WiM024 - The Frisby Series | Episode 5 | Taxation in History and Modernity

Summary

Podcast Summary: The "What is Money?" Show — WiM024 - The Frisby Series | Episode 5 | Taxation in History and Modernity

Hosts:

• Robert Breedlove: Founder and host of "What is Money?" Show.
• Dominic Frisbee: Guest speaker and co-host in the Frisby Series.

Release Date: June 10, 2021

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1. Introduction

In Episode 5 of the Frisby Series, Robert Breedlove engages in an in-depth conversation with Dominic Frisbee about the evolution of taxation from historical contexts to modern implications. The discussion delves into the intricate relationship between money systems, property rights, societal structures, and the emerging digital economy, particularly focusing on the transformative potential of Bitcoin.

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2. Marco Polo, Venice, and the Origins of Fiat Money

Dominic Frisbee initiates the conversation by recounting the history of Marco Polo and the Venetian Empire, highlighting Venice's prowess in trade and its eventual decline. He draws a parallel between Venice's use of early fiat money and modern fiat systems.

• Dominic Frisbee [02:30]: "Marco Polo tells all the amazing things that the Great Khan was doing... he describes... the most terrible fiat money system that you've ever heard."

Dominic explains how Kublai Khan's issuance of paper money in the 13th century imposed a monopoly that mirrored modern fiat systems’ vulnerabilities, such as forced usage and the eventual collapse due to overprinting.

• Dominic Frisbee [11:45]: "This is the Crux, anyone forging it would be punished with death. So he's got the Khan's monopoly on paper."

Robert Breedlove echoes this by emphasizing the inherent instability of fiat currency:

• Robert Breedlove [12:30]: "So you actually have to put them to the point of the spear, so to speak, to get people to use it... And it ends in social collapse."

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3. Venice's Trade Networks and Bitcoin's Potential

The conversation transitions to the economic structure of Venice, comparing its trade networks to modern digital infrastructures.

• Robert Breedlove [16:28]: "The trade networks were sort of like the ancient Internet as well, because they're moving goods, so they also moved information."

Dominic Frisbee highlights Venice's ability to capitalize on technological advancements like the printing press, which Venice leveraged to enhance its trade capabilities:

• Dominic Frisbee [15:09]: "They’d give each ship five copies of a pamphlet... that would be reprinted and distributed."

This historical perspective serves as a foundation for discussing Bitcoin's role in revolutionizing modern financial systems by enabling frictionless trade.

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4. The Intersection of Money, Property Rights, and Architecture

Robert Breedlove and Dominic Frisbee explore how money systems influence societal structures, particularly architecture and property rights. They argue that sound money standards foster long-term planning and sophisticated construction, whereas fiat systems lead to short-termism and infrastructural decay.

• Robert Breedlove [21:18]: "Beauty really has created so much economic return in Europe and that people take pilgrimages to Europe."

• Dominic Frisbee [24:30]: "With freedom comes responsibility."

They discuss how private property rights incentivize individuals to maintain and improve their properties, leading to thriving communities, contrasting sharply with the neglect seen in state-controlled housing.

• Robert Breedlove [25:25]: "Private property rights are also private property responsibilities."

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5. Historical Context of Surnames and Taxation

The hosts delve into the origins of surnames, tracing them back to taxation systems established during the Middle Ages. Dominic Frisbee explains how surnames emerged as identifiers for tax collection purposes, facilitating the imposition of poll taxes.

• Dominic Frisbee [37:57]: "And in some cultures... That's exactly what they were. And so I know you're different to Dominic, you know, John's son."

This historical insight underscores the perennial link between governance, taxation, and individual identity.

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6. The Peasants Revolt: A Case Study in Tax Resistance

Dominic Frisbee recounts the Peasants Revolt of the 14th century as a pivotal moment of tax resistance against oppressive systems. He details how the revolt targeted tax collectors and destroyed tax records, illustrating the populace's response to unjust taxation.

• Dominic Frisbee [42:16]: "They killed all the lawyers and burnt all the tax records."

Robert Breedlove likens this to modern-day disillusionment with tax systems, suggesting that Bitcoin offers a new avenue for individuals to opt out of traditional financial controls.

• Robert Breedlove [43:25]: "Bitcoin is the best hope. You just opt out of the system entirely and then it’s funded effectively."

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7. The Digital Revolution and Taxation Challenges

The discussion shifts to the present and future, where the digital revolution poses significant challenges to traditional taxation systems. Dominic Frisbee predicts a surge in digital nomadism and gig economy participation, complicating the tax landscape.

• Dominic Frisbee [66:05]: "There's going to be this huge standoff... So the governments, unless they adapt and they change the way they tax people, they're just going to be fighting and everyone's going to be going."

Robert Breedlove emphasizes the difficulty of taxing decentralized digital economies, highlighting the limitations of current tax frameworks designed for physical economies.

• Robert Breedlove [61:09]: "The tax systems were designed around a physical age."

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8. Proposing Land Value Tax as a Solution

In response to the identified challenges, the hosts explore the concept of a Land Value Tax (LVT) as an alternative taxation method. Dominic Frisbee explains the principles of Georgism, advocating for taxing land based on its unimproved value rather than taxing labor or production.

• Dominic Frisbee [80:21]: "The solution, in my opinion, is to stop taxing labor and to start taxing land."

Robert Breedlove supports this by relating it to Bitcoin’s philosophy of minimal government intervention, suggesting that LVT aligns with efficient and fair taxation.

• Robert Breedlove [82:22]: "We assume that there has to be some kind of tax, so let's tax what you consume rather than what you produce."

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9. Implications for the Future: Decentralization and Governance

The conversation concludes by contemplating the future of governance in a highly decentralized world empowered by technologies like Bitcoin. The hosts predict a fragmentation of nation-states and a shift towards individual sovereignty in financial matters.

• Dominic Frisbee [87:50]: "But the problem is no government ever is going to get elected going, I've got a great idea, we're going to give you a new tax on land value."

• Robert Breedlove [88:10]: "You just have this sense of freedom."

They envision a scenario where Bitcoin and decentralized systems mitigate the control of traditional governments, fostering a more liberated and economically efficient global society.

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10. Conclusion and Key Takeaways

Key Insights:

• Historical Parallels: Understanding Venice's trade dominance and its early fiat system provides valuable lessons for modern financial systems.
• Fiat vs. Bitcoin: Fiat currencies are prone to overvaluation and collapse due to inherent systemic flaws, whereas Bitcoin offers a decentralized and robust alternative.
• Property and Responsibility: Strong private property rights incentivize maintenance and community building, contrasting with the neglect seen in state-controlled properties.
• Taxation Evolution: Future tax systems must adapt to decentralized and digital economies, with Land Value Tax proposed as a viable solution.
• Decentralization’s Future: The rise of Bitcoin and digital nomadism may lead to the fragmentation of nation-states, promoting individual sovereignty and economic efficiency.

Notable Quotes:

• Dominic Frisbee [27:53]: "So they obfuscate it with fiat money. So it's a vicious circle."
• Robert Breedlove [49:17]: "Simple, clear purpose and principles give rise to complex and intelligent behavior."
• Dominic Frisbee [73:55]: "The solution, in my opinion, is to stop taxing labor and to start taxing land."
• Robert Breedlove [82:47]: "These really... That's super interesting."

This episode provides a comprehensive exploration of taxation's historical roots and its impending transformation in the digital age, emphasizing Bitcoin's role as a catalyst for economic and societal change.

Transcript

[Dominic Frisbee]

Foreign.

[Robert Breedlove]

Hey guys, this is Robert Reidlove from the what is Money? Show. And as you've learned by watching this show, Bitcoin is the single most important asset you can own in the 21st century. And one of the most important companies in Bitcoin today is NYDIG. NYDIG's mission is to facilitate financial security for all. They accomplish this by bringing a high level of professionalization and sophistication to the bitcoin marketplace. As a true game changer in the industry, NYDIG is safely unlocking the power of Bitcoin for forward thinking individuals and institutions alike. By using nydig, you will gain access to an end to end institutional grade platform providing bitcoin OTC transactions, bitcoin collateralized borrowing, secure custody, asset management, derivatives financing, market research and more. And all of these services meet the highest regulatory, governance and audit standards. Led by Robbie Guttman, Yin Zhao and Ross Stevens, NYDIG has absolutely exploded onto the bitcoin scene recently and is leading the way for ongoing institutional adoption in this nascent asset class. So please be sure to check out NYDIG as a single source for all your bitcoin needs. Welcome back to the what is Money Show. Mr. Dominic Frisbie. Glad to have you back.

[Dominic Frisbee]

Thanks very much, Robert. I'm looking forward to our weekly conversations. I have to revise during the week to brush up my knowledge.

[Robert Breedlove]

Yeah, so this is our third session together. We've been doing these once a week and yeah, it's given us a lot of time, I think, to explore the material and decide what topics to go into. I think today we're going to start with a name that a lot of people are familiar with, probably from their days in the swimming pool. But I honestly don't even know the story behind Marco Polo. So maybe you mentioned you wrote an article about it recently. Maybe you can enlighten us.

[Dominic Frisbee]

Yeah, well, we talked about him a little bit in the last show and I just happened to write an article about him this week and there's some really funny stories. Marco Polo was a Venetian. He's described as a Venetian explorer, as that is someone from Venice. And we tend to associate Venice with this tiny, beautiful city built on water. But the story of Venice is actually incredible and it's a real testament to free markets and individual enterprise and having no rulers. And so it's thought that with all the Goths and the Huns and the various other barbaric tribes that were invading Rome, as Rome sort of collapsed in I guess around about 4 or 500. Around about that kind of time, there were some Romans who fled. And the only way they were safe from these marauders was the marshes. So they fled into the marshes where no one could get them. And then they found that when they were in the marshes, they had direct access to the sea. And actually they didn't need to go back to mainland Italy at all. They could just look outwards towards the Adriatic. And so they gradually started trading via the network. And what Venice had a great tendency to do was import something. It would import metal or cloth or whatever and then make it into something else and then sell it on, so exactly like Hong Kong used to do. And it just grew into the most extraordinarily successful empire. And at one point in its history, Venice controlled the whole of the eastern Mediterranean. And it was all built on trade. And as always seems to happen with empire. And you go, if you've ever been to Venice, it's just the most extraordinary city. And the sheer unique. You think you're in almost like a fantasy land because some of the buildings just are so opulent and so wealthy. And it was extraordinarily successful. And there was various things that did for it. One of the things that did for it was Vasco da Gama going around the Cape of Good Hope in Africa and opening up entirely new trade routes to the Orient, Western Europe. So it lost its monopoly. But gradually, like all these things, wealth creeps in. And then it had all its little hierarchies and little monopolies and the state grew, and gradually it grew corrupt, and gradually it faded. But for three or 400 years, it was one of the most incredible places. So Marco Polo is always described, and he lived in the 13th century. I think he's. I can't remember his exact dates, but it was something like 1250-1320, something like that. Around about that kind of time he was alive, and he's described as a Venetian explorer, but of course, what he was, was a merchant. And, you know, many of the greatest discoveries, explorers in history, you know, they didn't go out because it wasn't just exploration. They went out to trade, they went out to buy stuff, sell stuff, generally enrich their lot. You know, you take something from your own country abroad, but they don't have there. They pay you a lot more than you get for it in your own country. And then you buy something there that you don't have in your own country, you buy it there cheap and you sell it back in your own country and you make a profit. That Was sort of, you know. Anyway, so he went off with his dad and his uncle and he set off for the Orient. And then at a certain point, I think they started off by boat, and then they ran into trouble at one point. Anyway, they ended up going all the way to China on the Silk Road. And at this point, Kublai Khan was the Mongol emperor and he was the ruler of China. And he ruled all the kind of. Not just China, but, you know, Burma or, sorry, Myanmar, Thailand, Mongolia, you know, the whole kind of surrounding area. And he sort of rather liked Marco Polo. And I think Marco Polo actually became one of his tax collectors at one point. Anyway, Marco Polo ended up staying there for 30 years. And then when he came back to Europe, Venice was at war with Genoa. At this time, Genoa was a rival port. And somehow or other, Marco Polo Fennin got captured by a Genovese fleet and he got locked in jail. And when he was in jail, in prison, he met this writer called Rustichello of Pisa. I guess that would be rusty from Pisa if you were to translate that into modern dialect. And Marco Polo started telling Rustichello his stories. And Rustichello was like, I've got to write this down. And he wrote it down. And this became. Well, originally it was called Description of the World, which is a brilliant title for a book description of the world. But anyway, I think it eventually became known as the. The Adventures of Marco Polo or something like that. Anyway, and then there's. And Polo. Marco Polo tells all the amazing things that the Great Khan was doing. The wonderful things he saw in China, the palaces, coal. I don't think Venetians were using coal at this point. They had a postal service, eyeglasses. But there's one particular chapter that I want to talk about which has got the most hilarious title, which is how the Great Khan causeth the bark of trees made into something like paper to pass for money all over his country. And so I'm just going to read you little sections of this chapter because it's so funny if you're a bitcoiner. But he says he's talking about Kahn Khan hath the secret of alchemy in perfection. Making money from the bark of mulberry trees, trees so numerous that whole districts are full of them. And all of these pieces of paper are issued with as much solemnity and authority as if they were pure gold or silver. They put. And then he describes how all the officials put their seal on it. And once the seal is on it, the money is authentic. And anyone. This is the Crux, anyone forging it would be punished with death. So he's got, the Khan's got a monopoly on paper. And then we discover, and Marco Polo's describing this Khan in admiring terms. But in fact, as you, as you listen to what he's saying, what he's describing is the most terrible fiat money system that you've ever heard in yourself. So firstly, if you don't use the paper, if you don't accept the paper, you get punished with death. If you forge the paper, you get punished with death as well. And I say anyone who dares refuse these notes is faced with pain of death, no matter how important he may think himself. And so when you realize you're going to die if you don't use this paper, it's no wonder that everyone took them readily. For wherever soever a person may go throughout the Great Khan's dominions, he shall find these pieces of paper current and shall be able to transact all sales and purchases of goods by means of them, just as well as if they were coins of pure gold. And then we learn that any merchant arriving into the kingdom with gold, silver or pearls was prohibited from selling to anyone but the Emperor. And then so the Emperor had a total monopoly on trade, it seems. And then there's this wonderful line, he says the Emperor then pays a liberal price for that gold, silver or pearls in those pieces of paper. So how easy it is to be generous with printed money that has no cost of production to it. And if you have some of this paper and it got damaged, you could take it into a mint or a printer and get a replacement piece at a cost of 3%. So he was making money on that as well. And so the net result of all of this was that he pretty much sequestered all the wealth of China and the surrounding empire where everywhere, everywhere else was left with his paper. And Polo went on, his treasure is endless. While all the time the money he pays away costs him nothing at all. And it's just one, I mean it's like it's exactly what's happening now with fiat money. And merchants accepted Kahn's money and his prices, what choice did they have? But it's also, we see the convenience of this paper money because first it enabled quick payments. Polo again says they are paid without any delay. And then the other thing he says is about the Kahn's paper is that it was vastly lighter to carry about on their journeys. 10 bezants worth of gold. 10 bezants worth of paper does not weigh one golden bezant. And so, you know, you do. I mean, paper money is convenient. That's one of the reasons it took off. And. But then he describes Khan had more treasure than all the kings in the world. Now, do you know what happened when Khan died, or as he was dying, the Mongol Empire soon fell into irrevocable decline. So Marco Polo left that bit out. So he sort of saw peak fiat, if you.

[Robert Breedlove]

Right, right, right.

[Dominic Frisbee]

But you've got the whole cycle right there.

[Robert Breedlove]

Yeah, that's the whole gamut of fiat currency in a nutshell. It is introduced for convenience. Very much easier to transact in paper than it is physical metals. But it can only be sustained when its demand is compelled. Right. So you actually have to put them to the point of the spear, so to speak, to get people to use it, not counterfeit it, et cetera. And it ends in social collapse because when it's broken away from its cost of production, the human tendency for greed just takes over and we print too much until the money becomes meaningless. And that was 13th century, you said 12th and 13th.

[Dominic Frisbee]

Well, it would have been 13th century. Yeah. It would have been late 1200s.

[Robert Breedlove]

Yeah. That was one of the earlier experiments. I think China may have had some experience with fiat currency, maybe even before that. I'd read somewhere like the 5th or 6th century at one point.

[Dominic Frisbee]

Well, the very first, China invented a form of the printing press. I mean, I think Europe had it. I can't Remember, was it 1489?

[Robert Breedlove]

Yeah, late 1400s in Europe.

[Dominic Frisbee]

I can tell you the exact date because it's in the same article. 1436. Gutenberg invented it, but the his was with metal blocks. The Chinese used wooden blocks. So they couldn't print. They could print, but they couldn't print with quite the same volume that Gutenberg. Gutenberg was able to achieve. And by the way, I'm just going to go off on a sidetrack, as I always do.

[Robert Breedlove]

Please.

[Dominic Frisbee]

Gutenberg, despite inventing perhaps the most important invention of that sort of 500 year period or something that completely transformed the power structure of Europe, Gutenberg actually died penniless, owing money to his creditors. And in fact his creditors came and seized his machinery when he died.

[Robert Breedlove]

Wow.

[Dominic Frisbee]

Because he was unable to turn his network to profit and his printing press to profit. And the reason was that he didn't have a network. He had this incredible machine. It's like having a brilliantly designed cryptocurrency. If you've got no network for it, there's no point. And one of the historical commentators said something like, there's no point him printing 200 copies of the Bible if there's only three people in his village who can read, because what's he going to do with the other 197 copies?

[Robert Breedlove]

Right.

[Dominic Frisbee]

And it was actually the Venetians, once again, who turned Gutenberg's invention to profit. Because what they would do is they would print. In those days, news was spread on the ships. You'd give the news on the ships and he'd sail off to Constantinople or wherever he was and bring news of what was going on in Venice. And so what the Venetians would do is they would give each ship five copies of a pamphlet or something, and that would be taken to wherever Constantinople or Alexander or wherever they were going, and then that pamphlet would be reprinted in wherever they'd gone and distributed there. And there was a whole business of, you know, people would come to the ships to find out news and somebody would like, they'd go to a tavern or the pub or something and they would read out these pamphlets. Cause most people were illiterate, of course, so people would just sit round and listen to these pamphlets, these bits of news being read aloud, and rather a nice sort of communal experience. And that was. But Venice had the network because of its ships and everything else. And that's how Venice turned the printing press to profit. The Venetians were the first to make money from it.

[Robert Breedlove]

That's incredible. So, yeah, the trade networks were sort of like the ancient Internet as well, because they're moving goods, so they also moved information. And all of that was back. We talked about Hong Kong previously. This has so much to do with the topography of the location and access to the sea. Venice clearly had a lot of sea access. Hong Kong did as well. Even Ancient Greece and the littoral had that kind of fractal coastline that made it really dominant both navally and as a merchant or a mercantile country. So Britain did as well. Yeah, Britain as well. So really there's been arguments too, that that's why North America has been dominant in the 20th century, because as we globalized, we've had more coastal access to both east and West. You know, it's helped us in a trade sense and from a military sense as well.

[Dominic Frisbee]

Yeah, I went to. I had some work about three or four years ago that took me to East Asia and I found myself in Tokyo for a bit, but I spent a while in Seoul and surrounding areas in South Korea. And, you know, to me, as a. As a Londoner, someone in Britain, that's east and America's West.

[Robert Breedlove]

Yeah.

[Dominic Frisbee]

And I was just amazed that I could just really feel how many Americans had come there. And you could really feel the American influence in that part of East Asia. And of course, and it felt to me, as a European, that sort of America had come in the back door almost. But it made me realize why America's got so involved in geopolitics in that area. Because it is just a sort of. Well, I was going to say a hop, skip and jump across the Pacific. That's quite a big hop, skip and a jump. You take my point.

[Robert Breedlove]

Yeah. No, I think it's just. For me, it's interesting to consider that our environments shape us so much. You know, like in America, there's sometimes this sense of American exceptionalism where for some reason, and this is just maybe a silly patriotic notion where people think America's, you know, we're the superpower, so we're somehow a better people or smarter, whatever the exceptional quality may be, when in fact it's just a historical accident or anomaly or happenstance that we happen to have this geographic advantage that played out over a century or centuries that gave us this unique economic position that tends to be fleeting. You tend to have a superpower that rises for some time and then declines. Like you mentioned with Venice and others, usually due to corruption in the hierarchies, corruption of the money that ultimately leads to breakdown in trade, loss of wealth, and eventually centralization. Yeah, centralization and societal collapse. So I'm just gonna.

[Dominic Frisbee]

I keep getting notifications. I'm on these bloody WhatsApp groups. Robert. I'm just gonna quickly quit. All these sure thing things. You can probably hear them all going off, telling me about some ridiculous shitcoin that I should be buying.

[Robert Breedlove]

Gotta block out the noise.

[Dominic Frisbee]

Yeah. So distracting. Right? I'm back in the room. Forgive me.

[Robert Breedlove]

There's a great piece written by Alan Farrington. Actually, I don't know if you've read it, and I would just encourage the audience to check it out. It's called Bitcoin Is Venice actually where he's exploring the economic properties and history of Venice. It looks at a number of historical anecdotes, but he culminates with Venice and he compares that to how Venice had frictionless trade, which made it very wealthy. He analogizes that roughly to how Bitcoin enables more frictionless trade and how that will make the world more wealthy. It's a really interesting piece and he's a great writer.

[Dominic Frisbee]

I think I've stumbled across that. But Venice is just such. I mean, it's such a great city. And they literally turned the most use. It was like turning the Everglades or something into the biggest trading hub in America. It was just extraordinary what they did.

[Robert Breedlove]

Yeah, yeah. And to your point, it showed, right. The opulence of the buildings.

[Dominic Frisbee]

Some of the buildings there. When you go down the Grand Canal, you're just like, we don't see buildings. It was more decadent than the houses you see on television programs about Beverly Hills. Just so opulent.

[Robert Breedlove]

To take another tangent, this is something we talked about previously and I've been thinking about a lot lately, where you had mentioned beauty is truth. Truth is beauty. It was sort of the original reason we started collecting gold was for its visual aesthetic, beauty, which led to its demand as money. And then we also talked about mathematic beauty, something like E equals mg squared and the supply formula for bitcoin. Jordan Peterson makes this great point that the construction in Europe, the cathedrals that took 300 years to build, all of this super opulent beautiful architecture that was built largely on a hard money standard historically. So beauty really has created so much economic return in Europe and that people take pilgrimages to Europe. The tourism has come off the back of that beautiful architecture, has paid for itself 100 times over and continues to do it. So not only is beauty kind of this window to truth, but it also is really pragmatically and economically very viable and very lucrative. So, and I was just.

[Dominic Frisbee]

There is. There is. I was going to say there is a relationship between the architecture of a society and its integrity, in my opinion.

[Robert Breedlove]

Absolutely right. It comes back to the time preference. The more sound the money is, the longer term projects you can plan, the more sophisticated construction projects you can enter into. And so the connection I was making was when you have beauty and money, I guess you would say, whether it's gold or sound money that tends to arise because of beauty. You end up with beauty in your architecture and that beauty draws in, it has a huge economic return and benefit over time, whereas the opposite is true. On a fiat standard, if you go and you can actually see this, the progression is pretty stark in the United States, where we have some more timeless architecture. In the east coast United States, when we were on a hard money standard, early 1900s, late 1800s. But then you start to look at architecture and building and development more in the middle of the country post 1971, and it's really bad, it's really dilapidated and it's built not to last, essentially. So it's so interesting how rooted the reflection of the Buildings and tools we make is in the money. The less the money can last, the less we build everything else to last.

[Dominic Frisbee]

I'm sure it and the communities, like architecture, causes people to behave in certain ways.

[Robert Breedlove]

Yes.

[Dominic Frisbee]

And so you for example, find those big blocks of social housing, I don't think you really have them in the States, but those huge blocks of social housing flats, lots of people living in flats in tower blocks and nobody looks after the common parts. Whereas if individual person owns their little plot of land, their little house and they're responsible for it, then they look after it. And then the aggregation of all those individual people looking after their little bit results in something wonderful and beautiful and communal and everything else. And it happens organically. It has to happen organically through everyone acting individually in, you know, making his own little bit nice. Rather than some top down state planner just comes in and goes, we're going to have these amazing huge flat that's going to house 10,000 people. The net result is always inferior.

[Robert Breedlove]

Yeah, I think it was Churchill maybe that said that the buildings we make in turn make us something to that effect. It actually shapes human behavior. And to your point, it's. We commonly talk about private property rights, but there's two sides to that coin. It's private property rights are also private property responsibilities. If you own something, you have an incentive to take care of that asset and make sure that it has a long and productive useful life. Whereas if you don't own it, you get these tragedy the commons situations where people just, they don't care, they just try to suck value out of it.

[Dominic Frisbee]

With freedom comes responsibility.

[Robert Breedlove]

Exactly, exactly. And with responsibility comes, you know, wealth.

[Dominic Frisbee]

And, and happiness and well being and everything else. Yeah, but when you see things get inverted. So when the state is looking after your health, you stop looking after your health.

[Robert Breedlove]

That's right.

[Dominic Frisbee]

When the. Oh my God, I thought I put a stop to this. That's my daughter. Right. And you know, are the states responsible for education? So I don't need to teach my kids anymore. You know, all these things creep in. And so as the state, you know, people don't understand, they sort of go, well if you have social health care or social education, state, state funded social healthcare education, you, you know, if you don't want to use it, you don't have to use, you don't have to use it. That's the argument that gets used. But you're forgetting the fact that it absolves people of responsibility and that distorts the way they behave. And again, if you just do that across a whole population. The whole population is going off in the wrong direction.

[Robert Breedlove]

Yeah, it's infantilizing.

[Dominic Frisbee]

It is. And again, on a sound money standard, the government cannot afford to provide all that stuff. And a sound money standard and transparent taxation where the cost of something is immediately felt by the taxpayer. It wouldn't be possible because the taxpayer will go, no, I'm not paying for that.

[Robert Breedlove]

Exactly.

[Dominic Frisbee]

So they obfuscate it with fiat money. So it's a vicious circle.

[Robert Breedlove]

Yeah, it's this whole. You need this tactile feedback with reality. You need to know if something's profitable or generating a loss so you can adjust your behavior. And when there's this layer of fiat money in between, you can't learn. It's interrupting the learning process and all of that. If we consider that ultimately wealth is just knowledge, it's how we're instantiating our knowledge into the world. You disrupt the learning process, you disrupt the physical world, things are worse basically all around us. There's this great quote I want to read to you too. I think just sums this up nicely. Says quote, give a man the secure possession of a bleak rock and watch him turn it into a garden. Give him a nine year lease on a garden and watch him convert it into a desert. The magic of property turns sand into gold, unquote. And that's really what it's all about. I don't even have the source, I just have the quote.

[Dominic Frisbee]

Lovely. That's what Venice did. They turn, not a rock, a marsh, but they turned a marsh into the most amazing city on the planet.

[Robert Breedlove]

Yeah. And it's what fiat currency reverses because it's a violation of private property rights. So you're giving everyone incentive to behave irresponsibly and enter into these tragedy. The commons dynamics.

[Dominic Frisbee]

100%. What should we talk about next?

[Robert Breedlove]

So I've got a really strange surname and I always wondered. I have actually someone.

[Dominic Frisbee]

I should have tried to figure this out actually before the call and I haven't. But you're going to have the answer.

[Robert Breedlove]

Well, someone did the research for it was an ex girlfriend and she provided me this thing. All I know is Breedlove apparently meant wolf hunter at one point.

[Dominic Frisbee]

So love must be as in lupus, wolf must be that kind of.

[Robert Breedlove]

Maybe it changed over time, you know from. It wasn't Breedlove 500 years ago was some other combination of words, but it evolved over time and she traced that. She had the service trace that back, but maybe.

[Dominic Frisbee]

Did you say breeder of wolves or lover of wolves?

[Robert Breedlove]

No, wolf hunter.

[Dominic Frisbee]

Okay.

[Robert Breedlove]

Yeah.

[Dominic Frisbee]

Why would you. Why would one hunt wolves? For self defense, presumably.

[Robert Breedlove]

I don't know. I could dig up she get. There were two crests for the. For my two family names. And then there's just like a little history behind each of them that traced it back. And I.

[Dominic Frisbee]

Well, I can tell you that Frisbee means village of the people from the Frisian Islands. And they were in the Dark Ages, basically. Apparently you're not supposed to call them the Dark Ages anymore, but when the Viking invaders all came over, they were Danes and Norse invading Britain, but they were also invaders from the Frisian Islands. I don't think the Frisian Islanders were technically Vikings, but they were from the Frisian Islands as sort of Germany and Holland, that part of Western Europe, northwestern Europe. But people wouldn't have been called Frisbee just then. They would have settled somewhere. The village of Frisbee is in Leicestershire. And Alfred the Great, who is an Anglo Saxon king well known for fighting off the Vikings, he actually, after he beat them in battle, he bought them off with a thing called the Dane Geld, which actually stands for Dane. I thought geld meant gold, but in this case it actually means yield. And he would pay the Danes money. There was a sort of border where the Vikings agreed not to cross this border and Alfred the Great promised, agreed, if we pay you this money, then you won't cross our border. And it was really efficient for both sides because it meant that land didn't get ransacked or anything like that. And on the other hand, the Danes actually earned more money from it because the collection of taxes that they were paid, this yield, was more efficient than looting and pillaging. So it kind of worked for both sides. There's actually a brilliant. I'm just going to get it up on the screen. There's a brilliant poem called about the Dane Geld by Rudyard Kipling. But basically it was a tax paid to keep off the Danes. And the village of Frisby is sort of just on the Danish side of the border. So, you know, that would have been as far as those particular invaders got. But people wouldn't have called themselves Frisbee at that point. And we learn that people only had surnames in about the 12 it was and 13th century. That's the only time people began to acquire surnames. And the Black Death had a huge part in this. And the reason is that prior to then it was only sort of lords and aristocrats and things like that who had surnames. And then the Black Death came along and I think it wiped out something like two thirds of the population of Europe or something.

[Robert Breedlove]

Six million down to two million. I think.

[Dominic Frisbee]

Yeah, it was something. I mean, it was an extra. I don't know where they get the numbers from, but that, that's the sort of generally agreed figure and. But it changed. It had a. In a way, it was a blessing in the sense that suddenly for the first time, serfs who were the descendants of Roman slaves and they were tied to the land and oh my God, will it ever stop? And the. I don't even know how to turn it off. That.

[Robert Breedlove]

I think you can just mute your computer perhaps, but that might mute you. That might mute me, Yeah.

[Dominic Frisbee]

I don't get that many messages on there. So I think we'll just have to deal with it most.

[Robert Breedlove]

It's no big deal.

[Dominic Frisbee]

So, and so if you acquired some land, you would normally acquire the serf who worked that land or the serfs who worked that land as well. So serfs were owned by lords, basically by knights and lords. And the serf would have to work three days a week tilling his lord's land. And the other three days a week he was given a strip of land which he could till for himself. Pretty rotten existence. But it was interesting that 50% of his labor effectively was owned. And the other 50% of his labor, he didn't actually own the land, but he could till it and keep its produce. But when you look at income tax rates or overall taxation as a percentage of GDP in Western Europe and the United States today, It's pretty much 50%.

[Robert Breedlove]

It's about the same.

[Dominic Frisbee]

Yeah, it's the same.

[Robert Breedlove]

Obviously. Neo feudalism.

[Dominic Frisbee]

Yeah. But the. In terms of freedom levels, the same amount of your labor is owned. It's in many other ways because of, you know, productivity and invention and so on. Life's much better today. But the fact is, the same portion of your labor zone, anyway, the Black Death came along and it wiped out two thirds of the population. And suddenly serfs found themselves in short supply. There was an under supply of labor. And so serfs were able to start charging for their little lords in order to keep the serf from just moving on to another bit of land, would start paying the serfs to keep him. And many serfs were given their freedom. And suddenly the lower orders were handling coins for the very first time. Previously, they'd never held coins. And as a result, these young upstarts started improving the way they dress, they started improving the food they ate and of course, the lordly class hated it. And they brought in all these laws to try and prevent this new upwardly mobile class. There were sumptuary laws that dictated what clothes of whichever class could actually wear and what food they could eat. Can you imagine laws? Anyway, but the fact is, they were handling coin for the very first time, and leaders wanted to get their hands on some of that money. And so they started introducing poll taxes, which would be. Is a tax each person has to pay a nominal sum, a poll, meaning it's a tax on your head, basically. And in order to distinguish people for the collection of poll taxes, people were given surnames so that I could distinguish Robert who, Robert the Smith, If I can distinguish Robert the Smith from Robert who lives by the river. Robert river who? From Robert who lives by the hill. Robert Hill from Robert Jack's son. And so your surname would be based on your paternity, your profession, or some striking geographical feature where you lived. And those are the three most common surnames. And so the reason we have surnames is for the purposes of collecting taxes. And in some cultures. Yeah, it's a great, great little.

[Robert Breedlove]

The original tax ID numbers.

[Dominic Frisbee]

Exactly. That's exactly what they were. That's a great observation. And in Celtic cultures, you'd be given a surname based on physical characteristics. I think Kennedy means something like shaggy hair or small shaggy hat or something like that. And Cameron means brave and there's no. No, Connolly means brave and Cameron means crooked nose. And. But. Yeah, and then you discover that surnames existed in China some 500 years BC, and then we discover that. I can't remember the name of the ruler. I think it was Suzhi or something like that. The reason surnames came about, though, was for precisely the same reason, for the purposes of eliciting collecting poll taxes. So there you go, you have your name because. And so that's the point at which Frisbee, you know, Dominic would have become Dominic Frisbee, because you're Dominic Frisbee, because you live in the village Frisbee. So that's how I know you're different to Dominic, you know, John's son.

[Robert Breedlove]

Yeah. Wow, that's so interesting. And so I guess at some point that just got adopted into a legal name at the government level.

[Dominic Frisbee]

Yeah, I don't. I don't entirely know that, but I do know when the Peasants Revolt came, and the Peasants Revolt is the best revolt ever. Yeah, they. They were called the. I mean, we say it was the peasants. They were actually artisans, most of them. They were led by A chap called. We know him now as Wat Tyler, but his actual name was Walter the Tyler because he was a Tyler of roofs and a low person is how he's described in the chronicles of the time. And they were led by. Just. Excuse me one second, I just want to just check one name very quickly. Yeah. So they were led by Wat Tyler and John Ball was their sort of. He was a preacher but he kept getting excommunicated because he said the wrong things. And I always used to think what's the problem with being excommunicated? But excommunicated is basically being. No. Platformed.

[Robert Breedlove]

Yeah, the platform back in the day, right.

[Dominic Frisbee]

Yeah.

[Robert Breedlove]

And he was the guy that was preaching against taxation, right?

[Dominic Frisbee]

Yeah, he was preaching. I have to. Let me find some. He's got some great quotes. He did some. They did such funny things. But the. I'm afraid, Robert, I haven't got the quote of. I think the famous one to hand. But the. He would go around preaching and he was saying one of his lines was that Adam and Eve, when Adam and Eve were there, who was the gentleman was one of the things he used to say, in other words, we're all equal. And it was a very kind of communist, anti authoritarian message and the church hated him and so they excommunicated him. And he predicted that 20,000 men would take him out of Rochester, Maidstone Castle, where he was imprisoned. And 20,000 men did take him out of. Of Maidstone Castle, which suggests that the Peasants Revolt was organized. It was quite well planned. They also planned it while all the armies were away fighting wars in Scotland and France. That's when they rose up and they marched on London. And the mistake they made was that they thought King Richard was good. He was the child king. They thought he was good, they just thought he was badly advised. But Richard actually betrayed them and went with his advisors. But at one point they took London and. But one of their tactics was everywhere they went, they killed lawyer, they killed all the lawyers and burnt all the tax records.

[Robert Breedlove]

Yeah.

[Dominic Frisbee]

And they opened up all the prison. Most people were in prison for non payment of taxes. As they opened up the prisons, burnt all the tax records in the churches and the lawyers and killed all the lawyers. And remember the church was one of the biggest tax collectors at the time.

[Robert Breedlove]

Yeah.

[Dominic Frisbee]

And so. But to rebel against the church was. Was quite a brave thing to do because you were not only rebelling against the power of the Church, but the sort of belief system that had infiltrated everyone.

[Robert Breedlove]

Yeah.

[Dominic Frisbee]

Anyway, eventually they were overthrown, but So I guess at that point there must have been some kind of. I wouldn't say people had id, but there was some kind of formal record of your surname because they were intent on burning, destroying those records.

[Robert Breedlove]

Yeah, they're really trying to overthrow the hierarchy, as you said, and break the system. I love it.

[Dominic Frisbee]

If there was a record today because we couldn't rise up and revolt and destroy because the government's got weapons that ordinary people just don't have. Particularly in Western America you've got guns, but in Western Europe we don't have anything.

[Robert Breedlove]

Well, that's why bitcoin's the best hope. Right. You just opt out of the system entirely and then it, it's funded effectively.

[Dominic Frisbee]

But I wonder if some hacker can get into the IRS and just destroy all the tax records.

[Robert Breedlove]

Well, wouldn't that be an interesting day?

[Dominic Frisbee]

So one of the courts, you take down the system, then if all the tax records have gone, because they won't be on a distributed network, it'll be a centralized network.

[Robert Breedlove]

Yeah, you would assume they have backup and security protocols for that, but who knows, man? Anything that's in a centralized database is definitely vulnerable.

[Dominic Frisbee]

If there are any hackers listening to this, you want to take down the system, go for the tax records, you know, and, and do. I probably shouldn't say that, but, but you know what I mean.

[Robert Breedlove]

Yeah, I mean, that's the truth, though. If you want to end globalized theft, then just break the system that's tracking all the theft. There's a quote here from John Ball. It says, now the time has come in which you may cast off the yoke of bondage and recover liberty. So he was sermonizing people against the system of taxation. And he was kind of the original Marxist too. Right. This guy's in the 1300s saying, we're not going to. Things won't be fixed until we commonize everything.

[Dominic Frisbee]

Everything is owned in the Commons. Yeah, I think he fits into that category of people that if you put them on their political compass, they'd be in the bottom corner, bottom left quadrant. And they tend to be very anti authoritarian, but at the same time very left wing. And the flaw in their argument is that they think that they want to overthrow the system, but they want to replace it with more government.

[Robert Breedlove]

Right.

[Dominic Frisbee]

They don't realize that less government is the answer. And so you see a lot of. Jeremy Corbyn was a bit like that. I sort of think Bernie Sanders might have been a little bit in that category. You know, they, they, they want to, they recognize that the System is wrong, they want to change it, but their solution is just more of the system.

[Robert Breedlove]

Right.

[Dominic Frisbee]

It's a very sort of common left wing thing. And I always think those people are sort of. That's why you get a lot of former Marxists who become quite militant libertarians. It's quite a common journey to go on and I think Ball would be in that category.

[Robert Breedlove]

I think there's a bit of misguided egotism there because it seems to me like the thought is if only I were in power, I would pass the laws that were fair and equitable for everyone. But the truth is that you can't put anyone in that position of absolute control. Because even if you are the pure, you know you're purely good and you do good in that position, someone is eventually going to fill that role that will bend the rules to their benefit. So the. To your point, the answer is less governance, less control, more freedom, more liberty. And that's the whole, you know, the Marxist credo from each according to their ability, to each according to their need. Sounds beautiful and utopian in principle, but it creates its precise opposite in practice, as we saw in the 20th century. So we can't have it's, it's natural law. Right? You need preservation of life, liberty and property. That's it. You don't want anything else. No other government intervention whatsoever beyond those sort of three core tenets of morality. If you get beyond that and try to replace the profit motive and the price signal with this commitment to nationalistic faith, it fails. It's a model that doesn't work. But it seems like people get caught up in that first order thinking. They just think that, oh, it's as easy as just making everything common. Nobody owns everything, we'll just be in paradise. But then we lose all the coordination of the market economy and then wealth collapses and conflict ensues.

[Dominic Frisbee]

You can't plan it centrally. You think you can, but you can't. And the way to do it is you just give. Like we said, it's a bit like the houses. Just give each little person their little plot, Let them cultivate their little plot. And the aggregation of all those little plots is a great society.

[Robert Breedlove]

Absolutely. There's another quote I want to grab here.

[Dominic Frisbee]

Quote.

[Robert Breedlove]

Simple, clear purpose and principles give rise to complex and intelligent behavior. Complex rules and regulations give rise to simple and stupid behavior. We just need simple, fair rules. It's like if you sit down to play a game of cards, you're not changing the rules every hand and fighting over who gets to change the rules and how they're going to be bent to favor one group over another. You just play by the rules, and in doing so, you develop these complex, elaborate strategies, right? You figure out how to play the game. You could look at the game of Go, right? This Chinese checkers game has very simple rules, very simple moves, but the explosion of complexity and strategy in that game is just cosmic, frankly. It's gigantic. Chess is the same. It has relatively simple rules. They're fixed, but there's all this complex strategy behind it. There's a deep principle there that I just think humanity cannot seem to get their head around. Or they keep thinking, individuals keep thinking that they can do better than some stable rule set, that we need a ruler instead of rules. But again, that's what bitcoin promises to be is money premise on rules instead of rulers.

[Dominic Frisbee]

I think I'm at best. I mean, I love history and I love finding unearthing little stories and anecdotes in history, especially ones that confirm my own biases.

[Robert Breedlove]

Don't we all? Don't we all?

[Dominic Frisbee]

But the. One of the recurring things I notice from history is that you get these moments like the peasants revolt. There were just a couple of bad decisions at the wrong time and they blew it all. They were within. They nearly won. But every time there's some revolt, some hope, there's some opportunity, chance to change things, somehow or other, the rulers always end up controlling it at the end of it. And I mean, I guess that's life. It doesn't ever work out quite as ideally as you hope. And so there's this eternal struggle between, you know, people and ruler, between those who would control and those who would be free. And it just seems to have been going on throughout history. But what is. And each time there was a sort of chance to build this new utopia. You know, maybe the first guys who arrived in america in the 17th and 18th century, they might have felt like, here we can have the new land. And, you know, they formed it and they made this wonderful constitution. And, you know, they really seem to thought it through, a bit like the bitcoiners have today. But then even eventually, America got sort of corrupted in a funny kind of way. I'm not saying all of America is corrupt, but it's a mess today compared to the ideals that it was when it was originally founded in the.

[Robert Breedlove]

Went off the rails in 1913 with the inception of the Fed. It's all been downhill.

[Dominic Frisbee]

Yeah, I mean, those key dates, 71 13, that civil war. I mean, there's a Lot in that civil war we can talk about. That's not for today's show. But the point I'm trying to get to is that bitcoin just does seem to be unique in history and that it's the first time that there is a genuinely independent. I mean, gold was independent, but it had the stamp of the ruler and it could be abused by. There's a genuinely independent system of money and money is power and you don't have to fight anymore. You can just opt out. And I've been in and out of the bitcoin space since 2011. But it's funny. It's only in the last three months, I've become more radicalized, I think, than ever before. And I've just got into a sort of real. I don't care. I've got into. What's this? I don't think I've quite got fuck you money, but I've got into a fuck you money state of mind where I just don't care anymore. And I'm just quite happy to go fuck you. I've got bitcoin. Doesn't matter. I come from the entertainment industry and we've always been a bit reverential towards the BBC and reverential to the guy who books this or that comedy club because you want to make sure you get booked and you don't want to piss the guy at the BBC off because lessens your chance of getting the TV series or whatever it is. But I'm literally just now. I just don't fucking care. I'll just go and find some get sponsored by a bitcoin company. I make my own TV programs. I literally don't care. It's just such a great place escape and it's just tremendously empowering. I feel so much happier as a result. And there is. You're headed for disaster when you say it's different this time. But there is something to bitcoin that really is different this time.

[Robert Breedlove]

Yeah, I agree completely. And it's like the peasant revolt you mentioned earlier. Once they were empowered, all of a sudden there was a premium on labor. They were handling cash. There was this renewed hope that led to this peasant revolt. The difference now, though, is that we are armed with a radically new technology. We're in a transformative age, I think. I mean, I guess this is not confirmed still, but I do think we're progressing from industrial.

[Dominic Frisbee]

The old economy is just toast. There's still huge wealth there, but it's just toast.

[Robert Breedlove]

Yeah. And to your point, on the fuck you money, it used to be a threshold of wealth. I don't know, $50 million net worth maybe was that number. But Bitcoin, based on the characteristics that it. The services that it renders unto you, really gives you this, fuck you, money of any amount because you can just take it anywhere, do whatever. There are no restrictions on the money. So you have this sense of freedom.

[Dominic Frisbee]

I don't need to be within half an hour of central London. I don't need to be within half an hour of central New York or an hour of. You know what I mean? I can go anywhere.

[Robert Breedlove]

Yeah, yeah, it does feel. I agree with you. You never want to say this time is different, but I think when we progress from the agricultural to the industrial age, anyone that was saying this time is different was right at that time. So, yeah, the factory thing really is a big deal and it's going to change the world. And it did. This seems to me to be at least as similarly transformative as something like that.

[Dominic Frisbee]

Yeah. And the Industrial Revolution took. We call it the Industrial Revolution, but It probably took 40, 50, 60 years, two generations. The agricultural revolution was hundreds, if not thousands of years. We are going through the digital revolution. And the first breakthrough was, I don't even know, in the 80s, the digital technology and then the Internet and the scalability and the instant replication and all that, the mobile and then all of that. And then the next breakthrough was digital scarcity, because that solved like replication, changed a lot. And then scarcity, it was sort of the icing on the cake or. I don't quite know what the right.

[Robert Breedlove]

Analogy is, but, yeah, there's this. So we've heard of postmodernism, the philosophy where everything, like moral relativism, nothing matters. You can interpret things in any infinite number of ways. It's almost like the digital age was suffering from a bit of that before bitcoin, because there was no scarcity. Everything was reproducible ad infinitum. But bitcoin reintroduces these physical world constraints in the digital space, so it roots it in reality. I think that's the biggest. The big thing here is we now have this bridge between physical and digital reality we call bitcoin. It's like this thing has real value, ultimate value in a monetary sense, but it can be utilized in this domain that's in the sovereign individual. And in the series I've been writing lately, sovereignism, I call it the digital high seas. It's this place that's ungovernable. There's a reason there's no permanent jurisdiction in international waters. It's too expensive to tax commerce there and patrol it. And cyberspace or digital space is similar.

[Dominic Frisbee]

Yeah, I think water is really interesting because we think about land like if you go into any. If you look at the Thames, the River Thames in the 17th, in the 18th, 16th, 17th, 18th, 19th century, there were hundreds of boats on there. There weren't bridges. People crossed the river, they got the ferry across the river, people slept on the boats. It was the fastest means of transport. It was the way to get to another country. Boats were everything. And then now if you go walk down the River Thames and I'm sure the big rivers in the States are exactly the same. In fact, I know they are. They are comparative economic deserts. There'll be a few places where maybe Seattle or Amsterdam, where there's a few houseboats, but on the whole people just don't live in the river. Life stops at the river. And there's been all sorts of economic studies have shown how important it is to have clear property title if you're to have economic development and economic growth. And one of the reasons that Africa's been so repeatedly stunted is that it doesn't have. In so many places there just isn't clear property title. And in the case of the River Thames, that applies because the water moves and so nobody actually owns the. And then the bed underneath the water is owned by a body called the Port of London Authority. The bank wall is owned by somebody else and then the bank is owned by a third person. So there's three people. So it just makes any kind of commercial development really difficult because nobody actually owns it. And one of the big muck ups with Brexit, where they're arguing over is where does the boundary stop between who owns which bit of water. It's really hard in the way nations think to be clear about who owns which water. Now if some bitcoin billionaire comes along and decides that he's going to plonk an amazing concrete island, I don't know, in the middle of the Atlantic Ocean, who, I mean, I guess if a government was, let's say he did it in the middle between. If he did it in the middle of the Atlantic Ocean between America and Britain, I can see America getting a bit arcy about it. But if, let's say he did it in the middle of the Atlantic between Brazil and Nigeria, okay, Like neither Brazil or Nigeria, they've both got too much on their plate to do anything about it. And then he just claims that bit of water. So it's like water's the one area where it's hard to develop because there isn't clear property title, but because there isn't clear property title, there is the opportunity to establish them. That's one of the reasons why this seasteading. I'm not quite sure if this seasteading thing is taking off or not, but if it's just an idea, but there's definitely citadel opportunities.

[Robert Breedlove]

Yeah, it's really interesting. I think the analogy is great too. This all begs the question, which probably gets us into our next point is how does the tax system adapt to this? As people move into these ungovernable, they're moving their business and capital identity into these digital high seas that you can't even trace your income to an identity. The identity may not even be a state assigned identity you can unbundle. I can go and set up different accounts to earn under different aliases and be paid in crypto or bitcoin. And then the income tax system is none the wiser. So how does the income or how does the tax system I guess adapt to this new reality?

[Dominic Frisbee]

Well, I can tell you what it should do and what it will do and I can just see it coming out pretty much exactly as Rees Mogg says in the Sovereign individual. The tax systems were designed around a physical age. And if you look at Google and Starbucks and Facebook and Apple and Amazon, they have just run ring. These globalized companies, they've just run rings around the tax man by having their trademark here, their IP there, their profits here, profits there. And you know, I mean even Starbucks, which is essentially coffee and shops, has run rings around the tax man. But the digital companies, where is Google exactly? It's really not that clear. And governments for the most part have just totally, they've made a noise, they've complained, they've moaned, they've lobbied. The way governments have dealt with it here is they've lobbied Facebook. Like I paid more tax in the UK than Facebook did last year. How can that be possible? I had a good year, but I'm, I'm not, whatever it is, a trillion dollar company or a 3/4 of a trillion dollar company. I can't believe I paid more tax.

[Robert Breedlove]

They lobbied Facebook. That's so interesting.

[Dominic Frisbee]

And they could just turn public opinion against these companies and these companies pay a little bit of tax, but these companies are simply playing by the existing rules. Now you obviously know about daos. Digital autonomous organizations like Google and Apple and so on are still they're listed companies and they've got Headquarters and so on. When digital autonomous organizations and they are coming. It is actually harder to realize a digital autonomous organization in practice than it is in theory. But there are all sorts of people working at it and trying to solve it. And even bitcoin, which is essentially decentralized, is sort of centralized in the way that the dev team is sort of a little bit centralized. And within the dev team people have their own little sort of niches and so on. So it's not entirely decentralized, but there are sort of evolutions of it going on. But how are governments going to deal with that? Decentralized organizations, autonomous organizations, they. I bet if you ask most government ministers what's a dao, they wouldn't even know. No, I have no idea, let alone deal with it. And then the next thing is when individual 50% of government revenue around the world comes from income taxes in one form or other. 50%. And most of the workforce until maybe 10 years ago was one guy working for one company 9 to 5 and he'd go to that, he or she would go to that company and the company would collect the tax at source and deliver it to the government. Well, Ernst and Young have already estimated that by 2030, and Covid's accelerated this, by 2030, half of the US workforce will be contingent. Half. So everyone, and particularly with COVID and remote working, everyone's moonlighting, everyone's doing one job here, one job there, a little bit there, rise of the gig economy, all this stuff. And then more and more people are thinking, actually, you know, I'll go to Florida, I'll go to Texas, I'll leave America, I'll go to Cartagena. And so you've got the rise of the digital nomad. And if digital nomad is spending less than that, we've talked about it already. But if digital nomad is spending less than 183 days a year in any given country, he's not obliged to pay income taxes to that country. He'll pay sales taxes and local taxes, he won't pay income taxes. And a lot of the time digital nomads feel betrayed by their country of origin. That's why they left. So they feel no obligation to pay taxes to it. Many of them deliberately avoid it. Many nomads are non compliant simply because they just don't know who they pay taxes to. And the tax systems are too inflexible to adapt. And the easiest thing to do is just not pay any taxes. Some it's deliberate, some it's accidental and more and More of them. I think the estimates are that already 50% of people, digital nomads operate in the crypto economy to some lesser or greater degree. That's only going to increase. I'm a, I'm a guy, I'm a web designer in, in Brazil, but I'm living in Chiang Mai. But I've just got a job for a company in London. You know who's. Where, where'd you pay the tax? And they're paying me in bitcoin. Where'd you pay the taxes? There. It's just, it's like how do you, and how do you do the accounts?

[Robert Breedlove]

You can't.

[Dominic Frisbee]

It's just a bloody nightmare. So most people don't. And, and so, but this is the fastest growing workforce in the world, the digital nomad.

[Robert Breedlove]

Yeah.

[Dominic Frisbee]

And, and there's going to be 9 billion people in the world 2035, of which 6 billion will be workers. So 6 billion workers in 2035, of whom half will be freelancers of some form or other freelance contingent gig economy, all that. So 3 billion freelancers of whom one third will be digital nomads. And the, the. So that's a billion digital nomads. And we think, oh, it's just Americans and, and Europeans going to South America. It's not. There's a huge South American middle class that wants to go. There's a huge Asian middle class, there's a huge African middle class. This is a global thing. The Africans all want to come and spend a bit of time in Europe but before they go home and, and, or whatever, you know, everyone's on the move and it's just gonna, it has. So the governments, they just, unless they adapt and they change the way they tax people, they're just going to be fighting and everyone's going to be going, you got to pay more tax. I don't know who to pay taxes. Just going to fight a noise and it won't be solved. The way to solve it, by the way, is land value taxes. And we talk about that in another program. But there's going to be this huge standoff. Meanwhile, government's got more and more obligations. Health care, education, paying off its debts, interest rates go up, bloody nightmare, devaluation of their currency. And those trapped in the physical economy are going to be the ones who struggle. And really we're going to have this two tier system. And it's just so obvious. Covid has accelerated some things but the one thing Covid has slowed down is the movement thing made it much harder to move and it's going to be really interesting to see what happens over the next year, whether all restrictions go and Covid disappears or we get another variant and the vaccine doesn't work and you've got to get another vaccine if you want to go to this country and blah, blah, blah. So the spanner in the ointment, the spanner in the works is what happens with COVID But otherwise that's where we're going. And governments are going to struggle to pay to meet their obligations and many of them will fold.

[Robert Breedlove]

Yeah, it is a major transition the likes of which we've never seen. Again, this is just one aspect of the impact of digital. It's a very big one. But this alone, if we just stopped here and said digital technology had no other impact. This is a radical change. We're talking about the fragmentation of nation states over the long run.

[Dominic Frisbee]

So most nation states aren't that old. They are normal to us, but they are not normal in the context of history.

[Robert Breedlove]

Right? Yeah. It's a relatively new dominant institution of the modern age. The sovereign individual talks about this. They say that the 20th century conception, to your point, was people have jobs, you have a career, you're a 9 to 5 guy for 30 years, you get a retirement, whatever. But what we're going to do is shift into this world where instead of people having a job, jobs actually have people. So we're much more freelance, like we're free agents going job to job. The analogy I think they draw to is like Hollywood, where actors and riggers and cameramen, these guys don't have a career, they're just free agents that coalesce around a project for a few months or a few years, do the job, get paid and roll back out to free agent status and then repeat the process. So the whole world is shifting into this free agency mode of work. You end up then with more.

[Dominic Frisbee]

The evidence is, by the way, because there's a huge campaign from the left. Oh, gig workers aren't being properly treated. They need to be. There's a big fight to prove that Uber people who work for Uber are in fact full time employees, not gig workers. And they won that particular fight. But actually most gig workers prefer gig work. They like the flexibility. They like, they feel more in control, they can work, it's more on their terms. And so this argument that they're mistreated is. It's not necessarily true. And employers love it because they don't have to pay all the payroll taxes, and maybe not payroll taxes, but the burden of employing a Gig worker compared to the burden of a full time guy is completely different. So employers like it too. One person who doesn't like it is the government. Because they lose all the employee taxes.

[Robert Breedlove]

That's right, yeah. There's all the employee employer taxes that roll off. They're not collected at source. The administrative burden rolls off. I mean I've been a CFO for a number of companies. The difference between the complexity related to full time, what we call W2 employee in the US which is full time employee versus a contract worker, the complexity is 100 to 1. When it's just a contractor, you just put them up and send them money. Versus the W2 has all these compliance issues behind it. State taxation, payroll tax, Social Security, Medicaid, et cetera, et cetera, et cetera. Everyone prefers it but the government to your point. And so in this transition we would then have so one of the main sources of government revenue, collapsing income tax. How are they going to. That's going to only increase deficits. They'll have no choice except to print more money to monetize more debt to cover those deficits. This is only going to increase the divisiveness between rich and poor, the wealth disparity through the money printing. It's also going to increase the price of Bitcoin. So all these digital nomads that are denominating their activity in bitcoin probably going to have a higher propensity to keep their wealth than Bitcoin. As more money's being printed, Bitcoin's going up in value. That's why I think this time is a little bit different because then you just have this hard money that no one can stop. Everyone prefers just dissolving the power structures that be from within. Again, even the people operating these power structures, they also wear a hat as citizen. The guys that work at the IRS or the government or anything else, they're going to see this happening too. And they're going to be placing some of their chips on Bitcoin as this process goes on. And I think that realigns the incentives towards it. So the way I'm visualizing this is that Bitcoin is this what I call my writing, this digital asset. In a way it's just dissolving analog power structures from within.

[Dominic Frisbee]

It's exactly what it's doing. And with every, I say this with every pound they print or every dollar they print, government control extends. Government invades that bit further into the economy, but it's only invading into the fiat economy. And it will Invade, invade and then destroy the fiat economy and the digital economy. We will go in the digital world, we've already gone where there isn't government. And in the physical world, we will only go where we're welcomed.

[Robert Breedlove]

You mentioned what you thought the solution might be for adapting the tax system to this new age. Is that something you want to talk about today or do you want to save that?

[Dominic Frisbee]

I would rather save that for another time, Robert, because it does seem like a natural place to go now. So I'm just lifting this microphone because it's just drooping. The. I'll just touch on it now and we'll talk about it more in another episode when I've done my homework on it. And so I mean, just, just because I'll just reread the chapter and I'll just have instant recall of all the, the facts and so on. But the solution, in my opinion is to stop taxing labor and to start taxing land. And this is based on the principles of Henry George, the Georgist. We've touched on this, I think, who was a best selling author, he wrote this book about taxing land called the single tax. And you would pay no other tax apart from land taxes. Now, the principle of this, we talked about natural law and it goes back to a philosophy of the physiocrats who were around in the Enlightenment. And they said that there are two types of wealth. There's the wealth created by men and human endeavor and hard work and inventiveness and all the rest of it. And then there's the wealth that nature gave to you. And the wealth that nature gives to you should not belong to anyone. It should belong to everyone. You know, why should the oil beneath the Saudi sands just belong to a few members of the royal family that should belong to every, every Saudi. But what you create as a result of your own endeavor should be yours to keep. And nobody else should have the right to take it from you. You. So the oil was always there, but effort goes into discovering it and extracting it. So the principle of land value tax is if you want a plot of land and you want it to be yours, you want exclusive rights to it, and you want the government to protect your title to that property, then you have to pay a rent to the community in order to have exclusive access to that land. That's the sort of principle of it. And we'll come to how much that rent is in a moment. And now let's say you've got two plots of land on fifth Avenue in New York and you know, that's the top address in New York, Fifth Avenue, is that right? Or one of them.

[Robert Breedlove]

Yeah, I think that's right.

[Dominic Frisbee]

Let's just say, or you know, Sunset Boulevard or something in la. I don't know my names. In my American streets, I'm just so. And you've got these two plots of land and they're absolutely identical. And one has got a beautiful house on it and the other one is undeveloped. Both those plots of land, the owner of those two plots of land would pay the same, would pay the same rent because they're identical plots of land. And then you only tax the land in its unimproved state. So you just tax the value of the land itself, not the building that's on it. And prime city center real estate will command a high tax because it's because of the needs of the community. Everyone wants to be in the city center, that's why that land has value. And farmland in the middle of nowhere will have pretty much zero rental value. And the tax you would pay is a percentage of the annual rental value of that land. So let's say tax rates are at 10% and you've got a, you've got a million dollar house. But the, the, if there was no house on that land, how much could you sell that land for? Let's say you could sell it for 100 grand. What would the annual rental value of that land be? Let's say it was, you know, 20 grand or 50 grand, assuming there was no house on it. You would then pay a percentage of that 20 or 50 grand, a percentage of the annual rental value. And the good thing about this tax is it's impossible. Under this system, we're talking utopia, no printing of money is allowed. You assume we're in a bitcoin standard. So governments can't print money and everyone's got a little plot of land. And we do need some kind of government just to organize whatever, to protect, right, to secure, to organize the army, say whatever. And then so we each pay a percentage of the unimproved rental value of the land we use. So the idea of this is, it's consumption tax. It's based on what you use rather than what you create. So you're taxing consumption, not productivity. So if you want a really big, rich, decadent city centre house, fine, you can have your really big, rich city, decadent city centre house, but you're gonna have to pay a higher rent than the guy who's just got a tiny little cottage. And then so the Question is, how much? Well, the annual taxable value will depend on. The government then says, well, each government comes along at the beginning of its election. By the way, this is an easy tax to organize because you just parcel up every. The land register has a register of every bit of land in your country. It knows who owns it and it just parcels it up into lots. And the government, each government, each party comes along and says, we're going to spend 20% of. We need £20,000 to spend this year. And another government says, we need 30,000. And the country votes for the government who's going to spend a certain amount. And if the person who is not happy paying that amount of tax, the same rate will be applicable across the country. It'll be 10% of the annual rental value, or 20 or 30 or 50, whatever. And the whole country is going to go, no, 50% of the annual rental value of the land is too much. We're going to pay 20%. We want it to be 20%. And so it's a very good way of population and government keeping each other in balance. It isn't possible for one or the other to step too far because the taxable rates go up and you get a revolt on your hands very quickly.

[Robert Breedlove]

So it's a negotiation. More.

[Dominic Frisbee]

Yeah. It's a natural way of keeping things in balance. And if you're sitting on an undeveloped plot of land on Fifth Avenue and you're suddenly. And you're just sitting on it, watching fiat money depreciate and watching your undeveloped plot of land go up in value because fiat money depreciating, and they've built a new station at the top of the road, and because everyone's now using that station, the value of your land's gone up. It stops all that because you're like, no, suddenly you've got to pay for that land that's sitting idle. So suddenly you're encouraged to do something with that land or sell it to somebody who will do something with it. It stops that. Just sitting on assets and waiting for them to appreciate that whole little racket. So that's the basic principles of land value tax. Now a lot of libertarians are going to hate it. I have long conversations with James Turk about it and he hates it. He says there should be no taxes at all. I have a lot of sympathy for that. And it is possible for taxes to be very low, but I would rather tax land use than labor.

[Robert Breedlove]

Yeah, absolutely.

[Dominic Frisbee]

We assume that there has to be some kind of tax, so let's tax what you consume rather than what you produce, and it stops the monopolization of land. In fact, the game Monopoly was invented to demonstrate the damages of land monopolies. And so it was actually invented to demonstrate that this tax solves the horrible economy that is created as a result of lamb monopoly.

[Robert Breedlove]

These really. That's super interesting. I agree there has to be taxation because we need physical protection of the territory. That's ultimately what government really should be rendering. But it shouldn't be contingent on the income of those living within it, because the service does not become more expensive, the more productive the economy becomes. Whether the economy has a GDP of 1 trillion or 10 trillion, the government securing the borders or securing that territory, their costs don't increase. In fact, they probably tend to decrease. The more people are trading, the more peaceful they tend to be, the more cooperative and interdependent they are. So if anything, tax rates should maybe decline relative to productivity, but in fact, we have the opposite today. The more wealth we're creating, the more the parasite is consuming. So that's an interesting perspective on it though, because that's basically a flat tax at that point, right?

[Dominic Frisbee]

It is, it would, it's a sort of flat tax. And the. It's interesting because at the moment, the government that promises the most goodies gets elected, right?

[Robert Breedlove]

Yeah. And as you said earlier to your earlier point, very easy to be generous with printed money, right?

[Dominic Frisbee]

Yeah, absolutely. As, as Kubla Khan showed us, so the government that promises the most goodies gets elected. And so we have this sort of vicious cycle of who can promise the most. And then there's a little bit of, oh, well, how are you going to pay for that goes on, but it's sort of brushed over. This will create a situation where the government that promises the lowest taxes will get elected. The government that promises the least goodies, the government that promises it to run itself the most efficiently and therefore charge the lowest taxes. And therefore you can get your, you can have your land on the cheap. They're the ones who'll get elected. And the government, and I think, I'm just thinking about it, I wonder if only those. No, no, no, it wouldn't work. I was about to suggest that only those who own the land can vote, but that would mean they all vote for lower taxes and their land ownership would be very cheap and those who don't own land would be excluded. So I'm not sure if that would work or not.

[Robert Breedlove]

I'd have to think it seems like it would maybe obfuscate a lot of the importance of voting too, because you're just voting in the negotiation process about which government does what. And then they're incentivized to render efficient, high quality services. And then that gets us closer to that ideal of the government that governs least governs best. Right. As long as there's peace and there's not a bunch of violent anarchic activity, then the government's doing its job. Just get out of people's way and let us trade and create wealth. Essentially we're halfway about an hour and a half mark.

[Dominic Frisbee]

Yeah. Just have one thing and then we'll do where we are. The reason that tax would work in this new digital economy, this new globalized economy, is that for a start, the likes of Google and Facebook and whatever would be taxed not on their profits or where their IP is or whatever. They'd be taxed on the land they use in whatever jurisdiction they're in.

[Robert Breedlove]

Right.

[Dominic Frisbee]

Does that make sense? And, and similarly, if, if digital nomads use no land, then they would pay no tax. But if they come and stay in a hotel or a, they rent a house in a place for six months while they're nomadic, well, the, the tax, whatever they pay to rent that hotel room or rent that flat for six months would be reflected in, you know, that would eventually be paid off in some of that would go in taxes. So they would effectively be paying the land value tax to that nation. So it, it, and whatever they get up to in the digital economy is whatever. Because this is, we're, we're a government and we're only dealing, governing the physical economy. We're not governing the, and, and if you want to use this bit of land, then you got to pay for it because it belongs to everyone. So it's sort of, it would, it addresses that. And if you've got some huge data center, Google would have to pay a little. And it wants to use the land for its data centers or it wants to use the energy for its data centers. Fine, you can use them. But you've got to play a little bit of rental for the energy and the land by the data center.

[Robert Breedlove]

It's really interesting. Yeah, Intuitively it makes sense. The first I've ever heard of it actually.

[Dominic Frisbee]

But the problem is you can't like no government ever is going to get elected going, I've got a great idea, we're going to give you a new tax on land value. Vote for me. No government. It's just not going to happen.

[Robert Breedlove]

But if the evidence. Yeah, but if, I mean it seems like if a government proposed this super simplified, like we're getting rid of the entire IRS tax code and here's your new tax code and it's like a 10 page land value tax. It seems like people might be smart enough to agree to that.

[Dominic Frisbee]

But I don't know, I think the risks of proposing it's just too outside the box. Yeah, well, I agree that and the evidence of history is that the point of land value, I think it's going to come by the way land value tax, but it's going to be in addition to other taxes, which is the worst possible thing. It's got to replace other taxes in addition to other taxes is just a horrible bastardized version. And they'll find some way of making the queen exempt.

[Robert Breedlove]

You know, we'll just have to wait for bitcoin to bankrupt and fragment the nation state and maybe that's all that will be left is the land.

[Dominic Frisbee]

Exactly. When you're building your new citadel, you build it based on that. I just, you know, you only get taxes and new taxes only get through the past. The thing in times of crisis, if you try and build introduce new taxes in times of peace, you, you get thrown out of power.

[Robert Breedlove]

Right.

[Dominic Frisbee]

One of the golden rules.

[Robert Breedlove]

Yeah, makes sense.