A Libertarian Manifesto
1. The State has failed its latest promises and its role must now be reshaped in a
manner which may serve and liberate rather than oppress people. We are
bankrupt, impoverished and at the end of our tether because of half a century of
financial mismanagement by the State in America, Europe and South Africa alike.
2. Since it emerged in the aftermaths of the treaty of Westphalia of 1648, the State has
achieved a lot for the cause of progress and liberation of mankind, in that it
destroyed intermediary social formations such as aristocracies and guilds, thereby
creating an immediate and exclusive relationship between itself as the new
sovereign and the people regarded as its citizens.
3. In the 20th century the State failed its promises in all countries and brought about
untold human sufferings: in the 20th century alone States butchered about
200’000’000 people in wars waged by armed States fighting one another for causes
which only existed and had worth because of the existence of the State and its
trained standing armies. The past century has witnessed many false-flag operations
consisting of acts of war perpetrated by the States across the Western world
against their own innocent citizens to manipulate popular will, justify unwarranted
or unpopular wars or maintain a state of emergency.
4. Mankind’s progress no longer relies on the State or on any super-States such as the
United Nation: it relies on returning power to that which bears no public power, viz.
civil society and the sovereign individual, and neutralizing the pernicious aspects of
the States and those who feed off them for their unlimited perpetual enrichment.
5. The role of the State in achieving desirable social goals must be reformed. There
must be a constitutionally entrenched and legally justiciable new divide between
State and civil society based on the principle of subsidiary, so that
a. the State may be barred from conducting any activity which civil society can
conduct with comparable efficiency and reliability, and
b. the judiciary may review the State’s engagement in any activity that can
potentially be undertaken by civil society and order the state to
i. stop, or divest itself of, or privatize said activity if there are no
compelling justifications for it to conduct it in lieu of civil society;
ii. sell state owned enterprises or assets when there are no compelling
public interest justifications for them;
iii. liquidate all commission, statutory bodies or other instrumentalities
and State assets in respect of which the State can no longer justify
their
1. mission in respect of the foregoing principle of subsidiary, or
2. respective budgets;
c. in the transition period, a short-lived interim commission is to be
established to identify all that which the State must transfer to civil society,
regulate or liquidate, so as to
i. prevent the aforesaid court action, and
ii. accelerate the process of libertarian transformation.
d. Because the State grows its functions through the self-generated persistent
growth of its legislation and regulation, an independent commission with
both economic and legal qualification is to be established in the constitution
with the power to declare the unconstitutionality of legislative and
regulatory requirements which are not, or are no longer, justified by
compelling reasons of public interest and when private activities can satisfy
the relevant needs with compatible reliability and efficiency at that point in
time.
6. The foregoing principle of subsidiary applied to the relationship between the State
and civil society must accompany the strict application of the constitutionally
entrenched and legally justiciable principle of subsidiary within the organization of
the State, so that no level of government or administrative structure within the
State deals with a matter which can be dealt with by a lower structure with
comparable reliability and efficiency: so that
a. the super-national organization must not do what the national State can do
b. the national State must not do what the region/province/member state can
do;
c. the region/province/member state must not do what the
county/municipality/local authority can do; and
d. this to continue all the way down to the sovereign individual who shall be
entitled to retain the full measure of societal power and autonomy which is
not justified to transfer to the State.
7. Whenever the choice exists between addressing a social problem by means of a
statist-regulatory approach or a civil-society-based approach the latter must
prevail, where
a. the statist regulatory approach, inter alia, consists of establishing a state
structure which makes the relevant conduct a crime and gives the function
to State officials to protect citizens and go after the perpetrators of the
violation, while
b. the civil-society based approach, inter alia, consists of protecting individual
interests by empowering citizens to react to the violations of their rights,
often by means of litigation, financed by the hope of incentives and rewards
such as class actions,. punitive and double damages.
8. We recognize that the most important provision in the American Constitution is the
Tenth Amendment, which indicates that all those powers which are not expressly
devolved to the federal level of government or reserved to the member states
belong to the member states and the people respectively. All constitutions must
have such a provision and all countries must enforce it and respect it to the fullest
extent possible.
9. The social goals ostensibly to be achieved through the State are in fact
impaired by the existence of the State. We subscribe to many socials goals,
including, inter alia, universally free quality education, quality health care,
social security, old age assistance and social safety nets including, food
security and food stamps, minimum income or social grant, and the right to
shelter or housing and a clean, pleasant and safe environment.
10. However, none of these or other goals requires the State to own or operate any
service provider. This shows how libertarianism is first and foremost a methodology
which may serve both traditionally right wing and left wing political philosophies.
The libertarian method has no necessary bearing on what one would wish the State
action to achieve. It is a method, not a policy or a social program. This means that
libertarianism may be neutral in respect of the dichotomy between socialism and
non-interventionism, for instance; for a socialist State could operate through the
libertarian method and in terms of the spirit of the Tenth Amendment. It could
make provision for everyone to have the right to free education, healthcare,
housing and other benefits without owning or running a single hospital, school,
housing project, power plant, jail or police station.
11. State institutions typically operate inferiorly and more expensively than those
operated by the private sector. It is absurd for the State to own and run services.
The same services must be provided by the private sector operating on the basis of
vouchers or direct government finance, in a system in which government, at any
level, is nothing more than an administrator of contracts.
12. The State must limit its action to
a. setting norms, standards and performance targets for the operation of a
service or the provision of a benefit;
b. tendering a first contract for the operation or the service concerned, such as
a jail;
c. tendering a separate second contract to another entity to monitor how the
operator performs and whether it is achieving its performance targets under
the first contract;
d. distribute vouchers, such as vouchers for schooling or to pay medical care
insurance companies, so that the intended beneficiaries may choose their
service provider, i.e. their school or medical insurance plan, on the same
basis as all those who have not been on welfare have done for two
centuries.
13. The State cannot pass laws and also be responsible for their implementation, for
that requires government to control itself and hold itself accountable, a double act
at which the State has failed to perform abysmally, in spite of its division in three
branches and its alleged checks and balances. Ostensibly, such accountability
should be brought about through the mechanisms of parliamentary democracy,
which have not worked and will not work. In reality when government breaks its
own laws and standards, for instance by running prisons which do not comply with
its own rules of human rights protection and quality of detention, or a failing
immensely expensive education system, there is nothing that can be done. The role
of government ought to be limited to setting out laws and performance standards
for their implementation and monitoring by the private companies contracted by
the State.
14. In this manner the State will be creating rather than wasting wealth. At present, the
most efficient Western governments use on average 23% of their resources merely
to run themselves and the least efficient up to 75%, with only the balance
translating into tangible services to the citizenry. A private company works on an
average G&A of 10% to 15%.
15. We are not opposed to, and in fact we support, the enlightened vision of a single
world community without boundaries which finally unifies mankind under a single
framework of governance, buy only if such form of world government is shaped by
the aforesaid principles of subsidiary, and only if it brings about a radical reform of
the financial world based on debt-free sound government-issued notes; failing
which the pattern of mankind’s enslavement and oppression which run through
recorded history will be maintained, enhanced and replicated in the new world
order.
16. The State is now the arc stone of a new social compact which is designed to oppress
and exploit the majority of mankind as much as the social compact was in the
feudal age. The present social compact benefits those who
a. lend money to the State to finance the national debt,
b. receive the first use of State money through government’s contracts, or
c. receive welfare of other benefits from the state because
i. they are poor and to be maintained poor in perpetuity: because
they are the State’s constituency and ultimate justification, the
financially impoverished are maintained poor and dependent on
subsidies and welfare, or
ii. industrialists receiving subsidies and forced transfers from the
family aggregate and the middle class on account of their employing
people who too will be kept poor in perpetuity by the State.
17. In today’s world, the juxtaposition of interests is not between social classes or
between proletariat and industrialists. It is rather between productive people
including workers, industrialists and the family aggregate on the one side and, on
the other side, the exploitative and parasitical financial potentates and money trusts
which produce nothing and impose their private tax on everything which is
produced or consumed. This private tax is exacted through the State which is
prevented from printing any public money and encouraged to borrow as much
private money as possible, and always at an interest.
18. In 1891, Democratic presidential candidate William Jennings Bryan, campaigning to
bring silver back as a money standard, put it to the international money trusts in
unforgettable words which ring as relevant today as they did 120 years ago. He told
them: " […], having behind us the producing masses of the nation and [...] the
commercial interests and the laboring interests and all the toiling masses, we shall
answer their demands [...] by saying to them, you shall not press down upon the
brow of labor this crown of thorns. You shall not crucify mankind upon a cross of
gold."
19. The reform of the monetary system is essential to break this oppressive social
compact. We must replace privately-owned banknotes, which are only created
through debt, with publically-owned debt-free government notes issued by the
treasury.
20. An unholy alliance is in place between bankers, insurances and financial institutions
and the state. The fulcrum of this alliance is in private central banks which own the
money which the State can only use by borrowing at an interest to be repaid by
taxing citizenry to the fullest extent possible. By not printing its own debt-free
money from its own treasury, the State effectively is constantly transferring wealth
from the citizenry to the bankers and the financial sector with no social benefit or
purpose, and the more it spends, the larger it is and the more it borrows, the greater
the measure of this robbing the poor to enrich the rich. The reform of the iniquitous
world monetary system which rules us all is the most pressing civil liberty agenda
item.
21. The State has failed in everything it has touched and sought to achieve. As
compared to private endeavors, State education in America, Europe and South
Africa alike has failed and all those who have not had the benefit of a private
education or private efforts and dedication to supplement their public education are
often far from having achieved the full measure of their God-given potentials. The
State has failed to administer public healthcare, prisons and social services. In
America, Europe and South Africa alike we are looking at a major failure in
infrastructures which for the past thirty years have just not been renewed, with no
amortization plan for their reconstruction.
22. The present debt crisis may not be fixable. It just may be the case that the imminent
collapse of the house of cards of debt-based money and government debt which
cannot possibly be repaid, will create a crisis in which the cause of liberty may
reemerge. We must prevent that the crisis creates a super international state with
global fiat money.
23. The State has cocooned itself in a web of special rules applying to its finances,
legality of its actions and administration, and has done so much more in Europe,
America and South Africa alike. There is no longer any rational justification for these
archaic sovereign privileges, including special administrative tribunals and
administrative law. There must be one set of rules, one set of courts and one set of
financial accountability criteria for any and all, including the State which should
operate on the same basis as companies and individuals. Whenever there are
different rules, privilege and parasitical corruption flourish. Only by achieving this
type of equality will the work of the French Revolution and the American War of
Independence be completed; for both have long been hijacked and betrayed.
24. The essence of the State is that of maintaining ever-increasing public spending in a
framework of freedom in which the overwhelming majority of people, albeit
formally free, is enslaved by poverty and by periodic economic crises created by the
unavoidable boom-burst economic cycles of a debt-based economy, which suck
away any equity people build for themselves or their posterity. In a civilized country
such as Italy, people are now subjected to 45% income tax, 23% VAT, and another
averaged 7% worth of indirect taxes. In addition they pay taxes on the property they
bought with their after-tax money or they inherited after having paid about 50%
inheritance tax on the after-tax money their parents saved for them. From the
United States to South Africa the situation is effectively the same even though
numbers and fiscal techniques may vary. In this manner, no equity is ever
maintainable and therefore is never acquired: the overwhelming majority of people
find themselves on a constant treadmill designed to prevent them from acquiring
equity which may free them.
25. The condition of citizens has dramatically improved over the centuries, but their
position has not changed from when they were part of the serfdom working for the
feudal lord. The feudal lord changed servants’ condition to that of tenants
transforming himself into a landlord while leaving tenants in the same position as
before. As the economy grew, tenants improved their position and become property
owners, and the landlord, who promoted the agrarian reform to divest himself of
the burden of land, became a banker lending both to the new property owners and
to the State which in turns robs from property owners to pay bankers. The wave of
progress has raised all, but changed no-one’s position; for citizens acquire nothing
but hold all only as servants or tenants for as long as they can pay for it through
their continuing work, failing which within two generations what they earned goes
back to the owners of the wealth through the good offices of the State.
26. Parliamentary democracy is but a choreography creating a sandpit in which a class
of parasitical meek and weak politicians can be seen to play and are allowed to
make decisions in matters of no or limited consequence, while those who really
matter make decisions of consequence elsewhere. The power to declare wars,
which are the ultimate tool to increase useless State expenditures, has been
removed from Parliament and transferred to the United Nations. Decisions on fiscal
and financial matters are not taken in parliaments. The entire management of the
domestic and international monetary system has been taken out of the perusal of
the State.
27. The citizens have been disempowered by elected representatives based on myth
that representatives elected once every 4 or 5 years will do exactly as the electors
would. The representatives are selected not on the basis of qualifications but on
account of their skill in ingratiating the population in an ever more stupefying
cultural environment in which characters and actors are no longer distinguishable.
Unskilled, under-resourced political representatives are divided in competing groups
and subjected to constant competition between parties and conflicts within their
own parties. They are distracted by having to prepare and run elections every 4 or 5
years, fundraise, hold rallies and constantly stage manage their relationship with the
citizens. They are forced to deliberate through tortuous and time-consuming
procedures which are often subject to paralysis by analysis or consultation. As soon
as the political system appears at risk of becoming capable of taking decisions, its
willpower becomes more fragmented by empowering trade unions and other role
players. In this context, there is no chance of steering the Titanic and politicians
cannot but rearrange chairs on its upper deck.
28. Nowadays the power of the State relies for its maintenance on a lesser measure of
repression than in the past, as the real sovereigns and masters of the State have
moved into hiding and to safety beyond the empty choreography of the democratic
curtain and stupefying the population has become more effective than repressing it.
Yet, even though less than in previous ages of history, the relation between freedom
and authority within a State is still skewed by a measure of repression greater than
what is required to maintain social cohesion. In this sense, the State relies on
victimless crimes, prohibitionist laws and social morality sanctioned by law. All
victimless crimes and prohibitionist laws must be abolished.
29. Libertarians must reaffirm the sovereignty of the individual as the starting point of
any social construct.
30. We must resist the project of disarming the citizen. We believe in the individual right
to bear arms. This right is foundation to an entire mindset which reminds us that all
that which has not been delegated by the citizens to the State belongs to the
citizens, as promised by the Tenth Amendment.
31. Explaining the difference between democracy and liberty, Benjamin Franklin said
that democracy is about two wolves and a lamb deciding what to have for dinner,
while liberty is about a well-armed lamb objecting to the vote. This mindset has
been lost in Europe and South Africa alike but is still alive in the healthy portions of
America. The French Revolution has been forgotten and the Restoration has won.
Europeans have been taught to love and trust their new faceless sovereign and have
been given enough space, freedom and stupefying entertainment to feel satisfied, in
spite of becoming poorer and poorer as each generation goes by, while the
sovereign puppet masters are becoming richer and richer.
32. We must believe that once again We, the People, the sovereign individuals, can rise
and right the wrongs.
A Libertarian Cry from the Wilderness
In today’s world the juxtaposition of interests is not between social classes or
between proletariat and industrialists. It is between productive people including workers,
industrialists and the family aggregate on the one side and, on the other side, the
exploitative and parasitical financial potentates and money trusts which produce nothing
and impose their private tax on everything which is produced or consumed. This private tax
is exacted through the State which is prevented from printing any public money and
encouraged to borrow as much private money as possible, and always at an interest.
Parliaments have the unlimited constitutional power to allow the State to borrow as
much money as they please. In South Africa we have borrowed over 45% of our annual GDP,
Italy has borrowed over 100% and the United States has managed to borrow more than the
annual GDP of the rest of the world combined. State borrowing is the only way through
which new money is created out of thin air and brought into circulation. Every unit of money
we use, whether cash or credit, comes with a measure of interest due on it, which must be
repaid to those who buy the treasury bills issued by the State. The buyers are mainly the
international money trusts and those who tag along, such as pension funds and speculators.
Parliaments have had, used and abused the constitutional power to bankrupt their
respective nations and mortgage the future of our children and grandchildren under
unlimited debt, and have done so from Italy, to Greece, Portugal, United States, Ireland,
South Africa, et cetera. Yet none of them has the power to allow our respective treasuries to
print a single unit of debt-free money. This is because, by becoming rich through debt,
nations get taxed on their wealth through the iniquity of the private monetary system and
by remote and secretive sovereigns. Sovereign debts amounts to over US$ 75 trillion of
which only a fraction can be reckoned in the balance sheets of pension funds and publicly
traded companies. The rest yields trillions of dollars per year worth of interest payments
paid to those who own the world.
Sixteen century French theorist of sovereignty Jean Bodin postulated that the power
of issue coins is one of the hallmark powers of sovereignty, alongside the power to wage war
and make laws. We, the purportedly sovereign people, have lost this power and have firmly
transferred into the hands of a distant, elusive, secretive and invisible group of sovereigns.
For mankind, there is only one way out of this, which is abolishing banknotes and
adopting government notes in their lieu, backed by a silver standard, as silver is so
sufficiently plenty and well distributed around the world that economic potentates cannot
control its price and supply the way they do with gold or diamonds. By itself a silver standard
may not be the sole solution, and a more diverse backing may be required for sound money
of the future, such as a basket of commodities and even tradable basic added value goods.
We must use this crisis to promote the reform of the monetary system to deprive
privately owned central banks, such as the South African Reserve Bank, the Federal Reserve
or the European Central Bank, of the power of owning and issuing our money. Money issued
by a treasury carries no interest and can be issued and retrieved with the same tools of
monetary policies used by central banks. We need government notes to repay sovereign
debts contracted in bank notes.
We must do away with debt-based money which is fiat money created out of
nothing with no backing or intrinsic value and replace it with sound debt-free money. Both
fiat money and a debt-based monetary system will always and inevitably produce inflation,
as they have since their introduction. Conversely, an ounce of silver buys today about the
same it bought a hundred years ago. Two hundred years of data prove that inflation is never
corrected by the various tools put in place to cope with it, such as consumer-price-index
adjustments. It is therefore the most pernicious hidden tax on the poor and the middle class
with an immense drag effect on the possibility that people may build sufficient equity to
emancipate themselves from poverty and debt.
Only this explains the role of the State for the past hundred years as a squandering,
rotten, irresponsible, inefficient, inept, ever delinquent and nefarious entity with the
unlimited power to borrow and with a million incentives to do so. The prevailing orthodoxy
has taught us that that the State is there to help, protect and assist us. But let us consider us
all as an aggregate and during the period of a generation. In the past 40 years, which is the
work period of a generation, we have given the Italian State resources in excess of half of all
that which we have produced or earned, either in term of cash such as direct or indirect
taxes or in term of credit as money that we are imposing on our children and grandchildren
to pay off.
What have gained in return? Somehow the prevailing ideological orthodoxy has
convinced us that we should not ask what we get from the State for our money, almost as if
we were to assist it the way we do with our aging parents. Not so, says the heretic who
demands to know what he gets in return for what he paid. In the past most States have built
no significant new infrastructures, have run abysmal education and health systems which
are of much inferior quality than what is provided by the private sector, and have failed to
provide housing and even decent policing. The State has failed or underperformed in each
and every task given to it, and squandered a huge amount of money in the process. If it were
a private company, the State ought to be fired, shut down and prevented from doing
business ever again because of unmitigated idiocy and inefficiency. Yet, the prevailing
ideological orthodoxy has convinced us that we, the hopeless people, cannot do without it.
Not so. Free public education does not necessitate State schools, teachers and
janitors: it would be much better operated by giving to all those qualifying for it a voucher
which they can use at any school they wish, engendering a healthy competition for the
business. By the same token, free public health does not require any State hospital, doctor
or nurses, as free justice does not require State judges and the appalling judicial system run
by the State. There is not even reason for the State to own and operate prisons, which in
Italy it is doing appallingly; for the State would be better off merely awarding two sets of
contracts: one to operate prisons and another to ensure that prisons are run in compliance
with the standards and rules set by government.
Even a fully socialist government can achieve its policies through a libertarian
methodology. The most socialist policies could be pursued, the widest social nets
established and the broadest public functions undertaken without the State owning or
operating any service outlet or provider, including the police and courtrooms. The function
of government should be limited to providing laws, regulations and standards in the public
interest, for the general and uncontroverted observation is that all that which the State
operates is inefficient and, as compared to the private sectors, substandard.
So why would anyone wish it expand its operating functions as much as it has done
throughout the Western world in the past eighty years? Do we really live in an age of
generalized lunacy or are we, the heretics, the real lunatics? Comforted by history teaching
us that more often than not prevailing orthodoxy turns out to be lunacy, I can identify no
reason for the unmitigated ever increasing expansions of State functions, but the fact that
no-one can spend and squander money as well and as fast as the State does. This fast
spending is essential in a debt-based money system in which real wealth is produced
through interest repayments. Among many things, this explains the otherwise 'mindboggling observations that since WWII, wars have been fought not to be won but to be
sustained for as long as possible together with their associated public expenditure, ranging
from the Korean war to Vietnam, the Cold War, Iraq and Afghanistan.
The State is but a delinquent scoundrel in the hands of the central banks. We must
deal with it at a later time. At this time it is essential to mount public pressure against the
privately owned central banks and the privately own fiat money we all use. If we do not
reverse this, through the European integration of fiscal policies, the present crisis will result
in the strengthening of a super European state with the power of taxation and the capacity
of increasing spending and public debt as we have not seen before. This would be like
sobering up by increasing alcohol consumption. We cannot escape the present crisis by
borrowing more and creating a super-State with the capacity and inclination to do so.
When confronted with the need to reform the monetary system, the high priests of
finance usually retort by stating that issues are too complex for the feeble mind of Members
of Parliament to comprehend them and ought to be left to the bankers who know best.
When that does not work, we are reminded that these proposals are advocated by Nobel
Laureates in Economics Milton Friedman and Friedrich von Hayek who are promptly styled
as right-wingers and reactionaries. The final argument is that if anyone touches the
monetary system, there will be widespread economic catastrophe, leading to everlasting
recession, poverty and anarchy. We have heard all this before both in our life times and as a
resonance echoing through history as the hallmark of false orthodoxies.
If allowed to do so, I will gladly post on our website my correspondence with central
banks, treasuries and academics dealing with the technical details of this issue, for those
who wish to look into it. It can be done and there are no technical reasons for not reforming
the monetary system.
Rationally, the Euro 1.9 trillion worth of Italian debt or the US$ 17 trillion of US debt cannot
be alleviated by borrowing more money, but only by progressively retiring them with
payments made with debt-free and sound money issued by the treasury, whether that be
the Italian treasury or a new European treasury. But this is not where we are directed to.
A catastrophe is now unavoidable. A sovereign default is unavoidable. The State is
so structured that it can no longer cut its spending. It could only do so if it gets out of the
business of operating everything, and allows the rest of us in the private sector to do its job
the way that job should be done and at a small fraction of the cost. But in the absence of a
catastrophe, this paradigm shift is not going to take place. Pillaging the equity of the
citizenry with greater taxes imposed under the guises of austerity measures may not work
this time around, especially if people like us begin what we ought to do, which is organizing
tax revolts, tax strikes and tax civil disobedience which are appropriate nonviolence tools for
this struggle.
The sooner the State’s financial house of cards collapses, the less painful it will be
for the citizens, and the sooner will we be able to begin rebuilding out of the inevitable
catastrophe. This sham cannot go on forever. The entire notion of credit rating has been
reduced merely to the sovereign’s capability of raising more debt to pay the interest on its
ever increasing debt, not on its ability to ever repay it. The European Central Bank buying
more of this debt is tantamount to counterfeiting money on a colossal and unprecedented
scale, as the ECB will create out of thin air the money used to finance the new issuance of Tbills from Italy and Portugal, possibly with the intention of neither placing such T-bills with
its client banks nor ever calling on their payment.
We are faced with a global conflict of a nature before unknown and because of it
not easily recognized. Through the tools of finance and state indebtedness, not war, was the
Soviet Union made to collapse within a decade, without a shot being fired. Thereafter, the
West fell prey to the same dynamics which are destroying its manufacturing capacity and
wealth on a scale comparable only to the devastation of WWII. Wealth, industries and soon
financial centres are moving East, in what could be the death of the Occident, which, alas,
Germany alone cannot prevent.
We must avoid that the inevitable catastrophe is used to justify the erection of the
same system on an even larger basis, which is a global private central bank issuing a global
fiat currency, whether based on drawing rights or a pool of existing currencies on behalf on
an invisible super-state disguised within the international and UN bureaucracies. If this
happens, the same catastrophe will reproduce itself within a hundred years, but on much
larger scale.
These catastrophes are not accidents and do not hurt everybody: they always
benefit international money trusts. They are created not by the markets but by the State’s
interfering with the markets and by the State getting away with acting in a manner in which
no non-state entity could do. The only way out of this and future catastrophes is to use their
devastating impact to reform the debt-based production of privately owned money, viz.
banknotes, to re-introduce debt-free money, which is government money issued by the
treasuries.
The establishment of a European treasury with such powers would be an immense
step forward on the path to federal integration of Europe, making Europe a true united
Europe of and for the European people and a viable building block of a re-born Occident.
So much more turns on this issue, but it shall suffice to add one more single
consideration. Any model of ever-increasing growth in a world of finite resources is
madness. Land, food, water and raw materials are finite. For compelling environmental,
social and economic reasons we must move onto a path leading to a zero growth balance
point within fifty years, otherwise pandemonium will ensue. This paradigm shift cannot even
begin under the present monetary system which commands ever increasing growth for debt
repayment, under pain of collapsing.
Nowhere, 21th of April 2012
Case Italy
Both in good and evil, Italy has produced most of history’s fruits. The Western
system of laws, the Catholic Church, banking, financial instruments, insurance, fine music,
fascism, fashion and good eating were all spread worldwide from there. Again, for good or
evil, Italy may find itself giving birth to a new future out of its imminent financial meltdown.
Confronted with a national debt of about US$2.4 trillion, about 121% of its GDP, a
pro capita public debt of about US$39’000, archaic and failing infrastructure and one of the
worst government administrations in Europe, Italy recognised that its problems could not be
solved by the same politicians who laboriously created them over the past 60 years. It
appointed a purportedly technical government ostensibly to do what no politician would do,
but in truth to take the blame for doing little or nothing of what needs to be done, as the
political system is incapable of allowing it to be done.
Public finance is cloaked in incomprehensible language and technicalities to prevent
common sense from penetrating its machinations; but in the end the broad-stroke picture is
simple and the conclusions inescapable. When in debt, whether man or State, one can only
earn more, spend less, sell something, or play around with the debt figures. For the State,
this last option consists of devaluing the currency or devaluing the debt through
hyperinflation. Being part of the EU monetary system, neither of these options is available to
Italy.
For a government, making more money means increasing revenues either by raising
taxes or promoting economic growth so that, by broadening its economic base, tax revenues
can increase. Faced with this simple dilemma, Italy has chosen the suicide path, which will
probably collapse the entire EU monetary system.
The technocratic government has chosen to rob whatever was left with the poor
and middle class, to transfer it to the superrich who own the large majority of its national
debt obligations.
In October, Italy will have 48% income tax, 23% VAT tax, and 8% to 9% indirect or hidden
taxes. Whatever after-tax money is left in Italians’ hands, will be taxed again by means of
property and vehicle taxes applied indiscriminately to productive and non-productive assets,
thereby becoming an additional cost of doing business. The economic basis will shrink, tax
revenues will decline, and the government will need to find other ways to steal more from
its citizens.
Italy has a tradition of imposing extraordinary taxes, unashamedly called una tantum
[in Latin “once only”], hardly an appropriate name for the cyclical ransacking, for the benefit
of international banking potentates, of whatever equity is built by families and businesses
alike.
The rational thing would be to reduce spending by eliminating the unbelievably
large number of public entities which Italy had carried on its books ever since they
proliferated under the Bourbon kings, the Catholic state, the various entities which merged
into the unified Italy, the fascist era and the post WWII Christian Democrats’ pillaging. Most
of such entities are widely recognised as useless, such as that established with luxurious
offices to put flowers on past kings’ graves, a function a contracted florist could perform.
Italy has four tiers of government besides being part of the EU. Since 1975, when its
regions came into existence, it was agreed that provinces, the tier between regions and
municipalities, be eliminated as redundant; but 35 years later, no step has been taken in
that direction, save for innumerable seminars and discussions.
When confronted with the obvious need to get rid of such fruitless expense, Italian
politicians rise in unison to protect them on account of protecting jobs. Yet, Italy could save
hundreds of billions by giving all those employed by these entities a life pension which
compensates for their lost salaries, while selling off the plethora of ancient and valuable
buildings which such entities occupy and eliminating their operating expenses.
Plus, the Italian government has huge assets on its balance sheet, consisting of
numerous public enterprises constantly run at a loss only because sugar-daddy State allows
it, and vast real estate which supports no public function but costs immensely. All this
requires urgent privatization.
In addition, Italy should have the guts to denounce the 1929 Concordato treaty with which
the fascist regime ingratiated itself to the Catholic Church by exempting the Church’s vast
income and properties in Italy from most taxation.
As the democratic system is unable to muster the political will for such necessary
actions, the Italian government is just rearranging chairs on the Titanic’s deck, while moving
steadfastly towards an unavoidable sovereign default. The Italian sovereign default is bound
to trigger a chain reaction of other sovereign defaults within Europe which may lead not
only to the collapse of Europe but also to the fusion of the international monetary system.
Probably a totalitarian government could do what needs to be done to cure Italy’s
finances, but I would be the last to advocate such a solution. Unfortunately, when
confronted with problems, southern Europeans are inclined to run into the bosoms of those
who created them and vote socialist, as the French and Greeks did. Yet, socialist
governments can only promise government-funded growth through more national debts,
which in this situation will neither help nor work.
The solution which would help democracy to survive lies in the hands of the real
sovereigns: “We the People”. Italians should denounce the State’s debt as being just that:
the debt of the State not their own, and disown it. Only an actual or threatened generalized
tax revolt can force government to do what the Italian people would want it to do.
Italy was forged through the will of people who found in their midst great leaders
such as Cavour, Mazzini, Garibaldi, Nitti and Giolitti. Gone are the days in which the spirit of
Risorgimento inspired those heroes. Yet, nothing less than such a spirit is required to infuse
courage into Italians to take destiny into their own hands and away from a political system
as corrupted as those of the pre-unification entities, Bourbon kings and Catholic Church.
A tax revolt, which can yield massive defiance on a single payment of VAT to the
State, would force the government onto its knees as it would immediately jeopardize the
rating of its bonds and its capability of refinancing its ever-increasing debt. Against that
crisis, the space for negotiation would arise out of which government could be forced to cut
its spending, sell its useless jewellery, rationalise its operations, and take its hand out of the
pocket of the impoverished Italians.
But, alas, I see no Garibaldi on the horizon to lead the second Italian Risorgimento.
Then what? If a new and better world is to emerge from all this, the root cause of the
problem must be addressed. The monetary system must be reformed to replace privately
created debt-based fiat banknotes created by the banking system out of nothing with debtfree silver-backed sound government notes issued from the treasury.
One hopes that if and when it rises out of the ashes of its collapse, Italy may lead the
way once more, and be the first country to realize what happened and break away from the
international money trusts, so as to regain its inalienable sovereign right to own and issue its
debt-free money.