Monday, July 8, 2019

The easy path to a humane capitalism

I have been postponing this blog for a long time. Let's say several voices have expressed that they really do not like the following few lines.
The first argument is that most society accepts de facto that gains of any form (especially money and power) should be based on a meritocratic system (not existing wealth, nor family ties, nor corruption). Additionally, societies should agree on what constitute merit. Wealth, violence, deception should probably not. Creativity, courage, passion, determination, societal responsibility, empathy probably should or Even in such a system gains can exceed what I like to call an obscene level. To address this, each society should consider what is acceptable and what is not. For example, a region will consider that an interval from $1,000 to $10Mi/year is humanly acceptable, another will consider that the interval should be $10,000 to 10,000Mi/month. At the end of the day, if the decision is transparent and a reflection of the people it represents, than it has to be OK, but the absence of limit leads to our societal fabric disintegrating as populism is used as acid.
We already have a way to implement this limit and it is called a tax system.
The problem is that we still have a royal tax system, that is, richness is not taxed proportionally. We do tax proportionally between say 10,000 per year until 50,000 per year, but then something strange happens, the rate of taxes stays the same. additionally, such capital is often finding ways to avoid taxation altogether. We argue here that the right to a nationality should be linked to an obligation to declare one own revenues in a single location. The form of the relationship between income and individual tax can also be a function of a society, but at the end of the day there must not be a refuge for the obscene, neither in another country or within one own country by capping the % over a certain income. I would argue that there is a maximum at which income becomes obscene, therefore personally, b) is what we should strive for, progressively. I would also argue that for the private sector, taxes should be in function of the cost to the environment or to society (people). Finally, and for fear mongers, this is in no shape or form communism. Communism as model did not work and even China and Russia know it. People need acknowledgement for certain merit, we are biologically built that way. The two essential points made here are (i) we have to decide as a society which merit we support, and (ii) in addition to point (i) there is an income level that is socially unacceptable, this income level is at the source of many sufferings and destroys the societal fabric, an income level beyond which any donation/foundation can not repair the damage done.

Example:
a) a society with a log tax function (progressive but making sure that the capping does not occur before the highest income)
b) a society with an exponential tax function (Rapid, which allows for the determination of an unacceptable income beyond which all will be a donation called tax)

c) a society with a sigmoid tax function (rapid in the middle, which is a bit of what we have but without capping at 40K but say at 10Mi)