The first reform every town should adopt is a shift to income tax and away from property tax. That way, taxation can be progressive. The rich pay more and the poor pay less. The elderly on a fixed income, and those who lose their jobs, are less pressured to move or downsize because of financial issues.
Second, a local public bank should be established. All mortgages need to be held locally. Funding for the bank can be from public pension funds, individual citizens and non-profit endowments. There will be a giant sucking sound as money moves from Wall Street to Main Street. These mortgages should be rewritten at zero percent. The public bank can be set up new, or existing local banks can handle the duties. The issue is to move the money and change the percentages. It is not necessary to have it be a publicly-run bank, as long as it is acting in the public interest and not for shareholders.
Next up is the problem of housing appreciation. This needs to end. Housing is not an 'investment,' it is a necessity. Developers should not be allowed to manipulate the market by flipping real estate or converting everyone to renters. All housing should have a fixed price, but more importantly, everyone should have a place to sleep and call their own. Housing should be inexpensive, plentiful, and easily exchanged. The Earth is more than big enough to fit everyone. The cost of building should not be prohibitive. Ensuring and coordinating the time and talent to build adequate housing is a basic function for government. Why join together collectively under a government if our most basic needs cannot be met?
While private ownership is maintained, the private real estate market as we know it is abolished. Every town government acts as a clearing house for real estate sales. If you want to sell and move, the property is sold to the town. When you want to move to the town, the housing is purchased from the town. Apartments essentially become condominiums. There is no gain or loss in housing. The price you buy for is the price you sell for. Some minor adjustments can be made for improved properties, or penalties for damaged properties, but as a whole, housing will become routine rather than a point of crisis. The town is always the buyer and the seller of property. There should be some special conditions, too. For example, Universities should be required to provide all housing for students.
Commercial space should also fall under the control of local government. It would be best for all commercial space to be owned by the town and leased rent-free to all businesses. The need for this reduction in overhead for business will become clear later, but if there are any conflicts, the people will have the upper hand. The need to give tax breaks to attract businesses will be moot. Ideally, people will live and work in the same town. Such a system will make moving easy for everyone.
Reforms for State Government
State government should abandon multiple taxes and defer to a single income tax. They should also make it illegal for towns to borrow. If a town needs more funds to operate, or for a special expenditure, than the state should supply all the funds.
The state government expends a lot of time on the budget process and trying to predict and respond to revenue fluctuations. As the towns rely on them, they should rely on the Federal government to balance any shortfalls. Borrowing at the state level should be illegal, too. Like the towns, pension funds can fund a public bank to enable the transition.
Reforms for Federal Government
The purpose of the federal government is to create a currency, act as the clearing house for debt (all money is inherently debt), to set principles and ensure standards or fairness in the states. Any system can easily be corrupted because checks and balances have a tendency to make a wider and wider circle of collusion. We need to eliminate all the 'separate but equal' systems. For example, Social Security for citizens, protections for union workers, and pensions for government workers. Everyone needs to be treated the same. The Universal Code of Conduct needs to establish wage and price controls that contain inflation, debt and inequality. With the previous reforms in place, this will be easy to do, since real estate inflation drives everything else. Once real estate inflation and debt are constrained at the local level, everything else will be easy.
It is possible for the government to eliminate taxes completely by relying on deficit spending, which it will need to resort to irregardless. The purpose of an income tax is to provide an auditing framework. While money could be rendered obsolete, and may be as the next significant reform after this one, it can serve as a method of measure for both fairness and demand. It is not necessary that everyone be a clone of one another. Diversity of interest and skill of what makes life interesting. The next economy will probably be a gift economy, but to deal with ever larger populations, distance and consumption volume, money can be a useful tool for enabling the flow of materials and labor. That is why these changes focus primarily on money flows. The problem is not the object of money itself, but in its accounting.
Reforms for Businesses and Banking
The current philosophy of every business is to 'buy low-sell high.' Besides the constant demand for new consumption, there is also a constant demand for new profit, as overhead and expenses consume revenue. Businesses are inherently fragile because of the volume of buy and sell that they experience. Increases in prices from suppliers, or decreases in demand from consumers, send their balance sheet into an immediate collision course with debt. In general, only the businesses with the most credit survive the boom and bust waves. Many large businesses are absorbed by other large businesses, whereas as small businesses simply cease to exist.
The volatility of business is directly related to the volatility of housing prices. As real estate increases, citizens need more revenue. Raising wages will eventually raise the price of goods, which will further increase real estate prices. It is an old but strong vicious circle, and entirely man-made. By stabilizing real estate pricing, we can begin to stablize prices on other goods.
Modern manufacturing has made it possible for everyone to produce far more than they can consume. To see the economy as a problem of scarcity is nonsensical. The landfills are bursting. We are throwing stuff away as fast as we can make it. What is called a shortage is really just an imbalance that has plagued man for centuries. That imbalance is created in the act of 'buy low-sell high.' The operating philosophy has to be 'buy low-sell low.'
The government needs to set standards of behavior for business. It does not need to set prices, but it does need to control the profit percentages used and establish a framework of what is acceptable and unacceptable behavior. The chart below shows the difference that mark up percentages can have on the price of an item. How much should an apple cost, 2 cents, 4 cents, 14 cents or 32 cents? The actual price these days is often close to and over a dollar each. The price is a reflection of pricing habits, not the apple.
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