i should start this post with a disclosure that i have studied minimal economics at college level, and even when i did, i thought it was such garbage that i didn't attend lectures and barely passed (micro-economics: you can graph the hypothetical variables that can never be observed in the real world, that is logical and even beneficial to see the hypothetical effect of the change in one variable on another. but calculating the exact change in an un-observable, hypothetical variable, is intellectual w@nkery at its finest. just because you can, doesn't mean you should).
by the above disclosure, i am giving fair warning that i have little or no understanding of the subject i will be talking about, and am therefore almost begging to be corrected by someone who actually attended lectures / did more than 2 econ units.
when i originally envisaged the ample system, i thought there would be no money, no currency at all, as it is a tool currently used to further entrench the economic power of the elite. i say this as it isn't real, there is no difference in having a wad of money in your pocket to having a deck of cards - it is just pulped wood and ink. the difference is the belief that it is different, and the trust that it can be used in the future to purchase economic resources (ie a medium of exchange and a store of value). an implication of this is it stores the accumulated power of the economic elite to wield over the disenfranchised majority. the accumulated green pulped wood (or accumulated zeroes as it is now) only has this power because we the disenfranchised majority allow it to.
however i came to the conclusion that the benefits of open markets outweighed the risk of a currency, so long as the currency cannot be manipulated by a banking system. currently you have banks creating money through the fractional reserve system, you have a central bank protecting the interests of these banks to ensure 'financial stability' (translate: preserve the current financial and economic power structure), issuing debt as they feel is required to fix the price of money where they think it should be. they then cover-up poor business decisions by banks by purchasing toxic assets at inflated prices while the banks allow the real businesses and employers to die due to lack of funding.
but in an ample system - there is no debt, there are no banks, nobody is actively printing money or performing quantitative easing, individuals can't take out loans, businesses don't need funding and don't need to pay interest, or dividends, or provide capital gains on shares that no longer exist. there is no federal reserve rate to falsely manage business levels in an economy. the boom-bust cycle that has been observed for centuries in market economies is entirely a money and debt phenomena. a bust is where people can't pay their creditors, but in an ample system, there is no debt, liabilities are immediately settled, companies can go negative in their currency reserves as currency isn't real anyway. but those businesses that are least efficient are culled, to be absorbed by efficient businesses or to start new businesses based on new ideas, new products, new practices.
the defacto currency of 'hours', as mentioned before, is effectively printed when citizens work. assuming a random minimum quota of 30 hours that citizens have to work every week to have their basic needs covered plus a minimum level of luxuries, their 'bank account' goes up 30 hours at the end of the week. the qualifying business' bank account goes down a corresponding amount, and this feeds in to the efficiency measure of the business. the citizens then spend their hours on whatever they want (goods, services, infrastructure, research, gift it directly to others, total economic freedom). various businesses receive these hours as income, also contributing to their efficiency rating.
so at a basic level (ie, my level), as citizens work, they produce goods and services. except for a small timing difference (hours expire like reward points on a credit card, to ensure they can't be hoarded to obtain unfair economic power), total money produced in a period is equal to total consumption of goods and services at the consumer level. the higher the population, the more hours worked, the higher the money produced, and the more goods and services that are produced to be purchased. it would make sense to me, given corresponding amounts of both money and goods and services to be purchased, there would be a downward bias in prices due to progressive improvements in efficiency as the less efficient businesses are culled, and as innovative new technologies come to the market drawing demand away from outdated goods and services.
for businesses, they would purchase inputs from other businesses (or pay to extract it from the ground etc). if it has a positive balance of hours, it would show a surplus of income over expenses, approximately the same as profitability in a capitalist system. payment for these inputs / labour costs is therefore existing money circulating through the system. if there is a negative balance (only businesses are allowed to go negative, not citizens), effectively they are printing money, but still creating goods and services for purchases. as any new money is offset by a corresponding increase in production, it seems logical to me that there wouldn't be a sudden increase in money floating around the system, chasing the same number of goods, and pushing up prices.
government, by my thinking, should have no income at all. if they have an income it suggests to me they are providing a good or service, and in an economic system where it is so easy to start a business as long as there is demonstrable demand, this product or service would be provided by a (more efficient) private sector business. i see government agencies therefore being restricted to pure policy and regulation, plus services that should not be charged for (fire services, police, prisons, armed forces). the exception i can see being fines and penalties. government agencies would therefore be permanently with a negative balance of hours, any purchase from them increasing this negative would therefore be printing money with no offsetting increase in production. this would therefore have an inflationary impact, which isn't good.
in the capitalist system, this is coerced away via compulsory taxation, and any remaining deficit is covered by incurring debt (which is working real well for greece and other parts of europe at the moment, with other countries probably to follow shortly). the temptation for all government departments and politicians is to spend up from this bottomless well, which necessitates rigorous systems to limit this urge.
in the ample system, i would suggest no tax. by taxing, you create a self-justifying system for government expenditure. the default position is any tax income is to be spent, with any reduction in taxes a cynical ploy to pretend tax-payers are receiving largesse, rather than getting their own money back. and by default, the country pays for the government it has, whether or not there is explicit taxation. i think it is a valuable psychological tool to see government as a large expense, so that we can all readily see they are a burden on society and should be minimised.
the cumulative negative position would show how much of a burden they are, and i would suggest there needs to be a specified limit on government as a % of private. the auditors also need to be very active in ensuring maximum efficiency in government, with full disclosure of all expenses, and penalties in place to ensure no politician or government employee is receiving benefits not received by all citizens.
the inflationary impact from government would i think be more than offset by the deflationary impact of efficiency and no new money without offsetting goods and services in the private sector.
Tuesday, 4 December 2012
Monday, 3 December 2012
bankruptcy vs efficiency
in a capitalist society, bankruptcy is dreaded, an outcome to be avoided any way possible. what is bankruptcy, and why is it so bad?
insolvency is the inability to meet your financial obligations as and when they fall due, with bankruptcy being when the courts recognise this inability to pay. at this point the company is either wound down, and sold off to pay creditors what it can, or provided with special freedoms / protections to allow it to trade out of bankruptcy (depending on what country you are looking at).
the inability to meet obligations would normally result from not making a profit for a period long enough to exhaust the working capital. it could also result from tying up capital in assets that cannot be converted to cash readily, but either way it means the entity cannot pay its liabilities, it cannot service its debts, and therefore under the rules of capitalism it should no longer retain stewardship of those assets.
bankruptcy is traumatic for all involved - creditors frequently get only a small amount back, shareholders even less, employees lose benefits, customers may not receive goods paid for, management become pariahs who failed the commerce game and will forever be stained by having guided a business into such dire straights.
but in reality - the assets still exist, and can still be used to produce goods or services as they have been. it is only in the human mind that the business, including the assets, has failed, and therefore must be disbanded. the human mind comes to this conclusion due to how the assets are funded. for example, if there was no liabilities, no debt, (ie 100% equity), the business can never go bankrupt, however the shareholders may choose to liquidate the assets if the feel their return on assets is inadequate. it is having debt, liabilities, that sets the conditions where bankruptcy may result.
so not being a natural law, merely being a concept in the human mind, there is no actual need for bankruptcy. just different rules for the game are required.
a bit of a tangent, but serfdom was a system prevalent in medieval europe where the lords retained ownership of the fields, but would allow the 'serfs' to grow crops on the fields in return for a substantial portion of the produce. the serfs in this system were trapped in subsistence and poverty, and the system is generally held to be grossly unfair.
in the modern capitalist system, businesses cannot be started without funding. this funding isn't real, there is no real asset that is provided to new businesses. it is the accumulated profits of prior economic activities representing power over future economic resources. this funding is largely wielded by an economic elite (frequently i read the ratio that 80% of the worlds wealth is held by 20% of the population, and am sure that the top 5-10% hold the vast majority of it). this funding is therefore equivalent to a field being tilled by a serf - you can use the funding, but only if you can pay your lord his required tithe, which will allow you to subsist a little longer. you may even be able to feed yourself in retirement.
effectively, bankruptcy is not having the capacity to pay a tithe to your master, in recognition of their previously accumulated power and resources which they want to continue building. this tithe (in the form of interest, dividends, taxes or capital gains) makes it more difficult to achieve a profit, but not impossible. the significance of profit is that, based on the market price of inputs and outputs, the business is adding value. while the money it is measured in isn't real, i think the underlying message of adding value to society is useful.
in the ample system, i have suggested that, rather than being required to make a profit as in capitalism, businesses be required to satisfy demand (a pre-requisite for profit, you could say) and maximise efficiency. i consider maximising efficiency a better measure because profit isn't necessarily meaningful, whether a company is making or losing something that isn't real in the first place (money). whether they are building up more of this fake resource on their balance sheet is actually irrelevant, but for the signal it gives on adding value based on market prices.
what if, rather than companies going bankrupt when they can't make a profit and can't service their liabilities, they are allowed to continue to operate due to the fact they are satisfying demand, their customers find their product or service of use and attach value in continuing to receive it. but, in recognition that society needs to make the best use of its resources, the least efficient companies in each sector are liquidated, effectively allowing the remaining more efficient businesses to purchase the assets and use them in their more efficient operations.
effectively, i envisage this efficiency measure to operate similar to profitability, probably be measured based on the ratio of the income measured in the defacto currency 'hours' to the costs. however, instead of a fake threshold (the business is not profitable, cannot meet it's obligations, and will be forced into bankruptcy), companies can go negative in 'hours' and continue to service their customers assuming there is still demand. the least efficient 10% (or other %) on an annual basis lose their business certification, with the auditors selling the assets on the open market to remaining businesses. in an ample system, there is no debt, there are no shareholders, liabilities are always settled as there is no impediment to going negative in the defacto currency 'hours' (just for business, private individuals cannot go negative).
employees are the most adversely affected by this loss of certification, but as they are guaranteed their minimum needs, and as there abundant jobs due to the ease of starting a business (no funding required, just demand for the product and a business plan), i foresee it being less stressful than bankruptcy in capitalism and much easier to find alternate employment.
a major benefit i see in replacing profitability with efficiency is that it facilitates 'creative destruction'. it 'destroys' those businesses least able to add value to society, offering up their assets and labour to businesses able to extract a larger societal dividend from them. and then does it again the next year, and the next, in a never-ending cycle toward a perfection that can never be achieved. also, there is no stigma attached to it, there is no impediment to starting a new business, people can still contribute to society to the limit of their ability, simultaneously having their needs met and achieving as affluent a lifestyle as they want based on how much they want to work.
insolvency is the inability to meet your financial obligations as and when they fall due, with bankruptcy being when the courts recognise this inability to pay. at this point the company is either wound down, and sold off to pay creditors what it can, or provided with special freedoms / protections to allow it to trade out of bankruptcy (depending on what country you are looking at).
the inability to meet obligations would normally result from not making a profit for a period long enough to exhaust the working capital. it could also result from tying up capital in assets that cannot be converted to cash readily, but either way it means the entity cannot pay its liabilities, it cannot service its debts, and therefore under the rules of capitalism it should no longer retain stewardship of those assets.
bankruptcy is traumatic for all involved - creditors frequently get only a small amount back, shareholders even less, employees lose benefits, customers may not receive goods paid for, management become pariahs who failed the commerce game and will forever be stained by having guided a business into such dire straights.
but in reality - the assets still exist, and can still be used to produce goods or services as they have been. it is only in the human mind that the business, including the assets, has failed, and therefore must be disbanded. the human mind comes to this conclusion due to how the assets are funded. for example, if there was no liabilities, no debt, (ie 100% equity), the business can never go bankrupt, however the shareholders may choose to liquidate the assets if the feel their return on assets is inadequate. it is having debt, liabilities, that sets the conditions where bankruptcy may result.
so not being a natural law, merely being a concept in the human mind, there is no actual need for bankruptcy. just different rules for the game are required.
a bit of a tangent, but serfdom was a system prevalent in medieval europe where the lords retained ownership of the fields, but would allow the 'serfs' to grow crops on the fields in return for a substantial portion of the produce. the serfs in this system were trapped in subsistence and poverty, and the system is generally held to be grossly unfair.
in the modern capitalist system, businesses cannot be started without funding. this funding isn't real, there is no real asset that is provided to new businesses. it is the accumulated profits of prior economic activities representing power over future economic resources. this funding is largely wielded by an economic elite (frequently i read the ratio that 80% of the worlds wealth is held by 20% of the population, and am sure that the top 5-10% hold the vast majority of it). this funding is therefore equivalent to a field being tilled by a serf - you can use the funding, but only if you can pay your lord his required tithe, which will allow you to subsist a little longer. you may even be able to feed yourself in retirement.
effectively, bankruptcy is not having the capacity to pay a tithe to your master, in recognition of their previously accumulated power and resources which they want to continue building. this tithe (in the form of interest, dividends, taxes or capital gains) makes it more difficult to achieve a profit, but not impossible. the significance of profit is that, based on the market price of inputs and outputs, the business is adding value. while the money it is measured in isn't real, i think the underlying message of adding value to society is useful.
in the ample system, i have suggested that, rather than being required to make a profit as in capitalism, businesses be required to satisfy demand (a pre-requisite for profit, you could say) and maximise efficiency. i consider maximising efficiency a better measure because profit isn't necessarily meaningful, whether a company is making or losing something that isn't real in the first place (money). whether they are building up more of this fake resource on their balance sheet is actually irrelevant, but for the signal it gives on adding value based on market prices.
what if, rather than companies going bankrupt when they can't make a profit and can't service their liabilities, they are allowed to continue to operate due to the fact they are satisfying demand, their customers find their product or service of use and attach value in continuing to receive it. but, in recognition that society needs to make the best use of its resources, the least efficient companies in each sector are liquidated, effectively allowing the remaining more efficient businesses to purchase the assets and use them in their more efficient operations.
effectively, i envisage this efficiency measure to operate similar to profitability, probably be measured based on the ratio of the income measured in the defacto currency 'hours' to the costs. however, instead of a fake threshold (the business is not profitable, cannot meet it's obligations, and will be forced into bankruptcy), companies can go negative in 'hours' and continue to service their customers assuming there is still demand. the least efficient 10% (or other %) on an annual basis lose their business certification, with the auditors selling the assets on the open market to remaining businesses. in an ample system, there is no debt, there are no shareholders, liabilities are always settled as there is no impediment to going negative in the defacto currency 'hours' (just for business, private individuals cannot go negative).
employees are the most adversely affected by this loss of certification, but as they are guaranteed their minimum needs, and as there abundant jobs due to the ease of starting a business (no funding required, just demand for the product and a business plan), i foresee it being less stressful than bankruptcy in capitalism and much easier to find alternate employment.
a major benefit i see in replacing profitability with efficiency is that it facilitates 'creative destruction'. it 'destroys' those businesses least able to add value to society, offering up their assets and labour to businesses able to extract a larger societal dividend from them. and then does it again the next year, and the next, in a never-ending cycle toward a perfection that can never be achieved. also, there is no stigma attached to it, there is no impediment to starting a new business, people can still contribute to society to the limit of their ability, simultaneously having their needs met and achieving as affluent a lifestyle as they want based on how much they want to work.
Sunday, 2 December 2012
land
in a system with no savings, no investments, and no debt, how do you allocate land? who decides? clearly lots of potential for corruption, people with power inevitably feel they are entitled to the best in life, which usually involves real estate with harbour views.
the basis of real estate in the ample system is that no one owns it, therefore everyone rents. without trying to get all spiritual, even in capitalism, nobody really owns real estate. we at best temporarily occupy it. this contractual occupation may last a while, but eventually, systems collapse, revolutions occur, empires crumble, and species a little too intelligent for their own good self-destruct. but the land will almost certainly remain, unaffected by the upheavals in the human domain.
renting in the ample system is all quite straight forward. everyone is entitled to a minimum area in "good" habitable condition. they can rent anywhere they want, any size they want, any quality and facility they want, but they have to pay the going market rate in the defacto currency 'hours'. they then get reimbursed the cost of the minimum area in the worst suburb in close proximity. the system would apply to everyone including politicians, auditors, secret police.
i expect that without investments, where everyone is restricted to just their salary, and due to full employment and useless jobs no longer being performed (finance industry, sales and marketing, the majority of the government, for example), there would be much less disparity in disposable income, and therefore much less disparity between 'ghettos' and affluent suburbs. and it would be impossible to afford a huge mansion with these restrictions.
that is all fine for residential accommodation, how about commercial sector? obviously still renting, still based on market rates, the business able to select the best location / facilities that match their needs. in an ample system, a business doesn't necessarily need to make a profit, so you could argue that commercial rents would just skyrocket as businesses kept bidding up the prices in preferable locations. but it would be constrained by the need to maximise efficiency, with the least efficient businesses being culled / losing their certification by the auditors. i still need to properly define efficiency, but it could just be the ratio of costs to income as measured in the defacto currency of hours, and therefore paying high rent will reduce efficiency and make it relatively more difficult to avoid the cull.
the actual building of structures (and logically, the allocation of land prior to the start of building) would be similar to the building of infrastructure. effectively first in first served, once the business has secured the resources to develop the land and has the necessary approvals. i don't see any way around having a government agency involved in planning land and issuing approvals, however definitely their power needs to be curtailed when compared to the current system. if demand is there to develop land, while it shouldn't be a rubber stamp, a government department shouldn't be holding up development. if they are, they need more resources / to make more efficient use of their existing resources, with the auditors providing the enforcement power to dump the management. on consideration, it could be out-sourced - any job done by government has a private sector counter-part. i guess it would just be the standards (what h&s standard is required etc) that would need to be driven by politicians / government, but even then it should be judged against other departments / other regions, and if it is slow or wasteful - the auditors step in.
these approvals would be in the nature of health & safety, environmental, not the desirability of the development. that is no business of a government employee to dictate to the market. keep in mind, businesses are very easy to start in an ample system - just demonstrated demand, and a business plan approved by an auditor.
so for example, if businesses keep having shortages of a key component needed to manufacture cars, the increased price would send the message that it would be easy to start an efficient business manufacturing these widgets, and this increased interest in widget making would send the message via increased rent that another widget factory would be good. a builder (existing or a start-up, doesn't matter), observing the increasing rent, would decide developing another widget factory would be an efficient use of resources, and would put in an application for allocation of land. the government department, as the plan shows adequate health & safety provisions and has environmental protection standards in line with other factories, approves it. if there are competing applications for the same land, first in first served, so it would be incumbent upon government to expedite all applications, and incumbent on applicants to make sure the application is complete and comprehensive.
another important point - no one is making a profit as such, everyone is just working to attain their preferred level of affluence by working minimum hours plus extra if they want a better lifestyle. the current system has so much legal angst because everyone is bitterly trying to capture profit for themselves. if profit is no longer the goal, if the goal is now to satisfy demand / provide a service / improve society, there would be less legal battles, and less lawyers, both of which would be better for society.
the basis of real estate in the ample system is that no one owns it, therefore everyone rents. without trying to get all spiritual, even in capitalism, nobody really owns real estate. we at best temporarily occupy it. this contractual occupation may last a while, but eventually, systems collapse, revolutions occur, empires crumble, and species a little too intelligent for their own good self-destruct. but the land will almost certainly remain, unaffected by the upheavals in the human domain.
renting in the ample system is all quite straight forward. everyone is entitled to a minimum area in "good" habitable condition. they can rent anywhere they want, any size they want, any quality and facility they want, but they have to pay the going market rate in the defacto currency 'hours'. they then get reimbursed the cost of the minimum area in the worst suburb in close proximity. the system would apply to everyone including politicians, auditors, secret police.
i expect that without investments, where everyone is restricted to just their salary, and due to full employment and useless jobs no longer being performed (finance industry, sales and marketing, the majority of the government, for example), there would be much less disparity in disposable income, and therefore much less disparity between 'ghettos' and affluent suburbs. and it would be impossible to afford a huge mansion with these restrictions.
that is all fine for residential accommodation, how about commercial sector? obviously still renting, still based on market rates, the business able to select the best location / facilities that match their needs. in an ample system, a business doesn't necessarily need to make a profit, so you could argue that commercial rents would just skyrocket as businesses kept bidding up the prices in preferable locations. but it would be constrained by the need to maximise efficiency, with the least efficient businesses being culled / losing their certification by the auditors. i still need to properly define efficiency, but it could just be the ratio of costs to income as measured in the defacto currency of hours, and therefore paying high rent will reduce efficiency and make it relatively more difficult to avoid the cull.
the actual building of structures (and logically, the allocation of land prior to the start of building) would be similar to the building of infrastructure. effectively first in first served, once the business has secured the resources to develop the land and has the necessary approvals. i don't see any way around having a government agency involved in planning land and issuing approvals, however definitely their power needs to be curtailed when compared to the current system. if demand is there to develop land, while it shouldn't be a rubber stamp, a government department shouldn't be holding up development. if they are, they need more resources / to make more efficient use of their existing resources, with the auditors providing the enforcement power to dump the management. on consideration, it could be out-sourced - any job done by government has a private sector counter-part. i guess it would just be the standards (what h&s standard is required etc) that would need to be driven by politicians / government, but even then it should be judged against other departments / other regions, and if it is slow or wasteful - the auditors step in.
these approvals would be in the nature of health & safety, environmental, not the desirability of the development. that is no business of a government employee to dictate to the market. keep in mind, businesses are very easy to start in an ample system - just demonstrated demand, and a business plan approved by an auditor.
so for example, if businesses keep having shortages of a key component needed to manufacture cars, the increased price would send the message that it would be easy to start an efficient business manufacturing these widgets, and this increased interest in widget making would send the message via increased rent that another widget factory would be good. a builder (existing or a start-up, doesn't matter), observing the increasing rent, would decide developing another widget factory would be an efficient use of resources, and would put in an application for allocation of land. the government department, as the plan shows adequate health & safety provisions and has environmental protection standards in line with other factories, approves it. if there are competing applications for the same land, first in first served, so it would be incumbent upon government to expedite all applications, and incumbent on applicants to make sure the application is complete and comprehensive.
another important point - no one is making a profit as such, everyone is just working to attain their preferred level of affluence by working minimum hours plus extra if they want a better lifestyle. the current system has so much legal angst because everyone is bitterly trying to capture profit for themselves. if profit is no longer the goal, if the goal is now to satisfy demand / provide a service / improve society, there would be less legal battles, and less lawyers, both of which would be better for society.
Thursday, 29 November 2012
research
research is an area where, unless there is a pressing reason to do it, research becomes a low priority. governments always have a vast array of things to spend money on, and there is never enough tax income that has been successfully extorted from the populace. if government isn't stumping up the funds, the only options remaining are venture capital (restricted to research where there is a reasonable prospect of profit), or failing that, charity.
to my mind, research is the greatest hope of humanity. the technological breakthroughs in the past have so immeasurably improved the quality of life for so many people, it seems to me one of the highest priorities in human society should be continued research, specifically in the desired outcomes of society (as per the measuring success post, i suggest the following as societal goals: longer lifespan; healthier; safer; happier; more productive; better educated).
it is a shame that, unless the economic elite that control the funding think there is a reasonable chance of profit that will therefore improve their economic power, the only time research is prioritised is at times of crisis. like a virulent new disease sweeping the world, or a world war.
so i think a shift to an 'ample' economic paradigm (ample-nomics?) where profit is no longer worshipped and no longer dictates the economic decision making would prove beneficial to research. specifics of how i think research would occur:
1) businesses are very easy to start in an ample system, effectively just needing to demonstrate demand for the product, and have the administrative skills to write up a coherent business plan and maintain adequate records to satisfy the auditors. so conceptually, research on new products no longer need to attract funding, no longer need to pass the profitability test, so long as there is demand for the product and they maintain adequate efficiency to escape being culled by the auditors (note - i really should define efficiency as it would be measured by the auditors).
2) this demand can be from citizens or from existing businesses, and in an ample system, anything that can be pushed out of a 'government organisation', would be. so hospitals, schools, transport, transport systems, anything where a product or service is being provided, i envisage being operated as a private business with the same dual goals of satisfying demand and maximising efficiency. therefore all these private businesses can undertake more research themselves, as they are no longer constrained by the profit / breakeven paradigm, but also provide demand for other research businesses (ie businesses whose product / service is pure research). there would still be government in an ample system, effectively setup by politicians where they think private / business demand is not providing a product or service that society needs (police, jails, national defence). these organisations would still be subject to efficiency requirements, would be required to accountable and transparent with audits being published on government organisations, and ultimately the politicians would be answerable to the citizens come election times.
3) anything not achieved via the above 2 concepts, same as large infrastructure, could put up a prospectus on the online marketplace, which citizens or businesses could allocate hours to. so for example, space technology and exploration. this is basically the same as charity in the current system, and would therefore probably only work for 'cool' research. any research that isn't cool, or isn't in demand, probably unlikely to get much traction. but that is the same as capitalism anyway.
i envisage people having more time in an ample system. profits aren't quarantined to an elite few but shared by everyone. people currently classified as unemployed would be contributing at least minimum hours to qualify for their basic needs (which means the labour pool would increase by 5%-15% based on official stats, plus all those who are missed in the stats as they are not looking for work, have given up, are not fully employed etc). businesses would be so easy to start, and there would be such an abundant workforce, that i envisage higher production, in that there would be the same physical assets, but increased workforce to extract goods and services. and many, maybe most, would work more than the minimum hours to enable a higher quality of life / level of luxuries.
obviously some of the population would spend spare time and resources on just R&R, that is their choice. but i think a fair portion of the populace would use the increased freedom to get education, training, take classes on hobbies, and assisting research and inventing things.
to my mind, research is the greatest hope of humanity. the technological breakthroughs in the past have so immeasurably improved the quality of life for so many people, it seems to me one of the highest priorities in human society should be continued research, specifically in the desired outcomes of society (as per the measuring success post, i suggest the following as societal goals: longer lifespan; healthier; safer; happier; more productive; better educated).
it is a shame that, unless the economic elite that control the funding think there is a reasonable chance of profit that will therefore improve their economic power, the only time research is prioritised is at times of crisis. like a virulent new disease sweeping the world, or a world war.
so i think a shift to an 'ample' economic paradigm (ample-nomics?) where profit is no longer worshipped and no longer dictates the economic decision making would prove beneficial to research. specifics of how i think research would occur:
1) businesses are very easy to start in an ample system, effectively just needing to demonstrate demand for the product, and have the administrative skills to write up a coherent business plan and maintain adequate records to satisfy the auditors. so conceptually, research on new products no longer need to attract funding, no longer need to pass the profitability test, so long as there is demand for the product and they maintain adequate efficiency to escape being culled by the auditors (note - i really should define efficiency as it would be measured by the auditors).
2) this demand can be from citizens or from existing businesses, and in an ample system, anything that can be pushed out of a 'government organisation', would be. so hospitals, schools, transport, transport systems, anything where a product or service is being provided, i envisage being operated as a private business with the same dual goals of satisfying demand and maximising efficiency. therefore all these private businesses can undertake more research themselves, as they are no longer constrained by the profit / breakeven paradigm, but also provide demand for other research businesses (ie businesses whose product / service is pure research). there would still be government in an ample system, effectively setup by politicians where they think private / business demand is not providing a product or service that society needs (police, jails, national defence). these organisations would still be subject to efficiency requirements, would be required to accountable and transparent with audits being published on government organisations, and ultimately the politicians would be answerable to the citizens come election times.
3) anything not achieved via the above 2 concepts, same as large infrastructure, could put up a prospectus on the online marketplace, which citizens or businesses could allocate hours to. so for example, space technology and exploration. this is basically the same as charity in the current system, and would therefore probably only work for 'cool' research. any research that isn't cool, or isn't in demand, probably unlikely to get much traction. but that is the same as capitalism anyway.
i envisage people having more time in an ample system. profits aren't quarantined to an elite few but shared by everyone. people currently classified as unemployed would be contributing at least minimum hours to qualify for their basic needs (which means the labour pool would increase by 5%-15% based on official stats, plus all those who are missed in the stats as they are not looking for work, have given up, are not fully employed etc). businesses would be so easy to start, and there would be such an abundant workforce, that i envisage higher production, in that there would be the same physical assets, but increased workforce to extract goods and services. and many, maybe most, would work more than the minimum hours to enable a higher quality of life / level of luxuries.
obviously some of the population would spend spare time and resources on just R&R, that is their choice. but i think a fair portion of the populace would use the increased freedom to get education, training, take classes on hobbies, and assisting research and inventing things.
Wednesday, 28 November 2012
infrastructure (with rant on the evils of government)
infrastructure in a capitalist system is usually provided by quite a circuitous process. people and companies are taxed to pay for inefficient, bloated government services. a government babu / elected politician decides a piece of infrastructure is a good idea. the government plods its way through the planning stages usually via the use of expensive consultants who, after decades of working in the government, come to the conclusion that doing the same job as an external consultant is far more lucrative for them. after many revisions, they come to an acceptable plan, and lurch into the tendering process.
tendering is just as ridiculous as the planning stage, with revisions, scope changes, political interference, all wasting more and more tax payer money on the bureaucratic nightmare that is modern day government. eventually, the process is finally completed, private companies submit their tenders, and a committee of government babus decree that company x provides the best value for money (hopefully company x is politically acceptable to the politicians, otherwise a sh!tfight starts about now). the honourable politician announces the decision with extensive press coverage and abundant fake smiles.
company x and government then begin their intricate dance of pretending to follow the tender / contract to the letter, while trying to maximise their profitability (for company x) and maximise value for money / government prestige (with different departments and different politicians often working at cross-purposes for internal reasons, making it all the more laughable). there are frequent revisions to the tender / contract at this stage. finally, infrastructure is produced, frequently late, over budget, and with contractual disputes about quality. the infrastructure may be owned by the government, in which case the tax payer pays, or it may be privately owned, in which case the tax payer pays (only when using it, this time). government is a beautiful thing.
just in case i have accidentally portrayed government workers as competent in the above, all work they do (in any department, at every level) is invariably less efficient than a private counterpart. government workers see no need to work overtime, find ways to have extensive coffee breaks, lots of staff meetings, lots of union meetings, work is stopped to watch sporting events, not only do they have no need to minimise costs to make a profit, they frequently maximise spending to ensure their budgetary allocation isn't taken away, their work is frequently interrupted by random ministerial queries and ministerial directives that reverse the directive from the week before, and work often gets shuffled around and re-done to accommodate the high levels of government workers that inexplicably take fully paid stress leave. all of this is topped off by an air of superiority because government workers think they keep the country running (clearly my opinion here has departed from objective analysis, and i have assumed that my limited experience in government is reflective of government workers everywhere).
slight diversion there as i waxed lyrical on the joys of government workers and bureaucracy, but it is relevant into how infrastructure is provided in the capitalist system (and also demonstrates why communism will never work, there being no private sector this level of dysfunction would be present in all economic activity throughout the country). i don't think anyone pretends that the current system is efficient or even good, but how can you improve it? how do i envisage it happening under an 'ample' economic system?
going back to the key events that have to happen - there is a need or want, there are adequate resources to provide this need or want, and it is then built. everything else is just the currently accepted mythology in how we get things done, and same as we used to sacrifice virgins and worship zeus, it is largely unnecessary.
in the ample system, all needs and wants can be found in a centralised website / online market-place, something similar to ebay. new products and services can be added to gauge consumer interest, consumers can purchase existing products and services by spending their 'hours' earnt. given there is no tax, no hoarded savings, and no debt in this system i am imagining, how can large scale projects and infrastructure occur?
anyone can add a new product or service to the market-place website, whether it is a haircut, an electronic widget, or a housing development (housing would be rented, not owned as per the previous post, nobody / nothing would own any land, it could just be temporarily used). people and businesses are then free to 'bid' on it as either a buyer or a seller in the defacto currency of hours. a seller would put together a business plan for the provision of the product or service demonstrating how they could provide it, what inputs would be needed, whether those inputs are available and at what cost in 'hours', what employees would be required, whether they are available and at what cost in 'hours'. small scale products or services can start running their business prior to receiving certification from an auditor, effectively as a sole trader in the current capitalist system (ie personally spending their 'hours' to buy materials, receiving 'hours' in payment for the product or service). as they can't go into negative 'hours' personally, they effectively would need to make a profit in 'hours' to continue, and to provide any incentive to continue (if it is profitable enough, they may not need to work their quota of hours as they get more than enough from their mini-business. this would of course attract other people to provide the good / service, bringing the price down to equitable levels).
once an auditor has certified the business, i consider this as equivalent to incorporation in the capitalist system. the business is effectively a separate legal entity, purchases materials in its own right, has employees that can work their minimum quota of hours at the business, has income from customers spending their 'hours' to purchase the good or service. importantly, and different to capitalism, the business does not need to make a profit, it can spend more 'hours' than it receives. the key criteria for the continuation of the business is firstly demonstrated continuing demand for the product or service (as evidenced by the online market-place showing a pipeline of customers wanting the product or service, note that this is a free market where customers can bid whatever hours they want to purchase the good/service), and secondly, by maximising efficiency. auditors would need to regularly review all businesses and cull the bottom 5%-10%-30%. there is therefore incentive to maximise efficiency (to avoid the cull), while also providing products or services that are in demand.
for larger scale projects (road, bridge, harbour), i envisage a supplier would write up a proposal / prospectus that would need to be certified by an auditor as being realistic and possible, but would leave it up to the citizens in the market to determine whether it was desirable. the project would then be placed in the online marketplace in a special category, where there can be only one supplier (other suppliers can have simultaneous mutually exclusive projects competing in the market place, probably with a special link between the pages to notify citizens they are mutually exclusive), and citizens can allocate 'hours' to any project that they want. citizens can allocate as many hours as they want, bearing in mind that they then can't spend these hours on luxuries or other projects etc. The project would need to reach the threshold hours required as per the audited business plan for the project to be built, and would need to reach the threshold first in a situation where there are competing mutually exclusive plans. hours allocated by citizens would be 'refunded' in a situation where the project doesn't meet the threshold by a key date specified in the business plan.
why would citizens allocate their hours to projects? bear in mind, in capitalism we are compelled to allocate circa 30% of our hours (depending on country and income level) to government in the form of taxation, which as i have never signed a contract saying i wish to do so, and have little to no say on how those taxes are spent, i consider theft. so it would be nice to actually have some control over infrastructure expenditure in my local area. secondly, if there is an infrastructure need (eg roads are really congested, wish we had a new freeway here; the closest airport is 3 hours away; i have to wait 5 hours to see a doctor), the citizens can directly influence the priorities of infrastructure expenditure as it affects their life. this is much more closely aligned to democratic ideals in that only projects that can attract adequate public support will get done, whereas bridges to nowhere are less likely to occur as citizens are less likely to allocate their hours to projects that they don't think will improve their life, they will allocate their hours to further their own goals, whether that be luxury food, booze, education, art for the wall, a new car, or a new hospital or airport.
obviously, there is still the potential for corruption, for example a politician publicly endorsing his brother's project x, and sheep from his party toeing the party line and allocating hours as instructed. but no more than with capitalism and if people choose to allocate hours as per political party instructions or as per any influential member of society, that is their choice. you can't stop stupid from being stupid, and at least it is democratically stupid and they could choose an alternative if they so wished. however there are no companies making massive profits on infrastructure, it is more difficult to get projects going unless citizens put value in it and allocate hours accordingly.
its an interesting idea, as to whether it would work as i envisage - no idea, but nothing ever goes to plan. i need to go further into detail on land usage and how it would be determined (eg project x involves building a highway through the house you currently live in, or project y involves locating hazardous materials next to a kindergarten, or just more housing is being demanded in desirable suburb z, where does it get built). but next i want to go into research and innovation, as i think this is an area where capitalism puts unnecessary artificial constraints on human aspiration.
tendering is just as ridiculous as the planning stage, with revisions, scope changes, political interference, all wasting more and more tax payer money on the bureaucratic nightmare that is modern day government. eventually, the process is finally completed, private companies submit their tenders, and a committee of government babus decree that company x provides the best value for money (hopefully company x is politically acceptable to the politicians, otherwise a sh!tfight starts about now). the honourable politician announces the decision with extensive press coverage and abundant fake smiles.
company x and government then begin their intricate dance of pretending to follow the tender / contract to the letter, while trying to maximise their profitability (for company x) and maximise value for money / government prestige (with different departments and different politicians often working at cross-purposes for internal reasons, making it all the more laughable). there are frequent revisions to the tender / contract at this stage. finally, infrastructure is produced, frequently late, over budget, and with contractual disputes about quality. the infrastructure may be owned by the government, in which case the tax payer pays, or it may be privately owned, in which case the tax payer pays (only when using it, this time). government is a beautiful thing.
just in case i have accidentally portrayed government workers as competent in the above, all work they do (in any department, at every level) is invariably less efficient than a private counterpart. government workers see no need to work overtime, find ways to have extensive coffee breaks, lots of staff meetings, lots of union meetings, work is stopped to watch sporting events, not only do they have no need to minimise costs to make a profit, they frequently maximise spending to ensure their budgetary allocation isn't taken away, their work is frequently interrupted by random ministerial queries and ministerial directives that reverse the directive from the week before, and work often gets shuffled around and re-done to accommodate the high levels of government workers that inexplicably take fully paid stress leave. all of this is topped off by an air of superiority because government workers think they keep the country running (clearly my opinion here has departed from objective analysis, and i have assumed that my limited experience in government is reflective of government workers everywhere).
slight diversion there as i waxed lyrical on the joys of government workers and bureaucracy, but it is relevant into how infrastructure is provided in the capitalist system (and also demonstrates why communism will never work, there being no private sector this level of dysfunction would be present in all economic activity throughout the country). i don't think anyone pretends that the current system is efficient or even good, but how can you improve it? how do i envisage it happening under an 'ample' economic system?
going back to the key events that have to happen - there is a need or want, there are adequate resources to provide this need or want, and it is then built. everything else is just the currently accepted mythology in how we get things done, and same as we used to sacrifice virgins and worship zeus, it is largely unnecessary.
in the ample system, all needs and wants can be found in a centralised website / online market-place, something similar to ebay. new products and services can be added to gauge consumer interest, consumers can purchase existing products and services by spending their 'hours' earnt. given there is no tax, no hoarded savings, and no debt in this system i am imagining, how can large scale projects and infrastructure occur?
anyone can add a new product or service to the market-place website, whether it is a haircut, an electronic widget, or a housing development (housing would be rented, not owned as per the previous post, nobody / nothing would own any land, it could just be temporarily used). people and businesses are then free to 'bid' on it as either a buyer or a seller in the defacto currency of hours. a seller would put together a business plan for the provision of the product or service demonstrating how they could provide it, what inputs would be needed, whether those inputs are available and at what cost in 'hours', what employees would be required, whether they are available and at what cost in 'hours'. small scale products or services can start running their business prior to receiving certification from an auditor, effectively as a sole trader in the current capitalist system (ie personally spending their 'hours' to buy materials, receiving 'hours' in payment for the product or service). as they can't go into negative 'hours' personally, they effectively would need to make a profit in 'hours' to continue, and to provide any incentive to continue (if it is profitable enough, they may not need to work their quota of hours as they get more than enough from their mini-business. this would of course attract other people to provide the good / service, bringing the price down to equitable levels).
once an auditor has certified the business, i consider this as equivalent to incorporation in the capitalist system. the business is effectively a separate legal entity, purchases materials in its own right, has employees that can work their minimum quota of hours at the business, has income from customers spending their 'hours' to purchase the good or service. importantly, and different to capitalism, the business does not need to make a profit, it can spend more 'hours' than it receives. the key criteria for the continuation of the business is firstly demonstrated continuing demand for the product or service (as evidenced by the online market-place showing a pipeline of customers wanting the product or service, note that this is a free market where customers can bid whatever hours they want to purchase the good/service), and secondly, by maximising efficiency. auditors would need to regularly review all businesses and cull the bottom 5%-10%-30%. there is therefore incentive to maximise efficiency (to avoid the cull), while also providing products or services that are in demand.
for larger scale projects (road, bridge, harbour), i envisage a supplier would write up a proposal / prospectus that would need to be certified by an auditor as being realistic and possible, but would leave it up to the citizens in the market to determine whether it was desirable. the project would then be placed in the online marketplace in a special category, where there can be only one supplier (other suppliers can have simultaneous mutually exclusive projects competing in the market place, probably with a special link between the pages to notify citizens they are mutually exclusive), and citizens can allocate 'hours' to any project that they want. citizens can allocate as many hours as they want, bearing in mind that they then can't spend these hours on luxuries or other projects etc. The project would need to reach the threshold hours required as per the audited business plan for the project to be built, and would need to reach the threshold first in a situation where there are competing mutually exclusive plans. hours allocated by citizens would be 'refunded' in a situation where the project doesn't meet the threshold by a key date specified in the business plan.
why would citizens allocate their hours to projects? bear in mind, in capitalism we are compelled to allocate circa 30% of our hours (depending on country and income level) to government in the form of taxation, which as i have never signed a contract saying i wish to do so, and have little to no say on how those taxes are spent, i consider theft. so it would be nice to actually have some control over infrastructure expenditure in my local area. secondly, if there is an infrastructure need (eg roads are really congested, wish we had a new freeway here; the closest airport is 3 hours away; i have to wait 5 hours to see a doctor), the citizens can directly influence the priorities of infrastructure expenditure as it affects their life. this is much more closely aligned to democratic ideals in that only projects that can attract adequate public support will get done, whereas bridges to nowhere are less likely to occur as citizens are less likely to allocate their hours to projects that they don't think will improve their life, they will allocate their hours to further their own goals, whether that be luxury food, booze, education, art for the wall, a new car, or a new hospital or airport.
obviously, there is still the potential for corruption, for example a politician publicly endorsing his brother's project x, and sheep from his party toeing the party line and allocating hours as instructed. but no more than with capitalism and if people choose to allocate hours as per political party instructions or as per any influential member of society, that is their choice. you can't stop stupid from being stupid, and at least it is democratically stupid and they could choose an alternative if they so wished. however there are no companies making massive profits on infrastructure, it is more difficult to get projects going unless citizens put value in it and allocate hours accordingly.
its an interesting idea, as to whether it would work as i envisage - no idea, but nothing ever goes to plan. i need to go further into detail on land usage and how it would be determined (eg project x involves building a highway through the house you currently live in, or project y involves locating hazardous materials next to a kindergarten, or just more housing is being demanded in desirable suburb z, where does it get built). but next i want to go into research and innovation, as i think this is an area where capitalism puts unnecessary artificial constraints on human aspiration.
Tuesday, 27 November 2012
debt & equity
in the previous post, i made the logical extension that if hoarding of money inevitably leads to the unfair distribution of economic resources and power, then all investments including owning real estate cannot be allowed. as previously stated, hoarding is a logical consequence of capitalism, in that profit is the ultimate goal, those that are good at profit / are born into the right families / right countries continue to make profits, they then retain these profits to maximise their future economic power. over generations this results in an economic elite that hoard a large portion of the economic resources, to the detriment of the majority of humankind. and by detriment, i am referring to people dying in various parts of the world due to the inequitable distribution of resources.
with no hoarding and no debt, there would be large implications for the banking sector. if you go back to the traditional banking model, people keep their savings in the bank for security, and maybe a little interest. the bank then aggregates this pool of savings and finds a suitable customer to loan it to. back when banks were responsible and prudent, they would make a margin of profit but would very carefully assess who they lent money to as even a small bad debt would wipe out the profit on many other healthy loans. but the obsession for profit combined with the concept of selling those loans (or more importantly, selling the risk of non-payment) resulted in banks lowering these lending standards. i think we all recall the consequences.
debt, even when it is provided by a prudent banking sector, is a significant cost in a capitalist society. a healthy business could easily have interest making up 10% of their expenses, often more. in my country, young people first entering the housing market often spend 25%-33% of their income to cover the interest expense. even people that don't hold any debt directly, consider that all the prices they pay for goods and services has to cover the cumulative cost of the interest of the logistical chain from when the raw resource was first extracted to the final finished good that they are purchasing. this is a significant impost for all purchases, reducing all economic activity due to the requirement to pay the holders of the debt this 'rent' on their accumulated economic resources.
investments (equity) are said to have a higher required return on capital than debt, due to there being higher risk as the returns are not contractual obligations. so debt, or equity investments, are effectively a tax on all economic activity that is required to be paid to the economic elite rather than the government, stifling all activity, stifling growth, stifling innovation, all because these elite were privileged to be born in the right place, right family, or be skilled at making a profit.
and once again, money isn't real. it is a symbol of the underlying economic resources or power. debt and equity is therefore, in the current capitalist mythology that we accept without question, a symbolic representation that a significant portion of all economic activity is quarantined for the benefit of the economic elite. that all activity currently taking place is at their discretion as they can withhold all forms of funding, and every transaction serves to strengthen the power these elite hold as they extract their interest, dividends and capital gains.
a logical question is - if there is no debt funding, no investment funding, how can businesses start and continue to operate? my answer to this is, once again, money isn't real. you don't need money, the physical assets continue to exist in the absence of money. money is just how we justify they flow of economic activity from raw materials to finished goods and services.
in the current system, a company sees an opportunity. obtains funding, buys materials, converts it to a value-added good, sells it at a profit. it then uses this profit to pay other expenses including the cost to service the funding.
the key events that happen - there is a need or want, they receive materials, they convert the materials, the finished product is transferred to the customer. money is not required for these key steps, it is used just a part of the currently accepted mythology. same with profit - it isn't required, the underlying assets don't spontaneously combust if there is no profit.
society can choose an alternate system to convert raw materials into goods and services. money and profit aren't required, and they both result in the continued and ever increasing power of the economic elite. instead of benefiting those few elite, it should benefit all of human-kind. it therefore should be allocated according to need first, rather than callous profit. the challenge as i see it is any system needs to be efficient to maximise the benefit to human-kind.
with no hoarding and no debt, there would be large implications for the banking sector. if you go back to the traditional banking model, people keep their savings in the bank for security, and maybe a little interest. the bank then aggregates this pool of savings and finds a suitable customer to loan it to. back when banks were responsible and prudent, they would make a margin of profit but would very carefully assess who they lent money to as even a small bad debt would wipe out the profit on many other healthy loans. but the obsession for profit combined with the concept of selling those loans (or more importantly, selling the risk of non-payment) resulted in banks lowering these lending standards. i think we all recall the consequences.
debt, even when it is provided by a prudent banking sector, is a significant cost in a capitalist society. a healthy business could easily have interest making up 10% of their expenses, often more. in my country, young people first entering the housing market often spend 25%-33% of their income to cover the interest expense. even people that don't hold any debt directly, consider that all the prices they pay for goods and services has to cover the cumulative cost of the interest of the logistical chain from when the raw resource was first extracted to the final finished good that they are purchasing. this is a significant impost for all purchases, reducing all economic activity due to the requirement to pay the holders of the debt this 'rent' on their accumulated economic resources.
investments (equity) are said to have a higher required return on capital than debt, due to there being higher risk as the returns are not contractual obligations. so debt, or equity investments, are effectively a tax on all economic activity that is required to be paid to the economic elite rather than the government, stifling all activity, stifling growth, stifling innovation, all because these elite were privileged to be born in the right place, right family, or be skilled at making a profit.
and once again, money isn't real. it is a symbol of the underlying economic resources or power. debt and equity is therefore, in the current capitalist mythology that we accept without question, a symbolic representation that a significant portion of all economic activity is quarantined for the benefit of the economic elite. that all activity currently taking place is at their discretion as they can withhold all forms of funding, and every transaction serves to strengthen the power these elite hold as they extract their interest, dividends and capital gains.
a logical question is - if there is no debt funding, no investment funding, how can businesses start and continue to operate? my answer to this is, once again, money isn't real. you don't need money, the physical assets continue to exist in the absence of money. money is just how we justify they flow of economic activity from raw materials to finished goods and services.
in the current system, a company sees an opportunity. obtains funding, buys materials, converts it to a value-added good, sells it at a profit. it then uses this profit to pay other expenses including the cost to service the funding.
the key events that happen - there is a need or want, they receive materials, they convert the materials, the finished product is transferred to the customer. money is not required for these key steps, it is used just a part of the currently accepted mythology. same with profit - it isn't required, the underlying assets don't spontaneously combust if there is no profit.
society can choose an alternate system to convert raw materials into goods and services. money and profit aren't required, and they both result in the continued and ever increasing power of the economic elite. instead of benefiting those few elite, it should benefit all of human-kind. it therefore should be allocated according to need first, rather than callous profit. the challenge as i see it is any system needs to be efficient to maximise the benefit to human-kind.
Monday, 26 November 2012
shelter
to my mind, of the basic needs i listed as being guaranteed to all citizens, shelter poses the largest conceptual problem due to the variables implicit in the provision of the need. in a capitalist system, we have rentals, mortgaged, owned, big, small, apartments, big gardens, good suburbs, bad suburbs, quality of construction, and more. what standard, and how, would the government/system (or an agent of the government) provide this basic need to the citizen?
the logic i have used in the provision of food and other needs is the minimum amount required to maintain good health is provided for free. i would suggest this be based on the number of calories, and i would also restrict it to common foods (ie citizens couldn't use their minimum guaranteed calories to eat caviar, for example). anything above the minimum calories, and other luxuries like coffee, alcohol, caviar, cake, would be paid for by spending the hours they earn working at their qualifying job (they need to work minimum hours to qualify for basic needs covered).
consistent with the food, i am thinking a minimum area per person be included in the guaranteed minimum. any additional area needs to be paid for with hours. the quality would need to be fit for the purpose, adequate, but doesn't need to be top quality with all the mod cons. in addition, i would suggest that the minimum provided be based on the price of the worst suburb in the vicinity. therefore those that don't want to live in the worst suburb, want more area, want higher quality, want a garden etc, would be free to select shelter more in line with the preferences, price set by the free market forces. they would then be rebated back the cost of the minimum area in the worst suburb in close proximity.
this seems logically rigorous, in that the basic needs are covered, but the citizens have the freedom to choose in line with their preferences but must pay to do so. but who would own the property?
in previous posts, i have ranted about how hoarding money is effectively stealing food from the mouth of a starving baby (nb, i am currently stealing food from starving babies). the only moral justification available is that as currently our future needs are not guaranteed, we need to be able save (hoard) resources to provide for those future needs for ourselves and our family.
in many parts of the capitalist world, the family home is the biggest investment they have. but effectively, they have this investment due to a combination of being born in a capitalist affluent society, perhaps having affluent parents, perhaps working in a well-paid trade or job, maybe due to the skilful trading of resources / investments on the open market. often being prudent and responsible as well. however, to be logically consistent, hoarding is hoarding. the logical consequences of hoarding are that those that prove good at hoarding will obtain unfair control of economic resources, eventually culminating in the same inequity we currently see in capitalist society. so no private ownership of real estate.
using the terms currently in use, citizens would therefore rent property, on the free market, selecting the property from those available that best matches their preferences and how much of their 'hours' they wish to spend on shelter. no one actually gets 'paid' the rent, nobody is receiving rental income, in the same way nobody 'loses' hours when citizens are paid for working. the 'hours' are printed (in bernanke speak) when citizens work, and disappear when they are spent. same as money in the current system - hours are not real, they have no intrinsic value.
as with rented properties now, maintenance on the existing structure would be provided by the 'owner' ie the cost would be rebated back to the citizen. any modifications and subsequent maintenance would be the responsibility of the citizen, along with the responsibility to repair any damage they cause.
the next logical topic i need to explore - if housing can't be owned as it is hoarding, logically you can't have investments for the same reason. to extend this logic further, if there are no accumulated (hoarded) savings, there are no accumulated savings to be lent out, and that means no debt.
final point i want to make - no hoarding, no investments, no debt, doesn't actually change anything. the same physical assets would still exist in the world. investments and debt are just a part of the capitalist mythology that we all believe is a natural law, but it's not. we can change the mythology if we choose to do so. this mythology is just the system by which we currently allocate resources, and i think the system is inequitable and therefore should change.
so next posting - debt.
the logic i have used in the provision of food and other needs is the minimum amount required to maintain good health is provided for free. i would suggest this be based on the number of calories, and i would also restrict it to common foods (ie citizens couldn't use their minimum guaranteed calories to eat caviar, for example). anything above the minimum calories, and other luxuries like coffee, alcohol, caviar, cake, would be paid for by spending the hours they earn working at their qualifying job (they need to work minimum hours to qualify for basic needs covered).
consistent with the food, i am thinking a minimum area per person be included in the guaranteed minimum. any additional area needs to be paid for with hours. the quality would need to be fit for the purpose, adequate, but doesn't need to be top quality with all the mod cons. in addition, i would suggest that the minimum provided be based on the price of the worst suburb in the vicinity. therefore those that don't want to live in the worst suburb, want more area, want higher quality, want a garden etc, would be free to select shelter more in line with the preferences, price set by the free market forces. they would then be rebated back the cost of the minimum area in the worst suburb in close proximity.
this seems logically rigorous, in that the basic needs are covered, but the citizens have the freedom to choose in line with their preferences but must pay to do so. but who would own the property?
in previous posts, i have ranted about how hoarding money is effectively stealing food from the mouth of a starving baby (nb, i am currently stealing food from starving babies). the only moral justification available is that as currently our future needs are not guaranteed, we need to be able save (hoard) resources to provide for those future needs for ourselves and our family.
in many parts of the capitalist world, the family home is the biggest investment they have. but effectively, they have this investment due to a combination of being born in a capitalist affluent society, perhaps having affluent parents, perhaps working in a well-paid trade or job, maybe due to the skilful trading of resources / investments on the open market. often being prudent and responsible as well. however, to be logically consistent, hoarding is hoarding. the logical consequences of hoarding are that those that prove good at hoarding will obtain unfair control of economic resources, eventually culminating in the same inequity we currently see in capitalist society. so no private ownership of real estate.
using the terms currently in use, citizens would therefore rent property, on the free market, selecting the property from those available that best matches their preferences and how much of their 'hours' they wish to spend on shelter. no one actually gets 'paid' the rent, nobody is receiving rental income, in the same way nobody 'loses' hours when citizens are paid for working. the 'hours' are printed (in bernanke speak) when citizens work, and disappear when they are spent. same as money in the current system - hours are not real, they have no intrinsic value.
as with rented properties now, maintenance on the existing structure would be provided by the 'owner' ie the cost would be rebated back to the citizen. any modifications and subsequent maintenance would be the responsibility of the citizen, along with the responsibility to repair any damage they cause.
the next logical topic i need to explore - if housing can't be owned as it is hoarding, logically you can't have investments for the same reason. to extend this logic further, if there are no accumulated (hoarded) savings, there are no accumulated savings to be lent out, and that means no debt.
final point i want to make - no hoarding, no investments, no debt, doesn't actually change anything. the same physical assets would still exist in the world. investments and debt are just a part of the capitalist mythology that we all believe is a natural law, but it's not. we can change the mythology if we choose to do so. this mythology is just the system by which we currently allocate resources, and i think the system is inequitable and therefore should change.
so next posting - debt.
Sunday, 25 November 2012
basic needs
the hypothetical contract with the citizens in this economic system would be that all basic needs are provided for, plus a basic level of luxuries, in return for a minimum number of hours worked. i envisage that certain groups of people would be exempt (or partially exempt) - perhaps full-time students up to the age of 21, people with disabilities, pensioners would slowly be scaled down, parents with dependant children (need to start working at least part-time when kids are at school). need to be pretty stringent with these categories to make sure nobody gets a free ride. unemployment wouldn't exist as businesses are less focused on profit, citizens need a qualifying job to obtain their basic needs, if they can't find anything they would be obligated to take training / education to assist in getting a qualifying job, or otherwise will be forced into an unpleasant / unpopular job. keep in mind, it would be far easier to start a business in the new system, so there would be an abundance of options.
the citizen contract, or bill of rights, would need to be clearly defined in terms of what needs are covered. i envisage luxuries (even basic luxuries that they qualify for by working the minimum quota of hours) would be set locally via local politicians, effectively based on how much is being produced, with the citizens able to elect the politician who best matches their demand for luxuries offset by what minimum quota of hours they wish to work. this would allow for citizens to relocate to regions with preferable luxury / work hour levels if they prefer.
the basic needs that would be guaranteed would need to be adequate to negate the normal urge to hoard resources to provide for future uncertainty. if citizens don't trust that all needs will be covered, and don't have the ability to save for the future, probably a revolution would be in the air. therefore, what basic needs should be enshrined in the bill of rights?
in my opinion, the following should be the minimum:
- food, i would suggest adequate calories to maintain good health;
- clean water for drinking, probably a minimum per person per day as with food;
- shelter, again a minimum area per person in 'good' condition;
- electricity, once again, minimum per person per day, any additional to be charged;
- medical and dental, fully covered for essential services, but cosmetic, any 'optional' procedures not covered;
- education, probably 12 years up to high school certificate;
- police and national defence;
that seems adequate to me in terms of specified minimum standards for all qualifying citizens. higher standards of all the above could be agreed to on a regional basis, based on the politicians elected by the citizens, but clearly any increased goods / services need to actually be produced, which would require more minimum hours worked by all citizens.
and just to differentiate this from communism - there is private property, there are elections. there is no money, hours serve as a defacto currency that is more resistant to manipulation and can't be hoarded due to an expiry date, there are no taxes (there are defacto taxes in that goods and services are provided by an 'agent' of the government), goods and services are provided by private companies / businesses, anything covered under the above minimums is rebated back to the citizen. prices (set in hours) is determined by free markets, anyone can effectively start a business by demonstrating demand for the product / service. the citizens are free to choose what goods and services, thereby still retaining the signalling mechanism of free markets. auditors will provide the system with the necessary discipline and enforcement to ensure no rorting and also to apply efficiency benchmarks and cull businesses that miss the benchmark.
areas that i still need to explore / explain - housing, debt, research, infrastructure.
the citizen contract, or bill of rights, would need to be clearly defined in terms of what needs are covered. i envisage luxuries (even basic luxuries that they qualify for by working the minimum quota of hours) would be set locally via local politicians, effectively based on how much is being produced, with the citizens able to elect the politician who best matches their demand for luxuries offset by what minimum quota of hours they wish to work. this would allow for citizens to relocate to regions with preferable luxury / work hour levels if they prefer.
the basic needs that would be guaranteed would need to be adequate to negate the normal urge to hoard resources to provide for future uncertainty. if citizens don't trust that all needs will be covered, and don't have the ability to save for the future, probably a revolution would be in the air. therefore, what basic needs should be enshrined in the bill of rights?
in my opinion, the following should be the minimum:
- food, i would suggest adequate calories to maintain good health;
- clean water for drinking, probably a minimum per person per day as with food;
- shelter, again a minimum area per person in 'good' condition;
- electricity, once again, minimum per person per day, any additional to be charged;
- medical and dental, fully covered for essential services, but cosmetic, any 'optional' procedures not covered;
- education, probably 12 years up to high school certificate;
- police and national defence;
that seems adequate to me in terms of specified minimum standards for all qualifying citizens. higher standards of all the above could be agreed to on a regional basis, based on the politicians elected by the citizens, but clearly any increased goods / services need to actually be produced, which would require more minimum hours worked by all citizens.
and just to differentiate this from communism - there is private property, there are elections. there is no money, hours serve as a defacto currency that is more resistant to manipulation and can't be hoarded due to an expiry date, there are no taxes (there are defacto taxes in that goods and services are provided by an 'agent' of the government), goods and services are provided by private companies / businesses, anything covered under the above minimums is rebated back to the citizen. prices (set in hours) is determined by free markets, anyone can effectively start a business by demonstrating demand for the product / service. the citizens are free to choose what goods and services, thereby still retaining the signalling mechanism of free markets. auditors will provide the system with the necessary discipline and enforcement to ensure no rorting and also to apply efficiency benchmarks and cull businesses that miss the benchmark.
areas that i still need to explore / explain - housing, debt, research, infrastructure.
Saturday, 24 November 2012
profit
instinctively, i start to scoff at the concept of a business not being run for the purpose of making a profit. of course it needs a profit, that is why it exists, that defines whether it is adding value or destroying value.
but that train of thought is just a product of the capitalist society in which i was brought up, effectively that we have all been indoctrinated in from an early age. in my case, it has been reinforced by studying finance, banking, and accounting. does it have to be that way?
looking at the physical capital - the assets of the company - even if the company starts making losses, even goes bankrupt, those assets are still there. physically nothing has changed. all that has changed is in the minds of humans - the rules of the human game commerce dictate these assets must now be sold at fire-sale prices so that creditors can get back a portion of what they are owed.
underlying those assets in a capitalist society, is how those assets are funded. a mix of debt and equity, debt increases the risk due to the contractual commitments associated with the debt (ie it must be paid back within a fixed timeframe, often with additional expenses in the form of interest / charges). making a profit results in an increase in assets / decrease in liabilities, with a corresponding increase in equity. in a simple business, as customers pay, the difference between the price of the product and the cost to produce accumulates in cash, resulting in ever increasing cash and equity.
in making a loss, the company pays out more cash than it receives from customers (keeping it simple, assuming that cash is equal to the expense), resulting in lower cash, lower equity, until such time as there is no cash, the company can't pay its debts / purchase more goods to sell, and so is wound-up.
as mentioned before - cash isn't real, it has no intrinsic value. only if two parties to a transaction agree that it does - so the value is once again just in the human mind. so accumulation of cash has no inherent value, although in a capitalist society the value provided by cash is future control of resources (because other parties agree that the cash has the value to purchase real resources).
debt is the same - it doesn't exist except in the human mind. entities that provide debt have successfully accumulated capital allowing them to lend it out and charge interest, but they aren't providing anything real, they are providing an idea, a concept.
looking at the bigger picture, society converts raw materials into useful products or services. the associated conceptual constructs by which we do this - you could even call it the capitalist mythology - is actually irrelevant. just human-made rules for a human-game that we play. companies, laws, money, debt, contracts, ownership and profit - all just the currently accepted mythology. but if none of it existed, there would still be raw materials, humans could still convert those raw materials into useful goods and services.
profit does communicate useful information, that value (as measured in the inflated currency of choice) is being added, and that only entities that add value should be able to stay in business. that is useful information, but i have two qualifications. first, profit should not be the goal, it should just be a message (of course, in a capitalist system, where profit means wealth can be greedily accumulated, profit is the logical goal).
second, something can be profitable today, but not profitable tomorrow. if the price of wheat collapses, exactly the same human activity as was being performed yesterday, but suddenly it's not profitable. of course the collapse in the price is the market saying too much is being produced / suddenly less is needed, assuming the market is operating efficiently. but it could just mean - real demand for wheat has remained constant, same number of mouths to feed, most days a few more even. perhaps demand for wheat by entities with the capital / capacity to pay money has suddenly dropped.
capital / money - a human concept, existing only in human minds, and yet dictating who can get wheat, how much wheat is produced.
so profit is useful - but it shouldn't dictate life and death...
but that train of thought is just a product of the capitalist society in which i was brought up, effectively that we have all been indoctrinated in from an early age. in my case, it has been reinforced by studying finance, banking, and accounting. does it have to be that way?
looking at the physical capital - the assets of the company - even if the company starts making losses, even goes bankrupt, those assets are still there. physically nothing has changed. all that has changed is in the minds of humans - the rules of the human game commerce dictate these assets must now be sold at fire-sale prices so that creditors can get back a portion of what they are owed.
underlying those assets in a capitalist society, is how those assets are funded. a mix of debt and equity, debt increases the risk due to the contractual commitments associated with the debt (ie it must be paid back within a fixed timeframe, often with additional expenses in the form of interest / charges). making a profit results in an increase in assets / decrease in liabilities, with a corresponding increase in equity. in a simple business, as customers pay, the difference between the price of the product and the cost to produce accumulates in cash, resulting in ever increasing cash and equity.
in making a loss, the company pays out more cash than it receives from customers (keeping it simple, assuming that cash is equal to the expense), resulting in lower cash, lower equity, until such time as there is no cash, the company can't pay its debts / purchase more goods to sell, and so is wound-up.
as mentioned before - cash isn't real, it has no intrinsic value. only if two parties to a transaction agree that it does - so the value is once again just in the human mind. so accumulation of cash has no inherent value, although in a capitalist society the value provided by cash is future control of resources (because other parties agree that the cash has the value to purchase real resources).
debt is the same - it doesn't exist except in the human mind. entities that provide debt have successfully accumulated capital allowing them to lend it out and charge interest, but they aren't providing anything real, they are providing an idea, a concept.
looking at the bigger picture, society converts raw materials into useful products or services. the associated conceptual constructs by which we do this - you could even call it the capitalist mythology - is actually irrelevant. just human-made rules for a human-game that we play. companies, laws, money, debt, contracts, ownership and profit - all just the currently accepted mythology. but if none of it existed, there would still be raw materials, humans could still convert those raw materials into useful goods and services.
profit does communicate useful information, that value (as measured in the inflated currency of choice) is being added, and that only entities that add value should be able to stay in business. that is useful information, but i have two qualifications. first, profit should not be the goal, it should just be a message (of course, in a capitalist system, where profit means wealth can be greedily accumulated, profit is the logical goal).
second, something can be profitable today, but not profitable tomorrow. if the price of wheat collapses, exactly the same human activity as was being performed yesterday, but suddenly it's not profitable. of course the collapse in the price is the market saying too much is being produced / suddenly less is needed, assuming the market is operating efficiently. but it could just mean - real demand for wheat has remained constant, same number of mouths to feed, most days a few more even. perhaps demand for wheat by entities with the capital / capacity to pay money has suddenly dropped.
capital / money - a human concept, existing only in human minds, and yet dictating who can get wheat, how much wheat is produced.
so profit is useful - but it shouldn't dictate life and death...
suggestions on measuring success
so i have complained about the current measurement practices, and in some cases suggested the measures are a cynical ploy to condition our behaviour toward being a good capitalist-consumer. but without any suggestions to improve, it is just a whinge. so in an attempt to be constructive....
as per the previous post, you get what you incentivise. so when designing your measuring tools, you need to look carefully at what results you hope to achieve, ensure that any incentives complement the target results, and then design your measurement tools to accurately track progress toward the desired results.
given my main criticisms of capitalism is the consequences on the health and wellbeing of humans everywhere, it would make sense that my suggested desired outcomes, and therefore incentives and corresponding measurements, need to be centred around human health and wellbeing.
desired outcomes, in no particular order:
- longer lifespan;
- healthier;
- safer;
- happier;
- more productive;
- better educated;
clearly, some of these are pretty intangible and so designing effective incentives and measurement tools... lets use the word challenging.
longer lifespan - pretty universal to want this, but providing for all the needs of citizens would improve the life, and thereby incentivise staying alive longer. as for measuring, take the average lifespan. this should really be the primary, defining statistic by which countries are judged, and also by which the performance of politicians is judged.
healthier - again pretty universal, no need to incentivise i would suggest. more difficult to measure this. could do trips to the doctor/hospital per citizen. could take the raw reported diseases (occurrences of, for example, heart attacks per period). could use readings of blood pressure, cholesterol, BMI etc so long as the sample size was statistically significant enough. not directly measuring increased health, but average time per day spent exercising would presumably have a positive correlation.
safer - no incentivisation required, although penalising offenders is in effect incentivising this. i would suggest raw reported offences (eg number of murders during the period).
happier - probably the most difficult due to the subjective nature of the outcome. while happiness would be different for everybody, and have different causes, certain underlying factors would be correlated. having all your basic needs met. the perception that your quality of life is improving (perhaps increased luxuries, more convenience, reduced working hours, more leisure, maybe even increased knowledge and education). the perception that society is fair and equitable. the perception that the future will be good. i can't think of a good measure to ensure this is actually improving over time - perhaps the best that could be done is statistically significant surveys of happiness.
more productive - and just to be clear here, not the inflated monetary price of the total goods and services produced. more production means more goods and services to consume, meaning a higher standard of living. ideally comprehensive data on every good and service produced would be great, however the time and resources taken to collect such comprehensive income probably exceed the benefit. and even with this comprehensive data, how do you aggregate it if you don't use an artificial currency? an imperfect solution would be to use hours worked.
as mentioned in the "day in the life" post, citizens would need to work a minimum quota of hours to be eligible to receive their basic needs plus luxuries up to the basic level. citizens can then work extra hours to earn extra hours to buy additional luxuries, to trade, or to gift to others depending on their preference. in effect, hours becomes a defacto currency, but a currency that can't be manipulated by the government, traders, doesn't have an exchange rate. the auditors would be tasked with keeping the system honest, ensuring hours recorded were backed up with appropriate records, that qualifying businesses were producing products and services that were actually demanded, ensuring efficiency benchmarks were being complied with, or else businesses would lose their certification (ie citizens couldn't work there and have their work hours contribute to the minimum quota).
i envisage total hours worked would be captured on a 'citizen card', adding hours worked, deducting hours 'spent', much the same as credit cards currently work but using the hours 'currency'. having this data on transactional cards would result in all the data being captured, so it would be available to be used. the underlying prices of all the products and services produced would still reflect the market supply and demand, thus utilising the key benefit of capitalism - the communication of information as to where additional resources could best be allocated.
final desired outcome - better education. simple enough to track what percentage of the population is finishing high school / trade apprenticeship / degree / post grad / masters. you could also track 'hours' spent purchasing an education (even when items are free under basic human needs eg minimum daily calories, i envisage they would be charged to the citizen card by the business providing the good / service, and then rebated back. this would provide lots of great data for tracking purposes). but an underlying question with education is - what are you being taught? i imagine nazi germany was quite happy with the investment and the results it was getting from the education system they implemented. as such i would suggest the auditors need to be active in certifying courses, benchmarking them against (competitors / other countries), and removing certification from the bottom 5-10%, as with the less-efficient businesses.
of course, many of these measures are present in capitalist societies today. however to a large extent, they are treated as light news, almost unworthy of serious attention, whereas governments live and die by the economic indicators GDP, unemployment and inflation. i think the above measures tell a much more complete story of how society is tracking - depending on what your desired outcomes are.
if the desired outcome is merely consumer-capitalist drones that exist to maximise profits of key companies, GDP, unemployment and inflation are good. GDP - more profit. unemployment / inflation - too high a reading, and the drones might realise they are being taken for a ride.
as per the previous post, you get what you incentivise. so when designing your measuring tools, you need to look carefully at what results you hope to achieve, ensure that any incentives complement the target results, and then design your measurement tools to accurately track progress toward the desired results.
given my main criticisms of capitalism is the consequences on the health and wellbeing of humans everywhere, it would make sense that my suggested desired outcomes, and therefore incentives and corresponding measurements, need to be centred around human health and wellbeing.
desired outcomes, in no particular order:
- longer lifespan;
- healthier;
- safer;
- happier;
- more productive;
- better educated;
clearly, some of these are pretty intangible and so designing effective incentives and measurement tools... lets use the word challenging.
longer lifespan - pretty universal to want this, but providing for all the needs of citizens would improve the life, and thereby incentivise staying alive longer. as for measuring, take the average lifespan. this should really be the primary, defining statistic by which countries are judged, and also by which the performance of politicians is judged.
healthier - again pretty universal, no need to incentivise i would suggest. more difficult to measure this. could do trips to the doctor/hospital per citizen. could take the raw reported diseases (occurrences of, for example, heart attacks per period). could use readings of blood pressure, cholesterol, BMI etc so long as the sample size was statistically significant enough. not directly measuring increased health, but average time per day spent exercising would presumably have a positive correlation.
safer - no incentivisation required, although penalising offenders is in effect incentivising this. i would suggest raw reported offences (eg number of murders during the period).
happier - probably the most difficult due to the subjective nature of the outcome. while happiness would be different for everybody, and have different causes, certain underlying factors would be correlated. having all your basic needs met. the perception that your quality of life is improving (perhaps increased luxuries, more convenience, reduced working hours, more leisure, maybe even increased knowledge and education). the perception that society is fair and equitable. the perception that the future will be good. i can't think of a good measure to ensure this is actually improving over time - perhaps the best that could be done is statistically significant surveys of happiness.
more productive - and just to be clear here, not the inflated monetary price of the total goods and services produced. more production means more goods and services to consume, meaning a higher standard of living. ideally comprehensive data on every good and service produced would be great, however the time and resources taken to collect such comprehensive income probably exceed the benefit. and even with this comprehensive data, how do you aggregate it if you don't use an artificial currency? an imperfect solution would be to use hours worked.
as mentioned in the "day in the life" post, citizens would need to work a minimum quota of hours to be eligible to receive their basic needs plus luxuries up to the basic level. citizens can then work extra hours to earn extra hours to buy additional luxuries, to trade, or to gift to others depending on their preference. in effect, hours becomes a defacto currency, but a currency that can't be manipulated by the government, traders, doesn't have an exchange rate. the auditors would be tasked with keeping the system honest, ensuring hours recorded were backed up with appropriate records, that qualifying businesses were producing products and services that were actually demanded, ensuring efficiency benchmarks were being complied with, or else businesses would lose their certification (ie citizens couldn't work there and have their work hours contribute to the minimum quota).
i envisage total hours worked would be captured on a 'citizen card', adding hours worked, deducting hours 'spent', much the same as credit cards currently work but using the hours 'currency'. having this data on transactional cards would result in all the data being captured, so it would be available to be used. the underlying prices of all the products and services produced would still reflect the market supply and demand, thus utilising the key benefit of capitalism - the communication of information as to where additional resources could best be allocated.
final desired outcome - better education. simple enough to track what percentage of the population is finishing high school / trade apprenticeship / degree / post grad / masters. you could also track 'hours' spent purchasing an education (even when items are free under basic human needs eg minimum daily calories, i envisage they would be charged to the citizen card by the business providing the good / service, and then rebated back. this would provide lots of great data for tracking purposes). but an underlying question with education is - what are you being taught? i imagine nazi germany was quite happy with the investment and the results it was getting from the education system they implemented. as such i would suggest the auditors need to be active in certifying courses, benchmarking them against (competitors / other countries), and removing certification from the bottom 5-10%, as with the less-efficient businesses.
of course, many of these measures are present in capitalist societies today. however to a large extent, they are treated as light news, almost unworthy of serious attention, whereas governments live and die by the economic indicators GDP, unemployment and inflation. i think the above measures tell a much more complete story of how society is tracking - depending on what your desired outcomes are.
if the desired outcome is merely consumer-capitalist drones that exist to maximise profits of key companies, GDP, unemployment and inflation are good. GDP - more profit. unemployment / inflation - too high a reading, and the drones might realise they are being taken for a ride.
Wednesday, 21 November 2012
measuring capitalist success
i once had a manager whose favourite saying was - "if you don't measure it, you can't improve it". the man was an absolute git in almost every sense of the word, but he was right on the money in this instance.
countries in the free market paradigm measure their success obsessively. GDP, unemployment, balance of payments, inflation, plus a whole bunch of others of lesser importance, all feeding into the all important interest rate decision (which, being the price of money, can't be trusted to free and open markets, this is where a government babu apparently knows better than the market).
so GDP, total goods and services produced, that must be useful. well to a certain extent, it is. again, my usual caveat of having almost no knowledge or research, but this number is distorted by inflation (thus incentivising inflation - and you get what you incentivise), and also includes goods and services that may actually be detrimental to society, or at least be a symptom of a deteriorating society. more security goods and services would presumably reflect an increased perception of danger in society, yet would serve to increase the GDP. increased production of economic textbooks, directly resulting in increased suffering in students and indirectly to the suffering of society at large, increases GDP.
obviously some positives as well - increased production shows increased economic activity, or at least more money floating around the country, and/or increased efficiency. efficiency or productivity gains - can't argue with that. but increased money floating around doesn't necessarily correlate with increased economic activity, it may just mean prices have gone up as measured in the random measuring unit of money, and money isn't real.
this leads into inflation nicely - measuring the increase in general prices, derived from a representative basket of goods. so increase in inflation is an erosion of your purchasing power, and as it is specifically targeted (1% in the US i believe, 2% in UK, 2-3% in australia as examples), clearly the government wishes your purchasing power to erode. unless you consent to the erosion of your purchasing power, this should therefore qualify as theft by the government. or taxation, as it is commonly called.
why would government want prices to increase, rather than decrease (for example, via productivity and efficiency gains resulting in lower prices, allowing everyone to buy more)? well reduced purchasing power tomorrow incentivises the spending of that dollar today, and again - you get what you incentivise. they want people out there spending (feeding into the GDP, in the short term at least). if they targeted too high an inflation rate, we the marks would catch on that we are being conned and start rioting, and so they prefer the slow, patient theft of your purchasing power.
unemployment is clearly a bad thing - a precious resource of society, just lying around when they could be contributing to common goals and well-being. ignoring the ridiculous hoops governments everywhere jump through to obfuscate how bad unemployment really is - why can't these people get jobs? because the economic system decrees that businesses can only operate to make a profit. in reality, if there are available inputs, they could be used to produce products or services that are in demand, if we weren't obsessed with the need for profit. and society needs to be able to move and change as the world develops, so education and training should be available to anyone needing to obtain skills and knowledge that are in demand.
balance of payments - same as capitalist society in general, the profit will eventually accumulate to those people / countries that are best at playing the capitalist game. however history shows that accumulation of hoarded currencies is usually followed by (sometimes rapid) decline in the power of that country. spain, holland, england, US, japan, now china. they all went through periods where they were economically dominant resulting in massive accumulation of foreign reserves, and all (arguably, and again precious little research here) went through a subsequent humiliating loss of power, prestige, and those reserves.
i think we are measuring the wrong things - we are measuring largely monetary phenomena when money is actually illusory, and thereby not measuring what actually matters, which should surely be the health and wellbeing of society at large?
countries in the free market paradigm measure their success obsessively. GDP, unemployment, balance of payments, inflation, plus a whole bunch of others of lesser importance, all feeding into the all important interest rate decision (which, being the price of money, can't be trusted to free and open markets, this is where a government babu apparently knows better than the market).
so GDP, total goods and services produced, that must be useful. well to a certain extent, it is. again, my usual caveat of having almost no knowledge or research, but this number is distorted by inflation (thus incentivising inflation - and you get what you incentivise), and also includes goods and services that may actually be detrimental to society, or at least be a symptom of a deteriorating society. more security goods and services would presumably reflect an increased perception of danger in society, yet would serve to increase the GDP. increased production of economic textbooks, directly resulting in increased suffering in students and indirectly to the suffering of society at large, increases GDP.
obviously some positives as well - increased production shows increased economic activity, or at least more money floating around the country, and/or increased efficiency. efficiency or productivity gains - can't argue with that. but increased money floating around doesn't necessarily correlate with increased economic activity, it may just mean prices have gone up as measured in the random measuring unit of money, and money isn't real.
this leads into inflation nicely - measuring the increase in general prices, derived from a representative basket of goods. so increase in inflation is an erosion of your purchasing power, and as it is specifically targeted (1% in the US i believe, 2% in UK, 2-3% in australia as examples), clearly the government wishes your purchasing power to erode. unless you consent to the erosion of your purchasing power, this should therefore qualify as theft by the government. or taxation, as it is commonly called.
why would government want prices to increase, rather than decrease (for example, via productivity and efficiency gains resulting in lower prices, allowing everyone to buy more)? well reduced purchasing power tomorrow incentivises the spending of that dollar today, and again - you get what you incentivise. they want people out there spending (feeding into the GDP, in the short term at least). if they targeted too high an inflation rate, we the marks would catch on that we are being conned and start rioting, and so they prefer the slow, patient theft of your purchasing power.
unemployment is clearly a bad thing - a precious resource of society, just lying around when they could be contributing to common goals and well-being. ignoring the ridiculous hoops governments everywhere jump through to obfuscate how bad unemployment really is - why can't these people get jobs? because the economic system decrees that businesses can only operate to make a profit. in reality, if there are available inputs, they could be used to produce products or services that are in demand, if we weren't obsessed with the need for profit. and society needs to be able to move and change as the world develops, so education and training should be available to anyone needing to obtain skills and knowledge that are in demand.
balance of payments - same as capitalist society in general, the profit will eventually accumulate to those people / countries that are best at playing the capitalist game. however history shows that accumulation of hoarded currencies is usually followed by (sometimes rapid) decline in the power of that country. spain, holland, england, US, japan, now china. they all went through periods where they were economically dominant resulting in massive accumulation of foreign reserves, and all (arguably, and again precious little research here) went through a subsequent humiliating loss of power, prestige, and those reserves.
i think we are measuring the wrong things - we are measuring largely monetary phenomena when money is actually illusory, and thereby not measuring what actually matters, which should surely be the health and wellbeing of society at large?
Tuesday, 20 November 2012
coming of age
reflecting on the world as it stands today, it seems to me comparable to a big room with 100 children inside. there are 110 toys in the room. if everyone shared, every child could have a toy. but because some of the children were born in the wrong part of the "room", their parents were toy-rich, or they are just naturally skilled at playing the toy-trading game - 20 children control 80 toys. they rent the toys out to 50 other kids for services, these 50 kids are generally satisfying their toy needs, and some toy wants as well. the remaining 30 kids get little or no toy time. they spend their time crying and being lectured by the other kids that they are doing everything wrong. of course they can't have the toys, not unless the other children can make a profit.
tragic enough for children to be without toys, but when the reality is basic human needs like food, water, shelter and medicine, when looked at in this context it seems more than merely unjust, it seems criminal.
surely, same as slavery and serfdom, humanity will eventually realise that being a selfish child / playing capitalist games causing people to die cannot continue. it seems to me just natural logic, like a collective coming of age for humanity, to have the maturity to acknowledge there are enough toys for everyone, we are all human, we all have the right to play with toys.
and as with anything in life, nothing is for free. the right to play with toys comes with a corresponding duty to each other and future generations to ensure there are enough toys to go around, that the playing environment is safe, and that we do what we can to make future playing even more fun that it is today.
tragic enough for children to be without toys, but when the reality is basic human needs like food, water, shelter and medicine, when looked at in this context it seems more than merely unjust, it seems criminal.
surely, same as slavery and serfdom, humanity will eventually realise that being a selfish child / playing capitalist games causing people to die cannot continue. it seems to me just natural logic, like a collective coming of age for humanity, to have the maturity to acknowledge there are enough toys for everyone, we are all human, we all have the right to play with toys.
and as with anything in life, nothing is for free. the right to play with toys comes with a corresponding duty to each other and future generations to ensure there are enough toys to go around, that the playing environment is safe, and that we do what we can to make future playing even more fun that it is today.
Monday, 19 November 2012
a day in the life....
what would a normal day be like under this new economic system i am imagining? i feel i should stress, this is all just a thought bubble - totally untried, not researched, not even discussed with anyone as it is so outside my normal opinions and lifestyle. so it might as well be a SF novel, lets give it some characters and have a walk in the shoes for a while.
lets call him Jimmy. wakes up, alarm clock made by a private company, furniture, bedsheets, clothes, all made by companies and provided for free where there was a want or a need. not necessarily as wide a range available as under capitalism, although there would be some options due to free competition. turns on the lights, showers, shaves, all still provided by private companies for no charge. as jimmy works his quota of hours every week, he qualifies for all his basic needs met, plus luxuries allocated based on extra hours worked at a qualifying company, or for hours traded with others, or just on a first come first served basis.
goes to a local dining hall for breakfast and coffee - why not, there is no money as such, just 'hours'. (preparing breaky is a pain in the ass, i personally am all for not needing a kitchen at all - a little kitchenette for snacks and drinks is adequate for my needs even under capitalism). there is more than enough labour, due to many of the former occupations performed under capitalism not actually benefiting anyone and therefore being discontinued. so there is a waitress, barista, cook, kitchenhand, all working at this qualifying dining hall to fulfil (or partially fulfil, perhaps they have several part-time jobs, if they prefer) their quota of hours. kitchenhand - pretty unsavoury job, the position couldn't be filled until the company scaled the hours up by 10%. therefore, with the quota currently being 30 hours a week (set locally, depending on the needs of the local community, as expressed via local elections. difficult to just vote yourself less hours, if that means a corresponding reduction in the living standards due to less goods and services being produced), the kitchenhand only has to work 27.3 hours to reach minimum quota.
jimmy has his breakfast, charges it to his 'ample citizen' card - basic calories cost nothing, additional calories and the coffee reduce the surplus balance accrued from working the minimum quota (ie minimum quota allows for a certain level of luxuries), working over time, from trading his hours. being time for work, he hops in a vacant street car and directs it to the widget factory. there are private cars, but only for people who are passionate about cars. most people just use the street cars (anyone can use, then leave on the street for the next user) or the mass transit system for going to densely developed areas where street cars can't enter. being basic transport, it is provided by a private company but there is no charge to the citizens of ample.
he clocks on at the widget factory - working hours are as flexible as the companies and the citizens want to be. if citizens don't like the conditions, they can look around for an alternate qualifying job. likewise, if the citizen isn't pulling their weight, subject to certain minimum standards they can be shown the door. the company needs to maintain a certain level of efficiency as well as demonstrated demand for their product / service, else they lose their certification at the regular audits. hours are also negotiated on an ongoing basis, with both parties free to end the relationship if agreement can't be reached. again, reduced hours would need to be able to be justified by reference to a market rate for that role and benchmark efficiency level, or the auditors would step in.
jimmy doesn't mind the work, doesn't love it. it isn't difficult, there isn't high demand / low supply for widget makers, therefore he works the standard quota of 30 hours a week. the remainder of his time, he could train for a different role. he could get an education. he could be working on his own business, trying to get the business plan in place and the resources required all together in an attempt to get it certified by the auditors and thereby leave the widget factory to be boss of his own company. but tonight, it is football. big game, against the arch-rivals.
jimmy loves his football, allocating an hour's work a week to the league, which along with allocations from all the other fans allows the players to play full-time without needing to work at a qualifying company. again, that depends on individual negotiations between the league / teams / players / admin etc, to find an arrangement acceptable to everyone. ultimately, if the football loses its fan-base, they will stop allocating the hours, so everyone involved in the football is very customer focused. the players in particular are humbled by the knowledge they don't need to work due to the generosity of their fellow citizens. there are no millionaire players, they can't hoard an unreasonable amount of 'hours', they can just play the game they enjoy so much, and try maximise the entertainment for the watching citizens.
similarly, jimmy likes a local artist - half an hour a month allocated to her, so that she can produce more art. he has a piece hanging on the wall of his apartment. loves his mother too - a full hour a week to her, although she is nearing retirement age, at which point her hours will be scaled down from 100% at age 60, to 0% when she reaches age 65. in total, he works 32.1 or so hours a week, plus extra when he is 'saving' for a specific item or luxury. surplus balances must be used or they expire.
Jimmy has a business in mind, he would like to get off the ground (mainly as i think it is conceptually critical to see how this would work - thanks Jimmy). recent years have seen good supply of all the essential goods and services, it has been a long time since the auditors had to suspend any luxury markets and prioritise the essentials. so there is a good chance the auditors will certify his luxury business, so long as he has done the ground work well.
he has been training in massage techniques for several years, and feels it is a service where demand exceeds supply (resulting in scaled up hours counting to the quota for existing businesses). his proposal identifies the ongoing resources it would require, he has obtained the initial required infrastructure and stock (using his surplus hours, forgoing other wants due to his keen desire to start this business). he has put the proposed service up on the market board, strong demand has been registered on the site, and he has been privately servicing these customers in his spare time (they transfer some surplus hours to him as payment for the service). in effect, the business is already up and running, the auditor certification would just allow him to make it his 'full-time' job (ie hours worked qualifying for his minimum quota, and therefore no need to be making widgets any longer). his business plan also includes specific systems and records he would need to keep in order to obtain and keep certification from the auditors.
so a full day for jimmy - from the factory straight to the game (they lost, damn those arch-rivals....), followed by dinner at another dining hall with significant other (thai green curry - he used some surplus hours to pay for both dinners, the basic calories for his partner charged allocated to their own account, his partner paid for the beers), and then back to his apartment to continue working on his business plan.
he drifts off to sleep, contemplating how happy his life is (except for the football) and how lucky he is to live
in ampleland (too much? probably so....).
lets call him Jimmy. wakes up, alarm clock made by a private company, furniture, bedsheets, clothes, all made by companies and provided for free where there was a want or a need. not necessarily as wide a range available as under capitalism, although there would be some options due to free competition. turns on the lights, showers, shaves, all still provided by private companies for no charge. as jimmy works his quota of hours every week, he qualifies for all his basic needs met, plus luxuries allocated based on extra hours worked at a qualifying company, or for hours traded with others, or just on a first come first served basis.
goes to a local dining hall for breakfast and coffee - why not, there is no money as such, just 'hours'. (preparing breaky is a pain in the ass, i personally am all for not needing a kitchen at all - a little kitchenette for snacks and drinks is adequate for my needs even under capitalism). there is more than enough labour, due to many of the former occupations performed under capitalism not actually benefiting anyone and therefore being discontinued. so there is a waitress, barista, cook, kitchenhand, all working at this qualifying dining hall to fulfil (or partially fulfil, perhaps they have several part-time jobs, if they prefer) their quota of hours. kitchenhand - pretty unsavoury job, the position couldn't be filled until the company scaled the hours up by 10%. therefore, with the quota currently being 30 hours a week (set locally, depending on the needs of the local community, as expressed via local elections. difficult to just vote yourself less hours, if that means a corresponding reduction in the living standards due to less goods and services being produced), the kitchenhand only has to work 27.3 hours to reach minimum quota.
jimmy has his breakfast, charges it to his 'ample citizen' card - basic calories cost nothing, additional calories and the coffee reduce the surplus balance accrued from working the minimum quota (ie minimum quota allows for a certain level of luxuries), working over time, from trading his hours. being time for work, he hops in a vacant street car and directs it to the widget factory. there are private cars, but only for people who are passionate about cars. most people just use the street cars (anyone can use, then leave on the street for the next user) or the mass transit system for going to densely developed areas where street cars can't enter. being basic transport, it is provided by a private company but there is no charge to the citizens of ample.
he clocks on at the widget factory - working hours are as flexible as the companies and the citizens want to be. if citizens don't like the conditions, they can look around for an alternate qualifying job. likewise, if the citizen isn't pulling their weight, subject to certain minimum standards they can be shown the door. the company needs to maintain a certain level of efficiency as well as demonstrated demand for their product / service, else they lose their certification at the regular audits. hours are also negotiated on an ongoing basis, with both parties free to end the relationship if agreement can't be reached. again, reduced hours would need to be able to be justified by reference to a market rate for that role and benchmark efficiency level, or the auditors would step in.
jimmy doesn't mind the work, doesn't love it. it isn't difficult, there isn't high demand / low supply for widget makers, therefore he works the standard quota of 30 hours a week. the remainder of his time, he could train for a different role. he could get an education. he could be working on his own business, trying to get the business plan in place and the resources required all together in an attempt to get it certified by the auditors and thereby leave the widget factory to be boss of his own company. but tonight, it is football. big game, against the arch-rivals.
jimmy loves his football, allocating an hour's work a week to the league, which along with allocations from all the other fans allows the players to play full-time without needing to work at a qualifying company. again, that depends on individual negotiations between the league / teams / players / admin etc, to find an arrangement acceptable to everyone. ultimately, if the football loses its fan-base, they will stop allocating the hours, so everyone involved in the football is very customer focused. the players in particular are humbled by the knowledge they don't need to work due to the generosity of their fellow citizens. there are no millionaire players, they can't hoard an unreasonable amount of 'hours', they can just play the game they enjoy so much, and try maximise the entertainment for the watching citizens.
similarly, jimmy likes a local artist - half an hour a month allocated to her, so that she can produce more art. he has a piece hanging on the wall of his apartment. loves his mother too - a full hour a week to her, although she is nearing retirement age, at which point her hours will be scaled down from 100% at age 60, to 0% when she reaches age 65. in total, he works 32.1 or so hours a week, plus extra when he is 'saving' for a specific item or luxury. surplus balances must be used or they expire.
Jimmy has a business in mind, he would like to get off the ground (mainly as i think it is conceptually critical to see how this would work - thanks Jimmy). recent years have seen good supply of all the essential goods and services, it has been a long time since the auditors had to suspend any luxury markets and prioritise the essentials. so there is a good chance the auditors will certify his luxury business, so long as he has done the ground work well.
he has been training in massage techniques for several years, and feels it is a service where demand exceeds supply (resulting in scaled up hours counting to the quota for existing businesses). his proposal identifies the ongoing resources it would require, he has obtained the initial required infrastructure and stock (using his surplus hours, forgoing other wants due to his keen desire to start this business). he has put the proposed service up on the market board, strong demand has been registered on the site, and he has been privately servicing these customers in his spare time (they transfer some surplus hours to him as payment for the service). in effect, the business is already up and running, the auditor certification would just allow him to make it his 'full-time' job (ie hours worked qualifying for his minimum quota, and therefore no need to be making widgets any longer). his business plan also includes specific systems and records he would need to keep in order to obtain and keep certification from the auditors.
so a full day for jimmy - from the factory straight to the game (they lost, damn those arch-rivals....), followed by dinner at another dining hall with significant other (thai green curry - he used some surplus hours to pay for both dinners, the basic calories for his partner charged allocated to their own account, his partner paid for the beers), and then back to his apartment to continue working on his business plan.
he drifts off to sleep, contemplating how happy his life is (except for the football) and how lucky he is to live
in ampleland (too much? probably so....).
Sunday, 18 November 2012
the watchers
as previously mentioned, i would suggest corruption was a significant cause in the downfall of communism, and is a problem for all other economic systems (including capitalism) as well. the debilitating, demoralising effects of not only suspecting someone is rorting the system, but often seeing evidence in full view of the public - it would undermine the effectiveness of any system, why would people wish to continue playing if the playing field isn't fair.
to combat this would obviously be challenging. a couple of points i feel are relevant:
- the two-term maximum that applies to the US president should apply to all elected positions;
- positions in government should have both a minimum (ie everyone should have a mandatory couple of years in government roles, whether armed forces, regional administration, or elected office), as well as a maximum (eg 20 years maximum including a maximum 2 terms / 8 years of elected office. i would suggest this maximum ensures people can build up good expertise in the public system, yet cannot become a permanent parasite, they must enter the real world for at least half of their working life. also, 8 years maximum of elected office is in any position - you can't go 8 years local government, then senate, congress, president. once you have had 8 cumulative years in any elected position, you can have a maximum of 12 years of government work, and otherwise must enter the real world);
- hopefully the above minimum and maximum limits ensures a grounding in the real world and combats institutionalising power in an elite few;
the most important change i can think of, however, is to raise the power and prestige of auditors, expanding their power well beyond the current accounting focus. in reality, accountants are mostly superfluous, their main purpose currently is to count beans and report on the cumulative beans at the end of each reporting period. being an accountant myself, i recognise there is minimal benefit to humanity in what i do - the benefit is almost exclusively to the finite shareholders that i serve.
in an 'ample' economic system, where profit is not the driver, where there are no shareholders hoarding their wealth, accountants would largely not be required. but they would all be able to transfer their skills to auditing, and auditing not just financial reporting (which bucket did you put that bean in during the counting process), but every facet of the economic system.
i envisage private companies providing all goods and services, in competition with each other. their goal would not be a profit, but to provide a good and/or service as efficiently as possible, to fulfil first of all basic human needs, followed by wants, followed by aspirational dreams. these private companies would provide the jobs that everyone would need to undertake to qualify to receive various goods and services from the companies. everyone would need to work a standard number of hours per week to qualify, although the specific number of hours could vary depending on industry depending on supply and demand (ie high demand / unpleasant tasks would probably result in a lower number of hours required to meet your personal quota, thus keeping many of the benefits of a market economy in terms of the signalling of information).
in this system, you would need a high number of auditors to ensure all companies in operation were providing a good or service that was needed / wanted, were providing it efficiently in terms of the materials used, were not rorting the system in terms of people not working their full quota of hours. same with government departments, same with politicians, same with auditors themselves. there should be full documentary evidence to ensure everyone is contributing fairly, systems in place to ensure auditors are rotated to ensure relationships cannot be formed and abused between the auditor and auditee.
in a similar vein - journalists should be elevated in both independence and prestige, with freedoms protected so that they can always fearlessly report on any topic, particularly corruption in the corridors of power. as a case in point, wikileaks. the ideological epitome of journalism, and the whistleblowing concept. astounding that they have been made an international pariah for merely reporting the truth. honest people have no fear of the truth, it shall set you free, am sure there are a whole bunch of relevant sayings and clichés i could insert here if i wasn't too lazy to google.
to combat this would obviously be challenging. a couple of points i feel are relevant:
- the two-term maximum that applies to the US president should apply to all elected positions;
- positions in government should have both a minimum (ie everyone should have a mandatory couple of years in government roles, whether armed forces, regional administration, or elected office), as well as a maximum (eg 20 years maximum including a maximum 2 terms / 8 years of elected office. i would suggest this maximum ensures people can build up good expertise in the public system, yet cannot become a permanent parasite, they must enter the real world for at least half of their working life. also, 8 years maximum of elected office is in any position - you can't go 8 years local government, then senate, congress, president. once you have had 8 cumulative years in any elected position, you can have a maximum of 12 years of government work, and otherwise must enter the real world);
- hopefully the above minimum and maximum limits ensures a grounding in the real world and combats institutionalising power in an elite few;
the most important change i can think of, however, is to raise the power and prestige of auditors, expanding their power well beyond the current accounting focus. in reality, accountants are mostly superfluous, their main purpose currently is to count beans and report on the cumulative beans at the end of each reporting period. being an accountant myself, i recognise there is minimal benefit to humanity in what i do - the benefit is almost exclusively to the finite shareholders that i serve.
in an 'ample' economic system, where profit is not the driver, where there are no shareholders hoarding their wealth, accountants would largely not be required. but they would all be able to transfer their skills to auditing, and auditing not just financial reporting (which bucket did you put that bean in during the counting process), but every facet of the economic system.
i envisage private companies providing all goods and services, in competition with each other. their goal would not be a profit, but to provide a good and/or service as efficiently as possible, to fulfil first of all basic human needs, followed by wants, followed by aspirational dreams. these private companies would provide the jobs that everyone would need to undertake to qualify to receive various goods and services from the companies. everyone would need to work a standard number of hours per week to qualify, although the specific number of hours could vary depending on industry depending on supply and demand (ie high demand / unpleasant tasks would probably result in a lower number of hours required to meet your personal quota, thus keeping many of the benefits of a market economy in terms of the signalling of information).
in this system, you would need a high number of auditors to ensure all companies in operation were providing a good or service that was needed / wanted, were providing it efficiently in terms of the materials used, were not rorting the system in terms of people not working their full quota of hours. same with government departments, same with politicians, same with auditors themselves. there should be full documentary evidence to ensure everyone is contributing fairly, systems in place to ensure auditors are rotated to ensure relationships cannot be formed and abused between the auditor and auditee.
in a similar vein - journalists should be elevated in both independence and prestige, with freedoms protected so that they can always fearlessly report on any topic, particularly corruption in the corridors of power. as a case in point, wikileaks. the ideological epitome of journalism, and the whistleblowing concept. astounding that they have been made an international pariah for merely reporting the truth. honest people have no fear of the truth, it shall set you free, am sure there are a whole bunch of relevant sayings and clichés i could insert here if i wasn't too lazy to google.
Thursday, 8 November 2012
hoarding
some of (in my opinion) the salient points of capitalism:
Pros:
Pros:
- signals optimal allocation of scarce resources;
- theoretical 'perfect' competition provides lowest possible prices;
- no omnipotent government required, best with no government interference at all (caveat - see con below);
- proven system that has improved the lives of many people over the ages;
Cons:
- incentivises greed, suggests that the only logical motivation is to maximise profit, often to the detriment of your neighbour;
- this greed compounds over time and generations, resulting in the very profitable (very greedy) having vastly superior control of resources and therefore power;
- the GFC demonstrated the logical consequences of capitalism - greed became an orgy of excess, so blatant that the world all but disowned capitalism. government intervention, bail-outs, regulation, became the elixir that would solve everything;
- the profits obtained tend to be hoarded to maximise future control of resources;
this hoarding bias is instinctive and logical. in a world teeming with risk, hoarded resources provide a buffer against this risk. it provides security, options, and eventually power, and clearly the incentive is to hoard more to obtain more of all three.
to do away with hoarding would therefore require reduced risk, or ideally no risk. to my mind, this means the 'state' provides all services required by the populace, such that they don't need to hoard to provide for an uncertain future. medical, education, dental, water, electricity, food, security, housing, luxuries - if they were all provided by the state, if the populace had confidence that the state could be relied upon to provide these as and when they were required, there would be no need to hoard.
by state, i don't mean government, so perhaps i'll use the word 'system' going forward. to my mind, competition is useful in finding efficiency, government is the opposite. i envisage corporations, competing against each other, offering in some cases the same or similar products, but without the profit motive. as discussed before, money is intrinsically useless. store of wealth (ie hoarding), medium of exchange and a handy way of keeping track of who is winning.
a slightly different point of view on hoarding - all those savings sitting there for wielding future power, is depriving a child of a meal now, depriving someone of medicine, shelter, food, water. in this context, it is morally unjust to be hoarding those hard earned dollars, but for the risk that you will need to pay for provision of these essential services for yourself or your family in the future. but in a different system, a system where all needs a catered for by efficient private organisations, that exist just to fulfil peoples needs rather than make a profit, these savings would not be required.
also, if you don't need money as a store of wealth (as all needs are catered for by the system), if you don't need money as a medium of exchange (as everything is free, except everyone must work to obtain the right to access the free goods and services), do you need money at all?
a slightly different point of view on hoarding - all those savings sitting there for wielding future power, is depriving a child of a meal now, depriving someone of medicine, shelter, food, water. in this context, it is morally unjust to be hoarding those hard earned dollars, but for the risk that you will need to pay for provision of these essential services for yourself or your family in the future. but in a different system, a system where all needs a catered for by efficient private organisations, that exist just to fulfil peoples needs rather than make a profit, these savings would not be required.
also, if you don't need money as a store of wealth (as all needs are catered for by the system), if you don't need money as a medium of exchange (as everything is free, except everyone must work to obtain the right to access the free goods and services), do you need money at all?
Thursday, 1 November 2012
k.i.s.s.
was it bill clinton that made the above famous? or was his famous phrase about stupid and the economy? i forget exactly, but if bill said the above, i do agree. got a lot of respect for the man actually - a whole lot of balanced budgets and paying off debt during his presidency, which makes a whole lot of sense to me. while i think money is a crock, the logical concept of living within your means i consider a natural law.
american politics is all very convoluted - clinton paying off debt, bush II doing various ridiculous things and simultaneously ruining the public finances, obama doing almost nothing and simultaneously further ruining the public finances.... who can you trust from that cast of fools? in my country, the tea party is portrayed as a bunch of extremist cranks, but anyone who espouses the fundamental principle of living within ones means, they have my respect. need more people like that in the world. a whole bunch of their other policies i'm pretty sure i find reprehensible, however fiscal responsibility trumps it all i'm afraid.
so anyways, free markets: really good, right up until they weren't, and how to replace that very useful signalling mechanism showing us where to allocate resources. well obviously, you could create an app for that. conceptually really simple - suppliers on one side, customers on the other, match them off in real time, unlimited 'products', effectively just a market without prices, just first-in-first-served.
i envisage this would need a classification system, whereby essential products or services, those needed to sustain life, get allocated first to those most in need. but again, who decides who is most in need? can't be a government babu, they are demonstrably useless. perhaps you could have a version of internet democracy, whereby those 'customers' in the most need are determined by the number of likes they receive. to further refine this system you could scale the likes, so that those from a trustworthy source (similar to ratings on ebay, combined with audits to keep bastards honest) get a higher value than a like from dodgy brothers inc.
points i intend to go into soon: what is the motivation in selling if there is no profit? who are these auditors i speak of? and how do you remove the hoard mentality?
american politics is all very convoluted - clinton paying off debt, bush II doing various ridiculous things and simultaneously ruining the public finances, obama doing almost nothing and simultaneously further ruining the public finances.... who can you trust from that cast of fools? in my country, the tea party is portrayed as a bunch of extremist cranks, but anyone who espouses the fundamental principle of living within ones means, they have my respect. need more people like that in the world. a whole bunch of their other policies i'm pretty sure i find reprehensible, however fiscal responsibility trumps it all i'm afraid.
so anyways, free markets: really good, right up until they weren't, and how to replace that very useful signalling mechanism showing us where to allocate resources. well obviously, you could create an app for that. conceptually really simple - suppliers on one side, customers on the other, match them off in real time, unlimited 'products', effectively just a market without prices, just first-in-first-served.
i envisage this would need a classification system, whereby essential products or services, those needed to sustain life, get allocated first to those most in need. but again, who decides who is most in need? can't be a government babu, they are demonstrably useless. perhaps you could have a version of internet democracy, whereby those 'customers' in the most need are determined by the number of likes they receive. to further refine this system you could scale the likes, so that those from a trustworthy source (similar to ratings on ebay, combined with audits to keep bastards honest) get a higher value than a like from dodgy brothers inc.
points i intend to go into soon: what is the motivation in selling if there is no profit? who are these auditors i speak of? and how do you remove the hoard mentality?
Wednesday, 31 October 2012
actual benefits of capitalism
so capitalism has an inherent flaw, in that those who are good at making a profit continue to do so, accumulating profit and power in the process. having attained their lofty position, it would be natural to protect those privileges, both for yourself and for your descendants. culminating in our current economic situation, whereby an exclusive few control the vast majority of economic power, and economic power controls everything else as the capitalist paradigm reigns supreme....
why is capitalism so revered? what does it provide that is so essential to our modern civilisation and society? again, not claiming to have any exclusive knowledge, and precious little research, however my opinion is that the true value of the market is the information it communicates - that being where scarce resources should be allocated to obtain maximum benefit. adam smith's invisible hand, pointing out to market participants where they can maximise their profit, and as a side-effect, where best to allocate those resources for the aggregate benefit of society.
however the invisible hand, while still ably fulfilling the task of maximising profits for the individual, is no longer providing as much benefit to society. i speculate that this reduced societal benefit is due to the transition from an environment of scarce resources (ie the vast majority of human history), to an environment that would be ample and abundant for all our needs, but for all the games we humans play which result in so much wastage and over-consumption. but again, easy to have an unsupported opinion, no real intention of backing it with research or evidence.
so any alternate economic system would need to provide this allocation signal, but in a way that doesn't result in profitable individuals hoarding the abundant fruit of their profitable endeavours. communication of information, seeing as we are currently in the 'information age', surely this is problem for which we can find a solution. the difficulty as i see it is - consistent with my concerns with communism - trusting any individual with the power to allocate resources. so clearly it cannot be a government babu, it either needs to be divorced from human manipulation, or democratised so that no individual can benefit.
however, this thought bubble will have to be revisited.
why is capitalism so revered? what does it provide that is so essential to our modern civilisation and society? again, not claiming to have any exclusive knowledge, and precious little research, however my opinion is that the true value of the market is the information it communicates - that being where scarce resources should be allocated to obtain maximum benefit. adam smith's invisible hand, pointing out to market participants where they can maximise their profit, and as a side-effect, where best to allocate those resources for the aggregate benefit of society.
however the invisible hand, while still ably fulfilling the task of maximising profits for the individual, is no longer providing as much benefit to society. i speculate that this reduced societal benefit is due to the transition from an environment of scarce resources (ie the vast majority of human history), to an environment that would be ample and abundant for all our needs, but for all the games we humans play which result in so much wastage and over-consumption. but again, easy to have an unsupported opinion, no real intention of backing it with research or evidence.
so any alternate economic system would need to provide this allocation signal, but in a way that doesn't result in profitable individuals hoarding the abundant fruit of their profitable endeavours. communication of information, seeing as we are currently in the 'information age', surely this is problem for which we can find a solution. the difficulty as i see it is - consistent with my concerns with communism - trusting any individual with the power to allocate resources. so clearly it cannot be a government babu, it either needs to be divorced from human manipulation, or democratised so that no individual can benefit.
however, this thought bubble will have to be revisited.
Sunday, 21 October 2012
alternate economic system
most of us, having been raised in a capitalist environment, having never been exposed to any other system, i expect find it difficult to imagine anything different. a higher level of government involvement in various industries we can picture, although in many countries even that is distasteful. the government fixing the price of money we are all used to - for some reason the free market ideology doesn't apply to money.
attempt to picture an economy not based on capitalism, i expect most of us would still subconsciously expect market based mechanisms to be involved in the majority of daily interactions. from electricity, to water, to food, business inputs, education, medicine, petrol, there is almost without exception a transaction, even if the markets are sometimes not competitive or free. but how else might it all happen?
one of my many vices is reading, and a good dystopian novel would be one of my favourite genres. one thing i like about them is how, in the post-apocalyptic world in which the novel is set, survivors will sometimes gamble using 'real' money. just months previously, those green dollar bills dictated most everything in life, but with the flick of an apocalyptic switch are suddenly rendered worthless.
money symbolises wealth and value only so long as market participants agree that it does - once that agreement is gone, it is just monopoly money, just paper, no inherent value except maybe for burning, or children's craft (or gambling). this criteria we judge ourselves by, our income, our net worth, which can make or break our happiness, marriage, that can dictate life or death depending on the medical coverage we can afford - all an illusion that remains because we all continue to believe.
the standard definition of money is a medium of exchange, a store of wealth. store of wealth i will go into another time, but a medium of exchange is based on trade, which is still based on capitalism. going back before artificial currency - gold, valuable commodities, or even a barter system, trade is still taking place (in theory) between two willing participants who seek to maximise their profit. if this profit motive is causing economic disparity (as i think, see 'capitalism' post), what other mechanism is available to get required resources where they are needed?
communism, i would suggest, has been tried extensively, and has extensively failed. i have very little knowledge of communism, but in my blissful ignorance would attribute its failure to two key problems: corruption, and the delusion that a government bureaucracy could do anything well. i have worked in government, lots of nice people, not so much stress, not so much urgency to perform, a whole lot of entitlement to a job for life. and i believe much higher levels of stress leave (fully paid) than the corporate sector. go figure.
i recall being instructed by senior management to hurry up and spend the full budget, otherwise we won't be allocated as much next year, which as a tax-paying citizen is just wrong, and best not to dwell on that sentiment being echoed in every department at every level of government in every country in the world. i am sure there are many government workers who truly do try to improve the country and provide the best possible service to the tax-paying public, but they would be the exception. governments are almost as much a parasite as the unions.
so i'm not going to suggest communism. need something new, i would suggest....
attempt to picture an economy not based on capitalism, i expect most of us would still subconsciously expect market based mechanisms to be involved in the majority of daily interactions. from electricity, to water, to food, business inputs, education, medicine, petrol, there is almost without exception a transaction, even if the markets are sometimes not competitive or free. but how else might it all happen?
one of my many vices is reading, and a good dystopian novel would be one of my favourite genres. one thing i like about them is how, in the post-apocalyptic world in which the novel is set, survivors will sometimes gamble using 'real' money. just months previously, those green dollar bills dictated most everything in life, but with the flick of an apocalyptic switch are suddenly rendered worthless.
money symbolises wealth and value only so long as market participants agree that it does - once that agreement is gone, it is just monopoly money, just paper, no inherent value except maybe for burning, or children's craft (or gambling). this criteria we judge ourselves by, our income, our net worth, which can make or break our happiness, marriage, that can dictate life or death depending on the medical coverage we can afford - all an illusion that remains because we all continue to believe.
the standard definition of money is a medium of exchange, a store of wealth. store of wealth i will go into another time, but a medium of exchange is based on trade, which is still based on capitalism. going back before artificial currency - gold, valuable commodities, or even a barter system, trade is still taking place (in theory) between two willing participants who seek to maximise their profit. if this profit motive is causing economic disparity (as i think, see 'capitalism' post), what other mechanism is available to get required resources where they are needed?
communism, i would suggest, has been tried extensively, and has extensively failed. i have very little knowledge of communism, but in my blissful ignorance would attribute its failure to two key problems: corruption, and the delusion that a government bureaucracy could do anything well. i have worked in government, lots of nice people, not so much stress, not so much urgency to perform, a whole lot of entitlement to a job for life. and i believe much higher levels of stress leave (fully paid) than the corporate sector. go figure.
i recall being instructed by senior management to hurry up and spend the full budget, otherwise we won't be allocated as much next year, which as a tax-paying citizen is just wrong, and best not to dwell on that sentiment being echoed in every department at every level of government in every country in the world. i am sure there are many government workers who truly do try to improve the country and provide the best possible service to the tax-paying public, but they would be the exception. governments are almost as much a parasite as the unions.
so i'm not going to suggest communism. need something new, i would suggest....
Friday, 19 October 2012
capitalism
capitalism has been great. for a significant portion of human history, it has provided a clear indication as to where scarce resources need to be allocated, and has provided adequate incentive (ie profit, or self-interest) to then allocate the required resources. this has benefited the individual, the customer, society, frequently mankind as a whole. humans would not be in nearly so good a position now, if it weren't for the benefits of capitalism.
however there have been periods of time when it hasn't worked so well. no doubt there are other contributing factors: protectionism, oil cartels, unions, political interference from both liberal and conservative sides - with many others that don't immediately come to mind. but in my short life time, i have experienced boom and bust, recessions, stock market crashes, sovereign defaults, financial crises, none of which reflect a stable and healthy system. and of course, these primarily financial phenomena lead in to various other spheres of human activity - poverty, persecution, unemployment, mental sickness, unhappiness, revolution, war. again, far too many to mention.
recently, it has occurred to me - there is nothing holy and sacred about capitalism and free markets. it is the dominant economic paradigm of our generation, but to bastardize a churchill quote on democracy - it is the worst economic system, except all the others that have been tried. specifically, i would suggest it is producing bizarre, even amoral, economic consequences, producing suffering for many of us where suffering is potentially unnecessary, and the logical consequence of capitalism is occurring before our very eyes - the growing differential between the haves, and the have-nots.
as evidence for the above charges against capitalism, i would offer the following. people are starving in many places in the world, cannot access medicine, have inadequate shelter, inadequate drinking water - all of which could be provided. we, the humans of the world, produce enough to more than satisfy the basic needs of the entire human race. but instead of satisfying these needs, there is cosmetic surgery, luxury brands, electronic gadgets, 5-star hotels, fast food. this is because the economic system, capitalism, dictates that we allocate our economic resources where profit can be maximised. there is no profit in feeding the 3rd world masses, but feeding time-poor westerners a salty, fatty, addictive hamburger - that is the highest aspiration capitalism can offer.
much of our daily life is driven by this model - our consumption, calories, work, housing, social mores, all is based on a foundation of maximising our income. in reality, for those of us not directly involved in food production (plus a couple of occupations like doctors and other services essential for prolonging life), everything we do is just a game, developed by humans, to relieve the boredom now that we don't need to hunt and gather. and despite the massive technological breakthroughs in recent centuries, there has been no reduction in stress and work levels - any productivity increase is offset by new 'games' that need to be done for us to earn an income, which will enable us to consume goods, calories, pay for housing, impress our friends, and hopefully save some for a rainy day or for the next generation.
the consequences of this profit driven system, is that profit accumulates at the top of the economic food chain. those that are very successful at making a profit continue to do so, accumulating more and more profit, more and more power, and being celebrated as the pinnacle of success because that is what capitalism is all about. and who can begrudge them - would we be different if we were the rich and successful? as with all of us, i expect the natural instinct is to protect and preserve your position, and then to protect and preserve the next generation. but when you control such vast resources, why stop at the next generation? you would plan in centuries, and use your resources to manipulate society, countries, politics, anything required to keep your legacy supreme.
the name of the blog - ample - is intended to reflect that what we now have, is ample. if resources could be allocated according to need rather profit, if so many resources weren't wasted in competition and if there was more cooperation, perhaps less people would be suffering. perhaps more people would be happier. perhaps without so much waste there would be more opportunity for ingenuity and innovation, perhaps there would be more freedom to pursue these objectives as well.
this blog will be a record of my thinking process, my insights, theories that have been half-thought-out and that are100% untried. and i expect it will go unread. but it may help me preserve thoughts that would otherwise go unrecorded, so why not.
however there have been periods of time when it hasn't worked so well. no doubt there are other contributing factors: protectionism, oil cartels, unions, political interference from both liberal and conservative sides - with many others that don't immediately come to mind. but in my short life time, i have experienced boom and bust, recessions, stock market crashes, sovereign defaults, financial crises, none of which reflect a stable and healthy system. and of course, these primarily financial phenomena lead in to various other spheres of human activity - poverty, persecution, unemployment, mental sickness, unhappiness, revolution, war. again, far too many to mention.
recently, it has occurred to me - there is nothing holy and sacred about capitalism and free markets. it is the dominant economic paradigm of our generation, but to bastardize a churchill quote on democracy - it is the worst economic system, except all the others that have been tried. specifically, i would suggest it is producing bizarre, even amoral, economic consequences, producing suffering for many of us where suffering is potentially unnecessary, and the logical consequence of capitalism is occurring before our very eyes - the growing differential between the haves, and the have-nots.
as evidence for the above charges against capitalism, i would offer the following. people are starving in many places in the world, cannot access medicine, have inadequate shelter, inadequate drinking water - all of which could be provided. we, the humans of the world, produce enough to more than satisfy the basic needs of the entire human race. but instead of satisfying these needs, there is cosmetic surgery, luxury brands, electronic gadgets, 5-star hotels, fast food. this is because the economic system, capitalism, dictates that we allocate our economic resources where profit can be maximised. there is no profit in feeding the 3rd world masses, but feeding time-poor westerners a salty, fatty, addictive hamburger - that is the highest aspiration capitalism can offer.
much of our daily life is driven by this model - our consumption, calories, work, housing, social mores, all is based on a foundation of maximising our income. in reality, for those of us not directly involved in food production (plus a couple of occupations like doctors and other services essential for prolonging life), everything we do is just a game, developed by humans, to relieve the boredom now that we don't need to hunt and gather. and despite the massive technological breakthroughs in recent centuries, there has been no reduction in stress and work levels - any productivity increase is offset by new 'games' that need to be done for us to earn an income, which will enable us to consume goods, calories, pay for housing, impress our friends, and hopefully save some for a rainy day or for the next generation.
the consequences of this profit driven system, is that profit accumulates at the top of the economic food chain. those that are very successful at making a profit continue to do so, accumulating more and more profit, more and more power, and being celebrated as the pinnacle of success because that is what capitalism is all about. and who can begrudge them - would we be different if we were the rich and successful? as with all of us, i expect the natural instinct is to protect and preserve your position, and then to protect and preserve the next generation. but when you control such vast resources, why stop at the next generation? you would plan in centuries, and use your resources to manipulate society, countries, politics, anything required to keep your legacy supreme.
the name of the blog - ample - is intended to reflect that what we now have, is ample. if resources could be allocated according to need rather profit, if so many resources weren't wasted in competition and if there was more cooperation, perhaps less people would be suffering. perhaps more people would be happier. perhaps without so much waste there would be more opportunity for ingenuity and innovation, perhaps there would be more freedom to pursue these objectives as well.
this blog will be a record of my thinking process, my insights, theories that have been half-thought-out and that are100% untried. and i expect it will go unread. but it may help me preserve thoughts that would otherwise go unrecorded, so why not.
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