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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.

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