Happy 2016 to everybody! The Vintage
Rocker had amazing holidays just reading a ton, thinking a good deal and
(surprise, surprise!) polishing his dissertation (yep, it takes forever to
really close and finish the damn thing, but it is what it is). Not much
training, unfortunately, as I injured my left elbow deadlifting at the
beginning of September and it doesn’t seem to have healed much. The bright side
of it is that I could devote the extra time to consider the multiple
implications of the economic system that was taking shape in my head (inspired
in my series of posts about how the Earth would look like 500 years from now)
and have finally settled on what I now consider a valid alternative to current
capitalism (talk of humility and setting realistically low goals!), which I
wouldn’t feel embarrassed promoting or even (gasp!) voting for. For those
interested in the intellectual underpinnings of such economic ideas, that will
round off my AT Manifesto, (for any newcomer reading this, the previous entries
are here: AT Manifesto I, II and III). In this final section of the Manifesto,
I will explore the basic rules constraining economic activity in an AT society:
how what to produce and how to distribute such production is decided (resource
allocation), how to ensure basic fairness (taxes) and finally the basis of all
regulation to correct the inefficiencies of the price mechanism (zero footprint
rule)
Who does what for whom
(resource allocation)
During the vast majority of human
history, each person’s occupation was decided well before he was born: most
would toil in the fields without any expectation of ever improving their lot,
or their descendant’s lot, while a few would rule over them thanks to their
superior martial prowess (or their possession of superior weaponry) or their
belonging to a transcendentally justified minority (priestly class, which always
needed to be allied with the former). With the advent of the Industrial
Revolution for the first time in History productivity gains outpaced
demographic increase, permitting the vast majority to escape that fate. People
could choose what they wanted to do with their lives (although it was
implicitly assumed that most would submit to joyless activities, their only
choice being what type of joyless activity would they devote most of their
waking time to), as long as most of it was exchanged for money in the job
market (which in turn required markets for most of life necessities that could
in turn be obtained in exchange for that money). There was some moral
justification for such state of things (exemplified in St. Paul’s not very charitable
dictum “he who does not work, neither shall he eat”, in 2 Thessalonians 3:10)
while the majority of the time of the majority of the able bodied population
was required to keep everybody alive. But today, thanks to technological
advances and automation it appears as a woefully inadequate system, that
condemns most to lives of meaningless effort just to scrape by existences
almost devoid of dignity, with the constant threat of loosing any social respectability
(that depends for almost all in having a salaried job and maintaining it for
life) if they do not conform to such travesty as pursuing an occupation that is
mostly unneeded and whose reward is most arbitrary.
That said, it must also be
recognized that such system has enabled the societies that espoused it to
extract unheard of quantities of work from their members, and through the “invisible
hand” of the market and its incentives led them to historically high levels of
material comfort (not necessarily well distributed, but some spillover assured that
even the poorest members could end better off than most of the inhabitants of
differently organized polities). Any attempt that has been made to achieve
similar levels of wealth with centrally planned economies has been an abject
failure, from which we should learn. And the lesson those attempts teach is
that people work most efficiently and contentedly when a) they can keep the
fruit of their labor and b) they feel they have “agency”, they have the
capability to take their own decisions (boneheaded as they may appear to an
external observer) and steer their own course. However, that agency and freedom
can pose an insurmountable obstacle to the coordination of activities that
require the collaboration of great numbers of individuals, that left to their
own devices end up producing vastly suboptimal collective arrangements
(typically known as “tragedy of the commons”, “free rider problem”, “prisoners’
dilemma” and such).
During the last century, efforts
have been made to alleviate the problems of unbridled markets by subtracting
certain sectors of economic activity from their rules, thus creating “mixed
economies” where some goods and services are provided free of charge to every
citizen (and some legal residents, or even to illegal ones) and other are
provided for a price, which is calculated by the more or less regulated
encounter of supply and demand. The theory says that the “freer” the market
(multiple buyers and sellers with similar small power to influence prices, no asymmetries
of information or ability to influence each other) the more apt to be left to
private players with minimal regulation, and the farther from such freedom
(inordinately big influence of a single provider or purchaser, impossibility to
make an educated decision for lack of transparency, etc.) the more demanding of
state intervention (or direct state provision). There is nothing inherently
wrong with such theory, except that it is the farthest thing from how things
really work that you can imagine, as some most regulated markets would
gravitate towards almost ideal freedom if left to their own devices, while some
apparently free ones are absurdly lopsided. Regulatory capture, and the need to
pander differentially to each party’s special interest groups in representative
democracies (or to the autocrat cronies in a dictatorship) explain most of
those deviations. Thus, an AT society would use the same principle (mixed
economy) but guided by more rational principles, striving always to balance the
guarantee to all the citizens of a decent (but not luxurious) standard of
living with the maximum freedom to spend their time (both as producers and as
consumers) as they damn please. A tentative list of what the AT state would
produce and provide their citizens free of charge (or subject to minimal, “administrative”
charges to avoid unnecessary, capricious use) is:
·
Basic
foodstuff (2,500 kcal/day per person of a reasonably healthy mix of dairy
products, cereals, vegetables and fruits, meat and fish)
·
Basic
energy (for residential use: whatever is needed given the climatic conditions
to keep a medium home heated/ air conditioned and well lit) and reliable
transport lines
·
Basic
communications (passable roads and streets, wireless and wireline networks w
accessible Wi-Fi hotspots, working postal service, reasonable access to
railways, ports and in some cases airports)
·
Basic
education (enough to ensure every prospective citizen has the ability to read, write, calculate and use statistics, plus
knowledge of history and legal institutions, which would be required to effectively exercise their political rights)
·
Healthcare
(it is almost impossible to differentiate here between “basic” and “luxurious”…
advanced oncological treatment is a luxury until one happens to suffer from a
rare cancer, at which point it becomes as basic as it comes… let´s for the
moment leave it at “as much healthcare as the state can pay with taxes the
citizenry is willing to bear”)
·
Security
(sadly, given human nature, state intervention is required to prevent
malfeasance and crime, and to defend the commonweal… this is another area where
it is difficult to set the line of what is strictly needed and what is just
satisfying the public tendency towards excessive paranoia, and I believe that a
less materialistic society, where material and easily fungible goods are not so
idolized would have a much lower crime rate, but even then there will always be
a need for a police force and depending on the international scenario the full
shebang of army, air force and navy)
We do not claim that the state
should be the sole provider of those services, or even that it should manage
them from beginning to end through publicly owned companies, run by political
appointees (which is a polite term for saying “unprofessional, incompetent and totally
deaf to market signals”). Depending on the circumstances pertaining how it can
pay for them (more about that when we talk about taxes) it may choose to
produce and provide them directly, or it may find more efficient to buy them in
the open market to people privately producing them (for a profit). All we say
is that the state should ensure that those products and services are freely
available to all. At the same time, people will have the maximum freedom to pursue
whatever occupation they like and believe can give them a reward worthy of the
effort. We do accept that some “crowding out” may occur, but do not think that
should frustrate anybody from pursuing their desired vocation: if everybody
receives a fixed ration of wheat or of milk, there may be not much of a market
for “normal” wheat or milk production, but if agriculture is what ticks you
there will always be unattended demand for truffles, goji berries, tiger nuts,
barley specialty hops for craft beer and whatnot. Similarly, the state will
ensure that everybody can read and count, but if people want to privately teach
them how to do differential calculus or research the law system of the Visigoths,
as long as they find other people willing to partake of such education they are
more than free (I wish to think they would be actively welcome, but good luck
with the latter!) to pursue such lines of work.
The question, then, is how will the
state pay for such generous supplies. To that end we must turn to our next
chapter
What we owe to each other
(taxes)
It is a sobering reminder of how
much we have strayed from a sensible rationality to read Keynes’ “Economic
possibilities for our Grandchildren”, written in 1930, where he famously
prophesized that in a hundred years time (that would be in 2030, so a mere 14
years from now) we would be working 15 hours per week, and the great problem of
the times would be what the masses would do with so much leisure time. To put
it mildly, the great economist what slightly off the mark with this prediction,
as we have managed to keep on working more and more (individually, not
socially, as less and less people participate in the workforce) to satisfy what
he termed “artificial needs”, more than compensating for the declining effort
required to satisfy the “natural” ones (why? Because our whole social
organization is geared towards extracting the maximum possible effort from
every able individual, tossing aside unceremoniously those that it deems not
able enough, as It has been selected for its ability to do so and to use that
extraction to fund better armies that allowed it to displace and subjugate any
potential competitor… but I’m repeating myself here once again). Although the
calculation of those 15 hours was reached by some questionable methods
(assuming a rate of global economic growth that has held remarkably well along
these impressively turbulent years), it happens to be not so far from my own
calculations of how much it would take to provide for the basic needs of an
advanced society with our current level of technical development. Think about it
for a moment: the US produced about 17,000 billion $ in 2013 (that was the
total value of its GNP, which considers both goods produced and services
rendered for a price), which amounts to roughly 55,000 $ per capita (given a
population of 300 million, give or take a few). If we remember the exercise I
did when considering what it would take to provide everybody in the USA with a
Universal Basic Income, while the state maintained its essential functions of
healthcare, defense, infrastructure, education and R&D (which you can find
detailed here: UBI in USA)
I settled on a figure of roughly 14,000 $/year to be paid per person. That
figure could be interpreted as meaning that people should pay in taxes about
25% of their income (as 14K is about a 25% of 55K), and thus should work about 25% of their time to cover
their basic needs (remember that we reached the figure of 14K precisely as the
amount required to cover such needs), which translates into 10 hours a week (if
we assume a standard work week of 40 hours). At this point let’s remember that
while we have to cover for everybody’s needs (all the 300 millions), the 17,000
billion $ were produced by just a fraction of the population, to be precise by the
67% that is counted as “active” (which is, let us remember, very low by
historical standards, although the unmistakable trend is for it to go even
lower). That means that the real “average” wealth production of each working
individual is 82,000 $/year, and if we could decouple occupation from taxation
(and thus have everybody, regardless of employment status, contributing to the
satisfaction of common needs, which seems just fair given that everybody, equally
regardless of employment status, would be receiving the UBI and the other
services provided by the state) the average contribution required to provided
the basics we identified previously “only” rises to 20,000 $/year (taking into
account the whole population between 18 and 65 years old), which requires about
8 hours/ week to discharge, slightly below 10% of the standard working time.
However, I’ll be a bit more conservative, assume the system is riddled with
inefficiencies and so to provide the aforementioned services the state has to
collect as much as 30% of the average worker’s time (that would be 12 hours/ week, not that far from Keynes 15
hours) to have enough to ensure that everybody receives a UBI (of 8,000 $/year)
plus can enjoy the full list of the basic goods and services described.
So our AT society would expect everybody (in the right age bracket and physically
able, it goes without saying) to work 12 hours per week to discharge their
duties towards their fellow citizens. That would be the counterpart to a bunch
of rights we mentioned in our initial list, and thus not optional. But that
would be ALL that the state demanded. There would be two ways of discharging
such obligation. One would be by communal work under the direction of the
phratry administrators doing either non skilled work (from picking the garbage
to milking cows to repairing roads) or skilled work (according to needs that
could range from teaching children to providing primary care to designing power
plants). Such skilled work would be counted applying a “correcting factor” to
take into account the extra time invested by the worker in acquiring the
required skill (although the maximum factor allowed would be 1:2, so for
example an hour of a skilled pediatrician attending kids would count as 2 hours
of a tractor driver plowing the fields). The other would be paying the
equivalent price in money, at average market rates (those rates would be
calculated dividing the total hours worked by the total wealth produced by the
phratry; in the case of the US, that produced those 17 billion $ with a 67% of
its 300 million inhabitants that rate would be 17,000B /(300M * 1,700 h/year *
0,67) = 49.75 $/h. That means that people could choose to work roughly 12
hours/week, or 576 hour/year (about three months and a half) in non skilled
work, a fraction of that depending on how much skill and training was required
(but of course they would need to acquire those skills/ training first) OR pay
28,656 $/year and be done with their fiscal obligations. I can hear the shrieks
of disgust from 99.9% of the political spectrum (if that 99.9 read my blog,
which is emphatically not the case), as what I am proposing is not just a flat
tax rate (anathema to liberals the
world over, although an old beloved idea of the far libertarian right) but a
flat tax fixed amount. The most
monstrously regressive idea ever! Billionaires paying the same as their humble
secretaries or as the honest manual laborer who toils from dusk til dawn! I
will leave the defense of such proposal for a later post, although I’ll only
point out here that both the secretary and the laborer would toil more than one
and a half hours a day strictly if they want to (and the compensation they get
from that extra work justifies it in their own eyes), as their lives would be
sufficiently secured with that minimal amount of exertion.
A more reasoned objection would be
that such a scheme may perpetuate social stratification, as the rich would not just
get richer (that occurrence may be initially credited to their extra effort,
ingenuity and drive –or just as well to their enhanced psychopathy,
relentlessness and lack of knowledge of how to live a properly fulfilling life),
but be able to bestow their extra wealth to their undeserving heirs. As this
post is already too long I’ll leave its answer to my next one, in which I will
defend that, given the right regulatory
framework that prevents the rich from exploiting common goods for their
advantage, as it happens much too frequently today, such difference in
outcomes is not necessarily a moral failing of the system. That regulatory
framework, in the form of the zero footprint rule, will be the subject then of
my next post on this series.
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