Fixing the World

All based on Good Greed & Enlightened Self-Interest:

1. Social Altruism Motivated by Profit
2. Making Peace as Good for the Economy as War Is
3. Designing a Consumerism Good for the Economy and for the Soul
4. Incentives For Healthy Living: Automatic Tax for All
5. Taxing the Disposal of Resource-Rich Consumer Items

Social Altruism Motivated by Profit

Usually what is good for society is not necessarily of direct benefit to any one company and so there is no given company which would invest in ensuing that this particualr good occur. However there are some cases where this is not the case: eg insurance companies attempt to prevent dangerous behavior by their clients since they will have to pay the medical expenses or death benefits. This is an example of what I call here 'social altruism motivated by profit'.

Similar mechanisms can be designed to prevent various forms of damage to the economy. Some people are a drain on the economy (some spend time in jail which is very expensive for the government, some don't work and instead collect governemnt payments and don't earn enough to pay tax), some produce gain (they open businesses which employ people, they earn salaries which are taxed). It's possible that intervention in the lives of some in the former category can help turn them into the latter type. If someone could make a success-linked profit on this transformation , they will be motivated to intervene effectively, so one needs to formulate a system where a private corporation can play this role.

For example: compute the eventual value to the economy of productive employment and gainful socially productive life, tax revenue etc, vs the cost of welfare payments, the justice system and incarceration costs, damage through crime etc: a private insurance corporation can then receive from the government the differential between the expected governmental savings and losses in return for proven successful intervention and conversion. For example, they can be assigned a geographical area or community where the average is of great economic loss, a known amount averaged over the years, and then br given a 10-year contract to change the situation and reap the reward.

Similarly for prevention of medical expenses, when extending life/improving health is a financial benefit to the economy, a way must be found to compute the benefit and have this economic savings accrue to a private company so that they will work effectively to keep their clients healthy. [Of course sometimes neglect is economically beneficial: an tooth extraction may be less expensive than a crown, a dead old person costs less than one in an old age home or on life support. However in many cases economic benefit to society lies in preventing disease etc.] and prolong their productive life span by helping them make wise choices, and to see a doctor when necessary early in the development of a condition rather than too late, as economically appropriate, etc. If companies would make a profit on this, they will do it, and if better results brings greater profit, they will do it effectively.

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Economics Questions/Proposals

Avi.Rabinowitz@nyu.edu

1. Social Engineering for Profit. Helping Big Business make lots of money by pre-emptive rehabilitation of the potentially non-productive.

2. War is Good for the Economy! So we need to find ways to make peace even more profitable

3. Consumerism: good for the economy but bad for the soul: Can one design a consumerism beneficial to both?

4. Automatic Tax for All (except if you have that medical checkup)

5. Tax on Disposing of Resource-Rich Consumer Objects as a means of incentivizing re-sale

1. Social Engineering for Profit. Helping Big Business make lots of money by pre-emptive rehabilitation of the potentially non-productive.

Idea: Just as insurance companies stimulate people to improve their health situation, fire safety etc, they should be encouraged to make money by helping potentially problematic people to achieve their productive potential. Challenge: how to create a system whereby they make money by causing young people in high-crime neighborhoods to choose education and productive lives.

Incarceration is expensive.

The potential for profit: Policing is expensive (and benefits even more so!). The criminal justice system - judges, DA’s etc - is expensive. On the other hand workers contribute to the economy by being productive and also pay taxes, so there is a huge gain to the economy if a young person goes into a profession rather than crime. There is no single company, industry or sector that gets enough of this as a profit to motivate it to ensure that this happens, but the economy as a whole certainly benefits: one needs to compute this expense and the loss of potential earnings to the economy carefully and then work out a way to make some of this available to private enterprise, to make it profitable for them to prevent people from going into crime etc.

Model: A futures-investment by insurance companies and investment banks, buying futures on a certain number of residents of certain communities, they get government money for each number below the expected criminal rate in a population, or of teenage pregnancy, or welfare etc – a percentage of the differential between the economy’s earning and expected spending on that population. They buy stock in companies which hire experts to work with municipalities, residents etc to put in place programs that will work, will achieve results. (Learn from programs with vouchers, privatized education, privately-run jails, new workfare programs etc.)

2.) War is Good for the Economy! So we need to find ways to make peace even more profitable

Although it has been said that war is often good for the economy, this is on the fac eof it counterintuitive. Huge amounts of effort are expended in manufacturing items which will be exploded, vast amounts of people are engaged only in killing, destroying etc: for counterpoint, imagine that all the manufacturing effort went to making needed medical equipment, and the manpower was used to help people in need.

Also, much destruction is caused and then rebuilding is necessary (via government spending of the peoples’ tax money). What are the elements of a war economy which are beneficial (manufacturers of weapons gain a lot, construction companies after the war etc? Can one learn from this how to stimulate a non-war economy to be beneficial?

Discussion: Do economists agree that war is in fact beneficial to economies? To certain economies? Only to great victors?

If yes, we need to look at the kinds of good effects, if any, that follow from wars and trying to figure out which if any can be adapted to peace time. Some are complex social/economic issues eg African-Americans and women achieved greater integration into the work force due to WWII, this may have benefited the economy in the long term.. trade openings and encouraging open free-trade and competition are also intensely political . but are there more-purely economic issues and ways that war has improved the economy in the real and long-term that are not generally employed in peace-time?

Of course a lot of jobs are created in the armaments and construction industry but all this is via government spending of the peoples’ tax money: so why is it good: is it a redistribution of the available money? Resources? Do people work longer for less pay during war? We shelled out tremendous amounts of money in WWI and afterwards to Europe to rebuild etc, why was this good for us?

Is it that people expect less profit on the stock market, and will do without certain items (rationing of products, or of fuel etc)

Is it all an illusion because times always seem better after a war, trade opportunities open with countries whose doors were closed due to war difficulties; war-related scientific R&D has beneficial spin-offs?

Peace-time state budget spending as in war-time will certainly in the short run bring about full-employment but it is unsustainable in the long-run.; trade openings can be achieved peacefully rather than by war; peace time scientific R&D is certainly to be encouraged. Rather than simply mimicking war conditions for pushing forward an economy, how can these be adapted appropriately?

3. Consumerism: good for the economy but bad for the soul: Can one design a consumerism beneficial to both?

Consumers are constantly encouraged – even exhorted - to purchase new items to stimulate the economy. But they don't really need (subjective definition of course) those items, so it is actually all a waste. Can't there be a way for the economy to be geared to productive purchases so that the economy is stimulated when people buy only needed items?

Not a committee to tell any particular individual what he or she is permitted to purchase, nor to 'objectively' determine what is and is not worthwhile.. Maybe educating people to think more deeply about what they need or not. But is there an economic theory which has pinpointed those things whose purchase would benefit an economy in a real and long-term sense as opposed to simply spending on newer electronic doodads and new fashion clothing?

As mentioned, having factories produce useful goods raises the standard of living, is better for an economy than having them produce things that explode themselves and others. Maybe the same goes for peace-time production of needed rather than un-needed goods: ie having factories produce needed goods raises the standard of living, is better for an economy than having them produce unneeded goods. Or is there nothing that people would want to buy of their own volition which is any better than what they are being encouraged to buy today. Or is there nothing that is better except for health and

education etc and people prefer doodads and fancier cars to health and education.

Instead of buying a new computer that does things you don't really need to do and does them faster, or a new designer dress, is it better for the economy that people invest in new businesses etc? Or is there not enough new business around to invest in? Or do people need to reward themselves for working, to motivate them to get on the train in the morning, and the shopping for (what I consider!) un-needed items?

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4. Automatic Tax for All (except if you have that medical checkup)

People die who would have lived had they gone for a checkup re cancers, heart etc. Many workers die of preventable diseases - this results in high hospital bills, insurance pay-outs, support for the family left behind etc: can't there be an economical way to prevent disease? (of course it is expensive to do so, and some workers are marginal and their death does not necessarily hurt the economy).

There can be tax on every person, with the amount of the tax rebated each year if the person went for their annual free checkup. Insurance companies and the corporations can be part of this.

If there are preventable conditions/diseases that are economical to treat, (eg the patient will contribute to the economy if they recover, and their loss will necessitate payments to dependants etc) then perhaps there should be automatic insurance for all to cover the detection of this disease.

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5. Tax on Disposing of Resource-Rich Consumer Objects as a means of incentivizing re-sale

So much is thrown out that either could be of use to others but are not sold on eBay because the shipping costs etc are too high eg old sofas, , or there are too many of them avalable eg books, some have little value here but would be grabbed up in a poor country if not for shipping costs, eg five-year old computers, some cannot be sold for health reasons eg, food, pharmaceuticals. Creating any of these products involves tremendous use of natural resources: people plant trees, the sun and earth and rain work for yers to produce them, people then chop the trees down, use energy to power the saws, and use gas to haul them, energy to chop/saw them up into boards, energy to transport them to factories where they are made into furniture, transported to stores, to the home etc. Work is put in at all stages; loggers, truckers, carpenters, salespeople etc, and then after a relatively short while it is ground to bits and left in a garbage dump to rot and turn eventually into earth. The same for a computer, a book, food.

There should perhaps be a tax on natural resources that are wasted – if the resources are used to grow food and the food is eaten, fine, but if it is thrown out …. If it used to make a couch or even a stupid toy or firewood, ok, but if the resulting product is simply discarded before a pre-detemrined time period then one need pay a tax…… but one cannot make it too expensive or difficult, because then people will simply try to dispose of their stuff surreptitiously….. using the system should confer an advantage…

Unfortunately it isn't economical to distribute this stuff to the people who need it, either because the equipment needs repair which is too expensive, or they are far away and transport time and effort costs too much, and storing it until a ‘needer’ is located and comes to pick it up is not economical – storage costs money, even if it is your home, you are paying rent on that space. But throwing stuff away costs money too…..

One needs to have a calculation of the expenses involved in disposing of garbage not sold as landfill. For example, the land itself could instead be used for commercial purposes, the cost of hauling the garbage, including the trucks and the pensions and health benefits of the workers etc, and the cost of environmental clean-up, and health inspectors etc etc. If people had to bear the costs directly for each sofa or refrigerator they disposed of rather than as part of municipal taxes this of course affects the costs of redistributing used stuff - but I don't know if it would affect it sufficiently significantly. (Also, there would be a cost to the bureaucracy which would be set up to assess and implement the fee for disposal..)

In an unintended way the recycling of plastic is a great idea: wealthier people do not care enough about 20 cents or a dollar to bother going to the store to get a deposit refund, while the poorest people collect the bottles and get the money, so the money goes directly from the wealthy in a voluntary tax paid directly to the poorest people, without any government intervention; if there were government involved, only a negligible percentage of the deposit money would be left for the poor after expenses and bureaucrats’ salaries! But without the government regulation about disposal, and inspectors giving fines etc, this system wouldn’t work.

There should be kind of an international e bay for thrown out stuff with a financial incentive to the disposer to use this service. Just as the US govt set up the Internet and then let it stand on its own, perhaps a government-organized collection, storage and inventory control facility. Instead of collecting only garbage, and plastic and paper for recycling, collect also furniture, clothing etc; and catalogue and store it. Perhaps electricians and carpenters etc hired to fix things, being paid from the profit of selling the stuff and the tax paid by those individuals and companies paying for the right to throw out stuff without recycling it.

Also, manufacturers could make some products more modular and therefore more easily fixable by second-hand purchasers, or have the components more readily usable in other ways when the product is unusable as-is (like transplanting organs from donors who died) and in return they get a tax break to cover the extra cost. The consumer might also be willing to pay more for the product knowing that there is a market for 10-year-old modular refrigerators. Of course manufacturers prefer planned obsolescence, but perhaps there is a way to make it profitable for them to benefit, eg by getting some percentage of the resale amount, or a rebate on their taxes based on the amounts of money generated by re-sales of their equipment etc.

I don't know if this is too big-brother but if each large item when purchased was registered to the owner, as a car would, and then if it is disposed of it is recorded, and a tax is paid for disposal, and if it is

sold it is recorded, and the amount of sale is recorded and tax is paid on it.. it is possible and relatively simple with high speed computers/Internet etc but perhaps too invasive (like EZ pass and credit cards keeping records of everything) . But some creative thinking along these lines, not necessarily exactly these ideas as I write them. Every plan will have some drawback which will have some creative solution which will engender other problems which . Etc, hopefully converging to a useful solution.