them to politicians.  And the ultimate injustice is the fact that politicians enjoy their services.  One of the perks of being in Washington.  High-priced call girls at your beckoned call.  Paid for, of course, by others.

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