Prediction 110
Within 100 years the citizens and companies of a large and prosperous country in excess of 100 million people will no longer pay taxes of any kind.
Prediction 110
Duration 100 years (02003-02103)
Predictor
Robert Thibadeau
Challenger
TBA
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A day of no taxes will happen because people hate taxes, most people don?t actually care about money, and there will come a means to have no taxes. Deemed impossible by basically every economist I have met, there seems no impossibility to this in a country where all payments are electronic and all transactions are monitored in near real-time through central banks. The governments will create the money they need out of ?thin air? based on a careful monitoring and controls of the money flow. The objective will be to do no economic harm.
We can all agree that if the U.S. Government today printed exactly one extra dollar bill to use for itself, this virgin birth of spending money for the Government would have absolutely no economic impact. Enterprising theoreticians in an epayment society will find that carefully working this philosophy of ?thin-air? emoney to achieve economic goals will lead to a society of no taxes.
The forces moving toward pure electronic money are enormous. Digital systems present for banks and government in the U.S. have already resulted in a web site where the U.S. Treasury keeps fairly accurate track of the accumulated value of all assets in the U.S.A. good to about 60 days. The time will come when theoreticians will start doing calculations of what they can accomplish, and they will be surprised. The surprise won?t happen very soon, because the calculations in today?s monetary system don?t give good results, but it will happen. People will no longer pay taxes (although the society will pay, of course).
It is somewhat interesting that this idea seems to have first surfaced in wide distribution in a book ?Social Credit? by C.H. Douglas (1924, plus at least five later editions). A political party formed around this work in Britain in the 1930s that survives to this day in British Columbia.
Current economists are buried in Newtonian calculus, but relativity should hit economic mechanics within a century, and we will be better off for it.
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Within 100 years the citizens and companies of a large and prosperous country in excess of 100 million people will no longer pay taxes of any kind.
From a historical perspective, the odds of this occurring are virtually nil. I don't realistically see a large nation without taxation unless it's also a society in which currency, in any form much like we have now, is of vastly lesser importance.
On the other hand, we're clearly at a point in known history where we're far closer to a 'materials utopia' than ever before, and by a wide margin. In such a society, goods would essentially have no value, because supply would always far outstrip practical demand.
However, there would still be other things that money could be spent on, things like services, art, and real estate. Looking at these (briefly) in turn:
Services may or may not be replaceable, in the conventional sense. If, for example, humanoid robots could perform personal services (as seen in the film AI, for instance), then they might almost entirely replace many service jobs otherwise filled by humans. Many non-physical service jobs ('lawyer', for instance) could also be filled by artificial intelligences.
Since these machines could potentially be considered "goods", and since goods could potentially have essentially no monetary value . . . services might, by and large, be rendered costless.
Art's financial value, on the other hand, rests on social and idiosyncratic factors. If cultural changes occurred where, for example, indistinguishably perfect copies of art were seen as equally valuable to the original, or where any artist's work was equally valuable, then art, too, might become monetarily valueless.
Real estate is more of a stickler. However, there may, in the future, come opportunities to spread into areas that are as yet undeveloped, such as the oceans (surface and subsurface), underground, and in space.
There's plenty of real estate out there, but the question remains as to whether or not it would become equally valued, much less monetarily valueless. (The concept of a nation of 100 million people, within a century, seems to negate the possibility of a society so spread out across a large, underpopulated area that real estate was 'free'.)
However, again, cultural changes could alter the equation. If, to pick a somewhat outlandish example, people spent enough time in virtual spaces rather than moving about in physical ones, then physical real estate might become valueless. And virtual spaces would simply be generated and maintained by artificial intelligences -- "goods".
All this said, it does seem unlikely to me that these kinds of sweeping changes will occur in the next century. Not impossible, though; I'm personally a subscriber to Vinge's "Singularity" theory. And note that the loss of monetary currency per se does not preclude other means of exchange, such as prestige, "karma" (not actual spiritual karma as such), or Doctorow's "whuffie".
Note that 110 does not predict that the government will not require money. It predicts that the government will simply print the money it requires.
The bet doesn't say that. It doesn't even mention "money".
One thought that has occurred to me is that, if semantics don't interfere, one way this prediction could potentially be fulfilled is by a 'virtual' country. If 100 million people became recognized citizens of a non-physical nation, eg, some virtual organization, who would decide if that were really a "country" or not?
I'm not suggesting that AOL or MSN will apply for recognition by the UN any time soon, but there are a lot of large online social groups that possess many of the non-physical characteristics of nation states, including what might be considered community, identity, nationalism, patriotism, internal economies and legal systems, etc.
It doesn't seem at all impossible to me that, within 100 years, online communities may become more significant to many people than their physical communities. If so, perhaps membership in such communities will trump citizenship of physical countries.
Online spaces, again, can be much cheaper and simple to operate than physical ones (mostly because infrastructure is reduced and automation is easier), so an online community of even 100 million people could very plausibly be run not on the basis of taxation but, say, donations, or even a single endowment. Or advertising.
And if such groups become economically significant, and membership in them becomes politically valuable, it's not much of a step from there to nationhood. I'd imagine that citizens of virtual states would often have dual citizenship with physical states as well, for convenience.
From the Bet Details:
"The governments will create the money they need out of 'thin air' based on a careful monitoring and controls of the money flow. The objective will be to do no economic harm ... We can all agree that if the U.S. Government today printed exactly one extra dollar bill to use for itself, this virgin birth of spending money for the Government would have absolutely no economic impact."
You are correct that the brief statement of the bet does not mention money. The bet details do.
You're right -- I'd glossed over the bet details, which I always consider very secondary to the wording of the bet itself.
Now that I've read it more carefully, I don't think Thibadeau's scheme will work out, although, to be frank, I'm not sure I understand exactly how it's supposed to work out.
If the economy is no longer tied to printed money (perhaps in the same way that currency is no longer tied to a gold or silver standard), then I don't see how printing extra money could possibly be of use to the government. Tax money, after all, is actually spent.
If printed money is valueless, then tax money, in that form, can't be spent meaningfully, so it wouldn't do the government any good. And if printed money is not valueless, then printing extra money on demand dilutes its value.
I don't see any way around this.
It certainly would be possible to fund the government by printing money out of thin air, with no physically collected taxes. The catch is that this would cause inflation, as the total supply of money in circulation would increase substantially from the yearly influx of new money. Each dollar in circulation would lose purchasing power as prices rise. So the tax would be real but hidden. The advantage of this system would be the elimination of the IRS and all the paperwork.
Since this would create perpetual rampant inflation, eventually a loaf of bread might cost $100. So every decade or so, by law, all denominations of currency, bank accounts, exchange rates and prices would have their numerical value divided by 10 to keep the numbers from getting too large. For example, existing $1000 bills would be replaced with newly designed $100 bills. Existing $100 bills would be replaced with newly designed $10 bills, and so on. No real value would be lost.
It's been tried. Each country that has tried to print it's way out of debt or out of taxation has had an economic collapse. The reason for this is the difference between value and cash.
Example: I pay 100,000 USD to build a house on a piece of land I already own. The money I paid in cash is balanced by the increased value of the property. The total cash in the economy is unchanged, but the value of the economy has been increased by 100,000 USD.
If a government tries to print money, it is adding cash, not value, to the economy. The US government, to take an example, needs roughly 2% of the value of the US economy per year to survive. So you'd think it could just print 2 cents per dollar / year and be fine. But no, it takes 20% of the existing cash per year, and every new dollar printed goes against the cash balance, not the value balance.
Continuing the example above: The government prints 20 cents per dollar. Every 100,000 USD property in the USA is now worth 120,000 of the new dollars because in this case only the amount of cash in the system is important, not the value of the individual properties. Thus, the US government got 20,000, but devalued the economy by many times that! The reason? All the houses built last year and the year before that are also impacted!
To go to a taxless system of providing services, the government would need to be able to barter rather than print cash money. In other words, I'd pay for police insurance and fire insurance and I'd have to pay an educational bond every year because I used the public education system and so forth. A taxless system has some very attractive advantages (drug dealers now pay as much in 'tax' as everyone else!)
First of all, the explanation of this bet makes no sense. As has been said, printing money cannot take the place of taxes. The idea that "emoney" would be different is ridiculous. In fact, currentls a large portion (more than half probably, I have no idea) of money resides in banks. In very few situations does a large amount of actual money exchange hands. More often you sign a check, or verify an electronic transfer and the banks make note of the transfer between accounts. This is essential the emoney as explained in the bet. The different means of keeping track of money (phyical or electronic) are equivalent.
Saying that, I think there is some possibility that this bet will succeed in some way. As the first discussor mentioned, as the value of essential goods drops, so does the need for taxes. When power is much much more efficient (ie fusion pehaps) and we have the automation/AI necessary for robots to perform surgery and stop crime and produce food and . . . well, etc. Assuming we continue to exist, there WILL come a time when no human must do work. At this point money may cease to exist (and with it, taxes). Wojcik went a little too far with this I think. It is not necessary that EVERYTHING lose it's value, only essentials (food, safety, health, etc.) While I don't see this completely happening in 100 years, look at the entertainment industry in the US. It is far outvaluing essentials (entertainment is the US's biggest export). This is the first indication that we are headed to this sort of society.
The only other way a government without taxes could exist would be something along the lines of communism. Where the government controls all the businesses and thus doesn't need to pay for their services. But then that would sorta be 100% taxes, if you think about it.
Mr. Thibadeau's prediction does leave some room for interpretation on the meaning of "country", but I take him to mean an entity in control of a given geographic area like nation states today.
The definition of "taxes" is problematic, however. If we assume that the citizens of this hypothetical country use the country's currency, rather than substituting a currency not subject to devaluation by the government, it seems that they will indeed pay taxes. As Mr. Thibadeau acknowledges, "the society will pay". So his prediction seems to boil down to the government taxing its citizens in proportion to how much wealth they hold in the form of cash valued in the country's currency, rather than taxing on the basis of income, property, or consumption, as is the usual practice now. This is a far less bold prediction than it would appear when he says "people will no longer pay taxes of any kind". Indeed, if citzens hold their country's currency, they will pay taxes, albeit taxes of a different kind.
But even this outcome seems unlikely. Other than those doing business with or receiving charity from the government, who would want even to accept the currency? And why would they hold it once they had? Does Mr. Thibadeau imagine that electronic transactions will make it easier for the government to force its citizenry to use its currency? Or does his prediction rely on a radical change in the size of the nation state relative to the economy? (The governments of the U.S. together spend about half the GDP, for example, so much more than a dollar with a vanishingly small effect is required to support them.)
As far as I can understand it, this prediction seems to be based on wishful or magical thinking about creating money with real value out of thin air. But I suggest that the wording of the prediction could use some clarification if it is going to make a viable bet.
In the mid-1970s, James Albus of the National Bureau of Standards proposed that the US Government invest directly in the purchase of automation for the manufacturing sector in this country, then collect a share of the resulting increase in productivity to redistribute as a minimum individual income for every American - sort of like the "oil dividend" collected by long-term residents of the state of Alaska.
This struck me as a compelling idea at the time, for it overcame the main flaw with most schemes to replace taxation - the fact that governments usually do not create wealth at all, merely spend it.
In fact, the US Government has sources of revenue like Alaska's, simply too few of them to run the country's government on. And investing the Social Security fund in something like the bond market still looks like an attractive alternatlve to letting it remain readily spendable by Congress.
I don't think, though, that the US or any other Government is capable of creating enough wealth to run itself, based purely on forty years of working both in the private and public sectors. Almost every revenue - producing arm of the Government, from the Postal Service to AMTRAK, to the Government Printing Office is a net money-loser.
An intriguing idea would be requiring Congress to not only avoid deficit spending (except in wartime) but to run up surpluses which would then be invested in the American economy - not by means of the SBA or other ways of subsidizing noncompetition, but invested in a blind trust which would legally be immune from Congressional or executive fiat.
A century of that MIGHT reduce the Federal tax burden on Americans. It'd be tempting to see what Warren Buffett could do with a few trillion dollars, wouldn't it?
Almost every revenue - producing arm of the Government, from the Postal Service to AMTRAK, to the Government Printing Office is a net money-loser.
Yes, but an investment in automation scheme like the one you described would have a key difference -- the industry involved wouldn't be run by the government.
As Japan (among other nations) has shown, the government can be a very effective silent partner in industry. And can profit from it. Corruption does tend to get in the way, so any such arrangement should ideally be made as open and public as possible.
However, the golden opportunities for what is essentially a capitalist socialization of industry came and went in the last century. Such a scheme could very likely still be profitably pursued, but not nearly so much so.
Mark J. Wojcik said:
"...an investment in automation scheme like the one you described would have a key difference -- the industry involved wouldn't be run by the government. "
Want to bet? (oops, no pun intended) The disposition of sums of money that large ALWAYS attracts bottom-feeders from Congress, lobbyists, and other political metazoa.
"As Japan (among other nations) has shown, the government can be a very effective silent partner in industry. And can profit from it. Corruption does tend to get in the way, so any such arrangement should ideally be made as open and public as possible. "
Japan is actually a story of how government and business cozying up can backfire big-time. Lately, many of the banks there went belly up specifically because business oversees government in Japan, not the other way around, and there was no agency which could or would protect depositors in those banks or small investors in the banks' holding companies.
I wish that something like Japan, Inc. could work here, but it doesn't even work in Japan, except to streamline and conceal the process of political corruption and allow the big people to walk all over the little guys.
Here, I suspect that a national holding corporation which would seek to finance the government by investing in increased productivity would immediately be forced by either Congress, the Executive Branch, or the activist judiciary (or all three) spend a lot of that money on everything BUT increased productivity.
I've noticed a sort of lull in pronouncements about applications for quantum physics, after a lot of noise had been made earlier. The last time I noticed something like this happening, it was the late '70s, and the hue and cry over recombinant DNA technology had died down - just before Genentech came up with ways to make insulin and human growth hormone in vats, a development capitalized on immediately by Lilly, then later by Novo Nordisk.
If the government was really interested in growing its capital, it could do a lot worse than to see whether or not large stakes in companies working in applications for quantum physics are still available.
That could be where the next surge of wealth creation happens - certainly, quantum devices represent the best hope that Moore's Law (computing devices doubling in capacity every 18 months or so) will continue to operate throughout the 21st century. And Moore's Law has been one of the engines driving the growth of productivity in this country.
The problem, of course, is seeing to it that the money winds up invested in companies with something to offer, and not in offshore subsidiaries of Operation PUSH or huge stock option packages for executives. And I haven't a clue about how to make that happen.
If the Governments properly manage their affairs, as "true trustee of their citizens", the advancements in economics, science and technology will make it possible to have a life without taxes. However, many governments of the world (including the leader i.e. USA), is presently not on that path, which can make this dream true.
1) historal applications of seinorage have lead to dire consequences.
2) Inflation results...bartering thrives...currency becomes worthless and not accepted...quite short-sided.
3) Predictor may be refering to Qatar, a) whose citizens currently do not pay taxes[although foreigners do] b)but has a population of only 928,635 (July 2008 est.)
----highly doubtful
What are politicians if they cannot tax? Windbags.
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