Dear Town Meeting Member,

Forty-five years ago when I walked out my front door to study History, I understood nothing about taxes, mortgages, insurance, interest, or property tax, just like most young adults of today. If you told me that someday I would suggest to Town Meeting a dramatic restructuring of municipal finance, I probably would have laughed and asked, “what does that mean?” Years later, when I signed my life away for a thirty year mortgage, I barely understood the system any better. Chances are you were in a similar boat.

I have always been a voracious reader and regularly read texts that I could barely comprehend. Now I find myself writing and saying things that others find challenging. The two warrant articles I submitted certainly fall into that category.

While the Federal government gathers all the attention, blame and hope for the conditions of our lives, I have come to the opposite conclusion: the micro is the macro. Society is laid to waste in the smallest of decisions, based on certain assumptions that are not true, but are widely shared. Like genuflecting to a king, or believing the Earth is flat, tradition can be wrong, very wrong.

America got its start in Town Meeting. Certain decisions that were followed cannot be undone, from the Revolution, to the Civil War, to our modern elections which resolve nothing beyond reinforcing echo chambers of mutual animosity at great expense and distraction. Other decisions, however, are well within our grasp. We must keep the faith and trust the spirit. Good things do not come easily, but they do come when the time is right.

The predominate problem of society is in how we handle money. We spend a lot of time discussing money, but seldom actually discussing economics and flow. Town Meeting exists primarily to approve spending, and there is little discussion of where money comes from or questioning of longstanding assumptions.
Politically, the poor blame the rich and the rich blame the poor. In this “duopoly” both sides are wrong. The middle class divides along these same lines, hence the two dominate political parties. We are stuck in a cycle that I call The Democracy Wheel of Confusion. It does not matter where the spinner lands, it will not fix anything.

What I have offered in these two warrant articles is by no means a comprehensive solution, but it does offer an opportunity to alter our direction. The inertia of the current system, with three levels of government and three methods of taxation, can only change if we change it. It is unlikely that reform will come from above. Even billionaires can’t change the system. They have no idea of why they are so rich and why others are so poor.

The trouble lies in the math. We have all played a game of Monopoly. Everyone starts out equal, but with just a few trips around the board, all the wealth automatically trickles up into the hands of one player. Neither the winner, nor the loser, had any control over their destiny. Luck, and random mathematical probability, is in control of one of the most important aspects of our lives.

The whole purpose of democracy is for everyone to win. The rules of Monopoly guarantees that the vast majority loses, or are at least perpetually stressed. We can engineer a better outcome for everyone. We are competitive where we should be cooperative. It is the division of labor that raises the standard of living, but the bookkeeping is working against us.

We are all playing by the same rules, but since the rules are forcing wealth to divide, the only way to have a peaceful and prosperous society is to change bad rules for better rules. That was the central and essential promise democracy offered over monarchy. When we changed who makes the decisions, we did not change how money was handled. That continues to be the primary cause of our enduring troubles.

What is the Monopoly board trying to tell us? It is based on the ideas of Henry George, who wrote a wildly popular book in 1879, Progress and Poverty. Separate from his ideas of a Land Value Tax, which has some merit, the game reveals the mathematical currents of “the free market.” People buying and selling are all operating from a single philosophy of ‘buy low-sell high.’ Unfortunately, there is a huge mathematical difference between TRADE 1:1, and PROFIT 2:1.


If we make ten million TRADES amongst thousands of people, everyone will stay equal 1:1. If we make ten million PROFIT exchanges amongst thousands of people, we will create inflation, volatility, and inequality. Our opinion is meaningless. The math speaks loudest. Compounding an imbalance makes the imbalance bigger.

The laws of mathematics overrule whatever we hope for our community. We must reap what we sow. The conversion of time and material goods into money is likely why James Madison called paper money “wicked and improper” in Federalist #10. The hypocrisy of keeping slaves notwithstanding, he recognized and rightfully feared some of its consequence. Paper money is only 300 years old, and is being rapidly replaced by something far less stable: digital currency.

The present and the future are determined by the numbers we write down. The only way to change the future is to write down different numbers. As “radical” as these warrant articles may appear, they are actually very conservative compared to the scope of the problem, but they do put us on a different path where other necessary changes could follow. A $34 Trillion National Debt is an obvious sign of a massive bookkeeping error. It is explainable; we should stop ignoring it. It’s an economic problem, not a political one.

Our municipal and personal and business finances are too isolated from one another. We are all working at cross purposes, attempting to shift the burden of inflation, rather than being part of the solution with a comprehensive and true philosophy of behavior. Thomas Paine opened *Commonsense* with these words: “SOME writers have so confounded society with government, as to leave little or no distinction between them.” The same could be said of the difference between TRADE and PROFIT. Which is true: 2+2=4 or 2+2=5?

I realize that thinking of TRADE and PROFIT as distinctly different is a challenge. I have spent most of my life self-employed. It took me a while to see it, too, but that is exactly the problem of civilization.

It was not very long ago when a 10% profit margin was considered adequate, and materials were supplied at cost, as the attached roofing invoice by a Bryn Mawr Avenue roofing company in 1956 demonstrates. Labor and Insurance was $87.84. Materials supplied at cost. 15% Overhead was $26.41, and 10% PROFIT was $20.25. Total cost for the new roof: $222.72. Today, that would not cover the labor cost of one person for one day.

Today, both materials and labor are marked up, and for a significantly higher profit margin. What has happened is that profit margins have increased over time, and as a result, so too have tax rates, interest costs and wage demands. We are living in the midst of a mathematical chain reaction. Like a snowball rolling downhill, the problem is only going to get bigger and bigger. Volatility and inequality generates more volatility and inequality.

This is not a new idea. It is a forgotten truth. Adam Smith wrote: "The nation with the highest rate of profit goes fastest to ruin.”

Town government is the only entity that exists that can coordinate a solution. We can only fix the problem by acting as one. E pluribus unum. The formation of a CDFI (Community Development Financial Institution) can eventually become the equivalent of a public bank and insurance company. Both were the entire purpose of government all along. Banking and insurance are a form of mutual aid, but the bookkeeping is sabotaging our efforts. In the aftermath of the Civil War, many banks and civic organizations formed, but again with no distinction of the difference between TRADE and PROFIT. Henry George’s book was popular because of the light it shed, but it was not enough light.

The Founding Fathers were simultaneously merchants, insurance companies, bankers and law-makers. They all wore many hats and protected each other. That’s why land ownership was a condition of voting. You could not understand how to regulate commerce without already being a manager of some sort.

Town Meeting, like being a business owner, has to manage people, resources and money. The greatest challenge is the inflation *We The People* are creating. There is no King to blame anymore. Businesses are cannibalizing each other in an attempt to survive, and that does not create a happy society. The Wealth of Nations that Adam Smith chose for his book title was the social contract. Without it, there can only be social conflict.

Government, tax rates, and government spending do not exist in the Monopoly game. It is entirely a private sector model. It reveals the flaws of capitalism. Blaming government ignores why and how wealth separates, but math explains both. The problem lies entirely in how the players handle money. Buy low-sell high generates trouble, but as the 1956 invoice shows, buy low-sell low works better. We have been going backwards as profit margins have increased. Ironically, getting richer is making us poorer as a society. As the cost of property goes up, life gets harder, just like on the Monopoly board.

Many signers of the founding documents ended up in bankruptcy, both before and after the Revolution. Adam Smith warned about the consequences of high profit margins, but it fell on too many deaf ears. Instead, desperation and lust for opportunity drove more desperation and volatility, leading eventually to the Civil War.

America has been making up rules as we went along ever since landing at Plymouth. It certainly seems counter-intuitive that lower profit margins would make a society richer. Nevertheless, the faster the cost of living rises, the greater the volatility and the misery. Inflation does makes the rich richer faster, but it also makes the volatility worse, too.

In trying to escape the problems caused by inflation, we end up making the inflation worse. This eventually leads to civil war. There is a great book on the topic called The Great Wave by a professor from Brandeis. He shows the pattern starting in the 1200’s, well before the adoption of paper money and stocks. We have amplified all the problems of agrarian economies. Every renaissance occurs during a period of pricing stability. Low profit margins create a happy environment.

A divided society can only be cured through a coordinated effort, which is the promise that Town Meeting offers. We need a method of financial cooperation, to get everyone out of debt, and to halt inflation. These two articles put us on the right path. The road ahead is still very long.

A CDFI (Community Development Financial Institute) can get us thinking and working cooperatively with our money. The town currently self-insures all town employees for health care. We would apply the same logic to property insurance, and extend the net out to all residents. Why ship premiums and profits out of town, when it is going to be local residents that repair any insurance claims? We The People are the insurance company. That is what the Founders understood. Merchants founded the nation and attempted a solution that worked for everyone. They went as far as their imagination and circumstances allowed. Like them, I was a merchant with a deep reading of history. I have found critical errors. How I wish I could travel back in time to tell them, and prevent the centuries of misery that followed. I can’t, but that is the choice I put before you.

Property tax is a huge problem, as I explained in the petition. There are other articles on the warrant to extend property tax exemptions to vulnerable populations. They are fine as far as they go, but why not eliminate the property tax instead? An income tax would automatically be better for vulnerable citizens. An income tax will make town revenue a little less predictable, but it is already unpredictable because of variability in state contributions. Having multiple governments with multiple competing percentages (income, sales and property) makes zero sense, and property tax is the worst of the three. If you are taxed for owning something, then you never actually own it. It encourages inflation in housing values, and every recession has been related to a real estate bubble that then bursts.

A virtuous society requires virtuous people, and that always requires shedding bad habits for better ones. Property tax belongs in the dustbin of history. A municipally-owned CDFI will allow us to chart a different economic future. If we can be successful, other towns will copy our approach, and in time the world we want and everyone desires for the next generation will arrive.

Don’t underestimate your power. The State House is a body of 140 people. Town Meeting is almost as big. A YES vote will have an impact.