Tuesday, December 29, 2015

High End Versus Low End Governing

One thing I commonly hear in stories of civilizational collapse is the "high taxes/debt" issue. I tend to think of these more as symptoms rather than causes of collapse. But looking at civilizational patterns, what more often happens is less high taxes, but rather a shift in wealth from the state to powerful individuals, and a subsequent loss of the ability of the state to maintain the upkeep of civilization. That is, it is looting by the rich which causes collapse, and a melding of government and private interests, not "greedy bureaucrats" that is the root cause. Taxes often do go up in these circumstances, but they go up on those without the insider connections to keep them low, which is the average person.

It's another rewriting of history, where the political mood of our time is invested in making big, bad government into the villain in order to further demonize collective governance. The "taxes cause the fall of civilization" meme is an old one. In its retelling, greedy bureaucrats live in sybaritic luxury by levying confiscatory taxes on hard-working, salt-of the earth capitalist farmers and merchants so that they can lay around and do nothing. Eventually the taxes get so high due to expanding government that the farmers walk away from their plows and the merchant ships stay in port. Useless, lazy bureaucrats get fat on the hard-work and sweat of the entrepreneurial classes. Thus civilization falls. It's easy to see who gains from perpetrating this narrative.

Proponents of this view of civilizational collapse might have a hard time squaring that with the fact that tax rates are at historic lows right now, and that trillions of dollars escape taxation altogether. Taxes in the U.S have been perennially lowered since 1980, especially on the wealthy, and it's hard to argue that we've entered a golden age since that's been happening.

A more plausible cause of collapse is the ability of the rich and powerful to escape taxation while the common person cannot. The burden falls ever more on the average citizen during a time of declining incomes, meaning decreased revenues for the state. The state loses its ability to get things done. Rather than the ever-expanding government of their imagination, contracting government proceeds a collapse, which is hard to square with exponentially expanding tax revenue theory.

The thing that makes civilization work is the ability of a central government to get things done - defend the borders, keep law and order, adjudicate disputes, maintain infrastructure, and so forth. As more of the state's wealth is siphoned off into private hands, the state's ability to do all of these things is hampered. That's what we see in history. It is the private powers who lay around in ostentatious luxury while contributing less and less to the wider society, helped along by the fact that moneyed and ruling classes merge to become one and the same. See this:

History Lesson

As money flows into private hands, they become the de facto government. When that happens, justice is enforced by whim, and the freedom of the average person doesn't increase, it declines.

As bureaucrats can't collect revenue, they become "entrepreneurial" i.e. corrupt. The tax revenue isn't there to support them in the manner in which they have become accustomed, so they do things like shake down people and demand bribes. The reason you have to grease palms in Latin America isn't because taxes are too high. Police in Nordic countries make good incomes, so they don't do that. It's less human nature than institutional circumstance. As government becomes more and more corrupt, people lose faith in it, and the cycle reinforces itself.

I've written a lot about Neofeudalism--where the resources built by the public commonwealth are seized by a tiny oligarchy who then restrict access to them via tollbooths which they use to siphon the wealth of the wider society into their own pockets while offering nothing in return. The philosophical justification for this is, of course, Neoliberalism, aka, free market fundamentalism under the tutelage of economic "science."

In our previous survey, we saw Michael Hudson describe this as one of the primary recurring patterns throughout history. Certain controls on the accumulation of the wealthy are dismantled. As wealth inequality increases, eventually more and more of the population becomes indebted to a small minority. Those debtors then lose their "stake" in society, often losing their ability to participate as citizens in the process, and the society falls apart. Societies become adversarial instead of cohesive - predator and prey instead of cooperation. This is fatal. Ibn Khaldun pointed out that that well-run, cohesive societies with a sense of common purpose - he used the Arabic word asabiyah, tended to out-compete and supplant adversarial, unequal ones over time. Often these societies were based around smaller, flatter social structures than the top-heavy ones they supplanted. Successor societies then put moderate curbs on wealth accumulation to preserve that cohesion, but those curbs are eventually dismantled. We've seen this just in a few hundred years of history of the U.S.

Wealth falls into private hands where it is distributed not by public necessity, but by the whims of the wealthy and powerful. Rather than the superior allocation predicted by Market fundamentalists, it leads to widespread misallocation as the wealthy compete for status. And so we get more and more luxury apartments while infrastructure crumbles, artwork going for hundreds of millions of dollars while public funding for the arts dries up, stadium luxury boxes while schools can't afford to replace lightbulbs, solid gold trashcans and toilet seats, single record albums selling for two million dollars, and things like that. Meanwhile, streetlights flicker out, bridges collapse, and urban areas become lawless.

We can see the disintegration of societies into Neofeudalism as part of a larger historical pattern of transition from a "high end" to 'low end" society.

What brought this to mind was this article by Noah Smith: Stop-and-Seize Turns Police Into Self-Funding Gangs (Bloomberg). Smith, following the work of historian Ian Morris, talks about "high end" and "low end" methods of running a society:
In his book "Why the West Rules -- for Now," historian Ian Morris draws a distinction between two ways of running a country. He calls these “high-end” and “low-end” strategies. High-end states have efficient, centralized bureaucracies and a credible legal apparatus, while low-end states rely on local authorities to do things like collecting taxes and providing security. According to Morris, high-end states are more effective at creating rich, powerful, technologically advanced civilizations, but they are also more expensive -- when resources are strained, countries sometimes revert to the cheaper, low-end solutions. Often, transitions from high-end to low-end strategies follow wars, famines and other disasters that reduce the state’s ability to finance its activities directly.
Modern rich nations, with their extensive court systems, bureaucracies, militaries and infrastructure, look distinctly high-end compared with the feudal lands of past centuries. But in the U.S., I see some troubling signs of a shift toward low-end institutions. Bounty hunting was a recent example (now happily going out of style). Another example is the use of private individuals or businesses to collect taxes, a practice known as tax farming. A third has been the extensive use of mercenaries in lieu of U.S. military personnel in Iraq and elsewhere. Practices such as these can save money for the government, but they encourage abuses by reducing oversight.
So we can conceive of collapse as a transition period between "high-end" and "low-end" modes of society.

Smith goes on to describe how local police are essentially becoming unaccountable extralegal gangs who shake down the people they are supposed to be protecting, since the government funding from which they derive their revenue keeps getting cut back every year. I'm sure we can all relate to getting some silly ticket for going a few miles over the limit when driving through a small, decaying local hole-in-the-ground community even though everyone else was going the same speed and there was no threat to safety (this happens to me in the near ring suburbs).
"A thriving subculture of road officers…now competes to see who can seize the most cash and contraband, describing their exploits in the network’s chat rooms and sharing “trophy shots” of money and drugs. Some police advocate highway interdiction as a way of raising revenue for cash-strapped municipalities.'

“All of our home towns are sitting on a tax-liberating gold mine,” Deputy Ron Hain of Kane County, Ill., wrote in a self-published book under a pseudonym…Hain’s book calls for “turning our police forces into present-day Robin Hoods.”

This is exactly the process of devolution that Morris describes. With government unable to pay police as much as they need or would like, police are confiscating their revenue directly from the populace.
The threat to individual liberty from stop-and-seize is painfully clear. Without requirements for an arrest or for a warrant, the power to confiscate cash is a clear diminution of property rights.

Effectively, the police have been given official sanction to commit literal highway robbery without the threat of punishment...Even more fundamentally, though, stop-and-seize is part of a worrying trend of less government accountability. The lack of oversight virtually ensures that the quality of government services will decline. This has been painfully apparent in abuses by bounty hunters, mercenaries and private prisons. But if the police are transformed into independent, self-funding armed gangs, the quality of policing -- and thus the effectiveness of all our legal institutions -- is sure to decline. 
This is exactly the process of devolution that Morris describes. With government unable to pay police as much as they need or would like, police are confiscating their revenue directly from the populace. So this transition from "high end" to low end" parallels the collapse dynamic, and it's what were seeing today. Centralized authority can no longer afford to maintain its vast network, so local authorities take matters into their own hands. Thus, a dissolution to more "local control" is not always the peaceful, desirable process it is often portrayed as.

Essentially, the police are turning into modern-day warlords. This probably happened during Roman collapse also, as local sheriffs and authorities continued collecting taxes, but used them to fund their own wealth and privilege instead of sending them on to the imperial state coffers. They also took over the power vacuum as the Roman state disintegrated. Surely the Romans stamped down on the practice where they could, but they couldn't stop it everywhere because they did not have the resources to do so. Eventually, the local police-cum-warlords became the new de facto rulers, and eventually the de jure rulers as well. More wealth was confiscated through police seizures than by robbery in 2015.

Cullen Murphy, in his book Are We Rome, points to an devolution of concern for public service, and a transformation of that service into private benefit, as a key factor in the unraveling of the empire. In other words, the ruling elite (senators, landholders, equites, generals) cared less and less about the Roman res publica, (the public thing) and just decided to loot the damn place. Roman politics depended ever more on sycophancy and quid-pro-quo patronage. As the Romans relied extensively on tax farming (publicans), we can assume more and more of those taxes ended up being diverted to private coffers, starving the government and army of the revenue required to get things done. Soldiers loyal to Rome were replaced by mercenaries loyal to their general, and their general was loyal only to himself.

Eventually, politics was just individual actors jockeying for power, with everyone else just caught in the crossfire and frozen out of policymaking. Any concern for a greater "idea" of Rome, that is the public welfare, was dismissed as quaint. We see that tendency today, with people just disengaging completely from the political process because they have no effect on it whatsoever. It's just a contest between the handpicked champions of the billionaire oligarchs for who will inherit the imperial purple and keep the gravy train going while individuals are left to fend for themselves.

America's Oligarch Problem: How the Super-Rich Threaten US Democracy (Der Spiegel)

How America Became an Oligarchy (Web of Debt)

Fortunately, I found  that chapter of Are We Rome available online:
To be sure, a lot of Rome-and-America comparisons are glib, and if you’re looking for reasons to brush parallels aside, it’s easy enough to find them. The two entities, Rome and America, are dissimilar in countless ways. But some parallels really do hold up, though maybe not the ones that have been most in the public eye...One core similarity is almost always overlooked—it has to do with “privatization,” which sometimes means “corruption,” though it’s actually a far broader phenomenon. Rome had trouble maintaining a distinction between public and private responsibilities—and between public and private resources. The line between these is never fixed, anywhere. But when it becomes too hazy, or fades altogether, central government becomes impossible to steer. It took a long time to happen, but the fraying connection between imperial will and concrete action is a big part of What Went Wrong in ancient Rome. America has in recent years embarked on a privatization binge like no other in its history, putting into private hands all manner of activities that once were thought to be public tasks—overseeing the nation’s highways, patrolling its neighborhoods, inspecting its food, protecting its borders. This may make sense in the short term—and sometimes, like Rome, we may have no choice in the matter. But how will the consequences play out over decades, or centuries? In all likelihood, very badly.

And just look at the behavior of our politicians: dining with CEO's, getting cushy consulting jobs, raising funds for their next election, passing rubber-stamped sweetheart deals for their backers, all while turning a blind eye to the fact that an increasing number of the nation's citizens live in poverty. Here's Murphy:
The phenomenon ...was called the “privatization of power,” or sometimes just “privatization,” by the historian Ramsay MacMullen in his classic study Corruption and the Decline of Rome (1988). MacMullen’s subject is “the diverting of governmental force, its misdirection.” In other words, how does it come about that the word and writ of a powerful central government lose all vector and force? Serious challenges to any society can come from outside factors—environmental catastrophe, foreign invasion. Privatization is fundamentally an internal factor. Such deflection of purpose occurs in any number of ways. It occurs whenever official positions are bought and sold. It occurs when people must pay before officials will act, and it occurs if payment also determines how they will act. And it can occur anytime public tasks (the collecting of taxes, the quartering of troops, the management of projects) are lodged in private hands, no matter how honest the intention or efficient the arrangement, because private and public interests tend to diverge over time.
Sarah Chayes’s new book Thieves of State: Why Corruption Threatens Global Security shows how far along this disturbing phenomenon has progressed in America:
A top government official with energy industry holdings huddles in secret with oil company executives to work out the details of a potentially lucrative “national energy policy.” Later, that same official steers billions of government dollars to his former oil-field services company. Well-paid elected representatives act with impunity, routinely trading government contracts and other favors for millions of dollars. Meanwhile, ordinary citizens live in fear of venal police forces that suck them dry by charging fees for services, throwing them in jail when they can’t pay arbitrary fines or selling their court “debts” to private companies. Sometimes the police just take people’s life savings leaving them with no recourse whatsoever. Sometimes they steal and deal drugs on the side. Meanwhile, the country’s infrastructure crumbles. Bridges collapse, or take a quarter-century to fix after a natural disaster, or (despite millions spent) turn out not to be fixed at all. Many citizens regard their government at all levels with a weary combination of cynicism and contempt. Fundamentalist groups respond by calling for a return to religious values and the imposition of religious law.
What country is this? Could it be Nigeria or some other kleptocratic developing state? Or post-invasion Afghanistan where Ahmed Wali Karzai, CIA asset and brother of the U.S.-installed president Hamid Karzai, made many millions on the opium trade (which the U.S. was ostensibly trying to suppress), while his brother Mahmoud raked in millions more from the fraud-ridden Bank of Kabul? Or could it be Mexico, where the actions of both the government and drug cartels have created perhaps the world’s first narco-terrorist state?
In fact, everything in this list happened (and much of it is still happening) in the United States, the world leader — or so we like to think — in clean government...And here’s a reasonable bet: it’s not going to get better any time soon and it could get a lot worse. When it comes to the growth of American corruption, one of TI’s key concerns is the how the Supreme Court’s 2010 Citizens United decision opened the pay-to-play floodgates of the political system, allowing Super PACs to pour billions of private and corporate money into it, sometimes in complete secrecy. Citizens United undammed the wealth of the super-rich and their enablers, allowing big donors like casino capitalist — a description that couldn’t be more literal — Sheldon Adelson to use their millions to influence government policy.
Kabul on the Potomac (Juan Cole). Or listen to pretty much any episode of Congressional Dish.

Indeed, the public’s trust in government remains at historic lows, and the public’s feelings about government run more toward frustration than anger, and no wonder.

If David Graeber's right, low-end societies are also the fermentation grounds for what comes next. He says that centralized states are run by warfare, bureaucracy , slavery, and centralized commodity money. By contrast, periods of dissolution give way to chartlist theories of credit money, local economies, and population decline. Feudalism is government by personal relation, which works better in small-scale systems. These systems are also the incubators of what comes next, and who knows what that could be.

One thing that strikes me is the vast span between when things are first invented and when they are widely adopted. Sometimes it is centuries before these things become commonplace, whether it is indoor plumbing (as far back as 1700's), smallpox vaccine (ditto, with even earlier precedents), the germ theory of disease or the steam engine. Were the 1970's a dress rehearsal for the future? Did those things just come about ahead of their time? Will we eventually see a world of Permaculture farms, of greenhouses, of urban gardens, of aquaponics, of living machines, of 3-D printing, wind and solar farms, methane gas digesters, and earth sheltered houses? Maybe all of those appropriate technologies of the seventies are the future after all.


  1. This shouldn't surprise anyone.

    The US was basically formed as a tax dodge and a few religious cranks aside its been entirely colonized by people who don't want to actually pay for things or are seeking a "Bette life" i.e economic improvement not social stability.

    Back in the day, the 1st think they taught in history tax was the Boston Tea Party, a tax protest. Of course once they go the country founded they realized that even indentured labor was expansive, so we ended up with slavery. On top of that there was another immediate anti tax thing (the Whiskey Rebellion) the Feds had to crush too. Its been that way forever.

    To my way of thinking this mess a natural outcome for a nation made by grifters.

    We could get away with it by colonizing the land the Indians had but once that ran out?

    The only reason we had the "break" from the usual grind down from the late 30's onward (roughly) is that we faced an existential crisis and a real risk of being turned fully Socialist.

    Between that and the fact that no one else actually had industry after WW2 we reluctantly kicking and screaming raised wages and tried to pay for things.

    Didn't last long though, guns and butter broke us.

    The real insanity came from allowing the Frankfurt School filth into the general culture. That will doom the US since it not only makes the social solidarity needed for fixes impossible via multiculturalism and general family decline it also makes the population stupid. Its a double whammy.

    The elite love it or at least they will till thing get too unstable for them and they lose the ability to control it.

    Than things get interesting.

  2. Indeed this country was founded because britain was too liberal for the so called founding fathers who were the 1% of their time.

    Some fathers, too. How would you think of your father if he enslaved and raped your mother, as many black descendants of George Washington can say?

    I'm all for socialism, let's do this.

  3. Thanks for another very thought-provoking article.

    "Maybe all of those appropriate technologies of the seventies are the future after all."
    Best-case scenario, and the future for which I aspire.

    A nation made by grifters, who by dumb luck had the last industrial base standing after WW2... yup. We are really showing our colors these days. Lots of unfortunate cultural features are playing out on the stage of resource & energy depletion & decline.

  4. "greedy bureaucrats live in sybaritic luxury by levying confiscatory taxes on hard-working, salt-of the earth"

    That would be the EU, right? Haha. Without even the pretense of democracy...

    These greedy bureaucrats are part of the plundering elites; why is that missing in your narrative? Btw, the word is getting out: organized crime is taking over everything.

    1. Well, these narratives do have a ring of truth to them that's why they resonate.

  5. "A more plausible cause of collapse is the ability of the rich and powerful to escape taxation while the common person cannot..."

    Whenever anyone suggests that the rich and corporations should be taxed at a higher rate, the standard counter seems to be that they--especially the rich (individuals)--already pay more taxes than other Americans, and that indeed as a group these people pay a disproportionate share of America's taxes now.

    I never hear anyone respond to this "defense" by pointing out that this is so because they're the ones with all the money.

    The disparity between what the rich and corporations pay now as against what they paid under FDR and even Eisenhower is something often highlighted in the monthly talks on the economy given by UMASS-Amherst Professor Emeritus Richard Wolff in NYC.

    Hoping that at least one journalist will someday call out anyone who attempts the "rich pay more" argument seems doomed to disappointment.


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