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What alternatives are there to the current economic system? Should global capitalism fail, what would be the best model to replace it?
There are a ton of people who are dissatisfied with how our current system operates. Quite a few people are coming to the conclusion that this system is endemically flawed.
The Occupy movement is merely the most obvious and vocal outgrowth of a sentiment that many feel very strongly... namely that our Capitalist model of resource and labor management is unfair, environmentally unsound, inefficient, and unsustainable.
The fact that the people who profit the most in our system are often people who do little or no actual work is fairly self-evident. The hardest work, like toilet cleaning, often garners the most minimal of recompense, while investing in abstract economic instruments like the S&P Index can net one millions of dollars in a 10 second phone call placed from a poolside lounge chair in a 5-star resort.
Given that any system, no matter how well designed, can be improved... this debate is an attempt to spark a rational conversation on what we could do to make the exchange of goods and services more just, more effective, and more healthy for the biosphere.
There are scant few models out there that even propose any clear alternative. Most of the writing on the subject amounts to either pure critique of the current system, or pie-in-the-sky Utopian idealism with no clear path to get from here to there.
So, brilliant TED lovers... anyone got any good ideas?
We can discuss the pros and cons of such extant alternative models as The Venus Project, the "Basic Income" (ala B.I.E.N.), some of the ideas presented in Pinchbeck's latest Evolver essay compendium "What Comes After Money?" or any other relevant topic that tickles your fancy. Feel free to defend global capitalism if that is how you feel.
Let's keep it civil and worthy of this esteemed venue. Logic, clarity, rationality, and respect are paramount.
It is worth pointing out that what is better or best, in this case, will be considered in light of all people and the biosphere we share.
Closing Statement from Jah Sun
It has been quite an interesting exploration.
Inspiring , frustrating, informative... but most of all, it has brought certain things into sharp focus.
The basic question of "what alternatives to the global economic system are there?" has been only cursorily addressed, because the answer is that there really AREN'T any that are ready for prime time. We've seen plenty of good fixes, adjustments & modifications... some quite striking & comprehensive... but nobody has been able to put forth a clear model of what we could actually do INSTEAD of the current status quo, should this model fail.
And, fail it could... make no mistake about that.
Also, I don't think the focus should be on what is best for US Citizens (or any single nation state or group of nations). The problem is already trans-national. National solutions to trans-national problems tend to prove disastrous. Unilateral actions & heavy handed moves in one nation's interest should become a thing of the past as people wake up & realize that we all share this one Earth, that national boundaries are imaginary lines drawn by people who often never even visited the place in question, and that humanity is going to have to work together if we want to solve the major issues of our time.
As far as short term fixes go, fractional reserve banking & debt based currency need to go. Lara posted this link: http://issuu.com/margritkennedy/docs/bue_eng_interest to an e-book which does a good job showing how this monetary system is crippling us.
The data that Richard Wilkinson put forth in his TED talk (linked in the intro) argues for us to recognize that economic inequality hurts everyone... even the ones at the top. The most equal societies are clearly the healthiest & most successful.
I think the Basic Income Guarantee is a good place to start in addressing the remorseless & uncivilized blight of abject poverty.
It is clear that we need to redress our priorities as a society.
Another conversation will follow.
:-)
Jah Sun
Capitalism in its basic ideal is not inherently bad, and as it serves to simplify the exchange of goods & services, or encourage progress, it is rather elegant at times.
However, what we have is not this. There is no such thing as real "free market."
What we have is a dangerous amalgamation of corporatism, resource domination & appropriation, closed-door collusion, subversion of democracy, and assault on our ecosystems. It is irrational, unsustainable, unfair, and the fact that so many people who are victims of it step up to defend it... shows just how effective the propaganda and control of popular perception actually is.
If anyone had any doubts about the corrupt and irredeemable nature of the beast... the recent revelation that the Federal Reserve (basically a privately owned central bank) gave 7.77 TRILLION dollars in 0.01% interest loans to the banks (their board members), and lied about it, hid the fact, and even withheld this info from the US Senate... should erase them. http://abcnews.go.com/blogs/business/2011/11/fed-gave-banks-trillions-in-bailout-bloomberg-reports/
The fact that we have no clear alternative to compare this current system to, makes it seem as basic & unalterable as the weather for most, but I guarantee you that humans will NOT be doing this in 500 years... if we want to survive on this planet.
I feel, even more than ever, that it behooves us as thoughtful & concerned human beings, to think long & hard on what we can really do to improve the quality of our lives, safeguard & improve our environment, and ensure that future generations are not handed a giant train wreck or some nightmarish post-apocalypse.
As a tease to the next conversation (and the title to the essay I have written about all of this)... WE CAN DO BETTER!
I want to extend a sincere gratitude and respect to everyone who participated here... even those I disagreed with. (You know who you are. ;-)
With abundant love,
JahSun
Jah Sun
It has been quite interesting. Inspiring , frustrating, informative... but most of all, it has brought certain things into sharp focus.
The basic question of "what alternatives to the global economic system are there?" has been only cursorily addressed, because the answer is that there really aren't any that are ready for prime time. We have seen plenty of good fixes, adjustments and modifications... some quite striking and comprehensive... but nobody has been able to put forth a clear model of what we could actually do INSTEAD of the current status quo, should this model fail. And, fail it could... make no mistake about that.
A lot of you might imagine that the Venus Project model could fill the breach, and while I think a resource based economic model is an extremely intelligent concept... I can't see how it could be implemented as it is currently formulated. It might provide a wealth of material for the system of the future, but it still smacks of Utopian fantasy at this point. IMHO
We have seen a lot of people defend global capitalism, and a couple wanting to shift the blame for its ills onto too much, or not enough government regulation. I find that this misses the point, personally. And, REGARDLESS of your feelings for the current system, one could treat this endeavor to find alternatives as a mental exercise. (i.e. Imagine that global capitalism was collapsing and couldn't be patched... what could we conceivably do to replace it with something more sustainable and friendly to the planet and its people?)
Anyway, with 3 hours left, I don't expect a last minute manifesto to appear... I have a number of ideas (developed over a long period of time) which I have been holding back, but rather than drop them now, I will start a new conversation around them when I have time.
A bit more blah blah follows in a new post...
Rich Florentino
The only solution is getting economic power into some system of gov't and the only gov't that is legitimate is that with the consent of the governed - i.e., democracy. A hint of what is needed is provided by companies that are owned and run exclusively by the employees. Some are quite successful - in many ways. Many, many ways.
Humans evolved in hunter gather societies, essentially tribes, 150 +/- consisting mainly of family members (with some 'in-laws'). The operating principle was sharing. We all inherently understand concepts of fairness. We teach it to our children.
Corporations and governments are human inventions to deal with larger societies. Many economic and government arrangements or sustainably have been tried in the 10,000 or so years since the "Ur Compromise". If what's in-place now is not working 'fairly' we have not only the right, obviously, but much more importantly the obligation to change it. If poverty and lack of health care are increasing year by year and there is significant evidence of long-term, if not irreversible, damage to the planet is piling up all around us - we have an obligation to improve things - or die trying.
Who knows what is the best way to go? We have to practice the arts of self-government again. We need to have some direct face-to-face direct democracy. From that and only that can come the energy and the will to change. It will take time. Hopefully we have enough. But we must hang together!
Jah Sun
The next conversation I start will be based on this very concept. Keep an eye for it in the coming weeks.
I too wonder how they managed to tell us all that we would work less and accomplish more as technology took us into a golden age of leisure and progress (ala the Jetsons) and then bait & switched us with this world where the middle class is disappearing faster than the glaciers.
We went from a society where a single wage earner could support a family, buy a house and a car, send the kids to a good school, and still have plenty to retire on. Now, we have both parents working (often multiple jobs) just to barely get by.
People think they are middle class because no one likes to admit they are poor... but if you are renting an apartment, in debt, have no hope of sending your kids to an ivy league school, and haven't been able to afford a real 2 week (or longer) vacation in recent memory... you are NOT middle class.
Carlos Rodriguez
John Garvey
There would need to be strengthening of many laws already on the books as well as many new laws and regulations that would, hopefully, serve to prevent another financial catastrophe caused by blatant greed. Another example of new law would be the rapid shift away from private health insurance to the single payer model. This alone would save many billions of dollars in wasted money paid out as insurance premiums. Some laws should be eliminated. The criminalization of cannabis has resulted in an unconscionable loss of life in Mexico and elsewhere, a shameful incarceration rate for non-violent crime, and a phenomenal waste of tax dollars. All this because the Republicans and other right wing extremists operate under the delusion that they are somehow morally superior to everyone else in the population to the point that they have the right to force their way of living upon us. Another requirement for capitalism to succeed is the existence of a large pool of well educated potential employees. We should therefore de-corporatize higher education and provide a college education free to all that seek it. In the K-12 grades classroom sizes need to be cut by 50% to 75%. And more.
Jah Sun
1) Corporations are already jumping ship and setting up in China, Indonesia, India and anywhere they can get people to work for pennies on the dollar. Raising wages without a fundamental change in the corporatism that underlies our system will only result in even more jobs being sent overseas.
Also, I don't think the focus should be on what is best for US Citizens (or any single nation state or group of nations). The problem is already trans-national. National solutions to trans-national problems tends to prove disastrous. Unilateral actions and heavy handed moves in one nation's interest should become a thing of the past as people wake up and realize that we all share this one Earth, that national boundaries are imaginary lines drawn by people who often never even visited the place in question, and that humanity is going to have to work together if we want to solve the major issues of our time.
2) Corporate lobbying is more of a blight and causes more problems than simply letting people who have studied law become lawmakers. There is nothing inherently wrong with being a lawyer. Being a shill for a rapacious corporation results in incidents like the Deep Water Horizon poisoning the entire Gulf.
3) Single payer is fine... as long as we get rid of the insurance companies, any system will be better. Middle men always raise prices, and the value they add is often negative. (watering down the commodity)
4) Cannabis prohibition is a form of criminal insanity. We have spent more money and time fighting that plant than we have fighting terrorism, or even Communism. And, it is a blatant lie that it was illegalized to protect people from themselves or enforce some ridiculous morality. The reason it was made illegal in 1938 is the same reason they had to re-legalize it in WWII... its amazing industrial properties.
cont.
Jah Sun
They used the racism and fear of black jazzmen and Mexicans who used reefer to push the law through, but they were all about getting rid of the single largest competition for their new wave of industrial products. Nylon was going to be the new linen (most linens at the time were hemp, as well as all waterproof canvas), hempseed oil (which was the hydrocarbon source of choice for the first plastics and the fuel for the first internal combustion engine) was going to be replaced by fossil fuels. Kimberly Clarke Co. had just patented the process of making paper from trees (owned by Hearst), and this new paper was being used for Hearst's epic newspaper empire because he had bought much of the forested land of the northwest.
The only group to speak on behalf of cannabis in the hearings was the AMA, because no one told the doctors that the plant which comprised nearly 2/3ds of the patent medicines used at the time was going to be shanghaied. They made out like bandits in the end with the introduction of patented drugs and chemicals rather than the old patented formulas of natural plants and extracts.
So you see, our modern corporate economic system (including many of the largest corporations in the world) built this current system (at great cost to the biosphere) on the back of cannabis prohibition.
Personally, I think prohibition of any kind is foolhardy. It only creates a dangerous and uncontrollable black market. Alcohol prohibition should have taught us all we need to know about this.
Jah Sun
I found many of the contributions here rather helpful and parts of the debate were inspiring. I hope anyone who still might stop by here will chime in and comment about some of the more recent proposals and concepts put forth here.
As of this post, there are still 2 1/2 days left. Maybe we can still squeeze some more juice out of this fruit.
Henry Inman
Communism, as envisioned by Marx was for an equal state where each person received according to their needs and gave according to their abilities. When implemented, a much different reality was realized. The party members became the only people who could advance to any position and the much of the Proletariat was left living in fear and worse off than before Socialism.
The same is true of Capitalism. It was conceived that every person would have the opportunity to make a fortune in their lifetime. That a basis of freedom and property rights would facilitate this culture. Unfortunately (or fortunately) some people (for the lack of a better term:the winners in life) are smarter than the others. Some of the winners used others' ignorance to their own advantage and manipulated the people so that they could profit. This left the winners on top, a shrinking middle class, and the losers on the bottom.
Capitalism is a dying concept. The main drive of the Occupy protests was that people feel that, to gain the education necessary to compete, they have to levy upon themselves so much debt. The mutilated form of Capitalism that is now practiced provides a small hope, shrinking by the day, of transcending the classes. As for a new system, at this point, less regulation would only benefit the previous winners and perpetuate the economic strife that has engulfed society. On the other hand, no one wants to give up money to a welfare state. It seems as though Capitalism has reached a point of stagnation: the only way that it will be reformed will be through a global economic meltdown.
I have no suggestions as to what system might be formed after this occurs, but Capitalism is failing.
TED 10+
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Thomas Jones 100+
Now, what "works" would have to be clearly defined: moderate wealth for all, sustainable growth, ecological responsibility, quality health care and education, no one going to sleep hungry for lack of available food, etc.
How could we bring that about?
I have no idea.
But I suspect trial and error will have something to do with it.
I also suspect that we will have to look at things that are distinctly "uneconomic" in their nature; things like the human brain - both neurologically and psychologically - human values and desires, "deeper truths" that most economists treat somewhat dismissively (not surprisingly given the state of "the dismal science") and who know what else.
I do not think we can engineer a system that we can graft onto present day planet earth nor do I think we can "move towards" a preconceived economic system (a la Mr Pintér's anarco-capitalism or what you, Mr Sun, propose here - coming up with a model to replace capitalism.)
First of all no one is actually practicing capitalism (or socialism) we are muddling along with hybrids of various kinds here and there. Adherents present that fact as confirmation of the efficacy of their models - if we actually "did" communism properly it would work (which is true.) And if we actually did capitalism right, it would work too (which is also true.)
But we don't. We don't "do them right" for reasons that seem obvious.
An idealized economic system no matter how perfect and pristine in its conception will not (can not) be flawlessly executed by humans who are less pristine than the model they are operating within.
So what will work?
Really, I do not know but I suspect it will come down to each one of us living up to our highest values regardless of the system we find ourselves in.
And we can (eventually) evolve a system that reflects those values.
Lara Iriarte
Lara Iriarte
Each time a loan is taken out there is an increased demand for money in circulation to repay the interest on the loan. Before the loan was taken out this interest was not due, after the loan is taken out the interest is then due. Thus there is must be an increase in the supply of money now required to repay interest.
This means that someone else somewhere else in the system must take out another loan if this demand for money to repay interest is to be met.
Thus more debt = more interest = more demand for money = more debt.
Interest is repaid at a % rate this is why our economic system requires growth at a % rate. The amount of money in supply and our economic activity must grow at a % rate.
As our economy grows at a % rate the amount of resources we use also grows at a % rate. Take a look at Al Bartlett's talk on exponential growth which I have linked to earlier. The amount of oil we are using has been growing at an exponential rate.
Our population also has been growing at an exponential rate. Our demand for food and water is growing at an exponential rate, because of population growth.
Earth is finite and our resources are finite. Even renewable resources have a limit to how much we can use at any one time, they require time for renewal. There is a limit to growth.
This is not an opinion, it is a mathematical fact. You can disagree with maths all you like, it doesn't make the math wrong.
Krisztián Pintér 200+
you got it backwards. if everyone were taking a loan from the bank, it would require increasing the amount of money. but this is like saying if everyone took double amount of chocolate, the chocolate stocks would have to be doubled. in fact, it just means that it is not possible for everyone to double chocolate consumption right away. similarly, interest makes it impossible to finance everything with loans, or at least some of them will default. that is unless something increases the money supply. so as you can see, debt is not the cause of the increase. as i have illustrated, interest existed back then, when money was gold and silver. and those things don't increase as we desire.
and second, i also explained how technology can reduce the ecological footprint of an individual. exponential growth in gdp or in any other measure of wellbeing does not imply exponential growth of any material parameters. for example it does not have to increase fossil usage if we manage develop solar, wind, nuclear or any other kind of energy source. granted, one day exponential function outgrows even the sun's energy production. but i don't think that we need to worry about it now. i'm much more worried about children not getting enough food in some parts of the world.
this time i'm going to ignore your rude remarks. but it is not wise to take such an arrogant position. especially if you don't do better than tell fall back to something i refuted already.
Andres Aullet 10+
Thomas Jones 100+
Your model seems rather simplistic: essentiality remove all regulation and let the market sort out the wheat from the chaff.
Your model might work - if everyone was "like you."
I honestly cannot think of a model that would work globally and trying to come up with a system that works universally ignores the fact that we, as a group, do not lend ourselves to conformity - it does not matter if we are talking about religion, politics, or economics.
So your idea your model will work ignores one of the fundamental principles of any functional model - it must work in conditions as they exist. That is, a model - yours or anyone else's - would have to not only be "logical" to Mr Pintér, it would also have to be logical to Mr Sun, Mr Zhang, and Mr Gebbedi.
It isn't.
No model can achieve universal acceptance - not in the foreseeable future - so a heterogeneous approach seems to be the only viable option.
That you assume your model is "true" whether others understand it or not, smacks of a dogmatic, almost religious adherence to a utopian worldview that is, qualitatively, not much different than a Muslim saying, "Islam is true, whether you agree with me or not, and the world will be a better place when we are all good Muslims" (or anarcho-capitalists, vegans or whatever.)
That you have such "faith in the markets" is not something that most economists would even agree on (and I assume they are more knowledgable than you.)
For example, Charles Wheelan makes a point invoking Friedman when he says, "Even Milton Friedman, a nobel laureate in economics and the most articulate spokesman for free markets, would concede that unfettered markets can lead to deeply flawed outcomes."
Krisztián Pintér 200+
i don't want anyone to believe me. i want people to follow my reasoning. and if they want to understand this point of view in greater detail, they can look it up. as a starter, i recommend henry hazlitt's book, economy in one lesson.
Thomas Jones 100+
Yes, Hazlitt's book is a good one. I have read it. Another good one is "Naked Economics / Undressing The Dismal Science" by Charles Wheelan (whom I quoted earlier.)
You say you are not smart enough to come up with these ideas ... that may be true. But here's what I've noticed about "geniuses" - they are not as smart as we think they are. So while you may be enamoured of the thinking of a few really bright guys, there are a bunch of other, equally bright guys, who disagree with you and with them.
If you are not smart enough to come up with these ideas you are also not smart enough to evaluate them. I would recommend that you give "the other side" just as must latitude as you give your "favourites."
And in keeping with your wish: I do not agree with you when you say you do not want people to agree with you.
It seems that is very much what you do want. You really, really like the internal coherence of the free market capitalistic model (as presented by "dozens of geniuses.")
You do not like any of the other models that other "geniuses" have come up with.
And you want us to agree with you. When we do not you get, to quote another, "bellicose."
As I said, those "geniuses" might not have been as smart as we think they were (they probably weren't.) For one thing, their models only work if the rest of us "obey the rules" of the model.
For the models to "work," it is expected that reality (that would be us and what we do) have to bend to conform to a model of reality.
It will not work.
So assume, for a minute, your favourite - "anarcho-capitalism" - is off the menu (and it is) - what do you think might work as a second choice?
As I have said, I do not know what will work. But I assume, whatever we come up with, it will evolve through a process of trial and error.
Now, if you do not think there is a viable alternative to anarcho-capitalism, you have made your point and likely have nothing more to contribute.
Krisztián Pintér 200+
Thomas Jones 100+
Your view seems a little skewed. You seem to think your opinion constitutes reasoning and proof whereas other people's opinions are simply opinions.
By your own admission there is no evidence that, for example, anarcho-capitalism will work because it has never been practiced. So any assertion you make regarding it (or even regarding capitalism) is simply an opinion.
That you choose to read into what others say such negative intent probably explains why you do get so bellicose at times. I did not tell you to shut up - I said if your position is that the only viable alternative is anarcho-capitalism then you likely have nothing more to contribute to this discussion. If that is your point - you have made it. We have the option of agreeing with you, or not, (most of us don't) so unless you have more to add that's about it.
I think we get it: You assert anarcho-capitalism works or would work; it is the only viable economic system. We need to get governments out of the picture, let the market sort things out, and all will be well in the world. And any other system will yield sub-optimal utility.
The whole "vote" thing rests on the assumption that what you say is quite simply "right" - not a matter of opinion.
You apparently operate out of a "right/wrong" paradigm. This is not the most conducive stance to take for fruitful conversation.
So if you think you are right and anyone who disagrees with you is wrong, again, you have made your point.
You are not going to "convince us" by becoming belligerent.
I'm pretty sure we all know we are not going to convince you that there might be some flaws in your worldview.
However, if you think there might be something to this whole collaboration idea, and want to contribute, it is a public forum and the invitation has been extended to think of a model to replace capitalism.
You might be smarter than you think ... you might actually be able to think of something better than Adam Smith or Frederic Bastiat did.
Anthony Lynch
"our economy grows exponentially for thousands of years. yet, you can not name a whole lot of products that are produced in exponentially growing amount. the economy develops in a way that old products and services go out of use, and new ones come in. we don!t use more, we use different."
As an argument for supporting the idea that ever continuing economic growth is achievable is flawed.
"money or GDP or welfare or wealth is not material. you can live a much better quality life, use higher quality products, have higher quality services without actually using more physical materials. so economic growth is not limited by any physical factors"
As is this premise.
All the factors you mention have physical manifestations and it is the physicalities of consumerism (ie the manufacture of products) that will eventually mean that exponential growth is unsustainable. This is so for 3 reasons.
1. general population expansion - ie more people = greater consumption = more manufacturing= more products
2. increased standards of living in previously "underdeveloped" nations - ie greater consumption and a greater demand for energy resources etc
3. the inability of the earth to create resources at the rate we consume them - even the processes of maintaining the current economy are unsustainable. As a species we rely heavily certain things - oil, coal, copper,gold etc to manufacture computers and power them which in turn maintains the money markets as they are now. Eventually these resources will run out and with the industrialisation of nations that were previously using less resources and the increase in population this will eventually become critical.
Also Free Market Capitalism even in its truest sense relies too heavily on consumerism to be the engine that drives it and allows those with an excess of capital to use those resources to provide items they "want" as opposed to items that other people "need" by any definition of what that need is. AKA inequality.
Krisztián Pintér 200+
you say the population expansion means more resources needed. but i already gave you the counterexample of food production and land. food production went up while land usage actually shrank a little. it is possible with every resources. with correct technology, the amount of pesticides and fertilizers can be reduced. the amount of waste produced by manufacturing a cell phone can be reduced. the level of recycling can be raised toward 100%. there is no scientific limit on any of these, except of course the sheer tonnage of materials available, but it gives us a very distant time horizon (imagine all the lithium on the earth embedded in batteries).
the key is technology. we need to increase the amount of R&D investment, and we need to do that now or sooner.
Comment deleted
Mordechay Ariely
Update the progressive Tax system.
Differentiated and increase VAT taxation and updated scheme of direct taxation.
--
1: Introduce a progressive VAT tax system.
Divide products and services in 5 groups.
--
Examples:
1:1Group 1 will pay 0% VAT.
Basic living products, babies and school utilities, materials and services, public transportation, bicycles.
1.2-Group 2 will pay 2-6% VAT.
A group of defined products and services and Electricity, Gas, Water per cap allocation. apartments up 3 living rooms, low fuel consumption cars.
1.3-Group 3 will pay 7-12%VAT
A group of defined products and Electricity, Gas, Water over per cap allocation, apartments up 5 living rooms, medium fuel consumption cars/
1.4-Group 4 will pay 17-22%
Luxury products and services ,Energy consuming cars-air conditioning systems, Luxury houses and cars, 5 star hotels, Yachts.
** 1.5: Addition 5% VAT if within 3 years the car, apartment owner and other commodities defined in this category will either buy or change his commodity to another product within the same or higher VAT group.
---
2: Update the scheme of direct taxation.
Young people are played less however they have initial high expenses to build a family.
Combine the progressive tax system with an age depending tax system.
---
2.1; A married couple will be entitled to 20 to 50% salary tax reduction for 5 years after marriage, pending income.
2.2: A tax reduction of 5 to 10% per child for 13 years pending income.
2.3: Change the progressive income tax system.
For incomes up 7 times the average income use the current system.
Increase the incoming tax by 5 to 20% per income increase step.
Example: average income*7=x tax
Income above average income of 7 to 8= x+5% tax.
Income above average income of 8 to 9 = X+10% tax.
Jah Sun
I am hoping some of our other contributors will give your proposals some serious thought and discuss the minutia and fine points here. I myself have a number of comments and questions that I will get around to posting when I am not quite so busy with other demands on my time.
I really appreciate your emphasis on social justice and opportunity for all. There are some elements that I might quibble with once I clarify exactly how you imagine this to be carried out, but I applaud you for your ability to do what many progressives and idealists forget to... namely lay out a clear alternative.
Kudos.
Jim Moonan 30+
I have learned a lot from the ideas shared here by Jah, Mordechay, Thomas, Lara, Orlando, Frans, Christophe and others. Although "detailed" thoughts such as Mordechay's are useful, I think the first step is to broadly outline principles and objectives for creating an economic system that is fair(er) and provides a better pathway for all people to gain personal happiness. If we can agree on those things broadly and philosophically, then we can dive into the details. In other words, collectively author a "declaration" of sorts. (Personally that's what I think the Occupy moverment is missing - along with leadership)
Like Jah, I, too have a day job I must get back to, but will make every effort in the next day or so to continue with my thoughts on constructing a platform/declaration that we can all stand on/behind :)
Jah Sun
The conversation ends in a bit over a day, and everyone has kind of jumped ship. I am still quite curious as to what you were going to say, though. So feel free to come back and post whatever you want.
I will go through this forum and assimilate all of the good ideas and comments for the future. It is likely I will start a similarly themed conversation in the coming weeks to start where this one left off, and discuss the various ideas that got tossed around here and on a few other forums as well.
Jah Sun
Obviously, the tax system could use an update and an overhaul. However, I don't think that VAT and consumption taxes are the way to go. The problem with this is that is shifts the burden to those with the least amount of money to afford it. Such taxes are inherently anti-progressive and amount to wealth redistribution upward. They always seem to reduce the amount of taxes paid by the wealthy, and make the cost of living for the poor higher. (see another discussion on this subject here in this very debate)
Your system is more compassionate than most. I like the idea of a 0% bracket for basic living expenses. And the idea of rather steep taxes on luxury goods is probably appropriate... At first glance, this might even seem to be a way around the anti-progressive assumptions of consumption taxes.
However, in practice, if you are not talking about shrinking government and expect to keep revenues the same, the new system must be able to raise the same amount of money as the old. The question then becomes only, who will pay more and who will pay less (assuming you change the demographic division of burden).
When looked at objectively, consumption taxes (no matter how high or weighted) always favor the rich. This is because rich people only spend a tiny portion of their wealth in any given year. The bulk of their money is invested, saved, or otherwise taken out of liquid circulation. Whereas, poor people spend every last cent they have every single month, and are often in the red. Therefore, even if the only expenditures that poor people make are in the 0% and the 2-6% brackets, all of their wealth will be subject to one or the other and ANY taxation of the poor will be paid for by the state in the form of welfare in the long run.
Mordechay Ariely
Following my comments to some of your points related to VAT-Tax
You said:
1:'If you are not talking about shrinking government and expect to keep revenues the same, the new system must be able to raise the same amount of money as the old"
2:" consumption taxes (no matter how high or weighted) always favor the rich. This is because rich people only spend a tiny portion of their wealth in any given year"
--
I agree that government activity should be balanced. The money raised should support government activities. The proposal is independent of government's efficiency.
The proposed change of Tax is a combination of both the total direct income from all types of incomes and not only salaries (including deposit interests, share gains, house rentals and so on) and the VAT indirect taxation.
I believe that this proposal will contribute to decrease the income inequality.
The rich will pay more, the middle class less.
People consuming more resources (Example energy) will pay more for their usage.
Overall taxation should:
From one hands the keep inequality to a point acceptable by the middle class.
From second hand it should encourage and reward people for initiatives, good performances, risk taking
Jah Sun
I am speaking, of course, of Capital Gains. (US capital gains tax stands at a record low of 15%)
I linked earlier to a Forbes article showing that 0.1% of the population makes 50% of the capital gains. If anyone thinks this is fair or justified in a supposed democracy... please explain this to me.
All the best Mordechay. Thanks for your contribution.
yrjo pesonen
The field of available politics is another sphere, a topic of it´s own.
How can we promote growth in a controlled economy? Is the only answer through people´s own morality? Do we need an economy based on greed to achieve that? What would be the calculus for a better version?
yrjo pesonen
Anyhow, Lara´s proposal is most agreeable, in the transition period between the current one and the next.
Of course you all realise a revolution takes but one law. Not more, not less... and as you all have realized steps to any such law takes casualties.
I would be most interested in any other mechanism proposed for handling the prices than market economy.
Jah Sun
I think it would be worthwhile to spend a bit of time giving some feedback on what he has posted. I am interested in your thoughts on this as well as the reconomy concept linked to above by Kevin.
As for Lara's proposal, I can't imagine that anyone who understands the current monetary system, and is not personally profiting from it, could mount a serious defense of fractional reserve or the basic debt of money.
Kevin Parcell 30+
Jah Sun
There are a number of these local currency initiatives going around. Some of them have interested me for quite some time. I'm curious as to how this one stacks up.
Kevin Parcell 30+
Jah Sun
Very interesting stuff.
Since this thread is winding down, perhaps I will chime in over there when I have some free time.
Thanks for your links Kevin.
Be well.
Mordechay Ariely
2:**** Create a new company's values evaluations standard and report****.
It will replace the current method of quarter and a year companies reports based only on income and revenues..
It will be used by investors.
The values of companies with high scores on the followings will be higher and they will get priority on government and public bids.
Include factors such as:
* Equality level of employs salaries and bonus.
*Percentage of employs with personal limited capabilities.
*Bonuses played on 4 years delay- valued on the company achievement during this long period and not quarter income.
3: Differentiation between the higher and lower Salary and bonus of government and public companies should be limited to the scale of 1 to 7.
4: Create a new type of companies- social companies –that will be rewarded by governments and public sector.
Creativity and investment on human being life improvement should be encouraged.
Not only direct money making.
Example:
A company that find and implement a idea that reduced the crime rate in a area by 20% should get 50% of the governmental savings from the budget
Jah Sun
I like this. It will be difficult to enforce, and will never voluntarily replace the current fiscal quarter bottom line. I don't see how shareholders can be convinced to accept such valuation over actual profits. They will simply move their money over to companies that don't bother with social conscience or other bleeding heart concerns.
#3
This seems like an arbitrary number. But I suppose it as good a place as any to start. It could simply cause an exodus of talent to private companies who will easily be able to out-pay the hamstrung public endeavors. The brain drain could be extreme and even more detrimental than it already is.
Nice in theory, but it would have to be part of a much larger overhaul of the economic system to stand any chance of working.
# 4
Social companies already exist... we are called non-profits.
Sadly, many of them are ineffective and inefficient. Such setups often attract unscrupulous sorts who want to take advantage of some loophole or another. We have seen too much abuse here, and whether Wyclef is personally responsible or not... this debacle with his Haiti charity is only the latest shameful example. (say it isn't so)
My 501 c3 does amazing work, is 100% transparent, and has never paid anyone a single dime in salary or benefits, but we also are somewhat small and have troubles raising funds. Nearly 750 water projects under our belts and not one failed project in 70 nations.
But I think you mean something a bit more business oriented than a purely charity organization?
I dig the idea that we could reward businesses for their societal benefits... perhaps some extra incentives for environmental stewardship as well.
Sadly, though, if a company can profit more from polluting and paying off any fees they accrue thereby, the chances of them behaving responsibly are slim.
Mordechay Ariely
Pls find my comments relative to your points.
#2
" It will be difficult to enforce, and will never voluntarily replace the current fiscal quarter bottom line. They will simply move their money over to companies that don't bother with social conscience or other bleeding heart concerns."
---
It should be a governmental requirement enforced by law, applicable to all companies and not voluntarily.
#3
" It could simply cause an exodus of talent to private companies who will easily be able to out-pay the hamstrung public endeavors. The brain drain could be extreme and even more detrimental than it already is"
---
The new combine progressive Tax scheme will be applicable to all citizens.
The net income above a define point will be marginal.
Imagine an exponential income line.
# 4
"Social companies already exist... we are called non-profits."
--
The proposed social companies are not non-profit.
They are profit companies and their revenues will be based on the budged savings to the government and public sector.
However their products will not be in creating new products or services.
They will create money measurable social products.
Jah Sun
Even if you can get a lot of major nations to sign on to this model... there will still be many nations that won't adopt these ideas (however good they are). Thus, given a choice of conforming to these strictures, many corporations will simply choose to move their operations to looser climes.
This is already the case, even when the countries are fairly well pro-business and anti-social justice as it is. This isn't so much a critique of your concept as it is a recognition that companies already prefer to set up shop in places like the Philipines where they can better exploit the workforce.
Thanks again for participating Mordechay. Your input is very much appreciated.
Mordechay Ariely
Alternative economic system or alternative life style?
The question of life philosophy is the leading question.
Economy systems are a part of a life philosophy.
Unfortunately I cannot question the proper life philosophy suitable for 21 century people in a comment>
that for I limit myself to some points related to the Alternative Economy question>
--
From all the systems – Capitalism, Socialism, Communism, Theocracy I favor Capitalism. is closed to human being nature and not an ideal that isforced on people against human nature
However the classic Capitalism needs changes.
____
1:** Compete by creating values on initiative, creativity, efficiency, quality but not labor without social rights***
Globalization is a good idea however it is badly implemented.
Competition and work transfer should be limited by international conventions to countries and enterprises providing the same social benefits to the works.
It should be enforce by lows in the attending countries.
---
Only few people benefit economically from the technological revolution.
They get richer only because they are in the junctions of decision making without contributing to create real prosperity.
(Banks and corporation managers,high level officials-unlike the few start up entrepreneurs.
All the others are losing.
The people in the free world have straggled for over 100 years for 8 working hours,illness insurance,vacation, retirement benefits,right of employed.
The last 3 decades they are losing social rights.
People on the developing world lucky to get jobs don’t get western social benefits.
Worldwide competition has a huge potential of distributing wealth across the globe.
Orlando Hawkins 20+
I tend to think things like consumption, imperialism, competition, materialism, affluenza, etc are social constructs as opposed to being part of our biology.
Jah Sun
You asked on another comment thread if we have gotten any real proposals going since you've been away, and I see you have found Mordechay's 3 part-er.
I agree that we should focus the last 5 days on discussing this, Lara's idea (which mirrors my own admonishments against fractional reserve banking & debt based currency), and the other interesting proposals that have cropped up like reconomy.
You will have noticed that since you left, a number of us have stopped responding to the poster in question. Sadly, though, he manages to suck others in to these endless and unproductive arguments while steadfastly refusing to even consider addressing the question of the conversation... even as a pure hypothetical. I suppose he feels it is his duty to correct the errors in everyone's thought processes ad nauseum.
:-) Anyway, welcome back.
Joanne Donovan 30+
Jah Sun
Sadly this conversation is at an end... last thoughts time and all.
But, I am sure we will see each other on another conversation relatively soon. I have a new one in mind to pick up where this one left off and be even more specific about what we can do.
Be well...
Jah Sun
"Alternative economic system or alternative life style?"
Both. Obviously they are not completely independent.
Life styles are not things that are dictated from above, though. While they may be socially engineered to some degree (lifestyle taxes and whatnot), they are not the starting point for any meaningful change on a societal level. They ARE the main starting point for any personal change, however.
A change in economic system and policy will effect a change in lifestyle to some degree, and it will open the door for members of society to begin the contemplation of how they actually want to live on this blue orb. IMHO.
"From all the systems – Capitalism, Socialism, Communism, Theocracy I favor Capitalism."
I don't believe that these 4 systems enumerate the sum total of possible ways that humans can organize their affairs. It is my conjecture that none of those systems will be in operation in 500 years. (You forgot Feudalism and Anarchy among others.)
Basically, I am absolutely sure that the system of the future has yet to be invented. Thus, this conversation was an attempt to get people thinking about the alternatives. It may have been co-opted and derailed to a large degree, but in doing this exercise, I realized that this is actually not an efficient forum for such in depth discussions. Places like this, can only amount to sounding boards and allow for some superficial sharing of basic concepts and links, while being prone to divisive tangents and a lack of overall coherence.
As for your changes to Capitalism, my comments will proceed in the next reply. (2000 character limit)
Jah Sun
I agree with this in principle. I'm curious as to how it would actually play out, but something along these lines should be factored into the economic system. Otherwise, there is no impetus for businesses to behave ethically. As it stands, there is no rational reason for them to care what happens to the citizens of any nation-state... or to the biosphere at large.
"Globalization is a good idea however it is badly implemented."
Absolutely.
And whether it is a good idea or not, it is a reality and will never not be so. The cat will never go back into the bag so to speak. Nor should it IMO. Globalization is oft maligned, but the society of the future (should we be able to avoid destroying ourselves) will certainly be global. Nation states are already fairly well obsolete.
The choice is not globalization or something else, but globalization as envisioned and manipulated by the current crop of multi national corporations, an even more totalitarian "New World Order," or something sane and somewhat democratic dreamed up and implemented by the people of the world, rather than imposed by the powerful.
I think your idea of restricted trade to ethical nations is interesting, but somewhat unenforceable. It is like sanctions or prohibition... it just creates an incentive for Black Markets.
Righteo... now on to pts. 2 & 3.
Joanne Donovan 30+
I think this brings us to the heart of what we have been discussing. The very word 'capitalism', i.e. the accumulation of capital or labour, means exploitation. We must cease to glorify exploitation, to see it as a sign of 'success', 'progress' and 'development'. We must develop a way to continue to trade and work for survival , in a new way without exploitation. Similarily, we must also develop a new way to transact with the planet, if we are to stay within its natural limits and avoid our own exctinction.
We are the 'god species' and we think we will continue forever. Our big fatty brain has led us to dominate and control nature for so long, that we think our clever inventions will beat all the planetry limits. We do not yet realise we can't drink Armani, we can't breathe an ipod.
Like so many, I am good at pointing at the problem, but designing solutions is not so easy. Through this discussion, I have thought hard not only about solutions, but also what I can do personally to begin a process toward them. I have found your comments and links regarding the Anarchistic movement particularily helpful Orlando, likewise, Lara's and Jah Sun's contributions regarding alternative economic systems.
I too have found many contributions inspiring, and the opportunity to link up with like-minded change seekers an enriching experience.
Jah Sun
Global Exploitation is accurate... but hard to sell.
;)
Lara Iriarte
I have been lightly involved in the Occupy movement here in New Zealand, trying to explain these concepts clearly and concisely enough to germinate the seed of the idea.
If the Occupy movements were to protest clearly FOR a structural change to our monetary system we might have a positive change.
They are protesting the gap between rich and poor and corporate greed but they have little to zero analysis of WHY these problems occur and are not offering a solution.
Interest is the biggest reason for the gap between rich and poor. Those who have loads of capital gain more in interest payments than they pay out (as part of the cost of stuff they buy). This concept works also between businesses and corporations. The biggest corporates have investments which earn them more interest than they pay out. Small and medium sized businesses pay more in interest than they receive from investing. Thus the big get bigger while the small get less.
Scandinavian countries with lower gaps between rich and poor reduce the gap by income redistribution via tax. However, even with this mechanism there is constant tension between interest pulling groups apart and tax trying to reduce the gap.
Wouldn't it be better to just fix the structural problem?
Furthermore, it is interest which creates the requirement for perpetual growth in a finite space.
Anything which grows at any % is exponential. Even a very low %, still exponential. Earth is finite. Thus we must change our system eventually to one which can cope with zero growth, or nature will force our societies to collapse.
This is an excellent talk from a Physics professor, Al Bartlett, on the exponential equation:
http://www.albartlett.org/presentations/arithmetic_population_energy.html
If you want to see a relatively easy to understand cartoon on how money works here is a link:
http://www.youtube.com/watch?v=vVkFb26u9g8
If you are pressed for time check out this 4 minute video:
http://www.positivemoney.org.uk/
Krisztián Pintér 200+
exponential growth in any physical is not possible, that is true. but money or GDP or welfare or wealth is not material. you can live a much better quality life, use higher quality products, have higher quality services without actually using more physical materials. so economic growth is not limited by any physical factors. another question is how soon we "grow out" our box. energy usage can grow in the same pace for thousands of years.
this "debt based money" concept does not really help understanding. it does not make too much sense, it is not a good explanation. the source of our money is not debt, but money multiplication via the fractional reserve system. interest rate is not a problem at all, and it does not create requirement for growth. the reason behind growth is that we simply want it. we want better stuff. we want to live better.
what we actually want is freedom of money. stop the governments forcing their own money on us, and let people choose for themselves. we, the people, can find what works for us. let it be gold or bitcoin or bank issued notes or whatever. free competition solves the problem.
Lara Iriarte
You need to watch the excellent YouTube video "money as debt".
The fractional reserve system means the banks only require a fraction of the total sum loaned out in reserve, the ratio is 9:1. Thus they loan 9 X more than they have. This 90% is created as debt.
Interest is required to be paid on this debt creating a requirement for more money in the system. Thus someone else somewhere within the system must take on more debt because this is how new money is created in the fractional reserve system. More debt = more interest is required to be paid = more debt. It is a vicious circle.
If interest is charged at a % rate then the growth of money in the system must grow at a % rate to keep up. This why we require constant growth and it is at a % rate, it is not linear. We want growth because we must keep trying to find the money to repay the interest due to banks on our debt.
You have stated various "does not" or "is not"' in your comment. If you think that this is NOT how the fractional reserve system works than it would be more constructive if you could state how you think it works.
Krisztián Pintér 200+
be mindful that i didn!t say our money is not created out of nothing. i!m pointing out that its creation "as debt" is not really important. the important part is the multiplication. if new money creation happens with other methods, it is just as bad. also note that if zero interest was charged on the multiplicated money, it would have the same negative effect on the economy. again, the multiplication is the problem.
also, you suggest that debt is inherently evil, as it adds more money to the system. no, it is not, and it is the fallacy of composition. if we have fixed amount of money, and people charge interest on loans, it means only very profitable businesses will get a loan, and they will pay it back using the money they get for their services. it is a perfectly reasonable scenario, and no new money is created. bear in mind that interest rate is an old concept, and money creation was not possible when it was specie. (for nitpickers: it is possible, but much harder and quite limited.)
i also would like to call your attention to the fact that my comment contained buts and actually's as well as does nots. maybe you should read more carefully.
Jah Sun
For me, the problems lie primarily in the fractional-reserve method of money creation, which as you have said quite succinctly creates debt by its very nature.
The second issue of fiat currencies is also troubling, but could conceivably be dealt with if the central banks like the Fed had full transparency and were truly governed by democratic means... rather than by a private cabal of secretive bankers (as is currently the case.).
As for interest and usury, it is distasteful, and was forbidden for Christians and Muslims for centuries due to admonishments against it in the respective holy books... but, usury alone never crashed the world economy or caused the kind of ravenous, resource gobbling business practices we see today.
The interest charged on money creation is simply criminal, but private credit and interest (minus the fractional reserve) would not be too big a deal IMHO. One does not need to borrow money from private lenders if one doesn't want to. It is the basic monetary system that saddles nations and people with inescapable debt and indentured servitude.
I'd love to hear more alternatives and thoughts about debt-based currency. This is a lynch pin in the irrational and unstable economic kraftwerks as far as I can tell.
Orlando Hawkins 20+
Hopefully the one in N.Z. does not lose its passion
Lara Iriarte
The cause is structural, and it requires a structural solution.
Most people think that money lent by banks is depositors money and the bank's profits are in the difference between the loan interest rates it receives and the savings interest rate it pays out. This is not so.
Banks operate on a fractional reserve system. They loan out 9 times more than they have. This means that when you go to the bank to take out a loan 90% of that money is new money. It is created by private banks as interest bearing debt.
If new money is created in the system it requires interest to be paid to the bank on it. The borrower must work to earn this interest. This means that there is a demand for more money in the system. The only way our system creates new money is as interest bearing debt. Thus more debt = more interest to be repaid = more debt needs to be created. It is a vicious circle.
When the population is saturated with debt, just like a sponge soaked with water it cannot take on anymore, then we have defaults and bankruptcies. The system crashes. This is why we have a debt crisis.
If all the debt owed were paid off tomorrow (never mind that this is mathematically impossible) there would not be enough money in circulation for the needs of business.
Interest is the cause of the wealth gap. Those who have more get more, those who must borrow get less.
We need to change to an interest free money system with demurrage. We need to allow only the peoples banks, publicly owned government banks, the ability to create new money for productive purposes, not as debt.
Demurrage is a fee for holding onto money. This brings money back to the means not the end, encourages circulation, encourages economic activity, controls inflation and reinstates the incentive to loan.
http://issuu.com/margritkennedy/docs/bue_eng_interest
This eBook outlines the solution.
Jah Sun
I have tried earlier on in this thread to explain and provoke some discussion of fractional reserve banking and debt-based currency, but your post and excellent link have really done a bang up job of it.
As I said previously, if people understood this system, there is no way they would stand for it. It makes ponzi schemes look quaint and socially productive.
Clearly any rational society would not operate this way.
So, people... let's give this concept some serious discussion now. I feel that of all the alternatives and modifications to the current global economic system we have discussed, this ranks at or near the top, because it is doable in relatively short order, and doesn't presuppose a drastic change in the way people live. We may get around to building a resource based economy, but we could eliminate debt based money and fractional reserve banking nearly overnight.
Huzzah Lara! Thanks for participating and keenly elevating the discourse on this conversation.
yrjo pesonen
Jah Sun
What it would do is defuse the notion that we have to grow the economy at all costs in order to keep from collapsing under mountains of illusory debt... as we see in many countries at this very moment.
The innate irrationality of the monetary system is a key factor in causing global capitalism to be so rapacious, and contributes equally to the rat-race, hamster wheel existence of those without capital.
Even more than the move from gold backed money to fiat currency, this element has caused a devaluing of basic monetary value. In some countries this factor alone has caused devaluations of 1,000,000 to 1... as well as the complete abandonment of various currencies that were worth less than the paper they were printed on.
This idea may not correct the playing field or address other serious concerns, but it does defang some troubling aspects of the current global economy.
There is no reason we couldn't go on to adopt other measures as well. Have you had a chance to check out Mordechay's 3 part proposal?
Krisztián Pintér 200+
also, i don't think there is a gap between the rich and the poor. i believe there is a continuum from below one dollar per day up to tens of thousands with no gap anywhere.
i agree though that lot of the largest incomes today are stolen public money, and this should of course be stopped..
Jim Moonan 30+
The purpose of regulating capitalism is to prevent those things from happening. Without regulation capitalism is just another form of dictatorship.
Krisztián Pintér 200+
Andres Aullet 10+
Here is my argument: Poverty and income inequality are intrinsically linked. If you think laissez-faire capitalism can sustain increasing income inequality while at the same time reducing poverty I would love to hear your ideas. If poverty could be reduced regardless of inequality, i could care less about how much money the top earners make.
But so far I've never found data that supports these two as separate (Rahman Khan has researched the topic extensively over decades) So yes if income inequality is intrinsically linked to poverty, then i think income inequality is a problem.
You seem to like to play with ambiguities. When people talk about a gap between the rich and the poor, i doubt they mean that the income distribution curve has gaps. It is easy to take the top 10% earners and the lowest 10% earners and use those slices to compare the difference. This is closer to what i mean when i use the term income gap.
Lastly, I could not agree more. A lot of public money is stolen and this is something that should be stopped. A lot of public money is also re-distributed back to top earners (i.e. TARP) and that is something that should be stopped too.
Krisztián Pintér 200+
i believe you are using ambiguities. if you mean difference, say difference. gap means ... well gap. some deeper, more profound difference. something that separates the two groups. the term is used to separate the "rich" from the "poor". but people rarely think about we are all rich in the eyes of a rice farmer in nepal, or in the eyes of an average guy in 1800. any line drawn to separate income groups into we and them is simply false.
Orlando Hawkins 20+
"i still haven't seen a single argument why inequality is a problem. everyone just takes it for granted, and does not try to prove that large income differences cause harm how?
also, i don't think there is a gap between the rich and the poor. i believe there is a continuum from below one dollar per day up to tens of thousands with no gap anywhere."
before I comment I really do want to ask something? do you really not see a problem? If you really do not I will gladly like to point it out to you being that I have first hand experience with seeing such a problem (as perhaps everyone else) but I do not want to comment on that unless you are being serious about such a statement because most of the time I discuss with you, I have mentioned such an issue.
Krisztián Pintér 200+
and yes, i have heard many arguments, but they were false. i don't count false arguments.
Jim Moonan 30+
Kirsztian - "i don't think there is a gap between the rich and the poor. i believe there is a continuum from below one dollar per day up to tens of thousands with no gap anywhere."
This statement is meaningless. It's also profoundly erroneous.
You go on to say, "i agree though that lot of the largest incomes today are stolen public money, and this should of course be stopped.."
Give us some ideas as to how we might stop this from happening, whether or not greed has anything to do with it, and whether putting regulations on the "free market" would help.
Krisztián Pintér 200+
Jim Moonan 30+
Now before firing back at me with questions of your own, answer the question I asked:
Give us some ideas as to how we might stop this from happening, whether or not greed has anything to do with it, and whether putting regulations on the "free market" would help.
Krisztián Pintér 200+
Jim Moonan 30+
Krisztián Pintér 200+
Jim Moonan 30+
Krisztián Pintér 200+
Jim Moonan 30+
Your answer (don't give the state money in the first place) is useless. I won't even give you the pleasure of explaining why it's useless because if you want to argue that it is a viable solution then you're out of the conversation. Anarchy is not an option.
You've asked earlier in the conversation, "I still haven't heard a single argument why inequality is a problem".
The answer is being demonstrated around the globe for a variety of reasons. Whether it be Syria or Yemen or Libya or Egypt or USA or Europe. When the masses realize that their lives are being dramatically, adversely affected by those in power they then begin the process of change to bring things more into balance/fairness/equality - call it whatever you'd like. Don't waste time trying to define it for the sake of argument. Inequality breeds discontent. The answer is not anarchy. The answer is democratic change. That is in essence what is happening in so many ways around the world.
And people say Obama was wrong when he ran on a platform of "hope and change". The fact is, since his election I see nothing but hope (it's dim and far away but it's there) and change. Change is in the air.
Krisztián Pintér 200+
i didn't understand a word from that rant about inequality. do you mean that it is wrong because people don't like it? and people don't like it because it is wrong?
it is rather funny that you believe democracy is the solution for a problem that originated in the oldest democracies, the USA and europe. it seems to me that democracy could not prevent it from happening. and now, people being disappointed in democracy, they declare it as "not true" democracy, and demand "true" democracy. yes, good luck with it. you can tweak it all day long, central planning or "fixing" the economy will lead to further demise of our civilization. the more "good" people come together to decide for us and pave the road to welfare, the faster the decline will be. the more regulations you put forward, the bigger the purses of some men will become. and at the end, our lives will be controlled and we will be shepherded by our wise leaders into total destruction.
Jim Moonan 30+
Jah Sun
It would be useful if everyone took a few minutes to watch Richard Wilkinson's talk "How income inequality harms society" here: http://www.ted.com/talks/richard_wilkinson.html The link is also in the intro.
Rather than try and explain the points he makes, it is easier to just give him a listen. He makes a number of very pertinent arguments with a decent statistical back-up. There are plenty of other issues, some have been raised here, some not, which also speak to this issue... but the stats speak for themselves. Societies with more equal wealth distribution do better on basically EVERY benchmark regardless of the actual amounts involved.
Comments or thoughts on this subject?
Krisztián Pintér 200+
"if we know a causal relationship, it is superior to statistical analysis. if they do have the actual link, why do we need to watch a 17 minute talk about the correlation?? show us the link!"
"the body of the talk does not support the conclusion. if inequality has a negative effect, does it mean we need to reduce it? if we can show correlation between wearing a mini skirt and rape, it is wise to discourage women wearing mini skirts? if displaying wealth causes increase shoplifting, should we penalize displaying wealth?"
full comment here: http://www.ted.com/talks/richard_wilkinson.html?c=344129
Jim Moonan 30+
Jah Sun
Finally managed to read through that e-book you put up. It reminded me basically of the "Freigeld" (free money in German) concept. I believe it was a part of the Freiwirtschaft concept from Silvio Gesell.
I think such monetary policies have been attempted to greater or lesser effect on limited, local scale in various communities. I think we should continue to explore these ideas on a small scale until they are perfected, and then see what would happen if we took it to a national level. There are plenty of countries with such poor performing currencies, so perhaps one of them might feel they have nothing to lose in trying something new.
I don't really have any criticisms, and agree basically with all of what you have said on this conversation. The jury (for me at least) has been in on the whole debt-based money scheme for a loooong time now. People who defend it astound me. It is basically indefensible as far as I am concerned. Fractional reserve has to go, and money must be returned to its original function of simplifying the exchange of goods and services.
Thanks for participating.
Craig Patterson 10+
OK, there have been a few (very few) fronts of progress. Civil rights has come a long way since Mississippi Summer and the voting rights drives. Perhaps drug epidemics in our inner cities has retreated ( I have no direct knowledge here) perhaps income inequality has advanced for some groups ( women and minorities) however one has to look at the dominate trends across all groups to clear see what is happening here.
Income disparity has never been greater across the globe. Those big banks and corporations have accepted their bailouts yet don't extent the same to us citizens. How many who have applied for mortgage notifications have actually gotten them opposed to those who have lost their homes? Lets get real about what is actually happening here. Are you a CEO of a corporation? Have you seen your wages and bonuses go up to where the difference between the rank and file and management can be a factor of hundreds of times difference?
Or take education. Follow the increase costs of tuition and now with an imploded economy those graduating often can;'t find jobs to pay back their massive debts. Recently the University of Oregon's president gave huge increases to his top management when everyone else was asked to take reductions in pay. Finally the board of higher education found the courage to fire the President, and you should see those who benefited standing up for him while all the rest say, its past time.
Regarding National or environmental security, it has gotten substantially worse over the last 30 years. Yes we use to hide under our desks, but now many rogue countries have nukes? Terrorism was very infrequent back then, and now is off the charts. Who knows what lurks inside that shipping container or what illegal or legal chemicals have been laced through our food?
This is not a time to be complacent in any way. Yes, often the darkest hour is just before the dawn. However on balance, things are far worse today than 30 years ago. I wish it wasn't
Jah Sun
I am just of the opinion that we need to give it our all and do our best not to succumb to defeatism.
Progressive, pragmatic optimism is not naïveté IME.
A lot of causes seemed even more hopeless in their day. And yet, MLK, Ghandi, Mandela and more have all had their dreams accomplished. This situation is not more drastic than others in the past.
There is no denying that things are bad for a large number of people. But, if it wasn't for the hard times and the economic collapse, I doubt you would see an Occupy movement at all... let alone spreading around the world like wildfire. Sometimes things need to get real for people before they throw off their despondency and quit their slacking.
The facts of economic inequality are indisputable, but it is also true that the average standards of living across the globe have risen tremendously and continually over the last century. Pre WWII Europe had a standard of living along the lines of modern day Ghana... and Africa was like the medieval serfdoms of the pre-Renaissance age. It is easy to see all of this from the lens of middle-class, baby-boomer America. But the world is a bigger place than that demographic.
Standard of living is actually rising the fastest in Latin America, of all places. Brazil & Costa Rica have not only avoided the recession, but continue to flourish. In fact, on the Happy Planet Index, Costa Rica scored #1 last year.
Anyway, I am not saying that it doesn't seem like we are going to hell in a handbasket sometimes... just that now is not the time to give up. We need to keep spreading awareness and pushing the masses to wake up. This system is unsustainable, and there is no way we will be practicing it in 200 years.
So, we need to lay the groundwork for the Utopian future we all hope for. We need to sow the seeds of the future, and not just piss and moan like a lot of my friends do.
Jah Sun
Yes, I am a CEO... but of a non-profit for which I have taken no salary or recompense whatsoever.
We are all-volunteer actually, and still manage to accomplish miraculous things around the world. With over 750 completed projects in over 70 countries... and starting an average of one new one a day, we have helped a huge number of people in a time when I still live basically hand to mouth.
I am also the President of an indie record label, but I make so little money doing that, that at this point it might as well also be a charity. ;)
Money is not my priority, but I do hope that all of my endeavors grow and spread out. I measure success in the number of people I can help make happy.
To this end, we might wind up hiring a publicist or PR firm to help us reach more people and raise more money... at the moment we have no PR budget whatsoever. When this happens we might cease being truly ALL volunteer.
But with both of my businesses, the core of people involved are all altruists and could all be making a lot more money with their time than they are.
There you have it. Feel free to check out the website if you have the interest, all our projects are online somewhere and we have 100% transparency.
Craig Patterson 10+
And I agree totally with you. I'm just sensitive to any form of Pollyanna ness, that sometimes I detect from those who say things are getting better. Remember over half the people on the planet live on under 2 dollars a day, hardly a sustainable amount. However I do agree with you that we must move beyond the negative and depressing realities and attempt to create new visions, institutions and models of what constitutes "success". I to haven't been motivated by personal monetary advancement but working on the issues and transitions that will benefit future generations. My fields of work include sustainable forestry, affordable housing and conservation and renewable energy. I would love to look at your website, just let me know how to find it. I applaud your efforts and perhaps one day we might find a way to collaborate and spread the wisdom that money isn't the most important measure of success. Thank you for all you do...
Jah Sun
I am also interested in your fields of work... feel free to share information or links as you see fit. These things can also be considered part of any real alternative to the current global economic system to some degree.
Be well Craig.
Serg Anishchenko
From my technical point of view (where capitalism takes most of ideas from according to Schumpeter) the trial-and-error is the most expensive way of evaluation. I believe it is not a secret anymore.
Of course, it seems not really rational to turn to our past to gather ideas for future considering such global phenomenon as economical system. But I want to bring to your attention the system worked much before WWII in Germany. Where government not being absolutely social collected most of ideas from such organization as "Verein fu¨r Socialpolitik". Which was disordered by Hitler but nowadays works still. In fact, this organization, consisting from university professors etc., has been designing plans to develop stable economical and social system in the country. The government needed to execute the plans only. Just goole this organization to get better idea about it. Very interested on my view.
Christophe Cop 500+
(much like a small political fraction in my country advocates: http://www.vivant.org/en)
Why?
- I don't think people who contribute to society should be penalized for it. (it is a medieval remnant anyway)
- It eliminates tax on labor fraud
- It allows for in-calculating the ecologic (pollution cleanup), health (fat tax, tobacco and alcohol tax) and social cost of products and services
- it is transparent
- It stresses the limits of our material resources
- people who consume more pay more taxes
- the amount of tax can be dependent on the basic needs of people (healthy, local cheap foods and transport, tools are low-taxed (say 6% or less), while luxury goods get taxes of 100% or more)
- no need to fill in tax-forms, or all the current constructions.
- tax-evasion would remain, but shift their attention
Jah Sun
They are inherently unfair and unsympathetic to the poor. Taxing consumption always means that poor people will pay a much higher percentage of their money to government. For people living hand to mouth, month to month, such taxes take money directly out of their food budget and rent.
Rich people save and invest their money, and do not spend their entire incomes every month. Even weighting the tax on luxury goods and non essentials doesn't nearly offset the fact that what you propose will inevitably lower the tax burden on the wealthy and raise it drastically on the poor.
Perhaps you have not considered these things?
Or maybe you find that even with capital gains taxes at their all time low of 15% and the highest income tax brackets also at record lows , that we need to somehow lower taxes even further for the wealthy? With the National Debt at record highs, social programs being gutted to balance the budget and pay for unprecedented corporate welfare... are you seriously proposing to shift the tax burden onto the backs of those least able to afford it?
What do you want? Homeless people who can't even afford to buy tents to sleep in because such items have luxury goods taxes of 100% on them?
Where is your heart?
People who "contribute to society" shouldn't be penalized for it? I don't know about you, but I think teachers and child care workers contribute more to society than hedge fund managers and bankers. I don't see how buying and selling stocks and real estate contributes to society. I don't see how calling your broker from poolside in Aruba is actually labor.
Taxing the wealthy is not a medieval remnant either.
In the feudal system, the lords of the land owned everything and let the serfs work the land on their mercy & grace... and huge tithes, sons for the army, with taxes going to profit the landed GENTRY who didn't work. Not too different from today, really. Except now we expect the gentry to pay SOME tax.
Christophe Cop 500+
Poor people don't by the luxury products, so they would not pay much at all. (if you assign value to tents as luxury good, then I guess you should have dealt with housing problems already)
poor people receive money from government (at least where I live).
As for ad-hominem arguments: please refrain from using them.
Dismissing people because they happen to have assembled more riches than others... depends on how they acquired it.
I don't say all wages are in proportion to the value, but I do think that high wages clearly show a gap for competition.
As for stock exchange more specific: I didn't make any statement about them, so you should not assume I think that they are doing a good thing. More-over, Buying a stock is buying a product... and that can be taxed according to my system (and that money could go to the poor so they can buy the proverbial tent)
Jah Sun
But as I said above, even weighting the tax on luxury goods and non essentials doesn't nearly offset the fact that what you propose will inevitably lower the tax burden on the wealthy and raise it drastically on the poor.
There have been many studies on taxing consumption and all of them that I am aware of show a lowering of tax burden on the wealthy.
Someone who makes 20k a year will spend all of it on products. Someone who earns 10 million will likely spend only a tiny fraction of it.
Are you proposing to get rid of capital gains taxes and estate taxes?
As for the old ad-hominem cry, this doesn't apply to my comment whatsoever.
1) I am not attacking you (or anyone else in this argument)
2) My argument does not rest on any kind of insult
3) There are no personal attacks whatsoever in my post
Recognizing that some people's labor and contribution to society amounts to laying by the pool in a 5 star resort and making a 3 minute phone call while being massaged and exfoliated... is not an ad hominem logical fallacy.
One way to recognize the oft shouted but rarely accurate ad hominem fallacy is if the supposed attack on the person (an opponent in the debate) were to be removed would there still be a valid argument. If the argument is not dependent on the insult, it is not a logical fallacy... merely dickish.
Jah Sun
Socialist European countries often miss the point that their safety nets, while eroding somewhat, are nearly nonexistent elsewhere.
A simple stroll around any actual ghetto, township, or favela will show you what I mean.
At any rate, income inequality is not so high in northern Europe. Totally free University educations may be a thing of the past, and privatizing of things like transportation and telecommunication haven't gone as well as you all had hoped... the whole euro thing is looking to be a mistake in retrospect... but it is still relatively unheard-of for poor Europeans to die of hypothermia or starvation.
Let's hope you keep it that way.
Be well Christophe.
Christophe Cop 500+
I did not dismiss your other arguments because of that.
Anyway. What would a person spend his money on when he earns 10 million?
If he invests it, then it goes in a win-win situation (labour for people and revenue for himself).
To be honest: I was only thinking on tax on labour and tax on consumption... other taxes can stay the same (or change, but I'll leave that to those with more knowledge in that area)...
I do think there are problems with current financial markets (some forme of speculation don't have anything to do with creating mutual benefits, or becoming the "invisible hand")
I don't have problems with people earning more than I do (let's say I spend everything on products), and if earned well (even when it means only making decisive phone calls from a beach), then why should I? If he gained it by doing bad (hurting people, stealing, slavery,...) then I do have a problem.
There is only a problem with rich people if there is no social structure to give a decent life to the poorest. When the poorest can live (have enough food, a roof & time to raise their kids, health insurance), the rich can be as rich as they happen to be...
I really don't see the conflict with my proposal... (so please feel free to elaborate or enlighten me on that account)
Jah Sun
If we lived in a perfect world, with a level playing field... decent safety nets, wealth creation without hurting people, and investments that actually create labor... then I suppose people wouldn't have much of a problem with your proposal.
Sadly, this is not the case.
Safety nets are nonexistent for most of the 7 billion humans on the planet. Even in a so-called first world nation like the US, people still die on the streets. We have families huddled in the cold. Meanwhile, members of the GOP who support shifting the tax burden to consumption, are trying to cut heating oil subsidies & school lunches.
You say "there is only a problem with rich people if there is no social structure to get a decent life to the poorest." Well, that happens to be the case. We have people working two jobs to support a family in a one room apartment that can't afford bus passes, let alone health care.
Most investments do not actually create labor for people. Savings accounts (often overseas), gold futures contracts, options on the Swiss franc... even buying stocks in blue chips... no new jobs are created. Generally, the only labor generated is for a single broker.
Anyway, the sales tax & other taxes on consumption are well known to disproportionately affect the poor. If you scrap the income tax, payroll tax, and other taxes on labor and made up the difference in consumption taxes... you would be effectively handing huge gobs of money to the richest people while making life even harder for the poor.
If you say that other taxes can stay the same or change, I'm not sure I understand your proposal. What would you do with the capital gains tax & the estate tax?
Note: Ad hominem does not simply mean insulting. It is a logical fallacy only in the context of a logical argument. If an argument is based on insulting one's opponent rather than proving one's case, only then is it an ad hominem fallacy.
Asking someone where their heart is, is not even an insult, IMHO.
Christophe Cop 500+
Coming back to your initial question: you clearly don't agree to my proposal... as such the question remains...
I do think that the answer can only be found through trial and error, meaning we do need to try new models, knowing that some might fail. We don't know enough about humankind to come up with an ideal solution right away.
I don't know about capital gain taxes nor estate tax (wiki helped me here).
Capital gain: probably tax is needed
estate tax: As I understand, it has to do with heritage. I don't think it's unfair to want to give your own children as much of an advantage as you can give... though some kind of tax might be beneficial to the community.
You did pull me into some revision of my initial thoughts (thank you for that!)... Though I'm inclined (certainly within my own experience and country laws) to think it's not a bad proposal at all...
The distribution of wealth needs to be contrasted to the amount of free-riding and the general well-being of the population. I think we can find better pareto balances, but there are a lot of (more or less) equal (but wildly different) options left.
Jah Sun
I agree that the balance needs to shift, and this is certainly different on a country by country basis.
As far as wanting to pass on one's wealth to one's children... it is quite understandable, and natural. But, it must be reined in to some degree, because it creates dynasties of wealth and opportunity that hearken back to the feudalism that we struggled so hard to get rid of. Inheritance doesn't account for merit, and it doesn't let the best and brightest rise to the top. Furthermore, it propagates and continues injustices from the past.
Let me give you an example. The diamond mines and gold mines in South Africa were acquired by theft, trickery, violence, and underhanded dealings. The vast wealth of these resources has never gone to benefit the people of that land, but rather makes its way to almost exclusively European hands... including, as you must know, many in Antwerp. The fact that this money is still being passed down, and providing unfair advantages for the descendants of the people who oppressed and murdered to get it, is not justice. Even if the family got out of the sordid business a century ago, and reinvested this ill gotten gains in land or even restaurants, this wealth still provides advantages.
The point is that we have never had a level playing field. Inheritance preserves imbalances and injustices. Knowing that one's vast wealth will be perpetuated through one's descendants gives people the motivation to hoard, be greedy and uncaring. It diminishes the sense of oneness with the species and communities, and instills a very narrow familial identification.
I don't think that we can get rid of heritage, but I do think that after you have provided a comfortable life, opportunity and education for your offspring... it is only fair to make sure that the less fortunate are not sleeping in the rain.
Nice chatting with you.