Taxation is an interesting facet of our society. Economists view taxes as a disincentive in a free market, and rightly so. Taxes increase the price of a product or service, making it less desirable. Yet, when you think about what we tax in this country, it’s mostly things we desire more of – income, profits, sales, et cetera. This odd behavior should be questioned, even more so today when every budget (state, city, federal) seems to be facing seriously tenuous times.

I took the train down to Oregon this last weekend to see my sister graduate from college. While there I stayed with Rob Dietz, Executive Director of CASSE and a good friend of mine. He handed me a very modest looking magazine called Sockeye. I am sure I will be drawing material from this one issue for some time (check it out, amazing articles). For now I want to talk about tax shifting, as mentioned in the article by Alan Durning and Amy Chan, “Making Prices Tell The Truth: Shifting Taxes from Bads to Goods.” (pdf)

The Imbalance of the Free Market

Taxes have the power of acting as a means of balancing what are called “market inefficiencies,” things in the free market system that generate negative externalities. These are unwanted side effects that are not taken into account in a product, service or activity. A great example of this is any fossil fuel, let’s take Coal for instance.

Let’s imagine a coal power plant starts leeching mercury into a watershed and a city water planet down river takes it in (coal accounts for most of the mercury in our waterways). The coal power plant is not paying to filter this mercury out, nor is it paying for all the damage that could occur from the toxin leeching into the ecosystems. Because the producer does not pay for the negative externalities it is left out of the decision to pursue coal power.

If these externalities were eliminated by charging or compensating for them, then they could be factored into the decision making process. This is especially important as all too often these become costs placed upon the society instead of the producer (e.g. the city water plant in the above example has to filter out the mercury from its water source). If these prices were added into coal’s price they would eventually make coal production to costly to be worthwhile.

One of the best ways to internalize these negatives into our free market is to increase their expense with taxes to help offset costs like oil spill clean ups, health care or water treatment.

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Banks should protect our money, not fleece us for their profit

Our money is loaned into existence and then must be paid back, plus interest. This interest can only come by earning (taking) money from other loans in the system, thereby installing inherit competition and scarcity in our society. Could you imagine a society in which we didn’t have to compete for a scarce amount of funds? How could this alter our communities or the way we treat each other?

An ethical banking system is one that upholds the value of the people who use it. Instead of a institution that values only profit, an ethical bank would value the people that support it. This really shouldn’t be too crazy of an idea, but our banks today do everything in their power to leverage greater profits. The recent economic crash being a prime example. We should support and create banks that support our societal and economic well being, not their CEO bonus checks.

The Reason We Need It

It seems like second nature to me that systems we create as a society should function with the ethics we value, but there is obvious room for improvement. When a lot of our organizations and industries started the room for growth seemed limitless, so it was much easier to gain advantage in the market and grow without sacrificing ethics. Like many things in this era, we’ve run out of that room and the only way to make a higher market share this year and next year is to start finding ethically gray (or black areas) for expansion (e.g. derivatives).

Paper exchanging for paper is now 20 times greater than exchanges of paper for real commodities. This distortion of value from real wealth to phantom wealth encourages a financially dependent system, driving up debt and down real value. Eventually those claims on wealth will be exchanged for actual wealth – even if there are no longer enough. An ethical banking system supports a more realistic approach to real wealth and the money that represents it – as well as environmental concerns with investment and social justice.

An Ethical Banking System is one that encourages stable and equal amounts of material wealth. If you haven’t clued into it yet, our current banking organizations do not function in an ethical way. Our banking system encourages debt, competition, scarcity, and unequal distributions of wealth. What if we created a bank in line with our values? One that supported the people, community, and real wealth?

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Taking inspiration from economist James Tobin, the new UK campaign for a “Robin Hood Tax” is a great example of the type of social movement for economic reform we need across the world. A global Robin Hood tax is a crucial part of transition from a growth-based economy to one that is people-based. This type of financial policy can be instuted to actually help eliminate poverty and hunger, fight climate change, and put social equality into a system that rewards greed instead of good.

By taxing a minuscule amount of each financial transaction (we’re talking half a percent – 0.5%) you could raise up to $500 billion or more a year, reduce speculative investing (the kind that promoted the recent Great Recession), and put the banks in check (those guys we just bought out with taxpayer money that made $5 million bonuses).

Check out the video here:

One year ago I started writing out of passion (and some anger). My how things have evolved! This blog has seen 75 posts in the last year, some of them great, some of them alright, some perhaps less so. I have tried my best to write about the issues important to me: a sustainable society, a healthier planet, a ethcial economy, and a more just world.

I have also learned so much about life, happiness, sustainability, and where I want to be in the world. More importantly, I have learned there is quite a large group of people out there feeling the same way, and we are all beginning to see the division between economic growth and true prosperity. What do you think? I would really value your input on ways I could make this blog better, both in function and in form. Please comment on this post or email me!

Since today marks Steady State Revolution‘s one year blogiversary I decided to take a look at the very first post and revise it with some fresh ideas (and hopefully improved writing skill). Here’s the 75th post on the 1-year blogiversary!

Citizen or Consumer?

The US Consumer Unit

Yesterday was the start of the “Christmas Shopping Season.” Aside from the typical trampling of an elderly person at a Wal-mart, this day signifies the beginning of the American Consumer’s busiest time of the year. Between today and New Years we Americans will increase our waste by 25%.

Each year we start sooner and sooner with our Christmas consumption, this year marketers started preparing for the season around Halloween. The average consumer spends about $1,100 a year on gifts, over $800 worth of which is holiday-related purchases. This means 73% of all our gift-related buying is done in the holiday season. That’s a lot of consumption.

Consumerism accounts for a large cog in the economy. Consumption drives the sales of goods, which is incentive to produce more goods. Producing goods is the basis our growth model. In order to grow the throughput (GDP) of our economy, we must increase the production and consumption cycle. What better way to do so than to make it your intuitive nature to spend? What if we could find a way to move people from identifying as themselves, or their jobs, but instead as what they buy? From this the American Consumer is born.

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You too can try this experiment in your house with some simple materials! This is a great short and informative video about neoliberalism, the economic thought that has been triumphed for awhile, that encourages more private economic control instead of public. Of course, we might point out that the economic system is not sustainable – neither ecologically or financially.  Enjoy this video:

Copenhagen Needs Some Help

The countdown is on with now just under 55 days until the much anxiously awaited Copenhagen Climate Conference where world leaders (we hope it’s the leaders, not delegates) will work on drafting a follow-up to the Kyoto Protocol that expires in 2012 (and a serious agreement is needed).

Nations know that there is no excuse for waiting, binding action must be taken at Copenhagen. Not only to maintain a decent standard of living and healthy planet for ourselves, but for our children. However, in order to realize this green dream we must recognize the inherent problems with our current system. Otherwise, we will continue to feed the growth machine without making ourselves happier and while making the world worse for our children.

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The New Economics Foundation‘s blog posted this last Friday about creating a salary cap for everyone. Steady state policies would encourage a maximum and minimum wage in order to create a fair distribution of wealth.

Creating a wage cap changes the focus – another common theme in our discussions. We have seen the destruction created in the wake of profit maximization policies all around our recession-laded land. Instead of constantly trying to make more money (phantom wealth), we can worry about more important issues:

“an executive’s performance has to be judged against achievements other than personal accumulation. So, instead of status derived from higher incomes, the desire to excel can instead be directed toward the social contribution and environmental performance of the bank or company involved.”

This does not remove the ability for you to receive promotions and bonuses, or further your career. It is a matter of scale – it is unjust for a CEO to make 500 times their entry level employee, they are not actually worth 500 other employees.

As Herman Daly and Joshua Farley put it,

“Distribution of wealth is about how we divide up the economic pie, and it’s critically important for a steady state economy in which the pie is not growing. Economic growth has been used as an excuse to avoid dealing with poverty. Without growth, there are no more excuses. People who are too poor tend not to care about sustainability. If daily life is a struggle for basic needs, there’s not much time or energy to consider the future. On the flipside, people who are excessively wealthy tend to consume unsustainably.

A key policy for ensuring fair distribution of wealth is to establish a cap on personal income. Such a cap would eliminate the worst cases of conspicuous consumption and curb overall throughput of resources in the economy. An income cap would also prevent the social unrest that comes from huge gaps between the ‘haves’ and the ‘have nots.’” (Ecological Economics)

Read the nef Triple Crunch blog post here.

Update August 18, 2009: nef’s follow-up post and the movement you should support to create a High Pay Commission.

Jon Cramer on Daily Show

The financial crisis is largely attributed to the collapse of the housing market and reckless leveraging of bad securities. Recently Jon Stewart began a campaign on The Daily Show to expose the effects of our corporate-owned media’s influence on this crisis, namely CNN (no link to them for a reason).

Our media should be a protected, locally-sourced, community-driven industry. It should not be corporate owned, money-driven. Radio and TV were once a community service, now they are a community annoyance.

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