May 3, 2014 § 54 Comments
Folks are always trying to pretend that “opportunity costs” are real. Opportunity costs aren’t real. Opportunity costs are by definition an imaginary exercise in what might (or might not) have happened if we had chosen a different course of action from the one we actually did choose.
At the fork in the road before we make an actual choice, our imagination can be helpful. We can tell stories about what might happen in the future under various scenarios, and try to make better choices after reflecting on those imaginary stories about possible futures.
But the temptation to treat these imaginary stories – and associated “opportunity costs” – as if they are actually real is very strong, and as a subtle kind of lie this temptation frequently leads unwary moderns like us astray.
Once you’ve seen this kind of rationalization in one place you’ll start to notice it everywhere.
Murdering civilians in wartime, it is thought, must not be judged apart from “opportunity cost”: the quantitative consequences of incinerating two cities filled with civilians using atomic bombs has to be compared to the “opportunity cost” of an imaginary land invasion and all of the imaginary consequences that flow, in the fictional story, from the fictional invasion. Divorcing her husband was necessary because of the imaginary life of misery for herself (and her husband and children, because if Momma ain’t happy nobody’s happy) in the fictional story of the imaginary future in which she had actually kept her vows. Charging profitable interest on a full-recourse loan (usury) was justified because in an imaginary alternate reality the lender could have invested in something profitable. In the Jerry Bruckheimer film I imagine in my mind, failing to torture terrorist captives led to mass murder and destruction in Los Angeles. Joining Team Litterbug was justified because heck, in the story I told in my head I actually won the lottery and lived happily ever after.
Our imaginations are powerful things, and when they are made unequivocally subservient to the moral law they can be a very good thing. But we must never be fooled into thinking that something imaginary out of a fictional story we tell about something that didn’t happen – something like “opportunity cost” – can justify choosing concretely evil actions.
So don’t play the part of the modernist chump who can’t distinguish between fiction and reality. Always do what is upright and morally good, and let imagined realities that might come to pass if we choose evil stay in the realm of fiction, where they belong. The future isn’t in our hands anyway; it is in the hands of Providence.
September 25, 2013 § 12 Comments
A while back I made an argument that property taxes are intrinsically unjust. Based on my understanding of usury as taking profits from what does not exist, I argued that property taxes are levied against transactions which haven’t happened. (That’s why an assessment is needed: the assessment is an imaginary transaction wherein the property is valued without actually being sold).
In this post I will make an independent argument that property taxes are intrinsically unjust. This argument will not depend on any particular understanding of currencies, usury, etc.
Assume that income taxes are not always unjust, but that a 100% income tax – an income tax which confiscates literally all of a man’s income – is unjust.
Then observe that a property tax confiscates 100% of the property against which it is levied. A 2.5% annual property tax will confiscate the entire property over the course of 40 years.
The fact that it happens in slow motion does not make it less than a 100% levy.
So in order to believe that property taxes are just, we must accept the premise that a tax which confiscates 100% of a man’s property is just. It follows, since income is property, that a 100% income tax is just. This contradicts our original premise that a 100% income tax is unjust.
August 29, 2013 § 21 Comments
We’ve discussed how modernity’s concept of property is broken, because in its zeal to reframe all authority as abuse it attempts to substitute the human will for natural-law based authority. Thus modernity frequently appeals to heretical and false theories under which some aggregation of human wills – some form of “consent of the governed” or alternative theory of the triumph of the will – forms an essential basis of the only authority permitted to operate as such in the modern social order.
Real exercise of real authority does involve the choices of human beings: the person in authority literally crafts specific moral obligations from the raw material of natural law, obligations which bind the consciences of those subject to that authority. In turn, those subject to authority choose the good when they act in obedience to legitimate authority. But real authority which produces genuine moral obligations does not ultimately derive from the human will, either simpliciter or in some theoretical aggregation mediated through some heretical theory of consent of the governed. The foundation of real authority is Nature and Nature’s God.
That still leaves many questions open, of course. One question it leaves open is what distinguishes ownership from other kinds of authority. In this post I will propose an understanding of property and ownership which addresses that question. I don’t claim that this understanding is perfect or fully refined, but I think it does provide a foundation for reasonable discussion. So here we go.
Property exists when an owner exercises fungible authority over subjects with respect to one or more objects. That is the gist of it, though additional explanation in order.
In ordinary language we use the term “property” to refer to the object or objects in the ownership relation; but for property to exist the entire structure must obtain.
By “object” we don’t mean physical objects: we mean the things in the property relation which are not subjects. Subjects are of course persons: moral agents with the capacity to choose behaviors.
Fungibility implies that the authority may be transferred from the owner (himself a subject) to a different owner through commerce, gift, inheritance, or some other means.
In the comments below, Nick Steves asks:
So are my children property? My (hypothetical) servants? Am I the property of my employer? Does every material obligation make the obliger to some extent property of the obligee?
Under this understanding of ownership, the answer is no — for the simple reason that children, servants, and employees are subjects, not objects. In fact rather than “property” as a label I recommend resurrecting archaic language for cases where a property-like relation obtains with persons rather than objects: “subject,” as in “subjects of the king” seems particularly appropriate.
This also permits some fine tuning on the issue of slavery, serfdom, etc.
Unlike many modern day traditionalists I am not troubled by development of doctrine, generally speaking. (The reason is because I am not a positivist; but that potentially leads to a rather wide digression from the subject of the post, so that’s all I’ll say on that for the moment). I have no doubt that chattel slavery – treating human beings as property – is intrinsically immoral, despite the fact that it has not been always and everywhere condemned as such by infallible acts of the Magisterium. Note that this is true even under the concept of property I’ve discussed in this post, not merely under modernism’s triumph-of-the-will reframing of authority, since it requires that we place a person – a subject – into the structure where the theory calls for an object. Treating persons as things (subjects as objects) is a basic violation of charity and has always been considered to be so by Christianity.
Serfdom, however, was not intrinsically immoral; or at least it wasn’t so for the same reason that slavery is intrinsically immoral. A serf was bound to the land; but the lord of the manor and the serf existed in a web of mutual human obligation. It might even be said that the serf had an ownership interest of a sort in the manor – although that interest was not fungible, or at least not via the serf’s own autonomous choice.
But whatever else may be said it is clear that as a moral agent in his own right the serf is not treated as property. He is treated as a subject. Serfdom may have been morally wrong – I rather suspect it wasn’t in broad brush, though of course it is likely that it was in specific situations, as is frequently the case with relations which are not intrinsically immoral – but if so, that conclusion would have to be reached through some other theory.
Apologies to Brian Wilson for the post title.
 I haven’t made up my mind if fungibility is essential to the property relation, but I include it because it does seem to be part of the general understanding most of the time. Also, it isn’t clear that fungible property becomes not-property when the decision of whether or not authority transfers isn’t the owner’s choice. Certainly in some cases – taxes, fines, etc – the property is fungible but the transfer is not the owner’s choice. I don’t think these considerations are central to the discussion though, at least offhand.
 There are modern forms of property which are almost impossible to get rid of – property which cannot be given away and has negative value in real terms. Timeshares, commercial properties with environmental concerns, homes with underwater mortgages in full recourse states, and Time Magazine come to mind.
March 27, 2013 § 86 Comments
Suppose I am the manager of a large investment fund, ZipFund. I have a little of my own personal money in ZipFund; but the vast majority of it is investments from small Mom and Pop investors.
Suppose my fund had invested in Cyprus Corp a few years ago by buying interest-bearing bonds. We’ll call these Zip bonds.
Cyprus Corp has other bond investors. Many of them are small investors like the majority of investors in ZipFund: we’ll call their Cyprus bonds Mom-n-Pop bonds. There are also some larger Cyprus investors who bought FatCat bonds. Mom-n-Pop bonds are senior to FatCat bonds: they are insured by the company, so they get redeemed at face value before the uninsured FatCat bonds are entitled to any proceeds.
Cyprus Corp is in big financial trouble, and the board of directors has been replaced by a judge. The new board has a fiduciary duty to make the best possible financial choice for existing Cyprus bondholders, and complete authority to make decisions. The company is about to go belly up if it doesn’t get an infusion of cash, which will make Zip, Mom-n-Pop, and FatCat bonds all virtually worthless.
The ZipFund partnership has voted to allow a deal to provide that additional cash, buying WhiteKnight bonds from Cyprus, as long as in doing so the value of Zip bonds is preserved going forward. Our goal is not as much to make a profit as it is to minimize losses on the capital we have already invested.
I offer the Cyprus board of directors a deal, and after shopping around a bit ZipFund is the only offer of new cash they get. Our deal preserves the value of both Zip bonds and Mom-n-Pop bonds. FatCat bonds are required to take a 40% haircut.
New cash from the deal would immediately change the viability of Cyprus going forward. It might not create overall value; but the board thinks it has a good chance of preventing wholesale value destruction. If they don’t do my deal, any Cyprus bondholders will be lucky to get pennies on the dollar and the uninsured FatCats will most likely get nothing at all.
If the Cyprus board accepts the deal, has anyone done moral wrong?
March 26, 2013 § 102 Comments
I wonder how people’s attitudes would change if, instead of Cyprus, we were dealing with an Indian tribe that had borrowed far more US dollars than it could afford and was operating its own internal banks on the reservation (its sovereign territory) that the Mob was using to launder money and evade taxes.
I’d have a strong inclination not to offer any additional financing at all. But if I was going to offer additional financing I’d definitely have very strict terms. Every big player would have to take a haircut on the deal, including those with an equity stake (whatever it is labeled: labeling it “deposits” doesn’t change its fundamental nature) in bank operations.
They would of course be free to take it or leave it.
March 23, 2013 § 46 Comments
Some folks are up in arms about the European Union’s attack on private property in Cyprus, and a few Internet pundits are updating their “THE END IS NEAR” signs with bigger, bolder fonts.
The Cypriot banking system is an order of magnitude larger than its GDP, largely (I am led to believe — I am certainly no expert on the Cyprus economy) on the back of Russian mafia money and other tax haven activity. The EU proposed that as a condition of getting EU bailout loans, Cyprus should levy a property tax on “money” deposited there (ahem). The different proposed tax brackets look to me like a rough proxy, targeting mainly foreigners who use the Cypriot system as a tax haven and locals who have profited from that use.
Like every politically expedient proxy it is a blunt instrument. People buy homes in “senior only” developments to keep out young thugs who tend to be disproportionately of certain races. But because you can’t say that out loud, “no residents under 50 permitted” as an HOA covenant accomplishes the goal without violating PC pieties. This is a rough cut, but it gets the job done while maintaining all the right fictions.
So yes, some “innocents” would probably be caught in the proposed Cypriot property tax net — if Cyprus hadn’t rejected the proposal, that is. And of course something like it may still happen on that wee Mediterranean isle.
But this hubbub hardly represents the camel’s nose in the tent. Large swaths of our economy are based on usury, which means that much of what constitutes “property” literally doesn’t exist as an ontologically real thing. I’ve made an argument that property taxes in general may be intrinsically unjust. I am open to a conclusion that property taxes in general (as opposed to taxes on transactions) are all basically forms of robbery perpetrated by the sovereign. But the notion that this rejected proposal on a small Mediterranean island somehow represents the end of private property is ridiculous: either private property ended long ago, the first time Mom and Pop had to sell the family home to get out from under property tax liabilities that they could not meet, or there is nothing to see here. I am somewhat inclined toward the former view.
December 18, 2012 § 14 Comments
A comment by reader tz2026 got me thinking about taxation in the context of our discussions about usury. I’ve long had an intuition that there was something not quite right about property taxes. I’ve on occasion been known to suggest a “mandatory sale” rule: if the property tax assessor values a house at X the property owner should be able to say “OK, you now own it for X” and walk away with the money.
As a provisional exploratory matter, I now think I may be developing an argument that property taxes are intrinsically unjust.
In a profitable loan broadly and colloquially construed, the lender charges the borrower rent for the use of something. In a case of usury the rent is charged for something which does not actually exist. Thus usury is unjust: it is a scam, a theft, a something-for-nothing taking from the borrower.
Now the sovereign’s currency has credibility as a medium of exchange precisely because it is the currency that he will accept as payment for taxes. We engage in all sorts of transactions in the sovereign’s currency. (Contrary to the popular view, the sovereign’s currency is not mandatory for transactions: non-cash transactions are actually quite commonplace. But that is something of an aside from the present subject, I think). Usually – though not always – when a house is sold, it is sold for sovereign currency.
Anyway, the argument goes something like this:
Property taxes are denominated in the sovereign’s currency. However, the value imputed for the property tax rests on the mere potentiality of selling the property for its assessed value. There isn’t any actual sale transacted in actual dollars; there is merely a potential sale which does not in fact occur.
If it is intrinsically unjust to charge rent for something which doesn’t actually exist, it is also intrinsically unjust to tax what does not actually exist.