A Way Out of the World Debt Spiral?
My own debt exit strategy to Save Capitalism with Radical Transparency is likely to be the simplest, easiest and most effective you'll find... and thus it is the very least likely to be tried, since it would sharply reduce the power of the most-mighty.
No, it isn't particularly radical. In fact, the concept might be called "conservative" in its fundamental ethos and judged by the writings of Adam Smith. The notion does not entail any particular campaign of confiscation, higher taxes, socialism or new regulation. In fact, it would allow a whole lot of regulations to simply fade away as no longer needed. It would certainly force very little change in the actual structure of capitalism.
The proposal is radical economic transparency. Imagine a simple requirement, negotiated into a treaty that encompassed the world, that is so simple it can be encapsulated in a few sentences.
Anyone who owns anything larger than a small farm or shop must simply declare and avow, openly, that they own it. People should state what it is that they own, and how they came to own it.
Oh, there is one necessary corollary to spell out.
Further -- no property may be possessed by any set of holding companies more than two layers deep, before getting to actual human people, who admit, assert and avow that ownership.
That's it; all there is. There ain't no more. Isn't it enough?
Not so radical an idea.
Note that there is nothing whatsoever socialistic, confiscatory or “leveling” about this proposal. All I am asking for is the situation that already, in theory, prevails! Look into it. Exactly this level of traceable ownership is the basis for most of our market systems, not so much for the benefit of the state, but so that all market players, from corporations to small consumers, can have the Hayekian knowledge they need, in order to make informed market and legal decisions.
See also my article: Transparent Ownership Treaty.
No property owned by the rich or mighty or by corporations... or by anybody at all... should be any more or less protected by the law, just because nobody knows who (or what) owns it. The law is the law and tax policy, and every other property-related concern, would be better thrashed out in the open, by adult citizens via the open political processes that are supposed to control such things.
In other words, those who use political means to fight for lower taxes on the rich may continue to do so; indeed, the propaganda machine agitating for continued low rates of taxation on the aristocracy is in full swing and very effective. But that is an entirely different matter from concealing the ownership path itself. There are no bases for justifying that, political, moral or philosophical.
One immediate benefit? An ability to attribute accountability, when it is badly needed. Take the case of the oil tanker that ran aground in Brittany, a few years ago, befouling half of Northern France. When it came to assigning blame, no one could even find out who owned the damned ship! Nested holding companies and flags of convenience simply should not be allowed to perpetrate such travesties.
So, what would happen to the secret wealth that’s revealed, if this plan were implemented? Well, much of it was, in fact, completely innocent, sheltered from general nosiness, but otherwise entirely legal. So? Should the rich really get to be the ones who determine this, on completely their say-so? Privacy is one thing but paranoia is another. We have a right to have a look, sniff a moment, and verify the aroma is good. Enjoy the wealth, but openly, please.
Much of the rest was derived from tax avoidance -- and for that huge reservoir, a generous partial amnesty should ease the transition and cleanse a lot of consciences. And the problem with making these people live by the same rules that apply to us is...?
As for the rest of the newly revealed wealth? I have seen estimates that a substantial fraction of the world's hidden ownership would be simply abandoned, rather than allow public connections to real people. Ill-gotten gains from criminal enterprise, drug-lord stashes, the holdings of local debt-lords who have no legitimate provenance for the estates they make peasants slave-upon. At-best, this might result in the return of maybe half of the wealth that was ripped out of developing nations by their own corrupt elites. (Africa, alone, would probably see a doubling of public assets, from the restoration of loot stolen by the likes of Mobutu Sese Seko.
It is all very good for the right to blame the plight of deficit-ridden nations on excessive government and entitlements. And indeed, these are problems that need the corrective force of conservative criticism. But that has nothing at all to do with the issue at hand, which is to fix the balance books as much as possible through the most-cleansing force of all. Light.
And here's the crux: erasing much of the world’s official debt can take place without any confiscation or increased taxation of legally-gained assets.
Ponder that last sentence again. What at first seems a state power grab and tax rape is not anything of the sort. Not inherently, at least. Not if put into effect honorably, by people who (with open eyes) genuinely want vibrant entrepreneurial markets to continue to work, ever-better. That desire, if sincere and pervasive, should limit the “victims” of transparency to those who flee from some assets, abandoning them because they never did (or never should have) own them.
In fact, taxes on legal assets could probably go down, steeply, after such a move. Think about that. Especially if some of the abandoned property is then vested in the tenant farmers who actually till the soil, following the pro-market, pro-entrepreneurial methods of Hernando de Soto... methods that have vested property in the poor farmers of Peru, giving them a giant leg up toward middle-class, land-owning independence. This is a story that proves my point. Lawful, open ownership is a goal that should inspire libertarians and honorable conservatives, easily as much as any liberal.
(It would also broaden the tax base, turning more of the voting population into tax-skeptical owners... think about it. In any event, the general transparency treaty might be accomplished as part of a no-new-taxes deal. Would that sweeten the pot, for conservatives?)
Ask economists. They will tell you that open information flows are the life-blood of markets, both in theory and in practice. According to F. Hayek, the patron saint of sane libertarians, capitalism falls apart when shrouded fogs - either of secrecy or pragmatic obscurity, or else oligarchic collusion - thwart the ability of six billion market participants to make intelligent choices, based upon all pertinent data. Note, also, that obscurity in order to mask cheating is precisely the kind of crony-aristocratic meddling that Adam Smith thoroughly denounced, in The Wealth of Nations, when he first shed light on the fundamental principles of market capitalism.
Of course you would expect such a proposal from the author of The Transparent Society: Will Technology Force Us to Choose Between Privacy and Freedom? But in fact, I am no goggle-eyed purist! I would allow considerable exceptions to Radical Transparency -- including professional confidentiality, basic intellectual property, tactical state security secrets, and temporary caching of business strategies and product development. This is not about purist radicalism, but pragmatically seeking equilibria that can help to keep our civilization healthy.
Entirely at right angles to the hoary and stupid and discredited so-called "left-vs-right political axis," this is the reform most likely to rescue and re-invigorate capitalism. It is also the one way that the debts can be paid off -- by criminals, tax cheats, and scoundrels.
And then there is science.
Of course, even the prodigious debt-payoff that results from transparency-of-ownership won't prime the pump forever. Sure, economic activity will also work better and more efficiently, with ownership information available to all. Nevertheless,these are one-time jolts. Once we've incorporated the new efficiencies and the reservoirs of illicit wealth, what will drive the engine?
Look, over the long run, there is really only one way out of our current economic troubles. Growth. And what propels growth? In developing nations it can be surges in previously under-utilized labor, as we've seen in China and India. Marx said that capital formation can come from administrative theft, but we'll assume we're moving past that kind of thing. So what is left?
It has been proved, time and again, that technology and science were responsible for 50% + of all growth in developed nations, since World War II. The figure in Western nations during the Internet boom of the 1990s was more than two-thirds, According to Mark Anderson of the Strategic News Service. Over sixty percent of growth, directly attributable to technological advancement.
Isn't the solution obvious? Especially after the infamous War on Science reversed America's tech-driven growth spurt, during the first decade of this century?
More tech entrepreneurship. More and better science education. Pull out the stops to encourage innovation. And more science...
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...and now... some Misc Political Items...
Said an alert fan: “FYI. Drudge just linked to a scare piece on an Alex Jones site about the coming dissolution of America in 2017, and they used a still from The Postman movie to illustrate the story. It was a hard LOL for me, and thought you'd all like to know.”
Indeed, while Drudge & Jones are major apologists for oligarchy, Roberts is actually less predictable, sometimes interesting, and aims a zinger on-target, toward the end.: "America’s collapse occurred when government ceased to represent the people and became the instrument of a private oligarchy. Decisions were made in behalf of short-term profits for the few at the expense of unmanageable liabilities for the many."
Of course, the destruction of the American middle class should be the biggest political issue of our time. Hence, read this article! Right now, the blame could very plausibly be heaped upon the Neoconservative Movement, whose misrule so horrifically harmed not only the United States, but the older mantle of responsible conservatism, which it hijacked. President Obama could “get all populist on their asses” over this devastating example of retro-social-engineering. But instead he has spent 18 months trying to reason with the unreasonable and to reach out to the rabid.
He now has very little time left before he winds up owning the decline. It is time to listen to Rahm Emmanuel. Or, at least, appoint a special prosecutor over the corruption at the Minerals Management Service... and let the SP’s trail take him where it will.
In the category of “who else do you know who has been saying all this, as long as I have been?” “A U.S. audit has found that the Pentagon cannot account for over 95 percent of $9.1 billion in Iraq reconstruction money, spotlighting that there is little to show for the massive funds pumped into their cash-strapped, war-ravaged nation.”
Continues the report: “The $8.7 billion in question was Iraqi money managed by the Pentagon, not part of the $53 billion that Congress has allocated for rebuilding. It's cash that Iraq, which relies on volatile oil revenues to fuel its spending, can ill afford to lose.... Complaints surfaced from the start of the war in 2003, when soldiers failed to secure banks, armories and other facilities against looters. Since then the allegations have only multiplied, including investigations of fraud, awarding of contracts without the required government bidding process and allowing contractors to charge exorbitant fees with little oversight, or oversight that came too late.” Oh, BTW... 100% of the funds in question went missing during the Bushite Administration. And yes, I have said all this since 2004.
Of course, you all could join the Coffee Party Movement. Yes, it is based on opposition to the rancorously partisan "Tea Party" movement. But not so much over left-right issues as red-blue temperaments and basic approaches to life. (There are conservatives and fiscal responsibility types etc in the Coffee Party movement; as I said, it is about personality.) No, the thing being opposed is the rancor itself. The culture war that is being foisted on America as a way to weaken us. "Our Vision: Reason, truth & civility in public affairs; A gov't of public servants accountable to the People; A People committed to civic virtue, compassion & the common good."
http://nakedcapitalism.com/ See an interesting extrapolation about hidden wealth in offshore tax havens... and the long-term implications for us all.
As someone who has experienced the most frigid extremes of the cold war between the US and Soviet Union, Admiral Bill Owens has made it his life's mission to try to prevent a similar chill freezing the emerging relationship between Beijing and Washington. (I have met Owens - a singularly impressive member of the officer corps. And all I can say, again, is thank God for the Navy.)
According to the Wall Street Journal, consumer tracking “has grown both far more pervasive and far more intrusive than is realized by all but a handful of people in the vanguard of the industry.” Tracking technology “beacons” are placed on a computer when you visit a website, gathering information on your online activity, your profile and preferences…this info is bought and sold on stock market-like exchanges…