Taxes and Tyranny

One of the very first bits of political writing I ever read on the World Wide Web was this 1996 column from a British libertarian named Jan Clifford Lester. Professor Lester argues that only taxpayers should be allowed to vote. After discussing the slogan “Taxation Without Representation is Tyranny,” he goes on:

This then prompted me to consider the converse proposition: Representation Without Taxation Is Tyranny. It would, of course, be a fallacy to think that this is entailed by the first proposition. But surely it is just as reasonable. It was accepted by most people as a fair limit on the franchise in the mid-nineteenth century. Why should people who are not taxpayers be allowed to vote money away from those who are? If we must have state services, it should at least be for those who pay for them to vote for which services they want and how much they wish to pay. To allow those providing, or living off, the services to vote is like allowing a shopkeeper to vote on what you must buy from him, or a beggar to vote on what you must give him. Naturally, I hear you say, but doesn’t everyone pay tax, at least on goods and services? And so is it not trivially true, insofar as morals can be ‘true’? No, they do not and it is not. Not by a very long chalk.

Professor Lester then differentiates state employees, who are paid out of taxes, from others who are not:

To take a clear case, when a direct state employee, such as a civil servant, receives his salary cheque there will be an apparent deduction for the amount of tax that he pays. As a matter of fact this is a mere book-keeping exercise designed to keep up the pretence that he is a taxpayer along with everyone else. Abandoning this pretence of taxpaying and simply paying him less in the first place would save taxpayers’ money in administration and make the political reality clearer to all.

If a “direct state employee” is merely “a clear case,” what other cases are there?:

So who does not pay taxes and so ought not to have an electoral vote? Judges, state-school teachers, all in local government, state policemen, all in the armed forces, all in prison, all in the NHS, all in the civil service, all employees of the BBC, all the unemployed, all in academia (except, perhaps, in the University of Buckingham), some farmers, some solicitors, maybe some barristers, any employed in businesses that receive tax-subsidies in excess of their tax-payments, and MPs with insufficient taxed market-incomes to cover their salaries. I cannot list them all, but you see the size of the problem. You can also see that there is no class conflict in any quasi-Marxian sense here.

Who, then, does pay taxes? Well — anyone who is left. If you are in any doubt as to which category that you are in then the simple test is to ask yourself whether, in your current position, you would have more purchasing power or less purchasing power if taxation were completely abolished.

That is rather a sweeping list- denying the franchise to “any employed in businesses that receive tax-subsidies in excess of their tax-payments,” for example, would mean that a great many people would have to wait for the results of quite a thoroughgoing audit of their employers before they would know whether they would have a place at the ballot box. And if we take Professor Lester’s “simple test” at face value, no one would be qualified to vote. If “taxation were completely abolished,” taking with it all enforcement of laws, one might expect new obstacles to be put in the path of wealth creation.

Professor Lester reaches his conclusion:

There are some who are on the periphery of net tax-receiving and whom it will not be possible to distinguish with certainty. These people receive most of their income from purchases by state institutions or state employees. The latter is especially hard to be sure of. For instance, those working for The Guardian and New Statesman &Society might just fit this category. But if it is too hard to prove then they might have to be given the benefit of the doubt. Though if the state sector shrinks, due to a new Taxpayer Democracy, then enterprises will decline to the extent that they necessarily depend on indirect state patronage. In the case of the latter two publications I would expect such journals as The Times and The Spectator to expand to replace them.

In view of the percentage of economic activity in modern societies that “purchases by state institutions and state employees” represent, one rather doubts that even The Spectator would pass this test.

And why stop there? If the employees of The New Statesman are disfranchised because most of their subscribers are net tax recipients, why should employees of the bar across the street from the offices of The New Statesman retain the right to vote? And if those workers are classified as net tax recipients because most of their income is derived from purchases made by net tax recipients, shouldn’t any purchases they make, and any purchase the bar makes, also be classified as a transfer of tax monies? Follow those knock-ons far enough, and again we come to a scenario in which voting is abolished altogether.

Moreover, while there are various schools of thought which propose that in a well-ordered society the laws defining those relationships among people which we call “property” could be written in a way that would reflect some moral reality given in nature, the radicalism of Professor Lester’s proposal would suggest that he does not believe that the UK has attained a particularly high level of justice. So, how can he consider any corporation chartered and regulated by the British state, even if the voting shares of that corporation’s stock are held by private individuals, to be less than suspect?

And what of tax recipients in other countries?  To return to his examples of The New Statesman and The Guardian, while it may in 1996 have been the case that both of these publications derived most of their revenue from net recipients of UK taxes, two thirds of  The Guardian’s revenue now comes from readers outside the UK, half of them in the United States. Few of these readers are in the pay of the British state, but it is possible that most of them are net tax recipients in their own countries. If so, would employees of The Guardian still be disqualified from voting in Britain because they are indirect recipients of US tax dollars?

Nor is that the only implication. Professor Lester is surely right that our conception of taxpaying is too narrow if it is simply limited to figures that appear on ledgers. I would not defend the idea that the line on a state employee’s pay stub indicating that some number of pounds or dollars has been deducted from his or her gross pay represents actual taxpaying. On the other hand, his conception of tax-receiving is just as narrow as this. So in the USA, profitable corporations pay their shareholders far less in dividends, and their executives far more in compensation, than do their counterparts in other advanced countries. This is largely the result of the US corporate income tax, under which companies pay taxes on money they distribute as dividends but not on money they pay to executives. Therefore, a rational analysis of taxes in the USA should classify as tax payments all compensation executives receive in excess of what their counterparts receive in countries with different tax regimes. That analysis would reveal that many of the individuals who are in the habit of regarding themselves as the USA’s greatest taxpayers are in fact net recipients of tax dollars. Professor Lester would have to deny them the franchise as well.

In fact, Professor Lester’s proposal might have some rather amusing consequences if applied to the USA. Not only executive compensation, but interest payments are also deductible from the corporate income tax. That encourages US firms to take on far more debt than do their counterparts in other countries. Those debt levels in turn give rise to the private equity sector, the “corporate raiders” who sometimes make such a big splash in the business pages. If we classify them as net tax recipients and on that account deprive them of the vote, we would suddenly have a bunch of disfranchised billionaires and centi-millionaires running about. I confess that I would find it difficult to refrain from laughing out loud if corporate raider-turned-politico Willard “Mitt” Romney were to lose the right to vote.

What brought this old column to my mind was an essay that popped up in my Twitter feed this morning, a 2017 piece by philosopher Philip Goff. Professor Goff begins with the observation that right-wing libertarians who denounce all taxation as theft are only the most extreme advocates of a widespread notion, the notion that what is listed on pay stubs and other accounting instruments as a payee’s pre-tax income is property to which that payee is morally entitled.  Again, this is the fallacy that Professor Lester identified, equating taxpaying with ledger items rather than with the actual allocation of resources.

Professor Goff writes:

Your gross, or pre-tax income, is the money the market delivers to you. In what sense might it be thought that you have a moral claim on this money? One answer might be that you deserve it: you have worked hard and have done a good job, and consequently you deserve all your gross income as recompense for your labour. According to this line of reasoning, when the government taxes, it takes the money that you deserve for the work you do.

This is not a plausible view. For it implies that the market distributes to people exactly what they deserve for the work that they do. But nobody thinks a hedge-fund manager deserves many times more wealth than a scientist working on a cure for cancer, and few would think that current pay ratios in companies reflect what philosophers call desert claims. Probably you work very hard in your job, and you make an important contribution. But then so do most people, and the market distribution of wealth patently does not reward in proportion to how hard-working people are, or how much of a contribution they make to society. If we were just focusing on desert, then there is a good case for taxation to correct the amoral distribution of the market.

If we have a moral claim on our gross income, it is not because we deserve it, but because we are entitled to it. What’s the difference? What you deserve is what you ought to have as a result of hard work or social contribution; what you are entitled to is the result of your property rights. Libertarians believe that each individual has natural property rights, which it would be immoral for the government to infringe. According to Right-wing libertarians such as Robert Nozick and Murray Rothbard, taxation is morally wrong not because the taxman takes what people deserve, but because he takes what people have a right to.

Therefore, if taxation is theft, it’s because it essentially involves the violation of people’s natural rights to property. But do we really have natural rights to property? And even if we do, does taxation really infringe them? To begin to address these questions, we need to think more carefully about the nature of property.

Professor Goff distinguishes between three schools of thought. Right libertarians hold that all things that have value to humans gained that value because someone discovered those things and by his or her labor created that value. For them, it is a truth inherent in the structure of the world that each individual has inalienable right to possess the fruits of his or her labor. Property law represents an attempt to tease out the moral facts that make up this truth. Property law must therefore recognize ownership as a relationship between a particular person and a particular object, and it must prohibit all other persons from interfering with this relationship.

Left libertarians agree that property law is just if and only if it teases out moral facts about the relationship between people and things. However, they do not accept that these facts are as Right libertarians say they are. Rather, they believe that it is unjust for any one person to lay exclusive claim to nature. At its most extreme, Left libertarianism proscribes ownership of anything other than one’s own body. At its most modest, it lays down rules enjoining requirements for sharing what one does own, and insisting on joint responsibility among members of a community for the use of the resources under their control.

Opposed to both varieties of libertarians are the social constructivists. Professor Goff summarizes their views thus:

Libertarians believe that property rights are natural, reflecting basic moral facts about the world. Others hold that property rights are merely legal, social constructions, which are created by us and can be shaped to suit our purposes. We can call the latter view ‘social constructivism’ about property. (Please note, our focus here is specifically on social constructivism about property; we are not considering a more general position according to which morality as a whole is a social construction.)

To bring out the difference, ask yourself: ‘Which comes first: facts about property or facts about property law?’ For the social constructivist, the right to property is not some natural, sacred thing that exists independently of human conventions and legal practices. Rather, we create property rights, by setting up legal institutions to ensure that people have certain legal rights over the material world. For the libertarian, in contrast, facts about property exist independently of human laws and conventions, and indeed human laws and conventions ought to be moulded to respect the natural right to property.

This distinction is crucial for our question. Suppose we accept the social-constructivist view that property rights are merely legal. Now we ask the question: ‘Do I have a moral claim on the entirety of my pre-tax income?’ We cannot argue that I am entitled to my pre-tax income on the basis of my natural property rights, as there are no such things as ‘natural’ property rights (according to the social-constructivist position we are now considering). So, if I have a moral claim on my entire pre-tax income, this must be because it is exactly the amount of money I deserve for my hard work and social contribution, presumably because in general the market delivers to each person exactly what they deserve. But we have already concluded that this is not a plausible claim. Without the belief in natural property rights, existing independent of human laws and conventions, there is no way to make sense of the idea that the deliverances of the market are inherently just, and hence no way to make sense of the idea that each person’s gross income (which is just the income the market delivers to them) is hers by right.

Here’s where we’re up to: to make sense of the idea that taxation is (moral) theft, we have to make sense of the idea that each person has a moral claim on the entirety of her gross income, and this can be made sense of only if property rights are natural rather than mere human constructions.


As already discussed, social constructivists do not deny the existence of property rights, rather they take them to be social or legal constructions, which humans are free to shape to reflect what they deem valuable. Jesus declared that ‘The Sabbath was made for man, and not man for the Sabbath.’ Analogously, for the social constructivist, property rights are made to serve human interests and not vice versa.

It is plausible that human flourishing requires certain legally protected rights to property, and hence most social constructivists will advocate a system of property rights. At the same time, there are other things of value – perhaps equality, perhaps reward for hard work and/or social contribution (which as we have seen is not well-protected by the market) – and in order to promote these other values, most social constructivists propose making property rights conditional on the payment of taxes. In the absence of pre-existing natural property rights, there is no moral reason to respect the market distribution of wealth (there will of course be pragmatic, economic reason, but that is another matter).

Professor Goff argues that Right libertarianism fails at two points. First, it cannot answer the basic claims of Left libertarianism, and so fails at the outset. Second, even if we choose to overlook this failing, it can defend the idea that gross income is a measure of special moral importance if and only if it can demonstrate that the market is operating in its best possible state, in no way distorted by political intervention. As this claim would leave Right libertarians without much of anything else to say, they would seem unlikely to adopt it.

I would like to add one point to Professor Goff’s description of social constructivism. Many years ago, I studied the legal codes of ancient Rome. I can’t say that much stuck with me from that study, but one thing I remember very clearly is that every time the ancients said they had “rights” they specified against whom they had those rights.  That is to say, rights were definitions of what was and what was not allowed in particular relationships among people. The concept of rights is simply not relevant to relationships between people and inanimate objects.

A property right describes, not what may happen between a person and a thing s/he owns, but among various people who might encounter that thing. That’s why I can’t kick your door down, but a police officer with the proper warrant can. Your ownership of your door gives you rights against me that it doesn’t give you against the agents of law enforcement. Likewise with the various actions allowed a tenant and a landlord with regard to the same location. Or for that matter, with regard to the right of free speech a citizen may have against the state, as opposed to the rights that same citizens might have against the owners of a social media platform with terms and conditions specifying that they can “terminate your account at any time, for any reason or no reason.” You may be able to challenge their particular exercise of that right in court, but if so it isn’t because you have the same right against them that you have against the state. Rather, it is because there are rights built into the law of contract that sometimes override particular provisions parties may write into a particular agreement.

It seems to me that the social constructivist view of property law is obviously right, and that the both varieties of libertarian are simply being childish. If you disagree, well, there is a comment section.

Who made a dollar worth a dollar?


Some years ago, the founder of this blog, VThunderlad, suggested that the time had come for the English-speaking world to scrap its old Christmas carols and adopt a new set. I was willing to be convinced, until he proposed that the first to be retired should be “The Carol of the Bells.” “The Carol of the Bells” is the one Christmas tune of which I have the strongest and most numerous memories, and so as soon as he recommended ditching that one I was dead set against scrapping any Christmas carol, even the drab, barely-singable ones.

What brought this story to mind is the ongoing discussion about redesigning US currency, a discussion most recently brought into the spotlight with the US Treasury Department’s decision to partly replace Andrew Jackson’s portrait on the $20 bill with Harriet Tubman’s. Since Jackson was a slave-trader whose most remembered political achievement was forcing thousands of Cherokee people to leave their homes in the southeastern US, costing an untold number of lives, there has long been a demand that his face should be removed from the $20 bill, but the Treasury Department opened the year with a proposal to remove, not Jackson’s portrait from the $20 bill, but Alexander Hamilton’s from the $10 bill.  The success of the Broadway musical Hamilton (much more productive of sympathy for its protagonist than Bloody Bloody Andrew Jackson ever was,) doomed that plan and redirected attention to the $20 bill. Even now, it looks like the Harriet Tubman $20 bill won’t be making its debut until 2030, after four presidential elections, any one of which may bring in an administration that will put a stop to the whole thing. Even if the plan goes through as announced, the new bill will feature on its reverse an image depicting a statue of… Andrew Jackson! The whole thing feels like a fiasco.

Andrew Jackson’s fans aren’t that numerous nowadays, but he is still a popular figure in the state of Tennessee, which was his home in adulthood, and in the border area between North and South Carolina, where he was born and raised. So people from those places felt singled out by the push to remove him, and resisted that push intensely enough to force the Treasury into the ridiculous position it now occupies. I say we should take a lesson from the United Kingdom’s decimalization of its currency, accomplished on a single day in February 1971. If we want to redo the currency, we should do it all at once.

What changes do we need to make? I can think of seven:

  1. The $100 is so attractive to counterfeiters and so inconvenient to the average currency user that it is not reasonable to continue its production.
  2. The $1 and $5 bills wear out so frequently that it would be logical to discontinue their production and replace them with coins. In the past, the USA has introduced dollar coins but kept dollar bills in circulation, with the result that it has not made economic sense to redesign vending machines and cash registers to take the dollar coins. Therefore, currency users have found little use for the coins. Only the discontinuation of the bills will prompt the redesigns necessary to bring the new coins into wide circulation.
  3. All US bills are the same size and texture, exposing the visually impaired to the threat of larceny every time they pay with cash. The $50 bill should be larger than the $20 bill and the $20 bill larger than the $10 bill.
  4. The $.50 piece has never caught on and is valued almost exclusively as a collector’s item. Ceasing production of this coin would inconvenience no one and please collectors by giving scarcity value to a coin many of them can’t help but hold onto, even though, as a coin still in production, it is worth only its face value.
  5. Each $.01 piece costs more than $.01 to produce, yielding negative seignorage. Moreover, they are nearly as inconvenient to currency users as is the $100 bill, and tend to fall out of circulation almost immediately. The presence of the $.01 piece in the US currency system benefits only two groups: the zinc industry, which would still be doing just fine without the subsidy the piece represents, and retailers who advertise prices of “$9.99” or “$19.99” knowing full well that, on the one hand, these keep them under the psychological barrier that $10 and $20 present to many customers, and on the other that buyers will leave a $.01 piece rather than claim it in change. As such, the $.01 piece not only costs the taxpayers money and unnecessarily inflates the price of a strategic mineral, it also encourages deceptive trading practices. Its production should be discontinued.
  6. As the physical size of bills should decline in proportion to their value, so the diameter of coins should decline in proportion to theirs. So, the $5 piece should be the largest coin, the $1 piece the next largest, and so on, so that the $.05 piece, not the $.10 piece, should be the smallest coin.
  7. All the men who are now or have ever been on the obverse of US coins or bills should be retired from them, and should be replaced by the faces of others who symbolize reasons why a dollar is worth a dollar.

The first six points are relatively familiar, and I don’t propose to enlarge on them. Point seven does require a bit of explanation.

That all the men who have been featured on the obverse of coins should be retired I support by the example of the not-entirely-unsuccessful resistance diehard Andrew Jackson fans have put up to the idea of removing him from the $20 bill. Only if every region and interest group that has ever succeeded in putting the face of its favorite on the money simultaneously gives up that success will reform go through.

Why should the new faces symbolize reasons why a dollar is worth a dollar?  Ever since the end of the seventh century BCE, when Alyattes of Lydia struck the oldest coin known to numismatics, it has been customary to put an image on the obverse of the coin indicating the power that gives the coin its value. In Alyattes’ case, that image was a lion, an image that his house apparently used as an heraldic device:


The coin was worth what it was worth because Alyattes and his kinsmen said it was worth that much, and no further explanation was required. It better not have been required, since it wasn’t going to be forthcoming from the unadorned gouge on the reverse:


A bit later, Alyattes’ old neighbors in Lycia started stamping portraits of their kings on the obverse of their coins, and the Greeks then started putting deities symbolic of the community at large on the obverse of their coins and doing imaginative things with the reverse. In each case, the point was to show who guaranteed the value of the coin, and with the reverse designs to give some background as to why that guarantee could be trusted.

The USA has no king, of course, but the images on US currency are still meant to show why a dollar is worth a dollar. Abraham Lincoln is on the $.01 piece and the $5 bill, and Ulysses Grant is on the $50 bill, because the Union’s victory in the civil war of 1861-1865, and the subsequent rise of a relatively strong central government, made it possible for the USA to build single internal markets for capital and labor, to conduct trade policy on a grand scale, and to break free of British economic domination once and for all.

Thomas Jefferson is on the $.05 piece and the $2 bill, and Andrew Jackson is on the $20 bill, because these two men were instrumental both in the territorial expansion of the USA in North America, and in the creation of the Democratic Party, which, despite the anti-nationalistic ideology of its first century of existence, as a political party operating on a national scale could not but act as a force consolidating the USA, thereby inadvertently promoting the ends which Lincoln and Grant served consciously.

Franklin Roosevelt is on the $.10 piece, not only because he had polio and the anti-polio efforts of the March of Dimes were very much associated with the $.10 piece at the time when Roosevelt’s portrait was put there, but because his New Deal policies normalized the idea of a mixed economy in which large-scale state intervention would both ease the plight of those individuals who took financial or career risks that did not pay off and counter the extremes of the business cycle. Moreover, leading the USA’s efforts in the Second World War, the Roosevelt Administration did three things that still help to make a dollar worth a dollar. First, in the period from September 1939 to December 1941, Roosevelt did what Woodrow Wilson, in an act of negligence approaching outright treason, failed to do in the period August 1914 to April 1917, and forced the UK to give up its gold reserves, its equity in strategically vital US industries, its naval bases in the Western hemisphere, and other assets that not only would have been dangerous had they fallen into German hands after a British surrender, but which also represented the dead hand of the former colonial power on the American economy and the US position in world affairs. Second, the USA did play a key role in defeating Nazi Germany and Imperial Japan, two powers which would have built an intolerable world had they won a secure triumph, and which would have left the world in utter chaos if, as was more likely, they had been unable to hold onto their gains. The USA emerged from the Second World War, not into either of those nightmare scenarios, but into a world in which it had greater access than ever before to the markets of Western Europe and Northeast Asia. Third, it was under the Roosevelt Administration that the USA established the relationship with Saudi Arabia that has periodically stabilized the price of petroleum over the last 70 years, a stabilization that has made possible worldwide industrial development that well merits the words of Gordon P. Merriam, an official of the Roosevelt administration, who called Saudi Arabia’s petroleum reserves “one of the greatest material prizes in world history.”

George Washington is on the $.25 piece and the $1 bill because if the thirteen colonies had not made a successful military revolt against the British Empire, there would be no US currency, and if the USA’s elites had not managed to create a stable political system in the aftermath of that revolt such currency would be valueless.

John Kennedy is on the $.50 piece because television promotes nostalgia for celebrities who die young, but also because his tough talk about Berlin still highlights the relationship between the USA and Germany, a relationship which guarantees US access to markets throughout the German Empire (or, as it is politely known, the European Union.) In turn, Germany’s desire for access to the American market keeps its behavior in check to some extent, though occasionally one does see the Chancellor unilaterally disregarding Germany’s international commitments, triggering a movement of populations which threatens to dissolve the borders of states in Central and Eastern Europe. And the Germans do still behave recklessly when they see an opportunity to set up operations in territories that have historically been within Russia’s sphere of influence. However, these tendencies are to some degree inherent in Germany’s geopolitical position and the deepest structures of its political culture. The attraction of trade with the USA can moderate Germany’s bent to those forms of bad behavior, but only a strong Russia can contain it, and nothing can eradicate it. So it is not unreasonable that an American coin should commemorate the US-German relationship.

Alexander Hamilton is on the $10 bill because, as the first Secretary of the Treasury, he did a great deal to create a viable financial system in the USA. The musical may have kept him on the bill, but that fact would make it absurd to dump him and only him from the currency.

Benjamin Franklin is on the $100 bill, not only because of his role in the War of Independence and the writing of the Constitution, but also because, as a scientist and inventor, he represents the roles that basic research and technological advancement have played in the enrichment of the USA. Besides, Franklin’s remark that Americans had a higher standard of living than their cousins in Europe because the country’s low population meant that the USA was a country of “cheap land and high wages” explains more about the USA’s economic and political history than any other five words could.

So those guys do a pretty good job of explaining why a dollar is worth a dollar. For old-fashioned types who want the design of the currency to include an explanation as blunt as Alyattes’ family crest, there are the words printed on each bill, “Federal Reserve Note. This note is legal tender for all debts, public and private.” A dollar is worth a dollar because the Federal Reserve Board says it is, Congress has passed a law saying that you have to take dollars if your debtors offer to pay in them, and the Secretary of the Treasury and the Treasurer of the United States have signed their names to the whole thing. If we’re going to change the images on the currency, we’re going to have to choose a set that give at least as good an explanation of why a dollar is worth a dollar as does the existing set.

What does the existing set leave out?  The first thing that comes to my mind is the smallpox epidemic that wiped out about 90% of North America’s population when European settlers arrived on its shores in the sixteenth century. Without that, Europeans may well have established more of a foothold on these shores than the Vikings had a few centuries before, but there is no way that a federative nation-state dominated by their descendants would today span the continent.  Perhaps the descendants of the natives would today be more prosperous than is the actual United States of America and perhaps they would issue currencies even more valuable than the dollar, but the dollar wouldn’t exist if it were not for that incomparable disaster.

You can’t really put the smallpox virus on a coin; it would be an ill-omen, for one thing, and in quite bad taste. Besides, the thing is just unsightly:


So, I would suggest that the $.05 piece carry a portrait of Dr Donald Henderson, who led the World Health Organization unit that completed the eradication of smallpox in 1967-1977. Honoring Dr Henderson would also honor both technological advancement and international cooperation, two other pillars of US economic might. Dr Henderson is still alive, and no living person may appear on US currency, but by the time this program could be implemented he’ll probably have died.

Some other points illustrated by the faces now on the currency would still have to be brought out. The main enemy US foreign policy confronted, beginning a decade or more before the formal inception of the United States in the 1770s and continuing up to about 1965, was the British Empire. In all those years, the USA’s chief international objective was to resist, contain, and destroy British influence. As I mentioned above in regard to Woodrow Wilson, some American leaders weakened in this resolution or even tried to betray the project altogether, but the general thrust was to restrict the British, whether by fighting them, supporting their opponents, or insisting on the highest possible price for whatever support the USA might give them in some or other limited enterprise. Even today, when Britain is a satellite of the USA in military affairs and a province of the German Empire in its domestic arrangements, memories of that tension linger. It’s hardly surprising they should, since the president of the United States, Barack Hussein Obama II, is the son of a man who may very well have been assassinated by the British Secret Service in 1982.

If we have to retire George Washington, Benjamin Franklin, Thomas Jefferson, Abraham Lincoln, U.S. Grant, Franklin Roosevelt, and John Kennedy from the currency, whom shall we choose as the symbol of the country’s two-century-plus struggle against Perfidious Albion? I would suggest Samuel Adams, who as an opponent of the Stamp Act of 1765 emerged as the best-known leader of the first step in the process that would reach its climax when the Union Jack was hauled down and the Stars and Stripes were raised in Singapore almost exactly 200 years later. So I propose Samuel Adams for the $.10 piece.

The political stability of the USA has of course been a major factor in raising the value of the US dollar above that of the Thai baht, let alone the Sudanese pound. George Washington is so much the obvious symbol of this circumstance that it is no wonder he is on two denominations of currency, but perhaps someone else could symbolize the same thing as effectively. Much of the cult of Robert E. Lee which is now in the process of evaporating from the USA comes from the fact that Lee’s surrender and his subsequent advocacy of reconciliation with the North were vital to preventing the decades of guerrilla war that usually follow the defeat of a major rebellion. Neither Lee nor any other representative of the Confederacy would be acceptable on US currency now, so I won’t propose him. But perhaps we should look to a gracious loser, rather than to a circumspect winner like Washington, to be our embodiment of political stability, since stability can’t be achieved without both. Perhaps Takanka Iyotanka, a.k.a. Sitting Bull, would serve this role as effectively as Lee did in a different time. The leader of his people and the last man to surrender his rifle at the end of the Great Sioux War in 1881, he strove in his last years to find a place for the Plains nations in the postwar world. Those efforts were repaid by an assassination at the hands of renegade Sioux working for the US authorities, which in itself should serve to remind us that it can be more dangerous to be a peacemaker than to be a warrior.

Much of the wealth of the USA has its roots in the unrewarded toil of dispossessed slaves, of Native Americans, and of women long excluded from direct participation in the labor market. Harriet Tubman is an excellent symbol of this fact, and of the initiative the dispossessed have taken to remedy this situation. She also takes over for Lincoln and Grant as a celebration of the Union’s victory in the Civil War. So, I propose her for the $1 piece.

Technology and basic research are vital to the USA’s economic position, as are the periodic expansions of opportunity to groups previously excluded from participation in the market. Moreover, the ability of various religious groups to live in peace is vital to the political stability, and therefore to the material prosperity, of the USA. One person who symbolizes all four of those things is Maria Mitchell. Mitchell was the first human being to use a telescope to discover a comet, the first American woman to earn a living as a scientist, and a Quaker lady who thought deeply about the relationship between science and religious faith, and about the role of religion in public life. I propose Maria Mitchell for the $5 piece.

Organized labor and the mixed economy are not beloved by the American far-right, but they should be pretty happy seeing pets of theirs like Sam Adams and the guy I have in mind for the $20 bill. So they shouldn’t complain too loudly when we acknowledge that working people not only have as much right to organize to demand better terms for their labor as investors have to form corporations to demand better terms for their capital, but also that increased wages and improved working conditions, which only organized labor can secure, do in fact increase economic activity by moving wealth away from those who would tend to hoard it and towards those who tend to spend it more quickly.  And without organized labor behind them, politicians like Franklin Roosevelt could never have built the mixed economy with the benefits, both to individuals and to the nation as a whole, mentioned above. I would suggest Cesar Chavez for the $10 bill, as symbol of organized labor, of American agriculture, and of opportunities won by the previously dispossessed.

The US financial system has its ugly side, but we started this exercise by facing the fact that the North American smallpox epidemic of the sixteenth century was a sine qua non of the USA’s existence, so I suppose we can stand to acknowledge that a dollar wouldn’t be worth a dollar without that system. Some might think the dollar would be worth a lot more than it is if the USA had a radically different system, but we aren’t trying to speculate about ways to increase the value of the dollar, only about ways to explain the value it actually has. So the $20 bill should feature a financial figure. Alexander Hamilton may have been the single most important figure in the inception of the system, but we can’t make any exceptions- they all have to go. So I would turn to a later stage in the development of the system, and, since the US currency is made up of Federal Reserve Notes, I would choose someone who symbolizes the founding of the Federal Reserve. The basis of the original Federal Reserve Act of 1913 was something called “the Aldrich Plan,” which Senator Nelson Aldrich put forward after a famous meeting on Georgia’s Jekyll Island. So I suppose I’ll suggest Nelson Aldrich for the $20 bill.

For the $50 bill, I think the choice is actually pretty obvious. George Washington Carver symbolizes technological advancement, opportunities won by the previously dispossessed, the unrewarded toil of the still-dispossessed, and American agriculture. Besides, his name has “George Washington” in it, so even if we can’t keep GW on the currency, at least we can tip our hats to him.

Those are the obverse portraits I would suggest. For the reverses, I would suggest three themes that don’t much lend themselves to prominent individuals as symbols. Those would be the natural resources of North America, the Atlantic and Pacific Oceans, and the system of legal title that gives US land-owners secure claim to their property.

For the natural resources of North America, I would suggest a wilderness scene on the reverse of the $.05 piece, depicting the world that the people who died in the great smallpox epidemic never had the opportunity to develop with the technology they and their descendants would likely have imported from the Old World had they lived. On the reverse of the $1 piece, I would suggest an agricultural scene suggesting the Great Plains, the sort of image that the people Harriet Tubman led to freedom might have had in mind as a hope for their future. And on the reverse of the $10 bill, I would suggest a scene depicting the Hoover Dam, which, coupled with Cesar Chavez on the obverse, would put the West Coast on regular US currency for the first time. And of course the three together would represent a chronological progression that thrusts up to the present day, inviting currency users to write themselves into the story.

There aren’t any generals or admirals or wartime political leaders of the USA on my list of obverse portraits; the only warrior is Takanka Iyotanka, who led a valiant fight against the USA. I’m anything but anti-military, but we only have eight units of currency, so some major things have to be left unrepresented. I believe it was James Bryce who said that it was wondrous how ready Americans were to identify as their countrymen’s martial valor what might more accurately be described as the Atlantic and Pacific Oceans. Those bodies of water have secured US independence by physically separating North America from Europe and Asia. That isn’t the whole story; when George Washington gave his Farewell Address advising against undue involvement in quarrels abroad, he was speaking to a nation that bordered on territories claimed by Britain, France, and Spain, with Dutch and Portuguese bases less than a week’s sailing away. Never since has the USA been within reach of so many revisionist world powers. Anyway, I suggest a scene of the Pacific on the reverse of the $.10 piece, an ocean which the relentlessly anti-British policy inaugurated in Sam Adams’ day made it possible for the USA to reach and, for a time, to dominate, and a scene of the Atlantic, the ocean on whose shores Nantucket’s Maria Mitchell passed her days, on the reverse of the $5 piece.

Secure title to land is a pretty hard thing to illustrate, but an absolutely indispensable part of the story of what makes a dollar worth a dollar. People who have secure title to land can borrow against it to make major investments, and without the ability of so large a segment of the US population to invest substantially the country would not have developed the industry it did or the middle class it did or the democratic politics it did. I’m not sure exactly what images could be put on the reverses of the $.25 piece, the $20 bill, and the $50 bill that would make this point; a mortgage book isn’t a very inspiring sight, neither is a loan officer’s desk. Maybe a house with some big trees out front, suggesting long residence, might do the trick. Or a picket fence, or a hearth, or something like that.

The Atlantic, May 2015

The Atlantic is largely written from the viewpoint of the rich, and this month’s issue is no exception.  But then, the rich are not a monolithic group, and it can be instructive to think about the differences that separate one subgroup of them from another.  After all, it is in their conflicts and contests that spaces sometimes open up in which the rest of us can make our voices heard.

A profile of Michele Roberts, head of the players’ union in the National Basketball Association, brought to my mind Yogi Berra’s remark, “The players don’t deserve it, but the owners don’t deserve it more.”  It also includes a concise explanation of the economics that give the owners the upper hand as they collect billions and leave the players with millions:

Despite (or perhaps because of) their athletic gifts, players have little incentive to engage in a protracted fight with the league. LeBron James may be a talent like no other, but even his prowess will not last long, which means a strike or a lockout could be devastating to his earning potential.

“The problem is that basketball players have an average career of four years and an average salary of $5 million per year,” says Andrew Zimbalist, a sports economist at Smith College. “Given that and given that these guys love to play basketball, they don’t really have the basis to stay unified for a substantial period of time. They’re saying, ‘You want me to risk half a season so my salary could go from $5.1 million to $5.2 million?’ That’s going to be Michele Roberts’s main challenge.”

Tim Harford reports on businesses that scalp reservations for tables at fashionable New York City restaurants, and asks why restaurants shouldn’t charge for reservations.  The only reason I can think of is that it might take some of the sport out of it.  A table at a fashionable NYC restaurant is the prize in a game with rules and tactics known only to a few, and is as such a sign of one’s initiation into that select company.  If such tables were awarded to the highest bidder, well, if you’re one of the richest people in New York, everyone who might see you at a fashionable eatery already knows that about you.  You can’t add anything to the reputation you already have by simply buying another expensive thing, while winning at the reservation game may show that you are still youthful enough to go to the trouble of playing the game and still wily enough to win it.  So making reservations simply a money game might reduce the attractiveness to super-rich New Yorkers of the most fashionable restaurants,  Whether that would make NYC restaurants more or less profitable overall I don’t know, but it certainly would reduce the premium that the most fashionable restaurants can charge.

Ross Douthat, of all people, asks “Will Pope Francis Break the Church?”  Close to half the article consists of concessions that most of the remarks quoted in the press as evidence that the pope is a bold reformer are exactly the same as remarks that his two immediate predecessors made, while a sizable chunk of the remainder are things he never actually said at all.  But Mr. Douthat still tries to play up the “reformer pope” storyline that has been running in world media for over two years now.

A profile of Justin Trudeau, leader of Canada’s opposition Liberal Party, includes this paragraph about polling data comparing his image with that of the current prime minister, Stephen Harper:

Earlier this year, pollsters asked Canadians which party leader would be best in various roles. Trudeau—who has, since joining parliament, smoked pot, gotten a tattoo, and practiced yoga in front of the parliament building—was the top choice for vacation buddy, dinner guest, pet-sitter, movie recommender, and wilderness survivor, and was rated “most likely to stop and help if your car was stranded.” Harper got picked for head of a company and contract negotiator.

Considering the relative importance in a prime minister’s working day of, on the one hand, management and negotiation, and, on the other, vacation buddying, dinner-guesting, pet-sitting, movie recommending, wilderness surviving, and roadside assisting, one may as well say “Harper got picked for prime minister.”

On the magazine’s website, Robinson Meyer offers suggestions on “What to Say When the Police Tell You to Stop Filming Them.”  Included is a link to the American Civil Liberties Union’s very handy guide on photographers’ rights.

Ancient Regime

Shortly before the stock markets closed yesterday afternoon, the US Supreme Court announced a ruling on the so-called “Affordable Care Act” (also known as ACA.)  Health care stocks generally rose on the news of the ruling, in some cases sharply, while shares in health insurers showed a mixed reaction.  Today, the trend has been slightly downward across the board.

A majority of the US Supreme Court held that the US government does have the power to compel citizens and other residents of the USA to buy health insurance.  While the court rejected the Obama administration’s argument that this power, the core of the law, was within the scope of the authority the Constitution grants the federal government to regulate interstate commerce, it concluded that, because the law is to be enforced by the Internal Revenue Service in the process of collecting taxes, it is supported by the government’s authority to levy taxes.

In effect, the law establishes a tax that will be paid directly to health insurance companies.  US residents who refuse to pay this tax will be assessed an alternative tax, one paid to the treasury.  As written, the statute did not include the word “tax,” speaking instead of “premiums” and “penalties.”  These words are euphemisms.  This is clear not only from the Supreme Court’s legal reasoning, but also from the most basic economic logic.  A law which directs people to dispose of their wealth in a particular way to advance a particular set of policy objectives is a tax, whatever label marketing-minded politicians may choose to give it.

Many opponents of the ACA have spoken out against the idea of a tax directly payable to private citizens.  For example, today on the Counterpunch website Dr Clark Newhall complains that the bipartisan Supreme majority represents “Corporatists United.”  Dr Newhall denounces the statute and the ruling in strong terms.  I would like to make three quotes from Dr Newhall’s piece abd add my own comments to them:

In an eagerly anticipated opinion on the Patient Protection and Affordable Care Act, colloquially known as “Obamacare’, an unusual alignment of justices upheld the Act nearly entirely.  The crucial part of the decision found the ‘odd bedfellows’ combination of Chief Justice Roberts joining the four ‘liberal’ justices to uphold the ‘individual mandate’, the section of the law requiring all Americans to buy health insurance from private health insurance companies…

Many supporters of the ACA object to the term “Obamacare.”  The law was crafted on the model of a regime of health insurance regulations and subsidies enacted in Massachusetts in 2006.  That regime is widely known as “Romneycare,” in honor of Willard M. Romney (alias “Mitt,”) who, as Massachusetts’ governor at the time, had been its chief advocate.  So calling the federal version “Obamacare” is simply a matter of continuing to follow the Massachusetts model.  Now, of course, Mr Romney is the Republican Party’s choice to oppose Mr Obama in this year’s presidential election.  Therefore Mr Romney and his surrogates are creating much merriment for political observers by trying to attack the president’s most widely-known legislative achievement, which as it so happens is identical to Mr Romney’s most widely-known legislative achievement.

Dr Newhall goes on:

Those who make, interpret and enforce the laws no longer lie on the ‘left-right’ political continuum. Instead, they are in effect at ‘right angles’ to that continuum.  The ideology that drives the Supreme Court, the political administration and the Congress is not Conservative or Liberal but can best be described as “Corporatist.”  This is the ideology that affirms that “corporations are citizens, my friends.”  it is the ideology that drove the Roberts Court to the odious Citizens United decision.  it is the ideology behind a bailout for banks that are ‘too big to fail.’  And it is the ideology that allows Congress to pass a law like the ACA that is essentially written by a favored industry…

It seems to me very clear what Dr Newhall means to evoke in these sentences is the spectre of fascism.  During the 1930’s, fascists in Italy, Britain, Belgium, and several other countries used the words “fascism” and “corporatism” interchangeably, and economic historians still cite Mussolini’s Italy, and to a lesser extent Hitler’s Germany, as examples of corporatist economics in practice.  The American diplomat-turned-economist-turned-journalist-turned-pariah Lawrence Dennis argued in a series of books in the 1930’s that laissez-faire capitalism was doomed, that state ownership of industry was a dead end, and that the economic future of the developed world belonged to a system in which the state coordinated and subsidized the operations of privately-owned corporations.  The most famous of the books in which Dennis endorsed this system was titled The Coming American Fascism.

Not only the word “corporatism,” but also the image of a ruling elite “at right angles” to the old left/right politics might well remind readers of fascism.  The fascists continually claimed to represent a new politics that was neither left nor right; while such anticapitalist fascist tendencies as il fascismo della sinistra or Germany’s Strasserites were not markedly successful in the intra-party politics of fascist movements,* all fascist parties used anticapitalist rhetoric from time to time (think of the “National Socialist German Workers’ Party,” and of Joseph Goebbels’ definition of revolution as a process by which the right adopts the language and tactics of the left.)  Moreover, the image of “left” and “right” suggests that political opinions form a continuum that stretches from one extreme to another, with any number of points in between.  That in turn suggests that people who disagree may have enough in common with each other that their conflicts may be productive.  Fascism, on the other hand, demands a one-party state in which a single ideology is imposed on everyone.  Fascism finds nothing of value in political conflict, and strives to annihilate disagreement.  I think that’s what the late Seymour Martin Lipset was driving at in his book Political Man when he placed most fascist movements, including the Italian fascists and German Nazis, not on the far right, but in the “Radical Center.”

Counterpunch is edited by Alexander Cockburn, who recently declared that the United States of America has completed its transition to fascism.  So it would not be surprising if by these remarks Dr Newhall were insinuating that the ACA is fascist in its substance.  I would demur from such an assessment.  Before I can explain why, permit me to quote one more paragraph from Dr Newhall’s piece:

Why does Corporatism favor Obamacare?  Because Obamacare is nothing more than a huge bailout for another failing industry — the health insurance industry.  No health insurer could continue to raise premiums at the rate of two to three times inflation, as they have done for at least a decade.  No health insurer could continue to pay 200 million dollar plus bonuses to top executives, as they have done repeatedly.  No health insurer could continue to restrict Americans’ access to decent health care, in effect creating slow and silent ‘death panels.’  No health insurer could do those things and survive.  But with the Obamacare act now firmly in place, health insurers will see a HUGE multibillion dollar windfall in the form of 40 million or more new health insurance customers whose premiums are paid largely by government subsidies.  That is the explanation for the numerous expansions and mergers you have seen in the health care industry in the past couple of years.  You will see more of the same, and if you are a stock bettor, you would do well to buy stock in smaller health insurers, because they will be snapped up in a wave of consolidation that dwarfs anything yet seen in this country.

Certainly the health insurance industry was in trouble in 2009, and the ACA is an attempt to enable that industry to continue business more or less as usual.  In that sense, it is a bailout.  Indeed, the health insurance companies are extremely influential in both the Democratic and Republican parties, and there can be little doubt that whichever of those parties won the 2008 elections would have enacted similar legislation.  Had Mr Romney been successful in his 2008 presidential campaign, doubtless he would have signed the same bill that Mr Obama in fact signed.  The loyal  Democrats who today defend the ACA as a great boon to working-class Americans would then be denouncing it in terms like those Dr Newhall employs, while the loyal Republicans who today denounce the ACA as a threat to the “free-enterprise system” that they fondly imagine to characterize American economic life would then defend it on some equally fanciful basis.

In a deeper sense, however, I disagree with Dr Newhall’s assessment quite thoroughly.  A moment ago, I defined taxation as any law that requires people to dispose of their wealth in particular ways to advance particular policy objectives.  If we think about that definition for a moment, we can see that the United States’ entire health insurance industry exists to receive taxes.  In the USA, wages paid to employees are subject to a rather heavy tax called FICA.  Premiums that are paid for employees’ health insurance policies are not subject to FICA, and so employers have an incentive to put a significant fraction of their employees’ compensation packages into health insurance premiums.  Since the health insurers have been collecting taxes all along, it is quite misleading to call the ACA a bailout.  It is, rather, a tax increase.

Now, as to the question of fascism, certainly fascist regimes did blur the line between the public and private sectors.  The most extreme case of this was of course the assignment of concentration camp inmates as slave labor for I. G. Farben and other cartels organized under the supervision of the Nazi state.  So it would not have been much of a stretch for fascists to grant corporations the power to collect taxes.  Even if they had done so, however, fascists could hardly claim to have made an innovation.  Tax farming, the collection of taxes by private-sector groups in pursuit of profit, was the norm in Persia by the sixth century BC, and spread rapidly throughout the ancient world.  In ancient Rome under the later Republic, tax farming proved itself to be a highly efficient means of organizing tax collection. So the fact that tax farming is one of the principal aspects of the US economy is not evidence that the USA is a fascist or a proto-fascist regime.  Indeed, the fact that the Supreme Court seriously considered a case that would have challenged the legitimacy of tax farming is an encouraging sign, however unedifying the opinions that the court issued as a result of that consideration might be.

Of course, in the ancient world tax farmers bid competitively for the right to collect taxes, and the winners put their bids into the public treasury.  In the USA, there is no such bidding, and no such payment.  Instead, wealthy individuals and interest groups buy politicians by financing their campaigns and their retirements.  Perhaps we would be better off to adopt the ancient system.

At any rate, “fascism” seems a misnomer for our economic system, almost as misleading as “free enterprise” or as anachronistic as “capitalism.”  A more accurate term, at least as regards the components that are dominated by tax farming, would be neo-feudalist.  The US political class is increasingly an hereditary class; Mr Obama defeated the wife of a former president to win his party’s nomination to succeed the son of a former president, and now faces the son of a former presidential candidate in his campaign for a second term.  This hereditary nobility will now sit atop a system in which the non-rich are legally obligated to pay tribute or provide service to those in power in the land, who will in turn honor certain obligations to them.

*Fascism being what it was, “not markedly successful in intra-party politics” often meant “shot several times in the head and dismembered,” as happened to Gregor Strasser.

Profiteering or Environmentalism

This morning, I came across this cartoon that Ted Rall published in April.  Click on the link or on thumbnail below for the readable version at the site that’s paying him.

I think there are some distinctions to be drawn here.  On the one hand, it does  cost money to degrade the environment.  So businesses that cut costs in the ways Mr Rall here takes to task may in fact be reducing their environmental impact.  Moreover, there are a great many uses of taxpayer money that benefit average consumers but are clearly bad for biodiversity, such as water subsidies.  Both the public sector and private economic actors, then, can adopt many policies which would be at once good for ecological diversity and bad for economic equality.

At the same time, there are economic actors who have great influence over the political system and who use that influence to distort markets to their advantage.  So, a company that develops a product that consumers are not interested in buying may well manufacture some pseudo-ecological reason why its competitors should be forbidden to sell their products, and if it sufficiently well-connected may succeed in passing laws to that effect.

Car Insurance vs Health Insurance

Earlier this evening, I posted a long comment on a post at Secular Right.  In the post, blogger Heather MacDonald said that she was, in principle, a supporter of the idea that the law should require people to buy health insurance.  In support of this view, she pointed out that motorists are required to buy car insurance.  My reply:

“I see little difference between mandated car insurance and mandated health insurance—in most places, having a car is virtually a necessity of life” Car insurance and health insurance have a couple of things in common. The chief of these is that both categories of products are called “insurance.” The rest of the similarities, such as the fact that the some of the same companies sell them and some of the same agencies regulate them, stem from this point of vocabulary.

The similarities between car insurance and health insurance, however, are dwarfed by the differences between them. You choose an auto dealer, choose a car, negotiate a price for that car, arrange financing for it, pay that price, buy the fuel of your choice for it, decide which routine maintenance tasks you will perform on it yourself and which you will entrust to a mechanic, choose the mechanic who will perform those tasks, and pay that mechanic for those routine tasks, all without input from your insurer. If car insurance were the same thing as health insurance, you would be dependent on the insurer to make all of these payments and all of these decisions for you. To use mandates for car insurance as an analogy to justify mandates for health insurance, then, is like saying that because lightning rods protect your house from lightning, they should also protect your garden from lightning bugs.

If the USA’s political leaders were serious about controlling the cost of health care, in fact, they would move to make health insurance more like car insurance- not by making it mandatory, but by removing the tax incentives that reward employers for redirecting money from employee’s paychecks to health insurance premiums. Under our current system, a substantial percentage of the compensation US employers pay to keep their employees on staff goes, not to them in the form of money they can spend as they see fit, but to insurers to form funds from which employees can draw only in the form of medical expenses. Therefore, when those employees become consumers of health care they have no incentive to keep the cost of their health care down. Health care providers obviously have no such incentive. Even employers and insurance companies have only a very weak incentive to keep costs down, since employers are paying premiums with money that would otherwise go to the corporate income tax or to some other tax shelter. That’s why the cost of health care has for many consecutive years grown at a rate well in excess of the general rate of inflation, something which is not true of cars, car insurance, or any of the services car insurance usually covers.

If the corporate income tax were abolished, it would be possible for health insurance to become like car insurance. Consumers could choose and pay for their own routine health care, and pay also for insurance to cover catastrophic health expenses, as consumers now buy car insurance to cover catastrophic auto expenses. Doubtless, the modern world being what it is, there would be a political demand for substantial public sector subsidies for low-income people who have need of health care. So long as these subsidies were in the form of direct transfers of money to these potential consumers, they might leave the recipients with as much incentive to negotiate for lower prices as they have when considering the purchase of other goods and services that money could gain them. Not being as far to the right (or as secular) as most people who hang around here at Secular Right, I would be eager to support a generous program of subsidies along these lines.

“If you see it in the Sun, it’s so.”

If you have enough money and you have access to an unrestricted market, you can find someone who will, for a price, do virtually any task you disdain to do yourself.  If the task you want to delegate to someone else is a task that a great many other people also want to avoid doing, then someone might well find a way of providing a service to many people all at once, collecting a small payment from each.

So far, so obvious.  If economics were a subject in the Kindergarten, so much might be a lesson there.  Why isn’t economics a subject in the Kindergarten?  Perhaps the text below, printed in The New York Sun on 21 September 1897 but extremely familiar to everyone who has ever spent the month of December in the USA, will elucidate:

“DEAR EDITOR: I am 8 years old.
“Some of my little friends say there is no Santa Claus.
“Papa says, ‘If you see it in THE SUN it’s so.’
“Please tell me the truth; is there a Santa Claus?


VIRGINIA, your little friends are wrong. They have been affected by the skepticism of a skeptical age. They do not believe except [what] they see. They think that nothing can be which is not comprehensible by their little minds. All minds, Virginia, whether they be men’s or children’s, are little. In this great universe of ours man is a mere insect, an ant, in his intellect, as compared with the boundless world about him, as measured by the intelligence capable of grasping the whole of truth and knowledge.

Yes, VIRGINIA, there is a Santa Claus. He exists as certainly as love and generosity and devotion exist, and you know that they abound and give to your life its highest beauty and joy. Alas! how dreary would be the world if there were no Santa Claus. It would be as dreary as if there were no VIRGINIAS. There would be no childlike faith then, no poetry, no romance to make tolerable this existence. We should have no enjoyment, except in sense and sight. The eternal light with which childhood fills the world would be extinguished.

Not believe in Santa Claus! You might as well not believe in fairies! You might get your papa to hire men to watch in all the chimneys on Christmas Eve to catch Santa Claus, but even if they did not see Santa Claus coming down, what would that prove? Nobody sees Santa Claus, but that is no sign that there is no Santa Claus. The most real things in the world are those that neither children nor men can see. Did you ever see fairies dancing on the lawn? Of course not, but that’s no proof that they are not there. Nobody can conceive or imagine all the wonders there are unseen and unseeable in the world.

You may tear apart the baby’s rattle and see what makes the noise inside, but there is a veil covering the unseen world which not the strongest man, nor even the united strength of all the strongest men that ever lived, could tear apart. Only faith, fancy, poetry, love, romance, can push aside that curtain and view and picture the supernal beauty and glory beyond. Is it all real? Ah, VIRGINIA, in all this world there is nothing else real and abiding.

No Santa Claus! Thank God! he lives, and he lives forever. A thousand years from now, Virginia, nay, ten times ten thousand years from now, he will continue to make glad the heart of childhood.

Virginia O’Hanlon of 115 West Ninety-Fifth Street was a real person, and later in life she confirmed that she had in fact written the letter the Sun published.  Her great-granddaughter displayed the original letter, in Virginia O’Hanlon’s handwriting, in 1997.    Virginia O’Hanlon’s father, who told her that “If you see it in the Sun it’s so,” was a medical doctor named Philip O’Hanlon.

What service did Dr O’Hanlon expect to the New York Sun to perform in return for his subscription?  An article in the far-right Taki’s Magazine proclaims that the newspaper’s response is a remarkably shameless lie; that article prompts me to wonder if lying to his daughter was the very task Dr O’Hanlon hoped the newspaper would take off his hands.  Surely he knew full well that the newspaper would not dare publish a statement denying that the beloved figure of childhood fantasy really existed, and that any response they printed would have to affirm Santa Claus’ reality.  By thus delegating the lie to someone else, he could distance himself from it, not leaving his daughter with a visual memory of his face as he told her something he knew to be false, and indeed to be an insult to her intelligence.  Of course, if he knew that the newspaper would say something that he knew to be false, then statement  that “If you see it in the Sun it’s so” was also a lie on Dr O’Hanlon’s part, but one that he might more plausibly be able to defend than he could defend a claim that Santa Claus existed.  On the other hand, a moralist might say that “If you see it in the Sun it’s so” was a far worse lie than “There is a Santa Claus.”  After all, telling Virginia that there was a Santa Claus might have been telling her a single, discrete, self-contained lie, while to tell her that “If you see it in the Sun it’s so” is to instruct her to put down her guard and swallow everything that might appear in that paper, day after day.

Who was Dr O’Hanlon?  He was, among other things, a functionary of New York City’s Tammany Hall political machine.  During Tammany’s dominion over city politics, Dr O’Hanlon worked for the city as an assistant coroner and as police surgeon.  When the reform wing of the Democratic Party briefly took power, Dr O’Hanlon was arrested on charges relating to his habit of helping himself to the stock of dry goods stores without bothering to pay the merchants.  In court on these charges, he boasted of his Tammany Hall loyalties.  When Tammany returned to power, Dr O’Hanlon’s legal troubles came to an end. So it’s hardly surprising that the doctor was a fan of the pro-Tammany New York Sun.

Tammany’s restoration must have been a relief to the O’Hanlon family, since Dr O’Hanlon’s had name also appeared in connection with a much more serious criminal case.  A friend of his, Dr Andre L. Stapler, had in August 1910 performed an abortion for a woman named Louise Heinrich.  Abortion was at that time illegal in New York state, and therefore unregulated.  In the course of the procedure, Mrs Heinrich died.  Dr O’Hanlon signed a death certificate saying that her death was the result of natural causes.  The state prosecuted Dr Stapler, arguing that his carelessness killed her.  Prosecutors alleged that Dr O’Hanlon’s death certificate was a fraud meant to cover up his friend’s culpability in Mrs Heinrich’s death.   Convicted of manslaughter, Dr Stapler confessed that he was part of a group of doctors who performed illegal abortions under unsanitary conditions, and that as a coroner’s assistant Dr O’Hanlon routinely filed false reports covering up the deaths of the women in their care.  Dr O’Hanlon does not appear to have been prosecuted as a result of Dr Stapler’s statement.   The doctor appears to have continued his medical and political careers without having to answer any inconvenient questions about falsified papers and dead women.  If Dr Stapler’s confession was true, then woman-killing doctors delegated a job of lying to Dr O’Hanlon, even as Dr O’Hanlon had delegated a job of lying to the Sun.

Did astrology originate in cities?

I wonder if the first astrologers were city-dwellers.  True, archeologists have found evidence that people who lived before the rise of cities paid close attention to the orbit of the Moon and identified constellations, and have argued that the orientations of temples and other religious structures from those days suggest that they attached a religious significance to the movements of heavenly bodies.  Those activities are hardly surprising; farmers need a calendar to plan their year, as hunter-gatherers also need to plan their expeditions for times when game will be relatively plentiful and fruit ripe for the picking.  Still, it might not be too much of a stretch to look at a society that invests heavily in maintaining and publicizing its calendar and to see a suggestion of something like what the western branch of organized Christianity used to call “natural astrology,” a set of ideas about ways in which heavenly bodies might influence the earth’s weather and various medical phenomena related to the transmission of disease.

Quite distinct from natural astrology are the various studies to which the Western Church used to refer as “judicial astrology.”  That’s the part that includes horoscopes, sun signs, and the like.  The difference matters when considering the origins of astrology; we have very ancient documents relating to the movements of heavenly bodies that seem to have some special significance and that predate the earliest references to judicial astronomy by centuries.  So, I’ll use the terms.

It is sometimes said that our earliest evidence of judicial astronomy comes from Mesopotamia, but that is misleading.  The nation state didn’t exist in those days; Ur and Lagash and Akkad and Babylon and the other urban centers that rose and fell in that region interacted with the political and economic systems of the countryside around them in a variety of ways, but in other ways they remained quite distinct.  It is in such cities that we find the first documents describing judicial astrology.

If astrology did arise in cities, it arose in a social environment where markets were familiar.  Its entire history would have taken place amid money, contracts, and production for exchange.  That calls into question the assumptions that we discussed last year when this xkcd appeared:

Not to be confused with "selling this stuff to OTHER people who think it works," which corporate accountants and actuaries have zero problems with.

Some people fall into the assumption that, because markets promote something called “rationality,” they must therefore favor every form of reason and disfavor every form of unreason.  However, the rationality which comes from markets is in fact something of a very narrow sort.  A month after our discussion, we noted that Shikha Dalmia had put it very well: “Markets don’t reward merit, they reward value.”  Dalmia summarizes the views of economist Friedrich Hayek:

In a functioning market, Hayek insisted, financial compensation depends not on someone’s innate gifts or moral character. Nor even on the originality or technological brilliance of their products. Nor, for that matter, on the effort that goes into producing them. The sole and only issue is a product’s value to others. Compare an innovation as incredibly mundane as a new plastic lid for paint cans with a whiz-bang, new computer chip. The painter could become just as rich as the computer whiz so long as the savings from spills that the lid offers are as great as the productivity gains from the chip. It matters not a whit that the lid maker is a drunk, wife-beating, out-of-work painter who stumbled upon this idea through pure serendipity when he tripped over a can of paint. Or that the computer whiz is a morally stellar Ph.D. who spent years perfecting his chip.

As markets are neutral as to the virtue or vice of economic actors, so too are they neutral as to the truth or falsity of the ideas that those actors bring as products for sale.  If falsehoods are in demand, falsehoods will sell; if truths are not in demand, their bearers will go begging.  The mouseover text for the xkcd represents a nod to this fact, and an attempt to wriggle out of its implications: “Not to be confused with ‘selling this stuff to OTHER people who think it works,’ which corporate accountants and actuaries have zero problems with.”  That won’t do, since it assumes that we can assign a fixed meaning to the expression “works.”  An investment advisor who believes in astrology may not be any likelier than other advisors to beat the market, but s/he may very well use that belief to “make a killing,” if s/he attracts clients who strongly value such a belief.  In that case, astrology would not “work” in the sense that quantitative analysts officially recognize, but it would make the advisor every bit as rich as it would if it did meet their definitions of success.  As for whether it makes the clients rich, well, Fred Schwed answered that one in 1940:

Once in the dear dead days beyond recall, an out of town visitor was being shown the wonders of the New York financial district.  When the party arrived at the Battery, one of his guides indicated some handsome ships riding at anchor.  He said, “Look, these are the bankers’ and brokers’ yachts.”  “Where are the customers’ yachts?,” asked the naive visitor.

Clearly, markets have not dissolved belief in astrology, any more than the continued non-existence of the customers’ yachts has discouraged people going to brokers and bankers.  If the practice of judicial astrology first arose in cities, it may in fact be a by-product of market society.  Perhaps we might find that judicial astrology began, not simply as a more elaborate version of a natural astrology that had long been a feature of rural life, but as an attempt to understand market interactions and the power of the market.  In that case, it would qualify as a school of economics.  One may wonder whether judicial astrology would be the most absurd such school in practice today.

Two items of interest to Classics types

When the world was young and I was in grad school, many of my classmates went to Rome to hang out with Father Reginald Foster.  Reggie, as they all called him, is an American priest who at that time was in charge of translating official Vatican documents into Latin.  His schedule was light in the summer, so Reggie ran a summer institute in conversational Latin.  Granted, there aren’t any native speakers of Latin around to converse with, but there is a substantial body of permanently interesting Latin literature, and it is easier to read the language if you can also speak it.

Reggie moved back to Milwaukee after Pope John Paul II died.  He teaches conversational Latin there from time to time.  No future generations of graduate students will be studying under him in Rome, but two current graduate students have revived the Rome summer program  They call it the Paideia Institute Slate magazine ran a piece about it recently.

David Graeber

Also of keen interest to classicists is this recent interview that economic anthropologist David Graeber granted to the website Naked Capitalism.  Graeber summarizes Adam Smith’s hypothesis that money originated as an advancement on barter systems that had prevailed before its adoption.  He then points out that in the 235 years since Smith published that hypothesis in The Wealth of Nations, observers have examined thousands of cultures in search of examples of pre-monetary barter economies, and that they have yet to find one.  Graeber concludes that Smith’s hypothesis is thereby defeated.  Societies which have not invented money do not organize markets around barter; they do not organize markets at all.  Money and markets arise together, and barter becomes widespread only when currency systems collapse.  Non-monetary societies distribute goods and services, not through markets, but through hierarchies in which obligations are based on force.  The king or chief or whatever he is has what he has because everyone else is indebted to him for protection and status, and they have what they have because of their relations with him.  When multiple authorities lay claim to the same person, they need a way of sorting out whose claim comes first and which authority is entitled to demand what deference or service.  Sometimes they develop a way of sorting those claims that involves quantifying them and making them transferable.  Once claims on a person’s deference or service can be quantified and transferred, there is a need for tokens to signify the quantification and contracts to enforce the transfer.  That is to say, there is money, and with it the dawn of market society.

Graeber makes some remarks that are similar to points that come up in some classes I teach.  For example:

Since antiquity the worst-case scenario that everyone felt would lead to total social breakdown was a major debt crisis; ordinary people would become so indebted to the top one or two percent of the population that they would start selling family members into slavery, or eventually, even themselves.

Well, what happened this time around? Instead of creating some sort of overarching institution to protect debtors, they create these grandiose, world-scale institutions like the IMF or S&P to protect creditors. They essentially declare (in defiance of all traditional economic logic) that no debtor should ever be allowed to default. Needless to say the result is catastrophic. We are experiencing something that to me, at least, looks exactly like what the ancients were most afraid of: a population of debtors skating at the edge of disaster.

And, I might add, if Aristotle were around today, I very much doubt he would think that the distinction between renting yourself or members of your family out to work and selling yourself or members of your family to work was more than a legal nicety. He’d probably conclude that most Americans were, for all intents and purposes, slaves.

When I’m talking to a class, I’m rather more emphatic than Graeber in saying that in this conclusion Aristotle was a man of his time, and that our view of wage labor as a form of freedom may be as legitimate in its own way as was the Greek view of wage labor as a form of slavery.  Partly that difference in views stems from the fact that so many slaves in ancient Greek cities were paid wages, and that those who labored side by side with free people in big workshops were paid exactly the same wages as those (nominally) free people, while American slaves were generally denied access to money.  Still, I do have a lecture that unnerves them when it ends with my remark that Aristotle would not have thought that we moderns have abolished slavery, but that we have abolished freedom.

I can’t resist quoting another bit of the Graeber’s interview.  After he derides the idea of money as a development subsequent to a barter economy, we have this exchange:

PP: You’d be forgiven for thinking this was all very Nietzschean. In his ‘On the Genealogy of Morals’ the German philosopher Friedrich Nietzsche famously argued that all morality was founded upon the extraction of debt under the threat of violence. The sense of obligation instilled in the debtor was, for Nietzsche, the origin of civilisation itself. You’ve been studying how morality and debt intertwine in great detail. How does Nietzsche’s argument look after over 100 years? And which do you see as primal: morality or debt?

DG: Well, to be honest, I’ve never been sure if Nietzsche was really serious in that passage or whether the whole argument is a way of annoying his bourgeois audience; a way of pointing out that if you start from existing bourgeois premises about human nature you logically end up in just the place that would make most of that audience most uncomfortable.
In fact, Nietzsche begins his argument from exactly the same place as Adam Smith: human beings are rational. But rational here means calculation, exchange and hence, trucking and bartering; buying and selling is then the first expression of human thought and is prior to any sort of social relations.

But then he reveals exactly why Adam Smith had to pretend that Neolithic villagers would be making transactions through the spot trade. Because if we have no prior moral relations with each other, and morality just emerges from exchange, then ongoing social relations between two people will only exist if the exchange is incomplete – if someone hasn’t paid up.

But in that case, one of the parties is a criminal, a deadbeat and justice would have to begin with the vindictive punishment of such deadbeats. Thus he says all those law codes where it says ‘twenty heifers for a gouged-out eye’ – really, originally, it was the other way around. If you owe someone twenty heifers and don’t pay they gouge out your eye. Morality begins with Shylock’s pound of flesh.
Needless to say there’s zero evidence for any of this – Nietzsche just completely made it up. The question is whether even he believed it. Maybe I’m an optimist, but I prefer to think he didn’t.

Anyway it only makes sense if you assume those premises; that all human interaction is exchange, and therefore, all ongoing relations are debts. This flies in the face of everything we actually know or experience of human life. But once you start thinking that the market is the model for all human behavior, that’s where you end up with.

If however you ditch the whole myth of barter, and start with a community where people do have prior moral relations, and then ask, how do those moral relations come to be framed as ‘debts’ – that is, as something precisely quantified, impersonal, and therefore, transferrable – well, that’s an entirely different question. In that case, yes, you do have to start with the role of violence.

Nietzsche may once have been overrated as a political thinker, but I believe that he is now seriously underrated in that wise.  So the bit above made me happy.

We’re still here

Hmm, been a bit of a hiatus since the last post.  But we’re still here.  Here are a couple of links to interesting things:

Andrew Gelman has redesigned his blog; same material, but a fresher look and you no longer have to go through the back door to link to individual posts.  A couple of days ago he put up a terrific post called “One of the easiest ways to differentiate an economist from almost anyone else in society.”  He wonders why it is that so many economists can simultaneously believe these two things:

1. People are rational and respond to incentives. Behavior that looks irrational is actually completely rational once you think like an economist.

2. People are irrational and they need economists, with their open minds, to show them how to be rational and efficient.

Anatoly Liberman, the Oxford Etymologist, put up a nice little piece in May about the odd career of the letter “H.”  I must register one small demurrer concerning this piece.  Liberman writes:

Everything would have been fine if th were not also used in Greek words for rendering the letter theta. We have it in such monstrosities as phthisis and chthonic.  Very few people are so pedantic as to pronounce the initial consonants in them, but th is part of both words.

Surely the charge of pedantry holds no terrors for anyone who speaks the words phthisis and chthonic aloud, and gives them no motive to suppress the initial consonant of either word.  Come to think of it, I’ve had occasion to pronounce the word chthonic a few times while teaching classes in which it came up, and I did say it very much as I would have if it were spelled χθωνικ-.*

A post on “Understanding Uncertainty” appears to be about mobile phones and brain cancer, but comes to this twist ending:

The moral of this story has nothing at all to do with mobile phones or cancer. It is that you can’t get a full story of what’s going on on a health issue by simply following what’s in the mainstream media. What you’ll find there is not necessarily what you want to read, but what other people want you to read.

Be careful out there!

*I know there’s supposed to be an acute over the omega, but WordPress doesn’t do diacriticals well enough to make it worthwhile.