Identity Check: 07/01/2008

Every now and again, I come across a fellow blogger, social forum crawler, and fun to debate with person that, while I would normally respect, comes out of the blue and blows me away with an opinion formed and expressed in a manner that I had not expected.

Sometimes this surprise is not such a great experience, but this time, well Mark From Stoneman's Corner dropped my jaw with his comment on a debate about wealthy, taxes, and paying a "fair share" over at BlogCatalog (you really should read the debate to get a better sense of the context). I will let you determine for yourself how best to interpret this commentary, but all I will say is this, Mark is highly educated, well researched, versed in history, and well written. I interpret his assessment of things with a great deal of respect.

Without further ado:

I disagree with the argument about our poor abused wealthy, but I'm not going to get into those numbers.

What I miss in such an argument is any mention of U.S. payroll taxes (Social Security, etc.), which even someone on minimum wage at $13,000 per year pays at the same rate as someone who earns much more. In fact, there's an upper limit to payroll deductions, so, in fact, the burden of this crucial tax (the one we all pay, no matter how poor we are) is not shared equally. (And if you're self-employed, we can talk about the onerous Self Employment tax, unless you're one of the wealthy who doesn't have to pay at the 15+% rate that the rest do.

I also miss the issue of consumption taxes, which are anything but progressive. And then there are corporate taxes. And there are not just tax rates, but the question of growing income gaps. Basing such far-reaching conclusions on such a limited set of economic data is not credible.

There are arguments about trickle down economics, I know, and we can't raise taxes so high that capital deserts the country, but we might reach a point in our lifetimes where those at the bottom and middle feel like they're in a drought, And it could be, if the wealthy aren't careful, that there will be a reaction on the streets. In general, it is better for social stability if the wealthy shoulder a bigger share of the burden than others. It is namely a wise investment, because what would their wealth be worth without social stability? Seen from that point of view, the wealthy also get more than the rest of us from the rule of law, so investing a bit more is not only in their interest but also fair. (My take on this is informed by European history, but listen to the second segment of the Diane Rehm Show, the one with David Sirota on "The Uprising" here.)

Did anyone notice when billionaire investor Warren Buffet said that there already is class war in America and his class is winning? He didn't think that was a good thing either (source), and I suspect that applies not just for morals, but for social stability, which in the end is necessary for any economic enterprise's bottom line. In other words, besides avoiding too narrow an economic set of data, we have to avoid too narrow a context in which to make sense of these factors. Fortunately, I think many wealthy understand the links that their would-be apologist here does not.

This criticism aside, I agree that the debate in the foreseeable future will slowly but surely move from yes or no to new taxes to an assessment of our tax system, including new ideas about how the burden is shared. I don't see any other way we're going to be able to achieve even the most minimal goals this society wants government to accomplish.

Well said! I am looking forward to a blog post on Stoneman's corner about this very subject.

Recently I have taken the time to learn about "Anarcho-Capitalism" an economic movement towards pure capitalism, officially put together as Anarcho-Capitalism sometime in the 1950s. Originally, not giving the movement much thought or consideration, I was under the impression that it was merely an exaggeration of Anarchism. That is to say, that while removing all authoritarian rule of State, businesses and monetary transactions would still take place, exist, and somehow work in an Anarchist society. Barters, loans, employment - if such arrangements were agreeable and fair would take place. OK, it doesn't really promote equality to have an economic hierarchy, but so long as it is fair and agreeable, so be it. I don't think it would work, but that's just me.

As it turns out, the philosophy is much more in depth, and contradictory, than I had ever imagined. It is also far more disturbing than I had anticipated.

Let's take a look at the basic premise, gathered from conversations, debates, and reading on my part. As it stands, my understanding is that Anarcho-Capitalists believe that no business shall be regulated by laws, however the Rule of Law would still apply to individuals. Of course, my first reaction was...how does an Anarchist support a Rule of Law? And, why? From what I have learned, the Anarcho-Capitalists believe that corporate entities can be trusted with matter of ethos and morals, but individuals cannot, ergo individuals must still be regulated, but corporations do not.

In fact, what I am hearing is that regulation of business supposedly harms businesses more so than regulations of people. Now, to be fair, the general consensus is that arbitrary laws regarding personal activities that are not considered harmful to anyone, or to society as a whole would not exist in this system, only 'Big Laws" such as violent crime, theft, and property rights would be regulated. I agree that in any system, the arbitrary laws - or the legislation of morality can go. I take it further however, and say that laws addressing larger, and more violent activities are a matter of common sense and/or upbringing and certainly genetics. You either think murder is OK, or you don't. I have serious doubts that if you removed these laws from official law status, that hoards of otherwise normal people will begin raping and pillaging. Dealing with people who do commit these crimes is a topic for another post, however.

Back to Anarcho-Capitalism. History has shown us that businesses, corporations, land owners (the original "business owners" pre-capitalism), and the like are not, in fact, prone to ethical behavior. If they were, slavery would never have existed. Child labor would never have come about, and worker's rights would never have been an issue. However time and time again, companies that are regulated by governments or not, are prone to try and get away with whatever they can. Of course, feudalistic times brought about indentured servitude, complete with wage slavery in the means of small appropriations, and then taxes on top of that, for the individuals, to be paid to the Lords. In the US plantation owners used slave labor to fuel their bank accounts, everyone knows that free labor equals a higher profit margin, and a higher profit margin is what a business is in business for after all. When slavery was abolished, these business owners were then forced to actually pay for the labor that made them so wealthy. But they didn't pay much. They paid so little, in fact that a minimum wage standard was put into effect by the government. From the Congressional Findings about minimum wage:

The Congress finds that the existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers
(1) causes commerce and the channels and instrumentalities of commerce to be used to spread and perpetuate such labor conditions among the workers of the several States;
(2) burdens commerce and the free flow of goods in commerce;
(3) constitutes an unfair method of competition in commerce;
(4) leads to labor disputes burdening and obstructing commerce and the free flow of goods in commerce; and
(5) interferes with the orderly and fair marketing of goods in commerce. That Congress further finds that the employment of persons in domestic service in households affects commerce.
(b) It is declared to be the policy of this chapter, through the exercise by Congress of its power to regulate commerce among the several States and with foreign nations, to correct and as rapidly as practicable to eliminate the conditions above referred to in such industries without substantially curtailing employment or earning power.

Clearly, someone found that businesses, farms, corporations and the like were simply not paying the employees enough to even live on, never mind enough to come back into the market and make a contribution. It is also clear, that they had no intention of raising wages either. Why would they? "Expensive" employees are bad for business. What else is bad for business? Competition.

Hence the need to regulate monopolistic companies, and monopolies altogether. Now, some cry that the government is a monopoly unto itself - I'll address that farther in the post, I promise, but suffice it to say it is a monopoly, because it can be, because there is nothing regulating it and forcing it not to be. Remember that, It's important. Without governments regulating whether or not a company can monopolize, thus create an unfair market for individuals who no longer have choices, thus making a fair market null and void, companies can, and do try to create such monopolies. In the US past, such companies as US steel, telecommunications companies, health care industries, railroad industries, and even sports industries have tried or were successful at creating monopolies. Of course, monopolies are good for the giant business that succeeds at crushing out the competition, but it is inherently bad for individuals, and yes, small businesses.

Taxes are another complaint I hear most often with regards to regulation of businesses. In fact, I hear complaints about taxes from everyone. I was also opposed to taxes (any taxes) until I realized that for what little we do pay into taxes, we get an awful lot out of it. Taxation is, actually, the largest group plan with the greatest group rate available. Regardless of your opinion about how budgets are made, and if we should have more say in how our taxes are used, you can't argue that the benefits of taxes give us the best bang for our buck. Taxes pay for, education, legal representation (of all kinds and in many different fields), Health care for those who cannot afford private industries, protection by police, and fire departments, public roads, public parks, not for profit organizations that are funded by grants that are funded by taxes, the list goes on and on. If you need something, taxes have typically been used to create a program to fill that need, and it fills that need in some form or fashion for anyone regardless of race, gender, income, or ability. In fact, it tends to favor those who are struggling more so than those who are not, but it is still accessible to everyone.

In the Anarcho-Capitalist ideology, however, taxes are inherently evil. But who will pay for all of these services? You will! On a higher cost, single payer rate to a privatized company. Leaving the vast majority of people who cannot afford these services out in the cold, and with no access to programs that defend or protect their human rights.

Here's the kicker, and I'm sure you knew at some point I would get back to the point. Without access to human rights - such as fair labor standards, legal representation, or even so much as protection of any sort, no place to redress grievances, and no money to pay for the privatized services - the corporations with their new found freedoms have just created a new slave class. To whom will the poor complain to about dangerous working conditions? To whom will the employees complain to about not being paid fairly, or at all? To whom will the workers turn to to stop exploitation? Will they complain to the company? Ha! The company will simply fire them, end of problem. Then what will they do? And before anyone says this - companies without regulation will exploit the ever living crap out of everyone they can, because they can, and because it will take their projected profit margin and shoot it right through the roof. History has proven that this is true, time and time again. Companies don't do anything altruistic, unless they are forced to by regulations, or stipulations from other charitable organizations. Also please note - all you small business owners out there, be prepared to be swallowed up whole by large companies with the means to buy you out, cut you out of a means of production, undercut you, or otherwise put you out of business. There is no room in a system like this for a small company or mom and pop business. And there will be no laws to protect you from the economic downward spiral that will inevitably follow.

Let's get into the ideology a bit more here. As I understand it, Anarcho-Capitalists want to abolish the Government, and all regulations on business practices, but maintain a Rule of Law for individuals. The "law" will then be legislated, interpreted, and agreed upon by the private sector. Whether or not there will be several sectors with different laws remains to be unseen. Legal representation will be in the private sector completely, as will court systems.

All other functions, and programs offered by the government will be put to the private sector as well, including law enforcement, fire departments, (public) education, health care and so on.

Would this not then, put the corporations into the position of power known as the State? If they are creating, enforcing, and interpreting law, as well as controlling currency (and said value), creating and enforcing policies regarding individuals, does this not make the corporations a government by default?

Sure it does. Except they do it for a price.

So let me think here, if corporations take over the functions of a government, to implement, impose, or otherwise control the Rule of Law onto individuals, the corporations have become a government entity. Ergo, a State.

Now that the State has been established, it imposes and inhibits the individual’s rights through law (and through economic hierarchies - or financial coercion) and no regulations onto the State (corporations), whereby the State benefits completely (and financially), and individuals do not, because they have lost the right to checks and balances as well as any constitutional rights they once had.

Isn't that fascism?

Fascism:

1. A system of government marked by centralization of authority under a dictator, stringent socioeconomic controls, suppression of the opposition through terror and censorship, and typically a policy of belligerent nationalism and racism.

It wouldn't initially come with terror and censorship, but as people slowly slide into economic poverty, thus losing the ability and access to basic human needs to redress such a State, it provides censorship and deters criticism by default. I don't think it needs to be said, but with the power of law enforcement in the hands of the few who can afford it, it seems a rather easy thing to control the impoverished populace, who have no recourse. Nor does it need to be said, but in the US, those affected the worse, will be minorities. Hence, inherently racist, to boot.

But but but, there will be many corporations in control, not just one! Let's go back to monopolies for a minute. Does anyone here think that very large, very rich corporations wouldn't get together and become one giant conglomerate to protect their interests, and make more money? (Like a....government?! Say it aint so!)

Not only will they have a monopoly, and thus possess the power of economic and legal coercion, but they will also possess a monopsony with regards to employees. It's win-win for employers, and lose-lose for individuals. Particularly individuals who are already experiencing economic hardships, without the added costs of privatized everything.

Which brings me to my next point, economic hardships, and the dangers they pose in a system like this.

In the US, right now, twelve percent of the population falls below the federal poverty threshold. In my state, a whopping twenty eight percent fall below the poverty threshold. In this country, forty-seven million people are without any health insurance whatsoever, and another massive eighty million rely on government sponsored insurance for health care. The main reasons for going without, or going with state based insurance is economic hardship, meaning they can't afford private insurance, or uninsurable clauses leaving millions of people, such as myself, out in the cold because private insurance companies will not insure us.

For many, it's both. Why am I brining this up? If one hundred and twenty seven million people, roughly one third of the country, cannot reasonably afford private insurance, under what pretense would anyone believe that they could afford not only private insurance, but also private police protection, private education, private fire departments, private legal representation, etc? In what world does private based, single payer services cost less than a group rate for three hundred million people, who pay into it collectively? I've heard the argument that eliminating these taxes will save the people money so they can afford to pay for these services, individually.

On what planet?

The sheer economics of it will leave millions of people with no access to health care, police protection, or any otherwise "given" services offered by the government, funded by tax dollars. Leaving these communities poor, and wide open for criminal activity in their neighborhoods. Who will stop them? The individuals will still be under a Rule of Law, subject to criminal investigations, law enforcement, and court trials not of their peers, but of corporate entities competing for dollars. So they have no real way to defend themselves, should the criminals decide to "press charges" and use the ill gotten goods to fund private lawyers and police investigations, to be used against the victims, instead of the criminals. I won't even get into the fact that some advocate that only landowners and - street owners (those who pay for street maintenance?) - get to hire police protection services. It stands to reason however, that either way the victims will not have the money to hire private detectives, to investigate the crimes, or ever get any kind of justice, lest they take it on themselves "vigilante" style, and be prosecuted for breaking the law.

If anyone thinks that all of these people will have the same chances as anyone else, may I remind you that capitalist business practices are inherently hierarchical. It's built into the system, if you are an employee, and someone is your boss in a capitalist company, you are inferior, period. You will do your job as told, or get fired, and you will work for the wages the company is willing to offer, and in this climate, there will be no wage safeguards in place for individuals with no education because their parents couldn't afford to send them to school, or for anyone, regardless of qualifications.

The poor will actually become poorer, and everyone knows that poverty breeds crime, so they will now be wide open for further victimization, by default.

We had might as well close the poor communities in, and spray paint a giant bullseye and an "Open for Pillaging" sign on the walls.

But this is a great system.

For all of the complaints about government restrictions on businesses, I read them while shaking my head. Let's look at these restrictions, minimum wage, any business complaining about minimum wage is an admission of guilt, of sorts, of wanting to pay employees less than the minimum amount. Otherwise, why complain if it doesn't affect you, or the great wages you're paying your employees? Hence the need for that regulation. Taxes, yes, companies have to pay taxes on profits they make. Complaints about that are particularly laughable coming from corporations who use federal subsidiaries, or corporate welfare. Fair labor laws and standards. Yup, businesses have to provide workers with safe work spaces, employee compensation (also funded by taxes), and aren't allowed to work them to death, without paying them accordingly for it. Child labor, do I even have to say it? Monopolies, no, businesses can't become financially coercive, forcing customers and clients to bend to their every will, because they have no alternatives to choose from. They can't automatically force our unions, or groups of employees coming together for work negotiations. My, my, my. Businesses can't simply squash workers rights to gather and negotiate better work conditions. How oppressive is that? Wow!

All sarcasm aside, I don't even think an economy such as this would last all that long, anyway. If we look to history, what we see is that excessive poverty, plus excessive wealth equals market meltdown. And yes, there is such a thing as excessive wealth. In economics, excessive wealth is an amount of wealth that is accumulated by a person or group that goes so far above the normal amount of wealth it can no

longer reasonably be used to purchase items, and thus, sustain an economic market. In other words, the uber-wealthy can only buy so many products, and when they stop buying products because they already have everything, their wealth becomes useless, thus excessive. If the poor don't have enough money to continue putting currency into the market, and the wealthy have nothing to buy, what you have is a market failure.

Either that, or the people pushed into poverty will not try to "climb ladders" but rather stage a revolution, and put a stop to it, anyway.

The moral of the story here is this, I am an Anarchist, but most people are not. Most people are regular old folks with regular old political leanings. SO while my post sounds eerily in favor of government here, I would like to make one thing clear. Capitalism should never, under any circumstances, exist without the checks and balances of a State. Which is why Anarchists oppose both State and Capitalism, because the two are linked at the hip. And one more note of observation, and ideology that supports the use of coercion - be it government force or economic force - while supporting laws against individuals and worshiping a Master known as the dollar when the end results would be chaos, violence, and oppression are in no way, shape, or form, Anarchists. Saying that one does not want regulation of something does not an Anarchist make, no matter how they tie up that package.