Dump The Banks

As anyone who has read the papers or seen the news in the last few years knows, banks around the world have broken numerous serious laws, have had to be bailed out with taxpayers money, and yet still pay millions of dollars to inept executives and billions more to stockholders.  It is estimated that Canadian banks will make $57 billion in profits this year, and pay out more than $19 billion in bonuses.

Many of the banks’ issues involve their connection to complex financial transactions that do nothing but make money for already-rich individuals. There has to be a better way, and there is.

I would oblige all banks to become credit unions and I would strictly limit their functionality.

Credit unions are not-for-profit institutions cooperatively owned by their members. They operate solely for the benefit of their members rather than for outside shareholders, of whom there would be none.  Their senior management is elected by the members and their policies are offered up for approval at regular meetings of the membership. Senior management remuneration would require members’ approval. The billions of dollars that are currently paid out in dividends to outsiders would be used to increase services and lower costs for the members. Any surplus could be re-paid to the members or added to the credit union’s capital.

Just this year’s profits alone would amount to a $1,700 payment for every Canadian, adult and child.

I would limit their functionality to the taking, managing and disbursement of members’ deposits, and to the issuance of personal loans (including credit cards) and personal mortgages.  Any member or corporation that required business loans, corporate mortgages, investments or insurance would turn to investment companies, mortgage brokers and insurance companies designed specifically for that function.

No one would be limited in their desire to engage in stock market or other investments.  But these would be handled entirely by companies separate from banks.   No longer would bank depositors’ cash be at risk in the marketplace for derivatives, for example.

Competition between credit unions, if such were needed, would become a function of service and accessibility.  I believe this would get us more branches on the streets and a more personalized service between member and bank.  It would bring banking back to the people, to a smaller scale that we can understand and control — after all, it is our money they are using.

An End To Tipping

.

These days, it seems to me, that generally speaking only three types of people received (and/or demand) gratuities: restaurant staff (including delivery people), taxi drivers, and hairdressers. Why are they treated differently from others who give us service?

When I was a lad, we also used to give a Christmas “bonus” to the postman, the milkman, and the newspaper delivery boy: I don’t know that anyone does that anymore.

Once there may have been a good reason to give cash tips to those who gave service over and above what one might expect. However, in my seventy-plus years, I have noticed three glaring issues with that generous policy.

• One: tips are generally limited to restaurant servers, taxi drivers, and hairdressers, whereas the best service I ever get is from my pharmacy and from my supermarket, employees at which never expect or get tips.
• Second: servers, taxi drivers, and barbers now expect a tip even if their level of service is nothing special, and some get quite belligerent if they don’t get one.
• Three: their employers treat the fact their employees get gratuities as a way to pay them less as a regular wage.

It is also worth mentioning that the amount to tip a server, say, after a group meal often becomes the subject of heated and sometimes acrimonious debate.

I propose that gratuities (as a standard way of doing business) be prohibited, and I make the case that this will be better for the employees, can save customers money, and still cost the employer nothing.

Let us suggest that a nice meal out for two or three people carries a charge of $100. Under the current arrangement, most customers will then add a tip, say 20%, and the actual cost becomes $120. However, if under a no-tip policy, the servers are given a 15% wage increase and the business adds, say, 12.5% to its menu prices to cover the increase, then the customer will pay $112.50.

The employee benefits because their regular wage goes up. The customer benefits because their costs go down. The employer comes out even.

A win-win-win solution.

How To End Tipping

.

Once there may have been a good reason to give cash tips to those who gave service over and above what one might expect. However, in my seventy-plus years, I have noticed three glaring issues with that generous policy.

• One: tips are generally limited to restaurant servers, taxi drivers, and hairdressers, whereas the best service I ever get is from my pharmacy and from my supermarket, employees at which never expect or get tips.
• Second: servers, taxi drivers, and barbers now expect a tip even if their level of service is nothing special, and some get quite belligerent if they don’t get one.
• Three: their employers treat the fact their employees get gratuities as a way to pay them less as a regular wage.

It is also worth mentioning that the amount to tip a server, say, after a group meal often becomes the subject of heated and sometimes acrimonious debate.

I propose that gratuities (as a standard way of doing business) be prohibited, and I make the case that this will be better for the employees, can save customers money, and still cost the employer nothing.

Let us suggest that a nice meal out for two or three people carries a charge of $100. Under the current arrangement, most customers will then add a tip, say 20%, and the actual cost becomes $120. However, if under a no-tip policy, the servers are given a 15% wage increase and the business adds, say, 12.5% to its menu prices to cover the increase, then the customer will pay $112.50.

The employee benefits because their regular wage goes up. The customer benefits because their costs go down. The employer comes out even.

A win-win-win solution.

Dump The Banks

As anyone who has read the papers or seen the news in the last few years knows, banks around the world have broken numerous serious laws, have had to be bailed out with taxpayers money, and yet still pay millions of dollars to inept executives and billions more to stockholders.  It is estimated that Canadian banks will make $57 billion in profits this year, and pay out more than $19 billion in bonuses.

Many of the banks’ issues involve their connection to complex financial transactions that do nothing but make money for already-rich individuals. There has to be a better way, and there is.

I would oblige all banks to become credit unions and I would strictly limit their functionality.

Credit unions are not-for-profit institutions cooperatively owned by their members. They operate solely for the benefit of their members rather than for outside shareholders, of whom there would be none.  Their senior management is elected by the members and their policies are offered up for approval at regular meetings of the membership. Senior management remuneration would require members’ approval. The billions of dollars that are currently paid out in dividends to outsiders would be used to increase services and lower costs for the members. Any surplus could be re-paid to the members or added to the credit union’s capital.

Just this year’s profits alone would amount to a $1,700 payment for every Canadian, adult and child.

I would limit their functionality to the taking, managing and disbursement of members’ deposits, and to the issuance of personal loans (including credit cards) and personal mortgages.  Any member or corporation that required business loans, corporate mortgages, investments or insurance would turn to investment companies, mortgage brokers and insurance companies designed specifically for that function.

No one would be limited in their desire to engage in stock market or other investments.  But these would be handled entirely by companies separate from banks.   No longer would bank depositors’ cash be at risk in the marketplace for derivatives, for example.

Competition between credit unions, if such were needed, would become a function of service and accessibility.  I believe this would get us more branches on the streets and a more personalized service between member and bank.  It would bring banking back to the people, to a smaller scale that we can understand and control — after all, it is our money they are using.

Turn Corporate Taxes Into Licenses

The new Trump tax code,

“lowered the U.S. corporate tax rate from 35% to 21%, but in practice large companies often pay far less than that because of deductions, tax breaks and other loopholes. In the first year of the law, the amount corporations paid in federal taxes on their incomes – their “effective rate” – was 11.3% on average, possibly its lowest level in more than three decades … [T]he new law introduced many new breaks and loopholes.”

Corporations around the world play the same tricks. Often they reside in tax havens and levy enough “corporate service charges” on their overseas subsidiaries to ensure that no taxes are paid.

And this all comes at a cost to the rest of us.  As corporate taxes fall and government deficits grow, there is increasing pressure to reduce those deficits by reducing spending on welfare services, health, and education.

Centre-right politicians have suggested that lowering corporate tax rates will encourage more companies to stay in-house as it were.  That is just an excuse to make the rich richer as the new Trump tax code proves.  There is a simpler and much more efficient way.

I suggest that corporate income taxes be eliminated completely. They should be replaced by a “license to operate” fee equal to, say, 10% of revenues earned in the country no matter where the head office is based. Simple to understand, simple to manage, and, I suspect, very difficult to get around.

Country of ownership becomes immediately irrelevant, and transfers to an offshore HQ will be pointless for tax purposes. Indeed, they may well create a double taxation situation in which those transfers become taxable revenue in the home country. It also gives corporations the right to NOT operate in any particular country if they choose to forgo the revenues.

Finally, I would make this tax law bullet-proof by including a provision that, should some smart accountant or lawyer find a loophole, then that loophole is closed retroactively to the dater of the law’s passage.

We should give this a try. It is a commonsense approach, eliminates the need for accountants, lawyers, and an army of regulators. It will produce fairness across the board.

Keeping Banks Safe For Our Money

As anyone who has read the papers or seen the news in the last few years knows, banks around the world have broken numerous serious laws, have had to be bailed out with taxpayers money, and yet still pay millions of dollars to inept executives and billions more to stockholders. Many of their problems involve their connection to complex financial transactions that do nothing but make money for already-rich individuals. There has to be a better way, and there is.  The economic melydown created by the covid-19 crisis seems a perfect time to reorganize the sector.

I would oblige all banks to become credit unions and I would strictly limit their functionality.

Credit unions are not-for-profit institutions cooperatively owned by their members. They operate solely for the benefit of their members rather than for outside shareholders, of whom there would be none.  Their senior management is elected by the members and their policies are offered up for approval at regular meetings of the membership. Senior management remuneration would require members’ approval. The billions of dollars that are currently paid out in dividends to outsiders would be used to increase services and lower costs for the members. Any surplus could be re-paid to the members or added to the credit union’s capital.

I would limit their functionality to the taking, managing and disbursement of members’ deposits, and to the issuance of personal loans (including credit cards) and personal mortgages.  Any member or corporation that required business loans, corporate mortgages, investments or insurance would turn to investment companies, mortgage brokers and insurance companies designed specifically for that function.

No one would be limited in their desire to engage in stock market or other investments.  But these would be handled entirely by companies separate from banks.   No longer would bank depositors’ cash be at risk in the marketplace for derivatives, for example.

Competition between credit unions, if such were needed, would become a function of service and accessibility.  I believe this would get us more branches on the streets and a more personalized service between member and bank.  It would bring banking back to the people, to a smaller scale that we can understand and control — after all, it is our money they are using.

 

We Are To Blame For The Billionaires

Today, Bernie Sanders posted the following on Twitter:

 

It’s a true enough statement, and I entirely agree with Sanders that we need to tax billionaires out of existence. There are numerous progressives who post similar statements day after day.  And none of them — none of them — ever refer to the fact that most billionaires are billionaires because we make them so.

It is a fact that some of their billions come from their ability to manipulate the tax system and workers’ rights to their advantage. But the vast majority of their wealth comes from us buying stuff we don’t really need from Amazon, giving eyeballs to advertizers on Facebook, and selling our privacy to cell phone makers and data cloud managers in return for so-called convenience.

If we stopped doing those things, billionaires would disappear like fog in the sunshine.  But we are too damned lazy. We somehow expect the billionaire-sponsored politicians to create a tax system that will mildly ameliorate — not even solve — the problem for us. Are we really that stupid?

I’m no saint when it come to this stuff: I do occasionally buy from Amazon because I am too lazy to do otherwise.  But I live a fairly productive and I hope useful life without a cell phone, without a Facebook account, without a Tesla (or, indeed, any car), and roughly 95% of all my monthly purchases are made on Commercial Drive where I live. I rarely even shop in Cedar Cottage or Hastings Sunrise because I believe so strongly in buying local and supporting local businesses.

We can blame the billionaires for being billionaires, we can blame politicians for the failures of capitalist inequality, but we damned well better blame ourselves most of all.

 

The Amazon Phenomenon

Most of us almost subconsciously know that Amazon is just about everywhere, that it is such a natural part of our lives that we do not give it much more thought. Thanks once again to Visual Capitalist, we now have a useful visualization of just how powerful Amazon has become, and how swiftly it has overcome all competitors.

[Image: Visual Capitalist] Select image for a better view

There seems little to stop further exponential growth. Bezos can keep spinning off more and more multi-billion dollar corporations in emerging markets for as long as the aggregate cash flow is counted in the trillions. This will eventually lead to “trust busting” populists breaking it up, like Standard Oil and Bell, I guess.  But I think any unravelling of Amazon-Bezos will be far more wrenching than any of the historical parallels.

Back2Basics Sounds Like A Tory Trap

There is a petition circulating right now called Back2Basics. It seeks to cut back on the services provided by the City of Vancouver with the express aim of relieving home owners of any additional burdens placed on property tax.

It seeks to use the covid-19 crisis as the cover for what is, in reality, a major Tory-like austerity rollback. And we all know from bitter experience gained across so many jurisdictions, that the only people who suffer during such an austerity squeeze are the poorest and most vulnerable.  Their services are the first to be cut in austerity and — should the crisis ever be declared over — their services are always the last to be restored.

We should not be cutting services during a major crisis. In fact, progressive economists will say that now is the time we should be spending more. Governments need to step in when needs are greatest, and step back when good times are here.

The promoters of the petition will not remind you that Vancouver already pays the lowest property tax in North America based on tax per $1,000 value. Their petition does nothing but attempt to guarantee that unsustainable position into the future.

The petition says: “The city must stop pushing their out of control spending onto tax payers.”  We do have out of control spending but it is not because we are spending too much, but rather that we are spending so unwisely.

The failure of the Stewart administration in this crisis has been a failure to prioritize spending where it can do most good. Steered by City staff inherited from the woe-begotten Vision Vancouver years of build for greed and headlines not for genuine need, Vancouver city’s budget is top-heavy on administration and “world class” projects, and sorely lacking in a vision for the most needy half of the population. And any advantage extra staff may have provided is completely lost in the ridiculous byzantine world of delays in development approvals for local projects.

The best thing John Horgan in Victoria could do for the City right now is to free them up to move parts of the huge and unwieldy capital budgets into operations. Put those capital projects on hold for the time being, and plough money into services on the ground where they are most needed. Keeping transit free beyond the virus crisis would be helpful, too:  if we can afford Site C, we can afford free transit!

Keeping Banks Safe For Our Money

As anyone who has read the papers or seen the news in the last few years knows, banks around the world have broken numerous serious laws, have had to be bailed out with taxpayers money, and yet still pay millions of dollars to inept executives and billions more to stockholders. Many of their problems involve their connection to complex financial transactions that do nothing but make money for already-rich individuals. There has to be a better way, and there is.  The economic melydown created by the covid-19 crisis seems a perfect time to reorganize the sector.

I would oblige all banks to become credit unions and I would strictly limit their functionality.

Credit unions are not-for-profit institutions cooperatively owned by their members. They operate solely for the benefit of their members rather than for outside shareholders, of whom there would be none.  Their senior management is elected by the members and their policies are offered up for approval at regular meetings of the membership. Senior management remuneration would require members’ approval. The billions of dollars that are currently paid out in dividends to outsiders would be used to increase services and lower costs for the members. Any surplus could be re-paid to the members or added to the credit union’s capital.

I would limit their functionality to the taking, managing and disbursement of members’ deposits, and to the issuance of personal loans (including credit cards) and personal mortgages.  Any member or corporation that required business loans, corporate mortgages, investments or insurance would turn to investment companies, mortgage brokers and insurance companies designed specifically for that function.

No one would be limited in their desire to engage in stock market or other investments.  But these would be handled entirely by companies separate from banks.   No longer would bank depositors’ cash be at risk in the marketplace for derivatives, for example.

Competition between credit unions, if such were needed, would become a function of service and accessibility.  I believe this would get us more branches on the streets and a more personalized service between member and bank.  It would bring banking back to the people, to a smaller scale that we can understand and control — after all, it is our money they are using.

 

Turn Corporate Taxes Into Licences

A recent story in the Washington Post and republished in Greenwich Times shows that, once again, major profitable US corporations are playing the tax code to their own advantage and to the cost of the rest of US taxpayers.

• 91 of the Fortune 500 paid NO taxes at all on earnings of $101 billion;
• Amazon made a profit in excess of $10 billion but received a tax rebate of $129 million;
• Video game maker Activision Blizzard had $447 million in profits but received a tax rebate of $243 million, resulting in an effective tax rate of -54.4%.

The new Trump tax code,

“lowered the U.S. corporate tax rate from 35% to 21%, but in practice large companies often pay far less than that because of deductions, tax breaks and other loopholes. In the first year of the law, the amount corporations paid in federal taxes on their incomes – their “effective rate” – was 11.3% on average, possibly its lowest level in more than three decades … [T]he new law introduced many new breaks and loopholes.”

Corporations around the world play the same tricks. Often they reside in tax havens and levy enough “corporate service charges” on their overseas subsidiaries to ensure that no taxes are paid.

And this all comes at a cost to the rest of us.  As corporate taxes fall and government deficits grow, there is increasing pressure to reduce those deficits by reducing spending on welfare services, health, and education.

Centre-right politicians have suggested that lowering corporate tax rates will encourage more companies to stay in-house as it were.  That is just an excuse to make the rich richer as the new Trump tax code proves.  There is a simpler and much more efficient way.

I suggest that corporate income taxes be eliminated completely. They should be replaced by a “license to operate” fee equal to, say, 10% of revenues earned in the country no matter where the head office is based. Simple to understand, simple to manage, and, I suspect, very difficult to get around.

Country of ownership becomes immediately irrelevant, and transfers to an offshore HQ will be pointless for tax purposes. Indeed, they may well create a double taxation situation in which those transfers become taxable revenue in the home country. It also gives corporations the right to NOT operate in any particular country if they choose to forgo the revenues.

Finally, I would make this tax law bullet-proof by including a provision that, should some smart accountant or lawyer find a loophole, then that loophole is closed retroactively to the dater of the law’s passage.

We should give this a try. It is a commonsense approach, eliminates the need for accountants, lawyers, and an army of regulators. It will produce fairness across the board.

Reforming Corporate Governance

This is the third in a series of discussions about changes that need to be made to modern capitalism to protect the mass of humanity in advance of a full and revolutionary change to mutual aid and co-operativism. In the first, I proposed new taxation rules for corporations and in the second, I suggested changes in structure for banks; here I discuss corporate governance in more general terms.   I note once again that these are just notes, eager for debate and adjustment.

The key to the improvements required for corporate governance is a constitutional amendment (or similar, depending on each national situation) stating specifically that corporations do not have the same rights as human beings; they have only the specific and particular rights granted to them by legislative or executive action.

More specific changes would include a ban on quarterly reporting and forecasting; possibly the half-yearly reports, too.  This will enable a new cadre of senior executives to concentrate on managing their companies for the long-term rather than for short-term stock market speculation. The CEO of the world’s largest investment management firm, Larry Fink of BlackRock agrees that CEOs should “focus on creating long-term value instead of emphasizing quarterly targets.”  This is such a fundamental and important priority that I would impose severe penalties (including mandatory jail time) on CEOs for any breach.

Loans from the taxpayer would be permissible (see the recent Bombardier requests) but indulgence of this kind in state socialism would trigger a specific set of rules of governance. Until the loan has been completely repaid:

• no dividends or similar may be paid to shareholders;
• no share buy-backs or similar schemes are permitted;
• no increase in executive emoluments (of any and all kinds);
• no executive bonuses of any form.

Lay-offs totalling 5% or more of company personnel in any two-year period trigger the same rules as loans for a period of two years; this sanction shall not be concurrent with the loans’ rules. The two-year sanction for any breach of maximum lay-offs will be imposed at the end of any loan repayment.

Corporations may pay unlimited salaries and bonuses to executives, subject to sanctions not being in place. However, the portion of any emolument exceeding thirty (30) times the average non-executive wage or salary shall not be a deductible expense for purposes of determining the corporation’s taxes (in a corporation income tax situation), or shall be added to aggregate revenues (in the license scheme proposed earlier). This will assist the system to return to the Eisenhower days (for example) when profits from increased productivity were shared more equitably among all workers. Currently, CEO pay and benefits are on average more than 300+ times that of the average employee.

Bankruptcy rules for corporations must be changed to ensure that non-executive wages, salaries, and pensions are first in line for payment. Labour should not be a risk proposition. If you work, you must be paid. I believe trade suppliers should be paid next. Banks, other lenders, and investors have to bear the risks that their rewards and “free enterprise” suggests.

Finally, no corporation should be allowed to make political donations (in cash, in kind, through third-parties, etc. without limitation) without the express consent in advance of sixty percent (60%) of all shareholders both as to amount to be contributed, and to whom donated. This rule will stay in place until we rid ourselves of political donations altogether.

If we put these rules in place, then we will mitigate some of the worst excesses of modern capitalism. If they stay in place long enough, these changes will tend to lean us in the direction of mutual aid and co-operativism, which should be the ultimate aim.

Wise Words on Immigration

Capitalism = Inequality

 

“This is a truly staggering fact: Wall Street bonuses totaled $27.5 billion last year, which is 3 times more than the combined annual earnings of *all* American workers employed full-time at the federal minimum wage.” — Robert Reich.

That is a sentence that needs to be read over several times, really slowly, to let the meaning sink in.

I have written how I would deal with banks.

 

 

Voluntary Taxation

It is tax time again.  And yet again I make my pitch for an all-voluntary tax system.

Way back in June 2002, I proposed doing away with all non-voluntary taxation by replacing income and all other taxes with a consumption tax. This is what I wrote in 2002, and I still see little need to change the basic structure proposed:

The basic principles for a new tax scheme are that it should be essentially voluntary, and concerned with ensuring equal opportunities for all. Therefore, I would propose the elimination of all personal and corporate income taxes as they violate by their very nature the voluntary aspect of taxation. I propose to replace the revenue with an all-inclusive sales tax on goods and services with a few, well-defined exceptions (the figures below represent Vancouver costs of living and could be adjusted as required):

• all foods
• shelter (to $24,000/year rent or the first $700,000 of purchase)
• all non-cosmetic medical, dental and optical-health services
• all educational services
• financial services (bank charges etc) to $500/year
• legal services to $2,500/year

The sales tax should be a single percentage across all categories of goods and services in order to reduce accounting and bureaucratic requirements.

The use of the sales tax for the bulk of government revenues brings a great deal of volunteerism to the matter. The exceptions provide an important and necessary break for those goods and services which can be described as the necessities of life; above that, the more I choose to buy, the more taxes I choose to pay.  Rampant consumerism therefore becomes a tax liability.

On the other side of the ledger, also to the good, the simplicity of the scheme allows for huge bureaucratic savings in administration and zero non-compliance. The tax would also be levied on all capital transfers outside the jurisdiction. It will oblige tens of thousands of “tax lawyers” to find genuine productive employment.

All government activity should be categorized into line items that can be shown to have a direct bearing on the level of the sales tax. In this way, the people are enabled to make decisions about what sections of government can be further cut to reduce the level of taxation. Conversely, any additional work to be performed by the government can be readily calculated as an addition to the sales tax.

In other words, the cost of a government service will be immediately and directly calculable — and the people can make their judgments on whether to go ahead with it on that basis. It is one thing to say that a government program costs $600 million — an abstraction at best; it is quite another to say that program x will cause a rise in the sales tax by 1%.

In a capitalist system where the government bureaucracy acts as a nanny on so many issues, taxation of some sort is inevitable, as will be resistance to such taxation. The sales tax that I propose will allow the taxation system to operate on a voluntary basis, thus achieving considerably greater support and compliance.

It might be claimed that rich folks will simply remove their money from Canada to avoid the sales tax.  Possibly true, but in my scheme, the sales tax would apply to all such financial transfers from the moment the scheme is announced.

Finally, I believe that many political types concern themselves far too much with how much money people make. If we concentrate on the input (salaries, bonuses etc) there will always be those who can play fast and loose with the rules.  However, if you apply taxation to outputs (purchases, transfers etc), the returns will always be progressive: the more they spend, the more they’ll pay.

Setting Up A Workplace Co-op

As an anarchist, I am always interested in finding alternative (i.e. non-capitalist) ways of organising production and society.  The idea of worker co-operatives has always appealed to me as a step toward both an economy and a decision-making process based on mutual aid rather than exploitation.

I came across this really interesting video that covers a lot of ground about setting up a co-op and thought it worth sharing:

 

It has to be remembered that all of the organization discussed here is setting up within a capitalist economy; establishing it within a mutual aid model would need some tweaks.

However, variations of the basic model works at any scale, as I have discussed previously in regard to the banking industry.

Getting Around The Corporate Tax Dodge

Until we manage to mature into a society that can depend on mutual aid and cooperatives, we have to mitigate the abysmal effects of today’s market capitalism and the supra-national power of corporations.  Google, Amazon and many other international companies make billions of dollars in revenue from, say, sales in the UK, but manage to pay virtually no tax in the UK.  They do this through foreign ownership — sometimes through multiple countries — and so-called management fees that the UK operation has to pay to the home corporation. It has become a regular scandal in the UK and threatens to do the same elsewhere.

Centre-right politicians have suggested that lowering corporate tax rates will encourage more companies to stay in- house as it were.  That is just an excuse to make the rich richer.  There is a simpler and much more efficient way.

I suggest that corporate income taxes be eliminated completely. They should be replaced by a “license to operate” fee equal to, say, 10% of revenues earned in the country no matter where the head office is based. Simple to understand, simple to manage, and, I suspect, very difficult to get around.

Country of ownership becomes immediately irrelevant, and transfers to an offshore HQ will be pointless for tax purposes. Indeed, they may well create a double taxation situation in which those transfers become taxable revenue in the home country. It also gives corporations the right to NOT operate in any particular country if they choose to forgo the revenues.

Finally, I would make this tax law bullet-proof by including a provision that, should some smart accountant or lawyer find a loophole, then that loophole is closed retroactively.

Keeping Banks Safe For Our Money

As anyone who has read the papers or seen the news in the last few years knows, banks around the world have broken numerous serious laws, have had to be bailed out with taxpayers money, and yet still pay millions of dollars to inept executives and billions more to stockholders. Many of their problems involve their connection to complex financial transactions that do nothing but make money for already-rich individuals. There has to be a better way, and there is.

I would oblige all banks to become credit unions and I would strictly limit their functionality.

Credit unions are not-for-profit institutions cooperatively owned by their members. They operate solely for the benefit of their members rather than for outside shareholders, of whom there would be none.  Their senior management is elected by the members and their policies are offered up for approval at regular meetings of the membership. Senior management remuneration would require members’ approval. The billions of dollars that are currently paid out in dividends to outsiders would be used to increase services and lower costs for the members. Any surplus could be re-paid to the members or added to the credit union’s capital.

I would limit their functionality to the taking, managing and disbursement of members’ deposits, and to the issuance of personal loans (including credit cards) and personal mortgages.  Any member or corporation that required business loans, corporate mortgages, investments or insurance would turn to investment companies, mortgage brokers and insurance companies designed specifically for that function.

No one would be limited in their desire to engage in stock market or other investments.  But these would be handled entirely by companies separate from banks.   No longer would bank depositors’ cash be at risk in the marketplace for derivatives, for example.

Competition between credit unions, if such were needed, would become a function of service and accessibility.  I believe this would get us more branches on the streets and a more personalized service between member and bank.  It would bring banking back to the people, to a smaller scale that we can understand and control — after all, it is our money they are using.

 

Competition Is Evil

There are a lot of things wrong — evilly wrong — with modern consumer capitalism, and so many of them start with the idea that life and every part of it is a competition.

From the very beginning, as tiny tots, we are taught, trained, indoctrinated to compare ourselves with everyone around us.  School tests, school sports, school grades are all based on comparing one child to another.  “Jimmy trues hard and does his best” is apparently not good enough; there is always a “but he doesn’t keep up with the others” even if not said. Baby shows and kids’ talent shows are nothing more than expanded public versions of the same affect.

Keeping up with the Jones’s, keeping up with the Kardashians, and white supremacy are adult versions. Conspicuous consumption is a vital part of keeping score. My whole train of thought was started this afternoon by seeing a clickbait headline; “Fifteen wedding dresses that are better than Kate Middleton’s”.

On the other hand, we are all (except preening CEOs and entertainment stars) very cagey and secretive about our own pay cheques because we don’t want to be compared unfavourably with those around us.  We all want more, sometimes for need, but more often it is because we want more than or at least the same as John Doe; and that is because we have been indoctrinated to think that way.

Capitalism breeds inequality which breeds envy which drives competition, most of it unproductive and wasteful. There has to be a better way.

Reforming Corporate Governance

This is the third in a series of discussions about changes that need to be made to modern capitalism to protect the mass of humanity in advance of a full and revolutionary change to mutual aid and co-operativism. In the first, I proposed new taxation rules for corporations and in the second, I suggested changes in structure for banks; here I discuss corporate governance in more general terms.   I note once again that these are just notes, eager for debate and adjustment.

The key to the improvements required for corporate governance is a constitutional amendment (or similar, depending on each national situation) stating specifically that corporations do not have the same rights as human beings; they have only the specific and particular rights granted to them by legislative or executive action.

More specific changes would include a ban on quarterly reporting and forecasting; possibly the half-yearly reports, too.  This will enable a new cadre of senior executives to concentrate on managing their companies for the long-term rather than for short-term stock market speculation. The CEO of the world’s largest investment management firm, Larry Fink of BlackRock agrees that CEOs should “focus on creating long-term value instead of emphasizing quarterly targets.”  This is such a fundamental and important priority that I would impose severe penalties (including mandatory jail time) on CEOs for any breach.

Loans from the taxpayer would be permissible (see the current Bombardier requests) but indulgence of this kind in state socialism would trigger a specific set of rules of governance. Until the loan has been completely repaid:

• no dividends or similar may be paid to shareholders;
• no share buy-backs or similar schemes are permitted;
• no increase in executive emoluments (of any and all kinds);
• no executive bonuses of any form.

Lay-offs totalling 5% or more of company personnel in any two-year period trigger the same rules as loans for a period of two years; this sanction shall not be concurrent with the loans’ rules. The two-year sanction for any breach of maximum lay-offs will be imposed at the end of any loan repayment.

Corporations may pay unlimited salaries and bonuses to executives, subject to sanctions not being in place. However, the portion of any emolument exceeding thirty (30) times the average non-executive wage or salary shall not be a deductible expense for purposes of determining the corporation’s taxes (in a corporation income tax situation), or shall be added to aggregate revenues (in the license scheme proposed earlier). This will assist the system to return to the Eisenhower days (for example) when profits from increased productivity were shared more equitably among all workers. Currently, CEO pay and benefits are on average more than 300+ times that of the average employee.

Bankruptcy rules for corporations must be changed to ensure that non-executive wages, salaries, and pensions are first in line for payment. Labour should not be a risk proposition. If you work, you must be paid. I believe trade suppliers should be paid next. Banks, other lenders, and investors have to bear the risks that their rewards suggest.

Finally, no corporation should be allowed to make political donations (in cash, in kind, through third-parties, etc. without limitation) without the express consent in advance of sixty percent (60%) of all shareholders both as to amount to be contributed, and to whom donated. This rule will only stay in place until we rid ourselves of politial donations altogether.

If we put these rules in place, then we will mitigate some of the worst excesses of modern capitalism. If they stay in place long enough, these changes will tend to lean us in the direction of mutual aid and co-operativism, which should be the ultimate aim.