
The Middle-Class Squeeze - grej
http://www.wsj.com/articles/the-middle-class-squeeze-1443194736
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tomohawk
Most of the squeezing seems to come down to cronyism, which is a problem in
just about any system. For example, the government pushing of subprime
mortgages (at the urging of cronies) over-inflated housing prices, and then
when the balloon burst, the cronies won again by having the government take
over their debt. The question should primarily be how to restrain cronyism,
and thereby provide the best outcome for the most people. Cronyism seeks to
restrain trade in a way that is advantageous to only a few politically
connected players.

A pure socialist system or a pure capitalist system would probably not have
these issues, but then these are both unicorns.

Cronyism seems to be the primary way a socialist system operates. If you're
politically connected, you tend to get best access to the goods and tend to be
able use regulations to handicap competitors. This makes sense as in a
socialist system, the people running the government are more actively engaged
in the economy, and the tendency to reward friends and punish adversaries is
hard to fight.

In a capitalist system, cronyism can also occur if players collude or if a
player obtains a monopoly (or some other type of controlling position). In
either case, the system then becomes distorted as players increasingly use
coercion instead of mutually beneficial exchange. For example, Apple colluding
to keep down the wages of workers.

~~~
ubernostrum
The issue, at least with the government, is that you can't win.

Whenever you hear people complain about how impossible it is to comply with
all the procedures and processes and regulations for getting a government
contract to develop some software, it's a safe bet that those procedures and
processes and regulations were all put in place by well-intentioned people who
wanted to prevent corruption. But as people found more inventive ways of being
corrupt, the countermeasures had to grow more complex and invasive, until
finally they reached the point where only a handful of companies would
actually bother to achieve compliance, guaranteeing them a steady stream of
contracts regardless of performance. Which is precisely the result that wasn't
supposed to happen.

Also, the mixed socialist/capitalist economies of Europe seem to do better, on
average, than our much more capitalist-leaning system, largely because they
aren't afraid to implement certain programs and regulations that in the US
would be screamed down as creeping socialism even when they'd be more
effective than what we actually do.

~~~
guard-of-terra
Why. You can. Line up suppliers, round-robin contracts between them, assess
after completion. Then downrank ones who did bad work and uprank those who did
good job on good money. For new companies, give them a few contracts, maybe
backed by insurance in case they fail horribly.

And then you can literally left suppliers to their own devices.

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natrius
The problem with our capitalism is our money.

Currency is a means for us to socialize debts so we can make trade more
efficient. When you give Steve money, you're saying, "my people, Steve has
provided me $30 of value, so please reward him in kind." Instead of having to
give Steve $30 of value directly in return, we communicate that $30 debt to
the rest of society with our money.

The problem with our currency is that it forces everyone to honor the debts of
every other person on the planet. There are people who destroy our
environment, manipulate our politics, and deceive our people in order to earn
rewards, and we're all forced to reward them because we can't identify whose
socialized debt we're honoring when we reward people in exchange for money.

If we always knew whose debts were being honored, any individual could refuse
to honor the debts of people they believe are harming society. You could
effectively _turn off people 's money_ if they're behaving poorly. No one
would work for you if they think others won't honor your debts. If you don't
honor the debts of polluters, polluters lose their purchasing power and go out
of business. Similarly, pharmaceutical price gougers, war profiteers, and
harbingers of financial crises would have powerful disincentives.

This enforcement mechanism would incentivize socially harmonious behavior
without requiring consensus on what socially harmonious behavior is. We'd have
a market mechanism for social behavior, which would prevent many of
capitalism's failures.

We could also prevent wealth accumulation by deciding that recent value
transfers are worth more than older value transfers. This is something that
people actually believe, but there's no way for our money to express that the
work you did twenty years ago doesn't mean as much as the work you do today. A
pleasant side effect of codifying this truth is that we could avoid the zero
lower bound on interest rates that's making it hard for the world to reach
full employment. If unemployment is high, just increase the value of recent
work so there's a bigger incentive to put people to work.

Instead of paying people based on how much money they have, you'd pay them
based on their merit, calculated however you decide as an individual.

All we need to implement merit capitalism is a ledger of who has provided
value for whom to replace our currencies that obfuscate that data. Blockchains
give us the power to build this ledger.

~~~
walterbell
How do you deal with the analytics/computation/HFT asymmetry available to
those who earned fortunes under the anonymous-currency regime, from
overwhelming new generations who must live in a cashless hampster wheel of
negative interest rates, no transactional privacy and gamified behavioral
nudges?

~~~
natrius
How can yesterday's wealthy overwhelm new generations? Yesterday's wealthy
don't have anything I need besides maybe land, which we could solve separately
if we wanted to. They have money, but if they overwhelm new generations with
money, we'll turn their money off.

Most of society lives in a hamster wheel already. It's what we call having to
work for a living. Valuing recent work over older work just puts the wealthy
back on the hamster wheel with us, and it will make society more wealthy since
everyone has to keep contributing to our total wealth.

Transactional privacy is undeserved. When you spend money, you're putting the
rest of society on the hook for the goods or services you just bought. We want
to know who you are so we can decide whether we want to honor your debt. If
you don't want to tell us, you're free to barter.

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prostoalex
A lot of the ails mentioned in the article seem to arise from Western
societies' preference on income taxation vs property taxation.

Low property taxes force the governments to finance its expenditures mainly
through sales and income taxes. The former are optional, the latter happen to
penalize those who elect to participate in the workforce (which large property
owners can safely sit out).

~~~
euroclydon
Property taxes also punish retired people. When your wages disappear after
retirement, it's a lot more difficult to pay the taxes on your home.

~~~
go1979
The recent run up in property prices in most major western cities makes me
think the home owning class isn't in too bad of a shape. If you own a house in
Vancouver, the Bay area, Toronto, London etc. you basically won the lottery.
If you are a young adult, well ... hope your parents help you out?

My parents were immigrants and not savvy enough to buy a house. I'm wondering
how I can ever afford a 200K down payment on a million dollar house, and if
that is in any way a reasonable idea. Taxing income is the wrong approach
since people getting income are contributing to society. The lottery winners
who happened to own houses in the right place .. I'm not sure what they
contributed.

~~~
douche
You could take that downpayment and buy a house outright, cash in hand, in the
99% of the country that isn't completely fucking bonkers.

------
nugget
Basic income will turn rural working class into the new middle class and cause
those areas to flourish.

~~~
tomohawk
Negative income tax is a much better idea.

