The Isocracy Network

The Precariat & the Expensiveness of Poverty

Over half of Americans are living paycheck-to-paycheck, with no substantial "rainy-day fund." 39% of Americans have almost no savings at all. They couldn't afford an extra $100 in an emergency situation. Almost 60% of Americans have less than $1,000 in savings. Most Americans can't afford to have a medical emergency or a significant unexpected expense. The proletariat has become the precariat, a class of people with no predictability or security — people who could very easily wind up homeless or in extreme poverty due to the slightest misstep or bad luck. The plight of millennials is precariousness and uncertainty about one's future well-being.

People who have never experienced real poverty generally do not realize how expensive it is to be poor. If your car starts making weird noises and you can't afford to get it looked at, much less fixed, then you ignore it. Eventually the car stops working altogether, then you have to come up with the money to get it fixed, and it will cost more to fix it at that point. If you can't afford to get your car fixed when it starts acting up, it will break down and you might have to get a loan to replace it with a new car. Since you couldn't afford a few hundred dollars in diagnostic and repair services from a mechanic, you are stuck having to spend even more money than that to replace the car. Now you have monthly payments too. So, you'll go get a second job, take out a loan, or whatever you have to do to come up with the money to fix or replace the car. For a lot of poor people, especially in areas with lousy public transit (or no public transit), a car is a necessity. So, you have no choice. If you can't afford to fix your car or buy a new one, you could lose your job. Miss a few payments and you could get evicted and end up homeless.

As you've probably heard, Sanders has released his climate change plan. As I did with Biden's, I'm going to read through it and provide commentary and context as it occurs to me. This is going to be a long post, so you might want to grab some snacks and a comfy pair of jeans before we start.

Also, full disclosure: I'm not a very big fan of Bernie Sanders. I generally like his political principles, but I don't like his personality. I'll do my best to be fair and impartial, but I'm not going to pull any punches. If you have a hard time listening to criticism of Bernie, you'll probably be happier if you just skip this post and move on.

Let's get started.

"Reaching 100 percent renewable energy for electricity and transportation by no later than 2030 and complete decarbonization by at least 2050 – consistent with the United Nations Intergovernmental Panel on Climate Change goals"
https://berniesanders.com/issues/the-green-new-deal/

This is a pretty terrible way to start, because it's such a grievous misrepresentation of the IPCC's goals that it borders on being dishonest. The IPCC does not say that we need to get to 100% renewable energy by 2030, 2050, 2100, or any other date. It says we need to cut emissions roughly in half by 2030 and get to net zero around 2050. It specifically rejects pathways that use 100% renewables as being based on implausible assumptions. Instead, it sees us getting the majority of our energy from renewables, with natural gas and nuclear providing reliability to the energy system.

Originally, this article was published without this addendum and was met with some criticism on social media. There were two sorts of objections. The first was simply, “Where is the data and evidence to substantiate these claims?” or “What are you talking about?” The second sort of objection, coming from policy wonks and tax experts, suggested that my analysis is wrong. This addendum should address all such objection and clear some things up.

More Info on Marginal Income Tax Rates on Top Brackets

High top marginal income tax rates effectively serve as a maximum wage and induce corporations to spend a greater portion of their excess profits on paying their workers better wages rather than on paying senior executives more.

The American income tax system is a progressive system with marginal rates. I’ll start by explaining how such a system works. Suppose you have a marginal tax rate of 5% that kicks in at an income of $30,000 per year, a rate of 10% that starts at $50,000 per year, and a rate of 15% that starts at $100,000, and a rate of 70% that kicks in at $10,000,000 per year. A person earning $10,100,000 per year would not pay a ridiculous $7,070,000 as lying pundits at Fox News would have you believe, but would rather pay $1,561,000 total in income taxes, which is an effective rate of closer to 15% — the 70% rate only applies to the last $100,000 earned.

The following charts show our theoretical tax brackets and how much people would have to pay at various different income levels.

1. Notification has been received by email from the Victorian branch of the Labor Party (Wed, July 17, 2019) that the ALP National Executive has commenced a review of the party’s 2019 Federal election campaign with submissions from branch members, affiliated unions, campaign volunteers and other interested parties. This submission is made by Lev Lafayette (Victorian branch member of the ALP, 41508) on behalf of the Isocracy Network, a non-profit incorporated association based in Victoria (A0054881M), as an "interested party". The Isocracy Network is a political advocacy group which draws upon liberal, socialist, and anarchist traditions and whose current committee of management includes members from the Australian Labor Party, the Liberal Party of Australia, the Australian Greens, and the Socialist Alliance.

2. Rather than address all the areas requested by the National Executive, this submission will concentrate on the following:
* A statistical analysis of the result
* Policy
* Digital campaigning and Anti-Labor campaign methods

The single-tax ideal has become obsolete. This does not mean, of course, that Henry George or his idea of a land value tax (LVT) is obsolete. Land value tax is still necessary, but it is no longer sufficient. A just society in the modern world must have a land value tax, but must not have a land value tax as its only tax. I have reached this conclusion largely as a result of discussions I’ve had regarding Andrew Yang’s proposal to fund his universal basic income (UBI) plan via a value-added tax (VAT). The more I think about it and engage in thoughtful conversations on the subject, the more I think that VAT may actually be the best way to fund a UBI.

I believe that Georgist-style LVT is also needed, but I have come to realize that such an LVT would only work for funding UBI in the short-term. Land values are currently driven up by land speculation and rentierism, which is why there is so much potential for LVT to capture much revenue. However, the implementation of LVT would place a check on land speculation and tend to drive down land values over time. The amount of revenue that LVT raises will have a tendency to decrease over time. This is especially the case as the LVT tax rate increases beyond a certain point. Consequently, in the long run, LVT won’t be sufficient to fund a UBI, especially if you plan on raising the level of UBI as automation progresses.

Following the surprise victory of the increasingly conservative Liberal-National coalition at the 2019 Australian federal election, one of their first orders of business was to implement their promised income tax reforms. This seemed a little odd as the LNP's tax policy provided excessive benefits that it would provide for the very well off. But the great joy of democracy is people get the government that they voted for, whether by informed, uninformed, or a misinformed public vote. At least the income tax cuts were one the few transparent policies, even if they were promised in the budget prior to the actual campaign. As a piece of electioneering, it was clever; little for the poor, larger tax cuts for the middle, and little for the rich in stage one, but by stage three the wealthiest ($180K per annum) would receive $8640 per annum extra, whilst the poorest (under $30K per annum) would receive a paltry $255 per annum.

Immediately after the election however, there was a snag. Either due to a stunning level of incompetence or a cunning level of plausible deniability, it was announced that they would not be implemented in the current financial year. When the tax package reached parliament, the opposition Labor Party was unable to get any amendments in the House of Representatives considered by the government, who has a majority. Rather than face the unpalatable prospect of having to be seen voting down middle-income tax-cuts, Labor opted to pass the package in full in the HoR to seek amendments in the Senate, where the government doesn't have a majority. That aspect was tactically reasonable at least, although it didn't work - the government was able to pass the package with the support the Centre Alliance and independent Lambie. The support of the Centre Alliance is unsurprising, being milquetoast centrists, who only occupy that position due to a complete lack of coherent ideology. Lambie's support was primarily due to a lack of intelligence; effectively bribed with the offer of $150m in relief for public housing debts, the loss in Commonwealth public revenue is five hundred times greater for the Stage Three proposals.

For the past several weeks there has been an argument in Australian politics, following the sacking of Israel Folau by Rugby Australia. Israel has in the past said there is no room for homophobia in rugby, but recently has had his contract revoked by RA that after a social media post that gays (along with drunks, atheists, all the usual suspects) were going to hell. Odd to be calling attention to the Old Testament verses when one has worked on the Sabbath and is covered in tatoos.

Israel has appealed to the Fair Work Commission on the basis of freedom of religious expression. Rugby Australia has argued that it has a duty of care to provide a workplace that is safe and respectful. Despite owning several properties, Folau initiated a GoFundMe campaign, which seemed a bit odd given that he has a massive property portfolio. It raised several hundred thousand dollars before being shut down as a breach of the terms of service.

Paper notes and metal coins are annoying and inconvenient, and we have the Internet now and digital cash is obviously a useful idea. The solution the developed world has mostly come to is just using our banks – you have an account, and you can move money to other people’s accounts, via debit card, credit card, PayPal or whatever. The central authority means it's sensibly regulated, errors and thefts can be reversed and so on. It’s also a smooth transition from paper money – the same thing, but you can do new things with it.

The alternative to this state of affairs is cyptocurrencies. "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution" (Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, 2008). Despite the good intentions of the creators of cryptocurrencies, the field is replete with scams and scammers. The technology is used as an excuse to make outlandish near-magical claims. It has turned out in practice to be a magnet for enthusiastic amateurs with stars in their eyes and con artists to prey upon them, with outcomes both hilarious and horrifying.

If Australia's 2019 Federal election campaign will be remembered by economic historians for anything, it will probably be over a fascinating debate over taxation policy. The governing LNP coalition, after a six-year stint which has witnessed three leadership spills and three different prime ministers, announced a budget just before the election which would include tax cuts, and a promise to return the budge to surplus, which itself is a bit of a sticking point since they have managed to double the net debt in that period. In contrast, the opposition Labor Party has come out with a strong redistributive program, including significant funding for public transport infrastructure, subsidised childcare for low-income earners, extra public school funding, and renewable energy funding, etc. Interestingly, Labor also has announced a budget surplus that's more than twice what the Coalition has promised.

Following from a previous sketch on the ideal size of government [1] the following is an attempt to describe some formative directions towards an ideal determination of government. This exploration is, in part, directly influenced by the previous essay, but also by debates over confederate, federal, and unity forms of governance and the notion of representation, influences from various voting systems, especially proportional representation in election and governance, social choice theory and Arrow's Impossibility Theorem, plus previous reviews of deliberative democracy [2]. Of course, engaging in the questions of what is the ideal determination of government is worth starting from the other direction and specifying what determines the worst government type, a kakistocracy [3], rule by the less competent and less scrupulous. Note that this is not describing the actions, but the process that has led to such a government.