by unexaminedlife on 5/9/21, 4:44 PM with 22 comments
I'm not saying the economy isn't already a "hybrid" of many ideas. In no way do I think the economy is purely capitalist (nor has any probably ever been).
The idea is based on revenue. How much money has "passed through" a business / entity. These numbers could be tracked by a government, and published in "tiers" (so as not to disclose precise information). These tiers wouldn't dictate how a government "taxes" the entity, but would dictate how the rest of the economy was (by law) required to treat these entities. Specifically around raw material consumption and/or other commodities such as energy prices, and even human resources, etc. I would imagine the formula would be based on how many standard deviations from the mean or median a given company was, which would exponentially affect commodity prices for those entities as the entity's revenue grew / shrank.
The question then becomes well how do you track the honesty of these entities? Technically it could be impossible, but based on statistical polling of consumers and/or other businesses it's likely the wealth would be distributed "evenly enough" that there would be no way to collude on a grand scale. This idea would likely require different human beings to be registered as the "controlling interests" in said entity so a company couldn't just spawn many companies all controlled by the same person.
This would also potentially make room to sway conservative viewpoints on issues since conservatives are generally against higher taxes. But if the tax was "transferred" into the economy directly there wouldn't be a middle man for some of this wealth distribution that we (almost all of us) seem to agree should happen in the US.
Also, would be interested (if a discussion occurs on this thread) what other promising ideas have been attempted / proposed historically and how did they pan out?
by torstenvl on 5/9/21, 5:30 PM
- What do you mean by "the economy" treating a business a certain way?
- You use the sentence "Specifically around raw material consumption and/or other commodities such as energy prices, and even human resources, etc." -- what did you actually intend that sentence fragment to say?
- You say "I would imagine the formula would be based on how many standard deviations from the mean or median a given company was" -- what formula? That's the first time you bring up the idea of some kind of formula.
- You say "based on statistical polling of consumers and/or other businesses it's likely the wealth would be distributed evenly enough" -- woah, what wealth distribution? This is the first time you bring up this topic.
In fifteen or fewer words, what is your proposal?
by sova on 5/9/21, 5:23 PM
Secondly, addressing inequality of unevenness of the playing field through organizations or corporations is still at least one level removed from actual humans.
Milton Friedman proposed the Negative Income Tax, a gradual inclined ramp out of poverty similar to modern-day calls for UBI. I wrote about a possible variant called GPI (Guaranteed Progressive Income) here: https://satisologie.substack.com/p/guaranteed-progressive-in...
Government mints money, government also collects taxes on minted money. We take this as a necessary truth, but is it not a little redundant? Some people question the effectiveness of taxation. I don't think the alternatives to taxation are explored much if at all. Maybe there are slim pickings as far as promising ideas in that direction go.
So your suggestion, if I understand it, is to tier businesses for tax purposes, similar to the idea of a progressive tax but for business entities? Yeah, we could do that, would that alter outcomes somehow? It seems like education is the main barrier, and the more people are aware of interdependence the more intelligent our buying and funding decisions will be.
I advocate for a documented progeny for where raw materials and produce come from. If one could see a latitude and longitude for where an apple came from before one bought it, or the conditions that led to its being harvested, then one would be able to make more resource-friendly decisions at the point of purchase.
However, I think that we are talking about altering human behavior to make things less toxic and more harmonious on our planet, yet the basic necessities of hunger, thirst, shelter, clothing, and medicine are somewhat immutable in the large-scale, and therefore our focus ought be to address these inflexible (inelastic) demands as a matter of priority, then everything else will fall into place.
by trcarney on 5/10/21, 6:33 PM
I'm making an assumption on what the OP is thinking but most people who propose similar things are asking a similar question. "How in a country as rich as the US does poverty exist?" This this the wrong question. Poverty will always exist. It is the base state of humans and has been the most common state throughout history. If you do nothing you will be in poverty. Therefore the question we need ask and solve is, "If poverty is the basic state of humanity, how does wealth exist?" The answer to this question is by providing value to other people. The more value your provide, the more wealthy you become. So to make a level playing field, we need to make it as easy as possible for people to provide value to others. This means lowering taxes to make it easier for people to start and run businesses and lowering the regulatory burden on those businesses.
by Bjartr on 5/9/21, 7:21 PM
* Companies are put into revenue tiers.
* The price for any good/service paid by a company is increased by some TBD formula.
* Roughly speaking, the formula chosen would mean that companies in higher revenue tiers pay more.
* Then survey companies/consumers that interact with a company to determine if that company is following the rules.
* Plus a rule to forbid playing shell games with companies you own.
If that's all in the ballpark of what you where trying to communicate, here are my immediate thoughts:
* Based on the "into the economy" instead of taxes angle, I'm assuming the intent is for the premium paid still goes to the company selling the good/service. I suspect this could end up incentivizing a pricing structure like the one we see in US medicine where insurance companies negotiate that they'll pay some discounted amount to the hospital, but the hospital just raises the line item cost a commensurate amount so they end up being paid what they originally wanted to. Only it'd be large companies will purchase from companies who agree to negotiate a price that after adding the legally mandated premium, ends up being what they wanted to pay anyway. Of course the selling company will be fine with this because it means business from a large company.
* Using surveys to determine compliance creates a perverse incentives to poison the surveys of your competitors. Even without such laws we already see that happen with Amazon reviews. Companies pay to have negative reviews placed on their competitors products.
* I'll suggest a possible negative conservative viewpoint: Manipulating an independent company's pricing by legal mandate in some new way is regulatory overreach.
* If disallowing self-ownership of multiple companies based on some rules were enough to stop collusion, we'd have solved it years ago. If I can't own it myself, I'll pay someone to own it, and have them follow my orders. This is well within the borders of what the SEC already deals with, only they deal with way more complicated versions of it. For example, the loophole du jour is SPACs. SEC says that both companies involved in a merger must meet certain requirements. Those requirements can be inconvenient for an existing company to meet (audits take time and money), so instead create a brand new company, which you control in practice, that's squeaky clean from the SEC's standpoint and have THAT company make the actual purchase. That's a Special Purpose Acquisition Company.
The takeaway I think is that ultimately, trying to regulate financial behavior directly is a losing game full of unintended consequences. It's all about (dis)incentives.
Subsidies incentivize. Taxes disincentivize. Everything will be gamed to the nth degree.
by curryst on 5/10/21, 12:39 AM
A couple of thoughts here. Firstly, revenue is a bad way to measure this. Low-margin businesses like groceries will have high revenue for fairly low actual profits. It will benefit companies that have high profit margins. Google has high profit margins and will be less impacted than a grocery company of equivalent size.
Secondly, this will discourage economies of scale. The prices of goods will likely rise, because megacorps pay more for raw materials and small businesses are fairly inefficient for the most part. It would be hard to run a small business making cars, for example. Not big enough to afford all the expensive automation.
Third, I would worry that all this causes is an expensive to audit shell game. You create lots of small companies that funnel their income to a parent company. The only thing the parent company does is hold IP, which they lease to the small companies for a rate that is almost exactly their profit margins. The parent company has no need for raw materials (as R&D can be done in a small subsidiary funded by 0% interest loans from the parent company), so the tiering does nothing. Or we have to prevent that somehow, which likely means lots of complicated audits on how businesses are structured.
As for prior examples, Communism was a fairly different attempt to level the playing field (at least ideologically). It went poorly, but for reasons that I don't think impact your idea.
I think you're coming in at the wrong angle. To me, large corporations make sense in a lot of fields. One example is how Amazon got big enough that they had organically needed many of the underpinnings that led to AWS. Their economy of scale makes it possible to sell those services for profit, but not be outrageously expensive relative to doing it yourself for many cases.
The problem is that the way we structure companies leads to an extremely unequal distribution of the company's returns. One proposed solution has been to cap the maximum pay of anyone at the company based on the pay of the lowest paid person. So if it was theoretically 10x, if the janitor makes $7.25/hr then the CEO can't make more than $72.50/hr. If the CEO wants to make more, they'll have to raise the janitors pay. Of course, that's not without faults either. If they contract for janitorial services, then the lowest paid person might be an engineer. You also have to watch for alternative transfers of wealth; i.e. if the CEO owns the janitorial services company that they use, overcharges for it, and the board allows it as a form of kickback.
I personally like that because it doesn't prevent the CEO from making money, it just requires them to lift up everyone else as well to do it.