A new economic dispensation

1200 words, work in progress.

As 2025 ends, it is hard to see any prospects for a re-ordering, but below are considerations and proposals on the dispensation that a re-ordering should include.

I. An overarching aim of economic policy must be to enable nearly everyone to have or acquire a useful skill, one which they can take pride in. Then the economics will take care of itself.

II. The circulation of money is key, with attention paid to the speed of circulation, which cannot be observed directly except via potentially oppressive digital currencies.

With changes in the monetary value of trade, money needs to be adjusted.

Not all trade is beneficial, least of all mutually beneficial.

There is a core problem with money. I have argued elsewhere that money is for paying taxes. It consists of credit notes issued by a powerful and permanent authority, which calls for them to be returned but only after a certain time delay; they cannot be returned ahead of time. Circulation is enforced.

Uncoined precious metals are not money: they are best described as barter intermediaries backed by the cultural force of tradition. There is no need for precious metals or jewels to be circulated. Money, by contrast, must circulate.

The problem with money is that it comes to be used also as a measure of value. Hence assets which are not traded, never have been and are unlikely to be traded, come to be measured as if they had a trading price. On this basis, they also come to be taxed, sometimes forcing them to enter the monetary trade cycle. This has now taken on such an extreme that natural resources and common land are having price-tags attached.

This deficiency makes it possible to create money recklessly and indefinitely, with bubbles and inflation.

III. Taxation is often lent a justification in terms of countering excessive accumulation of wealth; i.e. as redistributive. In practice, though, it has become a redistribution in favour of the rich and not, as claimed, in favour of the unjustly deprived.

With this understanding in place, there is no justification for income tax since there is already tax on spending with various forms of sales tax. In any new dispensation, income tax must be abolished.

There is no need to retain it even for the rich. Where their wealth is oppressive it is better combatted with other means. It is oppressive when it prevents a middle class of entrepreneurs from thriving. This happens when the distribution of assets and of money becomes lopsided. Although it is in the nature in particular of money that it is unequally distributed, the inequality must not exceed a definite band.

In practice, income tax has become a tool of oppression (a psychological operation, i.e. psyop). It forces people to waste time and nerves registering even paltry amounts of income and countervailing tax-exempt expenses. People may be forced to recall events of prior years that were traumatic in one way or another.

It is also a waste of the time of those administering this absurdity, often applied arbitrarily.

IV. Taxes on spending

Having established above that taxes are imperative in order to ensure recycling (retrieval) of credit-note money, the question arises of how these taxes can be imposed.

The time-honoured method is to tax spending. But there are important differences in which taxes on spending can work.

The most common is Value Added Tax (VAT). This is the worst of all. It is an ingenious method of imposing total surveillance by forcing each in the so-called value creation chain to report on the others, thereby preventing dishonesty. In practice it has proven wide open to fraud, with reimbursements to fraudsters of tax which was never paid. But that is not the main objection. It imposes on the smallest entrepreneurs an onerous administrative burden, much like income tax on all & sundry.

The alternative is a purchase tax, which may be imposed on spending according to what the spending is on. This enables luxury to be taxed at high rates while expenditure on necessities is untaxed or taxed only little.

A distinction must be made between spending on personal services, such as hairdressing, domestic cleaning, gardening or music or other lessons, and corporate spending for example on websites. Personal services must never be taxed. The EU does allow minor exceptions on VAT, but the exceptions themselves are onerous to register.

Prior to the actual purchase, taxes on spending are most reliably and simply collected on material things at the port of entry or the factory gate.

So-called free-trade arrangements between nations are commonly justified with bogus mathematics and other tricks.

The position of this author is in favour of the nation state with strictly guarded borders for both goods and people.

V. Patents must be abolished. They did grand work for a long time. But in recent decades they have come to be abused.

VI. Judicial persons likewise. There must be a physical person responsible for all decisions; there has to be a limit on the scope of responsibility, so even within a corporation the principle applies that no-one is responsible for everything but everyone is responsible for something.

At present there are judicial persons with holdings in each other, thereby destroying the last remnants of transparency.

VII. No tax exemption for spending on corporate advertising. This subsidy has led to the undermining of free expression in the press and other media.

There is one personal tax to be retained. It is that everyone must contribute to the funding of a free press, the media and critical journalism. Ideally, each citizen would demonstrate that they had contributed to any of hundreds of media organs, the contribution to be audited by a firm sworn to confidentiality. In a transition period there could be default recipients such as the prominent public broadcasters. These could be avoided (and potentially defunded) by citizens making ex gratia payments to alternative media.

The issue is how to finance content which is freely available at the point of reception. The payments would not be subscriptions.

VIII. Returning to the topic of money creation: many have objected to fiat money, which is when banks issue (digital) money on a ledger without any cash changing hands. But the alternative is for a central bank to create the money rather than it being devolved to what might be relatively small banks. Problems have arisen in recent decades, but not because the concept is flawed. The flaws lay with the individual bankers who were incompetent or corrupt. In the late nineteenth century, with upright bankers dedicated to the future prosperity of Scotland, the system worked formidably well. Later bankers thought only of their bonuses, which were based on financial manipulation without regard to the underlying economics.

IX. In order to replace patents, companies might be tempted to impose secrecy, or non-disclosure, agreements. Suchlike are already part & parcel of arrangements when employment is terminated under disputed conditions. We are not all enamoured of this development.

As a first counter-measure, I propose a high stamp duty on such agreements.

X. A propos secrecy: For certain appointments to public office or professional standing, a declaration of membership in any secretive societies (for example, Freemasons) must be required.