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Your Own Economic System

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CaiusFilimon
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Post: #1
Your Own Economic System

I really am truly curious as to how you guys would manage a national economy of your choice. I noticed that almost everyone around here is very liberal, or it could be it just seems so to me.
Would be nice if you could give a relatively detailed plan of what you would do/what you would aim for if you were to become the ruler of a country of your choice, mostly economy-wise. Of course, not only give an example of percentages on certain taxes, but perhaps also some examples of laws or tax loopholes you would like to be implemented.

29.01.2014 15:10
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Helsworth
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Post: #2
RE: Your Own Economic System

As an MMTer, I'd run appropriate fiscal deficits in order to reach and maintain full employment and price stability.
The constraints of a country with monetary sovereignty are always physical: unused resources, free labor, and spare production capacity. Money or financial constraints are not real constraints, they are political constraints and they stem from ideology and ignorance towards how a modern free-floating fiat system works.
The currency sovereign makes the rules, and all others are currency users. Issuing public debt is an idiosyncratic policy choice, it is not an implacable operational necessity. Public spending finances taxation. The government deficit equals the net savings or net surplus of the nongovernment sector in a given fiscal year.
The sectoral balance equation holds as accounting truth, not one's opinion: (S-I)+(G-T)+(X-M)=0


You can see Warren Mosler give a brief and thorough intro on Modern Monetary Theory or Chartalism.

As for my own economic preference:
-Surplus recycling system between national regions.
-Progressive income tax.
-Universal health care.
-Jog Guarantee program for all those willing and able to work.
-Low to mild consumption taxes (such as VAT and excise).
-Strict banking regulations a la Glass-Steagall and in some aspects going even beyond it.
-Eliminating individual fees for public transportation.
-Subsidies for the research and implementation of new technology for public purpose.
-Permanent 0% reference rate (which is the natural interest of fiat money anyway).
-Remove the government's cap guarantee on deposits and extend insurance coverage to include central bank deposits at member banks.
-Declare a payroll tax holiday and have parliament put the full faith and credit of the country behind all social security and medicare to eliminate the function of the trust fund regarding solvency. This supports demand. The taxes can be restored as needed should the economy be deemed ‘too hot’.

On the international stage, I'd advocate for the creation of Keyne's Bancor. Like Steve Keen argues in this vid.


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This post was last modified: 30.01.2014 18:19 by Helsworth.

29.01.2014 16:42
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Crossover
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Post: #3
RE: Your Own Economic System

TriniSary7 Wrote:
If it was a country like the U.S. or a country in Europe, then something like the Khmer Rouge, but more clear-cut. For instance, all the people with lawns should die for water conservation purposes.


All humans should die due to greenhouse gases emission mainly carbon dioxide through breathing.


-In sharp contrast, economic phenomena are not just hard to predict. Their prediction is impossible. Why? Because human economies (quite unlike those populated by automata) are subject to something worse than the worst non-linearities: infinite regress.
29.01.2014 17:03
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Helsworth
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Post: #4
RE: Your Own Economic System

Crossover Wrote:

TriniSary7 Wrote:
If it was a country like the U.S. or a country in Europe, then something like the Khmer Rouge, but more clear-cut. For instance, all the people with lawns should die for water conservation purposes.


All humans should die due to greenhouse gases emission mainly carbon dioxide through breathing.

You're gonna get Trini turned on about climate change, now. Hehe


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29.01.2014 17:12
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Crossover
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Post: #5
RE: Your Own Economic System

Helsworth Wrote:

Crossover Wrote:

TriniSary7 Wrote:
If it was a country like the U.S. or a country in Europe, then something like the Khmer Rouge, but more clear-cut. For instance, all the people with lawns should die for water conservation purposes.


All humans should die due to greenhouse gases emission mainly carbon dioxide through breathing.

You're gonna get Trini turned on about climate change, now. Hehe


Hooray! Applaus


-In sharp contrast, economic phenomena are not just hard to predict. Their prediction is impossible. Why? Because human economies (quite unlike those populated by automata) are subject to something worse than the worst non-linearities: infinite regress.
29.01.2014 17:45
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chad7405
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Post: #6
RE: Your Own Economic System

CaiusFilimon Wrote:
I really am truly curious as to how you guys would manage a national economy of your choice. I noticed that almost everyone around here is very liberal, or it could be it just seems so to me.
Would be nice if you could give a relatively detailed plan of what you would do/what you would aim for if you were to become the ruler of a country of your choice, mostly economy-wise. Of course, not only give an example of percentages on certain taxes, but perhaps also some examples of laws or tax loopholes you would like to be implemented.

To me, an Ideal tax/spending situation would be:

Taxes

5% flat income Tax on the poors; see my definitions of the social classes below)
10% flat income tax on middle class
15% flat income tax on upper class
25% flat income tax on the richest class
15% corporation tax (on profit)
10% corporation taxes (5% cut) for smaller businesses
eliminate fees on stock trades, deposits, and assets. Capital gains tax at around 10%
low tariff, can't give a set number because it depends on domestic economic climate at any given time whether i want to open more or less foreign goods to our markets.

Expenditure

welfare= 110% COL
Pensions/insurances=90% COL
Citizens dividend/Basic Income= 10% COL
~Actual budget may vary based on approved spending plan

policies

-Minimum wage=gotten rid of; It destroys potential low paying jobs that can be filled part time by people who need it (sweeping floors,washing cars,etc.) the 110% COL welfare will act AS a MW because if you want someone to work for you, you'll need to pay them enough that they want to work in the first place.
-Marriage equality= The LGBT and other marriage stuff that isn't ridiculous(i.e. I wanna marry a goat) should be legal.
-Soft drugs= legalized but regulated; if you can't beat 'em join 'em (and tax them Lachweg)
-prostitution= legalized but regulated; if you can't beat 'em join 'em (turn it into a business just like soft drugs; it is still illegal if illicitly operated.)
-Quit the whole abstinence shtick and let teenage sex happen; encourage safe sex and relationship/sex education versus just going "don't do it" and expecting them not to.
-Healthcare: Healthcare should be Privatized but subsidized to the people, not the companies. The Government acts as the medium between the company and the damaged person; that is healthcare spending versus universal healthcare like most people want. To clarify, A person gets injured and goes to the hospital. The person pays the Gov't who pays the company who pays the hospital. It is argued that that causes lots of bureaucracy, but it is beneficial so i don't care. The person saves money, the healthcare companies create jobs and drive the economy more than if the government did everything like in universal healthcare, the hospital still gets paid, and the government runs a small deficit by paying the difference of the person's savings to the company. This is all confusing to basically everyone, so let me give you numbers and an example. Guy breaks his leg and goes to hospital, whom he owes $10,000 for the stay. The guy pays, say, $8,000 to the gov't and the gov't pays the expected $10,000 to the company/hospital who work that out amongst themselves. This, on a micro level, is a government deficit doing good for the private sector; Guy saved $2,000 thanks to the gov't intervention and the deficit is accounted for in the healthcare section of the budget. This could replace medicare/medicaid and create a lot less loopholes and obnoxious paperwork.
-Energy: Phase out natural gas and start introducing crop energy,solar,hydro, and safe/isolated nuclear that is just as effective.
-social policy 101: if it's not killing stealing or rape, it should be legal(I don't want someone to go 'what about this'; there are exceptions that I don't want to ramble about)
-Economics 101: If it makes money and improves things, encourage it (again, some exceptions) Keep monopolies from forming but that's about it.

social classes

I measure wealth by assets, not income. A poor person can make lots of money and a rich person can make very little money, but if you tax income, the rich guy stays rich and the poor guy goes nowhere, so income measuring is important, but regressive tax-wise. Citizens in my country are taxed on income, but tax rate is determined by wealth.
the 'poors': the 25% poorest
the middle class: 50% middle ground
the upper class: 15% in between middle and richest
The 'Richest class': 10% wealthiest
these numbers are all relative and subject to change. Take my example from before; if the poor person makes good money at his job he can move up the social ladder and by the time he retires he can be in the upper class all the way from the lower class, and the rich guy not earning much can potentially drop down to the middle class. This also gives incentive to work for the poors because they can earn lots of low-taxed money and the rich still have to give back more of their income, whatever that may be.
Finally,

economic changes/conditions

-Budget deficit should be around 3%, though varying based on economic condition.
-MS should be grown/depleted every year based on GDP. For example, if the economy grows the American 'average' 3.00%, MS should grow 1.1X the growth; or 3.3% more. (2%=2.2% MS, 1%=1.1% MS) Negatives are added 10% to try to encourage it to recover (-5%=-4.5% MS) It is argued that this depletion makes a recession worse, but it is taken from the banks and Gov't spending is going to be kicked up to speed the recovery anyway.

P.S. I'm a right-wing Socially Progressive Libertarian, almost the exact opposite of a liberal if it makes you feel any better. (Just read my signature Daumenhoch)

29.01.2014 20:24
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Helsworth
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Post: #7
RE: Your Own Economic System

Overall I like your preferences, Chad.
Permit me a commentary, please ^^

1- "Abolishing" the minimum wage only to replace it with a smaller minimum wage won't increase employment. It will only work to shrink aggregate demand, which will decrease sales, which in turn will increase unemployment. Also, you stated that the 110% COL welfare is gonna function as the new minimum. Actually, it won't, because unemployment benefits are not infinite; a person gets paid a few months and then those funds get cut.

2- I don't like crop-biofuels. Crops should be used to produce food. Also, biofuels are not a clean source, when burned they do pollute.

3- I agree with you that taxing income differently won't stop the gap between the haves and the have nots. That's why taxing wealth is very important, aka taxing property. Sweden is skilled at doing this. You want to own huge tracts of land or huge buildings, you better ensure that they're put to good use in order to get the money to pay a high property tax. In ancient times, Mencius proposed the introduction of a tax on property in order to ensure that the nobles would have their lands worked, and not letting the earth go unplowed. "Hey, we're already rich and have massive amounts of stored grain; screw everyone else. Let them starve."
There's an old saying: The property belongs to him who uses it best. (i.e. not letting the property rot)
There are huge tracts of land left unused in my country. Garbage and foul-scrubs get accumulated on them, since they're private property and put to absolutely no use. People holding them are hoping either the government comes building a road, to pass on their land so they can obtain some expropriation money. Or they hope the wealthy foreigners will come some day buying. Property taxes in Romania are extremely low.

4- As for the size of the fiscal deficit. The 3% figure is arbitrary. Even the makers of the Maastricht treaty have confessed to it. Miterand was always "bugged" by ministers demanding more money for their departments, and he asked a few of his neoliberal friends what to do about it. When they made the euro-zone, they included a totally arbitrary figure of 3%.
The right (correct) size of the fiscal deficit is that which satisfies the desire of the private sector to net save. Ergo, the correct size is that which achieves full employment.
Also, in order to maintain the economy to work at full employment/full output - politicians MUSTN'T bring back the old ideological beliefs of "oh, the economy is booming, lets slash the deficit and obtain a surplus". That will have negative effects, and it will ultimately lead again to unemployment. In order to keep an economy working at full employment, a certain fiscal deficit is required. Not as high as during the years when the government was trying to achieve full employment, but a small enough deficit that it cannot be 0.

5- Loved your stance on drugs, sex, and equality.


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This post was last modified: 29.01.2014 21:14 by Helsworth.

29.01.2014 21:09
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Rising Phoenix
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Post: #8
RE: Your Own Economic System

If we have to work within the existing framework (like in this game)...

Take a look at Jacobinite. That is pretty much what I would do (sans a few points, but those can be safely overlooked). Place a great focus on fighting corruption and inefficiency; ideologies and/or goals are irrelevant if whatever money you print dissappears through your bureaucratic ranks and your projects go completely unheed (or almost).

Implement a basic income equal to the cost of living (adjusted to inflation). Completely eliminate welfare per se, but keep pensions. That way people who work get a nice boost to their income, people who cannot or do not want to work can still benefit the economy indirectly, and pensioners have enough to cover their needs.

Focus on efficient development. You do not want to subsidize this and that market for 3,4 months to produce 0,327% market growth. You want to build a top-tier national railway system, complete with it's own security and above-average mainteinance ratios.

Attract foreign investment that helps the above, not just 'financiers'. I.e.: You want tax exemptions for biotechnology firms and maybe that new hydroelectric dam - not for that international bank that just set up shop in your country or Burger King.

29.01.2014 23:36
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chad7405
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Post: #9
RE: Your Own Economic System

Helsworth Wrote:
1- "Abolishing" the minimum wage only to replace it with a smaller minimum wage won't increase employment. It will only work to shrink aggregate demand, which will decrease sales, which in turn will increase unemployment. Also, you stated that the 110% COL welfare is gonna function as the new minimum. Actually, it won't, because unemployment benefits are not infinite; a person gets paid a few months and then those funds get cut.

Ordinarily I'd agree it's a bad idea, but I'm not talking about the American system currently in place. That's total crap; I'm talking a new kind. If the government gives people enough to survive then a little pocket money, that creates demand in and of itself. As an employee, I know I can survive doing nothing, I won't starve. However, I can earn twice or even three times that working. That means I can earn 2-3 times COL and live in practical luxury. When people employ and get employed on that basis, that's growth in wages. The economy in the States is growing, but the median wage isn't. That's why this will CREATE Aggregate demand for WORK. Wage inflation can be a good thing when utilized properly; this idea will take money and effort as well as some sweeping reform but if it is set up this way in a brand new country you can immediately start from square one like I pointed out. Not everyone can, nor should they be, equal. However, I'd rather have everyone well off with some very rich people in the mix than some rich people and lots of poor people.

Helsworth Wrote:
2- I don't like crop-biofuels. Crops should be used to produce food. Also, biofuels are not a clean source, when burned they do pollute.

To be totally truthful, me neither. I didn't elaborate enough. This is mainly for rural and farming villages and small areas to be self-sufficient, while in those large, unused regions (Like you said in Romania, the Dakotas... or Montana) we install massive solar power grids, and maybe even small, contained, safe nuclear plants that could potentially sustain almost if not all of the country. We could still use oil and natural gas, but we could turn it into secondary power and use 90%+ less of it.

Helsworth Wrote:
As for the size of the fiscal deficit. The 3% figure is arbitrary. Even the makers of the Maastricht treaty have confessed to it. Miterand was always "bugged" by ministers demanding more money for their departments, and he asked a few of his neoliberal friends what to do about it. When they made the euro-zone, they included a totally arbitrary figure of 3%.The right (correct) size of the fiscal deficit is that which satisfies the desire of the private sector to net save. Ergo, the correct size is that which achieves full employment.

Correct me if I'm wrong, but I thought I stated that that was the 'X' value to start at and could and would be changed if needed. (By needed I mean getting unemployment to 3% and hopefully lower)If I sounded like I was saying something different, my apologies.

Helsworth Wrote:
politicians MUSTN'T bring back the old ideological beliefs of "oh, the economy is booming, lets slash the deficit and obtain a surplus". That will have negative effects, and it will ultimately lead again to unemployment.

I think gov't surpluses are stupid. What the hell do they expect to do with it? Examine it? Give it to the people!Juerg42x50

Helsworth Wrote:
Loved your stance on drugs, sex, and equality.

Thanks, It would seem that people don't understand the concept of 'not everyone can be completely equal'. By creating minimal inequality on PURPOSE, then, as SHOULD BE OBVIOUS, there will be minimal inequality! (Whoa, that was deep. Said the socialists.) As for sex and drugs, I hold firm that if there is consent between partners or sufficient consumer warning for drugs, they should both be legal. This is the 21st century for God's sake

30.01.2014 00:07
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CaiusFilimon
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Post: #10
RE: Your Own Economic System

I have to say that you people each have quite an exceptional view of the role of the government in an economy, one which I find interesting, though it does make me feel terribly outnumbered. Most of you seem to consider government involvement and ownership in an economy largely malicious. Well then, now to outline some of my ideas, which can be considered a terrible monstrosity and an aberration, as I do tend to combine hundreds of ideas.
Alright, so first of all, I do not entirely believe in the overindulgence in luxury goods almost always promoted by capital economies. Nonetheless I do believe that anyone should have the opportunity to build for themselves a very stable and good financial situation, albeit without excessive access to luxury goods and services.
I believe in a society that is supposed to encourage population growth, not to an extreme degree, but still encourage it significantly. I think the government should be a weird mutation between libertarian and left wing ideologies, but certainly not a nanny-state.
First of all, a general overview of taxes:
1) Income Taxes and Capital Gains: Non-existent for the majority. Nonetheless income taxes and capital gain taxes both apply to people who saved(cash/liquidity owned) more than: US$1million(IT*Income Tax*5% and CG *Capital Gains* 0.5%) more than US$5million(IT 10% CG 2%) more than US$15million(IT 20% CG 5%) more than US$100million(IT 30% CG 10%) more than US$500million(IT40% CG 15%).
Taxes on the revenue generated by the shares of national companies but owned by foreigners should be roughly 80%.
2) Corporation Tax: 20%
*If the money earned within the country is wired out of the nation, an 80% tax is applied.*
3) Tariffs: No tariffs.
4) Customs:*The exportation of natural resources is prohibited*
As it was the case in few countries during the Victorian era, negative value customs duties would be present for natural/raw resources, in order to encourage the importation of cheaper foreign resources meanwhile preserving those found in the country, which would be exploited if international trade would not be enough to satisfy domestic demand.
5) Employer/Employee Social Security Taxes: Certainly not present.
6) No property tax if: The property is being used/ Land is being cultivated. Otherwise, 1%.
7) VAT on 'luxury' goods: 30% Examples: Vacations, all cars, tobacco, alcohol, fast food, sugary foods, 5thousand inch plasma TVs...
Government Intervention(including policies concerning the labor market, etc): (In case my previous 'policies' have not alienated me enough with you guys, these ideas of mine are sure enough to make you consider me someone bordering lunacy)
1) The usual laws against monopolies in the private sector.
2) Important Economic Sectors such as Housing and Road construction, railroad construction, steel, cement, rice, healthcare, insurance and food retail would be structured the following way:
In every economic sector mentioned, there would be 3 corporations present. All of which being entirely independent from the government. They would be in competition with each other, not being allowed to form cartels either, and thus establishing oligopolies. 80% of the shares of such companies would be owned by the state. This is not to say the government will receive 80% of the profits of the business. The shares owned by the government would behave as they would if owned privately. The government would then also receive revenue from corporation taxes.
Exceptions: All profits received from Healthcare and Insurance are used to impose a paid lowering of prices for consumers. Same goes for cereals/rice/food retail. Housing is also subsidized with received profits to create public housing for the exceptionally poor.
3) No minimum wage
4) The use of foreign labor is unrestricted
5) Government would subsidize if it is considered that the money invested would stir up enough economic activity to be considered worthwhile.

1) Welfare: Not supposed to be a major issue for the government
a) All people would be paid a basic amount of money required for them to live a life considered 'humane'.

Miscellaneous Policies:
1) All immigrants that are not considered a public threat are allowed to claim full citizenship.
2) Environmentally friendly policies that do not impact too much business activity.
3) Main goal of the government would be to establish a space-fueled economy. Natural resources would be made available incredibly cheap for a very fast expanding domestic demand for natural resources caused by a very large population (a lot of immigration, high pop growth). Of course, with the help of a space elevator, and three state owned asteroid/celestial body exploiting corporations.
4) Another very important government objective: No budget deficit, ever. Only a good level of surplus.
5) A secondary main goal: Offer the population at large 'rejuvenation' services at accessible prices.

30.01.2014 00:57
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