The Indispensibles

The world is simultaneously less solid and more durable than we think. Take the EU. It isn’t forever. It didn’t even exist at the end of the Second World War. It had a beginning and perhaps it may even have an end.  Thus, joining it isn’t equivalent to ‘making it’.


A ratings agency has made Greece the first European country to be an ex-developed nation. “Greece’s long-running crisis has culminated in its downgrade to emerging-market status and its exit from the club of developed nations, according to one index provider.” Erin McCarthy and Prabha Natarajan of the Wall Street Journal say it is an insult to emerging markets.

Countries deemed to be emerging markets by Bank of America-Merrill Lynch are expected to grow an average of 4.9% this year, according to the bank’s analyst. In contract, the International Monetary Fund predicts Greece’s economy will contract by 4.2%….

“You don’t think of a submerging market like Greece when you think of emerging markets,” says Brian Jacobsen, chief portfolio strategist for Wells Fargo Funds Management, which advises on assets worth $225 billion. “Greece is a bit of a sore thumb that will stick out in the index.”

In some universe, probably the present one, it is possible for China and South Korea to overtake Europeans countries.  Rudyard Kipling once wrote that to be born British was to “win first place in the lottery of life.” A recent poll says Britain has fallen to 27th place, behind South Korea and Chile, in the current rankings of where people want to be born. It’s entirely possible for the words “I’m an American” to eventually become the equivalent of “I’m from India” someday.

The present changes.  Greece has become poor. The Atlantic has a photo gallery of homelessness in Greece set amidst abandoned theaters, public parks. They are  former hotel clerks, painters, small businessmen, chefs — not exactly the kind of alcoholic and dysfunctional crowd one might expect;  the detritus of an assured future that never was.


And yet Greece may become rich again.  The Economist argues that the fires of recession have burned out the fevers and leeched out the bad blood. The Germans are coming back to a cheapened Greece and the Russians are buying up everything in sight. “WHAT a difference a year makes.”

This summer should see a record 17m tourists crowding Greek beaches. Bookings from Germany and Russia are soaring, say travel agents. A projected rise of €1.5 billion-2 billion in tourist revenues will give the budget a boost, even though many hoteliers are struggling to service bank debts. Greek contractors expect to resume work in the autumn on €6 billion of EU-financed motorway projects stalled since the crisis. They could create 30,000 jobs.

Privatisation is under way after several false starts. Opap, the state gambling monopoly, has been sold for €712m to a consortium of Greek and east European investors. Gazprom is expected to bid for Depa, the natural-gas monopoly. Sintez, a private Russian energy company, and Socar, Azerbaijan’s state gas producer, are vying for the gas distributor Desfa.

Well who knows? Greece has been a long time dying. Byron famously wondered what had become of classical Greece when he saw its debased state in the 19th century.

THE isles of Greece! the isles of Greece
Where burning Sappho loved and sung,
Where grew the arts of war and peace,
Where Delos rose, and Phoebus sprung!
Eternal summer gilds them yet,
But all, except their sun, is set

Yet Greece even after the breakup of the Ottoman Empire, the World Wars and the crash of the EU lives still after a fashion. Perhaps the moral of the story is that the world keeps turning. You and I might not survive, but time marches on.


Populations in the aggregate  do what it takes to survive. The Pacific Standard describes a town in Spain that had to make a choice between dignity and cash. Cash won. Juzcar was a former tourist destination groaning under 40% unemployment.

And then, in 2011, the people of Juzcar learned that Hollywood location scouts had tapped the tiny hamlet—it has less than 1,000 residents—to set a feature-length version of childhood classic—and parental nightmare—The Smurfs. As Hollywood does, the producers told Juzcar’s town council that to get the gig, they would have to agree to temporarily paint every one of its classic, bone-white Andaluz stone buildings in a Smurfier baby blue. After the filming, the producers would pay to paint the whole town white again. Juzcar’s mayor quickly agreed.

So welcome to the only all-Smurf blue town in the world, in Spain.

We are often told that we can’t live without … [put your own word here] … government, the Internet, sliced bread, cars … you name it. But as Listverse notes in its enumeration of past financial catastrophes, humanity can take a whole lot of hits and keep trucking. It is sometimes a blessing in disguise as the loss of the old sometimes leads to the new. Apparently neither bubbles nor their dire consequences last forever.

1. Diocletian Destroys Rome’s Economy Fourth Century AD;
2. Pazzi Conspiracy and Medici Banking Collapse 1470s
3. Spanish Inflation 1600s
4. Bermuda’s Hog Money 1616-1624
5. Tipper and See-Saw 1621
6. Tulipmania Hits the Netherlands 1636-1637
7. South Seas Bubble 1719-1720
8. Mississippi Bubble 1716-1720
9. Confederacy Destroys its Economy 1860
10. Railroads and Silver Cripple America 1893


We live in hard times but if history is any guide, people living two generations hence will probably say of our troubles”what was that all about?” One of the more interesting Presidents in 20th century history was Calvin Coolidge, who the Narrative has made a concerted effort to forget because Silent Cal said something unforgivable.

He claimed we could live without a lot of government. Wikipedia says, “The regulatory state under Coolidge was, as one biographer described it, ‘thin to the point of invisibility.'” Silent Cal gave us the Roaring Twenties.

So why don’t we have less government?  One reason is the liberal argument that the impiety towards government must always be punished in the historical afterlife. In the manner of ‘Dry Bones’ Coolidge was connected to the Hoover and the Hoover connected to the Dee-presshun, and the Coolidge connected to Dee-presshun, oh hear the word of O! It’s an indirect argument at best, one whose  impetus is the force of belief. Most politics, especially Socialist politics, is really religion by other means. Remove the “of course” in government and there’s a whole lot that isn’t obvious. Perhaps the only thing that one can safely say is that many of the immutable givens in this world were once wild-eyed ideas themselves.

Take the IRS.

The IRS itself operates a website titled “Historical Highlights of the IRS” and many will be surprised to learn that the income tax did not exist since the dawn of time. In fact the 1040 form first made its appearance in 1913.  The IRS writes:

1862 – President Lincoln signed into law a revenue-raising measure to help pay for Civil War expenses. The measure created a Commissioner of Internal Revenue and the nation’s first income tax. It levied a 3 percent tax on incomes between $600 and $10,000 and a 5 percent tax on incomes of more than $10,000.

1867 – Heeding public opposition to the income tax, Congress cut the tax rate. From 1868 until 1913, 90 percent of all revenue came from taxes on liquor, beer, wine and tobacco.

1872 – Income tax repealed.

1894 – The Wilson Tariff Act revived the income tax and an income tax division within the Bureau of Internal Revenue was created.

1895 – Supreme Court ruled the new income tax unconstitutional on the grounds that it was a direct tax and not apportioned among the states on the basis of population. The income tax division was disbanded.

1909 – President Taft recommended Congress propose a constitutional amendment that would give the government the power to tax incomes without apportioning the burden among the states in line with population. Congress also levied a 1 percent tax on net corporate incomes of more than $5,000.

1913 – As the threat of war loomed, Wyoming became the 36th and last state needed to ratify the 16th Amendment. The amendment stated, “Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.” Later, Congress adopted a 1 percent tax on net personal income of more than $3,000 with a surtax of 6 percent on incomes of more than $500,000. It also repealed the 1909 corporate income tax. The first Form 1040 was introduced.


It’s sobering to realize that Washington was not always there.  Anyone who visits it today will be struck by the sheer imperial vastness of it and more than that, a burgeoning quality. There is a newness, wealth and power about it that contrasts with the older cities of the Acela corridor. And yet that newness is proof of impermanence. The only really permanent thing in this world is that those who cannot cope with change cannot survive.

It’s an interesting context in which to situate the Washington Post’s report that “a group advocating for a flat sales tax is going up with a new nationwide ad buy urging members of Congress to abolish the IRS. Americans for Fair Taxation, a group headed by wealthy super PAC donor Leo Linbeck III, will launch the ads Monday. The ad buy is in the mid-six-figures, according to the group.” The video at the Post site goes:

[jwplayer config=”pjmedia_richardfernandez” mediaid=”29583″]

“Our best chance ever to shutter the IRS is now,” the ad concludes, urging people to visit the Web site and call an 800 number to join the effort. … Linbeck made a splash in the 2012 election by founding a super PAC devoted to unseating incumbents in primaries, called the Campaign for Primary Accountability.

That group will consider a lawmaker’s stance on abolishing the IRS as part of its criteria for determining whether to fund primary challenges against them.

Is it a hopeless idea?  Given what we know about history, bubbles, Smurfs and the history of the IRS itself — nothing is ipso facto out of the question. Ending the IRS is as radical an idea as creating it in the first place. The IRS had a beginning. And it’s a fair guess to surmise that it will someday have an end or at least change into something else. Hopefully into something better.


The whole point is to adapt. The greatest failure of the current elite is a failure of the imagination; an incapacity to imagine a world without them in control. Without their ideas in ascendancy. Americans for Fair Taxation are at least asking the right question: “do the present arrangements still make sense? What needs to change?” And if so, change it, because nothing man makes is forever.

Perhaps it is possible to find a better tax paradigm and find the world still turning as it has these thousands and billions of years.

The Three Conjectures at Amazon Kindle for $1.99

Storming the Castle at Amazon Kindle for $3.99

No Way In at Amazon Kindle $8.95, print $9.99

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