What happens when the State abandons black Americans?

In their book, The Sovereign Individual: Mastering the Transition to the Information Age, James Dale Davidson and Lord William Rees-Mogg describe the demise of the welfare state with the political changes the information age will bring about. Those who can garner, manipulate, organize, distribute, and monetize information and use today’s digital technology to deploy this new capital from anywhere in the world will be able to achieve a level of individual sovereignty such that the protection services of the old nation-state will no longer be needed. The internet, cyberspace, will be their new jurisdiction, and with capital in the form of information, they will be able to carve out a minimized or tax-free environment in whatever physical jurisdiction they choose.

Information losers, according to Davidson and Rees-Mogg, won’t like this new world. This information-based economy will challenge their welfare state “employee” status. It is a welfare state employee status because in exchange for the “work” that they do at the polls i.e. their vote, information losers are awarded with transfer payments such as Medicaid, Medicare, food stamps, and low-income housing. As the hoarders of the new capital, information, choose lower tax jurisdictions, information losers are left holding the bag containing reduced benefits, the result of a lowered tax base.

The recent tax reform legislation passed by a GOP-led Congress and signed by President Donald Trump is a small indicator of the leverage the wealthy have, especially those who make their income as sole proprietors or partners in a business where they are now beneficiaries of a 20% reduction in the taxes they would normally pay on pass-through income. Congress and the President will now have to reduce or eliminate programs made infeasible by a $1.5 billion tax cut.

There is no guarantee that tax cut goody bags will be continually given out in the future. If the GOP loses both chambers of Congress in this year’s midterms, then Democrats will pursue a rewrite of the tax reform, or at least put on a good show effort.¬† I say a good show effort because the response by the wealthy will be, “Remember the two trillion dollars we have stashed overseas? How about we keep it there?”

Black Americans are not in the information age game even though blacks over-index on social media sites and, as a proportion of their population, own as many smartphones as whites and Latinos. Black Americans are under-indexed when it comes to employment in information technology. In an article for The Huffington Post, Jamal Simmons noted that black women may be able to scrape up $36,000 for a tech start-up, but white males scrape up on average $1.3 million in start-up funds.

And while blacks and Latinos continue to represent low single-digit proportions of actual STEM employees (technologists, mathematicians, engineers), there are plenty of black consumers of entertainment content on Facebook and Instagram. This content is low value. It differs from information which can be used as an input for production.

You may ask, “Don’t blacks have a right to consume entertainment?” My answer would be, “It’s not about rights to consumer content. It’s about channeling as much time and energy into mining and distributing information that creates knowledge that solves the deep well of problems in the black community.

Meanwhile, the State apparatus that blacks have disproportionately relied on for economic support and political protection is becoming bankrupt. Based on this recent tax reform, one would not sound too cynical in concluding that the GOP was in cahoots with the plot to blow it all up.  The information winners will not think twice about leaving information losers behind.

The new cyber society will see the poor pay more for government

I sense a major “cost shift” for tax payers over the next twenty to fifty years as the more affluent of United States citizens move more of their survivability activities into cyber society versus current brick and mortar society.

I believe one key will be the use of cyber currency by an increasing number of service providers and producers. Less dependence on fiat money and more reliance on a block chain that cuts out the middleman providing for faster payment systems. In addition, the affluent are re-imagining the use of public infrastructure by using it less frequently or more efficiently. Think drones, driver-less & fuel efficient vehicles, or the delivery of groceries via Instacart.

The affluent will also find more innovative ways to provide security, from improved security technology to private police forces. In short, as the affluent pursue an increasingly self-sovereign approach to life, they will make the case for dishing the traditional services of the State while arguing that their tax burdens should be less. Why support police and road services that hey hardly need. If anything, they will argue, let us reduce our tax bills by the amount that we spend on providing these services for ourselves.

For low income individuals and a large proportion of communities of color, they will experience the burden of the “cost shift” as tax jurisdictions pass on the costs of providing traditional State services to these communities. These communities will not be able to bear the burden given their low incomes. Services will be reduced as traditional government finds itself facing competition from non-State actors financed by the more affluent.

The State will react violently at first. It will create laws designed to slow down the affluent’s abandonment of the traditional State system. It may, ironically, use net neutrality laws to slow down deployment of the advanced networks necessary for delivering services to taxpayers leaving the system. It will further reduce renewable energy subsidies to residents that generate electricity at their residences.

I don’t expect the State’s attempts at holding sovereign individuals hostage will be successful. The attempts will invalidate the State’s arguments that it represents democracy when the actions to squelch freedom are the furthest from the truth.