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When
I'm feeling lazy and Sunday is coming up, I grab something out of my book. There's
so much good stuff in there, it's a practically endless resource. You should
really buy a copy if you haven't yet.
Today, we have passages by Ibn Khaldun, an Arab genius of the 14th century.
Ibn Khaldun must have one of the most impressive resumes of all history. He
was born in Tunis to a family of high-level bureaucrats. Although he held
minor government offices from a young age, his first high office, as prime
minister, came about after he had been plotting against a local monarch. He
was thrown in prison; one of his prison friends later became the monarch, and
brought Khaldun into his government. He was part of the court of the Sultan
of Grenada, for whom he successfully negotiated a peace treaty with the King
of Castile. Pedro the Cruel was so impressed by his abilities, he offered
Khaldun a place at his court, along with landholdings in the area that had
previously been in his family. More diplomatic positions followed.
Eventually, frustrated with the constantly changing alliances and politics, he
sought refuge wth one of the Berber tribes. For three years, in a small
village, he wrote the "Prolegomena," the first book of an enormous
history of the world that he had planned. The "prolegomena"
consisted of his theory of history, from which we get our passages below.
Finding that the small Berber town did not have the resources he needed for
his history, he migrated to Alexandria in Egypt. There, he held high office
within the justice system. His attempts to reform the system produced
conflict, however, and he was forced to resign. He then made a four-year trip
to Mecca. After his return, he continued to serve as something like a high
professor of law. During this time, his son Faraj was sent to lead an army to
relieve Damascus of a siege by the Mongol conqueror Timur. Faraj,
inexperienced and concerned about a revolt in Egypt, abandoned his army in
Syria, at which point Ibn Khaldun assumed command. Khaldun surmised that his
army was no match for Timur's, and, in typical Khaldun fashion, arranged to be
lowered over the city's walls by ropes to begin long series of talks with
Timur. He returned to Egypt without hostilities. His last five years were
spent completing his epic history of the region, which British historian
Arnold J. Toynbee called "a philosophy of history which is undoubtedly
the greatest work of its kind that has ever yet been created by any mind in
any time or place." The British philosopher Robert Flint wrote: "As
a theorist on history he had no equal in any age… Plato, Aristotle and
Augustine were not his peers."
Wikipedia on Ibn Khaldun
Chapter III, part 36: Taxation and the reason for low and high (tax
revenues).
It should be known that at the beginning of the dynasty, taxation yields a
large revenue from small assessments. At the end of the dynasty, taxation
yields a small revenue from large assessments.
The reason for this is that when the dynasty follows the ways (sunan) of the
religion, it imposes only such taxes as are stipulated by the religious law,
such as charity taxes, the land tax, and the poll tax. They mean small
assessments, because, as everyone knows, the charity tax on property is low.
The same applies to the charity tax on grain and cattle, and also to the poll
tax, the land tax, and all other taxes required by the religious law. They
have fixed limits that cannot be overstepped.
When the dynasty follows the ways of group feeling and (political)
superiority, it necessarily has at first a desert attitude, as has been
mentioned before. The desert attitude requires kindness, reverence,
humility, respect for the property of other people, and disinclination to
appropriate it, except in rare instances. Therefore, the individual imposts
and assessments, which together constitute the tax revenue, are low. When tax
assessments and imposts upon the subjects are low, the latter have the energy
and desire to do things. Cultural enterprises grow and increase, because the
low taxes bring satisfaction. When cultural enterprises grow, the number of
individual imposts and assessments mounts. In consequence, the tax revenue,
which is the sum total of (the individual assessments), increases.
When the dynasty continues in power and their rulers follow each other in succession,
they become sophisticated. The Bedouin attitude and simplicity lose their
significance, and the Bedouin qualities of moderation and restraint
disappear. Royal authority with its tyranny, and sedentary culture that
stimulates sophistication, make their appearance. The people of the dynasty
then acquire qualities of character related to cleverness. Their customs and
needs become more varied because of the prosperity and luxury in which they
are immersed. As a result, the individual imposts and assessments upon the
subjects, agricultural laborers, farmers, and all the other taxpayers,
increase. Every individual impost and assessment is greatly increased, in
order to obtain a higher tax revenue. Customs duties are placed upon articles
of commerce and (levied) at the city gates, as we shall mention later on.
Then, gradual increases in the amount of the assessments succeed each other
regularly, in correspondence with the gradual increase in the luxury customs
and many needs of the dynasty and the spending required in connection with
them. Eventually, the taxes will weigh heavily upon the subjects and
overburden them. Heavy taxes become an obligation and tradition, because the
increases took place gradually, and no one knows specifically who increased
them or levied them. They lie upon the subjects like an obligation and
tradition.
The assessments increase beyond the limits of equity. The result is that the
interest of the subjects in cultural enterprises disappears, since when they
compare expenditures and taxes with their income and gain and see the little
profit they make, they lose all hope. Therefore, many of them refrain from
all cultural activity. The result is that the total tax revenue goes down, as
(the number of) the individual assessments goes down. Often, when the
decrease is noticed, the amounts of individual imposts are increased. This is
considered a means of compensating for the decrease. Finally, individual
imposts and assessments reach their limit. It would be of no avail to
increase them further. The costs of all cultural enterprise are now too high,
the taxes are too heavy, and the profits anticipated fail to materialize.
Thus, the total revenue continues to decrease, while the amounts of
individual imposts and assessments continue to increase, because it is
believed that such an increase will compensate (for the drop in revenue) in
the end. Finally, civilization is destroyed, because the incentive for
cultural activity is gone. It is the dynasty that suffers from the situation,
because it (is the dynasty that) profits from cultural activity.
If (the reader) understands this, he will realize that the strongest
incentive for cultural activity is to lower as much as possible the amounts
of individual imposts levied upon persons capable of undertaking cultural
enterprises. In this manner, such persons will be psychologically disposed to
undertake them, because they can be confident of making a profit from them.
Chapter III, part 37: In the later (years) of dynasties, customs
duties are levied.
It should be known that at the beginning, dynasties maintain the Bedouin
attitude, as we have stated. Therefore, they have few needs, since luxury and
the habits that go with it do not (yet) exist. Expenses and expenditures are
small. At that time, revenue from taxes pays for much more than the necessary
expenditures, and there is a large surplus.
The dynasty, then, soon starts to adopt the luxury and luxury customs of
sedentary culture, and follows the course that had been taken by previous
dynasties. The result is that the expenses of the people of the dynasty grow.
Especially do the expenses of the ruler mount excessively, on account of his
expenditures for his entourage and the great number of allowances he has to
grant. The (available) revenue from taxes cannot pay for all that. Therefore,
the dynasty must increase its revenues, because the militia needs (ever)
larger allowances and the ruler needs (ever) more money to meet his
expenditures. At first, the amounts of individual imposts and assessments are
increased, as we have stated. Then, as expenses and needs increase under the
influence of the gradual growth of luxury customs and additional allowances
for the militia, the dynasty is affected by senility. Its people are too weak
to collect the taxes from the provinces and remote areas. Thus, the revenue
from taxes decreases, while the habits (requiring money) increase. As they
increase, salaries and allowances to the soldiers also increase. Therefore,
the ruler must invent new kinds of taxes. He levies them on commerce. He
imposes taxes of a certain amount on prices realized in the markets and on
the various (imported) goods at the city gates. (The ruler) is, after all,
forced to this because people have become spoiled by generous allowances, and
because of the growing numbers of soldiers and militiamen. In the later
(years) of the dynasty, (taxation) may become excessive. Business falls off,
because all hopes (of profit) are destroyed, permitting the dissolution of
civilization and reflecting upon (the status of) the dynasty. This
(situation) becomes more and more aggravated, until (the dynasty)
disintegrates.
Much of this sort happened in the Eastern cities during the later days of the
'Abbasid and 'Ubaydid(-Fatimid) dynasties. Taxes were levied even upon
pilgrims making the pilgrimage. Salah-ad-din Ibn Ayyub abolished all such
institutions and replaced them with good works. The same also happened in
Spain at the time of the reyes de ta'ifas. Yusuf b. Tashfin, the Almoravid
amir, put an end to it. The same has also been happening in the cities of the
Jarid in Ifrigiyah, ever since their chiefs gained control over them.
Chapter III, part 39: The ruler and his entourage are wealthy only in the
middle (period) of the dynasty.
The reason for this is that at the beginning of the dynasty, the revenues are
distributed among the tribe and the people who share in the ruler's group
feeling, in accordance with their usefulness and group feeling and because
they are needed to establish the dynasty, as we have stated before. Under
these circumstances, their leader refrains in their favor from (claiming) the
revenues which they would like to have. He feels compensated for (his
restraint) by the control over them that he hopes to establish. They can put
pressure on him, and he needs them. His share of the revenues is restricted
to the very small (amounts) he needs. Consequently, the members of his
entourage and company, his wazirs, secretaries, and clients, usually can be
observed to be destitute. Their position is restricted, because it depends on
the position of their master, and the authority of (his position) is narrowed
down by the competition of the people who share in his group feeling.
Then, when royal authority has come into its own and the ruler has obtained control
over his people, he prevents them from getting (any part of) the revenues,
beyond their official shares. Their portions shrink, because their usefulness
to the dynasty has diminished. Their influence has been checked, and clients
and followers have come to share with them in the support of the dynasty and
the establishment of its power. At this time, the ruler disposes alone of the
whole income from taxes, or the greater part of it. He keeps this money, and
holds it for spending on important projects. His wealth grows. His treasuries
are filled. The authority of his position expands, and he dominates all his
people. As a consequence, the men of his entourage and retinue, the wazir,
the secretary, the doorkeeper (hajib), the client, and the policeman, all
become more important, and their positions expand. They acquire property and
enrich themselves.
Then, when the dynasty starts to become senile, as the result of the
dissolution of group feeling and the disappearance of the tribe that founded
it, the ruler needs supporters and helpers, because there are then many
seceders, rivals, and rebels, and there is the fear of (complete)
destruction. His revenues then go to his allies and supporters, military men
who have their own group feelings. He spends his treasures and revenues on
attempts to restore (the power of) the dynasty. Moreover, the revenue from
taxes decreases, as we have stated before because there are many allowances
to be paid and expenditures to be made. The revenues from the land tax decrease.
The dynasty's need for money becomes more urgent. The intimates, the
doorkeepers (hajib), and the secretaries no longer live under the shadow of
prosperity and luxury, as their positions lose importance and the authority
of the ruler's (position) shrinks.
MORE
Chapter III, part 41: Injustice brings about the ruin of civilization
It should be known that attacks on people's property remove the incentive to
acquire and gain property. People, then, become of the opinion that the
purpose and ultimate destiny of (acquiring property) is to have it taken away
from them. When the incentive to acquire and obtain property is gone, people
no longer make efforts to acquire any. The extent and degree to which
property rights are infringed upon determines the extent and degree to which
the efforts of the subjects to acquire property slacken. When attacks (on
property) are extensive and general, extending to all means of making a
livelihood, business inactivity, too, becomes (general), because the general
extent of (such attacks upon property) means a general destruction of the
incentive (to do business). If the attacks upon property are but light, the
stoppage of gainful activity is correspondingly slight. Civilization and its
well-being as well as business prosperity depend on productivity and people's
efforts in all directions in their own interest and profit. When people no
longer do business in order to make a living, and when they cease all gainful
activity, the business of civilization slumps, and everything decays. People
scatter everywhere in search of sustenance, to places outside the
jurisdiction of their present government. The population of the particular
region becomes light. The settlements there become empty. The cities lie in
ruins. The disintegration of (civilization) causes the disintegration of the
status of dynasty and ruler, because (their peculiar status) constitutes the
form of civilization and the form necessarily decays when its matter (in this
case, civilization) decays.
MORE
Note: This is something worth watching today. Martin Armstrong talks
about it constantly (not surprisingly given his situation).
One of the things you'll notice is that the great discoveries regaring the Magic
Formula (low taxes, stable money) are only appreciated when people are in
the right frame of mind. There was a time when you could say that these things
were somewhat unknown. However, here in the United States, we already went
through the Supply Side Revolution in the 1980s. An immense amount of
investigation was done, and it was more or less a success. Just in the past
ten years, another 25 or so governments have adopted flat-tax systems, with
pretty much a 100% success rate.
The right frame of mind seems to happen most often after some terrible
disaster. All of the old systems and structures have been discredited. The
country is in ruins. There is no more "business as usual" because
it has all been blown to bits. This might have been after the fall of the
Soviet Union, or after World War II, and to some degree at the end of the
difficult 1970s. After three or five years of very hard times, people come together
-- maybe like the "tribe" that Khaldun speaks of. They decide, as a
society: "Enough is enough! We deserve better than this!" Then --
and only then! -- they rediscover the eternal secrets of success and failure
that we aim to describe here. And, they are willing to cooperate to make it
all happen.
Today, we have a government in the United States which has clearly rotted
away. Nobody wants to take any action that is for the good of the whole. It
has become very clear to everyone involved that those who suck resources
(bank bailouts, asset liquidations, defense contracts, pork) out of the
government prosper, and those that do not, do not prosper. At this late
stage, even regular business has become disadvantageous. The most successful
"businesspeople" today are those that collude with the government
to channel existing weatlh and assets into their possession, rather than
creating new wealth.
Thus, the primary goal of all involved is to strip wealth and assets from the
government, and indirectly from the population as a whole. Charles Hugh Smith
calls it "strip mining the populace," and that is a good term.
There is little interest in reducing tax rates today because that appears to
be contrary to the primary operating principle of strip-mining the government
and the populace. Nor is there a whiff of real interest in reducing
spending either.
Eventually, the government loses all legitimacy. It has become plain to see,
despite the constant stream of lies being told, that the government has
become nothing but a gang of criminals. I would call this a dissolution of
"group feeling" that Khaldun writes about. Certainly there are many
that feel this way today, but not a majority yet.
Nathan Lewis
Nathan
Lewis was formerly the chief international economist of a leading economic
forecasting firm. He now works in asset management. Lewis has written for the
Financial Times, the Wall Street Journal Asia, the Japan Times, Pravda, and
other publications. He has appeared on financial television in the United
States, Japan, and the Middle East. About the Book: Gold: The Once and Future
Money (Wiley, 2007, ISBN: 978-0-470-04766-8, $27.95) is available at
bookstores nationwide, from all major online booksellers, and direct from the
publisher at www.wileyfinance.com or 800-225-5945. In Canada, call
800-567-4797.
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