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Wednesday, July 16, 2014

The Hobby Lobby Decision: Back To Slavery or Unto Socialism?

The Hobby Lobby Decision: Back To Slavery or Unto Socialism?

Consider the following two passages from the SCOTUS Hobby Lobby Decision:

“Protecting the free-exercise rights of closely held corporations thus protects the religious liberty of the humans who own and control them.”

“ … no conceivable definition of “person” includes natural persons and non- profit corporations, but not for-profit corporations.”

These mean that  corporations  are to be treated as persons, with rights protected under the constitution; and,  corporations exist to protect the rights of the humans who own and control them.  The quotes essentially imply that,

            Protecting the free-exercise rights of closely held persons thus protects the             constitutional rights of the persons who own and control them.

This  decision is clearly about protecting the rights of persons who own and control other persons.

By opening the door through declaring that corporations, as persons (artificial or natural), have rights enumerated under the U.S. Constitution, they challenge the rights of natural persons.  This occurs since a right that is denied a corporation, as a person, can be denied to other persons, including humans.  One of these rights is the right of not being owned. This right stems from the 13th amendment, banning slavery, since to be a slave is to be owned by another person.  The decision, as elaborated, opens the door for Hobby Lobby Stores, Inc.  to sue its owners for civil  damages (for being treated as a slave), and for the government to seek criminal charges against those owners. Indeed, one could argue that the ACLU, or other civil rights organizations, have a duty to pursue this in order to protect our society from falling back into institutionalized slavery.  Consider that the Supreme Court based their decisions in the 1880’s  on corporate personhood (Santa Clara County v. Southern Pacific Railroad, and Pembina Consolidated Silver Mining Co. v. Pennsylvania) on the 14th amendment, intended to protect equal rights to newly freed slaves.  It might even seem a quid pro quo,  allowing slaves to have full rights in exchange for allowing corporations to have the same rights. It also underscores how morally bankrupt the American corporate economic system has become. It would be as if a slave owner told his slave to commit a crime, and it was the slave (and not the slave owner) who bore criminal responsibility while the slave owner received all the pecuniary benefits.

This also leaves the Supreme Court in a bind. The constitutionally sound approach, based on precedent, would be to expand the rights of corporations, which would mean the emancipation of corporations. However, this would topple our economic system, since it is the ownership of corporations that is expressed in the buying and selling  of equities in the stock market.

Such emancipation may seem a very unlikely outcome, for two competing yet complimentary reasons:

            1)  Fiscal Conservatives would not want to risk the U.S. economy,  due to the       massive wealth lost when corporations can not be owned.

            2)  Social Liberals would not want corporations to have exactly  the same rights     as humans citizens.

On the other hand, it would be difficult for the court to overturn its own decision (imagine SCOTUS attempting to make a decision on whether corporations have the right not to be treated as a slave!). So,  how do we  give rights, but not all rights, to a person?  An alternative might end up looking like the three-fifths, or the Missouri, compromise.

Another difficult question arises: does a corporate lawyer protect the rights of the corporation, or of the people who own the corporation?  Clearly, corporations continue to exist while its ownership changes hands.  If corporations now have religious liberty why must the corporations’ religious beliefs be considered identical to its owners? Why would we believe that a corporation has any beliefs other than atheism? Again, it seems like a slave owners mentality:  I own you, so your faith must be my faith. It is easy to imagine that if the owners of a corporation can say what the corporation’s faith is, they can also say that employees must also act consistently with such faith as well.  The failure to emancipate corporations can easily lead America back to de facto slavery, where humans are just considered a biologically structured corporation.

However, if the seemingly impossible occurs and corporations are emancipated, then the Federal government will be in a position to protect the rights of these corporations, not for the benefit of its owners (as there will be none) but for the benefit of society (at least as the government construes “society”).  This would be a big move in the direction of socialism.  People can still become wealthy, but not through corporate ownership. The movement of financial capital will be through bonds, and income through wages, interest and royalties alone. Moreover, if corporations are found guilty of crimes, based on the 13th amendment they can essentially be owned by the state. It also means that employees of a corporation, even as high up as a CEO or president, can’t own shares of the corporation. Their compensation may still be much greater than the average worker, but would have to be paid as salary/bonus and benefits, as shares in the corporation will no longer be available.  In essence, socialists should applaud the emancipation of corporations. How ironic that a court seemingly supporting conservative capitalism, might actually bring about its downfall through their own ideology!!

While all the attention of the decision has been on the increased difficulty of receiving reproductive healthcare, the potential loss of rights of employees, and the possibility of religious tyranny at the work place - all legitimate concerns-  the bigger issue of whether capitalism survives and whether we return to slavery or step into socialism seems to be completely missed. It should be no surprise, in the 18th century the concern was whether persons can be considered property, now we are dealing with whether property can be considered persons.  A fool and his money are quickly parted, unless, of course, money is treated as that fool.

Thursday, March 20, 2014

Generation App

Generation App

We have had the Greatest Generation, then Baby Boomers , then Generation X, then the Millenials. However, people are still wondering what to call the generation born in the 21st century.  I suggest the moniker “Generation App.”  Why?  Because, this generation is being raised surrounded by the information economy, and with the ubiquity of smart phones, it is  an economy based  on the production and accumulation of apps.

It is a generation for whom many social interactions are mediated through an app interface.  They are also the generation that will find its peak during  Kurzweil’s  so-called “singularity” , where artificial intelligence  may supersede natural intelligence. It is also a time when the meaning of being a person is changing, as is seen by Supreme Court decisions assigning the rights of  natural persons to corporations.  It is a time of high-speed trading where computer algorithms take the role of traders and decision makers. In other words,  the individuals of this generation will be identified by their apps. Indeed, one could argue the concepts of spirit and soul  are nothing other than algorithm and application.

This should be no surprise. Consider how at death an individual can leave a  will. What is a will?  It is a set of instruction for the disposal of material assets, including intellectual property.  An algorithm is nothing other than  a set of instructions.  Consider how  we understand work  as  applying oneself  to a task. What is an application?  It is a set of algorithms that can be applied to a task. 

It is this generation that will determine the future of humanity through a cyber-world.    Whether one is ruler of the apps, or ruled by apps,   we are seeing the evolution from homo sapiens  to homo applicus.  We are truly turning into the planet of the apps.

Sunday, March 24, 2013

The Immorality Premium and Morality Cycles

In the world of finance, one often talks of a risk premium. It is how much more an investor must expect to be paid in order to take on increased risk. This risk arises from the uncertainty over the outcomes of transactions and investment. In general, the premium flows from the more risk averse to the less risk averse. Those who have a strong preference against risk (maybe worries about risk keep them from sleeping at night, or impair them with anxiety) will trade off lower expected returns for a greater reassurance that “they have what they have.”  Those who are barely bothered by risk (or even enjoy it) find an extra source of income.  This logic can also be applied to morality.

Our society likes to talk of encouraging more ethical/moral behavior and might suggest increasing the rewards for people being more moral (and in some religions suggesting that there are heavenly, after-life rewards). However, as the above suggests, the  flow of pecuniary benefit will tend to be from those who choose to be moral, or at least want to be seen as moral, to those who are either indifferent or disinclined to moral behavior. Indeed, the greater the discrepancy in moral preference between the most moral and the least moral, the greater the premium paid by the former to the latter.

Now, consider  the notion of  moral capital,  the capacity to behave morally. This capital is generated when people choose to behave morally, and in the process show others how to act morally. In particular they must demonstrate what is to behave morally, as well as the non-pecuniary benefits from it (e.g being happier).  It is reasonable to assume that part of social cohesion, and hence economic well-being for society as a whole, is dependent on the amount of moral capital. The existence of an immorality premium implies an interesting dynamic. As moral capital increases, the greater the immorality premium. The greater the immorality premium the stronger the incentive to immorality, and hence a contango of moral capital. This incentivizes society to become less moral, and a degradation of well-being. However, this also would be associated with a decreasing immorality premium. Eventually the premium becomes small enough that moral capital starts accumulating again, thus generating a morality cycle (similar to a business cycle).

Tuesday, December 11, 2012

A dynamic tax rate solution to the fiscal cliff

As our government attempts to find a revenue and spending compromise to prevent the U.S. from going over the so-called fiscal cliff, let us consider three issues that must be addressed: the economic, the political, and the moral. The economic issue requires a solution that supports a growing economy. The political issue requires a solution that allows conservatives to understand the compromise as being consistent with no increase to top tax rates, and supports private sector solutions to our economic issues, while liberals would like to higher top rates now. The moral requires a solution that does not pass on more debt, or less opportunity, for future generations.

In the debate over whether increased taxes will dampen economic growth, the focus tends to be on their potential disincentive to working and making  profits. The argument is that higher taxes means less net income, and hence less incentive to work and take risks. Now, if all we were concerned about was economic activity now, and ignored the future, this might make sense (then again, if we were ignoring the future, then debts and deficits would be meaningless as well).  However, we are concerned about the future. There is also a concern for the size of government, and finding private sector solutions through investment and charity.  So what supports the private sector to invest and donate more?   Increased tax rates now, with decreasing rates as the recovery expands.    Here’s how:

An investment is an expense now, to generate more income in the future. When tax rates increase, the marginal cost of that investment decreases.  For example, a one million dollar investment at a 20% tax rate has a net cost of  $800,000, whereas the same investment at a 40% tax rate has a net cost  of  $600,000.   Similarly a one million dollar tax-deductible charitable donation at a 20% tax rate costs the donor only $800,000 (assuming their income is larger than one million), while a 40% rate reduces the net cost to $600,000. Charity becomes less expensive.

A second concept important for a solution is that of average top tax rate.  If  the top tax rate was 35% this year, and 40% the next year,  the average top tax rate would be 37.5%.

With this in mind, we can construct a tax policy that encourages private investment and charitable contributions when the economy needs stimulus.  For example, we can increase tax rates temporarily, maybe 2 years, followed by a longer length of time (e.g. 4 years) when tax rates are lower.  Repeat this pattern as necessary. The increased tax rates now, combined with the expectation of lower rates in the future, incentivizes businesses to increase investment now, with an expectation of greater net returns during the times of lower tax rates. Similarly, it incentivizes charitable contributions  now, at a time when it would help the economy the most.

The political beauty of this is the possibility of a tax plan where both parties can be satisfied. If we look at the average top tax rate over a cycle of six years, then it is possible to have a higher rate now while keeping the average the same as it is now. For example, increasing the top rate to 45% for two years, and then decreasing it to 30% for four years, maintains an average of  35% over the six years.  Because the rate is higher now, there is a tax benefit for investing now so as to be positioned to have greater income when the rate is low.  This does not preclude reducing or eliminating deductions and other loopholes (although changes to these will impact the effectiveness of this policy), it just makes a tax rate increase now more palatable while encouraging the private sector to increase supply (through more investment) and demand (through charitable spending), thereby stimulating growth. The numbers above are merely illustrative, although they could be a starting point for negotiation.

More than this, such a tax plan is consistent with the morality of avoiding passing on a debt to the future.  First, a debt problem is a REVENUE problem, not a sending problem. Why? Because even if all spending is eliminated (including the military), we still have a debt, and interest, to be paid. Revenue will be required. Second, whatever one believes to be the long-term optimal tax rate, tax morality would imply paying more in taxes now, relative to those who pay them in the future. Third, the issue is not just financial debt, it is also the quality of the country, and economic capacity, we pass on.  The greater sin is not the money the future must pay off; it is reducing their ability to pay it off.

Consider this question: is it better to leave a $15 trillion debt with an economy that produces $10 trillion a year, or to leave a $20 trillion debt with an economy that produces $20 trillion a year?  It is the debt as measured in the number of years of economic production that is the issue.   Failing to invest in the future is not a responsible option. To leave future generations with crumbling infrastructure, and without a productive education, because we wanted to pay less taxes now, is the height of selfish myopia. Anyone claiming that we must reduce these types of spending now, so as not to burden the future with debt, is disingenuous at best.

This last point raises another element for a long-run solution: we could add a debt reduction portion to the tax rate.  The U.S. currently has a federal debt of about  $16 trillion. Let’s say we commit to paying this off in 50 years, which implies that those who are too young to work now will have a country with no federal debt when they retire. It would tax additional revenue of about $320 billion each year (assuming a budget that is deficit neutral). With a GDP of roughly $15 trillion a year, this would require an extra tax of about 2%.

Of course, another possibility would be a mix of higher taxes and printing money to pay off the debt. While the latter could cause some inflation,  any serious attempt at reducing the debt will have some inconvenience.  Again, leaving the future with higher prices, but with an otherwise healthy economy, is morally preferable to leaving them with a weak economy. Including a debt tax implies that our example above would become a 47% tax rate reducing to 32%.  At some point in the near future, the increase of 2% would have to extend to lower tax brackets, preferably after the economy has created more jobs.

The reason for the biggest increase in taxes being in the upper income brackets is simple. Only those with sizable disposable incomes (above what they need to pay for their current lifestyle) are in a position to make significant investments and charitable donations.  Presumably this is why some refer to them as “job creators.”  Increasing the tax rate at lower incomes will do little to generate more investment or charity, since there is little to no disposable income.

The use of a short-term increase in the top tax rate, with an assurance that it will decrease thereafter, combined with a small tax to start paying off the debt, should be palatable to both democrats and republicans, liberals and conservative.  It includes the conservative argument for a private sector solution of private investment and increased charity, which they see as necessary to grow the economy and deal with issues of poverty, while liberals would get a higher top tax rate now that can support the type of public investments they see as necessary to grow the economy and balance the budget.

Friday, August 03, 2012

A Balancing Budget Amendment

A balanced budget amendment may have a good intent (making sure that expected revenues equals expected outlays); however, it does not assure that by the end of the fiscal year no deficit has been created. What we need is a balancing budget amendment, where an action is taken that actually balances the budget. Here is a suggestion.

At the end of the fiscal year the amount of the deficit for that year is calculated.  There are then two methods for paying off this deficit. The first way, calculate an apportioned wealth tax. For example, let's say we had $500 billion deficit, and the amount of wealth of all U.S. private property (real and financial) was  $50 trillion.   There would be a one-time 1% tax on wealth ($500 billion /  $50 trillion).   So, someone who owned a $5,000,000 home and had $10,000,000 in financial assets   would be assessed  $150,000 (= 1% of $15,000,000).

 A second way is that the money is printed to pay off the deficit. Thus,  if at the end of the year the government had $500 billion deficit, it would print the money and pay off what was owed.

Now, each method has its own side effects. The first could slow down consumption as people had less money to spend. The second could heat up inflation by expanding the money supply. Thus, it would be helpful to use a mix of these two, taking into account whether inflation or recession is the greater risk.

The reality is that assuring that we do not add to the debt, we must have a balanced budget (including interest payments, and emergencies) at the close of the year after we see what has been actually spent and received. While it is a good idea to write a budget  that is balanced to begin with, it is still necessary for us to be balancing it at the end of the year.

The exercise in the example above, allows us to get a better sense of how difficult are our problems with the deficit and the debt (the amount owed in total from all current and previous deficits).   To pay off our national debt (which is approaching $15 trillion),  would take us 30 years if we payed off the principal at $500 billion dollars a year, which as we see above would require something like a 1% a year wealth tax.

Monday, February 28, 2011

Monday, August 07, 2006

The Rapture:
America's Exit Strategy !!

Does it all make sense now?

Tuesday, August 01, 2006

The civilization that will survive the seeming war ahead of us, will be the one that has a greater love for survival than for destruction of a perceived enemy. It will also be the one that can express its truths without the need for advanced technological media. Whatever can only be communicated via the internet, wireless, and other forms of telecommunications is not likely to perpetuate. The ability to know someones mind and heart through awareness alone will become an evolved capability, and it requires being fearless, but not foolish, in the presence of the powerful and paranoid.

Friday, February 10, 2006

Incentivizing Peace

One of the common economic arguments for the cessation of war is the so called “peace dividend.” Unfortunately, these dividends do not accrue to those who specialize in military commodities. As such there is a strong incentive for them to lobby for, and promote, military solutions to social conflicts. As Galbraith phrases it, “Boom Times for War Inc.” Clearly, there is not enough reason for corporations to avoid war, when it can be, in a myopic way, so profitable. Can peace be made more profitable? Can a tax structure be used to incentivize peace?

Corporations are treated as persons for legal purposes. What if corporations were treated as “citizens” or “non-citizens” (based on their declaration), such that they are given different tax treatment based on the war status of a nation. Now consider the following scenario: citizen corporations are given a lower tax (income and/or revenue) rate than non-citizen corporations during official peace time, however, as citizens they are considered having a duty to support the nation during a time of war. This is done by their being required to provide their goods and services to the government for zero profit during war time. This can be presented on patriotic/ethical grounds – corporations that attempt to profit during war time are hindering the war effort by forcing the government to use scarce resources during a time of crisis. This does not hinder these corporations from making a profit from sales to non-governmental entities during war time, if the corporation has the resources to do so. The combination of lower peace time tax rates, and zero profits during war time, would encourage businesses to take on a “citizen” status and then invest in keeping the world peaceful. Note that the defense industry can still make profits during peace time, which, if they truly are there to support the defense of our nation, is similar to a doctor getting paid for keeping their patients healthy.

Whether or not this plan is ever implemented, it seems that in a time of corporate power and nationalism the path to peace must wind its way through both. It is not enough to say how peace can benefit humanity, it will be necessary to make peace beneficial for the institutions that organize humanity.

Thursday, December 22, 2005


God is not an imaginary being.
God is the imagination.
God is Imagination.
All of the imagination through and around the universe.

Where there was the void, Imagination could still distinguish between light and dark.

When Adam was created it was in the imagination of God, and as being that has imagination.

What separates us from the other creatures is not tools, nor language, nor war, nor desire.
What separates us the existence of imagination through our minds.

We see what nothing else sees.
We hear what nothing else hears.
We know what is unknown to others.

When part of Imagination energizes the human mind, the awareness of something greater than the mere physical universe dawns.

For some, who do not have the outlet to express this energy, Imagination is a terrible burden, something which they believe can be relieved through destruction.

For some, who are blessed with the space and materials to manifest, Imagination is a blessed member of their consciousness, which they joyfully express through creation.

The way to peace is not through the elimination of Imagination, nor through making others imagine only as you do, nor to follow our imaginings without question.

The path first starts with recognizing that we are part imagination and part of Imagination.
How we imagine Imagination is how we curse or bless ourselves and each other.

And for this we must respect that every ones relationship with Imagination and with God.
Whether it be through words, through experience, through everything or not at all.
For the desire to silence any way through which God finds self-expression, is a sign that one is not at peace with God nor with themselves.

The physical world is a synaesthetic canvas through which Imagination shares itself with itself as something else. How else could we imagine that there is a reality?

Tuesday, December 06, 2005

Humans may have the right against self-incrimination ...

but how does one repent without doing so?

Friday, December 02, 2005

Freedom may not be free ....

but are we being overcharged for it?

Monday, November 28, 2005

Frozen Food for Thought

- Great Tasting Ideas: Just Heat, Eat, Repeat and Delete