February 21, 2025 – Taxes are often seen as a mundane necessity, but what if they were the key to understanding the rise and fall of civilizations? In this compelling discussion, Dominic Frisby explores the fascinating history of taxation, revealing how it has shaped societies, fueled revolutions, and even determined the fate of empires. From ancient systems to modern monetary theories, Frisby sheds light on the unintended consequences of taxation, the growing challenges posed by digital economies, and the looming financial crises facing nations today. If you’ve never considered how deeply taxes influence your world, this conversation will change your perspective.
Amazon: Daylight Robbery: How Tax Shaped Our Past and Will Change Our Future: Frisby, Dominic
Key points discussed in today's show:
- Taxation follows a historical cycle – Governments introduce taxes, often during crises, claiming they are temporary, but they become permanent and grow over time.
- Taxation influences society and freedom – The way a society taxes its people determines prosperity, freedom, and economic mobility. Over-taxation often leads to unrest or revolt.
- The Islamic tax model and empire expansion – Low taxes played a role in the rapid expansion of early Islam, offering financial relief compared to heavily taxed regions.
- The Laffer Curve and economic growth – Lower taxes can sometimes generate higher government revenue by encouraging productivity and compliance.
- Government debt and inflation – Nations increasingly rely on debt, money printing, and inflation to cover spending, devaluing currencies over time.
- Modern Monetary Theory (MMT) debate – Governments justify endless debt issuance, but history suggests this approach leads to inflation and financial crises.
- Rise of the gig economy and digital nomads – Remote work and freelancing make income tax harder to collect, challenging traditional taxation models.
- Cryptocurrencies as a tax disruption – Bitcoin and decentralized finance pose a growing threat to government tax collection and economic control.
- Tax migration trends – High-tax states and countries are losing businesses and high-income individuals to low-tax regions, reshaping economic landscapes.
- Historical role of taxation in governance – From ancient Rome to modern times, taxation has influenced wars, revolutions, and government structures.
- Tech's growing role in governance – Technology could replace traditional government functions, challenging the nation-state model.
- Lessons from history – The most prosperous societies have historically had low taxes and high economic freedom, while over-taxation has led to decline.
Transcript
Jim Puplava:
Well, death and taxes are our inevitable fate. We’ve been told this since the beginning of civilization. But what if we stop to question our antiquated system? Is it fair, and is it capable of serving the needs of our rapidly changing modern society? Joining me on the program is author Dominic Frisby. He’s the author of a new book called Daylight Robbery: How Tax Shaped Our Past and Will Change Our Future. And Dominic, in the beginning of your book, you talk about how these tax cycles work, and I wonder if you’d explain that for our listeners.
Dominic Frisby:
Yeah, with great pleasure, Jim, and thanks very much for having me on the show. Taxes do seem to go through a cycle. It’s very hard for leaders to enact new taxes during peacetime, and often that will end up bringing down the leader. A great recent example was Margaret Thatcher, who was brought down in the UK by the poll tax. You tend to find that governments need some kind of crisis in order to justify new taxes, usually a war. And the tax is presented as temporary, but it becomes permanent. Another example of that might be quantitative easing, which is a sort of inflation tax, if you like. Income tax was introduced to the UK for the first time in the Napoleonic Wars, and it was supposed to be temporary. It’s never gone away. The amount of taxes payable is low at first, but it increases over time. The tax often violates some basic freedom of some kind. Many go to great lengths to avoid paying it. And so it distorts how people behave and the decisions they make. And then, as that tax matures, there are all sorts of unintended consequences which get worse. As the tax matures, much of the money is wasted or spent in a way with which the taxpayer doesn’t agree. And finally, people have had enough, and there’s some kind of movement—a campaign, a protest, even a revolution—to get rid of that tax. And government is always very slow. And you can take almost any tax in history, and they all go through that evolution to a greater or lesser degree.
Jim Puplava:
So when you take a look at taxes, and they’ve been with us throughout history—from pharaohs to prime ministers to presidents—I want to talk about, as you outline in your book, historically, how taxes played a role in shaping nations and civilization. And let’s begin with, for example, going all the way back to, let’s say, ancient times and where you had, basically, for example, if you look at Muslims who conquered most of Europe, they used taxation as a way of spreading their religion. Let’s talk about that and how it shapes society.
Dominic Frisby:
Let me just say how this book came around, and we’ll come to Islam in a second. It used to be—I still am—a massive gold bug back in the noughties. And I became convinced that if we’re going to save society, we needed to go back to some kind of sound money system. And I started to think more and more about that. And then, you know, there’s a close relationship between the system of money and taxation. And I realized that taxation is how you design a society. You determine a society’s destiny by how you tax it—whether its people are going to be prosperous or poor, whether free or subordinated. Taxation is almost a measure of freedom. At one end of the scale, you have a totalitarian state where a worker doesn’t own any of his own labor. And then at the other extreme, you have, you know, an anarchy where there’s no taxation at all. And this idea—and by the way, in all recorded history, there has never been a civilization without taxation. There have been civilizations, like ancient Greece, where taxes were voluntary, but there’s always been some kind of taxation. And the tradition of the tithe, where you give a tenth of your work or a tenth of your produce to the church—that predates Christianity and goes all the way back to ancient Mesopotamia. And the very first written records we have are, in fact, tax records. And tax records are how historians tend to investigate societies because they tend to be very well preserved, for obvious reasons. But it’s probable that this idea of a duty to the greater collective existed even in the hunter-gatherer societies that predated civilization. So, as you say, I think taxation of some kind is inevitable. But you get good systems of tax, you get fair systems of tax, and you get bad systems of tax. You know, you can tax people too much, and you can tax people in the wrong way. In my opinion, in the West today, we are taxed too much, and too much taxation is taxation of labor. We should tax land more and labor less. That’s just a general comment because labor is the only means by which somebody who starts out with nothing has to progress. And if you’re constantly taxing labor but not taxing assets, then it becomes very hard for the person who starts out with nothing to progress. And I think that’s one of the reasons why we have such a big inequality gap between the young and the old, who tend to be asset-rich but labor-light. So, coming to Islam now—you know, in olden times, religion wasn’t just about God; it was a means of—in fact, often the god was the king, and religion was a means of governing people. And, you know, if you wanted, for example, to stop people eating pork or something, you just made it a sin. It was almost like the media of the time, if you like—it was a way of communicating. But historians struggle to explain how it was that Islam grew so quickly. In three or four decades, it went from one tiny part of Saudi Arabia to owning most of North Africa, the Middle East, and even up into Spain. And then when you learn that Islam was built on a very, very low system of tax—the countries that Islam was invading, all the falling Roman Empire or the Byzantine Empire or the Sasanian Empire, had been burdened with war and heavy taxes for a long time. And so when the Islamic invaders came, they were given a choice, which is: you can convert to Islam and pay no taxes, or you can pay taxes—but if you don’t pay taxes, we’ll kill you. So it was death, taxes, or Islam. And most people chose Islam. And that’s one of the means by which the empire spread so quickly. It relieved people of the taxes that they were paying to their previous rulers.
Jim Puplava:
You know, I want to quote something from your book, from the Tunisian Ibn Khaldun. He said, “In the early stages of an empire, taxes are light in their incidence but fetch in large revenue. As time passes and kings succeed each other, they lose their tribal habits in favor of more civilized ones. Their needs and exigencies grow owing to the luxury in which they have been brought up. Hence, they impose fresh taxes on their subjects and sharply raise the rates of old taxes to increase their yield. But the effects on business of this rise in taxation make themselves felt, for businessmen are soon discouraged by the comparison of their profits with the burden of their taxes. Consequently, production falls off, and with it, the yield of taxation.”
Dominic Frisby:
Can you believe he was saying that in the 12th or the 13th century? It’s just incredible. And he was a great advocate—and he was one of Laffer’s heroes, by the way—Arthur Laffer, famous for the Laffer Curve. And Arthur Laffer quite often says, you know, “I didn’t invent the Laffer Curve; this goes all the way back to early Islam and probably even before that.” But it’s certainly true, and Kennedy said this as well, that people confuse high levels of taxation. Government revenue often actually increases with lower levels of taxation, simply because people are happier to pay it—so there’s less fraud and evasion—but secondly because the economy tends to grow. And as the economy grows, revenues increase, and economies stand a better chance of growing when taxation is low. And perhaps the greatest modern proponent of that theory was Cowperthwaite—John James Cowperthwaite—who was the financial controller of Hong Kong for many years and presided over its extraordinary growth in the second half of the 20th century.
Jim Puplava:
There was a quote in your book under “Taxes Gave Us the Modern State.” And the thing that really struck me—there was a passage in your book, and it was Louis XIV, who ruled France for 72 years, the longest-serving monarch. In 1715, as he lay on his deathbed, he said to his heir, “Do not follow the bad example which I have set you. I have often undertaken war too lightly and have sustained it for vanity. Do not imitate me, but be a peaceful prince, and may you apply yourself principally to the alleviation of the burdens of your subjects.” But unfortunately, Dominic, he left his country’s finances in a perilous state, which a lot of historians trace the origins of the French Revolution to what went on during Louis XIV’s reign. And the reason I’m bringing this up is, if you take a look at the U.S. today and just take a look at this new century—going back to George W. Bush, who ran up a war, ran up trillion-dollar deficits; Obama, who ran up trillion-dollar deficits; Trump, who ran up trillion-dollar deficits; and now Biden—we’re getting to the point where we’re approaching 30 trillion, and the interest rate that the government is paying is very low. But at some point, just like Louis XIV, these roosters are going to come home.
Dominic Frisby:
I really think they are. And you think America’s bad—come over to Europe, Jim; we’re a lot worse. I think America’s roughly at about 40% of GDP, but in Europe, we’re about—we’re a good 10% higher. France is the worst of all. And in fact, the French, you know, before COVID-19, the gilets jaunes—they were rioting, and it was petrol taxes that were the cause of their riots. But I mean, we’ve been saying this for so long, but the West is in a serious predicament where its spending obligations, its promises, way outweigh its ability to pay. And it’s dealing with it through three different methods. Firstly, it’s raising taxes. Secondly, it’s printing money—but that’s taxation without legislation, as Milton Friedman put it: inflation. And thirdly, it’s raising debt. And, you know, debt, in my opinion, is just a tax on the future. And it’s artificially suppressing rates to make that debt cheaper to manage. But the bill has to be paid in one way or another. And it’s been deemed that raising rates and making money sound again is a nonstarter—you know, Wall Street is just too addicted to stimulus now. And so it looks like the large majority of the bill is just going to be paid by effectively devaluing the currency. But it’s a terrible predicament, and it’s only gotten worse with COVID-19 because it’s just introduced extraordinary new levels of both spending and money printing.
Jim Puplava:
I want to talk about something that is really—if you take a look at the U.S.—has been in place for almost two decades, and that’s modern monetary theory, where the thinking is, if you can issue debt and spend money in your own currency, there’s no limit as to the debt you can issue, which, by the way, both sides subscribe to this view. Doesn’t matter if you’re a Republican or Democrat; nobody’s talking about deficits anymore. In fact, they’re actually being dismissed. But sooner or later, you can’t rack up this debt. And Dominic, governments, when they get in this situation, do what they always do: they print money, they inflate it away, or they devalue the currency. And how much of that is ahead of us?
Dominic Frisby:
Well, yeah, I mean, it’s classic Diocletian Rome chipping the coins. It’s funny—I was talking to a friend, and he was saying to me—I won’t mention the name—but he was saying, “I really like this particular economist.” And I said, “Why?” And he said, “Because I agree with what he says.” And I think what happens with government is that a lot of them are embracing this MMT because it gives them a route out of their predicament. But, you know, if you can just print money, then why do we need to tax people at all? And I’ve yet to hear a good answer to that from an MMT proponent. The main reason they give is that you use taxation to stop inflation. Now, my view is that the way inflation is presented is verging on the fraudulent because consumer price inflation only measures a basket of consumer goods, many of which are produced in China, which has been exporting its own deflation. And it doesn’t measure money supply growth, money creation. Only about 13% of newly created money actually goes into consumer goods, according to research by a company called Positive Money in the UK. And something like 80% either goes into real estate or financial assets in the form of leverage or mortgages—whatever it is. And we don’t include house prices; we don’t include stock prices. And in fact, one of the only reasons why the American stock market has been so strong is that people no longer hold their savings in—once upon a time, you’d keep your savings in gold because gold was money, and gold kept its purchasing power. But since gold’s left the money system, people have used government bonds and now the stock market. You hold your cash in the form of index trackers or whatever it is, and the stock market goes up by 10 or 15% a year. And that protects you against inflation. And so that’s, you know, one thing leads to another. But if you actually included financial assets—that is, the stock market—in your measures of inflation, actual inflation would be much higher. So it’s a sleight of hand, in my opinion.
Jim Puplava:
Two things that could be disruptors to the taxation schemes of government: one is the transformation of the economy, especially in the U.S., to the gig economy, where you’ve got these people working independently, part-time; and then also the emergence of cryptocurrencies like Bitcoin.
Dominic Frisby:
Yeah, I mean, this is a huge threat to the nation-state model around the world. And wherever taxes are highest, the bigger threat this will be. And that is—the system of taxation is built around the physical age, the Industrial Age, where goods were produced in one place, and you tax these goods, and the worker went to that place and worked—or he worked for that company all his lifetime—and taxes can be deducted at source. Now, something like 50% of government revenue around the world derives from income taxes in one form or another—50% of government revenue; it’s an extraordinarily large number. And an ordinary worker who lives in one place and goes to work in another place is an easy person to tax. But what we’ve seen over the last 20, 30 years is this move—this rise of the new intangible economy, the digital economy. If you compare Silicon Valley in 1990 to what it is today, it’s something like—the market cap of the four biggest companies is something like over 100 times higher. And yet those four biggest companies employ a quarter as many people. So there’s far fewer people in full-time employment, but many people are earning their money as a result of Apple, Google, Amazon, Facebook—whatever it is—eBay, all these companies, but on a freelance basis. Now, income tax is much harder to collect after the event from a freelance worker; there’s much more evasion, there’s much more error. Freelancers—it’s proven—much more expensive to write off against their tax. And on average, they pay 20 to 30% less. Now, once freelancers start using—and by the way, COVID has accelerated this dramatically because it’s seen a huge rise in remote working. And as people start working remotely, they take on freelance jobs. So more and more—COVID has slightly slowed this down, but it’s the rise of the digital nomad, and more and more people are going, “Why do I need to live in New York? Why do I need to live in London? Why do I need to live in Paris? Property prices are high, taxes are high. Do you know what? I’m going to go and move to Texas, or I’m going to go and move to Lisbon, or I’m going to go and move to Thailand.” And gradually, as more people leave their own countries and they’re working in the digital economy, they become much, much harder to tax. And it’s been proven that already 50% of digital nomads use cryptocurrencies. Now, it’s one thing taxing and regulating freelancers in a money system—in a money and banking system—which you can control. But governments have no control over the crypto markets. As more and more people start operating—freelancers in the digital economy, no fixed abode, abroad, using crypto, non-government money—suddenly, government tax revenue is prejudiced. It’s placed under great threat. And the more people that do this, the more pressure that is going to come under the physical economy that is quite easy to tax. But as that happens, more and more people are just going to escape and work in the digital economy. So governments, in terms of government revenue, have got a big problem on their hands: How do they tax-regulate the digital nomad operating in the crypto economy? And by 2035, it’s estimated that there will be 1 billion digital nomads worldwide. Because this isn’t just Westerners going to Thailand; it’s the Asian middle classes and the African and South American middle classes. It’s a huge international workforce—the rise of the digital nomad.
Jim Puplava:
Well, let’s talk about not necessarily a nomad, but something that is taking place on a massive scale in the U.S., and that is high-income individuals or businesses moving out of high-tax states like New York and California. And there was just an article in the Wall Street Journal that talked about New York is now starting to lose most of the hedge fund community, which is moving down to Palm Beach, which could become the next financial capital. You’ve got my own state of California, which has the highest income tax rates in the country. We’ve lost the two major banks—Wells Fargo and Bank of America. We’ve lost Nestlé, we’ve lost Toyota, we’ve lost Oracle, we’ve lost Tesla, we just lost Charles Schwab, Pantera—company after company are moving to low-tax states like Nevada, Texas, Florida. How disruptive is that to the nation-state when you have your tax base out of the states moving to areas where the tax burden is lower?
Dominic Frisby:
Yeah, well, you’re describing a dynamic—I mean, there was a tax author I know—you know him—Charles Adams, and he described—he described this as the three Fs. When taxation gets too heavy, you get the three Fs: flight or fraud. And in this case, we’re seeing flight. But I’ve—but can you blame people for—but particularly now, where there’s no longer the need, because of digital technology, there’s no longer the need to have plush offices in the middle of New York—you need it anymore; you’ve got Zoom. And so, you know, “Do you know what? The weather’s nicer in Florida.” And so you’re seeing this huge exodus. And it’s one of the advantages that America has—the United States has—over Europe: is you have—you can go from one state to another without leaving the country. So these competing states that you have—the system of competing states sort of keeps taxes down, at least at the local level, maybe not at the federal level. So that’s very healthy, the competition between states. And by the way, I think it’s not Miami—the mayor of Miami is talking about accepting payments for taxes and holding some of his treasury in Bitcoin. And Miami is rapidly—it seems—just, you know, more and more Bitcoiners are moving to Miami. And there’s a Saudi investment company that’s invested an extraordinary amount of money in Miami crypto infrastructure—it’s something like 10,000 Bitcoins or something—I forget the precise figure, but it’s one of those figures—you read it and your eyes pop out of your skull. So, you know, Florida, with its low taxes, is proving a very attractive place. And I think Mississippi’s doing something similar on the quiet, and Texas is. But in Europe, you know, we tend to think of, you know, Italy and Germany as these countries, but we forget that, you know, before—before the 1800s, Germany as a nation didn’t exist, and nor did Italy. You know, Italy was only unified after about 1870; before that, it was Venice and Naples and Rome and all the various city-states. And, you know, the model of the European nation-state came as a result of the Industrial Age and the tax model that accompanied the Industrial Age. But as the ability to tax falls away—and the digital economy is effectively doing that to the physical economy—you might start to see some of these—I mean, there’s already huge movements in—Brexit was a part of that. And Scotland wants independence from the UK, and Catalonia wants independence from Spain. And you’ve seen the breakup of all the Balkan states, and you’ve just seen this gradual fragmentation. And so I think if what we think of Germany and Italy and nation-states in 50 or 100 years could very well not exist. America’s slightly different because you’ve got this healthy competition between states. But, you know, who knows—one of the states might decide that taxes at the federal level are too much and try and apply to leave the United States. We’re not there yet, but maybe in 50 years’ time—who knows? You know, all these battles that are going on—you know, the culture war that’s happening across the Western world at the moment—you know, I said that taxation is a measure of freedom, but, you know, free movement, free speech, free minds, free choice—all these freedoms—there’s a big battle going on, and there’s a real attitude in the sort of government class that “we know better than you.” And it’s amazing how all these things sort of accompany each other. But all the greatest civilizations in history have all been built on low-tax models where there was, you know—you can’t have freedom without economic freedom, as Margaret Thatcher said. And there was low taxes, but there was also room to experiment, by the way—there’s room to experiment, investigate new ideas; there was free thought as well. And it’s very interesting—the word “censor,” as in censorship—the censor was the Roman magistrate who was responsible for the collecting of taxes, but also the monitoring of free speech and the monitoring of correct thought. You know, we have the census—the tax census—the population thing—who’s where—which is levied in order for the collection of taxes. So there’s this relationship between free thought, free speech, and also economic freedom—taxation. And the overwhelming evidence of history is that the greatest societies have been low-tax, high-freedom-of-thought, and the worst societies have been high-tax, low-freedom-of-thought. And at the moment, we seem to be veering in the direction of the latter. And it’s like an out-of-control train—everyone—there’s loads of people fighting their little good fight to try and stop the train, but the train is careering faster and faster to ever greater, larger government and more government control. And, you know, the evidence of history is that that does not end well.
Jim Puplava:
Yeah, because you just take a look at the amount of debt we are now amassing. I mean, I can remember in 1991 when they passed—George Bush Sr. went back on his pledge, “No new taxes,” because the deficit was close to half a trillion dollars. I mean, now we’re talking about multiple trillions. And I just don’t see—if you look at—I mean, it’s just a question of math. You can’t amass an amount of debt that’s growing at a rate that’s two or three times greater than your economic growth rate. And in the end, most of these countries end up doing something where they devalue the currency. And I can’t help but see that coming.
Dominic Frisby:
I think so. And I mean, I just think you just look at what the Bitcoin price is doing now—today it’s had one of its amazing corrections, but the fact that Bitcoin’s gone from 5,000 to $50,000 in a year, and Bitcoiners are so articulate and vocal about money printing and fiat money and that narrative—you know, you think how it was just a few gold bugs that understood this narrative back in about 2007, you know, 10 or 15 years ago. That narrative is well and truly out there. And more and more people are understanding that money is losing its purchasing power. And the stronger that narrative gets, the weaker the currencies get. As we talked about the sleights of hand, and it’s getting increasingly difficult to do these sleights of hand. And you can only kid people for so long.
Jim Puplava:
We take a look at the digital economy, the digital nomads, the great amount of debt that we’re taking on now, and especially with the theory of MMT that basically justifies the issuance of this kind of debt. If you were to look out into the future, how do you see this playing out?
Dominic Frisby:
I’m very positive about invention and ingenuity. And we’ve got this incredible digital world. And, you know, the digital economy is just amazing. And if you just look at what is going on and the things that we can do compared to what we could do 30 or 40 years ago, you have to be positive. You have to be positive about technology and the increased productivity that it’s going to bring. But it’s just going to force—I just think it’s going to force us to change the way we govern people. And in a funny kind of way, technology is even replacing government services in many ways. How much better education do you get from the internet than you do from schools? You look at something like Uber, and you compare the transport you get from Uber compared to what you get on a public bus or something—and in the UK, in London, for a short journey—two of you on a short journey—it’s now cheaper to get an Uber than it is to get the Tube. And, you know, it’s infinitely better. And so even in something like healthcare—Silicon Valley is putting its mind to solving the healthcare problem. And so, you know, as a result of early warning—you know, you do a DNA test, or you’ve discovered that you’re prone to Parkinson’s disease or whatever it is. And if you change your diet now and change your behavior now, it’s much less likely that you’re going to get Parkinson’s disease 10 years from now. You’re even seeing data and tech and so on being used to solve the healthcare problem. So you’re going to gradually see—and you just look at the market cap of Big Tech. And I think if you took the market cap of Microsoft, Amazon, Apple, Facebook, and Google, there’s only two countries in the world with a bigger—which are worth more—and that’s China and the USA. These large tech—globalized tech companies—are extraordinarily powerful. And you wonder if we’re going into a new—and in many cases, the only tithe that you have to pay these tech companies—certainly something like Google—is your data. And, you know, we’re very worried about our data and how it gets misused. But the idea of data even having a value 15 years ago or 20 years ago just didn’t. And so there’s a whole new market—this new value of personal data has been created. So I think we’re just going to go—and at the moment, there’s a sort of alliance between tech and government. But I think we might be going into a sort of world where tech is our new ruler. And I think that’s a very interesting dystopian future. I mean, and the ability of tech to understand you better than you do—I think Facebook already knows—by getting you to answer 20 questions—and it knows more about you than your spouse does. And even think, like, if I write an email—a really angry email—in Gmail, and then I decide, “Actually, do you know what? I’m not going to send that email,” and I just delete it—so effectively, that was thinking something that I didn’t utter—well, tech knows what I thought but didn’t utter. It’s just incredibly pervasive in our lives. And so I think tech is going to play some kind of role in governance and rulership in the future.
Jim Puplava:
So as you look at this—historically, we’ve, you know, most successful empires and nation-states start out with low taxation. And, you know, as you began in your book with Hong Kong, take a look at where Hong Kong is going under the Chinese since they’ve taken it over. Will it be the same place?
Dominic Frisby:
I don’t know, because there’s something—it’s very interesting what happened, because Hong Kong was so extraordinarily successful. You know, in 1905, there was a population of just a few hundred thousand. Its per capita GDP was on a par with most of Africa. And within 40 years—50 years—its per capita—it was like three or four times lower than the UK. By the 1990s, its per capita GDP was higher than the UK. At the turn of the century, its per capita GDP was higher than the United States. It enjoys the best public transport in the world. Its people live healthier and live longer than almost anywhere else in the world. Its people are among the best educated in the world. So it’s not like it loses out on the—the government services side. And taxation never exceeded 14% of GDP. And of its tax revenue, 40% came from land value taxes. There’s very low levels of income tax—you only paid income tax if you were a much higher earner. And it was just so extraordinarily successful so quickly. And its population went up by 10 times because everyone moved to Hong Kong to seek their fortune and to escape persecution in their own country, particularly in China. And Singapore looked at Hong Kong and said, “That model’s rather good; we’re going to copy that.” And so Singapore copied it. And then its economy grew. South Korea did something similar. And so did Taiwan. And you just saw this extraordinary Asian miracle built on low taxes. And China even copied it. There was the famous Chairman Mao speech—capitalism with—I forget the exact quote—with socialist characteristics or whatever it was. And, you know, China copied it and invented its tax-free zone, Shenzhen, which is just like another Hong Kong right on its doorstep. And so—but China’s done it with this sort of authoritarian capitalism mode. Now, when Hong Kong was handed back to the Chinese in 1997, I thought to myself, “Well, that’s game over. That’s game over.” And rather than Hong Kong becoming like China, bizarrely, the opposite happened. And China became more like Hong Kong and Taiwan. And so there’s a battle being fought there at the moment. And I guess it’s an Asian version of the same culture war that’s going on here. And it looks grim for Hong Kong at the moment, I have to say. But prosperity is a powerful thing, and free markets are powerful. And free thought and invention are all very powerful things. And they will—human beings will find ways to progress. I mean, and ultimately, you can explain the incredible success of the digital economy because it was basically the Wild West. There was no government there at all. And so there was no regulation—it was a total free-for-all. And as a result, we’ve got this incredible growth in digital technology. And as government creeps in and tries to regulate it, it’ll stop expanding. But that’s what’s going to save us—the digital economy in some form or other.
Jim Puplava:
I want to read something from one of your final chapters in the book. And you put: “Government insolvency, disruption of tax revenue, a potential crisis in the bond market, a loss of faith in national currencies—these are all very real possibilities in a world already awash with political discontent and desire for change. They are also recipes for revolution and civil war. Such a fate will be avoided by those nations that act first and adapt best to the realities of a new economic world around us. This also means adapting the way they govern and the services governments provide.” And I just wonder if what you see as a result of the gig economy, the digital economy, is a disruption or a dismemberment of the nation-state. And I could even see where you have some red states in the U.S.—Texas and some others—that basically secede from the nation because of the taxation policies.
Dominic Frisby:
Well, it’s very possible. And the sort of undertold story of the last American Civil War in the 1860s—we tend to look back at it now and think it was about slavery. But, you know, the—the role of taxes and the high taxes with which the Southern states were burdened—and in their eyes, they were paying for Northern—you know, they weren’t reaping the benefits; they were paying all the taxes but not getting any of the benefits—that was one of the key reasons why they wanted secession. So we know from that war that it doesn’t end very well. And so, you know, one wonders if states will try and secede in the future. But this huge migration of people to Texas and Florida—from California and New York, from high-tax to low-tax—you will see at an international level as well, I think. And, you know, for example, in Europe, there’s a huge migration at the moment to Portugal because Portugal has—and also Greece, to a slightly lesser extent—because it has very favorable tax laws, and people will just—will naturally go where there is prosperity and progress and high levels of freedom and low levels of taxation. And those people that are unlucky enough to not be able to move are the ones that won’t succeed. Now, this pattern—it’s like an endless dance. It’s been going on throughout history—this sort of ideological struggle between—between large government and small, between authoritarian and libertarian, between old business practices and new tech, between more taxes and fewer taxes. It’s been going on since forever, and it will carry on forever. But those nations that opt for low, simple, and fair systems of tax will be the ones that thrive.
Jim Puplava:
Well, the lesson of the book: fix taxes, and you fix society. Dominic, as we close—great, great book—people don’t realize the role that taxation has played throughout history, whether it was furthering the Muslim empire throughout the Middle East and Europe and various governments, including, you know, the things that happened that we saw in the 17th century.
Dominic Frisby:
Once you start to look at the world through this prism of taxation and you start to realize that tax is control, taxes—power—so much of why things are as they are, why things happened as they did, just—it suddenly becomes clear. And I just wish that taxation should be taught in the same way that French or economics or mathematics is taught—it’s so important. Every war was—was funded by some kind of tax; it made some kind of tax possible. Even things like the only reason we have surnames—surnames were introduced so that people could be identified in order that taxes could be collected. Even something as trivial as our surname—you were identified either by who your dad was—you know, Jackson—or by some geographical landmark where you lived—Hill or Ford or something like that—or by your profession—Smith or Gardner or whatever. Even something like our surnames—there’s a tax story there. Every great event in history has some kind of tax story. The birth of Christ—Mary and Joseph were only in Bethlehem to pay taxes. The death of Christ—you know, non-payment of taxes was the crime for which he was eventually crucified. The first men on the moon—you know, taxes paid for the man to get there. Every war, every revolt. And once you start to look at the world through this prism, you’re like, “Wow, suddenly everything makes sense.”
Jim Puplava:
It’s called Daylight Robbery: How Tax Shaped Our Past and Will Change Our Future by Dominic Frisby. Dominic, it was a pleasure reading the book, and I’ll put it right up there with Fight, Flight or Fraud with Charles Adams as one of the great books on tax history.
Dominic Frisby:
You’re very kind, Jim, and thanks very much for having me on the show.
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