Taxation is at the heart of what makes the state possible, and it's the state, as a guarantor of justice and peace, which makes creating and keeping wealth possible. The wealthy benefit more from this arrangement, and it's fair that they are taxed more as a result. I presume you're not arguing against the existence of the state, or the need for taxation for its upkeep.
Given the need for taxation, making taxation fair requires information about economic transactions. But there's a balance to be struck here: having the state be informed about the details of every transaction, tied to each individual, would probably be too dangerous for liberty. But on the other hand, lack of oversight will lead to evasion and free-riding. So it seems that it's best to put effort in investigation in proportion to detecting potential free-riders.
Large amounts of money held in opaque arrangements abroad would seem to me to have a high probability of abuse; and with the numbers of people involved being small, the instrumental loss of liberty in having these arrangements investigated seems to me small compared to the free-riding risk.
I also object to the argument you've used; it gives me a slimy feeling reading it. You've tried to drag in this notion of privacy and respect by association with "professionals", attorneys, priests and spouses (!), to what amounts to hired thugs protecting a box of valuables. Banks spend a lot on appearances because they need to give their customers the impression that they're safe places for their customers' money, but at the end of the day, they're out to extract as much of that money as they can. Banking isn't a respectable business, particularly these days. They're a necessary part of the economic infrastructure, a bit like water supply and sewers are to cities.
I thought this was a balanced and nuanced comment until you bring up "a slimy feeling" and "hired thugs", which is probably not conducive to clear and rational discussion.
That said, it's certainly possible to run an orderly taxation system with information that's publicly available - the more you require people to report their affairs to the authorities, the more chance of abuse you have. I'm personally of the belief that the sanest form of taxation is taxing assets held in a jurisdiction - then you're paying directly for what's protected. So tax property, and owned stocks and bonds perhaps. If you need someone to report all the money they have outside of your jurisdiction, everywhere, well I think that gets kind of scary.
Anyways, good discussion - armed thugs doesn't make for smart conversation, but good analysis overall.
I do not want to be dishonest when I comment. A large portion of the motivation for me replying was the emotional distaste I got from reading your argument, and I didn't want to deny it as a bias by pretending to some kind of intellectual distance and objectivity.
Fair enough, but both sides can play the "armed thugs" card, and then we wind up in a "screw the man!!!! the government is just thugs with guns!" "no dude screw the corporations!!! the banks is just thugs with guns!!!" discussion... which is bad.
You can characterize any political position you don't like with emotional language, but it makes it harder to get to truth. You did write some really good points, that's why I thought it was a shame that the emotional language comes in... it's possible to do without it.
Most people feel emotionally about their politics, but emotional language rallies your side at the expense of alienating the other side, and then discussion breaks down.
This subthread is unfortunately meta; I guess all I want to add is that I felt that your comment relied for much of its force on a rhetorical and psychological trick of associating the banking relationship with the relationship one might have with a doctor or one's spouse. I really do think banks gain a kind of veneer of respectability from their proximity to money, rather than an intrinsic worth in what they do. But scratch the surface, and atavistic greed oozes out.
I'm actually enjoying the meta discussion, learning from it. It feels like the ol' days a little bit, when people had nuanced civil disagreements on here commonly.
As for rhetoric, I didn't come up with the idea that your relationship with your banker should be private - that's actually how it worked in classical banking. Switzerland inherited it because they've had the longest continuous government in the world - it dates back to the Middle Ages.
The idea today that your banker and you don't have a relationship like your lawyer and you... honestly, I think classical banking is far more of an honest profession than modern law, but I'm not a huge fan of modern banking either.
I do understand resentment towards some of the financial engineering that occurred in the past fifteen years, especially in areas of exotic securitization in which systemic risks were made opaque.
But that has very little to do with classical banking. To say they have little intrinsic worth is essentially to claim that the industry that governs the allocation of credit in our economy -- that is, the credit line that finances my business's inventory and receivables, the loan that finances my new production equipment, the reasonable mortgage extended so a homeowner can buy a house, along with a substantial downpayment -- is of little use. That's an absurd position, and I don't know how one can reasonably claim that such an important function in our economy is not a respectable profession. My own company, which employs over 100 people, would immediately shut down without bank financing.
Are you confusing the practices of exotic finance, which arguably have a lesser or questionable value to society, with traditional banking?
> But that has very little to do with classical banking
I don't think anybody here is against that. I do recall that not too recently some not so classical banking organizations received billions upon billions of public funds to rescue them from their mistakes.
"What can government do? The sad answer is -- under the current monetary system -- nothing. It's not going to get better until the root of the problem is understood and addressed. There isn't enough stimulus money in the entire world to get us out of this hole.
"Why? Debt. The national debt is just like our consumer debt -- it's the interest that's killing us.
"Though most people don't realize it the government can't just issue it's own money anymore. It used to be that way. The King could just issue stuff called money. Abraham Lincoln did it to win the Civil War.
"No, today, in our crazy money system, the government has to borrow our money into existence and then pay interest on it. That's why they call it the National Debt. All our money is created out of debt. Politicians who focus on reducing the National Debt as an answer probably don't know what the National Debt really is. To reduce the National Debt would be to reduce our money -- and there's already too little of that.
"No, you have to go deeper. You have to get at the root of this problem or we're never going to fix this. The solution isn't new or radical. America used to do it. Politicians used to fight with big bankers over it. It's all in our history -- now sadly -- in the distant past.
"But why can't we just do it again? Why can't we just issue our own money, debt free? That, my friends, is the answer. Talk about reform! That's the only reform that will make a huge difference to everyone's life -- even worldwide.
"The solution is the secret that's been hidden from us for just over 100 years -- ever since the time when author L. Frank Baum wrote "The Wonderful Wizard of Oz."
The state is hardly the "guarantor of justice and peace." Governments use deadly force and have created the greatest horrors of humanity. In the 20th century alone the state created the Holocaust, deliberately starved tens of millions to death from the Ukraine to China, and obliterated entire cities with nuclear and firebomb weapons. Indeed, around the world today, as many people are oppressed by state power as liberated by it.
The state's justification is as guarantor of justice and peace - even broken regimes have laws and courts. Certainly, some states are better at it than others, but I don't think the anarchy of a Somalia is better. I believe the statistics hold out that, in terms of proportion of human population suffering, modern times are better than all historical times, and are continuously improving.
If we had a mechanism that improved states, that worked reliably in changing oppressive governments, I'd support it. I don't think we have such a mechanism, though.
In short, I support improving states where possible, I deplore bad states, and I think the alternatives to states that we have thus far seen in history are worse than states.
Somalia isn't anarchy. It's several states, some of which are very bad (Islamic theocracies and kleptocracies). That said, it's unclear that Somalia's current set of several competing governments is worse than the single government they had before, or worse than Somalia's neighbors.
Anarchy is lack of a government. As you acknowledge, parts of Somalia are dominated by lawless warlords. They are the government.
You also seem unaware of Somaliland (one of the countries Somalia split into), which is closer to a republic (not a fully representative one) than a "warlord dominated" state. The Mujahadeen region (before they were conquered) was also rather far from a warlord dominated state (they were an Islamist theocracy).
Anarchy has many definitions. For me, the most important one is the absence of state-wide law. Whether the law is enforced by government, warlords (I don't think you can call them "government" by any stretch) or the people is secondary to the definition of anarchy in my opinion.
Now as far as I know there's absolutely no state-wide rule of law in Somalia - Somaliland might have something, some parts practice Sharia to some extent, but most of the country is ruled by arbitrary enforcement of will of whatever warlord happens to control that part of the country at any point.
oh BTW, actually I found out about Somaliland just recently, in January I think, but thanks for reminding me anyway.
With your definition, anarchy is mainly a function of where you draw your borders.
If you draw your border around North America you find anarchy (the law varies as you move from Mexico to the US). Even within the US, laws vary widely. But if you draw the border around Somaliland, you don't get anarchy (Somaliland has more or less consistent laws).
I'm also not sure why you don't consider a warlord to be the government. In what way does a warlord differ from a government?
But it wasn't me who drew Somalia on the World Map
Depending on which world map you select, you'll find a single border which encompasses the UK, US, and India. Would you then declare that the British Empire now lives in anarchy?
If you go by official Chinese maps, China is also in a state of anarchy - the laws of China don't apply in Taiwan.
in what way feudal lord differs from a government? well, for one he's more likely to be enforcing his will, than any widely recognized laws.
This criticism applies to most dictatorships. Do dictatorships not qualify as governments?
jesus... I'm not talking about some historical situation, I'm talking about right here and right now.
AFAIR British Empire long ceased to exist. But when it existed it had quite unified law. That's why you have English law in the USA and that's what Law of India is largely based on too.
World map that shows PRC and Republic of China (and Hong Kong for that matter) as a single entity is simply wrong.
indeed, Somalia the political entity ceased to exist. That's why Somalia the geographical entity is in anarchy. Which nobody besides you is disputing. But fine, let's finish this pointless thread, we're not getting anywhere :)
'Government' does not imply any particular form, nor does it imply consent or participation of the governed; the warlord model has had a pretty good run throughout history.
And yeah, none of us drew the border, but neither did the folks who live there...so there figuring it out now. Better late than never, right?
'Government' does not imply any particular form, nor does it imply consent or participation of the governed
I didn't claim it implies consent, but there is a pretty clear distinction between warlord or feudal lord and "the government", at least to me.
Genghis Khan was pretty powerful warlord, controlling much of Eurasia at one point, but he didn't have the government and he wasn't governing.
There's something else that you need to have in order to be considered The Government than just the ability to kill many and collect tax from many. But I'm too tired to elaborate any further right now. This thread is getting too long anyway.
And yeah, none of us drew the border, but neither did the folks who live there...so there figuring it out now. Better late than never, right?
actually it was largely us, the so-called "Western Civilization" that drew Somalia borders as they are recognized today. My point was that we already agree where that border is supposed to be (and nobody seriously recognizes Somaliland).
There is a large distinction between anarchy and the lack of a state. While statelessness is necessary for anarchy, it is not sufficient.
That said, you can have whatever opinion you want, but when your opinion goes against hundreds of years of political thought and literature, people will be slightly confused.
I guess I focused in on you placing statelessness as the primary condition. Statelessness isn't the goal or an end; it's a natural consequence of building a society without hierarchy.
I guess I focused in on you placing statelessness as the primary condition. Statelessness isn't the goal or an end; it's a natural consequence of building a society without hierarchy.
Well, first of all I didn't place statelessness as the primary condition. By "state-wide" I meant "country-wide" or "land-wide", not "government-wide".
And secondly, I don't know of any other examples, but in my own country's history we had an anarchist society which had clearly defined hierarchy (that doesn't mean that people couldn't move between different levels of that hierarchy): http://en.wikipedia.org/wiki/Free_Territory_(Ukraine)
true, it wasn't probably a true anarchist society, but it is as close as it gets, again as I said, don't know any better.
So we should abolish all forms of governmental power and go for anarchy / literal mob rule, because that's worked so well in the past?
Every form of government has downsides, has abuses / abusers. Making a statement like you did implies you think they're fundamentally wrong and should be replaced by... what?
Well, you can say the same stuff about anything, really. You can say that, for example, the law is what makes the state possible, and creating and keeping wealth But this does not excuse a breach of attorney-client privilege. A lawyer who "blew the whistle" on a murderer would face severe penalties.
You can't just invoke the importance of the state here--you have to say why the situation is different for banking, but you only address this particular point with childish name-calling and complaints about injured feelings.
Actually, privileges are exceptions to the rule, and they each have their own justifications. The rule as stated is fine, and any privilege must be specifically justified on its own.
Attorney-client privilege and psychiatric privilege exist for different reasons. Attorney privilege comes from the necessary functioning of the judicial system, as you pointed out. Psychiatric privilege, in the opinion of the U.S. Supreme Court, "serves the public interest, since the mental health of the Nation's citizenry, no less than its physical health, is a public good of transcendent importance"
What is the reason that a banking privilege should exist? What "public good" is being served by protecting private transactions that outweighs the harm done by evasion of tax laws or other regulations? That's a difficult question to answer, and simply saying "it's the same as other privileges" is not sufficient.
Actually, a lawyer who fails to blow the whistle about a potential murder can face severe penalties. Privilege only extends to information or facts about past actions, it doesn't apply to future or ongoing circumstances, and definitely not if you're complicit in the crime.
The banking analogy would be a banker who can't reveal how much money you used to have. Current balance would not be privileged.
There's a simple solution to the tax problem: charge a flat tax rate on gains on "secret" assets, levied by the financial institutions to which they have been entrusted. Many countries do this (I'm fairly sure Switzerland is among them) [1]. A problem only arises when the home country gets greedy and wants a piece of that tax pie. I'm sure you could come up with some system by which the destination of the money is estimated and the aggregate taxes paid to that country, but that's probably not seen as enough.
[1] Austria uses a system like this - capital gains are flat-taxed at 25% unless you choose to declare them together with other income, falling under income tax (you'd be pretty stupid to do this considering the lowest income tax rate here is 36.5%, but that's another matter). This frequently causes the OECD and the US (the only country to tax its non-resident citizens, as far as I know) exert pressure on Austria (and Switzerland) to try to get them to drop banking confidentiality; they've had some success lately, privacy has been somewhat eroded.
Switzerland already does this. EU members were pressuring them to release bank information (they aren't part of the EU but are completed surrounded by it). So the new compromise is they don't release the bank records but the pool all the money each country is supposedley owed and forwards it to them.
The problem is the other countries don't trust the swiss. They are basically being handed a bag of money and being told trust us. Underreporting taxes benefits the 2 parties with all the information (the swiss and their account holders) and the 3rd is left totally in the dark.
That's the ESD (Europen Unions Saving) directive which Switzerland agreed to. So (I think 35%) now of interest related gains is anonymously delivered with a wink to the country where the secret account holder resides.
Here in Denmark tax authorities have used that anonymous amount transferred to estimate amount of money in Swiss banks which is supposedly enormous.
They've also gone further, like confiscate data about years of foreign credit card payments by Danish shops and search out anyone using a card from a foreign tax haven country based on e.g. shipping addresses for online shopping, or address supplied for hotels and airplane tickets. Except a few high-profile cases like a famous golf player, this had curiously limited criminal consequences, seems like 98% of those caught where just told to pay the tax and interest on the suspicious amounts.
The next step in the tax fraud battle is analysis of all bank payments from Danish bank to any bank in tax haven countries.
The credit card analysis was done in Sweden previously, so it wouldn't surprise me other countries started using that method as well.
I can't help but wonder in what relation the resources invested into tracking all of this down are vs. reclaimed tax (or lost tax revenue if they just simplified/reduced the domestic tax rate - don't forget there's a currency exchange rate risk associated with shipping your money out to Switzerland).
> don't forget there's a currency exchange rate risk associated with shipping your money out to Switzerland
Actually, there isn't. You can have accounts denominated in USD, JPY, EUR or any other sufficiently mainstream currency. It's even free if the amount is big enough, which is actually not that high (low five figures).
Don't worry about the banks though, they make it all back and more in their ludicrous transaction fees.
Some states are not pure guarantors of justice and peace. Some are downright kleptocracies. Many deposits in Swiss bank accounts are from people who need to secure their wealth from corrupt local officials.
The US is not a kleptocracy, but Olenicoff (the American who Birkenfeld smuggled diamonds for) has ample experience with them. A bio reads: Having escaped Stalin’s forced repatriation campaign [from Iran], the Olenicoffs sewed what little money they had into their coat linings and sailed for America. In that situation, a banker who helped them might be called a hero.
Other deposits in Swiss bank accounts are from the very kleptocrats who keep their citizens from having any money. Where do you think Kim Jong-il keeps his billions?
(Actually, he probably keeps it in a number of countries, like Switzerland, Luxembourg, and the Cayman Islands, just in case some of it gets siezed. But the point still stands.)
The government can exist without taxation.
Government provide services (security, healthcare, city planning, etc.)
The problem is that Government is a monopolist.
I have no problem to pay for the services, given I really need them and I have right to choose from which vendor to buy these services.
Right now peoples only choice is to emigrate to another country.
The other ugly face of tax system is that many, otherwise productive hours and resources, wasted for such a non-productive activity as accounting.
Right now peoples only choice is to emigrate to another country.
Even that choice doesn't work well.
The US government considers you an indentured servant. Even if you stop consuming the services they are providing with tax dollars, you are obligated to keep paying for them 10 years.
No, that's incorrect. Yes, the US is one of the few governments that will tax you for income earned outside of the united states or while living aboard as a US citizen, but if you renounce your citizenship, you're off the hook for taxes. You need to file a tax return and declare income, but you don't pay taxes.
P.L. 104-191 contains changes in the taxation of U.S. citizens who renounce or otherwise lose U.S. citizenship. In general, any person who lost U.S. citizenship within 10 years immediately preceding the close of the taxable year, whose principle purpose in losing citizenship was to avoid taxation, will be subject to continued taxation.
Renounce your citizenship for something other than to avoid taxation. Like, you're suddenly in love with socialized medicine. Or to "protest the war" or "America's imperialism". Just don't mention taxes in your "exit interview" and there you go.
Could a system such as a national sales tax, provide privacy _and_ revenue at the same time?
We need to collect data b/c the gov't has to know about your income, your investments, etc, etc. But how about a (hypothetical) system where you only pay taxes when you purchase goods. There wouldn't seem to be any fundamental reason to keep information on _who_ purchased what. Just the fact that the transaction occurred.
A lot of European countries have tax structures biased much more heavily towards "value-added taxes" (VATs), which are, in effect, sales taxes on steroids. (Also local governments in the US.)
One problem, though, is that in practice, sales taxes are generally regressive --- the poor spend a much larger fraction of their income than the rich, and so wind up getting (relatively) more heavily taxed.
Brazil tried to move this into the banking system - all withdrawals were taxed. It was not very popular, but it was effective and devilishly hard to dodge.
OTOH, companies routinely exchange services and that kind of transaction is very hard to tax.
Given the need for taxation, making taxation fair requires information about economic transactions. But there's a balance to be struck here: having the state be informed about the details of every transaction, tied to each individual, would probably be too dangerous for liberty. But on the other hand, lack of oversight will lead to evasion and free-riding. So it seems that it's best to put effort in investigation in proportion to detecting potential free-riders.
Large amounts of money held in opaque arrangements abroad would seem to me to have a high probability of abuse; and with the numbers of people involved being small, the instrumental loss of liberty in having these arrangements investigated seems to me small compared to the free-riding risk.
I also object to the argument you've used; it gives me a slimy feeling reading it. You've tried to drag in this notion of privacy and respect by association with "professionals", attorneys, priests and spouses (!), to what amounts to hired thugs protecting a box of valuables. Banks spend a lot on appearances because they need to give their customers the impression that they're safe places for their customers' money, but at the end of the day, they're out to extract as much of that money as they can. Banking isn't a respectable business, particularly these days. They're a necessary part of the economic infrastructure, a bit like water supply and sewers are to cities.