This is extracted from Sections 5-6 of a full paper:

Triumph of Ancient Philosophy,
Unanimously Agreeable Governance,
Economic Policy and Constitution
for Civilized Coexistence

Sankarshan Acharya[1]
Founder, Pro-Prosperity.Com and Citizens for Development

May 1, 2016

5. Unanimously Agreeable Philosophy of Governance
is Antithetic to the Common Underlying Ethos
of Every Modern System of Governance

This section argues that the common underlying ethos of every system of governance adopted by modern nations so far - be it socialism, communism, libertarianism, laissez faire capitalism or Islamic system - is usurpation of enterprising wealth creators.  This ethos is very antithetic to my unanimously agreeable philosophy governance defined by a guarantee of the democratic government of We the People to not enact any law facilitating usurpation of private or public wealth, even surreptitiously.     

Socialist and communist systems rely on a popular theme of equality to transfer wealth created by enterprising individuals to relatively indolent people including the rulers.  More importantly, these systems stifle motivation and creativity of inherently talented and enterprising individuals and, therefore, retard production of globally competitive merchandise and service, leading to a decay in national competitiveness and decline in international value of national currency - which makes most people poorer.  This is how the Soviet Union collapsed and China had to replace its cooperatives and communes, driven by equality in pay, with new profit making enterprises rewarding entrepreneurs.  India too had to disband its socialist-mixed economy. The underlying philosophy of Islamic System is schizophrenic because it touts for equality advocated by Islam but tolerates authoritarian leaders enjoying nonpareil privilege.    

Surreptitious systemic robbery of enterprising wealth creators underlying the Anglo-American system of governance of USA and Europe has been exposed by the financial catastrophe of 2008.  The financial catastrophe of 2008 caused a massive loss in USA of about $13 trillion of hard-earned wealth and 9 million of good paying jobs, while the government's borrowing and Federal Reserve's money printing has ballooned to $24 trillion, those searching for jobs has reached 94 million and the number of families in foods stamps and poverty has sky-rocketed.

The financial catastrophe of 2008 publicly bared the Anglo-American system of robbery.  The Financial Crisis Inquiry Commission of US Congress blamed the elite pundits of systemic robbery and their disciples heading the finance industry and government regulatory agencies for , for causing the 2008 crisis.  That Anglo-American rules constituted a legalized system of robbery is supported by evidence that (i) none of those blamed by FCIC for causing the enormous crisis has been jailed and (ii) the too-big-to-fail banks paid more than $100 billion in penalty for mortgage fraud.[1] 

The ensuing economic malaise and simmering social unrest in USA, Europe, Japan, China and India have made it necessary for nations to embrace my unanimously agreeable rules of governance for efficiency, stability and fundamental fairness or constitutional capitalism.[2] The unanimously agreeable philosophy is now "at the epicenter of transformation of USA from its currently established system of robbery of enterprising wealth creators - which has been proved as inefficient, unstable, fundamentally unfair (unconstitutional) and unanimously disagreeable - to an antithetic system which is unanimously agreeable and which attains within a general dynamic equilibrium model as efficient, stable and fundamentally fair or constitutional."[3,4] By fundamental fairness, I do not mean government-ordained equality which has failed in every country that had practiced it.[5] My fundamental fairness is a guarantee by the government of We the People to not pass any rule that facilitates legalized robbery of individual or common wealth, with impunity.  Such fundamental fairness is unanimously agreeable because even the robbers do not want to be robbed.

A system of governance formed with unanimously agreeable rules for such fundamental fairness is uniquely necessary to motivate inherently talented and enterprising individuals to innovate and produce their best by employing others and paying taxes to run a fundamentally fair government.  Furthermore, wealth held under the custody of individual wealth creators-under a fundamentally fair system-minimizes (diversifies) the risk to aggregate national wealth.  This contrasts systemic robbery which causes risky concentration of national wealth that can be easily looted or destroyed by intruders, invaders or terrorists.  The unanimously agreeable system (e.g., the safe central banking rule) is, thus, attained in general equilibrium within a model in which the government provides service not-for-profit at the least possible cost.[6]     

Despite unanimous disagreeability of systemic robbery, Robber Barons had succeeded, until they were publicly exposed due to failure of their system in 2008, by spreading a mythology that individual freedom could be attained only through small government that levies little taxes in the name of libertarian laissez faire capitalism. Myth in Sanskrit means lie. Mythology connotes a science of lies.  Epistemic lies are ultimately exposed and epistemic truths always prevail, eventually.  The libertarian system based on epistemic myth was bound to fail.  The true unanimously agreeable philosophy of governance, attained in a math-econ model of general equilibrium in 1991 and articulated and communicated in plain English to US Congress and Presidents during 2003-2007, exposed the myth about the pseudo unanimously agreeability of libertarian small government levying little taxes.  The libertarian system has made governments worldwide grow (not shrink) by borrowing unsustainably to make up for the taxes surrendered. 
The libertarian system failed because it is based on rewarding indolence and subservience (as opposed to efficiency and independence) in governance, academic-media punditry and wealth management.  This system still persisted for centuries because it created leaders in government, academy, media and financial industry driven by the following mission:

  • To advocate and enact laws needed to perpetrate legalized robbery of enterprising wealth creators with impunity.
  • To keep quiet about transfer of robbed wealth to the custody of embedded Robber Barons.
  • To forever remain subservient to the Robber Barons to receive a share of the systemically robbed loot via private accounts held secret by law.
  • To demolish any political or intellectual challenge to the system.

The crux of all the existing systems of governance is subsidies and quotas (based on birth to certain caste, race or social status) which are (i) inefficient (making a nation uncompetitive), (ii) unstable (causing social unrest) and (iii) fundamentally unfair (unanimously disagreeable).[7]  My unanimously agreeable philosophy of governance can be named constitutional capitalism, which eliminates all forms of subsidies and quotas.  The opponents or targets of my philosophy are the seekers of subsidies and quotas in any form: (a) socialists and communists or (b) Robber Barons and their anointed leaders in government, industry, academy and media who are willing to surrender their own freedom, in lieu of a share of the systemically robbed wealth, to spread myth (lies) about the now-failed libertarian system to systemically rob and subjugate the enterprising wealth creators.[8] Socialism and communism have failed to make nations efficient and stable in the long-run.  So has the libertarian system of privatizing profits and socializing losses. 

The systemic robbery in the libertarian system of legalized robbery is facilitated by the following:

  • Federal Deposit Insurance Corporation and Federal Reserve help Robber Barons (i) rob valuable assets of smaller banks and 'shadow' banks not protected by the FRA and (ii) get massive taxpayer funds in the name of 'rescuing' the smaller banks and 'shadow' banks. 
  • FDIC was created though Banking (Glass-Steagall) Act of 1933 to provide federal insurance of deposits held under the custody of 'private' banks.  The federal deposit insurance provision of the law effectively blackmails We the People to create new money on the back of people for the 'private' banks whenever the latter default on repayment of deposits under their custody.  This law thus facilitates a 'private' bank to rob insured deposits and then handover itself to the FDIC.  The FDIC then transfers the valuable assets of this bank to Robber Barons along with more taxpayer funds to the latter for 'rescuing' the failed bank.  This makes the banks run by Robber Barons ever larger and too-big-to-fail with protection by the FRA-1913. Robber Barons in the process have become too-big-to-be-jailed.
  • The Security and Exchange Act of 1934 permits Robber Barons to control Market Making and Clearing operations.  This facilitates Robber Barons to see vividly on real-time the flow of orders for trades submitted by everyone else like pension plans, mutual funds, and individual investors. Robber Barons can then trade against the interest of everyone else in the market with massive cheap public funds. This guarantees Robber Barons to rob everyone else with impunity.  They quickly privatize the profits and leave the corporate banking shells as wards of the public. The Security and Exchange Commission, created by this act, permits artificial creation and selling of securities not owned by the sellers.  Due to their privilege to view short and long positions of every other investor/trader in the clearing house and real-time order flows, the Robber Barons thus have a legally guaranteed privilege to squeeze wealth with impunity from other short-sellers and shareholders..
  • The Dodd-Frank Act of 2010 made the SEC's short-selling rule beyond judicial purview and made the TBTF banks systemically crucial (not subject to shut-down).
  • The Housing Economic Recovery Act of 2008 facilitated a takeover of Fannie Mae and Freddie Mac (which were well-capitalized according to the Treasury Secretary) under conservatorship to use them as 'bad banks' to rob their equity as well as $187 billion of taxpayer funds lent by Treasury to Fannie and Freddie to bail out insolvent TBTF banks.  Fannie and Freddie were forced to buy worthless (toxic) mortgage assets from TBTF banks at par.  The DOJ later charged TBTF banks more than $100 billion in fine for mortgage fraud so committed. 
  • Robber Barons want to pass new law to shut down Fannie and Freddie to collect usurious interest rates from credit-worthy mortgage borrowers.  

           
6. Conclusion

This paper has argued that the essence of modern constitution–to protect private property needed for individual freedom–is not as explicitly stated as the ancient Indian philosophy Hindutva scripted in Gita, namely, to not usurp others' wealth, even surreptitiously.  The Unanimously agreeable system (rules) of governance presented in this paper is consistent with the ancient Indian philosophy, but antithetic to the ethos of every system of governance ever adopted by modern nations - be it communism, socialism, libertarianism, laissez faire capitalism or Islamic system

The ethos underlying every system of governance adopted by modern nations thus far is surreptitious robbery of enterprising wealth creators with the loot shared by relatively indolent usurpers.  Any form of surreptitious robbery of enterprising wealth creators is antithetic to my unanimously agreeable system (rules) of governance with a philosophy of fundamental fairness (constitutionality) which are attained within a rational math-econ model of general equilibrium.  The unanimously agreeable system is not a dogmatic assertion.  It is amenable to (a) rational rejection for unreasonableness of the axioms used in my model to attain unanimously agreeable rules of governance in general equilibrium, (b) finding errors in my model or theorems and (c) argument about unreasonableness of my unanimously agreeable rules based on any other axioms or models.  Stated for brevity, my philosophy connotes the rational general equilibrium results, not some dogma.  This philosophy of fundamental fairness has been transgressed by every modern nation because of failure to script constitution explicitly to proscribe every form of robbery, privilege, subsidy or quota.  This failure has led to financial bondage of a vast majority of enterprising individuals worldwide. 

The only way to attain inclusive prosperity and freedom of enterprising individuals is (a) to mandate a new constitutional preamble of unanimously agreeable rationale of fundamental fairness to proscribe all forms of robbery, unfair privilege, subsidy or quota and (b) to shape all other articles of the constitution and rules of law conforming with this preamble.  This new constitutional preamble is the essence of my unanimously agreeable philosophy of governance, which is akin to the thrust of Gita or the ancient Indian philosophy of Hindutva. This paper substantiates that unanimously agreeable philosophy and rules of governance have indeed triumphed in the real word because of their necessity for civilized coexistence of humanity.

[1]Acharya, S. (April 2, 2016), "War, Prosperity and Civilized Co-existence of Humanity," http://pro-prosperity.com/War-Prosperity-and-Civilized-Coexistence-of-Humanity.html

[2]Acharya, S. (September 14, 2013), " Constitutional Capitalism for First-best Efficient Governance, Obtained in general equilibrium based on rational microeconomic analysis, devoid of parochial dogmas, politics or prejudice," http://pro-prosperity.com/Constitutional%20Capitalism.html

[3]Acharya, S. (2014), "Public Lending to Private Hedge Funds is Inefficient, Unstable, Unconstitutional and Unanimously Agreeable," forthcoming in the Journal of Governance and Regulation.

[4]Acharya, S. (March 2, 2016), " Established Ethos of Systemic Robbery Versus Antithetic
Unanimously Agreeable Philosophy in US General Election," http://pro-prosperity.com/Established-Philosophy-versus-Unanimously-Agreeable-Philosophy-in-Election.html

[5]Acharya, S. (March 4, 2016), "Demanders and Suppliers of Freedom," http://pro-prosperity.com/demanders-and-suppliers-of-freedom.html

[6]Acharya, S. (2016), " Arbitrage Pricing of Total Risk of Assets, First-best Governance of Financial Markets and Unanimously Agreeable Safe Central Bank in Equilibrium,"
http://pro-prosperity.com/Research/moralhazardliberty.pdf

[7]Acharya, S. (2012), "No-subsidy Mantra in Governance to Make a Attain the Most Efficiently Competitive Economy," Journal of Governance and Regulation," also available at
http://pro-prosperity.com/Research/Governance-and-Most-Efficient-Competitive-Economy.pdf

[8]Acharya, S. (April 15, 2016), "Adverse Impact Robber Barons Funding Elections,"
http://pro-prosperity.com/Adverse-Impact-of-Robber-Barons-Funding-Elections.html