Athenian taxes, a Tesla battleship, and game theory for the rich
Every historical society acts as a natural experiment for the ways they decided to organize themselves. Sometimes these methods are tried and true, sometimes they have never been tried before. By observing the success or failure of different governance models we can be better informed how they could apply in the future. Of course, we must be careful to ensure that we factor in the time and place, before extrapolating anything to modern day.
One society in particular left us more natural experiments than we would expect for a civilization that existed more than 2,500 years ago: the Athenians.
All pictures are my own.
Taxation in Ancient Athens
Ancient Athens was able to raise money from a variety of sources. Depending on the time period in question, some of this money came from a state-owned silver mine, member dues of the Delian League, or from trade taxation. For taxation, though, there was not a reliable way to levy a direct tax onto an individual, such as an income tax. For reasons of enforcement, most of the Athenian taxes were indirect, like a sales tax or a tariff. The easiest way for them to do this was to put guards at harbors or gates, and force traders to pay a customs duty on the goods coming in or out.
But a problem with indirect taxes is they are not fairly distributed among the citizenry. People whose businesses or consumption habits relied on goods that moved through the city’s entry and exit points paid a disproportionate share of the tax burden — whether they were wealthy or not.
Just like many societies today, the Athenians also wanted their wealthiest citizens to pay more than the average Athenian. We have many modern ways of doing this: estate taxes, wealth taxes, progressive taxation, etc, but these methods are all direct taxes, which rely on accurate assessments of the taxpayer’s wealth and assets. In 500 BC it was very easy to obscure one’s wealth. So instead, the Athenians came up with an ingenious way to have the wealthy class give back without having to rely on the operational nightmare that direct taxation would have been. They called it a liturgy.
Liturgy
First, some etymology is in order. The word liturgy, derived from the ancient Greek word leitourgia, translates to “work for the people”. The closest phrase we have would probably be community service or civic duty.
In practice, a liturgy was the wealthiest members of Athens using their time and resources to administer some sort of public service. These services were largely bucketed into two types: events and defense. Examples of an event type was gymnasiarchia, or the maintenance and financing of the gymnasium. Another was choregia, or the administration of the choir members used in theater for drama events. Others included funding public dinners, the Panhellenic Games, etc. Perhaps the most financially burdensome liturgy however was the trierarchy, which involved bankrolling the equipment, maintenance, and crew of a naval ship for a year. The liturgist was also expected to captain the ship, or at least find someone who would.
While it was mandatory for a wealthy citizen to perform a liturgy when called upon, most did not see it as a burden. Many in fact wanted to perform a liturgy for the purpose of fame and social status. It was widely known who was putting the event on, and there was a healthy degree of competition among the liturgists about who did the best job.
The core difference between modern progressive taxation and liturgies is that liturgies were not just cash expenditures, but also a time commitment. They had a built-in component of community service that shows a sense of dedication that pure bankrolling does not. While performing modern day liturgies would be a logistical nightmare, I think having a single owner whose reputation is on the line will generally get you a better outcome than not. Or, in other words, skin in the game.
Could we pull off a modern-day liturgy? While civic events and projects are one thing, having modern billionaires build and captain naval vessels may not be the best idea. I don’t find any way this works when you look at a modern nation states military capabilities. In Ancient Athens, you could add tremendous value building and captaining a naval ship for a year, today you would need years of training to even become a sailor, let alone the captain.
So, if we don’t care for parties, and don’t want Elon captaining a naval vessel (although a Tesla battleship would be awesome), how could we steelman the case for a modern liturgy? It would need to be something that is relatively expensive and can be started and finished within a year. Jeff Bezos doing a USPS project comes to mind, although the cultural aspects that have helped the success of Amazon likely wouldn’t stick after only a year. Additionally, there may be some weird conflict of interests. What about Bill Gates doing a big IT upgrade for some government department? That could work, and could also be done in a year. A construction mogul could also build…you get the point.
However, there are a few clear issues with trying liturgies today. First, there is the problem of skill set. While George Soros and Ray Dalio are smart guys, their skill is investing, which doesn’t match the things we would need like urban development or massive operational projects. Which brings us to folks like the Walton children whose skill set is that they were born, which also doesn’t really help us.
Second, it would be very hard to make a meaningful difference in the span of a year. But if we remove the year limit — you start getting into weird scenarios with billionaires acting as indentured servants to the government. This would inevitably lead to a mass exodus to other countries by the people most equipped to do so. While I’m sure some people would like that, it doesn’t seem like a viable solution to me.
At this point I am putting liturgies in the “interesting but not useful” category until someone can convince me otherwise.
Antidosis
Remember that the need for liturgies was due to the fact the state was unable to tax wealthy citizens directly because their wealth could be obscured. But if that’s the case, how did the state know which citizens should perform the liturgy? How did they know who the richest were? While we already determined that some liturgies were happily carried out by those looking to signal their wealth, not everyone wanted to perform the liturgy. Perhaps it was a “lesser” liturgy, or maybe the person just didn’t want to spend the money.
This was less of a problem when times were good, as the rich were seeing their wealth grow, but occasionally Athens was engaged in drawn out periods of war, in which the liturgists were expected to carry most of the load. The result of this was less optimism among the wealthy citizens to perform their liturgies, so they naturally tried to get out of it. The Athenians thought this may occur, so they developed antidosis, which translates to “an exchange”.
The antidosis was a law used to try and ensure that the wealthiest citizens were in fact the ones performing the liturgy. Instead of a tops-down approach, the antidosis was bottoms-up, utilizing the decentralized knowledge base of the citizens.
The antidosis allowed someone nominated for a liturgy to propose someone else to it do instead. In theory, the other citizen was wealthier and should therefore be responsible to perform it. The citizen being challenged had three options. First, they could just do the liturgy. Second, they could go to court with the challenger to determine who in fact was wealthier. Second, they could switch all belongings with the challenger, and have the challenger continue to be responsible for the liturgy.
Let’s look at an example. We have a citizen named Alice who was nominated to perform a liturgy. She is annoyed because Bob did not get selected, and Alice knows he is much wealthier than she is. Alice could then challenge Bob, telling everyone that Bob was richer and deserved to pay for the liturgy. If Bob was much richer, as Alice suspected, Bob would likely concede and just do the liturgy.
But let’s say Bob is not much richer, he feels that he is around the same wealth as Alice. Bob could decide to go to court and let a jury decide who was richer, with that person then having to perform the liturgy.
For a final scenario, let’s say that Alice is very rich, doesn’t want to do the liturgy, and decides to challenge Bob who unbeknownst to her recently lost most of his wealth. Bob could decide to switch all of his and Alice’s possessions, permanently. This acts as a significant check on the challenger to ensure that they are sure the person they are challenging is actually richer than they are.
What we have here is some interesting game theory amongst the wealthiest of citizens to determine who was richer (here is a paper that goes into the math). Despite the antidosis being very popular, we can see that there are no records of an exchange actually taking place.
Think about it, if you know that anyone that you challenge could potentially flip assets with you, you are going to be damn sure that they are wealthier. And significantly wealthier at that, since the face value of one’s possessions are always less than their owner ascribes to them (think sentimental items).
Concluding Thoughts
I understand that thinking about liturgies and especially antidoses in a modern context is a little ridiculous. But I think there is something to citizens having some skin in the game when it comes to paying their debts to society.
Utilizing a nuclear option to help enforce good behavior is interesting as well. The exchange option of the antidosis didn’t have to ever be used to have its desired effect.
