Category Archives: Economics

Aristocracy stymied corptocracy

European countries do not kowtow to corporations the way the United States does. In the US, the corporations own the politicians and they do the bidding of the plutocrats and the oligarchs — you know, the share holders and board members.

But European countries don’t let corporations run the show. And I wondered why this is.

Could it be that because Europe has had the bad taste in its collective mouth regarding kings and queens through the ages, that when it came time to form democratic governments they KNEW how to construct rules of government that limited the power of the powerful?

In the US, the new aristocracy are the corporate plutocrats that run and pay for government. The Koch asshats, and their ilk. When the corporations were just beginning to become “a thing” in the US, the likes of the robber barons, the train tycoons, the oil and steel magnates (Rockefeller and Morgan) we tried to handle them and the monopolies they formed (as all true capitalistic enterprises will eventually try to do). But when dozens, then hundreds and then tens of thousands of corporations and the power they wielded rose and demanded control of the country, its resources and its wealth — US Citizens had NO IDEA what to do? Why? Because we’d never had tyrants trying to run our lives for century after century.

So, is the United States just an aristocratic victim in the making because there’s no way that the plutocrats in power are going to relinquish that power? Or, like Europeans, can we learn to control the corptocracy?


There should be a law…

NOT that the world needs more laws… But…

Tupperware should be normalized.

There, I said it. I’m a, what am I? I’m a consumer!

How many different type, sizes, colors, shapes, depths, lids, cavities, volumes do you own that try to enclose — in plastic — your coveted leftovers? I KNOW for a fact you have at least two different styles of containers in your cupboards.

I would wager, (like a lot, like $50) that you have MORE than two. In fact, I’d bet that you have — OK, OK, get ready — FIVE different strange, funky, some are your’s, some are neighbor’s, some are, “where the hell did this come from” containers. Am I right?

Hell yes I’m right.

So, damn Tupperware! Rubbermade (or maid) (or mayde), get your shit together! Save the planet from the plastico-armageddon! Make all your stuff with STANDARD dimensions. And don’t give me no SAE measurements yo! I’m saying metric here. Cuz, you know, metric ain’t no size of someone’s got-damned shoe!

Are you feeling me Tuppermade? I CAN’T HEAR YOU! (Burp! — still good!)


Secure Society Tax

The wealthy are different

The rich don’t earn their income through work. They don’t get “paid”. Therefore they pay no payroll tax. And that’s what the Social Security tax is. Instead the wealthy earn their wealth through:

  • Dividend income
  • Bond income
  • Rental income
  • Venture debt income
  • Private equity income
  • Real estate income
  • P2P (peer to peer) income
  • CD interest income
  • Capital gains

All of which are taxed differently (or not taxed at all if you can finagle it.)

So, altering the Social Security taxation model is going to miss one HELLUVA LOT OF WEALTH. It would still work, to some degree. And the corporate inequality tax would contribute substantially. But probably not enough. How do we squeeze these filthy rich people of the funds that they’ve earned as capitalists climbing their wealth ladder made from the backs and bodies of us the worker?

Consumption tax? Not nearly enough. The rich don’t wear more sox, eat more food, drink more beer. And the expensive consuming they do do, maybe 2x to 10x of what the average cost to you and I would be, would contribute practically nothing in tax revenue for our SSI. Expensive cars, boats, homes, condos, planes? Eh, a drop in the bucket compared to what we need.

(We need to raise, oh let’s say $500billion per year to fund SSI. But that’s just a ass-pulled number. I’ll sit down here soon and determine just what we would need to fund this program.)

Still the problem exists — the rich don’t pay their share of their wealth — wealth built from the hard work of EVERY AMERICAN throughout the decades.

As funding sources for SSI here’s what we have:

  • Payroll taxes (SS and Medicare tax)
  • Corporate inequality tax
  • Paltry wealth-income taxes

What else could we tap?

  • Stock Market trading transaction tax?
  • Luxury consumption tax?
  • Luxury property tax?
  • Luxury travel tax?
  • ???

Our security has value

For the most part, in the United States, we live in security. We are secure from invasion. Secure from civil unrest. Secure from property seizure. We have systems in place to assist us in times of natural disaster and financial disaster. Fiduciary, physical and civil insurance infrastructures help protect our investments, our savings, our towns and cities. We have federal, state and local systems to protect us against fire and attack. We have transportation systems secured for safe travel and commerce.

Bottom line: we live in a pretty secure system, for which we all are grateful. If you own a car, rent a home, have a job and a kid or two — you should be thankful. And I bet you are.

But what if you own a building or ten of them? A couple of mansions, a yacht, a jet, a fleet of private vehicles. What if you have millions of dollars of investment in industry, technology, the trading markets? Are these not also protected by the country’s vast and comprehensive security system?

What if you are worth $500 million dollars. How much of that “worth” is actually tied up in the country’s protective infrastructure?

  • Need consistent and uninterrupted electricity?
  • Need pure water and a sewage system?
  • Need roads, bridges, traffic signals, emergency services?
  • Need airports, shipping ports?
  • Need a continuously operating communication system?
  • Need a fast and responsive medical system?
  • Need an education system for yourself, your kids and your employees?
  • Need a full featured legal system?

What if your entire wealth basis depended on every one of these (which it no doubt does)? How much would you have to pay to build all of this yourself in order to be worth that $500M?

As the country’s workers, we pay income tax. We pay sales and property tax. And we ARE the protection system. We ARE the cops, the firemen, the insurance adjusters, the nurses and doctors, the teachers, the soldiers. We ARE the country’s security network. And because we ARE this system — you, the wealthy of the nation, of the world, you need to pay up!

What we need is a Secure Society Tax. You like living in a secure society? Well, that security comes at a cost. The more you own, the more you have, the more you gather — ALL OF THAT NEEDS PROTECTION!

You can’t just live here and benefit from all of this amazing security systems that are the United States of America without coming to the realization that if it were NOT for US, the We the People, you would NOT be wealthy. So, pay up!

Secure Society Tax: 1% of net worth paid per year.

You don’t like paying for the great service and security you receive in the United States? Well then — move.


SSN – Social Security Net

Does it not seem obvious that when it comes to examining a UBI (universal basic income) that we already have a system for distribution of socially sourced funds?

The Social Security program was designed and implemented in 1935 (Roosevelt). It depends on payroll taxes collected through the FICA and SICA and deposited into two trust funds.

(See rejoinders to this theory here)

One of the curious aspects of the law is this: “All income over said amount is not taxed. In 2017, the maximum amount of taxable earnings was $127,200“.

Hmm, so the millionaires and billionaires who rake in the earnings through capitalism’s primary engine — the corporation populated stock market — don’t have to cough up more than any one “human” might be expected to contribute, year over year.

Whaaaaat? Not only don’t the wealthy of the world have to pay appropriately scaled income tax (to support the country as a whole), they don’t have to pay *proportionately* into the Social Safety Net that is there to provide for all the workers, that is, the wealthy’s wage-enslaved workers.  The workers on whom they built their multi-billion dollar empires. THAT doesn’t smell right!

If a society could rein in such income sources, I wonder if the Social Security System might not be the basic income platform the US, at least, could use to begin to create a UBI styled social safety net.

Imagine if instead of upping the age at which Social Security was endowed, we lowered it! What would happen if we lowered the age to get benefits to 50? Provided we could enforce expanded payments by the 1-5%’rs of the world. Could Social Security be lowered to 40 years of age? Might it need to be lowered to such an age in the coming automation onslaught?

I could see that those between the age of 20-40 could be the most active, the most productive, and energetic regarding productive forms of work that society would install a safety-net above that age. By the time anyone reached the age of forty — now you needed serious financial assistance to combat the robots taking your jobs.

I’ve only just started examining Social Security as THE form of a social safety network. But, stepping back and tilting one’s head to the side, Social Security sure as hell looks like the right system to hijack with regards to creating a basic income for all.

Social Security Income SSI

Imagine if the United States had the following policy in place RIGHT NOW.
Assumptions for SSI:

  • Humans live to 100 years of age (with adjustments over the generations).
  • Humans *can* begin receiving Social Security benefits at the age of 40.
  • The monthly income will be a factor of age and financial and economic data constructing a dynamic algorithm which will automatically adjust for inflation, population, and longevity. The point here is to build the algorithm such that Social Security Income determines how the system should work — NOT politicians.
  • The algorithm will scale from a minimum payment at age 40 to a maximum payment at age 100 or Average Longevity (AL).
  • Early benefit election will increase the SS and Medicare tax rate they must pay on actual income earned.

Impact of policy:

  • Some people will opt to begin receiving payment at the earliest possible – 40 years old.
  • This will tend to pull these people from the work force — FREEING UP jobs for the younger generation (20 – 40 years of age). This is how we combat the loss of jobs through automation.
  • Those that continue to work AND receive benefit can then support their dependents, children and grand children, who are not eligible, with their benefits. That is, at age 50, a parent could use the SSI to pay for higher education for their children.
  • Some people will opt to delay their SSI benefits out to whatever age they care to. When they begin to receive their payment, the algorithm will adjust their personal payments based on the age at which they began SSI benefits. This will provide the incentive to delay benefits as long as possible.
  • The end income for a working, benefit enabled 40 year old will still be greater than had they not elected for SSI benefits. But, the greater tax will help offset the extra outlay of the system such that it will behoove workers to still delay benefits for as long as possible.

Steps to accomplish this:

  • Use the EXISTING Social Security system to manage individual collection, accrual, and payment. No new system need be created. The Social Security system already has all the infrastructure, data (SSNs) and investment system to handle this.
  • Raise the ceiling limit for income to be taxed by Social Security. Instead of $127k, lift it to infinity, but scale it. 15.3% (12.4 Social Security, 2.9 Medicare) to $200k/year. Then half that to $500k/year. Then half of that, to $1m/yr. And so on and so forth
Income SS % Medicare % Total %
$0 – $200k 12.40% 2.90% 15.30%
$200k – $500k 6.20% 1.45% 7.65%
$500k – $1M 3.10% 0.73% 3.83%
$1M – $2M 1.55% 0.38% 1.93%
$2M-$10M 0.78% 0.19% 0.96%
$10M+ 0.39% 0.09% 0.48%
  • Include the Employee Inequality Tax the proceeds of which will join the Social Security Funds. This taxes corporations on the level of worker pay inequality.
  • Enact this policy as a gradual shift in Social Security behavior. Break down the changes, the tax increases, the lowering of the benefits eligibility age, over one to two generations.

 


Influence, impact, effect

A time ago, don’t ask me when, we, Martina, Jessie and I, were talking about UBI – Universal Basic Income (okay, we weren’t specifically discussing UBI, but near enough), and Jessie mentioned that she thought the struggle of the classes was power based. I, offhandedly, read through her comment not really having any reply at the moment (not that I didn’t reply, mind you).

However, on retrospect, I circled back to that theory: empowering all of us, giving each of us agency to affect our own lives, enough such that we can witness and claim responsibility for the changes, this would be a good thing. And that’s noble and admirable and, if it could be done (like in the Scandinavian countries) then maybe that’s the answer.

What prompted this latest doffing of words was thinking about myself as the curmudgeon that I’ve become. Yes, I’m a self-professed stick-in-the-mud, the proverbial “get off my lawn” old man with suspenders and a cane (well, maybe not the cane, um, or the suspenders). But I’ve grown less and less tolerant of fools over the years. And here’s the thing; Martina talks about criticism (here) and I wonder:  perhaps there’s simply some aspect of influence here. A “hey, he looked!” type behavior humans crave. More generally, we humans want to know we’ve impacted our world, left a mark, had an affect, effected others — in some way.

With criticism, that affect is negative (generally). With a curmudgeon like me, just seeing the teenagers flinch, that’s a kick in the pants, now isn’t it? (I don’t really do this, but I know you know someone who does.) The thing is, we crave influence. We yearn for self induced change in the world. Poke this thing and it cringes. “Hmm, I feel a little better (although it may not).”

All of social media is focused on this. You post a woodgiewoodgie (whatever to wherever) and what do you expect? A response of course. Trolls post the most foul and incendiary tripe. Why? For impact, for a response: “They — anybody — replied, responded, grimaced, smiled, screamed, cursed, cried, cheered!”

Do we crave power? Or influence?

And, to bring this back full circle, (circles in circles), is there a means to alter the economics of countries such that we provide for expanded influence, agency in how we govern and direct our own lives? Maybe, however a UBI’esque effort comes to be, if we provide every human the ability to change their lives –however they care to — maybe that will be enough.


Why Owners and Workers?

Owner : worker

How long has it been this way? Always?

Why is our relationship to each other in regards to producing goods and services organized this way?

Is this hierarchy the root cause of inequality?

When did I become subservient to you? When did your needs become more important than mine? When did my children, my home, my well-being assume to be lesser-than than yours? Is this some extended form of patriarchy; the father in charge, and the sons (and daughters) accepting less or portions of the harvest, the land, the wealth?

When the first merchant-like person requested help from their neighbor, to make pots or plant grain or chop firewood, did that person not consider that both he and they were equals? Or did that person, upon that singular act: “Do this for me and I will reward you,” create the first class system?

And have we lived this way ever since?

Capitalism, the outgrowth from such a domination hierarchy, and its founder, Adam Smith, seem conflicted:

“Labour was the first price, the original purchase – money that was paid for all things. It was not by gold or by silver, but by labour, that all wealth of the world was originally purchased.”

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.”

Above, from those two quotes, Adam Smith both acknowledges that labor is wealth and, from my mind, should be treated equally as wealth. But then assumes that the merchants, who must hire the laborers, do so not in recognition that labor is wealth, but in order to leverage that labor to their own interests.

The fallout from this relationship, today’s corporatism, has turned the worker in to a puny commodity, one which is denigrated and slighted, so much so that they lose all power in society. Only the owners, the capitalists shall be granted voice and power in this wealth based society.

From this we get the incomprehensible inequality we have today. The capitalists own thousands if not millions more wealth than the workers on whom they have depended, in a word, exploited.

Could we have built any other type of system — from the start? Could that first merchant-like person have not said: “Do this and I will reward you” but “We’ll do this together and the both of us shall be rewarded.”?

Could Adam Smith not have reinterpreted his beliefs such that:

“The price of labour shall be the price of ownership where all who struggle and persevere shall benefit from their toil.”

Or, “It is from the understanding that all who endeavor at a goal be it animal husbandry, brewing, or baking shall be rewarded with not only the fruits of their labour but ownership in that which their labour supports.”

Could these not have been the way we moved forward as an economically driven species?

Could we ever redirect our trajectory toward such an equality oriented system?


UBI is not the solution

The idea of Universal Basic Income is like a band-aid on a sucking chest wound, it appears as though the situation is solved, but the underlying problem remains.

UBI tries to solve the problem of inequality but will fail at this. Why? Because the problem of inequality can only be solved by the equalization of wealth. Yes, giving cash — outright — to a select few individuals, or group does, generally, lift those people up out of the mire of poverty, or elevate them enough, give them a glimmer of hope so that the specter of impoverishment is pushed to the shadows.

But, give everybody the same allotment of cash and all you’ll do is inflate the currency and we’ll be back to Zimbabwe or the Weimar Republic. The elites will still be thousands of times more wealthy than the median population.

That’s the inequality that will not be cured. That’s why a full coverage UBI will fail.

But what can we do? Well, we could start with understanding why the wealthy are wealthy. If we figure that out, and universally distribute that — whatever it is — then perhaps the inequality will be reduced, eventually, to a socially acceptable level.

So, why are the wealthy wealthy? No doubt there are dozens of reasons we could cite, but the primary one is that they do not work for their income. As Warren Buffet famously said “If you don’t find a way to make money while you sleep, you will work until you die.”

Okay, so what can we do with that thought? Let’s see, if the wealthy let their wealth earn them money, and if this is predominately done with investments in the corporations, the means of production, the growth and expansion of productivity, then somehow we need to get that into the hands of everyone.

What about this: create a financial instrument which can be distributed — UBI style — to every citizen of the country. Let’s say we create an ETF, an exchange traded fund, which is comprised of the rolling top 10000 companies and utilities, include bonds and treasuries in the instrument – a smorgasbord of components that represent the country’s economy.

We take that EFT and we give shares of it away to every citizen, one share per month, for life. We make investors out of every single person in the country, invested in the country itself, its progress, its future.

Some people will turn around and sell their shares right away. That’s okay, let them. They can use that money like the common UBI that has been proposed.

Others will let their shares sit. Accrue. Gain value and multiply. When they need cash for emergencies or buying a house or car, they can sell them then.

We could label this ETF: USAA — United States of America for All.

This would give cash to those who need cash, but for most, I suspect, it would give them a sense of participating in the wealth growth of the nation. Their investment would be making them money – “while they slept.”

This let’s every citizen participate in the economy just like the elites on Wall Street. This distributes Wall Street level prosperity down to Main Street where it’s needed.

GO USAA!

~~~

Sure, this is not the whole solution — the wealthy still have thousands or millions of times more wealth than the median population. And there are solutions for that too — namely progressive taxation…

Employee Income Inequality Tax
https://anonymole.wordpress.com/2016/01/16/employee-income-inequality-tax/

Scaled Tax Schedule:
https://drive.google.com/open?id=1NOAMnmO8XQnUwZbUWDWETC8Bs9jPeTehOj1LGWyMi-4

Scaled Federal Tax Schedule
Individual Income %Tax $Tax $Net
10000 10 $1,000 $9,000
11000 10.1 $1,111 $9,889
15000 10.5 $1,575 $13,425
25000 11.5 $2,875 $22,125
50000 14 $7,000 $43,000
75000 16.5 $12,375 $62,625
90000 19 $17,100 $72,900
100000 20 $20,000 $80,000
200000 21 $42,000 $158,000
300000 22 $66,000 $234,000
500000 24 $120,000 $380,000
1000000 30 $300,000 $700,000
10000000 40 $4,000,000 $6,000,000
100000000 50 $50,000,000 $50,000,000
1000000000 60 $600,000,000 $400,000,000