Like it or not, we’re all Socialists

There is a third side to the income tax debate, and you’ve probably never heard of it. That’s logical, because no one’s actually talked about it for 200 years. And to understand this alternate view of our system, you’ll want to remember why we have money in the first place.

Imagine a time before currency:

I have an apple tree, and you own a goat, so I trade one of my apples for a cup of your goat milk. Joe comes along with a hen and we all trade apples, and eggs and milk. Then Susie, Tom and Mike join our group and they each bring a product.

Eventually, the deals become too complicated so we invent the “dollar” to represent the value of an egg.  With the dollar, I don’t have to swap an apple for milk before I trade the milk for an egg. Now I can just trade the dollar for the egg.

Make sense? That’s why we have money – to make it easier to exchange goods. Well before creating money, we all had to agree that:

1. We can have only one type of dollar,
2. The number of dollars available is limited; just like eggs and apples are,
3. Using the dollar means you agree to be part of the group,
4. The group benefits when you use the dollar.
5. The organization that makes the dollar is called “government,” (the voice of the group.)

It’s important to note that currency itself is not wealth. Products (including one’s labor) are. Currency is a tool used only to facilitate the exchange of wealth.

By the rules, you’re allowed to “earn” as many dollars as you’re capable of earning – as long as you trade them for something else. But you can’t keep them in a private pile – that’s bad for everyone. Fewer available dollars makes the exchange of apples for eggs harder, not easier.

So if you don’t trade them, the group should take them from you. We call that “taxes.” Some people call it redistribution of wealth, but dollars themselves aren’t wealth. Apples (and gold, and labor, and land) are wealth. 

A tax system should make you trade your dollars for a product. That’s the point of deductions. If you buy a house that’s good for the economy, so we don’t tax you on that. Some saving is also good, so if you put money in a retirement account we don’t tax you on that either.

Why else do we tax?  Back in the beginning, even before currency was invented, the group decided to have a pile for extra produce. This is great because if my tree doesn’t have apples this year, the extra we’ve all put aside will sustain me until next season.

 When my tree makes only one apple, I don’t have to put any in the community pile. When your goat makes extra milk, you put a lot of it in the pile. Next year it may be my tree that does well and your goat that doesn’t. You’ll be glad we stored some up for you.

But produce can’t be saved, so the group lets us put a percentage of our dollars in the pile instead.

That’s how our group works. We all save dollars to protect group members from bad times.

The group can then buy Solyndra, or yachts or welfare – it doesn’t really matter, as long as the currency is returned to the group. Some people think that using tax receipts for useless projects is a waste. But they’re missing the point. The group just wants the dollars spent – and it really doesn’t matter what they’re spent on. As long as the dollars go back into the “economy,” it’s good for the group from a macro point of view.

That is the original point of dollars, and taxes, and the socialism of human beings. We all benefit from working together and pooling our resources.

We are all part of the group whether we like it or not. In that original sense of the word, we are all Socialists.

And if you don’t like it, try to stop using dollars. Go back to trading whatever product you have for whatever you need. But I’d like to be there when you offer to exchange your MBA for a cup of coffee.