From Fat to Flat

Following a massive accumulation of value, and an ensuing crisis of legitimacy, like we are experiencing now, the beneficiaries are busy protecting the accumulation from what they call a "confiscatory" political settlement.

The top income class has the legitimate right to keep private property (the accumulation) to the fullest extent and use it any way they see fit because (like Adam Smith said) they earned it--not the government (the king) or anybody else. A lot of time, effort, and technical expertise went into accumulating value, which resulted in the Great Recession.

On the one hand, the value accumulated is deliberately earned, and on the other, the recession is a cyclical, force-majeure ontology. No one can prevent the seasons from changing, and no one can prevent the best and the brightest from cyclically emerging at "the top." Being among the most high is empirically confirmed--measured--by income class, with all the rights and privileges legitimately earned therein by natural ability conferred by the sovereign power (the major force) of God.

Since, however, "We the People" are Constitutionally "The Sovereign" (i.e., the people rule legitimate rulers), the elite cannot claim power for themselves de jure, but de facto. They rule by accomplishment, and denying them what they have legitimately earned is unnatural and, thus, detrimental. So, when Eric Cantor says, "we cannot tax the very people we rely on to create jobs," he is not only saying it is unnatural, but the accumulated capital necessary to create full employment will be detrimentally expropriated by government (not allowing people to do as they see fit with what they earn, or accomplish...like employing people, or not). Thus, the capital will not be optimally available for job creation even though the reason it will be "confiscated" is because its accumulation is not being legitimately used to create jobs.

Discrepancy between the legitimate accumulation of capital and its use is the crisis we now face (it is the fully assumed risk of loss the power elite must avoid if it is to be the ruling "class"). If the capital is not being used to create jobs, but instead is being used to confirm income class by converting equity into debt (which results in the sovereign debt crisis we now face worldwide, for example), there is a benefit being derived by causing detriment.

(We have to keep in mind that the ruling class has an international dimension. Greek citizens, for example, are not stupid. They are politically astute and highly sophisticated. They know that the austerity plan is more the result of an international liquidity crisis than their so-called profligate lifestyle. Much of the debt was falsely valued, which derived a largely untaxed, internationally processed benefit from a detriment now being excised in the form of "needed" national austerity. Of course, Greeks question the legitimate distribution of the risk, with the reward supra-nationally derived from detriment devolved into sovereign debt.

Consumers, worldwide, also understand that "accommodative" monetary policy is driving up debt. On the one hand, rates are low and the dollar is weak because demand is slow, on the other, prices are high because demand is too high. The contradiction technically indicates manipulation supported by a bogus, exculpatory narrative. Consumers are paying a high price for food and fuel not because it is in short supply, but because it is being priced at the margin in unregulated, international, speculative markets. There is ample supply always available at a high, marginal price, and that margin turns equity into debt--it produces untaxed profits by causing a detriment--that consumers cannot pay without it being excised with the force and legitimacy of public authority.

Supposedly, according to the normative narrative, the weak dollar causes high oil prices, for example, but the dollar is weak because there is slow demand; and, keep in mind, we are not allowed to conclude that high oil prices cause a weak dollar because that, of course, would be illogical since a stronger dollar has the effect of lower prices. Notice, for example, that the IEA's decision to increase the supply of oil caused the dollar to strengthen, not the reverse. This contradiction--and the supporting hysteron proteron argumentation--results in a crisis of legitimacy, and the legitimacy of the austerity being excised--like cutting benefits for the infirm and the unemployed to pay the debt--is being questioned worldwide.

We are not in debt because grandma needs to buy food and medication, but because profligate profiteers--the people that benefit by causing detriment--are too greedy to pay it. The reason too-fat-to-fail interests should not sacrifice, but grandma should, is not, they say, because they are too greedy and selfish, but because it is a moral hazard. Greed is good because it keeps ample supply available by depriving us of what we need?

Arguing it is a moral hazard to take care of grandma is a thoroughly despiseable sentiment. It is retributively valued to the fullest point of probable risk redemption.

For politicians like Eric Cantor, the pressure is on to prevent redemption of the fully assumed risk ontology without sacrificing its detrimental proportion. A flat-tax is the probable political settlement to offset the accumulated gamma risk.

The probability of retributive-risk redemption is contained in analytical descriptions like, "high oil prices are like a tax." Yet, it is necessary, at the same time, to maintain the argument that high prices produce income that has been earned and not confiscated.

That high prices earn income, and taxes confiscate it, is a bogus argument if your income is being reduced by both, producing a largely untaxed, accumulated benefit at "the top" by causing detriment at the bottom. Ambivalent use of the values indicates a highly retributive valuation of the risk proportion.)

Causing detriment is not considered to be a noble, middle-class quality. Especially after the American Revolution, it is a quality considered characteristic of kings and an irrational--illegitimate--accumulation of power. For the post-Revolutionary elite, it is a measurable test of power, nevertheless. It is legitimate by the fact accomplished and cyclically verified in the normal course of "doing business" which, legitimately, is to expand the pie for everyone, not just your slice of it.

Doing business just to expand your slice of the pie is impolitic--it is what kings irrationally do, stealing from the hands that feed them, forcing the economy into subsistence and surplusing value only by expropriation and deprivation. The best way to increase your slice of the pie is to expand it for everyone, not confiscate it. It not only makes you unpopular, but it reduces the incentive to produce the pie--it's bad for business.

Government (the power to illegitimately confiscate value) is, according to conservatives, the problem and not the solution. Government (not the undistributed accumulation) has caused the sovereign debt crisis (the need to tax), and the crisis will only get worse until we accept what is natural by right--the rich get rich and the poor, naturally, get poorer, as God intended it. Our existence is determined by natural rights that are legitimately conferred by God, distributing wealth and power to those that have legitimately earned it; and taking that away is illegitimate--it is a crime against nature that results in a dead-weight loss (i.e., everybody loses).

In order to avoid the fully assumed loss, conservatives are now angling to reduce the inherent tax liability of an undistributed accumulation. Without sacrificing the natural, moral, economic imperative of being sure the most able to pay actually pay the least, a political compromise is sure to gain strength that appears legitimately equitable by increasing the tax burden of the elite while reducing the tax burden of the non-elite. To avoid the fully assumed risk without abandoning the Hamiltonian model, it is necessary to shape a policy that fits the model without appearing inequitable.

While being too fat is likely to result in a massive, coronary crisis, avoiding the crisis has to come from somewhere. Austerity is required. It is necessary to deprive yourself of what makes you fat--but in order to proverbially "have your cake and eat it too," it is necessary to get flat to stay fat.

With Republican policy we can go from fat to flat in no time! All we have to do is go on a strict diet that, combined with proper excising at a flat rate, will have our economy up and running with vim and vigor.

If achieving equity by means of assuring inequity does not seem exactly legitimate, the flat-tax fits the Hamiltonian model. It is a product of the anchoring effect. It is a psychological trick--the tax code is so inequitable that even a different form of the problem looks like a solution. The budget is so starved of needed revenue that anything, even an equally regressive tax burden, looks good. While the results will be the same, it at least appears we are losing the fat by going flat.

While it looks like we are all paying the same rate--paying the freight with each his own weight--the fat proportion of risk does not reduce, but maintains. Equity still turns into debt and though you may pay less tax on your reduced assets and income, the need increases, nevertheless, against the new, overall-lower, flat rate. The debate then again reduces to arguments of political philosophy (ideology) in which taxing the job creators is considered to be immoral (theft of property), which entails retributive value (sub-optimal capital investment and unemployment, like we have now).

Liberal ideology then becomes the practical alternative to a progressively reduced government influence against a progressively increasing need. Taxes then progressively rise with your income, and since taxing the job creators is counter-productive if not immoral, the debt rises due to insufficient income (like we have now).

The technical, non-partisan solution is to lower the tax rate on average incomes and progressively increase the rate on incomes above average. Revenues rise while the need for government spending, and debt, declines. Incomes rise from the bottom up rather than the top down, causing a distribution from the accumulation instead of more debt, and the risk of default, by borrowing from it.

From Fat to Flat--
It's no win
To lose the fat
By acting thin