Sustainable Economics is Paleo

As in Paleoconservative

"We need to stimulate the economy!"

"Consumer spending is two thirds of economic activity."

"We need to keep that Circular Flow of dollars going round and round, or the economy will tank and half the population will be living in Hoovervilles!"

"Paradox of Thrift!"

"Consume! Consume! Consume!"

Frantic consumerism. Environmentalists hate it: landfills filling up with cheap plastic junk from Walmart, landscapes paved over with concrete to support ever longer commutes, mountains leveled to mine fuel and minerals...

This leads many environmentalists to hate capitalism, which is a mistake. The past century has examples of even worse environmental destruction by socialist countries. What environmentalists should hate is unsustainable capitalism. They should hate Keynesian Economics, and its retarded younger brother, Supply Side Economics.

Sustainable Economics is Austrian

Fractional reserve banking, deficit spending, and a debt heavy financial system require ever more growth, ever more movement of small green pieces of paper (or virtual representations thereof) in order to avoid economic disaster. In the real world this entails sacrificing time and the planet for ever more stuff -- including stuff that doesn't make people more happy.

Suppose we were to balance the federal budget, outlaw maturity transformation on the part of banks, and encourage a less leveraged corporate America? Growth would become optional. Buy more stuff if and only if it makes you more happy. The dream of the good environmentalists -- those who would have us live more laid back lifestyles closer to nature, with time to enjoy the stuff we have -- would be compatible with capitalism.

There is no Paradox of Thrift in Austrian Economics. Getting out of debt and accumulating capital are good things. Compare the eco thrift blogs Early Retirement Extreme and Mr. Money Mustache with the works of Gary North, and Dave Ramsey. There is much overlap in mindset. (And no, Sustainable Economics doesn't require eating bugs or living in pods.)

It's also compatible with much smaller government. A stable economy which encourages savings and discourages debt is an economy which needs much less social safety net. And the Federal Reserve could be eliminated, or at least rendered more deterministic and lawful. Austrian economics is associated with the Really Old Right and with libertarianism. Think Ron Paul.

Alas, Austrian Economics is also associated with irresponsible anarchism and the ridiculous political strategies of Murray N. Rothbard.

In the Long Run the Baby Boomers Collect Social Security

How do we move to a sustainable economy? Ask a typical self-described Austrian School member and you get the answer: cut government and have a massive debt default, both public and private. Need to abandon those malinvestments, ya know.

Such a program has all the popularity of asparagus and okra ice cream.

So unless the gun toting members of this school can figure out how to forcibly take over the government without violating the Zero Aggression Principle, we need a path to get there from here -- not from some mythical State of Nature.

Not so fun facts:

1. Entitlements and debt service now eat up the entirety of our federal tax revenues.

2. The Baby Boomers haven't all retired yet. The fiscal situation will worsen.

3. There is a national socialist superpower rising in the East, and it's way bigger population wise than the Axis powers of old. We might need to keep funding our military.

4. Our debt laden system is absolutely dependent on the gentle time release default that is inflation. Going to a gold standard now would trigger Great Depression 2, Electric Boogaloo.

If we enforce the national picket line, we can get some of the people now collecting entitlements to enter the workforce. Indeed, with tariffs on par with what we tax domestic production, we would likely change the ratio of low skill wages to medical expenses, and thus have a shot at dialing back some of the medical entitlements a bit. But even with these effects and implementing the remotely politically feasible subset of Karl Denninger's medical reforms, we still need to raise some taxes in order to get the federal debt down to levels where a gold standard is a sane option. That is the real Inconvenient Truth.

The good news is that we can levy those additional taxes on people who deserve it. This will be the subject of Rule 10: Tax Thine Enemies -- which still needs a rewrite before I post it. In the meantime, we can use green concerns to revive an idea from the more sane wing of the right-libertarian movement: replacing the income and payroll taxes with a consumption tax (aka the Fair Tax).

While I don't support the Fair Tax per se -- due to some serious enforcement issues -- I do love the idea of going back towards the federal tax system described in our Constitution. The federal government was originally funded by tariffs, excises, and the sale of frontier land. Well, most of the good frontier land has been sold, and it's kind of nice to keep some of the good land as nature preserves. Funding the federal government with just tariffs and excises gets to be a challenge, and the arrangement can be overly regressive. This is why the income tax was added. The income tax was originally meant to be a tax surcharge on the super rich.

I'd like to go back towards that. Our government is way too big to go all the way back (and there is no way to shrink it enough without employing a time machine; the money has been spent!), but we could tax 95% of Americans with a low flat income tax (5 or 10 percent) and reserve the higher brackets for the wealthy. And by a flat income tax, I mean just one such federal tax, not the six we have today: employer Medicare, employee Medicare, employer FICA, employee FICA, unemployment insurance, and the federal income tax proper.

The only reason for middle and lower class Americans to pay any income tax is because the IRS requires the data in order to have compliance without resorting to no-knock searches.

With most tax collection in the form of consumption taxes, we no longer need special tax deferred savings accounts. Consumption taxes are an automatic IRA. When you are saving you aren't paying. And when savings aren't locked by special tax provisions, savings become general. Retirement savings also serve as self-insurance for periods of injury, unemployment, home repairs, etc. Our current system of locked accounts teaches irresponsibility to even the upper middle class. Employers act as outsourced welfare workers.

There, I just simplified the crap out of the employment process. Employers need to collect one flat rate tax for each employee. And employers face no tax penalty for simply paying employees with plain old money. With this enormous overhead penalty for employment removed, working according to the seasons becomes much more viable. The locally laborious process of repairing vs. replacing becomes more economically viable. Middle and lower class people could legally trade labor with each other without getting clobbered by taxes.

But they would still pay taxes.

Let's green it up another level by looking at what products to levy excise taxes on. How about nasty chemicals? Nasty chemicals can be very useful, but ceteris paribus the less used the better. Instead of having regulators play backseat driver and writing reams of regulations on when and where such use is legal, tax the chemicals themselves, and limit regulation to that needed to avoid acute harm. The market will often find alternatives.

And chemical plants are hard to hide. Economies of scale and whatnot. This makes enforcement easy. The government should be keeping an eye on nasty chemical plants anyway.

Now for the biggie: fossil fuels. Even if there was zero chance of global warming, even if there was no global warming hysteria, I would favor excise taxes on fossil fuels. The reason is moral: oil and coal deposits are God given and finite. When we burn them we are depriving our descendants of their natural inheritance. If people burn less in order to avoid carbon taxes, then that's more accessible fossil fuels for future generations. It also provides a non-socialist incentive to invent alternatives. Finally, blowing up West Virginia mountain tops to get to the coal is a serious blight on a beautiful bit of landscape.

Better to tax fossil fuel extraction than labor.

And, oh yeah, there is a global warming hysteria going on. That part of the Science is Settled. Winning back California is worth the price of losing West Virginia.

Carbon fuel excise taxes hit the entire economy without government snooping on the entire economy. The bottlenecks are huge and obvious. Hiding coal fired power plants, oil filled supertankers, and gas pipelines is really hard to do. A carbon tax is much more enforceable than the Fair Tax.

And we can ditch a whole bunch of purportedly energy saving regulations. No more Energy Star. No more Corporate Fuel Economy Standards. No more openings for eco lawfare. No more electric car subsidies. No more ethanol mandate. Burn fossil fuel; pay price; nuff said. The market decides where conservation and alternatives make sense. Government grants can be limited to basic research.

And jet setting WEF hypocrites get a hefty bill. Bwahahahahaha!

And for the Traditional Conservatives

I suspect the above reasoning failed to convince the Reaganites in the audience. Fair enough. Try this:

What happens when a married couple decides to go traditional? What happens when Mom stays home instead of going to work and putting the kids in daycare?

GDP goes down.

What happens when Tradwife cooks a delicious meal using vegetables from the garden -- instead of reheating processed crappe?

GDP goes down.

What happens when said family opts to homeschool instead of sending the kids to public indoctrination school?

GDP goes down.

What happens when Real Man Dad maintains the vintage car instead of buying the latest spyware on wheels?

GDP goes down.

It's all enough to make a Supply Sider cry.

Supply Side Economics and Christian Conservatism don't mix so well.

And it doesn't mix well with nationalism either. How do you grow the economy to pay for over thirty trillion dollars of deficit spending after women have already entered the workforce?

Sell your country. That's how. Encourage foreign investment and import more taxpayers.

Sustainable Economics isn't just compatible with real conservatism. It's required.