Economic Republic
The thesis of a republic is to balance the power between all three classes that comprise a nation or commonwealth. To do this requires first that the legislative power be divided between the three classes by dividing it between a House of Representatives, a Senate and an Executive. In this way, the people, capital and the government class all have the opportunity to agree or disagree with the legislation. That which negatively impacts one third or more of the mechanism of society will have a difficult time becoming the law of the land. The constitution is also equipped with checks and balances to prevent all power from accumulating in one branch or another. This, however means political power.
Today, there is a more popular power than political power, and that is financial power. Money goes a long way to influencing political power, it shapes the landscape and usually has the final say in decision making. To balance all power between the three classes of society, the social product, that is the money left over to do stuff with after all costs are taken care of, needs to be divided equally between the three classes as well. The social product in our capitalist economy is the sum of all profits taken before any taxes and any taxes taken from wages as well.
The best way to divide the social product up is to eliminate wage taxes, first of all and instead tax resources to get the social product for the common class, this is currently the social security and medicare taxes. This will come out of the profits of capital, as usual, only from a different direction, the actual balance in anyone's books or budget will stay the same. The tax can be exacted at the commodities exchanges that deal in natural resources. The criteria for taxing should be any resource that ENTERS the economy, hence recycled materials are exempt and the neoclassical option remains open.
The remaining profits are divided 50/50 between capital and government taxes. While this looks big with these numbers it is about a 60% increase in the profits of capital. Which allows for an immense amount of new investment and employment in the domestic or productive sector.
Following is an excerpt from a thesis I wrote earlier concerning this issue that reasons things from example and actual data taken from various government sources. As I was accumulating this data, I lost two hard drives to some sort of virus attack that rewrote the format code on the hard drives. I discovered that the drives were still functional when I connected them up on parallel connections and the drive format program showed them as working. I lost all the sources, but I had already written down the info. Some of the sites I visited were the U.S. Social Security web site, the IRS web site, some commodities web sites, which showed that the price of all resources in 1996 equaled the cost of social security taxes which gave me some ideas for establishing a working economic value for our natural heritage. The principal is based on the Ricardian rent idea, which theoretically should not impact profits of capital, being due instead to the productivity of nature.
Here is part of it:
So, let's apply this thesis to a hypothetical example in the manner of a Ricardo, Smith, or Marx. For instance, let there be an average business that makes $100.00 surplus in a year. The tax on that profit will be 50% or $50.00, so the actual profit is $50.00. The average business cost of materials might be $100.00, with $50.00 of that going into the dispensation tax.
Now, we need to make a couple of assumptions here. The first is that 20% of the population does not work and that 80% does. On average this ratio holds across the population. So if the average business pays $50.00 to the dispensation tax, the average total wages will be ($50.00/20%)*80% = $200.00. It is up to the new branch of government to keep businesses up to date on the ratio of employed to unemployed individuals, and also on the rate of 'rent' of resources for those who trade in primary commodities. This could be a monthly or weekly publication, or an instantaneous set of values using the computer outputs provided to exchanges.
In a simple business model, the price of commodities will equal the cost of materials + wages + profits. In this example that gives us $100.00 (materials) + $200.00 (wages) + $100.00 (surplus) = $400.00. The rate of profit in this example is $50.00/$400.00 = 12.5%. If the resources are all recycled, there is no materials tax (since the materials have not recently entered the economy) so the total price is $350.00 and the rate of profit is $50.00/$350.00 or 14.3%. These rates of profit are averages, but are close to what any business can expect. Some do better some don't do as well, but it is obvious that it is not oppressive. In addition there is a clear incentive to recycle, which implements the neoclassical economic model, which in turn makes everyone healthier, wealthier and wiser.
Now, how does this play out at the political level. Regarding the capitalist as the aristocracy, the laborer as the democracy and government as the monarchy, the goal is to balance the wealth between these classes. The balance of power being the only way known to mankind to maintain the liberation of any individual from the clutches of tyranny.
Using data from 1996, and rounding it all off, gives us a pretty clear picture of what we have now and what we would have with this Republican economy.
If we subtract from the government taxes a rate of 10% for the basic functioning of government itself ( a verifiable number), we must subtract out 83 billion, leaving them with 743 billion dollars of the social product. This is clearly not a balance of power. The difference went to bloat military expenses.
Take the sum of 1.77 trillion dollars, subtract the 83 billion of legitimate cost, gives 1.69 trillion dollars of pure social product, one third of that is 562 billion dollars.
To give each class one third of the surplus value produced by our nation, would lower the government's share by 743 billion - 562 billion = 181 billion, which if it came out of the military budget, would still leave us enough military to conquer all the world's largest countries. It would raise social security by an additional 97 billion, which ought to be enough to keep seniors solvent ad infinitum. The remaining money would go back into corporate profits, which would add an additional economic stimulus package to the tune of 83 billion. The additional money going to business contributes to the rate of individual consumption, as does that going to seniors and others unemployable. These additional markets should raise profits and the system become perpetually productive, the faster rate of exchange being the more sustainable too, due to the encouragement to recycle and conserve.
The improvement in the economy actually comes as a result of the market becoming more neo-classical, in the sense that money is more distributed and people can buy more stuff.
The current popular economic mythology is all classical, expecting markets to appear out of nowhere and pumping wealth into the hands of the few to invest in nothing. Concentrations of wealth are unnecessary in a capitalist economy. In fact they are one of the great threats to any republic, said President John Adams, an expert on the subject. The idea behind capitalism is that where there is a demand, capital will collect, and demand is another term for market. While there are many things people want, most people cannot afford them, so the market can't materialize (at least not without the slavery producing mechanism of debt). If government has the un-repubican lion's share of the social product, investment by capital - with or without tax breaks- will fall far short of remaining coincident with demand.
The main reason for this financial lacuna is clear in the economic breakdown from 1996, all the money is going to the military, and for no good reason other than a perverse drive for power that is rapidly destroying the U.S. republic. Markets are simply drying up due to the lack of an economic balance of power regarding either the broad-based consumers or the capitalist class. The social product needs to be invested in the national economy and not in chasing magnified bogeymen around the planet with grotesquely expensive forces. While 3000 people were in fact killed by terrorists in one year, three years ago, since that time, 9000 people per year were killed by handguns giving a total of 27,000 and 40,000 people per year were killed on our nations highways giving us a total of 120,000 deaths. In my book, working on some night vision, heat vision and wireless interactive technologies to prevent automobiles from hitting people and other vehicles should be getting the billions of extra dollars. Perhaps completely automating automobiles would go a long way to reducing the anxieties that lead to many of the handgun murders. Loosening individual liquidity would probably cover the rest of the distance.
We must still ask how this new republic will affect an individual from any of the three classes? The labor class gains a safety net, the aristocracy gains markets and respect and the government loses some of its bloated military potential, yet must fulfil its social obligations without abandoning the management of society. The system suggested could be implemented fractionally over a period of five years, with a lot of analysis and observations made to ensure that there is benefit and that losses are insignificant amd mitigated. The constitutional amendment would simply establish two new offices, the one to collect and distribute the resource rents for the unemployable class and a second to split the remaining corporate profit, progressively, in half, taking only one of the halves to support governmental activities.
The typical worker would at first find that their annual pay is a lot smaller, since the income tax fraction will be retained by the employer, but their take home pay larger. The social security tax would be returned to the working class to enable them to purchase goods where the price has risen due to the increased price of resources. This would appear as a mild form of inflation.
For example the cost of a barrel of oil doubled within the year 2004 and the price of gasoline barely noticed it. A bushel of grain weighs about 60# and costs about $4.00. If a 1# loaf of bread were assumed to be entirely made of flour, and not have any additional water or other ingredients, the cost of the flour is $.067. If a loaf of bread is $2.00, a doubling of the price of grain would raise the price of bread to $2.07. Since the individual is retaining an additional 10% of their pay, the extra 3.5% increase in cost shouldn't matter. In reality, however, the various additional costs such as sugar, yeast and ovens should add up and sum to that same 10% so bread should actually rise to $2.20 per loaf but wages rising the same 10% covers this increase.
In either case, the increase is not a lot, and it is accompanied by a real increase in the wage. The increase in pay, however, can lend itself to the purchase of a greater quantity of products where labor is the more significant cost, since the cost of labor with respect to the cost of working stock will diminish. As shown earlier, the money available to seniors will increase 27%, so they're covered too. Finally, the typical worker who doesn't have any significant investment income will not need to file an income tax form; their employer will be required to file an employee cost form, which shows what everyone made. There should probably be some sort of accountability as well, such as a notice mailed out by the government to each worker to verify the figures.
The capitalist will find surplus value split three ways. They will pay a 100% rent on all raw materials they purchase. If they are processed materials the additional cost will already be figured in, so there is no further action to take, other than paying a higher price. The primary effect most businesses will see is the tax rate fall and their labor costs fall, though not to the same extent. The typical tax rate will be near 50%, but it will be progressive and entirely on profits or growth. Labor will not be responsible for any taxes, this part of the wage now being retained. Control over these taxes in government is guaranteed by the U.S. Constitution to the House of Representative, so losing the actual handling of the money by each individual should pose no political threat. The benefit is that markets will increase and expand dramatically, and total profits rise due to the increased demand. In addition, there should be an increase in profitability across the board of (83 billion / 479 billion) * 100% = 17%, which should encourage all manner of improvements. State governments may get a healthy portion of that though.
There will be two new offices of government, one associated with the IRS the other with social security, this latter having a presence in the commodities exchanges. The unique part of this tax system is that government will be required to pay taxes on material things too. It is unavoidable when purchasing finished goods, and required when stockpiling strategic materials. The reason being that the rent on these materials accrues to the unemployed of the working class, the democratic class, and hopefully many of those now in the military class who have been disabled. Trying to circumvent this tax impoverishes those who need civil society the most.
Government debt should become a thing of the past. In fact, the elimination of government debt should be a requirement of the establishment phase, since debt is a way government can cheat the system and increase their share of the power. The dramatic increase in government funds due to downsizing to a realistic sized military should be applied directly to paying off debt and establishing a war fund in addition to funding improvements in the education system and transportation infrastructure.
Comparing the economic difference between the classes for the years 1996 to 2001 we see each got:
By 2001, it appears that labor is tending to grow with respect to the government, but capital is shrinking. While the combined capital plus labor, or democratic plus aristocratic forces seem to be gathering strength with respect to the government, the power of capital is shrinking steadily in recent years. In addition, government has been borrowing money, so its effective power is greater than that reflected purely in tax revenues.
Losing its aristocratic class is normally the greatest political tragedy a nation can suffer. It can either be lost to oligarchy and corruption of its own accord or to disempowerment through other means, such as despotical tyranny or anarchy. In either case, the loss means the loss of the best of skills, cooperation and intellect, which tend to benefit everyone when applied socially to wealth production. This impoverishment in our situation is a direct consequence of the rise of the military state, which may have worked for Sparta, but for which there is no longer an environment that can support such bigotry or unsecured balancing of power.
The temporary rise of the democratic class is far from permanent. The idea of privatizing social security was recently on the table. If such a policy had proceeded, it would have demolished both classes leaving only a tyrannical despotism. The reason being that the cost of providing funds as contrasted with the current dispensation system is about 20 times higher. It would have required all remaining profits of capital to fund it. -This is another proof that the Republican Party is anything but the party of business - the two are as mutually exclusive as business and the Democratic party or the Democratic party and the Republican party. The idea of our country was for a tripartite government, not a tug of war between two factions.
Vote U.S. Capitalist Party
Today, there is a more popular power than political power, and that is financial power. Money goes a long way to influencing political power, it shapes the landscape and usually has the final say in decision making. To balance all power between the three classes of society, the social product, that is the money left over to do stuff with after all costs are taken care of, needs to be divided equally between the three classes as well. The social product in our capitalist economy is the sum of all profits taken before any taxes and any taxes taken from wages as well.
The best way to divide the social product up is to eliminate wage taxes, first of all and instead tax resources to get the social product for the common class, this is currently the social security and medicare taxes. This will come out of the profits of capital, as usual, only from a different direction, the actual balance in anyone's books or budget will stay the same. The tax can be exacted at the commodities exchanges that deal in natural resources. The criteria for taxing should be any resource that ENTERS the economy, hence recycled materials are exempt and the neoclassical option remains open.
The remaining profits are divided 50/50 between capital and government taxes. While this looks big with these numbers it is about a 60% increase in the profits of capital. Which allows for an immense amount of new investment and employment in the domestic or productive sector.
Following is an excerpt from a thesis I wrote earlier concerning this issue that reasons things from example and actual data taken from various government sources. As I was accumulating this data, I lost two hard drives to some sort of virus attack that rewrote the format code on the hard drives. I discovered that the drives were still functional when I connected them up on parallel connections and the drive format program showed them as working. I lost all the sources, but I had already written down the info. Some of the sites I visited were the U.S. Social Security web site, the IRS web site, some commodities web sites, which showed that the price of all resources in 1996 equaled the cost of social security taxes which gave me some ideas for establishing a working economic value for our natural heritage. The principal is based on the Ricardian rent idea, which theoretically should not impact profits of capital, being due instead to the productivity of nature.
Here is part of it:
So, let's apply this thesis to a hypothetical example in the manner of a Ricardo, Smith, or Marx. For instance, let there be an average business that makes $100.00 surplus in a year. The tax on that profit will be 50% or $50.00, so the actual profit is $50.00. The average business cost of materials might be $100.00, with $50.00 of that going into the dispensation tax.
Now, we need to make a couple of assumptions here. The first is that 20% of the population does not work and that 80% does. On average this ratio holds across the population. So if the average business pays $50.00 to the dispensation tax, the average total wages will be ($50.00/20%)*80% = $200.00. It is up to the new branch of government to keep businesses up to date on the ratio of employed to unemployed individuals, and also on the rate of 'rent' of resources for those who trade in primary commodities. This could be a monthly or weekly publication, or an instantaneous set of values using the computer outputs provided to exchanges.
In a simple business model, the price of commodities will equal the cost of materials + wages + profits. In this example that gives us $100.00 (materials) + $200.00 (wages) + $100.00 (surplus) = $400.00. The rate of profit in this example is $50.00/$400.00 = 12.5%. If the resources are all recycled, there is no materials tax (since the materials have not recently entered the economy) so the total price is $350.00 and the rate of profit is $50.00/$350.00 or 14.3%. These rates of profit are averages, but are close to what any business can expect. Some do better some don't do as well, but it is obvious that it is not oppressive. In addition there is a clear incentive to recycle, which implements the neoclassical economic model, which in turn makes everyone healthier, wealthier and wiser.
Now, how does this play out at the political level. Regarding the capitalist as the aristocracy, the laborer as the democracy and government as the monarchy, the goal is to balance the wealth between these classes. The balance of power being the only way known to mankind to maintain the liberation of any individual from the clutches of tyranny.
Using data from 1996, and rounding it all off, gives us a pretty clear picture of what we have now and what we would have with this Republican economy.
- Corporate profits for that year were about 650 billion dollars.
- Corporate taxes paid were about 171 billion dollars.
- Corporate social security taxes were 233 billion dollars.
- Individuals paid 655 billion in taxes
- Individuals paid a total of 232 billion in social security, Medicare and Medicaid taxes.
If we subtract from the government taxes a rate of 10% for the basic functioning of government itself ( a verifiable number), we must subtract out 83 billion, leaving them with 743 billion dollars of the social product. This is clearly not a balance of power. The difference went to bloat military expenses.
Take the sum of 1.77 trillion dollars, subtract the 83 billion of legitimate cost, gives 1.69 trillion dollars of pure social product, one third of that is 562 billion dollars.
To give each class one third of the surplus value produced by our nation, would lower the government's share by 743 billion - 562 billion = 181 billion, which if it came out of the military budget, would still leave us enough military to conquer all the world's largest countries. It would raise social security by an additional 97 billion, which ought to be enough to keep seniors solvent ad infinitum. The remaining money would go back into corporate profits, which would add an additional economic stimulus package to the tune of 83 billion. The additional money going to business contributes to the rate of individual consumption, as does that going to seniors and others unemployable. These additional markets should raise profits and the system become perpetually productive, the faster rate of exchange being the more sustainable too, due to the encouragement to recycle and conserve.
The improvement in the economy actually comes as a result of the market becoming more neo-classical, in the sense that money is more distributed and people can buy more stuff.
The current popular economic mythology is all classical, expecting markets to appear out of nowhere and pumping wealth into the hands of the few to invest in nothing. Concentrations of wealth are unnecessary in a capitalist economy. In fact they are one of the great threats to any republic, said President John Adams, an expert on the subject. The idea behind capitalism is that where there is a demand, capital will collect, and demand is another term for market. While there are many things people want, most people cannot afford them, so the market can't materialize (at least not without the slavery producing mechanism of debt). If government has the un-repubican lion's share of the social product, investment by capital - with or without tax breaks- will fall far short of remaining coincident with demand.
The main reason for this financial lacuna is clear in the economic breakdown from 1996, all the money is going to the military, and for no good reason other than a perverse drive for power that is rapidly destroying the U.S. republic. Markets are simply drying up due to the lack of an economic balance of power regarding either the broad-based consumers or the capitalist class. The social product needs to be invested in the national economy and not in chasing magnified bogeymen around the planet with grotesquely expensive forces. While 3000 people were in fact killed by terrorists in one year, three years ago, since that time, 9000 people per year were killed by handguns giving a total of 27,000 and 40,000 people per year were killed on our nations highways giving us a total of 120,000 deaths. In my book, working on some night vision, heat vision and wireless interactive technologies to prevent automobiles from hitting people and other vehicles should be getting the billions of extra dollars. Perhaps completely automating automobiles would go a long way to reducing the anxieties that lead to many of the handgun murders. Loosening individual liquidity would probably cover the rest of the distance.
We must still ask how this new republic will affect an individual from any of the three classes? The labor class gains a safety net, the aristocracy gains markets and respect and the government loses some of its bloated military potential, yet must fulfil its social obligations without abandoning the management of society. The system suggested could be implemented fractionally over a period of five years, with a lot of analysis and observations made to ensure that there is benefit and that losses are insignificant amd mitigated. The constitutional amendment would simply establish two new offices, the one to collect and distribute the resource rents for the unemployable class and a second to split the remaining corporate profit, progressively, in half, taking only one of the halves to support governmental activities.
The typical worker would at first find that their annual pay is a lot smaller, since the income tax fraction will be retained by the employer, but their take home pay larger. The social security tax would be returned to the working class to enable them to purchase goods where the price has risen due to the increased price of resources. This would appear as a mild form of inflation.
For example the cost of a barrel of oil doubled within the year 2004 and the price of gasoline barely noticed it. A bushel of grain weighs about 60# and costs about $4.00. If a 1# loaf of bread were assumed to be entirely made of flour, and not have any additional water or other ingredients, the cost of the flour is $.067. If a loaf of bread is $2.00, a doubling of the price of grain would raise the price of bread to $2.07. Since the individual is retaining an additional 10% of their pay, the extra 3.5% increase in cost shouldn't matter. In reality, however, the various additional costs such as sugar, yeast and ovens should add up and sum to that same 10% so bread should actually rise to $2.20 per loaf but wages rising the same 10% covers this increase.
In either case, the increase is not a lot, and it is accompanied by a real increase in the wage. The increase in pay, however, can lend itself to the purchase of a greater quantity of products where labor is the more significant cost, since the cost of labor with respect to the cost of working stock will diminish. As shown earlier, the money available to seniors will increase 27%, so they're covered too. Finally, the typical worker who doesn't have any significant investment income will not need to file an income tax form; their employer will be required to file an employee cost form, which shows what everyone made. There should probably be some sort of accountability as well, such as a notice mailed out by the government to each worker to verify the figures.
The capitalist will find surplus value split three ways. They will pay a 100% rent on all raw materials they purchase. If they are processed materials the additional cost will already be figured in, so there is no further action to take, other than paying a higher price. The primary effect most businesses will see is the tax rate fall and their labor costs fall, though not to the same extent. The typical tax rate will be near 50%, but it will be progressive and entirely on profits or growth. Labor will not be responsible for any taxes, this part of the wage now being retained. Control over these taxes in government is guaranteed by the U.S. Constitution to the House of Representative, so losing the actual handling of the money by each individual should pose no political threat. The benefit is that markets will increase and expand dramatically, and total profits rise due to the increased demand. In addition, there should be an increase in profitability across the board of (83 billion / 479 billion) * 100% = 17%, which should encourage all manner of improvements. State governments may get a healthy portion of that though.
There will be two new offices of government, one associated with the IRS the other with social security, this latter having a presence in the commodities exchanges. The unique part of this tax system is that government will be required to pay taxes on material things too. It is unavoidable when purchasing finished goods, and required when stockpiling strategic materials. The reason being that the rent on these materials accrues to the unemployed of the working class, the democratic class, and hopefully many of those now in the military class who have been disabled. Trying to circumvent this tax impoverishes those who need civil society the most.
Government debt should become a thing of the past. In fact, the elimination of government debt should be a requirement of the establishment phase, since debt is a way government can cheat the system and increase their share of the power. The dramatic increase in government funds due to downsizing to a realistic sized military should be applied directly to paying off debt and establishing a war fund in addition to funding improvements in the education system and transportation infrastructure.
Comparing the economic difference between the classes for the years 1996 to 2001 we see each got:
| Year: | 1996 (millions) | 1998 (millions) | 2000 (millions) | 2001 (millions) | ||||||||||||||
| GOV (G) | 826,041,404 | 970,087,125 | 1,242,729,393 | 1,054,648,264 | ||||||||||||||
| Capital (C) | 469,219,050 | 481,840,382 | 556,360,546 | | 468,545,428 | |||||||||||||
| Labor (L) | 490,109,550 | 556,349,751 | 638,834,880 | | 671,579,948 | |||||||||||||
| G-(C+L) = | -133,287,196 | -68,103,008 | 47,533,967 | | -85,477,112 | |||||||||||||
| G/C = | 1.7 | 2.01 | 2.23 | | 2.25 | |||||||||||||
| G/L = | 1.68 | 1.74 | 1.95 | | 1.57 | |||||||||||||
By 2001, it appears that labor is tending to grow with respect to the government, but capital is shrinking. While the combined capital plus labor, or democratic plus aristocratic forces seem to be gathering strength with respect to the government, the power of capital is shrinking steadily in recent years. In addition, government has been borrowing money, so its effective power is greater than that reflected purely in tax revenues.
Losing its aristocratic class is normally the greatest political tragedy a nation can suffer. It can either be lost to oligarchy and corruption of its own accord or to disempowerment through other means, such as despotical tyranny or anarchy. In either case, the loss means the loss of the best of skills, cooperation and intellect, which tend to benefit everyone when applied socially to wealth production. This impoverishment in our situation is a direct consequence of the rise of the military state, which may have worked for Sparta, but for which there is no longer an environment that can support such bigotry or unsecured balancing of power.
The temporary rise of the democratic class is far from permanent. The idea of privatizing social security was recently on the table. If such a policy had proceeded, it would have demolished both classes leaving only a tyrannical despotism. The reason being that the cost of providing funds as contrasted with the current dispensation system is about 20 times higher. It would have required all remaining profits of capital to fund it. -This is another proof that the Republican Party is anything but the party of business - the two are as mutually exclusive as business and the Democratic party or the Democratic party and the Republican party. The idea of our country was for a tripartite government, not a tug of war between two factions.
Vote U.S. Capitalist Party
posted by lou_srewlect | 12:47 PM
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