You heard it here first - finally a solution to bridge the divide between the economic left and right.
Neutrality:
How do I know that the right are in favour of my solution?
For one, there is a common sentiment shared by the rich that success is not all just about being monetarily well off, it’s about a much broader spectrum of success and freedom, for example to do good for society by enabling valuable goods and services to be available to many more people than would otherwise be able to access such things. Perhaps there’s also an individual element of satisfaction derived from challenge, maybe to get the most out of yourself or against competition.
Just to help diffuse any doubt here, allow me to draw upon a quote by the US’s very own current president (as of the time of writing this post) that echoes the above values:
The right generally share a preference to not have these goals infringed upon or compromised, as is commonly the goal of the left - via means such as taxation, which I believe can be done away with.
How do I know that the left are in favour of my solution?
There is a way to resolve the apparent conflict between the loss aversion of the right and the distribution of wealth favoured by the left, which can be done by first identifying some unquestioned assumptions about “currency”. Rather than getting rid of money altogether, as has been proposed by some branches of leftism, the benefits of having a standard benchmark against which to value all goods and services can be held onto. But there is a critical disadvantage to currency, which is that interfering with the flow at any specific points affects the flow of the whole thing - you can’t localise and pinpoint things like taxes without the effects being displaced and flowing around the whole economy. For example, the effects of a sales tax aren’t restricted to proportionally affecting the most lavish of spenders more than the most frugal among us. Prices can just be raised to absorb the extra cost, or jobs cut, to allow employers and shareholders to afford just as much as they felt entitled to before, whilst employees and non-shareholders still have to pay more for the same thing even if they don’t have a job at all after business expenditure cuts to pay for higher taxation. Working in itself can in this way be penalised by a tax intended only to affect spending.
If this cornerstone of modern economic theory was overcome, the left wouldn’t need to be so concerned about effects like these on the less economically fortunate - so they would surely support my solution as well.
Get to the point:
We achieve this via a disconnect in the continuous flow of currency around the whole economy. Money given doesn’t necessarily have to equal money taken. Better still, the role of standard benchmark that money currently plays can be maintained by simply funding spending deficits with surpluses.
But why would anyone want to pay a surplus, I hear you ask?
I refer back to the common sentiment of the rich. Surplus can be kept track of and an individual non-exchangeable “score” can be kept - and even published. Want to demonstrate your social value? Want an official measure to go by to compete against yourself or others? Want to advertise the integrity and benevolence of your company to attract consumers to the best and most successful of all the competition? A simple number that won’t be taxed can do that for you objectively, just as it can land you a position working for the best companies. Just like before, the only way you can build this score is to first sell well and earn well before you can spend well - and as a top “giver” in society that such a person can afford to be, you receive the price you sell at regardless of how much is paid for it, and who you sell to, due to this “disconnect” in the continuous flow of currency at the point of exchange.
Unlike with tax, nothing is lost to “penalise” buying, selling or even working - and no consequences are passed messily throughout the whole economy to places they weren’t intended to reach.
Yet like tax, the less economically fortunate are paying less, funded by the more economically fortunate but without the more economically fortunate losing out and allowing them to maintain what they are really after in just the same way as Trump.
Since there are no downsides to this solution, it can be entirely optional. Businesses can continue to operate as normal, perhaps sticking to cash, or exchanging money any way that my solution doesn’t track. They don’t have to pay any surplus and they get no “score”, and without one they prove to everyone that they are staying off the radar for whatever reason. Perhaps their revenues aren’t enough to cover their costs because they’re inefficient or don’t offer good enough products and/or services? Perhaps they want to hide something by steering clear from a simple and objective measure of goodwill? Perhaps you’re only rich from inheritance (which will be decreased in the same way as a big spender spending on anything) and you want to hold back from giving it to society - avoiding this simple objective measure will prove this to everyone. There’s no need to keep track of deficits and negative “scores”, because otherwise a bad start in life can result in a lifetime of endlessly paying your way back up no matter how generous and socially valuable and successful you are in later life, which is unfortunately like things are with today’s economic model. Being socially in credit at any point in life can be rewarded in this way without ever being taken away at a later date. Equally this gives a much better chance for new businesses, since they can start out paying deficits until they are in a position to run an efficient company selling high quality goods and/or services that gets them on the leaderboard even if the company remains small. You can’t fake social utility without giving back to society and you also won’t be penalised if you aren’t in a position to give back to society for any reason.
Tax becomes obsolete since the poor are supported yet the rich are also rewarded without limit for doing good. Left and right both win.
The math:
Last year I began exploring the mathematics of all of this with the first two posts of this thread, where I introduce the mathematical model that I would propose to use to pull off the above solution to all our current economic problems. It’s based around the 80-20 rule, or “Pareto Principle”, to maintain economic inequality at an “optimal” rate - to make sure that success is rewarded at all levels of wealth. After the first 2 posts, I began talking about using a Sigmoid function to mimic the “Elo rating system” (as used in chess etc.) that adapts the 80-20 Pareto Distribution. I decided to scrap that since Elo doesn’t achieve the afore-mentioned “disconnect in the continuous flow of currency” that solves everything, whereas the initial 80-20 curve does (upon application to what I explained above).
The curve that I’m using to model this principle follows the form of (f(x) = L/e^{-k(x-x_0)}), where (L) is the curve’s maximum value, (k) is the growth rate (steepness of the curve) and (x_0) is the midpoint of the curve.
For population “(p)”, when (L) is roughly (\frac{\sqrt{22}}{110}), (k) is roughly (\frac{7.7}p) and (x_0) is (\frac{p}2), we get the 80-20 properties (the larger (p) gets) where the mid point of the y axis is the price, and the x axis tracks the relative historical “rate of expenditure” by any given individual or company. Like any personal bank account, your individual outgoings can be tracked throughout your life, placing you somewhere along this x axis, and you use the curve to read off the proportion of the price you pay for any item you want to buy from the y axis. There can be one set of data for individuals and a separate set of data for businesses.
Some facts:
Only the top 9% of spenders will be paying a surplus that will pay off the entire deficit incurred by the remaining 91%, making it no social shame to not have a particularly high score if any at all and affording all the more glory for achieving one.
The very highest spender will only be paying a maximum of 2200 times more than the very lowest spender.
The average person will be paying about 47 (the square root of 2200) times more than the very lowest spender (and therefore obviously about 47 times less than the highest spender). The difference between how much average spenders spend compared to one other is minimal - it’s only when spending gets very high that significant differences emerge (as is characteristic of exponential curves such as the 80-20 one).