The Senior Lecturer:
1) All money is created by a promise to pay.
OK, fair enough, not complete nor definitional but useful all the same.
2) The fiat currency of a government is created by its promise to pay.
No, it’s something that other people can use as a promise to pay.
3) The promise made by a government to pay is backed by its willingness to accept that currency in settlement of taxes owing.
Backed by, certainly, to some extent. But again this isn’t definitional. Cash US dollars circulate in Russia, they cannot be used to pay Russian taxes, the users aren’t racking up US taxes yet believe me, they do still have value. This is also where most of the seigniorage earned by the Federal Reserve comes from. Precisely and exactly those notes which circulate outside the US and which do not cycle back through the tax system.
4) As a result all fiat money is backed by the promise that there will be an obligation to pay taxes in the future.
5) without taxes there would, then, be no fiat money.
See 4). Both because of 3).
6) Government debt is, in that case, not a sum to be repaid by the government. It does instead represent government spending not yet cancelled by taxes due.
That doesn’t even follow by his own premises.
7) Since all fiat money is created by government spending in advance of tax collection the government’s debt is, then, simply the major part of the money supply.
No, not at all. The statistics are here. M4, total money supply, is some £2.2 trillion, absent gilts. Notes and coin, absent QE effects, maybe £80 billion. National debt is, dunno, £1.6 trillion? It’s not in either of those, oddly enough.
8) Banks can create money when they lend, but only under government licence.
This is where the distinction between money and credit becomes important. Banks cannot create narrow money, M0. They can create elements of M4, broad money. But we’ve another set of names for the distinction, money and credit. If you rewrite the theses so far making that distinction then Ritchie’s idea falls to pieces.
9) The licence the government grants to a bank to create money means that he bank is never independent of the government and is responsible to it.
The banks issues credit, not money.
10) As a consequence the government has a duty to regulate banks to ensure that they use their licence to create money appropriately.
Meh. There aren’t that many people who argue for no bank regulation. A few, the free bankers. Who do make that M0 and M4 distinction. What Spudda means here is “use that licence in the manner I consider appropriate” which is a rather different Fat Controller sort of meaning, isn’t it?
11) This obligation to regulate banks is universal, and should be reciprocal i.e. nations owe this duty to each other as well as to their own populations.
Eh? Zimbabwe owes it to the UK not to issue too much money?
12) Since banks can create money in the currency of a country both outside as well as within its jurisdiction the supply of data on the banking activities undertaken in one state to the authorities of another who has the obligation to regulate both monetary and taxation transactions arising within their state is inherent within the nature of the banking system.
Again with the confusion here. State have the righteous monopoly on the creation of their own fiat currency. But not on the creation of credit.
13) Tax is the mechanism most readily available to a government to impose its fiscal and social policies on a country.
Odd that really, a great deal of Keynes is about how spending can be used to influence fisal policy.
14) Markets have a natural tendency to concentrate wealth because wealth has never been equally distributed.
An entire non sequitur. Whether or not wealth has ever been equally distributed means nothing as to whether markets concentrate it or not. What’s worse is that they don’t. Capitalism we might think concentrates it, we can certainly make that argument. But it’s markets which temper that very process. When entrepreneurs end up with some 3% of value created, near all the rest turning up as the consumer surplus, that’s not concentration, is it?
15) The concentration of wealth within an economy reduces the well-being of all within it as those with excess resources derive lower marginal utility from their consumption than those with below average resources. Relative poverty always follows, as can absolute poverty.
Relative poverty is measured by income. Consumption is determined by income – well, usually. If it ain’t then people are becoming less wealthy. Thus neither really have anything to do with the wealth distribution.
No, really. Assume a wealth distribution. Double asset values, halve the return from assets. Relative poverty and incomes haven’t budged an inch, wealth inequality has soared.
16) The redistribution of income and wealth to achieve greater equality in the distribution of both does, therefore, increase well-being.
To a point Lord Spudda, to a point. The best guess from the likes of the OECD, IMF and the rest is that some 13 or 14 points on the Gini is about it. Yes, increased value of marginal resources etc, but also the effect running the other way, too high a level of redistribution strangling incentives in the economy.
BTW, the UK tax and benefit system moves the Gini by some 13 or 14 points…..
17) The legal ownership of land concentrates the ownership of wealth.
18) Land cannot be owned: it can only be tenanted.
Well, if you want to say that property can only be owned to death, maybe. You know, you’re not there to own it afterward. But otherwise this is drivel. We have rather a large system whih insists, very strongly, that land is indeed owned. Ever heard of the Land Registry?
19) The common ownership of land will therefore reduce wealth concentration.
Has no one pointed out to the Senior Lecturer the existence of Garrett Hardin? Elinor Ostrom? Even Henry George?
20) Markets tend towards monopoly.
Not obviously, no? There is that Marxist insistence that they do but it has not been proven. And even then, it’s really a reference to monopsony, a word that didn’t exist when Marx was writing.
21) Monopoly is contrary to the interests of consumers.
The exercise of monopoly power does, yes. So, that’s the NHS, state education system and so on that has to go, right?
22) Monopoly results in the generation of excess profits, or rents.
The exercise of monopoly power does, yes. But it is the exercise, not the existence.
23) To prevent such profits arising markets must be regulated by governments to ensure the fairest possible outcomes for all, including the rights of new entrants to the market.
We should indeed regulate to ensure ease of market access. You know, make it easier to set up private schools and hospitals perhaps?
24) The payment of interest is a transfer of wealth, none being created in the process of payment.
Bollocks. Interest is the time value of money, no more. This is Thomas Aquinas and his drivel about fair prices and usury, isn’t it?
25) The payment of interest concentrates wealth.
Bill Gates issues bonds to buy a company. I buy some, Bill pays me interest. This is concentrating wealth?
26) It is the job of government to, as a result. regulate the availability of credit and the price that is paid for it so that exploitation should not arise.
And we reach credit and price controls! You know, like interest ceilings on payday loans so that they don’t exist? Or perhaps he wants to extend that to junk bonds?
27) The obligation to regulate credit extends to the promotion of activities that induce the extension of credit, including advertising.
From Aquinas to banning soap powder ads. That’s an interesting tack, isn’t it?
28) The physical resources of the planet are finite.
In a sense, but only in a sense. We cannot use more copper atoms than there are copper atoms, that’s true. This says nothing about what we can use copper atoms for, the value we can create by doing so.
29) The second law of thermodynamics holds true.
Holds true in a closed system. Which this planet is not, there’s a vast nuclear reactor up there pumping energy in every second. We just ain’t in a closed system.
30) The use of the minimum possible energy in the process of meeting human need is, therefore, a necessity and not a choice.
There is, out there, some limit to the energy we can use. Current annual global energy use is, can’t recall, a few seconds, maybe a few minutes worth, of the energy arriving.
31) The use of taxation to change behaviour with regard to wealth and income distribution, the ownership of land, the abuse of markets, the payment of interest and the exploitation of natural resources is a necessity.
I have just justified why I should be the Fat Controller. Kip Esquire’s Law.
32) The process of taxation must be democratically controlled.
Err, yes? Not by unaccountable bureaucracies perhaps?
33) It is the job if government to ensure that when a tax has been decided upon it is equitably enforced.
Why not? We also have courts out there to decide what that equity is, according to the laws the government has written. Along with constitutions and constitutional courts to check whether the basic idea is indeed equitable.
34) A government must be held accountable for its failure to enforce the payment of taxes legally due because this represents a failure of its social as well as its fiscal obligations to those who elected it.
Sure. Hey, that tax is legally due, go collect it.
35) No government has the right to undermine the right of another government to collect the taxes owing to it.
Don’t think anyone argues otherwise. That’s rather different from what is meant here, that no government should structure matters so that less tax is legally due.
36) No government has the right to undermine the tax base or rate of anther government.
Sure they do. Taxes on Frenchmen working in London are lower than taxes on Frenchmen working in Paris. Shrug.
37) Governments have the positive obligation to assist each other in the process of collecting taxes lawfully due by those liable to pay them.
We do have extradition treaties, not paying tax is a crime so……
38) Each person must have the right to appeal against any tax liability imposed upon them and have that appeal heard in an independent court.
We’ve heard of this rule of law thing, yes.
39) To be equitable a tax system must take into account the capacity of a person to make payment and maintain their rights as described in Article 25 of the United Nations Universal Declaration of Human Rights.
40) Companies, corporations, partnerships, trusts, foundations, charities and other legal entities created by common or statute law are agents of those who create, own, manage or benefit from them as the situation requires with regard to taxation and afford no separate or identifiable rights not attributable to those persons when acting in their own beneficial capacity.
He doesn’t actually mean this. For if he did it would be impossible to say that “companies pay taxes” or that “companies should pay more taxes.”
41) Each person has the right to enjoy their after tax income or wealth without hindrance so long as the purpose they pursue with it is itself legal.
Sure, we’ve heard of private property too, the right to enjoy it within the law.
42) A person is an agent of the state acting as a trustee or custodian of the state’s funds due in taxation arising as a result of the income, wealth or transactions that they enjoy until such time as that taxation is settled and the funds that they hold in that capacity are not theirs to rightfully enjoy without such obligation having been taken into account.
No. This is just “Tutti nelle Stati” once again.
43) A person acting in breach of their obligation as an agent of the state to appropriately manage and retain the funds that they owe in taxation shall be liable for penalty for not doing so.
If you don’t pay your tax you get nicked. And?
44) The state shall, in reciprocation of the obligation to pay tax appropriately account for the use made of that taxation in a manner that shall be appropriate to those with obligation to make payment.
Well, yeah, most of us do make it easy for people to pay us.
45) Those who, when holding political or public office fail to account for taxation due or paid be held accountable for their failure to do so.
Ooooh, Goodie! We get to jail politicians and bureaucrats then, do we?