Doug Casey on Taxes and Freedom

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The Daily Reckoning | Monday, May 21, 2012 Spaniards follow Greeks on the path to Euro withdrawals, Taxes: Don’t let the thieves control the moral high ground, Plus, Bill Bonner with an “alternative” message for graduating students...and plenty more... ------------------------------------------------------ External Advertisement Anti-Wall Street Video Causing Internet Sensation Free online video reveals the perfect ‘Anti-Wall Street Retirement Plan.’ Some brokers have even lobbied Congress to make sure you never hear of some of the income opportunities revealed in it. Click here to watch it while it’s still available.   When Euros Turn to Zeros Greeks Run on Banks as Euro-Confidence Wanes   Eric Fry Reporting from Laguna Beach, California... In Pamplona, Spaniards run with the bulls. In Athens, Greeks run on the banks. Yes, folks a good, old-fashioned bank run is underway in Greece. During the last couple of years, anxious Greeks have yanked a net €72 billion from the banking system — or nearly a third of total short-term bank deposits. And according to the scuttlebutt, withdrawals have been accelerating in recent days, as the “unthinkable” possibility that Greece might withdraw from the euro bloc has become increasingly thinkable. So who could blame the Greeks for grabbing their euros before they turn into zeros...or, at best, drachma? In fact, given the chaotic conditions now unfolding in Europe, who could blame anyone for grabbing their euros before they turn into zeros? Anxious Spaniards are also queuing up to withdraw their euros from the banking system. And many bond investors are behaving similarly: they are dumping Spanish government bonds and/or buying insurance against a default by the Spanish government. You all remember Spain, don’t you, Dear Readers? That’s the country that, if it were an American high school senior, would be voted, “Most likely to follow Greece out of the euro zone.” Spain’s fiscal problems are not new news, but thanks to the renewed turmoil in Greece, distress has returned to the Spanish bond market. As the chart above illustrates, the yield on Spanish government 10- year bonds recently touched a six-month high, while the price of insuring Spanish bonds against a default just hit a new all-time high. That’s what we would call, no bueno.   From Jim Rogers... to Marc Faber... to Congressman Ron Paul, this book is sitting on the desks of some of the world's smartest thinkers... And for good reason, too. Inside you'll find 47 ways to protect your wealth from the declining value of the U.S. Dollar Discover FIVE of those 47 ways for free, right here. The Daily Reckoning Presents Doug Casey on Taxes and Freedom An Interview with Doug Casey   Doug Casey The always-outspoken Doug Casey addresses a broader view of taxation and its costs to both individuals and society in general in this interview with Louis James. Louis James: We get a lot of letters from readers who know about your international lifestyle and wonder about the tax advantages they assume it confers. Is this something you care to talk about? Doug Casey: Yes; something wicked this way comes, indeed. But first, I have to say that as much as I can understand the guy who flew his airplane into an IRS building, as we once discussed, I do not encourage anyone to break the law. That’s not for ethical reasons — far from it — but strictly on practical grounds. The Taxman can and will come for you, no matter how great or small the amount of tax he expects to extract from you. The IRS can impound your assets, take your computers, freeze your accounts, and make life just about impossible for you, while you struggle to defend yourself against their claims and keep the rest of your life going. The number of IRS horror stories is beyond counting. As the state goes deeper into insolvency, its enforcement of tax laws will necessarily become more draconian. So you absolutely don’t want to become a target. L: So... just bow down and lick the boots of our masters? Doug: Of course not. People can and should do everything they can to pay as little in taxes as possible. This is an ethical imperative; we must starve the beast. It could even be seen as a patriotic duty — if one believes in such things — to deny revenue to the state any way possible, short of endangering yourself. Starving the beast may be the only way to force it back into its cage — we certainly can’t count on politicians to make the right choices — they’re minions of the state. They inevitably act to make it bigger and more powerful... The state, the media, teachers, pundits, corporations — the entire establishment, really — all emphasize the moral correctness of paying taxes. They call someone who doesn’t do so a “tax cheat.” As usual, they have things upside down. Let’s start with a definition of “theft,” something I hold as immoral and destructive. Theft is to take someone’s property against his will, i.e., by force or fraud. There isn’t a clause in the definition that says, “unless the king or the state takes the property; then it’s no longer theft.” You have a right to defend yourself from theft, regardless of who the thief is or why he is stealing. It’s much as if a mugger grabs you on the street. You have no moral obligation to give him your money. On the contrary, you have a moral obligation to deny him that money. Does it matter if the thief says he’s going to use it to feed himself? No. Does it matter if he says he’s going to feed a starving person he knows? No. Does it matter if he’s talked to other people in the neighborhood, and 51% of them think he should rob you to feed the starving guy? No. Does it matter if the thief sets himself up as the government? No. Now of course, this gets us into a discussion of the nature of government as an institution, which we’ve talked about before. But my point here is that you can’t give the tax authorities the moral high ground. That’s important because decent people want to do the morally right thing. This is why sociopaths try to convince people that the wrong thing is the right thing. If an armed mugger or a gang of muggers wanted my wallet on the street, would I give it to them? Yes, most likely, because I can’t stop them from taking it, and I don’t want them to kill me. But do they have a right to it? No. And every taxpayer should keep that analogy at the top of his mind. L: I also believe that the initiation of the use of force (or fraud, which is a sort of indirect, disguised form of force) is unethical. It doesn’t matter what the reason for it might be nor how many people might approve of the action. But some people claim that taxation is really voluntary — the price one pays for living in society... and if I’m not mistaken, the US government says the federal income tax is voluntary. Doug: [Snorts] That is a widely promoted lie. It’s propaganda to help statists claim the moral high ground, confuse the argument, and intimidate people who aren’t critical thinkers. Just try not volunteering to pay it and see what happens. Taxation is force alloyed with fraud — a nasty combination. It’s theft, pure and simple. Most people basically admit this when they call taxation a “necessary evil,” somehow mentally evading confrontation with the fact that they are giving sanction to evil. But I question whether there can be such a thing as a “necessary evil.” Can anything evil really be necessary? Can anything necessary really be evil? Entirely apart from that, if people really wanted anything the state uses its taxes for, they would, should, and could pay for it in the marketplace. Services the state now provides would be offered by entrepreneurs making a profit. I understand, and am somewhat sympathetic, to the argument that a “night-watchman” state is acceptable; but since the state always has a monopoly of force, it inevitably grows like a cancer, to the extent that the parasite overwhelms and kills the host. That’s where we are today. I think a spade should be called a spade, theft should be recognized for what it is, and evil should be opposed, regardless of the excuses and justifications given for it. Ends do not justify means — and evil means lead to evil ends, as we see in the bloated, corrupt, dangerous governments we have all over the world. L: That runs counter to the conventional wisdom, Doug. Evil or not, most people think taxation is part of the natural order of things, like rain or day and night. Death and taxes are seen as the two inevitable things in life, and you are a silly idealist — if not a dangerous madman — if you believe otherwise. Doug: That saying about death and taxes is both evil and stupid; it’s a soul-destroying and mind-destroying perversion of reality. It’s evil, because it makes people reflexively accept the worst things in the world as permanent and inevitable. As for death, technology is actively advancing to vanquish it. Who knows how far medicine, biotech, and nanotech can delay the onset of death? And taxes are, at best, an artifact of a primitive feudal world; they’re actually no longer necessary in an advanced, free-market civilization. People also once thought the world was flat, that bathing was unhealthy, and that there was such a thing as the divine right of kings. Many things “everyone knows” just aren’t so, and this is one of those. A government — for those “practical” people who think they need one — that stuck to the basic core functions of police and courts to defend people against force and fraud and a military to defend against invasion, would cost a tiny, tiny fraction of what today’s government costs, and that could be funded in any number of ways that essentially boil down to charging for services. As it is now, the average US taxpayer probably works half of the year just to pay direct and indirect taxes. That doesn’t even count the cost of businesses destroyed by regulation and lives lost to slow approval of new treatments by regulators, or a million other ways governments burden, obstruct, and harass people. Stay tuned for Part II of the interview, tomorrow... Regards, Doug Casey, for The Daily Reckoning [Joel’s Note: For more thought-provoking ideas from Doug Casey — as well as actionable investment ideas — be sure to preorder the entire audio collection of Casey Research’s upcoming Recovery Reality Check Summit. You’ll hear every minute of every presentation... get specific investment information from over 30 experts... and be better prepared for what the future holds. Plus, if you order now, you’ll get the set at a generous discount. Also, Fellow Reckoners can catch Doug at this year’s Agora Financial Investment Symposium in Vancouver. The habitually provocative founder of Casey Research will join an all-star cast...possibly our best yet. Get all the details right here. P.S. Last year’s event sold out in record time...and if ticket sales so far are anything to go by, we expect 2012’s event to go even quicker. Again, snap up your discounted ticket right here. We hope to see you there.   The One Retirement Plan Obama Can’t Touch If you’ve already retired, or want to retire soon, I urge you to watch this video presentation before we have to pull it down. This “Secret $200 Retirement Blueprint” shows you step-by-step how to grow a monster-sized nest egg with a little time and a tiny grubstake. Click here to watch this video presentation now.   And now over to Bill Bonner who has the rest of today’s reckoning from Baltimore, Maryland... To the Class of 2012   Bill Bonner Down, down, down... Day after day for the last 2 weeks...almost everything has been grinding down. Stocks, oil, copper, bond yields... It looks as though the whole world economy is slowing down. China, India, America, Europe. All are slowing. How much longer can this slow down continue? A lot longer! We should have some bounce in the markets this week. But beware. Our “Crash Alert” flag is up. Meanwhile... We spent the weekend in Charlottesville, VA...at the UVA graduation for our son, Henry. The University of Virginia is probably the most handsome campus in America. Especially in May. It has a green central esplanade bordered by columned buildings in the Greco-Roman style. At one end is the famous Rotunda. Flowers and trees bloom everywhere. We know of no other president who achieved anything equivalent. Some waged dubious wars. Some launched weasely social welfare programs. The best of them idled away their careers, shaking hands, making deals, and otherwise shuffling offstage leaving it no better or worse than it was when the curtain first went up. But Mr. Jefferson left an architectural monument that is breathtaking. He would be proud of it today. It is too bad that the soliloquies of its 2012 commencement exercises came nowhere close to the grandeur of the setting itself. Instead, there was nothing more than the usual hollow, air-head do- goodism you associate with graduation speakers. One urges students to go out in the world and ‘make a difference.’ Another tells them to use their educations for some great public purpose. Another insists that they become the leaders of tomorrow. All declare that their years spent (there was no mention of the money) at UVA were a good investment...both formative and decisive...making them the determined, capable people that they have allegedly become. Jefferson would roll his eyes. Herewith, we offer an alternative graduation speech. An honest address to the class of 2012. One we will never be invited to give: I see you before me. Arranged in alphabetical order. From Mr. Aaron from Alexandria to Mr. Zyman of Richmond. You are all suited up...wearing the ancient vêtements that have marked men of learning for hundreds of years. And in a few minutes you will move the tassels on your funny little hats from the right side to the left, indicating that you have been awarded a bachelor’s degree. This signifies that you have joined the few...the elite...the learned. But how many of you really are learned? How many are imposters? How many are capable of writing a simple essay? How many can decline a Latin verb? How many have mastered calculus and quantum physics? You’ve heard about the group of men at the old English club. The waiter comes up and asks if they would like some hock. One of them cleverly says ‘hic, haec, hoc.’ So the waiter comes back with drinks for all of them except him. When he asks why, the waiter replies: ‘But sir, you declined the hock.’ How many of you got that joke? I only ask the question because I am suspicious. Many college grads of today could hardly be called intellectuals. Many have hardly used their brains at all. Some have merely spent the last four years learning a few tricks and the latest jargon of a trade. Marketing, for example. Or journalism. Marketing evolves so fast that whatever you learn here will be mostly obsolete by the time you get a job. If you ever get a job. Besides, the important points could be picked up in a few weeks on the job anyway. As to journalism, there are a few skills you need to know, which you could pick up in an afternoon; the rest is undifferentiated. You look. You ask questions. You think. And you tell the world what you come up with. No college necessary. In fact, college may hinder you. Instead of using your own eyes and your own brain, and developing your own way of looking at things, you spent your best years in class absorbing the claptrap du jour of the mainstream media. Others among you have read popular novels or a few history books. You think you know something. Maybe you call yourself a historian. Or perhaps a literary critic. My advice is to keep that to yourself. You have paid a lot of money for something that millions of other people — just as smart as you are — do for a hobby or past-time. There’s not much real knowledge in either of those things...just opinions and ideas which are more vanity and entertainment than genuine learning. Same thing for those who have spent years studying ‘politics’ or ‘economics.’ Drop the pretense that you know something. You don’t. All you have is a full plate of opinions...most of them preposterous...and most of them indigestible by a thoughtful person. I don’t doubt that many of the courses offered here — to say nothing of the beer parties — are interesting and fun. But are they worth $160,000 and 4 years of your life? How about some of these titles that I got out of the Course Catalog for 2012: “Fantasy and Values” or “Black Women Authors” or the “Cinema of India” or “Feminist Theory in Anthropology,” or “Creole Narratives” or “Zen” or “Business Ethics”...? As to that last one, when you get out in the real world, which unless you go to graduate school is happening as of tomorrow...you will find that it is very unlike the make-believe world at this university. They say that by going to a university you open yourself up to a whole world of knowledge. Yes, perhaps you do gain easy access to a whole world of simplified knowledge and politically correct opinions. But you also cut yourself off from a larger world of real knowledge...the kind you get by doing and observing. In your course on Business Ethics, for example, you are no-doubt exposed to a number of ideas and theories on the subject. You’d be better off learning it on the job. First, instead of paying someone to teach you, you would get paid for learning. Besides, you can get the ideas and information in the course materials by reading a few $29 books...or read them online for even less. That is true for almost all the coursework in the arts and social sciences. It is all available to you at much less expense. So, in a sense, you have been a sap to pay so much for it. But you would do even better to combine your reading with real life experience. And in real life you would quickly discover that things are much more complex, much more nuanced, and much less clear than you thought. That’s true in business ethics as it is in everything else. As the Jewish philosopher Hillel explained, the core idea of the Torah, the Bible, the Sermon on the Mount, and business ethics is as simple as this: if you wouldn’t want someone to do it to you, don’t do it to someone else. The rest is detail. And the details depend on the situation, which you only encounter in its full complexity, when you are face to face with it. You don’t encounter it in a book...or in your lecture halls...or in your seminars on campus. So, the time you spend on campus actually prevents and delays you from coming to grips with the real problems you will face in real life...and thus retards your education. So, you’ve spent — or your parents...or the taxpayers have spent — $150,000 on your education. And you’re retarded. And now you enter the job market. And don’t think you’ll have an easy time of it. Because previous graduates of this university and others have applied the lessons they learned in school and made a god-awful mess of the economy. There are 14 million people without jobs. About one in 20 young people is jobless. You’re just another one. Frankly, I’m surprised the unemployment rate for young people isn’t higher...given how worthless most young people are. Why so many unemployed? Because economics professors have taught 3 generations of economists that a command and control economy — to a point — will work. It won’t. But a command and control economy is good for economists and do-gooders, who get jobs commanding. Economists convinced policymakers...who have their own corrupt reasons for wanting to twist up the economy — to control the price of labor...and prevent it from falling, using a variety of tools and subterfuges. By the way, a ‘subterfuge’ is defined in the dictionary as “an artifice or expedient used to evade a rule, escape a consequence, hide something, etc.” I mention that because I know that half of you are functionally illiterate. MSNBC recently reported that: More than 50 percent of students at four-year schools and more than 75 percent at two-year colleges lacked the skills to perform complex literacy tasks. The results cut across three types of literacy: analyzing news stories and other prose, understanding documents and having math skills needed for checkbooks or restaurant tips. But one of the subterfuges used by the feds that makes it so hard for you to get a job is student loans. They’ve lent out more than $1 trillion — some of it to you. Rather than work for lower wages, students borrow money at low teaser rates...and go to school. On average, you have about $20,000 worth of debt when you leave this university. And I’ll bet that a lot of you won’t pay up. But I’ll give you some advice. String your lenders out as long as possible. Eventually, the same college-educated dimbulbs who perverted the employment market will destroy the dollar. Avoid paying your loan long enough and it will probably go away... Of course, the outlook is not all bad. Some of you will find good jobs — those who have used your time wisely, by studying science and engineering. It’s only the rest of you who are screwed. The feds keep the price of labor too high. Employers would have to pay you more than you are worth. So, they are reluctant to hire you. Employers know damned well too that you’ve been retarded by your education. So, they’re leery of hiring you. Especially if they see you’ve taken a class in business ethics. They think you’ll stab them in the back the first chance you get. And they’re probably right. Because you’ve been told to go forth and create a better world. I’ve seen the surveys. Two out of three of you want to work for non-profit organizations. Why is that? Because your whole weltanschauung...well, I mean, your worldview...has been corroded by your education. You think business is greedy...selfish...and stupid. But where they hell do you think non- profits get their money? Where does the government get its money? How can our society afford to let you waste so many years in college? All of this money has to come from the productive sector of the economy. You think you can do good by working for the government or a non- profit organization? Well, I’ve got news. You’ll be a parasite, just like the rest of them. A leech, sucking the life out of the real, productive economy. That’s another reason it’s so hard for you to find a job. The more people who fantasize about getting paid for doing good...for trying to make a better world...the worse the real world gets. Because that leaves fewer people actually doing the kind of real world work that makes the world richer and more prosperous...and better organized...safer and healthier. So, forget about making the world a better place. Forget about leading anybody anywhere. Forget about thinking you know something. You don’t know enough to lead yourself, let alone anyone else. And most of what you think you know is worthless claptrap. Pseudo- knowledge, in other words. Finally, don’t try to be a leader. The world doesn’t need any more leaders. It’s got too many already. Instead, try to find a real job in the real world. Do it well. And mind your own business. Thank you. And good luck. Regards, Bill Bonner for The Daily Reckoning ---------------------------------------- Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at joel@dailyreckoning.com Expatriation in the Wake of the Facebook IPO Immune to the Financial Crisis What Happens When the World Economy “Goes Japan” Hedge Funds Bail On Euro Now Data Show US Economy is Improving British Pound Sterling Losses “Safe-Haven” Status The Daily Reckoning: Now in its 11th year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. 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