Summary:  Chapter 8 explores the limitations of natural law societies, particularly their lack of incentives for innovation, progress, and risk management. It contrasts these societies with those that allow for ownership of certain rights, which can encourage improvements and technological advancements. The chapter discusses how strict adherence to non-ownership principles could lead to a reversion to primitive conditions over time. It introduces the concept of "partial ownability" societies, which balance the benefits of natural law systems with the need for progress. The chapter concludes by considering why exceptions to the "no ownability rule" might be desirable for a society like Pastland.

 

8:  Improving the World, Creating New Value, and Managing Risk

 

Some societies work in ways that cause people to get large amounts of wealth if they can do things that make the planet more productive.  They can also get fantastically wealthy if they can create new technologies or machines that can turn the super-abundant materials in the Earth into goods that make life better for humans.

Many of the entities called ‘countries’ that run our 21^st century world have found ways to allow individuals and groups of individuals (corporations) to make lots of money doing these things.

You can see the result all around you.  The cities have luxury steel and glass skyscrapers that allow people to live in what poets of the past described as paradise, high in the clouds with all manner of luxuries at their disposal.  We have devices that can produce electricity that allows us to turn night into day, to keep our homes comfortable in the coldest winter or the hottest summer, to talk to people on the other side of the planet in real-time video calls, to get on planes and travel to the other side of the world in a few hours.  People involved with the creation of these structures, goods, and services, clearly make money doing them.  Somehow, the system they live in transfers value to them in some way that encourages them to provide more and better structures, goods, and services.

We will see shortly that it isn’t necessary to allow people to own all rights to properties to have these incentives.  In fact, people actually have stronger incentives to improve if they don’t get the right to keep the bounty of the land (its free cash flow) as a benefit of ownership.

 

          For example, the Pastland Farm produces a free cash flow of $2.4 million a year.  Say you are given this land for free.   You star to get $2.4 million a year without doing anything.  Now say that you could possibly go out into the field and move a few thousand tons of dirt during the winter when the water was gone to make it level.  The level land would produce more than the land in its natural state.
          You could get more money if you went out and moved the dirt.  But why should you even go out to the dirty old farm?  (The free cash flow comes in after everyone who does anything, including manage the farm, has been paid.  You don’t have to do anything at all to get it and never have to set foot on the farm.)   To you, the money you can get from improving is actually pretty minor relative to the amount you get anyway. 
         Now consider a different system where the rights to the farm people can buy and own do not include the right to get the bounty of the land (its free cash flow).  You inherit all rights to the world except the right to the free money it generates.  (This right was kept by the human race when it arranged to set up ownability of land thousands of years ago.  It was never owned and the bounty has gone to the human race all this time.)  In this situation, the only way you can really benefit from the land is to improve it.  As we will see, in this system, the incentives to improve will be far greater than they would be in a system where people got massive amounts of free money as ‘owners’ without having to do anything at all.

 

Clearly, people do not have stronger incentives to improve property if they get money just because they have the title ‘owner of the land’ and they will get this money whether or not they improve.

People improve to get the extra money they get from the improvement, not because they are already getting huge piles of free money without doing anything.  This means that we can create even stronger incentives to improve by setting up a system where people can only buy and own certain specific rights to property.

But the point is here that natural law societies don’t allow any ownability of any rights to property at all.  Whatever rights are associated with improvements, they are not ownable, because no rights are ownable.  Almost always, improvements require people to invest their time, energy, skills, talents, money, or something.  They need to be assured that they will have legal rights to benefit from improvements before they can justify making these investments.  In other words, they must own something, even if it is just a document stating that they have the right to improve and the right to keep some of the benefits of improvement after the improvement is made.

Natural law societies don’t allow any ownability of any rights to land under any circumstances.  (This is the way the term is defined.   I will discuss this in more detail below.)  In fact, most natural law societies that have existed in the past not only didn’t encourage investments that would lead to progress and growth, most of them actually prohibited these investments.

This means that true natural law societies—pure ones that don’t ever make any exceptions to the absolute prohibition of humans to own parts of the world—are likely to not have any progress at all for incredibly long periods of time.  They may go thousands or even hundreds of thousands of years without any real change.  (Many of the pre-conquest American people lived pretty much the same way the first members of the homo genus lived when they first left Africa 1.9 million years earlier.)  In fact, without some sort of incentives to create things of value, even a group that starts with great advantages—as does our group in Pastland—will eventually revert to the most extreme level of primitiveness.  Let’s consider why this happens.

 

Reversion to Primitiveness

 

Our group in Pastland brought back a lot of wonderful things from the future.  We have the ship itself, made mostly of steel (an item that doesn’t normally exist in nature and has to be manufactured by humans).  We have computers, the generators and solar panels we use to generate our electricity, refrigerators to keep our food from spoiling, machines to help us sow the seeds and harvest the things the land gives us, radios, televisions, telephones, and the internet.

We have these things now, but they aren’t going to last forever.  When they break, we won’t have parts to fix them.

The ship is made almost entirely of steel.  If steel gets exposed to oxygen from the air, it starts rusting immediately.  Steel parts have to be protected or they will rust to nothing.  Ships are coated with paint.  The paint wears away and the ship has to be repainted every few years or it will start to rust.  A lot of paint was scraped from the ship in the events related to the time warp and many parts of the ship are already rusting.  Within a few decades, structures that were once thick enough to drive a tank across will be thin enough to poke a hand through.  Within a few generations, the floors and walls of the ship will be paper-thin and the ship will be so dangerous that we won’t be able to live there anymore.

We will have to move out onto the land.

If we still have an absolute prohibition on ownability and prohibit any alterations to the land, we will have to live in temporary structures like the teepees that the American natives in this area used before the first European people arrived.

When we arrived in the past, we had electricity produced by generators and solar panels.  We had a great many products that used electricity to operate.  These items have moving parts.  Generators have rotors that turn on bearings, and bearings eventually wear out.  Eventually our generators will break, and we won’t have the parts to fix them.

When the last of our generating devices fail, all our electrical devices will become useless.  All the data that was on hard drives will be lost forever.  If we have no paper factories, we won’t be able to write any of this information down and will have to pass it down to future generations verbally.  It won’t take long before the great bulk of the information about how to make things that we brought back from the future will be lost.

We will have babies: we don’t need any technology or factories for this; no investments are required.  Have sex and babies will come.  We have plentiful food; even without machines to collect the food, we will all have plenty to eat.  Babies will have good nutrition and grow up healthy.

Before modern birth control methods came into existence, the average woman gave birth about 8 times in her life.  If half of the babies survived to breeding age themselves, the population would double in a single generation.  (Four offspring would be alive and ready to reproduce from the original couple.)

If the population doubles every generation, it will increase by a factor of 32 every century and by a factor of more than 1000 every 200 years.  We don’t need technology for population to grow.  All we need is food and we have plenty of that.

The human population of the earth will grow.  We will spread out across the land.  Children will hear the stories of all of the wonderful things that people used to have, like giant ships that sailed the oceans, computers that stored vast amounts of data, and refrigerating devices that provided wonderful treats like ice cream on the hottest days.  In time, children will start to think of these stories as nonsense; stories told by adults for some unknown reason that really have no relationship to anything real or important.

They will stop believing these things.

Parents will not waste time telling their children stories that they don’t believe themselves.  All of the information we brought back from us from the 21^st century will be forgotten.

In later chapters we will see that it is possible to build societies that are almost identical to natural law societies, but have structures that allow people who want to build factories to do so, provided they agree to follow strict rules designed to protect the planet from harm and provided they agree to share the free cash flows the factories produce (once they have been completed and are in regular operation) with the human race.

We know that it is possible to have societies where factories exist.  We know this because we came from societies that worked in ways that not only allowed factories to exist, they encouraged factories to exist.

But we won’t have factories if we are strict about our prime directive and absolutely prohibit ownability or institutions that protect ownability of any kind.  To have factories, people have to be able to own rights to flows of value that factories produce, with their ownership rights protected by some sort of institutional structure.

 This doesn’t mean that people won’t make things in natural law societies.  They can produce a great many things.  They just won’t make things that are complicated enough to require large investments into things like factories to make.

People with natural law societies had a lot of fancy jewelry.  People made make clay pots and pottery.   Some metals can be worked without smelters, refineries, or factories: copper, gold, and sliver, for example, are all soft metals and can be hammered into thin sheets, drawn into wires, and otherwise worked with hand tools to make many different items.  People in natural law societies had these things.  We can have these things in Pastland, without allowing anyone to own any part of the world.

But we won’t have any additional refrigerators, television sets, paint, or any items made of steel; we won’t have cars, ethanol engines, jets, or bullet trains.  If we can make an item by hand, we can have it; if we need factories to make it, we can’t have it unless we have some sort of system that grants people some guaranteed rights to profit from their activities on land if they improve.  There has to be some sort of legal system that says ‘this right belongs to you.’  They have to own it.

 

 

Partial ownability societies

 

Territorial sovereignty societies and natural law societies are both extreme societies.  In one, everything is ownable, including nature, mountains, rivers, continents, corporations, and even naming rights to new star systems that are discovered.  In the other, no rights to any part of the world at all are ownable and can be purchased by anyone or any group at any price under any conditions.

Extreme systems of any kind always have limitations.  One obvious problem with extreme systems is flexibility.  Extreme systems do not allow any exceptions, no matter how great the benefits of exceptions may be.  Natural law societies are extreme systems because they don't allow any ownability of any rights to the world under any conditions.  It doesn’t mater how limited the rights or how great the advantages of allowing rights.  Humans and human entities can’t own them, period.

Our group in Pastland may not want an absolute system.  We may want exceptions.  If we decide to have them, we will no longer have a natural law society.  This is true by the way I have defined the term.  Natural law societies are zero ownability societies.

There is a reason for this definition.   The system we will look at starting with the next chapter, a socratic, is a partial ownability system.  In this system, people will not be able to own parts of the world around us.  The mountains, rivers, lakes, meadows, continents and parts of continents themselves will not be ownable.

But rights to use them will be ownable.

The human race can set up what you may think of as a 'permission slip' system for designated parcels of land that will allow people to buy and own the permission of the human race to use the land privately, provided they follow rules the human race sets for this system.

Here is a simple example.  Some people in Pastland may want private housing.  They may propose at a meeting that we set aside certain land for this purpose.  We can divide this land into ‘building lots.’  We can then sell documents that are essentially permission slips for each lot.  These permission slips give the owners of the land consent of the human race to use their lot as ‘a place to build and peacefully occupy a private home, as long as certain rules are followed.’

They buyers of these permission slips will not be the owners of any part of the planet.  They will only own the permission of the human race to use the land privately (provided they follow all the rules the human race sets for this, which may include payment over time to the human race).

In Pastland, we have a system built on majority rule.  If the majority want a rule, all have to respect it if they want to have the benefits of living in an organized system.

         This was the first rule we passed when we arrived in the past.  It is a defining rule that will make our system much different than territorial sovereignty societies, because in territorial sovereignty societies, the human race as a whole has no authority whatever.  (All authority is vested in the countries, which are sovereign entities.)   If the human race has no authority, it doesn’t matter what the human race wants. 
          A socratic system is built on majority rule for each ‘constituency.’  The primary constituency is the human race.  We make rules on matters that impact the entire human race.  If we (the members of the human race, acting collectively in a majority rule system) decide we want to divide the world into different administrative districts, we can do this and set up majority rule systems inside these districts.   But the rules for the human race will be made by the human race itself, in direct elections.

 

This kind of system is a sort of work around that allows private property without private ownership (or any kind of ownership at all).  In the above example, everything on the building lot will be private property.

But the part of the Earth that your home is built on will not be owned by you or anyone else.  No one will have a right to treat it as if it is a simple possession that they have the right to destroy as they would any possession.  You only own the right protection of your privacy on the land, not the land itself.

You could think of this as a ‘partial ownability’ system.  You could say that there is a certain package or list of rights that are potentially ownable by humans.  If everything on this list is actually ownable, we have a territorial sovereignty system:  the sovereign owners have absolute rights and authority over the land and can do anything they want with it.   in a socratic system, we don’t accept that all rights are ownable.  We do accept that people can buy and own rights to the consent of the people of the world to use land privately, and to have their privacy protected by courts.

If our group in Pastland decides to create a partial ownability system, we must decide what portion of the potentially ownable rights that we will make actually ownable.  We will see later that we actually have a lot of different options here.  Each of the ownability systems works differently.

We can think of territorial sovereignty societies as 100% ownability systems.  One hundred percent of potentially ownable rights are actually ownable (by dictators, kings, and the entities we call ‘governments of countries’).  We can think of natural law societies as 0% ownability societies.   Zero percent of potentially ownable rights are actually ownable.  These are extreme systems.  Partial ownability systems will be in between these two extremes.

It is possible to have systems that are very close to 100% ownability societies built leave some rights unownable and unowned.  You might expect these systems to work very much like territorial sovereignty societies. We will see that it is possible to create systems that are like this if we want to do this.  (This is going to be very important when we look at converting to a different system.  We can have a system that is almost identical to the system we have now, but where some rights to some properties have been transferred to the control of an organization called the community of humankind which represents the human race, and are no longer ownable.)

It is also possible to have systems that are very close to 0% ownability societies, but have some tiny, tiny bit of ownability of a tiny number of properties.  Such a system will look and work almost identically to a natural law society.

Since we know how the extreme systems work (both have existed) we know how the ‘almost extreme’ systems are going to work.  They are going to be almost identical to the extreme systems.   However, if we move away from the extremes toward the center of the range of possible ownability systems, we move into areas that aren’t really like any kind of society that has ever existed on Earth.

The book Possible Societies deals with all the options and shows how they all work.  To understand them all, you need a lot of information so Possible Societies is a very long book.  For the points of Preventing Extinction, you don’t need to understand everything, you just need to understand the specific system I call the ‘socratic.’

 

Why Might We Want Exceptions to the ‘ No ownability rule?’

 

Our natural law society in Pastland is actually pretty nice and comfortable.  If people respond to the inherent incentives of this system (if they try to maximize their own personal incomes) they will work hard, both individually and with others, to keep the land healthy and keep the environment clean.  In real-world natural law societies, the worst crime that anyone could commit involved harming the land.  In the societies of native Americans, it may be hard to see why they cared so much about keeping their environment clean and healthy.  In Pastland, we use money for transactions and the incentives stand out.  We share the bounty of the land.  Healthy land is more bountiful than land that suffers in any way.  We all get paid, in dollars and cents, to keep the land healthy and productive.  Some of us have other incomes (besides the bounty of the land).  But some depend entirely on the bounty of the land to raise their families.  If you harm the land, you are harming them directly.  You can’t expect people to not get angry at you if harm them and the people they love by taking money away from them, something that happens if you harm the land.

Everyone is also being paid to be personally and socially responsible.  The bounty of the land doesn’t belong to everyone.  It is a gift and belongs to no one until the people around you decide to let it become private and divide it in some way.  You can’t expect them to give you an equal share if you do things that harm them.  You need to cultivate good relationships with others.  It is in your best interests to go out of your way to help others if they need it, to share with them if you have more, and to work with others on projects that they think will make life better for everyone.  If you do this, and have a reputation for being responsible, you can get away with the occasional slip up (we all make mistakes that harm people accidentally).  If your do not have a reputation like this, when you slip up you could find yourself with a far lower income or no income at all.

We would expect people to go to extreme lengths to be environmentally, socially, and personally responsible.  Many natural law societies that existed in the past were able to function quite well without organized police forces and formal laws and court systems.  We may have such rules but, like other natural law societies, we could do without them.

The natural law societies bring some great advantages.  But natural law societies are extreme systems that place absolute limits on the things we can do and the polices we can have.  We can have exceptions if we want.  We won’t have a natural law society if we have these exceptions, but our group in the ancient past isn’t required to have an extreme system.  We can have something that is not a natural law society and not a territorial sovereignty society if we want.

 

SEO Snippet:  Natural law societies lack innovation incentives. Partial ownability systems balance progress with shared benefits, avoiding reversion to primitive conditions.

Keywords:  Innovation incentives, Partial ownability societies, Technological progress, Natural law limitations, Socratic system

 

 

Summary:   Chapter 7 explores the incentives in natural law societies, focusing on environmental, personal, and social responsibility. It contrasts the Pastland society with historical examples from pre-conquest Americas and modern territorial sovereignty societies. The chapter highlights how sharing the bounty of the land creates strong incentives for responsible behavior and community cohesion. It also discusses the limitations of natural law societies, including their lack of incentives for innovation and risk management. The chapter concludes by introducing the concept of a "socratic" society that aims to combine the benefits of natural law societies with incentives for progress.

 

7:  Incentives in Natural Law Societies

Environmental Responsibility Incentives

 

When we arrived in the ancient past, the land was already healthy.  Nature created a balanced ecosystem.  If we throw it out of balance, it won’t operate as well as it does now and won’t give us as much wealth as we get now.  If we want to keep our incomes high, we will want to make sure that the system remains balanced.  We will want to make sure that no harm comes to the land or any part of nature that we depend on.

We would expect these people to have very strong opinions about keeping the land healthy.  Any harm to the land could mean a death sentence for them.  They will obviously have powerful incentives to make sure that everyone around them is environmentally responsible.  If you do something that even has the tiniest potential to harm the land we depend on, you can expect a stern lecture.  You will be told that you are harming everyone.  (To quote chief Seattle of the Duwamish: ‘Teach your children what we have taught our children that the earth is our mother.  Whatever befalls the earth befalls the sons of earth.  If men spit upon the ground, they spit upon themselves.’)

A great many different natural law societies existed in the Americas before the conquest.  Some had enormous cities, used money for transactions as we do in Pastland, had extensive markets and many goods and services available, just as we have in Pastland.  Other groups roamed the land following buffalo or other game, trading meat and livestock products for other goods at pow-wows or other gatherings, and rarely even seeing money.  But they all shared a common feature: they all considered nature and the natural world to be unownable and unowned.  They all lived on a very bountiful world and shared the bounty.

When Columbus arrived in the Caribbean in October of 1492, very large numbers of people rowed out in canoes to meet him.  He had arrived in an area with thousands of islands, each of which produced entirely different things.  (Again, for people confused by standard history books that claim that Columbus ‘discovered’ America, it is important to realize that Columbus went to tropical islands in the Caribbean Sea, not to the American continent.  Each island has slightly different features and produces different things today; this was also true in 1492.)

Columbus visited many of these islands.  He was totally amazed by the incredible health of the land.  He had never seen anything like it.  Here are his words describing several different islands sequentially:

‘This is a large and level island, with trees extremely flourishing, and streams of water; there is a large lake in the middle of the island, but no mountains: the whole is completely covered with verdure and delightful to behold.  The natives are an inoffensive people, and so desirous to possess any thing they saw with us, that they kept swimming off to the ships with whatever they could find, and readily bartered for any article we saw fit to give them in return, even such as broken platters and fragments of glass.

 

I determined to steer for the largest, which is about five leagues from San Salvador [the name he gave the first island where he landed] the others were some at a greater, and some at a less distance from that island.  They are all very level, without mountains, exceedingly fertile and populous’.

 

Another island:

 

In the meantime I strayed about among the groves, which present the most enchanting sight ever witnessed, a degree of verdure prevailing like that of May in Andalusia, the trees as different from those of our country as day is from night, and the same may be said of the fruit, the weeds, the stones and everything else.

I assure your Highnesses that these lands are the most fertile, temperate, level and beautiful countries in the world’.

 

Another island:

 

This is so beautiful a place, as well as the neighboring regions, that I know not in which course to proceed first; my eyes are never tired with viewing such delightful verdure, and of a species so new and dissimilar to that of our country, and I have no doubt there are trees and herbs here which would be of great value in Spain, as dyeing materials, medicine, spicery, etc., but I am mortified that I have no acquaintance with them.  Upon our arrival here we experienced the most sweet and delightful odor from the flowers and trees of the island.

 

The next island.

 

The diversity in the appearance of the feathered tribe from those of our country is extremely curious.  A thousand different sorts of trees, with their fruit were to be met with, and of a wonderfully delicious odor.  It was a great affliction to me to be ignorant of their natures, for I am very certain they are all valuable; specimens of them and of the plants I have preserved.

 

We will see that some other societies actually have even more powerful incentives to be environmentally responsible than natural law societies.  Socratic societies, for example, operate in ways that encourage progress, growth, and mechanization of production with powerful internal reward systems.  People will respond to these incentives in ways that cause the land around them to produce more and more with less and less effort and cost.  The bounty of the land is the amount left over after subtracting enough to pay the costs.  As the total production increases (including production from factories and other facilities on the land) and costs fall, the free cash flow that represents the bounty of the land will increase.  The more bounty there is to divide, the more people will get from the land.  We will see that healthy land always produces more, at least over the long run, than destroyed land.  Socratic societies will have even stronger incentives to be environmentally responsible than natural law societies because people have stronger incentives to care for the land if they get more money from this care than if they get less.

Not all societies that are possible have incentives that encourage environmental responsibility.  Some societies have the opposite incentives: they have incentives that encourage irresponsible use of the land.  We will look at the flows of value that generate these incentives later in the book, when we look at Territorial sovereignty societies (which have the strongest possible destructive incentives) but, for now, I just want to go over the result.

At the time, hardwood lumber was incredibly valuable in Europe.  They weapons factories needed this to make steel.  If you want to ‘smelt’ iron, or remove it from rocks, you need to build an extremely hot fire.  Wood fires don’t produce enough heat for this, but charcoal made from hardwood does.  Europe had been making steel for more than 2,000 years and had basically eliminated all hardwood forests; with no hardwood they couldn’t make steel or more weapons.

Haiti is the native name for the island; in the Tianó language, this word means ‘the mountainous island.’ When the trees were gone, the mountains didn’t have any root systems to hold the soil in place; it began to wash away.

 

The list of catastrophes is mind-numbing: this week’s devastating earthquake.  Four tropical storms or hurricanes that killed about 800 people in 2008.  Killer storms in 2005 and 2004.  Floods in 2007, 2006, 2003 (twice) and 2002.  And that’s just the 21st Century run-down.

This week’s devastating quake comes as Haiti is still trying to recover from 2008, when it was hit four times by tropical storms and hurricanes, said Kathleen Tierney, director of the University of Colorado’s Natural Hazard Center.  Every factor that disaster experts look for in terms of vulnerability is the worst it can be for Haiti, said Dennis Mileti, a seismic safety commissioner for the state of California and author of the book Disasters by Design.  "It doesn’t get any worse," said Mileti, a retired University of Colorado professor.  "I fear this may go down in history as the largest disaster ever, or pretty close to it.".

While nobody knows the death toll in Haiti, a leading senator, Youri Latortue, told The Associated Press that as many as 500,000 could be dead.

 

We know from history that people who had natural law societies—including the people of the pre-conquest Americas—took truly incredible care of the land around them.

They think that destruction is a part of human nature.  If people lived on these lands, in immense numbers for long periods of time, the land would be destroyed.  Since the land was not destroyed, they claim that humans could not have actually lived in the Americas, at least not in any numbers or for any length of time.

 

          The book Fact Based History goes over the tools that we use to date artifacts and the evidence we have of a very long period of human habitation in the Americas.

 

Natural law societies work in ways that provide very real material benefits for people who take care of the land and keep it healthy.  The evidence we have tells us that these incentives made a difference.

Personal Responsibility Incentives

Our group in Pastland has a natural law society, at least as long as the moratorium lasts.  No one owns the land, so no one owns the wealth it produces.  We use part of this wealth to reward/pay people who help bring in the wealth of the land; this leaves the free cash flow, the money value of the bounty of the land.

We have been using part of the free cash that flows from the land to reward people (pay them) for services that benefit everyone.  After we pay them, there is still a lot of money left over.  We have been dividing this money among our members.

So far, we have been dividing it evenly.  I started with this particular distribution of the ‘leftover money’ because it is simple.  But we don’t have to divide the leftover money evenly.

We may decide to cut the amounts that go to certain people.  Some people may do things that reduce the quality of life for us and some may even do things that cause harm to us.  Say that there is a person in our group who picks up things that don’t belong to her and she sees laying around, and then keeps them.  We may have people who get into arguments that disturb the peace and quiet, or that stay up late into the night with loud parties that disturb the sleep of those who go to bed early.  We can let these people know that we don’t like their behavior in several ways.  We may start by simply talking to them and telling them that their behavior bothers us.  If this doesn’t work, we may decide to take action by accessing some sort of fine against them for actions that bother us and taking this fine out of their share of the distribution of wealth.  We can cut their share of the distribution of wealth from the land, in order to provide incentives for them to consider the feelings of the people around them and act in socially responsible ways.

It is important to realize that this particular option for encouraging social responsibility is not available in all possible societies.  Territorial sovereignty societies, for example, consider everything to belong to someone; there are free cash flows, but this money doesn’t flow to the community of humankind and isn’t available for the people to distribute.  (In systems where the land is owned, everything the land produces, including its free cash flow, belongs to the owner.)  In Territorial sovereignty societies, people who weren’t born rich or don’t have a steady job that can be garnished to get the money don’t really have anything to lose from socially irresponsible behavior.  (In some cases, their lives are better if they commit crimes and go to jail, because jail is a better home than they can have any other way.  I have known people who have robbed stores and then sat in front of the store waiting for the police, because it is the only way they could get enough to eat.)  In natural law societies, there is wealth to divide among the people.  People know that if they do things that harm others, the others may vote to reduce their share.  In natural law societies, people all have something to lose for acts that harm the people around them.

In our case, most people have two incomes: one comes from the money they earn; the other from their share of the unearned wealth the land produces (its free cash flow).  But many people don’t have earned income at all, and many people only get small amounts other than their share of the bounty.  These people have very powerful incentives to make sure they don’t cause problems for others and don’t do anything that may even have the appearance of dishonesty.

 

Personal Responsibility Incentives:  Examples

 

The first day Columbus met the people of the islands of the western hemisphere, Columbus described them this way in his logs:

 

They are very gentile and without knowledge of what is evil, nor do they murder or steal.  Your highness may believe that in all the world there can be no better or gentler people.  All the people show the most singular loving behavior and they speak pleasantly.  I assure Your Highnesses that I believe than in all the world there is no better people nor better country.  They love their neighbors as themselves and they have the sweetest talking the world and are gentle and always laughing.

 

The most prolific writer of the period, Bartolomé de Las Casas, described them this way:

 

All the land so far discovered is a beehive of people; it is as though God had crowded into these lands the great majority of mankind.  And of all the infinite universe of humanity, these people are the most devoid of wickedness and duplicity.  They are by nature the most humble, patient, and peaceable, holding no grudges, free from embroilments, neither excitable nor quarrelsome.  These people are the most devoid of rancors, hatreds, or desire for vengeance of any people in the world.

They possess little and have no desire to possess worldly goods.  For this reason they are not arrogant, embittered, or greedy.  They are very clean in their persons, with alert, intelligent minds.  Some of the secular Spaniards who have been here for many years say that the goodness of the Indians is undeniable.

 

Columbus had an occasion to see how incredibly honest people could be: Columbus had made a friend on the island of Haiti, a man of great respect in the community named ‘Guacanagari.’ Columbus referred to him as ‘the king’ because of the deference that others showed to him.  On the 17^th of December, Columbus told Guacanagari that in seven days it would be Christmas, the most important holiday for his people.  Guacanagari then arranged a feast and celebration in honor of Columbus and his men, to be held as his home on Christmas day.  Columbus accepted the invitation and they arranged to meet on Christmas at Guacanagari’s home.

Columbus then went out exploring but was determined to return for the Christmas celebration Guacanagari had arranged.

On December 24, Columbus was on his way from the other side of the island.  He had been up for two days straight and was very tired.  He had put a sailor on watch and went to bed.  The sailor who was in charge was apparently also very tired.  He put a cabin boy in charge of the wheel (‘tiller’) and went to bed himself.  At midnight, the ship hit a sandbank.

Here is the description of the event from the official logs of the voyage:

 

December 24, 1492:

Navigating yesterday, with little wind, from Santo Tomas to Punta Santa, and being a league from it, at about eleven o’clock at night the Admiral went down to get some sleep, for he had not had any rest for two days and a night.  As it was calm, the sailor who steered the ship thought he would go to sleep, leaving the tiller in charge of a boy.  The Admiral had forbidden this throughout the voyage, whether it was blowing or whether it was calm.  The boys were never to be entrusted with the helm.

The Admiral had no anxiety respecting sandbanks and rocks, because, when he sent the boats to Guacanagari on Sunday, they had passed to the east of Punta Santa at least three leagues and a half, and the sailors had seen all the coast, and the rocks there arc from Punta Santa, for a distance of three leagues to the E.S.E.  They saw the course that should be taken, which had not been the case before, during this voyage.

It pleased our Lord that, at twelve o’clock at night, when the Admiral had retired to rest, and when all had fallen asleep, seeing that it was a dead calm and the sea like glass, the tiller being in the hands of a boy, the current carried the ship on one of the sandbanks.

If it had not been night the bank could have been seen, and the surf on it could be heard for a good league.  But the ship ran upon it so gently that it could scarcely be felt.  The boy, who felt the helm and heard the rush of the sea, cried out.  The Admiral ordered him and others to launch the boat, which was on the poop, and lay out an anchor astern.

The master, with several others, got into the boat, and the Admiral thought that they did so with the object of obeying his orders.  But they did so in order to take refuge with the Nina, which was half a league to leeward.  The Nina would not allow them to come on board, acting judiciously, and they therefore returned to the ship; but the Nina’s boat arrived first.  When the Admiral saw that his own people fled in this way, the water rising and the ship being across the sea, seeing no other course, he ordered the masts to be cut away and the ship to be abandoned.

The master, who was also the owner, of the Admiral’s ship was Juan de la Cosa of Santofia, afterwards well known as a draughtsman and pilot, lightened as much as possible, to see if she would come off.  However, as the water continued to rise, nothing more could be done.  Her side fell over across the sea, but it was nearly calm.  Then the timbers’ opened, and the ship was lost.  The Admiral went to the Nina to arrange about the reception of the ship’s crew, and as a light breeze was blowing from the land, and continued during the greater part of the night, while it was unknown how far the bank extended, he hove her to until daylight.  He then went back to the ship, inside the reef; first having sent a boat on shore with Diego de Arana of Cordova, Alguazil of the Fleet, and I’edro Gutierrez, Gentleman of the King’s Bedchamber, to inform Guacanagari who had invited the ships to come on the previous Saturday.

His town was about a league and a half (4 miles) from the sandbank.

They reported that he wept when he heard the news, and he sent all his people with large canoes to unload the ship.  This was done, and they landed all there was between decks in a very short time.  Such was the great promptitude and diligence shown by Guacanagari.  He himself, with brothers and relations, were actively assisting as well in the ship as in the care of the property when it was landed, that all might be properly guarded.

Now and then he sent one of his relations weeping to the Admiral, to console him, saying that he must not feel sorrow or annoyance, for he would supply all that was needed.  The Admiral assured the Sovereigns that there could not have been such good watch kept in any part of Castille, for that there was not even a needle missing.

He ordered that all the property should be placed by some houses which the king placed at his disposal, until they were emptied, when everything would be stowed and guarded in them.  The king and all his people wept.  They are a loving people, without covetousness, and fit for anything; and I assure your Highnesses that there is neither better land nor people.  They love their neighbors as themselves, and their speech is the sweetest and gentlest in the world, and always with a smile.

‘Your Highnesses should believe that they have very good customs among themselves.  The king (Guacanagari) is a man of remarkable presence, and with a certain self contained manner that is a pleasure to see.  They have good memories, wish to see everything, and ask the use of what they see’.

 

Columbus was commanding the Santa Maria, the supply ship for the voyage.  The Santa Maria was far larger than the other ships, and laden with many very useful things.  Most of these things would have been worth enormous amounts to the natives.  When Columbus was trading for these things, the people offered large amounts of gold and skeins of cotton (as valuable as gold at the time to Europeans) for these things.

When they had an easy opportunity to steal them, they declined.

Not so much as a needle was missing.

You and I were born into societies where the great bulk of the people of the world have nothing unless they can get jobs.  If they don’t work, they die, regardless of the amount of wealth around them.  People in these societies are not rewarded for being personally responsible.  In fact, they often must act irresponsibly just to avoid death: if you don’t have a job and have no rich people to give you charity, you must either steal or die.  The need to steal is so common that many people don’t even get upset when people steal from them:  it is a common part of life and something everyone in business must simply account for: it will happen, and we all know it.

Because theft, deception, and trickery are so common, we all know that we are never really safe in the societies we were born into and which we live in now.  People in dire circumstances are behind the shadows of each tree, like ants sweeping the ground for crumbs, waiting to swoop in on any target of opportunity.

This is not the case in all possible societies.  Some societies work in ways that generate flows of value that the people as a group may distribute among their members as the group sees fit.  Our group in Pastland has $2.4 million left—the free cash flow of the farm—that we can divide any way we want.  We want to encourage people to do things that benefit us, so we use part of this money to provide rewards that encourage people to step up and do things that benefit the human race.  Some people will find things that we like.  If we want to keep having these things, we may give them some of the bounty of the land as a reward, to encourage them to keep doing these things.  But we have such enormous amounts of income that, after we pay people who do these things enough to make sure they keep doing them, we have $2 million left.  We can divide this money among our people.

If everyone is acting responsibly, it makes sense to divide it evenly.  But if some people are acting irresponsible, it wouldn’t make sense to give them an equal share.  We may come up with a process of some kind to determine a kind of schedule of offenses.  People who violate the rules can be given a hearing and, if the hearing officers conclude that the offense was intentional, they can be fined.  This will always reduce the quality of their lives because, as long as the fines are not more than their share of the bounty, they will always be able to afford to pay them.  (In Territorial sovereignty societies, most offenders can’t be fined because they have nothing to use to pay the fines.  All we can do in this case is put them in jail, which is often a better place to live than they would be living otherwise, so they actually can improve their lives by committing crimes.)

You could say that this system pays everyone to be responsible.  In our case, people are paid in money, but all natural law societies have flows of value that must be distributed in some way among the people, so all natural law societies pay or reward for being responsible.  If people are rewarded for certain behaviors on a consistent basis, starting at an early age, they become programmed to think about the consequences of their actions.  People may see something they want lying around that they know belongs to others.  They may have it, but if they realize that they may easily suffer much more than they gain from the object if anyone ever finds out they have it, they will ‘have a feeling’ that it is simply not the right thing to do.  Their feelings—actually the ingrained responses of their minds that result from the known relationship between responsible behavior and rewards—will push them to do the responsible thing, whatever they think it is.

Later we will see that we can actually use mathematical analysis to determine the strength of incentives that push toward personal responsibility in different societies.  We will see that some societies have very powerful incentives that encourage personal responsibility, some have weaker incentives, some have none at all, and some even have incentives that discourage personal responsibility.  We will see that natural law societies have very strong incentives that encourage personal responsibility, but they aren’t the strongest possible.  (Socratic societies, discussed later in the book, have much stronger incentives pushing toward social responsibility, because of rapid increases that drive up the bounty of the world; if the world is more bountiful, there is more to divide and people have more to gain from personal responsibility.)  But, although it is possible to have ‘personal responsibility incentives’ that are stronger than those in natural law societies, natural law societies have extremely strong incentives to come to understand the rules and act properly.  We can see from the historical records that these incentives really did exist in these societies when they dominated the western half of the world.

Columbus was amazed at the honesty of the people in the new world, as the excerpts from his logs presented above show.  Others expressed the same amazement:

The official historian of the Spanish Crown during the time that Columbus was alive was a Dutchman named ‘Peter Myrtar.’ Myrtar was very impressed by the honesty of the people of the lands he studied.  He studied the people and came to the conclusion that there is something about the idea of sharing the land and the things the land produced that led to this behavior.  Here are some quotes from his official report on the people of the new world, called ‘Orbo Novo’ (The New World):

 

It is proven that amongst them the land belongs to everybody, just as does the sun or the water.  They know no difference between meum and tuum, that source of all evils.  It requires so little to satisfy them, that in that vast region there is always more land to cultivate than is needed.  It is indeed a golden age, neither ditches, nor hedges, nor walls to enclose their domains; they live in gardens open to all, without laws and without judges; their conduct is naturally equitable, and whoever injures his neighbor is considered a criminal and an outlaw.

 

He goes on:

 

They know neither weights nor measures, nor that source of all misfortunes, money; living in a golden age, without laws, without lying judges, without books, satisfied with their life, and in no wise solicitous for the future.

 

Bartolomé de Las Casas was the most prolific writer of the time.  Here he describes these same people:

 

Of all the infinite universe of humanity, these people most devoid of wickedness and duplicity; they are by nature the most humble, patient, and peaceable, holding no grudges, free from embroilments, neither excitable nor quarrelsome.  These people are the most devoid of rancors, hatreds, or desire for vengeance of any people in the world.

 

What about these same lands now?

You can find many descriptions of the changes that occurred in the first few years after the arrival of the Europeans in the book Fact Based History.  They show that the Europeans made a dedicated effort to wipe out the old social order and replace it with a new one on the European model.  They succeeded.  The payments that went to responsible people are no longer being made; they haven’t been made for centuries.  The Europeans needed lumber very badly to make charcoal for steel.  Haiti, the first island they settled, was densely forested and the Europeans clear cut it.  The Europeans took the gold and other metals and then abandoned the useless hulk that remained.  The Europeans decimated the native population, generally by enslaving them and working them to death.  By 1540 there weren’t enough natives left to fill the Christian need for slaves, so the Europeans began bringing in both white slaves (purchased from European prisons) and black slaves (captured and enslaved from Africa) to finish raping the lands.  Once the land had been denuded of anything valuable, the slave masters basically abandoned it.  They left the descendents of the white and black slaves they had imported; these people interbred with the native people that remained to create the racial mixture we see on the island of Haiti today.  (DNA studies show that a large percentage of the people of Haiti have ancestors of all three races.)

These people did not have anything to work with: the ecosystem that had supported the natives, and that early European arrivals had marveled at, no longer existed: all resources valuable to the outside world were gone.

The former masters who abandoned this island did leave these people with something however: they left them with an administrative system based on the principles of sovereignty, as accepted in Europe.  These people had an entirely different foundation to build on than the people who lived before them.

How did things turn out?  You can get some idea from the next quote.  This quote is from the United States government’s travel advisory website, for the exact same island described in the above passages, the one with no ‘murder or theft’ (according to Columbus) where ‘their conduct is naturally equitable, and whoever injures his neighbor is considered a criminal and an outlaw’ according to Myrtar, where ‘these people most devoid of wickedness and duplicity of all the infinite universe of humanity’ reside.

 

Reconsider travel to Haiti due to crime and civil unrest.  Violent crime, such as armed robbery, is common.  Protests, tire burning, and road blockages are frequent and often spontaneous.  Local police may lack the resources to respond effectively to serious criminal incidents, and emergency response, including ambulance service, is limited or non-existent.

Travelers are sometimes targeted, followed, and violently attacked and robbed shortly after leaving the Port-au-Prince international airport.  The U.S.  Embassy requires its personnel to use official transportation to and from the airport, and it takes steps to detect surveillance and deter criminal attacks during these transports.

The U.S.  government has limited ability to provide emergency services to U.S.  citizens in some areas of Haiti.  The Embassy discourages its personnel from walking in most neighborhoods.  The Embassy prohibits its personnel from:

Visiting establishments after dark without secure, on-site parking.

Using any kind of public transportation or taxis.

Visiting banks and using ATMs.

Driving outside of Port-au-Prince at night.

Traveling anywhere between 1:00 a.m.  and 5:00 a.m..

Visiting certain parts of the city at any time without prior approval and special security measures in place.

If you decide to travel to Haiti:

Avoid demonstrations.

Arrange airport transfers and hotels in advance, or have your host meet you upon arrival.

Be careful about providing your destination address in Haiti.  Do not provide personal information to unauthorized individuals located in the immigration, customs, or other areas inside or near any airports in Haiti.

As you leave the airport, make sure you are not being followed.  If you notice you are being followed, drive to the nearest police station immediately.

Do not physically resist any robbery attempt.

 

Social Responsibility Incentives

 

What is the most irresponsible thing someone could do in a social situation? 

How about this: the person could organize a gang to use murder and terror to either drive off or kill all people who are not in her gang.  Then she could claim that the part of the world she and her gang live on belongs to the gang and she will kill any who try to cross the borders into her territory.  This is the  kind of system that territorial apes like gorillas and chimps had.  It is the kind of system territorial dogs like wolves and hyenas have.  It is also the kind of system humans have today.  The territories controlled by gangs are the things we call ‘countries.’ 

You and I were raised in a crazy world.  The schools in our world today teach children that their highest allegiance is not to their race, not to their culture, not to nature, not to the world around them, but to their country.  They are taught that the greatest heroes in history where the ones who organized the mass murder events called ‘wars’ that led to their country existing and then fought off any who even considered trying to benefit from anything inside the borders of the countries.  Children are raised to believe it is not just acceptable, but admirable to be willing to kill others and inflict terror on any who threaten the interests of their country.  In many areas, the mass murder is required:  the system classifies any who refuse to become part of the killing machines as criminals. 

Our group in Pastland has passed a moratorium.  For the time this moratorium is in effect, we will not allow any person or group to form into a gang to take control of any territory.  Natural law societies that existed in the past rest on the same basic principle.  The primary law of this society—we may call it a ‘prime directive’ if we want to use Star Trek terminology—is that no one may organize to use violence to create a country.  We have only one offense that is so serious that we will not allow any who commit it to remain among us:  you may not organize for violence to force others to accept a country.  Anyone who commits this offense will be evicted from orderly society and sent to live in the wild.  Since individuals sent to live in the wild will almost certainly not be able to survive, this is effectively a death sentence.

Pep who might consider organizing for mass murder or terror against others will realize that they can’t possibly gain from this.  Either they will be caught early and suffer the consequences of having violated primary laws or, if they can organize a gang and start murdering, they will be wiped out by the great majority, that will do everything it can to prevent the success of this takeover.

We may understand how hard it would be to break away from a community like this and form a country if we consider that the societies in the Americas existed for at least 10,000 years without anyone successfully creating a country.  Almost certainly, people tried to do so.  People are self-interested.  This is true in any society.  Self-interested people want more for themselves.  Any distribution of wealth that favors any individual or small group will effectively grant ownership rights for that individual or small group.  This violates our prime directive.  It is the one activity we can’t allow.

Of course, over the course of 10,000 years, a lot of people would try to find some tricky way to make the others accept that they had special rights to the land.  People trying to get more for themselves can be very clever.  But the fact that this didn’t happen over the course of 10,000 years tells us how hard it is to do it.  How are you going to react if someone tries to trick you into accepting she has special rights to a part of the world in Pastland?  Even if she can convince you of this, she won’t be able to get these rights unless she can trick the majority of the people.  If this were easy to do, surely someone would have been able to do it in the enormous period of time that people lived in the Americas.

The book Fact Based History deals with this issue from a wider perspective.  Forensic evidence tells us that humans have been on Afro-Eurasia for 350,000 years.  Countries leave very clear artifacts.  We know when these institutions first came to exist because, as soon as countries appeared, the special artifacts that are associated with countries appeared.  We can’t find any of these artifacts going back more than 6,000 years.  This tells us that humans existed on the Afro-Eurasian landmass for at least 344,000 years before the first group was able to form the first successful country.  (We will see, when we look at Territorial sovereignty societies, that once one successful country exists, the country-based system spreads very rapidly and conquers additional land.)  This means that, for more than 98% of the time humans lived on the Afro-Eurasian landmass, the people there were able to successfully resist all attempts to create countries.

As we will see shortly, the ideas of sovereignty and countries can spread extremely quickly once they take hold.  But the point here is that there will be almost universal resistance to the very ideas that the societies we have now encourage and foster.  The idea of fighting, killing, and committing terror to force the majority of the people of the world to accept special rights for the minority would be seen as the most wrong of all possible wrongs.  Nothing could inspire more guilt in the heart of someone raised in a natural law society than the idea of doing the things that are fostered and encouraged in Territorial sovereignty societies.  Nothing would be more likely to lead to action by the authorities and condemnation by all of the people than advocating murder and terror to gain special rights for minorities at the expense of the majority.  (No country in the world includes a majority of the people of the world; this means that all activities that are designed to advance the interests of countries are designed specifically to benefit minorities at the expense of the majority.)

General Incentives Of Natural Law Societies

Natural law societies naturally foster three very important kinds of incentives:

 

1.  Incentives to do things that keep the land healthy and environmental clean.
2.  Incentives to be personally responsible and honest.
3.  Incentives to be responsible socially (essentially, to not organize for murder and terror).

 

We may label these as ‘desirable incentives.’ 

Natural law societies also produce what we may call 'undesirable incentives.’ 

They reward activities that harm society or, to put this another way, they discourage people from doing things that need to be done to make society function smoothly and productively.  Some of the incentives of natural law societies expose the people in these societies to incredible risks, for example, by making it effectively impossible to manage risk.  As a result, many groups of people with natural law societies are totally wiped out by events that would not have had any significant impact on them if they had been able to manage risk. 

Other incentives if natural law societies actively discourage some of the most desirable behaviors of humankind.  Humans are smart.  We are inventive.  We are creative.  We have a sort of internal desire to try to make life better for ourselves and the other people around us.  We want to find ways to do things better than people have done them before.  We want to find ways to manage risk and prevent harm for the people around us.  Unfortunately, natural law societies work in ways that essentially punish people who try to make the world better. 

 

          The general idea here is much easier to see with examples and we will look at many, many examples later in the book.  If you must pay more in costs than you get in benefits to do things that bring benefits to the human race, you personally suffer for making them.  Any society that works in ways that makes the costs of these behaviors higher than the benefits punishes behaviors that benefit the human race, something that makes life worse for us all.  When we look at many societies and compare them, we will see that natural law societies impose the greatest possible punishments on behaviors that benefit society. 

 

Some societies work in ways that encourage beneficial behaviors.  In societies built on the idea of personal ownership of rights, including TS societies, people can buy and own rights to part of the streams of benefits that improvements can bring.  (People who find ways to make life better for people can patent their idea, for example and, for a time, make great profits doing these things.  Their improvement will benefit the human race forever.  The people who made the improvement get rich for the rest of their lives.  Although this often seems unfair (because of the enormous wealth these people get for a tiny amount of effort), the real beneficiary is the human race.  Our existence is better forever. 

The book Possible Societies examines the ways different types of societies work in various ways.  It shows that societies can work in ways that reward destructive behaviors.  Such societies have ‘destructive incentives.’  Societies can also work in ways that reward beneficial behaviors.  Such societies have ‘constructive incentives.’   Natural law societies have no real destructive incentives, but they don’t have any constructive incentives either.  Because constructive behaviors are essential for survival of the human race, natural law societies can’t work over the long term to meet the needs of the human race.  (That should be clear by the end of this chapter.) 

Our group in Pastland has unintentionally formed a natural law society.  We are not going to keep it.  To see why, we need to look at the downside.  We need to look at the reason this society won’t work for us.   The next chapter goes over what we may call the ‘undesirable incentives’ of natural law societies, or, to put this another way, it goes over the desirable incentives that could exist in society, which did exist in the TS societies we had before we went back in time, and which we could bring to our society in Pastland if we want to do this, without having to get rid of the desirable incentives. 

 

          This is possible because the desirable and undesirable incentives come from entirely different flows of value.  We have incentives that foster and encourage environmental responsibility (a harmonious relationship with the environmental), personal responsibility (a lack of crime), and social responsibility (a lack of divisiveness that would otherwise make organized conflict possible) because we share the bounty of the world.  In all societies where people share the bounty, they have incentives to make the land as bountiful as possible and to maintain good relationships with the community as a whole (because the community decides how the bounty is shared and will likely exclude people who do things that harm them.)  
          The beneficial incentives come from a flow of value that I will call 'marginal production.'  In economics, the term ‘marginal production’ refers to increases in production above the current level.  (The bounty only comes from basic production, which means the production that already takes place.  This is true under the definition of ‘free cash flow’ which this book uses to refer to the bounty.  The free cash flow only refers to the cash that already flows from the property when the current manager/owner became involved.  Any increase in the cash flow is not ‘free,’ it is earned.  I think you will find it easier to understand this with examples and a great many examples follow.)
          If two incentive streams result from two different flows of value, it is possible to adjust them separately and independently.  In other words, you can keep the desirable incentives by keeping the flow of value that creates them.  (As long as the people of the world share the bounty of the world, the desirable incentives will remain in place.)  At the same time, you can get rid of the undesirable incentives of natural law societies by making changes that take the flows of value that create them away from the human race.  (In other words, make it possible for private individuals to buy and own the rights to marginal production.) 

This is the basic idea behind the socratic.  It is designed to bring the interests of individuals into alignment with the interest of the human race by creating a system where the basic productivity of the world (its bounty, essentially) goes to the human race and the marginal productivity is under private control (people can make money if they improve the world). 

 

Chapter 7:  SEO Snippet:  Natural law societies foster environmental and social responsibility through shared bounty, but lack incentives for innovation. Socratic societies aim to balance both.

Keywords:  Natural law societies,  Environmental responsibility,  Social incentives, Land bounty sharing, Socratic society model

 

Chapter 6 introduces the concept of "natural law societies" and contrasts them with modern territorial sovereignty societies. It explains how Pastland inadvertently created a foundation for a society without intentional ownership of land or division into countries. The chapter discusses historical examples of such societies, particularly among Native Americans before European conquest. It emphasizes the possibility of sustainable, peaceful societies that live in harmony with nature, which is not achievable under territorial sovereignty. The chapter introduces "socratic" societies as a model and discusses the importance of understanding sound societal structures before transitioning from current systems.

 

6: Natural Law Societies

Our group in Pastland didn't intentionally lay out a foundation for a society.  We were just trying to give ourselves some breathing space.  We have created a few rules that are temporary.

But, even though we weren’t trying to do so, we did, in fact, lay out the foundational elements of a type of society.

When we first arrived in the past, we could have decided we wanted the land owned and then figured out who we wanted to own it.  But we didn’t do this.  We didn’t do these things mainly because we had a lot going on.  We basically chose to worry about our immediate needs first, and not make any decisions about ownability right away.  (We will do this shortly; some people will claim that their nations own and will be willing to fight for the rights of their country.  But, so far, we haven’t even discussed the issue.)

We may have also divided our population into 'countries' and accepted that there are global laws that grant sovereignty over territory in their borders.  But we didn’t do this either.

The concept of ownership and ownability of land, either by individuals or groups we call ‘countries,’ is an affirmative concept.  It doesn’t exist by default.  If we don’t intentionally create it, accept it, and create a set of rules to enforce it, the mountains, rivers, forests, swamps, and fields of the Earth do not belong to any person or group.

We have not intentionally laid out the underlying foundational principles of a society.  But as long as no one owns, we will have foundational principles that are entirely different than the principles of the 21^st century societies we left behind.

 

Natural Law Societies

Although our society is entirely different than the societies we left behind in the 21^st century, we did not invent this type of society.

This type of society existed in the last iteration of the human race.  In fact, a large part of the Earth had these societies on it.  In the Americas, a great many people lived in societies that didn’t accept the idea of ‘countries’ and didn’t accept that humans or human entities could own mountains, rivers, lakes, forests, valleys, continents, or parts of continents.

 

          The era when these people could roam free and live as they wanted is generally considered to have ended on December 31, 1890, with the wounded knee massacre.   Before this time, many people that the conquerors called ‘Indians’ (reflecting a simple mistake the Columbus had made when he arrived in what he thought was the Indian ocean) tried to keep living as they had in the past. 
          This had been possible a century earlier, in 1790.  By then the people who were conquering the land didn’t even know the extent of the continent.  (Lewis and Clark were sent out in 1803 to find this out.)   But over the course of a century, their old world disappeared.  The animals they lived on were wiped out (there were bounties on both buffalo and a prairie chicken called ‘passenger pigeons,’ both of which were important food supplies for the American natives that led to their almost extinction/total extinction respectively).  Corporations were granted rights to string nets across rivers and take every single fish that tried to migrate, causing mass extinctions.  (We still don’t know how many species were wiped from the Earth in these events.)  This, together with plagues of smallpox and measles Indian (both of which were generally fatal to the natives who got them), and forced removals, often in ‘trail of tears’ and ‘ethnic cleansing’ events where more than half of those removed perished, a dramatic reduction in the population of the ‘Indians.’   By 1890, few of these people were left and those that were had been rounded up and placed onto reservations, where they were under the total control of their capturers.  The wounded knee massacre involved a show of force by the military to generated a reputation of brutality.  It made it clear to those on reservations that they were under the absolute control of their conquerors and would not be allowed to live as they had in the past.  If they tried to resist, this would  happen to them.

 

We actually know quite a bit about the way their societies operated, when they were able to live as they had in the past.  Many of the native Americans wrote or dictated books that were published where they described the difference between their way of life and the way of life of the conquerors (generally called ‘whites’ in their books).  Many people from the conquering societies traveled to places where ‘Indians’ lived and lived with them, studying them, and then wrote books about the differences in their ways of life.   A great many records of the conquest were kept by military authorities.  Because these records showed atrocities committed by the people who they wanted the pubic to see as the ‘good guys,’ these records were not publicly released.  But they were kept.   Now, people are going into warehouses full of documents and scanning everything onto the internet.  Computers read the documents and translate them into text, which other computers categorize, organize, and make available to search engines.  Using these and other tools, we can put together a pretty good idea of the way natural law societies operated after they had been established and in place for centuries.

Socratics

This part of the Preventing Extinction, Part Two, book is about socratic societies.  I want you to understand that it is possible for humans to have societies that meet all of the needs of the human race in ways that are sustainable, peaceful, and where the people live in harmony with the world around them.

Unfortunately, is it not possible to build such a society on a foundation of territorial sovereignty.  These are animal societies, inherently violent, based on forces that require animals in certain conditions to divide into teams (packs/troops/tribes/countries) to fight to the death or end of one of the combatant teams over feeding territory.   If the human race is divided into teams that compete against each other for territory using armed conflict with no limits (the same way our ape ancestors competed for feeding territory) it simply isn’t possible to have peace and harmonious relationship with the environment and world we live on.  We need a different foundation.

To show you that sound societies are possible societies, I need to start with a foundation that can support sound societies.  Then, once you understand this foundation and see how it works, you will see that we can add features of the societies we inherited that do not alter the foundational conditions, but help us meet needs that can’t be met in natural law societies.

Our group in Pastland is going to build a system I will call a 'socratic.'  (It is built on principles Socrates worked out long ago).  We will start with the best possible conditions to build such a system:  We start from scratch without any structures in place that limit our options.  I realize that this is not the starting position of the human race at this time.  Part Three of Preventing Extinction  deals with transition from territorial sovereignty societies to socratic societies.  It shows that this transition is possible and, if properly planned, can be made without violence or trauma.  But this requires making changes in the foundation of the society while leaving all of the structures that rest on this foundation in place.

Here is why this is important:

Our societies are built on the same foundation as territorial ape societies.  But many of the structures built on this foundation are the result of complex intellectual analysis by very intelligent people.  They are, in the main, sound structures and work quite well.  The tool we call ‘money’ for example is a uniquely human tool.  (Humans are the only Earth beings that use money.)   Money plays an important role in our lives and we depend on it to transfer value, pay people for the work they do, organize public services, and allow us to obtain places to live (by paying rent or mortgage payments), food, transportation, and the other things that we need.  Money is not a simple tool.  If we want to use it as we do in the world today, we need a lot of structures including banks, lending systems, and the things we call ‘central banks’ that ‘create’ and regulate the supply of money.

The things we call ‘corporations’ play an important role in our lives.  The basic idea behind corporations is actually pretty sound:  Some projects are so long and complicated that they won’t ever be completed unless a large number of people work together in an organized way.  Corporations are designed to make this possible.  Because corporations are very useful in wars, governments have made it very easy to form them.

 

          You can set up a corporation.  It is easy and cheap.  To do this, you need to draw up a business plan that explains what the corporation is going to do.  You need rules and bylaws that explain how the corporation will proceed if you, the creator, or anyone else, leaves the corporation, either by selling out or dying.  You will need to appoint officers (a president, vice president, and treasurer, at least) by name and identify them in ways that will allow them to be located physically.  You will need to create a board of directors who will be able to replace the officers if they should die or leave the project. 
         You will be the ‘shareholder' and will have rules that say how shareholders will replace directors if they die.  (After you have these rules, you can sell some or all of your shares to others if you want.  The rules that you make and publish determine their rights and responsibilities.)  No living person is essential.  If you die, your heirs will take over your role as shareholder.  If directors die, they will be replaced by shareholders.  If officers die, they will be replaced by directors.  If employees die, they will be replaced by officers.  The project can go on for centuries, if necessary.

 

The basic idea of corporations is actually very sound.  Cooperation is a good thing and structures that make it easy to cooperate bring great benefits to the human race.  The problem with them involves certain details that are directly associated with the principle of territorial sovereignty.

Part three shows how we can change the foundation of society while leaving all of the structures we depend on in place.  I do not claim this is easy.  I only claim it is possible.

Before we can hope to understand how to convert to sound societies from unsound societies, we need to understand what sound societies look like.  We need to understand the specific flows of value that are different in sound societies and unsound ones.  We will see that the difference is almost entirely due to value flow that this book uses the term ‘bounty of the world’ to describe.  In sound societies, the bounty of the world is shared by the people of the world.  In unsound societies, people can get the bounty of the world by doing things that harm the human race.

Socratic societies and natural law societies have important differences.  But they also have important similarities.  The main similarity is that, in both of these systems, the bounty of the world is shared by the people of the world.  Any system where this happened will have incentives that reward people who are environmentally responsible and take the best possible care of the world around them, who are personally responsible (honest and reasonable), and socially responsible (don’t try to do things that harm society, like divide people into groups to fight over special rights to the land.)

I want to look at the flows of value that lead to these incentives two different ways.  To start, we will look at them in Pastland, so we can see what happens when modern people live in societies where the bounty of the world is shared among the people of the world.  I want you to see that if certain flows of value are parts of societies, people can get real rewards that can be measured I dollars and cents for environmental, social, and personal responsibility.  Their personal interests coincide with and interests of society.

A lot of people wonder how the natives of America before the conquest were able to live there for tens of thousands of years without harming the land and without forming ‘countries’ that organize mass murder events over ownership of territory.  They don’t think that modern humans could possibly do this:  we are somehow different from them.   I want you to see that this is not true.  If we have the same type of society that they had, it has the same incentives and humans respond to incentives in very consistent and understandable ways.  If we had the same kind of society they had, we would take care of our world too.  We would have the same high level of personal and social responsibility they had.

We will then come back to the real world and look at the records to see how these same incentives affected the people who had natural law societies in the past.  We will see that the people in real world natural law societies respond to incentives the exact same way that our analysis shows that people in Pastland would react to these incentives.

 

Keywords:  Natural law societies, Socratic societies, Territorial sovereignty, Sustainable social structures, Native American social systems

SEO Snippet:  Pastland exemplifies "natural law societies," contrasting with modern territorial systems. Chapter explores sustainable societal models based on shared world bounty.

 

Chapter 5 contrasts job dynamics in Pastland's "natural law society" with those in 21st-century "territorial sovereignty societies." In Pastland, the basic income from shared land bounty eliminates the need to work for survival. People work for higher living standards or enjoyment. The chapter critiques modern societies where most people must work to survive, leading to problematic job creation methods like environmental destruction and war. It highlights how technological advancements potentially exacerbate unemployment in current systems, while in Pastland, increased efficiency benefits everyone. The chapter advocates for societies where mechanization improves life rather than causing economic crises.

5:  Jobs

In Pastland, the bounty of the land will provide a ‘basic income’ for the people.  They never have to work to avoid death.  Their lack of a need for work will not be due to any kind of welfare system. There is no welfare.  They don’t need to work because they live on a bountiful world and they have a society where everyone shares the bounty. 

In the societies that dominate the word in the twentieth century, territorial sovereignty societies,  everything belongs to someone or some entity, including the extra wealth the bountiful world provides for us.  This is a natural result of the way these systems work:  The entities called ‘countries’ have sovereignty over land, meaning it all belongs to the countries.  The leaders of the countries then allocate rights to wealth to various individuals, government agencies, and corporations.  The owners then have rights to all wealth the land produces, including unearned wealth flows like free cash flows.  There is nothing left unowned.  As a result, there is nothing left to flow to the people.  Non owners have no rights to anything unless they work.

This leads to horrible problems.  If you doubt that the need for jobs leads to these problems in the societies we have in our 21^st century world, all you have to do is turn on the television and listen to the politicians speaking.  Politicians promise jobs and aren’t shy about the steps they are willing to take to create them.  They will actively support coal and other destructive energy systems with massive subsidies.  They know these industries emit fantastic amounts of pollution and devastate enormous amounts of land.  But the subsidize them anyway:  They don’t really need the coal (we can produce our electricity with solar so coal is not really needed) but they absolutely require the work.  Without it, people will starve.  In our 21^st century world, governments impose massive subsidies on destruction.  The link on this site goes over the items.  If you total them, you get about $10.4 trillion a year lost to subsidies on destruction.   to keep people working.  They aren’t ashamed of this, they are proud and scream it from rooftops. 

Often, politicians go even farther to create jobs.  The most horrible activity in the human behavioral repertoire is war.  Reasonable people would want to get as far from war as possible.  But people in government know that wars always create enormous numbers of jobs.  Each job created reduces the unemployment rate by one unit.  World War Two created 127 million jobs as soldiers alone.  Nothing is more wasteful in materials than war:  each bullet, each shell, each bomb, each missile is used only once.  Often these weapons require fantastic mounts of effort to make:  one explosion and they are gone.  Each death of a working age person has the same impact on unemployment as a new job created.  When the United States entered World War Two in 1941, the country’s unemployment rate was 15%, a dangerously high level that is associated with the economic catastrophes called ‘depressions.’  Within six months, it had fallen to less than 1%:  jobs were available in endless numbers to anyone who wanted them.  Often, politicians start wars that would otherwise not have taken place just to drive down unemployment rates.  (Why did the United States fight in Vietnam, Afghanistan, Iraq, Syria, Grenada, and Panama?  This is hard to understand on the surface:  the US strategic position wasn’t improved by any of these wars.  But they all created enormous numbers of jobs.)  

Not all societies consider 'unemployment' to be a problem.  In some societies, everyone gets more and life is better if less labor is required in production.  In the simple system in Pastland, for example, if Kathy if Kathy can mechanize production on the farm, eliminating jobs, the farm will produce the same amount of rice.  The same amount of money will go on the table next year as this one.  But with less work, less will be taken away to pay workers, leaving more for the people to divide. 

Less work means a higher bounty.  Since we share the bounty of the land, we all get more. 

We won’t beg people to create jobs and certainly won’t accept destruction of our world just to have jobs.  We want as few jobs as possible in production.  If there are fewer jobs needed for a given income, the average income the same.  The difference is that, if more work is needed, more work will have to be done (by the human race as a whole)  to get this income.  If we don’t need the ‘must do work,’ we can all work at things that are enjoyable, including many things that create value that wouldn’t exist if people didn’t work to create it.  

Jobs And Natural Law Societies

Although our society in Pastland doesn’t need jobs to function, and people don’t need jobs to keep from dying, most people do work.

Why do they do this?

There are several reasons:

One reason is a desire for a higher standard of living.  A lot of people like rich diets.  I happen to be in this category.

If you want surf and turf dinners at fancy restaurants, if you want to drink in bars with live music, or if you want to see live shows, you won’t be able to afford this lifestyle on the $2,400 that you get as a basic income each year.

You will have to find some way to earn some money.

Nature provides some value for free.  Everyone shares in this free value.

But some people want to consume more than their share of the free value.

They have to find a way to create additional value (turn something with less value into something with more value).  They can then ‘trade’ the value they create for whatever goods and services they want using money as a medium of exchange.

Some people work for this reason: they want to live better than they can from their basic income.

Other people work because they enjoy it.  Getting paid is a bonus.  Of course, if you aren’t getting any basic income (perhaps from a share of the bounty of the Earth)  you often can’t work in a job you enjoy because enjoyable jobs get taken pretty quickly.  Many people in group territoriality societies have no income unless they work and can’t find a job they find pleasant and enjoyable.  Often, the only jobs available to them are very dangerous and unpleasant.  (Coal mining and soldiering, for example, are some of the ‘make work’ jobs politicians create; it can be very unpleasant to dig through dirt underground or live in fetid trenches while people are trying to kill you and try your best to kill them first.)

In societies built on non-ownability of land (NOL societies)  people who would otherwise be forced to devote their time to unpleasant tasks will have an income and be able to spend their time doing things they enjoy doing.  We would expect to see flowers and berry plants start to be planted along all of the paths we use, as people like spending their time making the world around them more beautiful.  We would expect people to take care of the swimming holes and picnic grounds, not because they are being paid to do it, but because they want these places to be nice.

 

Jobs And Territorial Sovereignty Societies

In the societies that dominate the world in the 21^st century, most people are in the ‘working class.’  About 90% of the global population has no ownership interest in anything that produces a free cash flow, so they have natural right to share in any of the bounty of the world.  Improvements in efficiency that lead to more production with less labor don’t make them better off, they make them worse off.  Each machine added reduces labor costs for the business owner and drives up profits.  This makes the rich (the owners of most of the world’s businesses) richer.  Each job eliminated forces someone to compete for work with people who still have their jobs.  The competition for the limited number of jobs drives down wages for all workers and makes the workers even more desperate.  

This has been a problem for all of human history.  But with the advent of artificial intelligence and machines that can do the same work as humans, it is becoming catastrophic.  The machines will soon be capable doing anything humans can do.  As they do more and more, humans without skills and would otherwise do menial labor will lose their positions in vast numbers.  If they lose their income, they can’t buy anything, not even the food they need to stay alive.  This kind of thing happens from time to time in territorial sovereignty societies shortly after a period of rapid advance, or the end of a massive war.  In the 1930s, a surge of mechanization eliminated so many jobs that the entire global economy collapsed.  People couldn’t buy food and, since farmers couldn’t sell food, the farms stopped operating.  With no plants to hold soil in place, the wind blew the soil into the atmosphere and giant clouds of dust circled the globe, blocking out the sun for days on end. 

We need to understand that the problems related to ‘unemployment’—which include war and environmental destruction—don’t’ affect all societies humans can have.  In our simple ‘natural law society” in Pastland, more machines in production makes life better for all.  The best possible world would be one where machines did all the work.  Production would be the same (in this case, $3.15 million per year worth of rice).  Production would be sold for the same amount.  (Our money is receipts for rice, so the price of both rice and money are fixed at $1 per pound).  With no money having to go to anyone involved in production, all of the money would be on the table at our meeting.  We will divide it.  We can then spend time doing things that we want to do, either because they make us money (we can make money doing things that crate value) or because we enjoy them.  Society won’t collapse due to mechanization and no one would consider encouraging the rape of the world to put people to work.  

 We have seen that the societies that we have now on earth are not built on logical principles.  Nothing illustrates how illogical they are better than the need to create more of something that is unpleasant and would normally be undesirable, by encouraging destruction of our world and the most heinous activities within the capabilities of humans, wars.

THE TWO TYPES OF SOCIETIES we have looked at so far were both extreme systems.  Natural law societies are ‘0% ownability societies.’ They are built on the premise that humans are residents of this world, like the other animal residents, with no more rights than any other animal.  Natural law societies don’t accept any structures that built on the idea that humans are owners of the world, in any way, shape, or form.

Sovereignty-based societies started with the premise that the world was made specifically for certain groups of people and their descendents.  It belongs to them provided they are able to hold dominion over that part of the planet. All rights to each part of the world belong entirely to the first group to claim it and go through rituals and ceremonies that confirm the people of that group understand that they own. The other extreme societies start with the principle of ‘sovereign ownability’ or 100% ownability of the Earth by human entities.

Zero percent and one hundred percent are extremes.

If it is possible to start with the premise that humans have hundred percent ownability and build societies around this premise, and possible to start with the premise that humans have zero percent ownability and build societies around it, it must also be possible for a group of people in the right position to start with the premise that certain rights are ownable and belong to humans and certain other rights are not ownable and can never belong to humans, and build societies around this premise.

For example, a group of people in the right position might decide that humans are residents of this world and not its natural owners, but that we have superior abilities compared to those of other animals and we have the right to use these abilities to help us put together a sane and healthy relationship with the planet we are on.  We may do a scientific analysis of the different rights that we may be able to allow people to buy and own and conclude that we are harmed if we (the members of the human race) accept ownability of certain rights. For an extreme example, it should be clear that the human race may be harmed if its members either grant or accept that groups of people have the right to use parts of the world as places to gather materials for nuclear bombs, process these materials, and then build nuclear bombs or other devices that have the potential to destroy the world. A group of people in a position to form any kind of society they want may decide that they will not grant or accept ownability of this particular right and will work together to prevent anyone from ever buying or otherwise gaining the right to do these things.

In other words, if all members of the human race were in a position to make collective decisions—as is our group in Pastland—they may decide that the human race will stand unified in at least one area: certain rights will not be ownable and we will work together to prevent any subgroup of the human race from ever owning them.

The group may also decide that the human race benefits if it allows people to buy and own certain other rights to the world.  For example, if we set aside some land as ‘places to build homes’ and then allow people to buy the right to build homes on the lots and live in them, provided they follow certain strict rules designed to protect the land and the human race as a whole, people will have the right to construct high-quality housing and have the ability to personally benefit from this.  (They benefit both by having the right to live in the homes they build and the right to sell the rights that we have let them own later.) The human race is better off if it has high-quality housing, so, when we allow ownability of this right, we are creating an incentive system that encourages private individuals to do things that make life better for the human race as a whole.

If we decide that we want to accept ownability of some rights to the world, but that certain other rights will never be ownable by any group under any circumstances, we will be creating a society that is not an extreme system.

Extreme choices are rarely optimal for anything: if you only live in places with extreme temperatures, say moving to Death Valley in the summer (where temperatures average 45C/110F) and then to Oymyakon, Russia in the winter (where temperatures average –40C/–40F) you are probably not going to be very comfortable and you will probably have a lot of problems related to the temperature.  If you only know one way to drive, and that is to either hold the gas pedal all the way down or leave it all the way up, you are probably not going to find it very easy to get around and will probably have a lot of accidents. If you only communicate by screaming or whispering, with nothing in between, you probably aren’t going to be able to get your point across most of the time.

Extremes are normally not good. Usually, when you want to accomplish something productive, you are better off to use moderation, to find something in between the extremes.

Why might early humans have built societies around these extremes and ignored all intermediate options?

Most likely, they did this because they were ignorant.  They didn’t know how to build societies that were not extreme; perhaps, their way of thinking about important things in the world prevented them from even looking for moderate systems.

Humans have incredible intellectual abilities; we can use these abilities if we want to use them, but we don’t have to use them, and many people would prefer not to make the effort.  Feelings and emotions come easy; people can decide how they feel and make guesses about how the world works based on these feelings.  Both of the types of societies that have existed in the past appear to have been based on things people have come to believe, based on an analysis of feelings, emotions, and other analyses that had nothing to do with the higher logical centers of their minds. 

 

 

How did the extreme societies come to exist?  Most likely, this happened: some people, in the remote past, guessed that some force or being had created the world and some force or being had created humans.  They saw the wonders of nature and the world and were amazed.

Aren’t we all?

They thought there had to be some reason for us having come to exist on such an incredible world. 

What is this reason?

They guessed that there was something about the situation we find ourselves in that implies we are supposed to be interacting with the world a certain way.

How are we supposed to be acting?

What do you think? 

What do you feel is the right way to interact with the world?   Are we supposed to be taking care of it and keeping it healthy?  Or, perhaps, the world was made as a gift for us and, perhaps, we are supposed to be taking advantage of the things it produces to advance ourselves (‘subduing’ the land, as the Bible says) and fighting each other to control it (‘gaining dominion’ and ‘holding dominion’ over it, to use the words of the Bible)?

People guessing about such things would probably keep their guesses pretty simple.  Either we are supposed to be taking care of the world or we are supposed to be subduing and dominating it.  The extremes are simple choices.  If you are guessing about things that you believe come from the wishes of some invisible sprit being that lives in the sky, you are most likely going to keep it simple: the being either wants us to own and treat the land as a possession, or wants us to not own and treat the land as a the property of our host.  We would not expect people guessing about such things to come up with a complicated algorithm that claims certain specific rights are supposed to be ownable (say the right to set aside building lots where people can build private homes where they and their families can live) while certain other rights (say the right to build a uranium mine and enrichment facility on a part of the world to make nuclear bombs) are not supposed to be owned.  They probably wouldn’t guess that we are supposed to be allowing a certain percentage of the bounty of the world to be buyable and ownable, with the rest being unownable and being administered by the human race as a whole. 

People guessing about the intentions of an invisible sprit being are likely to keep their guesses pretty simple. Either we are supposed to own, totally and completely, or we are not supposed to own at all.  Hundred percent ownability or zero percent ownability; these are the guesses that people could easily work out without any need to use logic and reason.  People making such guesses with no way to directly contact the invisible spirit being they believe is in charge won’t be able to determine the intentions of the invisible being with objective scientific analysis.  They can only decide what they think feels right to them. 

Feelings can give us the two extreme options.  But they can’t give us anything in between.  If we want something that is not extreme, we need to use logic, reason, and scientific analysis. 

Intellect-Based Societies

Although all humans are very smart compared to our closest animal relatives, not all humans seem to have the same abilities when it comes to the use of logic and reason.  Some people are highly intellectual and use logic to solve nearly every problem they face.

 Others rely on intuition, on copying and repeating the behaviors of their parents and others who have worked through the problem intellectually and solved it.  Their instinct tells them to copy those who have had success and they follow this success. 

We are capable of incredible intellectual feats.  But not everyone feels comfortable with this kind of analysis all of the time.  In fact, thinking through complex projects is mental work and can be very hard work.  It can take a lot of mental effort to work through complex projects logically.

In some cases, the practical realities of our existence force us to go to this effort.  Warfare provides a perfect example: our adversaries in war have jet fighters, rockets, bombs, and nuclear weapons.  We can’t hope to defend ourselves against these adversaries by using feelings and emotions to build countermeasures.  We have to use science. 

Over the centuries, people have found that any emotion at all can interfere in the scientific calculations and lead to wrong answers.  For example, prior to Galileo’s findings in 1607, people designing cannons thought that heavy objects must fall faster than light ones; it just felt wrong that a cannonball that weighs 200 pounds (a solid iron ball) will take the same trajectory as one that weighs only 50 pounds (a hollow ball filled with gunpowder that will explode when it hits the ground).  Because people felt the light ball would fall at a different rate, they couldn’t figure out the right amount of powder and right angle to set the cannon to hit their target. 

In his book, ‘Two New Sciences,’ Galileo proposed that all objects fall at the same speed, after accounting for air resistance.  The book explains experiments that anyone who doubts the premise can perform to verify its truth.  Galileo was arrested and put on trial, shortly after writing this book, for ‘teaching false sciences.’  The things he said didn’t feel right.  (Galileo was convicted and spent the rest of his life in jail for the crime.)  But military scientists realized that Galileo’s formulas explained the trajectory of cannonballs perfectly and began to use them.  Over the years, people found out that physics just didn’t work the way our feelings tell us it is supposed to work. Military researchers were taught to never trust their feelings; they had to follow the science exactly and leave all emotion out of their calculations, or they would not be able to design and build weapons capable of protecting their country.  

The realities of warfare have forced us to totally banish emotions and beliefs from analysis these areas.  Try this: look up journal articles about the correct use of prayer to help work out the ballistics of rockets; you won’t find any.

But when thinking about societal design, we seem to believe it is somehow immoral to use our logic and reason. We use logic to help us build weapons. But we don’t use logic to help us understand the forces that push us to believe that the people born on the opposite sides of certain imaginary lines are worthy of nothing better than being blown to pieces by these weapons.

Our group in Pastland is in a position to think about the world differently than people did before the event that sent us into the distant past.  We have a moratorium on accepting the principles that led to the conflicts of the past.  We can think of the interests of our group as the interests of the human race.  We can do an analysis of the different structures that we can incorporate into our societies, figure out which will help us, and which will harm us.

We have stared with a natural law society.  This is a 0% ownability society. Zero percent of the rights that are potentially ownable to the world are actually ownable.  We can all see that the natural law society has forces pushing against progress, growth, and the development of facilities that will allow us to replace the technological tools that we brought back with us from the future and build new and even better technological tools in the future.  If we keep natural law societies, we will not have these things, we will revert to primitivism, and all knowledge of the better ways of doing things will be lost. 

We will realize that the societies that we left behind in the distant future had forces that led to improvements and progress.  We may come up with theories about the reasons for the difference.

Some may look back at the distant future societies and realize that people who improved in those societies often got very, very rich from this.  They owned rights to improve and they owned rights to keep the wealth they got by improving.  It might be possible to split out these particular rights—the rights that encouraged people to improve—from the other rights that they got and make these particular rights ownable.

We can work out the forces that lead to improvements.  Then we, the members of the human race, can discuss our priorities.  If a majority of the members of the human race want improvements, we can incorporate these structures into our society.

We don’t have to worry about what is ‘supposed to’ happen to do this kind of analysis.  We don’t have to search the heavens for invisible beings that may have created us and then determine the intentions of these beings.  We can simply determine the relationship between the structures that can be a part of human societies and the incentives. After we understand these things, we can figure out what incentives we want our societies to have and then put the required structures into place.

We have seen that 0% ownability societies have advantages and disadvantages, and 100% ownability societies have advantages and disadvantages.  If it is possible to build societies around the premise of ownability of no rights, and possible to build societies on the premise of ownability of all rights, it must also be possible to build societies around the idea of ownability of some rights or partial rights to the world.  I want to give a quick example to show you how such a thing might work:

Let’s consider partial ownability of the bounty or free cash flow the land produces.  If we sold 100% of the rights to the Pastland Farm, the buyer would be buying the right to get $2.4 million a year in free cash flow and all increases in production that she is responsible for creating. Imagine that we decide we are going to sell the right to some free cash flow but not all of it, and all increases in bounty that take place during the time that rights to the property are private. 

For example, say that we decide that we want only $400,000 of the free cash flow to be buyable and ownable; the rights to the first $2 million will not be sold.  We can do this by creating something called a ‘leasehold’ and selling the leasehold, but not the property itself.  The leasehold is simply a document.  This document grants certain rights.  In this case, it is an agreement between the human race and the buyer.  The buyer will own the permission of the human race to keep all production of the farm above the first $2 million it produces each year.  (The buyer will not own any land; she will only own a permission slip.)

Essentially, she will be buying the right to lease the land for a lease payment of $2 million a year.  There are several different kinds of leases people can create.  If a lease is granted by a document that can be bought or sold, it is called a ‘leasehold’ (rather than simply a ‘lease’ or a ‘rental agreement’).  The yearly payment is called a ‘leasehold payment’ (rather than simply a ‘lease’ payment or ‘rent’).  The document itself grants ownership of special rights to the land to the buyer of the document.  The buyer will not own the land itself.  She will, however, own certain rights that we will see are extremely valuable and that can be sold for very large amounts of money.  A document that grants marketable leasehold rights, and which is sellable after it has been issued, is called a ‘leasehold title.’

 

 

If we decide we want to sell only specific, limited, and conditional rights to the farm, we can do this using a leasehold ownership system. 

Now consider this:

A 100% ownability system sells 100% of the rights to the property.  A system based on 100% ownability is a 100% ownability society.

What if we create an entire society on the foundation of a partial ownability system?  The above example involved selling the right to 16⅔% of the free cash flow.  (The buyer would have to turn over $2 million of the free cash flow as a leasehold payment, leaving her owning only the right to $400,000 of it.  $400,000 is 16⅔% of the total $2.4 million in free cash, so the buyer of this document will be buying the right to get 16⅔% of the free cash flow, plus any increases in cash flows she is able to generate by improving the property.)  If this system was used for all properties that the group sold, people would be able to buy rights to operate land privately which will include the right to keep 16⅔% of the free wealth that flows from the land.  You might call a society based on a property control system like this a ‘16⅔% ownability society.’  It doesn’t sell all rights to the land, but it does sell some rights.

For now, let’s not worry about whether this is the ‘right’ percentage to sell.  We will look through the different percentages we can sell later in the book and compare them.  We will see that we can sell any percentage of the rights to the free cash flow that we want from 0% to 100%.  This means that, if we consider a scale of possible ownership systems that ranges from 0% ownability societies (natural law societies) to 100% ownability societies (sovereignty-based societies) we can go anywhere we want along this range.  Is the option here, 16⅔%, the best place to go?  That requires a lot of analysis.  Here, I am just trying to explain the basic idea. I want you to realize that there is something in between natural law societies and sovereignty-based societies. The two systems that have existed on Earth in our history are both extreme systems.  The example above is simply designed to show you that it would be possible for a group of people in the right position to build something that is NOT extreme. 

If you look on the back cover of the book, you will see a chart.  This chart shows the different possible societies that humans can form.  The ‘degrees of ownability’ are on the vertical (up-down) scale.  Go up and you move to systems with lower ownability.  If you go to the extreme top, you get to 0% ownability societies, or natural law societies.  If you go down, you go to systems with greater ownability.  The extreme systems on the bottom are sovereignty-based societies. The scale on the on the right side of the chart shows the strength of various different kinds of incentives that can exist in societies. 

Some societies work in ways that send wealth to people who harm the world and create violence.  I call these incentives ‘destructive incentives.’ You can see by the chart that destructive incentives don’t exist in natural law societies, they are very strong in sovereignty-based societies, and they have various strengths at various intermediate levels.   

Some societies work in ways that send wealth to people who improve the world and make it capable of producing more value with less inputs.  (In other words, they reward people who increase the bounty or free cash flow of the planet Earth.)  Note that natural law societies don’t have these incentives at all.  Sovereignty-based societies do have these incentives.  Intermediate societies have these incentives with various strengths.

We will see that the incentives come from flows of value that can be measured with absolute precision.  Since they are measurable, we can quantify them and put numbers on their strength.  On the chart, higher numbers mean stronger incentives. 

Incentives are not behaviors; they are behavioral motivations.  They are the forces that push people to act certain ways.  In other books, people have compared incentives to the idea of an ‘invisible hand’ pushing people to act certain ways.  For example, some societies have incentives that push people to deploy their ‘industry’ (their time, skills, effort, talent, and wealth) in ways that lead to more creation of value on the planet.  People have examined these incentives and said things like:

 

Every individual neither intends to promote the public interest, nor knows how much he is promoting it.  He intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.

 

Not everyone reacts to incentives. Some people may feel the pressure of an ‘invisible hand’ pushing them to do things that create value, but may not react: they may want to spend time with their families or may not have the freedom to quit their jobs so they can devote their effort to something that they think will lead to the creation of value.  But the incentive/invisible hand is still there.  It pushes on everyone.  The stronger the incentive, the greater the force of the invisible hand. 

This book claims that the problems that threaten us come from forces that are side-effects of the operation of the sets of structures our ancestors have created to determine who has the right to use the wealth the land produces and what rights they have.  These structures work in ways that generate very powerful destructive incentives.  They send wealth to people who do things that harm the human race and planet Earth.  We will see that we can measure the strength of these incentives with great precision. We can determine the impacts of small differences in the structures on the strength of the incentives.  We can see what changes are necessary to reduce the strength of the destructive incentives to manageable or acceptable levels.

 

 

If we understand all of the intermediate options, and know how to create them, we can basically pick and choose the exact incentives that we want our societies to have.  (We can do this by mathematical analysis described later, or by merely looking at the chart.) 

Our group in Pastland is in an ideal situation.  We have passed a moratorium that is only going to run a few years more.  After it is over, we will be back basically where we started, with every single option on the table.  We can take advantage of the next few years to figure out what is possible, find the best system, and put it into place.

We are actually very lucky in this regard.  We have people in our group with many different backgrounds.  Some of these people happen to have experience in fields that can help us figure out how to make our societies work the way we want them to work.  

Back in the future, partial ownership systems were used in certain specialized areas.  There were a lot of people who wanted to protect land.  They wanted to grant rights to it that would create incentives for the people who controlled it to keep it healthy and productive and even make certain specialized improvements to it. (The example below involves one of the most important of such people, President Teddy Roosevelt of the United States.)  They created partial ownability systems to make this happen.  We happen to have a few people in our group who have experience in these areas. They worked with leasehold ownership and other partial ownability systems their entire adult lives, until they took this trip.  We can take advantage of their specialized skills and backgrounds to help us create a system that brings the exact incentives we want.  If we want systems with zero destructive incentives (no forces pushing people toward violence and destruction), and very powerful constructive incentives, we can create them.  We can make our finished system work any way we want.

Tools To Use To Create Partial Ownability Societies

Theodore Roosevelt was born and raised in New York.  But he always considered himself to be an outdoorsman and moved to the part of North America called ‘the west’ and spent a lot of time there.  Roosevelt realized that the land in North America east of the Mississippi had been granted to and exploited by corporations that only cared about money.  They had no regard for the land and destroyed each area as soon as they arrived.

The corporations were running out of land in the east to exploit.  They were petitioning the government for grants of land west of the Mississippi. When corporations arrived, they took out the trees first and sold them, mostly in other countries (lumber was still relatively rare and therefore expensive, with the bulk of forests having already been destroyed in Europe, Asia, and the parts of Africa that Europeans had colonized).  They then concentrated on gold and other valuable minerals.  They took everything worth taking and moved on, offering the land to companies that would sell it as farmland.  But the land west of the Mississippi had not been under the control of the government for very long and most of it was still intact, preserved in the same pristine condition as the American native people kept it in. 

By the time Roosevelt became president, most of the American native people had already been removed (either exterminated or transferred to barren and inhospitable reserves), but the land was still intact. 

Roosevelt was in love with the land. He didn’t want it to fall under the control of the corporations, which he knew would destroy it.

But how could he prevent this?

He knew that the corporations had massive lobbies and basically owned enough government officials to get their way. If the government controlled this land, and the Congress had the authority to give it away, it would be given to the corporations (or sold for trivial amounts) and be destroyed.  To save the land from corporations, he had to take it out of the hands of the Congress and future presidents.  How to do this?

Roosevelt was an attorney from a family of attorneys.  His family and friends knew more about the law than just about anyone else in the world. He worked with these people to try to solve his problem.  He decided to create a new kind of organization, one that would control the land but not own the land.  It would be dedicated to protecting the land and would have the legal authority to take steps to protect it, but it would not have the legal authority to ever sell even a single square inch of this land to any corporations or any other persons.  The organization that would control the land would be called a ‘conservatorship.’ 

He called the organization he created the ‘United States Forest Service.’ 

Roosevelt wanted to protect the land, but he also wanted to make it available for people to use and enjoy.  He gave the conservatorship organization a mission: it had to provide uses that would allow people to enjoy the forests, but which would still keep them healthy and preserve them as forest lands.  One of the ways people might enjoy forests is to build little cabins where they can live in a protected forest environment. 

People aren’t going to invest their money in building a cabin unless they own some rights to it; they need to at least own the right to live in the cabin and the right to sell this right to others, or it just doesn’t make sense to build.  The Forest Service could make this right ownable by creating something called ‘leaseholds’ on the land and selling these leaseholds.  The buyers of the leaseholds don’t own the land.  (The Forest Service doesn’t own the land and therefore can’t sell ownership of the land itself; you can’t sell it if you don’t own it.)  But they would own a document issued by the Forest Service that granted the permission of the Forest Service to build a cabin on a site and live in it for a period of time.  These agreements are issued for a limited period of time, usually 30 years, after which they expire.  So far, the Forest Service has always agreed to renew them, meaning they will offer an additional 30 years to the term, but there is an increase in the leasehold rate to reflect inflation. 

A leasehold title is a document that grants certain rights to land to the buyer/owner of the document.  These documents are bought and sold in markets.  If you buy one of these leaseholds (and you can; many are for sale) you will not own any actual land.  If you buy one of these documents, you will be buying the permission of the conservator (in this case, the Forest Service) to live on land and make certain changes to it.  The Forest Service is very strict about the things you can do and can’t do on the land. Generally speaking, it wants the improvements to be small cabins (you can’t build a mansion) consistent with the natural forest setting.  Certain parts of the lot you have will be private property.  For example, inside the cabin, you will have the same rights to protection of your property as if you had actually owned the cabin.  If someone you don’t want in your house refuses to leave, you can call the police and they will arrest her and charge her under the same laws that protect private owners.  

You won’t own the land or the cabin, but you will own certain specific rights to it.  If you ever decide you don’t want these rights anymore, you can sell them; many of the leaseholds sell for hundreds of thousands of dollars, because people want the right to live in these homes.  (Most leasehold cabins are near lakes or rivers, or in mountains with fantastic views of the surrounding land.)  You can advertise the leasehold for sale, accept offers, and sell to the highest bidder. 

Since you will be leasing, not owning, you will have to pay money over time to keep your rights to the property. You have a landlord: the United States Forest Service.  Your landlord has created very strict rules designed to protect the land, keep the forest healthy, and maintain the residential areas in a condition that makes them look like ‘a forest with small cabins’ and not a ‘residential housing development with trees.’

If you buy one of these leaseholds, you will have to agree to follow these rules your landlord has set. However, as long as you make your leasehold payment as required, and follow the rules, you will own certain rights.  You will own the right to live in the cabin and this right can’t be taken away from you without due process, under the same rules that affect people who own freehold rights to property.  You will have a document called a ‘leasehold title’ registered with the state, in the same way that a regular title, called a ‘freehold title,’ would be registered. This document will guarantee you the same protection of your ownership rights as you would have if you had owned freehold rights to the land. 

A Restaurant In Manhattan

You may wonder why anyone would pay money for a document that only grants them the right to rent the land.

Isn’t rental a totally separate thing, and don’t people do only one or the other (either buy or rent, with nothing in between)?

Actually, people buy leaseholds all the time.  It is possible to mix and match owning and renting in many ways.  I want to give an example to show you why someone would buy the right to rent a property that should make it pretty easy to understand.

Say you are interested in opening a restaurant in New York City.  You first look for a building to buy with an open store on ground level that you can use as a restaurant.  Of course, most buildings in New York are high rise buildings and you aren’t going to find any high rise buildings for sale at prices that you, or anyone else interested in opening a restaurant, can afford. 

You are not going to buy the building with a standard freehold ownership sale.  You are going to have to find someone who already owns one of these buildings that has a suitable space available for lease. 

You can’t expect the space that is offered to be perfect for your particular restaurant.  You will have to put some money into it to fix it up. You may have to put in a lot of kitchen facilities, and this may cost thousands of dollars.  Obviously, you don’t want to make an investment like this unless you have long-term rights to the space.  If you only have a one month lease, for example, you could put thousands of dollars into the improvements and then the landlord may simply choose not to renew and you will be out all the money you put into the improvements. 

You want a long-term lease. 

The longer the better.

Say that you find two suitable sites. The first is unimproved, just basically an open room, that is offered on a lease with a rent of $5,000 a month, on a 20-year lease.  If you choose this option, you will have to put about $500,000 into improvements, like building the kitchen, putting in the tables and chairs, and all of the decorations.

The second site is the same except that the person who is currently leasing it already has a restaurant there that is already open and already operating.  The original lease of the person who runs this restaurant was for 30 years, but she has had it for 10 years, so there are only 20 years left on this lease.  She is offering to let you ‘take over’ this lease from her.  A lease that can be taken over is called a ‘leasehold.’  The leasehold payment on this property is also $5,000 a month.

The current operator of this restaurant has put more than $400,000 of her own money into the restaurant, including buying everything, getting it open, and establishing a clientele and a reputation, so that the restaurant currently makes a profit.  She will let you take over her leasehold, but she isn’t going to let you take it over for nothing.  You will have to give her $500,000.  That will cover the amount she paid to build out the restaurant and a reasonable profit for her time and effort.

If you agree to her offer, you will both sign some papers.  The papers will transfer the rights to the leasehold title from the current owner to you, in exchange for a payment of $500,000.  You will be ‘buying her leasehold’.

Your other option is to take on the lease of the unimproved property.  If you do this, you will not have to pay anything up front to ‘buy the leasehold.’  You will get ownership of the leasehold for free and continue to own it as long as you make the $5,000 monthly leasehold payment.  But you will have to come up with $500,000 anyway to build out the facilities and establish it as a restaurant.  You know that this is going to take a lot of time and it will probably be a year before you even open.  After you open, you will have to establish a reputation and clientele to begin generating profit and it may take a second year before you begin making a profit. 

If you buy the leasehold on the existing restaurant, you can simply change the name and open the next day, without any lag at all.  I hope you can see that buying a leasehold is not a silly idea at all: it makes total sense.

A Cabin in the Woods

Let’s now look at the idea of buying a leasehold on a cabin.  The basic idea is the same:

Take two properties offered for lease, both at a rate of $50 per month.  One is unimproved and has the right to build a cabin, but no cabin. The second already has a cabin on it. Someone bought the leasehold and built a cabin for $40,000.  That was 10 years ago.  The lease has 20 years left to run.  She is offering the leasehold for $50,000; she wants to recover her money and get a reasonable profit for her time.

If you take out the leasehold on the unimproved lot, you won’t have to pay any cash up front, but you won’t be able to move in right away.  You can put a cabin on it for $40,000 but you won’t be able to actually move in until the cabin has been built, inspected by the Forest Service, and approved. This is going to take a lot of time and effort (the rules for these cabins are very strict and you have to follow them to the letter or your leasehold can be canceled and you will be out all the money you invested). 

This is basically the same decision as the New York Restaurant. 

What if you buy the leasehold on the cabin, live there for a year, and then have to move to another state so you can no longer live in the cabin?  Are you out the $50,000 you paid for the leasehold?

Not at all: you can put it back on the market.  There is a ‘market price’ for these leaseholds.  In this case, after a year there will only be 19 years left on the lease, so buyers won’t be able to pay as much as you paid for it.  But consider the fact that you will have been living in the cabin for only $50 per month, far less than you could rent even an RV or tent to live in the forest anywhere else.  If you would have been willing to pay $500 rent for the right to live in this cabin (and many are rented out for market rates), you actually saved $450 a month or $5,400 by owning the leasehold rather than paying simple rent.  If you sell for $47,500 (19/20^th of the price you paid), you are still $2,900 ahead of where you would have been if you had rented the property. 

If you buy one of these leasehold cabins, you will not be buying and will not own the land or the cabin itself.  You will only be buying and owning rights to use the land and improvements, together with the right to make certain improvements that your landlord accepts. 

You won’t be buying and owning 100% of the rights to the land.  But you will own more than 0% of the rights. The leasehold ownership system is an ‘in between’ system, that allows people to buy and own some rights to land without buying and owning all rights. 

Who Owns The Land?

If you buy a leasehold on a national forest, you may think that someone must own the land and the cabin. 

After all, someone owns everything in our world today, don’t they?  The Forest Service may not be the owner, you may not be the owner, but someone must be the owner, right?

This is where Roosevelt and his lawyer friends and relatives have made things very confusing.  Roosevelt knew that if anyone had the right to sell this land, the corporations would find ways to buy it.  The best way to make sure that the Forest Service never sold the land would be to make sure the Forest Service never owned the land in the first place.

Roosevelt made this happen by setting up a new relationship with the land that he called a ‘conservatorship.’

The American native people who still lived freely in the west when Roosevelt first visited western lands were basically interacting with the land as conservators.  They didn’t own the land, and so they didn’t have any authority to sell it (at least not in their own minds). 

They were just there to take care of it. 

Roosevelt wanted to set up the Forest Service to have the same basic relationship with the land as the American native people who had been taking care of the land for thousands of years before Europeans arrived.

Who does own the land?

Roosevelt knew a few legal tricks. He created something called a ‘public trust’ to hold the title to the land.  The ‘trust’ would own the land and ‘the public’ would own the trust, so ‘the public’ would be the technical owners of this land.  But the terms of the trust would make it so difficult for ‘the public’ to actually do any of the things that owners do that, for practical purposes, no one would be able to do the kinds of things that owners do to land. 

The term ‘public’ is defined in such a way that it includes people who have not yet been born: the land is to be protected ‘for future generations to enjoy.’  Perhaps, if all members of ‘the public’ were to vote on the issue and consent to sell the land, it could be sold.  But the great majority of the members of ‘the public’ (as defined by Roosevelt) have not yet been born and therefore can’t consent to anything. You might say that the land is technically owned by ‘the public’ but, in practice, no one owns this land: it is unowned and unownable. 

Partial Ownability Societies

Our group in Pastland is in a position to form any kind of society we want.  We have seen that we can interact with the land in extreme ways, allowing 100% ownability or 0% ownability, but neither of these systems will meet the long-term needs of the human race.  If we want a partial ownability system, we can build one.  In fact, we can choose from a great many different types of partial ownability societies, with different ‘degrees of ownability’ of the world.

What ‘degree of ownability’ do we want? 

We might choose a high degree of ownability, one that is close to 100% ownability but not identical; we would expect systems that are close to 100% ownability systems to work almost identically to sovereignty-based societies, with only minor differences.

We might choose a low degree of ownability, one that is close to 0%.  We would expect systems that are close to 0% ownability systems to work almost identically to sovereignty-based societies, with only minor differences.

We could also choose somewhere that is not close to either extreme system.  If we do this, we will end up with property control that is entirely different than the property control systems that we have now.  If we use these systems as a foundation for our societies, we will end up with societies that operate entirely differently than the societies that have existed in the past.

If we want something in between, it makes sense to come to understand the different options.  It turns out that, due to a rather strange set of circumstances, there is one place in the world where people commonly buy rights that are very close to the middle of the range.  Let’s look at this system so we can see how it works:

Hawaii

Roosevelt created a partial ownability society for a specific reason: he wanted to protect the land, while still making it available for use.  Other people have put together partial ownability systems for entirely different purposes.  Since they had something else in mind when they built these other systems, they set them up different ways.

One important example of this involves the current United States state of Hawaii. 

 

 

In the late 1800s and early 1900s, five massive corporations gained ownership of the great bulk of the land on the island chain.  These companies originally used the land to raise tropical crops.  Most of their markets were on the east coast of the United States, a very long distance from Hawaii.  In the 1950s, these corporations got tropical land that could raise the same crops in Central America, which was much closer to their markets.  They moved their agricultural operations to these new locations.  They found themselves with a lot of land in Hawaii that wasn’t generating revenue for them.  They began to look for new uses for this land.

They didn’t want to sell the land.

Land is forever.  If you sell it for a pile of money, the money will eventually be gone and spent.  But if you keep it in the form of land, you have something that will always be there.  The owners of the corporations wanted to keep the land, but they wanted to make money from it over time.

Hawaii has one of the best climates in the world with an almost perfect climate year-round.  If they had nice facilities, including hotels, resorts, condos, and shopping malls, people would pay a lot to live there.  The ‘big five corporations of Hawaii’ wanted to have other companies and private investors come to the islands and invest their own money to build these facilities on the land that the big five corporations owned. The owners of these corporations wanted to turn the islands into a paradise that would belong to them.

They hired professionals to help them analyze ways to make this happen.  They eventually found that they could use leasehold ownership to grant partial rights to the land that would allow private individuals to come in, invest their own money in the property and improve so that, when the leasehold was renewed, the rights to use the property would be worth more money and they could increase the leasehold payment rates, causing the income of the big five corporations to go up and up and up as time passed. 

Roosevelt set up a leasehold ownership system to protect the land.  The big five of Hawaii set up a leasehold ownership system for a different reason: they wanted to collect revenue from the land and wanted outsiders to come in and invest massively to improve the land so it would generate more income for the big five.  The owners of the corporations were incredibly rich already, but they wanted to get even richer.

Here in Pastland, we are in a position to form any kind of society we want.  If we decide we don’t want absolute ownability (a sovereignty-based society) and don’t want absolute unownability (a natural law society) we can choose a partial ownability system.  There are actually a lot of different ways to set up partial ownability systems.  Some of them work in ways that preserve and protect the land and don’t have any particularly valuable rewards for improvements (but still offer more rewards than natural law societies, which don’t offer any).  Other systems focus less on protecting the land and more on creating incentives that encourage investment, progress, and improvement.  Before we make a final decision here in Pastland, we might want to know more about our options, by coming to understand the partial ownability structures that we know are workable because they are currently in place and operating.   Let’s consider a system that was designed around entirely different goals than the system that Roosevelt set up to protect forests:

Freehold And Leasehold Ownership in Hawaii

If you want to live in Hawaii today, you can. 

If you want your own home there, you can have it. 

But you almost certainly aren’t going to be able to buy a ‘freehold title’ to a home, which will allow you to own the home ‘free and clear.’  There are almost no homes available with this kind of ownership and they are so expensive that very few people can afford them.  If you want your own home in Hawaii, someplace you can live and improve to fit your needs, you will probably have to buy a leasehold on a property that is offered by one of the big five corporations of Hawaii.

Because there are two kinds of ownership in Hawaii, if you want to buy something there you have to specify what kind of property rights you want to buy so your agent will know what kinds of properties to show you.  Most properties offered for sale in Hawaii are offered with leasehold ownership. Some are offered with freehold ownership.  Prices for freeholds are extremely high and there are very few available, so unless you are among the super rich, you will probably have to focus on leasehold properties.

If you buy a condo or home or some other property with leasehold ownership, you will not end up owning the land or even the improvements on the land.  One of the big five corporations owns it and these owners are not selling, for any price.  You will be buying a permission slip generated by the owner.  This slip grants you certain rights to the property. The exact rights you will own are specified on the documents you sign on the closing and vary from property to property.  But, in general, you will own the right to use the land as a private residence with the full protections of the law that go to owners of private property, provided you follow the rules of the landlord (the freehold owner of the property, meaning whichever of the big five corporations owns that part of the world). You will own the right to improve the leasehold as long as you get the proper permits from the proper government agencies and the improvements meet the standards of the landlord as specified in the leasehold document.  You will own the right to renew the leasehold, provided you agree to have the property assessed and to determine if a higher leasehold payment is justified, and agree to pay the increases levied at the renewal.  You will also own the right to sell all of these rights to buyers who meet the standards of the landlords. 

The leaseholds are set up so that the total monthly payments, which include both the monthly leasehold payment and the mortgage on the price, are affordable to people who want to have something they can treat as their own (they can improve them; this is normally not allowed for rented properties).  Most people looking for housing care about their monthly payment. If they like the property and can afford the payment, they buy; if not, they don’t.  Because most people who want to live in Hawaii can’t afford the payments on freeholds, but can afford them on leaseholds, most buy leaseholds.

Frances

We happen to have someone in our group in Pastland who has experience with different land control systems.

Her name is Frances.  Frances got her bachelor’s degree in land management and did Ph.D. work in a field called ‘land tenure systems.’ The word ‘tenure’ is from the Latin verb ‘tenere,’ which means ‘to have or to hold’. Land tenure refers to the different ways that people can ‘have or hold’ land.  It basically is a study of the different ways that we human beings can interact with the planet around us. 

Freehold ownership is a land tenure system.  Because leasehold ownership can be set up many different ways, leasehold ownership is basically a large group of land tenure systems.  The pre-conquest American people interacted with the land and had land tenure systems. (They didn’t own the land, but they used it.  Any interaction between humans and land is a form of land tenure.) 

Frances was interested in all land tenure systems.  She studied all of the tenure systems that she could verify existed in the past, together with many that didn’t exist but which scientists in her field realized could exist if we wanted to have them.

Frances has a lot of background in many aspects of the field.  For her Ph.D., she studied the land tenure system of the pre-conquest American people. During the period of the conquest itself, the conquering governments discouraged any study of or even any interaction with these people.  (They were the enemy.  The government wanted them defeated and any objective analysis would tend to generate empathy for them that would harm the morale of the fighting troops.)  The conquering governments wanted to take away everything from these people, and didn’t want people standing in their way, possibly trying to protect them or their way of life.  The more people knew about these people and their societies, the more likely people would be to protest the government activities, so the governments did their best to keep any legitimate researchers from being involved.

Now that the conquest is over, people are starting to study these things.  They are finding that many natural law societies actually had some rather complex systems of interacting with the land that allowed the people in them to meet their needs without having to accept ownability of the land. Frances studied these systems.

After she got her Ph.D., she went to work as a consultant for conservatorship organizations like the Forest Service, park services around the world, and private conservatorship organizations like the Nature Conservancy.  She helped these organizations put together systems that encouraged conservation but still allowed the people trying to take care of the land to generate revenue from the land and make improvements that didn’t harm it.  Many of the systems she set up to make this happen involved creating partial ownability societies and leasehold ownership systems.

Then she went to Hawaii and met some people from Castle and Cooke, the largest of the big five corporations of Hawaii.  The company uses leasehold ownership systems on nearly all of its properties.  There are many different ways to set up leasehold ownership.

As soon as she got to the company, she started looking at the different systems the company had set up for different kinds of properties.  She found that the company actually owned so much land that it had lost track of a great deal of it.  A lot of its land was just sitting there, doing nothing, not being cared for or protected and not generating any revenue at all for the company.

Most people in management positions at Castle and Cooke get most of their income from bonuses.  Frances knew that if she could do things that increased the income the company generates, she would be well rewarded for this. She wanted to get this ‘ignored’ land generating revenue for the company and get people involved with it that would protect it and improve it, so that it would generate even higher revenues for the company later.  She started with a little rice farm that was almost identical to the Pastland Farm.

 

 

Please try to bear with me.  I will have to explain a lot of fairly complex things to make sure that every single base is covered (critics of change are always looking for weaknesses in arguments that claim a better society is possible).  This will include discussions of interest rates, money markets, types of property deeds and titles, and the forces that determine the prices of ownership rights to farms and other productive properties when they are offered in markets.  You don’t need to understand all of the details to know that we can have societies without problems that threaten us (and therefore prevent extinction) but you do have to be convinced that these structures are not fanciful figments of a utopian imagination, but are very real structures that work in totally understandable ways. 

THINGS COULD HAVE HAPPENED differently in Pastland.

What if one tiny thing was different, yet this led to another difference that led to another that totally altered the way our societies worked?

While the moratorium is in effect, we can think about how things might have worked out if certain things had happened differently.  This will help us understand how our societies might work in the future if we should intentionally make changes that make our societies work differently.

For example, imagine that people had simply accepted that land could be owned from the beginning.  Various groups argued about who owned the land and which nation’s laws applied to this land.  Some may have argued that we are starting fresh so we can form a new nation, one that can start fresh.  We may presume that the nation we are forming is the natural owner of this land and through this we have the right to treat the land any way that we want. 

Some may argue that the real problem with the societies in the future was the fact that different people owned different amounts of land.  They may believe that we can avoid this by making sure everyone owns an equal amount of land.  They may have advocated we divide the productive land around us into 1,000 separate farms, one for each person on Earth, and give every person here one of these farms.

How would our society have worked if we had done this?  What kind of incentives would it have had and how would its members have behaved if they reacted to these incentives, and tried to get as much wealth for themselves and their loved ones as they could? 

Dividing the Land

We decide that we want to make the distribution of land as fair as we can.  We have 1,000 people so we will divide the 1,500 acres of productive land into 1,000 equal parcels.  We will number each parcel, create 1,000 slips of paper with the numbers of the parcels on them, and put the papers into a hat. 

Each person will pick a number.

Whatever number you pick is your land.

Many people came on this cruise as families.  These people want adjacent land so they can work it together.  Once you get your land, other people will probably approach you to see if they can trade their land for yours so they can be next to their loved ones. In the first few months, people trade parcels with others to get the parcels they want.  We end up with some large farms that belong to large families, and some very small farms that belong to individuals. 

At first, we just put stakes on the corners of our lot lines with strings that mark the lines.  If you move the markers of your 1.5 acre parcel out by one inch, and get away with it, you will own 50 square feet more land that you didn’t own before.

Owning more land itself doesn’t benefit you.  Land is dirt.  You can’t eat dirt.  But you don’t just own dirt; you own the right to everything that land produces for the rest of time.  Nature is generous.  It produces a flow of wealth that lasts forever.  Even a tiny increase in the amount of land you own, multiplied by the number of years in ‘the rest of time,’ leads to an enormous amount of wealth.

We all have incentives to move the stakes if we can get away with it. 

Incentives are not behaviors themselves; they are behavioral motivations.  We may not all respond to the incentives and may try to be honest and reasonable with others.  But we all know that others may not be as honest.  We know that the flows of value of this system push everyone in it to be dishonest. (Remember in the natural law society, the flows of value encouraged honesty; sovereignty-based societies clearly have other incentives.)  

Most of us aren't going to feel safe having the borders of our properties marked by strings tied to wooden stakes that our neighbors can easily move.  We will realize that we need real physical barriers between our land and other people’s land.  These barriers will have to be put together in such a way that they can’t be moved without a great deal of effort.  We will need to build walls. 

To build walls, people will have to collect materials, bring them in, and assemble them. This will require a lot of work which will take time away from doing things that might make life better for ourselves and others we care about.  But it is necessary.  If people can’t build walls between themselves and other people, they will lose the land that they need to grow food to keep them and their loved ones alive.

If you look at aerial images of any part of the planet that accepts ownability, you will not be able to miss the barriers that mark the edge of one property from the beginning of the others. All societies built on absolute ownability (sovereignty-based societies) are inherently divisive: their foundational incentives divide people from each other in many different ways.  These incentives push people to build walls and, right away, people will start to build walls. 

Disputes over Ownership of Land

When building the walls, a matter of a few inches will make a very big difference.  Neighbors won’t always agree on the exact location of the property lines.  In fact, in any property line dispute, both parties have powerful incentives to make sure that any decision favors them. 

Some people will be civil about these disputes.  They will look for non-violent ways to resolve them.  Unfortunately, civil and diplomatic discussions won’t always work. I have been involved in disputes over property lines and I know that people can get very emotional in these disputes.  The interests of the parties are as opposite as they can be.  Anything one party gains will be matched by an equivalent loss from the other party.

People involved in these disputes know that they can gain great advantages by taking very tough negotiating positions.  They know that the other party will not give them everything they want just to be nice. They have to be aggressive.  If they can intimidate the other party, they have a chance at getting their way. 

They come into discussions expecting a fight and ready for it.  If both parties come into the discussions ready for a fight, the fight is very likely to take place; if enough of these fights take place, some will get violent.

Which side will win?  We can’t tell for sure.  If there is violence, and no structure in place to decide the matter in a non-violent way that will satisfy both parties, people will start to look for allies who can help them; they will organize for violence.

Countries

If you are having a dispute over property and you stand alone but the other party has allies, you will probably end up backing down and letting the other party have her way. 

You will need your own allies. 

People will get together with their neighbors to help them defend their rights against aggressive outsiders.  If you come from one country, say the United States, and the people on the other side come from some other country, say Iraq, you might talk to other people who you considered to be ‘your people’ (because they are from the same country as you) to see if you can deal with the ‘Iraqi threat’ together.  When the Iraqis see the Americans banding together, they will band together themselves; it is the only way they can hope to defend themselves.  They might appeal to people from the traditional allies of Iraq, like Egypt, Saudi Arabia, and Syria, for alliances. 

We might expect these people to take advantage of the hatred and fear that we all were raised with in the future, before we went back in time.  People in America were told that Iraqis are monsters; they are soulless killing machines who would destroy an entire town with poison gas just because someone in that town said something critical of their leaders. 

We would expect different groups to split off fairly quickly.  These groups will start to develop the characteristics of the entities we call ‘countries’ right away.

Consolidation of Power

Some countries will be large. They will have large amounts of resources and wealth.  They will see that there are still some individual owners who aren’t a part of any country.  They will realize they can simply take this land, make it a part of their country, and drive the former owner away.  The owners will realize, of course, that they are helpless against the country that wants their land. They are not very likely to wait until the attack comes: they will go to the leaders of the countries and ask to join. Perhaps the leaders will be generous and allow this.  Perhaps not.  Either way, the individual farms that are not aligned with countries will disappear very rapidly. In time, every bit of land in our area will be a part of one or another country. 

Although the country may claim to accept and even protect what it calls private ownership, in reality the country itself will be the true owner of the land.  The leaders of the country control the armies.  If the leaders want certain land that is ‘private’ for a military purpose, they can simply pass a law that requires the owners to ‘sell’ (accept pieces of paper with numbers on them in exchange for the land) or simply take the land. 

 

 

The rulers or governments of the countries may also take only partial ownership of the land, not the entire ownership.  The government of a country may say that certain flows of value from the land actually belong to the government.  The owners collect these flows of value from the land, but they have to turn them over to their true owners, the government.  They can call the flows of value that belong to the government ‘taxes.’  They can create institutions that monitor the people of the country to make sure the taxes are paid. 

Countries have incentives to take more land for several reasons.  As noted earlier, they need land for strategic reasons related to war: if they leave certain land unowned and unprotected, their enemies may come in and build bases there, then attack the more productive land from these bases. The countries want productive land because it generates the tax revenues that the countries use to make war, to support the industries the governments want to support, and to provide streams of value that the leaders in the government can divert for their own personal gain.  The land produces wealth. The governments own a part of this wealth.  (We can measure the amount of wealth that goes to the government by measuring the percentage of the GDP, or total value of everything produced in the country, that is under the control of government entities.  In most countries of the 21^st century, the governments get between 40% and 60% of all production.)  The more land they can add to their country, the more wealth they get. 

An important point: people don’t produce food.  The land does.  Without land, you will not be able to grow anything, no matter how hard you work.  Bountiful land produces so much that, after enough has been set aside to pay everyone involved in production, there is a great deal left over. In systems that use money, this ‘leftover production’ will be represented by the free cash flow of the land.

Bountiful land produces a free cash flow in any society that uses money for transactions.  The Pastland Farm is a bountiful farm; it produces a free cash flow.  This happens in any kind of society we create.

Where does this free cash go?

That is different in different societies.  If we have a natural law society, the free cash flows wherever the people of society want it to go.  The land is not owned so this free cash is not owned. It doesn’t belong to anyone, so no one has a right to any of it unless the people as a whole approve.  (If anyone could interfere in the elections or get a natural right to take it without the consent of the people, this person would have ownership rights and this system would no longer be a natural law society.  This means that in any true natural law society, the community will always decide what happens to the free cash flow.  This is true by the definition of a ‘natural law society.’)  

In sovereignty-based societies, the free money goes wherever the leaders of the country want it to go. Some leaders will allow private ownership and will it all go to the private owners.  Others will allow a limited form of private ownership and allow a limited amount to go to the owners, with the rest flowing to the government as taxes.  Some governments will take the land entirely and collect the free cash flows themselves, using it for any purposes the leaders of the governments want.  (This was quite common in feudal times: the sovereigns—generally kings and queens—owned everything.) 

Taxes and A need for a goveernment

The natural law society we looked at the last chapter didn’t need taxes because it didn’t accept the land could be owned.  The land was bountiful. If no one owned the land, no one owned the bounty.  The group as a whole had to administer this unowned wealth.  In that case, more than 2/3^rd of the wealth that flowed from the land was its bounty, or free cash flow.  The people had enormous amounts of wealth they could use for anything they wanted.  They clearly didn’t need taxes.

Sovereignty-based societies work entirely differently.  All rights to the land are ownable and owned.  The owners of the land are the owners of all rights to the land and all rights to everything the land produces.  There is no such thing as unowned wealth that is left over for the human race to use as its members see fit.  Everything the land produces belongs to someone.

The people of each country will need at least one common service: they will need a military to defend them against other countries that will want their land.  They will need to something to use to pay people for the weapons they will need and to pay the soldiers. 

They can’t depend on voluntary contributions for this: they need a consistent income so they can keep their military operating all the time.  They will need to require people to turn over some of their wealth to central authorities, to be used for common services, including defense of their country.

Not everyone will pay willingly. Some will not pay unless they are convinced that force will be used against them if they refuse to pay, collecting not only the tax itself but penalties and fines for not paying. 

The body that needs taxes will need to be able to use force against ‘its own people,’ if they refuse to pay taxes.

Once an administrative body has the ability to use force against ‘its own people,’ if its people don’t behave as the administrators want them to behave, the administrative body becomes the type of an organization that we call a ‘government.’  It has the power to control the people and govern them. 

What is a government?

Black’s Law Dictionary (the acknowledged authority on legal definitions) defines a government this way:

 

The regulation, restraint, supervision, or control which is exercised upon the individual members of an organized jural society by those invested with the supreme political authority or the act of exercising supreme political power or control.

 

A government is a body that controls the people.

Not all societies need governments. Natural law societies don’t need them because natural law societies have common income and don’t need taxes.  The people can have a government if they decide they want a body with the ability to control them, but a government is optional in such a society. 

Sovereignty-based societies absolutely must have governments.  They can’t function without them.  Once the people decide they want this kind of society, they have to form governments. Once a government exists, it becomes like Frankenstein’s monster, with the ability to do things that its creators never wanted to happen. 

We have all seen the horrible things that the governments of the world have done.  If we believe that governments are a necessary evil, we are likely to believe there is nothing we can do about the horrible things that governments do.  But I think it is important to believe that governments are not a necessary evil in all societies; they are only necessary in societies that are built on certain foundational principles. 

We were born into societies built on these principles and we were raised to accept these principles are parts of all societies.  For this reason, we have a very hard time even letting our minds accept that a society might exist that doesn’t have bodies that can take wealth away from their people and use this wealth for anything the people in these bodies want, including to build death camps and nuclear arsenals. 

Can Societies Really Exist Without Governments?

I know this is a hard concept to get your head around as it is so different from everything we have been told about the way the world works: we have been told that nothing is certain but death and taxes.  Taxes won’t always be paid in full when due by people who have the right and ability to not pay them.  Taxes have to be mandatory to support a society that needs militaries to survive. Some will not pay unless forced to do so, so any societies that need taxes also need bodies with the ability and authority to bring force to bear against ‘their own people.’  They must be able to control or govern the people. 

In his introduction to 'Historia de las Indies,’ Bartolomé de Las Casas dealt with this issue.  The societies in the Americas operated differently than societies in Europe.  The societies in the Americas didn’t have governments or organized countries.  Many people from the invading cultures thought that people without governments could never organize themselves or live in any logical way, and therefore couldn’t be true human beings.

He writes:

 

The ultimate cause for writing this work was to gain knowledge of all the many peoples of this vast new world.  They had been defamed by persons who feared neither God nor the charge, so grievous before divine judgment, of defaming men and causing them to lose esteem and honor.

It has been written that these peoples of the Indies, lacking ordered countries and structured governments, did not have the power of reason to govern themselves.  In order to demonstrate the truth, which is the opposite, this book brings together and compiles natural, special and accidental causes which are specified below. Not only have the people of these lands shown themselves to be very wise peoples and possessed of lively and marked understanding, prudently administering and providing for their people and making them prosper in justice; but they have equaled many diverse nations of the world, past and present, that have been praised for their governance, politics and customs; and exceed by no small measure the wisest of all these, such as the Greeks and Romans.

This advantage and superiority, along with everything said above, will appear quite clearly when the people of the Indies are compared with Europeans. This history has been written with the aforesaid aim in mind by Fray Bartolomé de Las Casas, a monk of the Dominican Order and bishop of Chiapa, who promises before the divine word that everything said and referred to is the truth, and that nothing of an untruthful nature appears to the best of his knowledge.

 

The Development of the Working Class

Our group in Pastland started with everyone getting an exactly equal plot.  Even if the people get together to form a single country, and this country is devoted to protecting private property rights, it won’t be long before a lot of people will not own any land at all, and a small number of people will own all the land.  As a practical reality, sovereignty-based societies have forces that cause land ownership to be concentrated over time.  The more time passes, the greater the concentration. In enough time, all of the bountiful land—the land that produces free cash flows—will be owned by a tiny percentage of the population.  These people will collect free incomes (the free cash flow is free to whoever gets it) that may be truly enormous.  Others, those who don’t own any land that produces free cash flows, will not have any free income at all.  They will not get any money unless they do something to earn it.  They will have to work ‘for a living.’

This means that, in time, this society will divide its people into two classifications: the class of people who get free incomes from the land (owners of cash-flow generating properties) and the class of people who must work for a living, or the ‘working class.’

Let’s consider why this must happen by going back to our group in Pastland, shortly after we divide the land:

You have 1.5 acres.  This is a square of land 208 feet by 208 feet.  This is not a lot of land.  If you are a very good farmer, you will have a chance of getting enough to keep yourself alive for the next year.  But some people are just not good at farming.  Only a few of the people in Pastland have any farming skills at all.

Our group had a very diverse population.  Some people are young, some are old.  Some are healthy, others have various ailments.  Some know how to tell if rice is ripe and ready to come off of the stalks; others wouldn’t be able to boil rice if they had a video to follow. At the end of the year, different people will end up with different amounts of rice. 

Some will not have enough to keep them alive for the rest of the year, until the next harvest.  They will have to trade whatever they have to offer with the few who have some excess or they won’t eat.

At first, they will trade their personal possessions.  They can get by without their jewelry; most of us brought more than one pair of shoes; we have a few personal items we can trade for food. (Laptops and phones aren’t going to be worth much because we don’t have any electricity; we don’t have any common income we can use to pay people to provide any services at all.) 

Eventually, some people who need food will have nothing to trade for food other than their land.  They will begin to sell parts of their farm.  They will start to trade their land for food. 

We would expect them to sell mostly to their neighbors.

They could sell one square foot at a time or they could agree to move the boundaries between their farms and their neighbors in ways that increase the neighbor’s land and decrease theirs, in exchange for certain amounts of rice or money.

Of course, if you can’t get enough to keep you alive on 1.5 acres of land, you certainly aren’t going to be able to get enough on less than 1.5 acres.  Once you start selling, you will have to keep selling and selling.  If you have ever been hungry—I mean really hungry—you will know how painful the decision to sell land can be.  If you have ever heard your children crying with hunger, you will know how hard it is to leave anything unsold if you can sell it to get food to ease their pain.

Other people will be good farmers.  Even the best farmers aren’t going to have enormous amounts of rice however, because they only have 1.5 acres per person in their household.  They will have small surpluses and will able to buy small amounts of land.  But each time they increase the size of their farms, their surpluses grow.  They have more to trade for land and can buy more land.

As time passes, the land ownership will become concentrated.  This happens in all societies built on this kind of ownability of land.  We may try very, very hard to start out in with an equal distribution of land.  But it won’t matter how good of a job we do to start; the distribution won’t stay equal for long.

In time, some people will have no land at all.  They will now have nothing to trade for food but their time.  They will go from farm to farm begging for any work they can do to get enough to keep them and their families alive a little longer. 

Others will have large farms.  Some will own so much land they will have enough to support themselves and workers. They will hire people to do the work on their farms.

Remember, this land is bountiful.  This was very easy to see when we had the natural law society: we could hire the best farm manager in the human race, in this case Kathy, to take in the rice. Kathy could then hire the best people available for each job.  They would all do their work quickly, efficiently and, most importantly for us, cheaply. 

No person is responsible for rice production.  Nature produced rice.  We only collected it and replanted it, so nature could do the same thing next year as it did this year.  Since we did everything with great efficiency, only a small amount of labor and other inputs were needed to collect the rice.  After we fully paid for these inputs, we had enormous amounts of rice left over.

People won’t be as efficient in sovereignty-based societies for several reasons.

The first involves skills.

Recall that the best farmer in our group, Kathy, was seriously injured and will probably not be able to do the hard labor needed to actually collect the rice, even on her own plot.  In the natural law society, she only managed and didn’t have to do any hard work.  In the hundred percent ownability society (sovereignty-based society), she will have to do everything herself.  Even the very best farmer on Earth is probably not going to produce enough to keep herself from starving to death (Kathy is very likely to soon lose her land and, since she can’t do hard work, she will have no income and probably starve to death).

A lot of other people had specific skills that Kathy found useful in collecting the rice, but these people didn’t have the general skills needed to be good farmers. Almost certainly, the land won’t provide as much grain for the benefit of the members of the human race (the human population of the Earth, which means all of us, taken together) as it produced in the natural law society. 

But a few people will be very good and be able to generate surpluses.  They will soon have free cash flows.  These flows of free cash will start out small because they only have a small amount of land generating them.  But as their holdings grow, their surpluses will grow.  In a few years, some people will have rather large parcels, perhaps as much as 10 acres.  These people will have surpluses of about 20,000 pounds per year.  If they create a type of money where rice sells for $1 per pound, a farmer with 10 acres will be getting a free cash flow of about $20,000 per year.

What will people do with this money?

By the time several years have passed, some of our people will not own any land.  They won’t get anything unless they work. There just aren’t a lot of jobs available in production: the farm produces without a lot of labor and most farmers can do everything they want on their farms.  The unemployed will have to scramble to stay alive.  Some of them will realize that they can supply services to the people with free cash flows.  They will offer to help build houses for them, to help them get wells dug and latrines built.  They will offer to do anything that can get them income.

Improvements

In hundred percent ownability societies, people own all rights to the land.  If you want to alter the land, you can: it is your land and you definitely own the right to alter it.

If you own all future cash flows the land generates, and you can make the land produce more rice or reduce the amount of labor needed to collect it, you will have a higher income.  People are greedy.  They want higher incomes.  The owners of land will look for ways to improve the land.  Eventually, they will find some.  The production will go up.

Often, the improvements will involve doing things that people haven’t tried before.  The owners will figure something out or invent something.  They will innovate and try modifications on things that have been tried before but haven’t worked.  Once people have an idea for a new process or invention, they will generally create a prototype to test it.  If it works, they will put it into place on a large scale.

People can do these things in hundred percent ownability societies and can make money doing them.  They can make a lot of money doing them.

Natural law societies are built on the premise that people can’t own any rights to the world.  They don’t own the right to alter the land and, generally speaking, natural law societies didn’t allow people to make modifications. Nature did things a certain way. They had to follow the rules of nature. Most natural law societies that existed in the past didn’t allow any modifications to the land at all, not even those that might improve it.  (You can find many examples of the way such societies work in the menu section marked ‘Books About Natural Law Societies’ on the Possible Societies website.)

 

 

In hundred percent ownability societies, people can do more than improve land they already own.  If you know of a way to improve land so it produces more value, you can buy a piece of unimproved land, improve it, and sell the land for far more than the cost of the land plus the cost of the improvements. People do this all the time: they are called ‘land developers.’ Many of the richest people on Earth are in this category.

Hundred percent ownability societies have incentives that encourage people to find ways to modify land and make it more productive.  They have incentives that encourage improvements.  As we have seen, these incentives don’t exist in natural law societies.

Because hundred percent ownablity societies have incentives that push toward improvement, and natural law societies don’t, we would expect to see almost constant and often massive change in hundred percent ownability societies.  Natural law societies will generally remain stagnant, with no significant improvements taking place for very long periods of time.

The Population Explosion

In 1798, Thomas Malthus wrote a book that is now considered to be the seminal work on the relationship between labor, wages, and population levels.  The book is called ‘An Essay on the Principle of Population.’ (You can find the full text of this book on the PossibleSocieties.com website.)

This book shows that wages can never remain higher than the minimum needed to support a family in what Malthus calls ‘the maximum level of misery’ for very long.  The reason is that, if the wages ever get higher than this, the population of the working class must grow faster than the wages can ever possibly rise.  Populations of all animals, including humans, grow by a mathematical progress that Malthus called a ‘geometric progression.’ 

 

 

Malthus is one of many who have looked at this issue.  Another person who provided great insight into the nature of population growth is Charles Darwin.  Both of these researchers noted that population levels tended to explode (grow at an exponential rate) if resources are available.  But both noted two exceptions in this rule:

The first involved humans who were in the upper class.  These people had access to opportunities to control birth that lower class people didn’t have and appeared to take advantage of these opportunities.  Upper class women had a lot of options about ways to spend their time.  They didn’t appear to want to spend their lives taking care of enormous broods and they didn’t have to.  The population of upper classes therefore tended to remain constant.  This basically means that the women had, on average, the 2 children per woman needed to replace themselves and their spouses.

The second exception involved natural law societies.  Both researchers noted that the standard rules that applied in the societies of Europe, Asia, and Africa, didn’t appear to apply to the societies of the Americas. For some reason, the societies of the Americas tended to have far lower population growth levels than those in Europe. In fact, during the lives of both researchers, populations among native people in the Americas were declining. Part of this decline is due to the attempts by the better-equipped sovereignty-based societies to remove the inhabitants from the land.  But even when the native people had sufficient food, there appeared to be something about their culture that caused their population to grow at far lower rates—and even often remain stable—while the population of people with other societies grew. 

Why does this happen? 

We don’t have a lot of research in this area.  People who have speculated on the reason have speculated that it involves security.  The members of the upper classes in sovereignty-based societies, and all people in natural law societies have security: they know that they will still be able to eat when they get sick and old, even if they can’t work full-time anymore.  They don’t need children to support them in their old age or fill in to get an income when they are sick.  They can base their reproduction on other factors.  If they want fewer babies, they can have them. 

 

 

Many national leaders in the world today seem to accept that members of the working class are far more likely to have large families if they have no security in their old age or when they are sick and can’t work.  They create ‘social security’ programs to reduce the strength of the forces that push toward large families, in an attempt to reduce population growth enough that job growth can keep up. 

We can tell that they are probably right by looking at the difference in the number of children per woman in societies with social security systems that provide basic incomes for the sick, injured, or elderly compared with societies that don’t have these systems in place.  Countries with social security systems tend to have far lower population growth rates than countries without them.

At first, in our hundred percent ownablity society in Pastland, we clearly can’t have a social security system: we have no common income we can use to pay for anything.  The owners of small farms will realize that if they get sick or injured and can’t do all the work on their farms, they will not have any income and will starve to death. 

People with no farms will be in even worse shape: often they will live from paycheck to paycheck, meaning from month to month or even from week to week.  Even a week without work can mean death if they don’t have family to help them out.

Malthus points out an obvious fact: jobs can disappear.  If jobs disappear but the number of workers remains the same, the workers will compete for the available work by offering to work for less money.  Wages will fall.  They will keep falling until the workers are not able to afford food, fuel, medical care, or other essentials needed to keep their babies alive.  When wages get this low, the worker class population will begin to fall.  It will keep falling until supply and demand match again.

Then wages can rise back to subsistence level (the level where two children per working class couple can be raised to maturity, but no more).  Malthus argues that wage levels will eventually tend to stabilize at ‘the maximum level of misery’ consistent with continued survival. 

Workers will survive, but the entire working class will exist in misery that puts its members always at the edge of death. 

War and Population

Certain things can cause a reduction in the supply of workers and an increase in the demand for workers, leading to an increase in wages.  With more wages, the workers can have better lives.

But all of the things that cause this to happen are temporary.

The most important force that can push wages up is war.  If the system is in a state of war, the worker supply can be kept down to the level demanded as long as the war continues.  If the population gets too high, the government can easily reduce the supply of labor to any level desired with massive and futile offensives. They can reduce the oversupply of labor by killing off members of the working class.  Malthus showed that the tool of war could be used to keep wages higher than they would otherwise be and even potentially get the working class to a level of prosperity. 

But this method couldn’t be used forever.  Eventually, one side won’t have the resources to continue the war and will surrender.  Then the war will end and the benefits that come from the war will disappear.  In fact, the end of war can lead to a catastrophic collapse in the demand for workers, as the soldiers who survive come home and the workers in the arms industry lose their jobs. 

Everyone can see the relationship between the amount of war taking place on the Earth and the jobs figure that governments in our world today care more about than any other: the ‘unemployment rate.’ (This is the percentage of people who need jobs that don’t have jobs.) Many government officials realize this relationship exists.  They feel great pressure to reduce the unemployment rate.  This pressure is particularly strong in nations with elected leaders just before elections.  Some politicians don’t even try to hide the fact that they are creating a war that would not otherwise exist to create jobs. (Hitler was very clear that he would bring the prosperity of the20^th century to Germany by restarting the war that had ended in 1918.)  They intentionally create military tensions that wouldn’t otherwise exist to create work.

Thomas Malthus published his book more than 200 years ago.  He presented some astute and well-reasoned observations.  He based his numbers on events that took place before 1798.  But the relationships he discussed still seem to hold. 

In the short-term, wars prevent declines in wages.  Massive wars can have long-term effects that can keep wages at higher levels for many decades after the wars end.  Destruction can also create large numbers of jobs.  But, again, the effects of this are only temporary: destruction is always expensive.  It costs a lot to rape our world of resources.  Non-destructive options don’t require people to rape the world and this makes them naturally cheap.  Solar energy comes to our Earth each day whether we use it or not.  The governments can prevent people from taking advantage of this free energy system for a while, if they work aggressively. (The book Anatomy of Destruction, on Amazon, explains the steps they take now.)  But eventually, competition between nations will force nations to accept the cheaper methods and make the subsidies on destruction impractical. Working diligently, the leaders can keep these subsidies going for a long time, but not forever. 

Malthus’ main conclusion involved the idea that wages will always eventually come to the point where workers can survive, but only in the ‘maximum state of misery possible.’  The basic forces that lead to this reality are the same now as they were in 1798. 

If our group in Pastland decides that we want to have a society built on the principle of sovereignty over land, our system will have the same basic forces Malthus described.  Our governments may work very hard to keep us at war or to keep destruction going, so that they can create jobs.  They may succeed for decades or even centuries at a time.  But eventually the working class population will rise to a level that is so high that no amount of effort by the governments can prevent the decline in wages. 

In this society, we don’t have a good choice to keep the welfare of the people high; we only have a bad choice, a worse choice, and an even worse choice.  We cannot even try to subsidize war and destruction and let the wages stabilize at the level that leads to the maximum in misery, we can subsidize destruction and allow temporary increases, at the expense of the only world we have, or we can create unnecessary wars that basically reduce the population of the working class by killing them.  There is no good choice here.

We have seen that natural law societies work entirely differently.  Natural law societies don’t have a certain class that gets free wealth and another class that doesn’t get free wealth.  The land produces free wealth.  No one owns the land, so no one owns the free wealth.  The people divide the free wealth in some way they agree is acceptable.  If the population rises too high, above the levels that production can support, everyone will suffer.  But there won’t be a situation where some people are suffering, year after year and generation after generation, and another class is living in luxury, like in sovereignty-based societies. 

We don’t know exactly how they did this, but we do know that the people in natural law societies appeared to have been able to keep their populations stable for very long periods of time. We might speculate that they realized that the land produced limited wealth and realized that population growth would create problems.  They therefore found various methods to control live birth rates and used them.

Later we will look at hybrid societies, those that mix the characteristics of natural law societies with the characteristics of sovereignty-based societies.  We will see that these societies have far more social security than do natural law societies, or even the best managed sovereignty-based societies.  As a result, we would expect the forces that push toward a stable population in these other societies to work for us.  We will also have technology, including birth control.  We will see that socratic societies can easily achieve population stability and keep population levels stable for any period of time desired.

Sovereignty-based societies, however, are inherently unstable in this regard.  The leaders can take certain measures that will have temporary effects. But even with very high-quality birth control and aggressive attempts to reduce population growth (as were taken by China with its ‘one child policy’) these societies still have forces that push toward population growth.  Eventually, the governments will have to face the choice above, between bad (a working class living in misery), worse (subsidies on destruction that temporarily reduce the misery) or even worse (wars that kill off large numbers of people). No matter which choice they make, is isn’t going to lead to population stability indefinitely. 

If we want healthy societies, we need to have societies that are at least capable of population stability.  We will see later that there are actually a lot of societies in this category.  Unfortunately, the sovereignty-based societies you and I inherited are not in this category. 

New Nations and War

In sovereignty-based societies, the different classes live very different lives.  Workers can live in extreme poverty alongside an upper class that can live lives of fabulous luxury.  The leaders and rulers of existing nations can expand their territory by sending out ‘conquerors’ to subjugate the people who have the less technologically advanced systems. 

Once countries are established, they can grow.  They can attract people to fight for them by offering to give some of the land they are able to conquer in exchange for military service to the conquering nation. If some land is controlled by societies that are less capable militarily, like natural law societies, they can expand their territory using terror and murder, driving these people from their homes and killing any who resist.  Once they control the territory, they can give some of it to the soldiers and arms makers who helped with the conquest and keep the rest for themselves, for their friends and family, or perhaps as ‘public land,’ available for use by any who are legally inside of the lines that mark the borders of their country. 

Once sovereignty-based societies exist, they will grow in much the same way as a cancer.  They grow bigger and bigger, expanding onto any land capable of providing nutrition for their residents.  When they get to a certain size, they will send out tendrils to new areas to establish new colonies.  The colonies will grow and take more territory.  Eventually the colonies will send out tendrils to become new colonies. Some of the colonies will remain part of the mother country; others will take advantage of their isolation, build militaries of their own, and challenge the militaries of their mother countries to become independent and sovereign nations themselves.  Each colony will affect more and more territory and various colonies will metastasize to form new diseases that are capable of greater and greater military feats. 

These societies have structural forces that make them inconsistent with healthy living for the human race and planet Earth.  They are inherently diseased. The disease will grow and spread and mutate to take over more and more of its host (the human race is the host for this disease).  Eventually one of two things must happen.

The first option: the people who live in these diseased societies will realize that they are diseased.  They will realize that their race is capable of more.  They will figure out other ways human societies can work.  They will figure out what steps must be taken to treat the disease, to cause it to grow less virulent over time, and to bring about a condition of health.  They can then take these steps.

What if they don’t?  This disease is fatal.  The infected race can’t leave it in place and survive. The people in this system may truly love the structures associated with the disease.  They may love their countries with all their hearts; they may truly believe that they own the land around them and that any who claim otherwise are enemies to be killed or subjugated so they have no control over anything.  But all of the love in the world isn’t going to save these societies.  Their disease is fatal.  Leave it in place long enough and the race of intelligent beings that contracted it—as our race did about 6,000 years ago—will cease to exist.  

Our group in Pastland is in a position to form any kind of society we want.  If we want, we could start with a very simple system, a natural law society, the same type of society the pre-conquest American people appeared to have had.  If we do this, we can then examine other options; we can look at various other different types of societies that we could build on this simple foundation.  We may also decide to recreate the systems that we left behind back in the future.  If we take this second option, we will basically be creating a monster with a life of its own.  Once it exists, it will be the master and we will have to meet its needs.  It will want to destroy us and, if we give it enough time, it will succeed.

Back To The Natural Law Society

This chapter was a thought experiment. It was a ‘what if’ discussion. What if we hadn’t even thought about whether the land was ownable and simply assumed it was?

If things had happened differently on the few days after we arrived in the remote past, the realities of our existence would have been entirely different.

Our group in Pastland has the luxury of a thought experiment because we have just passed the moratorium.  For the next 10 years, we can discuss many different options, but we can’t act on any of them without officially repealing the moratorium.  

We can go over the principles of natural law societies to see if we like them.  We can examine the principles of societies built on one hundred percent ownability to see how they compare.  We can also work out the specific structures of other societies, perhaps some that have not existed in the past but could exist if we wanted to create them.

We can take time to examine the goals of the human race. 

Do we want to move forward and have progress and growth?  If we do, we can incorporate structures that lead to progress and growth.  Do we want to keep the land healthy so that future generations will be around to enjoy it?  If so, we can work out the specific flows of value that encourage environmental responsibility and make sure they are a part of our finished society. (Hint: if everyone shares the bounty of the land in some way—it doesn’t have to be equal and we don’t have to share all of it—we all have incentives to keep the land bountiful so our incomes remain high.)  If we want social and personal responsibility, we can work out the specific flows of value that lead to these characteristics and make sure we include them in our finished society. If we decide we want to destroy ourselves (some people think it is inevitable so it should be done on our terms) we can decide how we want this to happen and make it happen. 

We have all options available to us. We can decide what we want and then build it.

Here in Pastland, we have these options.

Our real-world situation here in the 21^st century is slightly different.  We were not born into a situation where we had no roadblocks or obstacles. 

We can, however, take the starting steps discussed above: we can figure out what options are possible (or would be possible if we had all of the advantages the group in Pastland had). We can figure out which societies can meet our needs and decide whether we want to have these societies.  Once we have done this, we can look at the roadblocks and obstacles that we would face converting to these other societies. We can figure out what it would take to overcome these obstacles and whether it is worth the trouble to do these things.  Perhaps we may find that there really are societies that can meet our needs and, if we tried, we could get to them.  (If we really are the dominant species on Earth—and our destiny is not being determined by superbeings, angels, spirits, or gods who are currently invisible and undetectable by our sciences determining our destiny—who is to stop us?  If we are the dominant species on Earth and we want something else, we can have it.)

Our first step here in the 21^st century is the same as the first step for the people of Pastland: we need to know what kinds of societies are possible.

Chapter Seven
Incentives in Natural Law Societies.

The Pastland Farm produces a free-cash flow of $2.4 million a year.  We have been dividing this money evenly. We don’t have to do this.  We can use this money other ways. 

We might want to acknowledge the people who are doing various things to make life better for all of us.  Some people go over to the electric generating plant, check to make sure everything is working right, and fix things when they break.  We may want to reward them for this.  Some people take care of the internet and keep it working.  Some people take care of the routers, servers, and modems. 

Some people come to the medical clinic and help people who are injured or sick.  We want these people to know that we appreciate them.  We can show this by rewarding them.  As long as we show our appreciation to them, we can expect them to keep showing up.

We have a lot of money to use for rewards.  If we want, we can allocate rewards before we divide the money.  People can nominate those who help out with various services for rewards and we can vote on them. 

We will naturally want to make sure to reward the people who do the things that are most vital to us so they will keep doing these things.  This will create a kind of incentive system: people will know that those who do things that help society can get rewards; the more important their work, the more rewards they can expect to get. 

People will look for things that benefit the human race and just do them.  If they find the rest of the people value their input and reward them, they will keep doing these things.  If they aren’t getting rewarded (because the people don’t think the things they do are important), and the work isn’t rewarding for other reasons, they will stop.  In time, many people will wind up doing a bunch of different things that benefit the human race.  People will always be looking for things they might be able to do that others will find valuable enough to reward.

Money

So we have some figures to work with, let’s say that each year we allocate about $400,000 of the $2.4 million a year free cash that flows to us to rewards for services.

In time, we will probably create a formal system to deal with common facilities and services.  We may elect a committee to meet on a regular basis, figure out our priorities, line up bids for work that has to be paid or get volunteers to work for unpaid jobs, take care of the details, and provide a budget for our approval. 

If we like the work the members of the committee are doing, we can leave everything to them.  If we don’t like their priorities, or believe they are ignoring important matters, we can replace them or simply go over their heads and vote for rewards directly to people who do things that benefit us.

The money sitting on the table doesn’t belong to the committee.  It doesn’t belong to anyone.  In natural law societies, no one owns this unearned wealth.  It is a gift from nature.  The entire group decides what happens to the wealth and gifts that flow to us that don’t belong to anyone.  If we make it clear to people who do things that benefit us that they will be rewarded, people will have incentives to anticipate the needs of the human race and find things that can make life better for the people. 

Environmental Responsibility

Natural law societies distribute wealth in ways that lead to very powerful incentives for everyone to work both as individuals and as members of society to make sure no harm ever comes to the world around them. 

Consider our situation in Pastland: when we arrived in the ancient past, the land was already healthy.  Nature created a balanced ecosystem.  If we throw it out of balance, it won’t operate as well as it does now and won’t give us as much wealth as we get now.  If we want to keep our incomes high, we will want to make sure that the system remains balanced.  We will want to make sure that no harm comes to the land or any part of nature that we depend on.

We each get $2,000 a year; this is our personal share of the free cash flow of the land.  Most of us have more income from various other sources.  Kathy gets paid for managing the farm, Tanya makes money selling eggs, Dennis makes money at the bar, and Terry makes money providing banking services, for example; others get paid the ‘rewards’ we provide for those who maintain the public electricity supply, water system, internet, and medical system.  But some people only make a small amount of money outside of their share of the bounty that we divide; others have no other incomes at all.  Some of these people are barely able to get enough to eat a healthy diet.  If production fell by even a tiny amount, their share would fall below starvation levels and they would be in real trouble.

We would expect these people to have very strong opinions about keeping the land healthy.  Any harm to the land could mean a death sentence for them.  They will obviously have powerful incentives to make sure that everyone around them is environmentally responsible.  If you do something that even has the tiniest potential to harm the land we depend on, you can expect a stern lecture.  You will be told that you are harming everyone.  (To quote chief Seattle of the Duwamish: ‘Teach your children what we have taught our children that the earth is our mother.  Whatever befalls the earth befalls the sons of earth.  If men spit upon the ground, they spit upon themselves.’)

If the people harming the land don’t reform, we can expect some people to be truly dedicated environmentalists, far more motivated than environmentalists in our 21^st century world, because their lives depend on the land; even a tiny reduction in their incomes could be enough to make them starve to death.

A great many different natural law societies existed in the Americas before the conquest.  Some had enormous cities, used money for transactions as we do in Pastland, had extensive markets and many goods and services available, just as we have in Pastland.  Other groups roamed the land following buffalo or other game, trading meat and livestock products for other goods at pow-wows or other gatherings, and rarely even seeing money.  But they all shared a common feature: they all considered nature and the natural world to be unownable and unowned.  They all lived on a very bountiful world and shared the bounty. 

When the first humans arrived in any area, it already had a balanced and healthy ecosystem: nature made this happen.  All they had to do to keep it producing wealth for them is make sure it remained healthy.  They all had very powerful incentives to work both as individuals and as members of society to make sure this happened.

Columbus Quotes about the People of The Land Beyond he Western Ocean

When Columbus arrived in the Caribbean in October of 1492, very large numbers of people rowed out in canoes to meet him.  He had arrived in an area with thousands of islands, each of which produced entirely different things.  (Again, for people confused by standard history books that claim that Columbus ‘discovered’ America, it is important to realize that Columbus went to tropical islands in the Caribbean Sea, not to the American continent.  Each island has slightly different features and produces different things today; this was also true in 1492.)

They came to his ship to trade.  This is very clear from the descriptions of these people in Columbus’ logs (available on the PossibleSocieites.com website). 

Columbus visited many of these islands.  He was totally amazed by the incredible health of the land.  He had never seen anything like it.  Here are his words describing several different islands sequentially:

 

‘This is a large and level island, with trees extremely flourishing, and streams of water; there is a large lake in the middle of the island, but no mountains: the whole is completely covered with verdure and delightful to behold.  The natives are an inoffensive people, and so desirous to possess any thing they saw with us, that they kept swimming off to the ships with whatever they could find, and readily bartered for any article we saw fit to give them in return, even such as broken platters and fragments of glass.

Near the islet I have mentioned were groves of trees, the most beautiful I have ever seen, with their foliage as verdant as we see in Castile in April and May.  There were also many streams.  After having taken a survey of these parts, I returned to the ship, and setting sail, discovered such a number of islands that I knew not which first to visit; the natives whom I had taken on board informed me by signs that there were so many of them that they could not be numbered; they repeated the names of more than a hundred.

I determined to steer for the largest, which is about five leagues from San Salvador [the name he gave the first island where he landed] the others were some at a greater, and some at a less distance from that island.  They are all very level, without mountains, exceedingly fertile and populous’.

 

Another island:

 

The island is verdant, level and fertile to a high degree; and I doubt not that grain is sowed and reaped the whole year round, as well as all other productions of the place.  I saw many trees, very dissimilar to those of our country, and many of them had branches of different sorts upon the same trunk; and such diversity was among them that it was the greatest wonder in the world to behold.  Thus, for instance, one branch of a tree bore leaves like those of a cane, another branch of the same tree, leaves similar to those of the lentisk.  In this manner a single tree bears five or six different kinds of fruit.

In the meantime I strayed about among the groves, which present the most enchanting sight ever witnessed, a degree of verdure prevailing like that of May in Andalusia, the trees as different from those of our country as day is from night, and the same may be said of the fruit, the weeds, the stones and everything else.

A few of the trees, however, seemed to be of a species similar to some that are to be found in Castile, though still with a great dissimilarity, but the others so unlike, that it is impossible to find any resemblance in them to those of our land.

I assure your Highnesses that these lands are the most fertile, temperate, level and beautiful countries in the world’.

 

Another island:

 

This island is the most beautiful that I have yet seen, the trees in great number, flourishing and lofty; the land is higher than the other islands, and exhibits an eminence, which though it cannot be called a mountain, yet adds a beauty to its appearance, and gives an indication of streams of water in the interior.  From this part toward the northeast is an extensive bay with many large and thick groves.  I wished to anchor there, and land, that I might examine those delightful regions, but found the coast shoal, without a possibility of casting anchor except at a distance from the shore.  The wind being favorable, I came to the Cape, which I named Hermoso, where I anchored today.

This is so beautiful a place, as well as the neighboring regions, that I know not in which course to proceed first; my eyes are never tired with viewing such delightful verdure, and of a species so new and dissimilar to that of our country, and I have no doubt there are trees and herbs here which would be of great value in Spain, as dyeing materials, medicine, spicery, etc., but I am mortified that I have no acquaintance with them.  Upon our arrival here we experienced the most sweet and delightful odor from the flowers and trees of the island.

 

The next island.

 

This island even exceeds the others in beauty and fertility.  Groves of lofty and flourishing trees are abundant, as also large lakes, surrounded and overhung by the foliage, in a most enchanting manner.  Everything looked as green as in April in Andalusia.  The melody of the birds was so exquisite that one was never willing to part from the spot, and the flocks of parrots obscured the heavens.

The diversity in the appearance of the feathered tribe from those of our country is extremely curious.  A thousand different sorts of trees, with their fruit were to be met with, and of a wonderfully delicious odor.  It was a great affliction to me to be ignorant of their natures, for I am very certain they are all valuable; specimens of them and of the plants I have preserved.

Afterwards I shall set sail for another very large island which I believe to be Cipango [Japan], according to the indications I receive from the Indians on board.  They call the Island Colba, and say there are many large ships, and sailors there.  This other island they name Bosio, and inform me that it is very large; the others which lie in our course, I shall examine on the passage, and according as I find gold or spices in abundance, I shall determine what to do; at all events I am determined to proceed on to the continent, and visit the city of Guisay, where I shall deliver the letters of your Highnesses to the Great Kahn, and demand an answer, with which I shall return.

 

Later we will examine other societies and compare them to natural law societies.  We will see that any society that shares the bounty of the land among the people who live on the land will have flows of value that generate incentives to be environmentally responsible.  Natural law societies all share the bounty of the land among the people.  They have to do this: no one owns the land, so no one owns its bounty.  The people must get together and make decisions about what to do with it.  They may not share it equally among their members, but they will share it in some way.  No matter how they share, if there is more to share everyone’s share will be bigger.  Healthy land is more bountiful than devastated land.  Everyone gains if the land is healthy.

We will see that some other societies actually have even more powerful incentives to be environmentally responsible than natural law societies.  Socratic societies, for example, operate in ways that encourage progress, growth, and mechanization of production with powerful internal reward systems.  People will respond to these incentives in ways that cause the land around them to produce more and more with less and less effort and cost.  The bounty of the land is the amount left over after subtracting enough to pay the costs.  As the total production increases (including production from factories and other facilities on the land) and costs fall, the free cash flow that represents the bounty of the land will increase.  The more bounty there is to divide, the more people will get from the land.  We will see that healthy land always produces more, at least over the long run, than destroyed land.  Socratic societies will have even stronger incentives to be environmentally responsible than natural law societies because people have stronger incentives to care for the land if they get more money from this care than if they get less.

But, for now, we are only dealing with natural law societies.  Clearly, these societies produce incentives that encourage environmental responsibility. Imagine you are in Pastland.  You see someone doing something that may harm the land of the Pastland Farm, say dumping trash there.  Are you going to be silent?  You know that either Kathy will have to pay someone to remove the trash, which involves a direct cost to you (the pay for everyone who does anything on the farm will come out of what would otherwise be the bounty of the land), or avoid farming on the contaminated area, leading to less production to sell and less money for everyone.  Of course, you will say something.  Anyone who may be tempted to harm the land will realize that their acts harm literally every single person on Earth, including themselves.  People will realize they should not harm the land.

Not all societies that are possible have incentives that encourage environmental responsibility.  Some societies have the opposite incentives: they have incentives that encourage irresponsible use of the land.  We will look at the flows of value that generate these incentives later in the book, when we look at sovereignty-based societies (which have the strongest possible destructive incentives) but, for now, I just want to go over the result.  

In his book ‘The Devastation of the Indies,’ the historian Bartolomé de Las Casas describes what happened after the Europeans arrived in great detail.  The Europeans began to take everything of value, without any regard whatsoever for the health of the land.  As the name of Las Casas’ book implies, they left nothing but devastation. 

At the time, hardwood lumber was incredibly valuable in Europe.  They weapons factories needed this to make steel.  If you want to ‘smelt’ iron, or remove it from rocks, you need to build an extremely hot fire.  Wood fires don’t produce enough heat for this, but charcoal made from hardwood does.  Europe had been making steel for more than 2,000 years and had basically eliminated all hardwood forests; with no hardwood they couldn’t make steel or more weapons. 

The islands had enormous amounts of hardwood; Spain sent armies of loggers to remove it, convert it to charcoal, and send the coal back to Europe to use to make steel.  Within a few years, the great bulk of the hardwood forests were gone.

Haiti is the native name for the island; in the Tianó language, this word means ‘the mountainous island.’  When the trees were gone, the mountains didn’t have any root systems to hold the soil in place; it began to wash away. 

Haiti has still not recovered from the destruction that took place in the late 1400s and early 1500s.  Here is a description of the condition of the environment of the island as of 2010; bear in mind that this is the exact same island that Columbus described in such glowing terms and even claimed was the ‘terrestrial paradise’ later in his life as it was far closer to what heaven must be like because it is better than any place in the part of the world where he was raised:

 

"If you want to put the worst case scenario together in the Western hemisphere (for disasters), it’s Haiti," said Richard Olson, a professor at Florida International University who directs the Disaster Risk Reduction in the Americas project.

The list of catastrophes is mind-numbing: this week’s devastating earthquake.  Four tropical storms or hurricanes that killed about 800 people in 2008.  Killer storms in 2005 and 2004.  Floods in 2007, 2006, 2003 (twice) and 2002.  And that’s just the 21st Century run-down. 

“There’s a whole bunch of things working against Haiti.  One is the hurricane track.  The second is tectonics.  Then you have the environmental degradation and the poverty,” he said.  This [the 2010 earthquake] is the 15th disaster since 2001 in which the U.S.  Agency for International Development has sent money and help to Haiti.  Some 3,000 people have been killed and millions of people displaced in the disasters that preceded this week’s earthquake.

This week’s devastating quake comes as Haiti is still trying to recover from 2008, when it was hit four times by tropical storms and hurricanes, said Kathleen Tierney, director of the University of Colorado’s Natural Hazard Center.  Every factor that disaster experts look for in terms of vulnerability is the worst it can be for Haiti, said Dennis Mileti, a seismic safety commissioner for the state of California and author of the book Disasters by Design. "It doesn’t get any worse," said Mileti, a retired University of Colorado professor.  "I fear this may go down in history as the largest disaster ever, or pretty close to it.".

For this to be the deadliest disaster on record, the death toll will have to top the 2004 Asian tsunami that killed more than 227,000 and a 1976 earthquake in China that killed 255,000, according to the U.S.  Geological Survey.

While nobody knows the death toll in Haiti, a leading senator, Youri Latortue, told The Associated Press that as many as 500,000 could be dead.

"This was not that huge of an earthquake, but there’s been a lot of damage," he said.  "It’s the tragedy of a natural disaster superimposed on a poor country.".

 

The above passage was written in 2010, a long time ago in terms of environment disasters in the devastated lands of the Caribbean.  Since then, things have only gotten worse.  There is no hope in sight.  The trees are gone; the soil needed to hold new trees is gone, the land is devastated.  It would take many centuries of good stewardship to get to a stable place; the type of societies that dominate the land now just don’t have any forces that push toward this kind of care.

Other Places

We know from history that people who had natural law societies—including the people of the pre-conquest Americas—took truly incredible care of the land around them.

In fact, they kept the land in such good repair, and so close to its natural state, that many people from the societies that conquered these lands have claimed that the lands couldn’t have possibly even had people on them.

They think that destruction is a part of human nature.  If people lived on these lands, in immense numbers for long periods of time, the land would be destroyed.  Since the land was not destroyed, they claim that humans could not have actually lived in the Americas, at least not in any numbers or for any length of time.

We now have access to scientific tools that tell us that large numbers of people lived in the Americas for very long periods of time.

Natural law societies work in ways that provide very real material benefits for people who take care of the land and keep it healthy.  The evidence we have tells us that these incentives made a difference.

Personal Responsibility

Our group in Pastland has a natural law society, at least as long as the moratorium lasts.  No one owns the land, so no one owns the wealth it produces.  We use part of this wealth to reward/pay people who help bring in the wealth of the land; this leaves the free cash flow, the money value of the bounty of the land.

We have been using part of the free cash that flows from the land to reward people (pay them) for services that benefit everyone.  After we pay them, there is still a lot of money left over.  We have been dividing this money among our members.

So far, we have been dividing it evenly.  I started with this particular distribution of the ‘leftover money’ because it is simple.  But we don’t have to divide the leftover money evenly. 

We may decide to cut the amounts that go to certain people.  Some people may do things that reduce the quality of life for us and some may even do things that cause harm to us.  Say that there is a person in our group who picks up things that don’t belong to her and she sees laying around, and then keeps them.  We may have people who get into arguments that disturb the peace and quiet, or that stay up late into the night with loud parties that disturb the sleep of those who go to bed early.  We can let these people know that we don’t like their behavior in several ways.  We may start by simply talking to them and telling them that their behavior bothers us.  If this doesn’t work, we may decide to take action by accessing some sort of fine against them for actions that bother us and taking this fine out of their share of the distribution of wealth.  We can cut their share of the distribution of wealth from the land, in order to provide incentives for them to consider the feelings of the people around them and act in socially responsible ways. 

It is important to realize that this particular option for encouraging social responsibility is not available in all possible societies.  Sovereignty-based societies, for example, consider everything to belong to someone; there are free cash flows, but this money doesn’t flow to the community of humankind and isn’t available for the people to distribute.  (In systems where the land is owned, everything the land produces, including its free cash flow, belongs to the owner.)  In sovereignty-based societies, people who weren’t born rich or don’t have a steady job that can be garnished to get the money don’t really have anything to lose from socially irresponsible behavior.  (In some cases, their lives are better if they commit crimes and go to jail, because jail is a better home than they can have any other way.  I have known people who have robbed stores and then sat in front of the store waiting for the police, because it is the only way they could get enough to eat.)  In natural law societies, there is wealth to divide among the people.  People know that if they do things that harm others, the others may vote to reduce their share.  In natural law societies, people all have something to lose for acts that harm the people around them.  

In our case, most people have two incomes: one comes from the money they earn; the other from their share of the unearned wealth the land produces (its free cash flow).  But many people don’t have earned income at all, and many people only get small amounts other than their share of the bounty.  These people have very powerful incentives to make sure they don’t cause problems for others and don’t do anything that may even have the appearance of dishonesty. 

 

Examples

The first day Columbus met the people of the islands of the western hemisphere, Columbus described them this way in his logs:

 

They are very gentile and without knowledge of what is evil, nor do they murder or steal.  Your highness may believe that in all the world there can be no better or gentler people.  All the people show the most singular loving behavior and they speak pleasantly.  I assure Your Highnesses that I believe than in all the world there is no better people nor better country.  They love their neighbors as themselves and they have the sweetest talking the world and are gentle and always laughing.

 

The most prolific writer of the period, Bartolomé de Las Casas, described them this way:

 

All the land so far discovered is a beehive of people; it is as though God had crowded into these lands the great majority of mankind.  And of all the infinite universe of humanity, these people are the most devoid of wickedness and duplicity.  They are by nature the most humble, patient, and peaceable, holding no grudges, free from embroilments, neither excitable nor quarrelsome.  These people are the most devoid of rancors, hatreds, or desire for vengeance of any people in the world.

They possess little and have no desire to possess worldly goods.  For this reason they are not arrogant, embittered, or greedy.  They are very clean in their persons, with alert, intelligent minds.  Some of the secular Spaniards who have been here for many years say that the goodness of the Indians is undeniable.

 

Columbus had an occasion to see how incredibly honest people could be: Columbus had made a friend on the island of Haiti, a man of great respect in the community named ‘Guacanagari.’ Columbus referred to him as ‘the king’ because of the deference that others showed to him.  On the 17^th of December, Columbus told Guacanagari that in seven days it would be Christmas, the most important holiday for his people.  Guacanagari then arranged a feast and celebration in honor of Columbus and his men, to be held as his home on Christmas day.  Columbus accepted the invitation and they arranged to meet on Christmas at Guacanagari’s home.

Columbus then went out exploring but was determined to return for the Christmas celebration Guacanagari had arranged.  

On December 24, Columbus was on his way from the other side of the island.  He had been up for two days straight and was very tired.  He had put a sailor on watch and went to bed.  The sailor who was in charge was apparently also very tired.  He put a cabin boy in charge of the wheel (‘tiller’) and went to bed himself.  At midnight, the ship hit a sandbank.

Here is the description of the event from the official logs of the voyage:

 

December 24, 1492:

Navigating yesterday, with little wind, from Santo Tomas to Punta Santa, and being a league from it, at about eleven o’clock at night the Admiral went down to get some sleep, for he had not had any rest for two days and a night.  As it was calm, the sailor who steered the ship thought he would go to sleep, leaving the tiller in charge of a boy.  The Admiral had forbidden this throughout the voyage, whether it was blowing or whether it was calm.  The boys were never to be entrusted with the helm.

The Admiral had no anxiety respecting sandbanks and rocks, because, when he sent the boats to Guacanagari on Sunday, they had passed to the east of Punta Santa at least three leagues and a half, and the sailors had seen all the coast, and the rocks there arc from Punta Santa, for a distance of three leagues to the E.S.E.  They saw the course that should be taken, which had not been the case before, during this voyage.

It pleased our Lord that, at twelve o’clock at night, when the Admiral had retired to rest, and when all had fallen asleep, seeing that it was a dead calm and the sea like glass, the tiller being in the hands of a boy, the current carried the ship on one of the sandbanks.

If it had not been night the bank could have been seen, and the surf on it could be heard for a good league.  But the ship ran upon it so gently that it could scarcely be felt.  The boy, who felt the helm and heard the rush of the sea, cried out.  The Admiral ordered him and others to launch the boat, which was on the poop, and lay out an anchor astern.

The master, with several others, got into the boat, and the Admiral thought that they did so with the object of obeying his orders.  But they did so in order to take refuge with the Nina, which was half a league to leeward.  The Nina would not allow them to come on board, acting judiciously, and they therefore returned to the ship; but the Nina’s boat arrived first.  When the Admiral saw that his own people fled in this way, the water rising and the ship being across the sea, seeing no other course, he ordered the masts to be cut away and the ship to be abandoned.

The master, who was also the owner, of the Admiral’s ship was Juan de la Cosa of Santofia, afterwards well known as a draughtsman and pilot, lightened as much as possible, to see if she would come off.  However, as the water continued to rise, nothing more could be done.  Her side fell over across the sea, but it was nearly calm.  Then the timbers’ opened, and the ship was lost.  The Admiral went to the Nina to arrange about the reception of the ship’s crew, and as a light breeze was blowing from the land, and continued during the greater part of the night, while it was unknown how far the bank extended, he hove her to until daylight.  He then went back to the ship, inside the reef; first having sent a boat on shore with Diego de Arana of Cordova, Alguazil of the Fleet, and I’edro Gutierrez, Gentleman of the King’s Bedchamber, to inform Guacanagari who had invited the ships to come on the previous Saturday.

His town was about a league and a half (4 miles) from the sandbank.

They reported that he wept when he heard the news, and he sent all his people with large canoes to unload the ship.  This was done, and they landed all there was between decks in a very short time.  Such was the great promptitude and diligence shown by Guacanagari.  He himself, with brothers and relations, were actively assisting as well in the ship as in the care of the property when it was landed, that all might be properly guarded.

Now and then he sent one of his relations weeping to the Admiral, to console him, saying that he must not feel sorrow or annoyance, for he would supply all that was needed.  The Admiral assured the Sovereigns that there could not have been such good watch kept in any part of Castille, for that there was not even a needle missing.

He ordered that all the property should be placed by some houses which the king placed at his disposal, until they were emptied, when everything would be stowed and guarded in them.  The king and all his people wept.  They are a loving people, without covetousness, and fit for anything; and I assure your Highnesses that there is neither better land nor people.  They love their neighbors as themselves, and their speech is the sweetest and gentlest in the world, and always with a smile.

‘Your Highnesses should believe that they have very good customs among themselves.  The king (Guacanagari) is a man of remarkable presence, and with a certain self contained manner that is a pleasure to see.  They have good memories, wish to see everything, and ask the use of what they see’.

 

Columbus was commanding the Santa Maria, the supply ship for the voyage.  The Santa Maria was far larger than the other ships, and laden with many very useful things.  Most of these things would have been worth enormous amounts to the natives.  When Columbus was trading for these things, the people offered large amounts of gold and skeins of cotton (as valuable as gold at the time to Europeans) for these things.

When they had an easy opportunity to steal them, they declined.

Not so much as a needle was missing.

You and I were born into societies where the great bulk of the people of the world have nothing unless they can get jobs.  If they don’t work, they die, regardless of the amount of wealth around them.  People in these societies are not rewarded for being personally responsible.  In fact, they often must act irresponsibly just to avoid death: if you don’t have a job and have no rich people to give you charity, you must either steal or die.  The need to steal is so common that many people don’t even get upset when people steal from them:  it is a common part of life and something everyone in business must simply account for: it will happen, and we all know it. 

Because theft, deception, and trickery are so common, we all know that we are never really safe in the societies we were born into and which we live in now.  People in dire circumstances are behind the shadows of each tree, like ants sweeping the ground for crumbs, waiting to swoop in on any target of opportunity.

This is not the case in all possible societies.  Some societies work in ways that generate flows of value that the people as a group may distribute among their members as the group sees fit.  Our group in Pastland has $2.4 million left—the free cash flow of the farm—that we can divide any way we want.  We want to encourage people to do things that benefit us, so we use part of this money to provide rewards that encourage people to step up and do things that benefit the human race.  Some people will find things that we like.  If we want to keep having these things, we may give them some of the bounty of the land as a reward, to encourage them to keep doing these things.  But we have such enormous amounts of income that, after we pay people who do these things enough to make sure they keep doing them, we have $2 million left.  We can divide this money among our people. 

If everyone is acting responsibly, it makes sense to divide it evenly.  But if some people are acting irresponsible, it wouldn’t make sense to give them an equal share.  We may come up with a process of some kind to determine a kind of schedule of offenses.  People who violate the rules can be given a hearing and, if the hearing officers conclude that the offense was intentional, they can be fined.  This will always reduce the quality of their lives because, as long as the fines are not more than their share of the bounty, they will always be able to afford to pay them.  (In sovereignty-based societies, most offenders can’t be fined because they have nothing to use to pay the fines.  All we can do in this case is put them in jail, which is often a better place to live than they would be living otherwise, so they actually can improve their lives by committing crimes.)    

You could say that this system pays everyone to be responsible.  In our case, people are paid in money, but all natural law societies have flows of value that must be distributed in some way among the people, so all natural law societies pay or reward for being responsible.  If people are rewarded for certain behaviors on a consistent basis, starting at an early age, they become programmed to think about the consequences of their actions.  People may see something they want lying around that they know belongs to others.  They may have it, but if they realize that they may easily suffer much more than they gain from the object if anyone ever finds out they have it, they will ‘have a feeling’ that it is simply not the right thing to do.  Their feelings—actually the ingrained responses of their minds that result from the known relationship between responsible behavior and rewards—will push them to do the responsible thing, whatever they think it is. 

Later we will see that we can actually use mathematical analysis to determine the strength of incentives that push toward personal responsibility in different societies.  We will see that some societies have very powerful incentives that encourage personal responsibility, some have weaker incentives, some have none at all, and some even have incentives that discourage personal responsibility.  We will see that natural law societies have very strong incentives that encourage personal responsibility, but they aren’t the strongest possible.  (Socratic societies, discussed later in the book, have much stronger incentives pushing toward social responsibility, because of rapid increases that drive up the bounty of the world; if the world is more bountiful, there is more to divide and people have more to gain from personal responsibility.)  But, although it is possible to have ‘personal responsibility incentives’ that are stronger than those in natural law societies, natural law societies have extremely strong incentives to come to understand the rules and act properly.  We can see from the historical records that these incentives really did exist in these societies when they dominated the western half of the world.

Columbus was amazed at the honesty of the people in the new world, as the excerpts from his logs presented above show.  Others expressed the same amazement:

The official historian of the Spanish Crown during the time that Columbus was alive was a Dutchman named ‘Peter Myrtar.’ Myrtar was very impressed by the honesty of the people of the lands he studied.  He studied the people and came to the conclusion that there is something about the idea of sharing the land and the things the land produced that led to this behavior.  Here are some quotes from his official report on the people of the new world, called ‘Orbo Novo’ (The New World):

 

It is proven that amongst them the land belongs to everybody, just as does the sun or the water.  They know no difference between meum and tuum, that source of all evils.  It requires so little to satisfy them, that in that vast region there is always more land to cultivate than is needed.  It is indeed a golden age, neither ditches, nor hedges, nor walls to enclose their domains; they live in gardens open to all, without laws and without judges; their conduct is naturally equitable, and whoever injures his neighbor is considered a criminal and an outlaw.

 

He goes on:

 

They know neither weights nor measures, nor that source of all misfortunes, money; living in a golden age, without laws, without lying judges, without books, satisfied with their life, and in no wise solicitous for the future.

 

Bartolomé de Las Casas was the most prolific writer of the time.  Here he describes these same people:

 

Of all the infinite universe of humanity, these people most devoid of wickedness and duplicity; they are by nature the most humble, patient, and peaceable, holding no grudges, free from embroilments, neither excitable nor quarrelsome.  These people are the most devoid of rancors, hatreds, or desire for vengeance of any people in the world.

 

What about these same lands now? 

You can find many descriptions of the changes that occurred in the first few years after the arrival of the Europeans in the book Forensic History.  They show that the Europeans made a dedicated effort to wipe out the old social order and replace it with a new one on the European model.  They succeeded.  The payments that went to responsible people are no longer being made; they haven’t been made for centuries.  The Europeans needed lumber very badly to make charcoal for steel.  Haiti, the first island they settled, was densely forested and the Europeans clear cut it.  The Europeans took the gold and other metals and then abandoned the useless hulk that remained.  The Europeans decimated the native population, generally by enslaving them and working them to death.  By 1540 there weren’t enough natives left to fill the Christian need for slaves, so the Europeans began bringing in both white slaves (purchased from European prisons) and black slaves (captured and enslaved from Africa) to finish raping the lands.  Once the land had been denuded of anything valuable, the slave masters basically abandoned it.  They left the descendents of the white and black slaves they had imported; these people interbred with the native people that remained to create the racial mixture we see on the island of Haiti today.  (DNA studies show that a large percentage of the people of Haiti have ancestors of all three races.) 

These people did not have anything to work with: the ecosystem that had supported the natives, and that early European arrivals had marveled at, no longer existed: all resources valuable to the outside world were gone. 

The former masters who abandoned this island did leave these people with something however: they left them with an administrative system based on the principles of sovereignty, as accepted in Europe.  These people had an entirely different foundation to build on than the people who lived before them. 

How did things turn out?  You can get some idea from the next quote.  This quote is from the United States government’s travel advisory website, for the exact same island described in the above passages, the one with no ‘murder or theft’ (according to Columbus) where ‘their conduct is naturally equitable, and whoever injures his neighbor is considered a criminal and an outlaw’ according to Myrtar, where ‘these people most devoid of wickedness and duplicity of all the infinite universe of humanity’ reside.    

 

Reconsider travel to Haiti due to crime and civil unrest.  Violent crime, such as armed robbery, is common.  Protests, tire burning, and road blockages are frequent and often spontaneous.  Local police may lack the resources to respond effectively to serious criminal incidents, and emergency response, including ambulance service, is limited or non-existent.

Travelers are sometimes targeted, followed, and violently attacked and robbed shortly after leaving the Port-au-Prince international airport.  The U.S.  Embassy requires its personnel to use official transportation to and from the airport, and it takes steps to detect surveillance and deter criminal attacks during these transports.

The U.S. government has limited ability to provide emergency services to U.S. citizens in some areas of Haiti.  The Embassy discourages its personnel from walking in most neighborhoods.  The Embassy prohibits its personnel from:

Visiting establishments after dark without secure, on-site parking.

Using any kind of public transportation or taxis.

Visiting banks and using ATMs.

Driving outside of Port-au-Prince at night.

Traveling anywhere between 1:00 a.m.  and 5:00 a.m..

Visiting certain parts of the city at any time without prior approval and special security measures in place.

If you decide to travel to Haiti:

Avoid demonstrations.

Arrange airport transfers and hotels in advance, or have your host meet you upon arrival.

Be careful about providing your destination address in Haiti.  Do not provide personal information to unauthorized individuals located in the immigration, customs, or other areas inside or near any airports in Haiti.

As you leave the airport, make sure you are not being followed.  If you notice you are being followed, drive to the nearest police station immediately.

Do not physically resist any robbery attempt.

 

Social Responsibility

What is the most irresponsible thing someone could do in a social situation?  How about this: the person could organize a gang to use murder and terror to either drive off or kill all people who are not in her gang from a part of the world, then claim that part of the world belongs to her and her gang, without sharing with anyone else.  That seems like a very simple description of the idea of a ‘country.’

You and I were raised in a crazy world.  The schools in our world today teach children that their highest allegiance is not to their race, not to their culture, not to nature, not to the world around them, but to their country.  They are taught that the greatest heroes in history where the ones who organized the mass murder events called ‘wars’ that led to their ‘country’ existing.  Children are raised to believe it is not just acceptable, but admirable to be willing to kill others and inflict terror on any who threaten the interests of their country. 

Our group in Pastland has passed a moratorium.  For the time this moratorium is in effect, we have a natural law society.  The primary law of this society—we may call it a ‘prime directive’ if we want to use Star Trek terminology—is that no one may organize to use violence to create a country.  We have only one offense that is so serious that we will not allow any who commit it to remain among us:  you may not organize for violence to force others to accept a country.  Anyone who commits this offense will be evicted from orderly society and sent to live in the wild.  Since individuals sent to live in the wild will almost certainly not be able to survive, this is effectively a death sentence. 

Everyone who might consider organizing for mass murder or terror against others will realize that she can’t possibly gain from this.  Either she will be caught early and punished or, if she can organize a gang and start murdering, be wiped out by the great majority, that will do everything it can to prevent the success of this takeover. 

We may understand how hard it would be to break away from a community like this and form a country if we consider that the societies in the Americas existed for at least 10,000 years without anyone successfully creating a country.  Almost certainly, people tried to do so.  People are self-interested.  This is true in any society.  Self-interested people want more for themselves.  Any distribution of wealth that favors any individual or small group will effectively grant ownership rights for that individual or small group.  This violates our prime directive.  It is the one activity we can’t allow. 

Of course, over the course of 10,000 years, a lot of people would try to find some tricky way to make the others accept that they had special rights to the land.  People trying to get more for themselves can be very clever.  But the fact that this didn’t happen over the course of 10,000 years tells us how hard it is to do it.  How are you going to react if someone tries to trick you into accepting she has special rights to a part of the world in Pastland?  Even if she can convince you of this, she won’t be able to get these rights unless she can trick the majority of the people.  If this were easy to do, surely someone would have been able to do it in the enormous period of time that people lived in the Americas.

The book Forensic History deals with this issue from a wider perspective.  Forensic evidence tells us that humans have been on Afro-Eurasia for 350,000 years.  Countries leave very clear artifacts.  We know when these institutions first came to exist because, as soon as countries appeared, the special artifacts that are associated with countries appeared.  We can’t find any of these artifacts going back more than 6,000 years.  This tells us that humans existed on the Afro-Eurasian landmass for at least 344,000 years before the first group was able to form the first successful country.  (We will see, when we look at sovereignty-based societies, that once one successful country exists, the country-based system spreads very rapidly and conquers additional land.)  This means that, for more than 98% of the time humans lived on the Afro-Eurasian landmass, the people there were able to successfully resist all attempts to create countries. 

As we will see shortly, the ideas of sovereignty and countries can spread extremely quickly once they take hold.  But the point here is that there will be almost universal resistance to the very ideas that the societies we have now encourage and foster.  The idea of fighting, killing, and committing terror to force the majority of the people of the world to accept special rights for the minority would be seen as the wrongest of all possible wrongs.  Nothing could inspire more guilt in the heart of someone raised in a natural law society than the idea of doing the things that are fostered and encouraged in sovereignty-based societies.  Nothing would be more likely to lead to action by the authorities and condemnation by all of the people than advocating murder and terror to gain special rights for minorities at the expense of the majority.  (No country in the world includes a majority of the people of the world; this means that all activities that are designed to advance the interests of countries are designed specifically to benefit minorities at the expense of the majority.) 

Natural law societies naturally foster three very important kinds of incentives:

 

 

Later, we will see that we can actually follow the flows of value that lead to these incentives and quantify them with objective numerical analysis.  We can calculate the strength of these incentives.  Although natural law societies don’t have the strongest possible incentives in all of these areas, these incentives are extremely strong, easily enough to ensure that natural law societies will have three very positive attributes:

 

 

Other Incentives

The introduction compared the societies that we have in the 21^st century world with a disease.  This disease has a great many symptoms.  The primary symptoms are:

 

 

Are these the worst symptoms of this disease?  That is a value judgment.  The disease has many symptoms, and some would claim that others are more serious.  One example in this category includes the exploitation of more than half of the population, the female half, by the minority population.  (Males make up less than half of the world’s population.) 

This problem stems from the fact that the great majority of the people of this system (the non-owners) get nothing from the land unless they work.  Women have the babies and have to provide care for them for the first few years.  (The males of some species can produce milk from their chest nipples; this is not true for humans; only females produce milk so only females can nurse babies.)  Because sovereignty-based societies almost always have far too few jobs for the workers who need them, and a large number of people must therefore be unemployed, employers must make a lot of very quick decisions when considering job applicants: when choosing between a male and an equally qualified female, the employer knows that the male is not going to give birth and bring a baby to work; this may happen for the female.  (In fact, just to have a stable population, nearly every female must have at least one child.)  It becomes a simple decision: hire the man.  Since no members of the working class have an income without a job, and a very large percentage of the women will not find jobs, the system must create some sort of institution that grants women and their babies some sort of income and some protection.

A system has developed that considers females to belong to males.  A girl is the responsibility of her father until he ‘gives her away’ to another man, who will be her husband.   I have always found it strange to be surrounded by people clamoring to be possessions: the girls all wanted to ‘get married.’  Why?  If we look at it logically, it doesn’t make sense.  Doesn’t everyone want freedom?  Who wants to belong to someone else?  If we understand the pressures on females, we can see that it makes sense.  Their choice is to either compete with men on a playing field that is so sloped toward men that women can’t really hope to compete, or become the property of some man, preferably one with a job. 

Later we will look at socratic societies.  We will see that these societies divide the bounty of the land among the people of the land. The more bountiful the land, the more there is to divide.  Since these systems create incentives that lead to very rapid increases in the productive abilities of the productive facilities (land and factories), these systems will be extremely bountiful and have enormous amounts of wealth to distribute among the people.   Women are people.  They get a share.  Children are also people.  The community of humankind will have a stream of income from the land.  We can use it to make sure that all children will have a high quality of life and the same opportunities.  This is not the responsibility of the particular woman who gave birth to the baby in a socratic society.  Everyone shares the wealth of the land. 

In such a system, it will be possible to have true equality between the sexes.  In sovereignty-based societies, this equality can never exist: again, it is structurally impossible.

What about natural law societies?  In these societies, as long as there was food, children ate.  Women that were nursing or in later stages of pregnancy were not excluded from distributions of wealth, even though they may not have been able to work as long and as hard as men in their same age group.  The record shows that women in natural law societies had certain freedoms that women do not have in sovereignty-based societies.  For example, the records show that women were not considered to be the property of their husbands.  They could make their own sexual choices.  The records also show a much greater percentage of female political leaders in natural law societies than in sovereignty-based societies.  (You can find many of these records on the PossibleSocieties.com website.  One important source was Hernando De Soto’s 1537-1541 expedition through the southeastern part of North America.  Since this happened before the great plagues that devastated this land, the area visited was densely populated.  The authors on this trip note that many of the groups were matriarchal, with women in charge of important decisions.) 

If we accept this evidence, we can see that the inferior status of females in the societies now in place is not due to any quality of human nature.  It is related to the structures of society. 

We could go over a long list of differences in the incentives of natural law societies and sovereignty-based societies.  Different societies distribute the wealth the land produces entirely differently.  Natural law societies use this wealth to reward social, personal, and environmental responsibility.  We would therefore expect to see high degrees of responsibility in these areas.

The Bad, and the Ugly

We were born into societies with some serious problems.  In a sense, the societies that we were born into (‘sovereignty-based societies’) are the opposite of natural law societies.  These societies accept that absolutely everything associated with the world is ownable.  Humans can own the mountains, the rivers, the forests, the air above our land (governments sell air rights and rights to use each section of the electromagnetic spectrum); there is nothing about the physical world that doesn’t belong to whatever group claims to own it and then builds institutions to enforce their ownership rights.  Natural law societies take the opposite perspective, accepting that nature and the natural world around us doesn’t belong to us, not as individuals and not as groups of any description.  They don’t allow any institutions that enforce or even accept any ownability by humans of any part of the world.

These are both extreme systems.  Extreme systems of any kind always have certain limitations.  One obvious problem with extreme systems is flexibility.  The extreme system accepts no exceptions.  It is absolute.  Our rule in Pastland says that no one may own, and no institutions may be created to protect ownership while the moratorium is in effect, period. 

What if we want exceptions?  We can have them, but we have to either wait until the moratorium is over or vote to repeal or modify the moratorium.  As long as the moratorium is in effect, there are no exceptions. 

All of the people in our group are from the 21^st century.  We are used to certain things that were a part of all 21^st century societies.  For example, all 21^st century societies accepted the idea of housing built on land.  The housing was either owned by the countries that built it (which may then assign the housing to individuals), by corporations, or by individuals.  It was owned by some human entity.  We are living on the ship.  If you have ever been in a cruise ship cabin, you will know that even the large and deluxe cabins are tiny.  They have to be for the ships to make money: they need to pack in as many cabins as they can.  We have an entire world outside of the ship.  A lot of people love working with their hands and would love to build houses, either for themselves or for others to use as homes.  But we have an absolute prohibition against any ownership or ownability, or any institutions that grant any person or group any rights of ownership or ownability.  

Natural law societies in the pre-conquest Americas appeared to have been based on beliefs.  Beliefs are guesses about things that we can’t fully determine with objective scientific analysis.  The people who lived in the Americas appeared to have believed that nature, or perhaps some spirit being that was in charge of nature, had certain desires and intentions for the human race.  The human race was supposed to treat the world a certain way.  We didn’t have exact instructions about this, so we had to guess.  They guessed that we (the members of the human race) were supposed to treat nature and the world around us with respect.  Nothing could be more disrespectful to nature than to claim that it existed for our own personal pleasure and that the things nature created belonged to us.  They wanted people around them to treat the world with respect and made rules against treating the world as a possession; they wouldn’t accept institutions that allowed people to treat the world around them as a possession.

Our group in Pastland has gotten to the same rule system, but we got there a different way.  We didn’t start with guesses about the intention of some spirit or spirits that we guessed were in charge of nature.  We saw that accepting certain kinds of ownability led to conflicts.  We didn’t want these conflicts.  We didn’t have time to sort through the different kinds of ownability that were possible and find the ones that caused problems.  We didn’t want the conflicts and, without a full understanding of the different kinds of ownability, the only way we could avoid these conflicts was to ban all ownability. 

There are certain things that we will want and need over time that we could easily have if we accepted some ownability, but that we won’t have if we don’t accept any ownability at all.  There are certain limitations that all societies based on the absolute prohibition of ownability must have.  Later, we will examine some societies that allow exceptions and see that, if we allow exceptions, we can have the things we need and want without the problems that come from absolute ownability.  But before we look at these other societies, we need to explore the limitations of the absolute system that will be in effect during the term of the moratorium.  We have seen that this absolute system definitely has certain advantages that the absolute ownability systems (systems I will call ‘sovereignty-based societies’) don’t have.  Let’s now look at the disadvantages that this system has that the absolute ownability systems we left behind in the 21^st century do not have:

The Lack of Constructive Incentives

Some societies work in ways that cause people to get large amounts of wealth if they can do things that make the planet more productive or if they can create new technologies or machines that can turn the super-abundant materials in the Earth into goods like solar panels, computers, televisions, smart phones, steel for bridges, skyscrapers, cars, trucks, and other things that make our lives easier.

 

 

Our 21^st century world has these flows of value.  You can see the result all around you.  The cities have luxury steel and glass skyscrapers that allow people to live in what poets of the past described as paradise, high in the clouds with all manner of luxuries at their disposal.  We have devices that can produce electricity that allows us to turn night into day, to keep our homes comfortable in the coldest winter or the hottest summer, to talk to people on the other side of the planet in real-time video calls, to get on planes and travel to the other side of the world in a few hours.  People involved with the creation of these structures, goods, and services, clearly make money doing them.  Somehow, the system they live in transfers value to them in some way that encourages them to provide more and better structures, goods, and services. 

If it weren’t for the other problems of these societies (including the risks of war, the pressures to destroy the world to create jobs, the hatred and fear they foster, and the fact that they virtually enslave the great majority of the people for the benefit of various minorities), life would be getting better for everyone at an incredible rate.

Natural law societies don’t even allow the structures needed to have these things.  Even if they did change the rules to allow these facilities to be built, people would have to make investments in time, money, skills, and other things that we collectively call ‘capital,’ to cause these things to exist and provide value to the people.  Natural law societies don’t have any natural flows of value that encourage these investments.  So, even if the people of a natural law society were to change their rules to allow these structures, chances are that people wouldn’t make the investments needed to have efficient and smoothly running factories (to make things like solar panels, smart phones, air conditioners), or build high quality housing, or do the other things that bring such benefits in the societies that you and I inherited from past generations. 

In fact, most natural law societies not only don’t encourage investments that would lead to progress and growth, most of them actually prohibit these investments.  The foundational beliefs of natural law societies conflict with the idea of altering the world in any way.  They discourage (and, again, often prohibit) making changes that have the potential to improve the world with the same veracity that they discourage changes that harm the world.

This means that true natural law societies—pure ones that don’t ever make any exceptions to the absolute prohibition of humans to own parts of the world—are likely to be stagnant for incredibly long periods of time.  They may go thousands or even hundreds of thousands of years without any real progress or any structures that improve the quality of life and advance the standard of living of any of the people within these societies.  In fact, as we will see shortly, without some sort of incentives to create things of value, even a group that starts with great advantages—as does our group in Pastland—will eventually revert to the most extreme level of primitiveness.  Let’s consider why this happens.

Reversion to Primitiveness

Our group in Pastland brought back a lot of wonderful things from the future.  We have the ship itself, made mostly of steel (an item that doesn’t normally exist in nature and has to be manufactured by humans).  We have computers, the generators and solar panels we use to generate our electricity, refrigerators to keep our food from spoiling, machines to help us sow the seeds and harvest the things the land gives us, radios, televisions, telephones, and the internet. 

We have these things now, but they aren’t going to last forever.  When they break, we won’t have parts to fix them.

The ship is made almost entirely of steel.  If steel gets exposed to oxygen from the air, it starts rusting immediately.  Steel parts have to be protected by paint or they will rust to nothing.  We didn’t bring paint with us from the future.  A lot of paint was scraped from the ship in the events related to the time warp and many parts of the ship are already rusting.  Within a few decades, structures that were once thick enough to drive a tank across will be thin enough to poke a hand through.  Within a few generations, the floors and walls of the ship will be paper-thin and the ship will be so dangerous that we won’t be able to live there anymore.

We will have to move out onto the land.

If we still have an absolute prohibition on ownability and prohibit any alterations to the land, we will have to live in temporary structures like the teepees that the American natives in this area used before the first European people arrived.

When we arrived in the past, we had electricity produced by generators and solar panels.  We had a great many products that used electricity to operate.  These items have moving parts.  Generators have rotors that turn on bearings, and bearings eventually wear out.  Eventually our generators will break, and we won’t have the parts to fix them.

When the last of our generating devices fail, all our electrical devices will become useless.  All the data that was on hard drives will be lost forever.  If we have no paper factories, we won’t be able to write any of this information down and will have to pass it down to future generations verbally.  It won’t take long before the great bulk of the information about how to make things that we brought back from the future will be lost.

We will have babies: we don’t need any technology or factories for this; no investments are required.  Have sex and babies will come.  We have plentiful food; even without machines to collect the food, we will all have plenty to eat.  Babies will have good nutrition and grow up healthy. 

Before modern birth control methods came into existence, the average woman gave birth about 8 times in her life.  If half of the babies survived to breeding age themselves, the population would double in a single generation.  (Four offspring would be alive and ready to reproduce from the original couple.) 

If the population doubles every generation, it will increase by a factor of 32 every century and by a factor of more than 1000 every 200 years.  We don’t need technology for population to grow.  All we need is food and we have plenty of that. 

The human population of the earth will grow.  We will spread out across the land.  Children will hear the stories of all of the wonderful things that people used to have, like giant ships that sailed the oceans, computers that stored vast amounts of data, and refrigerating devices that provided wonderful treats like ice cream on the hottest days.  In time, children will start to think of these stories as nonsense; stories told by adults for some unknown reason that really have no relationship to anything real or important.

They will stop believing these things.

Parents will not waste time telling their children stories that they don’t believe themselves.  All of the information we brought back from us from the 21^st century will be forgotten.

In later chapters we will see that it is possible to build societies that are almost identical to natural law societies, but have structures that allow people who want to build factories to do so, provided they agree to follow strict rules designed to protect the planet from harm and provided they agree to share the free cash flows the factories produce (once they have been completed and are in regular operation) with the human race.

We know that it is possible to have societies where factories exist.  We know this because we came from societies that worked in ways that not only allowed factories to exist, they encouraged factories to exist.

But we won’t have factories if we are strict about our prime directive and absolutely prohibit ownability or institutions that protect ownability of any kind.  To have factories, people have to be able to own rights to flows of value that factories produce, with their ownership rights protected by some sort of institutional structure. 

 

 

This doesn’t mean that people won’t make things in natural law societies.  They can be highly productive systems and can produce a great many things.  They just won’t make things that are complicated enough to require a factory to make.  We may have some pretty fancy jewelry.  People can make clay pots and tiles and fire them into ceramics; all they need is a kiln that can be made out of clay, used to fire the products (using deadfall timber that can be collected without harm to the forest), and then turned back into clay, if the people don’t want the kiln to continue to exist. 

Some metals can be worked without smelters, refineries, or factories: copper, gold, and sliver, for example, are all soft metals and can be hammered into thin sheets, drawn into wires, and otherwise worked with hand tools to make many different items.  People in natural law societies had ceramics; they had lots of jewelry, they had copper cooking tools and various items made of gold, silver, and other soft metals.  We can have these things in Pastland, without allowing anyone to own any part of the world.

But we won’t have any additional refrigerators, television sets, paint, or any items made of steel; we won’t have cars, ethanol engines, jets, or bullet trains.  If we can make an item by hand, we can have it; if we need factories to make it, we can’t have it. 

Why Does this Matter?

If we keep the natural law society, we will eventually wind up living much as the American native people lived when Columbus first arrived.  It is true that they had a good relationship with the land and didn’t have the most serious of the wars that we have today, wars where groups of people use all the resources of their ‘countries’ to make weapons to get other groups of people to accept that their country is the owner of a part of the world.

But we will live in primitive ways.

Our population will grow.

Perhaps we had birth control technology when we came back from the future, but we won’t have any factories to make more of these devices and, when we run out, our population will begin to explode.

But our production methods will remain very primitive. 

The chart below shows what happens to the population of a group that starts at 1,000 and grows at an average rate of 3% per year (about three children per woman that survive to breeding age).  Note that after 40 generations, or 1,000 years, the population would be above 1 billion, the 2020 population of the Americas.  After another 6 generations, the world would have more than 8 billion people, higher than the population as of 2020 when I write this.

There will come a time when there isn’t enough food to support more babies.  But the babies will keep coming.  Eventually, the people in the natural law societies will have to take desperate measures to deal with the problem.  Most of these measures are too horrible for us to even think about.  (Infanticide, the killing of babies at birth, was common in some natural law societies that existed in the past; others engaged in human sacrifice.)

 

Generations	Years	population
0	0	1,000
2	50	2,000
4	100	4,000
6	150	8,000
8	200	16,000
10	250	32,000
12	300	64,000
14	350	128,000
16	400	256,000
18	450	512,000
20	500	1,024,000
22	550	2,048,000
24	600	4,096,000
26	650	8,192,000
28	700	16,384,000
30	750	32,768,000
32	800	65,536,000
34	850	131,072,000
36	900	262,144,000
38	950	524,288,000
40	1000	1,048,576,000
42	1050	2,097,152,000
44	1100	4,194,304,000
46	1150	8,388,608,000

 

Later, we will look at societies with the advantages of natural law societies combined with the advantages of sovereign ownability societies.  These ‘hybrid’ systems will have powerful incentives that encourage people to invent, innovate, invest, and find new and better ways to do things.  They will also have incentives to create machines and factories, including factories that make birth control devices.  We know from recent experience that if people have access to birth control and can plan pregnancies, they tend to choose small families, with an average size that is slightly smaller than the size required to keep populations stable.  As a result, these hybrid societies could have stable population and rapidly growing production, leading to universal prosperity, which will be combined with powerful incentives pushing toward social and environmental responsibility.

But natural law societies will almost certainly never have factories capable of making birth control devices.  Their populations will grow until they reach the maximum that the food supply in any given area will support.  Then we would expect a horrible cycle, with good years leading to health and prosperity and bad years leading to massive starvation.

A Fatal Flaw

In the end, the lack of constructive incentives will be a fatal flaw for natural law societies and cause them to disappear. 

Why? 

Eventually, someone somewhere will come up with another system.  Almost certainly, the people who look for some other system will not be able to discover the hybrid systems discussed later in this book, as people need technology and a certain skill set to understand the hybrid systems.  Our technology will not last; the skills needed to understand the hybrids existed in the 21^st century but will be lost over time if we keep the natural law society in Pastland, and all records of the past history needed to understand the required systems will be lost when the last of our hard drives stop working.  Almost certainly, when the other system comes, people will not accept the principles of natural law societies and simply make a few well-designed exceptions that allow ownability in certain areas.  Almost certainly, people will decide that they are the owners of some part of the world and have the right to use it as they wish.  Almost certainly, the ‘other systems’ that will one day compete with natural law societies will be the types of societies this book calls ‘sovereignty-based societies.’ 

Once a group has this other type of society, that group’s production will grow, and its technology will advance.  The people in this group will be raised to believe that the land belongs to the ones who ‘claim’ it (as Columbus ‘claimed’ the Americas for Spain) and then build institutions to protect and enforce their claims. 

The owners of the land will get all of its wealth.  People who can come to control bountiful land will get its bounty.  In systems that use money for transactions, the bounty of the land is represented by the free cash flow of the land.  People who take land will get free money.  The more bountiful land they take, the more free cash will flow from the land to them.  They will all have incentives to take as much land as they can. 

Once these societies start in any area, they will expand outward, in the same way that the colonies that landed in the western hemisphere started in small areas and expanded outward.  The expanding sovereignty-based societies will take the best land first.  The people with natural law societies who still live on this land will be little more than a nuisance to the expanding sovereignty-based societies: they will not have weapons, they won’t have technology, and, most importantly, they will have a culture that has never experienced the large-scale, well organized wars that are an inherent part of sovereignty-based societies.  The people in natural law societies won’t be able to remain on the land.  If they don’t agree to move away on their own, the people with the expanding sovereignty-based societies will simply exterminate them. 

The expanding sovereignty-based societies will face competition, but not from those with natural law: people with other ‘countries’ will fight them to gain control of the best land.  These fights will be brutal and vicious, with enormous numbers of people in the competing countries dying to gain priority for their particular ‘country.’ 

As a strategic measure, the countries will have to take even the less desirable land: if they don’t, competing countries will take it and use it as a base to launch attacks on the more desirable land.  The expanding countries will eventually take everything.  Nothing will be left unowned and unownable.  Natural law societies may exist for a very long time.  But they will eventually disappear.

This is an important observation for our group in Pastland.  If we can accept that the natural law societies are temporary, and will eventually disappear anyway, we might as well use our technology, our skills, talents, and the other advantages that we have to figure out something better and put it into place while this is easy for us to do. 

What else is possible?

To understand this, we really need to understand the features of societies that accept ownability.  Let’s take a mental trip—a ‘thought experiment’—and see if we can figure out aspects of societies that accept ownability that we can incorporate into the simple natural law societies we started with to create a sound system that can meet the needs of the human race indefinitely into the future. 

 

 

Chapter 3 introduces the concept of "free cash flow" or the "bounty of the land" in the context of Pastland's new society. It explains how the wild rice farm produces more value than is needed for production costs, resulting in a surplus of $2.4 million. The chapter explores different economic terms for this surplus and discusses its origins in nature's blessings and human improvements. The survivors debate how to distribute this unearned wealth, ultimately deciding to divide it equally among all members as a "basic income" of $2,400 per year. This system ensures that everyone receives a share of nature's bounty, while those who work earn additional income.

3:  The Bounty Of The World

In the 21^st century, accountants have terms for important concepts.  The most important to people who own any of the billions (literally) of properties that generate ‘income’ around the world is something they call the ‘free cash flow’ of the ‘income property.’  This is basically the amount of money that ‘flows’ from the land, year after year, like a river of money.  The people who get this money don’t have to be and generally aren’t involved in production in any way.  (If they are, it is just a coincidence.  It isn’t necessary that they do anything and the great majority of the people who get this money don’t do anything.)

You could therefore think of the ‘free cash flow’ of a property like the Pastland Farm (one example of literally billions, as we will see) as like a river of free money.  It flows at a certain rate.  Accountants have standard rules for accounting for the ‘free cash flows’ of properties.

The people who get this free money in territorial sovereignty societies (the kinds of societies that dominate the world today) generally like to keep low profiles.  We don’t hear about them on news programs, unless we like to watch programs about how the richest people in the world live.  Even on these programs, the only people we normally see are those that break the rule about keeping low profiles.  We don’t hear about how and why they get the massive incomes they have.  We hear about them because of their exploits, like traveling to space on their own private spaceship, circling the world in balloon, or because they are having sex with celebrities and get bored, so the relationship terminates in some news-making way.

We aren’t told that they have massive rivers of free money flowing to them.  We know that ‘the rich get richer’ but we aren’t told how this happens and most of us have no idea.  If you look on websites like loopnet.com where the ‘wealth managers’ that work for the people who are fantastically rich buy and sell the properties that generate the incomes for their clients, you will see that the people who are buying and selling clearly think something they call the 'free cash flow' of various different properties (things people can buy and sell) is incredibly important.  Sellers almost always put it right out front, often in the title or headline of their ad.  Buyers ask intricate details about it, and often ask sellers to supply many pages of detailed figures so that they can make sure the sellers know how to calculate the free cash flow and put the right number down.

We will see that the ‘free cash flow’ of properties like the Pastland Farm represents something that economists call by many names.  Some call it the ‘economic surplus,’ as it represents what they think of as ‘excess wealth’ that is generated by properties that produce more than others.  In communist countries it is called the ‘labor surplus,’ under the premise that all value on Earth comes from labor and the same labor can have different levels of productivity in different places.  They need to measure the ‘labor surplus’ so they can determine the best way to allocate labor.  In feudal systems, it was called the ‘rents’ because it represented the maximum amount of rents that kings could charge for land they conquered in wars.

 

          After kings conquered land, they wanted to generate income from it.  The ‘rents’ represent the maximum income that can be generated from the land over time in a consistent way without application of significant force. 
          Kings don’t like to have to apply force to get their money.  Force costs something—the soldiers who brutalize peons need to be paid well—and created discontent that may make the people who work the land favor some other king who wants the land and promises to give them freedom. 
          In a stable feudal system, kings hire appraisers who determine the maximum rents the land can support.  They are doing the same calculations that accountants do when they determine the free cash flow of each property.  The maximum affordable rent is the free cash flow:  this is the most that can be paid to a party that is not involved in production without affecting production.  (Take more and you don’t have enough left over to pay someone who is critical to keeping production going.)  The kings then hire a kind of middle level manager called a ‘feudal lord.’  (These are highly coveted positions and people compete vigorously to get them.   If you succeed, you are given a ‘title’ and granted a ‘feudal estate.’  You will then be a member of the ‘landed gentry’ and can pass your title and rights to income from the land down to your heirs.) 
          The 'lord' (of whatever title used in each country) gets a percentage of the rents.  The rest goes to the king.

 

The properties don't produce ‘free cash’ or any kind of cash at all.  They produce something of real value, like the rice that the Pastland Farm produces.  This rice ‘flows’ from the land each year.  Nature produces rice, not humans.  However, humans collect it and ‘help’ nature by replanting (necessary because we take everything, leaving no seeds for next year) and performing other tasks.  The labor and materials that we supply costs something.  If you imagine that everyone gets paid in actual rice, you can see what is happening:   the land produces 3.15 million pounds of rice.  A total of 750,000 pounds goes to people who provide some input.  This leaves 2.4 million pounds of ‘surplus’ rice (or ‘rent rice’ or ‘labor surplus rice’ or whatever else you want to call it) above the amount needed to cover the costs.

Whoever gets this extra rice is getting it for free.  It is something I want to call the ‘bounty of the land.’  It exists because the land is bountiful.  This basically means that nature has favored it with wonderful qualities that make it able to produce fantastic amounts of grains that humans can eat.  If the land had produced less, or if it required more work to collect whatever it produced, the ‘bounty’ would be lower.  The bounty of the land depends on two things:

 

1.  The blessings of nature.

2.  The extra production due to improvements made by people in the past who are no longer involved in operations of the land.

 

In our case in Pastland, all of the bounty is due to the blessings of nature.   This is true because humans just arrived here.  There have not been any other people involved with this land before we arrived.

 

Later, we will see that people can improve land and cause it to produce more.  This results in changes to the free cash flow.  The exact changes are fairly complicated, so I want to leave them for later until the basics are clear, but here is a brief description:
          Say you go to Texas today (in the 21^st century) and buy a farm like the Pastland Farm.  This farm generates $2.4 million in free cash flow.  The formula for the ‘price’ of an income generating farm is simple:  free cash flow / rate of return on similar investments.  The rate of return on similar investments, also called the ‘cap rate’ is a market rate.  (Look on Loopnet.com and you can find the rate at this time; it changes over time due to changes in the economy.)  Say that the ‘cap rate’ is 5% at the time you buy.  You will have to pay $48 million for the farm.  (This is $2.4 million/5%.) 
          Now say that you level the land at your own expense and production and costs both go up 20%.  The farm now generates $480,000 more in income.  But the free cash flow is no higher because you, the person who are responsible for the improvement, did work to get it.  It is not ‘free’ to you. 
          It will be free to the next owner, however.  Say you decide to sell the farm.  To the new owner, the farm will generate 20% more free cash.  The new owner can’t claim to be responsible for the additional money the land generates because you are the responsible party and you can’t be the buyer because you are the seller.  If you advertise it, you will advertise it has $2.88 million in free cash flow because to anyone who buys it, this will be correct. 
          We will see that a great many of the properties on Earth today are bountiful because of improvements made by people who were alive in the past but are no longer alive.  The world is more bountiful because of them, but they can’t get the bounty (or at least, it can’t benefit them) because they are dead and dead people don’t benefit from getting rice or money or anything.  This extra bounty, together with the bounty that is due to the blessings of nature, must go somewhere.  Where does it go?  That depends on the type of society.

 

The Pastland Farm is bountiful because nature has blessed this land.  Who gets this bounty?

In our case in Pastland, we 'sell' all of the bounty of the land and divide the money in some way we agree upon in our meeting.  So far, the money that represents the bounty of the land is sitting on a table in front of us.  We have not made any decision about what to do with this money.  Whoever gets this money will get the bounty of the land.

 

What Do We Do With The Free Cash Flow In Pastland?

 

In Pastland, there is $2.4 million sitting on the table in front of us.  This is the money value of the bounty of the Pastland Farm.  The money value of the bounty is the free cash flow.  What will we do with this free cash?

We discuss this.  Some of us say that we need to figure out who has earned it and give it to those who have earned it.  But no one seems to be responsible for anything that caused the rice to grow.  It would have grown even if there were no people.  No one earned it.  We have several people who were accountants and tax experts back in the 21^st century.  They tell us that free cash flows are classified as unearned income for tax purposes.   Even government taxing authorities accept that no one has done anything to earn it.

We can’t give it to those who have earned it because no one has earned it.  It is a gift from nature.

In Pastland, we have to decide what to do with the gifts that nature gives us.   (There will be a lot of gifts like this, as you will see shortly.)  We have discussions about this.

As we discuss this, people are starting to get hungry.  To get rice, you need money.   There is a big pile of money on the table.  All we need to do is agree on what to do with this money and we can divide it.  If you aren’t one of the few who worked and have already been paid, you are getting really hungry.  A lot of people want more than an equal amount of the money on the table.  They would like to find a way to get the others to all agree to accept less so that they can have more.  But they longer we argue, the hungrier we get.  Finally, in order to get the meeting over with, someone proposes the simplest possible distribution of the bounty of the land (represented by the cash on the table).  She proposes we divide it equally.  We vote on this and the majority of us (the majority of the members of the human race) agree to this.  We will divide the bounty of the land evenly among all members of the human race.

After we divide the money, here is what will have happened:

All the people who work or do anything in production got fully paid for everything they do.  This included the management team and others who did administrative work and paperwork.

 

The rest of the wealth the land produces is divided evenly.  Every member of the human race gets an equal share.

 

People who don’t do anything at all in production will get an equal share of the bounty of the land which, in this case, works out to $2,400 a year.

We will call this their ‘basic incomes.’

Everyone will get this.

People who work or do anything else to create value will get their ‘basic incomes’ plus whatever they have earned from working.

 

 

 

 

Chapter Summary:   The chapter describes a scenario where a group of conference attendees on a cruise ship are transported back in time by a nuclear experiment gone wrong. They find themselves 4 million years in the past, becoming the first humans on Earth. The survivors, numbering 1,000, are stranded in a location they dub "Pastland."

The narrative explores the practical aspects of their survival and the unique opportunity they have to build a society from scratch. They utilize the damaged ship for shelter and create basic infrastructure for power and water. The land they inhabit is a bountiful wild rice marsh, providing ample food for all.

The chapter introduces key characters and concepts, including Kathy, an experienced rice farmer who recognizes the land and can guide the harvesting process. It touches on the potential for creating a new economic system, as Kathy suggests the need for some form of currency to organize labor for the rice harvest.

The text sets the stage for exploring how a society might be built without the constraints of existing political, economic, and social structures, presenting a "blank slate" for utopian thinking.

 

 

1:  Pastland

Imagine that a friend calls you one day and says she has a ticket to a conference that you are very interested in.  The conference will be held on a luxury cruise ship.  She won a competition and has an all expenses paid ticket, but she can’t go.  She wants to know if you could attend in her place.  I am attending the same conference.  It has attracted people (in whatever field you are interested in)  from all over the world.

The ship leaves from Tampa, Florida and heads southwest toward Cozumel, Mexico.

We board and travel for a day.  We are in open water when a giant bright white cloud appears.  It surrounds us like a tornado and lifts us up.  It carries us along, faster and faster, eventually moving us so fast that light itself starts to bend.  The process then starts to reverse, and light straightens out.  We go slower and slower.  Then we start to bang against something hard:  the water is now so shallow we are hitting the ground below the water.  The water starts to move as it travels down over what is normally dry land and heads toward the distant ocean.  We are carried along on the receding water for several horrifying hours with no idea what is happening to us.

Finally, we come to a stop.

None of us on the ship realize this yet, but the realities of human existence have changed.  A government somewhere was testing a new type of nuclear bomb.  The military of that nation was trying to build a device that would send out a special kind of electromagnetic pulse (EMP) to destroy electronic devices.  Many of these bombs were tested in history, starting in the 1950s.  But this one had some components that had never been tested before.  Sometimes, materials act differently than scientists predict in the intense heat, pressure, and gamma radiation at the center of a nuclear explosion.  The scientists had hoped that the new materials would lead to an EMP they could ‘tune’ so it would destroy the enemy’s electronics but not those of their own armies.  But they made a tiny, tiny, mistake in their calculations.  The materials didn’t act as they expected; instead, they created a momentary vibration in the space-time field.

This was unfortunate for the majority of the people on the planet Earth back in the 21^st century: the vibration led to an ‘unsyncing’ of the motion of the electrons the in atoms that make up their world.  They were only out of sync for a tiny fraction of a microsecond.  But when the distortion ended, the electrons couldn’t find their way back into orbit around their nuclei.  All of the atoms of the great majority of the planet Earth disintegrated into bosons, quarks, and mesons that will never again be atoms—let alone a planet people can live on—for the rest of time.

The people on the cruise ship were lucky, however.

The space-time distortion field was shaped like a tornado.  It had powerful forces at the edges but included a calm eye at the center where almost nothing happened.  We were in the exact right place to catch the calm eye in the center of the distortion.  The space-time distortion sent our people, our ship, and several thousand cubic miles of ocean water back a little more than 4 million years in time.  We are now in the remote past.

We have gone back to before the first humans arrived on this world.

This makes us the world’s first humans.

The First Human Societies

Since no humans have existed, no human societies have existed either.

This means that the people in our group don’t have to follow anyone’s rules about how societies are supposed to work.

We haven’t inherited a legacy of ‘national debts’ that we must repay.  We don’t have to accept that we have traditional enemies anymore, and tax our people so we can build militaries to attack them and defend ourselves against their country’s attacks.  We don’t have to make sure that the nations, corporations, and individuals who ‘own’ parts of the world are able to keep people who don’t ‘own’ from benefiting from the existence of the part of the world that belongs to them, because there are no owners.  We don’t have to make sure that the imaginary lines called ‘borders’ that determine the limits of ‘nations’ are respected, because there are no borders and no nations.  We don’t have to pay taxes to cover the cost of police to enforce the existing order, because there is no existing order to enforce.

We have complete freedom as to what kind of society to form.  We can determine what ‘modes of existence’ we want.  We can make our own rules.

Practical Matters

The space-time wave moved us hundreds of miles from our previous location and washed us up, along with several thousand cubic miles of ocean water, deep into the interior of a continent.  When the water receded, it dragged the ship several miles and tore the bottom of the ship to pieces, leaving the upper part lodged in a muddy swamp.  The trauma killed more than a thousand of the people on the ship.

As soon as the ship comes to a stop, the people who were physically able to do so began working to rescue the trapped and save any who could be saved.  A few of our people had medical experience.  These people set up a triage center and makeshift emergency hospital on an upper deck.

People who find injured people bring them there.

A minister locates a parcel of land to use as a cemetery so we can bury the dead to prevent an outbreak of disease.  For several days, all able-bodied people help with the rescue attempts and burial parties to make sure the dead are buried.

Finally, we get to a stopping point and have a meeting so we can take stock of our situation.

The social director of the cruise ship opens the meeting.  She does this in part because she knows many of us—having organized the welcome party and some drinking games right after we left—and in part because no one who is in any position of authority is left alive.  The ship’s captain and everyone who might claim to have authority perished in the wreck.  She wants to make sure we realize she isn’t claiming to be in charge of anything: she has just come forward because no one else came forward first.

Like the rest of us, she has been digging through the rubble to try to find and help survivors.  She hasn’t slept for days, she is filthy, and her clothing is torn and covered with dirt and dried blood.  She thanks everyone who pitched in to help and says that this has saved many lives.  She tells us she has counted and there are 1,000 survivors, including people who are injured but are expected to recover.

She says she has no idea where we are or how long it will take to get us rescued.  (She has no idea we are in the past.  She has been working so hard to save lives she hasn’t had time to worry about such relatively unimportant things.)  She asks if anyone can shed some light on this and another woman comes to the front.

The other woman is an electronic expert who has been trying to get the ship’s electronic systems working.  She has gotten everything going but hasn’t been able to reach anyone on the standard rescue channels.  The GPS, satellite TV and satellite phone appear to be working but she can’t pick up any satellite signals.  She had a simple battery-powered satellite finder in her luggage.  She has been scanning the sky to try to find satellites, but her device hasn’t picked up any of them.  She finds this very strange: there are supposed to be thousands of satellites in the sky.  They seem to have all disappeared.

She is about ready to step down when she pauses to tell us something else:  all of the clocks on the instruments have a reading that she can’t figure out: they read the year as ‘-4,000,000.’ She says that this might mean ‘4,000,000 BC.’ This seemed so strange that she didn’t want to mention it, but she says it is possible we are all in the remote past.  She will keep trying to reach someone and get us rescued, but in the meantime, she suggests we try to make the best of our situation.  We may have to stay here a long time.

Another woman comes up to the front.  She is an astronomer.  She tells us that the stars all appear to be out of position from where they should be.  We are in an outer spiral arm of a galaxy and are orbiting the center of the galaxy at a speed of about one million miles per day.  This causes the view we get of certain stars and galaxies to shift.  She has calculated that the stars are where they would have been 4,002,024 years before we started on this trip.  This seems to confirm the information on the clocks.  It is possible we are in the remote past.

Someone jokingly says, ‘Welcome to Pastland.’ The name sticks.  People start to call our new home ‘Pastland.’

How and Where We Will Live

First, I want to go over some practical realities of our existence like where and how we will live and where we will get food and other necessities of life, so you can see what we have to work with in forming societies:

We will live in our cabins on the ship for the time being.  Although the extreme bottom decks of the ship were destroyed, we can still use most of the rest.  The ship is sitting on land that is more or less level.  People need to sleep somewhere, and people have moved back into their cabins to have places to sleep.

We ended up next to a large river with plenty of flow to turn turbines.  Some of the passengers are handy with tools.  They salvage the ship’s propellers and some other parts and use them to make a power plant to turn the ship’s electricity generators.  Many people volunteer to help build the power plant because we really want electricity: it is hot and muggy where we are, and we want our air conditioners back on.

The ship has freshwater piping to all cabins.  Some people rig up a piping system to move water from a clear spring and pump it into the freshwater distribution system.  The ship’s waste treatment plant still works so, once we have water, we can use our toilets.  Since we have both electricity and fresh water, we can take showers, do laundry, and even fill the ship’s swimming pools so we can swim.

The ship that went back in time with us gives us a place to live.  We have water and sanitary facilities.  We only need one thing that we don’t have now to sustain us: food.

The Bounty of the Planet Earth

We are very lucky to have ended up where we are.  Although some people call our landing place a ‘swamp,’ some use an alternate term and call it a ‘freshwater marsh.’ Wild rice grows in this marsh in great abundance.  For thousands of years before we got here, this land has had a stable and productive ecosystem, producing large amounts of rice for the benefit of its (non-human)  residents.

In the spring, runoff from snowmelt on lands upriver causes the river to swell.  When this happens, the water level rises above the level of the land to a depth of about a foot.  This creates the perfect conditions for rice to grow.  Wild rice has grown here every year for thousands of years.

 

Qqq wild rice here.

 

Late in the summer, the river flows ease and the water table falls.  By early fall the water table has fallen below the level of the land and the land becomes dry.  The rice ripens to a golden brown and the kernels fall off of the stalks onto the ground.

This has been happening for many thousands of years before we got here.

The wild rice never went to waste.  Each year, giant flocks of ducks, geese, cranes, passenger pigeons, and other migratory birds arrived to feast on nature’s bounty.  When winter came and the birds had moved on, possums, raccoons, beaver, otters, minks, muskrats, weasels, deer, elk, and other animals came to share the rice that the birds missed.  In the spring when the water rose, schools of fish—sturgeon, cavefish, shiners, darters, paddlefish, sunfishes, bream, catfish, crappies, and black basses, to name a few—moved in to feast on whatever was left.

The animals didn’t always thoroughly chew the rice kernels, however, and many kernels passed through their digestive systems intact.  This provided seeds for next year’s crop.

The next year, everything happened again.

This land is bountiful and produces large amounts of rice without any need for human effort.  For all of history so far, this bounty has gone to other animals.

But this is going to change.

Humans have abilities that other animals don’t: we can collect the rice at the exact right time of the year and put it into granaries so other animals can’t get it.  We can take the bounty the land produces for ourselves if we want.  Other animals will only get any of this rice if we let them have it, either by giving it to them or by deciding not to take it ourselves.

Some Numbers

Some people are curious about whether the land will produce enough to support us and have made some calculations.

Two of them measured the rice-growing area and determined its size: it is 1,500 acres.  They have decided to call this area Pastland Farm.  One person carefully measured out one square foot of land, cut the stalks on that land, removed the kernels and weighed them to get just under 1/20th of one pound per square foot, which works out to 2,100 pounds per acre, or 3.15 million pounds for the entire marsh/farm.  We have 1,000 people so if we divide this rice evenly, we will have 3,150 pounds for each of us per year, or just over 8 pounds for each of us per day.

 

The figures for rice yields come from two sources.  One is ‘Travels And Adventures in The Indian Territories Between The Years 1760 And 1776,’ by Alexander Henry.  Henry was put into circumstances (described in the book)  where he found himself the very first European living among natives in parts of North America where wild rice was a staple food.  He discusses the methods of collecting rice, the amounts of rice obtained from the land, and the trade value of rice in American communities before there was any significant influence from European invaders.
          The other is a scholarly work about the same issue: Alfred Jenks: ‘The Wild Rice Gatherers Of The Upper Lakes, A Study in American Primitive Economics.’ This book goes over the realities of existence for the people who lived in the lake areas of what is now Wisconsin and Minnesota, before the conquest of these lands began.  It provides detailed figures for the rice yields they actually obtained. 
          You can find the full text of both books on the PossibleSocieties.com website.

 

Each person needs about 2 pounds of rice per day, as a minimum, to stay alive, so we will clearly have much more than we need.

Kathy and The Pastland Farm

I want to introduce someone who will be involved in some key decisions in this book:

Kathy, a passenger on this ship, is an experienced rice farmer.  She was seriously injured in the wreck and has been in a coma since it happened.

When she wakes up, lying in a cot set up in our makeshift infirmary on the top deck of our ship, she thinks she is dreaming.  She is imagining she is back in her childhood home.  Before she even opens her eyes in this dream she is having, she knows where she is from the smell and feel of the air.

The wild rice-producing marshes of Texas have native bacteria that ‘fixes’ nitrogen, taking it from the air (which is 69% nitrogen)  and turning it into a form growing plants can use.  The bacteria evolved with the rice, millions of years ago, and the two living organisms depend on each other for survival.  The bacteria provide nitrogen that the plant needs, and the plant’s waste sustains the bacteria.

The bacteria impart an unmistakable smell into the air.  Kathy was raised in Texas rice country and grew up with this smell.  To her, this is the smell of home.  Before she even opens her eyes, she knows where she is.

Not only does she know where she is, she knows what time of year it is and roughly what time of day.  She can feel that the air is heavy with moisture with a powerful sun trying to bore through the mist, just as she remembers from her childhood home before a summer thundershower.  She is afraid to open her eyes for fear that she will find it is just a dream.

When she summons the courage, she looks out to see the silhouette of the distant hills against the horizon she remembers from her childhood.  This is the same view she got from her bedroom window on the farmhouse that used to stand on this very spot when she was growing up.

She knows this land.  She can tell you what the dirt looks like and what it feels like if you take off your shoes and walk barefoot through the shallow marshes, as she did in her childhood.  (She will warn you that you can’t wear shoes, because they will stick in the muck and you will lose them.)  She can tell you how to locate good spots to fish in the big river and how to find the best spots for wild berries, grapes, fruits, mushrooms, sunflower seeds and other nuts in the surrounding forests.  She can tell you how to find straight softwood trees for poles and very strong hickory for working into tools and other products.

She was practically raised here.  Her aunt and uncle had owned the farm that had stood on this very land and her family had spent a great deal of time here.  When she was very young, before her aunt and uncle had switched to hybrid rice that requires chemicals to grow, the farm raised the exact same kind of rice that grows wild here now.  She helped with many tasks and knows how to raise it.

When Kathy recovers enough to attend group meetings, the rice is ready to harvest.  She tells us that we have to harvest it quickly because if it gets too dry it will fall onto the ground and be impossible to collect.  Some people are pretty handy with tools and have drawn up plans to build a harvesting machine with a gasoline motor and some other parts found on the ship.  We don’t have any gasoline, but we did find some tanks with ethanol and we can use this for fuel (for next year, people will make more ethanol out of rice, as you will see).

Kathy says she can put the entire operation together for us because she has harvested rice before.  However, she will need to ask some people with specialized skills to help her and she doesn’t feel right asking them to work for nothing.  She wants the ability to pay them somehow.  She knows how to make this work if we have some kind of money.  She knows that the rice this land produced was ‘worth’ about $1 per pound in the future we came from.  She says it would be nice if we had some kind of money so that she could ‘sell’ the rice (trade it for money)  and then use the money to pay her workers.

 

 

 

WHEN THE BIG FIVE CORPORATIONS first came to the Hawaiian Islands, they got the title to vast amounts of land. At first, they used this land to raise tropical crops for American markets. They needed people to do the labor and wanted the cheapest workers they could find. They went to China and found large numbers of people willing to work for almost nothing. Most of their workers came from China.

The Chinese wanted rice to eat and the islands had no native rice. The companies allowed the workers to bring seeds from China and plant the rice on land wasn’t suitable for the crops the companies wanted to raise for export.

In the 1950s, the big five corporations became the owners of large amounts of land in Central America. This land was much closer to their markets in the United States and shipping costs were far lower, so they moved their agricultural operations to Central America. They sent the Chinese workers in Hawaii back to China and began converting the farmland that had raised tropical crops to other uses, mostly as sites for condominiums, homes, golf clubs, and resort facilities.

The bogs and the swamps where the workers had raised rice weren’t very desirable properties for just about anything and the companies basically ignored them so they could focus on other parcels with greater potential to generate revenue.

Rice kept growing on these lands, but humans didn’t harvest it. The rice was left for other animals.

Frances has been looking for land that former officials of the company had ignored but that the company could use to generate revenues. She found a parcel of land that the company had ignored where rice grew. This parcel is 1,500 acres in size, the same size as the Pastland Farm. As of the early 21^st century, chemical contamination from genetically modified hybrid rice (which needs chemicals to grow) was spreading throughout rice-producing lands all over the world. Wealthy consumers wanted uncontaminated rice and were willing to pay more for it. By the time our group took this trip, the uncontaminated rice was getting very rare, because contamination was spreading very rapidly. As a result, the price of uncontaminated rice was much, much higher than the price of standard rice: by the time Frances did her study, pure, uncontaminated, organic rice was selling for nearly ten times the price of standard rice. Since rice was never a common crop on Hawaii, the hybrids that needed chemicals had never been brought to the islands. The rice that grew in the bogs was pure, uncontaminated, totally organic rice which would sell for ten times the price as standard rice.

Several years ago, Frances began putting together an operation so that the company could generate revenue from this land. She hired a professional farm management company to monitor the land, determine when the rice was ready for harvesting, call a harvesting company and get the rice brought to market, and arrange for replanting so it will produce more rice next year. Each year, the farm produced 3.15 million pounds of organic rice.

Organic rice was selling for $1 a pound, so the land produced $3.15 million a year in revenue. (The same as the Pastland Farm.) All of the workers and suppliers that the management company hired to take care of harvesting and replanting submitted their bills to the management company, which then submitted a single bill each year to Castle and Cooke. These bills totaled exactly $700,000 a year. The company paid these operating costs out of the operating revenue and was left with $2.45 million a year, called the ‘gross operating profit’ of the Hawaii Organic Rice Farm. (This is the exact amount of the gross operating profit of the Pastland Farm.)

The management company didn’t work for free. Each year, it submitted a bill to Castle and Cooke for $50,000, the cost of the management services it provided.

After Castle and Cooke paid this bill, it had $2.4 million of the money from the sale of the crop left over.

This was the free cash flow of the farm. This is the amount of money Castle and Cooke got each year from the land. Note that this is the exact same free cash flow as the Pastland Farm.

Different Ways to Privatize Land

Frances has a Ph.D. in the field of land tenure design.

She designs land tenure systems, including leasehold ownership systems.

She is not a rice farmer, she has no interest in farming, and has no time to devote to analysis of rice farming. Her department deals with thousands of different kinds of properties. Most of the properties her department deals with are residential, commercial, and resort facilities, like hotels, condominiums, shopping malls, and housing developments.

Her department has ONE rice farm.

Often, the management company taking care of the Hawaii Rice Farm has questions: it needs to know what Frances wants done with the waste straw and other plant materials generated from farming, how to deal with birds and pests that eat the rice, and other details.

Frances has a lot of properties to deal with. She can’t deal with the details of every single property. This one is taking up too much of her time. She needs to get someone else involved with the property, preferably someone who will have very strong incentives to make the decisions that would be in the best interests of Castle and Cooke, take care of the land, keep it productive, and improve it if this is possible.

She has a kind of standard leasehold system that she often uses for properties that generate free cash flows. This works for residential properties, commercial properties, resorts, golf courses, restaurants, and just about any other property she wants under private control. In this system, she sells the rights to the property in a way that causes the great bulk of the free cash flow to flow to the company in the form of a leasehold payment.

Some of the free cash flow will be available for the buyer of the leasehold to keep. Because the buyer will be buying the right to some free money, the buyer will be willing to pay a price. Frances wants this to happen because if a buyer has to put up large amounts of her own money in the property, she will have incentives to make absolutely sure that she follows all of the rules and makes the leasehold payment as promised. (If she doesn’t do these things, her rights to the property may be cancelled ‘without recourse,’ meaning that she won’t be able to get back the price she paid. People don’t want to lose money. They will pay their leasehold payment and follow the rules to avoid this loss.)

She looks over her portfolio and finds a golf course that the company offers through leasehold ownership. The golf course charges people to play golf. They charge a lot because a lot of people move to Hawaii specifically to play golf: the weather is perfect there almost all year long. They use part of this money to cover the cost of maintaining the facility. The rest of the money is the free cash flow.

This particular golf course generates a free cash flow of $2.4 million a year. Frances created a leasehold on this property and sold it under these terms: the buyer of the leasehold would have to turn over $2 million of the free money to Castle and Cooke each year as a leasehold payment. This would leave the buyer with $400,000 a year in free cash. Interest rates were 4% at the time so the buyer wanted to buy on terms that would generate a 4% return on the money they invested. (If you pay a price for a document that grants you rights to a golf course, you are investing your money.) They realize that if they invest $10 million, they will get exactly a 4% return on their invested money. ($400,000 is exactly 4% of $10 million.) Frances found a golf course operating company that really wanted this particular course added to their portfolio. (Hint: the company name starts with the letter T, ends with P and has um in the middle.) The company thought that, with its brand, it could charge more to get people to play and make lots of money.

Since the golf course operating company would be buying the right to $400,000 a year in free money, it could afford to pay $10 million for the rights to the golf course. Frances wanted this because she knew that, if the company had $10 million invested, it would never be late on the yearly payment of $2 million. If it was late, Castle and Cooke could cancel the leasehold ‘without recourse,’ meaning the operating company would lose $10 million. No one would try to come up with excuses for missing a payment of $2 million knowing that they might possibly lose five times this amount ($10 million is five times $2 million), so Frances was sure that the golf course operating company would never miss its payments and never violate any of the rules that Castle and Cooke put in place to protect the land.

You might intuitively realize that Frances could set up many kinds of leasehold ownership systems that work differently. She could ask for an extremely high leasehold payment (even higher than $2 million), transferring more of the free cash flow of golf course to Castle and Cooke. But if she did this, the buyer would be buying less of the free cash flow and wouldn’t pay nearly as high of a price. For example, if she asked for $2.39 million, rather than $2 million, as a leasehold payment, the buyer would only be buying the right to $10,000. At a 4% interest rate, the most the buyer could pay for the price of the leasehold would be $250,000. (Why is this the most she could pay? If she invests $250,000 to buy the right to $10,000, she will get exactly a 4% yield on her invested capital. She can’t pay more because if she paid more, her yield would be less. For example, if she paid $1 million, her $10,000 yield would only be 1%. Since she can get 4% in the market, it doesn’t make sense for her to accept only 1% and Frances will not be able to sell the leasehold if she asks $1 million for it with a leasehold payment of $2.39 million.)

Her company sells a lot of leaseholds and it has a division that makes calculations to show what combinations of prices and leasehold payments would work. This division starts with the free cash flow of the land. It calculates how much of the free cash will be left over and buyable at each different leasehold payment that Frances may set. It then determines the price the right to get this ‘leftover free cash’ will bring in the market, at the interest rate in effect at that time.

This division creates a chart so that Frances can see her options for the Hawaii Organic Rice Farm. She can set a very high leasehold payment and therefore get a very high percentage of the free money the land generates but get only a very low price. She can set a very low leasehold payment and therefore leave a lot of free money offered for sale. Or, she can set something in between, a system that will lead to a high leasehold payment and a very high price. Here is the chart this division gives her:

 

Chart 7.1

 

Amount of Leasehold Payment Frances Sets	Price that leasehold will bring in a market, if interest rates remain at current level of 4% on farm loans	Amount of Free Cash Flow Offered for Sale	Percentage of free cash flow that will go to buyer	Percentage of free cash flow that will still be owned by Castle and Cooke
$0	$60,000,000	$2,400,000	100.00%	0.00%
$1	$59,999,975	$2,399,999	99.99996%	0.00%
$1,000	$59,975,000	$2,399,000	99.96%	0.04%
$10,000	$59,750,000	$2,390,000	99.58%	0.42%
$100,000	$57,500,000	$2,300,000	95.83%	4.17%
$1,000,000	$35,000,000	$1,400,000	58.33%	41.67%
$1,500,000	$22,500,000	$900,000	37.50%	62.50%
$2,000,000	$10,000,000	$400,000	16.67%	83.33%
$2,200,000	$5,000,000	$200,000	8.33%	91.67%
$2,300,000	$2,500,000	$100,000	4.17%	95.83%
$2,350,000	$1,250,000	$50,000	2.08%	97.92%
$2,375,000	$625,000	$25,000	1.04%	98.96%
$2,399,000	$25,000	$1,000	0.04%	99.96%
$2,399,999	$25	$1	0.00004%	99.99996%
$2,400,000	$0	$0	0.00%	100.00%

 

She is eventually going to settle on the shaded line in the middle; this give her the best combination of price and leasehold payment. Let’s consider why the other options aren’t optimal to her, starting with the first line.

Frances can decide to sell a leasehold where the leasehold payment is $0. If she does this, she is essentially selling a freehold on the farm, not a leasehold. She is offering to sell the entire $2.4 million in free money the farm generates. If she does this, she will get the price that a freehold on this farm will bring, or the price that this farm would bring if it were sold in a state that didn’t do leasehold ownership, like Texas.

Note that it would bring $60 million.

 

Frances would like to have this $60 million for her company. But there are two reasons she isn’t going to choose this:

First, if she sells the land this way, she is selling a freehold on the land. Castle and Cooke doesn’t sell freeholds: if it sells a freehold, it loses its rights to this land forever. The company wants to keep its land forever. It is not going to authorize her to sell a freehold on this or any other land.

Second, this option doesn’t bring in one dime of revenue for the corporation. Frances works for a company that wants revenue. The more revenue she can generate for Castle and Cooke, the more the company will value her as an employee. Each year, the company shows how much it values employees with bonuses. Very valuable employees get multimillion dollar bonus checks. Frances wants this to happen to her. She wants a system that generates some revenue for the company, so she isn’t going to choose this option.

She could offer a leasehold with a leasehold payment of $1 a year. Note that, if she does, she isn’t going to get as high of a price. She will only get $59,999,975, or $25 less than she would have gotten if she had sold a freehold. (There is a reason for these numbers; they are not made up but come from standard formulas which work for very understandable reasons. See endnote 2, at the end of the chapter, for an explanation.)

This will get her a $1 a year increase in the company’s income. This is better than nothing, but not much better. She can’t expect the company to go crazy with their bonuses when they find she only increased their income by $1 a year from a property that generates $2.4 million in free cash each year.

Socratic Leasehold Ownership

Frances goes down the chart until she gets to the highlighted line. She can sell a leasehold with a leasehold payment of $2 million a year. If she does, her appraisers say she can get a price of$10 million.

This particular leasehold ownership system has a leasehold payment that is exactly 20% of, or 1/5^th of the price paid for the leasehold. We will see that leasehold systems that work to make this happen have certain very special properties that no other leasehold systems have. I will need a name to refer to leasehold ownership systems that sell property rights with a leasehold payment that is 20% of the price, so I can refer to it in discussions. I will call this kind of leasehold ownership ‘socratic leasehold ownership.’

I want you to consider one important reason why this particular leasehold ownership option might appear to be very attractive to Frances:

Let’s say that someone buys a leasehold on this property for $10 million. The buyer promises to pay $2 million a year to her landlord. What if the buyer gets lazy and decides not to collect the rice this year and not make her leasehold payment? If she doesn’t make the leasehold payment, she has violated the terms of her leasehold agreement and her landlord can cancel the remaining term of the lease. She will not get her $10 million back.

If someone buys this leasehold under these terms, you can be very sure she is going to make absolutely sure she always makes her leasehold payment on time and in full, without any need for anyone to notify her or ask for any money. She knows that if she doesn’t make this $2 million payment, she instantly loses $10 million. No sane person would miss a $2 million payment knowing that, if she misses it, she will be out five times this amount of money.

The buyer of the leasehold will make sure the leasehold payment is made every year even if the farm doesn’t produce enough to make it. She has $10 million to lose if it is not made and will sell her personal possessions, if necessary, to get the money. She will borrow, if necessary, to get the money. She will sell her blood to a blood bank, if necessary, to get the money. If all else fails, she will find someone who wants to buy the leasehold and sell it, always making sure the leasehold payment is made. (Note: not all leasehold ownership systems work this way, but the one that Frances set up in Hawaii did work this way.) Frances wants to get this particular property off her back so that she can worry about other things.

If Frances sells the leasehold under these terms, she will never have to worry or lose a second’s sleep about possible problems that might make her drive out to the farm to figure out why she isn’t getting paid. She will never have to do it. In fact, the company will actually come out ahead if the leasehold payment is not made so they have no reason to even send out a notice or ask for it. They might even hope that the leasehold owner forgets.

Why? If the leasehold payment is missed, they can cancel this leasehold and immediately sell another one for $10 million, which is five times the amount of money they missed out on.

There is another reason that Frances likes this option: it provides very, very powerful incentives for the leasehold owner to protect the farm from damage and to repair any damage, at the leasehold owner’s own expense, if it happens. Consider the reason: say the leasehold owner has not taken any precautions against floods and a massive storm floods the farm, doing $5 million worth of damage.

A renter or someone with no money on the line might just walk away. But the leasehold owner is NOT going to walk away. If she does, she loses $10 million. If she can raise the $5 million by any means, and fix the farm, she will still lose, but she will only lose $5 million. If you have ever lost large amounts of money, you will know that it hurts you a lot and the loss will haunt you the rest of your life. People are not going to take this risk if they can avoid it. There are things she can do to protect the farm from floods. She is going to do them. Although she is only doing this to protect herself, her interests are the same as the interests of her landlord in this case. (This is true if the landlord is a giant corporation or if the landlord is the human race, as we will see.) As long as the farm remains healthy and productive, the landlords will get their money. The leasehold owners will make absolutely sure that the landlord’s interests are protected.

If the leasehold owner can’t prevent the loss, the landlords still aren’t going to suffer as long as she can fix the damage for anything less than $10 million. There is very, very little that nature can do to this farm that can’t be fixed for $10 million. The owners of this land (Castle and Cooke, in this case) don’t have to watch the weather forecast and wonder if their land is safe. The leasehold owners will make absolutely sure that no harm comes to the land if they can help it.

We will see that the price plays an important function in leasehold ownership systems. They place this money at risk. They will lose this money if something goes wrong. Frances particularly likes the socratic leasehold ownership system because in this system the price is five times the leasehold payment. (If the leasehold payment is 1/5^th of the price, the price is 5 times the leasehold payment; this is saying the same thing two different ways.) Since the leasehold owners always have five times more money at risk than they have agreed to give to the landlords, they will never leave their landlords hanging; the landlords will always get every cent they have been promised, on or before the due date, and never even one second late.

Even if the leasehold owner should somehow miss this payment, Castle and Cooke (the landlords) still can’t lose. As soon as the payment is missed, they can cancel the leasehold and will again own all rights to the property. They can then sell another leasehold on the same property for another $10 million, getting 5 times more money than they missed out on. The landlords take on no risk whatsoever. Since they take no risk whatsoever, they never have to collect anything, never have to send out notices, never have to bother anyone. They will always get their money. We will see that this is a very important issue when the ‘landlords of the Earth’ are the ‘members of the human race.’ Money will flow from the land, to us, totally automatically, and totally without risk.

Systems Below Socratic Leasehold Ownership in the Chart

Frances goes back to the chart that her analysis department gave her (see chart 7.1, above, for details). She has decided that she doesn’t want to use any of the systems above the shaded line (the one that suggests she sells the leasehold for $10 million with a yearly payment of $2 million). The system at the shaded line has some great advantages. But what about the systems lower than socratic leasehold ownership in the chart? If going down from the top brings ever-greater advantages, why not keep going down, to the bottom of the chart, with the assumption that lower is better?

She looks at options that are lower on the list, below the shaded line, to see if they might be even better than the one that is shaded.

She could get even more as a yearly leasehold payment than $2 million by choosing one of these options. But if she does, she will have to worry about things that she doesn’t have to worry about if her leasehold payment is $2 million. These problems come because the buyers of the leasehold won’t have as much money at risk, and therefore won’t have as much money to lose if they don’t make their payments or if something damages the farm.

To see this, consider the next to last line on the chart. Frances could offer a leasehold on this farm with a yearly payment of $2,399,999. If she does, she won’t be able to get much as a price. The buyer is not going to be buying the right to get the full $2.4 million in free cash flow. She is only buying the right to whatever free cash the farm produces that she doesn’t have to give to the landlord. In this case, she has to give all but $1 a year of the free cash flow to the landlord, so she is only really buying the right to get $1 a year in free cash. The standard formulas show that a person buying the right to get $1 a year in free cash is only going to pay $25 for it, if interest rates are 4%. (This is the price for buying a $1 cash flow that generates a 4% return on the invested money; if you want more information, see notes 1, 2, and 3, at the end of the chapter.)

In the socratic leasehold ownership system (the one marked by the shaded line) the buyer had to invest $10 million in the property by paying $10 million as a price; the buyer had $10 million to lose if she didn’t make her $2 million yearly payment. No one would ever miss an $2 million payment knowing they would lose $10 million if this happened.

But in the second to the last line system, the buyer only paid $25 for the leasehold. At the end of the year, she will be sitting there with $3.15 million in her hands. She might feel honor bound to pay her workers and suppliers, and if she does, she will be left with $2.45 million. Her contract with Castle and Cooke requires that she give Castle and Cooke $2,399,999 of this money. If she does this, she will wind up with $1, for a year of work with $25 of her own money invested.

What if she doesn’t make this payment?

What if she keeps the entire $2.45 million?

If this happens, Castle and Cooke will cancel her leasehold. She will immediately lose $25.

But why care about this? She has $2.45 million. Perhaps Castle and Cooke will file a suit against her and try to get this money. But she can easily use a pretty standard excuse for people who get money that that doesn’t belong to them: it is gone. She had some bills and spent it. If she doesn’t want to make this excuse, she can simply open an account in Switzerland, wire the money to that account (at the rate of $10,000 per day, to avoid reporting to the IRS, which happens if you wire more than this), and then move to some other state.

Frances realizes that the price acts like a deposit to the buyer of the leasehold. If she offers the rights to the farm under the terms on the second to the last line, the buyer is basically posting a $25 deposit to protect a $2,399,999 million yearly payment. It just doesn’t make financial sense to make this payment if all you lose for not making it is $25.

I consider myself pretty honest, but I would have to think pretty hard about this situation if it were me. Should I keep the full $2.45 million, get myself to Switzerland where I could put the money into a bank and live in luxury on the interest my money will generate for the rest of my life. (At 4% I will get $98,000 a year; since Switzerland doesn’t tax interest for foreign nationals and doesn’t report it to the United States so the IRS can tax it, this will be tax-free.) Or should I be honest and make my payment, leaving me with only the $50,000 that I need to justify the work on the farm and a $1 return on my $25 investment? It is a hard choice. I think a lot of people would be on the next plane to Switzerland.

Frances doesn’t want people to get into a position where they will make more money defaulting on their payments to Castle and Cooke than they would make if they kept their promises. True, perhaps she will get an honest person who will pay. But perhaps not. Why take the chance? She can avoid this problem entirely by choosing one of the other leasehold ownership systems, one that is higher on the chart.

If Frances wants to protect her company’s interests, she is not going to sell with options that are either very high or very low on the chart. The options close to the top don’t get her company enough money over time to make it worthwhile; the options close to the bottom don’t give her company security and safety and don’t give the leasehold owners incentives to work hard to protect the interests of the landlords. The only leasehold systems that make sense are those close to the shaded line on the chart.

In this example, Frances has been in the field for many years. She has sold a lot of leaseholds. She has been studying land tenure systems for her entire life. She manages thousands of leaseholds for Castle and Cooke and knows how they work. She isn’t going to waste a lot of time; she knows what works and want doesn’t. She knows that the option called ‘socratic leasehold ownership,’ the one on the shaded line of the chart, creates the particular set of incentives she wants to create. (Again, don’t worry if you don’t get this now: this is a complicated issue and I just want to introduce it here; we will go over the details in the far simpler system in Pastland, when we sell an identical leasehold ownership there.)

The Sale of the Leasehold

She calls her company’s real estate agent and says she wants to put a listing on the property. She will offer it on these terms:

 

1. Price: $10 million.

2. Leasehold payment: $2 million a year.

 

A Different Perspective

Now let’s change perspective a to see why a person buying a leasehold might like this particular system too:

Imagine that you have just moved to Hawaii and are interested in possibly getting some property. You have some experience in farming and would like to find a farm where you could tinker around a little, be in touch with the land, and possibly make some money.

You decide that you don’t really want a very small farm (one that is only a few acres in size, or a ‘garden farm’) because you are experienced with operating a farm that is 1,500 acres in size. You know how to make things work on a farm this size. You know how to find contractors to bring in the harvest and how to negotiate prices, fees, and contracts. You know how to monitor contractors and draw up contracts that make sure they perform. You know about planting, negotiating the sale of production, and other details of a farm that is this size. You don’t want a few acre ‘garden farm’ because you don’t know anything about putting together the workers and getting things done on a small farm. You are looking for something at least 1,000 acres in size.

You call a real estate agent and she tells you there is a farm that is ‘in the pipeline.’ The agent has put up a notice on internet websites that post farms for sale (most common is Loopnet.com) that a farm will soon be listed but hasn’t listed any details. On the notice, this farm is called this the ‘Hawaii Organic Rice Farm.’ It produces $3.15 million worth of organic rice a year. The farm has operating costs of $700,000 so it makes operating profits of $2.45 million a year. The farm has been under professional management for five years. The current owner, Castle and Cooke, has paid the management company $50,000 a year for its services. In exchange for this money, the managers arrange contractors to do all of the work (the management company doesn’t do any work itself), makes sure production gets sold in a competitive bidding process, takes care of all the paperwork, and has an outside auditing firm come in to make sure that the people who deal with money, equipment, and anything valuable associated with the farm are all being honest and accounting for everything properly.

After all these costs, the company is left with $2.4 million a year. This is the free cash flow of the farm. If you go to any site that offers rights to farms for sale in our world today (on any terms at all) you will see that the free cash flow is a very important number to buyers: most of the ads put the amount of free cash flow the land generates in the headline of the ad.

You drive out and look at the farm. There is no one onsite at the time; you just walk around and look at the land to see if the ad has represented it properly. You call the management company and set up an appointment to examine their books. You find all the numbers are exactly as claimed. You tell the real estate agent that you might be interested, depending on the terms of the deal.

The agent calls you the next day and says that the terms are this: the owner is offering a perpetual leasehold on this property (perpetual means ‘no termination date’). You will have to pay $10 million as a price to buy the leasehold and a $2 million leasehold payment each year you own the leasehold. This particular leasehold has an unusual provision called an ‘option to sell the leasehold back to the seller:’ Castle and Cooke will buy back the leasehold at any time for the full $10 million you paid for it, provided the farm is in as good or better condition as when you bought.

If you buy this leasehold and then later change your mind, you can basically return it to the seller and get all of your money back, at any time.

Is this a good deal for you?

There are two ways people can pay the price that they have to pay to purchase property rights. They can pay it with money they already have in their pockets, or they can borrow the money with a mortgage. Let’s consider both options to see how the numbers look. We will start with what would happen to you if you already had the money and could pay cash.

A Cash Purchase of the Leasehold

Say that you have $10 million in a money market fund paying 4%. You get $400,000 a year in returns on this money.

If you take $10 million out of this fund to buy the leasehold, you will no longer be getting the $400,000 a year in returns that you now get. But after you give this $10 million to Castle and Cooke as the purchase price of the leasehold, you will own the right to keep all but $2 million of the $2.4 million free cash flow this farm produces. If it continues to produce as it has in the past, you will wind up getting $400,000 a year, exactly enough to replace the $400,000 in returns you had been getting on this $10 million before.

You will basically break even on this part of the transaction. You had been getting a 4% yield on your money. You will still get a 4% yield on your money, you will just get it from the income of the farm, not from the investment fund.

If you had left your money in the investment fund, you could take it out any time you wanted by selling your shares in the fund. If you put your money into the farm, you can also get it back any time you want by selling your interest in the farm. (Castle and Cooke has agreed to buy it back for the same amount if you ask for it.)

The farm is currently under management. The managers don’t do any physical labor on the farm. They just have a database of suppliers; they monitor the farm and, when something needs to get done, they call the appropriate supplier. They get $50,000 a year for this. If you want, you can leave it under management. If you leave it under management, you will have to continue to pay them.

However, your entire reason for looking for property is that you want to manage it yourself. You intend to go to the farm frequently. You will deal with the contractors yourself. You will take care of selling the rice the land produces yourself. You will write the checks and audit the books yourself. You have experience in these things. If you are working for yourself, you have stronger incentives to make sure you get the best prices than the management company does: the employees of this company don’t really care how much things cost, because they don’t pay the costs. You will pay these costs and you think you can manage the costs much better than the disinterested management company. If you can keep costs down, or do things that drive up revenues, you will get all of the additional revenues. You will also save $50,000 a year on management. This is a lot of money for doing something you already know how to do and which you know will only take a few hundred hours each year.

The real estate agent tells you that there is another way to make money from this land. You can improve it. You saw for yourself, when you went to the land, that the land has never been leveled. There are high spots and low spots, neither of which produce the amount they would produce if they were exactly the right level. You can level the land and production will go up. You can keep all additional money. Quite often, leveling rice land causes production to go up by 20%. If this happens, you may end up with hundreds of thousands of dollars a year in income. Your leasehold payment will not go up: it is locked in and will never change as long as you own the leasehold. You will be able to keep all of the additional money the farm generates.

The real estate agent tells you that if you improve the farm, you can offer the leasehold for sale in the market and it will bring more money. In this system, the amount people are willing to pay for leaseholds depends on the free cash flow. If the free cash flow is 20% higher, and the terms of the leasehold remain the same, you can sell the investment for 20% more than you paid for it, leading to a $2 million gain. (We will look at examples below to show why this is true.)

Here is the bottom line:

If you buy the leasehold on the farm, you can get your $10 million back any time you want by taking advantage of the option to resell the farm. This is really no different than your current deal, with the money in the money market fund.

If you leave the money in the farm, it will generate a 4% yield, the same yield you get on the money market fund.

If you don’t want to manage the farm, you don’t have to: the management company is happy to take it over any time.

If you want to manage the farm, you will make $50,000 a year from this, plus any increases in profits that you can create by driving up production or reducing costs.

If you own the leasehold, you can improve the farm and may possibly wind up with hundreds of thousands of dollars a year without doing any additional work in the future.

If you improve the farm you can then sell it and pocket $2 million, increasing your wealth by an enormous amount.

If you have enough money to pay cash for the farm, this is clearly a very good deal: you get all of the benefits you want, and really don’t have any downside, as long as you take care of the farm and keep it in good condition.

What if you aren’t rich?

If you don’t have the $10 million, you will have to borrow it. At the time, interest rates are 4% so, if you borrow, you will have to sign a loan agreement that requires you to pay $400,000 a year to the lenders as interest.

If you take over management, you will end up with a $50,000 a year income for yourself. If you can cut costs or drive up revenues, you will get more. There is no limit to how much you can make.

If you level the land, your income will go up by whatever extra cash flows you generate. If you drive up production and costs by 20%, you will end up with $500,000 in additional income each year you own. If you decide to sell, you can sell for $12 million. You can use $10 million to repay the loan and be left with a $2 million gain.

Is this a good deal? I hope you can see that Frances isn’t really taking any chances here: someone will definitely buy this leasehold. She added the option to resell the leasehold to Castle and Cooke as an extra attraction: since people know that they can always sell the leasehold for $10 million, they never have to worry about the leasehold to this farm falling in value. Investors love this: it is very nice be offered the right to gain money but be protected from loss. Lenders also love it: they know that, if they should have to repossess the farm, they will be able to sell it for $10 million, so they aren’t very likely to lose any money on this farm.

Everyone wins.

And that is the general idea of this system. It is possible for everyone to win because the world gets richer each year due to the existence of this farm. If Frances sets up the land tenure system right, everyone will win.

Land Tenure Systems

Now that we are in Pastland, Frances is going to be in a position to design a land tenure system for the benefit of the human race. She understands how to align the incentives: to her, the alignment of incentives is a technical task. She can work out the incentives that would exist with each possible land tenure system that she might design. She can figure out the interests of the human race and design a system that has the closest possible alignment between the ‘incentives of the people who control the land’ and the ‘interests of the human race.’ This is what she has done her entire life.

In our 21^st century Earth, the land tenure systems were not designed to meet the needs of the human race. Most of the land tenure systems were not designed at all: they came to exist after warlords conquered land and used it entirely for the benefit of the warlords (who became ‘kings’ and were eventually deposed by ‘governments’ which took over the flows of value that had gone to the warlord-kings), or they were designed to meet the needs of certain corporations (like Castle and Cooke). In a way, we can be thankful that these companies existed because we can study the tools they used to get private individuals who did not own the land to make truly massive investments in the land they controlled, without having to ever sell any of the land to any of the improvers.

Our group in Pastland can take advantage of these things. As long as the moratorium is in effect, we have a natural law society. Once the moratorium ends, we may create any kind of land tenure system we want, including one that grants partial rights to private buyers provided they agree to rules we have passed to protect the land, and provided they share the bounty the land produces with the members of the human race.

What If You Don’t Pay Cash And Have To Borrow?

If you don’t have the $10 million, you can borrow the money. If interest rates are 4%, you will have to pay $400,000 a year in interest. You will also have to make the leasehold payment of $2 million to Castle and Cooke, so you will pay out $2.4 million of the $2.45 million in profits to others.

If you keep the farm under management, you will also have to pay $50,000 a year to the management company. But, again, in this example, you intend to manage it yourself. If you take over management, you will gain an income from the farm of $50,000 a year. You will have to manage. But it won’t be really a very difficult or time-consuming job for you. You will basically have to make a few phone calls, do a little paperwork, and make sure everything goes smoothly.

You can also make the improvement. If you do, you will gain the same benefit you would have gained if you had paid cash for the farm. Say that you level the land and all the numbers (costs and revenues) go up by 20%. The profits go up to $2.94 million. You will be paying $2.4 million a year as payments ($2 million as a leasehold payment and $400,000 as interest on the loan you took out to pay the price). You will be able to keep the other $540,000 a year in operating profits.

After you improve, you could also sell the leasehold for the same $12 million, leading to the same $2 million gain on the sale.

Either way, you will be able to get a $50,000 a year net increase in your income by buying the leasehold and managing the farm yourself. You can improve the land and will get the same benefits from improvements whether you have cash to pay for the leasehold or have to borrow.

The ending numbers are the same whether you pay cash for the leasehold or borrow, we just get there by a little different way.

Of course, if you aren’t rich, this is going to be a more attractive deal. Why? If you are a multi-millionaire, you may want to dabble a little in the farming, but you aren’t going to really care much about the $540,0000 per year you can gain through improvements. So what? You can already have everything you want. If you aren’t rich, that $540,000 is going to be a huge ‘invisible hand’ pushing you to get the improvements made as quickly as possible. Most people (those who aren’t already multi-millionaires) will stay up nights just thinking about this. They will make the plans as they go to sleep and dream about the workers moving dirt from spot to spot. They will be there before the workers show up in the morning to move the dirt and make sure they do everything exactly properly. Chances are that someone who is not already very rich is actually going to buy this leasehold, because the money that can be made from improvements is going to be a bigger draw for these people. But the point here is that, in the end, the actual incentives are the same for rich people and poor people. They have incentives to take care of the land, to protect it from harm, to make absolutely sure that the share of the free cash flow that belongs to others (the leasehold payment, which belongs to Castle and Cooke) gets where it is supposed to go, and to improve the farm if they can do this.

Frances set up the leasehold ownership system specifically to make sure all of this happened. As we saw earlier, she had a lot of choices. She could have set up leasehold ownership systems that had higher payments to Castle and Cooke but didn’t give Castle and Cooke as much in security. She could have set up systems that gave Castle and Cooke even more security than they had now, but at the expense of lower payments to Castle and Cooke. She chose this one because it was a kind of Goldilocks system, from her perspective: it aligned the interests of the buyer/owner of the leasehold with the interests of Castle and Cooke in a perfect way.

Details Of Socratic Leasehold Ownership

What about the buyback option?

Why did Frances put this option into the system?

We will see, later in this book, that the buyback option is a key provision in socratic leasehold ownership systems. If we, the members of the human race, include it, we will never have to worry about many things we otherwise would have worried about and we will guarantee an orderly and ‘liquid’ market for leaseholds. We will know that they will always sell, very quickly, and will have a reserve of funds that we can use, if necessary, to deal with any problems that may possibly come up in production.

Let’s consider why Frances included this provision:

First, she wanted the leasehold to sell quickly.

If not for the buyback agreement, people may have wondered about the price. Is it too high? They don’t want to pay a price that is more than the market value for the leasehold because, if they do, and they ever want to sell, they may not get their money back.

With the buyback agreement buyers don’t have to worry about this. The market valueof the leasehold cannot go down as long as they keep the farm in at least as good of condition as when they bought. If you buy this leasehold and, a week later, you decide you made a mistake, you can basically return the farm to the seller and get your money back, just as if the farm were an item you bought at Walmart that you decided you didn’t want. Adding in a ‘money back guarantee’ is going to make people realize they don’t have to worry about whether the price might be too high: if they find it is, they can always ‘return’ the farm and get their money back. Since there is no limit on the time for the buyback agreement, they can do this in a year, a decade, or at the end of their life if they want.

The money back guarantee is also going to make lenders far more willing to make a mortgage on the loan. Lenders can lose money if the price of the thing they are lending on falls. In 2007, the housing markets collapsed in large parts of the world and housing prices collapsed. If your house is worth less money than you owe on it, it is better just to walk away: why pay more for the house than it is worth, by continuing to pay the mortgage? Lenders lost trillions of dollars when this happened and the result was a collapse in the lending market (it doesn’t make sense to lend money in a situation like this).

The other reason Frances set up the system in Hawaii with a buyback option was that she wanted security. She wanted to protect herself and her boss.

The socratic leasehold ownership system has a price that is always 5 times the leasehold payment. This system works very much like a rental with a deposit system where the deposit is 5 times the rent. When Frances sells the leasehold, she can’t simply give the $10 million to Castle and Cooke to spend. She may have to give this money back, so she has to hold it in a reserve fund. If the leasehold owner wants the money back, Castle and Cooke must have it available to pay.

What if the leasehold payment is missed? If this happens, the leasehold owner will have violated the terms of the leasehold and the leasehold will simply expire. The (former) leasehold owner will lose all rights. She will not have any right to ask for the $10 million back: as soon as she missed her leasehold payment, she gave up this right. The company will get all rights to the farm back, just as if the leasehold had never been sold. But the company will have $10 million sitting in a reserve fund that it no longer has to hold; there is no longer any chance it will have to use this money to buy back a leasehold, because it already owns the leasehold. This money is just extra.

Before the leasehold payment was missed, this money didn’t really belong to Castle and Cooke. The leasehold owner could ask for it at any time, so it really belonged to the leasehold owner; Castle and Cooke was simply holding it in reserve. The very second the leasehold payment is missed, however, this $10 million belongs to Castle and Cooke.

Let’s say that the contract requires the leasehold payment to be made by 1:00:00 PM on the first business day of November of each year. This money must be paid into ‘the working account of Castle and Cooke’ in cleared funds to be considered paid.

Say that the first of November is a business day. At 12:59:00 PM on November 1, the $10 million is still in reserve; it doesn’t belong to Castle and Cooke. At exactly 1:00:00 PM, the computer checks to see if the leasehold payment is in the working account in cleared funds. If it is, nothing changes: the $10 million must remain in reserve. If the money is not there, the computer realizes that the reserve account has a surplus of $10 million. It has $10 million in the reserve account but will never have to buy back the leasehold to the Hawaii Farm, because the farm is no longer private. The computer transfers the ‘surplus reserves’ to the ‘working account of Castle and Cooke.’

This means that, by 1:00:00PM on the first business day of November each year, one of two things must happen: either the $2 million leasehold payment will appear, as if by magic, in the working account of Castle and Cooke, in cleared funds, ready for the company to spend, OR $10 million will appear in the working account of Castle and Cooke, ready for the company to spend. It is not possible for one of these two things to not happen.

Later, we will look at the idea of using socratic leasehold ownership in our system in Pastland. In that system, we may eventually have billions of private properties. You might think it would be a lot of trouble for us to go through each one and make sure the payments are made as required. But, if we set up our system the right way, we will never have to do this. Our money will come in completely automatically and without any risk at all, just as happened in Hawaii. Frances is never going to send out a notice or bill for her leasehold payment. She doesn’t have to. She doesn’t care if it is missed. In fact, she would be happy if it is missed: if this happens, her company will get an $8 million windfall. (It will get $10 million rather than $2 million.) She may have a dozen, a hundred, a thousand, or even a million separate leaseholds out there. As long as she sets them all up the same way, her company can never not get its share of the value the land produces. It is not possible for this money to not come in.

Selling Leaseholds

Say that you buy the leasehold to the Hawaii Farm. You paid $10 million for the price and have agreed to pay $2 million for the leasehold payment. Note that your leasehold payment is exactly 20% of the price. Your price is exactly 5 times the leasehold payment. (This is saying the exact same thing two different ways.)

If you want to sell the land, you can sell it back to Castle and Cooke for $10 million. You can also offer it to some other party for some other amount. Obviously, it doesn’t make sense to sell it to anyone else unless you can get more than $10 million from it. The leasehold agreement allows you to sell to anyone you want, any time you want, for any price you want that is $10 million or higher. However, if you sell it for more than $10 million, the leasehold payment for the new buyer will adjust upward to be 20% of the price you get, whatever it is. For example, if you sell it for $12 million, the leasehold payment will adjust upward to $2.4 million, which is 20% of $12 million.

Why did Frances put this provision into the contract?

Her company is in this land for the long run. The company has owned this land for more than a century, longer than anyone alive on Earth has been on this world. The company never intends to get rid of this land entirely. It wants to benefit from this land for the rest of time.

 

Frances put this provision into the contract because she wants the company to benefit from the incentives that private buyers of leaseholds have to improve properties. If you buy and improve, you will make money. When you make money, she wants her company to make money too.

It may seem that you are getting the biggest part of the benefits and the company is only getting crumbs. You get a one-time gain of $2 million. The company will only see its income go up by $200,000 a year, and this increase won’t even start until after you sell. But remember that the company is in this for the long run. Over the long run, it will get far, far more benefits from the improvements than you will get. In the next century after the land is improved, the company will get $20 million, or 10 times the amount you got.

If our group in Pastland sets up a system like this, we will have created incentives that lead to improvements. These improvements will not just benefit the people who make these improvements. They will make money but since our income depends on the amount of money they make, the more money they make, the more our income from the land will increase. We don’t have to just use this system for the Pastland Farm: we can use it for any properties we want improved. The buyers of the leaseholds make benefits that seem huge initially and really are huge compared to the incomes most people would otherwise get. But when they make money, we make money. Since our increases in income last for the rest of time, we will always get far more from improvements than any of the private parties involved.

In Hawaii, Frances set up this system for a very specific reason. She worked for a company that was in business to make profits. If she could drive up the profits of the company, she would be seen as a very valuable employee. Castle and Cooke had a long history of rewarding people who can drive up their profits with handsome bonuses. She wanted to help her bosses because she knew her bosses would reward her for this.

Frances is also going to set some common sense rules to protect the land, just as the Forest Service sets rules to protect its land. Frances wants to make sure no chemicals are used on this land so it will remain uncontaminated. (Chemical-free rice sells for five times the price of chemical-dependent rice and the chemical-free rice is getting rarer and rarer, because chemical contamination is spreading in areas where rice is commonly grown.) If she had sold a freehold on this land, she wouldn’t be able to protect it; as soon as the land was sold, the new owner would be in charge. But since she created a leasehold, instead, she can protect this land for the rest of time.

Why Does Anyone Care About Any of This?

We have seen that the societies you and I were born into are diseased societies. They work in ways that allow people to get very rich harming the land and harming other people. The incentives of the individuals in this society conflict with the interests of the human race.

These systems were not thought out. They weren’t the result of scientific analysis. They basically evolved, and they evolved in ways that often made them worse, not better. They started out very dangerous and primitive, and they are just as dangerous, and nearly as primitive now as they were when they were first formed.

These systems divide the land surface of the world into entities we were raised to call ‘sovereign countries.’ The leaders of these countries realized that if they could use their armies to ‘conquer’ land, they could then generate revenue from this land in various different ways. They could gain personal wealth and power by creating the conditions needed for wars to take place and then starting the wars.

They hired experts to manipulate the emotions of the people of their countries to make them feel the emotions needed for the war. If the experts the leaders hired could make the people live in fear and believe that the people that they would be asked to fight are horrible monsters worthy only of misery and death, the people would be more likely to make the sacrifices needed for wars and to participate in the wars. The leaders had powerful incentives to find ways to generate hatred, fear, and the strange emotion called ‘patriotism’ that makes people believe that the entity called their ‘country’ provides all wonderful things that exist and is worthy of any sacrifices necessary to defeat the ones the leaders tell the people to hate.

Not all national leaders respond to these incentives.

Incentives are psychological pressures, like an invisible hand pushing people to do certain things. Many people thought the things the incentives were pushing them to do were wrong and refused to do them, even though they could make themselves far better off, gaining both wealth and power, if they responded to the incentives. Not everyone responded, but some did and that is all it takes.

The conditions necessary for war became a reality. Wars became constant.

In these systems, the people and organizations who have control over the world and make day-to-day decisions over the land are notpartners with the human race. The entity we call the ‘human race’ has basically been banished, made to appear that it isn’t even real and has no common interests, by the paid propagandists who work for the individual clans/countries. The only thing that matters is the territorial goals of the clans/countries; those who think of the interests of the human race are traitors to their clans/countries and are often rounded up and disposed of.

These systems are hundred percent ownability systems, meaning that everything is ownable and owned (by some clan, country, corporation, commune, collective, or individual). Nothing is unowned and available for the members of the human race to use to meet the common needs of our race.

If we had anything at all; if any share of the wealth that flows from the land was unowned and available for us to control, we would have some power and some control over the important variables of our existence. But the people who built the societies that were here when we were born didn’t consider the needs of the human race, they considered only their instincts, superstitions, and beliefs about the invisible beings and unseen forces that they thought created a mandate for them to take the land and hold it.

We can’t do anything about the past.

We can’t do anything about the way the world worked when we were born.

But time has passed.

The people who set up this dangerous system are long dead. The people who were in charge are going away leaving new generations. The old beliefs are dying quickly, as technology makes information about objective analysis available to everyone. We can decide to try to keep the old beliefs alive if we want. We can choose to not allow ourselves to look at the world differently than people in the past. We can choose to not allow our children to know they have the right to think about the world the way they want and make it work they way they want.

But we can also make a break from the past. We can accept that there are many different paths that we can take into the future. We can analyze the landscape, figure out where the different paths go, and find one that leads to the type of world that we want to live in, and that we want our children and their children to be able to enjoy.

We are now in a position to do the analysis that the past generations that created this dangerous system were not willing, and not even really able to do. We have tools that include computers and the internet that can help us categorize the old beliefs and instinctual feelings as what they are: remnants of a primitive past. We can accept that we have the ability to set up systems that allow people to buy rights to the world in ways that give them rights to do things that benefit the human race and allow them to get rich if they do these things, without also having the rights to do things that harm our world and put our race and our world at risk.

How do we put such a system into place?

Before we can even think about such things, we have to know this: ‘What system are we trying to put into place?'

You can’t plan a journey until you have first decided on a destination.

We can’t determine the specific steps we need to take to change our societies until we know how we want our societies to work after the changes are complete.

The very first step that we must take is to figure out what characteristics human societies must have in order for them to be ‘healthy’ societies and able to meet the needs of the human race.

I know it is hard to imagine us making a transition from the societies we have now to sane, stable, peaceful, sustainable, and otherwise healthy societies. This is so hard to imagine that most people just want to give up on everything and not think about the issue. It causes real mental pain to think about and we naturally want to avoid pain, so we don’t think about it. But if we don’t think about things, we will never figure them out. We will never figure out how to get to healthy societies if we don’t know what healthy societies look like.

Once we understand how healthy societies work, and we have a destination in mind, we can start to consider what we must change about the societies that our primitive ancestors put into place to get from where we are now to the destination we have in mind.

We will look at the idea of societal change in great detail much later in the book. We will see that if we understand exactly where we want to go and know exactly what we must change to get there, the changes themselves are actually pretty easy. If you know where you want to go and have a map that shows how to get there, it is pretty easy to plan a route.

We must take this project one step at a time. The first step is to understand our capabilities. If we know that healthy societies are within our capabilities, we have taken the first step. We will then be willing to take the second step and do an analysis of the possibilities. We will see that a great many arrangements of human societies are fundamentally healthy. We can narrow down the options by looking for the specific healthy society that is the closest to the societies we have now, and therefore the easiest to get to.

Only after we know where we are going are we in a position to plan the trip itself. This, I believe, is the reason that attempts at societal change in the past have failed: the people who tried them didn’t have a destination in mind, they only knew they didn’t like what they had. (Marx basically said, ‘Kill all the evil owners and bureaucrats and destroy everything they have built; when the evil ones are gone, the good people who are left will figure out something better and put it into place.’ He had no idea about the destination and made entirely wrong guesses about how to get to better societies.)

The Pastland example is designed to make it easy to see that healthy societies really are possible. You and I and the rest of the people in our group are in a position to start from scratch. We can form any kind of society we want. We have incredible advantages, including all of the technology of the 21^st century, the skills of our time, and all information about the things that have been tried over the last iteration of history and the way they worked out. We can take advantage of these things. We are in a position to form any kind of society we want.

We have Frances and other people with skills and talents that can help us. Let’s go back to Pastland and consider what would happen if we decided to intentionally organize our society around a method of interacting with the land that was designed to align the interests of the people who control land with the interests of the human race as a whole. We will see that it is quite possible for humans to live in a healthy, sane, peaceful, prosperous society. Once we know it is possible and we have a potential destination in mind, all we have to do is decide if we want to go there and then make the trip.