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Saturday, September 27, 2014

A Driver's Lament

For most of my career, I've had a long commute.  I've put a lot of miles on a lot of cars and I've seen drivers of all types from timid drivers who go too slow to road ragers that would wish everyone into the corn field if they could.  What strikes me as most interesting is the juxtaposition of two very different spaces and how they affect people.

Unless you're using Zip Car or some such service, you probably own your own vehicle (or the bank does).  When you get into your car, you are in your own private space.  Your things are around you, your music or radio station is playing.  It's like a little piece of home on wheels.

Meanwhile, your vehicle is on a public road.  Public means that it is a shared space for all to use.  The idea of a public space carries very specific social meaning to us.  There are certain behaviors that are simply unacceptable when one is in a public space.

What makes driving unique is the private bubble containing us while we operate within a public space.  I have observed that many people exhibit private behavior patterns when they drive.  Behaviors which I have a hard time imagining they would exhibit if they weren't in a car.  For example, when was the last time you walked up to the front of a long line (queue for you Brits) and just stepped in front of the first person?  Unless you are a bona fide  sociopath, the answer is likely "never."  Yet, how often do you see someone zooming past cars piled up in the only remaining lane in front of a lane merge during heavy traffic?

Somehow, the private space of the vehicle causes many people to forget their manners.  The great irony is that the line-cutters anger others into doing the same.  The result is a pile-up at the choke point that would not even be there if everyone got into the only open lane before traffic began to constrict.

We see antisocial behavior in cars all the time.  People double park and then go to a meeting or to their offices or to the mall and behave like perfectly normal human beings who understand the rules of public behavior.  Maybe we need a new public relations campaign.  The slogan could be:


Sunday, September 21, 2014

Capitalism With Limits Part 2

In my last post, I finished by leaving lots of money in the hands of government.  The challenge with governments is they encourage the consolidation of power.  Unfortunately, those who seek power are usually the first to be corrupted by it.  Our government is no exception.  We are not drawn to great leaders.  We are drawn to charismatic orators who have a knack for appeasing the largest number of likely voters.

If government is to succeed in supporting people, it must become more distributed.  Distributed structures are much more difficult to corrupt.  Transparency is only a good start towards making shared systems work.  They must also be based on algorithms.  Bitcoin is a good case in point.

There are lots of powerful people out there who would like to see Bitcoin fail.  Why?  Because is is a currency with no central control.  It operates on an algorithm that is available for anyone to understand.  It's functioning is transparent.  There are no backroom boys pulling levers to affect its supply or demand.  It is not subject to fiscal policy or monetary policy or the whims of governmental meddlers.

Governments already use algorithmic controls for things like traffic. Projects like Google's driverless car show that algorithms can be used for highly sophisticated problems.  The system is both adaptive and heuristic.  So, to conclude, creating transparent algorithmic solutions to any governmental management problem is within our technological reach.

This begs the question: what is the optimal distribution of wealth?  The following chart from the Center on Budget and Policy Priorities tells the tale:
After the great depression, lots of personal wealth was wiped out.  The result was unprecedented equality in income distribution.  The U.S. economy has never been stronger before or since. However, the insidious nature of capitalism to concentrate wealth once again took hold.

In 2006, we were due for another reset, but the government forestalled the inevitable by printing money -- lots of money.  This works for us because oil, still the #1 source of energy, is traded in dollars.  So, there's little incentive for anyone to see the dollar tank.  This won't be the case as we move away from an oil based economy -- another good reason to step up domestic oil production.

Back to my wealth distribution algorithm.  Clearly, we have data to support at least a starting point for good calculations.  By creating a system of distribution based on math rather than power struggles, we can ensure a vibrant economy.  But, what about jobs?  Clearly, the most efficient use of capital is to invest in the reduction of humans -- the most expensive asset a business has. We cannot expect the capitalistic markets to support work for all citizens.

Fortunately, our aging infrastructure needs lots of help to bring it into the 21st century.  There are lots of jobs available.  They just aren't commercially viable.  With all the new-found wealth in the hands of government, these infrastructure projects could be funded.  People who can't find jobs in the commercial sector will work for the infrastructure sector.  Of course, this means deciding once and for all which parts of our society constitute "infrastructure."  Some things should be easy: roads, power grids, water and waste.  Others may be more difficult to decide: space exploration, transportation and mail delivery.

What seems clear is that our aging infrastructure is bankrupting our country, the commercial markets are not creating enough jobs for full employment, 99% of the population are fighting rising costs and diminishing income, and those in power are doing nothing about it.

A redistribution of power means a redistribution of wealth.  The United States is a very wealthy place, if we can build a controlled and sustainable form of algorithmic sociocapitalism here, maybe the rest of the world would follow suit.  This will be essential if we are to keep capital from seeking environments where extreme greed is tolerated.

Monday, September 01, 2014

Capitalism with Limits

I was watching a movie the other day and one of the characters said the top 84 wealthiest people in the world control more economic power than the poorest three billion.  I don't know if that's true, but if the chart on the left is accurate, it's probably not far off.

We talk a lot about growing income disparity in the United States, but the insidious nature of the global economy is that income disparity is now a global problem that cannot be solved by national initiatives.

If one government attempts to choke off the wealth creation abilities of certain individuals, they will simply seek residence elsewhere.  There will always be some country willing to allow individuals to accumulate as much wealth as possible.  Our history as a species has retold this story many times.

  1. A society is born
  2. Everyone feels good about it and everyone pitches in to make it work
  3. Society prospers and life is good
  4. A powerful wealthy class emerges
  5. The power class consolidates power and wealth at the expense of all others
  6. All the others finally get fed up with their condition and the disparity with the power class
  7. Revolution!
This story is so common in our history that it is far more difficult to find examples of smooth transitions of power.  If you're looking for a smooth transition that doesn't involve an external colonial power, the search will be even more difficult.  Why?  People with power never seem to want to lower their standing for the greater good.  They always believe in their own legitimacy, no matter how stacked the system may be in their favor.  

Is it possible to have an effective redistribution of wealth without a revolution or other form of massive social upheaval?  Maybe.  I have a simple idea that just might work.  It would require a global treaty, but it could be implemented by individual countries.  The basic premise that one must accept before seeing the value of this idea is simple:  taxation is ultimately a form of wealth redistribution.  When kings taxed the peasantry, they were redistributing wealth to themselves.  In the U.S. we use tax money to pay government workers, contractors and welfare recipients. 

So, if the tax code can be used for that purpose, why not be clear about it?  To make this work, we eliminate corporate taxes.  We eliminate the current income tax code and replace it with a progressive tax rate.  The rate is progressive, but based on income ranges.  The dollar amounts would need to be worked out, but it might look something like this:

  • $0 - $20k/yr. = 0%
  • $20k - $50k = 12%
  • $50k - $100k = 25%
  • $100k - $250k = 40%
  • $250k - $1m = 60%
  • $1m - $10m = 80%
  • +$10m = 100%
Again, these numbers are just an example, but the concept is simple.  Your effective tax rate goes up on incomes a higher levels.  So, nobody (even rich people) pay taxes on their first $20k of income.  If you make $50k, you will pay no taxes on the first $20k, but you will pay 12% on the next $30k.  Eventually (whether it is $10m per year or $50m), there needs to be a point at which income is maxed out.  The system has given all it can to one individual.  Live with it!

Not fair, you say?  Here's what isn't fair: people with lots of money have a steady stream of opportunities to use their wealth to increase it.  People without wealth must be creative, hardworking and persistent; and then there's no guarantee of success.  No, the world is not fair.  Why should it be more fair for rich people?  Their power has corrupted them into believing that they have legitimacy to decide the fate of society writ large.  If history is a good judge, they will eventually discover that power is ultimately granted by the masses and it can be taken away by the same.

Of course, giving the government all that money is concentrating power elsewhere.  This is another problem.  One which I will discuss in my next post about infrastructure and welfare.