The Kingdom That Changed Its Taxes
Summary: Khoni Chin shares a fairy tale illustrating complex economic dynamics involving taxes, legal battles, and market manipulation within a kingdom. The narrative highlights how these interconnected processes can create an inefficient cycle and questions who controls this 'machine'. The discussion evolves to critique systemic hierarchies and the importance of participating in institutional design, rather than accepting systems as immutable. Further stories emphasize the impacts of tariffs, paper money, and negotiation strategies, underlining how modern competition is shaped by structural designs rather than traditional bargaining.
Let me tell you a fairy tale.
There was once a kingdom whose treasury was always hungry.
The king announced a new tax on goods entering the kingdom.
Merchants complained.
They raised their prices.
Consumers paid more.
Businesses complained that their costs had increased.
They raised their prices too.
Then something interesting happened.
The merchants hired lawyers.
The lawyers challenged the king's tax in court.
Sometimes the court ordered the treasury to return money to the merchants.
But the returned money did not necessarily come back immediately.
Interest accumulated while the legal battle continued.
The kingdom therefore had a strange machine:
Tax the merchant.
The merchant raises the price.
The merchant hires the lawyer.
The lawyer challenges the tax.
The treasury eventually pays money back.
Interest accumulates.
Then everyone goes back to the beginning.
From the outside, it looked like a war between the Crown and the merchants.
But imagine, just for the sake of the story, that the same people kept appearing on both sides of the machine.
Would the machine still look like a war?
Or could it become a remarkably efficient way of extracting value from everyone outside the castle?
I have no evidence that such a conspiracy exists in the real world.
So please don't turn this story into one.
No evidence → no conclusion.
Treat it as a fairy tale.
The point of the story isn't to accuse anyone.
The point is to ask a more uncomfortable question:
Who designed the machine?
Because if ordinary people never participate in institutional design, they eventually live inside machines designed by other people.
And then they may spend their entire lives arguing about which button they should press.
There is something else I want to say to the people watching my project from outside.
If you believe institutional design belongs to old money, political insiders, lawyers, academics, or some mysterious class of people who were simply born qualified to make rules, that's your choice.
If I tell you:
“I can teach you how to participate.”
and you still decide:
“No. I don't belong there.”
that's also your choice.
If you would rather defend the existing hierarchy because you believe you are safer underneath someone else's rules, I won't stop you.
Perhaps Washington will eventually give you a medal.
Perhaps someone will shake your hand and say:
“Thank you for protecting the system.”
And then they will probably go back to work and forget your name.
I sometimes look at that choice with very mixed feelings.
Not because I think everyone must join me.
But because I can see the opportunity sitting in front of you.
And I can see some people defending the very structure that prevents them from participating in its design.
That is the part I find difficult to understand.
You don't need to become a revolutionary.
You don't need to hate Washington.
You don't need to hate lawyers, corporations, political parties, or old money.
You simply need to understand one thing:
The rules governing your life were designed by human beings.
That means human beings can study them.
Challenge them.
Modify them.
Replace them.
Or build something beside them.
You can remain a spectator.
That's perfectly legitimate.
But if you never learn how to participate in institutional design, you are voluntarily leaving one of the most important games of adulthood to other people.
And when the rules change again, you may discover that nobody asked you what you wanted.
That's not necessarily because they hate you.
They may simply have never needed your permission.
So I am not asking everyone to join.
I'm inviting the people who want to learn how the machine works.
And perhaps, eventually:
how to build one.
Long Live the civilization of Black Water.
Khoni Chin
OP1 week agoThe Art of Negotiation
The art of negotiation has almost disappeared from modern business.
In the 1970s, negotiation was everywhere.
Car dealerships were one of the most obvious examples. The buyer had a price. The seller had a price. Both sides had room to move. The game was to discover how much each side was willing to concede.
Today, in many major industries, that kind of negotiation has been replaced by something else:
Structure.
Walk into Hollywood, Silicon Valley, or Wall Street and you are often not entering a negotiation.
You are entering someone else's structure.
The rules have already been written.
There may be no meaningful negotiation interface at all.
Anyone can send you a Memorandum of Understanding.
I receive them. I send them too.
An MOU can effectively say:
That's useful.
But it isn't necessarily negotiation.
It is often simply maintaining an interface without conceding structural control.
This is why modern commercial competition increasingly looks less like two people bargaining across a table and more like two engineers building competing systems.
Everyone writes their own rules.
Everyone designs their own structure.
Then the question becomes:
Can your structure force the other side to compromise?
And more importantly:
Did your structure account for the possibility that the other side will simply remain silent?
Silence is not the absence of a negotiation strategy.
Sometimes silence is the strategy.
The real art of modern negotiation may therefore no longer be knowing how to bargain over the table.
It may be knowing how to design the table.
Khoni Chin
OP1 week ago · EditedMy previous story actually wasn't about government debt or taxation. It was mainly about tariffs.
I can give you another story I made up.
Once there was a kingdom where the aristocrats seized the land of the farmers. Eventually almost every farmer lost his land.
Then a general overthrew the king and became the new king.
The landless farmers expected the new king to execute the aristocrats and redistribute the land to prevent a rebellion.
But there was a problem.
The new king's own family had acquired more land than almost any other aristocratic family.
When the landless farmers finally decided to revolt, the king sent the army to suppress them.
Instead of giving the farmers their land back, the king increased production and pushed the kingdom's goods into other kingdoms.
The landless farmers were gradually turned into workers.
The enormous trade deficit accelerated urbanization. Cities grew rapidly along the trade routes, while the former farmland was consolidated into huge estates controlled by the aristocracy, producing food for the growing cities.
Eventually the kingdom had almost no farmers left.
It had workers.
And it had cities.
As overseas markets expanded, the kingdom's metal currency could no longer support the volume of commerce. Gold, silver and copper production could grow roughly linearly, but the demand for money was growing exponentially.
So the king invented paper money.
Every year, the king estimated how much additional money the kingdom might need the following year. He issued royal debt under the name of fiscal deficit.
The aristocrats collectively bought roughly 70% of the new debt at a discount, then sold it at face value to workers, merchants and other royal governments.
The overseas commercial system kept expanding.
The interest promised by the king was actually higher than inflation.
So no matter how much royal debt the king issued, workers, merchants and foreign kingdoms kept buying it.
The king gradually discovered that he could live by issuing new debt to pay off old debt.
Then a neighboring kingdom became jealous.
It could not defeat this kingdom directly, but it noticed something else: the kingdoms buying its goods were becoming increasingly poor, while their aristocracies were living increasingly luxurious lives.
So the neighboring kingdom started a war.
Over ten years, it destroyed almost all of the foreign kingdoms that had been buying the kingdom's goods.
Suddenly, the kingdom had lost its overseas markets.
The king panicked.
He began promising all kinds of benefits to his own population.
Then he started exchanging new currency for old currency, deliberately taking liquidity away from the aristocrats.
The aristocrats converted their losses into rapidly rising prices.
Every time the king promised the population a better exchange rate when converting old money into new money, the liquidity he extracted from the aristocrats somehow ended up transmitting a hundred times over into the broader population through prices and monetary circulation.
Ten years later, the neighboring kingdom invaded.
The army of the kingdom simply stopped resisting and helped the enemy enter.
And then someone asked:
“Where is taxation in this story?”
I'm afraid I forgot to put it in.
But somehow, the story still works.
And that's actually the interesting part.
Khoni Chin
OP1 week agoAnd one clarification: I didn't leave taxation out because I think taxation is unimportant.
Quite the opposite.
Taxation is important enough that I deliberately didn't put it into that story. The relationships attached to taxation may not be what you currently assume.
For example, there are people promising that one day governments will provide universal basic income and taxation can eventually disappear. That's also an attempt at institutional design — except that many of the people making such promises may be designing institutions before fully understanding the world and human behavior.
Why does that idea resonate?
Because it tells people: you don't need to struggle to change the system now; you don't need to build anything; the future will take care of you.
They may genuinely believe what they're saying.
But from my perspective, there is another consequence: people who decide not to compete are no longer competitors in the institutional-design game.
That is actually one reason I don't worry too much about silence.
American lawyers and European aristocrats can remain silent about what I'm building. That's their choice.
The architecture I'm developing is a commercial ecosystem based on private ordering under Delaware law. But I should be honest about something: I didn't invent the original architecture from nothing. I copied an existing architecture and iterated on it.
And the interesting part is that the original architecture is itself a political institutional architecture. It hasn't disappeared. It is still operating, and its original designer is still alive.
Once I open-source my version, it's only a matter of time before he recognizes that what I've built is an iteration of his architecture.
Then he may iterate again — change the vocabulary, modify the structure, and perhaps eventually produce something that I can barely recognize as the same architecture.
That's not a problem for me.
If the English-speaking world remains silent, will I give up?
No.
Once the system is open, I don't particularly care whether Britain, Germany, Russia, Israel, China, or someone else takes it, transforms it beyond recognition, and uses it to compete economically against the United States.
I don't need to know who eventually wins the new game.
What matters to me is that the underlying architecture is tied to a nomadic cultural logic that cannot easily be separated from it.
If I understand the rules of the new board, then I can play almost any game that emerges on top of it.
That's the part I'm actually betting on.