Plutoyperetonism in its Proper Place

A reader with the inattentive, fraternal, amorous yet equine name of Distracted Brony asks:

Mr. Wright,

I have learned a lot from your blog about the evils of socialism and other such wealth-redistribution ideologies. But I have not learned much about the possible corruptions and other problems of free-market systems.

It would be nice to hear about these things without having to go to a liberal site to do so. If you have any solid reading suggestions, or if you have written elsewhere on the subject, I would be pleased.

The comment flatters me beyond my merit. I am in no position to list the errors and drawbacks of the free-market and for this reason:

The problems are fraud and greed.

This has been known to all men since the dawn of time. What needs to be said of them?

The only thing to be said is that master can and do treat apprentices and employees badly, but that being a slave is even worse, because the employee is legally free to depart and seek another master. If the circumstances, for whatever reason, make the legal right difficult to exercise, enslaving the fellow do not alleviate such problems, but rather aggravate them.

You will have to seek elsewhere for your information. Since I have heard nothing but lies, horror stories, lies, criticisms, lies, nonsense, lies and lies about the free market since the time I was old enough to be propped up in front of a TV to watch THE FLINTSTONES, I am puzzled that you or anyone thinks there may be some criticism of the free market which has not yet been aired, discovered, trumpeted from the rooftops, refuted by sane economists in a paragraph or two, and, after being refuted, refuted again, triply refuted, and proven beyond any possible scintilla of a shadow of a doubt by a century or two of example and experience, the false belief goes on to become an ingrained and unshakeable core dogma of all Democrats and two thirds of the Republicans, and shows up in all the dramas and sitcoms and rock songs and half the news stories.

A man dying of thirst in the desert is not the right person to ask about the dangers of drowning in a teacup, not when you live in a culture where all the murder mysteries concern rich uncles found with mouth and nose jammed in teacups, with water in their lungs, and ninety percent of all public debates, laws, regulations, and court cases concern the manufacture, distributions, handling and filling of teacups so as to prevent accidental drowning.

In case you think I am exaggerating, I assure you most solemnly that the number of people harmed by unfair trade practices who are protected successfully by unfair trade practice laws against such things, or harmed by monopolies who are protected successfully from that danger by antitrust laws, is LESS THAN ZERO. No one has ever been harmed by such things, and no one has ever been protected, but many, many, many people have been harmed. If you believe, as I do, that the bad economic practices of Germany between the wars were a contributing factor to the rise of Communism and Fascism, then the number of people harmed by bad economic practices is literally incalculable.

So, no. Do not expect me to say anything but curses and anathemas against such wicked, illogical, counterproductive, unamerican, unchristian, vile and tyrannous and stupid laws as these. The science of economics studies the laws of economics, and human laws cannot refute them or overrule them any more than human laws can overrule the law of gravity.

You will never hear me arguing against the free market because there is no argument against it. Laws against fraud, breach of contract, and false advertising protect the free market and do not hinder it.


Another reader, Nate Winchester, my fan, read the above and writes and comments:

…the number of “capitalist-Catholics” out there seem very very few (heck, you don’t have to go far to hear some claim that the free-market is incompatible with Catholicism)…

My answer: Capitalism rewards and encourages greed and materialism, and a countless hoard of advertising agents calculate how to make men stupider and greedier to buy products we do not necessarily want or need. So, yes, indeed, the WORSHIP of Capitalism, Ayn Rand’s religion, is definitely, utterly and absolutely antithetical to Catholicism, or any sane religion.

Logically, if word good means anything other than whatever it is whim desires at the moment, then there must be an objective hierarchy of good, and an apex where the Highest Good rests.  This highest good is the source of all action and the goal of all motives. It is what Aristotle called the Unmoved Mover, and Socrates called The Ideal of Good, and Lao Tzu called the Way, and Confucius called Righteousness, and the Stoics called Mind, and the Buddha called Enlightenment, but Aquinas called God.

If so, than the worship of any lesser good in the hierarchy for the highest good is an error both in logic and in morality. It is an error in logic because the goodness of the lesser is derived or defined by the greater, that is, the lesser good is good because the highest good makes it good, and ergo to sacrifice the greater good to get more of the lesser is a self defeating act. It is an error in morality because to decrease the good is to increase the evil, and it is disobedience to the one and only thing that is the source of moral authority, namely, the the Ideal, the Way, Righteousness, Mind, Enlightenment, God.

So, capitalism is efficient, and it is a good thing, but it is not the best thing, and like all things in real life, it has drawbacks and costs. It is an attempt to draw the chariot of good fellowship by means of the dragons of greed. This is a dangerous chariot to ride, but it is far more dangerous to cut the traces and let the dragons turn, wreck the chariot, and rip the charioteer to shreds.

The reason for my vehemence in being unwilling to debate the evils of capitalism is that the other other option aside from liberty and the free market is slavery and the unfree market.

I am not talking about laws against fraud and deception — those are part and parcel of the free market not an alien intrusion. Unfreedom can take many forms, but it is always ultimately the use of force or fraud, either by  brigands or by Caesar.

The only option aside from the code of liberty is the code of conquest.

The code of liberty praises the cunning merchant, the industrious man, the hard worker, the innovator, the man of reason, the persuasive salesman, the clever negotiator, the silver tongued orator. The code of liberty like men who work with their hands, self made men. These are all good things in their place, and when they are out of place they turn into mere admiration for frauds and liars and cheats and dragons sleeping on hoarded gold.

The code of conquest praises the bold soldier, the fearless and cunning fighter, the innovative strategist, the glorious leader, the noble king, the ruthless warrior, the self sacrificing brother in arms, the faithful comrade, the worthy knight, the loyal squire, the orator who can stir an uncertain army to fire and glory, drinking death like wine and slaying foes as farmers slaughter swine. Is it not passing brave to be a King and ride in triumph through Persepolis? These are all good things in their place, and when they are out of place they turn into mere adulation for brigands and slavers and vampires drunk on blood, werewolves who ruin the peace of the world, Jinn who burn for the sake of hearing the lamentation of widows.

The only option aside from the code of individualism, treating each man’s life as God’s unique and sacred gift not to be destroyed nor chained nor used as an instrument for the pleasure of others at the pleasure of others, is the code of collectivism, which treats men like ants. Collectivism praises self sacrifice, obedience, uniformity, consensus, conformity to the laws of man and to the leaders of men. Individualism praises responsibility, self reliance. Out of place, the collectivism turns all mankind into slaves and insects, or, worse, as cogs in a clockwork, and its realm is death. Out of place, individualism is pride, the sin of Lucifer, and its realm is hell, the one place where one is utterly alone.

But I play no glib game of moral equivalence here: collectivism is incompatible with Christianity at its very root. For the collectivist, there is no salvation and no desire for salvation. There is only power, and the group is preferred to the individual for the very logical reason that the group can overpower the individual. The collective is saved by its unity, like the separate rods of the fasci which cannot be broken when they remain in a bundle.

This concept is so alien to Christendom that even atheists and agnostics who doubt or who deny Christian truth cannot even begin to understand what denying this concept would mean.

Imagine a world where you go to heaven if your baron or count who owns you and owns your soul does righteous deeds and avoids sin. Whether you yourself sin or do right matters nothing.

But every true pagan instinctively understands this world. The Egyptian knew the glory of his nation and the wealth of his people and the plenty of the waters to irrigate the fields depended on the virtue of the Pharaoh, who was the greatgrandson of he gods. The Chinaman knew the same thing of the Son of Heaven ruling in Forbidden City. Failure to commit the proper rituals and sacrifices in the Middle Palace of Harmony would cause bad weather, and the heavens would curse the prosperity of the people.

The loons who believe in Global Warming believe the same thing, except that the rituals are even more meaningless, things like recycling and erecting windmills, and the sacrifices are of whole industries rather than cattle, but, unlike the ancient pagans, the Greens lack any rational explanation as to how and why the sky gods will curse us if there are no sky gods.

The idea of relying on your incompetent royal family to save your souls is so laughable to a Christian that no one even bothers to make a joke about it. Where republics rather than royal families rule, the idea of relying on your incompetent and venal public servants to save your soul is an idea so repugnant and absurd that only Democrats believe it, and not the ones who actually make decisions for the Party, only the sheep who are herded into booths to pull levers on election day, to bless the Lightworker.

Likewise, socialism, fascism, totalitarianism is incompatible with Christianity at its very root. The reason why, even to this day, the Oriental potentates of old retain an air of alien cruelty is that they were totalitarian, and Christian kings, be they howsoever cruel or tyrannous, were cruel in the face of their oath and tyrannous despite the atmosphere of their world, whereas the Oriental Sultans and Brahmins were in keeping with their oaths and their atmosphere.

Much ado is made of the fact that certain Protestant preachers in the antebellum South sought Biblical excuses to ward off criticism of slavery. No ado is made of the much more striking fact that no other religion, no philosophy, no creed, no land, no peoples, aside from Christians motivated by Christian principles in Christendom have ever criticized slavery, ever excommunicated all slaveowners, ever abolished it, first in the Middle Ages by suasion, and then in the Enlightenment by force of arms. Seek through all lands for the Islamic Antislavery Society, of the Egyptian, or the Chinese, and you will find an idea invented in Christian lands.

The free market is not an ‘ism’, not a system, not a political scheme, not a philosophy. It is the natural result of men living as equals in rank (albeit not in intellect, strength or ability) where even the poor and weak are respected, and where mutually binding laws make wealth the servant of mankind rather than its master.

The reason why the two codes are not a case of moral equivalence is that the drawbacks, temptations, sins, and evil which the code of liberty might produce, the code of conquest definitely produces, and moreso. Owning a large business might tempt the unwary man to pride and greed; owning a large harem and a host of plantation slaves requires pride and greed as an inescapable necessity, and adds many vile inhumanities thereto, and corrupts even the beneficiaries of the system.

Socialists are under a far greater incentive to be greedier than Capitalists for the obvious reason that in Socialism, whoever can bribe, threaten, or corrupt the quartermaster distributing all the wealth for the alleged good of the collective is the one man who gets the most by being the least productive or useful to society, that is, the laziest and the greediest. Socialism is based on greed: on the false promise that running the economy along military lines with commanders and hordes of obedient underlings will produce MORE material goods more efficiently, and the equally false promise that all spiritual problems will be solved by these more material goods more efficiently produced, including alienation and disharmony.

Likewise the code of collectivism encourages all the flaws of the code of individualism and makes them inevitable. The collective crushes the individual so that all merit comes from obedience to the group, which means, in effect, obedience to the allegedly divine Pharaoh,  Tennyo, or Lightworker allegedly speaking for the group interests. The selfishness which often tempts the individualist here becomes not a temptation but a necessity; you must look out for your own interests more diligently than in an individualistic commonwealth when you are a unit in a hive, for no one else will. Love and sympathy, loyalty and fellow feeling, by being universally compulsory, are universally destroyed.  Each man is such a system must be a Lucifer in rebellion against the Lightworker or Pharaoh leading the hive merely for his own survival, because this rebellion is the rebellion of human nature against soullessness.

Is this clear? Individualism is not good except when in its proper place, and even there it is open to the temptations that afflict the lot of fallen man; but Collectivism makes indulgence in those temptations a necessity, and hypocrisy inevitable. Likewise, the code of liberty is not good except when in its proper place, and even there it is open to the temptations like pride or greed; but the code of conquest makes pride and greed for the land and woman and gold and lives of other men its top priority, and the only way to assuage that greed is war.


  1. Comment by AstroSorcorer:

    This was well said, thank you.
    I think I have not seen it so clearly detailed by any since Buckly or Rand (in her philosophy, which as you indicated is not the same as yours). At a time where it seems all of the country is being told to go totally Libertarian, or completely Socialist, this is a breath of fresh air for the reunion of economic Conservatism with its other elements. This, I think, can help quite a few people that have been struggling on how to reconcile the flood of information they receive with truths they have been taught and the evidence of what does and does not work seen with their own eyes.
    The more you can get this out, the more people you can help with this. Hopefully, before it is too late.

  2. Comment by AstroSorcorer:

    This was very well said, thank you.
    I think this will be very helpful for people struggling with reconciling faith with individualism. It also illustrates the logical and inevitable consequences of collectivism, and makes clear the dichotomy between socialism and Christianity.
    I have not seen capitalism argued for this eloquently since Buckly or Rand. I hope you can get this out to more people: it could help a lot.
    Maybe, even in time.

  3. Comment by masgramondou:

    I am in general in agreement with you but I think you may be overstating the case here.

    Firstly, it seems to me you are conflating free markets with capitalism. The two are indeed related and frequently go hand in hand but free markets do not require capitalism and arguably capitalism does not require free markets (though it does require markets). A Chestertonian world would have free markets but would generally lack capitalism. This would probably inhibit innovation but historical observation suggests that many humans seem to be quite content in regimes that inhibit innovation and limit the potential for changes. Of course all these societies eventually end up conquered by dynamic neighbors (or at the very least undergoing a Meiji restoration level regime change that allows a new ruling class to adopt the best of their neighbors), but there’s generally a decent period of time before that when there is pease, stability and the like.

    Secondly free markets are not perfect. To be sure they are far better than rigged ones but you are, I believe, understating the problems fo fraud and greed. A free market cannot work efficiently without a reasonably impartial rule of law and without that rule of law it is entirely possible that a better run rigged system is a better way to do things. In other words I think both you and Chesterton are basing your ideas on societies that have the rule of law in place which is not at all a universal underpinning.

    The foundation of wealth is a clear concept of property and a consistent, impartial judiciary that can and does enforce contracts and which punishes thieves, faudsters and others who violate other people’s property rights. Once you have that then you can have efficient free markets whch leads to increased wealth and the specialization that requires capitalism. Without the foundational rule of law all this is built on sand and fails. Hence the general failure of free markets and capitalism in, say, Russia where the concept of impartial rule of law has never taken root.

    • Comment by Robert Mitchell Jr:

      What is your definition of “Capitalism”? How does it differ from the Free Market?

      Second, nothing is perfect, but to argue that “without that rule of law it is entirely possible that a better run rigged system is a better way to do things.” is wrong, because if there is no functional rule of law, then there can be no “better run rigged system”. No system can function without serious respect for the rules (And any “System”, by definition, has rules to follow). And, of course, a “rigged” system is unjust by definition, and breeds contempt for the rule of law supporting it and the corrupt who benefit from the rigging, as opposed to the Free Market, which is much better about punishing the corrupt, the oathbreakers…..

      No. Free Markets predate recorded history. Before writing, before Governments, there has been trade. All the free market requires is two people with needs and some trust. It is true that in Russia, the Totalitarian rule has left people without trust, but even there, the free markets have stuff on their tables, as opposed to the empty shelves of the “better run rigged system” government stores. The Free Market is not perfect, but in any environment larger than a family, it would appear to be the system that works best.

    • Comment by John C Wright:

      “Firstly, it seems to me you are conflating free markets with capitalism.”

      If you are introducing a private terminology, you must provide the definitions, or otherwise no one can follow what you are saying. Define ‘free markets’ and define ‘capitalism’ and tell me the difference between the two.

      I will show you what I mean: ‘A free market is a market as it exists in the absence of government regulations hindering or outlawing the various activities of buying and selling good and services or lending money or transferring title to land. A market is a set of laws and customs, equally enforced, such that robbery and fraud and breach of contracts are deterred to the point where the various activities can reasonably be relied upon as trustworthy.

      ‘Capitalism is the swearword invented by Karl Marx in order to deceive the gullible with the preposterous claim that the laws and customs necessary for the market to exist somehow benefit anyone investing in stock to the detriment of anyone hiring his services as labor, particularly manual labor. How this is possible even theoretically, since one man both hire his services and invest in stock, is never addressed.

      ‘Since, in various interventionist and socialist schemes and regulatory regimes, certain unequal laws do indeed benefit one group at the expense of the others, such as, c.f., labor union regulations and antimonopoly laws, the word Capitalist is also used by Marx to refer to the corruption incest between government and manufacturing interests of the exact type his own paradoxical theories of government-run market encourage and require. Hence the word ‘Capitalism’ as used by the man who coined the term, Marx, is meaningless because it means two opposite things.

      ‘However, the lunatic conspiracy theory nonsense of Marx was proven so abundantly unconvincing, that the word ‘Capitalism’ is now used as a badge of courage by the men it was meant to slander, who use it as a synonym with the Free Market.’

      I have given this example to show you what I mean when I use the terms. Since I do not know what you mean by the terms, I cannot puzzle out just from context the meaning of your first paragraph.

      Second, you second paragraph is irrelevant. No one here is arguing that free markets are perfect, whatever that word means, merely that socialism is robbery, and that free markets cannot coexist with robbery. Whatever flaws or drawbacks exist in the free market, by definition continue to exist in that free market when it is invaded by a gang of robbers, except now added to them are the new and more painful flaws and drawbacks created by robbery.

      The idea that there will be less greed and fraud in a system when greed and fraud are rewarded and encouraged is a difficult idea to defend. Most critics of the free market merely change the subject and chase a squirrel around the front yard, barking, when this point is raised.

      You next state that the free market cannot exist without a rule of law. I would generally agree, with the proviso that trade between strangers still does exist, but only to the limited degree that custom and reputation delivery sufficient trustworthiness for the trade to be risked.

      Your comment about rigged markets I cannot answer since I do not follow what you are saying.

      You and I can certainly agree that an impartial law and order is a necessary precondition to lowering the risks of transaction and to encouraging the flourish of a market.

      • Comment by masgramondou:

        A succint description of the differences between free markets and capitalism as I am refering ot them is here – :

        “[Capitalism] is a description of ownership in an economy or society, [free markets] is a description of the method of exchange.”

        Markets are how we identify and then benefit from comparative advantage by exchnaging goods we don’t want for ones we do. Capitalism is how we reward investors in (new) business by ensuring that they get a return on the money they put in.

        Socialism, in theory at least, attacks both free markets and capitalism. It removes the ability for anyone (other than a bureaucrat in a planning office) to engage in investment or reap the resulting reward and hence the incentives to innovate that improve life. It also screws with the market by centrally determining what everyone should consume and who should make it.

        If you’ve ever been to any actual communist country (e.g. the Soviet Union in the 1980s, Venezuala or Cuba today) you see that markets still exist – black markets for the main part, but there exist poorly stocked government approved shops and market stalls too – but that innovative investment doesn’t because there’s no incentive whatsoever to take the risk that the innovation is worth it (and no way to accumulate the rewards of repeated investments).

        Chesterton (as I understand it, and many “progressives” from his day to today) objected to the risk/reward calculations of capitalistic investment but were absolutely fine with the market as a way to exchange goods and services. He also fell into the mercantilist zero-sum fallacy of trade (as, again, do many progressives and crony capitalists) because they don’t understand the idea of comparative edvantage.

        As for rigged markets with law vs free ones in anarchy. It’s a question of transaction cost. I.e. just as you say “trade between strangers still does exist, but only to the limited degree that custom and reputation delivery sufficient trustworthiness for the trade to be risked.”

        A rigged market where you know you’ll get ripped off by (say) 50% but are also sure the trade will occur without other impediments could be better than one where you need your own armed militia to prevent being robbed of your entire stock. Given a choice of, say, the free market anarchy of Somalia or the kleptocracy of adjacent Ethiopia, one suspects that most people would pick the latter.

        • Comment by John C Wright:

          The terminology is misleading and worthless but at least I understand you now. By ‘capitalism’ you mean the free market as it relates to investment and speculation. By ‘the free market’ you mean exchanges of goods and services, not including speculation.

          The thing that makes the definition misleading is that it defines by nonessentials, that is, WHAT is done with the goods and services, either speculation or consumption, not WHETHER the exchange is free or unfree.

          For example, you call a black market a free market, but a black market is called ‘black’ because the exchanges are forbidden by law, and the purchaser and vendor have no choice but to rely on their private reputation and vendetta for retaliation in the case of breaches of contract or negligence on the part of either party. If a crimelord gets a shipment of adulterated or substandard booze from a rumrunner during Prohibition, he does not turn to a court of law for redress, but to the Tommy Gun.

          The thing that makes this definition worthless is that the distinction between investment and purchase for consumer use is vague and indeterminate. A single example should make this clear: Suppose if I buy a plot of land called Blackacre and have not yet decided whether to improve and resell it should the price of land increase, or whether to build a summer home there is live there, is my purchase ‘capitalism’ or is it ‘the free market’?

          Does it become ‘capitalism’ the moment I decide to resell but not before? Suppose I use my own money to make the purchase rather than borrowing money at interest by means of a mortgage instrument? Is the holder of the instrument engaged in ‘capitalism’ whereas only I am engaged in ‘the free market’?

          I do not understand the terminology of a rigged market, nor why you are conflating transaction costs with theft. Here you lost me. By ‘ripped off’ are you referring to a levy, impost, tax or something of that sort, or are you referring to a situation where the merchant expects, due to the danger of lawlessness, to lose half his goods due to theft and plunder?

          Perhaps you should use the standard terminology of the last two hundred years of economics to discuss these matters, if you wish to be understood.

    • Comment by Robert Mitchell Jr:

      Why? It is the Marxists and the Left who have attempted to define all human activity in economic terms. Not only is fallacy 18 a straw-man, it is one created and pushed by the people now asking Mr. Wright and other defenders of freedom to defend it. Points for gall…..

  4. Comment by T.L. Knighton:

    I’d just like to add one advantage of the free market.

    Greed is, indeed, a potential side effect of a free market. However, the free market is also the only system that will either harness that greed, or punish it, all without outside influence.

    Let me explain.

    Using the good Mr. Wright’s example of a greedy, bad employer, the workers are more than free to seek employment elsewhere. When they leave, they take their skill and experience with them. Enough do this, and the employer finds himself with substandard employees, and his business will ultimately suffer because he offers inferior service to his customers. Now, say he treats his employees OK. Not great, but not horrible either. In his greed, he buys substandard materials. Same outcome.

    In this way, the free market has managed to punish the bad employer.

    However, sometimes, greed is “good” (to borrow a phrase from Gordon Gecko). Greed, the desire for more money, will also force innovation. It will drive a business to expand its operations despite success, which increases potential employment for those who need work. In this way, the free market has harnessed what is often considered an evil, and used it for good.

    No, it’s not universal. Greedy employers often manage to succeed without accidentally making the world a better place. However, the only real flaw in the free market IMHO is that human beings are involved. That automatically introduces all kinds of problems into the system.

    In reality, it’s the free market that allows the small, insignificant man to become a titan of industry. It’s not particularly common, but not because of a flaw in the system. It’s rare because the skills needed to do that are rare, and the talents needed seem to be even more rare.

  5. Comment by VunderGuy:

    Speaking of Marxism, what is New Historicism’s relationship to it and do both collapse into a form of moral relativism/Nihilism?

  6. Comment by UnknownProfessor:

    When you have imperfect people (but I repeat myself), Capitalism is the worst possible economic system. That is, except for all other systems.

    Greed is (to use Thomas Sowell’s definition) the desire for more. The way to get more is to produce something that a customer values more than he values the money you demand for it. And you sell it because you value the money more than the product. So, because of your “greed”, you benefit not just yourself, but also the customer.

    If anyone wants a fantastic read on economics, get Sowell’s Basic Economics. It gives a great and thorough explanation of basic microeconomics with nary a number in it. Sowell may be the single best economics writer for the average person around.

    And I teach this stuff (Finance and Economics) for a living, so let’s just assume I’m right (I keed, I keed). But right as I am, I’m not as smart as Wright.

    • Comment by John C Wright:

      I am smart enough, however, the second the recommendation of Sowell’s BASIC ECONOMICS. I also recommend CAPITALISM by George Reisman, FA Hayek’s ROAD TO SERFDOM, and of course Ludwig von Mises’ magisterial masterpiece HUMAN ACTION.

      • Comment by Sean Michael:

        I would recommend as well Henry Hazlitt’s brief and excellent ECONOMICS IN ONE LESSON.

        Sean M. Brooks

      • Comment by RyanM:

        +1 on all these suggestions.

        You should consider trying out Progress & Poverty by Henry George. If only for the beautiful Victorian prose. (note: Do not get any “Abridged” editions, especially those published by the self-proclaimed heirs of “Georgism” who have devolved in to leftist socialists… get the original edition so beloved by Albert J. Nock and William F. Buckely)

        Another good intro to Austrian econ is “Economics for Real People” by Gene Gene Callahan.

  7. Comment by Gary Black:

    I realize this isn’t the proper place to put this comment (but there is no proper place):

    I myself am not particularly political, but I do find your comments on the various systems quite instructive. I posited a possible piece of legislation to my wife and she has even less interest in politics than me. I was hoping to get some critical feedback (and reasoned dialogue) on a piece of legislation that most assuredly will never pass our federal houses. You see, it is my baby so I have a hard time seeing anything wrong with it. First I will give the brief outline, then add one caveat just to lower the persuasiveness of the proposal.

    I would propose to increase taxes. I call the plan the Variable Federal Sales Tax to Plan for a Balanced Budget and Create Healthy Incentives (VFSTPBBCHI). The idea is simple. Every year we look at last year’s deficit, we then calculate what sales tax we must apply in order to balance the budget. For example, each % of sales tax would generate approximately $100e9, our deficit was $680e9, so VFSTPBBCHI (VFST) would have been set as 6.8% in 2014. (I did some cursory research – taxpolicycenter claims Cain’s 999 plan was an effective 25% sales tax that would have raised $2.55e12 in 2013).

    The pros:
    It balances the budget. We don’t have to wait until our debt causes actual calamity to do something about it. For all of us worried about government spending (and I am one of them), it actually gives us some leverage to lower various superfluous government services. Simply put, starve the beast didn’t and doesn’t work; it only works to sow the seeds of our own destruction.
    It is (mostly) politics neutral. Democrats want to pay people not to work? OK but it means we’ll have a 60% VFST – all of a sudden no working man could support it. Republicans want to cut all other forms of taxes? That means a 30% VFST – all of a sudden some other forms of taxes (income, death) become popular.
    I think this plan forces everyone to pay for the services we receive. It allows us to prioritize which services we actually want and which ones will go by the wayside. For example, if I propose raising the retirement age, the only group that cares are retirees. It will get nowhere. If however, I could say that raising the retirement age lowers VFST by 3%, I would have broader support for the measure. This works for lowering of any type of spending or increasing any other type of tax. Plainly, it holds us accountable.

    Caveat: We may allow a certain max % of GDP as debt spending under “emergencies” at the discretion of the legislature. Yes, I realize that every year would be an emergency, and so it wouldn’t be a very high %. Maybe not too, this is a broad outline and I am not sold on any particular detail.

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