Monday, January 31, 2011

ISP Usage Based Billing is reason to leave Ontario and Canada

The CRTC's decision to allow BCE to protect its television properties and services by forcing all ISPs to charge $1.90 per gb (their cost is under $.01) over 25gb per month rate is a good reason for citizens to abandon Ontario and Canada.  Or perhaps coming back enough only to collect healthcare and old age benefits.

By creating exorbitantly expensive bandwidth consumption rates compared to other first world nations, it deprives Ontarians from the consumption benefits, and choice of services, enjoyed elsewhere.  In addition, it harms innovation and entrepreneurship in information technology industries, severely incentivizing that talent to leave for civilized and developed jurisdictions, and harms virtually all companies that use the internet as part of their business.

By rejecting information technology professionals and enthusiasts from enjoying life in Canada and Ontario, by increasing their internet bills $500-$1000 this year, and easily $2000+ in comming years compared to the benefits that could be enjoyed elsewhere in the world, Ontarians should reject Ontario and possibly Canada for this blatant favoritism to a monopolist.  Those regions of the world almost as great as Ontario to live and work in, surpass it if a $2000+/year comparative cost is included.

I urge the Ontario legislature to pass a monopolist tax of 80% or 90% or 100% on all UBB revenues, so that BCE rethinks its economic necessity.

Friday, January 14, 2011

Canadian basic income vs guaranteed income

Hugh Segal a Canadian senator has been proposing a guaranteed income for Canadians of $20k.  Guaranteed income means that if you make less than 20k, the government will provide you with the DIFFERENCE so that your total income is 20k only if it would be less than 20k without the supplement.  Universal basic income (UBI) on the other hand, is a cash award (likely much smaller than 20k) for all citizens to do with as they wish.

Guaranteed income is a patently horrible idea.  First, it creates a welfare trap.  It is a massive disincentive to work if every dollar you earn means losing a dollar in benefits.  It takes effort and experience to be qualified to earn more than $24-30k per year, and that effort becomes less attractive if you are taxed at 100% for your first 20k in earnings.  An even more important deathknell to the concept is the potential for tax fraud and riskless speculation.  First riskless speculation, as one example of the canadian tax code, gains and losses from short selling stocks are treated as ordinary income, and so making large bets against Canadian companies would have an outcome of heads I win, tails I break even because guaranteed income gives me back what i lost.  The tax fraud opportunities are similarly investment based, where apparent losses are reinbursed through guaranteed income, and it further promotes untaxed underground economic activity.

Basic income on the other hand is a spectacular idea.  There is no qualification for it, and so no potential for fraud or disincentive to work.  Seniors already receive it through OAS (old age security) program. is an advocacy site that does a good job detailing the case for basic income, and offers a math analysis using 2000 figures.  While I applaud the site's effort to partition basic income (and calculate impact) among adults, seniors and children, I strongly disagree with the proposed basic income levels (10k per adult 15k per couple) as being much too high.

Initial Target Basic income should be a survival level.
$6000 per adult, even in Toronto can afford renting a room ($300-$400/mo) from strangers at market rates, and food.  Granted not much else.  I'm about to show why this number should have strong political right wing support for it.  From page 8 of this UBI advocacy paper, in 2004,

The total Canadian government (both federal and provincial) transfer payments to persons was 130 BILLION dollars, more than double the MacDonald Commission numbers – excluding health care and education. This included all programmes mentioned plus the universal GST (our value added tax) credit. So replacing some of these with a more humane and efficient basic income is hardly a question of wasteful or even new spending.
The largest components of these transfer payments are UI, OAS and welfare. At 25M Canadians over 18, 130B is $5200 per adult.  It is unclear whether the $130B includes the administrative overhead of the agencies  that oversee the transfer programs (and it probably at last excludes union pension obligations), but assuming it does, it means that eliminating all of those transfer programs and replacing them with a $5200 basic income is revenue neutral.

But its much rosier than that.  $5200 in AFTER TAX basic income is revenue neutral.  If we assume that on average, most basic income recipients would have total income above $38k (and use that tax bracket), and with the marginal tax rate for Ontario of 33.30%, then the actual revenue neutral pretax basic income levels we could afford are $7796.10 per person.  So replacing transfer payments with $6000 per adult basic income is actually a significant government expense reduction.  Providing bonuses for seniors and children on top of the $6000 can still be revenue neutral.  Not only is it revenue neutral, but each taxpayer is getting back $6000 (pretax) as well.  Arguing for UBI above $6000 should be deferred until the effects of this initial UBI level can be appreciated.

Basic income has substantial economic and social benefits.  First it is not a poverty program, so it doesn't trap the poor into continuing qualifying.  It replaces many government and charity social services with private and cooperative ones.  It is much easier to help the homeless, depressed and disabled if they have $6000 to contribute to room and board, or for them to band together to share shelter or build communities.

Eliminating desperation through UBI means a whole lot of police and regulation requirements become less necessary.  Desperation is the prime motivator for violent crime.  Desperation and power imbalances are the reason we have oppression laws.  Minimum wage laws become no longer necessary.  So, the young and poor can gain more opportunities for experience and on-the-job training.  Domestic violence accusations without evidence, where intervention is as bad or worse than non-intervention, is based on dated myths that women are economically oppressed by spouses, and so we can shift towards non-judicial-intervention solutions (advise them to separate).  So basic income would help municipal budgets as well, by reducing large public and social services and social costs.

There are more important, but less well understood, economic benefits as well.  Citizens can consume and invest more, because the safety net of basic income means they need to set aside less for emergency or long term unemployment.  The economist Keynes noted that economic activity grows as the multiplier effect (the speed/velocity at which people spend their earned income) grows.  Less risk aversion to spending means increased velocity of money.  Less risk aversion due to the safety net of UBI leads to many more economic benefits:  It is easier to fund higher education.  It is easier to invest or start a small business with lower fixed salary if you have basic income support.  It is easier for employees to consider commission based or profit sharing based compensation instead of fixed salaries.  Both of these (less overhead) means it is easier to make a business case for loans to your business.  The benefits of cooperating for survival create greater sense of community through more relationships, and an interconnected pool of people to cooperate on business ventures and help themselves out of poverty.

There are also some left wing/pro-labour economic arguments for basic income, and higher than survival rate basic income.  First, the only mechanism that exists to counteract wealth inequality towards industrialists is wage inflation.  If some people drop out of the labour pool due to the availability of basic income, then it raises competitive wage and benefits balance for those that remain in the labour pool.  (Which incidentally probably attracts more people back into the labour pool).  In fact, the only criticism of basic income shown on the wikipedia page is that without benefit or wage concessions, labour tends to volunteer fewer hours to their employer.

A $6000 basic income to all Canadian adults is less expensive than the bureaucratic hierarchy that currently oversees poverty and personal transfer payment programmes.  It further brings substantial social and economic benefits that will make Canada strong, successful and happy.

Wednesday, January 12, 2011

Moderate Anarchy

Even anarchist communities would quickly institute regulation against murder and theft.  Human rights must be inclusive of property rights, as the right not to be murdered or abused is your property, with theoretically your right to bargain it away.  Even leftist versions of anarchy that promote sharing, circles of trust, or gift economies are implicitly recognizing property rights as communal property, membership property, or the social esteem (assets) of expected returned favours.  A commune must retain the right to sell itself either in whole or in expanded membership, even if it may choose to gift those rights away.  Without the right there is no incentive to invest in the commune.

The only form of anarchy that doesn't recognize property rights whether or not they admit it, is nihilism.  The state/media portrayal of anarchists as destroyers of everything ostensibly under the pretext of wanting to loot property lawlessly.  While such people exist, and arguably the most militant revolutionaries are those that seek the greatest power or greatest power vacuum under which they aim to personally profit, anarchism is essentially an idealist framework founded on liberty and voluntaryism.

Laws against violence and theft are easy to accept voluntarily.  The alternative is amassing or joining the strongest armies to fight for what little property exists, and employing people in the security or brigandry industry means they are not employed in creating property and value.  Once we accept that there needs to be regulation and enforcement against violence and theft, we accept that there must be laws, police and courts.  Privatising these is an impossibility, because the rich white gated community protection force can only serve its clients instead of idealist law, and state oppression is simply replaced with private oppression.

Accepting law, courts and police doesn't mean accepting a state, even though hardly anyone realizes this yet.  One solution, is to simply prevent all other legislation than violence and theft prevention.  Legislation is the tool by which the state circumvents all mandates and checks on its power.  Its irrelevant that the original US constitutional convention specifically mandated federal law to be as minimal as possible, all opportunities to expand federal power through legislation are taken with impunity.  Its irrelevant that there are independent branches of government who pretend to act as checks and balances if politicians have higher loyalty to their parties, and if the branches and parties can gain more power through collusion rather than opposition.

Having accepted laws and enforcement against violence and theft are worthwhile, what do we do when 12 year olds drag race cars drunk through school zones repeatedly causing death to themselves and pedestrian children?  Legislating driving privileges based on maturity, sobriety, and perhaps proven capacity would become popular, with no obvious alternative solution to preventing the harm.  Similarly, regulating stock (and other) markets such that buyers and sellers have a minimum amount of cash or assets to place trades is better for the market than if people are constantly dealing with fraudulent or insolvent counterparties.  Also similarly, its normal for people to prefer regulation aimed at preventing pollution and industrial disasters over seeking compensation for union carbide bhopal or bp event horizon oil spill type events on the grounds that preventing harm is better than compensating harm, and there is no guarantee that a negligent party has the capacity to compensate fully its victims.

Even though we have strong arguments for popular legislation, there is no reason whatsoever for these regulatory bodies to be hierarchically structured under one executive.  By making regulatory agencies independent, and as much as possible, each individual regulatory (sub) legislation independent, we prevent a state aparatus from using all of its tentacles to oppress its citizens.  By making these regulatory or legislative silos accountable to the electorate, their efficiency and necessity needs to always be justified.

Natural governance uses the term natural in its sense of truth and correctness.  It presumes the primal value of freedom and presumes that society should be a voluntary association for the mutual benefit of its members, and not its leadership.  Rather than eliminating all leadership, the natural solution is to have justified and accountable leadership on narrow mandates.  This provides a natural balance in providing social services that are essential or at least of value, and limiting the power and expense of government.

Tuesday, January 11, 2011

High Tax Libertarianism

Natural Governance proposes both high progressive taxation system and small libertarian government.  It is libertarian because it both breaks down government into small independent electorally accountable functions without the power to expand their powers legislatively, and distributes the surpluses associated with eliminating government functions back to the people.

The impossibility of legislative expansion of powers, or concentration of power either hierarchically or to single points of corruption means that all public (government) expansion must be through electoral majority, and the fact that every voter receives a direct cash payment for reducing government services or choosing cheaper regulation means that there are strong forces to limit public/social regulation.

At the same time, obvious and serious objections to libertarianism/anarchism are considered and addressed.  Private police forces are unworkable and simply another name for armed gangs serving their customers.  Wealth redistribution is actually a powerful economic development and social cohesion force.  It is socially cohesive in that it placates violent crime and social unrest.  Progressive taxation policies were largely the result of anarchist and communist revolutionaries, and is substantially the reason for national civility, docility, and conformity in 20th century OECD nations.  It is economically developing because wealth redistribution empowers more consumers.  We each need only one car, shelter, tv and phone, and have limits on drink and food desires, and so necessarily have the power to produce and sell more goods if all can afford them, rather than if few can afford hundreds of them.

A safety net conforming to libertarian principles is unconditional basic income.  For Americans, elimination of all government functions except for the IRS could lead it to distribute its tax revenue as $10,000 to each adult citizen.  It is libertarian and idealist in principle because no authority, discrimination or corruption is used to determine or qualify the recipient or pilfer administrative overhead in providing the redistribution.  Concern for and prevention of poverty are inherent popular fears of accepting libertarian principles, and so marrying basic income to systemic pressures to reduce the size and authority of the state serves to overcome the only practical objection to libertarianism.

Regulation is not inherently bad.  All necessary/appreciated regulation is a direct result of events that occurred in its absence.  Expansion of government and regulation made without accountability is evil and corrupt, but cannot be stopped in our current political systems because each individual law and program or enforcement policy is not important enough to determine the elected king of the hierarchy that produced it.  We are all too removed from political action to affect anything.  The only way to change ineffectual political action is make any law or social program a directly accountable function with no possibility of self expansion of the function.

Taxation is also not inherently bad.  Higher progressive rates are justified in being less of an inconvenience on the very successful.  All financial success is due mostly to the cooperation of the society that you extracted your surpluses from.  Other taxes (than income taxes) can also serve to direct social goals with invisible hands.  Taxes on pollutants or personally destructive behaviour can serve to both curb their consumption and fund society or recoup social costs.

Monday, January 10, 2011

Natural Governance

Natural Governance is the outcome of designing governance from the ground up.  The principles are similar to anarchist ideals, but also the ideals of democracy we are led to believe exist in grade school or from politicians.  These principles are:

  • Free Association by equal members.  Administrators are elected to serve the membership rather than rule over them.
  • Minimization of sovereignty.  Protection of membership from external aggression does not imply protection of the rulership from change or influence.
  • Secession and recall must be a recourse for freely associated members to maintain freedom.
  • Recognition of points of corruption in politics and rulerships.  The ease of empty promises, capturing unnaccountable regulators, and serving powerful interests ahead of social interests.

The primary solution is straightforward.  Independent governance silos as fine grained as practical, are to be elected on specific mandate and budgets.  This means that the head of the FDA and head of the military are each elected and accountable to the people and court review of their chosen budget and mandate, and have no relationship to each other or to a greater hierarchy.

There is no need for a legislative branch.  All laws and regulations are created by existing or newly created accountable governance silos.  A proposed silo can be as simple as a study to examine the impact of proposed legislation or program or policy.  Legislative branches are incapable of providing checks and balances if they are loyal to political parties and/or the institution of government.

There is no need for voter anonymity.  Voters or their chosen delegates can base their votes on principle or bribes.  There are no fixed terms, so buying a vote is only useful until it is paid for.  No anonymity means voter fraud is less likely, and voting can be done remotely and electronically.  Support for a delegate or proposal can be withdrawn at any time.

A governance silo can apply regionally and supercede a larger regional/national regulations or associations.  Natural governance supercedes nations or even national associations, replacing hierarchical subservience with membership in multiple individual regulatory associations.  Membership in a regulatory association may still be democratically imposed on the minority.

The chaotic guidance of Invisible hands is what Adam Smith glorified in the free market.  Goods and services innovated and produced based on consumer acceptance.  Ideas to provide value (as efficiently as possible) to society are allowed to spring up without central planning or approval.  Natural Governance applies the same principles to social policy where voter choice of every idea and initiative is on each individual idea/initiative's merits, and efficient execution of policy is needed to keep voter-supported governance of that policy.  Academics and truth proponents can thus play a much stronger role in society evaluating proposals and directly shaping policy.

Capturing regulators (having the regulators serve the industry/groups it is charged in policing) is easy under a hierarchical state, because any corruption or inneffectuality of an agency has no repercussions on the elected government.  No US presidential campaign ever includes projected appointments and mandate of the SEC, FEC, or FDA.  Therefore, politics and contributors determine their mandates without any electoral consequences.  Natural Governance provides the mandate's proponent with the authority to execute the elected mandate, and thus complete accountability for it.

The state and society supposedly share the same values and goals, though the state unfairly asserts its primacy.  Weakening the state can enhance social value, and prominence of society in competition with others.  Natural Governance is thus of national strategic importance in achieving social and economic prominence and relative dominance  over competing societies, by the simple virtue of being more desirable to join and remain in such society.  The naive implication is that a weaker state makes a stronger nation, and everyone should warmly embrace the concept.

Regulation means all laws and powers, (and, distinct but related, the enforcement thereof).  With popular determined regulation, comes the possibility to regulate government/regulator power.  Governance silos require common enforcement resources.  Enforcement agency mandates should still be elected, but they have a simple honest administration mandate.  They exist mostly as a an efficiency mechanism that murder regulations and robbery regulations can be enforced more efficiently within the same police agency.  The enforcement agency's budget is the sum of all funding assigned by governance silos that utilize the agency.

The main regulation of the government silos comes from philosophical opposition to the silo's mandate.  While one person can head multiple silos, it can be easy to separate silos into narrow divisions.  For instance, the EPA can have individual silos for each industry.  Driving regulations can branch off pilot programs for radical theories promoting either sharp spikes fixed on drivers steering wheels, or uncontrolled intersections.  Philosophical objection to mandates is manifested by proposing narrower mandates, or proposing competing mandates that can be implemented in parallel or in pilot locations, and receiving electoral support to do so.  The other regulation of governance silos involves regulation of mandate and budget execution.  Court or electoral challenges can be made to recall or replace the silo administratorship based on execution failures of its electorally promised mandate.

Starting Points
The obvious starting point is to simply transform all agencies, departments and ministry heads into elected silo heads.  But one election option must be to remove a department or program.  We can model an egalitarian nation as an egalitarian enterprise.  Progressive taxation is universally supported on the grounds of wealth redistribution, which happens to serve the industrious by providing more customers with the means to purchase the economic value they contribute.  In practice however, relatively few funds are distributed to the less wealthy because they are instead spent on government programs, only some of which expensively determine who is to be given funds.  So an alternative starting point is to treat tax revenue as belonging in equal share to all citizens, and absent a reason to spend it, redistribute it to all in equal shares as "basic social income".  This is a marriage of progressive and libertarian ideals.  It also provides a universal safety net that lessens desperation and the opportunity to prey on desperation, and allows more risk taking.  This implies very static tax policies.

A libertarian myth is that community funded enterprise is necessarily inefficient.   "Government" provided services such as healthcare and roads have several cost efficiencies over private services.  Savings from lack of metering (measuring each consumers use), lack of a sales transaction (education and convincing time), lack of cash security and handling, and no built-in profit markup.  These advantages mean that it is completely feasible for public services to be approved by voters and seen as an attractive option and worth foregoing part of their share of basic social income to support those services.  At the same time, those services must be provided efficiently to continue receiving support, and an ever expanding wasteful empire becomes constrained.

The most obvious services that would likely be dropped in favour of higher basic income include welfare, unemployment insurance, old age assistance, and military offense expenditures.  The biggest problem with welfare and UI is that it provides a massive disincentive to work.  Working means losing benefits.  Basic income has no demonstrated-need conditions.  Fixed tax rates and basic income happen to self regulate the economy.  There's no need for minimum wage laws.  If basic income is sufficient to remove people from the labour pool, then the labour pool's bargaining power is raised, and may attract more people to the labour pool.  If the economy does poorly, and each's basic income goes down due to lower tax revenues, then again the labour pool will tend to go up out of necessity and wages adjust down to the economy.

One regulation model to rule them all
Government and private sectors have always been intertwined through regulation of the private sector.  A model that maximizes both access to services and efficiency and effectiveness of those services is to regulate standards for those services in exchange for partly subsidizing them for consumers and provide low interest loans (by the community/nation) to consumers for purchasing the service.  Healthcare and education are considered by most as essential social services.  The above formula guarantees access to those services to all.  However, by insisting on a personally accountable portion of the costs to service users, there is a "market" incentive for the user to verify that the service is at least useful if not necessary.  The mechanism promotes efficient and effective services, and curbs the most serious fraud opportunities (phantom services).  It further shifts much of the funding for public socially desirable services away from taxes and towards users.  This, in addition to being fair (users pay more than non users), has the advantage of making programs that benefit some groups more than others more palatable to be partly publicly funded (by all through elections).  User loans can use the natural finance soft loan concept of being repaid based on ability through what is tantamount to surtaxes on income.  Unregulated businesses can tap into soft loan financing for their customers as well.