re: how non-contributory democracy led to the credit crisis
non-contributory democracy re: http://blogs.telegraph.co.uk/finance/ianmcowie/100010127/a-tax-based-alternative-to-the-alternative-vote/
The first four men (the poorest) would pay nothing. The fifth would pay £1. The sixth would pay £3. The seventh would pay £7. The eighth would pay £12. The ninth would pay £18. And the tenth man (the richest) would pay £59.
But, once outside the bar, the men began to compare their savings. “I only got £1 out of the £20 saving,” declared the sixth man. He pointed to the tenth man, “but he got £10!”
So, the nine men surrounded the tenth and beat him up. Funnily enough, the next month the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him.
But when it came to pay for their drinks, they discovered something important – they didn’t have enough money between all of them to pay for even half the bill.
That’s how non-contributory democracy led to the credit crisis in a nutshell.
Where to begin with this, uh, metaphor? Firstly, paying taxes is not voluntary. The 10th man cannot simply up and leave, or decide not to pay his portion. If he were a corporation he could try to do offshore banking, but that’s getting harder and harder. Chances are his customers would find out and stop buying his products. Which leads me into the next point –
The 10th man is likely rich because of the other men – he possibly owns shares in the bar or something like that. If in fact he did up and leave, and stopped buying the rest of the men drinks, they would probably drink somewhere cheaper, perhaps with strippers. Maybe somewhere they could wash dishes in return for beer. They don’t need him. In fact – I’d suggest that the rich need the poor, more than the other way around (where would I be with my mortgages without my tenants? Without me – they would simply be somewhere else. Without them – I’d be bankrupt)
And finally the credit crisis was in fact created by a disproportionate amount of power being given to those who were in charge of credit, insurance, banking, etc. ie those who are classified as wealthy. They played with an extremely complex system, invented even more complicated transactions that allowed them to create more middlemen in an industry that really did not need them, in order to siphon off more money, faster than ever. Of course they didn’t know that it would cause issues, unless of course they read economic history books, and the reasons there were restrictions on things like insurance in the banking industry. But weather or not they knew is irrelevant – the fact of the matter is that they were given the power to make these changes because of their influence and money. Now that they’ve screwed up, they blame welfare cases? If welfare cases had not been allowed to vote – the credit crises would never have happened? Using the same article and reasoning I could conclude that one must take a test that covered logic, history, economics and mathematics in order to vote; and it would still be as wrong a conclusion.
We need to separate the position between power and money, more, not combine them closer together. The rise of lobbies, special interest groups and the simple rising costs of running for office I think are the real problems that need to be addressed. There was such a time as when politicians were not career politicians, but they were men with jobs, who put their jobs in hold for 5 or so years while they did ‘public service’. No longer is this the case, as under the guise of creating fairness, we have created rules that restrict how campaign funds are raised, at the same time as making campaigns cost millions of dollars. The effect of this has created an environment where one must seek assistance from lobbies, special interest groups, and corporations in order to have a chance at winning. Once you’ve won though, it’s time to pay up. Now I know that it would be difficult to change this, but there must be a way to reduce the cost of running a campaign, and reduce the need to rely on groups of people inside power structures (who are insane by their very nature) and instead rely on individuals of like minds, who agree with platforms rather than sound bites.
I’ve often thought a novel solution to this might be to disallow television and radio based campaigns. They are part of the mechanism that creates the large cost to those campaigns, and also gives the main stream media a lot of control over the results. If people were forced to actually go to fundraisers, and events to meet their politicians, and conversely politicians were forced to meet more people in person because otherwise no one would know who they were, then it may level the playing field more. Also, not allowing these messages to be passed over MSM would force people to leverage their social networks (the real ones) in order to obtain information. The neat thing about people’s social networks is that they act like an information filter. The people that one actually listens to and trust, are the ones that they would get their information from. These people would likely pass on information that was relevant to them based on their belief system. Groups of people would stop being influenced by a central power, and be more influenced by their peers.
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Cian Kenshin is an MBA (Finance), a consultant for 32 of the top sports franchises in the US, and founder of multiple successful startups including a Vertical Farm company, is a certified teacher of Yoga and Zen, a Certified Virtual Coach by Eben Pagan, soon to be author, and a sought after Executive Coach for start-ups and boardroom executives alike. Known for his unique perspective on productivity, this serial entrepreneur and investor is a wealth of fresh ideas, constantly seeking new ways to ‘do business better’.
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