I know I have probably wittered on here before more than sufficiently about my pet subject of an asset tax BUT this has plenty of other witterings that perhaps might be fun to unpick/ tell me how I'm in a muddle. It has about what automation means for the job market, what money is, global capital flows, 1970s stagflation and how the great moderation "worked" until it didn't. It would be great to get any feedback (however scathing) about any bit of it. Please just look at any bit of it that might interest and slag that off. I've pasted contents page below and a link to the whole thing.
http://directeconomicdemocracy.files.wo ... cracy8.pdf
Contents
Introduction ... 1
Why deployment of capital by the wealthy fails to provide an optimal economy........................ 2
Doesn’t government deficit spending cure any such problem? .................................................... 6
Labour unions don’t solve the problem. ............................................................................................ 7
How direct economic democracy could optimise the economy .................................................... 7
Isn’t a financialized economy the goose that lays our golden eggs? ......................................... 10
How money, credit, tax and inflation relate in our current system. ............................................. 12
A zero interest rate policy does not reduce the financial overhead ............................................ 18
More detail of the suggested asset tax, citizens’ dividend and financial reform....................... 21
How this relates to land value tax, Georgism and wealth taxes today. ..................................... 26
Appendix: Gold Island –a fable ... 28
Diagram of monetary flows under our current system and under an asset tax system. ......... 30
Introduction
Direct democracy means rule of a country directly by the population (in contrast to representative
democracy where elected representatives rule the country).
“Democracy”? typically is used to refer to legislative power. However much of the way that people
and resources are controlled is by financial means. Proposals to make such financial power more
democratic have been termed “economic democracy”?. Generally such proposals entail transferring
financial control to elected representatives.
Direct economic democracy is the idea that financial power needs to be wielded directly by all of the
individuals in an economy.
A laissez-faire economy may provide direct economic democracy if all the participants have a share
of the wealth. In practice however, a laissez-faire approach leads to polarization of financial power.
Once some people have accumulated sufficient savings, these are used to acquire assets that
provide a return that enables more to be gathered. This compounding claim over wealth
redistributes financial power towards an oligarchic concentration.
2
Sustained peace and prosperity depends on the economy reflecting the priorities everyone has for
using their own time and the natural resources. If power is concentrated with a few people then
everyone else becomes economically excluded. That results in wastage of that most precious
resource- the ingenuity of the seven billion people we have on Earth. Money is an administrative
tool that we all use to govern our real lives. It is our responsibility to ensure that the nature of our
monetary system as best as possible facilitates the real economy we wish for.
When considering the distribution of financial control, it is important to distinguish between tangible
sources of wealth (such as land, infrastructure, technology, organization and expertise) and claims
over such wealth. Clearly increasing tangible sources of wealth will make the economy as a whole
wealthier. Much confusion arises when that gets conflated with simply increasing claims on the
same tangible wealth. The term “wealth creation”? is often confusingly used to refer to increasing
claims on the same tangible wealth.
I am putting forward the idea here that sustained direct economic democracy depends on
moderating the extent to which claims over wealth can be used to gather more such claims. Direct
economic democracy depends on everyone having sufficient claim over the economy’s wealth. In
order for such a widespread wealth distribution to be maintained, generalized “return on capital”?
would have to be taxed in such a way that, rather than money gathering money, adept use of wealth
is required simply to preserve it over time. The tax burden would need to shift off taxing what
people did to instead taxing what they owned. That would mean replacing all current taxes with a
uniform asset tax that applied equally to all gross asset values of land, cash, stocks, bonds,
collectables, commodities etc. If something could potentially be sold, then it would need to be taxed
at a proportion of its market value each year in order to be legally owned.
Some other changes could also contribute towards direct economic democracy. I would suggest
these reforms:
? Replace all current taxes with a uniform tax on gross assets.
? Replace means tested benefits with a uniform citizens’ dividend paid to every citizen
irrespective of any other earnings.
? Have widespread public comprehensibility as being a key criterion for monetary and
financial policy and regulation.
? Transfer financial power away from banks to all individual citizens.
Here I set out the overall reasoning behind this idea, then delve under the bonnet of our current
economic system and finally provide more detail about suggested changes.