Category Archives: Economics

Forced to lie

I went looking for a job.

I found this one, it looked like a fit for my skills — on the surface — not enough information was available though. So I applied on Dice.com.

The recruiter called me. “Here’s the job specs, go have a look-see.”

A few of the “Requirements” stuck out at me:

  • Excellent attention to detail
  • Excellent written and verbal communication skills
  • Excellent interpersonal skills
  • Excellent time management skills
  • Excellent problem-solving and analytical skills

I thought to myself, “I might be excellent in one or two of those, and probably above average in others (and maybe just average in time management…), but I sure as hell am not EXCELLENT in all of those!”

In fact, I’m not sure who is. I’ve never met someone like that. By stating that these are requirements, anyone stepping up with interest would effectively be lying:

“Yes, I’m excellent in all of those things.”

“No you’re not, nobody is. Therefore you’re already lying to us.”

“Well, you got me there. But if everyone who approaches you has to lie about possessing Excellent Everything skills, why make such stipulations? Do you WANT to force every one of your candidates into a LIE — right from the get-go?”

Apparently this is common practice. Job requirements call out completely unrealistic levels and numbers of skills and expect you to lie about them.

Needless to say I brought up this discrepancy and the blatant need to lie to get a job interview. The recruiter didn’t care. “Everyone does it,” he said.

Nice – an entire industry predicated on lies.

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Self-regulating Systems

Nature knows how to self-regulate. The cycles of feast or famine are simple examples of such systems. Too much browse for caribou produces too many caribou calves, which then feeds too many wolves which then produce too many pups which then grow up and eat too many caribou… Leading to too few caribou, starving too many wolves, which end up producing too few new pups, which then let too many new caribou to prosper. Yeah, The Lion King was right, it’s a circle, sometimes it’s a big circle and sometimes it’s a little one. But around and around it goes.

Other self regulating system examples are the human body: when we get hot, we sweat, which cools us down. If we get too cool then we shiver which produces excess heat which warms us up.

The climate is generally a homeostatic system – a system that reaches an equilibrium (or oscillates between extremes, the average of which is steady over time). Ignoring humans impact for now, too much CO2, produces too much plant growth, which then extracts much more CO2 (a greenhouse gas) which then allows the planet to cool, which kills or retards plant growth allowing the decay of plant material to return the CO2 to the atmosphere which then heats up and allows plants to thrive again.

Over the years I’ve tried to figure out how to apply such self-regulating behaviors to social systems. For instance, I dreamed up a number of Constitutional Amendments, one of which addressed campaign contribution limits. I figured that if we used median wage as the basis for contributions — this would self regulate: every citizen could contribute one days gross wage, per candidate, per year. If politicians wanted greater contributions — they should work to elevate wages.

Another one is: what should be the minimum wage for any one location? I figured that the cost of living should determine the minimum wage; it would cost more to live in New York, NY than in Lincoln, NB. To create an algorithm for this: if we use the median monthly cost of an apartment as the basis for minimum wage: $1000 / mo. rent multiplied by 2 and divided by 100 would give us $20/hr. At 20 dollars an hour, a $1000 a month rent seems reasonable. If you want to raise rent, you have to raise wages too. If you want to lower wages, you have to lower the cost of rent.

All sort of systems can be redesigned with self-regulation in mind. Taxes for instance. Or how to handle income inequality. I’ve posted on these topics here if you’re curious. But what about other applications? Healthcare? Are there self-regulatory aspects we could apply there? I’ve posted my thoughts on the “win/win” vs the “win/lose” aspect of capitalism. That seems like a candidate for determine when free-markets should be used. In fact when the “win/win” impact of capitalism is applied, supply and demand also finds its own equilibrium.

Tragedy of the commons algorithms? Water rights algorithms? Gun laws? Energy production and consumption? Land use? The elimination of biases in the hiring process for employers? I’m sure there are many facets of life that would benefit from an intelligent analysis and design of algorithms which would produce a self-regulating system.


New FED Mandate – Equality

The Federal Reserve is “governed” by a Congressional mandate:

  • Maximize employment.
  • Keep prices stable.
  • Retain moderate long-term interest rates.

I propose another:

  • Minimize income inequality.

Now, there’s a problem with all of these mandates. The FED has but three primitive tools with which to accomplish their goals.

  • The Discount Rate, that is, the oft stated “interest rate”.
  • Banking reserve requirements, what percentage of deposits banks are required to retain to substantiate their loans.
  • Open market activity, buying and selling of treasuries like the Quantitative Easing they did during the 2008 Financial Crisis.

So, what new (or existing) tool can Congress give the FED to help it with this new “Min- Inequality” mandate? How can the FED do its work with only a throttle/brake (interest rate), a bottle of NOX (QE),  and seat belts (banking reserve)?

If we postulate that the three main drivers of income inequality are corporations that:

  • Pay their executives and officers far more than they are worth, and pay their employees far less than they are worth.
  • That they distribute the income of the company’s business to shareholders rather than a larger portion going to employees (as wage, salary or shares).
  • And that they use net income to buy-back shares of the company from the stock market (which boosts stock prices).

Then those are the behaviors we want to change.

These are therefore the leverage points we can use:
1) Corporations borrow money from banks to fund growth.
2) They borrow money from investors as bonds to fund growth.
3) And corporations issue additional common or preferred stock to fund growth.

We would need to give the FED the power to throttle each of these corporate growth behaviors. With me so far? For each of these corporate expansion tactics we’ll add an inequality tax. This tax will be a calculation of the highest paid employee divided by the lowest paid employee — and that then divided by 100.

   CEO    ÷ low wage ÷ (adj)
5,000,000 ÷  50,000  ÷  100  = 1.00

The FED will now be given additional power, a number the “Inequality Quotient” IEQQ, by which they can lower the inequality penalty or raise it.

With the FED IEQQ number set to 1.00, a corporation with the above inequality metric would have to pay 1% higher interest rate to borrow money from any bank. Would have to pay 1% more in bond interest for any bonds they issue. And they would have to pay 1% gratuity tax on any new shares they offered.

   CEO    ÷ low wage ÷ (adj)
5,000,000 ÷ 50,000   ÷ 100 * (1.00 FED IEQQ) = 1.00%

All funds collected would go into — Social Security!

Simple right? Now, how do we convince Congress that this is important and that this (or a version of it) will work?


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.