A Simple 5-Point Program For Economic Recovery

1. Close loopholes on corporate taxes

2. Significantly increase taxes on the top 5%

3. Use increased tax revenue from (1) and (2) to employ people for massive infrastructure repair

4. Raise the minimum wage

5. Nationalize all banks and major industries under workers’ control without compensation and install a workers’ government that will use state power to protect the working class from the police, counterrevolutionaries, and other thugs of the corporations

In a pinch, we could probably skip 1-4.

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35 thoughts on “A Simple 5-Point Program For Economic Recovery”

  1. It only just now occurred to me that there is no reason that I need to keep thinking of the USA form of government as so wonderful. That was drilled into my head from day 1, and I still say that compared to most other forms of government on this planet, ours is only mildly malignant, but there is just no reason I have to keep thinking of it as the ultimate form of government. I can let that go now.

    Ok, done.

    If nothing else, you’ve taken me this far, Mr. Brust.

    I actually came here to say something else when I had that epiphany.

    I would love 1-4, those interest me way more than 5. But they probably aren’t sustainable without 5, even if they were achievable without 5.

  2. You are going to have to define banks very carefully; most financial transactions aren’t carried out by entities normally thought of as banks.

    I must confess that my heart leapt when the Swiss finally went into HSBC with a warrant based on suspicion of aggravated money laundering; your best bet is to keep hammering away on the point that the 2012 US HSBC settlement stemmed from the fact that they’d been washing the profits of Mexican drug cartels, as well as various countries deemed to be terrorist havens, through the US financial system.

    There’s a certain pleasure in the thought that the War on Drugs and the War on Terror requires a War on Capitalism…

  3. I would add a 1% tariff on each stock transaction and $1 on each quote request. This would reduce the high frequency trade traffic that’s likely to crash the economy sometime soon, and add a huge amount of income from the system that is currently ripping off our retirement funds.

  4. The big trouble with #1 (which every politician always agrees with), is in defining loopholes. When we tax net income, the big detail is defining what are business expenses. A loophole that is more unlikely than 2-4 is that for charitable or religious organizations. Replacing income tax with something else might allow for getting rid of loopholes, but if so, any business transaction would need to be taxed – some way would be needed to keep taxes from being regressive (but that’s a different issue).

  5. There are much better forms of governments available now, ones that empower every individual even more than a democratic republic, while containing influence to areas of recognized expertise or affect, and rely on dynamic, micro-cell groupings that overlap, both geographically and virtual. Technology is an awesome thing, if applied intelligently.

  6. There are many problems with capitalism but a core problem is that people with a disproportionate amount of power abuse it for their own ends.

    What prevents the people who lead the worker’s government from doing the same thing? It won’t be Larry Ellison and the Walton (Walmart) family at the country club with John Boehner and Barack Obama, but if the leader of the nationalized bank and the leader of the nationalized grocery store are spending a lot of time with the president and the Speaker of the House, then what’s the difference?

    Again, I’m not questioning many of the core ideas of socialism. I understand why the employer/employee relationship is inherently unbalanced in favor of the employer. I understand how a free market inevitably becomes a race to the bottom and how profit trumps all others concerns, especially ethical concerns.

    But how do you stop the leaders – socialist leaders, capitalist leaders, theocracy leaders, philosopher king leaders, any leaders you care to name – from coming to abuse their power?

  7. Mike S: The answer is that you don’t consolidate power into leaders, you distribute it into dynamic cells, and have the power shift as set of localized, consensus-driven support positions. The key is setting up the system in such a way that it naturally prevents a power build-up in any one spot (person, group, position, or structure).

  8. I suppose I didn’t actually address any of the points in my first answer, did I? (:

    Okay then – presented here is my personal take on these issues which, I’ll note, harmonizes with Steven’s on most of the end goals, but we usually diverge in paths to get there, and given that we both have well-considered positions developed over decades, it makes our conversations interesting… (:

    1) How would you propose we get this through? The biggest problem that I see is that the way these things got in there in the first place is through lobbyists convincing members of the house and senate to sneak in unrelated line items into bills that we need to get passed. In order for this to stop, we need one or both of two things: A) Require, as many states do (such as Washington State), that a bill can only address one specific law. This will eliminate close to 95% of the current extraneous-line-item-insertion that happens constantly. B) Line item veto for the president, with the option for the house and senate to rescind the bill after the veto on a simple majority vote. Both of these items would likely take an amendment to stick.

    2) This has been done actually, quite a lot in the past. The problem comes in that the top 5% pay lots of people to do nothing but pay close attention to changes in these areas, and switch around _how_ they make their money _before_ the law takes effect. Using game theory and similar strategies, the current levels are actually netting _more_ revenue from the top 5% from income taxes than ever before, because the top 5% are allowing more of their income to come through in the form of “earned income”. I am, however, totally on-board with an escalating capital gains tax based on number of company employees, based on the ideas that A) the larger the company, the more likely they are to do something damaging to the public interest, B) the larger the company, the more likely they are to take action to suppress the individual who’s trying something new in their market, C) the larger the company, the slower it is to respond to changing needs in their market, D) the larger the company, the more impersonal they become, both to their employees and their customers, resulting directly in increased likelihood of human rights violations, and E) the larger the company, the more likely they are to be able to exert an undue influence over public officials.

    3) I definitely believe we need to invest more in our infrastructure, but I think the currently-low-hanging-fruit is the DEA. With all sorts of research coming out now with scientific proof on effective treatment of drug addiction (being pretty much the opposite of what we’re doing – turns out, drug addition is 95% a quality of life / hopelessness issue, and not a chemical addiction), combined with the results of the solution to most of the homelessness problem (see: Utah and other states that have followed their lead; turns out it’s cheaper to house them for free forever in foreclosed apartments and provide counseling than to leave them on the streets and provide police/jail, emergency care, etc.), it becomes easy and obvious to see the solution, and it doesn’t involve the DEA at all. Cut their $2.8B+ annual budget (as of FY2014) and create a whole set of science-based treatment and quality-of-life step-up programs; do it for under $900M, and the elected officials will be able to pitch it as saving $2B/year while providing better, _real_ help for those in the most need. That savings can then go to improve education programs, including research and education on better, more effective ways to educate; improving our reliance on solar, wind, and tidal energies to help balance our power grid and shift it to a power balancer instead of primary provider; etc, etc, etc. And after the DEA, we can work on some of the massive excesses in the DoD…

    4) Already in progress. In January, 2014, a nearby city (SeaTac, home of the SEA airport) instituted an across-the-board minimum wage of $15/hour. All of the nay-sayers claimed it would collapse the economy, of course, but it didn’t; in fact, the city’s economy and businesses (especially the small businesses, which were the most concerned about being closed by it) are booming. Now, there are a handful of anti-minimum-wage-increase people (whose campaigns are mostly funded by the usual suspects – Walmart and Friends) desperately trying to pass a bill preventing local municipalities from being able to set local business-related things like the minimum wage, primarily because it’s been so hugely successful that the city of Seattle is now in-process rolling out a stepped minimum wage increase to $15/hour over the next couple of years. So, it’s happening on the local-level, despite the best efforts to prevent it, and it’s gaining momentum because it works.

    – A) Banks. I already belong to a credit union, as does my whole family and most of my friends, and I haven’t had an actual “bank” account for years. With credit unions, the account holders ARE the stock holders. They’re constantly adding new and better features for their customers / “stockholders”. A few months back, for instance, they just added (for free) a massive (and I must say dead-easy / intuitive) money manager, that can track all of your accounts automatically, coordinate them with an automated budget generator (that you can easily tweak as needed), gives you alerts when certain types of events happen that you’re interested in (such as overspending on a budget item, or an account dropping below / going over a certain amount), and can help you calculate the fastest way to pay off all of your debts, all visually with single-click and drag-and-drop interfaces. There’s a massive movement away from traditional banks currently underway, as people realize that with credit unions, they’re the ones who are the owners. The big banks realize this, and keep trying to push for legislation to severely limit and cull the credit unions, but for now, those bills keep failing. We just have to stay vigilant to ensure that they keep failing.
    – B) Utilities. Public Utility Districts are totally the way to go with this. Again, owned directly by the taxpayers in the area they serve, there is never any conflict of interest with external shareholders. Our PUD (which provides our electricity and gas) has been amazing, constantly looking for new and innovative programs to help improve the area. They have a full-time team that’s constantly evaluating the conditions on and around all power poles and feeds, and constantly fixing things _before_ they go wrong. They are constantly developing programs to connect home- and business-owners with local, vetted and bonded contractors and low-rate loan programs to help put in backup generators and supplemental or replacement solar power.
    – C) Major industries. What do you consider “major”? I ask, because I can almost guarantee you’ll get as many differing answers as people you ask. The best way to do this is the same way credit unions are tanking traditional banking – by providing a better answer that is an improvement that is clear enough to everyone who looks at it that it’s the better way to do things. Results speak for themselves, and enough of them will overwhelm even the biggest propaganda machine (at least these days they do).
    – D) Government…Well, this one’s going to take quite a bit longer, and a bunch more finesse. What we really need is to do is be able to demonstrate an alternative, again clearly and provably beneficial enough over the current form, and one that can be implemented a piece at a time, without appearing to pose any threat to the establishment, at least at first. Once there is enough of them in-place, provably working at a significantly-higher level and with fewer negative side-effects, establishing a set of best practices for a smooth “upgrade”, and there is enough legal precedent that it can’t be squashed without making those attempting it look blatantly like the big bad guys, there won’t be any stopping it. But it’s going to take years of careful planning, creativity, and steady progress by a large number of people spread across a large area. One would almost think you wrote a book on that… (:

    Okay, I’ll stop there. I think that’s enough from me for now, don’t you?

  9. Oh, one more thing: The Federal Reserve being a private corporation and not a Federal Department is a very serious, long-term issue that is one of the biggest threats to our economic stability. That definitely needs to be stopped, ASAP.

  10. Thought: even if the system works internally, can it prevent external sociopaths from biting off pieces of it? Theoretically sure. As a practical matter, armies and the support of armies tend to evolve rapidly into a particular mindset. With respect to the FAQ SKZB referenced, I think that one of the reasons why the Soviet Union took its eventual path was that the only concentrated, “industrialized” proletariat in the country of any material consequence was the conscript army kludged together to compete with the Germans. Even the “modern” parts of Russia were backwards by the standards of Poland or Czechoslovakia, not to mention America and Western Europe. So guess which class eventually became the template for the Revolution: the military bureaucracy. They made a valiant effort to create an industrial proletariat after the fact, but the mind set was already cast.

    What’s more interesting perhaps is that America’s entry into WWI was partly driven by a need to destroy the rising number of non-Anglophonic subcultures in the U.S., who tended to be more socialist and/or pacifist than the establishment. Even so, America was about the only country that wobbled left during the interwar years. The others either fell right or stayed on the fence. (Yes, having the New Deal instead of a KKK national “awakening” counts as wobbling left, for all we may scoff.)

  11. PrivateIron: Yes, it can. We’re rapidly evolving, as a global culture, away from the traditional “army as we knew it”, in large part due to a whole slew of tech advances in numerous areas, but also in large part because we see that we no longer have to tolerate an aggressive, bullying portion of society in order to maintain a minimum acceptable level of safety and stability. We have a lot of alternatives to handling all sorts of nasty situations now, and fewer and fewer of them are involving the military. You’ll notice that most of the US military, for instance, is currently over in the area of the world that is the most behind the rest of the world, at least in terms of cultural advancement. It’s one of the last big hold-outs on modernization, especially in terms of thought patterns and belief systems, and a whole lot is being done by a whole lot of people (not just militarily; in fact, most of the work for that area and its peoples doesn’t involve the military) to bring them up to speed, as it were, as fast as possible. This, in turn, is reducing the pool of abject poverty, desperation, and ignorance that is making it possible to churn out so many people that we would consider dangerously crazy.

    However, statistically, we will never be completely rid of dangerously crazy people. To that end, we have or are putting or need to put checks and balances and countermeasures into place that prevent any one or small group of people from taking on too much power to be able to hurt others with. This applies to weapons, laws, politics, economics, etc. It’s an equilibrium, and it needs to be maintained and grown; as technology and ideas grow, it needs to keep up with them. That’s one of the biggest and most important purposes to science fiction and fantasy – getting us to think about how things might turn out, and how we could do things differently, _before_ Really Bad Things ™ happen.

    Okay, I’m all over the map on this post, too. Whee!

  12. Can we add something to the effect of “No More College Tuition and Free Textbooks”? We’re running out of doctors because no one wants to go nearly a quarter of a million dollars in debt before starting their career.

  13. skzb,
    Thanks for the link to that post. I’ll read it, and see if I can find “The Revolution Betrayed”. Thanks.

  14. Dagonell: I like your suggestions, since I teach at a community college that charges $44.50 per credit for district residents, and I’m using a free textbook from OpenStax for one of my classes and am hoping to start using another next year. So far no repercussions from corporate thugs. In fact, your suggestion about free textbooks is the first of those above that might happen.

  15. Re: College tuition and textbooks

    Oregon’s starting a “pay it forward” college program, and there are now “almost no cost” online colleges, such as U of the People (uopeople.com)

  16. SKZB, you start your list with a populist idea that has little or no practical value – and may actually be counter-productive. Achieving #1 would not change the system for the better in any significant way.

    Businesses/corporations have a cost of doing business. They will set prices based on these costs. Increasing corporate taxes equals higher prices. The only real difference then is where the money is collected – on an IRS form or at the cash register.

    Looked ta another way, every tax-loophole is just a policy decision. With rare exception they (loopholes) don’t occur by accident. Does the government wish to subsidize a promising industry in hopes that it will grow to be a major employer and benefactor to the economy? Does the government wish to support an industry in a depressed area?These policy decisions have to be made regardless the form of government – unless one is a strict libertarian.

    Drop #1 from the list entirely.

  17. Kevin, loopholes in corporate taxes are subsidies for the particular corporations that get to use those loopholes, and put the corporations that don’t get to use those loopholes at a competitive disadvantage. I think it would be better to specifically give those advantages to businesses that we officially want to subsidize, and not sneak them in with complications in the tax code.

    But of course if we nationalize them, it doesn’t matter so much how they are taxed.

    I would consider an alternative. Rather than nationalizing all large businesses, I would ask whether there are compelling reasons they should be so big. If not, strongly encourage them to split up into smaller companies that compete, and that would have less influence on government. Of course if they wouldn’t work as small companies then we could nationalize them instead.

    I like my idea because it is simple, and it doesn’t require a large role for government. I can understand that Steven might dislike it because while it reduces the problem of big business controlling government etc, it still leaves a large number of business owners — and even more business managers than before — so it does not resolve the class issues.

    But then, if we’re going to have an owner class or a manager class at all, then we need to find some way to co-exist with them. The obvious alternative is to make them illegal, and then kill them if they refuse to give up their old habits. I have some qualms about that. Lots of times, killing people just makes things worse. Though admittedly sometimes it’s necessary.

  18. Even with the assumption that all corporate taxes are passed to consumers, when they *are* taxed, variations in the taxes (loopholes), change how the trade occurs. We can expand this to include how corporations pay for their costs to the environment (and elsewhere) that they don’t wish to pay. Regulations are a kind of tax that can have loopholes as well.

  19. I very much agree that “too big to fail” is “too big”.

    Unfortunately, we keep seeing over and over again that Big works. Big companies push out small companies. Big companies can afford huge R&D. Big companies can afford big bribes.

    Of course, the people who seem to like Big Business the most, often complain that the government is too big to be efficient.

  20. ‘I very much agree that “too big to fail” is “too big”.’

    There’s no reason the government shouldn’t demand that corporations be split into pairs of corporations that could compete.

    Here is a list of the largest US corporations by revenue:

    1 Wal-Mart Stores 469.2B
    2 Exxon Mobil 420.7
    3 Chevron 222.6
    4 Phillips 66 166.1
    5 Berkshire Hathaway 162.5
    6 Apple 156.5
    7 General Motors 152.3
    8 General Electric 144.8
    9 Valero Energy 138.3
    10 Ford Motor 134.3
    11 Federal National Mortgage Association 127.5
    12 AT&T 127.4
    13 CVS Caremark 123.1
    14 McKesson 122.5
    15 Hewlett-Packard 120.4
    16 Verizon Communications 115.8
    17 Koch Industries 115
    18 UnitedHealth Group 110.6
    19 JPMorgan Chase 108.2
    20 Cardinal Health 107.6
    22 IBM 104.5
    23 Costco 104

    But we can also split corporations if their employment is too high.

    1 Wal-Mart Stores 2,200,000
    2 Yum! Brands 523,000
    3 McDonald’s 440,000
    4 International Business Machines 434,246
    5 United Parcel Service 399,010
    6 Kroger 375,000
    7 Target 361,000
    8 Home Depot 340,000
    9 Hewlett-Packard 331,800
    10 General Electric 305,000
    11 Tata Consultancy Services 300,464
    12 Sears Holdings 293,000
    13 Bank of America 281,791
    14 Berkshire Hathaway 270,858
    15 Citigroup 266,000
    16 Wells Fargo 264,200
    17 J.P. Morgan Chase 260,157
    18 AT&T 256,420
    19 FedEx 255,573
    20 Walgreens 211,500
    21 General Motors 220,000
    22 Lowe’s 204,767
    23 Aramark 203,500
    24 United Technologies 199,900
    25 Verizon Communications 193,900

    There could be some corporations here that deserve not to be split up. AT&T? UPS? GE? I dunno. Splitting the ones that need it would surely do more good than splitting the ones that don’t would do bad.

  21. J Thomas: I don’t think companies should be split up by revenue, because I don’t see that as the driving source of the problem. I think they _definitely_ should be _strongly encouraged_ (one of my key rules – never _force_ anything, always inspire; if you have to force something, you’ve already failed) to split up if they get too many employees, because it’s far too easy to slip into the impersonal “it’s just business” mentality if there are more than 150-200 people in a company, and it gets orders of magnitude easier to slip into as you get orders of magnitude more employees. “It’s just business” is a lie people tell themselves to justify doing something that they really want to do, but know is very, very wrong; because if humans are involved, it’s _never_ “just business”, and can never be. But once the “tribe limit” is exceeded (Dunbar’s number), employees start falling off the “they are people” plateau and into the “them” / impersonal chasm, and I’d argue that a strong case could be made that a provably large portion of the problems we currently have relating to business have that as a source. Let’s remove that low-hanging fruit first, and see what the next-largest remaining problem is. That’s why I proposed above the “exponential increase in capital gains tax based on increased employment size” tax change. It would give the money-people, who pull the strings in the large corporations, a significant and very real and personal (to them) incentive to rearrange things into much smaller groups, which would make abuses far harder to accomplish, just from an emotional basis, and certainly much harder to implement in a wide-spread fashion. It should also significantly reduce the direct influence some of them exert over government officials, make for a friendlier, more personable working environment, and be healthier for both the companies and their customers.

    Steven: I suspect you were really only half-joking with this post, and are secretly pleased at the extensive discussion it inspired. Discussions like this are a healthy and critical part of a society’s and culture’s long-term viability. But then, you probably already knew I was going to say that. (:

  22. Thought: Well, yeah…only it’d have been nice if more people got the joke. I mean, in addition.

  23. Were you joking about #5? I thought you were serious.

    It seemed funny that you led up to it with 1-4.

  24. When I moved to Colorado, it was illegal to have branch banks. Banks were supposed to be more community oriented. That is no longer the case. I’m not sure what that meant, as there were banks that had national names.

  25. I do mean #5. The idea was to give four points of a generic liberal agenda, and then a fifth point that makes the others absurd. And it worked as well as any joke you have to explain. :-)

  26. Well I got it, at least.

    We have a problem. I have a whole lot of doubts about your solution, but I am not confident I have a better one.

    I’m not at all sure that I trust the particular members of the proletariat who would step forward to run the economy, any more than I trust the people who do it now.

    I’d prefer to find some way we could all just get along. Except that we aren’t doing very well at that….

    Sure, banking is a scam. It started out a scam. In the days of metal money it accidentally provided a useful service — sometimes. Now it’s utterly anachronistic, but we’re still using it and we’ve developed a culture where somebody who doesn’t go into debt can’t develop a credit history and his social status suffers. It’s absurd.

    We probably ought to nationalize the banks. But how can we? Most of the public and many of the politicians are entangled in debt. It might take a revolution.

    I want to propose a half-measure — no an eighth-measure — of government-run checking accounts. It’s a small step that we might actually manage to do, that weakens banking a little bit. I want to hope that maybe if we can take enough small steps to make things better, possibly we might avoid the massive bloodshed of a revolution, and the likely disappointment of “meet the new boss, same as the old boss”.

    I don’t have a lot of hope, but hoping for the revolution has too many parallels to hoping for the Second Coming. I don’t want to support Israel in the hope that Armageddon will come and Israel will be destroyed and that will bring us closer to the Rapture.

    I’d rather hope we can all get along. But I notice I take comfort in keeping a few months’ worth of rice and lentils and charcoal to cook them. The Mormons tell their people to store a year’s supply of food, and they probably get four times the comfort from it that I do. I don’t have nearly as much hope that we can get along as I’d like to.

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