The horizon is not so far as we can see, but as far as we can imagine

The Golden Laws of Prosperity

Image by [rom]

Image by [rom]

Implement policy which is as good for as many people as possible.

Keep the rich poor.

Punish negative externalities, encourage positive externalities.

Tax economic rents punishingly.

Do not allow pipeline companies (app stores, telecom companies, railways, etc…) to extract monopoly profits.

Enforce the doctrine of first sale (if you buy it, it’s yours) and do not allow items to be turned into services.

Do not allow elites to opt out of the experience of ordinary citizens.

Allow no unregulated monopolies or oligopolies (and by regulated, I mean 5 percent + inflation profit, no more, no less and strict limits on executive compensation).

Keep so-called “intellectual property” to an absolute minimum.

Make it worth doing social work and do not allow the private sector to pillage the social sector (for example, parenting).

Never use widespread targeted incentives.

Do not allow the rich to grow rich any faster than the bottom or middle of society.

Do not allow fraudulent profits to drive out real profits.

Allow easy bankruptcy.

Do not allow usury.

Do not allow resource extraction profits to drive out profits in other sectors of the economy.

Keep the real rate of return low, except on genuinely risky entrepreneurial activities.

Do not reward people for winning lotteries (economic competitions someone was going to win, like Facebook winning the social site competition).

Do not allow the financial sector to be the tail that wags the dog.

Allow no financial instruments which are more complicated than the underlying asset or project.

Do not allow anyone to take future profits in the present.

Make sure that people cannot cash out of the system without taking a huge loss.

Ensure that no one can give themselves a payday by destroying real value (i.e., much private equity).

Do not allow the old to make deathbets.

Enforce accountability on decision-makers, especially corporate decision-makers.

Do not allow private money to buy elections (taxpayers should pay for their own elections and not expect donations to do so).

Do not allow lawmakers or public executives to ever make more money (adjusted for minimum wage increase, median wage increase, and CPI) than they did while in office.

Give lawmakers generous pensions that kick in after only a few years of service, so that they are not worried about their next job.

Pay lawmakers generously, but link pay to minimum wage, CPI, and median wages.

Recognize health externalities caused by urban and exurban planning, pollution, and additives.

Reduce barriers to entry in new industries, including outlawing non-compete agreements and restrictive patents.

Reward creatives not primarily by patent or copyright, but by levy and distribution. Corporations are not creatives.

Do not allow trade to be used to externalize negatives like pollution.

Restrict capital flows significantly.

Treat credit as a utility and regulate all credit grantors as utilities.

Credit rates should be based on the utility of the end use of credit.

All universal or near-universal insurance should be run by the government, as the government is always the insurer of last resort.

Do not have large standing armies.

Do not obsess over inflation targets. Moderate inflation, to as much as 10 percent, is not harmful and is less harmful than very low inflation.

Do not use monetary policy for fiscal policy or vice-versa.

Do not lock up a large part of your population.

Do not make reintegration of criminals who have served their time effectively impossible.

Make sure your population eats healthily. There is no such thing as cheap food. Cheap food is paid for by death, disease, and health care costs.

Do not allow educational advantage to be bought by high housing prices or by money in general.

Do not impoverish your cities by allowing politicians to use city money to buy rural and suburban votes.

Do not allow city folks’ mores to run the country, nor country mores to run the cities.

Do not allow unproductive suburbs which do not allow light businesses or have covenants.

Do not borrow significant amounts of money in anything but your own currency.

Do not allow people to make large amounts of unearned money (i.e., as when housing inflation is much faster than general inflation).

Do not allow the costs of your society to outrun real gains spread over the population (i.e., housing prices to rise faster than wages).

Make sure that the consumer economy has an alternative.

Understand what the government does well and what the public sector does well.

Use competition between the private and public sectors.

Do not allow your elites to enter into direct competition with foreigners running resource economies.

Do not allow your economy to be owned or run by foreigners.

Do great things, not because of the return, but because they are great.

Seek the health and happiness of your citizenry, not maximum income.

(First published Sept 7, 2011. This is old, but the only relatively comprehensive list I’ve written, so back to the top. My thought has evolved on a few issues, but it’s still a very good list. – Ian)

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Trump/Clinton Debate Open Thread


  1. Oh God! I managed about two thirds of all that and it brought back memories of pontificating parsons and their eye-stabbingly tedious sermons based, and I use the oxymoron deliberately, on a non-existent reality!

    (Ooops, sorry, I really didn’t mean to be rude. I wrote the above under the misapprehension that it was an extract from a blog/book/magazine called ‘Economics, How to Think’. I now realise they are your own words and I was about to delete my comment but then I read:

    “Do great things, not because of the return, but because they are great.”

    For that alone, alas, I must leave my comment standing whilst wondering when you first began writing the trite messages to be found in the more sentimental of Hallmark’s greeting cards?)

  2. Ian Welsh

    We are getting almost all of these things wrong, consistently, right now, so they clearly need to be said. Much as I had to write a post on the Golden Rule, of all things. That’s where we are now.

    And yes, David, you did mean to be rude but I forgive you, because I’m not writing this for you.

  3. Formerly T-Bear

    Never employ mercenaries (or contracted parties) to supplement or replace regularly employed military.

    Never employ military upon credit (debt) unless engaged in war brought on by external forces.

    Reserve the death sentence for those who abuse or usurp power and like treason, once engaged upon, there is no restitution to prior conditions for those afflicted.

  4. Do not allow pipeline companies (app stores, telecom companies, railways, etc…) to extract monopoly profits.

    Enforce the doctrine of first sale (if you buy it, it’s yours) and do not allow items to be turned into services.

    This. Oy. One of my bugbears. The fetishization of Apple iWhatever products by hipsteriffic liberal poseurs is one of the signs of the apocalypse, I swear.

    Of course now, in order to feed my addiction for English-language SF novels in a non-English-speaking country, I bought an e-Book reader, which are dependent on DRMified eBook stores, so I have at last caved in. In my defense, all eBook protection schemes are trivially breakable, and anyone can “take possession” of most non-Kindle eBooks using a widely available Python script.

  5. Celsius 233

    The merest of quibbles; “Keep the rich poor?”
    Erm, could you expand a bit on your seeming oxymoron?

  6. Cloud

    Reward creatives not primarily by patent or copyright, but by levy and distribution.

    What does this mean? As an erstwhile would-be creative I’m intrigued, but the if the last two nouns have a well-known specific meaning in this context, I’m unfamiliar with it.

  7. @Celsius — on “Keeping the Rich poor” this is my interpretation, not Ian’s, but keep the income ratio of the top 1% to the Median to a “reasonable” level (10:1, 15:1 or something like that) so the wealthy are truly wealthy but are not completed insulated from the reality experienced by the median. This would discourage the “lottery” mindset and the elite opt-out that Ian has talked about numerous times.

  8. duck-billed placelot

    Cloud – I’m with you. Levy? Like, everyone pays a tax or a fee to access art and the government then turns around and pays the artists? And if you’re not on the government-approved art rolls, you still don’t own (copyright/intellectual property) your art and thus cannot support yourself? Surely I have this wrong, as it sounds like a truly awful idea.

  9. nihil obstet

    Use competition between the private and public sectors.

    In what? Most of the areas where I’ve seen it used have not had socially good results. Military contracting? Prisons? God help those who are placed at the absolute mercy of profit-seeking organizations. Schools? The rich are enabled, as Steven Colbert said, to keep their children from getting poor all over them. And of course, society’s problem children with physical disabilities or difficult homes are left concentrated in the public schools. Garbage collection? Private firms can’t compete without public contracts that eliminate the public sanitation department. And then of course, you’ve got employees even more miserably paid than public sanitation workers and with no benefits; how much does the public save when the employees need food stamps and Medicaid?

    The textbook theory is that competition produces better service. But when there’s a reason for a public service, it usually means that private competition will abuse whoever is powerless — employees, customers, the public purse.

  10. Bolo

    @Celsius: Keep the rich poor means that every dollar in income over $1 million should be taxed at 95%. The rich will still be rich, but they won’t be so far removed from the rest of society that they can ignore it.

    @Cloud and Duck-billed: I’m guessing “levy” means charge a small fee for use rather than allow the monopoly of patent/copyright. This pays the creator for spreading his/her idea rather than limiting its use and holding out on everyone.

    Honestly, this list is great. It’s a concise summary of the best ways to run society/state.

  11. duck-billed placelot

    How is a levy different than a licensing fee, then? And if an artist can’t keep a ‘monopoly’ of hir work, then how does said artist collect levies?

    artist: “You owe me 50 cents for every time you use my photo!”
    person selling tshirts: “Nuh-uh, I got it from somebody that gave you 50 cents already, so I’m putting it on tshirts and selling them; too bad, you don’t have a monopoly on it.”
    artist: starves.

    If it weren’t for Disney, people wouldn’t get all snitty about artists and intellectual property. Capping how much could be made from a single artwork or how long they can control it (which, again, Disney ruined it for everybody) would make sense to me. But making government the sole purveyor of art is just an awful, awful idea. The real intellectual property problems are a) patent law and b)major corporations/consortiums (Disney,RIAA). Oh, and c)genetic patents (plants and beasts).

  12. Good list! If I may weigh in on @Celsius 233’s question, and restate @Dave & @Bolo’s answers in a slightly different way:

    Make sure the rich remain as hungry as the rest of us.

  13. @Mandos:

    In my defense, all eBook protection schemes are trivially breakable, and anyone can “take possession” of most non-Kindle eBooks using a widely available Python script.

    Well done, sir!

  14. Self

    Well-stated as usual.

    Humbly, I would add this: in a world of art vs fashion, fight for art.

    Keep up the only fight on earth that matters. It helps me continue fighting.

  15. Ian Welsh

    Levy: think ASCAP. ASCAP charges radio stations every time they play a song, and sends some of that money to the artists. I’m not 100% sold on this, but it seems like a way to avoid copyright issues. And I know a composer who still gets checks regularly from ASCAP.

    Creatives would self-register. The levy is charged on internet access, and divided amongst creatives. Corps can’t register. Some stuff would have to be done to control for rent (ie. if you’re published in NYT you get hits that aren’t really “yours”.

    This wouldn’t noticeably increase internet costs if you’re doing the other things, at least not in America, but Americans are already massively overpaying for internet.

    If we went with copyright, I’d do something like corps can have 10 years, individuals 20. Period. That’s it.

    Keep the rich poor: what David and Bolo said.

    Mandos: so what type of e-book reader did you get?

  16. Tom Hickey


    Care to elaborate on “Do not use monetary policy for fiscal policy or vice-versa.”

    Are you thinking of the MMT approach to using fiscal policy to adjust non-government net financial asset to regulate effective demand in order to achieve full employment along with price stability, instead of the present system of using interest rates to control for inflation, which involves a buffer stock of unemployed? Or do you have something else in mind?

  17. Ian Welsh

    Monetary policy is a very crude instrument (as it is done now). You flood an economy as it is, or you deprive an economy as it is. You cannot restructure an economy with monetary policy, and you mostly can’t encourage or discourage specific behaviours (you sort of can if you really want to, as for example the Fed crashed the economy any time workers got ahead for about 20 years. But that’s insane.)

  18. Celsius 233

    September 7, 2011
    Dave anderson PERMALINK
    September 7, 2011
    Ian Welsh PERMALINK*
    September 7, 2011
    Thank you kind sirs.

  19. I see the Duff troll found your site.

  20. El Gringo Colombiano

    Ian, great article. Thx

  21. Shoes4Industry

    “Make sure that the consumer economy has an alternative”

    I think that ship has sailed. And this is at the heart of the economic/jobs crisis.

  22. Curt

    Eliminate personhood for corporations

    Eliminate conglomerate ownership of media outlets

    Tax corporations on worldwide income

  23. Ian Welsh

    Curt: excellent. First is semi-included under “enforce responsibility”, other two should be on the list.

  24. I’m mostly annoyed these proposals aren’t even in the “debate.”

  25. I loathe the contemporary copyright system. I run a very, very small business/hobby on the side and we release all our creative work under a Creative Commons license, which is much less odious. The thought that under current law something I create would persist in belonging to me long after I’ve rotted to dust in the ground is deeply obscene.

    As for a better method to pay artists, I’d kill to see Dean Baker’s proposal implemented.

  26. dangermouse

    “keep the rich poor” is presumably in reference to those people who complain that ~it’s just so hard to get by~ on a 200k+/year salary, what with having to make payments on both of the houses, and presumably means it’s to everyone’s best interest that their complaints go ignored.

  27. Ian:

    Kobo Touch bought at discount from dying Borders. If I hadn’t left the USA when I did, I’d have gotten an even steeper discount. At those prices, I’d have bought a few as gifts. While it’s shrinking in the USA, it’s apparently growing in Europe through a willingness to cooperate with local entities.

    I am relatively pleased with my purchase. It’s a sturdy device that does exactly what I bought it for, has reasonably good battery life, and is backed by a Canadian company that at least pays a little bit of attention to Linux users (in the sense of having an unofficial Linux version of the desktop client which is more than most companies do).

    While it’s easiest to download from the Kobo Store, you are by no means tied to it (unlike Kindle+Amazon), and can load books on it from any Adobe ePub store DRM or otherwise—or just plain old PDFs, which it pans quite well, though it eats up battery faster. It’s very light which is important for me as I carry a lot of things in my backpack, which as you may have noticed I take everywhere. It plays well with the public library Overdrive portal (which is quite abusive but that’s not the library’s fault).

    I don’t like the fact that it has only a touch keyboard (HATE), but I didn’t buy it to type with—that’s what my BB is for. It does not have 3G—you need to download books by USB or by wifi.

    The Adobe ePub DRM is beyond idiotic. I couldn’t have thought of a stupider protection scheme if I had tried. Of course, any *stronger* scheme would be even more obtrusive to the user. For non-Kobo DRM books you need the Adobe Digital Editions software, which works with tweaking under Linux/WINE.

    Publishing channels are engaged in a futile quest for survival. I’m happy to pay the author (e.g. C. J. Cherryh runs a non-DRM store with a couple of friends for some of their backlists), and perhaps there may be a way to enshrine editors. But the rest of the middleman business, well…

  28. PWAX

    Looking for simpler principles underlying your list, the basic one seems to be: do not let money (a symptom) be confused with actions and living (a cause). Ironically, most items in your list are about money.

    An expanded list of “DO” as opposed to “DO NOT” would be worth thinking about.

  29. I think your list is incomplete in an interesting way: I do not see explicit Keynesian policies (I may be missing something) or unions.

  30. Geo

    Don’t forget that last step, “Establish a tyranny to carry out all the preceding steps.”

    Be sure to find the correct multi-ethnic, transgendered, progressive, Keynesian euro-statist to run it for you!

  31. Sam

    “Creatives would self-register. The levy is charged on internet access, and divided amongst creatives.”

    How would it be divided? It seems like the only fair way would be based on how many people “consumed” the artist’s work.

    And how is it fair that everybody pays the same levy? Since these things aren’t that hard to track, why not charge people based on how much they consume.

    And if you’re doing both of those things, how is this system any different from copyright, other than creating additional bureaucracy?

  32. beowulf

    “Never employ mercenaries (or contracted parties) to supplement or replace regularly employed military”
    I’d go farther and change the War Powers Act that placing US soldiers into combat automatically revives the Selective Service draft. We probably should have an Army Reserve draft in any event– whether its universal or by lottery– call up young men after high school for infantry basic training (18 weeks these days). After this, they’d have no further obligation for the remainder of their 8 year service contract unless some other country decides to invade the United States– or more likely– the United States decides to invade some other country.

    “Looking for simpler principles underlying your list, the basic one seems to be: do not let money (a symptom) be confused with actions and living (a cause).”
    Read Roger Martin’s “Fixing The Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL”.

    “Rozelle and his successors have enforced a strict separation between the real market and the expectations market; everyone involved in the real game of football — players, coaches, and officials alike — are forbidden to have anything to do with betting on football — on their own games or on other teams’ games.
    “In other words, the NFL has managed the division between the real and expectations market in a manner that is exactly the opposite of the way we have managed it in business. American capitalism encourages, and in many cases even mandates, the players in the real game to invest heavily in the expectations game, and has built structures that bring the key players from the two markets into almost constant contact.”

  33. StewartM

    My addition (in some ways covered, but I’d like it expressed more directly):

    “Make the economic prosperity of the bottom 20 % of wealth-holders and income-earners your benchmark of how well your economy is doing. You do this because history shows that they are the best indicator of economic health. When they do better, everyone else is taken care of as well. When they do worse, most of the population will get worse, given time.”


  34. jb

    you omitted the most important: hire a dictator for life, not unlike, say, Stalin, to install your social programming policies and enforce what will inevitably become a 75 percent tax on all earnings. Give the government the power you suggest and it will consume everything.

  35. Ian Welsh


    Google ASCAP.

    It’s very different from copyright.

    Tyranny-mongers: there is nothing here that requires a dictator. In fact, by reducing the power of corporations to buy democracy, this is far more democratic than the current oligarchical system. Which is why you hate it, of course, you won’t be able to buy corruption as easily.

  36. StewartM


    not unlike, say, Stalin, to install your social programming policies and enforce what will inevitably become a 75 percent tax on all earnings.


    The US I was born into had a 90 % tax, which translated to a 71 % real tax on the top income earners, and in many ways it was more democratic than today.

    High taxes on the rich and on corporations not only promote democracy, they spur technology and promote real investment. You have to work for a living, however, to see this and understand how it plays out.


  37. henry porter

    Ian, I like it. It may be incomplete (what such list isn’t?), but it’s a great start. I’d second eliminating corporate ‘personhood’, and put much bigger restraints on the ability of large corporations to devour smaller companies.

  38. Chaz

    This is great! I would like to add agricultural biotechnology and drug patents too the list. Stop manipulating and grossly profiting from – food prices as everyone need to eat, and stop screwing over peoples health and wellfare…

  39. Shoes4Industry

    How it fix the jobs crisis and grow prosperity (in advance of Obama’s speech…)

    1. Lower the SS retirement age to 62, early retirement to age 60. Free up middle and upper management and lower positions for younger, healthier, less expensive workers.

    2. Remove the cap on Social Security contributions to pay for new and future retirees.

    3. Limit consumer credit interest rates to 15% max. This will reduce consumer debt and promote consumption without costing taxpayers a cent.

    4. Lower the eligibility age of Medicare to zero. It’s an insurance (not a health care) program. Younger, healthier contributors will dramatically drive down cost and increase savings. Employers will be out of the health care business.

    5. Rescind the Bush tax cuts immediately on those making over $250 and increase the rates on those making over $1M+ to Reagan era rates.

    6. Rewrite underwater mortgages by “splitting the difference” between current market value and what is owed, (4% -30 yr. fixed) both parties take a hit, homeowners have incentive to stay and pay and banks are not stuck with vacant, non- performing assets.

    7. Make all educational expenses tax deductible.

    Problem solved.

  40. Good list, one quibble:

    “Credit rates should be based on utility of the end use of credit.”

    This is not right. Credit rates should be based on the risk of the loan. Credit based on utility is a road to debt crises and is a mixing of a government objective (maximizing utility) with a business function (lending at interest).

    It’s equivalent to saying that prices in stores should be set based on the use to which the item will be put rather than the cost to the provider.

  41. Sam

    Google ASCAP.
    It’s very different from copyright.”

    Funny that you should say that, since the entire legal framework for ASCAP is built on copyright.

  42. NoPolitician

    I’d support a copyright law that is as follows:

    1) Notice of copyright required upon publication to establish the publication date.

    2) Initial copyright period of 15 years.

    3) Renewal of copyright after 15 years by republication. If not republished, the work falls into the public domain.

    4) Work falls into the public domain after 30 more years.

    I like this method because it has a “no copyright” state – something currently missing from our existing law, under which everything is instantly copyrighted.

    It requires a reasonably small but affirmative action to extend the copyright of something, which amounts to “if it is economically viable, it can go longer, if not, it becomes public domain”. Think about how this would affect newspapers – they’d have to republish the newspaper (which is impractical) or they could publish it in another medium (such as searchable archive).

    It also pegs the length closer to the lifespan of the author, not a corporation. If you’re the next Rolling Stones and you put out an album when you’re 20, you can live off your laurels until you’re 65. Sorry, your works don’t get to fund your grandchildren’s lifestyle.

  43. Tom W Harris

    “Do not allow the old to make deathbets.” What does that mean?

  44. ButteryPat

    What exactly is the purpose of this? Not a single one of these proposals are going to be enacted or followed. Not A Single One.

  45. Peter*

    I suppose this Pollyannaish wish list could be possible under the benevolent rule of Ian the Magnificent, World Emperor. In an earlier post Ian stated that we need a leadership/managerial class to guide us and then followed that with the claim that this class becomes war criminals when they achieve positions of power.

    This progression is confusing because it seems to infer that we need war criminals to lead us to a better future if we can’t find a benevolent emperor.

  46. A death bet is betting that the bill will not come due in your lifetime.

    Obviously you want old people not to make such an arrangement.

    It used to be done on life insurance all time.

  47. XFR

    This. Oy. One of my bugbears. The fetishization of Apple iWhatever products by hipsteriffic liberal poseurs is one of the signs of the apocalypse, I swear.

    They’re so busy running around in circles fatuously playing at re-fighting the late-20th century’s battles that they don’t even seem to notice that they’re being completely routed in all of the 21st century’s battles.

    It seems to me that this is entirely by design.

  48. the other thing I would say is “Do not use this as a checklist to run your economy.”

  49. XFR

    (And it may in the end bring on the apocalypse, at that…)

  50. XFR

    Oops, just noticed I was replying to a five-year-old comment.

  51. This wishlist is what comes after the evils of capitalism has done the needed heavy-lifting to get us past the point where scarcity is the main driver of political economy.

    What Middle-Class Canadians Need To Know – A Must-Watch, One Hour Economics Seminar
    Robert Skidelsky

    Ian, I would love to know your thoughts on the video above.

  52. Ian Welsh

    A rather large amount of this was done during the post-war liberal economy, actually.

    As for the rest, it is simply a useful list to remind people there are other options and that to not do them is a choice.

    It’s certainly a better checklist that the one used to run our economy now. Got a fair bit of it from a guy named SN, actually.

  53. Tom W Harris

    Thank you, Stirling. I guess the meaning should’ve been obvious but for some reason it was not.

  54. Tony Wikrent

    Not a very good list — an extraordinarily excellent list!

  55. Ian,

    You are right that much of it was done after WWII, BUT, with the rise of China and globalization, much of this had to be reversed so that the benefits of hegemony, and being the printer of the worlds reserve currency could be maximized. And, this also required that wealth become concentrated in the hands of the 1% (as this ensured that as little of it leaked out of the economy to buy goods from the likes of China and oil-producing nations). If everyone had been given their true keep, it would only have bid up the price of the manufactured goods and energy that the US was able to import (in return for IOUs that it has the ability to print the money to repay when needed). The benefits of hegemony would have been depleted quicker than need be.

  56. Guest

    Aside from the pie in the sky element, this list is all over the place and unorganized and sometimes redundant. Why not list the main principles involved first. Then list the related nuts and bolts applications under them. Or list the specifics later and explain which principle(s) are involved in each recommendation and how.

  57. Ian Welsh

    A lot of those articles have also been written. Might be worth collating a list some day when I’m bored.

    Most of these ideas are no more pie-in-the-sky than the ideas of Milton Friedman and Neoliberalism seemed in the 70s.

  58. Ian Welsh

    These policies were also followed in the 30s. 🙂 These policies need not be resource bottle-necked, that was a choice.

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