Debt: The First 5000 Years

I promised someone that I would write a review of this book. That was months ago. My promise is like a debt, except it’s one of those debts that rolls over indefinitely, like the Federal budget deficit.

I make other promises too. My friends from college promise that we’ll get together soon; except we won’t really, because they have kids, I have stuff to do, and we’ll just keep exchanging emails and text messages full of promises until one of us dies.

The US government will presumably never die, which means any debt can carry forward forever. There is good reason for this debt. Modern money is based on government debt, and governments borrow money to finance wars.

In Debt, David Graeber points out that the biggest overseas buyers of US Treasury bonds have been countries that are US military protectorates. To purchase a Treasury bond is to loan money to the US government. But the Treasury bonds depreciate as a result of inflation, which means overseas bondholders end up effectively paying the US government a seigniorage, or tribute tax. For the military protection, I guess.

Speaking of military protection: Consider a spider, because there happens to be one on my ceiling right now.

spiderdrawing

If you ask your spouse to kill it for you, they pretty much have to. Is it because they owe you a debt? Is your spouse an indentured servant? How is that different from your obligation to do work for an employer?

Obviously your spouse will kill the spider for free, because personal relationships are communistic. On another night you might take out the garbage, or feed the cat, without charge. In a commonwealth, there is no market exchange, and nothing has a price. This is how early human interactions transpired within tribes and families.

Who first affixed price tags to objects and labor? Thieves, according to the author. Burglars and looters trying to assess what they might get for others’ items in the market. Those who captured and sold slaves determined the price of freedom. Today, this is the price you charge when you rent yourself to an employer. Wage labor is not so different from slavery, because capitalist relationships are based on coercion.

We’ve made some big logical leaps here. It may be worth pointing out that the author co-founded the Anti-Capitalist Convergence. He’s also the guy who gave Occupy Wall Street its theme of “We are the 99 percent.”

This post is pretty terrible as far as book reviews go, but that’s what happens when you build an economy based on promises instead of wage labor. Goodnight 🙂

April 28, 2016September 7, 2016

Overcompensation

I’ve seen this car four times in a little over a week, in four different locations. At first I thought, nahh, it couldn’t possibly be the same car. Maybe chrome wrap jobs are becoming a Thing and I’m seeing several different cars. But aughh, those rims!

In the process of minding my own business, I’ve acquired enough information to guess where the car’s owner works. It’s only a guess, because I can’t believe anyone would drive to work in this thing. I’ve seen where he does his banking. And I’m pretty sure I’ve seen where he lives. At this point it would be easy to plan a burglary (but I’m not going to do that!)

I live in a dense urban area; there are probably many cars that I pass just as regularly. They simply aren’t noticeable because they look like all the other cars. Driving a factory stock Prius in the Bay Area is the equivalent of browsing the web through Tor. If there are any arguments to be made for commuting in an ostentatious vehicle, I have yet to understand them.

April 17, 2016June 15, 2018

The Laffer Curve Isn’t Completely Stupid

I did my taxes today! Last year was one of those rare years where I had income, and I nearly forgot.

Americans don’t like to pay taxes. We’re unique in this regard. Swedes love paying taxes. Danes love to pay taxes. The Dutch love taxes. Even the French love taxes!

If government-controlled media outlets say so, then it must be true. But just to be sure, I consulted a Scandinavian friend.

Swede: What? Nobody likes to pay taxes anywhere. Sweden just does a good job of maximizing tax rates where it can.

Sweden has the highest income tax rate of all the OECD countries. Even if Swedish wage-earners don’t like it, what are they going to do? Flee to another country and claim refugee status? As evidenced by Sweden’s tax revenue, the citizens prefer to stay.

Sales tax follows a similar strategy. The Nordic countries all have a 25% sales tax. High sales tax is rather regressive, but what are the residents going to do, take their business elsewhere? The government can tax as much as it wants as long as there’s no alternative to buying stuff.

Corporate taxes are a different story. It’s really easy to move a corporation to another country. Placing company headquarters in Liechtenstein is the European version of establishing a Delaware C-Corp.

Money flows to where it’s treated best, so Sweden keeps its corporate tax rates relatively low. IKEA, icon of Swedish capitalism, is actually owned by a tax-exempt holding company based in the Netherlands. The holding company is then owned by a charitable foundation in Liechtenstein, dedicated to “innovation in the field of architectural and interior design” and controlled by the founder of IKEA.

IKEA’s tax-free accounting structure was set up in the 80s, when Sweden’s corporate tax rates were much higher. Today, the US has the highest corporate tax rate of any developed country, and maybe that has something to do with why Burger King moved its headquarters to Canada.

Warren Buffett likes to point out that he has a lower tax rate than his secretary. Of course he does! Buffett’s secretary is an American employee, and there’s not a whole lot she can do to change that fact. Buffett himself, on the other hand, is an untethered capitalist. If his capital-gains tax is too high, he’ll simply take his capital elsewhere: Just like how he invested $3 billion to take Burger King to Canada.

See Also:
1. E. Norrman. Tax Policy in Sweden. NBER, 1997.
2. Dutch masters of tax avoidance –the guardian
3. Wrappers come off Ikea structure –FT

April 15, 2016

How’s Venture Capital Doing?

One chart, two different interpretations.

TechCrunch:
Apart from last year, National Venture Capital Association data shows that the $12.1 billion invested at the beginning of 2016 was the best start to a year since the dot-com boom in 2001.

Wall Street Journal:
Funding for U.S. startups fell 25% from the fourth quarter to $13.9 billion, the largest quarterly decline on record since the dot-com bust.

Both statements are technically correct, but imply opposite things. The story depends on what the readership wants to hear.

TechCrunch is a publication for tech workers in startup hubs. Keep things positive, the industry depends on a healthy supply of optimistic app developers. WSJ caters to rich people with self-managed investment portfolios. Play on their fears of impending market doom, scare tactics always get clicks.

It’s easy to be a journalist! Pick two data points, create a storyline, pad it with noncommittal quotes from vaguely credible sources, and wait for the Pulitzers to roll in.

April 8, 2016April 8, 2016

When Facebook is the Internet

Facebook is great at inflicting their service on captive audiences. Yesterday, I was super stoked that Lufthansa had free internet on my flight! Except it wasn’t free internet. It was free Facebook. Real internet cost 9 euro an hour.

It was like Internet.org, but for rich people. Internet.org is Facebook’s initiative to bring a limited version of the internet to developing countries, allowing locals access to a handpicked selection of websites, including (obviously) Facebook. The service was banned in India for violating the principles of net neutrality.

We take unrestricted internet for granted around here. The sum total of my knowledge comes from stuff I read on the Internet, and that’s true for most people I know. But what if the internet was limited to Facebook and its incredibly stupid list of What’s Trending?

During the flight, I created a proxy app to act as a window to the outside world. But the view isn’t the same when it’s lined with Mark Zuckerberg’s idea of what I should be looking at. And while I could have paid 9 euro for unrestricted access, this is the only view available to people in developing countries if they want any internet at all.

Facebook wants to become a primary news destination, the homepage of the internet. But curated news media isn’t information; corporations have to avoid offending advertisers and shareholders. The only free press is the collective internet, and that’s exactly what Facebook’s Internet.org is not.

Elaine's Idle Mind

and Devil's Workshop

Month: April 2016

Debt: The First 5000 Years

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Overcompensation

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The Laffer Curve Isn’t Completely Stupid

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How’s Venture Capital Doing?

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When Facebook is the Internet

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