Let me paint a picture for you and then ask you a couple of questions:
If I was to buy a piece of land, build a house on it, fit it with technologies such as solar and wind, rain tanks, breed animals, grow food, etc so that I was able to essentially leave the economy, live off the grid and become self-sufficient. At the same time, I only produced enough for my family and to maintain the place, I did not produce any good or service for anyone else in society or the economy, and when I am not tending to the place I was playing video games and other self serving activities.
1. Would this situation cause you or anyone else in society loss of any sort, particularly economic loss or prevent you from pursuing your goals in life?
2. By leaving the grid and the economy so to speak, am I imposing any political or other ideal on you or on society?
The answer to these two questions are obviously no, and for many of us we are aware that many people live like this and it has zero effect on any of us.
3. Do you believe that as a free society, everyone should have the right to choose if they want to operate from within the economy (jobs, business, markets etc) or if they want to live off the grid?
Again, we know many people live like this and it has zero effect on us and so we must answer this in the affirmative.
Now imagine that in my will I left the whole of the property to a particular charity which has the purpose of helping homeless individuals and families, and as a condition of my gift it was to be used solely for the purpose of taking a homeless person or family off the streets (and if there were no homeless, to offer it to the unemployed) and who would be able to live at the property for as long as they wanted provided they maintained it and if and when they decide they want to and can return to the economy (i.e. jobs, business, markets) they can and the charity would put another homeless (or unemployed) person or family in it.
Now again, answer the same three questions above and are your answers exactly the same as before (Q2 replace I with the homeless/unemployed person/family)?
Now imagine that 5% of all the households in any economy were to leave the grid and answer the questions again. Are your answers any different?
Now imagine that all of these same households were to leave their properties to the same charity and as a result homelessness, unemployment, and poverty would be significantly reduced over time. Are your answers any different now?
What if that number was to be bigger, say 10%, even 25%?
Let us be clear here. If every household on earth was to leave the grid then the world as we know it would be different. Many of the luxuries we enjoy would not be possible for obvious reasons, namely, no one would be producing anything other than needs. But the question is, would everyone on earth want to leave the grid, and I think the answer to this is a resounding NO!. So whilst we answered Q3 in the affirmative, we can never really know how many would even want to pursue this path. Even 5% seems a stretch as most economists would probably attest to. The idea of leaving the grid would probably bore most people. What is important is not whether or not most households would want to leave the grid because it just wouldn’t happen, but what loss if any is experienced by the rest of society if any household was to leave the grid.
So why have I painted these scenarios and asked you these questions?
Because I need to establish some common ground between you and I so that we do not go off tangent down the road and have you misinterpreting what you are about to read. In summary, we have established that any household leaving the grid is merely exercising a right of choice and has such a right because it does not cause anyone else loss of any sort and does not impose any ideal on anyone else; nor does it change anything if the owner was to leave the property to charity for the purpose of taking homeless and impoverished people off the streets.
If however you are able to demonstrate with clear evidence that any and all households who leave the grid actually cause you loss of any of your rights, then I am all ears. To date no one has been able to demonstrate this, particularly not with evidence that would hold up in court. It must be emphasised, if the actions of another cause you loss and you want legal relief, you must be able to prove in a court of law how the loss has occurred and how the actions of the other caused that loss. You can’t make the claim that you think it will cause you loss or that it might in the future, without clear evidence.
So what I am trying to say to you is this: it is a fundamental principle of the many developed countries that no one has the right to prevent how another lives or behaves unless they can demonstrate that the lifestyle or behaviour of that other is preventing them from living and behaving as they would wish.
I want you to keep this fundamental principle at the forefront of your mind as you read on. If at any time you begin to think that what is being suggested is going to prevent you from exercising any of your rights, is going to take something from you, you need to write down what it is that you are going to lose and why and how what is being suggested is going to cause you that loss. Because it is a fundamental principle and claim of what follows that if any household was to implement this model that it will never cause anyone else loss, and unless you can demonstrate it will with evidence, then it must stand that it won’t.
The Economists Challenge:
The following will eradicate crime, homelessness, unemployment, and poverty (the CHUP sector) without costing tax-payers and without the need to create new jobs, by allowing the addition of new legal institutions by which to manage resources, particularly human needs. These legal institutions will co-exist alongside the current institutions which are property and contract law which currently dominate the production and distribution of resources.
For the economist, our question or challenge to you is to tell us if any individual or household was to implement the following model, would it cause economic loss to any other? If so, then does this prove the economy is zero-sum?
A note:
It has been noticed that many economists debate over whether the economy is a zero-sum game or not. If you as an economist, or simply as a reader, firmly believe that the economy is not a zero-sum game, then any criticism you would have of the following would be contradictory to your beliefs. Whilst the author has absolutely no fears that anyone will be able to meet the challenge posed on this site and prove the claims wrong, and so far to date no economist has been able to do so, the experience has been that those who criticize it do so out of beliefs, and not facts. All criticisms have been based on feelings, views, opinions, etc and never on any concrete fact that demonstrates the models implementation would cause economic loss to any other. However, the very fact that people have these opinions, beliefs, views etc demonstrates that deep down they can’t believe the economy is not zero-sum, otherwise why the beliefs? If you firmly believe the economy is not zero-sum, then you can’t at the same time demonstrate that the implementation of this model would cause economic loss to any other. If you believe the economy is in fact a zero-sum game, then it is important that you read the following if you are concerned about reducing the CHUP sector.
The model
What follows is a presentation of a model or mode of living to co-exist alongside the current model of treating human needs as commodities. If a small percentage of the population choose to operate under this model, it could significantly reduce the CHUP sector without costing tax-payers a single cent and without the need to create new jobs. We will hereinafter, for illustration purposes, refer to to these people as Custodians.
This mode of living is a different way of holding, treating and distributing resources to be done for purposes which are outside of the purposes for which the private sector generally operates. We will refer to this mode or model as the Custodian model.
Households which implement this model will collectively make up what we call the Custodian sector (the term sector is used in the same way as distinguishing between public and private sector, and is therefore not to be confused with concepts like communes – the custodian sector is not a commune or anything similar to a commune), and as a sector will co-exist alongside the private, public, and voluntary sectors without competing against any of them.
In support of said model we make certain claims. As some of these claims involve matters which are often treated at some length within some economic circles, we challenge economists to peruse this model and to answer: if any individual or household was to implement the following model, would it cause economic loss to any other (economic loss would also mean and include any loss of purchasing power), and if so, does this prove the economy is zero-sum?
Claims:
We make the following claims that the Custodian sector, and the implementation of the Custodian model within it, will:
- Reduce the size of the CHUP sector (crime, homelessness, unemployment, and poverty) as well as lessen the burdens of government, and as a result bring benefits to both the private sector and to the whole community.
Further, that the Custodian sector, and the implementation of the Custodian model within it, will:
- Not come at any cost or expense to the tax-payer or have any need for welfare, charity, or government grants;
- Not cause personal, property, or economic loss to anyone;
- Not cause or create, nor change expectations of, inflation, deflation, or otherwise effect purchasing power for producers and consumers of the other sectors;
- Not compete against any business or industry, property owners, job seekers, or economic agents in general.
We also rely on the principle that if any individual or group with legal, economic, or property interests can prove that the custodian model is unlawful or will cause legal, economic, or property loss, then these same individuals or groups have grounds to prevent its implementation. If they cannot prove these claims to be untrue then they would have no grounds to prevent it.
What we are not:
There are no custodians at this point in time, and what is being presented is merely an idea for a way of living to co-exist alongside the current system, albeit a way of living that the author himself would prefer to operate under than the current property based system. The author believes that many people who exist in poverty cannot embrace the western ideology of treating everything as a commodity to be competed over and simply need another way to live and treat resources, and once being offered this alternative would no longer suffer from poverty, unemployment etc.
But it must be pointed out that if the author, and any other in society were to become custodians, that there is no threat to any other, and hence it is important that we make mention of the following:
The custodians are not a political movement, and neither do the Custodians position themselves anywhere along the political spectrum; therefore, the Custodians have no conflicts with any political ideology or political or legal interests.
The Custodians are not a charitable or not-for-profit organization (as they are commonly understood) nor a religious organization.
The Custodians are not a commune nor act like a commune, nor are the Custodians communists.
The Custodians have no intention or objective in selling, convincing, persuading others of their model, mode, or principles or to otherwise change the nature and character of the private sector economy or the legal rules and relations it operates under.
What is a Custodian and what is the Custodian model?
In a nutshell, a custodian is a household (individual or family) who desires to become a custodian and who therefore doesn’t wish to operate within the commodity framework (i.e. under property and contract relations). The household renounces the pursuit of private property and economic aims and instead holds and manages all resources necessary to legally function* in a society, plus any tools etc. necessary to produce what it is they will produce under a surplus share arrangement (the model) with the government as partner and beneficiary. They will produce only real things and any surpluses after taking out what they need themselves will be distributed through an entirely different network and process to the distribution network employed by the other sectors operating under the commodity framework.
Any surpluses the model provides come from two essential or direct sources, the first being the custodian themselves (such as their labours, tools etc), and second, any technologies, apparatus or otherwise attached to the land, house, etc. (such as solar power). Indirect sources will be education, research, assistance, etc. from government as the partner, and other custodians.
To illustrate the custodian model further, we will first give an example of what it would look like (from an outsider’s perspective) if an individual or family (household) was implementing the custodian model, i.e. the model was in full swing and all preliminaries (legal formation of the model and securing of resources) had already been taken care of.
In this illustration, we will draw from two examples, where one custodian will be someone who likes to, or is learning to, grow and raise food, and possibly has a family, and the other will be a researcher who happens to be interested in researching food preservation techniques for the 21st century and is possibly single (both these examples are not requirements of being a custodian – more on this below).
1. We will start with the land and housing.
Each custodian will be living and operating on whatever size land and housing the custodian needs to both legally function* and achieve their productive goals under the arrangement.
As the first custodian is a food grower and a family, depending on what types of food they will grow, will determine what size land they will need. The second custodian will have no need for land other than maybe the usual type suburban front and back yard or they could live in an apartment if it suits them. Depending on the size of the family, this will determine the size of the house required in each case.
In both cases, and in fact in all cases, the government will own legal title in both the land and housing with the community as beneficiary, and the custodian will have mere possession (or what is often known as naked title) but with the equitable duty to ensure the maintenance of the property (this is not public housing in the normal sense of public housing where residents are leasing from government).
2. All remaining resources necessary to achieve their productive goals under the arrangement.
For the food grower, this will mean all tools, equipment, machinery, etc. necessary to grow and raise the food they plan to grow and raise. For the researcher, all tools and equipment etc. necessary to conduct and compile research including computer, internet, software etc. Again, in all cases the government owns all the tools etc., and with the custodian as merely the possessor with the same equitable duty to maintain and take care of said tools etc.
In addition to the goals of each custodian, all custodian models may have technologies etc. attached to the housing and land, such as solar panels, wind turbines, rain tanks, water pumps, and whatever else which may be used to harness natural energies and other natural resources.
3. All remaining resources necessary to legally function*.
*We use the term legally function to refer to the minimum resources a human being living in a civilized society is required to have access to and some control over in order to obey the laws of the society they live in. Anyone who has suffered from homelessness or extreme poverty knows full well that it becomes almost impossible to obey the laws such as those against trespass, public nuisance, vagrancy, sleeping on park benches, etc when one reaches this low level; as an example, a homeless person obviously lacks access to housing or shelter, and as a result, the moment that person tries to sleep anywhere they will inevitably break some law; just as if you stripped a homeless person of the clothes he or she is wearing you will cause the person to break the law of indecent exposure; the same goes for lack of access to food, for it is illegal in most civilized countries to beg or dumpster dive. In other words, society has essentially made it illegal (even if indirectly) for anyone to lack access to basic human needs. There is an abundance of literature on this if you wish please ask me, or do an internet search on the subject.
Along with requiring housing to legally function, each custodian will require resources necessary to operate normally as a household, including but not limited to any basic needs they are unable to produce themselves, like clothing, food, water, and energy, and health and education for their children, etc. but also furniture, vehicles, appliances, linen, and so forth (the mechanism by which the custodians will actually acquire the use of said resources will be explained further on). Again, all these resources will be owned by the government.
So, to summarize so far, both example custodians have access to enough resources to both, legally function and to produce their respective goals, whilst the government will own legal title in all said resources.
Whatever it is the custodians produce from their own labours, plus, whatever is produced/harnessed from any technologies becomes the governments/community’s property subject only to what is needed by the custodians themselves to contribute to the ability to legally function and, to maintain the arrangement and the resources under the custodian’s care. The rest is then utilized by the government for whatever purposes it deems best except it can’t be used for commercial purposes.
What will the custodians primarily do?
The list of crafts, tasks, skills, activities etc., that a Custodian can engage in is almost endless. It is not determined by any commercial need coming out of the private sector, nor is it determined by any particular need of the government or the volunteer sector, but this does not prevent a custodian from devoting some or all their time to fulfilling needs from either the government or volunteer sector and in fact it would be encouraged for both sectors to collaborate with the custodian sector. Part of the purpose of being a custodian can be to discover new crafts, tasks, skills, activities etc., the Custodians can engage in as ways to contribute something to society in ways that the other sectors have not, such as fixing problems none of the other sectors can fix due to problems of costs or lack of incentive.
Ultimately, the custodian will either produce tangible goods or some type of service (or a combination of both). When it comes to tangible goods, after they produce what they themselves need, any surplus belongs to the government. When it comes to services, they essentially can provide those services for any of the three sectors government, volunteer, and custodian (just not the private sector unless it is done for purposes which are not commercial in nature).
To demonstrate some ideas, we list the following:
- Farming (surpluses include food produced beyond one’s own needs)
- Research, Analysis etc (can be done on behalf of the government and/or volunteer sectors)
- Arts, Crafts, etc. (surpluses can mean the artwork or crafts created becomes public property for display, or art is performed free for public enjoyment)
- Teaching (like research and analysis, teaching can be done for purposes which benefit the government and/or volunteer sectors, but also for purposes of the custodian model itself, or religious purposes, or scientific purposes, etc)
- Repair work
- Studies, surveys, etc.
- And just about any other field of study or occupation which can be done for purposes outside of commerce.
So how will the Custodians acquire the use of all said resources?
Whatever resources required, all will be purchased by the government (more on how this is done below). Big ticket items like land, housing, vehicles, etc. can be directly purchased by the government and then granted to the custodian to possess and use. Small ticket items (say anything under $5000) can be purchased using some form of purchase card attached to some account which the custodian will use for such purchases, but which the government will own. Either way, the custodian will be accountable to government for all purchases.
So, now comes the ultimate question – how is this funded?
We will first have to borrow a schematic from Professor of Economics Michael Hudson to show how current sectors are funded in today’s political economy:
All economists who rely on accounting models will most likely be familiar with this schematic or at least understand it by a simple cursory glance. The FIRE sector meaning the large group to the left is where all of the credit comes from.
Method 1.
The custodian model operates under a type of tri-lateral arrangement where the private sector has no financial input whatsoever, and where the government would fund the custodians (in order to purchase goods from the private sector) by either: 1) creating interest free money by the central bank which was then destroyed when it inevitably returns as taxes, or 2) providing businesses which supply any product or service to the custodians a tax-offset of equal amount (something which is used regularly within the non-profit sector).
This tri-lateral arrangement then looks as follows with the custodians giving to government what it is in need of (lessening the burdens of government by producing without pursuing or benefiting private property), the government giving to the private sector what it is in need of (money or tax-offsets, and buying local), and the private sector giving the custodians what it is in need of (goods, services and the tools to legally function and to produce).
Method 2.
This method includes the private sector, who whilst wanting to remain part of the private sector may also want to contribute to the custodian sector and get something in return (in contrast to simply donating to non-profits). This we call the Custodian Bond.
Unlike typical bonds, stocks, and other financial assets which are allowed to be freely traded in the secondary markets and allowed to fluctuate in value and yield based on market forces, the custodian bonds will operate similar to TIPS bonds. The idea is that that investor is not seeking to benefit from any free appreciation (and is thus not subjecting themselves to the risk of any market bust), but investing in the government/custodian partnership for a fixed return adjusted for inflation. It must be pointed out that the investor is not investing in a commercial enterprise – the government/custodian relationship is not using the money to create more money – it is using the money to purchase tools from the private sector which allow the custodian to operate their model.
With the Custodian bond, and the Custodian model process as explained above we can overlay the whole process on top of schematic overview of flow-of-fund models created by Research Professor of Economics Michael Hudson and now explain it.
Similar to the tri-lateral arrangement above, the government pays the private sector to supply those goods and services (which the custodians cannot produce themselves) necessary for the proper functioning of the custodian, but this time the money is funded either fully or in part (the other part as explained in the tri-lateral arrangement example above) from savings of those households who wish to invest in Custodian bonds.
As we can see, consumables + capital/tools (we use the term capital to mean simply machinery etc) produced by business (and we can include here the purchase of land/housing, vehicles etc on any secondary market) are channeled to the government, who becomes legal owner, and then into the possession of the custodian, who operates the surplus share arrangement, who then provides the surpluses back to the government. Meanwhile, savers who wish to invest channel savings into Custodian Bonds, this money is channeled to the producers/business by way of purchasing said consumables and tools, whilst savers receive interest net of inflation.
So to summarize the three methods of purchasing from the private sector:
- The central bank creates interest free money (credit), this credit is then used to purchase what is needed, and when those funds return in the form of taxes, they are destroyed (therefore there is no inflating of the money supply);
- Any business which supplies goods/services, or any bank which facilitates any purchasing of big or small ticket items, will receive a tax offset of equal amount;
- The government issues Custodian bonds to investors from the private sector looking for safe, non-tradeable, inflation adjusted investments, and uses these funds to purchase what is needed.
Is there room for abuse of the model – what about lazy people?
It would be no surprise to us that this question would get asked, but we challenge the premises upon which people hold the view that many of those who make up the CHUP sector are inherently lazy, on several counts. This also goes to the very heart of whether people truly believe the economy is not a zero-sum game.
The labeling of many of those who make up the CHUP sector as lazy is a very poor attempt to understand the whole situation. It unfortunately comes from a paradox which exists as a result of society basing its goals on the pursuit of self-interests but also labeling these self-pursuits as contributing to society. We will expand more on this a little further down.
Let’s first look at laziness from a relative perspective, i.e how are we defining laziness and in what context?
Why do most workers, particularly the middle class, work on average around 38-40 hours per week, or is otherwise known as full-time jobs or careers? What are their primary and secondary motivations, and what are their real and potential rewards?
When we answer these questions, then is someone lazy because they do not share the same motivations and goals as those who work full time? Do many of those who work full time do so because they have a lot of debt to service including a mortgage? Do many of them work full time because they are pursuing some goal which requires a lot of money? Do many of them work full time and for many years because eventually they want to retire or leave work and live off financial assets alone? How many workers work purely out of love for the vocation and would continue working doing the same work if they were no longer paid? Why do households have bills to begin with?
Let’s look at this last question for a moment. One of the benefits of having an electricity account with a company who charges for providing electricity is that you are not accountable to anyone for how you use that electricity. So whilst you pay for electricity, you are also paying for the freedom as to how you use it. These are the types of rewards and benefits that workers receive as a result of them working for money. It buys a certain level of freedom and security and it is important that those who work in jobs to remember this.
What about debts and mortgages? Obviously, when people purchase their own home they are doing this for many reasons, one of which is the potential appreciation in value and hence equity the home will generate. Without a solid job and income, such rewards as home ownership and the potential increase in value it can bring are not possible.
The point here is that people work for money, and many of them in full time jobs, because of the rewards and benefits it brings, not because some dictator has made them do it, and many if not most would not continue to work the same job if they were asked to do it for free. You cannot deem another lazy simply because they may not have the same desire for the such rewards and benefits.
To expand on this point, how much do we actually produce in the economy? Think about this for a moment. Go to your government’s statistics departments website and look up how much in GDP the average worker produces in a year. Now look up what the average unemployed consumes in a year. We can determine this by looking at how much they receive in benefits or welfare on average, whilst assuming they spend all of it, and we can take the average amount of welfare received per unemployed as a base amount of what it costs to live a basic existence. Now compare the average GDP the worker produces to that of the base amount it costs to live a basic existence. You will find that the average GDP produced is multiple times that of the base amount.
All the evidence clearly demonstrates that our economic machine produces far more in real terms than is needed, and is mostly made up of wants and desires. The point here is that those of us who work, particularly full time jobs, and produce so much more than is required for a basic existence do so, not because we have to but because we want the rewards and benefits it brings. You cannot compare another’s work ethic to yours unless you have evidence that they share the same motives as you. Further, if you claim the economy is not a zero-sum game, then how can you make the claim that the decision of someone else not to pursue economic aims is costing you or causing you loss? Yes you are paying taxes, but that is because you support the monopolization of all human needs under the system of property and contract (more on this next). To label others as lazy because they do not share the same wants and desires as you is bordering on being hypocritical.
However what pushes this attitude into the territory of being hypocritical is the fact that all human needs have been monopolized under the legal institutions of property and contract law, i.e. they are all treated as commodities, leaving only charity or politics as a means to redistribute to those who can’t access then for various reasons.
When a society monopolizes all resources under a system of property and contract, making it impossible to access them unless one accepts the system, then to label someone as lazy because they don’t accept the system is illogical. If they don’t accept the system it is for other reasons, not because they are lazy. The word laziness is a completely inadequate word to describe these types of people. Further, those born with silver spoons in their mouths are often far lazier than those who have to struggle each day trying to find food and shelter because they lack money.
Once we put the whole of our economic life, and the goals we have, into perspective, we must surely realize there are in fact no lazy people, but rather displaced people, people who simply do not embrace the economic ideal that so many, particularly the middle and upper classes so embrace. If anyone were to be deemed lazy, it is usually those who have more than they need, for why else do people accumulate so much money and property so they can give up their jobs? To laze about of course! There is nothing wrong with this and this is one of the very goals workers first work for, i.e. to earn their ability to be lazy, but to do this you must first accept and embrace the system your working under. But this then contradicts everything you say because if you accept and embrace the system, why work so hard to leave it?
Those who employ the custodian model are more than likely going to be those who do not and cannot embrace the economic system we are operating under and who will most likely pursue hobbies and passions closer to their heart rather than what the economy itself wants. This cannot be labelled as being lazy. Nor can anyone who pursues economic aims under an economic system such as ours, then compare their work ethic to someone who does not share the same or similar economic aims. That is like blaming an apple for not being as big as a watermelon.
We will make one final point on this. As mentioned earlier, the whole of our economic system is supposed to be based on the pursuit of self-interests, and that in pursuing our self-interests we are supposedly contributing to society.
If you believe that all of us ought to pursue our own self-interests, then aren’t you being hypocritical if you make this conditional, i.e. that it is only a pursuit if it is within the framework of a property and contract based system? If I chose not accept this system, then by my non-acceptance, am I not pursuing my own self-interests?
As a custodian, we will be pursuing our self-interests but outside the monopoly of the economic system, and we will be contributing to society again, outside the monopoly of the economic system. At the end of the day, this challenge is not about whether you agree with what has just been said but only can you answer the challenge posed at the beginning of this blog.
But if you come to this challenge with assumptions and presumptions about what is deemed a true contribution to society, then you are admitting that you aren’t entirely sure of the premise that the economy is not a zero-sum game nor of your acceptance of the system you operate under. The very notion that an economy is not a zero-sum game means that it matters not what the person to your left does, but only what you do. If you truly believed this, then why all the politics and why the necessity to label those who don’t meet your expectations as lazy?
Let go of any of this nonsense about whether someone is lazy or not, and whether they might abuse the custodian model by simply consuming and never producing, and get to the real question. Demonstrate to me that the custodian will cause you economic loss, and at the same time, demonstrate to me how this is so considering the claim that the economy is not a zero-sum game.
Further reasons in support of the claims we make.
We revisit our claims:
We the Custodians make the following claims that the Custodian sector, and the implementation of the Custodian model within it, will:
- Reduce the size of the CHUP sector (crime, homelessness, unemployment, and poverty) as well as lessen the burdens of government, and as a result;
- Bring benefits to both the private sector and to the whole community.
Further, that the Custodian sector, and the implementation of the Custodian model within it, will:
- Not come at any cost or expense to the tax-payer or have any need for welfare, charity, or government grants;
- Not cause personal, property, or economic loss to anyone;
- Not cause or create, nor change expectations of, inflation, deflation, or otherwise effect purchasing power for producers and consumers of the other sectors;
- Not compete against any business or industry, property owners, job seekers, or economic agents in general.
The fundamental aspect underpinning our first claim above is that we believe that the percentage of the population who would employ this model and would enjoy living this way would be similar to the level of unemployment (and if unemployment was reduced so too would crime, homelessness and poverty). This is not to say that everyone who is unemployed would be suited to this model; on the contrary, many unemployed want to be gainfully employed but are shut out of the jobs market because there is a lack of jobs and yet at the same time there are those who are employed but do not enjoy their jobs nor get any satisfaction from their jobs or even the money they earn, and who might consider the custodian model more suited to their needs. Our point is that we can significantly reduce unemployment by including the implementation of the custodian model as opposed to trying to reduce unemployment solely by trying to create more jobs; and if it so happens that some of the population would prefer to operate under the custodian model as opposed to working a job, then it makes more sense to offer the custodian model as an alternative, especially if it is proven that it can be implemented without causing loss to anyone.
However, we are not here to sell this model, and again, we rely on the principle that if any individual or group with legal, economic, or property interests can prove that the custodian model is unlawful or will cause legal, economic, or property loss or loss to person, then these same individuals or groups have grounds to prevent its implementation. If they cannot prove these claims they would have no reason to prevent it.
As it relates to being unlawful or causing loss to person or property, then in determining this it matters not whether the model be implemented by one household or millions; however, when it comes to economic loss (or even potential economic loss), then the percentage of the population who implement it may be a factor (we do not see any more than say 5% of the population would employ it – in other words, it would be around the same type of figure as those who make up the CHUP sector).
As it relates to being unlawful, we have yet to find any rule in law or equity that would prevent its implementation, and this includes the necessary trust relations with government.
[See:
http://www.bailii.org/uk/cases/UKHL/1977/2.html
Die Mercurii, 2° Martii 1977
HOUSE OF LORDS
TOWN INVESTMENTS LIMITED AND OTHERS
(RESPONDENTS)
v.
DEPARTMENT OF THE ENVIRONMENT
(APPELLANT)
…the legal relationship of trustee and cestui qui trust under a trust in private law is capable of existing between an officer of state in his official capacity and a subject…that property may be held in the capacity of a trustee for the Crown.
See also:
http://www.austlii.edu.au/au/cases/cth/HCA/1993/1.html
Registrar of the Accident Compensation Tribunal v Federal Commissioner of Taxation [1993] HCA 1; (1993) 178 CLR 145; (1993) 117 ALR 27; (1993) 67 ALJR 922 (7 December 1993)]
As it relates to loss to person or property, we see nothing which shows any property seizure or the destruction of property rights. Anything which is required by the custodian sector, which is not already owned by the government, will always be purchased (by one of the three methods above) and only if it is being offered on the market; nothing will be compulsory acquired. Furthermore, purchases are kept local, which only brings benefits to local business.
As it relates to economic loss, then as we have shown, there is no taxing of incomes or property to fund the sector just as there is no need for charity or gifts. Nor is anything the custodians produce treated as commodities nor brought to any market and so there is no competition against anyone for market share or for jobs or for yield etc, and more importantly, the custodians are not producing for the purpose of economic gain, and as such there can be no economic loss to any other.
[See
http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/sa/SASC/2007/365.html?
MILLS & ORS v SHEAHAN [2007] SASC 365 (16 October 2007)
Individual Autonomy
In a competitive world where one person’s economic gain is commonly another’s loss, a duty to take reasonable care to avoid causing mere economic loss to another, as distinct from physical injury to another’s personal property, may be inconsistent with community standards in relation to what is ordinarily legitimate in the pursuit of personal advantage.
This particular immunity from liability reflects the common law’s concern with the autonomy of the individual and its desire to give effect to the choices of the individual by not burdening his or her freedom of action. Thus, as long as a person is legitimately protecting or pursuing his or her commercial interests, the common law does not require that person to be concerned with the effect of his or her conduct on the economic interests of other persons.]
We acknowledge that the most burning question will probably center on inflation. Will the custodian sector create inflation a result of placing a demand on goods and services of the private sector considering they contribute nothing to supply (in GDP terms)?
As we understand it, under the commodity framework (debtor/creditor relations), all factors of production are treated as commodities and are thus charged for their use; rent for land, interest for credit, wages for labour, and taxes for government. Most businesses (all corporations) which employ people have shareholders and thus must generate profits over some period of time to pay dividends to shareholders. All these costs for the ‘use’ of all said commodities, is ultimately passed on to the end consumer and is captured in the price the consumer pays.
As demand inflation (in contrast to asset or currency inflation) is an increase in prices due to increased demand relative to supply of goods and services (in GDP terms), we acknowledge that the custodian sector is most likely to place at least some increase of demand relative to supply (although we must point out that many who exist in the CHUP sector are already contributing to this), for the same reason any purchases made from either the government or volunteer sectors does as these sectors do not add anything significant to the supply side (in GDP terms).
However, inflation also comes from increases in the cost of the supply side which includes demands from things like rent, interest, and wages (i.e. income). The more who pursue the ownership of assets, the more must go up the demands for financial income (and/or capital gains). Because the custodians do not own property, nor earn money, then they contribute nothing to the cost of the supply side for they themselves do not demand rent, interest, or wages (or capital gains). They also do not borrow and hence do not contribute to any increase in financial claims of others. Therefore, there is a trade-off. An increase in demand of real goods relative to supply of real goods is offset by having no demand for (or any contribution to the demand of) financial income relative to supply of financial income. Obviously, not owning property means custodians do not contribute to asset inflation either.
We can again borrow from the schematic from Michael Hudson to demonstrate the above: the circuit which flows from producer/employer to consumer/employee (the real sector), is subordinate to (and thus must feed) the circuit flowing out of and back into the FIRE sector, and it is only from the FIRE sector that financial income flows (although in theory this is not in fact how it must be done, this is just the way it is done in today’s modern world). This means that any claims of a financial nature must come before any claims of a real nature (for the latter cannot be acquired without the former), and unlike real goods and services, financial claims bear interest, therefore demand for financial income is always increasing relative to goods and services no matter how much real stuff is produced (until we have deflation). Because the custodians have no demand for financial income of any sort, they do not feed the FIRE sector and thus reduce the impact on supply side inflation.
As for currency inflation, the object of the custodian model is that all purchases are kept local as far as is humanly possible, therefore, not only is the custodian not contributing to any change in the value of the currency relative to other currencies, keeping purchases local obviously benefits local businesses.
Therefore, we do not find that the custodian sector will have any considerable impact on the level of prices and thus will not cause economic loss for those concerned.
So we are now at the point where we invite any responses to this challenge.
We have spent many years researching this model from legal, economic, philosophical, political and even religious perspectives, just to name a few perspectives. What we have presented above is really only a brief summary of the entire volumes of research, analysis, and evidence compiled in support of this model.
It has not always been this way. After a couple of years we realized we had to try and disprove it because we could not find anyone who was seeing what we were seeing and yet the more we tried to disprove it the more it seemed to prove itself.
However, we now leave it to you to prove us wrong or offer any suggestions.
For the economist, our question or challenge to you is to tell us if any individual or household was to implement the Custodian model, would it cause economic loss to any other, and if so, does this prove the economy is zero-sum?
You may present your responses below, or if you do not want us to make your responses public you can send them to us via the contact page where you will remain anonymous.
Thank you!
Added 5th May 2019:
I have recently come to realize that many of those in government and many economists, do not seem to understand the differences between some concepts and relations or that
some of these concepts even exist. Without this understanding, no one will understand what I am presenting:
It is assumed the reader understands the difference between relations based on debt and relations based on equity;
It is assumed the reader understands the difference between contract law and trust law.
It is also assumed the reader understands the difference between a commercial trust which ultimately operates under contract, and honory or custodian trusts which are governed exclusively in the jurisdiction of equity;
It is assumed the reader understands the difference between a ‘monetary profit’ which is generated under a competitive economic system and which cannot be produced in
isolation, and, an ‘organic surplus’ which is generated from real resources such as seed or livestock, requires no competition to generate, and can be produced in isolation;
It is assumed the reader understands, that the relations required to generate a monetary profit are contractual in nature, and the relations required to create real surpluses out of real resources, are relations which can be based on trust;
Finally, it is assumed the reader understands that people who are parties to relations which are contractual in nature seek damages or the seizure of property upon default of the contract, whereas trust relations are based on mutuality and involve operating on the conscience of the parties.
To illustrate the difference between the two, let us imagine a man owns a cow and lends the cow to his neighbour, for a price, for the purpose of allowing the neighbour to milk it:
Under the contractual relation the owner will pre-determine his price, i.e. he will stipulate that the neighbour must pay 5 litres of milk a week to the owner, and what is produced above this can be kept by the borrower, and he will place a lien on the borrowers property as insurance. It will be exclusively the borrowers duty to determine how to get the most out of the cow. If the neighbour fails to produce and deliver the stipulated 5 litres of milk a week he will be sued in a court for damages, he will have to return the cow, and if he is unable to pay the damages will have his property seized to make good to the lender. If he has no property he will become the slave of the owner.
Under a mutual trust relation, the owner will not pre-determine his price but offer a surplus share arrangement, whereby whatever milk is produced each will get half. If there is any week where no milk is produced, both parties get nothing, no one is sued, and no property is seized. The lender will take it upon himself to help and educate the borrower to find better ways to produce more milk or to prevent there being no milk (such as suggesting putting the cow in different locations on the land which may provide better grass or less stress for the cow).
The latter is in essence what the custodian model is based on.
The Economists Challenge 