hairyfigment (hairyfigment) wrote,

weird economics

This post consists of a rough draft of my favorite plan to end poverty and wage slavery in America. My dream Congress would threaten to put this plan into operation unless experts produced a better plan.

I would start by offering a reward of $X per year to any worker who designs him-or-herself out of a job. Simultaneously, we’d either start offering every citizen a lesser yearly amount (hereafter Social Credit) or give a lesser amount to the other workers who ‘lose’ their jobs to innovation.

Meanwhile, we’d declare that only the U.S. government can create US currency, and forbid banks to create money (except maybe if they call it something else, and make sure people know the government doesn’t consider it US currency and will not accept it for taxes or other payments. It probably depends if we can avoid Gresham’s Law.) Private banks could avoid violating this law by explicitly distinguishing savings accounts – where you can always get your money back, because the bank must keep that money on hand – from investment accounts, where you might not get it back because the bank has loaned it out. Today most of the money “in the bank”, and from what I read most of the money in the world, does not physically exist. (Fractional reserve laws say they can loan out money that officially remains in the bank.) We would, however, temporarily accept people’s bank accounts at face value if they want to switch to the new public Bank of the United States. And we’d have various other means to fight inflation so we can keep creating new money for Social Credit.

First, we’d make a deal with producers of consumer goods. If they lower their prices instead of increasing them, we’ll give them the difference when we see the receipts. People who refuse to make this deal will tend to lose out in the market, assuming others in their industry accept. People who make the agreement and then break it open themselves to harsh legal penalties, including at a minimum the loss of any money they make from their crime and then some. In principle we could confiscate all their assets except the Social Credit, which the theory regards as everyone’s birthright as a human – an inheritance from all the people who made this system possible. (If it works in the USA we can theoretically extend the benefits to people elsewhere.)

Medical care and land may present special problems. (We need both, and we can’t mass-produce them yet.) In the first case, we want more medical personnel. We can improve the situation by offering to pay all costs of education for any remotely qualified applicant – hopefully we can trust medical schools to pick them knowing that if the public hears enough stories of fake students, payments and thus demand for the schools’ services will diminish sharply – and in return the applicant will agree never to charge more than what we want them to charge for medical services. Perhaps we could also make it easier for qualified doctors to immigrate. It should go without saying that my government would offer universal health care. For those who’ve never had occasion to follow this debate, private health care doesn’t work. It suffers from adverse selection, meaning that insurance companies don’t want people who need health insurance. They need their healthier customers to balance the company’s losses. Once the healthier people figure this out and leave, it begins a death spiral where the company has to increase rates, thereby driving more people away.

We can apply the medical services tactics to any services (say, teaching) that we decide we literally need. Other jobs that we can’t automate will increase in price, and I expect we’ll decide to do without some of them.

When it comes to land or shelter, I feel less confident of my solutions. But perhaps the government could buy houses and land slowly, “selling” it with a contract that keeps the price low.

As a reserve measure we can keep the right to use Silvio Gesell’s suggestion for “free money”. This means we can have money decrease in official value with time – so that a dollar bill will decrease 10 cents in face value after a certain period – if the owners choose not to invest it and if we decide the measure seems necessary to fight inflation. Though I’d prefer not to actually use this option given how economically regressive it sounds. The decision would always rest with the experts.

As the anti-inflationary tactics start to prove themselves we could increase the Social Credit until everyone could live on it if they chose to do so. We could also cut taxes, starting with the taxes of the poor. I would suggest that in the meantime we cut what I consider foolish expenses, like drug Prohibition. The DEA would survive in some form, but could only go after improper use of antibiotics. I’d even restrict the FDA to enforcing labels (“This product will kill you,” “This product will get you hooked and kill you,” “This product does not work.”)

We could easily make the Social Credit and Social Security non-cumulative and reduce payroll taxes accordingly, in such a way that SS payments would increase again if we ever reduce the Social Credit to less than most people's payments for some reason. I doubt we would. If we can increase it that far in the first place, I doubt we'll have much trouble keeping it there.
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