Re: the trouble with money and a new economic model

On 2008-10-20, Han de Bruijn <Han.deBruijn@xxxxxxxxxxxxxx> wrote:
J.H.Boersema wrote:
My law system has a Constitutional limit on wealth:
http://www.jhwh.be/~joshb/constitution-short.html#8.2.a-8

Quote:

The limit is .[30].. times average wealth.

According to this book

Dr. Ravi Batra, 'The Great Depression of 1990'
Dell Publishing, New York, June 1988, ISBN 0-440-20168-3

the disparity of wealth should be delimited by a factor 10 (ten) between
the lowest and the highest amount of it. An objective study (on sports)
indicates an even lower rate. Your credentials suggest that you can read
Dutch, so:

http://hdebruijn.soo.dto.tudelft.nl/tomaatnet/loonwerk.htm

In view of nowadays reality, however, any decent proposal could probably
do good work. I'm not an economist and I'm eager to learn. You can reach
me privately (eventually in Dutch) by this (valid) e-mail adres.

Hello Han de Bruijn, TU Delft. (I continue in English if you don't mind,
for the sake of the readers.) The fact that you are not an economist is
a great asset, how could we do real economics if we had been
indoctrinated in the current cult of capitalism ?

If you are eager to learn the basics: I think it is all quite simple
really (to use an English accent ;-).

First think of the most simple trade one can imagine: we are a roaming
tribe and I catch a fish while you sow a leather boot. If we are a small
tribe, we wouldn't need trade, because we would kick the lazy ones in
the *** or expel them to die in the wilderness by themselves. We could
do the same with the greedy ones, everyone who doesn't pull their weight.
Now imagine however that our wandering tribe is 150.000 people strong.
At that point we don't know each other, and that's where trade becomes
very useful. Instead of a complicated system to check whether everyone
is doing their part, everyone trades their products and services with
each other, and we pass a law against thievery. This is an economy in
which there is no fixed soil ownership, probably no fixed companies that
specialize in things, only a little specialization, no banks although
there could be a simple commodity money such as gold or salt perhaps.
In this environment the trade system works as it should work: if it is
apparently highly profitable to sow boots, more people will want to do
that, creating more boots on the market, driving prices down to a more
reasonable level until people not yet specialized start looking for
other opportunities. A high price is both a signal that there is a
shortage of something, and the very reason to start producing it more.
Prices drive themselves to fair and equal. The quantity really traded
here is effort. If it is very difficult to catch a fish, price of fish
will increase, and it has to be at least high enough to make the
fishermen survive. Suppose it takes 100 days on average to catch one
fish, then one fish would cost at least 100 days of supplies. The point
to remember is that this is trade in effort.

Then when society develops, we settled down and started farming. Now
all of a sudden we have the problem not merely of owning personal items
that can be traded back and forth made with effort, but we have a new
problem: ownership of things we did not produce, which are not traded
based on the effort to produce them: land ! Owning land is more like
occupying it with arms, it is a power. Suppose someone makes a lot of
boots, that is a lot of work meaning a lot of money or bartered goods,
and that is fine. You can always make more, everyone can make boots if
they wanted to (in theory, often in practice also). Land is different.
It is not produced like that, not everyone can produce as much as they
like in principle. Land ownership is a power. If "have taken" a lot of
land for yourself, and then rent that out to farmers, you can create
for yourself an infinite source of wealth. You trade power against the
effort of the farmers. This is what the landed nobility in the middle
ages did. In return they didn't have to work, merely to continue to
occupy the land with their arms. All of a sudden trade that worked so
beautifully becomes a robbery game, and the winner doesn't have to work
anymore, grows rich, only to be able to oppress the victims more. Trade
in power is a poison to the trade system.

There are several other forms of power trading that are important in
todays "economy." One is the trade in money, and another is the
ownership of companies, both to trade that ownership and to have
dictatorial powers within that company. In the post before I mentioned
the dangers of trade in money, so not repeating that now.

To boil it down to its conclusion: trade in effort is fine and useful
and great, flexible, dynamic, challenging, all good things. Trade in
power is a big big problem. To eliminate trade in power, one would
naturally ... equalize power between people ! By giving people the same
power, neither can sell something at a premium because of having unfair
power.

How to do that, my idea is like so:
* Distribute natural resource rights, such as the right to farm land.
Since most people are no longer farming, they will be renting their
land right out to a farmer, or to a business that handles the contacts
with farmers for them. To a degree this can be a free market.
* The boss/slave problem exists in companies: the manager is able to
sell his/her management services to the rest of the people in the
company at a premium price, because a owner/manager can fire all other
people while they can not fire the owner/manager, and because the
owner/manager has dictatorial power over the company. This power
difference leads to the great income disparity between those with
power and those without.

It is not unfair that someone who started a company is then also
its dictatorial boss, because without that starter the company would
not even be there and if slaves don't like it why didn't they start
their own company.

The solution I'm suggesting for this is: if the company grows to be
larger then tiny, it goes over into the ownership of the employees
when the starter leaves. The starter is compensated out of the
existing company, and gets a share of future profits. That will keep
the original starter in the loop as an informal advisor. The reason
to leave tiny businesses (smaller then 10 employees in my proposal)
out of this arrangement, is that in such small companies the owner
is often doing a lot of real work himself, and I doubt that it will
be of much use to democratize them. In a way these minor companies
are always in an upstart type situation, and would continue to be
an upstart under a new owner (possibly the children of the owner).
Obviously this requires laws that prevent the owner to fire everyone
just before retiring, laws which I did already propose also.

In view of all of the above, I don't think it is necessary to use that
strict a limit on maximum wealth. My limit is to some degree quite high,
30 times average is way higher then 10 times between lowest/highest.
But given the corrected market model, I don't think people will be able
to reach a very great disparity, because the free markets should in most
cases take care of the problem. If it is hugely profitable to make
boots, more people will do so driving unfair income down.

The largest source of income in the modern economy comes from power
trading: being the owner of a large group of what effectively are
slaves. In my system these larger companies are democratized. The
positions to gain that much wealth have simply disappeared. Therefore
the wealth maximum is not a vital part of my system, just an added
barrier to deal with curious cases. In my system there is also no
private for profit business investment anymore, which is another road
to unfair wealth.

Please join my political party, sign petition, do what we can to set the
world right. It doesn't have to be exactly my laws, but we do need to
get the basics of the economy right. Not a Marxist plan-economy, it does
only work on a very limited scale (a few hundred people, see the small
tribe). Not a capitalist anarchy with power abuses everywhere, which
overwhelm the correct trade mechanisms. Instead trade in that which
takes effort, and special laws to deal with the problem of power
concentration and trade in things that are not manufactured with effort.

As far as I am concerned: that is a first scientific trade theory,
turning economics from the art of exploitation, into an objective science.
Right ?

beste groeten, jos
(Mijn email adres zit in de headers. Wat kunnen we doen om de economie
recht te zetten, als je dit een goed verhaal vind ? Beetje te pompeus
gebracht misschien, maar volgens mij zit het wel zo; dus het zou
gewoon moeten worden doorgevoerd als kloppende economische theorie, en
de politiek zou moeten volgen in het ideale geval. Overigens vind ik
30 x gemiddelde ook vrij extreem, maar het wordt goed gemaakt door
macht spreiding, en zo wordt de economie ook weer een soort spel dat
zijn eigen uitkomsten op ieder moment heeft; zolang we maar goede sociale
minimum voorzieningen hebben. Er is overigens ook een wet voor minimum
loon. Ik zie het dus wel zitten, ondanks dat ik in principe ben voor
gelijk loon voor gelijk werk.)
--
_ _ /_\ _ _ http://www.jhwh.be sign petition for Democratic
\ /v`vvv\ / Authorities Ventures Investments Demarcations
/_\_#_#_/_\ constitution today: http://www.jhwh.be/petition
\ / #185 http://www.xs4all.nl/~joshb/no-id-theft.html
.

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