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Economics 2018-02-10T18:28:26+00:00

WHAT’S IMPORTANT FROM A POLITICAL PERSPECTIVE

The purposes of our economic system is for people to live better lives. For people to form healthy communities and families, material needs must be met. For people to genuinely thrive we must all enjoy some degree of financial independence and autonomy.

Many misleading concepts often enter economic discussions, so we must always remember that the goal is to meet material needs so that people can have time for the other parts of their lives too.

Economic Policy Goals

  1. High-wage entrepreneurial economy – We need an economic strategy leading to high-wages and full employment. It is only when workers within an economy command a large amount of purchasing power that we have sustained and broad-based prosperity. It is only with a high-wage economy that people have enough time left to lead a meaningful life. The Republican party is doing everything possible to concentrate wealth in the hands of the few. This always leads to stagnation. The plan outlined here is how we lead the country to prosperity that will include everyone.
  2. Sustainability – We need an economic system that will function over the foreseeable future. When we deplete resources such as our atmosphere and soils we are not being prosperous in the long run. We are just sending bills to our grand-children. When we use government to concentrate wealth we are not building a sustainable system. The plan outlined here will lead to sustained prosperity.
  3. Fairness – It is a mark of our humanity that we need fair play. Our current system has serious injustices built into it. The path I describe here will go a long way toward relieving these injustices. People who work and product will receive much more of what they produce. People who skim from the system by way of privileges and government favors will receive less.

Economic Privileges & Monopoly Power

An economic privilege is a legal arrangement that allows one person (or group) to do something that others are prohibited from doing. It is never a thing of human labor, and for our examples in this section it is always a piece of paper issued by the government. Privileges will always confer some degree of monopoly power. A good example of a privilege is a license to use a particular frequency of the broadcast spectrum. Radio, broadcast television, cell phones, and satellite radio all depend on exclusive use of a portion of the broadcast spectrum. It is necessary to assign these privileged usages because otherwise multiple people would try to use the same frequency and the signals would become jumbled so that no one could derive any benefit. Chaos would rule. If you try to use a broadcast privilege without permission, you will be visited very soon by men with badges and guns who will insist that you cease and desist immediately.

While it is necessary to assign usage of the spectrum it is not necessary to do so for free. These are limited resources. Possessing the privilege does not by itself do anything useful. For a broadcast radio or cell phone service to be useful someone must build, maintain, and operate the equipment sending out signals. Radio & TV requires that someone work to produce programming content that will be sent out. These are all products of human labor. Once this work has been done the natural resource can be put to productive use. But why does this distinction matter?

There are two distinct interests at stake. First is the privilege owner, and second are all the other people working to create value. The privilege owner can demand payment from the second group while not even lifting a finger to add value. The privilege owner has a flow of income for no effort. The second group has income only with much effort. If untaxed, the privilege owner is in a stronger bargaining position than the workers requiring use of the privilege. This matters greatly as illustrated.

Where taxes are directed matters greatly in how they affect the bargaining power of the participants in a market negotiation. When taxes are placed directly onto privilege holders the bargaining position of the worker participants is greatly improved because the privilege holder must put the license to full use to cover his tax bill. If at the same time the taxes on workers are phased out this effect will be even stronger. This is precisely the tax shift that I propose.

The Morality of Ownership and Taxes

We all feel a need for taxes to be fair, though we may not have full consensus on what constitutes fairness. One general measure of fairness regarding ownership generally is to allow that the person who creates something has a moral right to own it. But who created the stream of value flowing from a government license? Radio and cell phone licenses are valuable in proportion to how many people live around the area licensed. Is it not the people and their presence that creates the value?

I used the example of the broadcast spectrum because phones, radios, and TV’s are all familiar to most of us. There are many other privileges imbedded in our economic system. Some examples include the list below.

  • Mineral extraction permissions
  • Water use permissions
  • Aircraft landing slots at major airports
  • Pollution permits
  • Earth surface rights (especially valuable in cities)
  • Auto dominance of urban streets (think congestion pricing as relief)
  • Banking privileges (several major types)
  • Waterways where scarce
  • Rail Rights of Way
  • Fishing licenses
  • Taxi cab monopolies
  • Patents (particularly frivolous ones)
  • Corporate structures (several major types)

And these are just the more obvious ones. A very large part of or national production is distributed in a manner highly impacted by these privileges. The distribution of wealth due to privileges is very much at the heart of the obscenely unequal distribution of wealth in the U.S. (as well as most of the world) I have no problem with income inequality related to actual contributions and productive investment. It will always be a feature of a free economy. But the differences we see today have little to do with active participation in wealth creation, but rather represent a privileged taking from the productive sector.

If we were to collect much of the value of all privileges it is not too difficult to imagine that we could fund the government without resort to taxing wages, or at least such taxation could be much lower than today. We could reasonably expect other pleasant results.

  • Generally higher real wages
  • More entrepreneurial activity
  • Less natural resource waste
  • Less government corruption
  • More equal income distribution

This is a what a world that works for everyone will look like. I know that these concepts will be new to many of you so many thanks, if you have followed this far. For questions you might have, or points you wish to raise, please join the blog site and contribute your thoughts. I look forward to hearing from you.

Additional Tools for Prosperity

It is deeply ironic that the Republican Party positions itself as the party of business.  Extreme and artificial inequality in the distribution of wealth from Republican policies is just bad business.  When a hugely disproportionate amount of the purchasing power is concentrated in the hands of only a few there simply is not enough demand to power the economy.  While the economy has generally done better under Democratic administrations the performance still falls short of what is needed for real and broad prosperity.  We need a completely new philosophy and approach.  My view is that the Democratic Party has often taken stands that work to alleviate some of the difficulties associated with poverty while not leading toward a real solution that will create prosperity for everyone.

Many Democrats support unions as a means of raising wages.  I also support unions while also recognizing that unions alone are not going to be able to change the present low-wage dynamic.  Shifting taxes onto privileges will fundamentally alter the labor market in favor of the productive sector where unions reside.  Unions can be a big help in bringing about this shift but they need some policy help too.  It’s also possible that a major tax shift will be sufficient to push wages higher without formal labor organization.  I also fully recognize that unions play other important roles such as worker training and broader social engagement.   Unions deserve our support for these roles too; we just shouldn’t expect unions alone to bring about a high-wage economy.

Worker/producer coops are also sometimes offered up as a solution to our low-wage dynamic.  Again, these might be helpful but without fundamental tax reform they will face significant market headwinds against raising the overall wage levels.  Coops can also play beneficial roles as community building organizations and deserve support for these purposes.  I fully support voluntary cooperative organizations and believe that the government can be a helpful catalyst in their formation.  It voluntary associations helps people to empower themselves and to retain local control then we should support them.

Conclusion: The Way Forward

These campaign proposals are not typical of what you hear from someone seeking office.  I am not emphasizing the infrastructure or services that government might provide even though I also care deeply about these issues.   I am asking you to consider some more fundamental questions about two tightly related ideas:

  1. How we finance government:  Many of the problems we face are related to how we finance government.  Government today mostly takes the result of individual labor and investment for public purposes.
  2. Privileges:  Government created privileges are the greatest source of unsustainable income inequality, as well as being a source of unending corruption.  Many of the problems we face are due to the privatization of the publicly-created value of privileges.

My proposal is to address both of these issues with a tax-shift whereby we stop taxing work and productive investment, while raising revenue from direct taxation of all monopoly privileges created by government.  This will be a long journey.  If you are ready to start this journey toward economic justice and inclusive prosperity, then I appreciate your vote.

CHANGE YOUR LIFE TODAY

It doesn’t take much to change a life, working together we can create policies that will lift those in poverty, reduce the grotesque economic inequality and develop common sense environmental policies.

Get in touch today and start making the difference.

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