hello and thank you for reading thsi blog.
below is a theorhetical model that I created for how transactions would operate in what I also theorize to be the ideal economic system. It explains some of the philosophy and lays out in detail the financial architecture that would support this system once it was in place.
FINANCIAL TRANSACTIONS IN THE IDEAL ECONOMIC SYSTEM (copyright joe benham 2008):
POINT NEGATIVE 2: the source of wealth (what comes out of the earth) belongs to the commons, requiring that entities (logging/mining companies, etc.) pay the people in compensation for whichever material resources they take out of the ground and whatever impact they have on the environment. This purchase takes place in the form of a credit transaction, through which the people are issued payment (either individually, or collectively through education, healthcare and other social programs), and the purchasing entity is issued the equivalent amount of debt, in the hopes that they will repay it by way of recouping that same money from the larger community that it was initially paid out to.
POINT NEGATIVE 1 (not covered in the meeting): in this competitive, capitalist, free-market enterprise system, "We the People" (not restricted to just U.S.) are the biggest and most powerful entity of them all and use that power for the sake of our own best interest: the good of our society. this means that (aside from claiming ownership of the commons) we collectively do other things, like buy up and develop patents, invest in industry and exercise influence in all of our various markets, with the aim that we do so for the overall good of life on earth (remember, this is just a sketch of the ideal economic system; throw in details, if you want to fill-in the blanks some more).
point 0: once money has entered into the national or local systems, all transactions within it are done electronically and automatically. there are no banking middlemen involved and everyone has access to making transactions within their respective electronic network community.
point 1: Reverse Taxation: people are only taxed for hoarding money or spending it outside of their financial network. ANY spending or investing within the network is an automatic tax write-off. Taxation occurs only when money is either spent outside the system, stays too long in one’s pre-tax account or when it is exchanged for cash or foreign currency (because then it can no longer be tracked once it leaves the electronic system). because this is automatic, tax evasion would become impossible and would therefore no longer exist as a crime (you couldn’t do it if you tried).
point 2: Time-regulated, Automated, Pier-to-Pier Investing: This free-moving system allows people to have access directly to each other in the investment, lending and capitol-venture process. People can leverage their trust with one another for these individual undertakings, and for acting as agents in directing the contributions of collective investors toward their own ventures and those of others. This model is scalable to any size and is activated at the sole discretion of the investor, the entrepreneur and any agent they may happen to use. In addition to that, community and government finance agencies could effectively eliminate abusive usury practices by offering 0% loans for necessary and socially responsible undertakings (no lender could compete with that). abusive borrowing could also be mitigated by means of automatic accounting and withdrawal from the accounts of those who would otherwise refuse to repay their loans (this needs more
so please put in your two cents).
In this investment system, timetables are also set to discourage early divestment and mere speculation. This is done by way of taxing early withdrawal, similar to what is done with a 401-K. There probably would be some kind of mechanism to protect the investor too, but that solution is still being worked on (more suggestions please).
Two additional notes regarding investment and lending:
– it is offered exclusively for those with access to this network (tax-free access to network features of buying, selling and investing/borrowing can also be selectively granted to like-minded entities outside of their respective communities, as long as they adhere to the same standards of human rights, environmental/economic justice and social equality).
– borrowing and credit are used exclusively for moneymaking ventures or other ventures with lasting social, economic, humanitarian or environmental value. people shouldn’t have to extend their credit in order to purchase groceries, shelter, clothing and other basic daily life necessities. there should be social programs to cover people when they fall short in this way (remember too that people in this system would also have a real financial stake in the commons, so that many of these basic needs could be largely met before resulting to taking any kind of outside assistance. needless to say, though, this might foster an attitude against environmental and resource conservation by a society which directly benefits from cashing-in. there would be, however, regulations revolving around the safe-guarding of the environment in consideration of other forms of life and future generations of humanity in order to keep this from happening. more on that in my next
point 3 (very long): local currency: This is the third tax shelter in this economic system (spending and investing being the other two, as mentioned above). People can buy local currency from their community bank in exchange for an equivalent amount of their own pre-tax national currency. They are free to hold onto that money for as long as they want to, or to spend it within their local or national community (for the sake of consistent international currency exchange, though, local currency would have to be converted back into national currency and then taxed before being spent outside the national system). This currency can then circulate in-perpetuity, until it is exchanged back for national currency by a member of that same local economic community, and simultaneously taxed.
the strong points working in favor of this kind of local economic system are that investment in local currency (and local community, by extension) are encouraged through two means:
– tax incentive is given to encourage people to convert their national currency into local currency and to discourage them from converting it back.
– local currency in one community can freely be spent anywhere within the national system because it will ultimately have to return to that community in order to be redeemed for its equivalent value (minus tax) in national currency (money’s other strength is also in its liquidity, therefore it works best when it is both allowed circulate from its original source and encouraged to return back to it).
another detail which i didn’t go into during the meeting is that this local economic model also allows for more local investment incentive by means of less regulation in local capitol endeavors. although usury would still be largely discouraged at the local level by the availability of zero-interest loans, investments using a community’s local money for ventures within that same community would actually allow investors more leeway for divestment from endeavors which they felt put them at financial risk. This would make initial local investment more attractive to the investing entity. what we need to understand here is that the purchasing of local money IS an investment in that local community, no matter what local undertaking that local money attaches itself to or detaches itself from.
in addition to this, by virtue of the fact that people would generally not want to cash-in their local currency once they receive it, the investment power of their local community COULD be effectively doubled. This is because, while local currency is being circulated within the system, the national money backing it is simultaneously being invested in other projects by the local bank holding it.
i actually have two ideas for enacting this kind of local economic model, but i think that both would require legislation to change current laws:
– simply pass initiatives that would put said local banks, local currencies and tax incentives in place.
– somehow allow for pre-tax contributions to non-profit organizations in exchange for equivalent local currency, which could then be freely exchanged and then placed back into pre-tax status upon it’s exchange back into national currency (perhaps in the form of a consultancy payment to the individual redeeming their money from that same NPO).