ON HOW TO PAY FOR CONVIVIAL GOVERNANCE

07.10.2019

This is the last of four essays which, taken together, outline my proposed system of minimal governance, called convivial governance. Today, it’s time to ask the thorny question: how should all this be paid for? Again, while I aim to make the general principles of how convivial governance should be paid for as clear as I can, the details may end up being very different from what I have envisaged.

Payment for protection

How to pay for government has been an issue for centuries. John Locke, in his Second Treatise of Government, wrote: “It is true governments cannot be supported without great charge, and it is fit everyone who enjoys his share of the protection should pay out of his estate his proportion for the maintenance of it.”

From which, I deduce two things about Locke’s view on this matter. First, an individual’s payment must be his proportion of the total. Second, it must come out of his estate. That is, from his wealth, not from his income, or from a cut on transactions he makes. What I think Locke is saying is that an individual’s payment for the “protection” functions of government should be in direct proportion to his wealth. That is similar to what happens with home buildings insurance, where (assuming the risk is constant) the price is in proportion to the amount insured for. And it seems very reasonable indeed, to me at least.

So, the amount each individual must pay each year for the “protection” elements of convivial governance ought to be a (small) percentage of the individual’s total wealth. Once this is achieved, to support these functions there will be no need for any taxes on income, or on transactions, or on anything else.

The services of convivial governance

Referring back to my previous essay, the services provided by convivial governance will be as follows:

At the neighbourhood level (NCG): A small set of functions concerned with neighbourhood matters, migration and representation at the community level.

At the community level (CCG): Military defence. First responders, including police. Setting of local rules as needed. Co-ordination of the provision of infrastructure. Maintenance of the local publicly accessible infrastructure, notably roads. And quality control. Of these, the first two come under the heading of protection, as might quality control too.

At the non-local level (SCG): Detective work on criminal cases. A justice and arbitration system, covering (at least) restitution for wrongs, punishment for crimes, and contract disputes. Together, of course, with its back-ups, such as prisons. Diplomacy, as required. And quality control. Of these, detectives and criminal justice come under the heading of protection. Diplomacy and quality control, too, might reasonably be included under that heading.

Payments for convivial governance

So, here are the various payments, which individuals or households might be expected to make each year, in order to support convivial governance.

First and foremost, payments to the CCG and SCG for those of their functions which come under the heading of protection. In a perfect world, these amounts should be in proportion to the total wealth of the individual or household being protected. Unfortunately, it’s hard to assess a person’s wealth accurately, without knowing so much about them that their privacy becomes compromised. So, at the start, I expect the system might work like home contents insurance, with the payer declaring how much wealth they want to insure, and a “cap” in proportion being placed on the level of protection. But for the longer term, I think there may be a better solution, which I’ll come to a little later.

Second, a payment for the NCG. This, I would expect, would be a small payment per head, just like a personal subscription to any other society.

Third, payments for infrastructure. It is only fair that the costs of infrastructure development and maintenance should be borne by the users of that infrastructure, in proportion to their use of it. For new infrastructure, this can be achieved through pay-as-you-go fees, such as tolls. These fees should include an allowance for the CCG’s work on co-ordinating the development.

As to maintenance, the only payments to convivial governance will be to the CCG for maintenance of local infrastructure in the public space, such as roads and parks. How this should best be paid for will vary from place to place and from asset to asset. In the particular case of roads, it might be achieved reasonably fairly by a small levy (far smaller than today’s fuel taxes!) on fuel sold in the CCG. For other types of infrastructure, the simplest and easiest option may be to include this, and the local rules function, along with the protection payments.

Fourth and last, civil courts would operate much as they do today, with court fees being paid by the loser of each case.

Some numbers – the current system

So, it’s time to start chucking around some ball-park numbers. I’ve been looking at figures for the UK, which ought to be fairly representative among Western countries.

According to Wikipedia, in 2017 the UK government spent about £34 billion on police and the criminal justice system combined, and £46 billion on the military. This is £80 billion out of a total spend of £772 billion, or just over 10% of total government spend. At the then UK population of 66 million, this amounts to £1,210 per head, or £2,900 per household.

The total government spend was £11,700 per head, or just over £28,000 per household. To put that in context, the government spend per household was almost exactly equal to the average worker’s gross pay in that year.

Of the 90% of government spend which did not go on police, military or criminal justice, part is accounted for by infrastructure development. This looks like around £50 billion, or 6.5% of total spend. Under convivial governance, this would be paid for by user fees for the new infrastructure.

Then there are things like welfare and pensions (looks like £270 billion, 35%), health care (£145 billion, 19%) and education (£102 billion, 13%). These, while vital, should never have been allowed to become politicized. In convivial governance, they would be provided by private actors operating in the free market, satisfying the needs and desires of individuals who know their own priorities and know what they need.

The rest of the spend looks to be things like vote-buying schemes, and subsidies to cronies. However, from a different source, I managed to find a figure of £4 billion for road maintenance in that year; a piffling 0.5% of total spend.

Some numbers – convivial governance

Let’s contrast this with how much convivial governance would cost us, shall we? The protection payments to CCG and SCG combined would be about £2,900 per household per year. The NCG annual subscription would be small, probably not much more than £25 per person. The road maintenance charge to the CCG would be of the order of £60 per year per person or (given that there are about 47 vehicles – cars and larger – in the UK per 100 people) £130 per vehicle. We’d also have to pay some tolls when using new infrastructure; add another £250 or so per year for that. Add it all up, put on an extra 15% for contingency, and you get £3,800 or so per year. Per household, not per person. And that’s it!

And that’s it. The rest of our earnings, we can use to buy the things we want, from the people we like to deal with. We can keep our money away from those we don’t like, and those that have treated us badly. For example: politicians, bureaucrats, psychopaths, crony “capitalists” and other rip-off merchants, bullies, killjoys, guilt-trippers, snoopers, bossy busybodies, meddlers, enviers, wasters, thieves, dirty-tricksters, troublemakers, obstructers, stop-the-worlders, peddlers of lies, bullshitters, the dishonest, assholes in general, and anyone that has or ever has had a political agenda. To hell with the damned lot of them. We, the good people of the world, will be able to live our own lives at last!

Demurrage

I mentioned above that there might be a better solution for collecting protection payments. In fact, for collecting any payment whose size should be in proportion to the total wealth of the payer. But it could only work in an ACG (Area of Convivial Governance – in concept, a group of allied CCGs) which is sufficiently large to have its own currency.

This solution is called demurrage. This word has several senses, but the one I mean here is a controlled, predictable inflation of the currency. With the proceeds being passed to CCGs and their SCGs, in proportion to the population of each CCG. This would spread the burden fairly, by in effect taxing fixed assets in the ACG, and other assets denominated in the ACG’s currency, at a rate in direct proportion to their value. It would also eliminate tax bureaucracy!

I envisage this demurrage would probably be done each month, to supply the month’s budget to each CCG and its SCG. And because these are non-profit organizations, any surplus remaining at the end of the month would be fed back to the people in the CCG, in the form of a per capita bonus.

More numbers

Now, let’s look at some numbers again. At 2017 prices, we need to raise £80 billion a year for protection services in a UK sized ACG. Add 15% for contingency, giving £92 billion. Now, the UK GDP (nominal) that year was £2.04 trillion, so the amount we need for the year is 4.5% of GDP. (In contrast to what the UK government actually took in 2017, which was 38% of GDP).

At the historical average wealth to GDP ratio, about 3.5, that would be 1.3% of total UK wealth. Though that ratio is currently higher than 3.5, meaning the demurrage required to cover all protection services is less than 1.3% per year. If we decided to go the whole way, and use demurrage to cover all activities of convivial governance – so no-one would ever have to pay any kind of “taxes” at all – then the inflation needed would still be less than 1.5% per year.

In wartime, there might be additional levies, or a higher demurrage, for an expanded militia. But once we have got rid of the last political states, there will be no rationale for anyone to try to make a war. For, with all individuals on the look-out for real wrongdoings, anyone planning a war would find it hard to avoid detection for long. And under convivial governance and its ideal of common sense justice, anyone seeking to start a war would be extremely harshly punished. So, once the last state has gone, we will be able to reduce, and eventually abolish, all militaries. Along, of course, with the costs that go with them.

A post-script

I won’t try to sum up this essay, or its three predecessors. Instead, I’ll offer a little ditty, to give an idea of what life might be like under convivial governance. It is modelled after the playground song “No more Latin, no more French.”

In a few years, how will things be,
When England is an ACG?

No more taxes, no more wars,
No more scheming behind closed doors.
No more lies or propaganda,
No more “justice” without candour.

No more politician prats,
No more bossy bureaucrats.
No more weasel words from moanies,
No more cushy jobs for cronies.

No more marxists, no more greens,
We all know that they’re has-beens.
No more fascists, no more tories,
We don’t listen to their stories.

No more barriers in the way
Of those who want to earn good pay.
No more taking of earned wealth,
Whether obvious or by stealth.

No more cameras all about,
Spying on us to catch us out.
No more tracking of our bytes,
No more trampling on our rights.

No more stops without good cause,
No more bad, politicized laws.
When England is an ACG,
Then all its people will be free.

 

 

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