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Wednesday, July 21, 2010

A bunch of deep questions, and a bunch of light answers

There are some very deep questions to be asked.

1. What is a government
2. What is a country
3. What is the goal of a government
4. What makes these people, and not those people, a government for this country

5. What is money
6. What is debt
7. What is inflation

8. What is a corporation
9. What is the goal of a corporation
10. What makes these , and not those , a corporation?

11. What is law? What is a court? What is legal punishment?

#11 is hard. To a large extent, the answers given in the first 4 define a big deal of #11. But perhaps this is the wrong approach -- perhaps #11 should be answered first, and from that work backwards to determine #1-4.

I don't expect everyone to agree with my answers. These are not "deep" answers that follow -- they are fairly shallow. Every one of these can be expanded into a long article.

But this gives a starting point. Lacking some sort of overview, nothing else that I say will make sense.

(WARNING: This is LONG. Every one of these points can be expanded into a full length blog. Consider this post an overview only; each of these will be examined, although not necessarily immediately, and not necessarily in this order. If you are going to skip this, please look at an excellent examination of this in fiction, "The Ungoverned".
Wiki article:
Entire story online: )

As an example of not making sense? What is money today? Right now, money today is a bank lying about how much money it has to lend, artificially creating new money and new debt at the same time, while pretending otherwise. The so-called expansion of our economy is in reality nothing more than the expansion of debt. From a viewpoint of history, this makes sense; from a viewpoint of "Let me explain this to a 'off the shelf alien' -- a visitor to our planet that has never seen anything like this before", it makes no sense.

Equally odd, is inflation. Most people look at inflation as a function of money versus demand; I'll argue that it's a three-sided relationship between money supply, desire (not the same as demand), and population. Lacking all three sides, you are usually assuming constant population, which was relatively true only up to the early 1900's. (Oddly, that  early 1900's was when the population really took off AND a major depression hit. Hmm...)

1. What is a government
2. What is a country
3. What is the goal of a government
4. What makes these people, and not those people, a government for this country

So what is the goal of government? I'll say that the goal is to protect the commons. Most of you should be familiar with "The tragedy of the commons" -- since everyone shares the commons, and no one has a reason to put effort into maintaining the commons, the commons gets destroyed while private property is maintained. Simply put, putting someone in charge of maintaining the commons, and funding that, is the goal of government.

So what then is a government? Many groups can maintain the commons. Historically, it has been "Whoever has the biggest force". Army, thugs, tax collectors, or police, the "force" has varied, but even in 1776 it really was "we had France" to help us fight England. The U.S. war of independence was really France vs. England, with our "army" being a way for France to fight. Lacking a French blockade fleet, the war would not have ended. Lacking some trade partner, we would not have been able to sell stuff made in this country for war goods to fight back.

What should a government be going forward from today? Should it still be "the biggest force"? Does "might make right"? In Afghanistan, do we really "control" more than a few dozen blocks? Is the "biggest force" the insurgents? What are "insurgents"? Would Washington's army of 235 years ago have been regarded as "Illegal combatants" today, insurgents without a country, not subject to the protections of international war prisoners?

Our country is founded on high treason, insurrection, and gorilla warfare; we celebrate this every year on July 4th.

What is a country? A group of people, and their lands, who agree that they are a common country, with the right to control their commons. Doesn't have to be adjacent -- Alaska isn't adjacent to the rest of the USA. If Texas and California decide to jointly split off into a new country, they aren't adjacent (and the pair do have a big enough economy to make a country.)

What is a government? Those that the people choose to put in charge of that commons? Maybe. Perhaps a better answer is "Those people that have (or control) a law system (courts, police, jail; or thugs, standing army, military presence, etc.) to enforce their declarations".

What makes this group of people, and not that group of people, the government? Maybe it's "We have the force in place". Maybe it's "The people of the country respect this legal setup and obey the rules". Maybe it's "We're fed up with this old setup, and we're making a force to fight back". And maybe it's "We're using the rules of change in the old setup to put in a new setup".

Should might make right? Or should approval of the people make right?
Should people have the right to declare independence without fighting for it? How many, how large a group?
Who determines who is in charge of what section of the commons, and for what goal of maintaining it?
How do you settle conflicts in answering these questions? How do you settle conflicts in answering "how do we settle these conflicts"? (See "Nomic": Wiki. See also "The paradox of self amendment", where Nomic originated.)

5. What is money
6. What is debt
7. What is inflation

Historically, banks "create" money by lending more than they have. The idea was simple enough -- bank B (think of a bank as a secure, protected place to store something of value, used by many people) would issue some assurance that person P has money to give to merchant M; P gives the money to M, gets something from M. The bank shows M some money, and claims it came from "that pile over there belonging to P".

But it's all one pile, in the bank. As long as not many people want to take money out of the bank pile, the bank can pretend to have money.

As crazy as that may sound, it worked, and worked well for many years. It worked because the banks didn't go overboard -- they didn't, as a rule, issue much more than they had. They made sure that people were able to pay them back.

Fundamentally, the fee for a loan is the cost of money, just like any other product. You want a loaf of bread? You pay X. You want a bundle of money? You pay Y. As long as money circulates, great. As long as bankers don't accumulate more than they can spend, great -- the money made from making loans is spent into the economy, and that is used by the people who borrow for business to repay the loan.

It works as long as money stays in circulation, and the "failure" rate of the loans is low. And, as long as a bunch of other assumptions stay the same.

One of those is that the value of money doesn't change much. But in this historical view, money and bank debt are one and the same. What about personal debt? Corporate debt?

Inflation is another oddball. Imagine a world where the economy is stable. Everyone has $1000. Everyone spends, works, earns. Some people earn more, and spend more; some people earn less, and spend less. Everyone has $1000 in the bank, plus what they earn, and what they spend. There's ample money in circulation; if someone wants something, it's available. Supply and demand are in balance. In other words, the perfect "Micro/macro economic balance". All is happy.

Now, increase the population, without increasing the money supply.
Suddenly, there is less money per person.
With less money per person, and the price of goods the same, people have to buy fewer items.
With fewer sales, businesses will produce less things
With less productions, employees will be laid off.

With no change in the money supply, you get a horrible depression; the economy collapses. * The money supply has to scale with population *. We've historically set a goal of "x% per year growth in money supply" entirely independent of population, because we think that "inflation is good for the country". That's a "crazy idea". Maybe it's right; I think it's not.

Incidentally, I don't agree with traditional micro- or macro- economics. Both make assumptions that just do not agree with reality. Both hand-wave the assumptions away, without any regard to the feedback/chaos loops that the assumptions create. The result of traditional micro- and macro- economics is stuff that just doesn't make sense no matter what you say, and the idea that "Everyone doing what is logical and good for the individual will destroy the economy as a whole" being a SOUND and valid deduction -- which is exactly what they claim -- is a good indication that they are broken.

So what is money?

Fundamentally, the standard definition is, "A tool for barter".
Fundamentally, the historical reality is, "A privileged tool for barter".
What gives it privilege? "The government says so".
But who is in charge of it? Not the government. Not those in charge of the commons. Private banks.

I have no answer. But the nature of a government saying "We  are not in charge of the basic tool of the economy that we are trying to create, grow, and control" is the same as saying "Those others that are in charge are just as much government as we are".

What is a government? What makes group A and not group B the government? Isn't "The economy" the single biggest "commons"?

So I'm left with "The government is the group that has the legal setup, and respect of the governed, and manages the commons, including the economy". Yet today, private banks are at the cornerstone of that.

8. What is a corporation
9. What is the goal of a corporation
10. What makes these , and not those , a corporation?

#8 has a fairly straightforward answer. Note that this is NOT what courts currently say. In fact, I can't even understand what courts currently say.

A corporation is three parts:
A. Investors that put funds into a common pool.
B. A group -- called the "board of the corporation" -- that are responsible for the decisions on how to spend those funds.
C. The funds themselves.

"Corporate shield" or "corporate immunity" only refers to the idea that investors are not required to put more money in if the corporation has a loss -- all they can lose is the current investment. They cannot be held liable for any legal issues or fines, or jail time. The board has no such restrictions -- if there is a financial issue, or legal issue, it is jointly on the corporate funds AND those responsible for the actions taken by the corporation.

As far as I can tell, the current court system says that corporate immunity also protects the board from their decisions -- so you can decide to do X, and if it's in the name of the corporation, you are immune from the consequences. Only the corporation's money can be challenged, not your decision, and you have less at risk than the investors do.

That, to me, is crazy.

What is the goal of the corporation? Well, that's a hard question. Really hard. Ultimately, though, whatever the goal is, that is why the investors invest. But once you have a corporation, investors, funds, board, etc, then what is the goal of the next action?

Answer: To make good use of the corporate funds.

In other words:
A corporation is a group of people in charge of the "corporate commons" -- the funds -- with the investors agreeing to it.

In other words, a group that has the respect of the investors, to make decisions on behalf of the commons.

A corporation looks exactly like a government, except that, in theory, a government has the authority to declare something "privileged money", or to issue rules ("law") that the corporation has to follow.

Yet today, our government lets corporations ("banks") declare and issue money; they let corporations declare and issue law ("mandatory, non-negotiable contracts"). So what's the government?

What makes something a corporation, and a mini-government? Whatever the "boss government" says. Well, no, not quite -- apparently, anyone can, in any state, file paperwork, and get "corporation / mini government" status. And in some states, it's free. Just pay them income taxes, if you have any income. Or manipulate your funds and assets so you don't.

Or go overseas, and become a foreign corporation. Heck, operate out of an "at-sea" installation, and call it a "ship". Then it's not even subject to the laws of the US -- that's exactly what was happening at the Deep Horizon's / BP oil rig that went "gush" in the gulf. How many other oil rigs are considered foreign ships not subject to our laws and regulations?

11. What is law? What is a court? What is legal punishment?

If corporations can create law, require that disputes start with "We are correct, unless you take us to mediation and the mediator agrees with you, but you give up your rights of appeal and discovery under the court system", and they can ignore the consequences of their decisions, then what's really going on? Who is really in charge? What is our government?

For an excellent examination of this in fiction, read "The Ungoverned".
Wiki article:
Entire story online:

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