"If the major opportunities for future growth of government lie in the area of conventional taxation, are there any defenses available to the citizenry? ... Perhaps the most fruitful advice comes in two parts. The first piece of advice is to avoid war and the rumor of war: this is history's greatest boon to the tax man. ... The second piece of advice is to seek ways of inhibiting government's ability conveniently to increase its collections. Possibly the very increase in that ability that is in prospect can be turned to account by a constitutional provision which forbade the income tax, and perhaps even the storage of information regarding individual incomes by third parties, including government." ~ Benjamin Ward
What a Century!
Column by Jim Davies.
Exclusive to STR
It was the best and the worst century in human history, and it ends this month.
The previous one closed in 1912, a year best remembered for the sinking of the Titanic--a story that has been skillfully tuned to incite distrust of business and reliance on governments. It's a fable, which I demolish here. But the fable served as a prélude to what came next.
In 1913, the government of what was to become the most powerful empire in history enacted two separate but related ways to grab more of the wealth of this productive people: It founded a quasi-central bank and it apparently imposed a tax on personal earnings – after two earlier attempts had been foiled in each case. Until 1912, government had grabbed no more than 9% of what Americans produced; after 1913, those acts soon enabled it to steal over 45%.
The tax was ”apparent” more than actual, because – fearful of not getting Amendment 16 ratified – the drafters worded it so loosely that no such legislation could be crafted. Instead, it was left to the judicial branch of the FedGov to enforce collection of the tax. But the bank was real enough, and very cunning: Instead of creating a wholly-owned subsidiary, the conspirators of Jekyll Island made America's central bank a “private” entity but chartered it so as to serve the same purpose. The banks loved it because they could earn interest on bogus ”money,” while the Feds loved it because they could spend fiat money to purchase votes without having at once to levy taxes – that being the purpose of all central banks.
The tax took a while to bite. At first the Supreme Court almost shot it down, rightly declaring Amendment 16 to have provided Congress with “no new taxing power” and that “income,” the stuff being allegedly taxed, was defined the same way as in the 1909 Corporate Excise Acts – that is, nothing to do with wages or salaries. But then there were some membership changes, and although it still didn't reverse itself (and never has, since!), in 1927 it did uphold the conviction of a bootlegger called Sullivan as if there were an individual earnings tax. It has continued with that hypocrisy ever since, so fulfilling its true function as a toady. Because the low earnings of the 1930s didn't trigger wide participation, most people didn't feel its effect before 1942. An object lesson in how to boil a frog.
Today the “income tax” confiscates over a trillion dollars a year, or nearly half of all FedGov revenue, but its effect is much larger yet. With a lot of work, the 44 state governments that tax earnings could dissolve the link, but currently all of them except one depend entirely upon it for their own revenues; as in “enter here the number you wrote on IRS Form 1040, Line X.” Further, the tax is used as an arithmetic base for the Social Security tax, fraudulently called “insurance contributions”--so, reckoning those as well, this unlegislated “income tax” is by far the largest heist in history. It's collected by the IRS, so making that agency the most hated in government (though the TSA has recently sprinted into second place), and which constitutes what Ron Paul has well called the “largest terrorist organization in the world.” Its sinister power to probe into everyone's private financial affairs has placed the Gestapo and the Stasi – and even King George's “swarms of Officers to harass our people, and eat out their substance”--in a less unfavorable historical light.
Fiat money, on the other hand, became useful immediately as a way to pay for WWI; and the “need” for the US to participate in that bloodbath was as part of an empire building program begun by Lincoln. Prior to 1861, America was a union of independent states (usually, even referred to in the plural, as in ”The United States are . . . .”), but after secession had been prevented in 1865, it was an empire ruled from Washington, and government ambitions led to a huge grab of land from Spain in 1898. The opportunity to plunge in to Europe for further influence when it became clear that states there were busy destroying each other was much too tempting to miss. There being no popular support for intervention or for the taxes that would inevitably be needed, the Federal Reserve sprang to the rescue right on time with the magic of fiat money.
The outcome in 1919 all but guaranteed a replay, so the US intervened again in 1941 and this time got it “right” by displacing the British Pound with the US Dollar as the world's “reserve currency” by agreement in New Hampshire in 1944. Our high living standards of the past six decades have been the result, along with a vast extension of the American Empire. Like all emperors, ours has attracted wave upon wave of richly deserved hatred, producing a profound contrast with the goodwill that led Frenchmen (!) to contribute to the Liberty Statue in the late 19th Century.
For the human cost of the 20th Century wars, in the bloodiest of which the FedGov played a leading part, see here for mainly battle deaths and here for the often-associated “democide.” Between those two sources, I suspect there's some overlap, but there's no avoiding the conclusion that those inter-government conflicts killed over 200 million people.
So here we are in 2012, after a century of massive theft and counterfeiting by the Feds, hated all over the world and poised on the very brink of economic collapse now that trillions of bogus dollars have become impossible to repay--and politically, so far impossible even to service with interest – for currently its new borrowings are annually four times greater than that interest even though its rate has been artificially depressed to 1.6%. The FedGov owes over $16 trillion, or nearly seven times its total annual revenue. The flood of bogus money that this massive debt represents has destroyed over 98.5% of the purchasing power of the 1912 dollar, while in the early 2000s it boosted house prices so fast that their apparent annual rise in “value” could exceed mortgage service costs and so trigger a runaway. Hence the bursting of the bubble and the current recession.
That's a sampling of the bad news, of the last 100 years, and it all results from government.
The century also brought an unprecedented flood of good news.
First, there's the magnificent advance and dispersal of knowledge and technical achievement that was fueled by the preceding two centuries of private thrift and investment, that has made life so much more agreeable, and which led to a huge increase in the size of the human family – from 1.6 billion in 1900 to 6.1 billion in 2000. Some view this as a threat; I view it as a delight, for to me, human life is good. Not only are more enjoying it, but we are also enjoying it for longer; worldwide life expectancy at birth doubled from 30 years in 1900 to 63 years a century later, and if free markets had been allowed to operate, a faster spread of wealth, good medicine and nutrition would have made the picture rosier yet.
Wherever markets have been allowed to function, the comforts and standards of life have risen almost beyond recognition. Just one century ago, there was little running hot water, no vacuum cleaners, few telephones and no radio or TV (never mind how the use of those has been corrupted). Refrigeration depended on ice. To travel, most needed a bicycle or train or horse-drawn carriage, and roads were infrequently paved. To cross an ocean or continent took days or weeks. Some will have family archives and photos of the era; check them out. Not many would choose to return to that lifestyle.
Moore & Simon's 2000 book It's Getting Better All the Time claims, “There has been more material progress in the United States in the 20th Century than in the entire world in all previous centuries combined” and proves it by detailing 100 “greatest trends” of the period. It explores health, wealth, poverty, children, labor, recreation, housing, transport, inventions, IT, education, safety, the environment, resource abundance, culture, sports, women, racism and government and provides overwhelming evidence of huge advances and improvement in each – even in that last item, on the premise that democracy is preferable to dictatorship. Not one of these improvements can be attributed to government. All of them spring from initiatives by persons and commercial ventures, and the authors' conclusion is incontestable.
Second, communications have changed from hierarchical to horizontal, and the effect is and will continue to be profound. Prior to around 1913, “news” was what a small class of editors decided would be passed downwards to readers, along with a set of opinions confined to a narrow, statist range. By 2012, most of what we learn each day comes from our peers; newspapers are about to go the way of the dinosaur (unthinkable, a century ago!), and most of what we know is found on the Internet, placed there by anyone with something to say. Even television is in trouble. The necessary task of filtration (discarding the rubbish) is now in the hands of each reader, where it should be, not those of an élite group of censors. Further, peer-to-peer communication is fast – with texting able to mobilize thousands in minutes; wherever the Arab Spring winds up leading, the technology that enabled it was breathtaking.
All this has shattered the old structure of central information control, and after government loses control of information, eventually it will lose control altogether. Personal electronic devices and the Internet form a far bigger change than Gutenberg's movable type, an invention that changed the course of history. We live in the middle of an amazing opportunity.
Third, one particular way in which that horizontal communication makes the rapid spread of ideas feasible is that of one-to-one exponential growth. The idea is quite old; the early Church used it to expand in its first three centuries, to grow from an obscure provincial religion to the largest in the Roman Empire. Friends told friends what they had believed and experienced. Today, that simple technique is now being used to spread an understanding that freedom is desirable, essential, and achievable; The On Line Freedom Academy is the first to make use of this technique to bring about a free society.
It could have been used a century ago, as I wrote here, but it wasn't – probably because the cost would have been considerable (instead of zero) and the speed of growth, far slower; for it would have been based on printed books instead of compact disks and on snail mail instead of the Internet. But it's in use now. Hence, government's days are numbered.
So, will the next century, 2013-2112, reverse the dreadful trend to ever-increasing government control over everyone? There are pessimists around who will disagree, but for the reasons above I say “yes.” If the doomsters should prove right, I don't believe there will be a 2112, so they will not have the pleasure of celebrating their prescience even if they'd otherwise live until then; for if the long dark night of government is not ended, nuclear or bio-chem war will inevitably eradicate the human race. It may not begin with a major inter-government conflict, as Paul Bonneau well reasoned here recently, but rather from an escalation of some use of WMDs by suicidal fanatics, driven to distraction by the FedGov's drumbeat of worldwide intervention. It might, though; the greatest constant in the 10,000-year history of governments is that they relentlessly, repeatedly engage in war. There were over 100 wars in the 20th Century, more than one per year, all of them between governments; so a fair prediction is that if governments continue, wars will.
The century now ending has demonstrated convincingly that fiat money and high taxes don't work. The chaos governments have used them to create is so massive that it's seriously possible that a total economic collapse will happen of its own accord even before we market anarchists can bring the government era to a decent and relatively orderly end. This has been their best shot, and it has utterly failed. The initiative has now passed to us advocates of individual freedom; our adversaries' theories lie in tatters, their excuses wear thinner every day, and they have lost the ability to control who says what to whom – all this at the very time that we have gained that ability and can show to everyone how society will function without government. Humanity stands on the very cusp of a new and glorious era. Carpe diem!