One of his main points is that if the tax on unearned income (capital gains etc) < tax on earned income, inevitably, money flows towards people who have unearned income, asset prices rise, those people get wealthier than those who have jobs and that cycle becomes entrenched.
Solid article! You captured so many critical threads to elucidate the inequality hyper loop. It’s like a Chinese finger trap that only resets with elegant interventions, or as you say, an unfortunate revolution. The flywheel is concentrating more gains and corrupting the system as it goes deeper.
I had my awakening in 2022 after decades in the professional investment game. There is a political opportunity to build a movement in support of the necessary types of reforms. The movement must be outside of the legacy party camps, but creep into both territories. It must be transparent, trustworthy, and decentralized in ways that avoid the corruption of seeking power. Game on!
I am not saying that you are wrong. Because everything you said is accurate. I have a pet peeve when people talk about the 10% or 1% because the problem is really just a few thousand people. But I understand that you started with a point on consumer spending.
But things are never going to change without some kind of horrific revolution. Before Trump the US had structural problems that prevented fixing this problem. However, that wasn't enough and the few thousand people who own almost everything decided that the best protection is fascism. And that's where we are. We have a president, congress, and Supreme Court actively pursuing fascist autocracy. There is no peaceful fix to that. None. But even before, the only politician who said anything remotely close to fixing the problem was Elizabeth warren with her 2% wealth tax. There are a few politicians who say things like there shouldn't be billionaires, but they never back it up with policy positions. We couldn't even get the earned income loophole fixed, much less get capital gains taxed as income. While there are good democrats out there, Chuck Schumer and Hakim Jeffries are fully into the pockets of the wealthy. Republicans are far far worse on this issue, but it was Bill Clinton who deregulated the banks. But the numbers are all insane. The top tax bracket is $600,000, while people are making tens of millions, hundreds of millions, or billions. We need new tax brackets that mirror reality. But it will never happen. We will not have a wealth tax. We will not fix the brackets.
We live in a world that is a maelstrom of conflicting ideals, motives, behavior and talents.
Personally, I do not think that there is some or one easy solution. Like much of life, there are multiple factors or parameters that are in play. There are foundational principles that also by their nature cannot be ignored.
#1. Goldilocks Principle. We could learn so much by reading children's' stories or fables. For me, and hopefully you, one basic tenet in Goldilocks and the 3 bears is about the porridge:
Not too hot, not too cold, but just right.
There is a need to look at wealth and at poverty and understand the pros and cons of each. I will use myself as an example. My mother was a mother and a hostess in a restaurant. My father was a gas station owner and an alcoholic. I grew up with anxiety about how secure my family was. I busted my chops in public school. I took on as many odd jobs as I could and handed the money over to my only responsible parent: my mother. I received a NY State Merit Scholarship and went to a private university, then another scholarship to the U of Chciago School of Medicine. All those years I worked in every imaginable odd job: hauling laundry, cooking on Sundays, working in the hospital laboratory, assisting in autopsies, painting houses, working in gas stations.
⇢ I became the first physician in my family. I achieved success. I lived up to what was taped to the wall of my workplace in the basement of our home:
"The only place where success comes before work is in the dictionary."
Bring back Goldilocks. What are the facts about those getting free healthcare or free food or free whatever? I really don't know. But I know this. In this country, if you want work you can find it and you can elevate your situation. I resent, no resent is not the right word, I am pissed that some coming to this country are recipients of the great American giveaway- at taxpayer's like me expense. Yes, help those truly seeking asylum. I know that situation in my family having lost many to the carbon monoxide trucks of the Nazis and then the more advanced killing with Zyklon B cyanide gas. But why wasn't millions or more spent on proper immigration strategies? Don't blame the Republicans or Democrats, blame the voters who remain apathetic, ignorant and/or lazy. Do your friggin due diligence no matter what you do. If you do something, do it right or don't do it at all.
In America, our focus is so much on acquisition of stuff. I live in a modest neighborhood despite being a retired MD. My neighbors have two or three vehicles and also many have RVs and boats. The garage is no longer sufficient for all their stuff. You go to Costco and half the people are grossly obese. We are not a nation of Christians or Catholicis, but a nation of consumers. Consumerism is our religion.
So #2 is our focus on the Economy which is really on our consumerism- our ability to buy more stuff. Americans live to work, in order to buy. Much of the rest of the world work to live and enjoy Nature, family, friendships. We have lost our focus on what is important in this world.
More than 200 years ago, Wordsworth had it right:
The world is too much with us; late and soon,
Getting and spending, we lay waste our powers;
Little we see in Nature that is ours;
We have given our hearts away, a sordid boon!
--William Wordsworth
If you want a more modern viewpoint on Economy and Life, read Wendell Berry.
"To those who still uphold the traditions of religious and political thought that influenced the shaping of our society and the founding of our government, it is astonishing, and of course discouraging, to see economics now elevated to the position of ultimate justifier and explainer of all the affairs of our daily life, and competition enshrined as the sovereign principle and ideal of economics."
Berry, Wendell. What Are People For?: Essays (p. 129). Catapult. Kindle Edition.
#3. Mike Brock is right most of the time. We don't read anymore. If you want to read an incredible purveyor of what has gone wrong in the US and elsewhere, read the above book. Berry is the Socrates of contemporary times; he is the gadfly of the State.
"It seems that we have been reduced almost to a state of absolute economics, in which people and all other creatures and things may be considered purely as economic “units,” or integers of production, and in which a human being may be dealt with, as John Ruskin put it, “merely as a covetous machine. And the voices bitterest to hear are those saying that all this destructive work of mindless genius, money, and power is regrettable but cannot be helped."
I do not believe there is anything wrong with ambition, but in perspective, not when it turns to greed over good, or greed over what was once understood as "god."
All of the major ills and crises come back to this insatiable greed to acquire, have more, and still more. Our ruination of the planet; the wars and genocides we are witness to, the inability to buy a home or afford healthcare all are intertwined with greed. And with greed comes envy and ego- sound famililar, like someone in the White House?
There is no simple solution. But there is a need to return to stepping back, looking at the grand scheme of things, having perspective about what are the important things in life. For starters I will tell you what I learned after spending six weeks in the USSR after Chernobyl in 1986.
Education: reading and discussing
Family: spending time with parents, children, grandparents
Nature: being in tune with this incredible gift of our pale blue dot, and realizing the oneness of all things.
We need to start this at the individual level and escalate to those who are in positions of change.
FINALLY. I’ve been saying this for years, but without money, status, or a platform, naturally nobody listened. Unfortunately, it probably is too late. I sure wish some of you guys who had some or all of those three things had paid attention a little sooner
A welcome late conversion especially given how eloquently and passionately you argue the case for a corrective redistribution of wealth and resources. I’m in the UK where a supposedly centre left government has clearly been captured by the corporates and colludes with the distraction of immigration as the cause of all ills while opening the doors to AI, tech surveillance and letting Palantir loose on our data.
The essential case you make is being being widely popularised by Gary Stephenson’s Gary’ Economics, and the Labour Government is deeply unpopular among both public and its own MPs and members - raising the hope of an internal coup. But it’s so damaging to people’s faith in democracy when the leadership of every party, with the exception v of the Greens, is deferring to the fairy tales of mainstream economics and turning a blind eye to the hoovering of wealth and assets from our pockets and our governments into the rising tide of a super-wealth ocean.
Thank-you for this superb essay. I’m not an economist but I have grasped that this Austrian method is being critiqued more and more by the sharpest thinkers of today. You are exactly right about the power of the ultra-rich to manipulate everything from markets to government policy in order to increase their wealth forever. When they become doubtful, we hear about Network States and massive land purchases where they can create their little fiefdoms away from the hoi-palloi.
But I’m seeing, in spite of the fascism coming our way, that people are beginning to wake up to the fact that the rich are not our friends.
First, I will once again quote Peter Kropotkin's "The Conquest of Bread":
"In our civilized societies we are rich. Why then are the many poor? Why this painful drudgery for the masses? Why, even to the best paid workman, this uncertainty for the morrow, in the midst of all the wealth inherited from the past, and in spite of the powerful means of production, which could ensure comfort to all, in return for a few hours of daily toil?
"The Socialists have said it and repeated it unwearyingly. Daily they reiterate it, demonstrating it by arguments taken from all the sciences. It is because all that is necessary for production—the land, the mines, the highways, machinery, food, shelter, education, knowledge—all have been seized by the few in the course of that long story of robbery, enforced migration and wars, of ignorance and oppression, which has been the life of the human race before it had learned to subdue the forces of Nature. It is because, taking advantage of alleged rights acquired in the past, these few appropriate to-day two-thirds of the products of human labour, and then squander them in the most stupid and shameful way. It is because, having reduced the masses to a point at which they have not the means of subsistence for a month, or even for a week in advance, the few can allow the many to work, only on the condition of themselves receiving the lion's share. It is because these few prevent the remainder of men from producing the things they need, and force them to produce, not the necessaries of life for all, but whatever offers the greatest profits to the monopolists. In this is the substance of all Socialism."
Second: The Laffer curve gets a bit of a bad rap. The underlying mathematics are actually correct. Consider a system of taxation of income with average rate T and gross revenue R, and assume that R is a once-differentiable function of T. If T = 0, that is, if no tax is levied, then no tax revenue is collected, that is, R = 0. If T = 1, meanwhile, then there is no economic incentive to earn any income, and thus there is no income to tax in the first place, so again R = 0. Since gross tax revenue is positive for any value of T strictly between 0 and 1, Rolle's Theorem implies that there is some rate T*, strictly between 0 and 1, at which revenue is maximised.
The reason the Laffer curve is so often mocked is not because of this mathematical basis (though you might challenge the assumption that R(1) = 0 on the basis of passive income earning, assuming the people earning said income do not shift its use toward non-income-generating economic activity) but rather because of the secondary assertion, not backed up by the mathematics, that whatever T* is, it's always lower than the current value of T. There is some interval with its right endpoint at 1 for which this is necessarily true, but there is also necessarily some interval with its left endpoint at 0 in which raising T increases tax revenue. So the assertion often made by tax-cut hawks that cutting taxes always increases tax revenue is clearly false, and the only question is determining what T* is.
Third: This time, to quote the US Army from 1945, Army Talk Orientation Fact Sheet Number 64:
"Whenever free governments anywhere fail to solve their basic economic and social problems, there is always the danger that a native brand of fascism will arise to exploit the situation and the people."
Fourth: Matt Bruenig, at Jacobin and the People's Policy Project, did a few pieces some years ago on the taxation system of the Faroe Islands. It exposes a key lie about the notion that we can afford to cut taxes but not raise benefits.
In the Faroe Islands (an internally self-governing territory in the Kingdom of Denmark), employers do not remit wages to workers directly. Instead, wages are remitted to the tax agency. The tax agency then computes, on the basis of each person's known income data (I do not know if, say, banks remit interest payments to the tax agency, or renters remit rent to them, companies remit dividends and bond coupons, etc), the tax owed on that payment, and further any benefits to which the person is entitled given the income profile. The tax agency then remits to the worker a payment consisting of their wages, minus any tax owed by the worker, plus any benefits owed to the worker.
What this exposes is that there is effectively no difference between taxes and government benefits. Taxes are negative benefits; benefits are negative taxes. Cutting taxes has the same effect on government revenue and economy-wide personal income as increasing benefits; the nature of the tax cuts or benefit increases, however, will determine which parts of society see increases to their personal income. (Similarly raising taxes and cutting benefits are the same thing, but the precise nature of them affects the distribution of income throughout the population similarly.)
Fifth: Another quote, this time from the Report of the Royal Commission on Taxation, 1966, chaired by Kenneth Carter:
"The decision to tax the annual changes in the economic power of each tax unit rather than "income", as it is now defined, has dramatic consequences.
"For adoption of the comprehensive tax base requires the taxation of not only income from property, but also "capital" gains on the disposition of property. Almost everyone is familiar,'at least in a general way, with the difference between "income" and "capital", even though the words seem to be incapable of precise definition. Capital is the source of income. By levying a tax on "income" the distinction between the two concepts takes on great significance, for if the courts find a particular gain to be "capital" the transaction is not now taxable. There is an enormous incentive for the taxpayer to try to transform "income" gains, into "capital" gains. However, it is impossible to draw an unambiguous distinction between "capital" gains and "income" gains and the attempt to do so necessarily results in great uncertainty for the taxpayer because a particular transaction may or may not be found by the courts to fall on one side of the line or the other.
"After the most careful and exhaustive consideration of this complex question, we have arrived at the conclusion that the present distinction between kinds of gain is inconsistent with our concept of what we believe "income" is for purposes of determining the individual's capacity to pay tax.
"A dollar gained through the sale of a share, bond or piece of real property bestows exactly the same economic power as a dollar gained through employment or operating a business. The equity principles we hold dictate that both should be taxed in exactly the same way. To tax the gain on the disposal of property more lightly than other kinds of gains or not at all would be grossly unfair.
"These radical reforms are advocated because equity can be achieved in no other way, because in our opinion there would be no adverse economic effects through their adoption when combined with our other proposed changes, and because they would simplify the tax system and reduce uncertainty."
Sixth and perhaps most importantly: this is why AI research must be stopped at all costs.
Set aside that AI in its current form is a bubble, and possibly one more destructive than previous bubbles like the dotcom bubble or the subprime mortgage crisis. (In the surest sign yet that it is a bubble, Jim Cramer recently stated that he thinks it isn't: https://www.cnbc.com/2025/09/29/jim-cramer-explains-why-he-thinks-the-ai-boom-is-different-than-the-dotcom-bubble.html ) It shows the signs of what you get if you cross the subprime mortgage crisis with a Ponzi scheme, and some have argued that if you remove tech growth from the US economy (a failure in which will send waves crashing throughout the global economy, even as Trump tries to reshape it with massively high and extractive tariffs that are themselves serving as a wealth transfer from the poor to the rich, since they are consumption taxes) you find an economy at best stagnant and at worst already in recession, and tech growth right now is being driven almost entirely by AI spending. (Sam Altman is a wonderful conman. If only it were Aaron Swartz who was being feted instead: https://journa.host/@jeremiak/113811327999722586 ) Not only that, but our experience of recent past recessions is that the rich always come out of it better than before; the entire system of boom-bust cycles only serves to transfer wealth from the poor to the rich. The underlying basis of capitalism as currently practiced, and what all its functions serve, is to privatise and concentrate gains in the hands of a rich few, while socialising and distributing losses among the many poor, forcing the latter to bear the burden of the bad economic decisions made by the former while insulating the former from the consequences of such. (Indeed because of how central banks operate to produce monetary stimulus, they do not make payments directly to the many; they inject capital into securities markets, which flows directly toward those most exposed to those markets, which is disproportionately the rich.)
The true threat of AI is that a true AGI would solve a problem that has plagued the owners of land and capital for centuries: wages. With actual AGI to perform labour instead of workers, the owner class would no longer need to pay any rent to labour and could instead keep all the economic rent they receive from their factors of production, since labour would no longer be necessary; indeed the end goal of AGI is to create a slave class all over again. (The term "wage slave" is meant to be understood literally. Economically there is little difference between a wage labourer and a slave; both labour on behalf of another, that other returning only a fraction of the economic gain to the labourer, whether in the form of wages or in the form of subsistence room and board, and retains the rest for himself.) This would deprive workers of their main source of income and of their ultimate economic power, that of a general strike. With a slave class created through AGI, this threat to capital and land, and this power of labour, vanishes utterly. The rich would no longer need the rest of society to produce what the rich desire (see the Kropotkin quote above) and class divisions and wealth inequality would be permanently entrenched.
AI is arguably a bigger threat than anything Mike listed off in his article. Do not ignore it. It will not serve human flourishing; it will only serve to further entrench the rich as the rich.
EDIT: Finally, I will leave off with a quote from the papal encyclical Populorum progressio from 1967, an encyclical considered so important that two more have been written by later Popes expounding further on it, those being Sollicitudo rei socialis and Caritas in veritate:
"He who has the goods of this world and sees his brother in need and closes his heart to him, how does the love of God abide in him?" Everyone knows that the Fathers of the Church laid down the duty of the rich toward the poor in no uncertain terms. As St. Ambrose put it: "You are not making a gift of what is yours to the poor man, but you are giving him back what is his. You have been appropriating things that are meant to be for the common use of everyone. The earth belongs to everyone, not to the rich." These words indicate that the right to private property is not absolute and unconditional.
No one may appropriate surplus goods solely for his own private use when others lack the bare necessities of life. In short, "as the Fathers of the Church and other eminent theologians tell us, the right of private property may never be exercised to the detriment of the common good." When "private gain and basic community needs conflict with one another," it is for the public authorities "to seek a solution to these questions, with the active involvement of individual citizens and social groups."
Second EDIT:
(Question: If we leave fascist nations alone, will they leave us alone? Or does fascism inevitably lead to war?)
We have seen that the people of a fascist state earn less and less, and so are able to buy less and less of the goods they produce with their slave labor. This means that eventually the fascist leaders either have to abandon the system, or look abroad for new markets to dispose of the mounting surplus of goods that cannot be sold at home.
The fascists do not choose to abandon their system and give up their graft, and so they are forced to acquire foreign markets and to eliminate competing nations. Due to their slave labor, the fascists are able to undersell the free nations of the world. The free nations must either resort to fascism, so that with slave labor they can meet the cut-throat prices of the fascist nations, or they must erect trade barriers to keep out the ruthless fascist competition. (See Douglas Miller: You Can't Do Business With Hitler!) In either case, the fascist nation still wants the markets, and it goes after them with the same methods used in domestic affairs—intimidation, terror, and force. In foreign affairs, force means war.
The war machine is ready, and waiting for duty. To justify the building of the war machine as the "solution" to unemployment, the fascists nurture a lust for war, a desire for conquest. "Live dangerously," said Mussolini. "Man has become great through perpetual strife," screamed Hitler. A Nazi slogan was "Guns instead of butter." The hungry people were told they would get butter and other riches in due time—by way of conquest.
The press, radio, movies, stage—all were put to the task of glorifying war. The school system, from kindergarten to university, justified and exalted tyranny of the strong over the weak. "The school is the preparation for the Army," said the Nazi Minister of Education.
The people were taught that their race was "superior." Since this concept of "superior" and "inferior" race is completely contrary to the findings of all science, science has to be as carefully controlled and perverted as the schools. No scientist in Germany could safely deny it when Hitler told the Germans that they were a "Master Race" entitled to the land and possessions of lesser folk. The Italians were told in fake "scientific" terms that Latins were born to rule. The Japanese were taught that as "Sons of Heaven" it was both their right and their duty to conquer and rule the world.
Once their people were sold on the "master race" idea, it was easy for the fascists to make them feel that other people were of no more consequence than vermin. We think nothing of killing a cockroach. They were encouraged to think nothing of killing unarmed and defenseless men, women, and children. Many even got to enjoy it. Hence Rotterdam, Lidice, Maidanek.
By all these devices, fascism creates and then is driven by forces that cannot be stopped at will. Fascism cannot stand still. Its internal and external policies are rooted in aggression. It must expand or explode. It must conquer or perish. Every measure taken by fascism—its entire economic, social, political, and military set-up—means eventual war. The war comes when intimidation and terror fail as instruments of fascist foreign policy. The war comes when other nations finally refuse further to appease the insatiable hunger of fascism for markets, military glory, and world domination.
(Army Talk Orientation Fact Sheet Number 64, March 1945)
“indeed the end goal of AGI is to create a slave class all over again.” Several rich Silicon Valley VC’s have said as much. Several aspire to exactly that.
Major problem is that we allowed the class warriors to use xenophobic scapegoating to start a culture war which is working on tearing apart the seams of the social fabric, and ignoring that for class solutions is like ignoring military forces repelling from helicopters and zip-tying infants, in order to speak about tax policy.
The damage done has turned the drought into raging wildfires, we need to stop the use our militarized agents on the vulnerable communities that they are targeting through culture war narratives NOW. That means taking on the anti-diversity forces attempting to occupy our cities head-on in public forums that private wealth is buying and consolidating as we speak.
Mike, your diagnosis that the crisis is driven by rent extraction through asset concentration is spot on, especially when it comes to real estate. Housing costs are the primary tax on the working and middle class.
I agree that the government needs to "call their bluff" on capital flight, but the political gridlock makes it feel like an endless game.
I’m proposing a structural, bottom-up mechanism to take the most fundamental, immobile asset—land—off the speculative market permanently, bypassing the need for a national wealth tax to get started.
I call it the Commons Trust. It starts as a local non-profit and a self-funding engine that uses a new financial vehicle—a pegged, non-speculative digital currency (LC)—to acquire land in a single pilot municipality. The overall vision is transition all land into the commons and distribute the rents to everyone.
Here’s the key difference from the "hard money" crowd you rightly critique:
1. It is not deflationary. The LC is a stable asset pegged to the dollar, backed by the growing value of the land in the Trust. It’s a tool for acquisition and redistribution, not hoarding.
2. It converts private rent into public equity. All rent from the land goes into a formula: 30% to the local government (replacing LVT), 50% to a Land Fund to buy more property, and 10% as a dividend to LC holders.
3. It ensures permanent affordability. Leaseholders own the buildings, but the land is perpetually leased at an auction-determined price, protecting them from speculative land value increases.
I’ve worked with Google's AI to model the financials, and we estimate we need about $6 million in seed funding to launch a self-sustaining pilot. This is an attempt to create a blueprint for structural reform without waiting for political consensus.
I've linked to a white paper that details the model as well as the original plan I wrote. I'd genuinely appreciate your thoughts on this approach as an institutional alternative to progressive taxation.
I suggest you have a look at Gary Stephenson.
One of his main points is that if the tax on unearned income (capital gains etc) < tax on earned income, inevitably, money flows towards people who have unearned income, asset prices rise, those people get wealthier than those who have jobs and that cycle becomes entrenched.
Thanks for spelling out the TRUTH so clearly.
Thanks for another great piece. And thanks for being free to read.
“I once was blind but now I see.”
Solid article! You captured so many critical threads to elucidate the inequality hyper loop. It’s like a Chinese finger trap that only resets with elegant interventions, or as you say, an unfortunate revolution. The flywheel is concentrating more gains and corrupting the system as it goes deeper.
I had my awakening in 2022 after decades in the professional investment game. There is a political opportunity to build a movement in support of the necessary types of reforms. The movement must be outside of the legacy party camps, but creep into both territories. It must be transparent, trustworthy, and decentralized in ways that avoid the corruption of seeking power. Game on!
I am not saying that you are wrong. Because everything you said is accurate. I have a pet peeve when people talk about the 10% or 1% because the problem is really just a few thousand people. But I understand that you started with a point on consumer spending.
But things are never going to change without some kind of horrific revolution. Before Trump the US had structural problems that prevented fixing this problem. However, that wasn't enough and the few thousand people who own almost everything decided that the best protection is fascism. And that's where we are. We have a president, congress, and Supreme Court actively pursuing fascist autocracy. There is no peaceful fix to that. None. But even before, the only politician who said anything remotely close to fixing the problem was Elizabeth warren with her 2% wealth tax. There are a few politicians who say things like there shouldn't be billionaires, but they never back it up with policy positions. We couldn't even get the earned income loophole fixed, much less get capital gains taxed as income. While there are good democrats out there, Chuck Schumer and Hakim Jeffries are fully into the pockets of the wealthy. Republicans are far far worse on this issue, but it was Bill Clinton who deregulated the banks. But the numbers are all insane. The top tax bracket is $600,000, while people are making tens of millions, hundreds of millions, or billions. We need new tax brackets that mirror reality. But it will never happen. We will not have a wealth tax. We will not fix the brackets.
We live in a world that is a maelstrom of conflicting ideals, motives, behavior and talents.
Personally, I do not think that there is some or one easy solution. Like much of life, there are multiple factors or parameters that are in play. There are foundational principles that also by their nature cannot be ignored.
#1. Goldilocks Principle. We could learn so much by reading children's' stories or fables. For me, and hopefully you, one basic tenet in Goldilocks and the 3 bears is about the porridge:
Not too hot, not too cold, but just right.
There is a need to look at wealth and at poverty and understand the pros and cons of each. I will use myself as an example. My mother was a mother and a hostess in a restaurant. My father was a gas station owner and an alcoholic. I grew up with anxiety about how secure my family was. I busted my chops in public school. I took on as many odd jobs as I could and handed the money over to my only responsible parent: my mother. I received a NY State Merit Scholarship and went to a private university, then another scholarship to the U of Chciago School of Medicine. All those years I worked in every imaginable odd job: hauling laundry, cooking on Sundays, working in the hospital laboratory, assisting in autopsies, painting houses, working in gas stations.
⇢ I became the first physician in my family. I achieved success. I lived up to what was taped to the wall of my workplace in the basement of our home:
"The only place where success comes before work is in the dictionary."
Bring back Goldilocks. What are the facts about those getting free healthcare or free food or free whatever? I really don't know. But I know this. In this country, if you want work you can find it and you can elevate your situation. I resent, no resent is not the right word, I am pissed that some coming to this country are recipients of the great American giveaway- at taxpayer's like me expense. Yes, help those truly seeking asylum. I know that situation in my family having lost many to the carbon monoxide trucks of the Nazis and then the more advanced killing with Zyklon B cyanide gas. But why wasn't millions or more spent on proper immigration strategies? Don't blame the Republicans or Democrats, blame the voters who remain apathetic, ignorant and/or lazy. Do your friggin due diligence no matter what you do. If you do something, do it right or don't do it at all.
In America, our focus is so much on acquisition of stuff. I live in a modest neighborhood despite being a retired MD. My neighbors have two or three vehicles and also many have RVs and boats. The garage is no longer sufficient for all their stuff. You go to Costco and half the people are grossly obese. We are not a nation of Christians or Catholicis, but a nation of consumers. Consumerism is our religion.
So #2 is our focus on the Economy which is really on our consumerism- our ability to buy more stuff. Americans live to work, in order to buy. Much of the rest of the world work to live and enjoy Nature, family, friendships. We have lost our focus on what is important in this world.
More than 200 years ago, Wordsworth had it right:
The world is too much with us; late and soon,
Getting and spending, we lay waste our powers;
Little we see in Nature that is ours;
We have given our hearts away, a sordid boon!
--William Wordsworth
If you want a more modern viewpoint on Economy and Life, read Wendell Berry.
"To those who still uphold the traditions of religious and political thought that influenced the shaping of our society and the founding of our government, it is astonishing, and of course discouraging, to see economics now elevated to the position of ultimate justifier and explainer of all the affairs of our daily life, and competition enshrined as the sovereign principle and ideal of economics."
Berry, Wendell. What Are People For?: Essays (p. 129). Catapult. Kindle Edition.
#3. Mike Brock is right most of the time. We don't read anymore. If you want to read an incredible purveyor of what has gone wrong in the US and elsewhere, read the above book. Berry is the Socrates of contemporary times; he is the gadfly of the State.
"It seems that we have been reduced almost to a state of absolute economics, in which people and all other creatures and things may be considered purely as economic “units,” or integers of production, and in which a human being may be dealt with, as John Ruskin put it, “merely as a covetous machine. And the voices bitterest to hear are those saying that all this destructive work of mindless genius, money, and power is regrettable but cannot be helped."
I do not believe there is anything wrong with ambition, but in perspective, not when it turns to greed over good, or greed over what was once understood as "god."
All of the major ills and crises come back to this insatiable greed to acquire, have more, and still more. Our ruination of the planet; the wars and genocides we are witness to, the inability to buy a home or afford healthcare all are intertwined with greed. And with greed comes envy and ego- sound famililar, like someone in the White House?
There is no simple solution. But there is a need to return to stepping back, looking at the grand scheme of things, having perspective about what are the important things in life. For starters I will tell you what I learned after spending six weeks in the USSR after Chernobyl in 1986.
Education: reading and discussing
Family: spending time with parents, children, grandparents
Nature: being in tune with this incredible gift of our pale blue dot, and realizing the oneness of all things.
We need to start this at the individual level and escalate to those who are in positions of change.
.
FINALLY. I’ve been saying this for years, but without money, status, or a platform, naturally nobody listened. Unfortunately, it probably is too late. I sure wish some of you guys who had some or all of those three things had paid attention a little sooner
A welcome late conversion especially given how eloquently and passionately you argue the case for a corrective redistribution of wealth and resources. I’m in the UK where a supposedly centre left government has clearly been captured by the corporates and colludes with the distraction of immigration as the cause of all ills while opening the doors to AI, tech surveillance and letting Palantir loose on our data.
The essential case you make is being being widely popularised by Gary Stephenson’s Gary’ Economics, and the Labour Government is deeply unpopular among both public and its own MPs and members - raising the hope of an internal coup. But it’s so damaging to people’s faith in democracy when the leadership of every party, with the exception v of the Greens, is deferring to the fairy tales of mainstream economics and turning a blind eye to the hoovering of wealth and assets from our pockets and our governments into the rising tide of a super-wealth ocean.
Your honesty about being wrong and changing your mind might be the most important part of this piece!
People need to hear that it's OK to admit to being wrong, and that learning and changing is a good thing!
Let's call it "Economic repentance"
Thanks for modeling that.
Thank-you for this superb essay. I’m not an economist but I have grasped that this Austrian method is being critiqued more and more by the sharpest thinkers of today. You are exactly right about the power of the ultra-rich to manipulate everything from markets to government policy in order to increase their wealth forever. When they become doubtful, we hear about Network States and massive land purchases where they can create their little fiefdoms away from the hoi-palloi.
But I’m seeing, in spite of the fascism coming our way, that people are beginning to wake up to the fact that the rich are not our friends.
Numerous points.
First, I will once again quote Peter Kropotkin's "The Conquest of Bread":
"In our civilized societies we are rich. Why then are the many poor? Why this painful drudgery for the masses? Why, even to the best paid workman, this uncertainty for the morrow, in the midst of all the wealth inherited from the past, and in spite of the powerful means of production, which could ensure comfort to all, in return for a few hours of daily toil?
"The Socialists have said it and repeated it unwearyingly. Daily they reiterate it, demonstrating it by arguments taken from all the sciences. It is because all that is necessary for production—the land, the mines, the highways, machinery, food, shelter, education, knowledge—all have been seized by the few in the course of that long story of robbery, enforced migration and wars, of ignorance and oppression, which has been the life of the human race before it had learned to subdue the forces of Nature. It is because, taking advantage of alleged rights acquired in the past, these few appropriate to-day two-thirds of the products of human labour, and then squander them in the most stupid and shameful way. It is because, having reduced the masses to a point at which they have not the means of subsistence for a month, or even for a week in advance, the few can allow the many to work, only on the condition of themselves receiving the lion's share. It is because these few prevent the remainder of men from producing the things they need, and force them to produce, not the necessaries of life for all, but whatever offers the greatest profits to the monopolists. In this is the substance of all Socialism."
Second: The Laffer curve gets a bit of a bad rap. The underlying mathematics are actually correct. Consider a system of taxation of income with average rate T and gross revenue R, and assume that R is a once-differentiable function of T. If T = 0, that is, if no tax is levied, then no tax revenue is collected, that is, R = 0. If T = 1, meanwhile, then there is no economic incentive to earn any income, and thus there is no income to tax in the first place, so again R = 0. Since gross tax revenue is positive for any value of T strictly between 0 and 1, Rolle's Theorem implies that there is some rate T*, strictly between 0 and 1, at which revenue is maximised.
The reason the Laffer curve is so often mocked is not because of this mathematical basis (though you might challenge the assumption that R(1) = 0 on the basis of passive income earning, assuming the people earning said income do not shift its use toward non-income-generating economic activity) but rather because of the secondary assertion, not backed up by the mathematics, that whatever T* is, it's always lower than the current value of T. There is some interval with its right endpoint at 1 for which this is necessarily true, but there is also necessarily some interval with its left endpoint at 0 in which raising T increases tax revenue. So the assertion often made by tax-cut hawks that cutting taxes always increases tax revenue is clearly false, and the only question is determining what T* is.
Third: This time, to quote the US Army from 1945, Army Talk Orientation Fact Sheet Number 64:
"Whenever free governments anywhere fail to solve their basic economic and social problems, there is always the danger that a native brand of fascism will arise to exploit the situation and the people."
Fourth: Matt Bruenig, at Jacobin and the People's Policy Project, did a few pieces some years ago on the taxation system of the Faroe Islands. It exposes a key lie about the notion that we can afford to cut taxes but not raise benefits.
https://jacobin.com/2023/12/faroe-islands-central-income-distribution-institution-means-testing-universalism-welfare-taxation
https://www.peoplespolicyproject.org/2022/11/30/the-best-tax-system-on-earth/
In the Faroe Islands (an internally self-governing territory in the Kingdom of Denmark), employers do not remit wages to workers directly. Instead, wages are remitted to the tax agency. The tax agency then computes, on the basis of each person's known income data (I do not know if, say, banks remit interest payments to the tax agency, or renters remit rent to them, companies remit dividends and bond coupons, etc), the tax owed on that payment, and further any benefits to which the person is entitled given the income profile. The tax agency then remits to the worker a payment consisting of their wages, minus any tax owed by the worker, plus any benefits owed to the worker.
What this exposes is that there is effectively no difference between taxes and government benefits. Taxes are negative benefits; benefits are negative taxes. Cutting taxes has the same effect on government revenue and economy-wide personal income as increasing benefits; the nature of the tax cuts or benefit increases, however, will determine which parts of society see increases to their personal income. (Similarly raising taxes and cutting benefits are the same thing, but the precise nature of them affects the distribution of income throughout the population similarly.)
Fifth: Another quote, this time from the Report of the Royal Commission on Taxation, 1966, chaired by Kenneth Carter:
"The decision to tax the annual changes in the economic power of each tax unit rather than "income", as it is now defined, has dramatic consequences.
"For adoption of the comprehensive tax base requires the taxation of not only income from property, but also "capital" gains on the disposition of property. Almost everyone is familiar,'at least in a general way, with the difference between "income" and "capital", even though the words seem to be incapable of precise definition. Capital is the source of income. By levying a tax on "income" the distinction between the two concepts takes on great significance, for if the courts find a particular gain to be "capital" the transaction is not now taxable. There is an enormous incentive for the taxpayer to try to transform "income" gains, into "capital" gains. However, it is impossible to draw an unambiguous distinction between "capital" gains and "income" gains and the attempt to do so necessarily results in great uncertainty for the taxpayer because a particular transaction may or may not be found by the courts to fall on one side of the line or the other.
"After the most careful and exhaustive consideration of this complex question, we have arrived at the conclusion that the present distinction between kinds of gain is inconsistent with our concept of what we believe "income" is for purposes of determining the individual's capacity to pay tax.
"A dollar gained through the sale of a share, bond or piece of real property bestows exactly the same economic power as a dollar gained through employment or operating a business. The equity principles we hold dictate that both should be taxed in exactly the same way. To tax the gain on the disposal of property more lightly than other kinds of gains or not at all would be grossly unfair.
"These radical reforms are advocated because equity can be achieved in no other way, because in our opinion there would be no adverse economic effects through their adoption when combined with our other proposed changes, and because they would simplify the tax system and reduce uncertainty."
Sixth and perhaps most importantly: this is why AI research must be stopped at all costs.
Set aside that AI in its current form is a bubble, and possibly one more destructive than previous bubbles like the dotcom bubble or the subprime mortgage crisis. (In the surest sign yet that it is a bubble, Jim Cramer recently stated that he thinks it isn't: https://www.cnbc.com/2025/09/29/jim-cramer-explains-why-he-thinks-the-ai-boom-is-different-than-the-dotcom-bubble.html ) It shows the signs of what you get if you cross the subprime mortgage crisis with a Ponzi scheme, and some have argued that if you remove tech growth from the US economy (a failure in which will send waves crashing throughout the global economy, even as Trump tries to reshape it with massively high and extractive tariffs that are themselves serving as a wealth transfer from the poor to the rich, since they are consumption taxes) you find an economy at best stagnant and at worst already in recession, and tech growth right now is being driven almost entirely by AI spending. (Sam Altman is a wonderful conman. If only it were Aaron Swartz who was being feted instead: https://journa.host/@jeremiak/113811327999722586 ) Not only that, but our experience of recent past recessions is that the rich always come out of it better than before; the entire system of boom-bust cycles only serves to transfer wealth from the poor to the rich. The underlying basis of capitalism as currently practiced, and what all its functions serve, is to privatise and concentrate gains in the hands of a rich few, while socialising and distributing losses among the many poor, forcing the latter to bear the burden of the bad economic decisions made by the former while insulating the former from the consequences of such. (Indeed because of how central banks operate to produce monetary stimulus, they do not make payments directly to the many; they inject capital into securities markets, which flows directly toward those most exposed to those markets, which is disproportionately the rich.)
The true threat of AI is that a true AGI would solve a problem that has plagued the owners of land and capital for centuries: wages. With actual AGI to perform labour instead of workers, the owner class would no longer need to pay any rent to labour and could instead keep all the economic rent they receive from their factors of production, since labour would no longer be necessary; indeed the end goal of AGI is to create a slave class all over again. (The term "wage slave" is meant to be understood literally. Economically there is little difference between a wage labourer and a slave; both labour on behalf of another, that other returning only a fraction of the economic gain to the labourer, whether in the form of wages or in the form of subsistence room and board, and retains the rest for himself.) This would deprive workers of their main source of income and of their ultimate economic power, that of a general strike. With a slave class created through AGI, this threat to capital and land, and this power of labour, vanishes utterly. The rich would no longer need the rest of society to produce what the rich desire (see the Kropotkin quote above) and class divisions and wealth inequality would be permanently entrenched.
AI is arguably a bigger threat than anything Mike listed off in his article. Do not ignore it. It will not serve human flourishing; it will only serve to further entrench the rich as the rich.
EDIT: Finally, I will leave off with a quote from the papal encyclical Populorum progressio from 1967, an encyclical considered so important that two more have been written by later Popes expounding further on it, those being Sollicitudo rei socialis and Caritas in veritate:
"He who has the goods of this world and sees his brother in need and closes his heart to him, how does the love of God abide in him?" Everyone knows that the Fathers of the Church laid down the duty of the rich toward the poor in no uncertain terms. As St. Ambrose put it: "You are not making a gift of what is yours to the poor man, but you are giving him back what is his. You have been appropriating things that are meant to be for the common use of everyone. The earth belongs to everyone, not to the rich." These words indicate that the right to private property is not absolute and unconditional.
No one may appropriate surplus goods solely for his own private use when others lack the bare necessities of life. In short, "as the Fathers of the Church and other eminent theologians tell us, the right of private property may never be exercised to the detriment of the common good." When "private gain and basic community needs conflict with one another," it is for the public authorities "to seek a solution to these questions, with the active involvement of individual citizens and social groups."
Second EDIT:
(Question: If we leave fascist nations alone, will they leave us alone? Or does fascism inevitably lead to war?)
We have seen that the people of a fascist state earn less and less, and so are able to buy less and less of the goods they produce with their slave labor. This means that eventually the fascist leaders either have to abandon the system, or look abroad for new markets to dispose of the mounting surplus of goods that cannot be sold at home.
The fascists do not choose to abandon their system and give up their graft, and so they are forced to acquire foreign markets and to eliminate competing nations. Due to their slave labor, the fascists are able to undersell the free nations of the world. The free nations must either resort to fascism, so that with slave labor they can meet the cut-throat prices of the fascist nations, or they must erect trade barriers to keep out the ruthless fascist competition. (See Douglas Miller: You Can't Do Business With Hitler!) In either case, the fascist nation still wants the markets, and it goes after them with the same methods used in domestic affairs—intimidation, terror, and force. In foreign affairs, force means war.
The war machine is ready, and waiting for duty. To justify the building of the war machine as the "solution" to unemployment, the fascists nurture a lust for war, a desire for conquest. "Live dangerously," said Mussolini. "Man has become great through perpetual strife," screamed Hitler. A Nazi slogan was "Guns instead of butter." The hungry people were told they would get butter and other riches in due time—by way of conquest.
The press, radio, movies, stage—all were put to the task of glorifying war. The school system, from kindergarten to university, justified and exalted tyranny of the strong over the weak. "The school is the preparation for the Army," said the Nazi Minister of Education.
The people were taught that their race was "superior." Since this concept of "superior" and "inferior" race is completely contrary to the findings of all science, science has to be as carefully controlled and perverted as the schools. No scientist in Germany could safely deny it when Hitler told the Germans that they were a "Master Race" entitled to the land and possessions of lesser folk. The Italians were told in fake "scientific" terms that Latins were born to rule. The Japanese were taught that as "Sons of Heaven" it was both their right and their duty to conquer and rule the world.
Once their people were sold on the "master race" idea, it was easy for the fascists to make them feel that other people were of no more consequence than vermin. We think nothing of killing a cockroach. They were encouraged to think nothing of killing unarmed and defenseless men, women, and children. Many even got to enjoy it. Hence Rotterdam, Lidice, Maidanek.
By all these devices, fascism creates and then is driven by forces that cannot be stopped at will. Fascism cannot stand still. Its internal and external policies are rooted in aggression. It must expand or explode. It must conquer or perish. Every measure taken by fascism—its entire economic, social, political, and military set-up—means eventual war. The war comes when intimidation and terror fail as instruments of fascist foreign policy. The war comes when other nations finally refuse further to appease the insatiable hunger of fascism for markets, military glory, and world domination.
(Army Talk Orientation Fact Sheet Number 64, March 1945)
“indeed the end goal of AGI is to create a slave class all over again.” Several rich Silicon Valley VC’s have said as much. Several aspire to exactly that.
Great article.
Major problem is that we allowed the class warriors to use xenophobic scapegoating to start a culture war which is working on tearing apart the seams of the social fabric, and ignoring that for class solutions is like ignoring military forces repelling from helicopters and zip-tying infants, in order to speak about tax policy.
The damage done has turned the drought into raging wildfires, we need to stop the use our militarized agents on the vulnerable communities that they are targeting through culture war narratives NOW. That means taking on the anti-diversity forces attempting to occupy our cities head-on in public forums that private wealth is buying and consolidating as we speak.
Mike, your diagnosis that the crisis is driven by rent extraction through asset concentration is spot on, especially when it comes to real estate. Housing costs are the primary tax on the working and middle class.
I agree that the government needs to "call their bluff" on capital flight, but the political gridlock makes it feel like an endless game.
I’m proposing a structural, bottom-up mechanism to take the most fundamental, immobile asset—land—off the speculative market permanently, bypassing the need for a national wealth tax to get started.
I call it the Commons Trust. It starts as a local non-profit and a self-funding engine that uses a new financial vehicle—a pegged, non-speculative digital currency (LC)—to acquire land in a single pilot municipality. The overall vision is transition all land into the commons and distribute the rents to everyone.
Here’s the key difference from the "hard money" crowd you rightly critique:
1. It is not deflationary. The LC is a stable asset pegged to the dollar, backed by the growing value of the land in the Trust. It’s a tool for acquisition and redistribution, not hoarding.
2. It converts private rent into public equity. All rent from the land goes into a formula: 30% to the local government (replacing LVT), 50% to a Land Fund to buy more property, and 10% as a dividend to LC holders.
3. It ensures permanent affordability. Leaseholders own the buildings, but the land is perpetually leased at an auction-determined price, protecting them from speculative land value increases.
I’ve worked with Google's AI to model the financials, and we estimate we need about $6 million in seed funding to launch a self-sustaining pilot. This is an attempt to create a blueprint for structural reform without waiting for political consensus.
I've linked to a white paper that details the model as well as the original plan I wrote. I'd genuinely appreciate your thoughts on this approach as an institutional alternative to progressive taxation.
https://substack.com/@thomascooper2/p-175635184
https://substack.com/@thomascooper2/p-154703885
Thanks for the urgency of your work.
We definitely all need to!
https://exploringhumans.substack.com/p/the-ghost-of-feudalism-doesnt-wear
How did ANTIFA GERMANS treat PRO NAZI Germans post WW2
https://substack.com/@onj2025/note/c-163799840?r=7iikn&utm_medium=ios&utm_source=notes-share-action
Can you show us data supporting your first statement?