Dignity

A few days ago, though it is difficult to keep track of time in camps, there was a NPR piece about the economic conditions in Greece.  A Greek man, either through a translator or directly, stated that while his job does not pay enough to cover his total expenses, at least he has a job, because a job is dignity.  I am paraphrasing this, but the basic idea remains, having a job is having dignity.

A coworker retorted that the idea of jobs as dignity is what caused the economic problems in Greece.  I took the bait, replying that I think, when you consider the entire situation, a job is probably necessary for dignity, and that it was probably the inflated credit rating from joining the EU that got Greece into economic trouble, not equating dignity and employment.  The conversation essentially died, but I continued to think about the idea of work as dignity.

Life in a camp lacks dignity.  As anyone who has had to use port-a-potties for an extended period of time, these destroy dignity.  The one I use here is cleaned weekly, and on Tuesdays, my bathroom situation becomes "less nasty, more splashy."  This is not dignity.

Yet, without employment, is there dignity?  A homemaker certainly has dignity, and is am important part of many households.  There is still an income in this.  There is a home, electricity, running water, etc.  These services that we have equated to basic rights are dignity, and these cost money.  I think it is likely that what the man in the NPR interview was saying was that with his job, he can afford (most of?) these services, which provide dignity.  What happens though, when one cannot afford this type of dignity?  What happens when an entire generation in entire nations cannot?  What will happen in the United States if the government continues to not spend money on necessary programs, and the economy continues to languish?

I have discussed these questions with various friends.  If, for example, I was not afforded the paycheck that accompanies my unfortunate restroom status, what would that mean.  Eventually, I would be faced with either homelessness, or with moving in with someone.  Conversely, if a friend or family member of mine was forced with this choice, I would gladly offer my home to them.  That said, in standard thinking, this means a period of months, and, in fact, my brother has extended this hospitality to me before.

In Greece though, these problems are not a problem of months, but of years.  Nay, likely decades!  If, for example, friends were to pool resources for 10 years, at the end of that period, would they want to part?  Pop culture has celebrated these arrangements in the television show Friends.  In fact, the idea of "roommates" is the basis of multiple television shows.  Frasier, Chuck, Firefly, and I am sure many others have some aspect of people being forced into a life together in order to maintain dignity.

Beyond the economic benefits to one or more members of the household, the environmental benefits are clear too.  Multifamily homes have smaller environmental footprints than single-family homes.  Thus, it may be possible that in the pursuit of personal dignity, these, dare I say, communes solve other problems that confront society.

For me, I see many ways that long-term, stable, relationships could form between people in the form of pooled resources.  I see a response to micro-sized apartments, shrinking or slow economies, and dwindling natural resources.  I see, a way for me to have dignity that includes a flush toilette.  Yet, it seems, that our collective dream of the future must shift from GM's Futurama, to something different, something that places universal dignity over consumption.

American Vanity

Internet privacy is an important idea.  Unfortunately, corporations, not any government, were pioneering ways to track people long before the internet was in every home.  Owing to corporations, there is no internet privacy.  In some ways, I agree, this is a terrifying prospect.

My credit card companies know that I am wont to show up, unannounced, in a foreign country, and buy something in a grocery store.  More or less, I do not need to tell Visa that I am heading overseas, they know I will pop up in a random place, and start buying fruit and vegetables.  Conversely, if I want to buy furniture, Visa is going to need a DNA test to prove that yes, I am interested in owning a bed.  They know my preferences better than I do.  I remember a credit card company advertising the "service" of monitoring every single purchase to protect you from fraud.  The ad I recall had a handsome man describing himself to the audience as a "t-shirt and jeans guy," who decided to get married and thus bought a tuxedo, at which point, the credit card company called him to verify his identity.  Society, it seems, bought the service side of this spying.

As consumers, it seems, we gain piece of mind and increased services if we let Visa, Mastercard, and American Express know us better than ourselves, by spying on our every moment.  It is accepted as common place that to enjoy the full warranty on one's new blender, Osterizer needs to know your annual household income.  Yet, when it comes time for the Census, the American people seem to be hesitant to tell the government the number of people living at the address.

By completing the Census, schools, roads, airports, and social programs get funding.  Libraries and museums may open or close in the neighborhood, but these are not, apparently, services as worthy as the ninety-day warranty on a coffee pot.  What fear of the government could possibly be worth sacrificing livelihood for?  I doubt, in fact, any fear would be worth it.

Fearing one's government is not actually about fear, I think.  Rather, fearing the government is about the vanity of thinking one's life is something special.  I do not want to condone the NSA or CIA spying on anyone.  Yet, as a society (and it seems universally human to do so), we have come to the conclusion that we need to employ spies to keep us safe.  However, we fancy that our secrets are too dear to have them found out by a stranger sitting on the outskirts of DC, or Salt Lake City.  When it turns out that clandestine services do spy on people, particularly Americans, rather than asking why, it seems that we react with vehement fear of our secrets being found out.

The reality about it is that you, and everyone you know has secrets that are far too boring for that spying to be worth it.  An NSA file on me would be short, boring, and on a tape drive gathering dust for lack of use.  I would like to think I matter, that I travel enough, or have poignant enough blog posts, to have a detail of NSA agents following my life and times.  In fact, if the agents' viewing of Faux Social gets counted as a "page view" by Google's servers, I would be happy to pepper in juicier words like explosive, jihad, and McVeigh just for my own vanity. -Oman-

I do not think that this will work.  To me, the internet is a public domain, I think about it like a busy street with storefronts, and people moving about.  It seems totally preposterous to think anything you do there is "private," yet, like the busy street, most of what you do is "anonymous."  This is not anonymous like voting, but in the numbers of it.  When I shop at Amazon, they and I know exactly what I perused, then did or did not buy.  A store with security cameras could do the same.  I feel anonymous not because Amazon does not know who I am, but because we are strangers.  In the company of strangers, we are free as if anonymous because there will be no repercussions for our actions, no need to blush, lie, proclaim, or explain in the realm where everyone is a stranger.  Yet, like a police officer walking the beat, well trained people may be able tell the difference between a stranger and a potential bad guy.  -Anthrax-

Thus, in my view, I do not think Americans (or anyone) should be actively monitored in public (including the internet), not because it is an issue of privacy rights (which it may be), but because I doubt it is really worth the money.  If all of the money invested in monitoring Oman went into improving the lives of the poor there, how many people would choose extremism?  If  the money Americans spent on lipstick and fighter jets went into schools, libraries, healthcare, and financial security, would there be gangs and religious/political extremism?  If Afghanistan had access to a port, electricity, phones, internet, and literacy, rather than a century of imperial domination, would it have the Taliban?  There is no one fix, but the real problem is that militarism cannot solve social crises, and Americans are worried about the vanity of being spied upon, more than they are about foreign policy.

-Terrorist-

Microcosm Societies

Before I had ever lived in a camp, I read Microserfs by Douglas Coupland. The title is far more clever than I ever gave it credit for while reading it. It is a play on Microsoft, on feudal social structures, and general computer nerd-dom, which, I suppose, is as far as I took it while reading the book. Living in camps though, the idea of microserfs, the peasants of the smallest microcosms of a society, becomes fascinating, far from the confines of computerized LEGO programming in Silicon Valley.

Like Coupland's imaginary startup, a camp has its visionaries, its leaders, its middle class and its serfs. The social structure is a rigid caste, and the only thing that keeps the society functioning is that there is the promise of life after camp. People come to a camp to pay for what they do when they go home. To pay for lives that do not include the people they spend most of their time with. It is a weird dynamic. Imagine a water cooler conversation where no one will ever know anything about anyone else, where no one did anything over the weekend, and where there are not plans for the coming weekend. One functions in this environment because they have to.

In all camps, there is a hierarchy. It is essential that people have a leader, as anarchism simply does not get a job done. These duchesses and feudal lords can be brutal or kind, just as any others. They may plan for the winter, or their fiefdoms may starve. It is impossible to know before one has been in the camp what the leadership is like. Leadership though, is strange. In the Medieval period, these microcosms worked because an army backed the leader, and the leader backed the army. A symbiosis occurred at all levels of the chain, where the over- and underlying social strata agreed where everyone was. In a camp there is no army, instead, there is the upcoming Visa bill.

We are all Visa's indentured servants in these microcosms. Maybe a person has no debt, maybe a person always pays cash, but in the end, we owe now or in the future, and we know that we must fill our role in order to make that payment. It is the army of creditors that keeps a camp in check, there is no symbiosis.

This, makes something of a leadership vacuum. The camp leaders lead only by directing the work, yet s/he who directs the work does have power. If the leader is a fan of a football team, days when that team plays may end early, the basketball enthusiasts lose out. If the leader likes to run in the mornings, the morning meeting will be later. If they like an early dinner, workers will be early to their jobs, but back at the mess when the food is served. The power comes from the little things.

Who gets the power? How do they keep it? Like in any political struggle, the key players start to show their hand, and the knights, rooks, and pawns move into position. The power positions in a camp are the same as chess, and society. The king is all powerful, but crippled by the burdens of leadership. Their second, the queen is more powerful, s/he faces the conundrum of Lady Galadriel, to be pure and good, a champion of the pawns, or to become all powerful dark sorceresses. In either case, the queen may, intentionally or not, seek to usurp the king. Lastly, are the bishops. These are the hidden players, they control the conscience of the serfs, and thus, wield power that the king and queen can only demand. Pawns are the first to choose sides.

In minerals exploration, the pawns are usually the locals. They are infinitely replaceable, yet impossible to control. They see the whole camp establishment as outsiders. Often, race or ethnicity complicate relations between the monarchy and the serfs. They have nothing to lose in their meager existence, and so they are eager to choose sides with the person who gives the most present, and often petty rewards. If the bishop offers a workday that is 10 minutes shorter, the bishop will win the pawns. Yet, the pawns are the downfall of s/he who controls them. For the locals want things that are often contrary to the desires of the more loyal, more skilled knights, who will triumph against the pawns every time.

Knights in the camp society get the work done. They have a platoon of serfs behind them, but they get samples submitted, they log core, they run the computers, they collect the data, and deliver the goods. In the camp power struggle, the knights will win the battle. Yet, an exploration campaign, like a war, is not about a battle, but the compound effect of many battles. In order for one to win the war, a strong position must be held through many skirmishes. For these, one looks to the rooks.

Rooks, in the camp society are consultants and technical experts. The knights can win the battles fought today, but the rooks win the battles that will be fought tomorrow. The rooks are motivated by entirely different things. Rooks are motivated by professional reputation, by what happens outside of camp, more than within. From the top of their battlements, a rook can see what tomorrow will bring beyond the confines of the short field campaign.

From my tower, for I fancy myself a rook, I can watch the battles ebb, and the tides turn. I see racial and ethnic tensions flare, and the knights rally around their banner. I have time to sit, and ponder, in this microcosm society, who are the allies I want to maintain when I leave this camp? Who will bring me the most benefit when I deliver my fealty? It will never be the bishop, s/he lacks the wherewithal in my networks. It may be the king or queen, or with enough ambition, I can usurp even these leaders. So I, and the other fortresses watch, listen, and wait.

All of this, requires that outside force. The creditors, whether they be from the Bank of America, or the Society of Economic Geologists, we all seek the value placed on us by those outside camp. In this way alone, we are truly a microcosm of society. The technicians are microserfs, not only because we are a microcosm, but because they are more insignificant than the feudal serf. They are nameless, and ephemeral, they are but leaves on a tree, inconsequential today, and forgotten by fall. The brave knights, who fight for the banner of their fancy, they are no more influential in society. They are not minuscule because this is a camp of 50, but because this is a country of 300,000,000. This microcosm functions not independent of society, but dependent upon society.

While I wile away hours with an iPod, and an endless cylinder of rock, I contemplate why people work. Why people live in these camps the way they do. I watch the power struggles, and I come back to the same idea again and again, they do this because they will leave here. I wonder then, what would a truly micro-society look like? What will be the dynamics of the Mars One team, when they land with no intention of returning? What will keep them going? There is no creditor, there is no army, there is no future, just today, for the rest of their lives. In this strange world, I wonder, will there be microserfs?

Laffer Curve

In debates about tax rates, so often the Laffer Curve gets invoked.  Two points on the curve are discussed, the 100% tax rate, and the inflection point.  The purpose of the Laffer Curve, as Laffer used it, was to simplify the problem of setting a tax rate.  I appreciate the simplification, as I lack any formal education in economics, beyond Economics for Mining Engineers, which never discussed economic theory, merely rates of return and depreciation.  On the other side of the simplification coin, it makes people think they understand economics when they may not understand as well as they think they do.

Accordingly, I suggest some simple adjustments to the Laffer Curve.  First, rotate it counterclockwise.

For those unfamiliar with the Laffer Curve it plots tax rate against revenue.  The origin of the plot is a 0% tax rate with a $0 revenue.  In real world examples, this is something like Somalia, which, to my knowledge, only Ayn Rand has ever really considered to be a model for the ideal society. The curve climbs the tax rate (x-axis), and accordingly, the government's revenue increases (y-axis).  It is supposedly nonlinear, for reasons I do not entirely understand (could be an issue of scale or to legitimately illustrate an idea).  At some point, say a tax rate of 30-70%, the curve reaches an apex, and revenue begins to decline while tax rates continue to climb.  This inflection point is the ideal tax rate.  When the tax rate hits 100%, the revenue hits $0 again.

The 100%,$0 point is the second most talked about point of the curve (behind the inflection point).  The argument goes that if the government takes 100% of your income you have no motivation to work harder, or really, to work at all.  The economy as we know it shuts down.  People either evade taxes, or barter (e.g. no income) to get what they need.  This is the point where I always want to shout, "POPPYCOCK," whenever someone mentions the Laffer Curve.

If the origin is Somalia, then the 100% tax rate is the ideal communist society.  I do not think Americans are interested in living at either end of the spectrum, but the point is still important.  The Laffer Curve seems to assume that GDP will be affected by tax rates, but government will not be.  This is, of course, ridiculous.  Somalis demand very little of the government that does not exist there.  People who pay low tax rates expect protection (police and military) and infrastructure (roads, power grids, etc.).  More taxes means more social services.  Next would come education, then healthcare, then housing, then food, and finally comforts.  If I commit a bit of Reaganomics heresy, and hold GDP constant (rather than government), the revenue would actually peak at 100% taxation (as a percent of GDP), but government spending would also have to peak to justify the tax rate.

By rotating the Laffer Curve counterclockwise we do introduce a small amount of complexity, but we capture the change in GDP and government.  Looking at all the communist states that have failed to outlast, or achieve greatness, it is pretty convincing that a 100% tax rate would be very bad for GDP, but the state's revenue is not $0!  The debate over the inflection point can still carry on, but the curve would actually start to reflect reality.

This would take the fun out of it for those who like to argue that Ayn Rand had it correct, and that in the case of human comfort, Somalia is second only to the Garden of Eden.  Sooner or later though, you have to eat the apple, and realize that we want to find the inflection point.  In this snipe hunt, there are two sides.  Avoiding the Keynes-Hayek tug-of-war at the inflection point, the argument, to me, comes down to how people budget, and how those budgets affect the economy.

To begin, I offer how I think the "average" person budgets, or wants to budget.  A household makes a given income, and because I am lazy, I will say it $50,000 (I wanted to use $100,000 because it is easier, but the Census has the median household income at $52,762).  In this household, we will say about 20% of the income goes to taxes of various kinds, or $10,000.  An additional 10% will go into savings, $5000.  Insurance easily costs $1000/month (24%). If groceries, gasoline, and other day-to-day expenses cost $1000/month (24%), and rent/mortgage is $900/month (~22%), the budget is totally consumed (yes, this is very simplified).

If that income decreased, savings and (non-government mandated) insurance would probably be the first things to be cut, then incidentals and rent.  If the income increases, then the gains are probably the reverse of the cutting order.  Incidental costs and rent increase before insurance and savings, to a point.  At some point a person is mostly comfortable.  Sure, they could move into a mansion or build a Taj Mahal like mausoleum for eternal comfort, but savings is going to start accounting for a greater and greater percentage of income.  I doubt, for example, that someone who makes ten times as much as I do has ten cell phones just to illustrate their wealth.  I also doubt that on his way to 100 billion dollars Bill Gates blew a trillion dollars at WalMart.

While a personal budget is a bit different than a corporate or government budget (all three take out loans, despite what Paul Ryan will say, just think mortgage), the analogy serves in this case.  In Jet Age, Sam Howe Verhovek credits the development of one of the most important jets ever built, the Boeing 707, to a fascinating thing.  Sure, the Comet beat the 707 to market, so there was competition.  There was also a visionary who saw a market his company could fill.  The post-Reaganomics dance card is full in the story except for one thing.  The Boeing 707 was developed largely owing to high taxes.

Owing to fear of war profiteering, the tax code made it such that a company's profits had to be reasonably comparable to their pre-war profits.  Boeing was a small company that grew tremendously because the market for aircraft grew, but the tax code did not allow for growth.  As such, their new profits would be taxed at a painfully high rate.  They could avoid these high taxes by investing in research and development.  Since R&D is a business expense, they cut corporate profits through reinvestment, or taxable profits anyway.  Given a tax rate of 90%, investing $1 million only costs the company $100,000.  The government, essentially, pays the remaining $900,000.

Conversely, a corporation that is taxed at a very low rate has little incentive to really invest in developing new products.  Certainly they must keep pace with the competition, but take the inverse of Boeing when it built the 707.  If a company is taxed at 10%, investing $1 million causes the share holders to lose $900,000, and the government only kicks in $100,000.  In this case, a low tax rate encourages companies to not hire more people, to not do research and development, to not donate to charities, but to instead, make the wealthiest share holders wealthier.

I acknowledge that a high tax rate probably does discourage corporations from working overly hard.  Boeing thought that the investment in the 707 would pay off, and it did.  It catapulted them from obscurity to eventually become one of only two jetliner manufacturers in the world.  The worry of profiteering waned, and the high tax rate disappeared.  It was a combination of carrot and stick that gave the world jet travel, not just endless carrots.

I propose then that corporate taxes be set fairly low on income that equals some percentage of their expenses. Corporate taxes could even potentially be zero (I question this, but for argument) for profits of up to, say, 20% of expenses (this means you are better investing in your company, then the historical trends of the stock market).  After that, the tax rate would sky rocket to 75% or 90%, any logical CEO would make sure to reinvest that money in their company, raising the 20% untaxed profit, and boosting the economy.  What if the CEO says, "well heck, my salary can increase by 100% of the profit beyond 20%, I do work pretty hard at this job"?  Then we have another issue that is present in this country.

According to this AFLCIO infographic, CEO pay is 380 times their company's average blue collar worker's pay.  In 1980 it was 42 times.  The 1980s were not exactly the best days of the economy, but neither was 2011.  From the same infographic, it seems that when the wealthy get too wealthy by percent of total wealth (e.g. 1929 and 2007) the country is due for imminent disaster.  Coupled with this carrot-and-stick tax scheme, executive pay could be limited by percent of total non-executive pay.  I doubt that running a really big company is harder than running a middle-sized company, but having never done either, I will accept the anti-tax argument that CEOs deserves high pay.  Okay, the bigger one's company's payroll, the bigger one's salary.  I cannot even begin to suggest a pay limit, but in all honesty, is any one employee, including the CEO, really worth 380 other people?  Is being a CEO really that high risk?

In my mind around $5 million dollars in the bank pretty much allows one to never work again, and live more or less comfortably without worry.  If you make just shy of $24 million a year (the average income for the richest 1% of 1% of Americans), if you find yourself out of a job after a year, you are set for life, comfortably.  If, on the other hand, you make $50,000/year, you will never achieve that.  While I appreciate the effort that the titans of industry give us, I cannot help but think that being a Koch brother, with $25 billion of wealth feels much better than making $7.25 an hour (minimum wage).  If the Kochs disagree, I am sure they could find no shortage of people willing to trade.

What does salary have to do with the Laffer Curve?  The Laffer Curve is not looking at the tax rates that individuals would pay, but rather the rate at which revenue is collected from the tax base.  How the tax code is written to achieve that percentage is not represented.  The most simple approach is to put a flat tax on all wealth that is equal to the ideal tax rate on the Laffer Curve.  Flat tax rates do not make sense though, and even my modified Laffer Curve does nothing to elucidate the issue.

Unfortunately, for my previously proposed tax rate complicated tax rules seem to cause a lot of problems.  For example, most Americans would probably object to eliminating the mortgage interest deduction, but this deduction rewards opulence, and taxes the poor.  When politicians argue to eliminate deductions, and broaden the base, I have to set aside my cynicism, and agree.  The problem I see with simplifying the tax code, and incorporating elements that legitimately encourage reinvestment in America is that so many people want to cheat their taxes.  The idea behind deductions is to encourage various sectors of the economy.  When I read tax code, it seems simply evident that the IRS is trying to keep up with people who are trying to game the system.  When I come to that conclusion, I groan, knowing my taxes are more complicated because someone else did not want to pay their fair share.

That is the whole debate when it comes to taxes though.  How do we agree on what each person's fair share is?  I think even Laffer would agree that the curve that bares his name has limited use in the construction of an actual tax system.  I do think the tax code could be improved, and I think raising taxes is the best way for this country to get out of the financial situation that lowering taxes has put us in.

In economics and taxes, even a statement like "raise taxes" seems convoluted.  While I agree that under certain circumstances lowering the rate while cutting deductions could increase revenue.  I might also agree that cutting some taxes may help grow the economy, the argument that cutting taxes increases revenue is silliness that I am getting tired of hearing.  I am also tired of people demanding less government, but demanding more government services (VA benefits and over a decade of war are expensive, requiring Americans to pay their taxes, not complain about them).

Accordingly, I offer an additional change to the Laffer Curve.  Rather than revenue on the y-axis, use GDP.  We know that having no government fails to create meaningful GDP, and we know that 100% taxation limits GDP, though it is probably more than zero.  There is still an inflection point of unknown tax rate where taxation maximizes GDP.  The government maximizing GDP (or coming close to the maximum) would likely increase revenue.  Maximizing GDP would not simply be a result of the tax rate, the tax revenue would have to be used for the benefit of the GDP.

To investigate the revenue-spending situation that best supports the GDP (and hopefully the common good, though that may slightly damage the economy), the modified Laffer Curve must be supplemented with a second curve. The second curve would plot tax rate against the services a government can provide.  Presumably, these curves could be constructed such that the ideal combination would fall at the intersection of the two curves.  Even without them being that eloquent, they would give people a reference, taxing at a given percent could have a given effect on the GDP, and provide these services.  This may help illuminate how much we want taxes to collect.

There will still be those who argue for ever lower taxes.  The modified Laffer curve will also not solve the who to tax issue, or how to find the ideal rate.  It will though, reflect how economics actually work, and maybe help us remember that Boeing shrunk the world because of high taxes, not low.