finem respice

Contemplating Valiant Rearguard Actions Against Intractable Foes

Submitted by ep on Fri, 11/23/2012 - 00:04
if only we had a fiscal english longbow

A remarkable feature of the English military is its historical propensity to transform near mathematically certain defeat into resounding victory (or at least a crafty retreat that left the enemy bloodied and suddenly bereft of a taste for pursuit). The always skeptical and worldly finem respice reader might be tempted to retort that between 1187 and 1801 England's militancy, her unquenchable thirst for foreign military adventure, and her often substandard understanding of the arts of war gave her much opportunity to distinguish herself by performing odds-defying feats- chiefly characterized by luck- to extract herself from existential threats on foreign soil to which she had so ignorantly hazarded herself. In an effort to set the record straight against this cynical and mean-spirited critique finem respice can only reply: "Precisely."

Those unfamiliar with the military history of England might be inclined to take particular note of the number of her heroes elevated to that position by reason of their untimely death, and the frequency with which said demise resulted from their own- how does one put this delicately?- peerless incompetence.

The crowning example is, of course, Richard the Lionhearted, who, evidently finding the necessity of wearing his chainmail on this particular occasion decidedly underwhelming, languidly roamed the siege works his army had erected around the pathetically defended Châlus-Chabrol in pursuit of his effort to suppress an insurrection against the King's authority (well, technically Richard's Ducal authority as Duke of Normandy) mounted by one Aimar V. Boso, the then Viscount of Limoges and a frequent source of trouble for Richard I.

The Château de Châlus-Chabrol had little hope of resisting Richard's authority for any real duration and its defenders had been reduced to taking random potshots with arrow and crossbow bolt from the battlements above as Richard's engineers slowly but surely worked to breach the defenses.

According to legend, Richard was taunting one crossbowman when another (purportedly a young boy) struck him in the shoulder. Richard the Lionhearted expired some days later on the 6th of April, 1199 owing to the wound, which had gone gangrenous after some rather awful "surgery".

As to the rumors that Richard I had only laid siege to Châlus-Chabrol (a nearly insignificant and poorly armed Château) in the first place because a cache of roman gold had been discovered there, finem respice is shocked you, gentle reader, would even bring up such a scurrilous bit of cheap slander.

Ironically, while the manner in which Richard I embraced the infinite is the stuff of legends, no one is quite certain how or when (or if?) the Viscount of Limoges met his end.

A chronicle of gallant and memorable acts of pre-modern and decidedly Darwinesque English military stupidity could itself comprise several volumes. Examples ranging from Lord Admiral Nelson (shot while standing on one of the most prominent of the HMS Victory's rises during the Battle of Trafalgar by a French marksman aboard the Redoubtable from a range of a mere 50 feet) to Sir Henry Bagenal (shot through the head while parading back and forth along the vanguard of his forces wearing the bright colors of the crown during the Battle of the Yellow Ford in 1598) pepper the history books.

Of course, some of this testicular sort of nonsense relates to the prevailing mores governing military conflict in the period (as the victors in the American Revolution would happily tell you). Much as it pains finem respice to admit, it might be carrying things a bit far to single out the English in this respect. Doubtless, Charles I (Charles d'Albret), the then Constable of France, was quite surprised to find himself being introduced formally to the Angel of Death by the numerically inferior forces of Henry V during the battle of Agincourt, for instance.

It bears mentioning that, if nothing else, the Battle of Agincourt may be notable for being one of the last occasions on which French military forces suffered owing to an overwhelming urge to charge into (rather than flee from) a battlefield.

Is it any wonder that victories (and defeats) in this period (and throughout ancient history before it) were often attributed to the will of the divine? When a force outnumbered by between 4:3 and 6:1 makes short work of the French (and in the process sends to the dark and tender reaches of oblivion the pride of French nobility) while inflicting something like 7,000 casualties (including the highly impious summary execution of probably over 1,000 prisoners- many entitled to ransom) and taking less than 200 while doing it, how does one not resort to divine intervention in explanation. Little wonder then at the popularity of the cry "Deus vult!" (or "Dieu le veut" if you are the Constable of France).

On reflection, however, the forces of Guy of Lusignan, King of Jerusalem, and Raymond III, Count of Tripoli found that particular incantation (along with the "True Cross," which the crusader army carried with it) returned meager returns when used prior to marching on Saladin and thus prompting the Battle of Hattin to be, finally, joined. Just contemplating the temptingly near but unreachable, cool waters of the Spring of Turan likely makes the always empathetic reader of finem respice thirsty.

Certainly, we scoff at the apparent naiveté that prompts unarmored Kings, overladen cavalry, thirsty Knights Templar, and brilliantly adorned Sirs to gallantly assume brazenly foreseeable, mortal risks and dare the fates either to throw them the laurels of victory or dispatch them where they stand. And yet, in the last several generations post-modern leaders (and the hapless men and women at arms that march with them) have wantonly thrown down the gauntlet and joined the battle with the forces of an altogether more powerful King, the scales for which even the supernatural is unlikely to lay a divine and intervening thumb upon. In finem respice's lifetime we are likely to see the climax of the next Hundred Years War. A war that is already underway. A war declared quietly some 80 years ago against an intractable, heartless, unfeeling and irresistible sovereign enemy: Mathematics.

If the exceptionally astute and sage regular reader of finem respice harbored any doubts that the forces of Barack of Lusignan have committed themselves by marching from the Spring of Turan into the sands, one "Daniel Altman," who is insultingly described as "...adjunct associate professor of economics at the New York University Stern School of Business and a former member of the New York Times editorial board..." provides this week ample evidence for the proposition via the "paper of record." To wit:

Whether you’re in the 99 percent, the 47 percent or the 1 percent, inequality in America may threaten your future. Often decried for moral or social reasons, inequality imperils the economy, too; the International Monetary Fund recently warned that high income inequality could damage a country’s long-term growth. But the real menace for our long-term prosperity is not income inequality — it’s wealth inequality, which distorts access to economic opportunities.

Wealth inequality has worsened for two decades and is now at an extreme level. Replacing the income, estate and gift taxes with a progressive wealth tax would do much more to reduce it than any other tax plan being considered in Washington.1

Leaving aside for a moment contemplation of the diminutive fate of being an "adjunct associate professor of economics" (and the precipitous fall in stature the Stern School of Business is presently evidencing by playing host to a Mr. Altman) it is difficult not to regard as simply astounding the inability of anyone bold enough to simultaneously claim the words "professor" and "economics" in their title to recognize and reject a doctrine that was dealt fatal philosophical, moral, and intellectual blows not even a generation ago.

To quote a long-time friend of finem respice who originally brought this illuminating prose to finem respice's attention:

"...outright socialism within historical spitting distance of the concept's utter collapse in other countries."

In stark contrast to the sporadic and lackluster military prowess exhibited by the Count of Philosophy, the Baron of Theology, the Viscount of Ethics, or the Baronet of Anthropology, armies of the King of Mathematics march slowly but inexorably, tirelessly, without pause or respite, and utterly without even a hint of mercy. While his vanguard can be beaten back successfully in quick and highly expensive (in men and treasure) campaigns, slowly but surely the aggressor finds escape route after escape route cut off as General Subtraction, General Addition, and Field Marshall Compound Interest methodically cut off avenues of fiscal retreat and offer no terms and no quarter whatsoever.

Indeed, a valiant rear-guard action against the King and his vassals can be successfully (and, again, expensively) fought for some time, but eventually the costs of delay compound and a failure to retire from the field early results in envelopment and, eventually, annihilation.

The more astute of military advisors might ask what exactly is to be gained from marching on the Barony of Inequality and thus rousing the slow but inevitable march of the King of Mathematics. Generals (or more often "Political Officers" like "Professor" Altman) focused on the conquest of the Barony of Inequality are rarely possessed of even a passing acquaintance with its population. Consider:

"Professor" Altman gleefully conflates the evils of "inequality in America" with "income inequality" (the undesirability of which he asserts via recourse to the International Monetary Fund) before distinguishing what he regards as the ultimate evil: "wealth inequality." Altman resorts to the Gini coefficient to make his case:

This is exactly what happened in the United States. A common statistical measure of inequality is the Gini coefficient, a number between 0 and 100 that rises with greater disparities. From the late 1970s through the early 1990s, the Census Bureau recorded Gini coefficients for income in the low 40s. Yet by 1992, the Gini coefficient for wealth had risen into the mid-70s, according to data from the Federal Reserve.2

As an aside, notice how easily (and perplexingly) "Professor" Altman glides between a Gini coefficient as a measure of "Inequality," "Income Equality," and "Wealth Inequality." This is no accident. The careless reader is easily numbed into intellectual complacency as these terms are repeatedly conflated and repeated.

But the complexity does not stop there. "Professor" Altman continues in explaining the implementation of this latest campaign to regain the Barony of Inequality from the infidels and thus navigate the path to Marxist heaven:

Naturally a cottage industry would spring up to help wealthy people lessen their exposure to the new tax. The federal government would need new rules for the reporting and valuation of assets, as well as new auditing processes. Levying the tax at the family level — perhaps parents and children up to a fixed age — might make it harder for the wealthy to reduce their tax liability by allocating their assets among multiple family members to reduce the wealth-tax liability.

By contrast, people with wealth tied up in property and small businesses might have real trouble coming up with enough cash to pay the tax. This is a problem that can be solved, or at least mitigated, by making payment periods flexible over several years. In addition, new financial products could offer cash for tax payments, either as loans or in return for partial ownership of assets — much like home equity loans do today.3

Not two paragraphs later "Professor" Altman later has the nerve to suggest that:

The benefits of the wealth tax would make these adjustments worthwhile. The economy would allocate opportunities more equitably and efficiently, and the tax system would become simpler.4 (Emphasis ours).

One wonders if the professor reads even his own prose.

This, in particular, bears inspection:

In addition, new financial products could offer cash for tax payments, either as loans or in return for partial ownership of assets — much like home equity loans do today.

Certainly, "Professor" Altman regards his intellectual creation as the stuff of genius. Alas, as a concept, this is hardly novel.

Perhaps "Professor" Altman is too young (or simply too poorly read) to remember the many similar firms that sprung up during the Carter Administration (requiescat in pace, speak not its name lest it appear) to provide similar services. "Integrated Resources, Inc." comes immediately to mind, but in the 1970s any number of firms clamped onto the flanks of the United States Tax Code like lampreys, sucking lifeblood from the economy and productive businesses and individuals to provide a small measure of protection from deleterious taxation, making the byzantine tax code merely a conduit to funnel wealth to those otherwise unproductive members of society who were able to provide expertise in dodging through the many complexities of a Kafkaesque revenue code. Hardly the stuff of enlightened national policy.

Alas, this is lost history, seeing as one has to actually pick up a textbook on economics to uncover the many secret revelations exposed by the experience of the 1970s.

With this sort of drag on the economy lifted, is it any surprise that the Tax Reform Act of 1986 had the effect that it did?

But no need to consult an ancient history, the stone tablets of which have been worn by time, sandstorms, grave robbers and the mutation of linguistic families. There are recent data points to consult.

For instance, "Professor" Altman might want to ask France about its experience with a new "Wealth Tax" not even two decades ago. For about $2.5 billion a year in revenues generated by the Tax, France managed to cause over $120 billion in capital flight. But fear not, France will see break-even on that deal somewhere in the year 2054 if you don't discount the cash flows- or not at all if you factor in lost revenues from other taxes on the missing $120 billion.

Switzerland has experimented with wealth taxes at the cantonal level. Shockingly, with the exception of Zürich, the cantons with the lowest wealth tax and the highest exemptions are the most economically prosperous (and seem to house the largest share of assets that are re-invested back into the economy). It is worth mentioning that the highest rate in Switzerland is 0.8% with an exemption of CHF 4,000,000. That's 40% of "Professor" Altman's proposed highest rate and with four times the exemption.

Of course, few people pay that rate in the city of Basel, where it is levied. Instead they simply move next door. Moving out of the city halves the tax immediately. Moving an hour away to Schwyz drops it another 90%. And this is the catch with a tax on assets: unless you purport to create an environment where the free movement of capital is restricted (read: something other than a free society) the levy will be far more counterproductive than productive. How oppressive you are willing to be is a significant factor in your success restricting capital. Will you hand search for assets anyone traveling out of the country? How will you probe for uncut dimonds? Will you simply forbid foreign travel entirely? Erect a wall to prevent departure? Enforce it with the IRS or, perhaps, "shoot to kill" orders? This is sounding vaguely familiar now.

But, like squeezing a balloon, it is all for naught. Even if you do lock in the wealthy (and it is worth noting that some rich folk escaped even the National Socialists), you are requiring them to produce returns on their asset base of at least the rate of the tax plus inflation to simply keep their estates from deteriorating. In the event you are simultaneously fighting the King of Mathematics on the "Near Zero Interest Rate Policy" front you are encouraging highly leveraged and risky investment from your capital class. This is somewhat less than wise. Actually, much, much less than wise.

California is in the middle of a pitched battle with the King of Mathematics on this very field, as her millionaires begin to find that the charms of California weather no longer outweigh the expense (both direct and via regulation) that is levied on their heads simply for the privilege of having a California driver's license.

Despite all efforts, the United States at large faces a similar problem. Those most penalized by a wealth tax are those subjects (sorry, "citizens") most able to avoid it. True, legislation like FATCA, and increasingly burdensome "Exit Taxes" might stem the tide for a time, but now the United States is fighting a rear guard action against the forces of the King of Mathematics again. This is not a promising development, and, like quarrelsome French nobility, the wealthy are as like to sneak off the battlefield quietly and under your nose as they are to join your charge across the plain between Agincourt and Tramecourt.

But beyond these specifics, the basic moral premise "Professor" Altman co-opts to argue for an invasion of the Barony of Inequality is flawed:

The very math of "inequality coefficients" is simplistic and uninformative. What matters is neither wealth inequality nor income equality (both of which are equality of results and ultimately impossible to enforce). What matters in a free society is equality of opportunity and mobility. If for every Horatio Alger story in the United States there are two penniless immigrants who take up residence in a given year, crude measures of "wealth inequality" will show a shocking and morally repugnant increase in "wealth inequality coefficients."

For a country that has so wantonly opened its borders to immigrants over the last 20 years (ironically the same period "Professor" Altman cites as the great hockey stick in inequality) a wide expansion in measures like this is more than expected, it is inevitable. Of course, it is heresy to suggest that immigration policy should be tuned to match the ability of a country to expand its middle class. Instead, apparently, the "Professor" Altmans of the world believe that the protagonists in America's Horatio Alger stories should pay for that country's unduly promiscuous immigration non-policies.

This is not to suggest that finem respice avails itself of an "immigration hawk" posture with respect to national borders. On the contrary, to the extent that finem respice has an opinion about the immigration policies of the United States it is with the inclination that legal immigration should be at least tripled (and illegal immigration actually enforced). It bears noting that the sum total of legal immigration in 2010 was just over one million persons. This is criminally deficient as a policy.

Stated another way, if the ultimate goal of domestic policy in the United States is to be the leveling of measures of income or wealth inequality, then the most expedient means to accomplish these goals is to simply seize all private property and distribute it equally among subjects of the United States (excuse us, we mean, of course, the citizenry). Thereafter simply impose a uniform wage ceiling (and floor) equal to the average income per capita in place at the time of the decree. For reference, as of 2011 that figure is $41,560.

Of course, as various... citizens spend and invest differently they might accumulate property of differing value (the mercurial whims and passions of men being fickle and dangerous). Obviously periodic "relevelings" would be required- to avoid inequality, you understand.

Really, "Professor" Altman, you must admit, anything else is a half-assed excuse of a policy in the fight for the divine goals of income and wealth equality. Also, it is with no small amount of glee that finem respice points out that under this system residents of the District of Columbia will, on average, face a $32,233 annual pay cut. Why, after all, should the District's residents enjoy the upside of an income inequality environment to the tune of 178% the national average?

Then again, if nationalization and price fixing are not the sorts of things that move you, it might be simpler to adopt a Goldman Sachs approach and simply eject (or otherwise dispose of... and here we believe that the historical term is to give the non-performers "special treatment") the bottom quartile of the population according to assets and/or income every year for five or ten years. This approach has the added benefit of providing an exceptionally strong incentive for subjects (sorry, "citizens") to produce and build wealth.

Alas, you too will eventually have to wrangle with the problem of immigration. When the numerator of the inequality equation is frozen in this way adding numbers unchecked to the divisor will be a dangerous luxury. Suddenly, "Professor" Altman, you might find yourself having to close the borders to maintain the "Third Revised Gini Inequality Coefficient" to within the tolerances permitted by the latest "Approved Five Year Inequality Progress Plan," or find yourself sewing mittens in "People's Re-Education Camp C, Cando, North Dakota."

Sure, the price would be high in early years but nothing in the Duke's battle with the King of Mathematics is more important than to keep supplied those brilliant redistribution regiments of his with food for powder.

  1. 1. Altman, Daniel "To Reduce Inequality, Tax Wealth, Not Income," The New York Times (November 18, 2012).
  2. 2. Altman, Daniel "To Reduce Inequality, Tax Wealth, Not Income," The New York Times (November 18, 2012).
  3. 3. Altman, Daniel "To Reduce Inequality, Tax Wealth, Not Income," The New York Times (November 18, 2012).
  4. 4. Altman, Daniel "To Reduce Inequality, Tax Wealth, Not Income," The New York Times (November 18, 2012).
[Art Credit: Unknown artist "untitled," digital illustration (unknown date), Wikipedia. Sure, the longbow helped, but more important was the lack of unity and lackdasical martial spirit of the French. Quelle surprise, no?]

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