I thought of something very similar and practically identical as far as what we'd provide for the lower class. It's amusing because I've never seen anyone else actually put it this way - but maybe my view is a lot more popular.
My ideal society would be a lot more lax, government wise, than yours but government would provide all the basic necessities - we could call it base level living. Housing, medicine, food, clothing - all free, all very basic and cheap but that would keep a person content, healthy, and educated. I'd even go further and allocate a welfare payment for some basic entertainment. If they want to work and improve their life, that's their choice. I believe this system will be possible as the costs of energy and certain goods will drop in the future.
Of course once you rise above that level, you don't deal much with the government anymore except for the flat tax to cover the basic living for the "losers" below. Sky is the limit on luxury items, housing, transportation, etc.
So you have two choices: a lazy zombie stuck in govt provided Virtual Reality entertainment with all the necessities provided to you, or you can try and rise about your station and become all you can be.
Capitalism with an underlying basic level of socialism on the bottom. Fine with me.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
And why? Very few of us work for the sake of working so what would the motivation be?
Would it be law that you had to work to receive these entitlements?
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
Most people are going to be motivated to work because they want something. What it is they want is up to them but most people are not going to be completely satisfied living simply on the basic amenities. In order to get those things they are going to work to get money to aford the luxuries.
It isn't required by law to work, and you have to assume there would be a small percentage of serious "drop outs" who would just coast by on the basics. That shoprtfall would be covered by the government taxes. Everyone else is basically paying their way through the installments. The difference being that if they fall short for a while they have a cushion.
a. Our society is not ready for something like that as with our current level of technology this system would be prohibitively expensive and bankrupt us.
b. Though it is a concession to socialism, it is fair to those who want to make something out of themselves and I believe that most would. I think it would make our capitalist system a lot stronger by making removing the focus on social programs and poverty, and allowing us to make our capitalist system more robust and healthy.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
You left wage structure out of economy. Are wages to be controlled? Is there to be a minimum or maximum?
How about entrepreneurship? Do people have to go to the government to get capital? What happens if they are turned down, but want to still pursue their idea?
China and the USSR both had guaranteed employment. It worked pretty well for most of population, but there was no innovation and the ruling elite exploited the system (they still do).
I'm in favor of a guaranteed minimum income even for slackers. I don't think it will be excessively abused, especially if there are emotional rewards to earning your keep that don't exist for those unwilling to work. Furthermore we can afford it.
I think capitalism with adequate controls over business is the best we can do with our present state of social development. It allows for innovation, but prevents abuse of markets and workers. Unfortunately, we are currently in a period of low business control and are seeing the consequences: wage stagnation, environmental damage, excessive wealth concentration and runaway militarism, among other things.
I'm not sure it would be too expensive really. It would certainly require a large scale upheaval of our current economy if we were to try and put it into operation but the actual costs?
I guess I look at at Medicare ($340 billion from the feds in 2006), Medicaid ($193 billion from the feds in 2006), Social Security ($764 billion from payrolls, $120 billion from the feds in 2005). That's a lot of money for projects that wouldn't be needed under this system.
You left wage structure out of economy. Are wages to be controlled? Is there to be a minimum or maximum?
Hadn't thought about it. Given the meaninglessness of "living wage" under such a system I'd be tempted to let wages float unconstrained. Ideally since people wouldn't be in a situation of needing the money to live they would have more flexibility to seek out a job with compensation that suited them.
LOL. The irony of my system, in a way, being more appropriate to a "free market" job market isn't lost on me.
How about entrepreneurship? Do people have to go to the government to get capital? What happens if they are turned down, but want to still pursue their idea?
People are still free to invest the money that they keep (i.e. that which is above their account payments and the taxes) if they choose. Off the top of my head I'd guess such a system would be less attractive to foreign capital but that's just a guess.
I'm in favor of a guaranteed minimum income even for slackers. I don't think it will be excessively abused, especially if there are emotional rewards to earning your keep that don't exist for those unwilling to work. Furthermore we can afford it.
I'm not sure if you are saying this by way of agreeing with my plan or in contrast to my plan. I think that what you describe is basically what I've tried to outline.
I think everyone should have basic Govt health care and if they need fancy stuff like choice of doctors, experimental drugs, brand name drugs etc then they buy more insurance.
Right now we pay for our own health care and it runs $300/month for individual without problems but then it may even go upto $1000/month or more if you have a lot of medical problems or may not even be able to buy insurance.
So it is like paying taxes except it goes to an insurance company.
At least with Medicare-- you dont have the problem of authorization and increase premiums that you do with HMO or other insurance.
Furthermore it will be good for business who dont have to shoulder increasing health costs and employees who end up paying more premiums.
I'm not sure exactly about your question. I listed medical care as one of the basic amenities. In general I like universal health care and rather despise insurance companies as one of the more extreme examples of blood sucking parasites on the human condition.
Suppose it costs the government X dollars to support Y percent of the population doing nothing, and the government makes Z dollars from taxing the (100-Y) percent of the population that works. What sort of figures make this feasible?
For example, suppose it would cost the government $20k/year to support a non-worker, and suppose that the average net income from taxes is $2k/worker/year (in other words, after subtracting out the consumption of government services from these workers). I think those numbers are a reasonable starting point, anyway. Then to break even on these expenses alone, the government would have to have 10 workers supporting every non-worker -- in other words, if more than about 9% of the population decided not to work, we'd be in trouble.
I suppose you could tie the government output to the input, and then the system might self-correct: as payouts decrease, people would be more likely to go and work. But there has to be a minimum level of expense somewhere if we are trying to provide a basic living situation.
The long-term account aspect makes this much more appealing than just giving away money, of course, and I do like that idea quite a bit. OTOH, after someone runs up a bit of a tab there's not much incentive to work anymore, since their standard of living wouldn't really improve as they pay back the government.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
For example, suppose it would cost the government $20k/year to support a non-worker, and suppose that the average net income from taxes is $2k/worker/year (in other words, after subtracting out the consumption of government services from these workers). I think those numbers are a reasonable starting point, anyway.
consider that the median income currently is about $29,000 dollars including things like social security deductions which wouldn't exist under my system. If I look at my paycheck and add back in all those kinds of deductions my pay goes up almost 38%. Actually I may have added that up wrong, but lets say at least 20%.
That takes out median personal income up to $34,800. And realy for this we should be using mean instead of median as the professional sports stars, actors, and grossly overpaid CEOs will be contributing far more (no loopholes for you!). Mean personal income is $38,500. Add on a base 20% and you are up to $46,000
$2000 tax on $46,000 a year is only about 4% tax rate. That moaning sound you hear is Grover Norquist getting very happy.
Under this system, if I knew that my basics would be covered no matter what, I'd be very likely to work for a while to build up the "luxuries" that I wanted, then quit. Start working at 18, build it up, retire at 40.
Work is way overrated. Try it for 40 years before saying you doubt me. You'd have a lot of folks bailing early in this system. But it's an interesting proposition.
"Perplexity is the beginning of knowledge" -- Kahlil Gibran
...but consider how many people right now could have set themselves up for a decent retirement but just don't. My mother is a prime example of this. She's worked as an Occupational Therapist at a major hospital for over 20 years now. And I fully expect she'll be working there right to the end. She makes good money but she's constantly living above her means.
She's not stupid by any means and she knows that she's basically screwed herself but she just won't stop.
One of the most basic assumptions in economics is that people make rqtional decisions, that's precisely why the whole field is so amazingly incompetent.
that the first $20k/year of worker earnings goes towards the basic services provided by government, and then the $2k/year is an average tax on additional earnings. IOW everyone would get the basic housing, health-care, etc from the government and workers could upgrade with their extra income if they wanted.
Alternatively workers could be permitted to opt-out of governmental services and purchase their own housing, health-care, etc, in which case the government would let them keep all that income.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
but still $2k tax on $26,000 (mean-20k for government amenities) is only a 7% tax rate. Of course the actual tax rate would have to be higher for things like military and infrastructure (roads, et cetera).
The plan sounds too good to be true in my opinion. You will of course have the common reaction of folks who say "I work, why shouldn't they..." But then you'd have to hope people's Quest for More exceeds people's tendency to settle for the path of least resistance. Many ideas are developed out of necessity. If that necessity is already provided, will people really be driven to innovate?
Second, a point on Universal Health Care: if we do it, will all the other "Universal" solutions follow it? I mean, it'll only be a matter of time before people demand Universal Health demands -- like Universal Smoking Bans, Mandatory Banning of Trans Fats (like here in New York City), Universal Excercise Requirements, Cholesterol Limits, Limits on Sugar Intakes, etc. After all, if everyone shares the burden, shouldn't there be concessions made?
And on the housing, I think everyone should have a roof over their head. It's in everyone's best interest, but I'd be interested in who owns the property--the government, or the person? Since it's "free," they won't be able to take tax deductions, etc. IF we do provide Housing for All, does the government decide where people should live?
I like the idea on its face, don't get me wrong, but I'd have some concerns about letting the government handle the logistics of such a process. Outside the military, logistics management is not the Government's forte, as we're well aware. They're primary concern is campaigning every 2 years.
Employee might even get a higher pay raise or provide additional health insurance.
I bet the additional tax for having universal health insurance is even less than the employeees contribution for health premiums. And emplyee wont even get the stress of being afraid that if he gets disable he will lose his insurance.
Now, certainly $10000 by itself is not enough to get by. But consider two people pooling their resources (could be a married couple, or could be just a pair of roommates). Suppose each person also has a full-time $10/hr job. That's $60K total a year for two people to live on. You're not going to have a super-glamorous lifestyle on that, but you're definitely not going to starve to death and go homeless either, not even here in CA where the cost of living is high. (Think $1500/month for a 2-bedroom apartment)
I think you would find a lot of conservatives who would be willing to go along with something like Murray's plan -- as long as it *replaces* the existing welfare state, rather than it being added on top.
The part about research, on the other hand, does not seem as well thought out to me. You propose that the government offer prizes for particular breakthroughs -- but by what standard are the values of these prizes to be set? What if you think a particular invention is great, and I think it is useless, or vice versa? How is the government to decide who is right and who is wrong?
In a capitalist system, this is where the capital markets come in. If you have an idea you think is great and want to sell it to the world, you have several choices:
- You can self-fund the business and put your own money on the line. This is the riskiest for you, but if it works, you get to keep 100% of the profits.
- You can borrow someone else's money to put on the line, and compensate them for the risk they are taking by paying them back not just principal but also interest.
- You can sell stock in the business, and compensate your shareholders for the risk they are taking by giving them a percentage stake in the earnings of your company.
- You can do a mixture of these things.
But the capital markets are also competitive. Other people are *also* going to the capital markets seeking loans or trying to sell stock to prospective investors. To get funded, you have to convince your investors that your idea is *better* than other peoples' ideas, i.e., that they can make a higher rate of return by investing in you. To do this, your idea needs to be *more profitable* than other peoples' ideas, i.e., it needs to generate a higher return on the invested capital. Or, maybe it needs to be *less risky* than other peoples' ideas, i.e., the probability of your idea failing is lower.
And there is only so much capital out there to go around, so some ideas will *not* get funded. These will tend to be the ones that are too risky, or the ones that don't have enough prospect for returns.
To use your example...
Suppose that there is currently a $1B/year market for solar panels. Each solar panel costs $1000 and 1 million are sold per year. Suppose I have an idea for a new technology that will allow me to build a solar panel that produces just as much power and lasts just as long, but that is more efficient, so it only costs me $800 to build it, and I can still sell it for $1000.
But, suppose I need $50M in venture capital to make it happen, and my idea isn't guaranteed to succeed. If the idea fails, all $50M goes down the drain with nothing to show for it. If it succeeds, let's suppose my company can claim 20% of the solar panel market.
20% of the $1B/year market is $200M/year, or 200K solar panels. Since my profit is $200 per solar panel, that means I would make a $40M/year profit if my idea works out.
Of course, eventually other people will catch up to my idea. Suppose that it will take them 5 years to clone my idea. Once they catch up, competition will drive the price of a solar panel from $1000 down to $800, and I can no longer make any money unless I come up with some *other* new idea.
$40M/year profit times 5 years is $200M in total profit. I want a $50M investment. So, my idea will not get funded unless I can convince investors that my idea has at least a 25% chance of working, or else I'm not expected to make money on average.
In fact they'll want it to be *more* than a 25% chance of success, because they'll want a return on their investment too to compensate them for the risk. How much more than 25%? Depends on how much of a return they are looking for. Remember, you can get 5% a year risk free in a savings account right now, so if I want to borrow money, I'd better offer them an interest rate quite a bit better than 5%. Or, if I want to sell stock, they'll know they can earn an easy 8% or more a year over the long run just investing in index funds, so I'd better offer them better returns than that.
I'd actually qualify this system as the opposite of what Murray suggests. He wants a system where the government provides a small chunk of cahs and it is entirely up to you to figure out what to do with it. I want a system where the government provides basic living amenities and then you get spend whatever extra cash you have.
The part about research, on the other hand, does not seem as well thought out to me. You propose that the government offer prizes for particular breakthroughs -- but by what standard are the values of these prizes to be set? What if you think a particular invention is great, and I think it is useless, or vice versa? How is the government to decide who is right and who is wrong?
Remember that anyone can carry out research, patent the results and then sell in the luxury space under this system. That'd be virtually identical to today's environment.
The difference is if you want to research for the government amenity space. In that case the government can set the prize based on how much money your reseach will save them in providing the same quality of amenity. As in the example if you improve solar cell efficiency by 15% then they base how much you get on how much money that save s them. That encourages research in the most impactful areas.
In general, I'd rather someone give me $X in cash rather than $X worth of stuff. With the cash I could spend it on something different, or save it for the future. It's a lot easier to turn cash into stuff than to turn stuff into cash (e.g. buy stuff vs. try to sell it on EBay).
As in the example if you improve solar cell efficiency by 15% then they base how much you get on how much money that save s them.
Suppose I have an invention that I think will save them $100K a year, but when I describe it to them, they don't like the idea (for reasons that I disagree with) and are only willing to offer me $50K for it? What recourse do I have? Or, suppose the government offers *too much* for it (say, $10M) -- what recourse do the taxpayers have?
In a capitalist system, this is resolved via competition. Entrepreneurs compete for investors' money, but investors also compete for entrepreneurs' ideas. If an investor is trying to scam me and claim too much of the profits on my idea in exchange for funding it, no big deal -- there are always other investors who might be willing to offer me a better deal. And investors are also free to not invest in any idea whose promised return on invested capital is too low for the risk. Both sides have an incentive to make reasonable offers, because if they make an unreasonable offer, they know the other side will decline.
In your proposal, the prices of innovations are set by the government rather than by self-interested individuals out to make a buck. If I as a private individual overpay for something, *I* suffer. If I am not willing to pay enough for something and end up not getting it because the other party isn't willing to sell, *I* suffer. So it is strongly in my interest to make good economic decisions. On the other hand, when the government makes a poor decision, someone other than the decision-maker suffers. The decision-maker does not have a strong incentive to make the right decision, because they are "playing with someone else's money." In technical terms, it is an "agency problem."
Agency problems are not unique to government. Any organization has them. For example, in a large corporation with 100,000 employees, the day-to-day actions of at least 99% of those employees are almost certainly not going to have a material impact on the bottom line of the entire corporation. As an employee, if I get paid the same amount whether I work or slack off, and it's easier to slack off, my incentive is to slack off. But suppose I get paid a "piece rate" rather than an hourly wage or an annual salary -- I get paid a particular number of dollars for every widget that I assemble, every crate of strawberries I pick, every pair of jeans I sew, or whatever my job is. Now slacking earns me zip, while working extra hard earns me *more* in the same amount of time. The agency problem is solved -- my interests and the interests of the shareholders of the company are now aligned.
Because in general people make terrible decisions economically. Seriously. I know we all like to think we are smart and can handle the nuances of every aspect of life from knowing what vaccines a kid needs to figuring out how much money we need to retire, but it just isn't true. At best each of us is only an expert in two or three areas and have a passing knowledge of another half dozen.
This is why there are so many service industries that are nothing more than consulting practices. The problem of course being that these consulting businesses aren't always best served by giving you the best information (witness wall street brokerages who make more money not when you make money but merely when you transfer funds from one stock to another).
This is part of the reason social security privatization hasn't caught on. A lot of people, especially older voters who tend to be more cautious, realized they didn;t want to have to suddenly learn everything ever about what investments made sense. Nor did they particularly want to get fleeced by some broker who doesn't give a rat's behind if his clients are eating cat food.
I think it was a cartoon that said "And in case you were wondering I don't want to haul my own garbage to the city dump either." Some minimum level of existence should be taken care of by the government.
For what it's worth, each of us currently spends three times the average Canadian on health care. If we
The truth is governments are much better with money than corporations. Any study reveals this. A good example is how Medicaid spends something like 2 cents on the dollar to administer; HMOs typically require about 20 cents to keep their heads above water.
The difference, of course, is that HMOs need to make profits, and governments do not.
My plan is very consistent with my pro-capitalist stance. I simply want to remove persistent problems from the equation thus freeing our system up for real guiltless and almost government regulation free competition.
Under my plan the elderly, the sick, the incompetent, the retarded, the lazy, etc will all have a very basic lifestyle covered so they do not get hungry or ill. But those who want to excel will have all the opportunities and unlimited possibilities to do so. With a fair non-progressive tax on all their income to boot.
It unleashes capitalism while providing for those who don't want to or can't participate.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
"I'm in favor of a guaranteed minimum income even for slackers."
The current system works better. Give them medical cards and food stamps, and if they can't make the rent they can get help there. I don't even personally mind if someone is homeless as long as they have access to food and medical care, but I'm somewhat of a moderate.
Cash handouts are just an awful idea on the face of it. Welfare works much better than socialism.
better systems for the future and this was just one of the possible solutions when some of the costs (energy, food, medicine) come down.
Obviously Tlaloc outlines something along similar lines. However my intent is not to move away from capitalism but to actually move back towards the less regulated version of the past. In order to do that we have to remove all the problems that have weighed it down in a consistent and fair manner.
That means a fair tax, less regulations on business, more incentives to achieve and get off the government dole. That means we have to provide a really great alternative to just getting by. A system that promotes wealth creation and lavish wealth consumption.
It's capitalism on steroids.
I had a whole system fleshed out maybe 6-8 years ago when I first came up with what seemed like a decent idea. Of course it has other points like inability to vote while on public pay, and capitalism enshrined and unalterable in the constitution.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
I am sure our reasons are not totally opposite. I don't want people suffering either and if it can be avoided in the future while at the same time providing stabilizing force for the society in general, then why not.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
I agree that many people badly mismanage their money. I think it is critical for young people to learn money management skills as they grow up and believe various aspects of this should be taught in schools as well as at home, starting from fairly early grade levels. (I remember being forced to learn how to balance a checkbook in elementary school. I watched "Nightly Business Report" with my dad when I was 15. I had a subscription to the Wall Street Journal in college and read the entire paper every single day.)
Example of the kind of advice I'd think would be obvious, and yet somehow escapes some people: if you're struggling to pay the bills, you should not buy a car that costs upwards of $20K. In fact, you probably shouldn't spend more than *$10K* on your car if you are struggling to get by. And yet I know people who *do* have trouble paying the bills, and who not only have cars that cost more than $20K, but also choose to spend money on extra car-related luxuries like tinted windows, rims, etc.
In the classic words of a recent SNL skit, "Don't Buy Stuff You Cannot Afford." (http://www.salon.com... )
At the same time, I strongly believe that *I* am fully competent to manage *my* money. I am the kind of person the credit card companies lose money on, for example -- I pay off my balance in full every month and use cards that pay lots of cash back on all my purchases (and let's not even go into abusing 0% APR credit cards). My bank rebates me any ATM fees I incur. My paycheck gets deposited straight into a Vanguard tax-exempt money market fund (with better rates after-tax than any taxable account pays). My investments are in ETFs with low expense ratios and high tax efficiency. I max out my IRA and 401k contributions every year. Oh, and most important of all, I'm *cheap*. Really cheap. I don't buy stuff just for the hell of it.
So why can't the government just *trust* me with my money? Why does it have to come up with all sorts of crazy schemes, a la Social Security, to take it from me now and then give it back to me later?
Or, in your scheme, why should the government give me stuff rather than money? In fact, just give me (for example) $8K cash rather than $10K in stuff. I probably didn't need the $10K of stuff anyway.
...to having a voluntary social security program where people invest the funds at their discretion. Or at least a pilot program (although given how long it takes to get from meaningful change in investing to an actual measurable result prehaps "pilot" is misleading). I'm not completely in favor of it because SS exists in part as the government's assurance to you that you won't be completely screwed in your old age if you don't plan well.
Or to compare to my system it has to be goods because the goal is to eliminate entirely homelessness and hunger. If you give people appropriate cash some of them are going to blow it. And there's really no way to tell who will and who won't. So you give them what they need, and not what they want. Then you let them work for what they want.
Giving them cash means ending up right back where we are now.
Comments :
when I thought of an ideal society for the future
I thought of something very similar and practically identical as far as what we'd provide for the lower class. It's amusing because I've never seen anyone else actually put it this way - but maybe my view is a lot more popular.
My ideal society would be a lot more lax, government wise, than yours but government would provide all the basic necessities - we could call it base level living. Housing, medicine, food, clothing - all free, all very basic and cheap but that would keep a person content, healthy, and educated. I'd even go further and allocate a welfare payment for some basic entertainment. If they want to work and improve their life, that's their choice. I believe this system will be possible as the costs of energy and certain goods will drop in the future.
Of course once you rise above that level, you don't deal much with the government anymore except for the flat tax to cover the basic living for the "losers" below. Sky is the limit on luxury items, housing, transportation, etc.
So you have two choices: a lazy zombie stuck in govt provided Virtual Reality entertainment with all the necessities provided to you, or you can try and rise about your station and become all you can be.
Capitalism with an underlying basic level of socialism on the bottom. Fine with me.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
couple of quick questions
Who would work to support these entitlements?
And why? Very few of us work for the sake of working so what would the motivation be?
Would it be law that you had to work to receive these entitlements?
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777
dang
Agreement is a hell of a way to start a knock-down drag-em-out debate!
I came. I saw. I posted.
Veni, Vidi, Bitchy.
motivation
Most people are going to be motivated to work because they want something. What it is they want is up to them but most people are not going to be completely satisfied living simply on the basic amenities. In order to get those things they are going to work to get money to aford the luxuries.
It isn't required by law to work, and you have to assume there would be a small percentage of serious "drop outs" who would just coast by on the basics. That shoprtfall would be covered by the government taxes. Everyone else is basically paying their way through the installments. The difference being that if they fall short for a while they have a cushion.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
hehe
yeah indeed... Though a few caveats:
a. Our society is not ready for something like that as with our current level of technology this system would be prohibitively expensive and bankrupt us.
b. Though it is a concession to socialism, it is fair to those who want to make something out of themselves and I believe that most would. I think it would make our capitalist system a lot stronger by making removing the focus on social programs and poverty, and allowing us to make our capitalist system more robust and healthy.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
Wages
You left wage structure out of economy. Are wages to be controlled? Is there to be a minimum or maximum?
How about entrepreneurship? Do people have to go to the government to get capital? What happens if they are turned down, but want to still pursue their idea?
China and the USSR both had guaranteed employment. It worked pretty well for most of population, but there was no innovation and the ruling elite exploited the system (they still do).
I'm in favor of a guaranteed minimum income even for slackers. I don't think it will be excessively abused, especially if there are emotional rewards to earning your keep that don't exist for those unwilling to work. Furthermore we can afford it.
I think capitalism with adequate controls over business is the best we can do with our present state of social development. It allows for innovation, but prevents abuse of markets and workers. Unfortunately, we are currently in a period of low business control and are seeing the consequences: wage stagnation, environmental damage, excessive wealth concentration and runaway militarism, among other things.
--- Policies not Politics
I'm not sure about (A)
I'm not sure it would be too expensive really. It would certainly require a large scale upheaval of our current economy if we were to try and put it into operation but the actual costs?
I guess I look at at Medicare ($340 billion from the feds in 2006), Medicaid ($193 billion from the feds in 2006), Social Security ($764 billion from payrolls, $120 billion from the feds in 2005). That's a lot of money for projects that wouldn't be needed under this system.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
interesting points.
Hadn't thought about it. Given the meaninglessness of "living wage" under such a system I'd be tempted to let wages float unconstrained. Ideally since people wouldn't be in a situation of needing the money to live they would have more flexibility to seek out a job with compensation that suited them.
LOL. The irony of my system, in a way, being more appropriate to a "free market" job market isn't lost on me.
People are still free to invest the money that they keep (i.e. that which is above their account payments and the taxes) if they choose. Off the top of my head I'd guess such a system would be less attractive to foreign capital but that's just a guess.
I'm not sure if you are saying this by way of agreeing with my plan or in contrast to my plan. I think that what you describe is basically what I've tried to outline.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
How about Health Care
I think everyone should have basic Govt health care and if they need fancy stuff like choice of doctors, experimental drugs, brand name drugs etc then they buy more insurance.
Right now we pay for our own health care and it runs $300/month for individual without problems but then it may even go upto $1000/month or more if you have a lot of medical problems or may not even be able to buy insurance.
So it is like paying taxes except it goes to an insurance company.
At least with Medicare-- you dont have the problem of authorization and increase premiums that you do with HMO or other insurance.
Furthermore it will be good for business who dont have to shoulder increasing health costs and employees who end up paying more premiums.
health care is mentioned as one of the basic amenities
I'm not sure exactly about your question. I listed medical care as one of the basic amenities. In general I like universal health care and rather despise insurance companies as one of the more extreme examples of blood sucking parasites on the human condition.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Thanks for the promotion
I'm glad you found it worthwhile.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Let's try to quantify this
Suppose it costs the government X dollars to support Y percent of the population doing nothing, and the government makes Z dollars from taxing the (100-Y) percent of the population that works. What sort of figures make this feasible?
For example, suppose it would cost the government $20k/year to support a non-worker, and suppose that the average net income from taxes is $2k/worker/year (in other words, after subtracting out the consumption of government services from these workers). I think those numbers are a reasonable starting point, anyway. Then to break even on these expenses alone, the government would have to have 10 workers supporting every non-worker -- in other words, if more than about 9% of the population decided not to work, we'd be in trouble.
I suppose you could tie the government output to the input, and then the system might self-correct: as payouts decrease, people would be more likely to go and work. But there has to be a minimum level of expense somewhere if we are trying to provide a basic living situation.
The long-term account aspect makes this much more appealing than just giving away money, of course, and I do like that idea quite a bit. OTOH, after someone runs up a bit of a tab there's not much incentive to work anymore, since their standard of living wouldn't really improve as they pay back the government.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
Absolutely
Thanks to you and the other regulars for writing consistently interesting and engaging diaries that really promote discussion.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
I think income would be substantially higher than that
consider that the median income currently is about $29,000 dollars including things like social security deductions which wouldn't exist under my system. If I look at my paycheck and add back in all those kinds of deductions my pay goes up almost 38%. Actually I may have added that up wrong, but lets say at least 20%.
That takes out median personal income up to $34,800. And realy for this we should be using mean instead of median as the professional sports stars, actors, and grossly overpaid CEOs will be contributing far more (no loopholes for you!). Mean personal income is $38,500. Add on a base 20% and you are up to $46,000
$2000 tax on $46,000 a year is only about 4% tax rate. That moaning sound you hear is Grover Norquist getting very happy.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
doh, source for the numbers
http://pubdb3.census...
In case I misunderstood the table.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Early retirement!
Under this system, if I knew that my basics would be covered no matter what, I'd be very likely to work for a while to build up the "luxuries" that I wanted, then quit. Start working at 18, build it up, retire at 40.
Work is way overrated. Try it for 40 years before saying you doubt me. You'd have a lot of folks bailing early in this system. But it's an interesting proposition.
"Perplexity is the beginning of knowledge" -- Kahlil Gibran
You might be right
...but consider how many people right now could have set themselves up for a decent retirement but just don't. My mother is a prime example of this. She's worked as an Occupational Therapist at a major hospital for over 20 years now. And I fully expect she'll be working there right to the end. She makes good money but she's constantly living above her means.
She's not stupid by any means and she knows that she's basically screwed herself but she just won't stop.
One of the most basic assumptions in economics is that people make rqtional decisions, that's precisely why the whole field is so amazingly incompetent.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Well I guess I was assuming
that the first $20k/year of worker earnings goes towards the basic services provided by government, and then the $2k/year is an average tax on additional earnings. IOW everyone would get the basic housing, health-care, etc from the government and workers could upgrade with their extra income if they wanted.
Alternatively workers could be permitted to opt-out of governmental services and purchase their own housing, health-care, etc, in which case the government would let them keep all that income.
Come, my friends. 'Tis not too late to seek a newer world -- Tennyson
makes sense
but still $2k tax on $26,000 (mean-20k for government amenities) is only a 7% tax rate. Of course the actual tax rate would have to be higher for things like military and infrastructure (roads, et cetera).
I came. I saw. I posted.
Veni, Vidi, Bitchy.
A Few Points
The plan sounds too good to be true in my opinion. You will of course have the common reaction of folks who say "I work, why shouldn't they..." But then you'd have to hope people's Quest for More exceeds people's tendency to settle for the path of least resistance. Many ideas are developed out of necessity. If that necessity is already provided, will people really be driven to innovate?
Second, a point on Universal Health Care: if we do it, will all the other "Universal" solutions follow it? I mean, it'll only be a matter of time before people demand Universal Health demands -- like Universal Smoking Bans, Mandatory Banning of Trans Fats (like here in New York City), Universal Excercise Requirements, Cholesterol Limits, Limits on Sugar Intakes, etc. After all, if everyone shares the burden, shouldn't there be concessions made?
And on the housing, I think everyone should have a roof over their head. It's in everyone's best interest, but I'd be interested in who owns the property--the government, or the person? Since it's "free," they won't be able to take tax deductions, etc. IF we do provide Housing for All, does the government decide where people should live?
I like the idea on its face, don't get me wrong, but I'd have some concerns about letting the government handle the logistics of such a process. Outside the military, logistics management is not the Government's forte, as we're well aware. They're primary concern is campaigning every 2 years.
http://wealthweekly.blogspot.com
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If they work and company does not have to pay insurance
Employee might even get a higher pay raise or provide additional health insurance.
I bet the additional tax for having universal health insurance is even less than the employeees contribution for health premiums. And emplyee wont even get the stress of being afraid that if he gets disable he will lose his insurance.
Reminds me a lot of Charles Murray's new book
Here's an article he wrote describing his plan, and the book itself.
http://www.opinionjo...
http://www.amazon.co...
Now, certainly $10000 by itself is not enough to get by. But consider two people pooling their resources (could be a married couple, or could be just a pair of roommates). Suppose each person also has a full-time $10/hr job. That's $60K total a year for two people to live on. You're not going to have a super-glamorous lifestyle on that, but you're definitely not going to starve to death and go homeless either, not even here in CA where the cost of living is high. (Think $1500/month for a 2-bedroom apartment)
I think you would find a lot of conservatives who would be willing to go along with something like Murray's plan -- as long as it *replaces* the existing welfare state, rather than it being added on top.
The part about research, on the other hand, does not seem as well thought out to me. You propose that the government offer prizes for particular breakthroughs -- but by what standard are the values of these prizes to be set? What if you think a particular invention is great, and I think it is useless, or vice versa? How is the government to decide who is right and who is wrong?
In a capitalist system, this is where the capital markets come in. If you have an idea you think is great and want to sell it to the world, you have several choices:
- You can self-fund the business and put your own money on the line. This is the riskiest for you, but if it works, you get to keep 100% of the profits.
- You can borrow someone else's money to put on the line, and compensate them for the risk they are taking by paying them back not just principal but also interest.
- You can sell stock in the business, and compensate your shareholders for the risk they are taking by giving them a percentage stake in the earnings of your company.
- You can do a mixture of these things.
But the capital markets are also competitive. Other people are *also* going to the capital markets seeking loans or trying to sell stock to prospective investors. To get funded, you have to convince your investors that your idea is *better* than other peoples' ideas, i.e., that they can make a higher rate of return by investing in you. To do this, your idea needs to be *more profitable* than other peoples' ideas, i.e., it needs to generate a higher return on the invested capital. Or, maybe it needs to be *less risky* than other peoples' ideas, i.e., the probability of your idea failing is lower.
And there is only so much capital out there to go around, so some ideas will *not* get funded. These will tend to be the ones that are too risky, or the ones that don't have enough prospect for returns.
To use your example...
Suppose that there is currently a $1B/year market for solar panels. Each solar panel costs $1000 and 1 million are sold per year. Suppose I have an idea for a new technology that will allow me to build a solar panel that produces just as much power and lasts just as long, but that is more efficient, so it only costs me $800 to build it, and I can still sell it for $1000.
But, suppose I need $50M in venture capital to make it happen, and my idea isn't guaranteed to succeed. If the idea fails, all $50M goes down the drain with nothing to show for it. If it succeeds, let's suppose my company can claim 20% of the solar panel market.
20% of the $1B/year market is $200M/year, or 200K solar panels. Since my profit is $200 per solar panel, that means I would make a $40M/year profit if my idea works out.
Of course, eventually other people will catch up to my idea. Suppose that it will take them 5 years to clone my idea. Once they catch up, competition will drive the price of a solar panel from $1000 down to $800, and I can no longer make any money unless I come up with some *other* new idea.
$40M/year profit times 5 years is $200M in total profit. I want a $50M investment. So, my idea will not get funded unless I can convince investors that my idea has at least a 25% chance of working, or else I'm not expected to make money on average.
In fact they'll want it to be *more* than a 25% chance of success, because they'll want a return on their investment too to compensate them for the risk. How much more than 25%? Depends on how much of a return they are looking for. Remember, you can get 5% a year risk free in a savings account right now, so if I want to borrow money, I'd better offer them an interest rate quite a bit better than 5%. Or, if I want to sell stock, they'll know they can earn an easy 8% or more a year over the long run just investing in index funds, so I'd better offer them better returns than that.
hrrrm
I'd actually qualify this system as the opposite of what Murray suggests. He wants a system where the government provides a small chunk of cahs and it is entirely up to you to figure out what to do with it. I want a system where the government provides basic living amenities and then you get spend whatever extra cash you have.
Remember that anyone can carry out research, patent the results and then sell in the luxury space under this system. That'd be virtually identical to today's environment.
The difference is if you want to research for the government amenity space. In that case the government can set the prize based on how much money your reseach will save them in providing the same quality of amenity. As in the example if you improve solar cell efficiency by 15% then they base how much you get on how much money that save s them. That encourages research in the most impactful areas.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Why give people stuff rather than money?
In general, I'd rather someone give me $X in cash rather than $X worth of stuff. With the cash I could spend it on something different, or save it for the future. It's a lot easier to turn cash into stuff than to turn stuff into cash (e.g. buy stuff vs. try to sell it on EBay).
Suppose I have an invention that I think will save them $100K a year, but when I describe it to them, they don't like the idea (for reasons that I disagree with) and are only willing to offer me $50K for it? What recourse do I have? Or, suppose the government offers *too much* for it (say, $10M) -- what recourse do the taxpayers have?
In a capitalist system, this is resolved via competition. Entrepreneurs compete for investors' money, but investors also compete for entrepreneurs' ideas. If an investor is trying to scam me and claim too much of the profits on my idea in exchange for funding it, no big deal -- there are always other investors who might be willing to offer me a better deal. And investors are also free to not invest in any idea whose promised return on invested capital is too low for the risk. Both sides have an incentive to make reasonable offers, because if they make an unreasonable offer, they know the other side will decline.
In your proposal, the prices of innovations are set by the government rather than by self-interested individuals out to make a buck. If I as a private individual overpay for something, *I* suffer. If I am not willing to pay enough for something and end up not getting it because the other party isn't willing to sell, *I* suffer. So it is strongly in my interest to make good economic decisions. On the other hand, when the government makes a poor decision, someone other than the decision-maker suffers. The decision-maker does not have a strong incentive to make the right decision, because they are "playing with someone else's money." In technical terms, it is an "agency problem."
Agency problems are not unique to government. Any organization has them. For example, in a large corporation with 100,000 employees, the day-to-day actions of at least 99% of those employees are almost certainly not going to have a material impact on the bottom line of the entire corporation. As an employee, if I get paid the same amount whether I work or slack off, and it's easier to slack off, my incentive is to slack off. But suppose I get paid a "piece rate" rather than an hourly wage or an annual salary -- I get paid a particular number of dollars for every widget that I assemble, every crate of strawberries I pick, every pair of jeans I sew, or whatever my job is. Now slacking earns me zip, while working extra hard earns me *more* in the same amount of time. The agency problem is solved -- my interests and the interests of the shareholders of the company are now aligned.
Why stuff?
Because in general people make terrible decisions economically. Seriously. I know we all like to think we are smart and can handle the nuances of every aspect of life from knowing what vaccines a kid needs to figuring out how much money we need to retire, but it just isn't true. At best each of us is only an expert in two or three areas and have a passing knowledge of another half dozen.
This is why there are so many service industries that are nothing more than consulting practices. The problem of course being that these consulting businesses aren't always best served by giving you the best information (witness wall street brokerages who make more money not when you make money but merely when you transfer funds from one stock to another).
This is part of the reason social security privatization hasn't caught on. A lot of people, especially older voters who tend to be more cautious, realized they didn;t want to have to suddenly learn everything ever about what investments made sense. Nor did they particularly want to get fleeced by some broker who doesn't give a rat's behind if his clients are eating cat food.
I think it was a cartoon that said "And in case you were wondering I don't want to haul my own garbage to the city dump either." Some minimum level of existence should be taken care of by the government.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
Liberal!
"Capitalism with an underlying basic level of socialism on the bottom. Fine with me."
So, you're a liberal now? Really, your plan is to the left of most people on Kos. Congrats!
Now if we can only get you to vote against the party that wants to run people like you out of the country.
Medic!
For what it's worth, each of us currently spends three times the average Canadian on health care. If we
The truth is governments are much better with money than corporations. Any study reveals this. A good example is how Medicaid spends something like 2 cents on the dollar to administer; HMOs typically require about 20 cents to keep their heads above water.
The difference, of course, is that HMOs need to make profits, and governments do not.
I thought the same thing
Where did that idea come from, Ender? Don't get me wrong, I kind of like it. :)
heh please
My plan is very consistent with my pro-capitalist stance. I simply want to remove persistent problems from the equation thus freeing our system up for real guiltless and almost government regulation free competition.
Under my plan the elderly, the sick, the incompetent, the retarded, the lazy, etc will all have a very basic lifestyle covered so they do not get hungry or ill. But those who want to excel will have all the opportunities and unlimited possibilities to do so. With a fair non-progressive tax on all their income to boot.
It unleashes capitalism while providing for those who don't want to or can't participate.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
Welfare vs. Socialism
"I'm in favor of a guaranteed minimum income even for slackers."
The current system works better. Give them medical cards and food stamps, and if they can't make the rent they can get help there. I don't even personally mind if someone is homeless as long as they have access to food and medical care, but I'm somewhat of a moderate.
Cash handouts are just an awful idea on the face of it. Welfare works much better than socialism.
sometimes I like to dream up
better systems for the future and this was just one of the possible solutions when some of the costs (energy, food, medicine) come down.
Obviously Tlaloc outlines something along similar lines. However my intent is not to move away from capitalism but to actually move back towards the less regulated version of the past. In order to do that we have to remove all the problems that have weighed it down in a consistent and fair manner.
That means a fair tax, less regulations on business, more incentives to achieve and get off the government dole. That means we have to provide a really great alternative to just getting by. A system that promotes wealth creation and lavish wealth consumption.
It's capitalism on steroids.
I had a whole system fleshed out maybe 6-8 years ago when I first came up with what seemed like a decent idea. Of course it has other points like inability to vote while on public pay, and capitalism enshrined and unalterable in the constitution.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
Scary
I find it mildly frightnening that for totally opposite reasons and from opposite persepctives and values we independently reach the same conclusion.
Almost as if Conservatives and Liberals (or even a fairly Anarchists!) could dialogue and find common ground.
Nah.
I came. I saw. I posted.
Veni, Vidi, Bitchy.
hehe
I am sure our reasons are not totally opposite. I don't want people suffering either and if it can be avoided in the future while at the same time providing stabilizing force for the society in general, then why not.
"To discuss evil in a manner implying neutrality, is to sanction it." AR
Some truth, but why make it mandatory?
I agree that many people badly mismanage their money. I think it is critical for young people to learn money management skills as they grow up and believe various aspects of this should be taught in schools as well as at home, starting from fairly early grade levels. (I remember being forced to learn how to balance a checkbook in elementary school. I watched "Nightly Business Report" with my dad when I was 15. I had a subscription to the Wall Street Journal in college and read the entire paper every single day.)
Example of the kind of advice I'd think would be obvious, and yet somehow escapes some people: if you're struggling to pay the bills, you should not buy a car that costs upwards of $20K. In fact, you probably shouldn't spend more than *$10K* on your car if you are struggling to get by. And yet I know people who *do* have trouble paying the bills, and who not only have cars that cost more than $20K, but also choose to spend money on extra car-related luxuries like tinted windows, rims, etc.
In the classic words of a recent SNL skit, "Don't Buy Stuff You Cannot Afford." (http://www.salon.com...
)
At the same time, I strongly believe that *I* am fully competent to manage *my* money. I am the kind of person the credit card companies lose money on, for example -- I pay off my balance in full every month and use cards that pay lots of cash back on all my purchases (and let's not even go into abusing 0% APR credit cards). My bank rebates me any ATM fees I incur. My paycheck gets deposited straight into a Vanguard tax-exempt money market fund (with better rates after-tax than any taxable account pays). My investments are in ETFs with low expense ratios and high tax efficiency. I max out my IRA and 401k contributions every year. Oh, and most important of all, I'm *cheap*. Really cheap. I don't buy stuff just for the hell of it.
So why can't the government just *trust* me with my money? Why does it have to come up with all sorts of crazy schemes, a la Social Security, to take it from me now and then give it back to me later?
Or, in your scheme, why should the government give me stuff rather than money? In fact, just give me (for example) $8K cash rather than $10K in stuff. I probably didn't need the $10K of stuff anyway.
I'm somewhat amenable...
...to having a voluntary social security program where people invest the funds at their discretion. Or at least a pilot program (although given how long it takes to get from meaningful change in investing to an actual measurable result prehaps "pilot" is misleading). I'm not completely in favor of it because SS exists in part as the government's assurance to you that you won't be completely screwed in your old age if you don't plan well.
Or to compare to my system it has to be goods because the goal is to eliminate entirely homelessness and hunger. If you give people appropriate cash some of them are going to blow it. And there's really no way to tell who will and who won't. So you give them what they need, and not what they want. Then you let them work for what they want.
Giving them cash means ending up right back where we are now.
I came. I saw. I posted.
Veni, Vidi, Bitchy.