Customer Reviews

The Sovereign Individual

5 star:		(32)
4 star:		(15)
3 star:		(5)
2 star:		(6)
1 star:		(4)

 

 

Robert Kiyosaki, author of Rich Dad Poor Dad recommends The Sovereign Individual as one of the must-read books for those who want to be Financially Independent. I like this book for its contribution to future-trend-watching. It ranks as one of the essential readings for those who want to be Financially Independent.

James Dale Davidson and Lord William Rees-Mogg are experts at predicting future trends and tailoring financial strategies and self-reliant measures to protect oneself against the future. The Sovereign Individual is about self-accountability and taking action. The Sovereign Individual is not beholden to his government and looks out for himself/herself and his/her loved ones. The Sovereign Individual takes steps to ensure his/her physical safety, job/business and finances.

This book challenges the concept of nationhood and all the propaganda fed to us. The concept of nationhood as we have come to known is a relatively young one and not necessarily a good one. Governments, spouting patriotism, can make use of its people for its own ends e.g. burdensome taxes, raising armies for wars, treating its citizens like low-classed employees - all for the benefit of a select elite few.

A warning for the interested would-be reader. The Sovereign Individual is written in the typical Davidson/Rees-Mogg famed-style - alarmist, paranoid and hyberbolic. I urge the reader to see pass this style because there is much to be gained from reading this book.

For the interested reader, I would also recommend The Roaring 2000s by Harry Dent.

Keep in mind that this book was written around 1997, before 9/11/2001.
It is summer 2008 and the "US empire" is in decline.
The US debt is quickly approaching the $10 trillion mark.
(that is a one with thirteen zeros behind it)
The US dollar is in decline.
The US financial markets are in meltdown mode.
The FDIC has taken over IndyMac, more banks to follow.
The government is talking about a bailout of Fannie Mae and Freddie Mac.
(how high can the US deficit go?)
The government has enacted the so called "patriot act".
The government has expanded the FISA rules.
The housing market is in deflation mode.
The commodities market is in inflation mode (oil approaching $150).

Here are few quotes from the book:
Page 20: "Governments will violate human rights, censor the free flow of information, sabotage useful technologies, and worse".

Page 23: "All nation-states face bankruptcy and the rapid erosion of their authority".

Page 29: "We forecast and explained why militant Islam would displace Marxism as the principal ideology of confrontation with the West".

Page 137: "You can expect to see crises of misgovernment in many countries as political promises are deflated and governments run out of credit".

Page 196: "Governments that tax too much will simply make residence anywhere within their power a bankrupting liability".

Page 197: "Paper money also contributed significantly to the power of the state, not only by generating profits from depreciating the currency, but by giving the state leverage over who could accumulate wealth".

Page 198: "Control over money will migrate from the halls of power to the global marketplace".

Davidson and Rees-Mogg put forward a dispassionate and compelling argument on the ramifications and logical outworkings of the information age. What sets the book apart from its peers' is the unemotional and, some would say, cold logic the authors use in developing their hypothesis, argument and conclusions. By comparison, most authors attempting to 'predict' the future tend to use an emotional, idealistic approach to the argument proposed - little, or dubious emperical evidence is put forth. As a result the reader will either agree,or disagree, on the basis of their personal belief system. We can assume, in the marjority of cases, that neither party will change his views.

This book is therefore fundamentally different, the case provides a wealth of evidence, facts and historical precedent to support the hypothesis. The reader is challenged to seek out for himself the signs that these 'megapolitical' changes are, in fact, occuring. Recent examples include, the 'asian financial meltdown', the 'revenue problems' that taxation departments are experiencing world wide, the rise of xenophobic 'nationalist' parties reacting to globalisation and technology (Australias "One Nation Party"), the 'luddite' irrational argument of the evironmental movement, the list goes one - however, as Davidson and Rees-Mogg clearly state, you must find out for yourself.

Even within this review section, several reviewers have argued, bitterly, against this book using emotional and idealistic arguments. I am afraid that 'wishful' thinking will matter not in the least as these megapolitical events unfold.

However, this reaction is entirely expected.

PS: The "offshore" services and facilities proposed by the authors to protect your assets and avoid predatory taxation are now readily available - use your 'browser'! Sorry 'state worshippers' the 'cats already out of the bag', so to speak.

This is more than simply a reprint of the hardback edition. The authors have added material on the possible effects of y2k, and have rewritten their assessment of Bill Clinton, for example. I think the best part of the book is the historical analysis of how changes in the monopoly on violence impact civilization. This aspect of the book alone makes it a must read in my view.

Those who worship the State as their true God hate this book and its authors, are startled and angered by their own attraction to its core ideas and their lack of ability to refute those ideas. Fewof them are insightful enough to realize that the only serious vulnerability of the Davidson-Rees Mogg thesis is their dogmatic and poorly explained assertion that the State cannot devise means to control and tax the internet and its users. The authors, whose adumbration of the manner in which civilization and mankind was brought to their present conditions and characteristics is superb, original and most convincing, would be well-advised to devote their next book to telling us just why and how the State will be prevented from working its will in cyberspace while individuals will not. There are strong arguments against this notion, and if they cannot be effectively disposed of, all the rest of this book is simply a rambling exposition of ideas about the facts of history and human nature.

This book contains an explanatory theory of what the authors call Megapolitics. The theory is grounded in three past revolutions and predicts that we are in the middle of a fourth.

Each revolution is brought about by technology, occurs very quickly and almost invisibly to the participants.

The first revolution was the transition from hunter-gatherer to a world of private property, brought about by the technology of agriculture.

The second, around 1000AD, resulted from knights on horseback, and involved the transition from lawless anarchy to a world dominated by the Church and the code of chivalry.

The third transition happened due to gunpowder and the invention of the movable type printing press, around 1500AD, and resulted in the fall of the power of the Church, and the rise of centralized military power and eventually the nation-state.

The authors make a convincing case that the fourth transition is happening now due to the Internet and microprocessor. Over the last 1000 years, the returns on violence were going up, but now, with the Net and computing resources, the returns have gone down.

The authors say this will result in the decline of nation-states, and skilled individuals opting out of their "contract" between themselves and their government. These individuals, call them "haves", will be able to move their assets and possibly themselves so that they are subject to dramatically lower taxes.

There are a lot of nuances here but what makes this book so interesting is that it has detailed historical back-up. I highly recommend this book to anyone interested in the ramifications of the web and the microprocessor.

So said a wise philospher!

This book could have easily had this maxim as its subtitle. The authors cogently, and compellingly use historical trends to show that democracy as we know it is at an end.

Many will decry this book's "apocalyptic tone" but the fact remains that statistics don't lie: the majority of people do not vote in any election, which is one of the leading indicators of a democracy's demise. The authors use the example of the Roman church's hold on power during the Dark ages as a prime example of a system that lost its hold due to decadence from within. Because the leader's lived large at the expense of the common man, people no longer felt that religion had a relevence to their lives.

The same is true with politics today. We all know that the ruling class in this country lives large with perquisities and privaleges befitting royalty, all at taxpayer expense. Washington, or "inside the Beltway," is perceived as being so far removed from our daily lives that most politicians are looked upon with derision. Just watch how mercilessly they are pillioried in the popular culture, and in the media. This contempt for the nobles is but one of many signs that the nation-state is at an end.

It is very hard to get the average person to understand that times have changed, and the changes will dramatically effect our lives in every way. It is natural to want to hold onto what is familiar and safe. But the things that will be, will be regardless of protest or mawkish sentimentality, and these two authors have their fingers on the pulse of the future.

This book makes many forecasts about what the 21st century will be like; many, perhaps most, will prove wrong. This is not intended as a criticism of the authors, but as a reminder of the perils of the crystal ball business! In any event, Davidson and Rees-Mogg can be quite guilty of wishful libertarian daydreaming.

Nevertheless, I value The Sovereign Individual for its interpretation of our past. Reading this book, any intelligent lay person will understand that the technologies of taxation and violence are deep factors underlying the rise and evolution of the nation-state. Now information technology is increasing the possibilities for untaxable income. This will erode the power of nation-states, which is no more than the power to use the threat of violence to compel payment of taxes. Granted, many of us pay taxes voluntarily. But if nations had to rely solely on voluntary taxation, they would be a lot weaker than they are at present. Information technology has implications for the future payoff to private violence (crime, terrorism) and national violence (war), but these are less evident.

For those of you out there who are academic economists, Davidson and Rees-Mogg interpret history and politics in terms strongly derived from Coase and Oliver Williamson (transaction costs, property rights, asset specificity, opportunism, and so on). And it is definitely true that if a firm owns a lot of physical assets that can be rendered worthless during a strike, its workers can easily hold those assets hostage in exchange for higher wages.

This book is the third in a series of predictive essays by this duo of financial wizards. It is another attempt to estimate future events using trends from the present and historical analyses. As with any philosophical exercise, it is crucial to identify the project, or standpoint of the authors to place the work in perspective. They are well-known in the world of offshore finance and financial services and one is a former editor of the London Times. Both would appear to be independently wealthy and from previous works, supporters of the entrepreneurial movement which pervades the Western world currently.

The book begins with a fascinating interpretation of the changes in society over recorded history. The authors argue a convincing case for a common, economically based theme running throughout history: one which has persisted despite great discontinuities in the organisation of society. They argue that the principal determinant of societal structures throughout history is the economics of the use of violence, by individuals or groups. They go on to describe the alterations they see in that equation consequent upon the introduction of microcomputing and the interconnectivity of the Internet.

Early in this book they make the point that an enormous amount of the revenue of nation-states derives from a tiny portion of its inhabitants and that the state redistributes this income to their disadvantage. The changes they foresee will remove any benefits to such contributors who will be in a position to seek newer and more favourable jurisdictions. They predict that people of 'wealth and talent' will be able to avoid the strictures of geography and 'predatory taxation' and sketch a world view of Sovereign Individuals who can shop around for protection and advantageous taxation systems.

The language of the middle part of the book is pejorative. They talk of 'have-nots'; 'under achievers with credentials' and label the critics of their worldview as neo-Luddites. I found this irritating after a while and it left an unpleasant feeling that the authors might actually visualise people in this fashion. The timescale for these changes is naturally vague, but they talk of the end of the first quarter of the next century. They deal with many ramifications of their thesis, but the gaping hole in their vision arises from their own standpoint. Their view is ultimately of a global, 'winner takes all' economy and naturally they see themselves as among the winners. They have given some thought to the problems of poverty but the reader is given the impression that it is the fault of the poor that they are poor. The authors1 vision of the future, while no less valid than anyone elses, leaves nothing for disadvantaged groups, except for violent opposition.

In the last chapter, on morality and crime, the authors hope for a common and generally accepted moral code based on religion that would introduce some humanity into their scenarios. Whether this happens and how the uneducated poor will react to these changes and, in turn, what effects their reactions will have, are the imponderables from this vision. Without injecting some humanity from whatever source, their vision, very plausible as it is, will be one of a feudal, Hobbesian 'war, .... of every man, against every man'.

For those who wish to avoid this unpleasantness, and more importantly have the wherewithal to do so, the authors provide a section full of adverts for their services disguised as Appendix 2.

The Sovereign Individual describes how the cybereconomy, with its lack of ties to any particular country, will dissolve the bonds of taxation and regulation. It also predicts the collapse or drastic downsizing of the tax-financed welfare states.

While it is all too easy to deplore or cheer (according to personal conviction) these predictions, it is interesting to compare some books by different authors with widely different personal preferences, namely

The Sovereign Individual, by James Dale Davidson and William Rees-Mogg

The Future of Capitalism, by Lester Thurow

Turbo-Capitalism, by Luttwak

One World, Ready or Not, by William Greider

The interesting thing is that ALL these authors make mainly identical predictions, although the all cheers from James D. Davidson and the mostly jeers from Greider are obvious. Luttwak and Thurow take more balanced positions, both looking at pros and cons.

The unanimity of prediction tells me that the predicions, most starkly spelled out in The Sovereign Individual, are very likely to come true.

Nils Andersson