Completing the Groundwork of a Feudal Hierarchy of Sovereign Corporations

Once the democratic commons had been enclosed, how could a feudal hierarchy of sovereign corporations be established? The thing need not be that difficult, in principle.

Consider first that you are already at once a denizen, participant and – provided you are not merely a stranger passing through – a member of a village or neighbourhood, of its county or city, of its province or state, and of its nation. All of us, throughout the world, live this way without a second thought. We each of us bear duties to and enjoy privileges under each of these sorts of sovereign entities. So has it been since the dawn of civilization.

Villages, counties, provinces and nations have furthermore been always ordered, and have always been legal agents. They have acted, owned property, engaged in commercial transactions (even if only so far as to collect taxes or fees and then pay their officers), negotiated agreements, granted benefices, levied penalties, and so forth. They have, i.e., been actual entities – i.e., entities that act – and for a thousand years at least have been treated as corporations (with the sole proprietorships of royal or lordly domains construed as ‘corporations sole’). They have been construed as corporations on account of the fact that they were understood to be real, albeit invisible, bodies.

[Excursus: Bodies are coordinate assemblages of actual entities – atoms, cells, men – their members. Bodies are not material. They are coordinations of matter; which is to say, that they are forms that matter has taken, and by which its motions are ordered. Atoms are the matter of molecular bodies, e.g., while molecules are the matter of cells, cells of men, men of corporations, and so forth. Being formal, bodies have then all, as the mediaeval lawyers had it of corporations, a mystical aspect. Bodies as such are intangible; when we touch or see them, it is only by way of an encounter with their material constituent members.  

Bodies that can take actions distinct from the acts of their members are themselves actual. Rocks then are factual, and concrete, but are not actual. Humans and their societies are actual; their acts do not necessarily engage the complete cooperation of their members, as do the motions of rocks. Human bodies and societies admit of internal conflict and disagreement. This is why they have systems of internal communication.]  

So, we already have plenty of experience living under the government of hierarchies of sovereign corporations.

What then if each such sovereign corporation were owned by its citizens? What if we each owned a share in our village or neighbourhood, a share in our county or city, a share in our state or province, and a share in our nation? In most places this is already the case, for many practical purposes. Each citizen effectually owns a single share in each sovereign corporation that governs him, at each level of the hierarchy. These shares are granted at birth or naturalization, cannot be transferred, and expire with their owners. They can be renounced or forfeited, but cannot be bought or sold. They confer both duties (as jury service, payment of taxes, and so forth) and privileges (as protection of the law, registry and protection of private property, enforcement of contracts, and so forth).

One thing they don’t do – with a few exceptions, like Saudi Arabia and Alaska – is pay dividends. But there is no reason why they could not.

Legal denizens – not strangers or visitors, but legal residents – who are not citizens have different interests in the sovereign corporations that govern them. They must pay the relevant taxes and obey the relevant laws; they enjoy some of the services funded by those taxes and enjoy the protection of the law, such as it is; but do not have the right to pass judgement on others as members of juries, to vote in elections, and so forth.

So, we have already two classes of people who are subjects of all the corporations sovereign where they reside: denizens who are citizens, and those who are not. Both are analogous to the customers of a corporation, while citizens are analogous to customers who are also shareholders.

How then do we evolve a feudal hierarchy, characterized and formed by familiar and friendly relations, without upending the present order in a violent revolution?

Simple: make the present de facto share ownership in each denizen’s governing sovereign corporations explicit, formal and de jure. For each sovereign corporation – each village or neighbourhood, each city or county, each province or state, and for the nation as a whole – make all denizens de jure shareholders of one class – call them D shares – and citizens de jure shareholders of another, called C shares. Denizens each own a D share, and citizens each own at least one C share to boot.

C and D shares are alike in most ways.

  • Both earn portions of such dividends as may be – portions, i.e., of the distributed surplus of sovereign revenues over expenditures and investments. NB that there can be profits that are not distributed, but instead invested in capital goods like buildings, parks, vehicles, and the like.
  • Both are entitled to the same dividend per share. Thus if the dividend on a C share is $1,500/quarter, so is the dividend on a D share.
  • Both can be owned only by natural persons.
  • Both classes expire at the deaths of their owners.
  • Single shares of both are granted to denizens and citizens (or to their guardians, as need be) at birth, conditioned only an oath of loyalty to the sovereign corporation (implicit at birth, but made explicit and formal at their majority).
  • No person can own more than (say) 10% of the shares outstanding in its class, of any sovereign corporation.
  • Nor can one own shares of a given sovereign corporation unless one owns also shares of all the subsidiary corporations over which it is sovereign. One cannot own shares in the USA, e.g., except insofar as one also owns shares in, e.g., Vermont; one cannot own shares in Vermont except insofar as one also owns shares in, e.g., Windsor County; and one cannot own shares in Windsor County except insofar as one also owns shares in, e.g., Chester Township.
  • One can’t be a denizen of a sovereign corporation unless one owns a D share of it. Likewise, one can’t be a citizen unless one owns a C share.
  • Only denizens of a sovereign corporation’s domains can own shares in it, of either sort; one can’t own shares in a sovereignty to whose government one is nowise subject, for that would engender a class of rootless, cosmopolitan absentee owners.
    • Thus to own C shares of Chester, one would first have to be a denizen of Chester who, as such, owns a D share of it. Only D shareholders can be C shareholders.
    • Thus if a man were to leave Chester to live in Troy, he’d have to sell all his shares in Chester, in Windsor County, and in Vermont back to them, and apply to purchase denizenship in Troy, in Rensselaer County, and in New York.
    • Administratively, this needn’t be more complicated than our current changes of address.
    • NB however that approval of an immigrant’s application for denizenship is not automatic.

But there are some crucial differences between the two share classes.

  • D shares are inalienable – they cannot be transferred from one person to another, but only between a sovereign corporation and its denizens. They are as it were irrevocably proper to the life of the person to whom they were first issued, so long as he remains a denizen. D shares, i.e., are ineluctably per capita: each legal denizen owns one D share.
    • But, remember, one must be a denizen to own a D share, and vice versa. So if one moves from Chester to Ludlow, one must surrender to Chester one’s D share thereof in hopes of eventually obtaining a D share of Ludlow.
    • Sovereign corporations will want to be sure that immigrants are likely to add value before their candidacy for denizenship is approved. After all, every new D share dilutes the dividends that would otherwise accrue in future to the present denizens and citizens.
    • So you would not want to move somewhere, ceteris paribus, until you were pretty sure you would be admitted as a denizen.
    • NB also that D shares are not granted by sovereign corporations to otherwise satisfactory applicants for denizenship, but rather sold. Immigrants must buy in to a sovereign corporation in order to be denizen there. The price of a D share is determined by raising it until proceeds of D share sales stop rising (D shares of an improvident or unfortunate town might cost nothing).
    • Emigration, then, is administratively easy and financially inexpensive; immigration is risky and expensive.
    • This requirement would make moving a weightier decision than it already is. One would have to weigh the economic, financial and political condition of each corporation in the hierarchy at each location, their respective share prices, and the likelihood that one’s application for denizenship would meet with approval, in order to make a reasoned choice.
    • This would tend to decrease the elasticity of the labor market, by reducing the volatility of labor mobility. On the other hand, it would promote more stable communities. That in turn would promote greater amounts of local investment.
    • It would also erect a substantial barrier to permanent immigration. Foreigners could sojourn in a sovereign corporation for extended periods, provided they were current on the per diem toll for their visas. But until they had been approved to buy D shares and had paid for them, they could not enjoy any of the benefits of denizenship. The most desirable sovereignties would have the most costly D shares.
  • C shares can be transferred (provided their owner has reached competent maturity).
    • NB that because they can be transferred, C shares can be used as collateral. Not so for D shares; for, D shares being inalienable, that would be a species of usury, which is a type of slavery.
    • C shares then also can be transferred to another in all sorts of ways. For example, I might transfer my C shares to my heirs now, while retaining a life interest in their dividends, or a portion thereof.
  • Critically, C shares remain in force so long as their current owner lives, whether or not their original owner still does. D shares expire with their original owner.
  • Most important of all: D shares cannot be voted, while each C share can be voted.
  • D shares are shares of subjection to a community and her laws. C shares are shares of citizenship. Only citizens have de jure political power (de facto political power is, of course – always – dispersed throughout the community). Those who have transferred all their C shares to other persons do not enjoy the protections and benefits that go only to citizens; nor, likewise, do they bear the responsibilities that come only with citizenship (what those protections, benefits and obligations peculiar to citizenship might be could vary from one jurisdiction to another, although presumably they would always involve an obligation to levy some soldiers in event of a war, and to fund them).

[Excursus: there could be other classes of shares, and these could vary from one sovereign corporation to another. One that comes to mind is a special share class for military veterans – a V share, that confers additional dividends and votes, that cannot be transferred to another person, and that veterans can hold no matter where they reside. Additional V shares could be awarded for additional tours, for combat, for wounds suffered, for valor, or for promotions. An S share for those who have served as sovereigns is another possibility. Additional S shares could be awarded for years of service, for promotion, and so forth. The possibilities are endless.]

That is the full extent of the legal changes that would be needed to transform the political system now more or less in effect everywhere throughout the Eurosphere into a feudal familiar system.

How would this transformation occur, and what would it look like once it had? That is the subject of a future post

20 thoughts on “Completing the Groundwork of a Feudal Hierarchy of Sovereign Corporations

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  3. I like the formalism, but suspect that it would not take long before there would be SJW shares, awarded by the virtuous (SJW sense) to the virtuous (SJW sense), and conferring the right to express opinions within corporate boundaries.

    • Yeah, the Gnostics are an ever present danger. Any political order is somewhat vulnerable to hijacking at their hands. As we saw with the High Medieval Synthesis.

      It seems to me however that making share ownership explicit and formal, and opening the possibility of substantial dividends to shareholders on sovereign business activities, close a feedback circuit that has never before been closed (equivocally: they correct a market imperfection; they enclose a commons). When everyone stands to get a nicer dividend if the sovereign doesn’t engage in foolishness, there is bound to be less demand for foolishness, and greater demand for sagacity.

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  6. I found you through Moldbug, and I read your “enclosing the commons” post as well as this one. I agree with you that democracy has perverse incentives because the treasury is a commons ready to be “raped” by the voters, where political power is diluted through immigration/births, where the performance of the sovereign’s government is not known, etc. I agree with you that enclosure is necessary for any eternal sovereign. I do NOT agree with your idea of making these shares so restrictive, though.

    Your proposed system is a contrived and diluted version of Capitonationalism. Under capitonationalism, everyone becomes a shareholder of their government by receiving 1000 tradeable “nationshares”, locking away 900 of them while they reside in the country, and having most of their wealth kept in the nationshares. The nationshares entitle their holders to perpetual service dividends; police/military/property/courts/etc. Perpetual cash dividends can be a thing too but would only make up a small portion of the total value of the nationshares to the typical resident shareholder.

    You can just google capitonationalism because I’ve written about this topic. I also bring up “nationshares” in public discord channel voicechat rooms quite often to see what kind of criticisms people have of my system. I would definitely speak more with you about this genre of systems (even though your system doesn’t go as far as mine, I still believe you’re in my camp). We should talk because positions like ours are absurdly rare.

    I’m also working on a bureaucracy solution that brings property titles into bureaucracies. The argument is that if these titles are tradeable and taxed based on their value, then any Rents (Ricardian) that the bureaucrats collect will have to be paid back, at least in part, to the sovereign. The titles also go to the most efficient bureaucrats without the sovereign having to do or know anything; thus, no information problem. All the sovereign has to do is enforce the title and its defined authority within the bureaucracy. Add in the regulation that the number of shares the bureaucrat has must out-value the value of the bureaucrat’s title(s). This creates a system where the bureaucrat doesn’t want to collect too much rent from his position because tax payments will go up, the value of his title will exceed the value of the bureaucrat’s shares and he’ll have to sell his position or buy more shares. Thus, the bureacrat’s interests become aligned with the sovereign’s.

    Anyway, I hope to hear from you because I believe you would not only be a good ally, but also the best critic of my position.

    • Thanks, Eternal Propagation.

      It is hard to see how your proposal differs greatly from mine, except in respect to numbers of shares issued to each denizen – a detail. I talk in terms of one untradeable D share per head, and another tradeable C share; you in terms of what amount to 900 untradeable D shares per head, and another 100 tradeable C shares. Either arrangement would suit, it seems to me.
      Possession of shares of either sort would entitle the bearer to protection of the sovereign and of his laws. So, that’s the same under both our proposals.

      I find your notion of tradeable sovereign commissions intriguing. Such was a not abnormal practice in Europe right up through the middle of the 19th Century.

      I think it’s a great idea to suggest that it would be better to mandate that the NPV of rents to a given bureaucratic office (net of overwrites to the supersidiary hierarchy) should be less valuable than the NPV of revenues on account of share ownership of the bureaucrat.

      • It’s not just a detail. Under the dichotomy you propose, there is tension between the C class and the D class because the Denizens have no reason to want the C shares to go up in market value. If anything, they want C shares to go DOWN in market value so that Denizens get more relative power in your society. It would resemble today’s friction between capitalists and workers because workers don’t own capital, they have no reason (that they can see) to not abolish the capital ownership class. Even if a worker’s wage requires the capitalist to have money, they feel they’d benefit from a transition. Regardless of if they’re right, this is what they think. Same too would Denizens view Citizens as a different class.

        Under Capitonationalism, there is only one type of share, the Nationshare. Thus, all shareholders would be part of the same class. Even a shareholder with only 900 nationshares (that are all locked away) would want the shareholder with a million nationshares to gain wealth. There is no tension between the two.

        Moreover, because most of a resident’s wealth would be required to be in these nationshares, every resident would have a mutual interest with every other resident. You make no such requirement. You would allow a Denizen to have billions in wealth and no C shares, thus creating a conflict of interests. That Denizen will prioritize his billions in pcivate wealth over the market value of the C shares. This means a Citizen will not be able to trust that Denizen without costly punitive institutions at the ready. And that Denizen would have a conflict of interest with that institution as well!

        In fact, you said there would be residents that hold no shares at all! This creates ANOTHER conflict of interests. Under Capitonationalism, everyone in the country, even tourists, holds at least 900 nationshares locked away.

        These are not just details, these are entirely different systems.

  7. One more thing, under Capitonationalism, aristoi still get created. The most industrious and wise of residents gain more and more nationshares, thus giving the industrious and wise more and more political say over the State and its treasury.

    It may be a criticism to say that a bussiness owner would be required to sell more and more of his business as his business grows in market value (because a resident must always have most of his wealth in nationshares) to buy more and more nationshares to maintain his Interest Parity (allegiance) to the nation, thus taking that businessman away from what he does best (grow his business). I do not see that as a problem though. He can still stay as CEO of his business, and his wisdom is now also applied to the nation. Jeff Bezos still wants Amazon to thrive even though he only holds 17% ownership. Only under Capitonationalism, he would want the nation to thrive in general as well.

    • Under the dichotomy you propose, there is tension between the C class and the D class because the Denizens have no reason to want the C shares to go up in market value. If anything, they want C shares to go DOWN in market value so that Denizens get more relative power in your society.

      Not quite. Remember that D shares can’t vote, so denizens – who are not also citizens – cannot gain power in the regulation of society over citizens other than by violent revolution – or, far more simply and cheaply, by just buying C shares, and thus becoming citizens.

      Citizens meanwhile would be interested in preventing violent revolution *by making it unnecessary.* Because C shares and D shares would earn exactly the same dividend, the interest of citizens in increasing the revenues to their C shares would be identical with the interest of D shareholders in increasing the revenues to their D shares. Everything C shareholders did to improve their own fortunes qua C shareholders would tend to increase the dividends to D shareholders. And that would tend to reduce the interest of denizens in fomenting violent revolution. Both denizens and citizens would be interested in making things better for all shareholders of either sort; in, that is to say, eliminating any reason to revolt in the first place.

      Under such a system, some sovereigns – or brokers operating within their realms – would set up programs whereby dividends to D shares could be accumulated as earned and then invested in C shares. A D shareholder who had a good job, and thus did not need his D dividends to support his living, could thus allocate all his D dividends to purchase of C shares, each of which would in turn earn C dividends. Over a lifetime of reinvestment of D and C dividends, that could result in quite a substantial position in C shares; in, i.e., a considerable fortune. I would not be surprised to find that under such a system such reinvestment programs would be the basic and most common way of saving for retirement.

      As a side benefit, the popularity of such a retirement saving strategy would mean that C shares would tend to be concentrated in the oldest portion of the demos; i.e., the most sagacious and prudent portion.

      Such a retirement saving strategy could be popular only if denizens and citizens felt rather confident in the future prospects of the realm.

      Do denizens want C shares to go down in value? No. The only way that could happen is if prospective dividends to *both C and D shares* were widely expected to go down (because the market price of a security is in part a function of the NPV of its expected future earnings). No sane denizen would want that to happen. Every sane denizen would want dividends to keep going up, for as far as the eye could see. Every sane denizen would therefore be personally invested in the overall economic rationality and thus success of the realm.

      Under Capitonationalism, there is only one type of share, the Nationshare. Thus, all shareholders would be part of the same class. Even a shareholder with only 900 nationshares (that are all locked away) would want the shareholder with a million nationshares to gain wealth. There is no tension between the two.

      Tradable shares are effectually in a different share class than shares that cannot be traded. So unless I’m badly misunderstanding what you mean to say, your formalism, too, would engender two different classes of people: those who owned only 900 non-tradable shares, and those who also owned tradable shares. That’s pretty much like the share classes under the formalism I propose, in which everyone owns a single non-tradable share, and can own many tradable shares.

      The 900 shares that you would lock up could not be sold to realize capital gains. There would be then no market for such shares – no sell side means no buy side, and so no market – and they would therefore have no market value. Thus those subjects of the realm who owned only those locked up 900 shares would have no interest whatever in future capital gains on the increasing value of their shares. There could be no such value, or therefore any interest therein.

      You would allow a Denizen to have billions in wealth and no C shares, thus creating a conflict of interests. That Denizen will prioritize his billions in private wealth over the market value of the C shares.

      Yes. But to the extent his billions of private wealth are tied up in enterprises operating within the realm, he does better if the realm is governed rationally than if it is not. So he wants citizens to make rational, prudent decisions about policy – provided, of course, that he is an honest businessman, and not a crook. If he is a crook, then his interests are adverse to those of the realm, its denizens, and its citizens, *no matter how it is formally organized.* If he is an honest businessman, then his interest in the prosperity of his private enterprises is perfectly aligned with his interest in the rationality and prosperity of the realm – i.e., with the interest of the citizens and denizens. The better the realm does, the better his enterprises do – and the better the denizens and citizens do.

      In practice, almost all wealthy people would want to own a lot of C shares, so that they could take part with others of their ilk in ensuring that the economic policies of the realm were rational and prudent, so as to support the prosperity of the realm, of the markets they participate, and thus of the profit of their own enterprises.

      In fact, you said there would be residents that hold no shares at all! This creates ANOTHER conflict of interests. Under Capitonationalism, everyone in the country, even tourists, holds at least 900 nationshares locked away.

      Why on Earth would you want temporary residents to be able to vote shares in the nation, or to earn her dividends, or to have any voice in setting her policies? Why would you want them to have *any say at all* in the government of the realm? The interests of temporary residents differ from those of denizens *radically,* and *by definition.* They have *no stake at all* in the future of the realm; no skin in the game. Thus tourists *just are,* by nature, and in reality, a different class of persons than denizens or citizens. It’s nuts to construe them otherwise, as our current immigration policy does.

      It may be a criticism to say that a business owner would be required to sell more and more of his business as his business grows in market value (because a resident must always have most of his wealth in nationshares) to buy more and more nationshares to maintain his Interest Parity (allegiance) to the nation, thus taking that businessman away from what he does best (grow his business). I do not see that as a problem though.

      It is a problem. Consider the businessman whose business is a farm, or – like mine – a small, closely held, privately owned – i.e., not publicly traded – enterprise. No such businessman could sell off portions of his enterprise without enormous expense and inconvenience, and without accepting terrific risk of dilution of its principles – the principles that had operated to make it successful – in virtue of the dilution of its principal.

      The vast majority of successful entrepreneurs are like that. Their enterprises are very hard to sell, very costly to sell, and it is very hard to sell them without making them over into something else.

      Moreover, if you knew that the success of your enterprise would mean that it would be appropriated from you by the state, bit by bit, why would you work to make it successful in the first place? It takes a ridiculous amount of sacrifice and work to build and run a business. If you can’t keep what you build, why not just instead kick back and buy nationshares with every marginal dollar of disposable income?

      Finally, a requirement that nationshares must constitute the greater part of every person’s personal wealth would vastly reduce the demand for all other sorts of wealth. That would reduce the return to any sort of enterprise, whatsoever – other than the state enterprise. It would therefore drastically reduce economic activity, and investment return, across the whole society. It would make society a lot poorer than it might have been, and so reduce its relative ability to cope with threats and disasters of all sorts.

      It would also vastly increase the proportion of social wealth that was invested in the enterprise of the state, and a huge increase in the investment concentration of every person’s portfolio in the securities of just a single enterprise: that of the state. Thus it would impose a huge increase in the investment risk borne by each subject of the realm. Such a regulation would mean a truly fantastic increase of state inspection of and intervention in the private affairs of every citizen. It would cost a ton of money, and impose huge frictional costs on all private transactions. Our tax and regulatory compliance costs in the US at present are as nothing to what they would be under such a requirement.

      This requirement could not be carried into practice other than by the creation of a totalitarian state.

      I conclude that the vastly simpler alternative I propose would be far more effective. It would not be at all invasive. It would impose no compliance costs to speak of. It would not itself reduce any subject’s scope of action. It would not be at all restrictive: to each of his subjects, the sovereign would devolve at birth a D and a C share. Everyone would start out equal, vis-à-vis his state (no one would start out equal vis-à-vis his inheritance, but there is nothing that can be done to eliminate that factor (even assuming we should – an absurd supposition), other than to rip children away from their parents at birth, as Plato would have done – thus vastly reducing fertility, increasing mental illness, and so dooming the nation versus its less insane competitors). Share ownership in the state enterprise would be distributed to *all* subjects of the realm – and not to subjects of any other. So every subject of the realm would have a stake in the rationality and prudence of state policy – literally every subject would benefit directly and immediately from such rationality and prudence – and no one would have any interest in voting his class special goodies.

      Finally, a knock on effect I had not before now considered: because the formal political set up would reward and thus emphasize national rationality and prudence in the internal utility functions of every subject, it would be an effectual subsidy of rationality and prudence in their mental operations more generally. Put bluntly, it would tend to make every subject of the realm a better businessman, a better economist, in short a better person. It would engender, reward, and reinforce rationality and prudence – which is to say, moral righteousness and duteousness – in every subject of the realm. That would have truly immense consequences over the course of generations, not just eucivic, but euconomic, eupolitic, and even, yes, eugenic.

  8. Your argument #1 is that because D shares can’t vote, Denizens have no political power and therefore cannot use the political apparatus to actualize their interest in increasing their political power. Except that demographics with no political power have gained political power before. Women could have just continued to manipulate their husbands’ voting preferences, but instead got voting rights by leveraging their social/cultural/sexual power. Voting used to be reserved for land owners only. Why did the landless get voting rights when according to you it’s must easier to just spend money on the asset that grants political power? Clearly, political power can be attained, and lost, because there are other levers of power that the politically-disenfranchised demographics can lean on. Rational land owners, in your sense of the word rational, wouldn’t allow the landless to vote to maintain the value of being a land owner, but they did. And so too would Citizens make violent revolution unnecessary by giving Denizens, and the shareless, political power.

    Your argument #2 is that D shares and C shares will pay out the same dividend. That may be true of the cash dividend but cash dividends is not the only reason these shares have value. C shares have more value than D shares because C shares grant political power while D shares don’t. C shares are also tradeable meaning their market value fluctuates with the value of, and demand for, the C share. A perpetuity you can sell, a C share, is much more valuable than a perpetuity of the exact same income stream that you cannot sell, a D share. You are willing to pay more for something you can sell later on, than for something you cannot. Thus, the difference in liquidity and amount of SERVICE dividend that the two shareholder classes receive is enough of an incentive to cause a conflict between the two, even if the amount of CASH dividend per share was equivalent.

    Your argument #3 is that the 900 nationshares that get locked away won’t have a market value and the shareholders who only hold 900 nationshares will have no interest in increasing their market value, and thus they’re equivalent to the D share class. There is confusion here because resident shareholders who only hold 900 locked away nationshares CAN sell them, they just have to leave the country first. Upon proof of emmigration, the State unlocks those 900 nationshares and they’re tradeable again. There’s also the fact that the resident mandatory nationshare minimum can move down from the 900 nationshare mark, 1% a year for ex. This means 9 shares would be freed in the first year even for resident shareholders who own the minimum amount. This promise of future liquidity is incentive enough. The 900 nationshares may also be used as collateral against debt (where the lenders would be responsible for deportation costs etc).

    Your argument #4 is that an honest billionare does not need to be required to keep most of his wealth in the nationshare to make sure his interests are aligned with the rest of the nation because his physical capital is in the nation already. One, if everyone was honest then it wouldn’t matter what kind of system we implement. But the system does matter because honesty is situational. Two, just because someone stuff is inside a nation does not mean they necessarily care about the health of said nation. Under your lax system, the largest social structure (the State) can fall without the billionaire suffering. The billionaire is capable of maintaining, even growing, his wealth after a collapse. He would be free to pollute more, enslave more, etc. Under capitonationalism, 51% of the billionaire’s wealth would disappear in the State’s collapse.

    Your argument #5 is that tourists shouldn’t be required to own the mandatory minimum number of nationshares before being allowed into the country because tourists have no interest in the country’s future and shouldn’t be allowed to vote or collect dividends. Ironically, you just made my point for me. Tourists today don’t care about the future of the country they’re visiting beyond the month they’ll be there. So you’re describing what happens TODAY. Under capitonationalism, tourists would care about the future of the country because they want to sell their 900 nationshares at the end of their vacation for a profit. If done right, they can even turn a profit which will pay for their whole vacation. This doesn’t cause inefficiency either because tourists can just take out a loan to buy the 900 nationshares. Under such a mechanism, lenders would be legally responsible for any crime the tourists commit and thus would choose whom they lend to very carefully to make sure no bad actors enter the nation. You also over-estimate how much voting power tourists will have; they have a relatively small amount of nationshares and, according to you, no desire to vote. You also view cash dividends paid to tourists as a loss. Not only are cash dividends tiny compared to the value of the nationshare, that cash will just be spent at tourist destinations!

    Your argument #6 is that a private businessman, like a farmer, would have to sell off his farm to buy more nationshares if his farm grew in value and this is bad because the farm is closely held (sentimental) and not publicly traded. One, up to 49% of the farm can easily be sold off without comprimising the farmer’s authority over it. Two, the farmer can just mortgage the farm to some extent. Three, the farmer can just move to another plot. The farmer will never want to not imporve his farm just because he’ll be required to buy more nationshares to maintain his teering Interest Parity with the nation. You also overestimate how quickly farms can grow in value. Nationshares will almost certainly grow in value faster than a farm will. The farm is also never “appropriated”, it is bought. Every privately-held asset is publicly registed via the self-assessed valuation mechanism. The higher the asset’s value that the owner registers, the higher the 1% annual self-assessed wealth tax payment is for him. The lower the asset’s value that the owner registers, the more likely it is to be bought by someone else. Under the self-assessed valuation mechanism, all registrations of assets are on sale at all times. This makes asset “appropriation” quick and fair. No more red tape to start building a bridge, you just buy all the land you need instantly if you have the money. Then you would lump all those registrations into a single registration and publish an asking price for that. This 1% annual self-assessed wealth tax is the only tax because it the cheapest to implement and enforce, and least distortionary. Exchange is not taxed.

    Moreover, under this system, the process to determine where a resident’s Interest Parity lies is completely automatic. No IRS necessary because the resident’s registered assets and their values are all publicly available. The step to auction off a portion of a resident’s private assets to autopurchase nationshares for him such that Interest Parity is achieved again, can also be automated. The assets don’t even have to be sold, they can just be mortgaged just enough to free up enough money to buy enough nationshares. This transaction of last resort is automatic.

    Your argument #7 is that the nationshare asset will syphon off wealth from the private productive markets. This a possibility under your system as well. However, a resident who just spends every net dollar of income on nationshares, and not on anything truly productive, might exist, but it wouldn’t be as profitable as investing in private enterprise. The nationshare is a steady safe asset, lowest risk. This means it has the lowest reward. Private investment opportunities will net much higher rewards, a portion of which can be used to buy the nationshares you were originally going to buy anyway, which you have to now that your private wealth is increasing, and you still have net capital to further grow your wealth and move it around. But even if such a resident existed, you forget that on the other end, another shareholder just sold his nationshare and now has cash. That cash will now be put to more productive use even if the nationshare buyer didn’t. There is no issue here, on two fronts.

    Thus, the economy will still grow. no wealth is being siphoned away from private enterprise because nationshare wealth is being *created*, not shuffled! Remember that money moved in a transaction is money put in better hands, not money (wealth) lost. Your argument would be like saying me publishing a new corporation onto the public market and getting a billion dollar market cap causes the rest of the private market to be a billion dollars poorer. Wealth is not zero sum!

    The nationshare is not a singular undiversified asset. it is the complete pantheon of all assets in the nation: it is the tax revenue the state collects and the services it provides with that revenue. It is the most diversified asset imaginable. You wouldn’t call a man investing all his money into the s&p500 “undiversified” would you? Same thing with the nationshare, only even more so.

    Yes, I do believe that the average resident would, by natural and self selection, start to discount the future less and less because of their investment in said future, and I also believe that men who are better able to acquire more nationshares will reproduce more. They will be billionaires-plus-politicians levels of famous in my society.

    The elderly will also have the most nationshares as well, like you said would be in your system. My system compounds this effect because children receive the minimum number of nationshares upon birth, and they’re locked up for 18 years. This means the elderly give their nationshares to the less-elderly upon death which results in an unequal distribution of nationshares per age demographic growing larger and larger as generations pass. The youth would know they’re getting more nationshares when they get older so this should cause them to value the future of the nationshare. Or it may cause some of the youth to just spend friviously because they know they’re getting more soon. But then the elder can just choose to not give that fool any nationshares in the will, thereby avoiding a mistake of nationshare allocation.

    In conclusion, your system of “no compliance necessary” is a communist-tier utopia. As soon as the system is setup, you cannot be sure the members of the system will choose to not force everyone to comply. Are taxes not required in your system? If the argument is that shareholders choose to pay taxes to collect cash dividends, then that’s bad. Just because a non-shareholder doesn’t receive cash dividends does not mean he doesn’t receive benefits in other forms like military protection, roads, economic productivity, etc. You’re also assuming that it makes sense to pay taxes just to collect some of that money back. No. There needs to be something extra to make paying into the system worth it. Your system will devolve into conflict between C and D and Nons classes. My system avoids that conflict by keeping a national border between classes/conflicts of interests.

    You also say that your “Aristoishare” system is simpler than my Capitonationalism, but it’s not. You have two asset classes, I have one. You have an explicit authority framework, I have a quantitative authority framework. You require widespread punitive and enforcement mechanisms throughout your entire nation to make sure conflicts are stopped and punished. My enforcement mechanisms only exist on the boundary of my system to protect against outsiders; there’s little effort needed from the sovereign to make sure resident shareholders get along. The square-cube law says your system will slow down and collapse because area is an exponential correlation of circumference.

    Regardless, do you have another way to communicate? Talking over mic (like discord) would be more efficient than these long posts.

    • I think writing to each other in this medium is best. It forces us to clarify the expression of our thoughts, and thus forces us to clarify the thoughts themselves. It allows the 1.3 other readers who are interested to listen in on our conversation, which would otherwise edify only us two. I also find, again and again, that the process of writing can be extremely productive of new insight.

      Your argument #1 is that because D shares can’t vote, Denizens have no political power and therefore cannot use the political apparatus to actualize their interest in increasing their political power.

      That’s not my argument. Denizens can use the political apparatus to increase their political power quite easily, cheaply, simply, and quickly: they can just buy C shares. It’s as easy as depositing money in the bank. Corruption and rebellion – and for that matter mere lobbying, advertising, and all the panoply of indirect political persuasion now at work in our society – are far more costly, dangerous, risky, cumbersome, complicated, or unlikely to succeed.

      Why did the landless get voting rights when according to you it’s much easier to just spend money on the asset that grants political power?

      Because it made sense to the electors of the time to expand the franchise, and the system of C and D shares was not then in place to make that expansion unnecessary. Securities markets and the common stock corporation were then essentially nonexistent. Land ownership was the best indicator of sagacity then available.

      It takes a ton of money to buy land, and the transaction costs of doing so are very high. So the barriers to entry to the class of landed electors were very high. Nevertheless commoners quite commonly bought their way into the old elector classes by becoming landowners. British historical dramas almost always include such up and comers.

      Compared to buying land, it would take relatively little money to buy a C share, and the transaction costs would be close to zero. Don’t get me wrong, once the sovereign corporation had reformed its policies and operations enough to start earning a profit and distributing dividends, C shares would be worth a ton. But, there is no reason why fractional C shares could not be traded, as is the case for shares of open ended mutual funds today. A D dividend of only a few hundred dollars could buy a tiny bit of a C share, and that tiny fractional share would then immediately begin generating a tiny fraction of the C dividend, which could be reinvested in yet more fractional C shares. Ownership of a fractional C share would entitle the holder to a fractional vote, so participation in electoral politics would begin with the first purchase of a fractional C share.

      So the barriers to entry to the class of citizen electors would be quite low. Just find a good job and devote your D share dividends to reinvestment in C shares. Piece of cake.

      Rational land owners, in your sense of the word rational, wouldn’t allow the landless to vote to maintain the value of being a land owner, but they did.

      I think you have misconstrued my notion of what is rational. Electors – in the Christian West, at least – have repeatedly expanded the franchise, on the basis of the quite rational notion that all men are imago dei, and have therefore something of value to contribute to the political process. They overshot the mark – democracy devolves quickly into ochlocracy. But that does not mean that they were irrational in so doing.

      The system I have proposed would correct their overshoot in such a way as could seem fair to everyone involved. Everyone would receive at birth a D and a C share, gratis. Upon their majority, those who wanted to could sell their C shares, fair and square. No one would find himself expropriated; no one would be excluded from political power for any reasons not originally his own. And any denizen could buy into citizenship at will.

      And so too would Citizens make violent revolution unnecessary by giving Denizens, and the shareless, political power.

      Under the system I have proposed, citizens would not *need* to give denizens political power so as to avoid revolution. The path to political power for denizens would be plain, and easy: just buy C shares. So simple.

      Nothing, of course, would prevent citizens from simply giving some of their C shares to denizens, if that’s what they wanted to do. Probably there would be some such schemes, for the deserving poor, as there are now, and have always been. Citizens could give their C shares to the Church; but, since C shares can only be held by natural persons, the Church would have little option but to devolve those shares upon the poor.

      And so too would Citizens make violent revolution unnecessary by giving … the shareless, political power.

      Why, again, should foreigners have political power? Why should they not be kicked out, or just killed, if they start getting uppity?

      … the difference in liquidity and amount of SERVICE dividend that the two shareholder classes receive is enough of an incentive to cause a conflict between the two, even if the amount of CASH dividend per share was equivalent.

      My presumption is that all D shareholders – i.e., all natives and naturalized subjects – enjoy equal protection of the laws, and receive the same government services. And, again, to the extent that a D shareholder is discomfited by the fact that he has no C shares, he can just go buy some.

      All the other distinctions you draw between D shares and C shares apply with equal pertinence between the 900 shares each citizen holds “locked up” and illiquid under your proposal, and the tradable shares he might also own.

      There is confusion here because resident shareholders who only hold 900 locked away nation-shares CAN sell them, they just have to leave the country first.

      Same for D shares, more or less. They can be sold back to the sovereign at the suitably discounted current NPV of their expected future dividend stream; the seller loses his denizenship in the bargain, and must then leave the country (or else buy a temporary visa). The sovereign makes a market in D shares, in other words. NB that this means the sovereign is at liberty to refrain altogether from buying, and also to set the price of the transaction – i.e., to discount the NPV of the D share so deeply as to impose a pretty substantial economic penalty on emigrants.

      Thus if you sneak out of the country to avoid criminal prosecution, or engage in treachery or sedition, you can forfeit the entire value of your D share. Whether felons might at their conviction lose their D shares this way is an interesting question. That level of detail is best left to each nation to decide for itself.

      But think about this, then; the only way to sell your 900 locked up nation-shares, or your D share, is to leave your native land, your family, and all your friendly connections. And there’s no guarantee that you’ll be able to use the proceeds of your sale to buy your way into another nation. To any other nation, an immigrant would present himself as an alien and a stranger, worshipping strange gods, in strange ways, and so of dubious loyalty.

      Leaving your homeland with no guarantee you’ll find another land to call home: that’s a very high price to pay for liquidity of your 900 locked up nation shares or your D share. So high is the price of that liquidity, that it is tantamount to total illiquidity.

      Whether or not he plans on leaving his country, the denizen benefits by higher expected future sovereign dividends, because *he receives those higher dividends.* So does the citizen. The only way that D dividends can increase is if C dividends increase commensurately, and vice versa. Likewise, the only way that C shares can increase in value is if D shares go up commensurately, and vice versa. This is true under your system, too. The fortunes of denizens and citizens are inextricably linked. The interests of denizens and citizens are then aligned toward rational public policy. Neither of them benefit from irrational policy.

      The 900 nation-shares may also be used as collateral against debt (where the lenders would be responsible for deportation costs, etc.).

      Smells like usury.

      Under your lax system, the largest social structure (the State) can fall without the billionaire suffering.

      This just isn’t so. It is to be sure possible for a canny trader to profit from almost any circumstances, no matter how dire. But there is almost nothing that is worse for business generally than political chaos. Viz., Venezuela, the Fall of Rome, South Central LA, and so forth. Businessmen *hate* turmoil. And, no one is naturally more interested in sane public policy or social peace than the businessman. When the state falls, the security of the businessman’s property vanishes, and it is taken from him by brigands. The state exists in part to forestall such an outcome.

      Your argument #5 is that tourists shouldn’t be required to own the mandatory minimum number of nation-shares before being allowed into the country because tourists have no interest in the country’s future and shouldn’t be allowed to vote or collect dividends.

      Not exactly. My argument is just that no shares ought to be issued to aliens, no aliens should vote shares of the sovereign corporation, and no sovereign corporation dividends ought to be paid to aliens. Because why? Because aliens are constrained by no bonds of loyalty to the nation. They are *aliens,* visiting the country temporarily. And you don’t want aliens exerting any political power whatever.

      You should still charge them a hefty fee to get into the country, in exchange for safe passage and the protection of their lives and property by her laws. Such fees are called tonlieux. They were standard operating procedure in Medieval Europe. The safer and more wonderful the country, the higher the tonlieu visitors should pay. Some of that tonlieu could be a refundable security deposit, to be forfeit should aliens make trouble or overstay their visas.

      You also over-estimate how much voting power tourists will have; they have a relatively small amount of nation-shares and, according to you, no desire to vote.

      It’s not just about tourists, and I never said visitors would not want to vote. There are tens of millions of aliens in the US right now, and they very much want to vote.

      Your argument #6 is that a private businessman, like a farmer, would have to sell off his farm to buy more nation-shares if his farm grew in value and this is bad because the farm is closely held (sentimental) and not publicly traded.

      No. While it is true that the famous illiquidity and imperfection of the markets for real estate and small private businesses do indeed make the notion of selling off marginal shares of such assets in dribs and drabs wildly impractical and expensive (in terms of search and transaction costs), my argument is that no one would invest in a property that he knows he will have to sell to the extent it does better than the nation as a whole.

      Economic profit is earned only when a business does *better* than average. It takes a ton of work to do better than average. And the average is as good as it is only because it is composed of the results only of those who are trying to beat it. If the result of beating the average was that you were forced to sell what you had worked so hard to achieve, you wouldn’t work to achieve it. The average return on investment would then fall, because no one would be trying to do better than average; so then would the tax base, and thus state revenues, and thus dividends on shares of the sovereign corporation.

      One, up to 49% of the farm can easily be sold off without compromising the farmer’s authority over it.

      Easily? Have you ever tried to sell 1% of a house? Ever tried to sell 1% of a mom & pop store?

      Small business just does not work that way. Sorry.

      Even if it did: run roughshod over a 49% partner, and you’ll destroy the business. Moreover, under your system, if the operation is successful, you won’t be able to stop selling it off at 51%. You’ll lose control, eventually.

      Two, the farmer can just mortgage the farm to some extent.

      What could possibly go wrong with that strategy?

      Farmers mortgage up to their eyeballs right now, just to make it from one season to the next. If they were forced by law to use their lines of credit to buy sovereign shares instead, they wouldn’t be able to use them to buy seed, fuel, fertilizer, and food. They’d go under immediately, and the nation would starve.

      Three, the farmer can just move to another plot.

      Sure, piece of cake. Real estate commissions would eat up 6% of his value every time, of course; and he’d have to invest a lot in the new place to get it up and running. And if all goes well with that, and he succeeds again, why he’ll just have to go through the same economic wringer all over again.

      Have you ever run a business or husbanded a piece of land? Hell, have you ever moved from one house to another? Have you any idea how impractical this idea is?

      The farmer will never want to not improve his farm just because he’ll be required to buy more nation-shares to maintain his [?] Interest Parity with the nation.

      The farmer will never want to do better than average, because if he does, the law will force him back to that average. So he’ll aim for average at most. The average will keep dropping as no one tries to beat it, and many fail to meet it. It will be a vicious cycle.

      You also overestimate how quickly farms can grow in value. Nation-shares will almost certainly grow in value faster than a farm will.

      We aren’t talking only about farms. They are a proxy for illiquid enterprises of any sort.

      Lots of businesses can grow faster than average. But by definition, shares of the sovereign corporation *cannot* grow faster than the national average.

      Under your scheme, then, any business that does better than average will be penalized; mediocrity will be enforced by the power of the state.

      The farm is also never “appropriated,” it is bought.

      Forced sales always go for a lower price/economic value, ceteris paribus. It’s almost a rule of nature. A forced sale is always something of an effectual appropriation of economic value that would otherwise have been gained for the seller.

      Think about it. Under your system, the buy side of the market knows that the seller must sell, or face the wrath of the law. So they’ll offer less, knowing the seller is under the gun. It’s a state-mandated haircut for the seller: an appropriation.

      Under the self-assessed valuation mechanism, all registrations of assets are on sale at all times. This makes asset “appropriation” quick and fair. No more red tape to start building a bridge, you just buy all the land you need instantly if you have the money.

      So you never know when someone is going to buy your house out from under you, giving you 60 days to move out? You could build a factory and set it up with state of the art equipment, and then a competitor could just buy it out from under you, instantly, with no possible recourse from you?

      This 1% annual self-assessed wealth tax is the only tax because it the cheapest to implement and enforce, and least distortionary. Exchange is not taxed.

      Disagree. Wealth taxes and property taxes are distortionary because they penalize economic growth and reinvestment. Income taxes are distortionary because they penalize enterprise and the production of economic value, and increase time preference.

      Transaction taxes – tolls, tonlieux, tariffs, and sales taxes – are far simpler and easier to enforce, and not at all distortionary. They are furthermore totally voluntary, so that they are subject to control by the pricing mechanism.

      Under transaction taxes, if you guess the value of your house wrong, you might end up having to decide whether to pull it off the market or sell for less than you might have wished. Whether you pay the transaction tax is therefore up to you; it depends on whether it is worth it to you to go ahead with the transaction. It is an entirely *voluntary* tax. No one is forcing anyone to buy or sell so as to generate transaction taxes.

      Under your 1% annual self-assessed wealth tax, if you guess the value of your house wrong, you stand to lose it at any moment, whether you like it or not. Same for your business, or your car, or your stock portfolio. The transactions can be forced, and there is nothing you can do to stop them.

      Your argument #7 is that the nation-share asset will siphon off wealth from the private productive markets. This a possibility under your system as well.

      Again, that is not quite my argument. My argument is:

      … a requirement that nation shares must constitute the greater part of every person’s personal wealth would vastly reduce the demand for all other sorts of wealth. That would reduce the return to any sort of enterprise, whatsoever – other than the state enterprise. It would therefore drastically reduce economic activity, and investment return, across the whole society. It would make society a lot poorer than it might have been, and so reduce its relative ability to cope with threats and disasters of all sorts.

      Allow me to explain. Take Alan, who lives under your system. He is worth $1 million. He owns a house worth $400K, and a position in an S&P 500 Index Fund, worth $600K. He has lousy credit, and cannot get a loan of any sort (just to simplify the example, so that you can see what I am arguing). To stay out of jail, Alan must sell at least $500K of his stock portfolio, and buy nation-shares instead. That increases the supply of S&P 500 stocks available for purchase on the stock market, which decreases their prices at the margin. All holders of those stocks suffer a marginal reduction of the return on their investment. As the return to stocks drops, demand to hold them drops. The price of such stocks drops further. It’s a vicious cycle: the more stock prices drop, the more investors want to sell those stocks.

      Meanwhile Alan has been forced by the state to increase the demand for its own shares. The price of nation-shares goes up marginally, as the prices of other sorts of shares go down.

      Multiply that tale across all the investors who own lots of publicly traded securities and also lots of illiquid real estate. You see the problem, no? When investor demand for stocks is low, companies have a harder time raising capital to invest in plant and equipment, in research and development, in new businesses, new employees, new markets, and so forth. Capital being expensive to raise, the marginal project goes unfunded.

      Meanwhile there is one business enterprise – just one – that is seeing constantly increasing demand for its stock, and constantly decreasing cost of capital: the business enterprise of taxing.

      This is why I write that:

      [This] would also vastly increase the proportion of social wealth that was invested in the enterprise of the state, and a huge increase in the investment concentration of every person’s portfolio in the securities of just a single enterprise: that of the state. Thus it would impose a huge increase in the investment risk borne by each subject of the realm.

      After Alan has sold $500K of his S&P 500 Index Fund and bought nation-shares, his portfolio is massively weighted toward the fortunes of just one enterprise operating in just one business operating in just one country. It is a terrifically concentrated, and therefore risky, portfolio.

      No wealth is being siphoned away from private enterprise because nation-share wealth is being *created,* not shuffled!

      The financial markets just don’t work that way. GM and Toyota are competing for investor dollars. If I invest elsewhere than in GM stock, I marginally reduce the total market capitalization – i.e., the economic value (or at least a pretty good proxy thereof) of GM vis-à-vis that of the rest of the capital markets. The company is worth less than it would be if I had bought its stock. It is just not true that when I sell my GM stock and buy Toyota stock, totally new value is created in Toyota without any decrement to the value of GM.

      There is no free lunch.

      Now, that said, it is indeed true that in an uncoerced transactions, both parties can benefit. They can each increase their utility, and in that sense an uncoerced transaction can create wealth for both parties. When I sell my GM, some other investor who values it more than I do buys it, and we both end up better off, at least by our own lights. But it is not true that when I sell GM and buy Toyota, both GM and Toyota benefit.

      There is also the problem that in our example above, Alan is not engaging in an uncoerced exchange. The state is forcing him to sell his S&P 500 Index Fund, which he would rather have kept. He is poorer as a result.

      Coerced exchanges destroy the pricing mechanism of the market; which is to say, that they destroy the market.

      Remember that money moved in a transaction is money put in better hands, not money (wealth) lost.

      This is true of uncoerced transactions. It is not true of coerced transactions. In coerced transactions, wealth is destroyed. Were this not so, the coercion would be superfluous.

      Your argument would be like saying me publishing a new corporation onto the public market and getting a billion dollar market cap causes the rest of the private market to be a billion dollars poorer. Wealth is not zero sum!

      Total global wealth available for investment is not, to be sure, fixed. It grows and shrinks. But it is finite. TANSTAAFL. A dollar invested in GM can’t also be invested in Toyota.

      The nation-share is not a singular undiversified asset. It is the complete pantheon of all assets in the nation: it is the tax revenue the state collects and the services it provides with that revenue. It is the most diversified asset imaginable. You wouldn’t call a man investing all his money into the S&P 500 “undiversified” would you?

      Yup; absolutely. His portfolio is not as concentrated and risky as the Dow Jones 30 Industrials, to be sure. Nor is it as concentrated and risky as the largest company in America, Apple. But it is still risky. You can’t increase diversification by owning fewer securities.

      Imagine for example that the business of USA Inc., was providing government services for a fee of 0.05% per transaction, or of the value of all assets, throughout the country. Its revenues would be a direct function of the value of all assets in the country as mediated by prices of transactions on those assets. Could those revenues change? Certainly. A natural disaster or war, or an error of fiscal or monetary policy, could change them drastically, and for years. The revenue base of USA, Inc., is huge and diversified; but nevertheless it is a terrifically risky – i.e., uncertain – business. And with every jink of its revenues, its market value changes.

      … your system of “no compliance necessary” is a communist-tier utopia. As soon as the system is set up, you cannot be sure the members of the system will choose to not force everyone to comply.

      Any system is vulnerable to hijacking. But I don’t see how the system I have proposed would require lots and lots of compliance. Everyone gets a C share and a D share at birth, and at their majority they can sell or buy C shares. C shares can be owned only by natural persons; no person may own more than some minuscule portion of all C shares outstanding. D shares are inalienable and expire at death; C shares expire only when held by a natural person at his death. The compliance necessary is only that of sovereigns in general, that enforces the law, including law about taxes.

      Are taxes not required in your system?

      Depends upon the ingenuity of the citizens. Taxes might not be needed; tonlieux and tariffs might suffice, as they did for the USA through most of the 19th Century. I lean toward a fee for service model: tonlieux and tariffs to ensure life and property imported into the country, and a transaction fee paid by all subjects – aliens, denizens, and citizens – to enforce contracts, laws and property rights, keep the peace, and so forth.

      If the argument is that shareholders choose to pay taxes to collect cash dividends, then that’s bad.

      That’s not the argument.

      Just because a non-shareholder doesn’t receive cash dividends does not mean he doesn’t receive benefits in other forms like military protection, roads, economic productivity, etc.

      Right. That’s why you want to charge a stiff tonlieu at ports of entry, to cover the costs of all those benefits received by aliens temporarily visiting the country.

      You’re also assuming that it makes sense to pay taxes just to collect some of that money back.

      Nope. No such assumption. A cloistered monk, for example, who had given his C share away, would retain his D share. As cloistered, and without property of his own, and without participating much in the market, he would pay almost no taxes of any sort. Yet he would still receive all the services and the D dividend of the nation. Ditto for a farmer who produced absolutely everything he needed.

      On a fee for service model of taxation, no one pays a dime of taxes unless the cost of the transaction is not so high as to make the transaction uneconomical. All tax payments then are strictly voluntary.

      Your system will devolve into conflict between C and D and [non-shareholder] classes.

      Why? As I have explained, the interests of denizens and citizens would be immaculately aligned: they both do better when the country does better.

      I think you misunderstand the system I have suggested.

      Perhaps you should show your work. *Exactly how* would conflict arise between citizens and denizens, strictly on account of the fact that only the citizens owned C shares? What would they have to fight about, on that account, given that any denizen who wanted to could become a citizen?

      You have two asset classes, I have one.

      No, you too have two, at least in effect: the 900 shares that are locked up and illiquid, and the rest that are tradable.

      You have an explicit authority framework, I have a quantitative authority framework.

      *Every* government has an explicit authority framework. That’s what government *is.*

      And your quantitative authority framework is enforced by … what? Do people just volunteer to pay taxes, publish the value of their property, and sell it on demand? If you publish your valuation of your house at $500K and I come along and demand that you sell it to me instantly for $501K, you just say, “OK, sure, whatever,” and start moving out? Or if you don’t want to move out, say because you like the place, who forces you to take my offer – or, rather, who enforces my demand upon you?

      If everyone has effectual right of eminent domain over all the property of everyone else, right down to used gym socks and recyclable cans and bottles, as is the case under your system, in what sense is there any real private ownership of property?

      You require widespread punitive and enforcement mechanisms throughout your entire nation to make sure conflicts are stopped and punished.

      Why? Again, you’ll have to show your work here. Why would the system I have suggested require more enforcement mechanisms than yours, or than, say, our own in America today? What could denizens gain from conflict with citizens that they could not far more easily and safely and cheaply gain by simply buying some citizenship?

      I can see such class conflicts arising in only two ways. First, the citizens could declare that no one could buy C shares who did not already own them. They could make the class system rigid, and the membrane between classes impassable. That would constitute a rejection of the system I have suggested, so it can’t really count as a defect inherent in the system itself. If the defect that led to such a declaration is inherent in anything, it is inherent in human nature.

      Second, the citizens could exploit the denizens. But they would have to be stupid to do that, because in that case the denizens would be less prosperous, would transact less, and the total value of the nation’s economy – and of the C share dividends – would go down. Such a thing could happen. But, again, the defect is of human nature: government authority is *always* subject to corruption and stupidity.

  9. Writing is fine for establishing an idea, but talking allows for either man to interject if the other is criticizing a strawman. Instead of me writing a paragraph about something you didn’t say, you can just interrupt me to tell I’m wasting my time. There are public discord servers (destiny, politics, canis, the right, etc) where others will listen. I’ve been in voice chat rooms with a dozen others who are all trying to throw a wrench into the system I’m explaining to them. That instant feedback allows for faster intellectual development. I still write about it more than I talk about it though.

    Sidenote, I’d call the genre of governances such as Moldbug’s patchwork, your two-share solution, and my capitonationalism, as “sharearchy”. Even though we disagree, it’s obvious we’re in the same group since we agree on most things unsaid and just assumed.

    ——-

    Denizens within the two-share political apparatus can increase their political power by using the *economic* apparatus to buy more C shares. This economic path is also easier for a Denizen than revolting (the physical path), because from a cost-benefit analysis, paying some laborhours/cash for C shares is “cheaper” than paying in sweat/blood/lives/etc.

    I should have been more articulate to explain the failure here. You’re ignoring the implicit power that Denizens have that is very “cheap” for them to “spend” or leverage. Denizens do not need to jump full-shark into a revolt. They can just protest, or strike, or just riot, or build social media campaigns, or spread propaganda on tv, etc. Any gap there is to leverage from, someone will use it because manipulating someone (denizens) into believing they’re lacking something (parity) and someone (citizens) is to blame, can be very profitable. Example: if I am losing 100k a year because of some entity, then I willing to pay up to 100k a year to combat them. This means if I can convince you that you’re losing more than 100k, and that funding me is the solution to that problem, then I can get more money from you than I if I didn’t. And I have an incentive to do this even if I own a perpetuity (a D share), because its loss is negligible to me compared to the gain I get from extracting from you. It’s why perpetuities are sold to begin with! There are things more valuable to some than the perpetuity.

    You said land is expensive and illiquid and thus is not a good analogy to the “just buy shares to get voting power”. I agree. When I first discovered capitonationalism, I remember writing about it in a Georgist forum and I described nationshares as a form of “Liquid Land”. So I will use another analogy: stocks. They are very liquid, have low transaction costs and grant voting power, yet there is a growing movement of the shareless who are protesting, rioting, boycotting, damaging property, advocating for stealing from employers, etc to get “democracy in the workplace”. How does your model explain them? Why aren’t these shareless folk just buying stocks of the company where they each work to get voting power in the workplace? The dividends from the stocks can then be used to buy more stocks of their company. Clearly, the cost of their chosen path is “cheaper” than the cost of just buying stocks. Your system would not prevent this culture. They signal to others because being violent has a benefit in and of itself, even if it results in no change. Men respect other violent men and women select for violent men, for ex. The single (even if compounding) share of cash flow from profits is not enough benefit to outweigh the benefit of “being a rebel”.

    Thus, the denizen mob does have the desire and the power to pressure citizens into giving into their demands. Under capitonationalism, the shareholders with 900 locked away shares would have no such desire because most of their wealth is in the nationshare and attacking the largest shareholders would make the smallest shareholders poorer. Even if there was a potential culture that could profit from the smallest shareholders attacking the largest shareholders, they would still need the nationshare value to go up to be allowed to own that increased amount of wealth. This catch-22 makes any such culture contradictory to its goals!

    Voting wouldn’t even be necessary because the price would already move up and down based on how the demand side felt about the future of the nationshares. As soon as an up-coming policy is announced, everyone knows very quickly if that policy should be rejected or not. If you walking into the CEO’s office and imprisoning him caused the nationshare market value to go up, then every other shareholder, even the CEO, would lay down a red carpet for you as you did so. Yes, even the CEO himself would want to be imprisoned.

    I’ll also add here that you don’t need fractional anything. Just perform a stock split. It’s why I said everyone gets 1000 nationshares. It’s more liquid that way.

    Foreigners who become shareholders would be treated well by the other shareholders because that’s what would cause the price of the nationshare to go up. For ex, if Mexico bought a billion American nationshares, then American shareholders would want to defend Mexico from its enemies. Such an act of service would cause every other country to want to buy American nationshares so that they too would be protected by Americans from threats. Imagine being in Iraq during the invasion and coming up to the American soldiers, showing them proof of your nationshare holdings(“I’m an American shareholder!! 5000 nationshares!!” you yell, and show proof), and they escort you to safety.

    Foreigners are not issued nationshares. They have to buy them from someone. Any who buy nationshares but “get uppity” regardless will be seen as traitors who hurt the market value of the nationshare and will thus be liquidated of their nationshare holdings to pay off the debt they incurred on themselves and kicked out of the country if they fall below the minimum.

    Foreigners will want to buy nationshares,for the services, and the shareholders will want them to buy nationshares, for the increased demand. This applies to your two-share solution as well. Citizens will want their C shares to be demanded by others. Instead of your contrived fee to get into the country, it’s shares. This way the foreigners know they’re getting their investment back when they leave the country. Yes, the safer and more wonderful the country, the higher the shares will cost to be allowed into the country.

    So the argument isn’t why you would want foreigners to have political power, it’s why you would want a foreign entity inside your country that doesn’t care about the country. You’re only looking at the political power the foreigners receive and you’re not looking at the cost the foreigner paid for that power. I don’t want a conflicting interest in my country, even temporarily. Foreigners today do want to vote, which is why according to you, they should be able to buy shares so that they don’t feel the need to revolt. Your words.

    Your egalitarian approach to services offered to citizens/denizens would not work. Citizens would want to be offered better services because they bought more C shares. They would vote to make that happen because they have the voting power and they know their C shares will skyrocket in value if they do so. Are you saying you would prevent this? One, why? Two, how? Is it because you see how denizens would not profit from this unequal distribution of services? Now you see what I mean, then, except you kept saying that C shares and D shares are tied together in market value, but that’s not necessarily true as I showed you.

    Different amount of nationshare ownership would mean different quality/quantity/priority of services. The military would prioritize saving a larger shareholder from pirates than it would a smaller shareholder from pirates. Have you seen that navy seals movie where they rescrue Tom Hanks from pirates? In the pre-mission briefing room, under Tom Hank’s name would be the number of nationshares he holds. That number would communicate to everyone the priority of this mission and the level of lethal force authorized.

    If a public emergency hospital room is overburdened, then triage will take nationshare holdings into account. Parking rules might state that the time you’re allowed to park for depends on how many nationshares you own. Allowances for speeding, carrying a weapon, draft order, etc, would all vary based on how many nationshares you own. And of course the property rights that only extend to the value of your nationshare holdings.

    You say the locked up 900 nationshares are illiquid, but you need to realize that they are only temporarily/spaciarily illiquid. Those 900 nationshares can be unlocked and sold to anyone else. Your D shares cannot be unlocked and are only able to be sold to the sovereign. This means the State is at risk of going bankrupt if too many denizens leave. You say you can regulate this selling of D shares and that is good. You want to stop people from leaving in case there is war and you need to draft men to fight. Under capitonationalism, the locked away nationshares can just stay locked if the State chooses to not unlock them.

    Sneaking out of the country is possible but your nationshares are on the central database and thus may be locked away until you’re found. Defendants don’t need to pay a bond as long as they have enough nationshares to lock away until their trial. If found guilty, nationshares are used as a reserve to draw from if the criminal can’t pay off all of his debts with his private wealth. If the number of nationshares goes below the minimum, then he is not allowed into the country and is thus arrested. At this point, either he is deported, or can beg for his family/friends/charities to give him enough nationshares to meet the minimum he needs to be allowed into society. Or he can wait for the minimum to fall. Prisoners have to pay for their stay and can choose what prison they go to. But they are not allowed into society until they have the minimum number of nationshares. How long that takes is to the criminal and his ability to convince others to help him. If the criminal cannot pay for his stay in the prison anymore, then his last amount of nationshares are liquidated to pay for the trip out of the country.

    Prisons are entirely privately funded and are allowed to house criminals because the prison can use its excess of nationshares to make up for the difference in nationshares the criminals need to be in the country. Prisons compete with each other to convince criminals to come stay with them in exchange for the criminal’s labor/nationshares/cash. Prisons can even work the criminal to allow the criminal to earn nationshares from the prison as long as the criminal provides added value to the prison. This way, the criminal can get back out into society as soon as he can manage by being industrious and intelligent. The only thing holding the criminal in the prison is his lack of nationshares.

    When sentencing the guilty criminal, the State chooses how many nationshares to take away from him. Murder would cost more nationshares than assault. Robbery would depend on the amount of capital stolen, etc. This means negative amounts of nationshares are possible for the worst crimes like treason/terrorism/etc.

    If no private prison wants to house and work with that criminal, then the criminal is put into a public prison where his debt is repaid. Once repaid, he is deported out of the country to just outside the nation’s border. What he does after that is not of the nation’s concern. Other countries might choose to let him in. Not every country would necessarily be capitonationalist. There would still be some backwards countries. It’s a lot easier to enter another country than you think it is.

    Usury is good. Not only are loans good, but allowing lenders to use the locked away 900 nationshares as collateral for the loans makes the borrower even more invested in the rising value of the nationshare. The higher the value of the nationshare, the more the borrower can leverage without fear of being liquidated and deported by the lender. This loan is so secure, even more secure than a house-backed loan, that the real interest on such a loan is almost zero, even the cash dividend (tiny fraction of the entire value of the nationshare) can be used to pay down the interest.

    Turning your farm ownership into shareownership is easy and would provide liquidity.

    Regardless, you can always just mortgage your business/farm/house/etc to afford more nationshares and you don’t have to give up ownership of what you built. In fact, because your business is going up in value so fast, you can just mortgage more and more. Even while requiring you to buy more nationshares as what you build your private enterprise, you have the incentive to grow your business faster than nationshares grow in value. But you’re against debt in general which is why you didn’t know this solution. So no, national productivity would not stall.

    You also say that a farmer would have to use money to buy nationshares instead of seeds/fertilizer/etc thus reducing the productivity of the farm and thus the nation starves. Again though, you’re looking at only one side. Someone sold their nationshares and got cash. Now that cash can be used to buy seeds/fertilizer and the nation does not starve. You’re also begging the question because remember, the only reason why the farmer has to buy more nationshares is because his farm is going up in value! That presupposes the health and stocks of the farm. A farm with no seeds and fertilizer would not be valuable enough to require more nationshare purchases.

    The farmer moving to a new marginal plot of land is not as crazy as it sounds. Some farmers are good at doing the development part and may choose to focus on that; plus, it’s more profitable to go from 0 to something. Other farmers are only good at managing an already-developed farm. It’s why startups exist where someone sells a successful company to go start something new. This is called the Peter Principle Solution. Remember that this is all a choice. And yes, I’ve worked on many farms as a youth. I’ve worked with men who bought virgin undeveloped land, felled the trees, removed all the stumps, raised the barns and house, and then sold it to some yuppies for a huge return and used that return to buy other virgin land.

    You still say that the nationshare is an undiversified asset, yet in the previous breath you said it is by definition the average of national productivity. You need to make up your mind. Ironically, you are also saying business owners should remain undiversified by not selling some of their growing business to buy another asset. The business is risky, the nationshare is not. By balancing the two, the business owner remains growing and growing-yet-stable. Business owners today already sell off part of their business to diversify their wealth anyway, so you’re arguing contrary to how business owners behave.

    The self-assessed value mechanism makes sure that the “forced” sales are not undervalued. Because the business owner self-evaluates his own growing business, he chooses to register the value higher to avoid someone buying part of it. The buy side of the market does not have intimate knowledge of the business either and thus the business owner has the monopoly on information. The buy side does not know that the seller must sell because they don’t know how fast the business is growing other than how the business owner says.

    If someone does buy one of your assets because your price was appealing to the buyer, and you don’t want to part with the asset, then all you have to do is pay the new asking price of the registration and you get your registration back. Then you set a higher asking price (can only deviate 1%) and so on until you either keep your registration without anyone else paying that higher asking price, or you are happy with the amount paid and let the buyer take the asset they bought the registration for. So no, you do not lose your asset necessarily just because someone bought the asset’s registration.

    Your argument is that periodic value taxes on held assets are distortionary while taxes on interaction are not distortionary. Your reasoning is that a negative perpettuity that comes with an asset causes that asset’s value to go down. You’re right. At a 1% annual property value tax and a 1% real interest rate (discount rate of the future), the property is at half the market value that it otherwise could be if it was not taxed. However, this is not a distortion because there is still an incentive to increase the market value of the property because you keep half the Ricardian Rent of the property under these conditions. You also ignore the fact that it takes effort to insure, protect, register, etc assets that are move valuable than assets that are not. This means the State may not have enough capital to protect a trillion dollar asset if all you’re doing is collecting revenue from transactions/interaction; asset values can and do exceed the value transfer in a transaction. No such possibility exists if you collect revenue from asset values and not transactions, because no transaction can ever exceed the value of the asset. You also ignore the fact that assets have to now be put to productive use and can’t just be hoarded for unproductive reasons.

    You can lower the tax down to 0.1% if you wish, also. I’ll also add that it’s totally voluntary to hold an asset when someone can just buy it from you instead. Even Georgists will tell you you’re wrong: a land value tax is necessarily non-distortionary.

    Transaction taxes are actually the MOST distortionary because they make it costlier to put assets into the most productive hands. If it costs 100k to transfer my asset to someone who can only get 90k extra out of my asset than I can, then the transaction does not happen. Your State loses out on 90k of taxable value. It’s funny how you see this is a virtue though with your “if the transaction does not happen then that is good because it’s not worth it to you”.

    You also see mandatory selling as a bad thing. I wonder if you believe that even after I explained above how you can just buy it back, because selling is mandatory. If you do, then I’ll just state again how assets should go to the most productive user of those assets. That’s probably the only thing I agree with Georgists on. The way for the State to maximize its tax revenue is to make sure assets are valued as high as possible. That requires those assets be put to the most productive use possible to be able to handle being valued so highly. This is also good for the economy in general. Unproductive assets do little for anyone. Sentimentality is an illness. The cure is cash for your sentimental asset, and it’s mandatory.

    Your Alan examples ignores the fact that Alan would already have 1000 nationshares and would be able to mortgage his other assets to afford any extra nationshares he would need to maintain Interest Parity. And just like leverage (debt) hyperappreciates stock prices, so too will this leverage avoid causing a stock/asset price collapse.

    You also have your demand curve backwards. The more the price of a stock drops, the MORE it is demanded. Returns on a stock are not affected by its price because the company’s productivity is unaffected. Thus the constant returns become more appealing for the lower asking price. Your logic also implies that everyone just sells stocks that go down in value when doing so realizes the investor’s net-loss. Holding through a price slump is the best strategy.

    In case you didn’t know, if the total market value of 1000 nationshares goes up, then your private assets can go up as well without you having to buy any more nationshares to maintain Interest Parity.

    Nationshares are not a free lunch. Their value comes from the value of services that the State provides to everyone in the country. This value ALREADY EXISTS, it’s just not on the market with a dollar price tag attached to it.

    This is not a coerced transaction. The asset owner CHOOSES to value their assets higher, thus CHOOSES to place himself into a situation where he needs to buy more nationshares. The price associated with these transactions are also voluntary. You wouldn’t say mortgage terms are coercive just because you lose your house if its value falls below your margin.

    A dollar invested in GM CAN also be invested in Toyota. You buy a dollar of GM, that dollar goes to someone who buys a dollar of Toyota. Again, you’re only looking at one side of the transactions.

    Just because the USA Inc. revenue stream can change does not make nationshares an undivdersified asset. You said it yourself, nationshares are the average of all productivity in the nation. I also never said there was no risk. I said it was the LOWEST risk. By the way, nationshares are more than just the average because the State offers services at a bigger economy of scale than any index fund.

    So there are taxes in your two-share solution. You’re also putting a limit on the maximum amount of C shares someone can own. That limitation increases the chances of a wealthy man viewing the cost of losing the dividends from his conflicting interest as negligible compared to the benefits of having a conflicting interest. Example: I have a billion dollars in assets, and I have a million dollars in cash flow from C share dividends. Nefarious Action A results in my billion dollars in assets to increase to two billion dollars in assets, but my million dollar a year C share cash dividend is cut in half. That would be a rational action to take. The possibility of such an action means the interests of denizens and citizens (even citizens and citizens!) are NOT “immaculately” aligned.

    Capitonationalism does require a payment from anyone who wants to enter the country. That payment is become a shareholder to some minimum degree determined by Interest Parity.

    The goal of capitonationalism is to create a society where it costs more for me to go against the mutual interest of the other shareholders than it benefits me. Explicit punitive measures are superfluous and just exist as a buffer just in case. So if you call my asking price of 500k for my house, and I do not move out, then you can just get all the other shareholders to come help you get me away from your asset. The amount of desire and capital and manpower will always be on your side. Even if I chose to wall myself into my house and had some mercenaries I hired with your 500k that you gave me, to protect it from you, you would ALWAYS be able to call on more power than I have. This is because *all the other shareholders have more to lose, than I to gain, from this theft.* Even if I call on lenders to invest in my conflict, I will never get more capital than you can. Lenders will only lend to me based on how much I can pay back. Thus, you will always win. Thus, I will not even try.

    Note: I wouldn’t actually even receive the 500k until the State verified the asset was transferred hands successfully with no issue. The 500k would remain in the State escrow until then. So I wouldn’t be able to use the money I got from selling the asset’s registration to fund a defense of said asset. This just pushes the balance even more in your favor.

    The reason you will always be able to raise more capital than I in this conflict is because all the other shareholders have some some economic interest in the asset being held by the owners of the asset’s registrations. That economic interest is a Monopoly on Economy. It determines the net incentives of each transacting actor in the country.

    In the 500k house example conflict: if I keep the asset from you even though you have the registration, then the price of the nationshare will drop. How much will it drop is hard to tell. Everyone’s houses will drop in value because no one wants to buy a registration that doesn’t come with the registered asset. This drop in demand causes a huge amount of market capitalization to be lost. The amount of that loss is slightly more than the amount the homeowners are willing to pay to prevent said loss. The nationshare is tied to home prices, and thus will also drop in market cap. So add that difference in. The amount of difference you get is slightly more than the amount of capital you will be able to raise to defeat me.

    Without most wealth being held in nationshares, conflicts where I gain more than you lose can exist. Someone who has no wealth tied up in home prices won’t care about your conflict about a house. Even if someone owns a house they don’t necessarily care; they might be too far away to be affected, for ex. Or they don’t need government police to protect their property, for ex. Or they don’t plan on selling their house. There is less loss to account for in your conflict. If a billionaire only has 100 dollars in C shares, then he’s only willing to pay 99 dollars to help fund your conflict against me.

    With most wealth being held in nationshares, all conflicts affect all shareholders. Thus, costs to conflicting interests are magnified such that any gain to conflict is dwarfed by others’ loss to said conflict. Capitonationalism creates mutual loss as much as it does mutual gain. If a billionaire has 500MM in nationshares, then he is willing to pay 499MM to fund your conflict against me.

    **AS LONG AS A CONFLICT’S POTENTIAL ECONOMIC LOSS TO SHAREHOLDERS EXCEEDS THE CONFLICT’S POTENTIAL GAIN TO ME, I WILL NEVER BE ABLE TO RAISE MORE CAPITAL TO FUND THE CONFLICT THAN WHAT THE SHAREHOLDERS ARE WILLING TO RAISE TO FUND THE CONFLICT.**

    Blaming human nature does not excuse a gap in any system. Human nature is why we need better systems to begin with.

    ——-

    Regardless of my critiques, I still support your system because it will just inevitibly turn into my system after a few hiccups. Every denizen will just be made into a citizen. Most wealth will be required to be in the shares. Your system is, at worst, a stepping stone towards mine.

    I believe showing through an experiment would be the best way to convince everyone. Something like a Monopoly boardgame variant with teams. Players can chooses to leave teams or form new ones or join existing ones with permission from that team. Players would receive laborhours to spend on buying/developing properties they land. The cash, then, would just be used to buy other players’ laborhours. This means you can just be propertyless and still earn an income enough to pay the rents. And properties would degrade and thus you’d need laborhours to maintain them. I posted a capitalist version and a socialist version of monopoly on the capitalism vs socialism subreddit. Capitonationalism would be where the team itself would have market value.

    Beyond games though, I believe capitonationalism would solve North Korea. Kim would just get a huge portion of nationshares, his generals would get a big portion, soldiers, citizens, etc. Everyone. This would allow Kim to grant economic freedom to his subjects without fearing they will grow too powerful and threaten him.

    I also pasted this to a public google document you can edit if you want. The link is in my name of this post.

    • Thanks for your engagement with these topics, Eternal Propagation. I prefer to keep writing, because even when I am responding to mistaken arguments, as I write I keep learning more about the implications of the ideas I’m working on. There is something about the deliberative process of writing that elicits new insights.

      Denizens do not need to jump full-shark into a revolt. They can just protest, or strike, or just riot, or build social media campaigns, or spread propaganda on TV, etc. Any gap there is to leverage from, someone will use it because manipulating someone (denizens) into believing they’re lacking something (parity) and someone (citizens) is to blame, can be very profitable.

      Sure. There will always be rabble rousers. That’s what you get with free speech, and I doubt we are going to make that go away altogether. Any system in which there are inequalities – i.e., any system whatever – is going to be somewhat vulnerable to that sort of thing.

      But when all the denizens of the land were D shareholders, their incentive to respond to rabble rousers would be greatly diminished, as compared with today. This, because each denizen would be receiving D dividends roughly comparable to his per capita share of all public spending on welfare programs today; indeed, over time perhaps much more, as government policies and expenditures rationalized and the government bottom line moved sharply and massively into the black. The D dividend might be comparable in value to a Social Security benefit payment. That’s a fair chunk of monthly change, which few denizens – especially the poorest among them – would like to see go down on account of the ructions of a rabble.

      In any case, if the state was under the control of the C shareholders, it simply would not cave to that sort of pressure from denizens. If the denizens broke the law in the course of their protests, they’d forfeit their D shares and their denizenship – i.e., they’d be banished. The dividends they forfeited would redound to the immediate benefit of other C and D shareholders. And most of the denizens would support that, because most of them would see quite clearly which side of their bread was buttered; they’d know that the primary effect of social turmoil would be a reduction in their own next month’s dividend.

      Excursus: [Here is an example of the sort of insight that sometimes arrives when I am explaining the notions I’m already working on.] It would be a good idea if C and D dividends were paid out monthly, based on profits earned the preceding month. That way, the feedback circuit that runs from events in the news → government responses thereto → effects thereof → revenues less government expenditures → dividends would cycle quickly, and even people with high time preference – mostly denizens – would begin to discern the connections. It would make sense to them that the massive hurricane in Florida, for example, would likely have a negative marginal impact on their next few dividends.

      [Stocks] are very liquid, have low transaction costs and grant voting power, yet there is a growing movement of the shareless who are protesting, rioting, boycotting, damaging property, advocating for stealing from employers, etc., to get “democracy in the workplace.” How does your model explain them?

      On the system I have suggested, the only people in the country who are shareless are the relatively few temporarily resident aliens. Everyone who lives in the country permanently – nationals whether native or naturalized – is a denizen, and owns a D share that pays a very nice dividend every month. So everyone who lives in the country permanently benefits directly from social peace and prosperity (in the form of increasing dividends), and pays an immediate and specific price (in the form of a reduced dividend) for the measures needed to cope with social turmoil, violence, war, natural catastrophe, and the like. Because they are not nationals, but, precisely, foreigners, the few temporarily resident aliens present at any time in the country are alone shareless; so they receive no dividends, and have no votes.

      Why aren’t these shareless folk just buying stocks of the company where they each work to get voting power in the workplace?

      Actually they are doing just that, more and more. As transaction and recordkeeping costs for financial instruments have plummeted over the last few decades, such share purchase and participation by employees has become more and more common. Had you not noticed that private sector unions have lately been languishing? Unions are flourishing only in the public sector – which is composed of organizations that do not sell shares to the public.

      … being violent has a benefit in and of itself, even if it results in no change. Men respect other violent men and women select for violent men, for example.

      Being criminally violent at the cost of losing your D and C shares, your D and C dividends, your locally registered property, and your denizenship, and then being flogged and banished forever, would really, really suck. Rather than do that, you’d demonstrate your manliness some other way. Boxing, say. Push up competitions. Earning lots of money. Dressing sharp. Faking alpha. Whatever.

      Or, perhaps, being truly noble. That would work.

      Thus, the denizen mob does have the desire and the power to pressure citizens into giving into their demands.

      It is a mistake to project forward from the way our cucked society operates today. The protesters would have power only if the citizens gave in to their pressure. But why would they? On the likelihood that the vast majority of the denizen class would not be in favor of such protests – as is the case even today – the protests would not get very far if they were justly punished. And those among the protesters who caused property damage or indulged in violence would be banished: deleted from the nation. Because the dividends forfeited by the felonious protesters would redound *immediately* to other, lawful denizens, those other denizens would be able to relish the comeuppance of the protesters.

      Protest is fashionable right now because the authorities are either gutless or on the side of the protesters, so it costs almost nothing, and you get to signal virtue, party, and possibly get laid. It would get a lot less fashionable if it entailed risk of poverty and banishment.

      Under capito-nationalism, the shareholders with 900 locked away shares would have no such desire because most of their wealth is in the nation-share and attacking the largest shareholders would make the smallest shareholders poorer.

      It would be the same under the system I have suggested. The single most valuable asset of the poorest would be their D share. They most of all would feel the pinch of social chaos, would have relatively most to lose and least ability to endure the loss, and would feel the greatest resentment at those who threatened their D dividends.

      Even if there was a potential culture that could profit from the smallest shareholders attacking the largest shareholders, they would still need the nation-share value to go up to be allowed to own that increased amount of wealth. This catch-22 makes any such culture contradictory to its goals!

      I can’t tell what you are arguing in that passage.

      Voting wouldn’t even be necessary because the price would already move up and down based on how the demand side felt about the future of the nation-shares. As soon as an up-coming policy is announced, everyone knows very quickly if that policy should be rejected or not. If [your] walking into the CEO’s office and imprisoning him caused the nation-share market value to go up, then every other shareholder, even the CEO, would lay down a red carpet for you as you did so. Yes, even the CEO himself would want to be imprisoned.

      Yes! This is one of the tremendous virtues of an actively traded market in national shares. The feedback from the market to any news of government policy or personnel changes would be instant. That could pose new sorts of problems, too, of course. I should ponder what they might be.

      … you don’t need fractional anything. Just perform a stock split. It’s why I said everyone gets 1000 nation-shares. It’s more liquid that way.

      Whether you get 1000 D shares or a single D share does not matter. Add as many zeroes as you like; they are immaterial to the value of the position. Fractional shares are easy, though. All mutual funds use them, as do some corporate registrars. Fractional shares are all mediated algorithmically – i.e., instantly, and automatically. Stock splits generate investment banking fees, and must be planned and organized; so they are cumbersome and expensive.

      Foreigners who become shareholders would be treated well by the other shareholders because that’s what would cause the price of the nation-share to go up. For example, if Mexico bought a billion American nation-shares, then American shareholders would want to defend Mexico from its enemies. Such an act of service would cause every other country to want to buy American nation-shares so that they too would be protected by Americans from threats..

      No: absolutely not. We are working on radically different notions of “nation.” A nation is not just its state, no matter how that state is owned or operated. It is a people, a heritage, a patrimony, a homeland, a culture. If it is to maintain its own character and coherence, and thus its continued survival as just the thing that it is, it must repel almost all foreigners, in just the way that the immune system tries to keep almost all foreign organisms out of the body.

      To the extent that foreigners gain political control of a nation, it becomes theirs, its own native ways are deformed toward their ways, and the denizens of the country lose their native land. If foreigners could buy national shares, then, e.g., there would be nothing to stop dar al Islam from buying a majority of shares in, say, Vermont, and immediately replacing English Common Law in that country with sharia. They could do this without even moving to Vermont. That would allow for polygamy in Vermont; for slavery, clitoridectomy, the hijab, honor killing, persecution of Christians and Jews and homosexuals and liberals, on and on. As mediated by global financial markets, that revolution in the culture, laws, and customs of Vermont could be got under way in a matter of days. The foreign shareholders would moreover all earn dividends in proportion to their shareholdings. The dividends would be generated by the work of Vermonters – denizens and citizens – and then sent off to foreigners in foreign lands, who never contributed anything to Vermont’s economic production.

      Foreigners today do want to vote, which is why according to you, they should be able to buy shares so that they don’t feel the need to revolt. Your words.

      When did I say foreigners should be allowed to buy shares? I have been saying the opposite: that foreigners should be allowed no political influence whatever; that, rather than letting them buy shares, as you would, they should instead pay a fee for entry, a tonlieu. No one should be allowed to enter the country who is not willing to pay the optimum tonlieu for persons of his own sort (aliens from shithole countries, e.g., would have to pay lots more for entry to Vermont than aliens from Canada or Britain) – the maximum, i.e., that the market will bear. And if he should revolt while temporarily in country, or otherwise cause trouble, let his security deposit be forfeit, and let him be flogged and deported, or even if need be killed.

      Your egalitarian approach to services offered to citizens/denizens would not work. Citizens would want to be offered better services because they bought more C shares. They would vote to make that happen because they have the voting power and they know their C shares will skyrocket in value if they do so. Are you saying you would prevent this? One, why? Two, how?

      I wouldn’t prevent it. But I think the sagacity of C shareholders would. The master who exploits his subsidiaries, or holds them anywise in contempt (as our liberal masters now do), or treats them unfairly, is an idiotic businessman – especially in these days, when news travels fast across liquid and efficient labor markets. There are idiots out there, of course. Can’t help that. Business competition crushes them, sooner or later.

      In any case, as with D shares, the reward to owning C shares would be, not government services, but those juicy dividends. If C shareholders had succeeded in rationalizing government policies, most services now provided by the government would have been privatized (so as to reduce expenditures, increase the tax base, increase revenues, increase profits, and increase dividends (not to mention improving the quality of services provided)). Denizens could then buy more of those privatized services with their fatter dividends, if that’s what they wanted – and they could buy exactly the services they wanted, rather than paying for all sorts of things they didn’t want, as “clients” of the government must now do.

      Is it because you see how denizens would not profit from this unequal distribution of services? Now you see what I mean, then …

      Actually, I don’t. Denizens would, to be sure, have fewer dividends with which to buy the services they wanted than those who held C shares as well. But they’d still be receiving D dividends of … national profit.

      … except you kept saying that C shares and D shares are tied together in market value, but that’s not necessarily true as I showed you.

      How have you demonstrated this? I missed the syllogism. C shares would be far more valuable than D shares, because they would be liquid, and marketable. D shares would not be marketable at all; so they would have no market price, properly speaking; and, therefore, no market value, properly so called.

      Different [amounts] of nation-share ownership would mean different quality/quantity/priority of services. The military would prioritize saving a larger shareholder from pirates than it would a smaller shareholder from pirates. … If a public emergency hospital room is overburdened, then triage will take nation-share holdings into account. Parking rules might state that the time you’re allowed to park for depends on how many nation-shares you own. Allowances for speeding, carrying a weapon, draft order, etc., would all vary based on how many nation-shares you own.

      Now *that* sounds like a recipe for class warfare. Especially the stuff about parking and guns. I see enraged gun battles over parking spaces. Especially since most cops would presumably hold very few shares. Daily life would be a stew of resentment and hatred, far more than it already is.

      Excursus: [Another new insight discovered as I write]: One of the most important benefits of de minimis equal treatment under the law is, precisely, that it damps class resentment, by removing one of the causes of it. This is why sagacious rulers practice it.

      The *really* sagacious sovereigns practice inequality under the law, such that the state places stricter legal burdens on the wealthy than on the poor; harsher penalties, mostly, so long as they fall within the sentencing guidelines. E.g., a denizen might lose his D share and suffer banishment, whereas a wealthy man might for the same crime lose also his C shares and all his locally registered property.

      You say the locked up 900 nation-shares are illiquid, but you need to realize that they are only temporarily … illiquid.

      Temporary illiquidity is … illiquidity, period full stop. A CD is illiquid, compared to demand deposits. You can cash out of it, but to avoid penalty you must wait to do so. The only perfectly liquid asset is cash. So, temporary illiquidity *just is* illiquidity.

      Transaction costs, too, are a factor of liquidity. You can get out of a CD or whole life insurance policy early, but only if you pay a penalty. Likewise, one of the transaction costs you must bear if you want to sell your D shares or your locked up 900 national shares is the penalty entailed in loss of your denizenship: you must leave the country, or else buy a visa that allows you to stay.

      Those 900 nation-shares can be unlocked and sold to anyone else. Your D shares cannot be unlocked and are only able to be sold to the sovereign.

      That the D shares can be sold to the sovereign means, exactly, that they *can* be unlocked. As with your 900 locked up shares, the result of doing so is mandatory emigration.

      This means the State is at risk of going bankrupt if too many denizens leave.

      This is true for every state whatsoever, regardless of its formal organization. So this criticism is neither here nor there.

      You want to stop people from leaving in case there is war and you need to draft men to fight. Under capito-nationalism, the locked away nation-shares can just stay locked if the State chooses to not unlock them.

      Likewise, the sovereign can suspend purchases of D shares in time of national emergency (or at whim). So the rats fleeing a nation in peril are liable to lose their denizenship without any compensation whatever.

      Regardless, you can always just mortgage your business/farm/house/etc., to afford more nation-shares and you don’t have to give up ownership of what you built. In fact, because your business is going up in value so fast, you can just mortgage more and more. Even while requiring you to buy more nation-shares as what you build your private enterprise, you have the incentive to grow your business faster than nation-shares grow in value.

      No, you just don’t. If you had $1M in national shares and a business worth $1M, and your business grew 10% in the year while nation shares grew only 3%, you’d end the year with $1.03M in nation shares and $1.1M in your business. Your total wealth would be $2.13M. To get to the point where you had evened out your holdings as between your business and your national shares, you’d have to buy ($2.13/2) – $1M = $65K of national shares, and take $65K out of your business to do it. You’d be forced by law to take value out of a project yielding 10%, and put it into a project – the national shares – earning only 3%.

      Can you really not see how this would crush enterprise? Can you really not see how diseconomical it would be? Can you not see how it would gut economic growth? No sane businessman would sign up for that deal. He’d put his assets in national shares instead, kick back, and enjoy the effortless 3% return to his national shares. All the sane businessmen would do the same.

      Recall too that mortgaging an asset to buy national shares has no net effect on net equity. When you borrow X worth of this to buy X worth of that, the borrowing and the buying cancel each other out. Your net wealth is unchanged.

      But you’re against debt in general which is why you didn’t know this solution. So no, national productivity would not stall.

      When did I say I’m against debt in general? That’s a silly notion. Debt is *fine,* albeit suboptimal. I’m against *usury.* I’ve written on the topic some, both here and at Zippy Catholic’s site. If you want to understand usury, I recommend that you read him on the topic. Almost no one who talks about usury these days has the foggiest notion what it is, and are therefore talking nonsense. Usury is not debt; it is not debt that carries a high rate of interest. It is full recourse debt, no matter what the rate of interest charged. Full recourse debt is next door to slavery, because in the final analysis it is collateralized only by the human life value of the debtor. So likewise is the right to sell a man’s denizenship out from under him in the event he does not perform on his debt. Such debts are collateralized by denizenship; and denizenship entails almost all that is involved in life, and precious therein.

      You also say that a farmer would have to use money to buy nation-shares instead of seeds/fertilizer/etc., thus reducing the productivity of the farm and thus the nation starves. Again though, you’re looking at only one side. Someone sold their nation-shares and got cash. Now that cash can be used to buy seeds/fertilizer and the nation does not starve.

      Alan, who has succeeded in making his farm more productive than average, has two ways to pull value out of it so as to rectify his ratio of national shares/farm: he can sell a portion of the place, or he can mortgage it. He doesn’t want to sell, because dealing with partners who know less than he does about the business is a costly pain in the ass, and will hurt the enterprise – and if he keeps succeeding despite the hassle of partners, he stands to get more of them, and may even lose control and be forced out. So he’ll prefer to mortgage. But, bankers will loan him only so much. Any part of his total available credit that he uses to buy national shares cannot be used to finance annual operations (he can’t mortgage the national shares he bought on credit, because they are already collateralizing the debt he incurred to buy them). His ability to weather storms and bad seasons is then reduced, at the margin. A bad season comes along and Alan is forced out of business: his assets (both the farm and his national shares) are mortgaged to the hilt, he cannot repay the notes with cash flow from operations, and he must sell the whole place. Having used his sale proceeds – and a big chunk of his national shares – to pay off his mortgages and lines of credit, he has little left over that he might use to buy a smaller, less valuable spread. Alan knows that if he succeeds again on the smaller, poorer bit of land, he faces a fair likelihood of going through the same wringer all over again. He throws in the towel, buys some stock with what he has left, and starts looking for a job as a trucker or heavy equipment operator.

      Yay. The system has forced an excellent farmer who has succeeded at farming – who has, i.e., husbanded his land so that it is more productive than average – out of the farming business. The nation’s supply of excellent farmers has been reduced.

      Unfortunately for Alan in his search for other work, all the successful freight operators and builders – *and all other businesses, of every type* – have had to pare their operations, just as he had to do, so as to allocate capital to national shares. So there are fewer jobs out there than there might otherwise have been. With demand for labor dwindling and a plentiful supply of talented businessmen looking for jobs, wages are falling.

      Meanwhile the poor sod who bought the farm from Alan works his ass off and succeeds – and then he begins to lose his ownership of the place, too.

      A farm with no seeds and fertilizer would not be valuable enough to require more nation-share purchases.

      Yes. The requirement that the successful farmer mortgage his farm to buy national shares has crushed the value of the farm. If the farmer can survive until next tax season, he can declare a new value for the operation that is steeply discounted on account of its massive failure. Then he can get out from under some of his taxes. But he’ll probably be out of business the minute he pays them. So he’ll sell at that steeply discounted rate. A disaster.

      I’ve worked with men who bought virgin undeveloped land, felled the trees, removed all the stumps, raised the barns and house, and then sold it to some yuppies for a huge return and used that return to buy other virgin land.

      And would those men have taken all that immense risk and worked so hard on those projects if they knew they’d have to gut their returns if they succeeded?

      You still say that the nation-share is an undiversified asset, yet in the previous breath you said it is by definition the average of national productivity.

      Mortgage backed securities are invested in hundreds of mortgages, and yield the average of the yield on the underlying mortgages (less fees and expenses, of course). As recent experience should have demonstrated, that does not mean that such pooled instruments are either diversified or low risk.

      Do you see now how a pooled investment vehicle invested in lots of different instruments and earning their average return can still be undiversified, and extremely risky?

      The self-assessed value mechanism makes sure that the “forced” sales are not undervalued. Because the business owner self-evaluates his own growing business, he chooses to register the value higher to avoid someone buying part of it. The buy side of the market does not have intimate knowledge of the business either and thus the business owner has the monopoly on information. The buy side does not know that the seller must sell because they don’t know how fast the business is growing other than how the business owner says.

      OK, that makes sense. But then, notice that because buyers don’t know how fast the business is growing, they have no way of knowing whether the owner has understated the value of the business, so that they have an opportunity to snag it profitably.

      If someone does buy one of your assets because your price was appealing to the buyer, and you don’t want to part with the asset, then all you have to do is pay the new asking price of the registration and you get your registration back.

      I can see how that would work, but only if you had ready access to plenty of cash at all times. A business growing robustly often finds itself horribly short of cash and credit.

      Your argument is that periodic value taxes on held assets are distortionary while taxes on interaction are not distortionary. … You also ignore the fact that assets have to now be put to productive use and can’t just be hoarded for unproductive reasons.

      A tax on assets is distortionary precisely because it forces assets to be put to “productive” use in such a way as to generate cash flows that can be used to pay the tax. Consider a retired couple living in their house. It generates no revenue. Does that mean it is not in productive use? Hell no; it is in exactly the use for which it was designed, valued, bought, and maintained.

      Or consider a wealthy man who holds a thousand acres of woodland, and leaves it alone so that it can return to climax condition, where he plans to leave it. His motivation is aesthetic, and moral. He loves the place. The land is generating no revenues. Should the man pay tax on it?

      Or consider the diamond a wife wears in her wedding band. Should she pay tax on it? Should she be forced to sell off a bit of it in order to buy national shares? Should she be forced to pay cash in order to keep it from buyers?

      Not all real economically valuable production is accountable in cash. Costs can be externalities, but so can benefits. Indeed, almost all benefits are externalities, because they occur only within the crania of buyers and owners; as private phenomena, they *can’t* all be reckoned by the sell side of the market.

      Transaction taxes are actually the MOST distortionary because they make it costlier to put assets into the most productive hands. If it costs $100K to transfer my asset to someone who can only get $90K extra out of my asset than I can, then the transaction does not happen. Your State loses out on $90K of taxable value. It’s funny how you see this is a virtue though with your “if the transaction does not happen then that is good because it’s not worth it to you.”

      When there is a level tax on all transactions, the tax is a factor of the cost of every transaction whatever. So all transactions are on a level playing field. If I spend $100K, I know that no matter what I spend it on, 10% (say) will go to the sovereign as a transaction tax. So, no type of transaction is favored by the tax regime over any other, and no decisions about buying or selling are distorted.

      This is microeconomics 101.

      Understand that whatever form is taken by the revenues of the state – property or transaction taxes, tariffs or tolls, fees or penalties, it makes no difference – all those revenues are captured already in the prices of goods and services. They have to be. So prices already reflect all the taxes presently paid by upstream parties. If all the revenues now derived from denizens came instead from a transaction tax, the likelihood is that the total economic burden of state revenues imposed upon society would go *down* somewhat, due to increased efficiency and lower costs of collection and compliance. Thus the transaction tax might actually end up a bit lower than the implicit costs of other sorts of state revenue that are already factored in to present prices of all goods and services.

      You also see mandatory selling as a bad thing. I wonder if you believe that even after I explained above how you can just buy it back, because selling is mandatory.

      Yeah, mandatory selling is still a bad thing, because it forces the current owner to cough up more cash just to keep his asset, and then yet more cash to pay the higher asset taxes due on it as a result of the sale and repurchase transactions he had to suffer. Not to mention the additional cash he might have to expend on national shares, due to the recalibration upward of the value of the asset he was forced to buy back. If he’s cash poor, it forces him into sales or mortgages he’d rather avoid.

      In general, that government is best which governs least. The less forcing of transactions, the better. Let people decide for themselves upon the most valuable use of the assets they have purchased.

      Excursus: [Yet another insight just disclosed to me]: Consider then also that mandatory sales would create a new class of financial predator: asset raiders. Such raiders would buy a property listed at $500K for $501,000, forcing the present owner to cough up $1,001 in order to get the property back. The raider can turn around and buy for even more. This can continue until the raider is satisfied that he can’t squeeze another nickel out of his victim. No problem for the raider; he pockets his profit on the series of trades and moves on to the next victim.

      The way for the State to maximize its tax revenue is to make sure assets are valued as high as possible.

      It is nuts for the state to try to maximize its tax revenue. The maximum tax revenue is generated by a tax of 100% of all private assets, right now. That obviously bankrupts the country, so no sane sovereign would ever try to maximize revenues. The correct objective is rather to *optimize the NPV of expected state revenues.* If you set collections (of any sort) too high, you depress economic activity, reduce your revenue base, and decrease your NPV. If you set it too low, you forego revenue you might otherwise have collected without reducing economic growth, and decrease your NPV. What’s the solution?

      To find the optimum revenue, gradually increase transaction taxes, tolls, and tonlieux from a low base until the revenues that each source generates stop increasing. That’s your optimum: the equilibrium price of government. Also, of course, to optimize your NPV of revenues you have collected, you also want to control expenditures by ensuring that you are providing only such government services as cannot be provided better by the private sector, and that are likely to lead to general prosperity and thus a larger revenue base.

      Sentimentality is an illness. The cure is cash for your sentimental asset, and it’s mandatory.

      That’s monstrous. Sorry, but it’s just inhuman. It’s also – therefore – a fundamental misconception of economics; i.e., of reality. That’s what mental illness is: a basic error about reality.

      All valuation is sentimental; all production is of value sentimentally valued; all pricing is therefore a function of sentiment. The utility function is a function of hedonic sentiment, which has multiple dimensions: moral sentiment, aesthetic sentiment, religious sentiment, physiological sentiment, and so forth – indeed, even rational sentiment (i.e., the sentiments that arise from the operations of the intellect, as for example the sentiment that truth is better than falsehood, accuracy better than error, validity better than invalidity, and so forth).

      Let’s apply a reductio: you have a sick sentimental attachment to your dick. You aren’t putting it to good use. It would be better for society if it were sliced off and fed to pigs. I can sell it for $0.50 to a pig farmer. So that’s what I offer you for it, and you must accept my offer and fork over your dick immediately, or else counter my offer with a higher. But, see, I’m not really interested in selling your dick to the pig farmer. The reality is I hate your guts and I want to ruin your life. It’s that ruination that’s really valuable to me, on account of your egregious insult to me at the party the other night. I have a sick sentimental attachment to destroying your dick, that is more valuable to me than your dick is to you. So because I am ridiculously wealthy, while you are a man of meager means, I counter offer for your dick a price – a market price, set by a willing (sickly sentimental) buyer – which you cannot possibly match: $1,000,000. And so you must sell. You take out a knife.

      You see the problem?

      Apart from the ridiculous fortune I paid you for your measly half dollar dick – a fortune on which, if you are a canny investor, you shall henceforth be forced to pay asset taxes every year, adding insult to your injury – I suffer no ill effects of the transaction. I just toss your dick in the toilet, and from then on I pay no taxes on it, because the asset no longer exists.

      Substitute for “your dick” any other thing a person might find valuable. Try “your life,” or “your child’s life.” Think that’s outrageously unlikely? Ever heard of death panels and euthanasia? Dude, it’s happening right now. Don’t worry, though: your attachments to your life, and to the lives of those you love, are just diseased sentiments. You are better off without those sentiments. Let’s cure you of your absurd affections for this over that. You like your car? You like chocolate better than dogshit? You are more attracted to economic efficiency than to inefficiency? You are a sick person. All your likes and loves, all your desires and aversions and preferences, those are all diseased. You are better off without all those sick sentimental feelings.

      The pricing mechanism is a way of ascertaining and quantifying the sentimental feelings various people have about various states of affairs – keeping one’s dick rather than losing it, e.g. The market price is the price that a counterparty *wants* – sentimentally wants – to pay.

      Rationality per se operates upon aesthetic evaluations of states of affairs and of propositions – i.e., upon sentiments.

      The more the price of a stock drops, the MORE it is demanded.

      I surmise that you have neither studied nor experienced what happens when markets turn bearish. Were you paying attention in 2008?

      Have you never heard of value stocks, that persistently trade at high book to market?

      If a price drops far enough, then yes, *eventually* demand for the stock will likely pick up. But the bottom line is that a drop in the price of a stock *just is* a reflection either of increased sell side supply or of decreased buy side demand for the stock – or both. It is a reflection of increase in the ratio of pressure to sell / pressure to buy.

      Returns on a stock are not affected by its price because the company’s productivity is unaffected.

      Sorry, no. The return on a stock *just is* the return on its price at time of purchase.

      Your logic also implies that everyone just sells stocks that go down in value when doing so realizes the investor’s net-loss.

      Investors do that sort of thing all the time.

      Holding through a price slump is the best strategy.

      Sometimes it is, and sometimes it isn’t.

      Nation-shares are not a free lunch.

      I didn’t suggest that they are. But you can’t have your cake and eat it too. The national shares are not free; they have a positive price, which you must pay to own them. So, you can’t buy national shares without eating the lost opportunity to buy something else. To the extent that investor demand for national shares displaces demand for other assets that, in the absence of an artificial state requirement to buy additional national shares, investors would rather own, it decreases the quantity demanded of those other assets, and so depresses their prices, ceteris paribus.

      This is not a coerced transaction. The asset owner CHOOSES to value their assets higher, thus CHOOSES to place himself into a situation where he needs to buy more nation-shares.

      Of *course* it is a coerced transaction. The owner *must* value his assets higher or risk being forced into losing them to someone else under the legal authority of the state which has established these policies. And once he does that, he *must* under that same legal authority forfeit other assets so as to buy national shares, and *must* under that same legal authority pay higher asset taxes. Oh, he can of course CHOOSE to commit legal and economic seppuku; totally up to him.

      On the system I have suggested, per contra, no one is forced, or even urged, to any particular transaction by the dictates of the system itself.

      Your system messes with people constantly, in respect to all of their valuable assets, and puts them totally at risk all the time with respect to their continued possession of what they hold dear. Mine leaves them almost entirely alone. Which system will people prefer? The question answers itself.

      The price associated with these transactions [is] also voluntary. You wouldn’t say mortgage terms are coercive just because you lose your house if its value falls below your margin.

      Dude, that’s not how mortgages work. If the value of your house falls, you owe your debt service on it, willy nilly; but, so long as you service that debt, the bank can’t take the house from you.

      The reason mortgages are not coercive is that *no one forces you to execute them.* Your system, on the other hand, forces all sorts of repeated transactions upon almost everyone who owns assets, year after year after year. The economic friction of your system is horrifying to contemplate. It makes the labor and care of preparing an IRS tax return look trivial.

      A dollar invested in GM CAN also be invested in Toyota. You buy a dollar of GM, that dollar goes to someone who buys a dollar of Toyota. Again, you’re only looking at one side of the transactions.

      Not quite. *Your* dollar must be invested in either GM or Toyota. Once you have used it to invest in either company, your dollar becomes the dollar of someone else, who must then make just such an exclusive choice about what to do with it. He might bet on Toyota, to be sure. But it is absurd to suggest that these bets on either of those stocks have no effect upon those firms. What if your counterparty had decided to invest in Walmart? Both GM and Toyota would in that case have suffered a marginal reduction in the demand for their stock, and a marginal increase in their cost of capital.

      It’s simple, really: selling a stock increases the cost of capital of the issuer; with all that that entails.

      When a new stock XYZ is listed on an exchange, then except to the extent that new dollars flow into that exchange so as to buy XYZ, the total of all the wealth invested in companies already listed on that exchange is diluted, because the only way any of the market participants can buy XYZ is to sell positions in other companies traded on that exchange. Demand for XYZ goes up, demand for all the other shares traded on the exchange goes down commensurately. All those other shares must then offer a higher return – a higher cost of capital.

      Just because the USA Inc. revenue stream can change does not make nation-shares an undiversified asset. You said it yourself, nation-shares are the average of all productivity in the nation.

      Likewise, mortgage backed securities are the average of all the mortgages backing them. Res ipsa loquitur. That national shares average sovereign revenues from all enterprises in the nation does not mean they are diversified. Does the fact that dividends on shares of Phillip Morris average that firm’s profits on revenues from their operations all over the world mean that Phillip Morris is diversified, and thus low risk? No; that’s a ridiculous assertion.

      Averages are not necessarily diversified.

      By the way, nation-shares [earn] more than just the average …

      National dividends are shares of net state revenues – i.e., state profits – based on and generated as a function of the economic performance of the entire nation; of GDP. Developed nation GDP tends to track the risk free rate.

      So as a function of GDP, yield on national shares under either of our systems is likely to run at roughly the risk free rate.

      That limitation [in ownership of C shares] increases the chances of a wealthy man viewing the cost of losing the dividends from his conflicting interest as negligible compared to the benefits of having a conflicting interest. Example: I have a billion dollars in assets, and I have a million dollars in cash flow from C share dividends. Nefarious Action A results in my billion dollars in assets to increase to two billion dollars in assets, but my million dollar a year C share cash dividend is cut in half. That would be a rational action to take.

      It might not look so rational if the penalty for conviction of your nefarious acts was permanent forfeiture of all your D and C shares, plus permanent sovereign seizure of all your assets registered by his registrar, plus flogging in the public square, plus permanent banishment or death. That’s the sort of punishment that a sovereignty might impose upon those convicted of treason, sedition, or felony. Some nations might add heresy to that list of offenses; others might add moral turpitude (as divorce, bigamy, fornication, paederasty, sodomy, and the like).

      The possibility of such an action means the interests of denizens and citizens (even citizens and citizens!) are NOT “immaculately” aligned.

      I didn’t mean to suggest that denizens and citizens could never come into conflict of interests in any way whatever. I meant to suggest only that their interests *with respect to public policy* would be aligned. There is of course always an incorrigible risk to any polity, howsoever organized, of defection or criminality.

      Capito-nationalism does require a payment from anyone who wants to enter the country. That payment is [to] become a shareholder to some minimum degree determined by Interest Parity.

      It’s nuts to offer to sell national shares to foreigners. They have no personal interest in the welfare of the current denizens – in, i.e., the customers and shareholders and employees of the sovereign corporation. They are, in effect, foreign agents, and should have no political power at all.

      Unless, that is, and until, they renounce their citizenship and denizenship in other countries, and pledge their fealty to their new country. To become a naturalized denizen, a foreigner must pledge allegiance to the nation, and buy a D share from the sovereign.

      The goal of capito-nationalism is to create a society where it costs more for me to go against the mutual interest of the other shareholders than it benefits me. Explicit punitive measures are superfluous and just exist as a buffer just in case.

      You have succeeded in that. But you have done so in a way that men would hate. People want ownership to mean control. And they want to be able to keep what they have paid for without being forced to pay imponderably more in future just so as to retain it. This is why people resent SaaS, and would rather own than rent. Your system eradicates true ownership of all goods, and replaces it with rent. That destroys the price mechanism, because it means the nominal asking price is really only the first rent payment, with future rent payments, that will certainly happen at least annually, and also unpredictably at any other time, and in any amount, with no end, left completely unascertainable. The real price of any good under your system is therefore the NPV of an unknowable and unlimited stream of future payments. Because that stream of future payments is unknowable, the nominal asking price of a good carries almost no information.

      The consequence of the destruction of information normally mediated by the price mechanism is that all transactions of durable goods can be undertaken only under conditions of nearly total ignorance; of nearly total uncertainty about what it is, exactly, that is contemplated in the proposed transactions. There is then no way to evaluate them ex ante. They will not therefore happen. Market activity will almost cease.

      Reforms as radical as what you propose are almost certain to fail. Better minimal policy tweaks that accord with human nature and tradition.

      If a billionaire only has 100 dollars in C shares …

      Most wealthy people are going to want to own a lot of C shares, so that they can have the greatest possible influence on public policy, which can either hurt the customers, employees and shareholders of their businesses – and, thus, the businesses themselves – or help them. Of all sorts of men, the wealthy are the most interested in sane public policy, which redounds to the accumulation of wealth, not just by the wealthy, but by all denizens. Their desire to own lots of C shares will be greater than that of any other sort of men.

      With most wealth being held in nation-shares, all conflicts affect all shareholders. Thus, costs to conflicting interests are magnified such that any gain to conflict is dwarfed by others’ loss to said conflict.

      **AS LONG AS A CONFLICT’S POTENTIAL ECONOMIC LOSS TO SHAREHOLDERS EXCEEDS THE CONFLICT’S POTENTIAL GAIN TO ME, I WILL NEVER BE ABLE TO RAISE MORE CAPITAL TO FUND THE CONFLICT THAN WHAT THE SHAREHOLDERS ARE WILLING TO RAISE TO FUND THE CONFLICT.**

      This is why most denizens are going to oppose rabble rousers and other purveyors of mass envy: most of the wealth of most denizens will consist of their D shares. There just won’t be much of a market for the bullshit that rabble rousers spout.

      Blaming human nature does not excuse a gap in any system. Human nature is why we need better systems to begin with.

      Some bits of human nature are corrigible, and some are not. It is insane utopianism to suppose that any feat of social engineering whatsoever can possibly correct the incorrigible defects endemic among humans. Human nature – human nature Fallen, as we find it, and prone to wickedness – is an inescapable design constraint on any reform we might devise. If a policy reform can work only insofar as men behave otherwise than as men inveterately do behave, it will certainly fail. Human nature as we find it – Fallen – *just is* the solution space. Solutions that fall outside that space are not solutions at all.

      Regardless of my critiques, I still support your system because it will just inevitably turn into my system after a few hiccups. Every denizen will just be made into a citizen. Most wealth will be required to be in the shares. Your system is, at worst, a stepping stone towards mine.

      Maybe so. On Patchwork, some nations might try your system. But such experiments would be short lived, I think; for your system is radically democratic, and therefore prone to tyranny and to the tragedy of the commons we already suffer; and thus, prone to disastrous ochlocratic errors of policy that would gut national prosperity. By opening citizenship to anyone in the world willing to buy it, it would furthermore destroy the nation that tried it; would demolish the very idea of nationality. And because it can function only insofar as human sentiment is eradicated from economic considerations – a contradiction in terms, since economic considerations *just are* sentimental, at bottom – it contravenes human nature, and cannot therefore long succeed with humans.

      Otherwise, it makes some sense. Apart from the power of eminent domain over all property that it would confer upon every person – which I think would be a disaster that no one would tolerate – and the requirement that national shares constitute at least 50% of all assets in the nation – which would crash the economy – it is far preferable to what we have now. Its offer of denizenship to all comers is just like what we have now; except that it forces those comers to pay *something or other* for the privilege, so that’s better than what we have now; but on the other hand it gives them citizenship right away, which is worse. Its main effect would however be to give all denizens some direct financial stake in the financial performance of the state, and thus in rational public policy. And that would be a very good thing.

      Thanks again for all the work you have put into this discussion.

  10. Your thanks are unnecessary. In fact, your use of past tense implies you don’t expect me to respond, as if your word is final. Did I make it read like I was done responding? The tension is still there and, like you, I get everything from this because these words will exist forever (whether on here or on other platforms).

    Before I address your arguments, I will address your passive-aggressive attempt at nomenclature. The name of my system is “Capitonationalism” and it uses “Nationshares”. Your naming efforts should be directed at YOUR system, not mine. If you feel frustrated at me referring to your system as “Two-Share-Solution”, then you should come up with a name so I can drop the placeholder and give you your agency back. If you feel frustrated at me rephrasing your arguments back in my own way, it’s because I want to make sure I understand them, in my own way, such that I pass the ideological turing test.

    ——-

    You believe the cash dividends paid out to denizens/citizens is enough incentive to support the state; that they’ll have an incentive to support policies that increase the state’s tax revenue and decrease its expenditures. Thus, any action that causes the amount of dividends to go down will be opposed/punished, and vice versa.

    What your logic fails to take into account is that the extent to which an action is opposed is determined by a discounted cost-benefit analysis. If a denizen only has one D share that nets him 1k a month, then he will oppose any huge expenditure that lowers that even if it will raise it in the future. So ironically, it is your very tight feedback circuit that prevents longterm planning. Few are going to support a 10-year plan to double the per-share dividend to 2k a month if it results in the dividend being cut to 500 a month for those 10 years. You would also lose control of the denizens because they cannot foresee that far ahead. They would be fed propaganda about how that 2k a month dividend is a lie. Under capitonationalism, the “denizens” who will only have 900 nationshares, will not oppose such a longterm investment scheme because that 900 nationshare minimum will be lowered by 1% to allow them to sell off just enough to make up the difference in loss of income. Your system lack this solution.

    Moreover, you ignore the fact that total tax revenue must be greater than total dividend payouts. This means those with only one share are paying more taxes than they are receiving back! To prove otherwise, you’d have to show that an option to just take out today’s taxes out of next month’s dividend results in paying no taxes and still receiving a dividend payment. This would mean though, that there are some, the hyperproductive, who are paying that difference and will thus oppose your system unless they receive a service dividend to make up the difference in value. You are either punishing the productive, or shifting the direction of denizens’ interests.

    You argue that employees are actually choosing to buy shares in their employer rather than oppose their employer. I disagree. The popularity of anti-capitalist rhetoric/policies/culture means buying shares of the capitalist is not as appealing as attacking the capitalist. Thus, just because the option to buy C shares exists and is utilized, does not necessarily mean denizens will not try alternative routes to political power.

    Your logic about manhood not needing self-costly violence ignores the fact that the risks and costs of being violent are exactly the reason why being violent is respected. Risk-taking is an evolved trait.

    You describe your nation as a body, and foreigners as environmental threats. Your system is that of a people who are governed by their own. A sort of ethnoplutarchy where the non-plutos of the plutos’ ethnicity are handed out the cash equivalent of bread and circuses.

    While I do want my own ethno/theo/civo state, it will exist within the capitonation, as a part of it. In my worldview, going back is impossible. Sovereign ethnostates do not exist anymore. Thus, I want a system that will allow me to build an ethnostate within a larger state. Thus, capitonationalism; the nationshares are recursive where there will be stateshares, cityshares, townshares, streetshares, blockshares, etc. As long as you pay a self-assessed 1% annual value tax on that “substate” you are allowed subsovereignty within it. This creates a fluid dynamic of subgroups that arise and fall by their ability to be productive. Opposite to now, it will be in the state’s interest to increase the sovereignty of its substates because doing so will increase the value of the subtates, and thus the tax revenue paid to the state, and thus the value of the nationshares. So while the state will look like America does today, your substate can look as homogenous as you want. You would be able to impose strict shareholder restrictions for your substate and even regulate who comes in and out. This patchwork of substates of stateshares is bound together by a state of nationshares. Maybe it should be named the other way around? Should stateshares refer to the top-most level of state?

    I chose the name “capitonationalism” for a very specific reason. Ethnonationalism is where your membership is determined by your ownership of some genes. Civonationalism is where your membership is determined by your ownership of some culture. Theonationalism is where your membership is determined by ownership of some belief. Capitonationalism is where your membership is determined by ownership of some nationshares.

    You believe that allowing foreigners to buy nationshares will somehow destroy the nation. Doesn’t that contradict your premise that the most rational and long-term-thinking will buy the most nationshares and will thus self-select themselves to be the most rational rulers of the country?

    What’s more is that just because you buy nationshares does not necessarily mean you will have voting power, or even be let into the country. Remember, you will have to pass the interest parity test. This means foreign governments like Russia, China, Saudi Arabia, etc will be able to buy nationshares and the country never has to change. Why would foreigners buy nationshares if they don’t get the services offered to resident shareholders? Nationshares would have an increasing market value so they be used as a store of value. They would also be proof of the alliance between countries. In a war, America is going to side with a country that owns many American nationshares, than another country that has none.

    Your other argument is that foreigners will somehow be extracting surplus value from tax-paying resident shareholders. One, even cash dividends do not necessarily have to be paid to foreign shareholders. Two, even if cash dividends were paid to foreign shareholders, you would not receive less than your share of dividends because your share of the total supply of nationshares did not go down. This income is sold to foreigners, not provided free of charge. This means a resident shareholder receives money from foreigners which he can then spend in Vermont, and thus increase Vermont’s productivity.

    You did not say foreigners should be allowed to vote, you said that there should be an option for those who want to vote to have the option to buy more voting power. I’ll also add that you can make voting power as a product of the number of nationshares and the length of time they have been locked for and the length of time they will be locked for. This still makes voting a choice, and gives more voting power to the most long-term-thinkers. So your fear of foreigners having any political influence is overestimated.

    You believe that citizens will choose not to use their voting power to further empower those who own C shares because that would be “idiotic” and would be “crushed by competitors”. You do not provide a mechanism for this happening though. Who, or what, will cause citizens to lose wealth when they choose to grant citizens more and more power? If they own many C shares, then enacting a policy that will double the market value of the C share will INCREASE the citizens’ wealth, not decrease it.

    And again, you say again how cash dividends will be the incentive to own more shares. Not everyone can receive more cash than they pay. Someone has to pay more than they receive.

    You also agree that D shares and C shares will not be tied together in market value because D shares will have no “market” value.

    You believe that paying out a service dividend to shareholders will lead to class warfare. I will just simply invoke your “if they want more X, then they will just buy more shares because it’s easier than warfare” argument here.

    Thus, to increase the value of the shares (whether C shares or nationshares), having more shares WILL entitle the holder to more services.

    Example: committing crimes will result in a loss of pre-defined number of nationshares as punishment. The more nationshares you have, the more you can afford to lose before you’re imprisoned.

    The result of emmigration is that those nationshares are unlocked to sell on the market. This is more decentralized than your state-as-final-buyer solution.

    Moreover, in the extreme case of widespread emmigration, my state does not suffer at all because it does not have to pay out emmigrants. And my tax revenue structure is unaffected as well because asset values do not necessarily go down if there are fewer people in the country. What matters is the demand side which may actually increase as the short-term-thinkers leave; the homeless would all emmigrate and cause the once-occupied properties to jump in market value. Your tax revenue comes from transactions which scale exponentially with the number of people in the country. Thus, you lose tax revenue and state capital, and I gain both.

    You still believe that a productive capitalist will feel punished by having to sell off, or leverage, half his capital gains to buy nationshares. Your argument is that he’s losing ownership of something appreciating quickly, and gaining ownership of something appreciating slowly.

    You fail to take into account risk. Just because something appreciates slowly does not necessarily mean it’s a bad investment. Nationshares are the lowest risk investment. Thus, just because the capitalist is losing ownership of his appreciating capital does not necessarily mean the capitalist is upset at having to own a safe asset. Then when the capitalist feels like he’s saturated the market enough, he can sell off some of his unleveraged business shares to pay off his debt on his leveraged business shares. He never has to sell before his business has slowed down growing.

    The point of mortgaging your private enterprise to buy more nationshares is not to increase your net wealth, but to change your DISTRIBUTION of net wealth.

    You say you don’t hate debt, just usury. Then why did you reply to a nationshare mortgage as “smells like usury” in a previous comment?

    The threats to Alan’s farm are going to be priced into its value before Alan pays a dime in taxes. So no, Alan can’t lose his farm just because he has to spend half his capital gains on nationshares. If the farm goes down in productivity, then Alan will resubmit a lower value for his farm, sell some his freed-up nationshares to increase his margin on his farm, and use the rest of the cash to fix the productivity issues.

    The only way he can lose his farm is if his debt payments exceed his productivity minus wage minus tax. Which would imply the farmer is not as good as you think he is because he doesn’t know how to self-assess the value of his farm such that he can sustain those expenditures. This seems to be too complex though so let’s write Alan’s story out:

    Alan has 900 nationshares, valued at 450k total (500 per). He gets a low interest 1% loan of 400k collateralized by his deportation (the lender makes him wear a gps tracker around his ankle). Alan buys a farm for 200k and auxiliaries for 100k. A year later, he gets 100k in harvest, minus 3k in taxes, minus 4k in debt interest, minus 10k in auxiliary depreciation. He self-assesses the value of his 50 hours of labor a week at 1000 dollars a week, 50k a year. 33k of surplus rent per year.

    How high should he self-assess the value of his farm? He looks at the marginal real interest rate of farmers is around 3%. Wow! He knows his farm is at risk of being bought by another farmer so he knows he has to resubmit a self-assessed value of 33k/(3%+1%) = 825k. But this would put him out of interest parity with his nation because 900 nationshares only appreciated up to 500k now. He would need to leverage, 825k + 500k all over 2 all minus 500k =, 163k out of his farm to buy enough nationshares to maintain his interest parity with the nation. So he mortgages his farm for 200k at 2% and buys up to 700k worth of nationshares.

    825k@-1% – 200k@2% in farm, 90k@-1% in aux, 83k cash, and 700k – 400k@1% in nationshares. His net wealth went from 450k to 1.1MM all while maintaining most of his wealth in nationshares. Alan has every incentive to appreciate the value of his farm faster than his nationshares appreciate so that he increases his leveraged purchasing power in relation to the nationshares.

    You argue that buyers don’t know the value of a business so they don’t know if there’s an opportunity for profit by buying. I don’t see that as an issue. It’s up to the business owner to advertise the profitability of his business.

    If the business is bought against the founder’s wishes, then he can just buy the registration back instantly for the new asking price (can only deviate 1% per day). The cash to buy the registration back would already be in the escrow and can be used to deduct from the buyback. Thus, you only need to deposit the difference.

    Your arguments against the annual self-assessed 1% value tax don’t convince me. A retired couple already have to pay property taxes today so nothing would change there. They can lose their house to the state which would then auction it off for a low price far below the government-assessed market value of the property. Thus, today, retires have to pay MORE taxes than they otherwise would when they get to perform that perpetual auction themselves.

    I’m also not against setting that annual self-assessed value tax even lower. 0.1% would collect 10% of the rent instead of 50% and would almost double market values. As long as the state has enough tax revenue to protect those assets, then it doesn’t matter how low the tax rate goes.

    You wouldn’t necessarily have to register jewelry. It’s so small that it’s easy to keep a secret. Just understand that the state will not protect your wedding ring if you do not register it. Thus, don’t complain when someone steals it. Registering a ring would be cheap because its value can be registered for half the sticker price of the ring in a store. No one knows the purity of the gold, the size, the design, etc so they’re less likely to call your ask. And if they do, just buy it back.

    A forest can be put to productive use even while it regenerates. Trails can be made and people can pay to hike there, etc. But you overestimate the value of wild woods. Land is very cheap so you would just pay taxes on it from your other productive enterprises.

    Distortion is a technical term in economics. Transaction taxes cause distortion because they increase the price of the asset and thus lower the demand for said asset which makes the asset harder to create in the first place since the cost-benefit margins become much tighter. A periodic tax on the value of something does not have this issue; you do not need to be the one to put the asset to productive use to be able to afford to make it.

    If the marginal price for a sand belt machine is at 11k, then with a 10% transaction tax, you must spend less than 10k to build the sand belt machine. If you can’t do that, then the transaction does not happen. With an annual 1% value tax, then you can spend up to 11k because whoever buys it is going to pay a 1% tax on that value after the first year and after that the value will depreciate and so too will the tax payments.

    We both agree that a simpler more efficient tax structure is necessary but your tax structure requires everyone to track and record every transaction they participate in, and a huge bureaucracy to verify those records. Mine doesn’t.

    You also point out that there will be market participants who will just call asks hoping the original owner will just call their new higher ask, netting the “troll” a nice profit. I believe that would be a good behavior because it would cause values to go up. I wrote about the possibility of these “trolls” on the CvS subreddit (link is in my name on this comment).

    You seem to believe that “maximizing tax revenue” equal “setting the tax rate at 100%”. That is not so. Market values will go down to 0 and everything will be “rented” at that point. While that would not cause bankruptcy, it would cause horrible incentives to arise which would destroy the state’s ability to collect tax revenue.

    Thus, the maximum tax revenue is collected at around a 1% tax rate. At that point, half the rent is collected while retaining productive incentives for both private and state behaviors. The state’s option to increase its tax revenue then is just to have every citizen discount the future less, thereby increase market values.

    You also seem to apply the concept of sentimentality to everything bought on the market. I was referring to the resistance of the unproductive to sell their “sentimental” asset so that it can be put to more productive use. Just because you grew up in a house and lived there for 50 years does not mean you should get to live there for 50 more when you’re preventing something more valuable from being built.

    We already seize such homes from such owners. The process is just 100x more complicated, lengthier, and stressful. My mechanism only applies to registered assets. Are you suggesting body parts and humans will be registered assets?

    You argue that one dollar invested in GM, and that dollar going to someone who invests in Toyota, does not necessarily mean the seller of the Toyota stock is going to invest that dollar in WalMart. If the buy position is attractive enough, then that dollar will be invested in WalMart. GM, Toyota, and WalMart get the dollar.

    You seem really attached to this notion that new companies being listed on exchanges causes all the other companies to be devalued. This worldview of yours ignores the fact that the net value of listed companies do not go down when a new company is listed. If they did go down, then everyone would short them when an impending new company listing is announced.

    ——-

    I’m not convinced that denizens and citizens will want the something for public policy. Denizens do not own C shares, thus they don’t want C shares to go up in market value. Citizens owns C shares, thus they do want C shares to go up in market value. This is a conflict of interests.

    I’m also not convinced how capitonationalism is “too democratic”. The wealthy will *explicitly* have more voting power. In your system, it’s not necessarily true that the wealthy will have more voting power. In fact, a billionaire might have no voting power at all!

    I’m also not convinced how mandating most wealth to be in nationshares will hurt productivity. You seem to believe that wealth is zero-sum, as if something becomes worth more, then something else must be worth less by that same amount. That’s not how wealth works.

    It is impossible to convince anyone of any of that.

    • Your thanks are unnecessary.

      Sure. Courtesy is not necessary. But it is generally good policy. E.g., it would have been better policy for you to respond to thanks, not by dismissing them discourteously, but by saying, “you are welcome.” That way, you would not appear as boorish to readers as you otherwise might, and they might then be more inclined to take your comments seriously, and invest their own time in reading them. It would also make you a more fitting and pleasant guest here; which would increase the likelihood that your future comments here would pass the threshold of moderation so as to appear in the first place.

      I truly am grateful at the work you are investing in this discussion. My posts on the feudal stack of sovereign corporations have generated lots of comments, but no one has engaged with them as much as you have done. Our discussion has been fruitful for me, and I appreciate it.

      In fact, your use of past tense implies you don’t expect me to respond, as if your word is final.

      Not at all. It’s just that it would be odd to thank someone for something they might or might not do in the future. Usually we thank people for things they have already done, or undertaken to do. So past tense makes sense. Plus I didn’t want to make you feel obliged to continue the discussion.

      Before I address your arguments, I will address your passive-aggressive attempt at nomenclature. The name of my system is “Capito-nationalism” and it uses “Nation shares.” Your naming efforts should be directed at YOUR system, not mine.

      I’m not trying to rename your system for you. I started using the term “national shares” in this discussion when I realized that I needed an efficient way to refer to shares of the sovereign national corporation in *either* of our systems. I believe I was pretty consistent in using it that way. I agree with you that we are haggling over details of a system that is based on the same idea: that the operations of the state ought to be run as a profitable enterprise, and the residents of state domains given shares in that business: national shares.

      The most important difference between our two systems is that in mine, there are two disparate classes of national shares – the C and D classes – whereas in yours, there is (putatively) only one. Thus when I wanted to refer to your shares, I didn’t need to call them anything other than national shares. But when I wanted to refer to mine specifically, I had to specify that I was talking about C or D shares.

      Excursus: I should say in passing that, despite your protestations to the contrary, Wall Street would consider your locked up shares to be in a different share class than your tradable shares, because different shareholder rights appertain to the two types of shares. So it would be less cumbersome for you, too, to refer to your locked up shares as D shares. But if you want to keep typing out “locked up shares,” knock yourself out.

      I usually write longer comments in Word, then paste them to WordPress. And I save my conversations with interlocutors in a Word document. If there are spelling errors in a commenter’s text, Word bugs me about them. I hate that. So I correct them (I also correct syntactical and grammatical errors, because they irritate me even if Word overlooks them). Neologisms sometimes make sense to add to my custom dictionary, and sometimes they don’t. If I don’t add them, Word nags me that they are misspelled. If I can recast a neologism that I don’t want to add to the dictionary in such a way as to fool Word into thinking it is not an error, I’m happy. That’s why I hyphenated “capito-nationalism,” for example.

      If a denizen only has one D share that nets him $1K a month, then he will oppose any huge expenditure that lowers that even if it will raise it in the future. So ironically, it is your very tight feedback circuit that prevents long term planning.

      Fortunately, D shareholders don’t have votes! And, C shareholders will feel the same way: they’ll be reluctant to spend money that doesn’t need to be spent. That’s one of the main reasons to set things up so that substantial dividends are paid to national shareholders: so that they’ll have some incentive, however small, to control silly spending.

      My expectation is that shortly after national shares were issued, national expenditures would plummet. Meanwhile, national revenues would be something like what they are today, if not greater. The state would optimize revenues from all channels, by increasing them until revenues from each channel stopped going up and then backing off a bit. This would happen at the maximum of the Laffer curve for a given sort of revenue. At that maximum, state revenues begin to impose enough of a burden on economic activity that they begin to suppress it. So, reaching that point of diminishing marginal returns and then backing off a bit would allow economic activity to continue to expand.

      My expectation, again, is that the optimum state revenue thus derived would substantially exceed rational state expenditures. States are usually ridiculously profitable, even when badly run. If that were not so, then no one would want to gain personal control over the organs of the state. But there has been no state that did not engender competition for its control. I take that to demonstrate that state operations are extraordinarily profitable in almost all circumstances (whether or not that profit is honestly reckoned or publicly acknowledged).

      What we want is for the state to be optimally profitable. This is achieved when state expenditures are optimally directed, so that the policies and expenditures of the state engender the greatest prosperity of the nation, ceteris paribus. What those policies might be in detail would of course vary from one state to another, depending upon its circumstances. That’s why you’d want to leave the details of policy to the local C shareholders, who are most intimately acquainted with local conditions.

      Anyway, shortly after national shares were issued, the sovereign corporation should become pretty massively profitable. At that point, the national dividend would become pretty substantial.

      NB again that not all state revenues need to come from taxes on residents. Throughout the 19th Century, US Federal revenues came almost entirely from tariffs.

      Huge investments in capital assets of the sovereign – a military base, say – could be financed the same way they are now: by issuing sovereign debt. That way there would not need to be a massive hit to the income statement – and the national dividend – during the two years it took to build the base. Instead, the hit could be spread out over 30 years.

      Under capito-nationalism, the “denizens” who will only have 900 nation shares will not oppose such a long term investment scheme because that 900 nation share minimum will be lowered by 1% to allow them to sell off just enough to make up the difference in loss of income.

      That’s a clever solution. It would have the same economic effect on a national shareholder as long term debt financing of major projects by the sovereign. Either way, the shareholder’s national equity and dividend would diminish marginally. So that’s a wash.

      … total tax revenue must be greater than total dividend payouts. This means those with only one share are paying more taxes than they are receiving back!

      Not necessarily. In the first place, I expect that tariffs and tonlieux would generate pretty massive revenues, which would ease the tax burden on residents. In the second, if the tax on residents took the form of a transaction tax, then the majority of it would be paid by those who did the most spending: the wealthy. But all payments of taxes, tolls and tonlieux would be completely voluntary. Don’t want to pay them? Don’t engage in the transactions that generate them.

      You argue that employees are actually choosing to buy shares in their employer rather than oppose their employer. I disagree.

      What can I say? Whether you agree or not, it’s happening. My local pizza joint has an ESOP for the college kids who work there.

      The popularity of anti-capitalist rhetoric/policies/culture means buying shares of the capitalist is not as appealing as attacking the capitalist.

      One of the expenditures that would be cut first in the event that national shares were issued would be state subsidies to universities where socialism is taught and capitalism reviled. Quite apart from that, the fact that all denizens would own D shares automatically and inalienably from birth would give each of them some stake in the prosperity of the nation, willy nilly. It would be an odd Social Justice Warrior who *wanted* to see her D dividend go down. She might have the same social justice goals, but she’d be happy to find some way to meet them that didn’t hit her dividend.

      The idea is not to make everything all perfect overnight – things never get all perfect – but rather to give the high time preference denizens *some reason* to think prudently.

      Thus, just because the option to buy C shares exists and is utilized, does not necessarily mean denizens will not try alternative routes to political power.

      Sure. It’s just that the D and C shares *will make a difference.* Right now, Social Justice Warriors have zero motivation to enact rational policy, and massive motivation to enact insane policy. Under either of our systems, they would have at least some tiny motivation to think and act like sane patriots.

      Your logic about manhood not needing self-costly violence ignores the fact that the risks and costs of being violent are exactly the reason why being violent is respected. Risk-taking is an evolved trait.

      No argument there. I was not suggesting that manly displays would stop. I was pointing out that there are lots of ways to display manliness. Fighting cops is actually a pretty costly way to do it, even now. If fighting cops meant you lost everything, were flogged and then banished – in the process losing access to the girl you had been trying to impress – why, you’d display manliness in some other less costly way. A fast car; great dancing; MMA; endurance sports; whitewater (that worked for me!).

      I want a system that will allow me to build an ethno-state within a larger state.

      Yeah, I think that’s bound to happen, sooner or later, and whether or not systems such as those we propose are ever implemented. People would rather live with their own ilk than not.

      Thus, capito-nationalism; the nation shares are recursive where there will be state shares, city shares, town shares, street shares, block shares, etc.

      Yes! That’s the feudal stack of sovereign corporations, that allows for subsidiarity, and in fact encourages it. Because each sovereign corporation is anxious to reduce expenses, it will delegate as many tasks – and thus authority – and thus the attendant expenditures – downward in the hierarchy as it can. Higher levels of the stack *will not want* to control everything lower down in the stack, as they now do. This will allow for much greater heterogeneity among regions, and homogeneity within them.

      This patchwork of substates of state shares is bound together by a state of nation shares. Maybe it should be named the other way around? Should state shares refer to the top-most level of state?

      Excellent question. It seems to me that “state” could refer to the administrative organs of government at any level of the stack. Meanwhile, as you say, the USA is already inhabited by many nations, and that would be so even after their sortition. So, post-sortition, the current domain of the USA would be a federation of several nations. Shares in the USA then would be Federal shares. If Utah was a relatively homogeneous nation – as seems it likely would be – then shares in Utah would be national shares.

      It’s an interesting thing to speculate about.

      I chose the name “capito-nationalism” for a very specific reason. Ethno-nationalism is where your membership is determined by your ownership of some genes. Civic nationalism is where your membership is determined by your ownership of some culture. Theo-nationalism is where your membership is determined by ownership of some belief. Capito-nationalism is where your membership is determined by ownership of some nation shares.

      My bet is that once shares in each level of the stack were issued, sortition into homogeneous territories would get going pretty quickly. And it could transpire rather peacefully. Shareholders in Somali neighbourhoods of Minneapolis, for example, would soon adopt Sharia and discriminate against Christians and Europeans, so that it would become intolerable for anyone other than Somali Muslims to live, work, visit, or do business there. Surrounding Scandinavian neighbourhoods would reciprocate, and sortition would ensue. The economic performance of the Somali districts would then almost instantly crater, and the Somalis in them – cut off by the borders of their own district from the welfare benefits of the surrounding Scandinavians – would want to emigrate. But they would not be allowed into the Scandinavian neighbourhoods. They’d have to leave Minnesota. So they would. The Scandinavians would take over the formerly Somali districts of Minneapolis.

      After a decade or so, most of the Somalis in the USA would end up living together in a single area. But the process would then iterate, and the only place the Somalis would have to go would be … Somalia. No one else on the planet would want them around.

      You believe that allowing foreigners to buy nation shares will somehow destroy the nation. Doesn’t that contradict your premise that the most rational and long-term-thinking will buy the most nation shares and will thus self-select themselves to be the most rational rulers of the country?

      No. The most rational minds who end up owning C shares and controlling policy will observe that Diversity + Proximity → War, and – wanting to avoid war – will enact policies that discourage diversity and social friction, and that encourage homogeneity and social harmony.

      What’s more is that just because you buy nation shares does not necessarily mean you will have voting power, or even be let into the country. Remember, you will have to pass the interest parity test. This means foreign governments like Russia, China, Saudi Arabia, etc., will be able to buy nation shares and the country never has to change.

      You are describing the purchase by foreigners of what sounds more like sovereign debt than sovereign shares. The instruments they are buying entitle them to nothing other than a dividend, paid either in cash or in services. That’s an awful lot like a bond. Notice then that China can already buy our sovereign debt. That gives China lots of power over us. If they wanted to damage us, they could sell their US Treasuries for yuan, and crush the dollar even as they massively increased our national cost of capital.

      Why would foreigners buy nation shares if they don’t get the services offered to resident shareholders?

      To enjoy the dividends. But, again: foreigners should not be allowed to own national shares. Only denizens should be allowed to own them.

      Nation shares would have an increasing market value so they [could] be used as a store of value. They would also be proof of the alliance between countries. In a war, America is going to side with a country that owns many American nation shares, [more] than another country that has none.

      Do we really want to be at the beck and call of foreign nations that own a lot of our shares – or our sovereign debt, for that matter? I don’t think so. We’d be much less vulnerable to foreigners if we bought back all our sovereign instruments from them.

      [Sovereign] income is sold to foreigners, not provided free of charge. This means a resident shareholder receives money from foreigners which he can then spend in Vermont, and thus increase Vermont’s productivity.

      True. Is the transaction worth the loss of sovereignty? It’s a question that the owners of Vermont would have to consider quite carefully.

      You did not say foreigners should be allowed to vote, you said that there should be an option for those who want to vote to have the option to buy more voting power.

      I said that there should be an option for D shareholders – denizens who live in country and are subject to her laws – to buy voting C shares. I never said foreigners should be allowed to own shares at all. I have said again and again that foreigners should have no political power. Among other things, that means they should not be allowed to vote. And that means they should not be allowed to buy C shares. Only those who live in country should be D shareholders; and only D shareholders should be allowed to own C shares.

      I’ll also add that you can make voting power as a product of the number of nation shares and the length of time they have been locked for and the length of time they will be locked for. This still makes voting a choice, and gives more voting power to the most long term thinkers. So your fear of foreigners having any political influence is overestimated.

      Why not just adopt the rule that foreigners can’t have political power, period full stop? What is the problem with such a policy? I repeat the question I have asked repeatedly: why would a people *want* foreigners to exert political influence upon them, for Heaven’s sake? *Every people on Earth* has wanted to control its own destiny, and resisted the depredations of other peoples. Why should we expect that to change? Why should we *want* it to change?

      You believe that citizens will choose not to use their voting power to further empower those who own C shares because that would be “idiotic” and would be “crushed by competitors.” You do not provide a mechanism for this happening though.

      Who, or what, will cause citizens to lose wealth when they choose to grant citizens more and more power?

      C shareholders would already have all the available political power. They *couldn’t* vote themselves any more of it. All they might do is vote themselves more benefits per share than D shareholders enjoy. But because that would stoke class resentment that degraded economic performance, reduced C dividends, and made C shares less valuable, citizens wouldn’t want to do that sort of thing unless they were idiots. But ex hypothesi, there would be relatively few idiots among the C shareholders.

      … enacting a policy that will double the market value of the C share will INCREASE the citizens’ wealth, not decrease it.

      Yes. That’s why the big C shareholders would not want to do anything so stupid as to enrage the denizens by ruling that they be entitled to fewer benefits per share than citizens, or to a lower dividend per share. They’d be smart, and keep the denizens excited and happy at how great the country was going, and at how prosperous everyone was getting, and at how everyone was sharing in it, and able to succeed. They’d do what they could to prevent lower class resentment.

      And again, you say again how cash dividends will be the incentive to own more shares. Not everyone can receive more cash than they pay. Someone has to pay more than they receive.

      Those who spend a lot of money – the wealthier sort – would pay far more in transaction taxes than they received in dividends. Foreigners coming to the country or doing business in it would pay transaction taxes, tonlieux, and tariffs; they would earn no dividends at all. In its effects, then, the system would be progressive. The poorest, who transacted least, would pay the least in tax, and the wealthy would pay the most. But all the taxes would be voluntary.

      You also agree that D shares and C shares will not be tied together in market value because D shares will have no “market” value.

      Yes. My argument is not that C and D shares would have the same market value, but that they would earn the same dividend per share. Stupid C shareholders could of course vote for a higher dividend on C shares. They’d have the power to do it. But, being interested in the peace and thus prosperity of their sovereign domains, smart C shareholders would vote to keep dividends the same for both sorts of shares.

      Excursus: [Yet another new idea discovered in the process of writing]: smart C shareholders might even vote to make D dividends *greater* than C dividends, to increase the interest of the poorest denizens in supporting rational and prudent public policy – and just to give them more of a helping hand. After all, C shareholders don’t need the dividends so much as they need the political power to ensure rational public policy that can allow them – and the D shareholders – to prosper in their various enterprises.

      Voting a greater D dividend is after all exactly the sort of generous thing that citizens of the wealthiest nations have repeatedly voted to do in the 20th Century, via welfare benefits. Delivering welfare benefits via D dividends would be vastly simpler and cheaper to administer.

      You believe that paying out a service dividend to shareholders will lead to class warfare. I will just simply invoke your “if they want more X, then they will just buy more shares because it’s easier than warfare” argument here.

      A good point. But it won’t work for the poorest denizens. They won’t be able to afford more shares under either of our systems. So it will behoove smart citizens to increase the interest of denizens in good government, by making the D dividend (whether it is paid in cash or in services (it makes no economic difference either way, but cash is lots easier to administer)) at least as generous as the C dividend.

      Thus, to increase the value of the shares (whether C shares or nation shares), having more shares WILL entitle the holder to more services.

      Yes. Whether dividends are paid out as government services or as cash makes no economic difference to the recipient, apart from the cumbersome and anticompetitive aspects of being forced to accept services from a monopolist with guns. E.g., wealthy shareholders will not want to be forced to receive more health benefits from a health system like the VA. They’ll prefer to take the dividend and shop for the doctor and hospital of their choice.

      Cash dividends would get the government out of the business of providing services, and keep it limited to the business of government.

      Example: committing crimes will result in a loss of pre-defined number of nation shares as punishment. The more nation shares you have, the more you can afford to lose before you’re imprisoned.

      Excellent idea. Smart C shareholders would mandate that criminals would lose all their shares, of every sort, and all their other property in country, and suffer banishment. Who wants felons for fellows? Expropriate their stuff, all of it, and add it to the national Treasury. Banish them forever.

      The result of emigration is that those nation shares are unlocked to sell on the market. This is more decentralized than your state-as-final-buyer solution.

      Either way it is the state that is making the market. Appropriating locked up national shares and selling them on the open market is exactly what mutual fund operators do when they redeem shares from shareholders who want to sell and then turn around and sell them to other people who want to buy.

      Moreover, in the extreme case of widespread emigration, my state does not suffer at all because it does not have to pay out emigrants.

      The suffering of the sovereign corporation in the event of massive emigration is a feature, not a bug. You *want* sovereign corporations to suffer when they govern badly. You *want* the C shareholders to take a haircut when they enact stupid policy that drives people to emigrate.

      And my tax revenue structure is unaffected as well because asset values do not necessarily go down if there are fewer people in the country. What matters is the demand side which may actually increase as the short term thinkers leave; the homeless would all emigrate and cause the once-occupied properties to jump in market value.

      Fewer people → smaller buy side of all domestic markets → reduced quantity demanded of all goods & services → falling prices → diseconomies of scale → falling accounting profit → languishing investment in capital goods → languishing productivity → falling economic profit → falling asset values → smaller tax base → reduced tax revenues → weaker military → increased vulnerability to hostile takeover.

      You still believe that a productive capitalist will feel punished by having to sell off, or leverage, half his capital gains to buy nation shares. Your argument is that he’s losing ownership of something appreciating quickly, and gaining ownership of something appreciating slowly.

      Some will not feel punished at being forced to take capital out of a rapidly appreciating project and putting it into a slowly appreciating asset. Some will: those who think their project is worthy of their capital investment, despite its greater risk. Let’s face it, people don’t want to be told what to do with their money or their stuff.

      Who is really the most competent to decide whether an entrepreneur is right in wanting to invest in his enterprise: the entrepreneur himself, or some blind rule set long ago by distant bureaucrats and senators who are totally ignorant of the merits and demerits of his project?

      Deciding how society’s capital should be allocated should be left in the hands of investors. You don’t want the state intervening in capital allocation, any more than you want it intervening in the price of bread. The financial markets are perhaps the most economically perfect, efficient and intelligent of the whole economy. They are the *last* markets the state should intervene to deform.

      Consider that under the rule that at least 50% of everyone’s wealth must be held in national shares, at least half the total capital of the nation would be invested in shares of the sovereign enterprise. When we count the value of mortgages on real estate that would have to be invested in national shares, far more than half the total capital of the nation would be invested in the sovereign enterprise. It would be locked up there, and unavailable for private investment in plant, equipment, business formation, R & D, and so forth.

      What would the sovereign enterprise *do* with all that capital? It would – at least, if it were rational, it *should* – have no business activities of its own, other than the business of government. Would it use its vast capital to buy shares in private enterprises? In that event, at least half the nation’s land and publicly traded companies would be owned by the state.

      That is starting to look a *lot* like socialism, or else massive state capitalism on a scale that would have made the Nazis blush.

      You say you don’t hate debt, just usury. Then why did you reply [that] a [mortgage collateralized by nation shares] “smells like usury” in a previous comment?

      As I wrote:

      Full recourse debt is next door to slavery, because in the final analysis it is collateralized only by the human life value of the debtor. So likewise is the right to sell a man’s denizenship out from under him in the event he does not perform on his debt. Such debts are collateralized by denizenship; and denizenship entails almost all that is involved in life, and precious therein.

      If your debt to me is collateralized by your shares that entitle you to denizenship, which if you default I shall seize as is my right under terms of the note, why then if you default you shall lose your whole life within the sovereign domain. You’ll have to leave everything you know and own and love, and depart to live as a stranger in some foreign land – if you can find a foreign land that will have you.

      My right to collect your D shares then is tantamount to my right to destroy your whole life.

      That’s why that right smells like usury. Indeed, if anything it smells somewhat worse; for, even the debt slave is entitled to live in the land of his fathers, and of his family and friends.

      This is why I argue that D shares must be inalienable, except in case of emigration, or in case of felony, sedition, or treason. As inalienable, not only may D shares not be traded, but nor may they be pledged as collateral.

      I got totally confused by your example of Alan’s farm. If you could recast it in standard mathematical syntax, I’ll take a shot at it.

      I will however just say that I would never borrow money from a lender who made me wear a GPS tracker as a condition of the loan. Stinks of usury.

      You argue that buyers don’t know the value of a business so they don’t know if there’s an opportunity for profit by buying. I don’t see that as an issue. It’s up to the business owner to advertise the profitability of his business.

      And it’s up to the buyer to figure out what bets he wants to take, despite his deficit of information. Caveat emptor! OK, I buy that.

      If the business is bought against the founder’s wishes, then he can just buy the registration back instantly for the new asking price (can only deviate 1% per day). The cash to buy the registration back would already be in the escrow and can be used to deduct from the buyback. Thus, you only need to deposit the difference.

      OK, was not aware of that 1%/day limit. So say you had declared your business was worth $100M. 1%/day rule means that over 20 days a buyer could bid it up to $120M. So, to keep the business, you’d have to fork over the $20M he had already deposited in escrow, plus $1 to outbid him. You would keep the business. At the next self-assessment of its value, you’d declare it worth $100M. No change in your taxes, so that’s cool. The question is: why would the guy bid for your business at all, if he knew you could keep it for $1? Why would he go to that trouble and expense (of the interest lost while his millions were in escrow), unless he thought you were ready to sell? If he thought you were in fact ready to sell, why wouldn’t he just give you a call and make you an offer, and leave the state out of it?

      I’m not seeing how this works to keep self-assessments honest. Given the foregoing, why wouldn’t you declare the value of your business to be $1? Someone could come along and offer you $120M for it, and you could buy it back at the net cost to you of an additional $1. Meanwhile state asset taxes on your business valued at $1 would be $0.01/year. Sucks for the state and her shareholders, but great for the entrepreneur.

      Your arguments against the annual self-assessed 1% value tax don’t convince me. A retired couple already have to pay property taxes today so nothing would change there.

      But it should. People should be able to live in their houses in peace, once they’ve paid for them. People should, in other words, be allowed *to finish paying* for assets. If you never finish paying for an asset, you don’t own it. You are leasing it. It doesn’t appear on your books as an asset. It appears as a liability.

      But you overestimate the value of wild woods.

      The wild woods are valuable *to their owner.* Who is to say he is wrong in that? Whoever would say that, let him put his money where his mouth is, and offer so much for those woods that their present owner *wants* to sell them.

      Distortion is a technical term in economics.

      Believe me, I understand economics.

      Transaction taxes cause distortion because they increase the price of the asset and thus lower the demand for said asset …

      You’ve missed the point. Where simple and straightforward transaction taxes are levied on transactions in *all* goods, and have replaced the complex and disparate other taxes that had been variously and differently imposed upon them, there is no distortion. When transactions in *all* goods are taxed 1%, all goods are on a level playing field.

      Say the transaction tax is 1%. That means that I will pay that 1% *no matter what I spend my money on.” I may buy 1% less than I would have otherwise, but my decision about *what* to buy will not be affected. So the transaction tax will not push the market for any good away from its equilibrium; and all goods will then be in equilibrium with each other, ceteris paribus.

      … your tax structure requires everyone to track and record every transaction they participate in, and a huge bureaucracy to verify those records. Mine doesn’t.

      Most merchants are already tracking and paying sales taxes. They do it with software. It would not be a big deal for them to continue doing so – especially when their compliance costs respecting all other taxes would have disappeared.

      You seem to believe that “maximizing tax revenue” [equals] “setting the tax rate at 100%.” That is not so. Market values will go down to 0 and everything will be “rented” at that point. While that would not cause bankruptcy, it would cause horrible incentives to arise which would destroy the state’s ability to collect tax revenue.

      That was my point. The mathematical absolute maximum tax consists of state confiscation of all assets and all compensation on all work. The sovereign does have the power to enact that confiscation. It’s not going to happen. Better then to speak of *optimizing* taxes.

      You also seem to apply the concept of sentimentality to everything bought on the market. I was referring to the resistance of the unproductive to sell their “sentimental” asset so that it can be put to more productive use.

      I apply the concept of sentimentality to *all economic evaluations.* What is valuable to a person is valuable by the light of his sentiments – his feelings – about it. His sentiments about the value of a good are a factor of the price he is willing to accept or pay for it. His sentiments, netted against the sentiments of all other counterparties in the market, are then going to determine the market price of that good: the price at which a buyer and seller agree that both their sentiments are happy with the transaction.

      A homeowner who does not want to sell because he grew up in the house is valuing it sentimentally; so is the developer who wants to buy it from him on account of his sentimental attachment to making money by developing real estate.

      Sentiments then are the urge that subvene all economic transactions.

      Just because you grew up in a house and lived there for 50 years does not mean you should get to live there for 50 more when you’re preventing something more valuable from being built.

      Just because you have a nifty idea for a new development does not mean you should get to kick out all the people who live on a property when you are preventing something more valuable from being enjoyed by them.

      We already seize such homes from such owners. The process is just [100 times] more complicated, lengthier, and stressful.

      As it ought to be. Who is to say that the sentiments of the developer about a property are more important, accurate, or socially useful than the sentiments of its present owner? The developer may be an idiot. It might be better for society, when all is said and done, to leave the neighbourhood alone. If the developer’s project is so terrific, let him bid so much for the properties he needs that the present owners will be thrilled to sell to him. If he can’t bid that much, then his project is not economical, and should not go forward.

      Economical projects don’t need to be forced. All parties agree to them voluntarily. The only reason transactions ever need to be forced is that they are uneconomical.

      My mechanism only applies to registered assets. Are you suggesting body parts and humans will be registered assets?

      No. It was a reductio ad absurdum. To see whether a notion is workable, push it to the extreme and see what happens. Your attachment to *everything you have* is sentimental, just like your affection for your dick. No one would suggest that your sentimental affection for your dick is sick; ergo, etc.

      See how it works?

      You argue that one dollar invested in GM, and that dollar going to someone who invests in Toyota, does not necessarily mean the seller of the Toyota stock is going to invest that dollar in Walmart.

      No. You got that all wrong. It appears that you are not reading carefully. If I sell GM, I reduce the demand for GM stock at the margin. If I turn around and buy Toyota with my sales proceeds, I increase the demand for Toyota stock at the margin. There is no free lunch. GM doesn’t get to keep my dollar when I invest it in Toyota instead.

      GM, Toyota, and Walmart get the dollar.

      They may all get *a* dollar, but they don’t all get *my* dollar. I can buy only one thing with it. I can’t buy all three stocks with the same dollar. Thus there is no way I can buy one stock or sell another without affecting the overall quantity of those stocks demanded by the market, and thus their market prices, and thus their costs of capital.

      You seem really attached to this notion that new companies being listed on exchanges causes all the other companies to be devalued.

      Ceteris paribus, that has to happen. It’s just that, in practice, numquam ceteris paribus.

      I’ll make this as simple as I can. Let X be the value of all wealth invested in the publicly traded financial markets. Say that X is fixed, so that ceteris paribus. ABC Corp. goes public. If any of X is to be invested in ABC, other assets must be sold. Their market capitalization must go down if ABC is to have any market capitalization.

      See how that works?

      In the real world, of course, X is not fixed. Wealth can flow into and out of the financial markets. When ABC goes public, lots of wealth that had been on the sidelines might flow into the markets to buy it.

      I’m not convinced that denizens and citizens will want the same thing for public policy. Denizens do not own C shares, thus they don’t want C shares to go up in market value. Citizens owns C shares, thus they do want C shares to go up in market value. This is a conflict of interests.

      Denizens don’t really care about the market value of C shares one way or another, until they are ready to go buy some. They care about their D dividend. They want it to go up. So they want good government, that will engender prosperity, ceteris paribus. So do citizens. Everyone then profits from good government. The D dividends are feeding back to denizens explicitly the effects upon them of good government. They allow denizens to feel – sentimentally – the effects of good government, in the form of a nice fat monthly check.

      I’m also not convinced [that] capito-nationalism is “too democratic.”

      Upon reflection, I think you are right about that. I retract that criticism.

      In your system, it’s not necessarily true that the wealthy will have more voting power. In fact, a billionaire might have no voting power at all!

      Yup. The wealthy will not be forced to park their capital in the sovereign corporation. They will be able to invest elsewhere, should it make sense to them to do so. Is that a problem? No; for, those people who *do* own C shares will generally be *more sagacious than those who do not.* That is all that is needed to correct for the Tragedy of the Commons.

      I’m also not convinced [that] mandating most wealth to be in nation shares will hurt productivity.

      Let’s try another reductio. Say that instead of forcing everyone to hold half their wealth in national shares, the system forced them to hold half their wealth in pig farms. There’d be lots and lots of pork, right? Too much though, huh? Way, way, way too much pork. I know, I know; it’s hard to imagine *too much bacon.* But it would happen if half of all society’s wealth *had* to be invested in pigs.

      The massive investment in pigs would mean that investment in *everything else* would be less than it would otherwise be. There would be less investment in pharmaceuticals, energy, software, lumber, education, you name it. Everything else would suffer. Reduced investment in plant, equipment, research and development *just is* reduced improvement in productivity: in output per hour of labor.

      But we’d have pig farms all over the place; why, every second property would be a gleaming pig farm.

      You see the problem? Forcing investment of half of all social wealth into *anything* would be massively inefficient.

      The general rule is that if an investment doesn’t happen unless it is forced, why then it is a lousy investment, for sure. Reciprocally, if an investment has been forced, you can be pretty safe in presuming that it was a lousy investment.

      Let investment in national shares be so attractive that no one has to be forced to own them. That’s the way to do it. And the way to make that happen is to make the operations of the state really great, so that the state is wonderfully profitable to its shareholders.

      • If you can’t even bother to click “add to dictionary”, then I know your level of engagement is necessarily below that of the effort required to click a couple buttons. Thus, it makes no sense for me to engage further. Even more offensive, you tried to sell me a story about wanting to keep your dictionary list slimmed down when, last time I checked, latin words and links are not stored in the spell-checker’s dictionary. I might check back in the future to see if your level of engagement has increased so that mine can.

      • Don’t be absurd. If my detailed and careful 7,000 word reply to your penultimate comment does not adequately testify to my engagement with your thinking, nothing will.

        You are a guest here, and I am your host. It behooves you then, if you want to maintain your welcome, to behave courteously. Berating your host and insisting that he do things your way is not only boorish, it is ass backward: when in Rome, do as the Romans do. Or else, the Romans will take a dislike to you, and kick you out of the city.

        See, this is why we need national borders, and to keep out the influences of foreigners and their foreign ways, who do not want to accustom themselves to our customs.

        If you want to comment here, you shall have to accommodate yourself to the occasional emendation of your prose by the editors of the site. We are traditionalists around here, and one of the traditions we care about is that of English. We guard it rather carefully. Not that we never ourselves err in its use, but we work hard to drive errors out of our prose – and, we not uncommonly try to correct those of our commenters, taking it on faith that, as gentlemen of like mind with us, they will not take our corrections amiss, as you have done, but rather appreciate them.

        I’ve had to correct dozens of syntactical, grammatical and spelling errors in each of your comments, before I could bear to read them for substance – which I very much wanted to do. I had to correct two in just your most recent paragraph. Your high error rate bespeaks a more general sloppiness, which appears to be echoed in your misprision of so many of my arguments.

        Case in point: you’ve just badly misunderstood my explanation of my preferences regarding my custom dictionary in Word. I don’t want to keep it trimmed down, and did not write that I do. On the contrary: I love words, cherish archaic terms, and devise neologisms all the time when it suits my purposes – doing my best to make them consistent with the aetymological roots of their progenitors – and I save them in my dictionary, which is enormous. I save a lot of words from languages such as Sanskrit and Hebrew, too. It’s fun.

        What I want to do with my dictionary is keep out ugly or barbaric or ill made neologisms (and URLs). Madison Avenue comes up with them all the time. One of the things that drives me nuts about latter day writers of English is the widespread habit of collapsing terms into new compound words, when the expanded term is just as economical, more precise, and more euphonious. I often add a hyphen to them, so that Word doesn’t nag me about them.

        The fact that you are so worked up about whether I use your neologisms that your ire at my reluctance to do so prevents you from engaging with substantive arguments gives the appearance of retreat from the lists. “He’s not wearing the same style of surcoat as I, so I’m done with jousting for now.”

        I’m not saying you are in fact retreating. That’s just what it looks like. It’s not a good look.

        You are welcome back here at the Orthosphere whenever you choose to return, provided you drop the aggressive tone and observe a few more of the niceties of courtesy.

        I shall close by thanking you again, honestly, for all the work you have put into this conversation. It is something of an honor to have enjoyed so much of your earnest intellectual attention. Fare well.

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