submitted by jwithrow.
Click here to get the Journal of a Wayward Philosopher by Email
Journal of a Wayward Philosopher
Transitioning from Coercion to Voluntary Association
April 27, 2016
Hot Springs, VA
“The only highwayman I ever met was the state itself. When I have refused to pay the tax which is demanded for that protection which I did not want, itself has robbed me. When I have asserted the freedom it declared, it has imprisoned me.” – Henry David Thoreau
The S&P closed out Tuesday at $2,091. Gold closed at $1,244 per ounce. Crude Oil closed at $44.02 per barrel, and the 10-year Treasury rate closed at 1.93%. Bitcoin is trading around $455 per BTC today.
Dear Journal,
Last week we gazed into our crystal ball and discussed the future of commerce. As part of that discussion, we suggested that centralized governments have been skimming 50% of all production via taxation for quite some time now, and we suggested that the global economy would boom if producers were permitted to keep the monetary fruits of their labor.
I should clarify this a bit more by saying the vast majority of those taxes go towards financing corruption, cronyism, special interests, bureaucracy, militarism, dependency programs, and waste. In other words, they are used to destroy wealth and destabilize civilized society. A very small portion of the taxes you pay goes towards providing core civil services.
Further, the entire system of centralized government is underwritten by coercion and violence. Here’s what I mean by this:
Everyone must comply with the policies, programs, restrictions, prohibitions, regulations, licenses, and taxes handed down to them. Everyone must contribute a portion of their hard-earned income to finance the administration and enforcement of these policies, programs, restrictions, prohibitions, regulations, licenses, and taxes. There is no option to simply opt out.
It does not matter if you are morally offended by a particular government program or policy. It does not matter if you know a particular program or policy is vastly inefficient and wasteful. It does not matter if you simply think your money could be used more effectively in a different manner. It does not matter if you think government is facilitating the destabilization of human civilization. You must comply no matter what or you will be punished.
Typically the penalty for non-compliance is an onerous fine that is far disproportionate to the violation. Eventually, if the fine is not paid or if the non-compliance continues, men with guns will show up to arrest you, take you to jail, and lock you in a cage. It doesn’t matter if you are a peaceable person who would never harm another human being. You must comply, or else.
This is the threat that underwrites every government policy. Even policies considered “benevolent” by many citizens, such as social safety net programs, are enforced by coercion and, if necessary, violence.
Imagine the outrage that would ensue if a charitable organization began treating non-participants in this fashion!
Such is the nature of government. Government is nothing more than a corporation with a legal monopoly on violence. I mean this quite literally, and I refer you to Title 28 3002 of the UNITED STATES code which reads:
(15) “United States” means –
(A) a Federal corporation;
(B) an agency, department, commission, board, or other entity of the United States; or
(C) an instrumentality of the United States
Notice how items B and C refer back to item A which defines the United States as a Federal corporation.
Here’s where I am going with this: there are only two fundamental ways in which people can interact with one another in society. The first is through voluntary association. The second is through the use of force and coercion.
Voluntary association or coercion – these are the only two choices.
It has gotten to the point, especially in the U.S., where most people know that government has become corrupt to the core. Approval ratings confirm this. But most people still view this mode of coercive government as a necessary evil, so they remain locked within the current paradigm.
To an extent, I suppose they are right. It is well documented that roughly 50% of the U.S. population is dependent upon the federal government for monetary support in some capacity.
If you took away Social Security Retirement benefits, Supplemental Security Income, Medicare, Medicaid, Food Stamps, Emergency Food Assistance, Temporary Assistance for Needy Families, Public Housing Assistance, and Unemployment Benefits then you would see a rash of debt defaults, some economic dislocations, and probably riots in the streets.
Now keep in mind these programs have nothing to do with core civil services, and none of them existed a short 100 years ago. Instead, many of these functions were handled on a voluntary basis by community-based organizations.
Given technology today, all of these programs could be administered much more effectively, and in ways that do not foster dependency by mutual insurance companies, mutual aid societies, and charitable organizations. Such a transition would keep social safety nets in place, but would decouple the functions people want from all of the corruption, cronyism, special interests, bureaucracy, militarism, dependency, and waste that most people do not want.
Oh, and these functions would be voluntary in nature; no longer would they be administered coercively with the threat of violence for non-compliance.
So how does human civilization get from here to there… from coercion to voluntary association?
Those of us who believe in individual liberty and voluntary association are always hesitant to prescribe mass-solutions. We are not central planners, nor do we seek to be the world’s general manager. “Live and let live”, is usually the best advice we can give.
Today I am going to go out a limb, however. I am going to outline a set of solutions from start-to-finish that anyone can implement to make the current system completely obsolete. If enough people were to implement these solutions then we could transition away from a society organized by coercion and violence to a society organized according to voluntary association within one generation.
Such a transition would put trillions of dollars back into the economy every single year, reduce the cost of living significantly, foster innovation and commerce, eradicate cronyism, severely curtail poverty, and spark a second Renaissance for human civilization.
But of course the beauty of voluntary solutions is that you don’t need anyone else to go along with them in order for them to work for you. Even if the transition away from coercion and violence does not occur, you can still structure your affairs so that you (and your family) are as insulated and independent from the system as possible.
So the first thing we need to do is render all of those government dependency programs obsolete. We can do this in one fell stroke utilizing mutual life insurance.
Mutual life insurance companies are entirely owned by their policyholders. These are not publicly traded companies thus there are no shareholders and no executive compensation tied to stock performance. These companies are overshadowed by the high-flying, risk-taking Wall Street-connected insurance companies, but mutual life companies have been in existence for centuries. They are extremely risk-averse organizations that take their commitments seriously.
You won’t find this advertised or discussed in the personal finance arena, but you can structure a very powerful type of life insurance policy with these companies to take advantage of the mutual relationship. With no shareholders to appease, these companies actually return their profits in excess of expenses and reserve requirements directly to policyholders every year in the form of policy dividends. This serves to keep mutual life policies growing in an exponential fashion.
I don’t have room in this entry to get into the technical details of this strategy, but I do have an entire chapter dedicated to this strategy in my book The Individual is Rising.
Here’s what is relevant for this entry: if you structure one of these policies for an infant and fund it for eighteen years consecutively, then that person will have no need for government assistance whatsoever so long as they do not squander the capital pool warehoused within their policy.
Here’s what this looks like:
I set up a policy for my daughter when she was a few months old with an annual premium of $3,000. The cash value will be at least $62,000 (and likely higher) upon her 18th birthday at which point I will turn the policy over to her and she will have access to those funds tax-free.
Here’s the beauty of this strategy: my daughter’s policy will be completely self-sustaining by the time she assumes control of it. It will be on auto-pilot.
The cash value will be growing by at least $12,000 per year by her 18th birthday. We will set it up to automatically use $3,000 of this to pay the policy up for another year which contractually guarantees that the cash value will grow by an even greater amount the year after.
Mind you, this cash-value growth is an exponential function – it starts small but gets much bigger as the policy grows. This is why it is so important to establish these policies for infants as soon as possible.
If she plugs the additional $9,000 back into the policy then it will super-charge the growth, but I am assuming she will use these funds to help finance her young adult adventures – be they education, business, or travel.
In this way her policy will pay for itself for the rest of her life, and the cash value will be at least $650,000 by the time she turns 65. This figure is contractually guaranteed, and it assumes nothing goes into the policy except the base premium of $3,000 every single year. This particular mutual life company has never failed to pay a policy dividend, however, so it is likely the cash value will be in excess of $1 million by age 65.
By the way, the cash value does not fluctuate – there is no risk to principal whatsoever. That’s the beauty of participating whole life insurance.
The policy contains a disability rider as well, which states that the insurance company will pay the policy’s premium annually in the event that the owner becomes disabled. I am the owner until I transfer the policy over which means this disability rider actually covers me, not my daughter. This guarantees that the policy will get funded for the first 18 years no matter what. The rider will then cover my daughter once I transfer the policy over to her.
Do you see how this strategy renders government dependency programs obsolete?
You can access the accumulated cash value in the policy at anytime for any reason. This is your personal safety net, and it makes all of those welfare programs mentioned above unnecessary. This strategy also blows Social Security Retirement benefits out of the water.
Staying with my daughter’s example – not only is the guaranteed cash value $650,000 at age 65, but the cash value will be growing by more than $50,000 per year. If she simply pays herself a monthly income from the annual growth then she will have more than doubled Social Security’s monthly check.
Picture this strategy applied generationally: each person would not only have their own substantial policy on auto-pilot, but they would also receive huge death benefits when their parents eventually pass away. These death benefits could be used to further build the family’s capital pool and contribute to the viability of mutual aid societies for those who truly need help.
To put this in perspective: the death benefit for my daughter’s policy at age 80 is over $3 million. Just like the cash value, this figure grows substantially each year as well.
Now I would take this strategy a step further and use a portion of this capital pool to construct an antifragile asset allocation model. A properly constructed asset allocation model will enable you to both hedge against major financial risks, and also grow your capital by leveraging prominent macroeconomic trends. Finance for Freedom and Bulletproof Money Management are two great resources detailing how, specifically, this can be done.
Of course if our children are going to be handed a powerful financial tool upon their maturation into adulthood then they need to be prepared to manage it responsibly. This means they need to be self-driven, confident young people with communication abilities, marketable skills, and an understanding of finance and economics. This will not come from the current model of education which isolates students from the real world and conditions them to be complicit laborers, compulsive consumers, and/or obedient soldiers.
For this reason I think we would also want to craft a world-class education for our children while their policies were being capitalized. I have written about this topic at length in these journal entries, in my book, and in the Zenconomics Guide to the Information Age. This would entail either homeschooling or seeking an alternative school based upon Montessori, Waldorf, or Sudbury Valley principles. By the way, this approach to education renders government schools obsolete as well.
Do you see how none of this requires force, coercion, or violence? You don’t need to raise taxes, pass new laws, implement new policies, reform the government, or fight the system; all you need to do is use the freedom you already have to build a better model.
You don’t even need to convince your neighbors that this strategy is superior. Once they see how easy it is to get rid of their stress, fear, and financial problems; once they see that there is a better way, your neighbors will likely move in the voluntarist direction on their own. Philosophy, theory, and debate very rarely changes minds; quantifiable results often do.
You see, financial dependency – whether on a government program or on a monthly paycheck – is the core cause of most of the problems the politicians seek to “solve” through coercive legislation. Get rid of the dependency using this strategy, and you can get rid of both the problems and the politicians.
At this point I need to touch on the administration of core civil services: monetary systems, security, property protection, legal systems, dispute settlement, road maintenance, etc. All of these services are currently funded via coercive taxation, and the taxes extracted typically exceed the quality of service provided.
There are already superior voluntary alternatives for most of these services, and these alternatives will become more viable and robust as more people free themselves from dependency and embrace voluntary association. Freedom from dependency is the first step in this direction.
This journal entry has already run long, but I need to issue a parting word of warning: the time to transition towards voluntary society is now.
Government programs are already insolvent, and they will either be cut significantly or national currencies will be destroyed in an attempt to prop them up. I don’t have an exact timeline for this, but I suspect the day of reckoning is rapidly approaching. Your television news programming will not examine the insolvency of government, but you can look at the numbers and the circumstances to see this for yourself.
The U.S. national debt has doubled in less than a decade. The federal government has accumulated over $200 trillion dollars of unfunded liabilities that it cannot possibly honor. Every single G-20 nation operates in the red every single year. Roughly one-third of the world’s sovereign debt is now in negative-yield territory as bloated governments around the world struggle to finance themselves. Central banks are taking turns at cutting rates and launching quantitative easing programs in an attempt to keep the game going.
This is not going to end well.
The politicians are right when they say that there is a magic solution to cure all that ails human civilization, but they are wrong on what that solution is. That solution has nothing to do with government or politics whatsoever.
That magic solution is you.
More to come,
Joe Withrow
Wayward Philosopher
We have just released the Zenconomics Guide to the Information Age to members of the Zenconomics Report email list. This guide is 28 pages in length, and it discusses: money, commerce, jobs, Bitcoin wallets, peer-to-peer lending, Open Bazaar, freelancing, educational resources, mutual aid societies, the Infinite Banking Concept, peer-to-peer travel, Internet privacy, and numerous other Information Age tips and tricks with an eye on the future. We are offering a free copy to all new mailing list subscribers at this link: http://eepurl.com/bXyrQ1.