Loan Type	Amount	Interest Rate	Monthly Interest
SNSC (assumed)	$210,889.41	3.75%	$659.03
Wells Fargo (assumed)	$135,881.54	4.875%	$552.02
Owner Carryback	$653,229.05	5.5%	$2,994.80
TOTAL	$1,000,000	4.97%	$4,205.85
No Loan Assumption	$1,000,000	5.5%	$4,583.33
Monthly Savings			$377.48
Loan Type	Amount	Interest Rate	Monthly Interest
SNSC (assumed)	$210,889.41	3.75%	$659.03
Wells Fargo (assumed)	$135,881.54	4.875%	$552.02
Owner Carryback	$653,229.05	6.0%	$3,266.15
TOTAL	$1,000,000	5.27%	$4,477.20
No Loan Assumption	$1,000,000	6.0%	$5,000.00
Monthly Savings			$522.80

Annie set up this system for a very specific reason:  Castle and Cooke owns enormous amounts of land.  It is a ‘land holding’ company.  It is in the business of ‘holding’ land.  It is not in the business of operating the any kind of business to make the land create value.

The land Castle and Cooke owns has many different uses.  Some is used for golf courses; some for private homes; some for resorts, condos, strip malls, destination shopping malls, marinas, parking lots, electric transmission facilities, and everything else modern people use land for in our 21st century world. 

Castle and Cooke doesn’t operate any of these facilities.  That is not its business.  It is in the business of ‘holding’ land.

Annie deals with the people who will actually go to the land, figure out what it can produce, and make it produce value.  These people are going to do things.  Castle and Cooke wants the incentives of these operating partners to align with the interests of Castle and Cooke.  Annie’s job is to find a way to design agreements with these partners that will align the interests of the partners with the interests of Castle and Cooke. 

What are their ‘interests?’

They are basically interested in sending money for shareholders.  The money will come from the sale of things the land produces.  The company wants the land to produce things with value to people.  These things will then get sold or rented or otherwise exchanged for money. Some of this money will have to go to the operating partners who do the actual work. But Annie wants anything that doesn’t have to go to these operating partners to go to Castle and Cooke. Her pay depends on how much money she makes for shareholders.  She wants them to do well so she can do well herself.

Annie knows a lot about stock investing.  She knows what makes stockholders money.  She knows that it isn’t always better for shareholders to have as much money as they can get as quickly as they can get it.  She knows that companies called ‘growth companies’ have far higher stock prices (compared to their earnings) than companies that don’t grow.  She knows that companies that have stable income have higher stock prices than unstable companies. She knows that if she can set up systems that will give her operating partners incentives to work hard to get the land they control to create value, manage risk well so their income is stable, and improve whenever this is cost effective to drive up their income (and eventually drive up Castle and Cooke’s income), the share price will go up and up, her bosses will be happy and they will show her how happy they are when they decide on the bonus that makes up the bulk of her pay. 

Realities of Life

Annie wants the operating partners to have the strongest possible incentives to work hard to make sure everything goes smoothly.  If everything goes smoothly for them, they won’t have any problem paying their rents. 

But risk is a part of production.  Risk is a part of life itself.  Things can go wrong.  Wait long enough, and something will go wrong.  That is the way ‘existence’ works. 

Annie wants her operating partners to have so much on the line that they will do everything in their power to prevent anything they can prevent from going wrong. She wants people like Kathy to stay awake at night thinking about things that she might be able to do to make things go more smoothly on the farm and to have backstops in place so that if something does go wrong, she will have the ability to deal with it quickly, before it gets serious. 

That is one of the reasons she chose a system that sold a fairly high percentage of the rights to the land.  Kathy is buying the rights to a lot of free cash.  (The farm produces $2.4 million a year; Kathy won’t own the first $1.8 million of this, she will have to give it to Castle and Cooke as rents.  But she will own the right to everything else, which will be $600,000 a year.  That is a lot.)  Because she was buying a lot, she had to pay a very high price: $12 million is a lot of money. 

Every dime of this money is at risk. 

If something goes very wrong, she could lose it. 

She is willing to take on this risk for a reason:  If she can keep things from going wrong, and actually make them go better, she can get rich.  If she does a very good job at this, she can get very rich.  Since she wants the reward, she is willing to take on the risk. She is going to make her rents a priority.  She absolutely must pay them. If she doesn’t pay, she has violated her leasehold agreement and Castle and Cooke can cancel her contract and take away her rights.  What happens to her $12 million then?  She doesn’t know for sure (in practice it is quite complicated) but one thing she does know is that she won’t have some smiling executive in a suit handing her a check for the full amount.  She may well lose millions. 

Kathy took out a loan for the money to buy this leasehold, so she isn’t the only one at risk.  Her lenders are also at risk. They know it.  They are willing to take on risk for the same reason Kathy is: They get rewarded for it.  They are getting the interest that Kathy pays. If nothing goes wrong and Kathy pays as promised, they will get $15 million in interest over the course of 25 years.  Of course, the lenders know that there are things they can do to manage risk and make it lower.  In practice, the lenders will work quite aggressively to manage risk.

 

Lending companies take several steps to manage risk.  In this case, the lending company (let’s call it a ‘bank’) is collecting 5% interest from Kathy and other borrowers who are buying leaseholds. The bank isn’t going to be able to attract depositors if it tells them ‘if you deposit your money with us, you may or may not get returns and may or may not get your money back.’  No one would put their money into the bank if they did this.  They have to protect the depositors so they set aside large amounts of the money they get as interest to cover risk.  Part of this money goes to provide a budget for a ‘risk management division’ that has the responsibility of making sure borrowers are responsible and collateral can be sold for enough to cover the loan balance.  Another part goes to pay for ‘loss mitigation,’ a division that deals with problem borrowers to try to get them back on track if this is possible or find a way to use complicated tools like ‘short sales’ and ‘deed in lieu’ that will transfer ownership to a responsible and qualified buyer without any need for repossession.  Another part of the money goes to something called a ‘loss reserve’ fund:  if the bank has to repossess, it might lose money on some loans.  It can’t pass this loss on to depositors so it must have reserves to cover it.  Yet another part of the interest goes to buy insurance:  If all its efforts fail and it can’t avoid losses, the money of the depositors must be safe.

The bank gets revenues from the interest it collects from borrowers.  It pays is depositors (as little as it can and still get people to keep money in the bank), pays to manage risk, pays to mitigate losses, pays the losses out of its loss reserve, and buys insurance to protect it from catastrophic events.  (If the bank absolutely can’t pay depositors the insurance company will, but the bank will close and the owners of the bank will lose their entire investment; they do not want to ever have to use their insurance.)   If the people who run the bank can do all these things well, they can make profits.  The most important part of their job, the one that their fates depend on, is risk management.  They have to do this well or they won’t have money to pay their depositors, let alone make profits. 

 

Basically, the lenders and the owners are working together to protect Castle and Cooke. Kathy knows that if she can’t make her rents, she will lose her rights to the farm and can possibly lose $12 million. The lenders have put up this money and know that if Kathy loses the farm (because something went wrong that prevented her from making her rents) they won’t get the money back from her.  They will lose.  They aren’t going to sit back and wait for something bad to happen. They have hired teams of professionals to manage risk and given them budgets that are big enough to do their jobs. (We will look at some specific examples later; here, I just want to lay out the big picture.)  

For these reasons, it is extremely unlikely that the rent payment will ever be missed. In this case, the rent payment is $1.8 million.  Kathy and the lenders stand to lose $12 million if this is missed.  No one would ever miss a $1.8 million payment knowing that, if they do, they are likely to lose $12 million.  To protect this investment, people will make sure that the rent is paid.  They are acting in their own interests to do this, of course.  But they can’t protect their interests without also protecting Castle and Cooke’s interests, because they are aligned perfectly in this case.

Improvements

Kathy is used to farming land that has been farmland for a fairly long time. Farmers know that crops need water to grow and level land holds water better than unleveled land.  Make it level and it will produce more.  This is a very easy thing to do and improves yield a lot.  If farmers have some time, they go out and move dirt from high spots to low spots.  The closer the land is to level, the more it will produce. (Large commercial farms bring in massive equipment and lasers to make the land totally level.) 

The land of the Hawaii farm is  far from level.  There are high areas that stick up above the ground all year long; rice does not grow there at all. There are low spots that are so deep the rice can’t grow.  Kathy will have the right to level the land.  If she does, she estimates that the land will produce 20% more rice than it does now.  The costs will also be 20% higher so the operating profits will be 20% higher and the free cash flow will be 20% higher. 

Her rent payment to Castle and Cooke is fixed for 25 years or until the property changes ownership.  Kathy will not have to share any of the increase with Castle and Cooke for the foreseeable future. 

If she improves, she will actually get two benefits. 

The first is the extra money.  She will get that for as long as she owns the leasehold or, if she doesn’t sell in this time, for 25 years.  

The second benefit will be a ‘paper gain’ on the value of the farm that takes place as soon as the improvement is completed and which she can ‘realize’ (turn from being a paper gain to a actual money gain) any time she wants by selling the leasehold. 

 

As soon as the improvement is complete her leasehold interest in the farm will go up in value by 20%.  In other words, her interest in the farm will be worth 20% more because the farm is not the same farm after she improves it:  It is a much more productive farm that will generate more wealth for the (new) owner than the old farm. 

 

She paid $12 million for her rights to this farm.  After the improvement, these rights will be worth $14.4 million. She will have made $2.4 million. Her wealth position  goes up by this amount as soon as the improvement is complete, but she won’t actually have this money at that time.  This kind of a gain is called a ‘paper gain.’  If she wants to turn this paper gain into cash that she can spend, she will have to find a buyer and sell her rights to the farm for $14.4 million.  She can then use $12 million to pay off her mortgage and she will be left with the $2.4 million. 

Incentives to Improve

If Kathy can increase the operating profits by $480,000 a year, the farm’s market value will go up by $2.4 million.

She will not actually get $2.4 million.

But she will be worth $2.4 million more ‘on paper.’  The  market value of something she owns will be this much higher.  If she wants to turn this ‘paper gain’ into real money that she can spend, she has to sell the leasehold. 

Annie wants people to buy leaseholds, improve them, and sell them.

That is what Castle and Cooke wants to encourage.

It owns immense amounts of land. 

It started with primitive land with grass huts. 

It now owns well-developed facilities including mega-resorts, condo complexes with thousands of units, row on row of luxury mansions, electric power plants, office complexes, stores of all kinds, and all of the facilities needed to maintain the lifestyles of the rich that it wants to buy into the projects on the island. It cost hundreds of millions to build all of these things. 

Castle and Cooke didn’t make these improvements. 

The leasehold owners did. 

They planned them.

They got the permits.

They arranged financing.

They brought in the contractors. 

They hired professionals to monitor everything to make sure it was done right.  They got the improvements to a point where they were working and generating free cash flow.

Then they sold their rights to someone else. 

The rents went up and up, from hundreds of dollars per acre to thousands and eventually millions. 

 

Our group in Pastland is in a position to form any kind of society we want.  We know that in the societies we inherited back in the 21st century, the interests of the people who make day to day decisions about how the world is to be used do not align with the interests of the human race.  The human race wants a clean, safe, peaceful world.  The people who control land can make themselves very rich by raping it of its wealth and using this wealth to make weapons to ‘conquer’ neighbors.

Their interests not only don’t align with ours, they are virtually the opposite of ours. If they make money, we suffer. This is not a sound way to organize a society.

We want certain things.  We have certain ‘interests’.  Our interests are basically the same as those of Castle and Cooke.   We want the land protected. We want it to stay healthy.  We want it to produce wealth for our benefit. We want things to go smoothly, with protection taken against risk and potential problems.

There is a kind of taboo topic that we aren’t supposed to discuss.

We aren’t even supposed to think about it. 

There are pretty obvious similarities between humans and other animals.  We have the same internal organs as other mammals.  We have hearts, they have hearts. We have lungs, they have lungs  We have blood, they have blood.  We have brains, eyes, ears, and noses and they have the same organs that clearly have the same functions.  We have a 3 billion link DNA molecule in the nucleus of all or cells.  They have DNA molecules of similar length, that are almost entirely identical (about 99% compared to chimpanzees and bonobos). 

Might it be that we are basically just another variety of the beings we call ‘animals?’ 

When Charles Darwin proposed that we were, his peers attacked him with incredible vigor.  His first book on this topic, called the ‘Origin of Species,’ didn’t even deal specifically with human evolution, it only talked about the basic processes that seemed to operate in nature to cause the capabilities of the most capable species in nature to increase over time.  He called this process ‘natural selection.’ Although he didn’t specifically claim (at least in this book) that this process might explain how humans came to exist, his analysis implied that it had to do this:  He presented evidence that showed that natural selection was a scientific principle that operated whenever certain conditions existed. 

Attacks came from all quarters. In his introduction to the follow up book, called the ‘Descent of Man,’ he discusses the mental deliberations he went through before he decided to publish his research on this topic.  It would give his many enemies ammunition they could use to attack him.  Finally, he decided it was just too important.  His research provided important insight about the way human existence worked.  He had to make it available.  Perhaps people in his own generation would not see its value.  But there may be a time, in the future, when people are able to see it importance. 

Many countries immediately banned the work.  It was heretical, going against everything people have believed since the very first humans (Adam and Eve, for believers in the religions based on land grants made to Abraham, including Islam, Judiasm, and Christianity) walked this world.  Humans are unique, created through an entirely different process, than the beings that we eat for dinner.  All of the religions I have researched seem to accept this.  We are not like our food.  Whoever or whatever process created the world was not satisfied with the unintelligent beings that make up all other life on earth.  The creators (creator, singular, for monotheists) needed beings more like them/him.  There are two classes of living beings on earth:  humans and everything else.  We are in a different category. 

In some cases, the leaders went farther than simply banning work that claimed otherwise.  They passed laws that punished people who even talked about the ideas of Darwin (which spread among the scientific community like wildfire), or told young people these ideas even existed. 

You can read Darwin’s words: both of the key books discussed above are available on the PossibleSocieties.com website, under ‘resources.’  You can see for yourself that they aren’t designed to be critical or make any value judgments whatever. He only presents evidence, the same kinds of evidence that would be accepted in courts as unassailable, for point after point after point, all of which lead to the same conclusion.  The scientific evidence can only be explained by accepting that the process of ‘natural selection’ causes change that slowly improve the capabilities of living things.  This process takes place in molds and fungi, in bacteria, single celled amoeba, and in multi-celled beings (called ‘eukayarotes’) of varying levels of complexity.  It happens in insects, in rodents, in birds, in fish, and it even happens in the extremely complex living things we call ‘mammals.’   

In the book Descent of Man, he shows that it even happens in the highest family of mammals, the family we now call ‘primates.’ 

 

The Acceptance of Evolution

Resistance persists to Darwin’s ideas even to this day. 

Nothing seems to make a true believer in any of the Abrahamic religions madder than proposing that Darwin may have had a point.  But most countries have gotten rid of the laws banning Darwin’s book and making it illegal to accept his ideas. 

Darwin’s logic is impeccable.  I am amazed, when I read his work, by his ability to keep his focus on the scientific evidence, and follow it where it leads.  It is so perfect and so obviously correct.  More than 150 years have passed since Darwin’s books were published.  Science has advanced by many orders of magnitude and we have tools that can be used to check his work that were far beyond the capabilities of science at the time he did his work.  We learned how to date artifacts with radiocarbon dating, so we can verify the calculations he made, using far simpler methods, about the ages of fossils and other artifacts, including artifacts about early humans. We now have the incredible tool of DNA sequencing that allows us to monitor the progress of evolution step by step, codon by codon, link by link in the more than 3 billion link DNA profile that leads to through various lower animals to mammals, to primates, to higher primates, and eventually to humans. 

The evidence is so clear and obvious that no one who claims to accept science can doubt it:  to reject the premise that humans evolved from other primates requires that they reject infinite evidence, all of which points to the same conclusion. 

There are still quarters where it is considered heresy to accept that humans have animal voluntary ancestors. But there is no longer any real resistance to the ideas in the scientific community.  This basic premise is accepted as scientific fact.

 

The Key Period in Evolution

Our brains are electrical devices. They operate by sending electrical signals  various different places. Scientists can detect the signals with sensors and determine where various different thoughts originate and how they are processed.  Research in this area is still in its infancy, but scientists have determined that humans have several different brain components that our closest non-human ancestors do not have.  This tells us that it probably took a lot of time for the final stage in evolution to take place. 

Each different brain component has a different function.  Our ability to speak, which is unique to our species, depends on brain components that are independent of our higher reasoning abilities.  The thoughts that allow us to build complex tools, also unique to our species, appears to take place in a different part of the brain than the thoughts that allow us to build complex models and draw them out (on paper if we have paper, but on dirt with a stick if we don’t have paper).  The fact that there are many different specific differences tells us that, most likely, certain very intelligent non-human primates developed each of these abilities separately.  Each ability gave the primate that had the advantages over others when time came to find a mate and gather food to support offspring.  The offspring of the more-capable primates were more likely to survive than the children of the primates without these abilities.  In some tribes, a few individuals could make models better than others.  In some, a few could make better tools.  In some, a few could communicate better.  These gave these individuals and their groups advantages.  Over a very long period of time, nature would basically try out various combination of these thinking advantages.  Males with one advantageous capability would mate with females with a different capability.  Babies would be born that had both. 

At birth, the babies would not know that they were smarter than their parents.   Primate babies are born with brains that are almost a blank slate. We don’t even know how to focus our eyes or control or fingers at birth. We learn these things.

 

The behaviorist John Watson did research to determine the capabilities of newborn humans.  He explains his findings in the book:  ‘Psychology as the Behaviorist views it,’ available on the PossibleSocieties.com website.   His conclusion is that we only seem to have three ‘preprogrammed’ behaviors when we are born.  He calls the first ‘nipple seeking.’  We turn our heads to try to find a nipple to suck on.  The second is sucking itself.  The third appears to be our greatest fear, something that elicits a behavioral pattern he associates with the emotion called ‘panic.’  This response is elected when we sense a lack of physical support (if we not being protected from falling, or being held incorrectly). Watson conduced extensive experiments and determined that these are the only things we are preprogrammed to do. All else is learned. 

 

As they grew up, they would find that they could solve problems their parents couldn’t solve.  They be smarter than their parents, at least in certain areas. The increase in intellect would come slowly. 

At some point, the children would get frustrated at the shortcomings of their parents.  They want to say things and know how to say them.  They can discuss these things with their siblings and perhaps with other members of their tribe.  But their parents appear to be unable to understand. 

 

Chimp Societies

Our closest genetic relatives are in the Chimpanzee family.  The match is perfect for 96% of our DNA:  For almost all of our DNA, every single link matches, more than 2.9 billion links match exactly.  Even the other 4% is very similar, with only a few links off here and there. Genetically, we are very similar to chimpanzees. 

The societies of humans on earth operate so much like the societies of one of our animal ancestors that we could almost say that they operate identically.  The primates we call ‘chimpanzees’ are extremely territorial animals.  They form into collectivist groups (tribes, clans, packs, nations, whatever you want to call them) and mark territories.  The territorial borders are marked by certain members of the tribe and then accepted by others in the tribe.  Generations may pass after the first chimps marked the territories; later individuals will be taught where the borders are and will continue to respect them.  (In other words, they don’t let each individual decide where the borders are:  the entire collective accepts the borders, as marked by the early members who first determined the borders.)  

They defend the territory inside the borders with their lives.  They select certain individuals (normally strong and aggressive males) to a patrol the borders.  If the group on patrol finds that other members of their species that were not members of their collectivist group have crossed the lines onto their property, they track these individuals down and kill them. 

They do this very aggressively.  Trespassers can’t save themselves by retreating across the lines to avoid capture and punishment.  The chimps will organize parties to cross the lines, find the guilty individuals, and kill them.  If the trespassers have allies that protect them, the patrolling party attacks the entire group with the clear intention of killing very last one of them.  This behavior has been well documented and the ‘resources’ section of the PossibleSocieties.com website has a number of scholarly articles written confirming this. 

If we want to come up with a name for these societies, we may start by nothing that they divide the population into separate collectives, so we may start by calling them ‘collectivist societies.’  The individuals expend enormous energy to protect their marked territories.  (A study by Sylvia J. Amsler of the Department of Anthropology at the University of Michigan, available in full text on the PossibleSocieties.com website, discusses the energy cost of this behavior.  She has determined that a large portion of the resources of the tribe have to be devoted to protecting the borders; this percentage is comparable to the percentage of wealth that humans devote to the same behaviors, by taking wealth as taxes and using it to fund militaries.)  

Why do chimps do this?

Or, more importantly, what are the explanations for this behavior we can exclude:

We know that they don’t have organized sciences that study the different ways that chimp societies can operate; they don’t write and publish papers about this so they can compare notes; they don’t have forums about the best way to organize society where they analyze the options, and hold global elections where all chimps vote where they choose this option.  We know they don’t do these things because chimpanzees don’t have the ability to do any of these things.  There is no such thing as ‘chimpanzee scientists.’  There are no scholarly papers comparing societies (or on any other topic) published by chimpanzees.  There are no global forums of chimpanzees.  Whatever the reason for these behaviors, we can exclude this option:  they don’t do it because of logical and scientific analysis.

If there is no logical reason for these things, yet they happen in numerous chimpanzee communities that are not in communication with each other, there must be some sort of hard wiring in whatever structures determine their behaviors that pushes them t act this way.  We can use the term ‘instinct’ as a generic one to refer to ‘some pressure that pushes animals to behave some way that is passed down genetically.’

In other words, we can say that, whatever forces pushes them to act as they act, they come from instinct.  This instinct is then passed down, in some way, to offspring.  The offspring don’t do logical analysis, determine that having borders is a good idea, then create the borders and protect them.  They are born with a propensity to act this way.

 

The consortium found that the chimp and human genomes are very similar and encode very similar proteins. The DNA sequence that can be directly compared between the two genomes is almost 99 percent identical. When DNA insertions and deletions are taken into account, humans and chimps still share 96 percent of their sequence. At the protein level, 29 percent of genes code for the same amino sequences in chimps and humans. In fact, the typical human protein has accumulated just one unique change since chimps and humans diverged from a common ancestor about 6 million years ago.

To put this into perspective, the number of genetic differences between humans and chimps is approximately 60 times less than that seen between human and mouse and about 10 times less than between the mouse and rat. On the other hand, the number of genetic differences between a human and a chimp is about 10 times more than between any two humans.  From https://www.genome.gov/15515096/

 

These societies are collectivist:  the animals divide themselves into collective organizations of some type (tribes, clans, nations, whatever you want to call them). Then they respond to instincts that push them to mark territory as their property.  We may call them ‘Collectivist systems built on the Instinctive Marking of Property’ or chimp societies. 

Humans in Chimp Societies

Imagine that you could be transported back in time.  You are living with a group of whatever kind of primate was the immediate ancestors of humans just before they started gaining the higher reasoning and complex communication abilities that we now associate with ‘humans.’  

Imagine that their societies were organized as described above before they gained these thinking abilities. 

At some point, some of the animals realized that they had abilities their peers did not have. 

They could do things the others couldn’t. 

The others looked up to them. When they needed things done that they couldn’t do themselves, but that the more advanced members of their group could do, they went to the more advanced ones for help. 

All of these beings were born with instinctual pressures that we might call ‘feelings’ that pushed them to want to do the things discussed in the quote above.  (The chimps didn’t have discussions, do logical analysis, and decide to patrol their territory and kill any members of their species that weren’t members of their tribe.  They didn’t have the mental capability to do these things.)  The more intelligent members of the group have these same instincts (or ‘feelings’).  

 

Feelings and instincts:  In the book ‘on Feelings and Emotions’ Darwin discusses the relationship between what we call ‘instincts’ in other animals and what we call ‘feelings’ and ‘emotions’ in humans.  Jane Goodall (a scientist who has studied chimpanzees very closely and live in their societies for many years), interprets the forces pushing them to act certain ways as ‘emotions.’  They seem to have feelings that tell them they are a part of a collective group (again, we may give this collective group many different names, including a ‘nation’).  She would say (interpreting the psychological pressures as emotions) that they have feelings that push them to identify with what is actually an arbitrary group (there is no identifiable genetic difference between the different groups that patrol different areas.)   Then there is something that makes them feel it is necessary to mark the borders of their group’s territory in some way that is absolutely clear to other members of their species and make sure that any members of their species that are not identifiable members of their own collective are not able to cross the lines without severe repercussions.  To make this very clear, they have feelings that push them to follow any who violate the sanctity of their borders and kill them, together with any who try to protect them.

 

If you could talk to them and ask them why they thought it so important to patrol the borders (which are basically arbitrary, which they didn’t set themselves, and which don’t separate individuals that could be told apart by outsiders), they would not know.  They just know they have these feelings and they are very strong.  They know that the other members of their collective have the same feelings. Although they are different in some ways (some are much smarter than others), there is one thing that ties them together:  their feelings of what we may call ‘kinship’ with others born inside their borders and their hatred and fear of the members of their own species who were not born part of their collective. 

The more intelligent chimps use their capabilities to help them do the things their feelings told them were absolutely essential and that they had to do.  Their instincts/feelings told them to respect the borders that their ancestors had marked, perhaps many generations ago.  Their instincts/feelings told them to work with other members of their collective to organize the patrols and, when necessary, the parties to track down violators and kill them. 

They saw that the members of both groups used extremely primitive tools to carry out these missions.  They used sticks and rocks.  They (the more intelligent chimps) could figure out how to build more effective weapons.  The could then help their group carry out its objectives.  They could inflict so much damage on the enemies that they would be forced to flee in terror.  Their enemies, in their panic, would leave large swaths of productive territory undefended.  The attackers (the ones with the better weapons) could simply take over this land and add it to their territory. 

In time, the greater intelligence and superior weapons would spread. 

 

Nature hates inbreeding.  Animals have instincts that are designed to prevent it. Mammals are driven to seek mates from outside of their immediate family.  (Inbreeding reinforces dangerous recessive genes that lead to a host of extremely serous diseases, many of which are so deadly they kill the inbred ones, generally at a very early age.  Territorial animals often raid other territories for mates or relax their territorial rules at certain times so that males and females from otherwise ‘enemy’ territories can meet and form pair bonds.  Instinct gives all mammals, including humans, aversions to having sex with individuals of the opposite sex who were in their immediate family or close to them when growing up.  Many human groups with close genetic ties actually contract with ‘matchmakers’ to help arrange mates for their children from other villages than their own. 

 

The more intelligent members of the group would then be driven to design and build even more effective weapons. They would figure out how to make slings to multiply the force of projectiles; they would find ways to light projectiles to set anything they hit on fire; they would figure out how to build javelins that could hit and kill enemies long before the enemies could get close enough to do any harm to the attackers. 

They would still have chimp societies. 

Their societies would still be the same as the societies of pre-sapient animal ancestors.  They would still have instincts that pushed them to patrol the borders their ancestors had defined and organize parties to kill any members of their species who were not recognized parts of their collective who didn’t show the proper respect for their ‘property.’  They would just have better tools to respond to the instinctual pressures pushing on them. 

In time, they will learn to anneal rocks in ways that allow the rocks to hold create razor sharp edges that can slice through human skin with ease.  They will learn to attach these cutting tools to arrows and build bows that will propel the arrows through the air with enough force to cut deeply into the body and tear apart the internal organs of those who are hit, causing such internal damage that a single arrow can be fatal. 

At some point, after building very hot fires, some curious individuals will see that tiny droplets of metals have formed on the rocks around the fires.  They will have ‘smelted’ metals.  Copper and tin precipitate out of oxides in the rocks at lower temperatures than the other metals and would be found first.  The little droplets can be hammered together and would combine to form the metal bronze, which is extremely hard and durable.  Bronze weapons gave great advantages in war to the particular collectives (tribes, nations, whatever you want to call them) that had these weapons.  They would be able to drive the other tribes from parts of their territory and could take over and expand their property.  The metal technology would spread.  On earth, the age of bronze weapons began about 3500 BC (about 5,500 years ago, almost immediately after the first evidence of societies built on territorial sovereignty appear).  Metal smiths would try various techniques to make even harder metals.  Eventually they would figure out how to smelt iron from rocks. Iron is much more difficult to remove from rocks than copper and tin (the raw materials of brass) but iron is much more abundant; it is basically available everywhere. 

 

Qqqq bronze weapons

 

Metal smiths would have quickly found that they could take iron and work it in certain ways that would create an even stronger metal, called ‘steel.’  Steel is a mixture of iron and carbon.  The carbon gets picked up from the carbon monoxide in coal smoke.  To make it, you need to heat iron red hot in a coal fire then beat it with a hammer, essentially forcing the carbon atoms into the iron.  It is a very long process but, if done properly, will create weapons that can hold razor edges that will cut through any kind of flesh.  (Steel swords can decapitate enemies or amputate their limbs with a single stroke.) 

The beings would still have the simplistic societies they inherited from their pre-sapient animal ancestors; they would still mark territory with borders which they will defend with weapons. They don’t do this because it is logical or their intelligence tells them to do it, they do it because they have the feelings and emotions (names people like Darwin and Jane Goodall use to refer to the pressures that push animals to do things that we otherwise wouldn’t be able to explain) make them feel this is necessary.  They do use their logic and reason, however, to make steel:  your emotions don’t tell you how to make a kiln to smelt iron from rocks, feed it, blow air through it, and do all of the other things needed to turn iron-containing rocks into iron. You have to learn these things from others who have studied the field and found out what works.  Once the weapons are made, they can be sent to the beings in charge of the military, so they can be used to defend the borders and possibly drive members of other territories off of their territory so their own group can claim it.  

These beings will be in the same category of the beings we call ‘humans’ on earth at this point.  They will have built quite large and complex facilities to make the weapons.  This requires some rather complicated organizational skills.  Iron refining requires full time workers:  enormous amounts of energy have to be expended to get the fires in the furnace hot enough to smelt the iron; this requires creating vast amounts of charcoal. 

 

Wood and coal do not burn hot enough to smelt iron.   You need a fuel that is basically pure carbon.  Charcoal is wood that has been processed to remove everything except the carbon; ‘coke’ is the name given to the same product if it is made with coal.  Even with pure carbon fuel, you can’t make a hot enough fire without an enormous amount of oxygen being forced through the burning coals; this requires a large and powerful bellows that needs to be operated at high speed for more than 6 hours without stop.  (Normally, a single worker will only be able to put out this effort for about 5 minutes, so workers need to be rotated to keep the bellows operating.) 

 

The people who build and operate the iron refineries, the steel mills that turn it into steel, and the weapons factories that turn the steel in to metal, will not be able to go out and raise their own food, build and take care of their own homes, and take care of their own other needs, and still have time to make steel.  An organized system must exist to support these people in some way. The people with the advanced weapons must set up a system where people specialize in different jobs and work together to make sure the weapons are available.  The soldiers who use the weapons must also be freed of the need to get their own food and provide their own housing, or they won’t be available to fight when this is necessary.

The basic foundational elements of the societies of these beings will still be primitive and animalistic societies. But they will have to have a great deal of technical ability to organize the structures needed to defend the territories their instincts push them to defend.  In time, certain fields will develop into complex technical sciences.  Some of the collectives (which we may call ‘nations’ at this point) will open schools to teach children how to refine and make metals.  Certain people will step forward to lead the military effort.  These people will propose rules that they think will increase the military capabilities of their nation.  In some cases, they will propose that all of the people who are being protected by these militaries be required to make some sort of contribution to support the people who make the weapons and the soldiers themselves. They will set up a tax system. Although it is possible to have complex industrial societies without money, societies that find something to use for money will run more efficiently and be able to produce better and more powerful weapons industries and military machines. 

At some point, some people will realize that certain mixtures of chemicals, if missed together and ignited, will explode with incredible force.  The first such mixture found on earth consists of 75% saltpeter, 15% charcoal, and 10% sulfur.  This mixture is called ‘gunpowder.’  Put it in a properly constructed steel ball with a tiny hole in it, put a fire to the tiny hole so it can get into the ball, and the ball will explode, sending steel shrapnel in all directions at such great speed that it will tear any living things nearby to pieces.  (This kind of weapon is called a ‘grenade;’ the old saying goes ‘close only counts in horseshoes and hand grenades; if it explodes within a few feet of you, you will be dead.)   They will discover bombs (large grenades), rockets (tubes that are open on one end with gunpowder burning inside), guns, cannon, mines, torpedoes, and many other weapons.   The nations that get these weapons will have great advantages in war over the other nations (essentially territories of arbitrary size defend by arbitrary borders).  These beings will still have the animal societies that operate according to instincts (which we would call ‘emotions’).  The people would feel that the land inside the territory was ‘theirs.’ It belonged to them.  The people on the other side were trying to take something that was theirs.  They had to stop these people. 

Even at this late point, when they must have fairly complicated sciences and societal structures, they may not think of applying logic and reason to the basic structures of their societies. 

Why do they divide the land around them with imaginary lines and fight over these lines?

They may never even consider this.

In fact, when people start to raise this question, they may consider it to be dangerous.  The war effort is a priority.  If people start asking questions like ‘what are we fighting for?’ that may corrupt the minds of the children who will have to take the places of the soldiers now on the battlefield when these solders are killed. We don’t want children to be wondering about these things:  they may not go to war when asked or fight with fanatic abandon.  If people raise questions like this, they need to be silenced.  If they don’t agree to stop asking these questions, it may even be necessary to kill them.  (Pythagoras, Socrates, Alexander the Great, Thomas More, are among many people silenced this way. )  

Government in Chimp Societies

As we have seen, some societies can function quite well without any organization with the power and authority to ‘govern’ (or ‘control’ or ‘rule’) the people.  Natural law societies don’t need these organizations.  The land isn’t owned so the wealth the land produces isn’t owned.  Our group in Pastland doesn’t need taxes:  we can use part of the unowned wealth to pay for services, and divide the rest among the people.  Everyone has a basic income (from their share of the unowned wealth) that is enough to provide their needs, so there is no need for a ‘job creation’ system.  We can make basic rules that make sense without any need for a ‘legislature.’   (We can have a legislature if we want one, but we don’t need one.)   Since we don’t accept the basic principle of territoriality, we don’t have to devote our wealth to fighting over borders and we don’t need a powerful body organizing the economy so it can produce enough weapons.

The chimp society can’t function without a government.  In fact, for practical purposes, this chimp society is just another name for a society built on the principle of territorial sovereignty.  Since it is built on divisions that require force to maintain, and nations that don’t have the ability to produce enough weapons and powerful enough armies to defend their territory will be conquered, the system needs a central authority directing all activity so that it can meet its prime need, which is the need to support the military machine. 

Socrates discussed the needs of such societies in great detail in the book Politika, available on the PossibleSocieties.com website.  They need an intensive education system that does not focus on providing correct and objective information for children:  It must focus on bringing out their territorial emotions.  It must have lessons that lead them to believe that the people on their side of the imaginary line are somehow entirely different kinds of people than the people on the other side of the imaginary lines that they call ‘borders.’ Socrates claimed that true, objective, logical, and scientific analysis are not going to make children think this way. They must be told lies.  They must be fed a version of history that portrays the entity they will be fighting for (their nation) as a wonderful thing that is moral, pure, just, and righteous and that the entity they will be fighting against is the epitome of evil, populated by monstrous savages or vermin who need to be wiped from the face of the earth for the benefit of all that is good and holy and pure.  Socrates discusses the techniques that had been created to implant these modes of thought in children of his own day in detail.  He discusses everything from the tempo, key, and harmony requirements for patriotic songs to the specific truths that have be omitted from history books and replaced by lies.  If you read his words, you will recognize all the tools he discusses:  the same tools that were used to indoctrinate children to turn them into ‘patriots’ 2,400 years ago where used on you when you went to school and are being used on the six year olds going to class the very first time this year. 

In these societies, the entities that we are raised to call ‘governments’ (which don’t even exist in many societies, including both the socratic societies we examine in Part Four and the natural law societies we examined in Part three), will control everything. 

There will be times when people will get upset with the government of the entity they were raised to call ‘ their country.’

Why does it have the incredible power it has?  Why does it make all the laws, take as much wealth as it wants from anyone, decide how land is to be used, subsidizing destruction, deciding who gets medical care and who doesn’t, deciding which foods people should eat and which they shouldn’t?  People will get upset and want to do away with as much of the government as they can do without.  The people in the government will want to increase their power.  They can generally do this by playing on the emotions that people have that come from the instincts that make them want to mark territory as ‘property.’  We normally call these instincts ‘fear’ and ‘hatred.’  The people in the government can use techniques that have been known for centuries to increase the amount of fear and hatred in the people.  They can hire ‘information specialists’ who go to war areas and take pictures of children and other innocents who have been mutilated by war.  They can go over the ‘enemies’ new weapons and show how horrible they are and make their people think that they are in imminent fear of attack.  If this isn’t enough to create the required fear, they can organize attacks against their own people which they will blame on the enemy: the enemy is trying to destroy them. This is NOT the time to worry about reducing the side of the government.  We need to increase it to deal with the threats.

 

Many atrocities that led to the beginning of wars over history are staged events where soldiers dress up in the uniforms of the enemies to do horrible things (mass rape and mutilation of children are common themes), making sure they are being watched by people who will report it; they retreat but leave behind bodies and artifacts of the enemy. Since these events are staged, the press has been put on alert and are waiting for news:  the press releases are prepared well in advance. 

If all else fails, a real event is staged that kills large numbers of people in the country of the government who committed the atrocities.  Because this happens frequently, and people mistrust governments so much, when events called ‘terrorist’ occur that incite great emotion, many people suspect their own government was behind them. 

Segue to Part Four

 

Two kinds of societies have existed on earth in our history.  One is the natural law society that doesn’t accept ownability of parts of planets at all. Both of these societies are simplistic and primitive.  They can both be based on beliefs, feelings, emotions, and instincts.  Neither is truly a ‘human’ society in that humans are not need to create either of them.  Some species of primates are non-territorial and live a lot like people in natural law societies.  Some are highly territorial and live a lot like people in territorial sovereignty societies. 

Humans are animals and we can function in animal societies.  But we are the only living beings on earth, at least that we know if, that do not have to accept the societies our instincts/feelings/ emotions push us into.  We can use the same tools we use to help us build better weapons to help us build better societies.  

I am not the first to propose this idea.  Socrates discussed the same issues 2,300 years ago.  He understood there were two different systems, both extreme and both simple, that have existed in the past.  He proposed studying them scientifically. Figure out the different structures required for societies.  Figure out the different ways these societies an be put together to make finished societies.  Figure out how the different societies work. 

The socratic society described in Part Four, the next part of the book, is built on the basic ideas that Socrates proposed more than 2,300 years ago. 

Although the basic ideas are the same, we have a lot of tools now that we can use to understand societies that simply weren’t available 2,300 years ago.  We have a great deal more ‘history’ than Socrates had to draw on, in determining what is possible.  Scientific and mathematical tools are far more advanced.  We have the benefit of seeing how the basic structures that Socrates claimed were extremely dangerous and would eventually destroy us (if they were left in place) evolve over time.  We have the internet, which allows us to interact with others and work with others all around the globe.  We have the ability to store and access large amounts of information, and proceed down a path to logic and reason. 

The basic principle of the socratic society is not new.  It has been around a very long time.  But as the saying goes, ‘the devil is in the details.’  Socrates could propose that we try to take the steps and try to figure out how societies work to see if we could put together the best features of the two societies that we know are possible.  However, he didn’t have the tools to work out the details.  People could protest that Socrates really didn’t know what he was talking about, or he would understand the details. 

 

At his trial, Socrates describes the charges against him in his speech to the jury:

‘This confounded Socrates, they [the accusers] say; this villainous misleader of youth!— and then if somebody asks them, Why, what evil does he practice or teach? they do not know, and cannot tell; but in order that they may not appear to be at a loss, they repeat the ready-made charges which are used against all philosophers about teaching things up in the clouds and under the earth.

 

He must not be allowed to mislead people into thinking there is a road to a better world, when their efforts were needed to help keep the war machine operating.  He is proposing study but, his critics said, study had to be prevented at all costs; they rationalized this by saying that if his ideas were sound he would already have answered all questions and shown exactly how the better society he claimed was possible worked.

Starting with the next chapter, we will examine a society that starts with the simple natural law we started with in Pastland (when we passed the moratorium on ownership of parts of planets by countries and other human entities).  That is a very simple system.  We will all have experience from the future (before the nuclear test destroyed the world, when we lived in the 21^st century) that tells us that allowing ownership brings advantages.

We happen to have someone with us who was, back in the 21^st century, a kind of expert in this field. As we will see, there are people in our world today who study the different ways that ownership works and the different kinds of ownership that are possible.  In certain places, what we may call ‘alternate kinds of ownership’ of parts of planets have been put in place.  We have very large amounts of data showing the way they work, the incentives they create, and the prices of the different rights that are offered. 

In recent history, certain corporations have acquired enormous amounts of land.  They never intend to get rid of that land.  They want to keep it forever.  But they want certain things from the land over time.  They want people to manage it, treat it as if it was there own, to improve it, care for it, and keep it healthy and productive. But they do not want to let the people who will do these things keep the free wealth that flows from the land already. The corporations have set up systems that allow them to sit in the background, do absolutely nothing, and remain the primary beneficiaries of the land. They don’t want he people who make decisions to own the land because they want the primary benefits of ownership for themselves. 

We have a person with us here in Pastland who has an experience with this.  Her name is Terry.  She realizes that the human race, in Pastland, has the same basic goals and requirements as her former bosses in Hawaii.  We want the land to be healthy.  We want it protected.  We want it improved.  We want the people who work it to treat it as if it were their own, even though they don’t own it.  She realizes that we, in Pastland, we can use the same tools that her bosses used to accomplish the same ends.  We don’t have to let people own land itself to get the benefits we want.  We can let them buy, sell, and own rights to land, essentially making them ‘part owners.’  They are partners.  Their other partners are us, the members of the human race. 

She will show us how this kind of partial ownership system works.  She will show us that we can try out her system in a ‘no risk’ basis, in the same way that someone might try on a pair of sunglasses before buying them.  If we like it, we can keep it.  If not, we can go back to the natural law system where nothing was owned or ownable, without any need for any revolution, taxes, or any need to take anything away from anyone.  

We will have a vote and approve her ‘trial socratic ownership’ system. 

This system she is explaining is not something she has invented and is proposing. 

It is something that has existed.

It has been around more than a hundred years, thousands of properties are under the control of this system, and we know how it works.  We decide to try it out.  We will see that it works the same way in Pastland as it did in Hawaii; it creates incentives that push the people who control property to make massive investments that improve the properties.  The improvements will benefit everyone. 

After we see that it benefits us all, some people will propose expanding the socratic ownership system to other areas.  We will do this slowly.  Any properties that are not specifically designated as ownable will not be owned or ownable.  In other words, it will be administered the same way that it was administered when we had the natural law society.  Any property designated for ownability will be sold with socratic ownership.  

We will follow the socratic system for several generations.  We will see that people have the same basic incentives to improve in socratic systems as in societies built on sovereign ownability.  They make the same decisions for the same reasons.   They make the same money from the same sources. (Because socratics don’t need taxes, the people who work will be able to keep all of the benefits, so after everything is said and done they will actually end up with more money improving in socratic societies than in the societies we inherited.  As a result, the constructive incentives will be stronger in that system.)  We will have growth and progress, but no one will ever own sovereign rights to any part of the world. 

We will examine the incentives of the socratic system in the same way we examined the incentives of the two ‘parent’ systems.  We will see that it inherits many incentives from natural law societies, including incentives that encourage environmental, social, and personal responsibility. 

It also inherits certain incentives from societies built on territorial sovereignty, including the powerful constructive incentives that are the foundation for progress, growth, investment, effective risk management, and advances in technology. 

Part Five

Part Four explains the socratic system.  After you understand this, you will understand three entirely different systems. 

 

1. Natural law societies

2.  Socratic societies

3.  CHIMP societies/territorial sovereignty societies

 

It is almost impossible to really understand the societies that are possible if you have never seen or even heard about any other society than the one that currently dominates the world around you. 

You don’t think in terms of the different societies that are possible for thinking beings with physical needs, and the specific place that the system where you were born fits in.  You just think of this as another part of reality, like gravity, something that exists and that you must accept.  You wouldn’t be any more likely to think you can change the basic realities of the system of your birth than to think you could change the laws of gravity.

If you were born into a natural law society, as billions of people were, you will just think it is the way things are.  If others tell you there are other societies (like societies that divide the world into independent and sovereign territories) you may think they are just crazy, like someone who has taken LSD and says there is no such thing as gravity and she will prove it by jumping off of a bridge.  If you understand two societies, you may then see that, perhaps, there are two different ways to do things:  the first is the way you were raised to do them.  The second is the way people who are primitive, savage, superstitious, believe in strange gods, or have strange ideas about the world works, may do things. If you understand three systems, however, you can start to see that there is more to existence than just right or wrong, good or bad, or ‘rightthinking’ and ‘wrongthinking.’ In fact, there are a lot of different ways that humans, or other beings in the same category as humans, can organize their/our existence.  The structures of societies are tools.  We can use these tools to accomplish goals. 

You can stop looking at societies with value judgments.  It is not about deciding whether ‘they’ (the ones who organized their existence differently) were stupid and ‘we’ are smart, or we are stupid and they were smart. There are tools that intelligent beings can use to meet their goals.  We shouldn’t look at only one tool, out of the entire tool box, and argue over whether it is a good or bad tool.  We should look at all of the tools first; then we should figure out what we want to do, and then we should figure out which tools helps us do this best.

The society described in Part Four is not intended to be a ‘perfect’ society or a ‘utopian’ society.  It is an example of a society that uses intellect—rather than beliefs and rationalizations of instinctual behavior—to organize the important realities of existence.  It is an illustration of a society in this category.  There are many societies that could be formed by thinking beings with physical needs that are in this category. 

Which is the best?

To answer this question, we would have to have a lot more understanding than we have now.  This will take time and research.  We will see that all societies that are built on the idea of ownability of rights to parts of planet and other things that we call the ‘means of production’ must rest on mathematical relationships.  There has to be some way to set the ‘prices’ of the rights to these kinds of properties (properties that that last far longer than a human lifetime—possibly forever—and create value over time).  I chose the socratic system to illustrate this kind of society because the mathematical relationships are simple enough that most people will be able to do the math in their heads.  (This is a huge contrast to the realities of sovereignty based ownership systems, where people can study pricing models their entire lives and still only have a vague understanding of actual prices they see in markets.) 

I don’t think that many people will feel a need to understand the points of Part Four.  But I think they will feel a need to know that these matters are understandable.  They will want to know that the information is there and someone understands it.  If people know this, they can approach an understanding of human societies the same way scientists approach an understanding of complex biology (like DNA and its influence over organisms) or physics (like why things fall ‘down’ when we drop them, what makes them go up, and what the difference is between ‘up’ and ‘down’). 

Before Galileo, people didn’t even try to understand the basic forces that operated in the physical world, appearing to believe that these things were beyond human understanding. Galileo showed that they were not beyond human understanding.  We could study them and understand them.  If we did, we could take advantage of laws to build devices that make our lives better.  We now have many wonderful things, including phones that bounce signals off of satellites to allow us to video chat around the world, jets that can take us anywhere in the planet in less than a day, car seats that remember our height, weight, arm length, the exact temperature we want, all of the places we normally go and can make very good guesses about all the places we would want to go.  Virtually none of these things would exist if not for the confidence that we get by accepting the things Galileo was arrested and jailed for trying to tell us:  the physical world is understandable. 

We are still afraid to let this idea into our minds:  we can understand the societies of thinking beings with physical needs, including humans, with the same clarity that we now understand the laws of the physical world. It is true that, to accept this, we need to be able to overcome superstition and prejudice.  (The ideas that wars and other societal problems are due to the ‘will of God’ or due to forces of ‘evil’ are clearly incompatible with a scientific understanding of human societies.)   But since the time of Galileo, we have seen it is possible to overcome these mental roadblocks. 

Part Five is for the very brave.

It is for people who are willing to believe that the human race exists for some reason other than to destroy ourselves and our world in a battle over the location of imaginary lines.  It is for people who are willing to accept that the universe is bigger than their ‘countries’ and battles, or the petty superstitions and religions of people in the past.  It is for people who are willing to have hope that there is a reason for the human race to exist and a way to make it happen.

I hope that includes many people.

basic to prepare children's minds for later propaganda

It’s easy to build a society that can meet our needs if we can start with ideal conditions. If there are no limits, no restrictions, no vested interests, no constitutions, no laws that previous generations have declared are immutable and have set up police, militaries, and prisons to enforce, people merely have to decide what they want, vote on it, and if approved, make the necessary changes.

Natural law societies give us these ‘no-limit’ societies that we can easily alter into any other societies. Natural law societies are essentially ‘blank-slate societies.’ They are built on the belief that we, the members of the human race, are servants of nature, not its masters, and we must conform to its rules or we will perish. They are built on the belief that the very idea of believing humans can own planets or parts of planets is totally nonsense, and only people who are deluded are likely to be able to believe it. Ownability is just as impossible for groups of people as individuals, even if the groups of people call themselves ‘nations.’

Since they don’t believe in ownability, they don’t believe that ‘nations’ can even exist. If there are no nations, there are no borders, no border disputes, no national debts, no inflexible and antagonistic ‘constitutions’ or other immutable laws that might lead to conflict; there are no ownable corporations with legal rights (such rights require people to accept that they or their governments have the authority to grant them), no obligations to contracts or nations, no special rights for minorities of the population to get special advantages from the land. If we start with natural law societies, we start with blank slates, with no obstacles based on special rights to the good things the world produces that people would fight or resist. The ‘journey through possible societies’ explained in the last few chapters started with this ‘blank-slate society’ and then moved from there to systems that had greater ownability to permanently productive properties, like parts of planets and long-term cooperative structures.

It is easy to move in this direction.

People are always happy to accept situations that make more rights available to people who want to pay for them. They won’t resist or fight against these kinds of changes.

 

Realistic Change

 

Unfortunately, you and I were not born into ‘blank-slate societies.’ We were born into societies that already had nations, debts, owners, vested corporations, and a great many other realities that grant specific rights to small groups of people at the expense of humankind as a whole. All this existed long before anyone now alive was even born. The societies we were born into are extreme societies, which grant the maximum possible rights to individuals and minorities (like the citizens of ‘nations’) of the of the human race.

This means that if we start with these extreme societies, and move upward through the range of possible societies (toward sustainable societies, and then eventually—if we keep going—to socratic leasehold ownership societies, and finally back to natural law societies), our journey will have different dynamics than one that moves downward. The movement upward will require more planning than a movement downward, because it will have to be organized so that the groups that find their special rights to the world declining must have other rights (general rights that go to the human race as a whole, for example) increasing, so that they gain more than they lose, or they will lose rights and wealth during the transition phase.

People don’t want to lose rights and wealth.

They have incentives to resist changes that cause them to lose rights and wealth.

If we want a smooth transition, without trauma, we will have to use our intellect to work out the flows of value during the transition phase, to make sure that all groups benefit. This not anything like fighting or having a ‘revolution.’ Violence is a primal reaction to adversity: it is a last resort that nature programs into the beings of all animals to allow them to survive after all non-violent options have been exhausted. We have seen revolutions and violence over and over again. This approach has been proven not to work. Einstein defined ‘insanity’ as ‘trying things you know don’t work, over and over, in the hope of getting different results.’

 

A Scientific Approach

 

Possible Societies (Books One and Two combined) was designed to make it clear that the ‘modes of existence’ that humans have had in the past are not the only possible modes of existence. Natural law societies and sovereign law societies are both extreme societies, one built on the belief that 0% of the rights to the world are ownable, the other built on the belief that 100% of the rights to the world are ownable. Possible Societies was designed to show that we don’t have to base our societies on guesses (beliefs; mental convictions which, by definition, can’t be proven with science) about whether some power that is above us all wants us to take care of the planet or fight over it (say nature, which may want us to take care of the planet, or God, which may want us to ‘dominate and subdue’ the world).

We have the ability to use our intellect, to figure out other ways to interact with the world. If we want, we can use our intellects to work out options that are not absolute non-ownability societies, and not absolute (sovereign) ownability societies, but where the human race considers itself to be the landlords of the world, with the ability to grant its members specific rights to the world, without having to accept absolute ownability of all rights to the world. Book One of Possible Societies was designed to provide arguments to the effect that other societies are possible. Although Book One did discuss all of the options, it did so only superficially, because to prove something is possible, it is only necessary to come up with one example. Book One focused on the idea of building societies around an intermediate kind of property control called ‘socratic leasehold ownership,’ explaining this intermediate option in detail, in an attempt to convince as many people as possible that the human race really is capable of having intellect-based societies.

A society is not really possible if it can’t be formed unless certain conditions are met, and these conditions can’t possibly be met. In order to show that intellect-based societies are truly possible, I had to show that the human race has enough tools at its disposal to meet the conditions needed to convert to socratic leasehold ownership societies, if we decide we want to accept the underlying premises of intellect-based societies (specifically, that we are the dominant species on Earth, making us the lords of the land).

 

 

 

Book One was designed for ‘lay audiences,’ which means people without any extensive scientific or mathematical background in fields related to the issue being discussed.

It had a specific purpose: I am trying to create a state of mind. I hope to be able to create this state of mind in enough people to create a kind of movement, where people who think this way work together to make changes that, if made, will gradually move the planet away from the societies you and I were born into and raised in.

This state of mind accepts science and its findings and is willing to use logic and reason to understand and deal with issues that people have traditionally used beliefs, emotions, feelings, and guesses about the intentions of invisible beings who are presumed to have control over earthly events with desires they keep hidden from us. It basically means ‘accepting reality,’ at least for the sake of argument and discussion. If we accept reality exists and is real (again, even for just the sake of argument and discussion), and don’t try to temper or mix our logical analysis with modes of thought that derive from the less intellectually-inclined parts of our minds, we can easily see the evidence that the human race is almost certainly the dominant species of being on this planet, and therefore in charge of its own destiny.

The contrast: the human race may be nothing but minions of invisible superbeings with hidden agendas. If this is true—and it might be—then nothing we do will make any difference and there is no point in doing anything but prepare for death. However, if we accept—again, just for the sake of argument—that reality might be real, and humans might be the dominant species, and work out a plan of action based on ‘what options we would have if reality turns out to be real,’ we can then decide if we prefer to accept reality as real or accept the beliefs handed down to us by past generations.

Scientific evidence tells us that the human race evolved over a period of billions of years, as a result of scientifically explainable processes. In other words, the science contradicts the view that some superhuman being created us and therefore has designs and intentions for us, that we can only guess about.

Scientific evidence tells us that the current conditions of our ‘modes of existence’ or ‘societies’ are the understandable and predictable results of actions taken by people who lived before us, of things they raised their children to accept and believe, and of the beliefs that have been passed down to our current generation. There is no scientific evidence supporting the widespread belief that the events and conditions of our societies are due to the intentions of invisible superbeings. We can understand everything we see around us without having to resort to supernatural explanations.

Scientific evidence tells us that humans are capable of modes of existence that are entirely different than those that dominate the world today. History, in the form of eyewitness accounts from the last few centuries, written records, and as derived from anthropological studies of archeological sites, tells us that humans organized their existence in different ways in the past. This provides proof that other human modes of existence or societies are possible. We are capable of more. To reject this, we must reject science, history, and unlimited evidence of our own eyes.

All of the discussions of Book One were designed to help people attain this kind of mental attitude. I am not trying to get you to reject the beliefs of the past, only to be able to accept that it is possible that they may not be correct. It is possible that reality is real, science gives us correct answers, and the things we see happening with our own eyes are really happening. If you can accept that this is possible, you can easily see that, if indeed reality is real, the human race is not doomed. We have real hope. Logic and reason can provide answers that beliefs and guesses about the desires of unseen beings can’t provide.

If enough people can attain this enlightened state of mind, we can work together (without needing vindication or acceptance by the people who don’t have this state of mind) to start initiating changes that will alter the mechanical structures of our societies. In order to create this state of mind in people without a scientific understanding of the different ways human societies can work, I had to cut a few corners and leave out a few complicated arguments. As a result, I would expect that people with very inquiring minds may have had questions about issues that couldn’t be explained without a great deal of math, and therefore weren’t explained in Book One. Some people may have felt that the changes described in Book One were too good to be true, and nothing therefore but wishful thinking.

The absolute proof that the human race can move from the societies we were born into to societies that can meet our needs is technical, and mathematical. If you don’t have the necessary background, some of the discussions of Book One may have been pretty hard to accept. They can be proven, but the proof requires understanding of very complex topics that I didn’t want to introduce in Book One for fear of losing the great bulk of potential readers.

Let me give you an example to show what I mean:

The relationship between high risk-free rates of return on money and destruction is quite complex, but it is well understand and accepted among people who understand it. Since I have discussed it several times in the book, I will not go over it again in the text, but have put a brief explanation in the text box to refresh your memory.

If the rate of growth in money (the rate at which people get rich) is higher than the natural rate of growth of resources, people can get rich by destroying resources, so they have incentives to destroy resources and sell the resources for money, to convert their wealth into the form that grows faster.

For example: A healthy forest grows at 2%. This is the maximum income you can get through sustainable forestry. If you can get 20% without risk or effort (this was the risk-free rate in the early 1980s), you will get 10 times more income from your wealth by converting the lumber into money than by managing the forest for the maximum sustainable yield. If you leave even a single tree you are missing out on returns you could get if you killed this tree, so you are losing money if you leave a single tree alive. If you wait even a day longer than necessary to destroy the forest, you miss a day of the higher returns, so you are losing money to wait. You not only have incentives to destroy the forest, but to destroy it as thoroughly and rapidly as you can manage.

This relationship is well understood and not introduced in this book by any stretch of the imagination. A lot of people understand it.

Chapter 11 showed that, if we move to socratic leasehold ownership societies, we will divert a great deal of the money that now flows to money as risk-free returns. As this happens, the risk-free rate of return will have to fall. (The rate of return is the return per dollar of invested money. If people who get free money as returns get less in free money, because some of the free money goes to the human race, but they have the same amount of dollars invested, they have to get lower rates of return.) As the risk-free rate of return on money falls, the rewards for destruction fall, and the strength of destructive incentives falls.

If the risk-free rate of return on money falls to the same rate as natural growth of resources (2% or so in the case of forests), then destruction is no longer profitable, it is only a ‘break even’ transaction. If the risk-free rate of return on money falls below the rate of natural growth of resources, destruction is a money-losing proposition. People are better off financially (they make more money) interacting with forests as if they treat the land as sustainable tree farms, rather than as if they are cash registers that they can raid to get money to use to collect the much higher rates of return offered on money assets.

If you don’t understand the scientific reason that rates of return must fall, the claim that destructive incentives would not exist in socratic leasehold ownership societies might have seemed to be nothing but a hoped-for result that couldn’t be justified logically. If you understand the science, however, you can see that it absolutely has to be true. As you saw in the ‘journey through possible societies,’ there it would be possible to build a leasehold ownership system where the prices of private property rights are so low that they would be trivial. In ‘virtual rental leasehold ownership societies,’ for example, the ‘price’ of the property rights to the Pastland Farm would be a mere 24¢.

The price of the leasehold is the amount invested in it. In a virtual rental leasehold ownership system, only a few pennies will be needed to make all of the investments in the world. The demand for investment money will be almost zero. The supply of investment money (the amount of savings in the society that people would like to invest) will be far, far, higher. If the demand for anything is very low and the supply is very high, the price must fall. It will fall until the supply and demand are in balance. Since it would never be possible for the demand for investment money to equal the supply (no matter how low interest or return rates go), the ‘price’ of money, or the interest/return rate, would have to fall as far as it could go, to zero, and stay there.

If you understand the science, you know this has to be true in ‘virtual rental leasehold ownership societies.’

In fact, the price of money (the risk-free rate of interest or returns) has to be zero in all societies where the demand for money is lower than the supply.

As you saw in the last few chapters, if we start with a virtual rental leasehold ownership system, and move downward in the range (to societies with higher price leasehold payment ratios), the prices go up. The price is the amount invested, so the amount of money invested, and the demand for investment money must also go up. There will be a point, in this range, when the demand will rise to the level of the supply of investable money. Although we can’t tell exactly where this point will come without knowing a great many details of the specific society, we know that there is a limit of investable money (provided we use treasure-based money, rather than fiat money), because there is a limit to the amount of real value or ‘treasure’ that can be in storage, backing money. In this example, I picked a number for the investable money supply of $10 million.

When the demand for investment money gets up to $10 million, the demand and supply will be in balance. This is the lowest option on the road map of possible societies that can possibly have a zero risk-free interest/return rate on money. As a result, this is the lowest option in the road map of possible societies that can possibly have zero strength destructive incentives.

All options below socratic leasehold ownership have demand for investment money that is higher than the supply. If the demand for something exceeds the supply, the price of that thing must go up. The price of money is the interest or return rate that people must pay to people who have money to get to use it. After socratic leasehold ownership, the rate of return on money must go up above what it was before.

Since the rate before was always equal to the rate investors needed to justify risk (investors won’t invest unless they get enough to compensate them for risk), if the rate goes up above this, any increase must be a risk-free rate.

If we understand this, we can understand exactly why it would be possible make the claim that socratic leasehold ownership societies have zero percent risk-free return/interest rates, so this particular enormous source of rewards for destroyers won’t exist. The societies we live in now, and all societies below socratic leasehold ownership on the road map of possible societies, pay people to destroy our world. Socratic leasehold ownership societies are the first societies we get to where this does not happen.

I want to repeat that this (long) example involving interest rates is just an example. I am trying to show you that many of the claims that may have appeared to be overzealous about the way society would change when you read Chapter 11 can be shown to be scientific and mathematical certainties, using the scientific background explained in the last few chapters.

 

Trip Planning

 

On a regular road map of a part of the world, we can plan journeys. We can identify our starting position, on the map, the end point we would wish to reach, and then work through the various different roads that can get us there. The same is true for transitions between societies. We know where we are on the road map of possible societies. We can identify an intended destination or, at the very least, a direction that we would like to travel.

As we saw in Books One and Two of this series, there are paths from sovereign law societies to other societies. (Book One showed that Alexander the Great, working with the great scientist Aristotle and advancing on the principles of societal construction that Socrates and Plato worked out, was able to put a society built on the same principles this book explains in place, albeit for only a very short period of time. Book One explained a different option, taking advantage of modern tools like the internet and global humanitarian corporations, to create a gradual transition to one specific type of society, a global socratic leasehold ownership society.)

These are paths from one place (one type of society) on the road map of possible societies to a different place (different type of society). If you look at any road map of any part of the planet, you will be able to see that there are actually infinite ways to get from any point on the map to any other. (For example, to get to St Paul to Minneapolis, you can take I94. You could also take Franklin Ave. You could swim the Mississippi river at any of millions of different locations. You could also head east to New York, take a train to Cape Canaveral, get on a rocket, stop at the moon and plant a flag, come back and splash down in the Pacific Ocean, take a jet ski to San Francisco, and then take a jet to the Minneapolis airport. There are infinite options.)

The same is true for making transitions between societies. There are as many ways to get there as there are thoughts that humans can think.

Some options are quite difficult and no sane person would be likely to actually consider them as practical. (For example, I have never heard of anyone trying to get from St Paul to Minneapolis by the route described above, which goes by way of the moon. It may be possible. But it is so far from practicality that no sane person would suggest trying it.)

Perhaps there is no easy way to get from where you are to where you want to go. In the movie two women had to get from Arkansas to Mexico to avoid being arrested for killing a man, but they couldn’t go through Texas. There is no easy way to get to Mexico from Arkansas without going through Texas. (After looking at the map, Thelma told Louise that there is nothing between Arkansas and Mexico except Texas.) But that doesn’t mean that no one can get to Mexico from Arkansas without going through Texas. If you have enough of a motivation to get there, you can make it.

It is not as easy to get to societies that can meet the long-term needs of the human race from sovereign law societies as from natural law societies. But it can be done.

Chapter 11 of Book One (Possible Societies), explained a possible way to get from sovereign law societies to socratic leasehold ownership societies. The discussions in Chapter 11 were designed for people who only had the most superficial introduction to the science behind the operation of societies built on different ways of interacting with the world we live on. At this point, I want to explain the same example again, filling in a few of the discussions that wouldn’t have been understandable without the scientific background presented in Book Three.

 

Cosmos Revisted

 

Once again, I want to try to depersonalize the discussions involving change. I want to do this for the same reason Socrates did it, when he created the idea of a hypothetical continent of ‘Atlantis’ to discuss the problems of society and the steps required to repair them. He did this because he knew that people got very emotional about discussions involving change, because they took them personally. They had been raised to believe that ‘nations’ are real things and can be either ‘good’ or ‘evil;’ they had been raised to believe that a certain nation was ‘their own nation’ and that they had a natural responsibility to preserve ‘their own nation’ in its same basic form, and resist any attempts to alter ‘their own’ nations, by any means necessary. (They had to kill Socrates to get him to stop ‘corrupting youth’ by telling youth things that might lead to change, so they killed him. They had been raised to believe that nothing is more important than preserving the integrity of ‘their nation.’)

Emotion doesn’t help us understand the idea of a transition between societies. It harms understanding. Emotion is, in many ways, the antithesis of logic: when we revert to emotion, we have mental excuses to abandon things that we know make sense and must be done. (‘It just doesn’t feel right,’ I am often told. Of course not: We were raised by people who worked very hard to make us feel that nations are real things, even though logic and reason tell us they are made up. It never feels right to use logic in areas where we have been trained to think illogically.) I will to depersonalize the ‘reverse journey’ by setting it on another world. This other world does not have a ‘United States,’ it doesn’t have a ‘China,’ and none of the other ‘nations’ on this other world match the names and specific details of any nations on Earth. You don’t have to worry about changes on this other world affecting anything you believe in or care about, because this other world is so remote from Earth that nothing that happens there could ever affect you or anyone you care about.

I will call this other planet ‘Cosmos.’

Cosmos is roughly the size and weight as Earth, with roughly the same percentage ocean coverage as Earth, and roughly the same climate as Earth. Early life appeared on Cosmos some 3.6 billion years ago. Natural selection worked on Cosmos as on Earth to ‘select’ more capable beings and, over billions of years, complex animals evolved. Eventually beings that called themselves ‘humans’ evolved. These beings were self-aware, thinking beings.

The first humans were not fully confident in their intellectual abilities. They tended to rely on superstition, beliefs, feelings, and emotions. They surmised that the things Cosmos provided for them were gifts from nature, which they thought of as a higher power and force than humans. They formed natural law societies. Natural law societies don’t naturally reward innovation, invention, progress, or advancement in technology. They don’t have constructive incentives. All living things must react to incentives (they must figure out and practice behaviors that help them meet their needs). The inherent incentives of the early societies on Cosmos pushed for stagnancy and these societies were stagnant for millions of years.

One day, a group somewhere decided that the world was ownable. That group created the type of society this book calls a ‘sovereign law society.’ The owners owned everything. This society has inherent incentives that lead to progress and growth. The people in this society wanted more land and had the ability to take it. Over the course of 6,000 years, they kept taking more and more land, eventually taking over the entire planet.

When we first visit Cosmos, it is divided into roughly 200 ‘nations’ of various sizes, spread over the 60 million square miles of land surface of the planet. Its population is roughly 8 billion people. Several nations have massive arsenals and many nations devote such massive amounts of wealth to weapons and have economies that many call ‘military industrial complexes.’ To make weapons more efficiently, these nations have created formal organizations called ‘corporations’ and given these corporations roughly the same powers and authorities that Earth corporations have.

Only a few decades before we visit Cosmos, its weapons-makers made the planet’s first nuclear bombs. Nuclear weapons generate massive electromagnetic pulses that destroy simple communication systems. The military planners realized they needed an open-architecture communication system. They needed the architecture to be open (non-standardized) to make it impossible for enemies to shut down or censor their new ‘internet.’ The open architecture also meant, however, that even the nations that created the internet couldn’t censor it in any effective way.

Now the people of Cosmos have access to several important tools that they can use to alter the nature of their society, including giant, multi-national, humanitarian corporations and internet websites.

 

Change On Cosmos

 

Change started when a man named ‘Henri Dunant’ formed a global humanitarian corporation.

Dunant had some business dealings with people with cash-flow generating properties. These people wanted to set up a system so that the income from these properties would benefit the human race going forward. They didn’t want any government involved.

They wanted decisions about this money to be made entirely by an organization that was not affiliated with any nation or government on Cosmos. The philanthropists who wanted Dunant to set up this organization were trying to find a way to advance the interests of the human race as a whole, not some group of people who happened to have been born inside a certain configuration of imaginary lines. They wanted an organization that would bring the human race together into a true ‘community,’ and give this ‘community of humans’ a forum and revenue it could use to advance the interests of the human race as a whole.

Dunant decided to call the new humanitarian organization he would form ‘the Community of Humankind.’

Dunant didn’t want to guess about the best way to organize the Community of Humankind so it could do the most good. He traveled around the world to find the best property management people on the planet. He organized a conference for them to discuss the issue and present options to him and his backers, so they could make an informed decision about the best way to accomplish their goals.

One of the recommendations stood out. It recommended that the humanitarian organization to create leaseholds for the cash-flow generating proprieties, sell the leaseholds, and then use the income from the leasehold payments to provide humanitarian services.

Dunant set up this system.

He originally set it up for the philanthropists who had asked him to set up the organization. But these people were happy to have an organization that had an even wider scope, and fully approved when Dunant suggested making this system available to everyone who wanted to take advantage of it.

Dunant set up a web site that would allow anyone to participate. If any inhabitant of Cosmos owned any kind of property that generated free cash flows (including either corporate stock or real estate), and wanted the entire human race to benefit from the existence of these flows of free value, she could download and fill out a simple form from the internet.

During the lifetime of the benefactor, nothing would change. After she died, the property would transfer to the control of the Community of Humankind. The Community of Humankind would then create a leasehold on the property and sell it. The landlords of the property in question would now be the members of the human race, as represented by the Community of Humankind. Income from the property would flow from the land to the landlords automatically and without risk, and the leasehold owners would be able to use their land for anything that freehold owners could use their land for, except certain uses on a list; they would have to get landlord permission first if they wanted to use their land for any of the uses on this list.

 

Exponential Growth

 

The system Dunant set up on Cosmos is a ‘one way’ system.

Freeholds become leaseholds.

But leaseholds can never become freeholds.

Each additional property that ‘gets into the system’ (converts from a freehold to a leasehold) means higher incomes for the landlords, the members of the human race.

When Dunant was setting up the system, he was told that there are infinite numbers of ways to set up leasehold ownership systems. His experts analyzed them, as discussed in the last few chapters, and explained the incentives inherent in each system. Dunant choose a leasehold ownership system structured so that the leasehold payment would be exactly 20% times the price the current owner paid for the leasehold. His people called this system ‘socratic leasehold ownership.’

As we have seen, leasehold ownership systems that work this way send massive amounts of value to people who improve properties. People can make a lot of money in ‘pure improvement projects,’ which involve buying leaseholds, improving the underlying properties, then selling the leaseholds to get the ‘capital gain,’ reflecting the difference between the sale and purchase price of the leaseholds. The improvers want to do this because they are greedy. But their interests coincide with the interests of the Community of Humankind, because each time a leasehold sells for more money, the leasehold payment that goes to the human race ‘resets’ to a higher amount, and the income of the human race goes up.

The income of the human race will grow.

In order to understand what must happen now, you have to have some idea of what it means for income to grow. There are three general categories of growth in income, with different mathematical properties. They are:

 

1. Simple growth

2. Compound growth

3. Exponential growth.

 

The section in blue shading below explains them, for people not already familiar with them:

 

Simple growth takes place when an income grows by a fixed amount of money each year. For example, say you start with $100 and your income is set to go up by $10 a year every year in the future. The second year, you get $110, the third you get $120, the fourth you get $130, and so on. Simple growth is the slowest growth of the three possible ways money could grow.

Compound growth is when the income goes up by a certain percentage each year. A 10% compound return on a $100 income stream would provide $110 the second year, but then go up to $121 the third year. ($121 is 10% more than $110.) It would then go up to $133, $146, $161, $177, $195, and so on.

Compound growth is significantly faster growth than simple growth.

The above compound growth rates are compounded annually. This means nothing happens all year long. The very day that your money is due, the growth is calculated and added. This is called ‘yearly compounding.’ Although income that grows at a yearly compound rate grows much faster than income that grows at a simple rate, the final kind of growth is significantly faster than yearly compound growth. It is called ‘exponential growth.’

Generally speaking, events in nature happen as described above, with nothing happening all year long, and then on one day, growth takes place. Generally speaking, events in nature are continuous. They take place all the time. This includes growth. To see this, imagine you are starting with a small colony of bacteria, consisting of 1 billion cells. Each cell takes an average of 20 minutes to divide into two cells. If all cells divided at the exact same time, the population would double every 20 minutes. But the cells are always in a process of dividing, and the ‘births’ of new baby cells take place constantly. As a result, the population of the bacteria will increase faster than indicated above: the population will more than double every 20 minutes.

In the system Dunant set up on Cosmos, the income of the Community of Humankind in the system Dunant set up will not increase on a regular basis once each year, with nothing happening on the other 364 days. People will constantly work to improve properties, they will constantly bequeath new properties, and the Community of Humankind will have a set amount of money (allocated in the elections, described above) to purchase freeholds properties and convert them to leaseholds. All of the processes will take place continuously, so the income of the human race will grow at a rate reflecting continuous compounding growth. People who deal with growth rates don’t want to have to use the term ‘continuous compounding growth’ over and over, so they have coined a name to refer to this kind of growth: exponential growth.

Exponential growth is rather difficult to calculate, because it involves literally infinite compounding periods. To calculate by hand or computer would not be possible because it would take you forever to do the infinite calculations. However, it is possible to use the shortcuts that Euler devised to make it very easy to do these calculations. Many people do them in their heads. For example, many people in financial, and population, and radiation related fields that have to understand growth rates have learned the ‘rule of 69.’ This rule tells us that, at any continuous growth rate, populations will double in the number of periods indicated by this formula “growth rate/0.69. For example, at a rate of 10%, the population will double in 6.9 years; at 1% it will double in 100 years. Euler calculated a set of numbers that can be used to calculate exponential growth rates with ease. These numbers are called the ‘natural logarithms,’ because they are logarithms (exponents) that tell us what actually happens in the natural world.

In calculus, the derivative is a formula for the ‘rate of change’ of something. A positive derivative means that the ‘rate of change’ is positive. If you have an income function (a formula that indicates your income) you will want it to have a ‘positive first derivative,’ because that means that your income is growing.

A positive second derivative means that the ‘rate of change of the rate of change’ is also positive. (Note: all these terms have formal definitions in calculus. I am including the descriptions for people without backgrounds in calculus.) In other words, the income not only grows each year, it grows be a higher amount each year that passes.

A positive third derivative means that the rate of growth of the rate of growth of the rate of growth increases each year that passes. In other words, the income not only grows each year, and grows more each year that passes, the rate of growth increases by a higher rate each year that passes.

Table	10.1	Exponential Growth
years	simple	exponential
0	$100	$100
10	$200	$272
20	$300	$739
30	$400	$2,009
40	$500	$5,460
50	$600	$14,841
60	$700	$40,343
70	$800	$109,663
80	$900	$298,096
90	$1,000	$810,308
100	$1,100	$2,202,647
110	$1,200	$5,987,414
120	$1,300	$16,275,479
130	$1,400	$44,241,339
140	$1,500	$120,260,428
150	$1,600	$326,901,737
160	$1,700	$888,611,052
170	$1,800	$2,415,495,275
180	$1,900	$6,565,996,914
190	$2,000	$17,848,230,096
200	$2,100	$48,516,519,541
210	$2,200	$131,881,573,448
220	$2,300	$358,491,284,613
230	$2,400	$974,480,344,625
240	$2,500	$2,648,912,212,984
250	$2,600	$7,200,489,933,739

The formula for a exponential growth rate has a special property: all derivatives are positive. It is the only mathematical formula that has this property. This means that it is the fastest-growing mathematical function possible.

 

Note that the numbers in the Exponential column grow at a fantastic rate, so fast that it is often hard for people who aren’t familiar with math to understand how such a thing could happen. You can find a great many books that explain exponential growth if you are interested in this concept or can’t believe it is true. It is true. It is a mathematical fact that natural growth processes are exponential and anyone with a computer can calculate them.

(To calculate with a computer, merely use the formula for ‘future value,’ and fill in the rate, time, and present value into the formula. The ‘help’ file on your computer spreadsheet program will tell you want the terms mean. The pencil-and-paper formula is ‘FV=PV*e^(rt) where FV means ‘future value,’ PV means ‘present value, e means Euler’s constant—the base of the natural logarithms—r means ‘rate’ and t means ‘time.’)

On Cosmos, Dunant set up the Community of Humankind so that its income would increase at an exponential rate.

It started relatively small.

But it increased at ever faster rates each year that passed.

 

Bequests

 

Many people on Cosmos realized that their world had some serious problems. They wanted to find a way to help solve these problems. Book One, Fact Based History, explained the goals of the Earth Henri Dunant, and his desire to create a corporation like the Community of Humankind. We saw in Book One that, although the humanitarian organization Dunant created didn’t do what he wanted it to do, the basic idea behind it inspired a great many people to donate to it. This organization has become the largest organization of any kind, with 89 million employees (more than any government on Earth), offices in every nation (and every disputed region) on Earth, and services that affect virtually everyone on Earth in some way. (See text box for more information.)

Cosmos is like Earth in many ways, in that the people there really want to do things to make life better for others, and would be happy to do this if they had some sort of vehicle that made this easy to do.

The Community of Humankind was a corporation with an income. Anyone on Cosmos who knew about the organization and wanted to do so could register to vote, and voters determined what happened to the income of the Community of Humankind. They used part of this income to fund research into the different kinds of societies humans could form. They used part of it to teach people about the different mode of thinking of the company’s founder, and the idea of empowering the human race as a whole, rather than of individual nations. The Community of Humankind was designed to be a tool that the people of Cosmos could use to make their collective voices head, over the noise of the ‘nations’ and ‘governments’ of their world.

As more people heard about it, more people became involved. If someone wanted to vote, she merely had to register. Everyone who registered would be involved, and each of them would have equal rights to determine what happened to the portion of the bounty of their world that was under the control of the Community of Humankind. People could see that their opinion mattered and that they could make a real difference in the world. Once they realized this, they realized that they could increase the power and rights of future generations by simply downloading the form, including whatever part of the world they owned in the parts of the world that benefited the human race.

 

Time Passages

 

Cosmos was a very bountiful planet, about as bountiful as our wonderful Earth. The total free cash flow of all properties on Cosmos (including all of the land, farms, forests, factories, mines, corporations, rivers, oceans, and other ‘properties’ that created value) started out at about $40 trillion a year. (In other words, equivalent in purchasing power to $40 trillion in Earth United States dollars.)

After the first donations, the Community of Humankind had control over so little of this money that it sound silly to represent it as a percentage: the total income the first year was a mere $40,000,000 a year. (This is about the yearly income of the today, a humanitarian organization dedicated to ‘advancing the cause of interior design.) This was only 1/10000^th of 1% of the total free cash flow of the planet. But although $40 million may be small compared to the total free money available, it is a large amount of money in nominal terms. It helped a lot of people.

By the time a 15 years had passed, the income of the Community of Humankind had increased to $2 billion a year. This is still small relative to the total free wealth of Cosmos (about 1/20^th of 1%) but is enough to make a big difference in important variables in the world. (It is roughly equal to the 2015 income of the United States government.) By this time, nearly everyone on Cosmos knew about the system, and participated in its elections.

The human race began to use the income and power of the Community of Humankind as a tool to induce national governments to conform to certain standards. For example, the people of Cosmos realized that their governments really didn’t do good jobs in certain areas, because of their focus on politics and military power. They didn’t really deal with disaster very well, they didn’t have any comprehensive policy to deal with war refugees, they didn’t have any organized system to adjudicate disputes between governments, for a few examples. The Community of Humankind could take on these roles, relieving the governments of nations of any need to worry about them. But, in return for being relieved of these costs, the governments of the nations would have to sign documents agreeing to protect certain rights.

On Earth, Dunant set up the Geneva Accords, a system that would give all nations access to free medical care (provided by the Red Cross), in exchange for signing the accords and agreeing to certain rules of war. The Earth Dunant set up the World Court, and made attempts to set up similar provisions which would provide certain services for everyone, in return for agreements to abide by the decisions of the court. (Dunant was just about broke by the time he set up this system, due to his legal fees defending his vision for the Red Cross. As a result, his attempts didn’t work out.) By the time 15 years had passed, the Community of Humankind was a very large and well-respected organization. It wanted nations to be tools to create cooperation so there could be more value for everyone, rather than independent sovereign entities with the authority to take wealth from their people and use it to build weapons to force other people of their world to adhere to the edicts of the governments.

Over time, power shifted. The power of the Community of Humankind increased while the power of nations decreased.

On the road map of possible societies, the society of Cosmos had changed. It was not on the extreme bottom line anymore. Nations still had a great deal of power and wealth. But the members of the human race had a tool they could use to transfer some decisions from ‘nations’ to the human race as a whole. The term ‘sovereignty’ means ‘unlimited rights.’ Nations no longer had sovereignty. They no longer had sovereign law societies on Cosmos.

It took more than a decade to get from ‘the extreme bottom line’ on the road map of possible societies to ‘a line that is a tiny, tiny bit above the extreme bottom line.’ In 15 years, the human race had moved from controlling 0% of the bounty of Cosmos to 1/20^th of 1%. This is such a small difference that you wouldn’t even be able to tell the difference on the road map of possible societies between the two lines, they would be so close to each other. Relative to what is possible, the people haven’t changed very much. But in absolute terms, the human race had enormous powers. At 1/20^th of 1% of the bounty of their world, they controlled $20 billion a year in wealth. Although 1/20^th of 1% is a tiny percentage, the actual amount of money they got, $20 billion a year, was high enough to make a huge difference in the way the world worked. Since this money was controlled by the human race as a whole. The human race had certain goals and common needs that the nations of the world weren’t able to meet. Before the Community of Humankind existed, the people of Cosmos didn’t have any kinds of tools they could use to advance these interests.

Now they did.

Having this tool also gave them a forum. There is an old expression: money talks, bullshit walks. Before they had a tool, people could talk all they wanted about how messed up their system was and what ‘they’ (the mysterious unspecified ‘they’ who supposedly looks out for the interests of the common people) should do about it. This was, as the saying goes, nothing but bullshit: It had no value because there was no value to back it up. Now that they had the tool, they had something which ‘talked:’ money. They could talk with their money and make a real difference in the world.

 

Sustainability

 

By the time 15 years had passed, only about 1/20^th of 1% of the free wealth of Cosmos went to the human race.

This is a tiny percentage.

The laws of exponential growth kept operating. These are mechanical, mathematical laws that don’t have anything to do with feelings or emotions. When the Cosmos Dunant set up the Community of Humankind, he wanted to change the world. He knew that he couldn’t do this all at once, and transform the world in a single day. It would take time. He wasn’t trying to make a name for himself or gain power or control, he was trying to do something that would really work. He wanted to give the human race some power, even if it was such an infinitesimally small amount of power that it wouldn’t be noticed. This kind of change could make a difference if it were set up so that the power of the human race would grow over time.

Each time the power of the human race grows, the society of Cosmos moves upward in the range of possible societies on the road map of possible societies. Seen from the perspective of someone living on Cosmos, the change would be so slow as to be imperceptible. However, an outsider, say someone watching Cosmos from outer space, who had any kind of reasonably long time horizon, would begin to see significant and important transformations in the way the societies of Cosmos worked.

One important change would involve incentives and responses to incentives. Movement upward in the chart causes money that had gone to pay people to destroy and create conflict now no longer goes to these people and is not tied to destruction and conflict anymore. As the rewards of conflict and destruction fall, the incentives to destroy and make war get weaker.

Incentives matter.

Perhaps many of the people who had been involved in war industries or destructive resource management would have preferred to have had a peaceful and healthy world for their children. But in the sovereign law societies, they weren’t in a position to choose: they needed money, they could get money by participating in the military industrial complex, so they had to participate. As the rewards that flow to destroyers and murderers wane, many of these people are not going to make enough money participating in destruction to justify the damage they know their participation will case. (As the rewards of destruction fall, the people who control wealth or want to build weapons can’t afford to pay as high of wages to people who help them do this.) At the same time, the rewards that come from constructive behaviors increase. People can make more money creating value and less money destroying it.

The amounts of money involved, so far, are not huge. But incentives matter, and even small changes in incentives lead to changes in behavior, particularly when we look at large groups of people. Rates of destruction fall. Rates of creation of value increase.

The minimum condition that must be met to have sustainability would be for the rates of destruction of things of real value to be no greater than the rates of creation of real value. A society can create more value than it destroys forever. Since ‘value’ is defined ‘good for humans,’ more value created means more good things for humans to enjoy. There is no point at which life will get ‘too good to continue to survive.’ Life can keep getting better forever, so any society that creates more value than it destroys is sustainable. The minimum conditions needed for sustainability involve destroying no more value (of all kinds) than is created. All societies that destroy more value than they destroy are not sustainable.

If we continue moving upward in the range of possible societies, we will eventually get to the minimum conditions needed for sustainability.

 

The realities of the Minimally Sustainable Societies

 

The people of Cosmos are raised in entities called ‘nations.’ The nations of the minimally sustainable societies are not so far removed from the nations of sovereign law societies as to change their nature. The people in the governments of Cosmos still think of war as a reality of existence and still believe that they will absolutely need children to grow up with the mindset necessary for organized mass murder and the rape of the world’s resources needed to keep the war machines operating. They still try their best to implant the necessary mindset in children. The adults in this altered society were generally raised in school systems that were designed to implant these beliefs.

The first ‘joint stock’ corporation, East India Company (British) was formed in 1600. The first corporation with stock certificates (which allowed owners to be anonymous, because the owners names weren’t recorded anywhere) was the Dutch East India Company, incorporated in 1602. In the next few years, several corporations were formed and given ownership of roughly half of North America. (The Virginia Company and subsidiaries, the Massachussetes Bay Company, the Company of New France, and the French West India Company, to name a few.) These corporations ran North America independent of the rule of national governments until 1763, when a treaty signed by all major powers granted the eastern half of North America to England.

On Earth today, corporations do the exact same things. They have gained autonomy, meaning the ability to act independently of governments (if a corporation doesn’t like the rules of the nation where it is incorporated, it can move its ‘nation of incorporation’ in a very short time—a matter of seconds for small corporations, and days for large ones—allowing it to create its own rules). Although corporations can do these things, they generally don’t, for a simple reason: the corporations basically control the governments through their lobbies.

Virtually all legislation today is written by lobbies, not elected officials. (To verify, look up the text of any modern law and read it. Do you really think that any of the people elevated to office could possibly have enough background in the area the law deals with to write such a law? Then consider the effects of the law. Do you think it is an accident that the ‘clean air act’ increases the subsidies that go to industries that pollute the air? The people who wrote the laws wanted this to happen; the realities of party politics forced politicians to support the bills without any need for the politicians to even read the bills, let alone understand them.)

Remember that the Community of Humankind is not a national organization, formed in a single nation to advance the interests of that nation. In fact, the Community of Humankind is a global corporation that acts totally independently of the governments of the world.

The Community of Humankind is independent of nations. It is an autonomous corporation, an entity that the leaders of war-driven societies of Cosmos had been forced to build enough war supplies to compete in their wars. Once this organization began operating, people began to realize that they had power and authority that was independent of the organizations they had been raised to call ‘their nations.’ Theys had flows of wealth that depended on the productivity of the parts of the world and other productive assets that had been purchased by or donated to the Community of Humankind; the more assets n this category, the more power and control the human race had and, by extinction, the less power and control the nations of the world had.

The people of Cosmos could increase the power and control the human race had, relative to the power and control that the entities called ‘nations’ had, by several mechanisms. (They could vote to use some of the revenue of the human race to expand the system, they could donate their time, effort, resources, skills, money, land rights and other capital to the cause, or they could generate bequests that would cause their estates to sell socratic leasehold ownership rights to the land and give the money to their heirs, rather than giving freehold rights away after they died, for a few examples.) People would realize that they had control over their destiny. They would realize that the story that nations were in charge of everything was simply not true.

As time passed, more and more people came to realize that the human race has real control and power to affect its destiny. They would be able to project the trends that give the human race power into the future; they would realize that eventually the human race would have more power and control over important realities of earth existence than the nations of the world. If the human race is in charge, the interest of the human race matter, not the interest of nations. The rulers of nations are behind war and conflict; they are behind the propaganda that induces children to think that we must fight, kill, and die for these entities, they are behind the laws that subsidize the destruction of the human race and prevent the majority from sharing in the wealth of the world, forcing them to care more about the amount of jobs that exist in the world than they care about the very existence of the planet.

The human race as a whole does not benefit from any of these things. As we move toward a situation where the human race has power and authority, the interests of the human race will matter more and more and the interests of other entities, including nations and organized religions, will matter less and less.

 

First, vote.

 

In sovereign law societies, elections are generally meaningless, as the people have no power to alter any important realities of their existence. (They can’t vote on whether nations will exist, for example, or alter any fundamental fixed realities held in ‘constitutions.’ They can’t prevent schools from teaching patriotism in the elections, divert money from government programs that pay for nuclear bombs to programs that bring real benefits to the people of the world, or change the way ownership or ownablity of productive assets works (either in society as a whole or in the land called ‘their nation’).

When the Community of Humankind voted, the votes meant something important. Each vote represented some share of the wealth the world created. Each vote transferred some of this wealth to programs the people of the world had created which were designed to meet some need or advance some goal of the human race as a whole. If you lived on Cosmos, you could watch the numbers in the accounts: when you transfer $100 to ‘the child welfare fund,’ you would see the bank balance of the human race for ‘unallocated funds’ fall by $100 and see the bank balance for the ‘child welfare fund’ increase by $100. If you have 1,000 votes, each worth $100, you could make a substantial difference in the way the world works with your votes.

In his book 1984, Orwell commented many times on whether democracy really could exist in a society. We have seen that no sovereign law society can be a true democracy, because of the practical requirements of war: Victory in war is essential for nations to exist and the decisions needed for war can’t be made effectively in elections. (Most people would rather have better roads than more aircraft carriers and ICBMs. If some nations made these decisions in elections and others didn’t, the ones with elections would not have enough weapons to defend themselves against the nations without elections and would be conquered.)

It is true that democracy can’t exist in societies built on the belief that invisible superbeing have given away parts of planets to people who own them totally (or that people who go through the rituals needed to claim the land are the absolute owners). But these are not the only kinds of societies that are possible. Others can exist that are capable of supporting true democracy. Socratic leasehold ownership societies are fully compatible with true democracy. In fact, they work best if the people make the decsions about allocation of all unearned wealth (the basic productivity of the land).

 

Growth in Power of the People

 

All of the people of Cosmos had a right to vote in the global elections. If they wanted, they could use the wealth they distributed to benefit them, personally, providing services for themselves and distributing all of the rest of the money to the people as cash basic incomes. But if even a single person on Cosmos cared about the future of the human race, she could cast one, more, or all of her votes for projects that would increase the power and authority of the human race going forward. These projects could work to provide cash subsidies to property owners who agree to bequeath their properties to the Community of Humankind, after they die, to be sold with socratic leasehold ownership (instead of with freehold ownership). True, the properties would not sell for as high of prices with socratic leasehold ownership as with freehold ownership.

A great many people on Cosmos wanted their properties to benefit both their heirs and all future generations of humans. Before the Community of Humankind was created, they didn’t have any real way to do this. After it came to exist, they could download a form from the internet, fill it out, have it notarized and sent back to the Community of Humankind administrative offices. When these people passed, the properties would go to the Community of Humankind, which would then sell socratic leasehold ownerships on the property and transfer all funds obtained to the designated beneficiaries of the benefactors.

With the right kind of program, this system can be very beneficial to estate planners. In some nations on Cosmos, estates pay out more than 90% of the money value of the inheritance on lawyers, probate, taxes, and fees. Owners would realize that their heirs really wouldn’t get much money from the properties if they went through probate, they would be able to give more to their heirs if they went through the Community of Humankind program, with much more rapid progress and much less chance for disputes among heirs. The system the Community of Humankind set up on Cosmos was very easy: a single form, signed, notarized, and sent in by mail, and everything was done. The leasehold to the property would be sold within 30 days, and their heirs would get the money the next day. Many times, people could actually leave more money to their heirs by going through the system at the Community of Humankind, than by bequeathing the property to their heirs (who often would have to sell anyway to pay legal fees, probate costs, and estate taxes).

As on Earth, people of Cosmos cared about the world and wanted to make it better. They gave to many charities. As time passed, the Community of Humankind became a kind of ‘charity of charities.’ If the people of Cosmos wanted more to go to a project like ‘Habitat for the People of Cosmos,’ but had no money ‘of their own’ to give to the charity, they could log on to the website of the Community of Humankind and give money that belonged to the human race to the ‘Habitat for the People of Cosmos’ or ‘Doctors without Borders.’

People giving to charities often have hard decisions. Not all charities are honest. Some are shams. Dunant set up the Community of Humankind to be totally transparent. Every single penny of income and expenses for the humanitarian organization was recorded on accounting forms that anyone could verify and audit (using the procedures explained in Chapter 11 of Book One.) People who wanted to give to other charities would not know exactly what would happen to the revenues from their bequests after they had passed away. (Dunant wanted to create a system where the people had authority over the Red Cross to make decisions. He was overruled. The executive committee of the Red Cross makes these decisions, in meetings that the donors of the corporate can’t attend.) For most charities, people have no way to tell if the charity is giving money to organizations designed for terrorism (like national governments, which use the money to build weapons). The Community of Humankind was a safe way to donate money. The rules were clear, the human race was in charge (not some bureaucrat), and would always be in charge. The money only went where the people of the world wanted it to go.

 

 

 

 

As we proceed on our journey, we move to societies where the human race, acting as landlords of the world, get less and less income from the land. While this happens, we have more and more need for funding, because we have more and more problems. At some point, we will not have enough money to deal with our problems and we will have no choice but to start taking money away from people as taxes.

 

 

It may appear that we could easily deal with this issue by simply moving to a leasehold ownership system with a higher leasehold payment percentage. This is true. But we are moving to societies with ever lower leasehold payment percentages and explaining how they work. In systems with very low leasehold payment percentages (if we have decided that we won’t move to higher percentages, for some reason) the only way to increase the public income is with taxes.

The taxes take away some of the rewards for improvements, so they reduce the strength of constructive incentives. As we go through the range that needs taxes, the strength of constructive incentives will fall.

People will still be able to make money improving the world, but they won’t be able to make as much as before. They will still work to find ways to create value and drive up the free cash flows of properties, but they won’t work as hard as they were working before on these things. Rates of progress and growth will fall.

Factors That Reduce The Strength Of Constructive Incentives

Taxes are only one of several factors that reduce the strength of constructive incentives as we go through the next rage.

Increasing Instability

In the earlier systems, demand for items that were produced was pretty consistent, because the people who needed to buy things got the money they needed to buy them. In this example, which deals with Pastland during the time when it had a rice-based economy and the only property was the Pastland Farm, total production was $3.15 million a year. In the natural law society, $750,000 of this went to people who worked in production, leaving $2.4 million to go to the members of the human race. Everyone got an equal share of this $2.4 million, either in cash or in the form of services that benefited everyone. (We all voted in the elections so we decided how much we wanted in cash and how much in services.)

As we go downward through the range, the income shifts: the people who have saved money get more (as risk-free returns on their wealth) and people who don’t have savings get less. People with greater savings will get higher incomes than people with lesser savings, and people with the greatest amount of starting money will get enormous incomes, while people with no savings at all will get ever smaller incomes, and eventually zero incomes (unless they work).

Only a very few people are in a position to save an enormous amount of money, so only a few people will be rich and get the fabulous incomes that go to the rich. The great majority of the people will wind up with lower and lower incomes as we go through the destructive range.

Here is the problem:

People without money can’t buy the things they need. In order for the economy to work, there must be buyers to match with each seller. Often, very rich people simply can’t spend any more money than they are already spending, no matter what. You can only eat so much food. If you are already eating so much that you are morbidly obese, diabetic, and sick all the time from overeating, increases in your income are not going to cause you to eat more.

At some point, people without savings won’t be able to afford enough to keep them from starving to death unless they take jobs. At this point, they will have to work or die. Unfortunately, more need for jobs (to get income to avoid death) doesn’t translate to a higher need for labor in production. If the world is bountiful, only a small amount of labor is needed to collect its wealth. (This was the definition of bounty the book started with.)

The only way the people who now need jobs (but didn’t in the earlier societies) can get jobs is to take jobs away from people who already have them. They have to do this by offering to work longer and harder for the same money, do the same work for less money, or some combination of working longer and harder with lower wages. The people who already have jobs can’t afford to lose them in these lower societies: they will starve to death. They have no choice but to offer to work even longer and harder than the others, and for still lower wages, or they will die.

As we go through the destructive range, wages will fall very rapidly.

Wages started out in the natural law society at rates that allowed people to be fully paid for the unpleasantness, effort, risk, and other requirements of the job. For example, cleaning sewers of clogs is very unpleasant work, so sewer-cleaners got paid a lot, or they wouldn’t do the work. As wages fall, people with no skills will not be in a position to be picky. The wages for the most unpleasant jobs, which are generally those requiring the least skills, will plummet. They will get so low that, often, people with these jobs won’t be able to make enough money to keep them and their families out of poverty, no matter how many hours each day they work.

The poor will start to get poorer, over the course of time.

As the rich get richer and poor get poorer, this system will be increasingly out of balance. The rich simply won’t be able to spend all of their money. The poor won’t have money to spend. Spending will collapse. At this point, people who have hired others to help in production won’t be able to afford to pay them and will have to lay them off. This reduces spending for three reasons:

First, people without jobs (and without enough of the free income from the land to survive on) can’t spend as much as they did before, no matter how much they need food and other things. They have no choice. They can only spend money they have.

Second, many people will not be able to afford enough to keep them and their families alive. They will start dying of poverty related ailments, like opportunistic diseases, hypothermia (because they can’t afford fuel or clothing to keep them warm), and starvation. As they die, their spending will fall to zero. (Dead people don’t spend any money.)

Third, people with enough money to get by will panic. They will see people starving to death around them and think that, if they spend as usual, they will run out of money faster and join the dead. As they panic, they will cut back their spending to create a larger buffer.

The lower spending leads to something that mathematicians call a ‘self reinforcing loop.’ Each reduction in spending leads to more unemployment, more poverty, more fear, and still lower spending. The system can continue to collapse until a very large percentage of the population has starved to death.

Book One went over the history of the world and showed that many of these total collapses have taken place. After the wars of conquest by the Roman Empire ended (because Rome had conquered all land geographically accessible), the Roman economy collapsed, and remained in a collapsed state until the renaissance, which occurred roughly 1,100 years later. (As we saw, the recovery was due to new war technology, in the form of gunpowder; if not for the need to compete in war, we may still be in the ‘dark ages,’ the name given to the collapse.)

Another collapse occurred in 1929 when the financial market collapsed. This collapse lasted until the final major county that held out for peace, the United States, entered the war and the war became the Second World War. Although the war killed more people than any other event in the recorded history of sovereign law societies, it was considered to be a success because the war, combined with the nuclear escalation that started in 1945, was able to pull the world out of this collapse, and get the systems functioning again.

There have also been a great many minor collapses. These didn’t totally destroy the economies, but caused collapses in production, high unemployment and massive starvation among the lower classes.

The extreme instability of societies low in the range of possibilities prevents people from making improvements that they would otherwise make. If you can improve a part of the world to turn something with relatively low value (say dirt, which contains an average of 5.8% iron) into steel (which is roughly 98% iron), you have to make sure you can sell the steel before you can justify the expense of improvement. If people can’t afford cars, they can’t afford skyscrapers, can’t afford trains, planes, tools, or appliances that would be made out of steel, people who may consider investing in facilities to turn dirt into steel will probably not build them. In fact, even if people can afford things made out of steel at this time, people considering building facilities will hesitate to build if they think there is a good chance the economy will collapse before the facility has repaid their investment. The mere risk of instability reduces incentives to improve the world

 

War

 

At some point, the differential between the incomes of the wealthy and the incomes of the workers will become so great that the workers will rebel. They will try to overthrow the system. The system must be kept in place by force. The wealthy must get together into groups and set up a system to defend them from the poor. Each group will form its own ‘government,’ to administer that area.

The people in the governments will realize that they will have more power if they control greater areas. They will work together with the rich (who will become the owners of the conquered land) to conquer land that belongs to other groups, when this land is not very well defended. Once they have armies, they will want to find ways to train these armies in situations that are as close to actual combat conditions as possible. They will find they can do this by engaging in ‘skirmishes’ with their ‘enemies,’ in something that we may think of ‘practice wars.’ These wars, like the United States wars in Korea and Vietnam and the Soviet war in Afghanistan, are not intended to conquer territory. They are intended to stimulate demand for weapons, to make sure there will be plenty of weapons-making facilities available when ‘real’ war comes, and to keep the combat troops familiar with the mental states needed to win real wars, when they come.

The best situation, for a large nation, will be perpetual war, war that never ends. This will make sure the infrastructure needed for any supply of weapons that may be needed is always there, it will create the jobs needed to provide income to the non-rich, and it will destroy a large part of production, to help bring the enormous supply of goods close to the amounts the people can afford.

Here is the problem: Wars are risky. They increase the risk level of improvements. The people who improve never know for sure that their country may be ‘taken over’ and the conquering government may simply take their land away. They never know for sure if the war may increase demand for labor and drive wages up to levels that are so high the can’t afford to operate their facilities. Wars may also end and this frequently leads to very high unemployment rates (as both soldiers and arms workers lose their jobs) which may drive the economy into an unemployment-related recession.

If risks are higher, people need higher rewards to justify investing in improvements. An improvement that would have worked out (provided returns that justified the risks) during a time when the land that will hold the intended improvement is not in a war zone will probably not provided the necessary returns to justify the risk if the area is in a war zone. The risks associated with wars provide another reason that constructive incentives are weaker in societies that are lower in the range of possibilities.

 

Taxes

 

People have incentives to improve if the income they get to keep from an improvement is higher than the cost of the improvement. Remember that societies high in the range do not need taxes because the systems are set up so that the free cash flows the system naturally produce flow to the landlords of the Earth, the members of the human race. Nothing has to be taken away from people who have earned it, because nature is so incredibly bountiful and produces gifts. If this free wealth flows to the human race, acting as landlords of the Earth, they have no need to take anything away from anyone who works for it or does anything to deserve it.

In systems lower in the range, more of this free money flows to the wealthy, and less to the human race. At some point, we won’t have enough income to deal with the problems and will have to tax. It is, of course, possible to construct a tax system that will take only unearned wealth. But such a system is not practical in societies lower in the range, because the people who get the unearned wealth, the rich, are in positions of power and control. They control the governments that will take the taxes. They know they are better off if they are allowed to keep the unearned wealth, and make the workers and others who earn money pay the taxes. They can set up tax systems that make this a reality.

In our 21st century world, people whose income comes from unearned risk-free free cash flow can easily eliminate all tax liability, provided they are rich enough to afford a tax attorney. Although there are many ways to do this, one common option involves moving all of their wealth to a ‘tax haven country.’ (About half of nations on Earth are tax havens: they only tax earned incomes and don’t have any taxes on dividends, capital gains, interest, or other returns on wealth at all.) They can take a vacation to the ‘tax haven’ country and apply for and get a green card, meaning an official residency card. (Rich people automatically get green cards; in the United States, anyone with more than $1 million has to apply and it is always approved. Poor people have to go though a long procedure and most of them are not approved.)

Now they are a legal resident of a foreign country. (It doesn’t matter where they actually live. What matters is their legal residency.) They pay tax to their country of residence, not their country of citizenship or the place they live. Since their country of residence doesn’t tax unearned income, they don’t pay taxes on unearned income.

Note: even countries that pretend to have equal taxation offer huge tax breaks for unearned income. In the United States, a couple that earns their income pays taxes on everything above the first $10,000. The same couple doesn’t pay any income tax on unearned income until it exceeds $137,000 a year, and, of course, the largest tax in the United States, the social security tax, doesn’t apply at all to unearned income. These countries don’t want rich people to leave, because rich people spend more than poor people, generating more jobs, so they simply create tax breaks that make it very easy for rich to not pay any tax.

The huge majority of taxes in the 21st century world come from levies on money that people worked, taken on risk, or otherwise done something to earn. People who want to make improvements have to pay taxes on the materials they use to improve, on the labor, and on the supplies. They have to get permission (often at a cost higher than the cost of the improvements, payable to the government as a permit fee), and pay increased taxes on any increases that are specifically due to the improvements and therefore earned. They have to pay increased valuation taxes on the increase in value of the property (remember, earlier societies don’t have taxes and the leasehold payments never change, no matter how much the property is improved, as long as the property is owned by the same owner).

When we are higher in the destructive range, we have higher incomes from the land and smaller problems, so we don’t need very high taxes. But as we go down through the range of possible societies, we get into systems which will need higher and higher taxes. They will also be more and more unstable, more and more prone to war and other problems that reduce the rewards or increase the risks of investments that lead to increases in the amounts of value that flow from the world over time. The further we get through the destructive range, the weaker the constructive incentives become.

 

Destructive Incentives

 

As this happens, the rewards for destruction grow. The forces pushing toward war become ever stronger.

In the systems higher in the range, the human race had enormous power because we had an enormous income. We had nothing at all to gain from war in the societies higher in the range: war in these societies is nothing but sensless destruction of value that would otherwise benefit the entire human race. As we went through the destructive range, we got into systems where people needed and wanted war. The working class wanted war because war created the jobs that they needed and killed large numbers of others in their age and class who competed against them for jobs, forcing the supply of workers lower and driving up wages. The systems needed war to balance supply with demand: in peacetime the production facilities produced far more than people could afford to buy, leading to recessions and depressions (where unsold value caused market collapses). War destroyed fantastic amounts of value, reducing the supply, which had the same effect as increasing demand: more goods were needed, industry expanded, wages rose, profits rose, prices rose, government taxes increased, and everyone (except the relatively few people who were mutilated, lost their children, lost their homes and families, or were driven insane by the realties of war) was happy.

As we get into the range where war is essential to keep the society functioning smoothly (where humans must be killed to reduce unemployment, value must be destroyed to match the supply of goods with the spendable money, and the system msut employ large numbers of people doing things that don’t lead to the creation of anything valuable), we can expect the leaders to start to accept this necessity. They will start to devote a lot of effort to figuring out ways to create the state of mind needed for perpetual war, and will figure this out.

They will start taking children from their parents at an early age and indoctrinating the children to make them believe that people born in different sides of imaginary lines are different, with some imaginary lines creating people who are good and others creating people who are horribly evil monsters who are trying to destroy everything decent people care about. They must instill hatred in the enemies in the minds of the children, while instilling a love for the allies and people in their own country. They must make children believe things that are obviously untrue, like that their country has liberty and justice for all, where everyone is equal and we all have freedom ringing from every mountaintop.

Since logic and reason will quickly show the children that the things the schools teach children are not and can not possibly be true, children must also be educated in a process that we might call ‘doublethink,’ so that they won’t apply logic and reason to certain areas of existence. When it comes to making weapons, they have to be able to use logic and reason. But the reason that nations exist? The actual conditions relating to freedom, justice, liberty, brotherhood, and equally that they are supposedly building the weapons to defend? They can’t look too closely at that.

As we go lower in the range of possibilities, we would expect more and more intensive indoctrination methods, to instill the desired hatred and fear and make children think that they must inevitably submit to the realities of the system. The people who run the systems will do ever more research into ways to create the desired state of mind; to the extent that they are successful, the people will begin to think that there is nothing they can do to alter the realities of human existence.

This is not true.

But if the people who run the systems have enough resources at their disposal, and use these resources well, they can convince nearly everyone that it is true. They can breed depression and misery and cause their people to give up all hope and take their role as cogs in the wheels of the giant military industrial complexes that they live in.

 

Minimally Sustainable Societies

 

As we go through this range, the human race, in their role as landlords of the world, wind up getting less and less automatic risk-free income from the land. At some point, we will get so little income from the land that we won’t have enough wealth to affect any important matters in our societies. The forces that push people to do things that lead to the creation of value are growing weaker while the forces that push people to do things that create hatred, conflict, violence, and destruction grow stronger.

You and I were born into societies where the rates of destruction of value (including ‘value’ in the form of breathable air, healthy food, safe water, and the value of knowing that your family will be safe from nuclear annihilation and that there is no pollution to give you cancer) exceed the rates of creation of value.

This is an unsustainable condition.

It is not possible for people to destroy more value than gets created forever. At some point, if they continue to destroy, some vital component of existence will no longer exist and the human race will not be able to survive. The societies we were born into are unsustainable. They do not meet the minimum conditions needed for the perpetual existence of the human race.

We have seen that some societies do not destroy more value than they create. Natural law societies, for example, clearly meet the minimum conditions needed for sustainable. We know this is true because billions of people lived in these societies for millions of years with no destruction that we can detect at this time.

If there are some societies in a range that do meet the conditions needed for sustainability, and there are other societies in the range that do not meet the conditions for sustainability, and the range is ‘continuous,’ (meaning there are no holes or gaps in the range), there must be a transitional system. There must be a system that marks the border between the two different types of societies. There must be a particular society that barely meets the conditions needed for sustainability.

Perhaps we may not be able to place the exact location of this particular society, but we know it is somewhere. If we continue going down through the range of possibilities, we will eventually get to this transitional system.

 

All beings that exist must have ‘modes of existence.’

This is true for the lowest living things and for the highest.

We must all find some way of meeting our needs. We must all reproduce and have some means of caring for our offspring until they are capable of caring for themselves. If we can’t do this, we perish.

Most living beings must accept whatever realities of existence that nature gives them. The lowest living things on earth, for example, are called ‘cyanobacteria.’ (They used to be called ‘blue green algae;’ after it was realized that they are actually bacteria, their name was changed.) Cyanobacteria must find sunlight and bathe in it; the sunlight works with their chloroplasts (containing chlorophyll) to break down carbon dioxide into carbon and oxygen, and break down water into hydrogen and oxygen, then recombine the carbon and hydrogen into carbohydrates, then release the oxygen into the air. They need to do this because the mitochondria in their bodies will then take the carbohydrates and turn them into usable energy that will allow their life processes to work and facilitate their reproduction. They need certain temperatures and conditions of moisture: they must find these conditions and get there. They organize their existence around very simple principles which were determined by nature. They have no self will or ability to alter the realities of their existence.

Other animals have slightly more discretion in the way they organize their existence. Mammals have complex brains that allow them to identify plentiful food supplies and move to them, identify good conditions for raising their young and move to them, and form relationships with others to help them fend off predators and meet their basic needs. But they have very little power to alter the realities of their existence compared to humans.

Humans alone can plan. We have a brain component no other earth animals have, called a ‘prefrontal cortex.’ Scientists can put electrodes into this part of the brain and monitor the electrical impulses that go through it when the subject is doing certain things. They have found that this part of the brain is responsible for the mental activities called ‘planning.’ Humans can plan. We can run through various complex scenarios in our minds. We can determine which behaviors will bring the optimal results before we act. We don’t have to use trial and error and learn everything ‘the hard way’ (when trials fail). We can do thought experiments in our minds to determine which behaviors will bring the optimal results. Then we can act. No other animals have been shown to have this same capability. None of them even have the brain component that is responsible for these complex behaviors. In this area, humans are unique.

Other living things must accept whatever role that nature has assigned to them. If this role no longer fits into the changing realities of nature, they go extinct. Humans alone can decide what kind of role we want to play in existence.

Possible Societies

There are two things we can change about the realities of our existence.

 

 

If we understand all of the options for each of these two variables, and understand the way we can mix these options to come up with finished ‘societies,’ we can understand all of the options that we have for organizing our existence.

Part One introduced a visual aid that helps us understand the way different societies relate to each other. It is a chart I called the ‘Road Map of Possible Societies.’

Since there are two things we can change, we can lay out the options on a two dimensional chart, with each axis representing a different ‘thing we can change’ (or ‘variable’). A two dimensional chart is also often called a ‘map,’ so we can essentially create a map of options.

There is a certain place on this map where we are: we have a type of society based on a certain way of interacting with the land and a certain way of interacting with each other. (We interact with the land by dividing it into nations and accepting that each nation has sovereignty over the part of the world inside of its lines. We interact with each other in a hierarchical way: the governments of nations make the rules, granting certain rights to corporations and others who own parts of the world and dictating both the economic and social rules—down to their rights to have sex, the foods they can eat, and the medicines they can use—for the remainder of the people.)

This is just one point on the map.

There are infinite others.

The option we chose has certain disadvantages. Although many would be happy to present a list that is so long it is essentially endless, I think one example of a ‘disadvantage’ is enough to make the point that it makes sense for us to consider some other options: This society is unsustainable. It has inherent incentives that lead to violence and destruction that will destroy the world if it continues long enough. This type of society is going away. Either we will replace it with something that is sustainable or it will destroy us.

There are a great many points on the map that represent sustainable societies. Natural law societies are sustainable, provided there are no competing sovereign law societies: natural law societies lasted millions of years; the people in them lived in harmony with the land and had no ability to fight with each other on a scale that could do any permanent damage to world or the human race as a whole. But natural law societies have certain disadvantages that make them unacceptable as a practical replacement for the sovereign law societies that we have now. There are other societies that are both sustainable and do not have the problems of natural law societies. We have to pick some other society as an alternative to the one into which we were born. We can’t stay here. We must go somewhere else.

If we can find an option that we prefer, we will have identified two points on the map: the point that indicates where we are now and the point that indicates where we went to go. Having a map in front of us helps us to plan a route from ‘where we are’ to ‘where we want to go.’ As you will see, once we have identified another type of society, we can take various different roads to get from where we are to that other society.

 

Note. In the Road Map of Possible Societies, all options below the line marked ‘minimally sustainable societies here’ are very dangerous. We are at the extreme limit of the dangerous section, in the middle of the bottom line. The socratic societies are actually a long way from us, on the middle line of the chart, but the line that marks the danger zone is not very far away. If we understand this, we will understand that we only have to make fairly minor changes—as long as they are the proper changes—to get us out of the danger zone. Once we are there, we can decide on our final destination and decide which of the many roads will take us there.

 

Having a road map helps us see that there are many ways to get from one place to another. It also helps us understand how the ‘in between’ societies will look, which we might compare to the scenery we will see while on the road from one place to another. If we have a map, we can decide if we want to head strength to our final destination by the fastest possible route, or whether we may want to find a fairly rapid road that will take us out of the very dangerous areas to a place of safety where we can rest for a while and plan for the second leg, which will take us by a ‘scenic route’ to our final destination.

These are the advantages of having a map.

If we have a map, we can understand where we are and where we may want to go. We can work out the time it will take and make plans for the journey. We can figure out what we will need to have a comfortable and safe trip. We can work out waypoints and places to rest.

If we don’t have a map, we are likely to be overwhelmed by the idea of making societal change. What must be done, how much time will it take, what obstacles will we face along the way? We won’t know any of these things. Without this information, we are likely to be overwhelmed and confused. We can expect to be afraid: what will we encounter around the next bend? If we don’t have a map, we don’t know. If we do have a map, and some idea about the idea of making a transit from one kind of society to another, we will be able to plan our trip. We can anticipate problems and prepare for them. We will then be in a position to make informed choices about societal change.

 

A Look Ahead

 

The next book in this series, Reforming Societies (at ‘’) is about the specific steps that, if taken, will cause our societies to change in ways that cause an evolution to a society that can meet our needs. It explains how to get from the societies into which we were born to two different destinations. The first destination is a waypoint: it is the closest point to us in the ‘safety zone,’ or the closest society to the societies we have now that meets the minimum conditions needed for sustainability.

Minimum sustainability does NOT mean nondestructive. It just means that the rate of destruction will be such that the combined efforts of humans and nature will be able to counter it and prevent conditions here on earth from getting worse. The first step in the transition explained in Reforming Societies still has most of the structures we were used to. Since most of the structures are still there, most of the undesirable characteristics of the societies we have now will still exist. The most serious problems we face won’t be as bad, but they will still be there. The point of discussing societal change through the two step process is to make the trip seem less intimidating. All we have to do get to the next waypoint. If we can make good progress for the first few years, we will be essentially out of danger. Once we get out of danger, we can take our time. If people want to keep certain structures that are part of our current societies until we can find better structures to replace them, we will have this option. The second part of the journey will take us to whatever kind of society we think best meets the needs of the human race.

Part One Pointed out that the socratic leasehold ownership society is an example society. It is designed to illustrate a point: it is possible for humans to organize the realities of their existence in ways that align the interests of individuals with those of the human race as a whole. If we do this, we are all on the same team, all working for a common goal. Individuals can make their lives better doing things that move the human race toward a better future. If they are self interested and try to make their own lives better, their actions will improve the conditions of existence for the rest of us.

The example society is just that, however: an example. There are many different societies that align the interests of the various parties. Each of the options has different characteristics. Once we get to a place of safety, we can decide where we want to go from there. We may choose something very similar to the socratic society described in Part One, or we may choose some other society that has a different mixture of characteristics.

Before we can really plan a trip, we need to have some idea were we might go. We need to know what options are available. This book is designed to help you understand all of the options, so you can make an informed choice about where to go.

 

The Road Map of Possible Societies

 

Figure 2.1.1, below, is the Road Map of Possible Societies. It has many components that are explained in the rest of the chapter

Qqq Road Map of Possible Societies

 

Different Interactions Between The Human Race And The Planet We Live On

 

Humans are physical being with physical needs. We eat food for energy; we have to eat on a regular basis to replenish our energy or we will die. Evolution has made tradeoffs and sacrificed certain capabilities to give us larger brains. One trade off involves our physical vulnerability: in most places, we are unable to survive without shelter of some kind and some kind of clothing. Most of the places we live are so cold, at least part of the year, that shelter alone is not enough: we also need some sort of fuel to burn to keep our body temperatures high enough to allow us to remain alive. We need certain physical items to remain alive.

The planet we live on provides the food, shelter, fuel, and other physical items we need. We have to ‘interact with’ the planet in some way to get these items so we can live.

There are two extreme ways we can interact with the world, and an infinite number of options between the extremes.

100% Ownablity Societies

One extreme way to interact with the world is to consider the planet to be a possession.

We can decide that the planet is totally ownable and that certain groups of people have come to own it. We can accept that ownership of planets is no more complicated than ownership of simple consumable items like apples: If you own, you own all rights without limit. This means that the owners of each part of the world have unlimited or sovereign rights to their parts of the planet: Everything it produces and contains belongs entirely to them, all rights to do anything on it—even walk on it—belong to them, and no one else now and forever in the future has any rights to have this part of the planet even remain in existence if this conflicts with the wishes of the currently-living owners.

It is possible to accept this premise and build societies around it. Since such societies would be built on the premise of sovereign or 100% ownability, we might call such societies ‘100% ownability societies.’ The idea of 100% ownability is an extreme way to interact with the planet. It has an extreme position on the chart. All societies on the extreme bottom line of the Road Map of Possible Societies (the ‘x’ axis) represent societies built on 100% ownability of the world. They correspond with the label ‘100% Ownablity Societies’ on the scale of ownability on the left side of the chart.

 

0% Ownability Societies

 

There is another extreme way to interact with the plane that is essentially the opposite of the above option: we can interact with the world as if we are vassals and servants to a planet that is our all-powerful master. We could consider the world to be above us all, the ultimate provider, a kind of a god that makes all the rules; our only role is to serve this god and try to guess the rules so we can obey them. We could decide that the world owns us, not the other way around, and we commit the ultimate offense against our master and god if we even claim that this magnificent world is ownable by mere humans.

It is possible to accept this premise and build societies around it. Since such societies would be built on the premise of total or 0% ownability, we might call such societies ‘0% ownability societies.’ All societies built on this method of interacting with the land are on the extreme top line of the chart. They correspond with the label 0% ownablity societies on the scale of ownability on the left side of the chart.

 

Partial Ownability Societies

 

We know that both extreme societies are possible, because both have existed in our history. If it is possible for societies to exist that are built on 0% ownability, and possible for societies to exist built on 100% ownability, logic tells us that it must also be possible to start with methods of land tenure that allow people to own certain rights, but not total rights, and build societies around these structures.

Book One went over one of these partial ownability societies, socratic leasehold ownership, built on the sale of a leasehold on certain properties structured so that the leasehold payment is exactly 20% of the price the buyer paid for the leasehold. You can find societies built on this kind of land tenure on the chart. The left scale indicates the different ‘price leasehold payment ratios’ that are possible. Go to 1:20% on this chart and you will see ‘socratic leasehold ownership societies here.’ All societies on this line are partial ownability societies. They allow people to buy and own certain rights to the land, but not total rights.

As we will see, it is possible to use various different leasehold ownership systems to create literally any kind of relationship with the land we want. We can use a kind of leasehold ownership called ‘sovereign law leasehold ownership’ which will create a system that makes 100% of rights to the land ownable and buyable, creating a system that is exactly like a sovereign law society, with the same incentives and same problems. It is also possible to create a kind of leasehold ownership called ‘natural law leasehold ownership’ that makes exactly 0% of rights to the land ownable and buyable. It is possible to create land tenure systems that allow people to buy and own virtually all rights to the land, but not total rights. Societies built on these land tenure systems are called ‘virtual sovereign law leasehold ownership societies.’

It is possible to create land tenure systems that allow people to buy and own such miniscule rights that, for practical purposes, they own no rights at all. I will call the leasehold ownership system that works like this a ‘virtual natural law leasehold ownership system’ and call societies built on it ‘virtual natural law societies.’ They will work so much like natural law societies that an observer wouldn’t be able to tell the difference, but they are not true natural law societies as the degree of ownability will only be ‘extremely close to 0%,’ not ‘exactly 0%.’

As this book progresses, we will look at the entire range of possible land tenure systems. We will see that there are infinite options. Each option creates a different relationship between the human race and the planet earth. Each different relationship has different characteristics, creates different incentives, and affects the realities of life for the people in it various different ways.

The way we interact with the planet is ONE of the things we can change about the way our societies work. The other is the way we interact with each other.

 

Possible Social Realities

 

Humans are very fragile relative to other animals.

Most animal infants can stand, walk, follow their mothers, and escape danger within hours after birth. Infant humans can’t even focus our eyes for many days after birth; we can’t even control our fingers until several weeks after birth, and can’t function well enough to live on own for many years after birth. We don’t develop our full physical or mental potentials for decades.

We are helpless for a large percentage of our lives. We must depend on others for survival.

Although our mothers can provide a great deal of this support (as happens for other animals), the needs of infants and children are so great that most mothers would not be able to provide 100% of this support for the entire time it is required, at least not in ways that would allow enough offspring to be born and grow to maturity to keep the human population stable. People have to work together, with one person or group providing shelter, another person or group providing food, another providing fuel, another person or group organizing education so that children will have the skills needed to replace the adults.

We need some social framework to live in.

Again, there must be two extreme options for arranging this social framework, and an infinite number of options between these extremes.

One extreme option have some person or group with authority over everyone else. We might call these authority figures ‘rulers.’ In the extreme system, the rulers would make all decisions for the other people. In the extreme system, the rulers could make all rules, including the rules about how the people must spend their time, and the rulers would be able to punish violators any way they wanted for any infraction, no matter how minor. These societies would organize themselves around a two-class hierarchy, with rulers and followers, where rulers have 100% authority over followers.

We might call these societies ‘100% authoritarian control societies.’

The other extreme would not have any classes or hierarchy at all. People would make their own decisions. No one would have more authority than anyone else. The people would make all common decisions in meetings and elections. In the meetings in this extreme society, no one would have any more authority or right to speak and provide inputs than anyone else. In elections, no one would have any more of a vote than anyone else. This extreme system would not be any authoritarian bodies at all. We might call these societies ‘0% authoritarian control societies.’

Intermediate options would have some degree of authoritarian control between 0% and 100%.

To help us visualize the options, we may go back to the chart we started before and draw a line perpendicular to first line, and label it ‘degrees of authoritarian control.’ (On the Road Map of Possible Societies, this second line is horizontal.) We could put 0% at one end and 100% at the other. (On the Road Map of Possible Societies, 100% authoritarian control is on the left and 0% on the right.) We might then split the line into regular intervals and label the increments with numbers between these two extremes.

 

The Road Map of Possible Societies

 

Each point on the body of the chart represents a specific combination of two variables.

We would be able to find every possible combination of the two variables one exact place on the chart. For example, if we want to find a society with 50% of all possible rights to the world ownable and 50% authoritarian control, we could go to the line on the left side (inside scale) that indicates ‘Percent Ownability,’ and find 50%. We could then draw a line from the 50% mark to the end of the page. All options on this line have 50% ownability.

We could then go to the bottom line that indicates ‘Percent Authoritarian Control’ and find 50%. We could then draw a line upward through all of the options. All societies on this line have 50% authoritarian control.

There is only one society on the chart that combines the two different characteristics, with 50% ownability and 50% authoritarian control. This society is the one at the point where the two lines intersect each other.

The discussions that follow refer to the map many times. You may find it helpful to print a copy of the Road Map so you can refer to it without having to change the computer screen. I have put two printable PDF files of the Road Map in the references section of the possible societies website, one a large map that you can print on 11x17 (A3) paper, the other a smaller one that will print on 8.5x11 (letter size, or A4) paper.

 

When we first evolved on this world, hundreds of thousands of years ago, we didn’t find a pre-existing set of instructions about how to organize our existence.

How should we interact with the world around us? 

How should we organize our interactions with other members of or species? 

The first humans didn’t find a set of guidelines. 

Our ancestors had to figure this out for themselves. 

Since they didn’t arrive to find any pre-existing sciences with instructors standing by to help them uncover evidence and put it together through algorithms that would lead, if followed, to the correct answer, they basically had to guess. 

Different people made different guesses. 

Some guessed that the wonders they saw around them were so amazing that they couldn’t be the result of mere chance events.  There had to be some sort of intelligent design.  There had to be a creator of some kind, a wonderful being of vast intelligence, who made things as they were when humans first arrived. 

The may have guessed that there was a reason for their existence; they were created for a certain purpose and they were supposed to organize themselves to fulfill this purpose.  We have great powers and abilities that no other animals have.  If there is a creator, and the creator gave us these powers and abilities, we are clearly supposed to use them. 

The creator gave us the power to dominate all other beings on this world.  If they harm us, we can drive them into remote areas where they aren’t threats; if they continue to bother us, from isolation, we can hunt them down and exterminate every last member of their species. 

We have the ability to do this.

The creators (creator for monotheists) gave us these abilities. 

We are supposed to use them. 

To not use them is an insult to the one(s) who gave us these powers. 

We are supposed to wipe out any other beings that threaten us or even bother us. 

We have the ability to organize into groups and use or ability to plan and communicate to carry out vast projects that no other animals can carry out.  If we want to change the course of rivers, we can dig canals to divert them wherever we want them to go.  We wouldn’t have been given these powers if we weren’t supposed to use them.  We can build, design, modify the land, subdue it to make it suit our purposes. We are supposed to do all of these things.

People have accepted this as a reality of existence for a very long time, perhaps for the entire time we have been here.  The formal name for this mode of thinking is ‘manifest destiny.’

The idea is that there is a creator (or creators for polytheists), the creator has a destiny in mind for us, and the creator makes this destiny clear (‘manifest’) by giving us the power to do the things we are supposed to be doing. 

The principle of manifest destiny is often used by groups of people to claim a mandate to wipe out people living in areas that the people in that group want to take over for themselves. For example, during the conquest of the Americas, organized military groups (well funded by tax revenues from the masses) were sent into densely inhabited towns and villages to evict all of the people form their homes and send them to remote areas.  Often,  these people resisted the  removals and had to be killed to remove them.  A large portion of the people who were killed were children, not because children were targeted, but because a large percentage of the people anywhere are children.  This is a horrible thing to have to do and many soldiers who did these things often were so depressed afterward that they committed suicide.  (Suicide is a leading cause of death in soldiers and many scholars say that more soldiers have died of suicide than have died in action.)  

But this activity was organized and carried out on a massive scale.  Hundreds of thousands of people were involved in planning and arming the troops and millions of people contributed to the cost of these ‘removals’ by paying taxes that funded the activities.  Without the wealth that the tax revenues generated, these activities could not have taken place. 

How were people convinced to contribute to this cause?  They were told that we really don’t have any choice. The creator (a god who, in the religions involved in the conquest was named ‘God’) has made his intentions manifest and we must comply.  We must follow God’s mandates or we will be punished by an afterlife of eternal physical torture in hell, without any hope of respite from the pain through unconsciousness or ultimate death.  It is our destiny.  Any resistance is an insult to the creator who guides us and a mortal sin.

If a group of people are guessing about how they think humans are supposed to be interacting with the world, they may start with the principle of manifest destiny.  They may guess that humans are supposed to use our powers and take full advantage of the gifts that the creator which they guessed existed gave us. 

We are supposed to treat the world as ours, to use any way we want.

How about our interactions with other members of our species? 

Here, practical realities become important:  We (our group/tribe/clan/nation) are trying to take certain land.  Other groups are trying to take the same land.  The people who interpret the will of the creator tell us the answer is obvious:  God controls everything.  We fight the other groups.  God decides who he wants to have the land and makes sure that side wins.  They (the people who interpret the will of the creator ) tell us that God divided the world into ‘nations.’   He ordered the nations to fight each other and granted land to the victors.  (This is a foundational principle of the religions in the family called ‘The Abrahamic religions, which include Christianity, Islam, and Judiasm; all these religions share the same primary instruction book, called ‘Genesis’ in the Christian version.  The discussions of nations start with Chapter 10.) 

We must take the land or at least try to take it.  We must oppose other ‘nations’ who want the same land with all our power.  We are mandated to win these wars:  if we fail, we have no right to even continue to live. 

All this follows naturally and simply from this particular guess that a group of recently-evolved people might make shortly after they gained self-awareness’ and cognition.  They start with a guess and build on it. They need to fight over land and this requires a great many complex structures.  They need to build these structures.

Other Guesses

Other people may make other guesses. Starting with these other guesses, they may think other structures are necessary and may build other kinds of societies. 

Some people saw the awesome power of nature.  They realized they were helpless before nature.  If nature wanted to destroy them, it would destroy them: there wouldn’t be anything they could do to stop it. 

If you have ever seen a volcano erupt, you see that it incinerates everything.  It doesn’t treat humans any different than anything else.  If you have ever seen a flood, you will know that it can wash away homes and loved ones, sweeping them from you so fast that you don’t even have time to say goodbye.  Droughts take away crops and there is nothing  you can do to force rain to come:  if nature doesn’t want it, there won’t be any rain.  I have personally seen the power of nature on many occasions. 

I was in Orange Texas in 2005, 200 miles away from New Orleans, when Katrina hit.  Even at this great distance it had awesome power and no sane person could claim to have the ability to survive if something this powerful wanted them dead.  I was in Yellowstone in 1988 when fires burned most of the park, creating their own weather conditions with 100MPH winds flowing in as the heat of the fire lifted the air and everything in it upward.  Most of us have seen footage of disasters of what we were told were ‘biblical proportions:’  the 2004 Indian Ocean tsunami killed 230,000 people; the 2010 Haiti earthquake killed 316,000.  Although the newscasters call these ‘events of Biblical proportions’  the truth is that they are not rare.  Thousands of events that take lives occur each year and I have seen a great many of them with my own eyes. 

Nature is unpredictable. 

It has always been so. 

It was unpredictable for newly-evolved people.  They saw tragedies.  They would have wondered why these things happened.  Whatever forces direct the fury of nature somehow decided to destroy the people they loved.   They may think that any sane person would realize that nature is powerful and they needed to respect this power. 

Nature isn’t always  our enemy, however.

Normally, nature is a great benefactor, giving us everything we need and want. We see the beauty and generousness of nature far more often than we see its fury.  The smell of the rain during a summer thunderstorm, the songs of the birds in the morning, the serenity of a clear blue mountain lake at sunrise, the sweetness of a mango picked fresh from a tree, every day there are new wonders. It is almost as if nature treats us as a loving parent.  Normally, it gives us everything we want and does whatever possible to make us happy. Sometimes, however, we have committed some offense—probably without us even realizing this—and corrections are needed. 

They saw that most people in their community had the proper respect for nature.  But not all of them.  Perhaps the disasters were signs from whatever forces control nature.  Perhaps nature treats us well if we can understand its basic laws and follow them, but harms us if we take it for granted or treat it with a lack of respect. 

People don’t have to be religious to think this way.  Logical people can come to the same conclusion.  There is a balance in nature.  If we understand this and work within it we can make changes and keep nature operating as before. 

Religious people might go farther than this, imagining that there are spirits in the mountains and rivers that they must appease.  If they don’t respect nature, the sprits will punish them.  Some people combine these ideas in their minds.  They don’t really believe in spirits, at least most of the time.  It makes sense that the natural world has to be healthy in order to meet their needs.  But at times, when things get crazy, villages get destroyed and loved ones killed, they may slip back into superstition and believe it is better to try to appease the spirits even if they may not really exist.  Maybe sacrificing one who didn’t show the proper respect might allow the spirits to leave them alone. 

Newly-evolved humans had to guess what was important.  After they guessed, decided that a certain way to interact with the land and other people on it was right and other behaviors went against the things the believed were true and were wrong.  Groups that guessed that nature was in charge and that humans were just as helpless before nature as other animals, might conclude that we have the obligation to use our intellectual skills to create rules that prevent people from doing things that might bring harm to nature or offend any spirits that might direct nature. 

Nothing could be more dangerous to nature or offensive to any sprits that might be in charge than treating nature as something that we own and have the right to buy, sell, rape of its resources, pollute, devastate, or alter for the personal benefit of the owner.  When people who started with these guesses are making their rules, they will work very hard to make sure that no rules ever exist that allow people to treat nature as property.  They may discuss this with people who are not committed on the topic and make it clear that they will be very angry if anyone breaks the rules designed to prevent people from owning or claiming to own land. 

If people break these rules and disaster comes, some of the religious ones may be looking for someone to sacrifice to the spirits that caused the disaster.  If there are people who didn’t follow the rules, or people who followed the rules but said things that indicated they didn’t share the underlying beliefs, these people would be obvious candidates.  If you lived in such a system, you would realize it was not very smart to go around telling people you thought the beliefs were wrong.

People raised in such societies would probably never meet anyone who had any other ideas about how the world works. Nature is in charge.  The laws of nature are paramount and above all human laws. We don’t own the world and can’t own it.  Children raised in societies built on these beliefs would probably never consider that the had a specific type of society or that other types are possible.  They would think that there is only one sound and logical way to interact with the world:  they way they interact with it. 

But they do have a ‘type of society.’ When the first upright apes on earth gained self awareness and sapience, they didn’t find a guidebook explaining how existence works, whether they were created and, if so, giving the intentions of the creator.  They had to guess about these things.  They started with a very simple guess and decided it made sense.  They decided that they had certain beliefs about what was important in existence.  They built rules for the practical structures of their societies that depended on these beliefs.   They ended up with a very specific type of society that was built on specific guesses their ancestors about these things and the beliefs that were built on these guesses. 

Imagine you are an objective observer of earth societies, say a scientist on another world which had sent probe with high power cameras to earth as of the year 1400, in the calendar of the part of the world called ‘Europe.’ 

You see two entirely different types of societies.  One, in Afro-Eurasia, is built on the belief that we are supposed to fight over land, dominate it, and subdue it. This society has been around for several thousand years and, since it is built on conquest, it spread rapidly after it first formed.  (Any group that claims it is a ‘nation’ is the absolute or sovereign owner of any territory it can conquer.  Ownership-based societies have much stronger incentives to innovate, invent, invest, and take other steps that lead to progress and technology; the group with these advantages could take advantage of them to conquer additional land.  By 1400, there were no significant areas that hadn’t yet been conquered.) 

All of the rest of the world (all except for the Afro-Eurasia landmass and islands close enough to conquer) had societies built on the opposite belief system. 

You would probably think that both of these societies were pretty primitive. Neither was built on logical or scientific analysis of the different ways that thinking beings can interact with the world that meets their physical needs, or an analysis of the way the structures of society impact the human race as a whole or planet we live on. You may say that both of these societies are ‘first stage’ societies.  They are societies that beings might form that hadn’t fully come to grips with their intellectual capabilities. 

Societies built around Intellect

Our group in Pastland is in a position to form any kind of society we want.  We could start by holding séances, prayer vigils, vision quests, and drug-induced hallucinations to help us get in contact with spirits and our feelings about what might be right; we might work out belief systems based on the results to figure out the way our feelings or possible spirits tell us about the way we are supposed to organize our feelings. 

But we don’t have to do this. 

We can study the different structures that can be a building block of the societies of humans (or other beings with the same general characteristics as humans).  We can figure out the way these blocks can fit together and determine how each of the societies that can be built will operate.  We can organize and categorize the results so we can compare them to each other, to determine how each would work if we adopted it in our situation.

Of course, if we understand all possible societies, we will also understand societies that are built on beliefs:  the set of belief-based societies is a subset of the set of all possible societies.  We can examine the way they fit into the mix.  We know that, in the last iteration of the human race, at least two ‘example’ societies existed.  We can examine the way these societies worked. 

Once we understand all of the options, we can hold meetings where our group—which includes the entire human race—can decide what we want.  We basically have a blank slate to build on:  our moratorium prevented us from giving any people or groups (by any name, including ‘countries’) from having any rights to the world around us. There is nothing to undo, no vested parties to ‘overthrow,’ no owners to disenfranchise, and no corporations with rights to the world they will fight to keep. 

All we have to do is vote on the choice we want.  We can then make it a reality. 

Partial Ownability Systems

We would expect societies built on beliefs to be simplistic.  We wouldn’t expect people guessing about things they can’t verify to make extremely complicated and convoluted guesses.  For example, lets go back to a primitive time (say when humans first evolved) and imagine their guesses about whether spirits or gods (if they exist) want us to own or not own parts of the planet. 

The simplistic guesses are:

1.  We are supposed to own. 

2.  We are not supposed to own.

We would expect them to choose one of these two options.  Perhaps different groups in different areas may make different choices, some choosing option 1 and some choosing option 2.  But we would not expect these people to guess that we are supposed to accept that our people are supposed to own partial rights, including the rights to improve parts of the world but not the rights to use destroy and including the right to keep some of the rights to wealth (or money if money is used) the land generates, but not all of it. 

Those who are religious would not presume that the creators (creator for monotheists) want us to let people have deeds or titles that grant them some collection of rights that are in a ‘list of possibly ownable rights’ and that these creators expect to guess which rights we will let people own, make it a reality, and then be judged after death for our ability to make these complicated guesses and create contracts that transfer these rights accurately. 

It would be possible to create a system that has this kind of ownership.  But we would not expect people who are guessing about the intentions of superbeings with whom we can’t communicate (at least not in any verifiable scientific way) to guess that these invisible beings created this world and then are now watching all of the religions here to see if any of them get this right.  If a group of people were to create a system that was designed to let people own certain rights to the world (say the right to benefit by doing things that improve its productivity) but not own other rights, they would almost certainly not base this on guesses about the intentions of invisible superbeings that they guess might exist. 

They would build on science, logical analysis, and a comparison of the different systems that could be created.

Back to Pastland

When our group in Pastland arrived, we passed a moratorium.

We did this to give us time. 

We know that if we recreated the systems we had in the 21^st century, before we went back in time, we would immediately recreate the violent systems we left behind.  We didn’t rule this out entirely:  we can still choose to have these systems after 20 years, if a majority of our members want this.  But we have some breathing space.  We have time to consider the different kinds of societies that we could build, how they would work, and how each choice would affect the human race and planet earth over the long run. 

We all know the moratorium is going to end someday. 

We all know that something is going to replace it.  (It is possible that another moratorium will replace it, but it is also possible that something else will replace it.) 

What are our options? 

What other systems can we build?

We can take advantage of this 20 years to come up with options.  We can work them out. 

What Might Other Societies Look Like?

The two societies that have existed in our history were extreme systems. 

Territorial sovereignty societies start with one extreme:  all rights to the world, or 100% of the rights, are ownable.  Group of people who calls themselves the right name (‘nations’) can claim a part of the world (if it has not yet been claimed) or conquer it from people who have claimed it in the past.  As long as they take the right steps and can show that they have gone through the right ceremonies (they have a national song, for example, a flag, some fancy documents stating that they are a country, and a few others) they are considered to be nations and whatever part of the world they have conquered belongs to them, absolutely and completely, with no limits or restrictions of any kind.   This is an extreme way to interact with the world.  It is not possible to exceed the degree of ownability (100% ownability) that forms the foundation for these societies. 

Natural law societies at the other extreme.  They are built on the principle that humans have no rights to ever own, even for a limited period of time, even if the rights are limited, and even if accepting ownability (perhaps of a limited number of rights for a limited period of time) would bring great benefits for the people accepting these rights.  Nothing is so important that it can justify granting any rights for any length of time.  This is the opposite extreme, reflecting exactly 0.00000% ownability, period. 

If we were trying to figure out other societies, we might start by looking for systems that are in between these two extremes.  We could draw a line that includes ‘all possible options,’ including those we don’t understand and haven’t discovered.  We could place the two options we already understand on this line. We might come up with a line like this:

 

Chart of societies based on degrees of ownability:

0%                                                                                                                100%

 

Zero percent and 100% are extremes. There are a lot of numbers between these two extremes.  If it is possible to start with 0% ownability and build a society on this premise, and possible to start with 100% ownability and build a society, we might imagine it must be possible to have something in between, say a 25% ownability system, and build on that.  If it is, our chart of possible societies would look like this:

 

Chart of societies based on degrees of ownability:

0%                                  25%                                                                       100%

 

The idea of partial ownability is pretty hard for us to imagine, because it doesn’t correspond with the way we were raised to think about ownership.  To understand it, you must be willing to accept that ownership is not a philosophical concept at all (one created by a divine being or existing as a universal given that we must accept) but a mechanical system.  It is not a ‘yes’ or ‘no’ concept.  It is a device like a car engine, that we can adjust to operate any way we want it to operate. 

I want to give a quick example so you can see the general idea:

What Should You Do With Your Land?

Imagine that have just inherited a ‘land holding company.’  This company came to own a great deal of land over the decades before you were born. You didn’t even know the company existed until one of your distant relatives died and left it to you. 

The former owner did nothing with the land. 

You want to do something with it.

You open the files and to the first page, a property description.  It is a bog where wild rice grows.  You contact a land use consultant and have her go out and evaluate the land. 

She determines that if it were operated as farm, it would produce a free cash flow of $2.4 million a year. You can deal with this land several different ways. 

One option would be to simply get rid of it. 

Sell it. 

Don’t even consider whether you may possibly sell some rights to it and keep others:  simply conduct an auction and ask people to bid for the size of a pile of $100 bills they will trade you for the land.  Whoever offers you the largest pile will get the land in exchange for the pile of money. 

If you ask your consultant how large of a pile of $100 bills you might be able to guess, she will use some standard formulas to work this out. 

 

The standard formula to determine the market value of a cash-flow generating property is called the ‘capitalization of free cash flows’ formula.  You can find detailed descriptions of this formula on the internet.  The formula determines the amount of cash that, if invested in an interest-bearing account, will generate the same yearly cash income as the free cash flow of the property.  For example, what amount of cash would you need to invest at 5% interest (assuming this is the current market interest rate) to get $2.4 million a year in interest?  To calculate this, you look for a number which, when multiplied by 5%, equals $2.4 million.  In high-school algebra notation: X * 0.05 = $2.4 million.  To solve for X, divide both sides of the equation by 0.05 to get X = $2.4 million/.0.05.  Divide to get X = $48 million. 

 

If the going market interest rate is 5%, she will give you a number of $48 million (or some figure so close to this that any difference isn’t important for practical purposes.)  You could just get rid of the land, trading it for a pile of $100 bills roughly 17.2 feet high. 

But you decide you don’t want to do this. 

For this example, let’s say that you have an extremely large family.  You love them all and they think of you as their protector and provider. You have promised you are going to provide for your people forever.  The land produces wealth.  If the farm is operated in a sustainable way, it will produce wealth forever. 

If you sell the land, you will get a pile of cash.  You can divide this cash among your currently-living family members.  They will then spend it and there will be nothing left for the people you promised to support in the future. 

You decide you will not get rid of the land. 

You tell your consultant that you aren’t going to do this.  What other choices do you have?

She tells you that you could just hire someone to run the farm. 

There are people who manage farms and are looking for jobs.  You have to be very careful, however, because if people who know what they are doing and are honest, they probably already have jobs.  If you get someone who doesn’t know what she is doing, the farm isn’t going to produce anything close to what it can produce.  If you get someone who is dishonest, she may simply take everything the farm produces, sell it for cash, and leave.  You also have to worry about something bad happening to the farm.  Say a hurricane comes and the river nearby is predicted to breach its embankments. Once a breach started, it could grow rapidly into a flood that washes away all of the soil in your farm.  You, as the owner, don’t want this to happen. If you are there, you could order your employee to go out in the pouring rain and fill sandbags to reinforce the bank. But you can’t expect her to care enough to do this without being ordered to do it.  She has no financial interest in the farm.  Why should she put her life and health at risk trying to save it? Even if you order her to do it, she might just tell you she is going to do it and not do anything.  Then, if the farm gets destroyed and you call her, she can say ‘I did what I could, sorry.’  It isn’t her problem, it is yours. 

This option doesn’t meet your needs. You don’t want to create a business relationship where you have to watch your partner 24 hours a day to make sure she knows what she is doing, isn’t going to try to rip you off, and has no interest in whether the farm continues to exist or is washed into the sea.  You tell your consultant that this isn’t going to work either.  You want another option. 

Her next suggestion is to just find a renter and turn it over to the renter.  You can set you rent at the free cash flow of $2.4 million.  She can run the farm and keep everything above this.

But this has basically the same problems you would have if you hired someone to run the farm, but gives you no ability to interfere to protect your interests.  Your renter is going to sell production and get a bunch of money. She is then supposed to give the great bulk of that money to you. 

But when the time comes to pay the rent, she may say she just doesn’t have the money.  There are a lot of excuses she could use for this.  A few standard ones are: 

1.  I lost the check from the sale of the grain.

2.  I had it in cash but someone held me up at gunpoint and stole it. 

3.  Someone hacked my account and transferred the money to Nigeria. 

4.  I deposited the check but the bank must have made an error in the accounts and deposited it to someone else’s account. 

I have been a landlord for many years. I have heard so many excuses for not paying rents that I could write an entire book about them.  I had a tenant whose mother died so she had to spend the rent money getting to the funeral. The next month, her father died so she had to miss her rent.  The next month, it was the mother again.  I said ‘I thought your mother died two months ago.’  The reply was:  ‘That was my step mother; this is my real mother.’  I let her slide and eventually had to take her to court and remove her from the property, at great expense when her relatives died for a third time. 

Renting is a hassle and has the same problems that hiring people has:  the people who make the day to day decisions on the land can make money doing things that harm you.  You don’t want this.

You want to know if there are any other options. 

Partial Ownership

In this case, the example involves a ‘land holding company’ and not just the land itself.  You inherited a corporation.  Corporations have certain options that aren’t really available for mortal people.  One of them involves basically turning the person who makes day to day decisions on the farm into a kind of partner.  Make her a part owner.  She can make decisions on the farm and keep part of the wealth the land generates. If you do this by selling her an interest, she will have money invested and will have money at risk.  This will give her incentives to protect the land, to make sure nothing goes wrong that she can prevent, and to deal with any problems that arise quickly to prevent problems she can prevent and deal with any problems she can’t prevent quickly, while they are small and before they grow into major problems. 

Your consultant tells you that this is actually a very common way that land-holding companies deal with their land. In fact, there are companies in Hawaii that own millions of properties and deal with them by selling part interests. (The next chapter provides an example to show how this works in our real 21^st century world.)  You can do the same. 

If you do this, you will be an owner and the person who operates the farm will be an owner. 

Owners have certain interests. Owners want the land to be in as good of condition as possible so that, if they sold, they could get the highest price possible.  

Owners want production to be as high as possible. They want the free cash flow to be as high as possible. 

They want to prevent anything that can damage the property from happening if the can.  If something happens they can’t prevent, they want to minimize the damage and repair it as quickly as possible for the lowest possible price, so it will continue to produce as before.  If you take on a partner with an ownership interest in the property, this person will have the same interests you have.

 You are not going to simply give this other person a part interest. 

That won’t meet your needs. 

You need her to have some of her own money on the line.  In the investment world, people use the term ‘skin in the game.’  People who have a lot of their own money on the line feel incredible mental agony when they lose this money.  It feels so bad that, if you asked them, many of them would have preferred to have had skin rubbed raw (the worst kind of pain most people have experienced) than to have lost the money, if they had had the option.  People with a lot of ‘skin in the game’ are not going to let things go wrong if they can help it. 

What is the Right Percentage to Sell?

If the part owner has only a tiny amount of skin in the game, she may not really care enough to prevent problems.

For example, say you have a hired worker on the land and you want to sell her an interest but she only has $48 to spend. You can sell her a one millionth share for this.  (If a 100% interest would bring $48 million, a millionth should be worth $48.).  If she runs the farm well and it produces a free cash flow of $2.4 million, she will own the right to one millionth of this, or $2.40.  She will also get her $50,000 a year, of course, for running the farm, so her income will be $50,002.40 if she is a part owner and $50,000 if she is not. 

Each year, she must run the farm, pay all operating costs, pay her $50,000 salary for running the farm, and give you $2,399,997.60 as your rents.  (This is 999999/1000000^th of the free cash flow.)  If she does not do this, she will lose all the money she invested in the farm. 

But this isn’t going to be enough money for her to really care about, because she invested only $48. 

Let’s say she has paid everyone except you and has your money ready to go.  She is holding $2,399,997.60 of your money.  Now she has a decision to make: Is she going to be honest and give you the money that belongs to you, or is she going to keep it and make you sue her for it? 

She may be totally honest, but you would have to admit it would be tempting for her to take your money and let you have the farm back, giving up her $48 investment. 

She does have skin in the game.

But not enough to protect you. 

If you want to be protected, you need to sell her a larger share.  (If she can’t afford it or won’t buy, you can get someone else.  As long as you are offering at market rates, you will find someone who will buy the share you are trying to sell.)  

If you want her to have the largest possible incentive to prevent problems with the farm, it seems logical that you should sell her the largest possible percentage of the rights to the farm. The largest possible percentage is 100%.  This does give her very strong incentives to take care of the farm.  She will own all rights to it.

But you will now own no rights to it. 

The farm will produce for many generations.  You want this production to benefit your heirs.  But if you sell 100% of the rights, there will be nothing left to pass down to them.

It doesn’t do YOU any good to have HER working hard to take care of the farm, if you don’t keep at least some interest in the farm. 

Remember why you are doing this: You want to care for your people forever.  The land produces wealth forever. 

If you don’t keep any interest in the land at all, you have nothing to give your people.

Selling TOO MANY rights

You need to keep some interest in the property. 

Obviously, if your interest is miniscule, this won’t really be any different than having  no interest at all.  For example, say you decide you are going to sell all but one millionth of the rights to the farm yourself.  If the entire farm would sell for $48 million, a 99 999999/1000000^th interest will sell for $47,999,952. 

The part owner will keep everything the land produces except for $2.40 per year, which will be your company’s share. Of course the part owner will have very strong incentives to keep the farm in good condition.  This will benefit you:  there will be almost no chance you will ever not get your $2.40 each year.  (It is never in her best interests to not pay the $2.40, and let you repossess a property you can then sell for $47,999,952.)

She will also have strong incentives to improve the land. If she doubles the wealth this land produces, your share of the income from the farm will also double.  Rather than $2.40, you will get $4.80 a year.  This is a trivial amount of money.  Doubling the wealth production of the farm only makes you enough to buy a cup of coffee each year (at a cheap, cheap coffee shop).  It isn’t going to take care of your people. They will look back as you as an idiot.