Back in September 2011, I wrote a bit about how we should tax the rich in order to save the economy. I still think that's a good idea, but there are other issues that are out there which need to be addressed, too, and I think I know how to do that. Whether anyone in power has the will to do it (which is like saying whether there are belly dancers on Mars) remains to be seen, but my idea is relatively simple, addressing complex issues in what I think is a realistic and workable manner.
The plan is this:
1. Impose a surcharge on the top 20% of income earners so that they, collectively, pay off the national debt, plus today's interest on that debt, over a 5 year period.
2. Reduce taxes on the bottom 80% of income earners by the amount of that interest payment.
3. Remove the maximum taxable income cap on social security.
This will result in a massive transfer of wealth from the wealthy to the rest of us. I realize how socialist this sounds, but bear with me for a bit while I explain how this will work both short and long-term.
First of all, paying off the debt entirely has a multitude of impacts across the financial spectrum. We can buy back our debt (much of the debt is actually bought by the government), meaning the government gets more money to use almost immediately through that investment (preferably to fund education at the collegiate level).
The credit rating of the United States will go way up because there is a viable plan to fund repayment of the debt. We won't have to worry about raising the debt ceiling cap ever again, assuming Congress acts wisely and doesn't spend more than it takes in again. (As if that's going to happen, but that is down a much longer road). The value of the dollar starts to stabilize and grow against world currency, meaning oil gets cheaper. Part of the price of oil has to do with the value of the dollar rather than the oil itself. If the value of the dollar is high, the price of oil is lower.
That could have some negative effects on green tech development since money tends to be put into that only when the price of gas is high, but there will be these kinds of fluctuations in the economy as this plan is implemented. Also, the price of oil isn't going to go down that much since it's a finite resource and the straw is beginning to hit the bottom of the barrel there, so the overall impact may well be pretty low. With European markets being stupid, it's hard to say where the value of the dollar will head, but it can't hurt (except in American exports - which usually runs a gigantic deficit compared to imports) to have a strong dollar.
Still with me? Overall, it's a good thing to have a plan to get rid of the debt. The best thing about it is that we don't have to saddle our great-grandchildren with paying off OUR stupidity.
The reason it's done over 5 years is to reduce the detrimental effects of pulling that much money out of the economy. The wealthy invest rather than spend (see my previous blog for how that works), but if one pulls gigantic amounts of investment out of a company, the company tanks, followed by the economy if enough companies tank. A reduction of invested capital over five years which amounts to about 2% of their total wealth should reduce that impact.
And that doesn't include any potential GAINS a rebounded economy may have.
The second point there is basically letting the people get money to spend. The top 20% don't spend ENOUGH to make a difference in demand. The bottom 80% certainly do. By transferring that amount from them (through shifting the tax burden back onto the wealthy who can best afford it) to the people who spend that money, the economy is stimulated to a slight degree each year.
I don't want to over-state the case, because the interest owed on the debt today is about $200 billion dollars. That may seem like a lot, but to stimulate the U.S. economy, it will take a lot more than that. However there is another component to stimulating the economy - or at least getting people to spend their money. That is the attitude of the people toward the economy.
Even if the economy shows all the"on-paper" indications of health, if the people think times are bad, they don't spend as much. Previous stimulus packages were one-time tax breaks. One-time infusions don't create the kind of attitude boost a permanent tax cut can create. Permanent means the extra money will always be there, even if that extra money isn't a lot. Extra money will be spent, even if people save it (which in itself will help strengthen the economy and ease up credit for businesses and start-ups).
And over 5 years, that mounts to one trillion dollars of spending power. THAT is a lot of spending power. Toss on the positive effects of tax cuts for the POOR (instead of the wealthy as is usually the case) and you get a much brighter picture.
Finally, the thing about social security is that we don't tax everyone ENOUGH. Shortfalls are expected very soon and they will grow as the large minority of the population - the baby boomers - age. So cut out the cap.
No, the wealthy don't need social security. I agree. But without a lot of us minions supporting their wealthy life-styles, their wealth would never have happened.
Is it taking money from the rich and giving it to the poor? Yes.
Do I have a problem with that? No.
Is it unfair for the rich? Not really.
Without a hell of a lot of poor people, they wouldn't be rich in the first place. It's time to pay that back once these poor can no longer work, or have reached the age where they shouldn't have to continue to work so stay in cat food and kitty litter.
It's called being humane.
The amount of new funds coming in should be sufficient to fund social security for the foreseeable future. The wealthy may not LIKE it, and call it welfare, but their lifestyles are supported by those people. Those people paid into it, too, and they didn't get the lion's share of their income exempted from it.
The most important point in this is that the wealthy can AFFORD TO DO IT. An extreme example is that the SIX family members of Walmart founder Sam Walton, between them, have more wealth than the combined wealth of 90 MILLION of the poorest Americans. It takes the combined wealth of the next 2.1 million richer Americans to equal it. (Their wealth is equal to the wealth of the poorest 30% of Americans, with a population of 307 million people, that means these six people have the same total wealth as the poorest 92.1 million Americans do combined.)
They will not miss meals, worry about whether they'll have a roof over their heads or wonder if they can buy clothes for their kids. They may not be living as large as they might want to, but the inconveniences will be comparatively nonexistent to the troubles facing the vast majority of Americans. And it's not as if they'll lose their money in the long-run.
Longer-term the wealthy will do fine. As the economy grows, so, too, will their fortunes. It may not grow as much as it would have had the economy recovered like that on its own, but indications are that the economy won't be stimulated enough to do that on its own now. So the upshot is that the wealthy will pay a lot to get a lot more, or they pay nothing and get a lot less. My bet is once it's explained that this surcharge is a one-time thing, that funding social security will also help the economy and that both will stimulate the economy generating greater wealth for them in the long-run, they may be a lot more willing to come on board for it. If they think of it as an investment in the future, rather than a burden, they'll be in a much better frame of mind.
In short, everyone wins in the end. That's the kind of solution to a problem I like.
Showing posts with label wealth. Show all posts
Showing posts with label wealth. Show all posts
Friday, January 6, 2012
Tuesday, October 25, 2011
Fair Taxation With Representation
Much has been bandied about in the news these days about a Flat Tax. Proponents (the right-wing, of course) say that simplifying the (admittedly complex) tax code would be good for everyone.
Actually, it's pretty bad for about 50% of Americans, but hey, we already know that the Republicans are the lapdogs of the wealthy, which is the 15% of Americans a flat tax would actually benefit.
The idea behind a flat tax is to tax everyone the same percentage of income. If everyone had basically the same income, that isn't an unwarranted idea. But obviously incomes vary from a few hundred dollars to a few hundred million dollars annually. That kind of disparity in income is why a flat tax doesn't work. You can see how this works in my blog about how taxing the wealthy more and the poor less will stimulate the economy.
A flat tax means everyone pays the same rate, but it doesn't impact everyone the same way. Someone who is taxed at 10% earning $25,000 is losing a hell of a lot more of their spending power compared to someone who is taxed at 70% earning a million dollars. Let's face it, there aren't a lot of millionaires out there starving on $300,000 of income per year while there are people out there starving on a $22,500 annual income. Making a flat tax of 20% means the millionaires are taking home $500,000 MORE and the poor are taking home $2500 LESS.
This is called robbing from the poor and giving to the rich.
Not exactly a good way to manage the economy by taking money away from the multitudes who will likely spend it and giving it to the few who don't.
But if people are looking for simple, then how about this: One formula. No deductions, exemptions, alterations. And it is applied for the average income of the household. The average income is the total income of the household divided by the number of people living there, and each person pays for their share of the income.
If you have two people and one income for the household, the income is averaged for each person. Let's say you have two people who live in a household whose income is $34,000 between the two. You divide that by the two people to give an average income of $17,000 each. Each person files for a $17,000 income regardless of who got the income.
A family of four? Same thing, only each person would be paying taxes on $8500 dollars instead - a much smaller tax burden.
This doesn't mean that everyone has to file a tax return, of course. There would one form for each person to be listed by name, SSN and such, a simple formula to calculate the taxes on the average income and then multiply that tax times the number of people listed in the household.
One page, maybe two depending on how large of a household we're talking about, with extra pages to list more people added.
Income would be defined as, "If you get it in that year and you can use it, it's income". This means interest earned in IRA's or bank accounts and any increase in the value of investments over which you have control of deposits and withdrawals would be income. You can't write off a loss.
On the bright side, since you were taxed on the money you used to put into an IRA (No deductions, no loopholes) or buy an investment, and were taxed on the IRA and investment earnings, you aren't taxed separately for taking that money out and spending it. You've paid taxes for the returns you received already. It's like a bank account and you pay taxes on the interest and earnings.
The tax formula itself would have to be worked out by someone with better math skills than I, but I imagine it would be something simple that increases with the increase in income, yet stays below the cumulative amount that would be paid if filed as one person's income. I expect it will be a logarithmic table or a place you can go online and enter your averaged income for the tax you fill in and multiply by the number of people in the household for the total tax burden.
If you have one person with $34,000 in income and 8 people with $34,000 in income between them, those 8 people in one household should pay less in taxes together than that one person in one household.
This takes care of the deduction for kids and other such standard deductions.
As for the other deductions, you're out of luck. No tax shelters. You pay taxes on interest You pay taxes on investment gains. You don't pay taxes on principle since that was your money to begin with.
Whatever the formula is (and if there's a math guru out there who can use a person's income as a specific basis for an increasing tax rate as described here, let me know), and whether it's put online for the convenience of tax payers or something they can do with a pocket calculator (A whole new cottage industry would be an app for it or a stand-alone electronic device), the idea is to simplify the codes and do it in a way that doesn't so grossly advantage the rich.
Flat rate taxes are the wet dream of the wealthy and the nightmare of the poor. The tax codes can be simplified by many other means that don't involve this kind of inequity.
Of course, there will be a lot of tax prep agencies put out of business by this, but in life, there are no guarantees - especially with regard to employment.
Actually, it's pretty bad for about 50% of Americans, but hey, we already know that the Republicans are the lapdogs of the wealthy, which is the 15% of Americans a flat tax would actually benefit.
The idea behind a flat tax is to tax everyone the same percentage of income. If everyone had basically the same income, that isn't an unwarranted idea. But obviously incomes vary from a few hundred dollars to a few hundred million dollars annually. That kind of disparity in income is why a flat tax doesn't work. You can see how this works in my blog about how taxing the wealthy more and the poor less will stimulate the economy.
A flat tax means everyone pays the same rate, but it doesn't impact everyone the same way. Someone who is taxed at 10% earning $25,000 is losing a hell of a lot more of their spending power compared to someone who is taxed at 70% earning a million dollars. Let's face it, there aren't a lot of millionaires out there starving on $300,000 of income per year while there are people out there starving on a $22,500 annual income. Making a flat tax of 20% means the millionaires are taking home $500,000 MORE and the poor are taking home $2500 LESS.
This is called robbing from the poor and giving to the rich.
Not exactly a good way to manage the economy by taking money away from the multitudes who will likely spend it and giving it to the few who don't.
But if people are looking for simple, then how about this: One formula. No deductions, exemptions, alterations. And it is applied for the average income of the household. The average income is the total income of the household divided by the number of people living there, and each person pays for their share of the income.
If you have two people and one income for the household, the income is averaged for each person. Let's say you have two people who live in a household whose income is $34,000 between the two. You divide that by the two people to give an average income of $17,000 each. Each person files for a $17,000 income regardless of who got the income.
A family of four? Same thing, only each person would be paying taxes on $8500 dollars instead - a much smaller tax burden.
This doesn't mean that everyone has to file a tax return, of course. There would one form for each person to be listed by name, SSN and such, a simple formula to calculate the taxes on the average income and then multiply that tax times the number of people listed in the household.
One page, maybe two depending on how large of a household we're talking about, with extra pages to list more people added.
Income would be defined as, "If you get it in that year and you can use it, it's income". This means interest earned in IRA's or bank accounts and any increase in the value of investments over which you have control of deposits and withdrawals would be income. You can't write off a loss.
On the bright side, since you were taxed on the money you used to put into an IRA (No deductions, no loopholes) or buy an investment, and were taxed on the IRA and investment earnings, you aren't taxed separately for taking that money out and spending it. You've paid taxes for the returns you received already. It's like a bank account and you pay taxes on the interest and earnings.
The tax formula itself would have to be worked out by someone with better math skills than I, but I imagine it would be something simple that increases with the increase in income, yet stays below the cumulative amount that would be paid if filed as one person's income. I expect it will be a logarithmic table or a place you can go online and enter your averaged income for the tax you fill in and multiply by the number of people in the household for the total tax burden.
If you have one person with $34,000 in income and 8 people with $34,000 in income between them, those 8 people in one household should pay less in taxes together than that one person in one household.
This takes care of the deduction for kids and other such standard deductions.
As for the other deductions, you're out of luck. No tax shelters. You pay taxes on interest You pay taxes on investment gains. You don't pay taxes on principle since that was your money to begin with.
Whatever the formula is (and if there's a math guru out there who can use a person's income as a specific basis for an increasing tax rate as described here, let me know), and whether it's put online for the convenience of tax payers or something they can do with a pocket calculator (A whole new cottage industry would be an app for it or a stand-alone electronic device), the idea is to simplify the codes and do it in a way that doesn't so grossly advantage the rich.
Flat rate taxes are the wet dream of the wealthy and the nightmare of the poor. The tax codes can be simplified by many other means that don't involve this kind of inequity.
Of course, there will be a lot of tax prep agencies put out of business by this, but in life, there are no guarantees - especially with regard to employment.
Sunday, September 25, 2011
Why Taxing the Rich Will Save the US Economy
I'm not in favor of tax and spend politics. I'm not in favor of increasing taxes just to spend it on social programs. But one can just revamp the taxes without increasing tax revenue and still get the economy going. The Government playing Robin Hood may not be such a bad idea, but it's not exactly giving money to the poor. It's more like making the rich pay their fair share while the the poor are pretty much left to their own devices.
(If you think being poor is simple, go to Spent and play a game or ten. Bet you starve.)
"Tax and spend" is a phrase used by conservatives to imply that the government increases taxes to create social programs to give extra money to the poor without any expectations. Often times, it means spending more than is taxed. And that is the context in which I'm against Tax and Spend. I want some value for my tax dollars being increased. But in this case, I don't want any increases unless they are specifically budgeted for deficit reduction. Rather, I'm looking at a shifting of the tax burden away from the poor and middle class and onto those who can most afford it: the wealthy. A shift of the tax burden will reduce the deficit (by stimulating the economy) without increasing tax revenue or adding to the deficit and without increasing or creating new "welfare" programs.
As I have mentioned, in the last 20 years or so (ever since 1990), we have seen the biggest a shift of revenue from the poor to the rich in global history. This gap between the Haves and the Have Nots was mentioned here earlier this month.
The idea has been floated that we should start taxing the rich more than we have and I agree - to a point. Tax the rich, yes, but no more than we actually need given necessary cost-cutting and fiscal responsibility. Then cut the taxes on the rest of us. We don't NEED to generate more tax revenue. We heed to shift the tax burden from the middle class and poor to the rich. Just doing that will stimulate the economy and make things better for EVERYONE.
Now, before we go much further, I have to explain how an economy works. You don't need to take notes and keep in mind, this is a thumb-nail version of the thing.
In the beginning there was barter. People would trade goods and services for goods or services. But there was an inherent inequity in barter in that some goods given seemed to be more valuable than what was received. So the concept of money was created. In essence, money placed a quantitative number to the value of things - be they goods or services. It worked so well, that money became what we use to trade for goods and services today.
But money has a problem. In ourt modern society, those who don't have money must acquire it in order to acquire the goods and services they need to live. They do this by trading their labor or talents in exchange for money. We call this work. A person who has the need of their labors (usually someone who is engaged in the manufacturing and sale of goods and/or services) hires people to trade their labors for his money.
All is well and good.
But some people have more money than they can spend in one spree. For a very long time, they kept this money (and other valuables) in their homes, but this became impractical. So banks were created. Banks operate as repositories of your money, who then use that money to sponsor other ventures with the expectation of being paid back with "interest", which creates an income for the bank so they can operate without paying themselves with the money of the depositors.
Again, all is well and good.
In an ideal economy, people labor for wages they spend on goods and services, the surplus of which they deposit in banks which use that money to loan to people or businesses who pay them back more than they were loaned in order to acquire goods needed in their lives, the excess of which is used to pay for the operation of the banks and offer a small incentive to the depositors for the privilege of using their money in the first place. As long as people are working, getting wages, spending wages and depositing excess wages in banks, things get better for everyone.
But then we have human nature to deal with and the major one here is greed. The greed is everywhere. The depositor who deposits their money wants the little extra the banks offer. The banks want more depositors because if they can make more loans, they make more money when people pay the loans back (Emphasis added for later effect). People getting loans want to get the loans, so can lie or fake the information necessary to get the loans if they're greedy, or find a banker who will give them a loan even if it can't be paid back because the bank looks at its income not so much as what is coming in NOW, but what WILL come in later. And the business owners are greedy realizing that if they can make their minions do more work for less wages, the business owner can make more money.
All of this has happened already. Hence why the world is screwed up. Going back to our model, the banks gave away loans to people who shouldn't have gotten them, meaning they have no income and no money to lend, and no money to give back to the depositors. (The FDIC isn't there for nothing, you know, but it, too, is running out of money). With no money coming in for businesses, they can't expand their operations or, occasionally pay their workers. So they lay the workers off. Fewer workers means less wages for the labors being traded, which means fewer people buying goods or services which means less business which means more workers are laid off.
But the bankers got paid. The business owners got paid. The poor don't. The middle class struggles.
From our (overly simplistic, but still relevant) economic model, we see where the money went: To business owners and bankers. In our society today, we call them "the wealthy".
Now, taxes were never mentioned in our economic model, but let's toss them in now and see how it all works out.
The government is in charge of maintaining the military, the roads, sewers, bridges and other public works we rely on to go about our daily lives. It also provides a safety net for those who for whatever reason can't exchange their labors for wages. It is financed by a tax on the wages of the people who live in that country. Now, a little about the people who live in the country. We'll split them up into three groups: The Wealthy (top 20% who hold the money), the Middle Class - the 60% of people who have been hired by the wealthy to labor to produce goods and services for the wealthy - and the 20% Poor (which are those who usually work, but at jobs which do not pay much, or those who can't work for whatever reason.)
The top 20% of the wealthy control 85% of the TOTAL WEALTH. If the total wealth of the economy was a million coins and the total population was 1000, the 200 wealthiest would have 850,000 to split between them, 600 would have 149,000 and the bottom 200 would have 1000.
The Wealthy have 4250 coins each.
The Middle Class have 248 coins each.
The Poor have 50 coins each.
Okay, let's move back to our model and see how this works. In a good economy, people trade labor for wages because the business owners has a demand for their goods/services. The greater the demand, the more laborers are needed. If the demand falls, so, too, does the need for laborers, which in turn means fewer people getting wages which means less spending for goods/services. The flow of money through demand is what keeps the economy working. If the money stops flowing, usually through a lack of demand (cause in this case by low wages), the economy falters and fails.
There are only 200 rich. They have a lot of money, but how many goods or services can they buy? 200. Their spending power is gigantic, but the demand they generate is small. The Middle Class and Poor are gigantic in potential demand, but compared to the rich, on an individual basis, their spending power is poor. If they don't have the money, they can't spend it on the goods and services their demand may potentially be.
Back to taxes. The Wealthy pay a lot of taxes, but they also control most of the wealth of the nation. In our model, even if they pay the 33% they pay today, the amount they have left over is still an order or two of magnitude greater than it is for the Middle Class, who control nearly a magnitude of order more than the poor. And that money IS NOT FLOWING as it should in a healthy, working economy. Rather than using their wealth to reinvest into the economy by creating new jobs, investing in new industries and making new opportunities, they're holding on to it.
Greed.
The Middle Class and Poor are spending almost all of their money on the necessities of living. They can't get enough well paying jobs to be able to pump more into the economy.
So the shifting of wealth from the wealthy to the less wealthy is in order. Since the wealthy aren't doing that on their own, the government has to do it.
Now, I understand the wealthy pay a lot in taxes, but historically, they pay barely a third of what they used to have to pay. They control 85% of the wealth. They should be paying 85% of the taxes. They aren't.
Let's look at what the taxes does to the coins people have:
33% of 4250 = 1403 leaving 2847
15% of 248 = 37 leaving 211
10% of 50 =5 leaving 45.
Clearly, the rich remain substantially wealthier than the middle class. That 33% in taxes represents 35% of the total taxes collected today. The 15% in taxes represents 60% of the taxes collected. The 10% the Poor pays represents 5% of the taxes collected.
The rich still have 10 times the wealth of the middle class.
But let's remember what the middle class does: Spend. A little goes a long way. 60% of the taxes means there are a hell of a lot of middle class. A small increase in what each of them has translates to a gigantic spending potential. By shifting the tax burden 10% so the rich pay 45% of the taxes, the middle class 55% and the poor 0%, then 10% of the TOTAL INCOME TAX REVENUE is shifted to a large number of people who are willing to spend it, all this without in any way, shape or form decreasing the quality of life among the wealthy. Given that the wealthy control 85% of the wealth, this shift isn't what one would call onerous.
In 2009, the US collected 2.4 TRILLION dollars in tax revenue. 10% of that is 240 BILLION dollars. Imagine that 240 billion dollars, every year, being pumped into the economy in the form of spending or even savings (which helps generate revenue banks can use to make loans which stimulates business, investment and hiring) without adding to the deficit. The "Economic Incentive Plan" we got from the government was a one time tax bonus intended to have people go out and spend it to stimulate the economy. It didn't help much because the public perception was it's one-time only, the economy sucks, let's NOT spend it.
A major tax cut for the 80% of Americans who actually do the largest amount of spending would be seen as a positive step toward helping them. Doing that without actually increasing the deficit, nor adversely impacting those who will be shouldering a fairer share of the tax burden will be even better.
As has been mentioned, the gap between the rich and the poor and Middle Class has never been larger. A shift of wealth is in order. It will take the money from where it's been (stagnating while only enriching the rich) to stimulating the economy.
The infusion of cash into the middle class would most definitely create more spending power and more willingness to spend it. This would fuel demand for goods and services, which in turn fuels demand for workers, which in turn puts more money into the economy.
This is a redistribution of the tax burden. Taking it one step further, increasing the taxes on the rich to actually generate extra tax revenue could ALSO be done. This extra revenue could be used to reduce the national deficit as well as help fund emergency social programs like FEMA or even bolster Social Security. But what would be best is using the money to stimulate business by investing it in the things government is supposed to take care of: Infrastructure. Just creating those jobs to repair/maintain/build the vital infrastructure the nation needs to keep moving would put more money into the economy and improve the quality of life for everyone. Putting more people to work generates more jobs which generates wages which can be taxed increasing the amount of taxes being taken in which can be used to reduce the deficit and further stimulate the economy.
But it all starts with shifting some of the wealth away from the few wealthy to the many of the rest who are willing to spend it. That can only be done through re-balancing the tax structure to place far more of the total burden onto those who can most afford it and away from those who can least afford it.
While some in Congress (who, by the way, are among the "wealthy"), call this idea "Class Warfare", the fact is the wealthy will benefit from a shift in the tax burden just as much as the rest of us over the long term. They're just too greedy to see it.
(If you think being poor is simple, go to Spent and play a game or ten. Bet you starve.)
"Tax and spend" is a phrase used by conservatives to imply that the government increases taxes to create social programs to give extra money to the poor without any expectations. Often times, it means spending more than is taxed. And that is the context in which I'm against Tax and Spend. I want some value for my tax dollars being increased. But in this case, I don't want any increases unless they are specifically budgeted for deficit reduction. Rather, I'm looking at a shifting of the tax burden away from the poor and middle class and onto those who can most afford it: the wealthy. A shift of the tax burden will reduce the deficit (by stimulating the economy) without increasing tax revenue or adding to the deficit and without increasing or creating new "welfare" programs.
As I have mentioned, in the last 20 years or so (ever since 1990), we have seen the biggest a shift of revenue from the poor to the rich in global history. This gap between the Haves and the Have Nots was mentioned here earlier this month.
The idea has been floated that we should start taxing the rich more than we have and I agree - to a point. Tax the rich, yes, but no more than we actually need given necessary cost-cutting and fiscal responsibility. Then cut the taxes on the rest of us. We don't NEED to generate more tax revenue. We heed to shift the tax burden from the middle class and poor to the rich. Just doing that will stimulate the economy and make things better for EVERYONE.
Now, before we go much further, I have to explain how an economy works. You don't need to take notes and keep in mind, this is a thumb-nail version of the thing.
In the beginning there was barter. People would trade goods and services for goods or services. But there was an inherent inequity in barter in that some goods given seemed to be more valuable than what was received. So the concept of money was created. In essence, money placed a quantitative number to the value of things - be they goods or services. It worked so well, that money became what we use to trade for goods and services today.
But money has a problem. In ourt modern society, those who don't have money must acquire it in order to acquire the goods and services they need to live. They do this by trading their labor or talents in exchange for money. We call this work. A person who has the need of their labors (usually someone who is engaged in the manufacturing and sale of goods and/or services) hires people to trade their labors for his money.
All is well and good.
But some people have more money than they can spend in one spree. For a very long time, they kept this money (and other valuables) in their homes, but this became impractical. So banks were created. Banks operate as repositories of your money, who then use that money to sponsor other ventures with the expectation of being paid back with "interest", which creates an income for the bank so they can operate without paying themselves with the money of the depositors.
Again, all is well and good.
In an ideal economy, people labor for wages they spend on goods and services, the surplus of which they deposit in banks which use that money to loan to people or businesses who pay them back more than they were loaned in order to acquire goods needed in their lives, the excess of which is used to pay for the operation of the banks and offer a small incentive to the depositors for the privilege of using their money in the first place. As long as people are working, getting wages, spending wages and depositing excess wages in banks, things get better for everyone.
But then we have human nature to deal with and the major one here is greed. The greed is everywhere. The depositor who deposits their money wants the little extra the banks offer. The banks want more depositors because if they can make more loans, they make more money when people pay the loans back (Emphasis added for later effect). People getting loans want to get the loans, so can lie or fake the information necessary to get the loans if they're greedy, or find a banker who will give them a loan even if it can't be paid back because the bank looks at its income not so much as what is coming in NOW, but what WILL come in later. And the business owners are greedy realizing that if they can make their minions do more work for less wages, the business owner can make more money.
All of this has happened already. Hence why the world is screwed up. Going back to our model, the banks gave away loans to people who shouldn't have gotten them, meaning they have no income and no money to lend, and no money to give back to the depositors. (The FDIC isn't there for nothing, you know, but it, too, is running out of money). With no money coming in for businesses, they can't expand their operations or, occasionally pay their workers. So they lay the workers off. Fewer workers means less wages for the labors being traded, which means fewer people buying goods or services which means less business which means more workers are laid off.
But the bankers got paid. The business owners got paid. The poor don't. The middle class struggles.
From our (overly simplistic, but still relevant) economic model, we see where the money went: To business owners and bankers. In our society today, we call them "the wealthy".
Now, taxes were never mentioned in our economic model, but let's toss them in now and see how it all works out.
The government is in charge of maintaining the military, the roads, sewers, bridges and other public works we rely on to go about our daily lives. It also provides a safety net for those who for whatever reason can't exchange their labors for wages. It is financed by a tax on the wages of the people who live in that country. Now, a little about the people who live in the country. We'll split them up into three groups: The Wealthy (top 20% who hold the money), the Middle Class - the 60% of people who have been hired by the wealthy to labor to produce goods and services for the wealthy - and the 20% Poor (which are those who usually work, but at jobs which do not pay much, or those who can't work for whatever reason.)
The top 20% of the wealthy control 85% of the TOTAL WEALTH. If the total wealth of the economy was a million coins and the total population was 1000, the 200 wealthiest would have 850,000 to split between them, 600 would have 149,000 and the bottom 200 would have 1000.
The Wealthy have 4250 coins each.
The Middle Class have 248 coins each.
The Poor have 50 coins each.
Okay, let's move back to our model and see how this works. In a good economy, people trade labor for wages because the business owners has a demand for their goods/services. The greater the demand, the more laborers are needed. If the demand falls, so, too, does the need for laborers, which in turn means fewer people getting wages which means less spending for goods/services. The flow of money through demand is what keeps the economy working. If the money stops flowing, usually through a lack of demand (cause in this case by low wages), the economy falters and fails.
There are only 200 rich. They have a lot of money, but how many goods or services can they buy? 200. Their spending power is gigantic, but the demand they generate is small. The Middle Class and Poor are gigantic in potential demand, but compared to the rich, on an individual basis, their spending power is poor. If they don't have the money, they can't spend it on the goods and services their demand may potentially be.
Back to taxes. The Wealthy pay a lot of taxes, but they also control most of the wealth of the nation. In our model, even if they pay the 33% they pay today, the amount they have left over is still an order or two of magnitude greater than it is for the Middle Class, who control nearly a magnitude of order more than the poor. And that money IS NOT FLOWING as it should in a healthy, working economy. Rather than using their wealth to reinvest into the economy by creating new jobs, investing in new industries and making new opportunities, they're holding on to it.
Greed.
The Middle Class and Poor are spending almost all of their money on the necessities of living. They can't get enough well paying jobs to be able to pump more into the economy.
So the shifting of wealth from the wealthy to the less wealthy is in order. Since the wealthy aren't doing that on their own, the government has to do it.
Now, I understand the wealthy pay a lot in taxes, but historically, they pay barely a third of what they used to have to pay. They control 85% of the wealth. They should be paying 85% of the taxes. They aren't.
Let's look at what the taxes does to the coins people have:
33% of 4250 = 1403 leaving 2847
15% of 248 = 37 leaving 211
10% of 50 =5 leaving 45.
Clearly, the rich remain substantially wealthier than the middle class. That 33% in taxes represents 35% of the total taxes collected today. The 15% in taxes represents 60% of the taxes collected. The 10% the Poor pays represents 5% of the taxes collected.
The rich still have 10 times the wealth of the middle class.
But let's remember what the middle class does: Spend. A little goes a long way. 60% of the taxes means there are a hell of a lot of middle class. A small increase in what each of them has translates to a gigantic spending potential. By shifting the tax burden 10% so the rich pay 45% of the taxes, the middle class 55% and the poor 0%, then 10% of the TOTAL INCOME TAX REVENUE is shifted to a large number of people who are willing to spend it, all this without in any way, shape or form decreasing the quality of life among the wealthy. Given that the wealthy control 85% of the wealth, this shift isn't what one would call onerous.
In 2009, the US collected 2.4 TRILLION dollars in tax revenue. 10% of that is 240 BILLION dollars. Imagine that 240 billion dollars, every year, being pumped into the economy in the form of spending or even savings (which helps generate revenue banks can use to make loans which stimulates business, investment and hiring) without adding to the deficit. The "Economic Incentive Plan" we got from the government was a one time tax bonus intended to have people go out and spend it to stimulate the economy. It didn't help much because the public perception was it's one-time only, the economy sucks, let's NOT spend it.
A major tax cut for the 80% of Americans who actually do the largest amount of spending would be seen as a positive step toward helping them. Doing that without actually increasing the deficit, nor adversely impacting those who will be shouldering a fairer share of the tax burden will be even better.
As has been mentioned, the gap between the rich and the poor and Middle Class has never been larger. A shift of wealth is in order. It will take the money from where it's been (stagnating while only enriching the rich) to stimulating the economy.
The infusion of cash into the middle class would most definitely create more spending power and more willingness to spend it. This would fuel demand for goods and services, which in turn fuels demand for workers, which in turn puts more money into the economy.
This is a redistribution of the tax burden. Taking it one step further, increasing the taxes on the rich to actually generate extra tax revenue could ALSO be done. This extra revenue could be used to reduce the national deficit as well as help fund emergency social programs like FEMA or even bolster Social Security. But what would be best is using the money to stimulate business by investing it in the things government is supposed to take care of: Infrastructure. Just creating those jobs to repair/maintain/build the vital infrastructure the nation needs to keep moving would put more money into the economy and improve the quality of life for everyone. Putting more people to work generates more jobs which generates wages which can be taxed increasing the amount of taxes being taken in which can be used to reduce the deficit and further stimulate the economy.
But it all starts with shifting some of the wealth away from the few wealthy to the many of the rest who are willing to spend it. That can only be done through re-balancing the tax structure to place far more of the total burden onto those who can most afford it and away from those who can least afford it.
While some in Congress (who, by the way, are among the "wealthy"), call this idea "Class Warfare", the fact is the wealthy will benefit from a shift in the tax burden just as much as the rest of us over the long term. They're just too greedy to see it.
Friday, September 16, 2011
The Karma of Democracy
To begin with, I am in favor of democracy - in moderation. But I'm NOT in favor of the way we elect our politicians and approve (or disapprove) new laws or propositions. To be more specific, I'm not in favor of the "anyone over the age of 18 can vote and the majority wins" form of democracy (and I loathe and despise the Electoral College).
As a disclosure on this, I don't vote anymore. Nor am I registered any longer. I actually took the step of removing myself from the voter registration lists. My political affiliations went from Republican to Independent. When I was a registered Independent, it was the worst of both worlds. I got bombarded by all parties, but couldn't vote in any primary elections for any viable candidates. But it got worse and now no one represents the "middle of the road" points of view I tend to have. Since there are no candidates I respect, let alone want to vote for, I refuse to participate in what I see as a flawed system. Referendums are backed by special interests and it won't matter what my vote is if I don't vote for the side which spent the most on promoting it. The side spending the most money for or against a proposition wins 95% of the time. Go look up the facts on that for yourself.
I'm not sure where this puts me on the political/ideological spectrum, but the notion that a population can pass a law based on a popular vote is fine in theory, but it utterly falls apart in practice. There are several reasons why this theoretically good, but realistically flawed ideal doesn't really work. Many of them interrelate, but they can be separated.
The first reason is participation. In no election in US history has voter turnout been 100%. I'm not sure there's ever been a 90% voter turnout in the history of the world, let alone 100%. This means there are people who register, but don't vote. I don't get that. If you're not going to vote, why register? I know people die or move and whatnot, but still, the best voter turnout in the last 50 years was 63.1% of the voting age population in 1960 (before 18 year olds could vote). It's been as low as 49% for a presidential election (in 1996). But not everyone always participates, so the elections we have aren't truly representative of the will of the people.
The second reason is ability. I fail to see how a 60- year old functional moron (say with an IQ of about 60) can make a better political decision than a 180 IQ child of 12. Experience counts, but frankly, you have to be bright enough to process the dredge and garbage the politicians put out these days (not to mention the proliferation of shitty-smelling smoke screens from secretly funded special interest groups and PAC's). A moron can't. A genius probably can. Toss in the fact that people are often voting on a number of things in each election and you compound the problem. Those less able (or less interested) will not take the responsibility to educate themselves on all of their choices to make an INFORMED vote. Some folks utterly lack the ability to do that on all things they're voting about.
The third reason is human nature. Let's face it, Ray Bradbury was right when he said that Democracy can't work in a society that doesn't have the self discipline to NOT vote for bread and circuses for themselves (implying that they will vote to give themselves all sorts of wonderful things, but never vote for the means necessary to do it). This mostly has to do with propositions and referendums (see the last reason), but people, if given a choice between something that will feel good now, but hurt like hell later and something that will hurt a bit now, but feel a hell of a lot better later, will choose to feel good now and somehow think later will never come. Welfare, social security, Unemployment, Unnecessary declarations of war... Those are all things that feel good (or righteous) now, but really screw things up later.
The fourth reason it's going to fail, oddly, is communications. Today, we have a lot of ways to communicate. What we lack is a lot of ways to verify what those communications are telling us. Far more information is being thrown at people than most people can even hope to process, let alone make sure it's true, real and accurate. The proliferation of misinformation in the web and in our lives makes knowing what's real and what's not next to impossible. The rant I did last year about blogs, and about how blogs have destroyed impartiality in the news exacerbates this issue. Add to this the fact that politics has become a religion to people these days means that not only is the information biased, but there's not enough time in the day to verify the veracity of what is being said.
The last reason is function. Our political system is broken. It's broken because the rich have taken control. Left or right, they throw all sorts of BS at us to distract us from the fact the rich only want to get richer and damn anyone who gets in their way. (Sadly, yes, I believe this. The wealthiest 20% of the population control 85% of the country's wealth, the poorest 20% control 0.1% of the country's wealth, leaving the middle 60% a paltry 14.9% of the total wealth to deal with. Don't take my word for that. Go look it up for yourselves.) The wealthy select the candidates they want (it's mostly for the dog and pony show they sponsor we call Congress and the Presidency) and it doesn't much matter who gets in - the BS will continue unabated.
In some way, change some names and descriptions, this describes all democracies that allow "the average man" to vote. In good times, Democracies lay the groundwork for their own destruction when the bad times come (or at least the foundation for making the bad times a hell of a lot worse than they had to be). In bad times, extremism causes them to fall apart. Case in point, the formation of the terrorist group "The Tea Party" and it's acceptance as a "legitimate political movement" by the powers that be. (More about this extremist group in another blog).
The point is, while you have unfettered ability for any idiot on the street to vote, the whole system will eventually fall apart.
If each of the reasons democracy as we know it doesn't work were properly addressed, democracy COULD be made to work. And as a template, I look at Jury Duty - at least in concept if not actual form. With Jury Duty, a group of "peers" is taken from the voter registration rosters and are asked to be society's judge of the guilt or innocence of an individual accused of a crime based solely on the evidence presented in court. They vote to convict or acquit. Why not apply this basic idea - taking a pool of people to make our political decisions - to a greater extreme?
Looking at the major factors influencing the inevitable demise of democracy (at least in my humble opinion), one has to deal with them individually but with one means in order to create a democratic process which is fair, stable and unbreakable.
The first thing one must look at is participation. Why do people NOT vote, though they went through the trouble of registering? Because they can. It's that simple. So change that and make voting mandatory. The whole idea of jury duty says that if you are picked to vote, you MUST vote. Only incapacitating illness, or death, can get someone out of it. Make the penalty for failing to vote harsh enough to cause the individual moderately severe inconvenience. Make the rewards of voting better through social recognition and appreciation - a tax break or something tangible. But make it known that failing to abide by the voting laws will result in punishment.
This takes care of the participation part, but there are other things to add to this concept to make it work. Obviously we can't do this for everyone in the country. It's impractical to include everyone all the time. So, like Jury Duty, only a select few are picked. Enough to get a demographically representative cross-section of the population - based on the most recent census - which would be affected by the vote, but a much smaller, more manageable number. It won't matter if they WANT to vote or not. All must do it.
Now that we have taken care of the participation issue, we need to address ability. Some people are stupid. Some aren't. But the issue boils down to comprehension of the issues. Therefore, like in jury duty, a person chosen to participate in a vote MUST KNOW WHAT THEY ARE VOTING ON. They must be aware of the issues, the positions, all of the things that are in the voters' guide which are sent to registered voters before the vote is due to give them some idea of what is involved.
But again, we have an issue with ability, and in some elections, where you can be voting on dozens of things from the local dog catcher to the President of the United States, it can be overwhelming to a lot of people (usually about half of the population). So let's simplify it: no one will have to know about or vote on more than two issues in any one election. This keeps it simple for the stupid. And there WILL be a test to prove the voter has read the material and understands both sides of the issues. Once they pass the test, they're sent the voting forms or location to vote. The test can be done by mail or by secure website. If someone is too stupid to pass the test, they are stricken from the voting roles and will never be bothered again.
Now, by creating a demographically balanced, mandatory, focused voter base, it's next to impossible for people to be manipulated into voting for bread and circuses. They can't just vote for what appeals to them based on misinformation. They can still vote according to what they believe, but it will be an informed vote rather than one based entirely on bias. Not perfect to avoid the bread and circuses BS, but it is more effective than letting special interest groups sway large forces of like-minded politically active individuals into hijacking an election and unbalancing the democratic processes we have in the country.
This also helps reduce the misinformation out there. With only one or two issues to focus on, a voter won't be as distracted as one exposed to hundreds of other points of view on other issues.
Finally, these voters will be anonymous. They will be selected and identified by number. Each election, different voters will be selected. No one will know which voters are to vote on which issue. They won't know what markets to target, what mailboxes to fill, what people to try to manipulate. This makes it very difficult for the rich elite to manipulate legions of like-minded zombies into doing their bidding. And like a jury, it will be illegal to attempt to directly influence a voters' vote.
This will undermine the rich's ability to unduly influence the outcome of an election.
Of course, the weak points in this system are obvious. Who makes up the voter guides? How are the voters selected? Who guards the guardians? Again, I'd do this by jury duty. A Grand Jury style of selection. One per candidate/issue. A committee of 13 (no ties allowed) will come up with the voter guide based on the interest groups who submit their positions. Another committee will review the list of voters (no personally identifying information) - just to ensure it matches the demographics of the region which will be affected by the vote. They will review the census data and the selected voter's demographics and vote to approve the selection. This spreads out the risk of tampering with the system. It can still happen, but those responsible for the vote carry the legal liability of tampering. If they were found to have acted in a particular way due to outside influences, they will be charged with a state or federal crime - depending on the level of vote over which they had control.
This system is more balanced, less able to be tampered with, gives everyone an opportunity to be chosen to vote, demands that they vote if chosen, requires them to understand what they're voting about, reduces the influence of money on the vote and creates accountability to ensure a fair voting process. It also has the advantage of not being overly burdensome to people to "get out and vote". Voting can be done by mail. It will reduce the cost of setting up voting centers or holding votes in the first place, and reduce the financial overhead for strained districts.
Of course, there would be details to be worked out about implementation, not to mention re-writing the constitutions of every state in the union, but let's face it, Democracy in the United States is broken. I said it 7 years ago, and I say it again: The US is headed for a second civil war and most of the world will be involved. It will be fought by people who are tired of being manipulated by the powerful few. Maybe this idea, or one like it, will be picked up in the aftermath and put into effect to avoid the kind of manipulation of the democratic process we see today.
The only really sad part about that is how many people will die because the few want to control the many who don't want to be controlled. If our founding fathers could have anticipated the graft and greed humans would eventually come to regard as "normal", maybe they would have had more foresight in drafting the constitution. But then, the only thing they had was honor and a sense of personal responsibility. Both qualities which have been lost in the decades since their time. If people acted with honor and responsibility today, democracy would have stood a chance.
As a disclosure on this, I don't vote anymore. Nor am I registered any longer. I actually took the step of removing myself from the voter registration lists. My political affiliations went from Republican to Independent. When I was a registered Independent, it was the worst of both worlds. I got bombarded by all parties, but couldn't vote in any primary elections for any viable candidates. But it got worse and now no one represents the "middle of the road" points of view I tend to have. Since there are no candidates I respect, let alone want to vote for, I refuse to participate in what I see as a flawed system. Referendums are backed by special interests and it won't matter what my vote is if I don't vote for the side which spent the most on promoting it. The side spending the most money for or against a proposition wins 95% of the time. Go look up the facts on that for yourself.
I'm not sure where this puts me on the political/ideological spectrum, but the notion that a population can pass a law based on a popular vote is fine in theory, but it utterly falls apart in practice. There are several reasons why this theoretically good, but realistically flawed ideal doesn't really work. Many of them interrelate, but they can be separated.
The first reason is participation. In no election in US history has voter turnout been 100%. I'm not sure there's ever been a 90% voter turnout in the history of the world, let alone 100%. This means there are people who register, but don't vote. I don't get that. If you're not going to vote, why register? I know people die or move and whatnot, but still, the best voter turnout in the last 50 years was 63.1% of the voting age population in 1960 (before 18 year olds could vote). It's been as low as 49% for a presidential election (in 1996). But not everyone always participates, so the elections we have aren't truly representative of the will of the people.
The second reason is ability. I fail to see how a 60- year old functional moron (say with an IQ of about 60) can make a better political decision than a 180 IQ child of 12. Experience counts, but frankly, you have to be bright enough to process the dredge and garbage the politicians put out these days (not to mention the proliferation of shitty-smelling smoke screens from secretly funded special interest groups and PAC's). A moron can't. A genius probably can. Toss in the fact that people are often voting on a number of things in each election and you compound the problem. Those less able (or less interested) will not take the responsibility to educate themselves on all of their choices to make an INFORMED vote. Some folks utterly lack the ability to do that on all things they're voting about.
The third reason is human nature. Let's face it, Ray Bradbury was right when he said that Democracy can't work in a society that doesn't have the self discipline to NOT vote for bread and circuses for themselves (implying that they will vote to give themselves all sorts of wonderful things, but never vote for the means necessary to do it). This mostly has to do with propositions and referendums (see the last reason), but people, if given a choice between something that will feel good now, but hurt like hell later and something that will hurt a bit now, but feel a hell of a lot better later, will choose to feel good now and somehow think later will never come. Welfare, social security, Unemployment, Unnecessary declarations of war... Those are all things that feel good (or righteous) now, but really screw things up later.
The fourth reason it's going to fail, oddly, is communications. Today, we have a lot of ways to communicate. What we lack is a lot of ways to verify what those communications are telling us. Far more information is being thrown at people than most people can even hope to process, let alone make sure it's true, real and accurate. The proliferation of misinformation in the web and in our lives makes knowing what's real and what's not next to impossible. The rant I did last year about blogs, and about how blogs have destroyed impartiality in the news exacerbates this issue. Add to this the fact that politics has become a religion to people these days means that not only is the information biased, but there's not enough time in the day to verify the veracity of what is being said.
The last reason is function. Our political system is broken. It's broken because the rich have taken control. Left or right, they throw all sorts of BS at us to distract us from the fact the rich only want to get richer and damn anyone who gets in their way. (Sadly, yes, I believe this. The wealthiest 20% of the population control 85% of the country's wealth, the poorest 20% control 0.1% of the country's wealth, leaving the middle 60% a paltry 14.9% of the total wealth to deal with. Don't take my word for that. Go look it up for yourselves.) The wealthy select the candidates they want (it's mostly for the dog and pony show they sponsor we call Congress and the Presidency) and it doesn't much matter who gets in - the BS will continue unabated.
In some way, change some names and descriptions, this describes all democracies that allow "the average man" to vote. In good times, Democracies lay the groundwork for their own destruction when the bad times come (or at least the foundation for making the bad times a hell of a lot worse than they had to be). In bad times, extremism causes them to fall apart. Case in point, the formation of the terrorist group "The Tea Party" and it's acceptance as a "legitimate political movement" by the powers that be. (More about this extremist group in another blog).
The point is, while you have unfettered ability for any idiot on the street to vote, the whole system will eventually fall apart.
If each of the reasons democracy as we know it doesn't work were properly addressed, democracy COULD be made to work. And as a template, I look at Jury Duty - at least in concept if not actual form. With Jury Duty, a group of "peers" is taken from the voter registration rosters and are asked to be society's judge of the guilt or innocence of an individual accused of a crime based solely on the evidence presented in court. They vote to convict or acquit. Why not apply this basic idea - taking a pool of people to make our political decisions - to a greater extreme?
Looking at the major factors influencing the inevitable demise of democracy (at least in my humble opinion), one has to deal with them individually but with one means in order to create a democratic process which is fair, stable and unbreakable.
The first thing one must look at is participation. Why do people NOT vote, though they went through the trouble of registering? Because they can. It's that simple. So change that and make voting mandatory. The whole idea of jury duty says that if you are picked to vote, you MUST vote. Only incapacitating illness, or death, can get someone out of it. Make the penalty for failing to vote harsh enough to cause the individual moderately severe inconvenience. Make the rewards of voting better through social recognition and appreciation - a tax break or something tangible. But make it known that failing to abide by the voting laws will result in punishment.
This takes care of the participation part, but there are other things to add to this concept to make it work. Obviously we can't do this for everyone in the country. It's impractical to include everyone all the time. So, like Jury Duty, only a select few are picked. Enough to get a demographically representative cross-section of the population - based on the most recent census - which would be affected by the vote, but a much smaller, more manageable number. It won't matter if they WANT to vote or not. All must do it.
Now that we have taken care of the participation issue, we need to address ability. Some people are stupid. Some aren't. But the issue boils down to comprehension of the issues. Therefore, like in jury duty, a person chosen to participate in a vote MUST KNOW WHAT THEY ARE VOTING ON. They must be aware of the issues, the positions, all of the things that are in the voters' guide which are sent to registered voters before the vote is due to give them some idea of what is involved.
But again, we have an issue with ability, and in some elections, where you can be voting on dozens of things from the local dog catcher to the President of the United States, it can be overwhelming to a lot of people (usually about half of the population). So let's simplify it: no one will have to know about or vote on more than two issues in any one election. This keeps it simple for the stupid. And there WILL be a test to prove the voter has read the material and understands both sides of the issues. Once they pass the test, they're sent the voting forms or location to vote. The test can be done by mail or by secure website. If someone is too stupid to pass the test, they are stricken from the voting roles and will never be bothered again.
Now, by creating a demographically balanced, mandatory, focused voter base, it's next to impossible for people to be manipulated into voting for bread and circuses. They can't just vote for what appeals to them based on misinformation. They can still vote according to what they believe, but it will be an informed vote rather than one based entirely on bias. Not perfect to avoid the bread and circuses BS, but it is more effective than letting special interest groups sway large forces of like-minded politically active individuals into hijacking an election and unbalancing the democratic processes we have in the country.
This also helps reduce the misinformation out there. With only one or two issues to focus on, a voter won't be as distracted as one exposed to hundreds of other points of view on other issues.
Finally, these voters will be anonymous. They will be selected and identified by number. Each election, different voters will be selected. No one will know which voters are to vote on which issue. They won't know what markets to target, what mailboxes to fill, what people to try to manipulate. This makes it very difficult for the rich elite to manipulate legions of like-minded zombies into doing their bidding. And like a jury, it will be illegal to attempt to directly influence a voters' vote.
This will undermine the rich's ability to unduly influence the outcome of an election.
Of course, the weak points in this system are obvious. Who makes up the voter guides? How are the voters selected? Who guards the guardians? Again, I'd do this by jury duty. A Grand Jury style of selection. One per candidate/issue. A committee of 13 (no ties allowed) will come up with the voter guide based on the interest groups who submit their positions. Another committee will review the list of voters (no personally identifying information) - just to ensure it matches the demographics of the region which will be affected by the vote. They will review the census data and the selected voter's demographics and vote to approve the selection. This spreads out the risk of tampering with the system. It can still happen, but those responsible for the vote carry the legal liability of tampering. If they were found to have acted in a particular way due to outside influences, they will be charged with a state or federal crime - depending on the level of vote over which they had control.
This system is more balanced, less able to be tampered with, gives everyone an opportunity to be chosen to vote, demands that they vote if chosen, requires them to understand what they're voting about, reduces the influence of money on the vote and creates accountability to ensure a fair voting process. It also has the advantage of not being overly burdensome to people to "get out and vote". Voting can be done by mail. It will reduce the cost of setting up voting centers or holding votes in the first place, and reduce the financial overhead for strained districts.
Of course, there would be details to be worked out about implementation, not to mention re-writing the constitutions of every state in the union, but let's face it, Democracy in the United States is broken. I said it 7 years ago, and I say it again: The US is headed for a second civil war and most of the world will be involved. It will be fought by people who are tired of being manipulated by the powerful few. Maybe this idea, or one like it, will be picked up in the aftermath and put into effect to avoid the kind of manipulation of the democratic process we see today.
The only really sad part about that is how many people will die because the few want to control the many who don't want to be controlled. If our founding fathers could have anticipated the graft and greed humans would eventually come to regard as "normal", maybe they would have had more foresight in drafting the constitution. But then, the only thing they had was honor and a sense of personal responsibility. Both qualities which have been lost in the decades since their time. If people acted with honor and responsibility today, democracy would have stood a chance.
Wednesday, August 17, 2011
The Necessary Demise of the Free Market
One of the views I tend to hold regarding economic models is often cited (when such things are cited) as why some folks believe I'm a screaming liberal. This conservatively offensive view is that a free-market economy is doomed to fail.
In essence, a free market economy is where businesses compete openly for customers without much (if any) regulatory control. Supposedly with its own built-in checks and balances it is thought (erroneously, as it happens) that the market is self-stabilizing and that any necessary corrections for imbalances will happen automatically by enlightened captains of industry and finance because it's for the good of the market. Yes, people actually believe this nonsense. But the flaws in this thinking were highlighted all too glaringly when the flaws in the free market model destroyed the world economy two years ago, the effects of which are still being felt today.
On paper, it DOES work. Then again, so do all pie-in-the-sky economic models. Paper isn't human and the human factor is why they all fail. In fact, there's only ONE human factor involved in all economic models which causes them to fail: Greed.
Dress it up howsoever you want, but greed is the nexus that breaks all economic models tried so far. Greed drives people to better themselves economically (keeping up with the neighbors' acquisition of "things", getting a better job to buy the things that mark one's status in society). No economic model so far created has ever adequately taken human greed into account.
Communism fails because people aren't interested in the greatest good for the greatest number. They are looking out for number one - themselves. Socialism fails because if you satisfy the needs of the people without requiring the people to work, the people won't work. After all, why bother? And with capitalism, if you are a have, you only want more, to the expense of the have-nots. And you will do everything you can to keep the have nots from becoming haves.
These economic theories all fail to take into account human greed.
Now, one could say we need to change as human beings, and I couldn't agree more, but realistically, that ain't gonna happen anytime in the next thousand years. Mankind is still too close to his animal roots to know when he has "enough" and that more than that is too much, not a good thing and can lead to disaster. Unfortunately, we live on a planet where the resources are limited and when one person has more than enough, it's inevitable that others don't have "enough".
So the trick here is to acknowledge greed as a driving force, but to place breaks on it so that when one has enough, they strive to be satisfied with that. All the while you have to provide incentive to continue to excel, so a reward system has to be in place for the go-getters and the doers which doesn't necessarily result in tangible rewards, but in rewards which are satisfying enough to seek none the less.
This is probably an impossible task on paper, and let's face it, there are people out there who will defy all attempts to plug them into any economic model.
So instead of inventing a new one, let's look at modifying one that is somewhat more successful in acknowledging greed: Capitalism.
The problem with capitalism is that people don't acknowledge when enough is enough. I'm not saying that everyone should have a yacht in their back yards. After all some people just aren't that motivated. Nor am I talking entitlements. Those who can't work at a conventional job should have some kind of task they can perform for an income. Regardless of one's ability, employment of some kind - even if it's just to do the work of living - by everyone is vital to the revised capitalist economic model. Everyone should have an income based on their own efforts at earning one even if it isn't derived from a standard "job".
The next thing you do is cap income and profits. There are people out there making obscene amounts of money just because their companies make obscene amounts of money. Profits should be capped at a percentage plus inflation (Say what a US savings bond would earn in total back when US Savings bonds were worth buying). Since inflation varies, call it inflation plus 15% just as an example. The idea is to target the most egregious profit mongering, not to retard the average business's incentive to earn income. It's important to note that profits are what's left over after all research and development has been done, everything's been paid and all is good and right with the company.
The excess should be funneled into building roads, schools, new infrastructure and other civil projects which require vast amounts of money no one seems willing to spend on these days.
Now, greed would ask once a company has made X amount of money above their expenses and maxed out their profits, why would they bother working any harder? After all, they can't earn any more. What's the point of continuing to push?
That's where the trick comes in. They HAVE to work harder to MAINTAIN those profits, because if they do two years in a row, the next year their profit cap is allowed to increase by enough to make the effort worth it. If they fail to meet that cap, it's maintained at the higher level, but not raised. If they fail two years in a row to reach that cap, their cap is lowered again.
This way, there is more incentive to improve profits than there are penalties for not profiting, but they're always capped.
You do this for people, too, albeit in a slightly different fashion. Income is capped at a high, but not obscenely high level. Whatever pays for government, infrastructure, education, defense and the things that taxes help pay for would be the cut off the top and the rest would be used as the way to figure the cap. An example of this would be to take the average of the actual income (before taxes) of working Americans, multiply that by 10 (or whatever number is appropriate to allow for a lot of worker bees and not so many queens based on the boss-to-worker ratio averaged over the last 10 years or something like that) and call that the income cap. More knowledgeable people than I can work it out.
Income is all actual funds gained in a year from all sources - Profits on property and personal belonging sales, inheritance, expenses that are reimbursed above actual costs, sales of stocks, etc.
Now before I go on, a word on inheritance. Inheritance is a time-honored tradition whereby someone gets someone else's stuff when that someone else dies. You can't take it with you, after all. Unfortunately, there are people out there who leech off their rich parents (or husbands/wives) who are pretty much wastes of sperm in the first place and have never really worked a day in their lives.
So here's how it would work: For those who stand to inherit anything in excess of the annual income cap, there are consequences. All monetary assets would be placed in a trust. All property assets would be allowed to transfer to the beneficiary. If the beneficiary liquidates any of that property at any time during the beneficiary's life, those assets would also go into the same trust. The idea here is to limit income to the personal cap per year using the funds in this trust. If a person continues to keep the property, it isn't considered income. A cherished family home can be passed from generation to generation without tax or penalty.
The trust into which liquid assets and the proceeds of inherited property sales are placed would be passed on to the next of kin upon the death of the beneficiary who inherited the trust in the first place.
After all, property is NOT income. It may have a great deal of value, but unless you sell it - and at a profit - that value is virtual rather than actual and it's only valued at the profit for which it was sold. Yes, it can be used as collateral, but then a business receiving the property in the event of a default wouldn't be allowed to keep the income from it if that income made the lender's profits exceed the cap.
A little on this property as income thing. The government considers property sales as "income". It does not consider the purchase of property a "loss". So you end up paying taxes on property you sell regardless of whether you make a profit on it or not. The income cap says you can only make X amount per year in actual cash. Property purchases are NOT deducted from your income, but if you sell it at a loss, you don't exceed the cap in income provided the sale is in the same year as the purchase. If it is, and you have the receipt from the purchase you're covered. If it isn't, then it's income for that year. If you get more than you paid for it, it's income for that year. A simple-enough concept to follow. People could "save" by purchasing property with their income while they are working and augment their income by selling it when they're not, or are working for less. As long as they don't exceed the cap for that year, they can keep all proceeds from property sales. Income would be based on money actually received between January 1st and December 31st for one calendar year.
The funds in the trust may be donated to non-profit organizations which provide for the public good, to venture capitalists who have not exceeded their profit cap, to non-profit medical research for incurable diseases and to other causes which promote good things for everyone rather than just a few.
Of course, this issue will have their detractors. After all, men of industry who are "worth" billions of dollars might take exception to cutting their kids/spouse down to "only" the maximum income per year, but if they still have homes whose maintenance alone exceeds the personal income cap, finding a supermarket from which to buy food would be problematic for someone whose income is capped.
I say, "Tough." If you have so much that ten million dollars a year isn't enough to cover your expenses, you have too much. Part of that "more than enough" stuff. I say liquidate the excess, keep the heirlooms and sentimental stuff and live off the trust fund if you're not making the max per year.
What this will do is get those outrageously over-the-top mansions for one person and a staff of fifty off the market entirely in a generation. They'll be torn down and turned into housing which someone making ten million a year can afford, instead. It's not exactly spreading the wealth to everyone, but it is putting a halt to egregiously "more than enough" living.
Now, back to incomes...
The personal income cap is problematic for the simple reason that once a person hits it, they tend to slack off. This means you have to keep them at it and motivated or the slackers of the world will unite. The first thing you do is monitor their performance. If they don't perform like they did in getting to the top, you don't pay them as much and they don't earn the cap. This makes salaries tied to performance.
What is "performance"? In essence, performance is doing what is expected of them for the company. It is "average". They are meeting all job requirements and fulfilling all necessary expectations. Someone may bust their ass to get to the top, then just coast. That's their right. But if their performance drops, they get less income for it.
Now, there are people who are highly motivated and want to be rewarded for a better than just an "average" performance. This is not an unreasonable demand. Performing above and beyond the call of duty must be rewarded and there are many ways of doing this that don't necessarily involve raising the cap, primarily through peer recognition and acclaim.
I fall back to the military in this aspect by creating levels of rewards for consistently high performance. You CAN reach the cap by being average in a vital field. But to go beyond that, you must maintain a higher than average level of performance for a long duration. One starts with special recognition for a couple of years. And then one starts increasing the cap, along with the special recognition. Once the cap starts being raised, the performance must INCREASE to get it to go higher again, all the way up to doubling their personal cap in $500,000.00 increments per year. Their annual evaluations will be filed with the IRS and they'll be allowed to earn based on their performance rating and years of service with a particular company.
Now, of course, not everyone is going to make it to that cap. That's fine. The cap is in place to decapitate the wealthiest and spread the wealth.
Oh, I believe I failed to mention that income, corporate and sales taxes would be abolished. In fact, all funding fees (those which are in place strictly to fund projects and programs) would be abolished as well. The government would be financed by the money that would have been paid to people who earn more than ten million a year, plus the excess profits companies make. To highlight how effective this would be, the wealthiest 10% of the country makes something like 60%-70% of the income. That leaves about 30%-40% of total income in the US to be spread among the remaining 90% of the population. There is MORE than enough money coming in to run the government, and all programs currently funded, with plenty left over for a rainy day.
The income and profit cap would also be tied to the amount of money coming into the coffers of the state, so that if more is coming in, the cap would be raised and if less was coming in, the cap would be lowered.
Keep in mind, also, that $10,000,000.00 is a hell of a lot of money for one person for one year. I used it as an example. It could be set at 5 million dollars or 1 million. How much money does one person need, after all? If they're married, the combined income would be maxed at 10 million, and 2 live cheaper than one, so it's not like anyone would be enduring any hardship. The point is there needs to be a cap that reduces the gap between the haves and the have nots. - whatever that gap turns out to be. At least 25% of the total income earned should be used to pay for government, infrastructure, social programs like education, school construction, assistance and such. Whatever is left over should be averaged for the total working population, multiplied by ten and set as the cap. The concept of "per capita" income is a fail since it relies on income reported in tax forms, including things like property values and such. They are often reported after deductions, and are not necessarily all actual income.
I don't think the average income earner would complain about this concept of mine since you get to keep all of what you earn. I also don't think too many people would be affected by the "I'm not getting enough so I'm not doing anything more" syndrome. It also provides for checks and balances for slackers.
In the end, it would be a relatively simple system to understand, if not necessarily implement.
Now, this is a "detailed plan". The concept here is to reduce the amount of earnings or profit one person or company can make on average, but still allow for the greed, "I want more" incentive. Additionally, it creates an environment where government is less intrusive (and better funded), simplifies the tax structure, helps reduce the gap between the haves and the have nots, allows someone to rise to their level of "enough" and still allows for incentive and growth. What I've detailed may have fundamental flaws, but they're merely a suggestion in trying to implement the concept. Someone with more knowledge of human nature and economic theory may have better luck.
The on-going increase in the gap between the haves and have nots is the widest it's been in history, and it's getting substantially wider. In times of relative prosperity for all, the masses aren't terribly motivated to correct this gap. Their levels of greed have been mostly accommodated. However, in times of economic crisis and recession (such as now - thanks to a government run mostly by men and women who are in that top 10% of income earners), the masses are much more critical of the fact they are getting less, while the wealthy aren't getting any less, and are, in fact, getting even more. This has a much greater potential for the outbreak of social unrest. It's happened before - many times - in human history. There's no reason to believe it won't happen again.
The sad part is that social unrest, revolution, whatever you want to call it, may be the only way to initiate this new economic model. I don't see billionaires divesting themselves of their wealth to help reduce the rising social tensions over the wealth gap anytime soon. Nor do I see investors and captains of industry willingly giving up their profits above and beyond "enough". But when the masses rise up, crying "Enough!" and tear it all down, then, maybe, some bright boy or girl will see the flaws in the capitalist economic model and finally do something to prevent such an egregiously huge gap from ever forming again.
And that cry of "Enough!" may come sooner than later.
In essence, a free market economy is where businesses compete openly for customers without much (if any) regulatory control. Supposedly with its own built-in checks and balances it is thought (erroneously, as it happens) that the market is self-stabilizing and that any necessary corrections for imbalances will happen automatically by enlightened captains of industry and finance because it's for the good of the market. Yes, people actually believe this nonsense. But the flaws in this thinking were highlighted all too glaringly when the flaws in the free market model destroyed the world economy two years ago, the effects of which are still being felt today.
On paper, it DOES work. Then again, so do all pie-in-the-sky economic models. Paper isn't human and the human factor is why they all fail. In fact, there's only ONE human factor involved in all economic models which causes them to fail: Greed.
Dress it up howsoever you want, but greed is the nexus that breaks all economic models tried so far. Greed drives people to better themselves economically (keeping up with the neighbors' acquisition of "things", getting a better job to buy the things that mark one's status in society). No economic model so far created has ever adequately taken human greed into account.
Communism fails because people aren't interested in the greatest good for the greatest number. They are looking out for number one - themselves. Socialism fails because if you satisfy the needs of the people without requiring the people to work, the people won't work. After all, why bother? And with capitalism, if you are a have, you only want more, to the expense of the have-nots. And you will do everything you can to keep the have nots from becoming haves.
These economic theories all fail to take into account human greed.
Now, one could say we need to change as human beings, and I couldn't agree more, but realistically, that ain't gonna happen anytime in the next thousand years. Mankind is still too close to his animal roots to know when he has "enough" and that more than that is too much, not a good thing and can lead to disaster. Unfortunately, we live on a planet where the resources are limited and when one person has more than enough, it's inevitable that others don't have "enough".
So the trick here is to acknowledge greed as a driving force, but to place breaks on it so that when one has enough, they strive to be satisfied with that. All the while you have to provide incentive to continue to excel, so a reward system has to be in place for the go-getters and the doers which doesn't necessarily result in tangible rewards, but in rewards which are satisfying enough to seek none the less.
This is probably an impossible task on paper, and let's face it, there are people out there who will defy all attempts to plug them into any economic model.
So instead of inventing a new one, let's look at modifying one that is somewhat more successful in acknowledging greed: Capitalism.
The problem with capitalism is that people don't acknowledge when enough is enough. I'm not saying that everyone should have a yacht in their back yards. After all some people just aren't that motivated. Nor am I talking entitlements. Those who can't work at a conventional job should have some kind of task they can perform for an income. Regardless of one's ability, employment of some kind - even if it's just to do the work of living - by everyone is vital to the revised capitalist economic model. Everyone should have an income based on their own efforts at earning one even if it isn't derived from a standard "job".
The next thing you do is cap income and profits. There are people out there making obscene amounts of money just because their companies make obscene amounts of money. Profits should be capped at a percentage plus inflation (Say what a US savings bond would earn in total back when US Savings bonds were worth buying). Since inflation varies, call it inflation plus 15% just as an example. The idea is to target the most egregious profit mongering, not to retard the average business's incentive to earn income. It's important to note that profits are what's left over after all research and development has been done, everything's been paid and all is good and right with the company.
The excess should be funneled into building roads, schools, new infrastructure and other civil projects which require vast amounts of money no one seems willing to spend on these days.
Now, greed would ask once a company has made X amount of money above their expenses and maxed out their profits, why would they bother working any harder? After all, they can't earn any more. What's the point of continuing to push?
That's where the trick comes in. They HAVE to work harder to MAINTAIN those profits, because if they do two years in a row, the next year their profit cap is allowed to increase by enough to make the effort worth it. If they fail to meet that cap, it's maintained at the higher level, but not raised. If they fail two years in a row to reach that cap, their cap is lowered again.
This way, there is more incentive to improve profits than there are penalties for not profiting, but they're always capped.
You do this for people, too, albeit in a slightly different fashion. Income is capped at a high, but not obscenely high level. Whatever pays for government, infrastructure, education, defense and the things that taxes help pay for would be the cut off the top and the rest would be used as the way to figure the cap. An example of this would be to take the average of the actual income (before taxes) of working Americans, multiply that by 10 (or whatever number is appropriate to allow for a lot of worker bees and not so many queens based on the boss-to-worker ratio averaged over the last 10 years or something like that) and call that the income cap. More knowledgeable people than I can work it out.
Income is all actual funds gained in a year from all sources - Profits on property and personal belonging sales, inheritance, expenses that are reimbursed above actual costs, sales of stocks, etc.
Now before I go on, a word on inheritance. Inheritance is a time-honored tradition whereby someone gets someone else's stuff when that someone else dies. You can't take it with you, after all. Unfortunately, there are people out there who leech off their rich parents (or husbands/wives) who are pretty much wastes of sperm in the first place and have never really worked a day in their lives.
So here's how it would work: For those who stand to inherit anything in excess of the annual income cap, there are consequences. All monetary assets would be placed in a trust. All property assets would be allowed to transfer to the beneficiary. If the beneficiary liquidates any of that property at any time during the beneficiary's life, those assets would also go into the same trust. The idea here is to limit income to the personal cap per year using the funds in this trust. If a person continues to keep the property, it isn't considered income. A cherished family home can be passed from generation to generation without tax or penalty.
The trust into which liquid assets and the proceeds of inherited property sales are placed would be passed on to the next of kin upon the death of the beneficiary who inherited the trust in the first place.
After all, property is NOT income. It may have a great deal of value, but unless you sell it - and at a profit - that value is virtual rather than actual and it's only valued at the profit for which it was sold. Yes, it can be used as collateral, but then a business receiving the property in the event of a default wouldn't be allowed to keep the income from it if that income made the lender's profits exceed the cap.
A little on this property as income thing. The government considers property sales as "income". It does not consider the purchase of property a "loss". So you end up paying taxes on property you sell regardless of whether you make a profit on it or not. The income cap says you can only make X amount per year in actual cash. Property purchases are NOT deducted from your income, but if you sell it at a loss, you don't exceed the cap in income provided the sale is in the same year as the purchase. If it is, and you have the receipt from the purchase you're covered. If it isn't, then it's income for that year. If you get more than you paid for it, it's income for that year. A simple-enough concept to follow. People could "save" by purchasing property with their income while they are working and augment their income by selling it when they're not, or are working for less. As long as they don't exceed the cap for that year, they can keep all proceeds from property sales. Income would be based on money actually received between January 1st and December 31st for one calendar year.
The funds in the trust may be donated to non-profit organizations which provide for the public good, to venture capitalists who have not exceeded their profit cap, to non-profit medical research for incurable diseases and to other causes which promote good things for everyone rather than just a few.
Of course, this issue will have their detractors. After all, men of industry who are "worth" billions of dollars might take exception to cutting their kids/spouse down to "only" the maximum income per year, but if they still have homes whose maintenance alone exceeds the personal income cap, finding a supermarket from which to buy food would be problematic for someone whose income is capped.
I say, "Tough." If you have so much that ten million dollars a year isn't enough to cover your expenses, you have too much. Part of that "more than enough" stuff. I say liquidate the excess, keep the heirlooms and sentimental stuff and live off the trust fund if you're not making the max per year.
What this will do is get those outrageously over-the-top mansions for one person and a staff of fifty off the market entirely in a generation. They'll be torn down and turned into housing which someone making ten million a year can afford, instead. It's not exactly spreading the wealth to everyone, but it is putting a halt to egregiously "more than enough" living.
Now, back to incomes...
The personal income cap is problematic for the simple reason that once a person hits it, they tend to slack off. This means you have to keep them at it and motivated or the slackers of the world will unite. The first thing you do is monitor their performance. If they don't perform like they did in getting to the top, you don't pay them as much and they don't earn the cap. This makes salaries tied to performance.
What is "performance"? In essence, performance is doing what is expected of them for the company. It is "average". They are meeting all job requirements and fulfilling all necessary expectations. Someone may bust their ass to get to the top, then just coast. That's their right. But if their performance drops, they get less income for it.
Now, there are people who are highly motivated and want to be rewarded for a better than just an "average" performance. This is not an unreasonable demand. Performing above and beyond the call of duty must be rewarded and there are many ways of doing this that don't necessarily involve raising the cap, primarily through peer recognition and acclaim.
I fall back to the military in this aspect by creating levels of rewards for consistently high performance. You CAN reach the cap by being average in a vital field. But to go beyond that, you must maintain a higher than average level of performance for a long duration. One starts with special recognition for a couple of years. And then one starts increasing the cap, along with the special recognition. Once the cap starts being raised, the performance must INCREASE to get it to go higher again, all the way up to doubling their personal cap in $500,000.00 increments per year. Their annual evaluations will be filed with the IRS and they'll be allowed to earn based on their performance rating and years of service with a particular company.
Now, of course, not everyone is going to make it to that cap. That's fine. The cap is in place to decapitate the wealthiest and spread the wealth.
Oh, I believe I failed to mention that income, corporate and sales taxes would be abolished. In fact, all funding fees (those which are in place strictly to fund projects and programs) would be abolished as well. The government would be financed by the money that would have been paid to people who earn more than ten million a year, plus the excess profits companies make. To highlight how effective this would be, the wealthiest 10% of the country makes something like 60%-70% of the income. That leaves about 30%-40% of total income in the US to be spread among the remaining 90% of the population. There is MORE than enough money coming in to run the government, and all programs currently funded, with plenty left over for a rainy day.
The income and profit cap would also be tied to the amount of money coming into the coffers of the state, so that if more is coming in, the cap would be raised and if less was coming in, the cap would be lowered.
Keep in mind, also, that $10,000,000.00 is a hell of a lot of money for one person for one year. I used it as an example. It could be set at 5 million dollars or 1 million. How much money does one person need, after all? If they're married, the combined income would be maxed at 10 million, and 2 live cheaper than one, so it's not like anyone would be enduring any hardship. The point is there needs to be a cap that reduces the gap between the haves and the have nots. - whatever that gap turns out to be. At least 25% of the total income earned should be used to pay for government, infrastructure, social programs like education, school construction, assistance and such. Whatever is left over should be averaged for the total working population, multiplied by ten and set as the cap. The concept of "per capita" income is a fail since it relies on income reported in tax forms, including things like property values and such. They are often reported after deductions, and are not necessarily all actual income.
I don't think the average income earner would complain about this concept of mine since you get to keep all of what you earn. I also don't think too many people would be affected by the "I'm not getting enough so I'm not doing anything more" syndrome. It also provides for checks and balances for slackers.
In the end, it would be a relatively simple system to understand, if not necessarily implement.
Now, this is a "detailed plan". The concept here is to reduce the amount of earnings or profit one person or company can make on average, but still allow for the greed, "I want more" incentive. Additionally, it creates an environment where government is less intrusive (and better funded), simplifies the tax structure, helps reduce the gap between the haves and the have nots, allows someone to rise to their level of "enough" and still allows for incentive and growth. What I've detailed may have fundamental flaws, but they're merely a suggestion in trying to implement the concept. Someone with more knowledge of human nature and economic theory may have better luck.
The on-going increase in the gap between the haves and have nots is the widest it's been in history, and it's getting substantially wider. In times of relative prosperity for all, the masses aren't terribly motivated to correct this gap. Their levels of greed have been mostly accommodated. However, in times of economic crisis and recession (such as now - thanks to a government run mostly by men and women who are in that top 10% of income earners), the masses are much more critical of the fact they are getting less, while the wealthy aren't getting any less, and are, in fact, getting even more. This has a much greater potential for the outbreak of social unrest. It's happened before - many times - in human history. There's no reason to believe it won't happen again.
The sad part is that social unrest, revolution, whatever you want to call it, may be the only way to initiate this new economic model. I don't see billionaires divesting themselves of their wealth to help reduce the rising social tensions over the wealth gap anytime soon. Nor do I see investors and captains of industry willingly giving up their profits above and beyond "enough". But when the masses rise up, crying "Enough!" and tear it all down, then, maybe, some bright boy or girl will see the flaws in the capitalist economic model and finally do something to prevent such an egregiously huge gap from ever forming again.
And that cry of "Enough!" may come sooner than later.
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