The Economics of Anarchy

anarchy is rule by rules rather than by rulers

As the czar or czarina of your fiefdom, what will your policies be? This discusses Universal Basic Income, student debt forgiveness, naive do-gooders, capitalism vs. socialism, and cheap vs. free. To create a supplemental economy, it takes the mortgages back from capitalists and takes the social pension back from government. It enables those who work for corporations to participate in the local economy while adding to the reserves that generate more prosperity for all. With a segue into a spirituality of enough, it ends by debating Matt Ehret on protectionism vs. free trade and the need for a standing army.

What is an economy? An economy is a system that uses money, backed by ownership of the assets, that’s issued and collected as a means of organizing labor.

What is anarchy? Anarchy is rule by rules rather than by rulers. It comes from the Greek an- (without) and archons, the rulers who claimed ownership of the land of ancient Greece and therefore the labor of those who worked it.

Rather than practicing personalitics and choosing a person to solve all our problems, we need to practice politics and figure out how would we solve our problems if we were in charge. What are the policies we’d enact? This post gets into the nitty-gritty of thinking through policies and their consequences in a small closed system.

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As czarina of your fiefdom, people will try to trap you by asking if you’re a socialist or a capitalist—do you believe in private property? Your answer is that this is a false dichotomy. Socialism is a government monopoly of the assets that gives them the right to distribute the products of other people’s labor. Capitalism is a banker monopoly of the assets that gives them the right to control other people’s labor.

What you want to encourage is private ownership but there’s always a default owner when properties change hands over generations. That’s the role that you need to take. You’re going to be the banker who issues the mortgage and holds the property while someone earns their right to it as private property.

The next problem you’ll face are the Naive Do-Gooders, or NDGs as I call them. They’ll want you to solve all the problems that capitalism created, and you’ll be inheriting a lot of them. NDGs are, imo, more dangerous than the psychopaths in charge because they’d never get away with it without well-meaning, caring self-righteous people.

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One popular policy is Universal Basic Income, so let’s examine that. If you issue $1000 per month to everyone in your country, within ten years, this will raise the cost of housing by $1000 per bedroom, since we bid against each other for the maximum debt we can absorb. It will all go to the bankers. In the meantime, it will be sucked out of your economy to wherever the cost of labor is cheapest.

Now let’s say you’ve taken back the houses so that money is getting returned to you. You issue the $1000 per person and they hand it right back to you in mortgages—it doesn’t create any new economic activity. That’s why my system forces it to change hands at least once: in order to use it, someone has to earn it from someone else. So if you had ^200 carets / community credits per month designated for food production, wellcare, education and home improvement, everyone could do one or four of those things. And you could put the last ^200 towards something the neighborhood wanted to do together—fix up a community hub, build a playground, have universal internet.

Now let’s look at another popular policy—student debt forgiveness followed by free education because education is a human right, like food, healthcare, housing. So if you’re going to make all these things free, who are you going to make your slaves? Someone will need to produce them without the right to consume or sell the products of their own labor. And debt forgiveness will have a discrepant impact on students who went to a less expensive college or not at all or worked their way through, and on parents who took on a second mortgage or saved.

However, as I talk about in my book, usurious student debt is a huge problem that you do need to solve. A different way would be to limit the maximum monthly amount and total time to make it manageable. Then you can use the amount owed to push it out into the economy for jobs that new grads can do. I think that students would be thrilled to have useful roles helping the community.

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This is a supplemental economy that doesn’t replace the dollar or Euro or whatever imperial currency you’re under. The only thing it takes from capitalism is the ability of bankers to issue mortgages and all it takes from government is the social pension, which is Social Security in the US. For everyone with a good corporate job, good for them! And it’s good for you.

You can give them the ability to transfer dollars or Euros to carets at a 1:1 ratio up to a limit you set, let’s say ^6000 per month. This enables them to pay their rent or mortgage and buy local goods and services with no income or sales tax. Anything bought outside the local economy with dollars or Euros would be taxed at 50%. So that enables you to add that $6000 per month to your reserves.

If carets exchanged for dollars or Euros that leave the economy are taxed at 50%, you can safely issue twice as much in carets as you have currency in reserves. The formula then for how much you can issue in local credit is Debt + Tax + 2X Cash. As long as you don’t exceed this, you can never get caught short and have to sell off your assets.

You want to build up your reserves so the amount in circulation exceeds your debt by a factor of four. According to Benjamin Franklin, no more than 20% of the currency should be created through debt, the rest should be spent into existence by the government. So you should thank those who are working in the imperial economy by letting them participate while you’re building up your independence.

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A maximum wage is a way to make things cheap, which is better than free. When something is subsidized, it becomes as expensive as the deep pockets of the state. But if no one can make more than ^60 an hour, doctor visits become affordable without insurance.

Another thing I love about a maximum income is that it means enough is enough! For retirement savings, you can give your social security trust fund a 7% return to keep it solvent forever. And then you can allow people to put ^900 per month into long term savings for retirement, a house, or whatever they want, and give them a 4% return.

This means that a person doesn’t need to keep pace with inflation because, under my system, the cost of living goes down. They can reasonably meet their goals and relax, knowing they’re going to be okay. They can contribute to their kids’ retirement, help them buy a house, help others because there’s no need to hoard. This could be possible for everyone.

<intermission into a spiritual segue of enough, but you have to watch the video for it>

I’ve also been having this discussion with Matt Ehret on his Substack comments. Some of the questions were:

1. Do you back your currency with the housing or let the bankers have the housing for free and then borrow the gold from them to back your currency?

2. Do you have free trade or protective tariffs? We’re both fans of protective tariffs but how local you keep free trade depends on your situation, and whether there’s a discrepency in earning power in your vicinity.

3. Do you want free trade with sibling cities around the world?

4. Do you need a standing army? What’s the definition of defense? And would you want your kids to be drafted or only poor kids?

Within one generation, we can amass for the masses, improving soil quality and food production, knowledge and skills, restoring houses and building neighborhood hubs, creating local cuisines and a welcome for travelers who share passions and interests. That’s the world I want to live in!

Since posting the video on YouTube, Lyndsey from Scotland said she “may replay this video 'til I wear it out—you've again inspired me. You prompt me to consider the societal discomforts we accept, and I've a mind to write a piece about that. Bankers are the devil we know and yet we do nothing about them but complain. So hope my fiefdom can neighbour yours, if you'll have me.”

I wrote back “I would love your fiefdom to neighbor mine, and Maria's in Australia, Colin's in NZ, Gan's in Maine, JoE's in Utah, and Jack's in Arizona. And of course the electric mule kicking up a ruckus in Appalachia.” And I hope you add yours!

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If this is the world you want, we need to understand money so here’s Who Stole the Assets? with Anwar Shaikh:

Responds to Russell Brand's interview of Anwar Shaikh, What Does Capitalism Mean? by asking Whose Capitalism? Describes what community capitalism or family capitalism could look like if we owned the assets. Explains why we don't need to change human nature and what we could learn from China. Suggests that Russell is asking for too little with higher pay for employees, and we should ask for it all--ownership of our time, our labor, and our assets.

and we need to understand spirituality, so here’s Are YOU Ready to Save the World? :

Looks at undoing empire-thinking as a spiritual practice. ACIM says that God only ever asks one question, "Are you ready yet to help me save the world?" I look at why our answer is "not yet" because of our attachment to our own superiority. Our message to one another should be "You are magnificent" and "Here's why I think you're mistaken," using facts, logic and consistency. I connect the comments of three magnificent viewers and convey the views of four magnificent writers on Ukraine--Glenn Greenwald, Matt Taibbi, Caitlin Johnstone and Andrew Bacevich. I end with hearing from the horse's mouth.