I’ve recently gone deep down a content rabbit hole. Specifically, I’ve been consuming everything on Robert Breedlove’s YouTube/Podcast series titled “What is Money?”. I just finished listening to Dominic Frisbee on his series. Dominic is a British author who has penned several books about money, government, and taxes. The topic that they covered most thoroughly in the 8 part podcast series was money, government, and taxes. These topics are related most closely to Frisby’s book “Daylight Robbery”.
This letter should serve as a loose overview of what was discussed in the 8 hours of content, and in no way represents the total breadth of knowledge in his books. I thought I’d compile some of the insights in hopes that you’ll go and watch the Dominic Frisby Series yourself.
Value is What you Find Beautiful
Breedlove has a knack for returning to the question “What is Money”. After all, that is the title of his show. One of the side effects of defining money, is asking yourself “What is valuable?”. The answer to this question varies from person to person. Dominic and Breedlove generalized the answer to what is beautiful, and I think they did a pretty good job at it. They decided that value is what you find beautiful.
What you find beautiful is also typically what you want in life. Whether that is a life that you imagine yourself having wherein you own a cabin on a lake or a vacation with your family. I would take this a step further and say that beauty is subjective. In other words, beauty is in the eye of the beholder. Therefore, value is in the eye of the beholder.
I personally use this insight to guide my goals. I try to picture a beautiful life, a life that I would value. Then I try to orient my career, my finances, and my time around obtaining goals that satisfy that outcome. That way, when I’ve obtained that goal, I know I am moving closer to a beautiful, valuable life.
The History of Taxes
Switching gears from value and beauty, Breedlove and Frisby also talk about the history of taxes. I found this discussion rather interesting because it brought upon the revelation that we’ve never lived in a society without taxes. For as long as we’ve had rulers, kingdoms, states, countries, and empires, there have been taxes. In theory, taxes are used to hire an army to defend the boundaries of the sovereign state against invaders that would do harm to those domiciled within. However, history has shown us that the ruling parties are too often tempted to raise taxes, or create new ones to justify any number of state expenditures.
It’s ironic and counterintuitive that high taxes correlate with the end of the nation1, rather than its prosperity. You would think that as taxes go up, the state has more money to spread throughout the nation and care for its citizens. History says otherwise. As taxes go up, the ability for the individual, or the family to survive goes down. Revolutions and societal collapse coincide with higher taxes2.
The Measure of Freedom
An interesting discussion ensued around how to measure freedom within a country. I found this to be a crude measure of freedom, but an interesting thought experiment nonetheless. This is also a nice way to conceptualize and demarcate the various “isms” present within our society on a one-dimensional scale.
Imagine a scale of freedom wherein the measure is how much taxes are paid to the state. On the one side, we have anarchism, where 0% of people’s incomes are given to the government. This is a 100% free society, but not necessarily a prosperous one as there is no police or military to protect the property rights of others. On the other end of the scale is slavery wherein 100% of people’s incomes are not their own. This is a 0% free society.
The reason why this is a crude example is because we are using a single definition of freedom. Here, freedom is defined as the individuals’ ability to decide what they do with the fruits of their labour. I still find this a useful way to think about taxes and freedom as it directly calls into question whether or not the government has the right to the product of our labour. In the example of Canadians, if you make over $100k per year, then 50% of your income is paid to the government. We’re right in the middle of anarchy and slavery. All things considered, things are very good here in Canada. Still, I wonder where the right balance lays on that same scale.
Consumption Tax vs Production Tax
Right now, we have a system that taxes the work/labour of individuals. This is a production tax. An alternative way to run an economy may be to have a consumption tax, rather than a production tax. The reason why this may be a more favourable system is because we would retain the freedom to do what we like with the fruits of our labour.
Our income would ultimately be our own, and we are only taxed when we spend it. If you want to acquire/consume something, you would be making that decision freely and on your own accord. None of your income would be voluntarily or involuntarily surrendered to the governing body.
Are Taxes Necessary in an MMT World?
The train of thought of questioning our tax system ultimately leads you to ask the question of whether or not taxes are even necessary. Taxes certainly seem superfluous in an era wherein central banks can print money at will. If governments can borrow a seemingly unlimited amount of money from the central banks, why do you pay taxes?
The narrative that I was brought up believing was that taxes are used to pay for social services and infrastructure. But why do my taxes need to pay for those things when we can print the money for those services? Keeping more money in the hands of individuals would leave people with more money to spend on themselves, providing a boost for the economy.
This was the partial purpose of the stimulus cheques Americans and Canadians received during COVID. The best answer I’ve received so far came from the book “The Deficit Myth” by Stephanie Kelton. She puts forward the idea that taxes create demand for the currency in the first place, and helps keep inflation in check. I’m less than satisfied with this answer. Needless to say, I am still searching for a better answer to the question, why do we pay taxes?
Temporary Taxes are not Temporary
Last but not the least, I wanted to mention a thing or two about how temporary tax measures are anything but temporary. Frisby made a point of mentioning, then backing up with historical context, the fact that politicians love to create new taxes as temporary measures, only to have them stick around long after their proposed end date. Here are some relevant examples.
Canada’s Income Tax started in 1917 as a temporary wartime tax. In 1948 it became permanent
Britians Income Tax Act of 1842 was temporary, but was never rescinded
United States Income Tax began in 1916, and increased in 1940 to fund war efforts. Both the instantiation and the increase were supposed to be temporary, but never were rescinded
Taxes are a Certainty
If I learned one thing from the Frisby series, it is that taxes are a certainty. They are a common thread throughout the entirety of human civilization. I’m not sure if I would want to live in a society without taxes, as I do enjoy a lot of the benefits of being a tax-paying Canadian.
That being said, taxes are something that the average voting citizen needs to pay more attention to. Higher taxes, regardless of the reason, signal the end-times and collapse of a particular civilization. The only wildcard I can think of here is Bitcoin.
For the first time in history, we have a form of money that cannot be confiscated assuming individuals have their bitcoin adequately secured. In the past, governments have seized gold, money, and assets in the event that citizens don’t want to pay. Will there come a time when taxes get so high that citizens show dissent? Governments will have a much more difficult time confiscating bitcoin, if that’s where the majority of their citizen’ wealth is stored. When looked at this way, bitcoin can be seen as a tool for protesting high taxes.
At the end of the podcast series, Frisby disclosed his original hypothesis and intent. All historical events can be reinterpreted, and re-analyzed from the perspective of taxes. What he found is that taxes have a lot more to do with how history unfolded than the history books might lead you to believe.
Mrugakshee and I spoke about this exact set of topics on a podcast with Brad Mills (Host of Magic Internet Money Podcast) recently. It has not been released yet, but we definitely get into the weeds in this discussion so I recommend you subscribe to our podcast channel for when it is released.
A question for you - would you take a course on Money, Bitcoin, and/or Financial Literacy, if Mrugakshee and I were to make it? Please indulge me on this curiosity by responding to this email with your answer and comments!