What Is Takenomics?

14 Oct

Economics is defined as the study of production and exchange.  It is easy to see that without exchange, existence above a Stone Age level is impossible, while without production, human existence itself is impossible.  But theories about production and exchange don’t explain what goes on in real economies very well, because the major factor that determines who gets ahead economically, who holds power and who makes the rules we all have to live by isn’t production or exchange at all.  It’s taking.  Takenomics explains how takers use a rigged economy to take the wealth that producers produce, while making no commensurate contribution to wealth production themselves.

Taking takes many forms, but by far the most important is privilege: legal entitlements to benefit by the uncompensated violation of others’ rights.  Everyone knows that thieves take from others, but they do it a foolish way, by breaking the law and thus getting into trouble.  The privileged take from others the smart way: legally, especially by owning assets that entitle them to do it.

What kind of assets are these privileges that enable takers to take from producers?  How about bank charters that enable them to create money out of debt in order to charge interest on it?  Intellectual property monopolies that enable them to privatize what has entered the public domain?  Corporate shareholdings that enable them to take advantage of limited liability laws to pocket profits while pushing the costs and risks onto others, especially taxpayers?  And most importantly, ownership titles to land and natural resources that enable them not only to pocket the value of what nature provides, but of everything government and the community provide, too.

Let’s start with a little story that may make the concept of assets as privileges clearer:

THE BANDIT

Suppose there is a bandit who lurks in the mountain pass between two countries. He robs the merchant caravans as they pass through, but is careful to take only as much as the merchants can afford to lose, so that they will keep using the pass and he will keep getting the loot.

A thief, right?

Now, suppose he has a license to charge tolls of those who use the pass, a license issued by the government of one of the countries — or even both of them.  The tolls are by coincidence equal to what he formerly took by force.  How has the nature of his enterprise changed, simply through being made legal? He is still just a thief. He is still just demanding payment and not contributing anything in return. How can the mere existence of that piece of paper entitling him to rob the caravans alter the fact that what he is doing is in fact robbing them?

But now suppose instead of a license to steal, he has a land title to the pass. He now charges the caravans the exact same amount in “rent” for using the pass, and has become quite a respectable gentleman. But how has the nature of his business really changed? It’s all legal now, but he is still just taking money from those who use what nature provided for free, and contributing nothing whatever in return, just as he did when he was a lowly bandit. How is he any different now that he is a landowner?

And come to that, how is any other landowner, charging rent for what nature provided for free, any different?

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One Response to “What Is Takenomics?”

  1. Walto 2011/10/28 at 12:33 #

    Hi, Roy. So nice to see that you’ve started a blog. I hope it will be the basis for a future book called _Takenomics_.

    One point. While the first and third guys taking cash from the mountain travelers are clearly thieves, it’s not clear whether the middle guy (the gov’t licensee) is keeping the money. If he is, I agree there’s no difference. But if he’s just a functionary, charging tolls and delivering the money to his bosses so that they can provide something necessary to the populace–(maybe medical care for the poor), might that not be something we’d want to call thievery? I mean, it may not be the best method of taxation–but if everyone in the jurisdiction were nomadic–I could think of worse ones!

    Best,

    W

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