Wither Rights?

by Paul Hein

My tax preparation lady called a few years ago on Friday, April 10. Although I had sent her a thick envelope of the 1099 forms I had received, she said she needed more data. On certain dates in the preceding year the reports showed that I had sold some securities, and she couldn't find out what I had paid for them. I assured her I hadn't the faintest idea. Probably my broker, who is a friend, suggested moving from one investment to another perceived as more profitable, or safer, so I did. I had only a dim recollection the event, and no hard facts whatsoever. Why didn't she call the brokerage? Well, she had, but it was Good Friday, and they had closed for the day. Once again we were getting down to the wire with the damned income tax. 

This system is abominable! Arguably, the income tax is Constitutional, (assuming the validity of the XVIth Amendment--and that's a big assumption!) but the means by which it is administered tramples all over the rights of the victims. What, for example, of my rights of freedom of speech and privacy of records? I don't want to talk to strangers about my investments, and what I paid or received. I don't want to hire people, either directly or indirectly, to keep track of these things for the benefit of strangers. I don't want to turn my private documents, or their contents, over to public servants who, most un-servant-like, demand them. 

Why can't investing be a simple matter? As a self-employed individual, who will have no "retirement benefits" unless I make my own arrangements, I feel I must invest, at least to some extent, to provide for my senior years, now virtually upon me. Hence, a broker, and brokerage account. But the reports which regularly issue from that company are so abstruse as to cause me dismay. I look at them, but do not really understand them; and perhaps my aversion is psychological: I really abhor the system which makes it so complicated. Not only does the brokerage send me monthly reports, so do the companies in which my funds have been invested. And it's all gibberish, at least to one unacquainted with business terms, and business reports. 

Were I to suggest to my broker that my next purchase be private, and not reported to anyone but me, and then only in the most basic terms: what I own, what it cost, and what it's now worth, for example, he would not agree. Indeed, I do not even dare suggest it, except, perhaps, in jest. It just isn't thinkable! Broker, customer, and company whose securities are being bought, accept as inevitable and natural that any purchase be reported to others, whose participation is not in the customer's best interest--or that of anyone else involved, for that matter. 

Do you recall the parable of the merchant who found a pearl of great price? He sold what he owned and bought it. There isn't a word in the story to indicate that his purchase was registered, or reported to another. The pearl was his, the opportunity was his, the risk was his. Why not? Who else was involved except buyer and seller? 

Do not tell me that the government needs taxes to sustain itself. Who prints our so-called "money?" Taxes are not to sustain government, but to protect the economy from hyper-inflation, by drawing off funds that would otherwise find their way to the marketplace, and there be revealed as worthless, or nearly so. Why should the rights of every investor be sacrificed to protect the monopoly of the money-creators, whose activities are neither lawful, logical, nor moral? 

Buying and holding property as an investment is as basic a civilized activity as can be imagined. Why it should be difficult, or at least inconvenient, to do that privately in a land with "Constitutional" government is something that should concern every American. 

Perhaps, of even greater concern, is that fact that it can be done, legally, and without too much trouble, but no conventional investment counselor will recommend it. Ask any financial adviser about investing, and you will find yourself in the world of paper: annuities, stocks, bonds, T-bills, etc. Suggest that you would prefer to invest in tangible wealth, and real estate will enter the conversation. Further suggest that you would like to invest in tangible wealth privately, without the knowledge, permission, or participation of strangers, and you will probably find yourself regarded with suspicion. Now that's depressing!

March 26, 2002