Market Curiosity: Exploring Markets And Systems

January 6, 2011

Efficient tax, regulation and representation systems

Filed under: Favorite Posts, Systems — Tags: , , , — Jeff Fitzmyers @ 10:19 am

Does a politician ever contract: “Elect me to do XYZ within 1 year or else I will pay half my net worth to the SmileTrain charity within 30 days”?

The obvious solution to social challenges is: opportunities –> competition –> contracts –> reward success; amend failure. The real challenge: is the milieu mostly efficient (transparent yet private, mutual agreement) or inefficient (parasites, corruption)? Power or force? “The question is,” said Humpty Dumpty, “which is to be MASTER — that’s all.”

The belief that a plethora of rules, laws and supporting taxes are required for life if false. As ilustrated below, life progresses EVEN WITH of all that inefficacy.

Contracts: Do all you say you are going to do; do not encroach on other people or their property (Richard Maybury). NOT ten octillion indecipherable and conflicting laws, rules, regulations, etc. Contracts specify: who, what, where, when, amendments, renegotiation, conflict resolution, rewards and amends. Since that is a complete system, superfluous regulations specify who is not minding their own beeswax.

TAXES The current system of multiple bureaucracies and multiple hierarchies steals money by force. It’s confusing, inefficient (so it costs more) and offers desultory representation. Bureaucracies can’t be held accountable efficiently by small groups of people with few resources. Consequently about 4,500 PAC’s using $100’s of millions have manifested to fill the niche of who representatives listen too.

Efficient tax system: People contract through local representatives to live in a county (forcing contracts to be clear and fair). The county collects ALL taxes via ONE sales tax, and contracts out all work. There is no property tax. The county then negotiates contracts (not passes yet-more-laws) with the state to use some tax money to pay for state offerings. The state does the same with federal offerings. An efficient and respectful system allows for all parties to directly manage finances by:
+ Direct and manageable representation at all 3 levels
+ Bureaucracies contract with other bureaucracies and so actually preform to avoid loss of money and reputation.
+ People can move to a county where the % tax and allocations suits them.
+ Property will be private, which is a basis for prosperity.
+ Businesses already have to manage sales taxes. It’s inefficient to have people duplicate the effort.
+ Savings grow which provides investment capital. (Right now gov’s provide much of the “investment capital” at near zero percent interest. Being able to rent money for free is what produces malinvestment.)
+ It is better to have a nation’s wealth spread out and stewarded by the people who have the most stake. Gov’s don’t have much stake since they are not really answerable to anyone creating situations where other entities can “own” too much of a nation. The US owes China and Japan about $1.8 trillion.

REGULATIONS, “SELF REGULATION”, AND COURTS The poster child is Commodity Futures Trading Commission judge says colleague biased against complainants.

“On Judge Levine’s first week on the job, nearly twenty years ago, he came into my office and stated that he had promised Wendy Gramm, then Chairwoman of the Commission, that we would never rule in a complainant’s favor,” Painter wrote. “A review of his rulings will confirm that he fulfilled his vow,” Painter wrote… “Judge Levine, in the cynical guise of enforcing the rules, forces pro se complainants to run a hostile procedural gauntlet until they lose hope, and either withdraw their complaint or settle for a pittance, regardless of the merits of the case.”

Judge Painter’s Notice and Order is posted below. It gets better:

… a CFTC spokesman declined to comment… An attorney adviser to Levine, Thaddeus Glotfelty, said that the official position of the CFTC press office was to decline comment and that “Judge Levine has determined to go along with that.”… Levine was the subject of a story 10 years ago in the Wall Street Journal, which said that [basically] Levine had never ruled in favor of an investor…. former senator Phil Gramm (R-Tex.), said he would pass along a message but added, “I doubt she’s going to want to get involved in this.” … [Mrs.] Gramm was head of the CFTC just before president Bill Clinton took office. She has been criticized by Democrats for helping firms such as Goldman Sachs and Enron gain influence over the commodity markets. After leaving the CFTC, she joined Enron’s board.

How is a single person or small group going to mange the gauntlets? Unlikely, unless they have resources.

Bernie Madoff’s $50 Billion fraud is partly a result of the SEC utterly failing:

Concerns about Madoff’s business surfaced as early as 1999, when financial analyst Harry Markopolos informed the U.S. Securities and Exchange Commission (SEC) that he believed it was legally and mathematically impossible to achieve the gains Madoff claimed to deliver. He was ignored by the Boston SEC in 2000 and 2001, as well as by Meaghan Cheung at the New York SEC in 2005 and 2007 when he presented further evidence. He has since published a book, No One Would Listen, about the frustrating efforts he and his team made over a ten-year period to alert the government, the industry, and the press about the Madoff fraud.

Enron happened in a “regulated” market — regulated by bureaucratic rules and laws instead of supply, demand and skill in managing the two forces. Free markets by definition “self regulate”. Bureaucratic “regulation” is just another tax and does not “regulate”.

Gobbledygook from the head regulator of a nation’s money supply:

“Although our asset-class analysis of detailed disaggregated data is still at an early stage, preliminary examination finds that the data are consistent with the hypothesis of differential spending propensities by asset type and by whether or not capital gains have been realized.” – Alan Greenspan

Translation: “This is too complicated for you. We experts will help out by taxing you to sort it all out. Run along and play.”

UNION BUREAUCRACIES [New York] Snow cleanup was a budget protest

…Sanitation Department bosses from the snow-slammed outer boroughs ordered their drivers to snarl the blizzard cleanup to protest budget cuts — a disastrous move that turned streets into a minefield for emergency-services vehicles [a baby reportedly died waiting 9 hours for an ambulance]…

What’s going on with this system? 2 bureaucratic bosses with 2 different bureaucratic responsibilities. The mayor is supposed to keep the roads clear, the union is supposed to keep wages high. This creates inefficiency.

RATING AGENCIES Typical sentiment: “What good is a rating anyway? Everything is rated AAA until after it blows up.”

Inefficiencies can be manipulated via campaign promises that have no consequences:

Where are the calls to sic [the President’s] Justice Department on Big Oil to hold the oil companies accountable for “market manipulation”? Why aren’t we hunting down the amoral “oil speculators” responsible for repealing the law of supply-and-demand in order to line their pockets?

Inefficiencies have psychological consequenes:

…The sheer amount of stupidity, learned helplessness, and outright WHINING from the general population that I’ve seen being down here during the blizzard has been COLOSSAL. … I’ve had to push out multiple cars full of people GOING TO THE MALL in the blizzard, shoveled out crosswalk curbs while the neighbors [complained] that “no one has cleared the curb snow yet”, read newspaper articles of people trapped in railroad stations and bus terminals complaining about how no one came and brought them food… One couple got stuck at the Amtrak station … saying “It was more traumatic than the deaths of our parents”. WHAT. THE. [HECK]. … This place is a gigantic clusterflock and it’s not just the unions. It’s a large portion of the population who has learned to be so reliant on government that they can’t pick up a [freaking] snow shovel on their own…

BASIC LAW ENFORCEMENT The Dead Sign Affidavits – Nationwide

“Some regulators complain that the use of Ms. Kunkle’s name reflects an epidemic of mass-produced, sloppy and inaccurate documentation in the debt-collection industry.” Complain? Sloppy? Inaccurate Perjury is a felony! … “When you see corner-cutting like this, it’s alarming,” Minnesota Attorney General Lori Swanson said about the Kunkle case. … The State Attorney General for Minnesota calls this corner-cutting?

Since “leaders” are not enforcing the rules, the people who are not victims are going to accurately think, “Why should I?” And that can lead to mayhem on many sides. It is much more efficient to use a system that enforces contracts, rather than a rule and force (slavery) based system where over feeding parasites are messily shucked off when things get dire.

Examples are ubiquitous. The Ticker Guy reports that Mrs. Warren says the solution to not enforcing laws — that have been admitted to being broken in courts of laws — is to have more laws. Failure of law enforcement, regulators, judges, and leaders all paid for with taxes. The umbrella “Consumer Financial Protection Bureau”, will probably fail, and then the plea will be for smaller, independent bureaucracies. “It’s just a game” said the Merovingian.

Ugly example:

She says she shouted at [the police], “What are you doing? We’re your brothers and sisters!” and that they were ashamed – but they followed their orders…

MEDIA Fox News Wins Lawsuit To Misinform Public – Seriously

… charged she was pressured by Fox News management and lawyers to air what she knew and documented to be false information … [that] … cows in Florida were being injected with RBGH, a drug designed to make cows produce milk – and, according to FDA-redacted studies, unintentionally designed to make human beings produce cancer… Fox lawyers, under pressure by the Monsanto Corporation (who produced RBGH), rewrote her report over 80 times to make it compatible with the company’s requests…

BUREAUCRACIES IN GENERAL The epitome:

An early push … requiring every bill cite its specific constitutional authority failed in a … conference meeting…

To paraphrase the Ticker Guy’s take, Congreass couldn’t even manage to wait for one day before repudiating … The Constitution.

A more efficient and respectable system is to have local representatives contract with law enforcement providing companies to handle contract enforcement. Everyone would know the rules. And if broken would be held accountable with amends (partly provided by insurance companies) There would be competition to select the best fitting “contract” enforcers. All parties would love to have cameras around then to prove they were following the contract. And in the process making money and enhancing reputation.

How are efficient taxes paid? The universal default is mass of gold or silver. Or both parties can agree on different competing free market currencies, some of which might be fractional reserve. But no fiat currencies, that just creates inefficiencies.

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