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Sell Now, Pay Later

This report on Chicago selling its revenue sources in a monetary crisis—for less than it could have gotten, through the very architects of the money crisis—is a textbook case of crisis capitalism: create a crisis and use that crisis as an excuse for private gain at public expense, ideally one which will deepen the crisis and justify further private gains. I don’t know how much anyone can add to that analysis, nor to the Rolling Stone article from which it draws, apart from a reminder of the French Revolution.

Plenty of confluent forces fed into the French Revolution: a rise of rationalism challenging (among other things) the divine right of monarchs, a rise in self-governance in other nations against which the French could measure their own fortunes, the utter arrogance of much of the French nobility…but chief among these were taxes. France was spending far more than it could afford, on wars abroad and lavish parties for royalty at home, and piled this burden onto the shoulders of the commoners, taxing them beyond the limit of endurance.

The reason France was taxing the commoners was that it (or rather, earlier French monarchs) had sold off its other revenue sources over the past several centuries in exchange for quick cash in a crisis. Either it sold the right to draw taxes, essentially as Chicago has done with its parking meters, or it sold immunities to nobles against further taxation—literally, privileges. But the crises passed, as crises do, and the revenue sources were gone for eternity. Eventually, the crown found itself with nothing left to tax but the peasants, and they didn’t have the money to give, even had they been willing. Ultimately, a system in which the privileged owed nothing to the state and were entitled to charge what they liked from the common citizen proved unsustainble. The French Revolution erupted and destroyed the parasitic aristocracy—though not, it must be observed, without the ensuing Terror and a ruinous world war, ensuring that everyone suffered horrifically before the nation regained an even keel.

Comparisons to our own regressive capital gains tax structure, the elimination of the inheritance tax, and the power of wealthy individuals to sequester their private wealth in tax-sheltered shell corporations which exist only to sequester that wealth, and the likely implications for the US, are left as an exercise to the reader.

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