Continuing with our revised proposal, then:
3. A one year moratorium on taxation of any kind. The government(s) will retain a sizable portion of the monetary wealth of the nation: in the US, 10% of the available gold would remain with the federal government under what I have proposed, and another 10% would be distributed pro-rata to the state governments. Thus, between them, the governments will start out with 20% of the dollars in existence. They know how many “dollars” they have, in other words, and they can easily determine from there what they will need to make it through a year of operations assuming no new revenue from taxation.
This, then, is what the governments must do. The private economy will have endured such an incredible shock from the jubilee event that it will need time to recalibrate, free from the concern that it must fund the government as well through the payment of taxes.
Also, there is an important corollary effect of the government’s determinations regarding how it will fund itself for a one year period out of a finite pool of money with no new revenue coming in: the dollar numbers the government comes up with will suggest – not dictate, obviously, but suggest – beginning wage and price levels in the wider economy.
So in that sense, this is another important public service the government can perform in monetary matters, to ease uncertainty and facilitate trade and commerce generally.
And continuing on to the last two steps:
4. A five year moratorium on evictions for non-payment. Speaking of reducing the burdens on a shocked economy and populace, it strikes me as being very desirable that for a relatively longer period of time no one has to worry about their family being kicked out onto the street or their business being shuttered and closed down, simply because they haven’t paid some monthly revolving sum to a landlord who, in all likelihood, will have been relieved (through the jubilee) of having to pay any debts on a parcel of real property that he now owns free and clear. This measure will effectively be a moratorium on charging rent, or on the mortgaging of real property, since neither will be effectively enforceable during that five year period.
Note, real property (i.e., land and buildings, etc.) can still be traded, bought and sold, and there could be title disputes. But anyone coming into any court saying: “I want him out because he agreed to pay rent and he hasn’t paid it.”, will not have a claim for the five year moratorium period.
Perhaps this should be a permanent feature of the new economy: no more “rent seeking”. I don’t know. What I do know is that for some substantial time after a jubilee this should be the law.
And finally, a related step:
5. The government should be empowered to lend money through its central banking system at no interest.
Let me explain why you would do this. As I have noted elsewhere, there is a lot of complaining about “fractional reserve” lending and, for the moment accepting for purposes of discussion that reducing or eliminating the practice is desirable, absolutely no one, so far as I know, has come up with any decent proposal to do that.
Another first for me, in other words.
If the government lends money at no interest, then other things being equal people will borrow from the government rather than pay interest to a different lender, and lending at interest will more or less dry up, including of course any fractional reserve lending. Will this eliminate the practice entirely? Probably not, but it would be greatly discouraged and stigmatized: if your desire for a loan is worthwhile then the government will lend to you at no interest. If you had to go to someone else and pay interest, this would mark you as a fool or a gambler, or both. People, not liking such connotations of themselves, would be extremely reluctant to borrow from anyone except the government, to the degree that they would even want to borrow at all.
The big problem with this final step is: where does the government get the money to lend?
After the first post jubilee year, of course, taxation can resume. So the government can loan whatever revenue it doesn’t otherwise spend. I was also thinking that the government would be well advised to become a fairly major gold producer itself, so that it can perform its important public services, such as lending what it produces at no interest.
Let me point out something important here. The fourth and fifth steps are related in a “real economy” way, and should appeal to those who regard themselves as politically left leaning or even “Marxist” as that is usually understood. The common thread is to discourage the deriving of ongoing income from ownership of land or from money itself. Income would be solely the product of labor, of profit from buying or selling – in other words, the product of real economic activity of some kind in the present.
So let’s recap from the political feasibility point of view. Originally, I proposed a jubilee, a return to the gold standard, and abolishing the central bank. This is almost entirely what most would regard as “right wing” thinking. Not the jubilee, perhaps.
The revised proposal is: a jubilee, gold redeemability but no fixed “standard”, as such (although there would be a dollar price cap), and preserving a central bank with the authority to adjust the money supply through changing the dollar-gold ratio subject to the cap restriction, and also the authority to lend money on behalf of the government at no interest. As corollaries to all this, there would also be an adjustment period of no taxation and a moratorium on any evictions from real property owing to non-payment.
Overall, these revised proposals might be what you would call decidedly more left-leaning, to put it in political terms, although I hasten to add that I believe it is structurally completely consonant with the idea of a free market under the rule of law.
But in the end I don’t think this is a partisan political problem in the usual sense. We’re all in this together. And we’re going to sink or swim together.
Thoughts and comments appreciated.