The Income Tax
Inflation is a benefit when selling, and a squeeze when buying. Eventually, there is never enough revenue for individuals, business or government. Inflation always wins. The income tax got its start during the Civil War, was eliminated in 1872, then reinstated fourteen years later in 1894, only to be declared unconstitutional the following year in 1895. In 1913, the Constitution was amended (#16) to allow a permanent income tax. The revolution and its democratic ideals would seem to be officially dead. Government had made war on its own citizenry, and now taxation was permanently fixed from above. Local representation, taxation and spending was surrendered to a centralized authority, much like to the Lords of Trade a century earlier. Washington D.C. was closer than London, but the same bad habits ensued. Rather than tariffs (as on tea), the entire economy was subject to taxation. The forms of taxation were multiplying (sales, property, income), which each level of government adding more taxes in a mindless search for more revenue.
The new income tax paid for World War I. The dissonance of production for destructive purposes had reached a global scale. Unions and workers rights issues were coming to the fore. Corporations were having great success by abusing the non-slave labor force. Child labor supported the craving and gluttony of unearned income on Wall Street. During the 20's, self-sustainability on the farm became less and less common. People were forced into the industrial workforce in search of wages. Excessive wealth and poverty cannot coexist. Businesses cannot sell only to the rich; workers are also customers. With the crash of Wall Street, the factories were idle. Only the need for daily consumption kept people and the economy working. The Great Depression represents a colossal accounting failure.
Dissonance of Ownership
Conditions have improved for the American worker since the New Deal was instituted, but things are still very bizarre. Some of the largest holdings on Wall Street are the pension funds of union members. American workers have become slaves of themselves by proxy, often owning stock in the company that employs them, and watching their jobs be outsourced overseas for greater profit. Because of their high income, union workers are constantly targeted by insurance companies and investing brokerages who seek to abscond with their savings. Better-paid workers do not understand economics any better than under-paid workers or the owners themselves. The brutality of the 1920's child worker system was exported to faraway countries. Foxconn, a subcontractor for Apple, has a million employees. The harsh garment factory conditions, which led the Pilgrims to flee Europe before modern finance began, has spread around the world.
Many young adults are working for startup companies for the promise of future stocks options when the company goes public. Like the blue-collar union worker, they have combined a craving for effortless wealth with our own labor. Marx's distain for the bourgeois middle-class was because they are so blinded by their love of money. Being in the majority, they have the political power to fix things, but lack the moral and economic insight to act. Marx, for his part, failed to realize that the lower classes would copy the middle-class, the same way that the middle-class copied the upper-class.
Wall Street and the Role of Gold
As we know today, there is no shortage of currency, but there is still not enough money. The problem was always how money was handled, not what it was made from. Modern finance is the same buy-low sell-high system that has been with us for thousands of years. Paper money was gold once removed. Stocks are gold twice removed. Modern finance has been a failure, and any alleged gains of industrial and political advancement pale in comparison. Every generation has had an opportunity for peace and plenty, but lost it in pursuit of unearned income. The book of Nehemiah details the same story. Unearned income is a merciless process. Older citizens take advantage of young laborers. Today we do it across national boundaries. Because of stocks, we live in a perplexing multi-colonial world, where the slave and the master can be the same person, paying interest with one hand while trying to collect it with the other.
The French (1720) desired to gather all the gold because of failures in the stock market. America (1933) tried to do the same thing, but FDR's attempt fell flat. The law was generally ignored. They both operated on the false assumption that centralizing a problem was the same as solving it.
Richard Nixon eventually abandoned the gold standard (1971). He never understood the complaints of the communists, but attempted to use their solutions by introducing wage and price controls. His attempts at regulating the oil supply through geo-politics and regulation failed miserably, leading to the rise of Islamic terrorism. Financial volatility continues with or without gold in the mix. Oil stocks have dominated the market for almost a century, and stocks have eclipsed money in importance, leading to attacks on Wall Street and oil facilities.
The stock market is a not very well disguised international slave system, where the desire for unearned income rules men's imagination. The slave-master is not the 1%, but a familiar evil that resides in all of us. The attempt to use evil for good was illogical. The promise of modern finance was that it would solve the money problems, reduce conflict, and allow art and the common good to flourish. It failed primarily because of a mathematical flaw, and grew into the FIRE economy, which is the topic of the next chapter.
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