Why Feudal Societies Won't Let You Save Money and Government Can Do Nothing About It
This Is Not A Policy Issue
Among conservatives, the argument in favor of capitalism is that capitalism has lifted more people out of poverty than any other socioeconomic system, but welfare reform is needed for greater access to opportunities. Among progressives, the argument in favor of capitalism is the same, but government investments are needed for greater access to opportunities.
In both cases, they are wrong — and part of the reason is a disconnect between money and liberty in people’s minds. Furthermore, this illusion of free money seems natural after several decades of State monopoly money, trillion dollar government deficits, and endless media reports about money supply and trade deficits.
But is policy reform the best or only way to expand opportunities for a great number of people – especially those living in the poorest regions? It is not. There are even greater impediments than the invasive force of taxation and the covert force of government spending. Given that premise, this brief essay will examine some of the ways savings and the accumulation of capital can be stymied or penalized – to the detriment of everyone.
Specifically, in what other ways are people forced to part with their money — and what is force? For my purposes here, force is the threat of physical violence, and fraud will coerce you to act against your self-interest, but force is also the threat of social isolation. When you are conditioned by family bloodlines, ethnic traditions, religious dogma, cultural indoctrination, nationalist loyalty, etc., to pledge part of your livelihood to the group, you will experience that force.
Social pressure is real, it can be powerful — and is probably most fierce with family. Naturally, we are all born as totally dependent on our parents or their surrogates for many years and for everything — and this demands a collectivist social structure. Furthermore, parents have a moral duty to their children, must share what they produce, and teach them to become productive and self-sufficient. In turn, the young and mature adults are expected to return the favor as the older generation ages and becomes less capable.
In fact, independence is an existential need for human vitality and a virtue for ethical behavior and self-esteem, but independence is also a threat to those who prefer the ease of dependence on collectivist social structures. Of course, those who live in fear of independence have the legacy of tradition, the emotional pull of need and the guilt of duty to invoke against the independence minded.
To help illustrate the power and punitive nature of socially enforced taxation, the Akan tribe of the west-central African country of Ghana has elaborate protocols and rituals for the remains of deceased family members. According to matrilineal bloodlines, members of the extended family are expected to contribute to the costs of a lavish funeral that is deserving of an Akan elder. And this can become a three day event with a custom designed, hand painted coffin, an event center with a large staff to feed hundreds of strangers, photographers, dancing pallbearers, and live music.
But that is the event. The fundraising can take months, during which the body is refrigerated in mortuaries at hospitals at an escalating rate. As David Oks wrote:
families will spend more money on burying the dead than on keeping the sick alive: indeed, in the Kagera region of northern Tanzania, families spend 50 percent more money on funerals than on medical care.
As he notes, this is not unique to Ghana. In many parts of sub-Saharan Africa, funeral insurance is more popular than health insurance and many families go into debt or poverty because of funeral costs — all because of cultural traditions, reverence for elders, and societal prestige. Tradition, reverence and prestige – keep those in mind.
These are known as kinship societies and the duty imposed on the most productive members of extended families in Africa is known as “the black tax,” as Oks reported:
One experiment found that rural Kenyan women were willing to pay significant sums in order to hide their income from relatives; likewise, in Cameroon, it’s common for people to pretend to be poorer than they are, and thus avoid sharing obligations, by taking out unnecessary bank loans.
Certainly, the cost of hiding wealth is another layer of tax that could have been invested more productively, but it makes sense for the prime mover of wealth creation — the individual, to protect their earnings. And “the black tax” covers more than just lavish funerals. An informal redistribution system of payments among extended family networks throughout sub-Saharan Africa imposes even greater duties on high income earners.
Not only can this include friends and neighbors, the social pressure extends to wedding ceremonies, elderly pensions, and operates in other cultures in different ways. For example, the practice of “wasta” in Arab societies amounts to influence peddling. This may be for employment opportunities or service and manufacturing contracts, but it circumvents a merit-based selection process that naturally imposes an unseen tax on productive capital.
In other words, the power of pull demands payment. There is reciprocity for the influencer. Profit is diverted to the strongest connections, not the most profitable uses — and this amounts to a system of tribute. If you are successful, you owe a duty to your sponsors and kinship priorities.
And in China, these are called Guanxi networks. Based on Confucianism, there is a social hierarchy for mutual commitments that demand face-saving gestures of reciprocity. As an elaborate scorekeeping system of gifts and favors, when “mianzi” (face) is at stake, it can be a moral or social catastrophe to refuse a guanxi obligation. Not surprisingly, this strict enforcement mechanism extends to awards for government contracts — and political corruption has become a routine force in business transactions.
Another insidious tax that impedes wealth creation is a centuries-long practice in rural India known as the Jajmani system. This is a social caste-based structure in which entire families are obligated to serve their landowning caste families. Everyone from farmers to artisans and service workers to landowners are paid in grain. That is key, for without money, wealth accumulation was not possible. And for those born into this arrangement, you inherit the duty or try to separate yourself from Hindu social pressure.
A less noxious example of reciprocal economic obligations is the “familisimo” tradition of Latin America collectivism. This includes payments from immigrants to the United States of about 6% of GDP for El Salvador and Honduras, but also obligates godparents (padrinos or madrinos) who assume financial and spiritual obligations for young couples engaged to be married. This may dilute the cost of the fiesta to the immediate family and assure a larger celebration, but declining to contribute has social consequences.
Perhaps the most obvious and one of the most egregious practices is wedding dowry. As reported by the University of Central Florida:
The dowry system in India perpetuates this cycle further as women are expected to gift their future husbands and future in-laws with durable goods, jewelry, money, and other lavish gifts as an expectation of marriage. Through this system, many workers and families are trapped in consistent cycles of debt. If parents cannot pay the debt, children are sent to pay it in their stead.
All of these practices share a common, practical heritage — collectivized efforts for survival in harsh environments and primitive societies. And a common theme — the destruction of wealth as the bond for collectivised societies built on traditions, reverence and prestige that has become useless, unearned, and superficial. As experienced by the victims of the African kinship tax, wealth accumulation leads to independence – and that is the greatest threat to the survival of all collectivist systems.
And perhaps the most accurate description of today’s multicultural forced march to primitivism is the Big Man system of ritual wealth destruction in Melanesia’s Papua New Guinea. As Anthropology Review summarizes this:
The Big Man is a term used in ethnographies of Melanesian societies to describe a person who occupies a position of leadership and prestige and has great influence over the community. His power comes from his ability to accumulate wealth and resources and distribute them among the people. He is also responsible for mediating disputes and ensuring the well-being of his constituents.
In America today, those constituents are the political donors who run non-governmental organizations (NGOs) tackling the “existential threats” of free markets, earned profits and contractual obligations. To them, savings, investment and wealth accumulation must be punished — for “the common good.” And the Big Man is people like the Mayor of New York City who are worthless without the wealth of their victims.
And what do modern societies have that primitive cultures and their postmodern promoters in the West not understand? The anonymity of objective law and sound money that is provided by trusted institutions that defend property rights. In other words, no one is born owing a duty to anyone or obligated to duties they did not voluntarily accept.
When your earned wealth and your privacy are no longer a liability, the social forces of wealth destruction will evaporate, personal wealth and pride will compound, societal wealth will expand, capital will further accumulate, and this benefits everyone. Yet, Africa and other impoverished regions will not overcome State corruption until the traditions of altruistic collectivism are rejected.
To conclude, the ultimate measure of any civilized society is privacy — and this can only be achieved when individual rights, political liberty and equal justice become the revered traditions.
