Saturday, September 2, 2017

UBI as a solution to the public pension crisis

Universal Basic Income (UBI) is a cash dividend paid to society's members with the primary philosophical justification being that members own the society, and deserving an equal share of social revenues should be the primary purpose of those revenues.  Diversion of social revenues to fund public programs is appropriate when the programs are useful and efficient enough to convince the majority of social members to forgo a portion of their dividend in favour of funding that program.  When UBI is a sufficiently high amount, it also happens to eliminate poverty.

Political simpliciy of UBI
If the UBI amount is higher than the value of any government entitlement, then reform can eliminate that entitlement as part of the funding formula for UBI, without causing any harm to the beneficiary of the previous entitlement, and so no rational political objection to it.  A public pension is a government promise, and government promises are fundamentally entitlements.  So public pension funds become part of the financial/program pools available to convert into a  UBI amount.

Pensions are fundamentally ponzi schemes
For a pension system to stay solvent for 1000 years, it cannot use a defined benefit (promise of a specific compound annual return) system, and it cannot pool funds for general use (as opposed to segregating shares for individual entitlees), and it cannot be administered by anyone controlled by any motive other than protecting and maximizing all pension entitlee's returns, including the 1000 year sustainability mandate.

Public pensions typically fail all 3 of these tests, and all pensions fail at least one of them.  The defined benefit rule is always either a corruptibly unappealing too low of a return, or one that is unsustainable in the long run.  To sell a pension system to enrollees, it is necessary to lie about magnificent promised returns.  The reason you sell a pension system to enrollees is to control their money.  Buying debt or shares of the organization with their money in order to boost those values, is the typically envisioned use of that control.  Paying employees with future promises may also effectively augment their work ethic/devotion, using the tax code to induce them into accepting less pay in exchange for dubious promises.

Defined contributions (the alternative to defined benefit, where enrollees' entitlements are not a specific promised return, but whatever the returns happen to turn out to be) have their own problems.  The administrators are interested in fees or in fulfilling the motives of the controlling party.  Any friendships (bribery or corruption) they can form by utilizing the pension pool can provide better compensation alternatives than performance fees, though the latter can eat through returns well enough on their own.  The ideal performance fee structure is more complex than pension enrollees can understand, but is one that mirrors the defined benefit promises, while also encouraging capital preservation.  The better the pension administrator, the more power for the administrator to set a fee structure that benefits the administrator in deviation from the ideal.

The most important determinant of the ponzi scheme nature of every pension system is that there is no genuine concern for the 1000 year mandate.  At any slight performance or sustainability risk, protecting the benefits of the majority of entitlees (always the oldest) is the tradeoff chosen in favour of an eventual sustainability calamity/bankruptcy.  Ignoring sustainability issues such that bankruptcy occurs in 20 years is the preference of a 60 year old (with average life expectancy) compared to the alternative of taking a pension cut to ensure longer term sustainability.

A pension fund that invests in the organizations' securities is one that insures its bankruptcy's dependence on the organization.

Pensions as a corruption of democracy
A promise made 40+ years from now where no one today will be accountable if it is fulfilled or not is empty, even if it can be honest.  The important essay goes into detail on the incompatibility of pension systems with democracy, and also into details given in the next sections on liquidiating public pensions for immediate payout.

Immediate pension liquidation alternative to forseen insolvency
Although a pension ponzi scheme, like most investment offerings, is designed to take in money while taking every (legal) opportunity to avoid paying it back, a fundamental option satisfying the inherent rights of the entitlees is immidate liquidation proportional to the vested balance of each entitlee prorated to the fund's current solvency rate.  This is the fairest solution when worsening solvency fears exist, but its also a fair solution under any circumstance (a pension system is just holding money for you, restricting your access to the future, "for your own good".  Removing that restriction is still not a real harm to you.).  The relevance of "solvency fears" is that a wide variety of corrupt pension modifications are proposed in the face of these.  Invariably, the proposals of no change, or stealing from the benefits of younger enrollees to sustain older enrollees' benefits are both generational warfare solutions, as they harm those at the end of the entitlement line.

While public officials have the same corruptibility as private pension systems, and the desire to control their stakeholder's money as long as possible, it doesn't change the point that the only fair pension variance rule is one of immediate dissolution.

Non-UBI pension dissolution solution
Considering that pension enrollees may not need immediate access to funds, and that current tax policies favour ponzi schemes  (tax due when deferred income paid), dissolution of pensions into an on-demand withdrawal fund based on current market value (and so defined contribution based from hereon out), and asset portfolio is both fair, and avoids the costly rapid liquidation of the pension fund, satisfying concerns of the pension inflictor.

A UBI solution is preferable and applicable in the case of public pensions due to its inclusion in broader tax and institutional reform that is needed for many federal and regional organizational jurisdictions.

UBI as cooperation among levels of government
Though UBI is most often proposed as a federal program, it can be implemented at any social revenue  level, and is best implemented as contributions from all levels of government.  Program savings from UBI can be in social services, justice, education, health care, and if the savings created by UBI come to 3 budget levels, ideally, so should the funding.

In the context of eliminating pensions, that is a major UBI funding source, if the UBI level is sufficiently high to eliminate most pension obligations.   This implies funding participation by all levels of government in order that the total contributions of each can help discharge each's pension obligations.

Mechanism that UBI replaces an entitlement or pension oblligation
A UBI of say $15k can fairly replace a pension obligation if that pension obligation is either below $15k, or if the pensioner still receives the excess over $15k, if their pension entitlement is above the $15k UBI level.

Under UBI the pensioner receives everything they were originally promised.  Considering the sustainability jeopardy present in almost all public pension systems, UBI being a stronger and permanent entitlement makes it much more preferable to the pensioner than potential bankruptcy negotiated or politically dictated cutbacks.

UBI replacement is fair to both strong and weak pension funds.
While weak pension fund entitlees are gratefully bailed out by UBI conversion, strong pension funds provide stronger funding for their UBI pool.  Though not necessary for fairness, strong public pension systems could offer a politically motivated incentive to pensioners offering them their pension entitlements above say $14k on top of the $15k UBI (an extra $1000 for those with pensions worth more than $14k/year).

The idea of replacing pensions with UBI is a key affordability facilitator for UBI, and it is fair to deny public pensioner's the windfall of a supplementary entitlement above and beyond their pensions.

Amount pension replacement contributes to UBI
US state pension obligations are $4.3T,   US state and local pension assets are a bit under $4T.  These assets could be liquidated over a 10 year period.  Contributing over $560B per year (over $2000 per 227M adult citizens) with a 5% assumed return on the fund (conservative considering the economic growth impact of UBI).

This is a substantial contribution source that means UBI can be $2k higher at the same tax funded cost than any baseline amount.  Funding UBI is a simple sum of all funding sources, as was done in this tax-rate neutral plan for Canada.  An extra $2k per person in funding can be either $2k more, or $560B is a flat 3.1% lower tax rate on GDP, or 18% less needed (federal) tax revenue.

The pension crisis
The figures of $4T assets and $4.3T liabilities come from the federal reserve (and omit liabilities other than state pension funds).  With Federal reserve numbers, Illinois has a $114B funding of $247B liabilities ($133B funding shortfall, at a 46% funding level) as of Q1 2017.

Moody's assesses total public pension liability shortfall at $1.75T

This article highlights California's problems, and how the state politicians are assuming 8% perpetual future returns as a device to use pension funds for other purposes.

Previously apparently nearly solvent states (Minnesota) crumble when forced into appropriate accounting rules.

A portal devoted to the seemingly innescapable pension calamity with over 10 topical articles per day

Federal pension plans (social security, Canada Pension Plan) have similar solvency cliffs.  Population pyramids with low birth rates in generations following the baby boom are a root cause of funding deficits.

There is no pleasant or fair solution other than public pension elimination and liquidation with UBI replacement.  UBI solves the ponzi scheme nature of pensions by insuring short term budgeting (rather than 40 year or 1000 year) of its funding.  Any program or financial crisis management policy is a cost taken equally from every citizen (by reducing their UBI equally to pay for the program/policy) instead of an act of political favouritism that has one group made to bail out another.

Wednesday, April 26, 2017

work ethic is a code word for slavery

Universal Basic Income (UBI) has the same rationale as Universal Health Care.  Provide the means to survive without a work requirement.  The recent legislation attempt in the US to replace the flawed ACA (Obamacare) health plan with an even more flawed and (lower quality) health plan that would push 24M Americans out of coverage, and failed to pass only because the so-called freedom caucus (a wing of Republican party) found the bill insufficiently oppressive. They used the language of "work ethic promotion" as code for "insufficiently oppressive".  Some Democrats share the Republican's deep hatred for the American people by not supporting the alternate "Medicare for all" bill.  Nanci Pelosi's voiced concern is that it would mean higher taxes.

Structural oppression to maintain the people's work ethic is fundamentally equivalent to supporting slavery.  Its a transformation of the unacceptable physical chains and abuse of slavery, with less visible, structural chains that force us to seek kind masters to alleviate our food and shelter (and healthcare in US) insecurity.  High abundance dictates that we should make the world/society more welcoming (easier) rather than harsher.

Work is awesome!!!!
It provides fame, fortune, a positive source of self identity, a feeling of helpfulness, pride of creation and responsibility, and the means to form a family, and/or buy boats, hookers and intoxicants.

The benefit of work sells itself.  For necessarily evil reasons, however, leaders and politicians wish to structure a harsh world such that those benefits need to be supplemented with harsh consequences for failing to do or find work.  Conventional thinking is that the labour market must be unfairly coercive towards labour suppliers and create a bias towards employers.

Slavery and oppression are awesome!
Most people support slavery.  Its not a rational support, but it is rooted in philosophical belief in the work ethic.  Still a significant number of powerful people do directly benefit from oppression.   If you want to buy a house, you will get a better price from a seller financially overburdened from owning another  house, or desperate to pay for a medical procedure.  Buy products manufactured in low cost third world areas because they are cheaper.  Forcibly manufacture desperation in your own society so that you can oppress your fellow citizens into conditions competitive with the third world, or to consider the military a sensible career choice.

Its only this last (very small numbered, but powerful) group that has a rational interest in opposing UBI.  For the rest, their position in the harsh hierarchical order is probably a zombification they prefer over unknown freedom..

Yet the necessity and desirability of having others to exploit decreases every day as machines grow more capable of following direction without question or relative expense.  Remote control of (military) murder weapons only needs to pay the operator enough to overcome the moral deficit of the actions without needing to convince them that the actions are more important than their fears.

The family farm - origins of the work ethic
Families are communes.  The wealth is shared within it.  But a family is also a hierarchy.  Parents teach their children a work ethic in order for them to help around the house/farm, respect for their creators, and aid them in their old age.  Developed nation birth rates declined in large part because of socialized eldercare.  There's less of a need for children to help.  The birth rate decline started with industrialization.

The freeloader problem exists (only) within communes.  A fixed amount of work is required to sustain the household, farm or commune.  All work that I avoid, you have to do.  Both of us are unpaid to do the communal work.  So work ethic is important to the household/commune to ensure a fair share of duties.

Outside of the commune, freeloaders are an opportunity (not problem) for you
If no one else in the world wanted to grow wheat, I would like to  grow it all because I love bread so much.  If no one else in the world wanted to bake bread, I would do it all because I love boats, hookers and intoxicants so much.    Extremely high wealth potential exists for any activity that other people are too lazy to do.

Outside of your commune/family, your work is paid for.  A small portion of your profits being used to pay for freeloaders (through taxes) enhances your wealth compared to an exterminist policy.  If 50 out of 100 social members are productive, and share the burden of socialized support for the population, then on average each productive person supports the subsistence of 1 other.

It does not take twice as much work for me to produce wheat for 100 vs 50 people.At the cost of just 2% of my production, I get to double my sales, and more than double my profits.  Other productive people and businesses support most of the "hippies".  The hippies can also provide me with hookers and intoxicants and entertainment.

"Teaching" work ethic to the hippies is counterproductive for me
If I am the only one growing wheat for a 100 people market, I sure as hell don't want to force anyone else into competing with me.  Even if I were lucky, and teaching/forcing  a work ethic upon the masses drove the hippies into bread baking or boat building, there is the much more important consideration that UBI supports them in the most (cost) efficient way possible.

Hateful work indoctrination programs such as conditional welfare, police and prisons to deal with hippie non-compliance (including survival motivated theft) means an even more expensive solution involving employing/forcing unproductive people to inflict unnecessary conflict and hate on the hippies. The conflict itself distracts from hippie productive pursuits.

Financial destressing/security helps the productive classes too
The most important obvious benefit of UBI, or anti-poverty programs in general, for the productive is that the poor spend it all, and so tax money flows right back up to taxpayers.  The less obvious, but even more important benefit of UBI specifically for the rich productive is that, UBI is a safety net for everyone.  Not just the poor.  This means that the only reason to have savings is having more wealth than you know how to spend. (An alternative reason to have savings today is an emergency/rainy day fund, or planning an early retirement, or funding children's early adulthood education or support )

Lower income variability, and assured future income subsidies means a lower need for emergency savings, and setting aside for children's adulthood (they will be able to pay for their own education through UBI), among productive people.  This necessarily means, more spending, and so more income for society as a whole as more work is needed to collect all of that spending.  Since income always flows up to those with more wealth than they know how to spend, this is a benefit to people at all income levels.

It is this point that UBI is an improvement to life for people at all income levels, and with all possible attitudes towards work, that leaves as the only rational opposition to UBI as the manufacturing of misery and desperation  for exploitation.

The right may have more evil motives for expolitation:  military service, slums, sweat shops, motivated servitude in pursuit of unethical behaviour, intentional destabilization of regions to promote violence and racial tensions.  But the left can also wish for exploitation to persist as it justifies hierarchical empires to combat it:  Union dues, government charitable services, unnecessary work.

Controlling the work ethic of others is a root of this irrationality
The need and acceptance of controlling others is a root of this root, but the thinking around coercing work ethic is clouded by misunderstanding society as part of the same family farm.  Other people's laziness (outside of our commune) is the source of our profits.  Oppression causes savings and hoarding (and therefore not trading for your profit) in defense against that oppression, and violence, fraud, and other costly antagonism in reaction to that oppression.

Coercing work ethic is necessary in forcing tax cuts for successful companies and people (where success is portrayed as work ethic).  It helps convince the public that the rich deserve to rape society, if other workers share a bit of the traits that are glorified.

Proof that UBI and higher taxes leads to more wealth and income for the rich
An empirical point is that the GINI coeficient (measures wealth inequality) for Denmark is (slightly) higher than that of the US.   Denmark is recognized as having a generous social safety net.  Logically this is explained by most people not needing to save in Denmark, and so savers are typically those with more wealth than they know how to spend.

In a simplified economy designed to approximate the US economy, with $10T consumer spending, 200M non-senior adults can be provided UBI of $16k/year, at an average tax cut of $4000 ($800B in  program cuts).  Couples with household income of $160k could break even taxwise, with those earning less getting a net tax cut, and those earning more a net tax increase. 

$2.4T in redistribution is accomplished (16k * 200M less 800B program cuts)  All of which is taken from savers and given to those with high propensity to spend.  Furthermore, households near the  $160k income threshold would typically save for kids college education and early retirement opportunities.  Both of these needs are significantly alleviated by UBI:  Kids will be able to fund their own education, and UBI income supplements significantly reduce the savings requirements for any sustainable income level.  So existing savings by those earning under $160k will be drawn down, and the increase in consumer spending will likely be greater than $2.4T.

$2.4T in increased consumer spending on a $10T base, is 24% growth.  Since all income flows up to rich savers, this will mean a greater than 24% increase in the incomes of the highest earners, and a much higher benefit than any tax increases they face.

More wealth for the rich should not be understood as negative under UBI.  They get rich by providing more value to lower income groups which have an easier opportunity to acquire that value.  Even though lower income groups will have less reason to save, they may still choose to do so in order to climb up the wealth ladder.  Poverty and lack of opportunity are real problems.  Wealth inequality is not a real problem.

Getting Business leaders advice on the economy is like getting polution and climate advice from coal miners

Business leaders have no goal for employment, research or investment.  All of which are necessary for economic health and growth.  Business leaders want to hire slaves, want to cheat customers without repercussion, pollute freely, have innovation subsidized, and bailed out by government when they fail.  They don't want money in order to do economically productive activities, they do econoomically productive activities because they want money. 

Business tax cuts directly reduce employment and other investment because lower tax rates means less of a tax refund for those activities.  Any filth that tells you differently, is lying, trying to steal from you, and trying to destroy your country.

If destroying the economic health of a society can be done while milking it dry for a greater share of the milk for business leaders, along with the opportunity to acquire the rubble at bargain prices, with a good share of the bailout subsidies meant to redress the destruction, then that path to destroying the country is the advice business leaders will provide media and political leaders, and the latter can often value the friendship of business leaders more than their constituents economic health.

Free and fair labour markets

UBI relies on the market principle that work will get accepted at a sufficiently high offer.  I recognize that slavery, and oppressive conditions approaching slavery, can motivate more work more cost effectively than fair markets can.

But the only change to labour markets that UBI causes is higher wage offers and better work conditions needed to be made to compete with the leisure or entrepreneurial options available to the worker with UBI.  Businesses are not at a competitive disadvantage with each other, and can just raise prices to pay for the higher costs.

There's also the potential for lower wages under UBI.  Labour regulations become less necessary.  If there are 1M applicants per job opening, but the applicant's needs are for beer money (because food and housing is covered by UBI), then some applicants may be happy with a wage offer that is for beer money.

UBI promises a happy society with high wealth inequality
Under UBI, the rich get richer by manufacturing the abundance for a very broad consumer base.  The poor happily trade their UBI money for those goods, secure in knowing more will come next month.  The alternative gets ugly:  culling people to save on taxes, similar to recent republican healthcare bill compromise to deny insurance coverage on the basis of pre-existing conditions, exterminating them, so premiums can be reduced for the healthy.

Exterminism is the logical alternative to UBI

Automation in just transportation, retail, and food service will mean massive social disemployment.  Meanwhile, all of those industries need significant numbers of consumers with disposible income to survive and thrive.  The exterminism option is also the choice that ensures economic collapse.

The appeal of exterminism is that once "we" don't need people for military and police (especially), then exterminating anyone that might require social support saves the cost of that social support.  The seeds for this are already firmly planted.  First you come for the muslims and mexicans, and the nazis will cheer for it, for they are neither muslim nor mexican, but are too stupid to understand that genocide does not create jobs.  It creates empty housing and abandoned cars, and excess food capacity, then just scavenging for those goods. The weapons used to exterminate the early waves of undesirables can easily be turned onto expanded groups made desperately criminal by the spiraling collapse.

But before you start the explicit extermination on racial/ethnic grounds, you should destroy the social safety nets such as healthcare access and welfare.   Manufacture crime increases to strenghten police and prison resources, and show society how undeserving the criminally desperate are of social support.  An invisible sheppard's hand can manufacture hate and violence among the sheeple and the goats.  Short sighted cost savings are often mistakenly chosen despite the obvious economic benefits of population sustanence.

Greater than 50% chance that exterminism wins
US Republicans favour exterminism.  Climate destruction and war is one path to exterminism they favour.  But, even if we escape that fate, robocops can be as little as 10 years away.  Corrupt electoral and governance processes may make democratic opposition to exterminism irrelevant.

Even if there is a clear path towards great economic shared prosperity, there may be too many idiots who will follow those who see profit from actions directly leading to collapse.  For example, coal is a dead techology.  There should never be another dirty coal electric plant built even on profitability grounds.  But if someone can make a dollar keeping a coal plant from shutting down for 5 years, regardless of the destruction caused, he'll use that power to make a dollar.

Is a world based on slavery necessary?
There is obvious appeal to business leaders for creating and maintaining a desperate subclass for which work ethic is "whipped" up, and structurally shaping a labour market composed of desperate sellers forced to aggressively outcompete each other, and powerful buyers able to dictate oppressive terms

For UBI not to cause production collapse, the labour market would still need to function when people may refuse to work.  Employers offering better wages and work conditions is not a world collapsing situation.  Fairly power balanced labour markets exist in professional sports, entertainment, and have existed in stem fields and mid 20th century high demand conditions which gave rise to unionized manufacturing labour.  In the case of stem fields and manufacturing, industry was thriving when wages were higher.  Entertainment and sports are still thriving now.

Quite obviously, balanced markets work themselves out just as easily as coercive markets.  So there should not be a panic or opposition over allowing fair labour markets.

Automation makes slavery no longer necessary.
Forcing other people's work ethic only benefits the slavers, and threatens you with culling/extermination, not to mention increases the competition you face for work.

RoboCops, RoboSoldiers, RoboDrivers, RoboMiners, RoboBuilders, RoboFoodservice all promise to eliminate the need for slaves.  Unless immediate consciousness that renounces work ethic politics and the false notion that exterminating/deporting groups of people can ever create more work for the slavers' favourites, then your eventual extermination is threatened too.  When only white republicans remain, poor white republicans will be put up for extermination.

Liberating people from slavery (and letting them survive and thrive) with UBI, lets 9B people contribute to the improving abundance in the world.  Art, design, software, science are more useful and profitable and affordable the more people they benefit.  A robot is very useful in providing food for 1M people.  For 4 people, research into improved automation is not worthwhile.

Even if it should be obvious that more people helps all of us be richer, the stupid believe what they do despite reason.  Power rather than wealth can motivate slavery, and then when slavery is no longer useful, extermination rather than pursuing the market opportunities that UBI fed people would deliver for you.

Laziness, Greed, and Fear
  1.  Everyone is lazy.  Even the poor opt to pay for pipes to deliver water and energy (automation) rather than going out every day to collect it from nature.  (property rights/regulation may prevent that option in some places).  UBI gives everyone the means to pay for their laziness.
  2. Everyone is greedy.  No one would respond to a $5M offer for their house or their labour with an argument with the bidder for it being too high of an offer.  Where greed is destructive, is the use of coercive power to further accumulations.  Greed ensures, under UBI, that people will volunteer to permit other's laziness in exchange for their money.
  3. The overwhelming political majority can be made afraid of false phantoms as a result of the combination of relative stupidity and information imbalance relative to the wizards.  Jealousy, hatred, and envy are also easily manipulated negative emotions.  Where UBI equalizes opportunity, society can be much more harmonious, and individuals can look to themselves to improve their lives as they see best.  The significant difficulty facing the world is that political structure rewards manipulation with an objective of obtaining power to abuse power.  It is greedy to lie and distribute the spoils of victory to favorites, but why engage in difficult struggle if not to abuse the power of victory?  UBI as a social dividend is fundamentally incorruptible, and its appeal is based on avoiding the abuses of traditional political liars.
 The commonality of these 3 attributes is that none of them will ever be changed, but with automation and abundance, individual laziness becomes a positive for the rest of society as it improves "much needed" work opportunities.  Phantom manipulations of fear and hatred must be exposed because tax cuts for the rich and accelerated climate destruction is the straight line path to extermination.

Why mainstream political ideas are worthless compared to UBI
  •  Minimum wage:  accelerates drive to automation.  Eliminating jobs and leaving many more desperate to compete with others, driving them to unethical service or behaviour.
  • Job guarantees:  Force people to do useless work, based on work ethic retardation.  This leaves people too tired to develop themselves and/or produce something useful.
  • Infrastructure and government expansion:  Like the job guarantee, job-creation is the worst possible justification for programs or projects.  All programs/projects should be proposed solely on inherent value.  No one actually wants a job.  They want the wage.  UBI provides the job creation benefits while freeing up the time to do something useful or interesting.
  • Institutionalized retraining programs:  While there is a role for institutionalized education, large scale bureaucratic determination of your institutional attendance is far less productive than UBI.  UBI should be enough to get a computer, internet, 3d printer (or other tool), and pursue independent study of your choice that may be more relevant and interesting to you and your goals.  UBI should also be enough to enroll in structured education programs, without an institutional hand compelling you into them.  A bureaucratic/institutional bias towards education makes education more expensive and less beneficial to the institutionalized.
  • appeals to inequality:  Raising income taxes is needed and effective.  UBI doesn't reduce income inequality even if it eliminates poverty.  The latter should be the goal.  Shaming people into paying you more won't work.  Violence towards the rich will get you exterminated.
  • Politically established channels for labour empowerment:  Labour needs to have power to take power.  UBI gives them that power in that it is the privilege to refuse work, making it easier for those that want work to compete.  But a fight to help unionization is a fight against more powerful forces, and a fight consumers side against.  UBI is an individual's empowerment to collectivize or not collectivize in a way that does not impose the choice on the losers.
  • Minincome:  The sabotaged Ontario pilot that is designed to fail pays 0 net BI to those making over $34k, and includes clawback/deduction rates as high as 93% on some lower income brackets.  Minincome forces the poor to pay for all of the costs of BI.  High clawback rates force people to either work for nothing, or not work.  Extremely counterproductive.  The Ontario pilot further reduces the BI amount for couples, disempowering people from forming civil partnerships.  Minincome has important "cheating" problems as well.  Only corrupt vermin attempting to promote other failures in this list as an alternative to UBI design such brainlessly destructive policies to vilify the poor for not having the work ethic to take jobs with 0 takehome pay.
  • Higher Daycare subsidies: Meant to push people (women) into work, its not necessary under UBI.  The UBI is the daycare fund, and you only need daycare if you are earning income.  Though it generates tax revenue to force people into work and further daycare workers
  • Social housing and poverty programs:  has historically been a racist policy of ghetoization and poverty traps, that provide race bait resentment, that races other than their own are getting free stuff, despite the ghettoization, impoverishment and criminalization of those races.  UBI empowers people to live where they wish, and racist supremacists should see no objection, since no race gets more, and they are already convinced that their race will naturally thrive more than the others.
  • Higher conditional (need-based) programs: This is the fundamental problem with work ethic.  They are conditional based on the pressure to stop needing aid, but it is simultaneously a poverty trap in that work involves loss of benefits.  We don't need to force a work ethic on people because natural greed will ensure that, under UBI, people will work to take others' money.
  • Labour protections from robots:  automation is awesome when it saves you from doing needless extra work.  That makes it awesome for society and businesses so that they not force you to do useless work, useless by definition, if an automated process does it more efficiently.  Taxing business profits regardless of their level of automation captures the social value of automation, and those profits should be used to fund UBI thereby compensating all of those searching for useful endeavours.  Protection from robots is a dead end policy in that international competitors will not force their population to do useless work, but will be able to sell useful goods at better value than what the wasteful slavery produces domestically.
  • Wait until the robots come before UBI: is a recipe for exterminism.  Even when the US significantly outperformed OECD peers over the last 8 years, a highly exterminist republican regime gained power.  More tax cuts, and the necessarily ensuing economic destruction, is the only path they follow.  Exterminism is just further along the same path.   UBI while jobs are still available speeds up the automation path, but does so with economic growth and shared prosperity.  Once you start down a path where Robocops guard Detroit concentration camps with the economic power comparable to famine stricken Sudan, its easier to dismiss the value of economic support to the group to the same level of famine stricken Sudan.
Every idea other than UBI is terrible
UBI maximizes social prosperity and liberty,  empowers workers, lets everyone set the exact work-life balance they wish, reduces everyone's stress and their impacts on health and crime, and eliminates poverty.  Only petty and evil power strugles to fight for a better outcome for their narrow slice of society would get in the way of this.

The work ethic counterproductive delusion is the widespread complicity to the power struggle agendas that are likely to lead towards mass extermination, unless the delusion is broken.  Telling other people how awesome work is, just makes them compete with you instead of hiring you to do the awesome work.

Wednesday, February 1, 2017

Border adjustment tax and natural (cashflow) taxation

Republican House of Representatives are proposing the key element of a tax policy I've developed on this blog, and also framing it under the same philosophy of cashflow taxation principles.  This proposal should be supported by progressives, humanists, economists, and international trading partners, even if it is flawed for failing to fully adopt natural taxation principles.

Reasons to support
  • Border adjustments or cashflow taxation allows any jurisdiction in the world to unilaterally set their tax rates treating domestic and foreign production equally.
  • Higher tax rates subsidize production/investment and exports more than lower tax rates, thereby funding Universal basic income or refundable tax credits, and increasing jurisdictional competitiveness.
  • The alternative to cashflow taxation or border adjustments, to meet pissface's policy promises, would be tariffs.  These are supplementary taxes paid by consumers instead of tax reform.
  • Reciprocal policies by global jurisdictions will mean minimal disruption, if it is through tax reform rather than supplementary tarriffs.
  • It permits greater jurisdictional autonomy within economic and state unions.
  • It eliminates the roots of all tax avoidance strategies.
  • Retailer/importer/consumer punishment scaremongering is false.  Because other countries will copy the system in some fashion, importers /consumers will face similar pricing as foreign tax system subsidizes their exports.  US Retailer lobbying is entirely related to keeping their advantage for cross border shoppers who face a VAT/GST at home.
Border adjustment taxation is the gateway to the most progressive human development since the magna carta.  It would be a greater progressive achievement than the abolition of slavery or the advent of  representative democracy because it empowers regions to unilaterally determine the balance they wish to establish between production output, consumer favouritism, and social programs, by the simple adjustment of a single business income tax rate.  It will forever shut down the lie that lower business income taxes can ever motivate investment and production.

The regional control this empowers, directly empowers its human population to influence local policy to suit its economic interests in a way that democratic systems have never been able to achieve, and similarly, how the abolition of slavery was simply a minor shift away from oppressive hierarchical structures.  Corrupt states and regions will feel forced to match policies of humanist policy regions.
Natural/cashflow taxation
The best paper on the subject is I think easy to read and thorough, but still summarized as:

  • Business tax rate based on jurisdictional cashflow.  All spending and receipts is taxable to the receiver and refundable to the payer in the jurisdiction it (where the payer is) occurs.  Investment inflows (such as loans or share purchases) are taxable to the business receiving funds, and investment repayments such as dividends are tax deductible to the business paying them.
  • A flat personal rate equal to 0% to 10% higher than the Business tax  rate applies to personal income.  Progressive taxation is achieved through a flat universal refundable tax credit (UBI) which creates negative taxes payable for low and middle income individuals.
  • A personal investment surtax 0% to 10% above the personal income tax rate applies to investment profits.  This includes interest and dividends received, and may apply to rental profits.
Border adjustment tax differences
A decent overview of the republican proposal though with the usual media negativity slant on it. The proposal:
  • immediate tax deductibility of capital investments is a partial though principal move towards cashflow taxation.  The partiality causes incoherent elements in the plan such as not allowing interest payment deductibility.
  • Retaining payroll taxes is an unhealthy and unfair penalty on employment vs. other income.  It unnecessarily discourages employment from both the employer and employee sides. 
  • Its wrong to seek additional social revenue by forbidding interest deductibility as this uselessly depresses demand for capital.  The investment profits surtax is an appropriate means of enhancing social revenue because capital can always voluntarily choose to be kept under a mattress to both avoid investment profits and their tax consequences.
  • The export "tax freeness" and  import "non-deductibility" is not as disruptive as feared.  Reciprocity of some sort by other nations, preferably through pure natural/cashflow taxation is going to mean that US exports are taxed overseas, and there is likely to be some reciprocal subsidy of exports that limits significant change in consumer prices.
  • Violation of WTO rules is unimportant.  The WTO system sanctions the corrupt transfer pricing model, offshore sheltering, and tax inversion system.  The US violating the WTO, gives the remedy of everyone else abandoning it for a fair system.  Natural taxation does not violate the main WTO principle that domestic and foreign companies be treated equally.

The rest of this paper is going to detail why full cashflow taxation is better than border adjustments or tariffs.

BPI: 3 tax rates
(B)usiness, (P)ersonal, and (I)nvestment flat tax rates are used.   Each is greater or equal than the last.

Business tax policy has always been that of near 0 collections
Since businesses all end in eventual bankrupty, lifetime tax credits equal lifetime taxes paid less dividends paid which are often undertaxed at the individual level.  The tax code is complex only to allow difficulty in converting tax credits into cash refunds for businesses, but the complexity generates minimal social revenue.

Under natural taxation, business income tax revenue is 0 regardless of the tax rate
Since all business outlays are a tax refund to the spender, and an equal tax obligation to the receiver, net social revenue from business income taxes are 0.  Social revenue comes from:

  1. Private sector Salaries and wages generate P-B
  2. Government salaries and wages generate P
  3. Government and consumer purchases from  business generate B
  4. Personal Investment profits generate I
A 0% or low business tax rate is a bad idea
Even if it were to provide extreme reporting simplicity, and the same social revenue (assuming end user purchases taxed with a sales tax to cover point 3 above) as a higher business income, having both sides of a business transaction  account for tax effects has important motivational factors:

  1.  Higher tax rates encourage spending and investment (to avoid paying taxes) and significantly reduces the risk of business spending and investment (because of the certain tax rebate no matter the investment outcome) compared to lower tax rates.
  2. An incentive to repay shareholders since that provides a tax reduction.  It would not at 0 tax rates.  The incentive generates social revenue at rate I.
  3. A 0% business tax would raise 0 revenue from consumer purchases
  4.  Less disruption to price levels,  Somewhat minor, but a 0 rate would be slightly deflationary rewarding the wealthy/prior savers on purchases.  Though the business tax on consumer purchases may appear similar to a sales tax, the net price is the same as would be under current income taxes.  The cost base of goods can be modeled as being after input cost tax rebates, and so the after tax break even prices are the same under all models and tax rates.
  5. Having input credits and sales taxes allows for timing adjustments.  For instance the tax bill and deduction for investments could be applied over 2 years under the assumption that not all of it will be spent right away.  Limits on the percentage of personal (non investment return) income that is available to be deducted in any one year might apply.

Job creation policies require high business taxes
Lower taxes can motivate you to invest more of your time, but higher taxes motivate the investment of your capital/money for the simple reason that the investment provides a certain tax reduction.  This exists under existing income tax system for the most part, but exists perfectly, and is clearly obvious, under natural taxation.

In the case of time investment, the only rational consideration is the after tax expected income of a venture.  Lower tax rates reduce the incentive to hire you at all, and so there can be downward pressure on the wage offered you.  Higher tax rates reduce the importance of the wage, and the time/labour supplier can adjust their demands upwards to meet their after tax needs.

Why are pervasive lies in favour of  lower taxes perpetuated to be an economic/social benefit ?
Large successful businesses operate a profitable formula where nearly all investments are sure things that will lead to higher profits.  Tax rates don't affect whether McDonalds will open a new store.  The science of demographics and past experience, lets them confidently pursue new locations.

Large successful companies have a profit momentum from investment made 2 to 50 years ago.  Lower tax rates provide them with the opportunity to harvest profits instead of innovating and growing.  Lower tax rates also discourage upstart competitors from the risky investments that might challenge their dominance.

Companies have zero concern for general economic growth and sustainability, but politicians and demons whore themselves out to advocate for their selfishness.

Another important benefit of natural taxation is that companies obtain the natural tax avoidance process of repaying investors for a tax reduction instead of tieing up money offshore or through other avoidance schemes.  Business profits are taxed in investor hands.

Higher tax rates on a border tax system or natural taxation encourage domestic production
If it costs $100 (pretax) to make a phone in California and Alabama, and California has a 50% business tax rate, while Alabama's is 20% then:

  • After tax cost to make in California is $50.  In Alabama it is $80.
  • If the company wants to make $10 after tax on each phone, then it sells it for $60+tax from California, or $90+tax from Alabama.  
  • The California phone would sell for $120 in California or $75 in Alabama.
  • The Alabama phone would sell for $180 in California or $112.50 in Alabama.
Every company's production is advantaged by being located in the higher tax state.  There is no basis for trade disputes as each nation or state can just raise their tax rates to be more competitive.

Reasons to lower tax rates
To invite retail tourism (or discourage foreign state tourism) is a main one.  In above example people would visit Alabama to purchase their phone.  If no one would hire your population no matter how high the tax rates/incentives, then lower tax rates would lower cost of living.

The other reason to favour low taxes is to create misery and desperation so that it can be exploited for competitiveness.  Often with an export context, but also to subsidize conflict: police, prisons, and military career choice.  If Alabamans can be oppressed sufficiently to drive down the production cost (pretax) of the phone to $62.50, then it can be sold for the same price and profit in the Alabama and California markets as the California phone.

What to do with all of the tax revenue
The only valid criticism of income taxes is what they are used for.  An authoritarian deciding what's good for you.  Basic income and social dividends is the best governance organization because it allows market solutions for everything, without poverty, and including a fair labour market where participants are not coerced by starvation or healthcare into submitting to the first offer made.

Crude border tax system is close enough
It is better to replace the entire tax system than the limited border tax system which still maintains avoidance opportunities.  But border tax adjustments achieve the main benefits.  The white house's warming to this idea has focused on accusing Germany of leveraging its VAT system.  This is better than VAT as it is not separate from the income tax system.  Both have the advantage of unilateral settings, and total self reliance and responsibility for the economic results.

Payment processors as tax collectors
International/online retailing is already prominent and rapidly growing.  International adoption of this tax system will let online retailers price tax free, and payment processors including bitcoin options will simply add the tax based on the shipping address.

Natural tax allows tax rates customized to postal code
A 1 person UN department can maintain the system of tax rate updates.  Postal code individualization may be too narrow, but there is no technical or even political reason not to allow it.  Where narrowly customized tax policy makes sense is as part of a tributary tax system where sub regions contribute to larger associations

California Secession alternatives
Pissface is threatening the withholding of federal funds to California unless they form immigrant lynch mobs, and to prevent its rights to create regulation in addition to federal ones, specifically targeting its vehicle emission standards which would force Californians to burn more Oklahoma oil and cover the state in smog.

Secession is a human right.  It must be an option to participate in a democratic union, because if it is not, then there is a complete absence of democratic voice by the enslaved possessed colony.  Marriage without the option of divorce is slavery.  The United States, when formed, created the appearance of a voluntary union.

Secession does not need to be isolationist.  If in fact it is used in order to re-form a new voluntary union, then an alternative is to reform the existing union.  Polarized politics in a powerful empire with slave possessions creates a risk of fascism, but always unnecessary unhappiness.  Certainly, distinct red and blue Americas should be an alternative to forcing tolerance of opposing views.

A constitutional convention could explore a wide variety of issues that many states are open to:
  • State rights:  gun rights and abortion laws are polarising national political issues.  It is a small price to pay to let Kansas make the wrong choices in exercising their freedom if you are also allowed to exercise your own.
  • Interstate commerce and federal highway program:  is a source of unnecessary leverage over state rights (state funding is often threatened over it).  The highway system is already built.  Transferring ownership of the highways to the states, and letting them fund them.  New interstate infrastructure can be sponsored/negotiated by the affected states.
  • Tributary and border/natural tax system: A concession to poorer red states is to codify that richer states will contribute more taxes to the common union.  Ideally union contributions are spent almost entirely as a social dividend, but no matter how the federal/union surplus is spent, richer states would be contributing to union harmony where others success contributes to one's own success, though the only way for the stupid to grasp the obviousness, is through cash dividend entitlements.  Using tributary funds as a social dividend also puts upward pressure on oppressed state's wages, which simultaneously maintains rich state competitiveness and popular support/harmony for the union.
  • dissolution of the union:  The main appeal to most states would be to eliminate federal debt. obligations.  But this doesn't have to be the objective of the convention.  Rather, it can focus all stakeholders on the concerns states may have with the union.
 Even if the goal is secession or dissolution of the union, a constitutional convention where discontent states offer nazi republican states permanent freedom and subsidized support as part of decentralization initiatives is the right opening move, is constructive, and may produce tangilbe solutions that pacify secessionists, but also address the discontent that sympathises with secessionist motivation, but fears unknown change.

A constructive and concessional constitutional convention process pacifies any strong reaction against secession or federal tax non compliance, and is a path to compromise.

All immigration is economically constructive, and unless ALL of the immigrants admitted directly compete for your job, increase your employment prospects.   More people means more construction, teachers, medical, retail, and food production.  More of those jobs leads to auto and yacht production, as wealth trickles up the capitalist hierarchy.  Not all of these new jobs will go to immigrants.

That some states or societies wish to restrict immigration enriches the states and societies that won't.  There is no need to argue economics against hate if the enlightened and hateful can both get the outcomes they want.  The EU's surprising economic growth for 2015 and 2016 can be attributed to its large refugee influx.

European Union
Right wing stupidity threatens the union somewhat.  Natural taxation's international competitiveness focused based on higher taxation rather than current available manipulations to send capital/profits to lower taxes jurisidictions allows a system based on race to the top rather than race to the bottom.

Still, within the union, allowing poorer members to have a tax advantage (higher) in order to mitigate trade imbalances, and supporting union wide basic income is helpful harmonious policy.  The main reason for the EU to lead on natural taxation though is that the US is threatening trade wars.  Be proactive not reactive, EU first.... and any other slogans they use are all appropriate rhethoric.  A natural taxation approach offers a better, though similar enough, alternative to border taxation.  Since there is some necessary policy response to US action, the EU should both embrace and lead on natural taxation.

Basic income can be implemented with nationalist citizen-advantages/privileges.

Natural taxation and tribute-funded union wide basic income/dividend is  an ultra powerful and flexible policy tool that strongly promotes union membership and cohesion.  There's no longer any complaints about Brussels controlling everything, if Brussels just pays all EU citizens for being part of the union.  EU members with trade surpluses can let other members have higher taxes to help with both their fiscal problems, and trade/employment disgruntlements.

Climate change and pollution
The only possible successful action on climate change and carbon emmissions is a carbon tax.  To ensure popularity of the measure, proceeds from the tax should be distributed as dividend, and it empowers citizens to use the dividend proceeds to make better energy decisions that let them avoid the carbon tax.   A carbon dividend further mitigates other funding sources towards a basic income.

The Paris climate agreement is insufficient in that it relies on future carbon sequestration technology.  No matter how awesome that technology turns out to be, it will involve a cost (without monetizable benefit) per ton of co2 to remove, and so eventually a carbon tax will need to be diverted to equal the sequestration cost.  A dividend is useful to prime basic income, mitigate emmissions, and so buy time for technology magic to be developed.

Without a carbon tax, nationalist impulse to destroy the planet for immediate profit doesn't go away.  Denial is a human response of aligning beliefs with pocketbook interests.  A carbon tarriff has been brought up as a response to the US withdrawing form its Paris agreement commitments, and it is an appropriate response to willful subsidy for planet destruction.  Still, seriousness towards the Paris agreement goals requires carbon taxes.

Inter state harmony and happiness is not a universal goal.  Gun manufacturers thrive on misery, but more generally, destabilizing neighbour states through crime or armed government opposition, can be seen as competitive strengthening of neighbours.  This is easily done through subsidizing gun access in the target jurisdiction.

Basic income is a key policy in offering people with better life choices than engaging in gun violence, but anti-harmonious forces may still strive to disrupt your state.  Cash for guns programs are likely great investment for protecting harmony.  If the target is sure that its neighbour states are not doing a sufficient job in reducing the flow of guns in the destabilization attack, it can leverage its newly generated gun stockpile for cooperation under the implied threat of sponsoring a guns for toddlers program in their state.

The main key to interstate harmony is basic income, but alliances and treaties can replace an all powerful overlord guaranteeing safety from state sponsored conflict./aggression.   A large enough alliance is in fact equivalent to a protective dictatorial overlord, but alliance membership