Walk the talk

One person asked me, upon reading my anti-capitalism pro-free market essay series, for ideas on how individuals might help contribute in daily life.

Walking the walk on two of the big points is easy: shop at independant stores instead of chains, don't buy IPOs, and if you create something (art, music, software, inventions), make it creative commons / open source / patent it but then licence it for free.

As to walking the walk on real estate: I don't really think it's applicable. There is some political momentum behind changing the corporate system after Citizen's United, and there is piracy/file sharing undermining copyright, but there is exactly zero movement behind one person one parcel.
Thats not even a phrase that exists. I just made it up, just now, as I was typing!
But there really is no inbetween. Nothing any one person does (short of the solution proposed in Manna) is going to have more than zero effect on the rest of the world.
The closest I imagine one could possibly come would be buying rental properties, and renting them at below market rent, even at cost (though with hidden irregular costs, like vacancies and major maintenance, factored in). One could opt out, but that would do as little to change the system or benefit anyone as opting out of voting does (i.e. exactly none, and possibly counter-productive, since then you are diluting your own potential influence)

For one person one parcel, I think the best anyone could do right now, even a billionaire, would be to publicize and promote the idea, because the first step would be getting the idea into the minds of millions of people. Its not quite communism, not quite libertarianism, not quite anarchy, not quite free market. As far as I know, its something no one has ever thought of before.

There is one other thing - probably the single biggest change to our system, (short of one person one parcel) would be for working hours to be adjusted downward to match increases in efficiency.
That is something we could easily do, if we were so inclined, just like we reduced working hours from 60-80 per week at the turn of the last century down to 40-50 hours today, as the industrial revolution vastly increased output per worker.

Today, computers and the internet and robots, plus outsourcing and corporate consolidation, not to mention quickly advancing 3D printing, has increased productivity far more than steam power and assembly lines ever did, yet we have never adjusted the 40 hour work week to match.  Our insanely massive income inequality, inflation adjusted income stagnation, and steadily high unemployment are all direct results of that.
I have started a petition to that end: http://petitions.moveon.org/sign/a-35-hour-work-week-will
Of course, given the actual increase in output per worker since the 1940s when the 40 hour week was officially established, we should be at 4 hour work weeks by now,

 but 35 seems a bit more politically realistic as a starting point.

Unfortunately, I'm just a manual laborer with some ideas and a free blog account, not an activist or promoter, but if you happen to have a network of people who'd support the idea, by all means help me get some signatures
http://petitions.moveon.org/sign/a-35-hour-work-week-will

Free Market VS Capitalism: So How Do We Fix It?

[Part 10 of 10, Free Market VS Capitalism essay series.  Part 1 here]

At its root, the solution is a change in mindset.

The whole point of having an economy is to support and improve the lives of the citizens, the people, who make up society.  The economy isn't a goal in itself.  Benefiting "the economy" has no value if it doesn't benefit actual people.  There is no principal involved - any principle which does not actually make life better for real life people is necessarily an invalid principle.

There is a widespread misunderstanding of the Amish approach to technology.  The Amish are not luddites.  They simply question the value of each and every use of technology on an individual case by case.  So while they may not find that the use of tractors in general improves life for their society, if a particular farmer is disabled, he might be granted an exception.
If the entire point of the economy is to benefit society as a whole, it makes sense to question whether or not that end goal is being accomplished.  As the graphs in part 3 show, it is not.  Maximizing growth had value when the nation was young and growing, but today we are grown, and conditions have changed.

Our current system gives the biggest reward to people who do no actual productive work, thereby decreasing the pool of wealth and resources available to everyone else. It keeps employment up only by constantly growing, ensuring rapid environmental destruction and unnecessarily stressful lives for everyone but the upper 0.01%, with some people working 40-50 hours a week and others working none at all.

This would all be easy to fix - and far from socialistic idealism, doing so would require less government intervention, and more free markets.

The trick is to remove all those government creations whose sole purpose is supporting capitalism.



Stop issuing deeds for investment property.  Everyone should be able to have the opportunity to own the land on which they live - having a place to exist is as much a fundamental human need as water and air.  And, like water and air, we can choose to place limits on what an individual can claim ownership over.  No one can buy a river, and no one can claim title to a chunk of atmosphere.  If government refused to issue titles, and refused to enforce claims of ownership of property which the owner was not personally using, there would be no such thing as investment property.  Each individual could own exactly 2 parcels of land - one on which they live, and one for a business.

Stop issuing corporate charters- or at least look at them on an individual case-by-case basis, as the Amish would, and approve them if - and ONLY if - it is determined to be in the best interest of society as a whole.
Instead of issuing a corporate charter of indefinite length to anyone who applied, a charter could be (as they originally were) for a fixed period of time - say 1 year.  After a year, the corporation is dissolved.  For any time longer than that, the applicants would have to demonstrate that its existence would not just profit the shareholders, but would provide some tangible benefit to society that could not be provided any other way, and which more than compensates for it's inherently anti-competitive, anti-free-market nature.

Never allow any corporations to merge, and severely limit the ability of privately held companies to buy each other - this last is a government regulation, but it is one that preserves the integrity of competition, which is a prerequisite for free markets to operate efficiently.

Tie working hours to productivity.  If, for example, the invention of computers increases the overall average productivity per worker by 100%, then overtime law should be adjusted to begin paying time and a half at 20 hours per week.  Again, this preserves an existing regulation, but it is necessary to offset the effect that technology has on income inequality and the labor market (and it isn't a new regulation, but merely an adjustment to an existing one - does anyone really want to go back to before there was such a thing as a "weekend"?)

Instead of copyright lasting for an entire lifetime after the author dies, it could be based on compensation - once the creator has sold enough to make back their investment plus living expenses, maybe a nominal percentage profit on top (10%?  maybe even be generous, and say 25%), once that threshold has been reached, the copyright would automatically expire, and it would enter the public domain.
In the age of the internet, an investment in technology or software or media can become profitable within months, sometimes days, of going public.  There is no reason to leave technology to profit a single individual for 20 years - the moment the investment pays off, there is incentive to have made the investment.

Stop underwriting the finance industry.  Not just the occasional bailout, but ongoing stuff like free insurance and below market rate loans, give banks and investment firms a huge advantage using tax payer dollars.

Tax unearned income at a rate at least as high as earned income - in our current system, money you get just because you already have money - snowball money - is actually taxed  less than money you earn by going to a job, working hard, and producing something of tangible value to society.  Although it is not the biggest reason for income inequality, it is certainly one of the most blatant ways we have set up rules to benefit the already rich at the expense of everyone else.


All these steps would serve to level the playing field, so to speak.  If the playing field is level, then snowballs can't take off under their own weight.  No one would be limited from getting rich - people could make their snowballs as large as they want - but a person would have to roll it themselves.  We would have a true merit based society, where the rich earned not just their seed money, but every penny along the way, by producing value and contributing to society.
Economic growth would slow, but that would be ok, because we have enough already.
With all the excess wealth no longer going to the investment class, there would be plenty left over to raise per hour wages, which would allow everyone to make a decent living with far fewer working hours, which would more than compensate for jobs lost due to less economic growth.  If working hours were reduced proportionately to how much productivity has increased since the 40 hour week was instituted...

  

 ...the standard work week would be 5 hours, increasing job openings by 800% - there would be no unemployment, and the market would naturally drive up wages as employers competed for employees.
Instead of some working overtime (plus long commutes and mandatory lunch breaks), some collecting government checks, and others living on investments, everyone who could work would work, but no one would have to work more than an hour a day.

This vision is so far from today's reality that it seems idealistic, utopian, downright silly.  But the numbers work.  It only seems unrealistic because it is so hard to conceptualize just how enormously much wealth the upper 0.1%  skims off the top of the productivity of everyone else.
Eighty-five people control the same amount of wealth as half the world's population.
That is 85 people compared with 3.5 billion.  That's all snowball money.  All those resources being so concentrated is the reason everyone else has to work 40 hours a week, despite all the gains that technology have brought to production.

(What a funny coincidence, this looks just like those last graphs!)

This didn't "just happen".  It isn't the inevitable consequence of the free market. It began when government started instituting laws and policies which were, in theory, pro "business" and growth, but in reality which much more specifically pro "large corporation", at the expense of small independent business.  The citizenry has gone along with it, seduced by the claim that what is good for giant corporations is good for America as a whole.  Because the effects are gradual, and diffuse in a very complex system, most never noticed the consequences as they happened - and those who did usually jump to a reactionary opposite extreme such as anarchy or communism, and as a result get written off altogether.

If we recognize that the free market and capitalism are not the same thing, that capitalism is better for growth but the free market is better for equality of opportunity, average standard of living, the environment, and the well being of everyone (even those who would only be wealthy instead of rich, since additional money has zero marginal utility to the already wealthy, but they would live in a world with more stability and less crime) - then the solutions to the problems of capitalism are obvious.


The only question left is, how do we go about actually instituting them?


[UPDATE: A friend who read this asked me for any ideas on how, as an individual, we might work towards a free market future.  This is what I came up with: http://biodieselhauling.blogspot.com/2014/06/walk-talk.html ]

Free Market VS Capitalism (Market Corrupting Capitalism, Part 3: Intellectual "Property")

[Part 8 of 10, Free Market VS Capitalism essay series.  Part 1 here]

The Colbert Report
Get More: Daily Show Full Episodes,Indecision Political Humor,The Colbert Report on Facebook

I don't know if that video will come through on blogger properly.
Here's a link, in case it doesn't: http://www.colbertnation.com/the-colbert-report-videos/433578/march-06-2014/warner-music-s--happy-birthday--copyright?xrs=share_copy



It seems kind of funny, and fairly trivial, but the implications are really kind of profound.

The tune to the traditional birthday song was created by two school teachers in 1893.

The lyrics were created by their elementary school students (there are only 5 words).

It was published 20 years later in a music book.

Then, in 1935 a company randomly decided to copywrite it - which they could do since no one else had ever tried to.  This company had no connection with the original authors, or even the first people to transcript the notation.  They simply claimed it.  For some bizarre reason, our legal system considers "finders keepers" and "I called it first" as a legitimate grounds for ownership of something which has already been established as being in the public sphere.

Flash forward 50 years (95 years after it's creation, the people who actually created the tune aren't even alive anymore) - and Warner Brother's buys the company that "owns" the song.

Technically speaking, if you sing "Happy Birthday to You" at a birthday party, you own Warner Brothers a royalty.  They don't go to the extent of enforcing that at individual parties, but they really will demand payment if the song is played in any form of media or at any commercial venue.

And the law supports them in this!  Remember, the people who came up with it were not under contract to Warner Brothers.  They were not Warner Brother employees.  Warner did not purchase the song from the people who wrote it.  They purchased it from a company that simply decided to claim it, on the grounds that no one else had.

They took something that was freely available to everyone, and make a profit from it.

The story of Microsoft is not nearly as bad, as Gates and Allen did make significant technical changes to the software they used to monopolize the market - but similar to claiming a freely available song, their first operating system was based on free, open source, existing software (BASIC), adapted to new hardware.  Later DOS was a modification of other existing software (CP/M), which they purchased, they did not create from scratch.

The entire idea of having "intellectual property" is supposed to be to facilitate the compensation of the creative and innovative, to encourage things like art and research which might not be cost effective to invest the time or money into otherwise.

Isn't it?

That would make sense, and its the reasoning most frequently encountered.

The rather bizarre reality is, though, that copyright extends to 70 years AFTER the creator dies!

If its a corporation instead of an individual taking credit, it lasts 120 years after creation (since a corporation may never die).

That kind of undermines the idea that the purpose is to support the creation of creative works and invention.  A dead person can't receive royalties.  This system GUARANTEES that someone is going to get income that they did nothing to earn, whether its the creator's descendants or the corporation that buys the rights to something they didn't create in the first place (because, of course, a corporation isn't actually a person, its just a concept, and it can't create anything).

It's reasonable that a person should be entitled to compensation for the hard work that goes into creating a creative work.  It's less clear how one's heirs are entitled to compensation for their creative work.  Or, to be more direct: they aren't.  Not morally, anyway.

But even aside for the whole "royalties go to some random person for an entire lifetime after death" thing, even extending profits for a single lifetime is a questionable practice.

Labor with tangible products requires just as much effort, and frequently just as much skill and/or creativity.

A fine custom furniture maker, for example, puts in physical labor, needs special skills and tools, and artistic creativity.  When they are done they can sell the product of their labor and creativity.

But they can only sell it once.  They don't get residuals from that one creation for the rest of their life.  Once the piece has been sold, the new owner is free to do what they like with it, including turn around and sell it to someone else.
Intellectual "property" isn't like actual property.  Media industry has popularized the word "piracy" to describe the sharing of media, but in actual piracy or theft the original owner is deprived of something.  At one point they had some physical object in their possession, now they don't have it anymore.  If a person burns a copy of a CD and gives it to a friend, the record company hasn't actually lost anything.

When the concept of government protected intellectual property rights was first developed, your potential consumers consisted of the town you lived in, or however many people you could personally stand in front of and pitch to.  As a writer or composer that was unlikely to be any different.  Without some guarantee of protection, an author would get no compensation at all, as people could copy your work freely.   But even with it, if it was reproduced by someone who brought it to some other country, you would never even know about it. 
Your income from any one creative work was limited by the distribution network - as in, there was no such thing as distribution networks, therefor it was quite limited.

Today distribution networks reach every part of the globe (thanks to mobile computing, one in three people in the developing world has internet access in 2014), and the per unit production cost of (e)"books", video, software, etc is essentially zero. 
Consequently, any of the ways a person can get extremely rich involve creating something which can be infinitely reproduced, and a small to moderate fee charged to each of a virtually unlimited audience.
Examples range from software developers to musicians, movie stars and athletes - any form of media creation; all examples of a zero or negligible additional cost per consumer, and millions of user.

In 1710 it might actually take an entire lifetime to make back the cost of producing a book.  In 2014, with our virtually universal distribution networks, a movie which cost $70 million to produce can make back its entire production budget on opening weekend.  And movies make most of their money not in theaters, but from DVD sales and TV licensing!

Its not that people who produce intangible goods are actually more valuable to society than those who create tangible goods. Its just that the concept of intellectual property was developed before "unlimited consumer audience" was even conceivable, and human (and Americans in particular) have trouble with the concept of "enough".  Especially when the topic is money.

Patents are not nearly as bad as copyright.  Far from lasting an entire lifetime after the creator dies, a patent generally lasts only 20 years.  The rational behind having patents is valid: without them, innovating wouldn't be profitable, and so many innovations, especially those that take significant investment in time or money, are unlikely to be made, and unlikely to result in an actual end product even if they are invented.  Furthermore, without formal protection, even if an invention were made, its creator is likely to keep its function as secret as possible, to prevent copycats.  When applying for a patent all the details must be revealed to the patent office, which means that once the term of patent is up it becomes public knowledge that others can build upon.

Fair enough.

But, like with copyright, times have changed much since the standards were set, and twenty years is a very very long time in the internet age.  Given how soon an invention can break even on production costs, it leaves a lot of time where further innovation building off the first is impossible.

How much further back would human technology be today if the process of deliberately making fire had been patented, and the idea was not allowed to be spread or built upon for an extra 20 years?  What if the wheel had been patented?  How about writing, or the idea of planting certain edible plants? 

When a drug company scientist discovers a cure to a horrible debilitating disease, her employer can charge whatever they want for it for 20 years, even if they already made a profit over and above all of their research and production costs in year 5.  The net result of such a situation is that executives and shareholders of the company can become extremely rich, while humanity as a whole suffers unnecessarily.

How much faster would science, technology, human knowledge grow if patents were only 5 years - or tied to profit, rather than time?  What if, instead of an arbitrary fixed length of time, a patent lasted until the inventor made back no more than 20% above development costs?  There would still be economic incentive to invent and innovate - 20% is a much larger return on investment than you can expect from the stock market or real estate.  Profit just wouldn't be unlimited.



[Next up: Government Intervention]

How to get to the Top (without actually having to work for it)

[Part 5 of 10, Free Market VS Capitalism essay series.  Part 1 here]

Pro-capitalists generally take it as a given that anything someone has they must have earned, and therefor must deserve.

Of the 20 wealthiest people in the world, 1/2 of them inherited their snowballs.  At best, they get credit for keeping it rolling, for not finding a way to stop it, but they got it already large, already moving.

More to the point, nobody actually creates a truly massive snowball of wealth by their own productivity.

Nobody has ever gotten to the top 0.01% via hourly wages.  One would have to average $25,000 per hour for an entire full-time working lifetime in order to actually earn a billion dollars.

Nobody gets 0.01% rich on salary either - not even CEO or sports legend level salary. 

For the most part CEOs of successful companies are still just in the relatively lowly 1%, maybe the top half a percent.

The most reliable way to get even just to the 0.1% is setting up conditions so that you make money without having to work for it: rent, investment dividends, royalties - or, of course, just having employees.

Acquiring a disproportionate amount of world resources tends to involve one or more of the following - lending out existing capital so that other people give you a percentage of their own labor productivity, or producing something with low marginal cost (something cheap to reproduce) that can be widely distributed - music, movies, sports, software.

I'll come back to the second later.

Pro-capitalists generally justify investment returns on the grounds that the person paying the interest is benefiting from the use of capital that they didn't have to save up on their own.

But that argument is circular.

If some people weren't hoarding all the wealth to begin with, there would be more left over to go around, and people wouldn't need to borrow so much in the first place.

Imagine if a rich man moves into a tiny country and buys the entire nation's mining land. 

His miner's extract ore, it is delivered to his smelters and forges, and he builds all sorts of metal tools.

Then he opens tool rental places.  Anyone who wants to build anything has to rent all their tools from him.

He claims he deserves all the rental fees he gets, because he put down the capital investment in the mines and factories that create the tools.  But before he showed up, the metal ore was still there, the mines were a public good, and competition between lots of little tool makers kept prices competitive.  The fact that he rents the tools instead of selling keeps supply limited and his income high.

In short, if he weren't hoarding resources in the first place, people wouldn't be dependent on his capital.

Perhaps the best example of this is in land, which will be the topic of the next installment.

[Next up: Market Corrupting Capitalism Part 1: Investment Property]

Free Market VS Capitalism (Current State of Affairs; or: Why Should We Care?)

[Part 4 of 10, Free Market VS Capitalism essay series.  Part 1 here]

 A Historically Unprecedented Concentration of Wealth

There are a number of independent ways our system tilts the field and gives an unfair advantage to those who already have capital. This makes things much easier for those who need the least help.  At the same time, by encouraging resources (remember, financial wealth, like paper curranecy, is just a convenient placeholder for actual tangible resources) to be concentrated in a few hands, the system makes it substantially harder for those without capital to make a living. 

Pro-capitalists will often point out that wealth is not finite - value can be created, both by extracting primary resources from the Earth (farming, mining, logging), but notably via technology - an iphone has more value than the plastic glass and metal it is made of. 

However, at any given moment there is a finite amount of wealth currently in existence.   If one person were to have 220 trillion dollars, that is another way of saying that one person controls 98% of all the (currently available) resources on the planet.  This means that the other 7 billion humans would have to divide the remaining 2% among them. 

Gross world product (GDP of all countries combined) grows by approximately 3-5% per year.  But our one insanely rich individual is getting 98% of that 3-5%.  So the growth that goes to everyone else would be .08%  Less than a 1/10th.

This is just a thought experiment - reality is not quite that bad - but it demonstrates why the "wealth can be created" argument is meaningless.  For one, it is impossible to live on hypothetical future growth.  For two, under capitalism, those who already have enough are the ones who get the vast majority of that new growth anyway.

My analogy of one person owning everything is extreme... but it is not as far off as most people would assume.

I think this is one of the primary reasons this issue isn't taken more seriously by more people.  Most people don't realize just how extreme wealth inequality really is.  It's nearly impossible, because the numbers are bigger than the human brain is able to conceptualize.  It's like trying to really understand, on an intuitive level, the size of galaxies, or the distances between them, or the age of the universe, or how everything is made of subatomic particles.  It is humanly impossible to have an idea in our minds of exactly how big the number one googol is (yes, it was a number, before it was a brand name). In reality it is a specific number, but as far as the human mind is concerned, it is interchangeable with infinity.  The number one billion is trillions and trillions of times smaller a number, but it is already inconceivable.  Go ahead, try it: try to picture one billion people.  Or a billion stars.  What does it really mean?  It just gets blurred together as "lots and lots".

We tend to think of emperors, pharaohs , sultans, railroad barons, as having extreme wealth and power compared to the people they lived among. 

In reality there is currently the most extreme wealth inequality there has ever been in human history.

Eighty-five people control the same amount of wealth as half the world's population.

That is 85 people compared with 3.5 billion.

Imagine 85 people.  They could all fit in one large room.  You know more than 85 people by first name.

Now imagine half of all humans in the entire world. 

See, I wasn't exaggerating when I said my analogy wasn't actually that far off from reality.

Those 85 people each have (on average) over 41 million times as much as each of half of the human population has (on average).

Almost half of the world’s wealth is now owned by just one percent of the population - $110 trillion.

Most people know that there is wealth inequality.  But few people realize the extent:

But even this graphic is extremely misleading - the smallest division it shows is 1% of the population.  Within the 1%, if you subdivide it even further to 0.1% or 0.01%, that set of subgroups is just as unequal as the 1% is to everyone else:

See that pink square about 3 or 4 squares down from the top on the right? There is more or less your successful 1%er.
See how much closer it is to the rest of the 99% than it is to the top square? 

The lower 1% is made up of doctors, lawyers, CEOs, frugal computer programers, small business people, and others who actually earn their wealth through direct productivity. 
They actually have a closer amount of wealth to the poorest 50% than they do to the handful of billionaires in the top 0.01%

These graphs are all only showing the distribution in the US.

Granted, the US has some of the most extreme inequality in the developed world, and the country as a whole has disproportionate wealth for its population size compared to most of the world.  But these same graphs would be far more extreme if they included the entire human population.

Now go back to my thought experiment near the beginning of this page.  There is a finite amount of material resources at any one time.  If one person - or 31 thousand (the top 0.01% of America) - holds the majority of everything, then everyone else has to divide up whatever is left.  This means that the the concentration of wealth directly impacts poverty.  You can not ever eliminate poverty while leaving such massive wealth concentration in tact.

Go back to my analogy from a previous page - some people's snowballs have gotten so large that they pick up ALL of the snow as they pass, so that there is basically nothing left for anyone else.

[Next up: How to get to the Top (without actually having to work for it)]

Free Market VS Capitalism (What is Capitalism?)

[Part 3 of 10, Free Market VS Capitalism essay series.  Part 1 here]

When people point out the extreme income inequality, the corruption of politics, the dissolution of labor protections, environmental degradation, and all the other similar and related injustices we see occurring, they are not referring to free market economics.  These things are almost all due directly to capitalism.

The best analogy for capitalism I've come up with was during a spirited debate about the ethics of capitalism on the Mr Money Mustache forums:

A person makes a snowball.  In order to make a snowball, you have to physically go outside, scoop up some snow, and mush it together.  You produce it by your own physical labor.  Once you have it, you can put it down in the fresh snow and start rolling it around, and more snow will stick to it.  That makes it a lot easier to get more snow on your ball more quickly.  And the bigger it gets, the more it collects with each revolution.

The assumption I always made - the one that most make - is that capitalism arises naturally from the free market.  One person produces more income than they spend, they save the difference, they invest it, it earns them more income, which they reinvest. 

This really does happen, and could happen in even the most primitive and simple society.

So the extremes we see today must be the natural extension of that process... right?



But that is equivalent to saying "When I work out, I get stronger and more muscular - therefor body builders and power lifers must have gotten to where they are just by working out even harder, for more years" - neglecting that all of the top athletes have some degree of genetic gifts, professional coaches, extremely strict diet plans, and most use some form of biochemical assistance that would get them banned from most professional televised sports.

Its the same with capitalism - the extremes we see today are not just from some people working harder and investing more wisely.  There is another element being introduced.  That element is the state.
The State is the coach, diet plan, and performance enhancing drug of capitalism.

In my analogy the person making the massive snowball is still out there in the field, pushing the ball around the field with their own arms and legs.  The increases come faster, but they are still contributing to the process.

But what happens if they find themselves at the top of a hill?  Push it to the edge, and it takes off on its own.  At that point they have stopped contributing any labor.  They have stopped contributing anything at all.  If the hill is big enough, it may get enormous, gobbling up any snow in its path (and perhaps crushing anything that gets in its way - but lets not take this analogy too far just yet...) much faster than any person could possibly collect it by actual productive labor.

What the state does, in this analogy, is control the angle of the hill.

By default, the part of capitalism that is built into the market - if you earn more than you spend, you will have excess, and that excess can be invested - can tilt the field inherently. 
But what we see today is a massively tilted field, and that is due to specific policies and laws and rules that - although we take many of them for granted - are choices we, as a society, have made. Choices which we could change any time we, collectively, decide to.


[Next up: The Current State of Affairs; or: Why Should We Care?]

Free Market VS Capitalism (What is a Free Market?)

[part 2 of 10, Free Market VS Capitalism essay series.  Part 1 here]

So, what do I mean by the assertion that capitalism and the free market are different things?

The key feature of a free market is that all individuals are free to participate and make their own decisions.

We treat the term "capitalism" as if it's key feature were the same, but the real key feature of capitalism is that some people accumulate wealth - capital - and use that wealth in ways that allow them to leverage additional wealth out of existing wealth, without having to personally contribute any additional productivity. 

The easiest way to think of a free market is imagining a literal market: a flea market or farmer's market.

You have a big empty lot partitioned into more or less equally sized parcels.  A bunch of different independent vendors rent one, and sell whatever they want, for whatever price they want.  Customers wander around and buy whatever they want.  Seller and buyer can negotiate prices, and sellers with better product will sell more and/or can raise prices, but as long as each seller does better than break even, they will likely show up again next week, keeping competitive pressure on every one else and keeping variety available for the consumer.

Under capitalism any one vendor which has any form of advantage - maybe they have a better product or a more efficient process that allows them to lower prices (or maybe they just have an advertising guy with a degree in psychology, or they are friends with the market manager, or they inherited a million dollars from Great Uncle Giles, or they use slave labor; the point is it really doesn't matter what the advantage is, and there is no reason to assume it is always a better product) - can use that initial advantage to first buy 5 or 6 different stalls in the same market (but as likely as not, give them all different brand names so that customers don't know), and then 1/2 of all the stalls, and eventually all of them, so that its really just one single vendor (pretending to be many small vendors, for marketing purposes).  At that point they can set prices and lower quality, because there is no competition, and consumers no longer have any choices.

Really, in the real world that process would be simpler and more straight forward - the big empty lot that once housed the market would become the parking lot to the new WalMart, done and done.

When Adam Smith talked about the invisible hand of the free market, he was explicitly talking about the former scenario, and not the latter.  When people point out the efficiency of markets, how many people acting independently can produce complex things more efficiently than central planning can, whether they realize it or not, its the free market they are talking about.

Remember this the next time you hear anyone use the "invisible hand" analogy, or support the notion of the efficiency of individual self-interest in the context of capitalism - these concepts were never meant to apply to capitalism.  They are referring specifically to a free market.

There are a bunch of individual factors that are necessary for the "invisible hand" of individual self-interest to actually maximize efficiency and utility for a society:

-Virtually unlimited buyers and sellers - any industry which has seen significant corporate consolidation is out

-No barriers to new sellers opening up shop - anything which requires major investment in infrastructure or equipment doesn't count

-Complete transparency of information - the internet has gone a long way to providing this one - in the past this one made the entire idea purely hypothetical. 
So, score one for Free Markets.

-Zero transaction costs - any purchase made by credit card isn't a free market transaction.  Also all financial industry transactions, stocks purchases, loans, by definition, don't operate in a free market

-Non-increasing returns to scale - as soon as you outsource manufacturing because you can't keep up with demand, you have left the free market, and transitioned into capitalism.

-Rational buyers - the entire $44 billion advertising industry is devoted almost entirely to preventing rational buyers. Pre-Edward Bernays advertising was generally of the format: "This product exists.  These are its features.  This is what it costs."  Post-Bernays marketing is about using psychology to manipulate individual behavior; getting people to buy something which they wouldn't without the ad, even if they knew about it.

-No externalities - anything that produces pollution or draws on common goods can not be claimed to operate in the free market.

Obviously that doesn't leave much left. 

Even in the best of circumstances, its very unlikely that all of those conditions would apply.  The entire thing was a theoretical framework to begin with. But it is certainly possible for an economy to lean more in one direction than the other.  The more we set things up to encourage capitalism, the further we get from a free market.

There are a few other factors in addition to the ones above, but if you don't want to enroll in an economics class before finishing this blog post, there is one very easy and quick way to tell whether a particular industry or company is actually operating in a free market, in the original Smith use of the term:

In a free market, sellers make zero profit.

Read that last sentence again a couple times.

Think about all it implies.

Understand - this is not my own personal opinion or interpretation.  This is what Adam Smith, father of economics, wrote in his famous, oft quoted, book, The Wealth of Nations.

Perfect competition dictates that sellers will sell at the lowest possible price that allows them to break even.

This does not make being in business pointless.

Profit is what is left over after paying not just costs for materials and rent and advertising and loan payments, but also paying the employees, including management.

People are still making money.  If the manager is the owner, the money they make is not profit, it is salary.

That is the point in running the business.  There is even still a point in investing, as the company could still pay interest on their loans.  Profit is what is left over after all costs.

Any industry or company that has more than zero profit is not operating in the free market.

[Next up: What is Capitalism?]

Free Market VS Capitalism

7 years ago I wrote about how, contrary to almost universal belief, democracy and the free market not only don't necessarily go hand-in-hand, but they are actively opposed to each other.

That they are two parts of a single whole comes from a extremely successful deliberate public relations campaign by US government and corporations, going all the way back to inventor of manipulative public relations and advertising, Edward Bernays.

The next year I pointed out parallels between capitalism and anarchy - but I got it wrong.  I should have compared the free market to anarchy.

I was making a similar mistake myself.  American propaganda has basically everyone assuming that the terms "free market" and "capitalism" are interchangeable.  I realized quite some time ago, in arguing with anarchists, libertarians, conservatives, and capitalists that the two meant distinct things.

But what I've realized only recently is that, just like democracy and capitalism, the two are actively opposed to each other.

You can not have a free market under capitalism.  And you can not have our current degree of capitalism without a significant amount of State power actively manipulating the market, which inherently means it is no longer "free".

Of course, even though modern America treats them as interchangeable, this idea is not new.

The person who basically invented the entire discipline of economics, the person who's words capitalists use more often than any other, Adam Smith, recognized that the two were actively opposed, and even that it was the role of the State to intervene to prevent capitalism from corrupting a truly free market.  Unfortunately, few of the people who claim to follow his model actually read his book...

In my next couple posts I'll get into explanations, examples, problems and (hypothetical) solutions.

For now let me just point out that realizing this distinction reconciles a lot of the apparent conflict between the arguments of people with various political/economic outlooks.  One side points out the (legitimate) benefits of the free market, while the other is focused on the (legitimate) problems of capitalism.  Its only because both sides assume (incorrectly) that the two are the same that they are stuck at an impasse.  I propose there is no valid reason we could not set up society in such a way to continue to receive (the majority) of the benefit of a free market economy, while avoiding (the majority) of the problems of capitalism.

[Next up: What is a Free Market?]

All of the money stuff I sometimes talk about, condensed

A lot of my personal friends and family have heard me mention something regarding saving money and investing, probably remember hearing me referencing "Mr Money Mustache" or "Jacob of Early Retirement Extreme".

Chances are, though, you chalk it up to one of those random Bakari nutty things, or maybe you even glance briefly at one of the links I send you, but it's long and there's like 300 other articles, and you don't have time for all that.

I'm going to try to explain all that stuff in a condensed and untechnical manner.

Of course, the majority of my readers who I don't know in real life found me through MMM, and all of y'all feel free to skip this post, as you won't learn anything new - it might be perfect for forwarding on to your own friends and family though who haven't come around yet.

Very early on into adulthood I discovered that I don't particularly care for employment.

Its not just about the work itself - it doesn't matter how much fun, how creative or rewarding or self-directed the job is - its just the fact of being forced to be some specific place doing some specific thing for almost exactly 1/2 of your discretionary time (factoring in mandatory lunch hours and commute time), for the majority of your life.

Luckily, I grew up poor (there were 73 of us, living in a cardboard box), plus I self-identified as an environmentalist since about age 9, plus being non-conformist, all combined to make rejection of all forms of materialism come naturally.

I never felt much need for "stuff".  Living in my RV felt plenty luxurious enough.

Psychologists say that money spent on experiences produces more happiness than money spent on stuff - but I've found there is a practically infinite supply of entertaining and educational and downright amazing and wonderful experiences to be found for free almost everywhere I look.  No, not even that - I frequently don't even have to look; often times they come to me!  Sometimes when I was looking for something else, other times they just literally come seek me out.

I've never even had the desire for the stuff most American's spend money on: cable TV, a new car, fashionable clothes, or a "phone" that is really a tiny computer.  So, after food and rent, I never had all that much to spend money on.

And here is the point of all that backstory:
 
 

I discovered early on that if I don't spend a lot of money, then I don't need a lot of money, and if I don't need a lot of money, I don't have to spend so much time working.

So that is what I did for the next 10 years.

I might work full time somewhere, but I'd get bored after a few months, and quit, with no backup plan. Other times I'd work part time, maybe two or three very part time jobs, or maybe just show up sporadically to my supposedly full-time job. I built up a ridiculous resume of jobs - experiences (that I got paid for). I traveled across the country, I went to school purely to learn interesting stuff with no intention of leveraging a "career" out of it.

I made a couple of less than ideal financial decisions here and there, but managed to pay very little in interest, never miss a payment, and keep my credit score high.

And I had lots of free time, whether I was working or not, to play, to spend with my partner, to read and learn, to go on bike rides and camping trips.

Not that I ever thought debt was no big deal, but between moving cross country, college, buying a bigger RV, and getting divorced, I hit a peak of debt (around 10k), and decided to focus seriously on getting rid of it.

Older and more mature, the day I made my last payment, I also opened an IRA - 18 February 2010

Along the way, one of my blog posts caught the attention of Kirsten Dirksen of Faircompanies.com, who asked me to write for her, and then later did a video interview of me when she was in the country.

Which got moderately popular (a good quarter million views in a couple months), which resulted in a number of internet fans who found me on facebook - one of whom suggested I look up Jacob Lund Fisker of ERE, who also lived in an RV at the time.  Well, it turned out he also lived in the Bay Area, and was planning a get together soon, we met, I started reading his blog posts... it couldn't have come at a better time.

Having recently paid off the last of my debt and opened an IRA, it was perfect timing for the message.

It turns out I was on the right track, but I missed an important detail.

Allow me to summarize how many, if not most, young people look at money:

Retirement is something that happens when you are old.  If we are lucky, it will still be at age 67 by the time we get there.  By that time most of your life has gone by and if you don't have major health problems, at the least you are too weak and tired to do all the sort of things you want to do now.  Hell, you don't even know for sure you'll live that long, so it doesn't make any sense to put off living life to the fullest now.

Of course you aren't stupid either, you aren't going to spend money frivolously, and its good to have some savings in case of emergency, maybe even a retirement plan, but that all has to be balanced with enjoying life today.
 

That's more or less how most people I talk to look at it.

It's how I looked at it.

The philosophy is good.

It's the underlying assumption that is mistaken.

Its a totally understandable mistake, because every one else around us takes it for granted.

Here is the enormous underlying mistake from the paragraph above:

67 is when social security starts paying out.  That has nothing to do with when you retire.  Retiring can happen much sooner, or much later.  Its simply a function of when (if!) you have enough to live on without having to work.

And let me cut off objections preemptively here, by emphasizing a word from my last paragraph:

"...have enough to live on without having to work."

Maybe you really enjoy your job.

It may be fun, and/or meaningful.

As of now, lets stop using the word "retire".  Lets substitute "financial independence" instead.

Not having to work means that if you get bored, you can do something else, with no stress during the transition.  It means if your boss is a jerk, you quit.  It means you can start your own small business, doing what you love.

If you already love what you do, but your company is small and on the brink, you can take a voluntary pay cut.

If you love what you do, and your employer is a soulless corporation, you can use your salary to buy expensive toys, vacations, or donate to charity, or whatever you want, because if you are already financially independent you don't need to worry about rent or food or transportation or health care.

In a word, it means "Freedom".

Would you rather have more freedom in your life, or less?

"Yeah, all that sounds great, Bakari, but it is totally unrealistic"

Ah, you'd think so, wouldn't you?

Now we get to the fun part.

I'm going to leave out all the math, and all the stock market/investing stuff.  I'll point you to some MMM posts that go into detail if you want to learn a little more and go a little deeper, but for now just trust me on the numbers.

If you invest wisely (and that doesn't mean "picking the right stocks", it means taking the safe, easy, average, middle of the road route) then once you have saved up 25 times your annual spending, you are set for life.

That's actually a really really important summary, that deserves an inset section

Once you have saved 25 times your annual spending, you are set for life.

( http://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/ )

That's secret ("secret") number one.

Here's another:

Under capitalism, money that is invested creates its own money.  Then that new money also creates new money.  Then that new money creates even more new money.  This cycle repeats indefinitely.

An early MMM analogy is to think of each and every dollar bill you have as a potential employee.  If you spend it, you have essentially fired a reliable worker.  If you invest it, it will produce a small percentage of its own value for you, 24/7, forever.  Give it enough time, and that dollar will make you a new dollar, just by sitting there not being spent.  Then, if you only spend the new dollar, and leave the original alone, you just got something for nothing.

It gets better.

If you put away five bucks a week, starting at age 18, you will have more money at (official) retirement age than you would if you put away 30 times as much - $150 a week - but didn't start until 10 years before you retire.

In the former, you only put away $260 a year, for a grand total of 13k of your own money (spread out over 50 years)

In the latter, you spent $7,800 a year, for a grand total of  78k.

You spend 6 times as much, and have less to show for it!

All that extra free cash in the former is coming from interest and dividends, compounding and snowballing on themselves.  The new money creates new money which creates new money which creates...

But what if you put away $150 a week, starting at age 18?

Well, then you would be a millionaire just a little after your 50th birthday.

Literally.

That's just math.

But lets go back to the first secret again; once you save 25 times your annual spending, you are set for life.

If you can spend less than 40k in one year, then you don't need to be a millionaire in order to be financially independent.

Given that 40k is substantially more than median individual income (and only slightly less than median household income, which on average has more than one earner), I'm going to say it is not a particularly bold claim to suggest that it is possible - nay, downright easy - to live on less than 40k per year.

(Remember, we're talking spending, not income, and you can subtract any spending on savings, as well as any spending directly related to employment, such as commuting or work clothes, from what you need once you are financially independent).
If, for example, you can live comfortably on under 20k a year, then you don't even need one half of a million in order to be financially independent for the rest of your life.

Here's the other big mistake that people tend to make:

We think in terms of what we can afford.  When we have some extra cash, we think about what we can spend it on.  Money burns holes in our pockets.

I don't hold it against you.  Its human nature, and I'm just as guilty of it as anyone else.  Most of my working life I made only enough to cover my expenses, however much that was, and if I happened across a nice large lump sum I thought "what fun and cool thing or experience can I buy with this?"

That reasoning means we tend to spend however much we have.

In other words, maybe you were actually fairly comfortable when you were only making 23k per year, but you just switched to a better job, and you moved in with your partner so your rent is half as much, and so all these opportunities open up of stuff to buy and trips to take, maybe you get your internet speed one tier higher, since you can easily afford it, maybe you eat out a little more, get a latte at Starbucks twice a week, and before you know it, you're breaking even again.
   

There's a term for that: "lifestyle inflation".
  

Hedonic adaptation dictates that it soon becomes the new normal, and provides exactly zero happiness above baseline.

Suppose when life changes allow you to have higher income and lower expenses, you threw all the excess into investments?

Suppose you make a point of lowering expenses, cutting out anything that doesn't truly make your life better in a tangible, ongoing way.

Could you save 10% of your income?
25%?
50%?
75%?
90?

90%??!? Lets not get ridiculous here.  We aren't all stock brokers and corporate lawyers and software engineers.  Sure, if you make 6 digits each year, it would be totally possible to live a comfortable life with all the modern amenities (like cars and internet) on 10% of your salary.

Here in the real world, 1/2 of all American who work make less than 30k per year, and even bike-riding, 30-year-old-truck-owning, RV-trailer-living Bakari can't see living comfortably on three grand a year.

Ok, ok, so lets step back a couple lines.

How about 50%?

This still probably sounds a bit extreme - at first...
 
 

For reasons I don't entirely understand, people seem to think money numbers are supposed to be private.  But then, I have never been much of one for secrets, so how about I use me for an example:

Remember, I started saving at the beginning of 2010.  I made $22k that year, after subtracting business expenses.

In 2011 I made $22k again. In 2012, $21k.  This past year was my worst since I began working for myself, (8 years ago), and I only made $13k.

In 2010 my net worth was $0.

Today it is $52,000

("Wait a minute now..." you say, "those numbers mean you have to be living on less than 10 Gs on average each year!" Yup.)

It's not hard.

It is, more than anything, a change in mindset.

Remember that whole thing with my old RV trailer being stolen?

The entire settlement check went straight into one of my IRA accounts.

Remember that giant chicken coop and run I built?

The 2 large I made on that, all invested.

I don't live a deprived life.

I still buy toys now and then, (like my boombox and its battery pack). I have high speed internet, a cell phone, pets, I buy organic food, I eat out and go to the movie theater now and then.

I just try to ration spending, and avoid spending money on crap I know I really don't need, that won't improve my life in any significant way in the long run.

As a result, I am 1/5th of the way to financial independence, in just over 3 years.

At this rate, about 15 years from when I started, I should be there.

I'll be 45 - still young enough to take full advantage of freedom from mandatory employment. 

Just imagine though - if I had started back at 18; I'd be financially independent already!

You aren't me, you don't live how I live, so enough anecdote - lets segue back into some real life numbers.

We were talking about saving 50% of your income, and I was just using myself as an example to prove that even if your income is much lower than average, it is still possible.

In my example of me, spending only about 1/2 of income led to a working career of 15 years.

And there's that sweet math magic again: that number isn't just true for my particular circumstances.

It is universal.

If you only spend 50% of your income, you will have approximately 25 times your annual spending saved up in approximately 15-20 years.

Simple mathematics proves that.

Even without the power of compound interest, if you spend 50% of your income, then for every year you work you buy a year of freedom (think about it for a second).
But add in the money generating money infinite feedback loop, and at 50% every year you work earns you more than a year of freedom, and the earlier you start, the more free bonus time you get.

And here is the really beautiful part of all that, which may be easy to miss:

It doesn't matter how much your income is.  The ONLY variable in that equation is what percentage of your income you spend, VS what percentage you save.

 
( http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ )

Going back to the philosophical point from near the beginning, but with this new knowledge, we have two potential life paths, especially while we are still young:

• Path 1: Live simple, so you don't need too much money to live, and take advantage of that by not working too much.
  Spend the occasional windfall on toys and/or experiences.
  Low income, low cost of living, moderate amount of free time and freedom - but you will never retire.
  The same is true if you have a higher income, but lifestyle inflation keeps you spending however much you make.  If your savings rate is zero, you will need to continue working until you die.

• Path 2: Live simple, so you don't need too much money to live - and work full time anyway, so that you have plenty of surplus to invest.
  Put most, if not all, of your occasional windfalls into your savings too.
  Moderate income, low cost of living - and low free time and freedom, at first, for a few years.  But then, before you know it, TOTAL freedom, and as much free time as you want.  For the rest of your life.

Path 1 is pretty good, beats working a 9-5 for 50 years.  Path 2 is a whole heck of a lot better.

Especially considering we aren't talking about some hypothetical future 50 years from now.  We are talking a short decade and a half.  We are talking "retiring" with the majority of your life still ahead of you.

Don't believe the math?  There are hundreds of people who have actually done exactly what I'm talking about.  A lot of them are on the Mr Money Mustache forums.  Mr MM himself is one, one who uses some of his free time to share all this information with others.  If you want to learn more, his blog is the place to start:

http://www.mrmoneymustache.com/2011/04/06/meet-mr-money-mustache/
 
(if you start here at the beginning, when you finish this post, scroll down a little to the link that says "Meet the Realist")

and

http://www.mrmoneymustache.com/2013/02/22/getting-rich-from-zero-to-hero-in-one-blog-post/

 

If you don't feel like reading too much, try maybe just this last link.

Later, if you like, you can read more for all sort of details on how to actually start spending less (with zero sacrifice to quality of life), what specifically to do with your savings to make it start working for you, and answers to all the other questions and concerns and objections you either have already, or will come up with soon.

The really important part is just the concept.  You have it now.  Very minor delayed gratification now, for totally life changing payoff in a few years.  You - you, reading this right now - can be one of those "financially independent" people.  No inheritance, no lottery, no lucky breaks.  Just being moderately frugal, and the math of compound interest.

Start looking at your money differently.

And make sure to come thank me when employment becomes optional for you.

Quote on Consumerism from the founder of Early Retirement Extreme

"The problem is that most of us have become utterly dependent on this industrial-technological  system  for  all  of  our  needs  and  wants.  Shopping is as important as oxygen to us. Close down the malls for a few days and people go crazy. We no longer think of ourselves as citizens but as ”consumers”, a descriptive term that I've always found kind of derogatory. This dependence  is  so  fundamental  that  it  goes unseen, much like fish don't see the water they swim in. Consequentially, the only solution we can think of whenever we struggle with unfulfilled needs or wants is to ”earn more” and start a side-business, negotiate a raise, and gamble on some more education – it's an investment in your future (ha!). The only perceived way to a better so-called standard-of-living is to work harder and smarter and earn more. However, what this often results in is more environmental damage or at best reshufling money from suckers to scammers." - Jacob Lund Fisker

Why OWS and the 99% is THE fundamental issue, which lies behind all others:

[This is another of those things I wrote years ago, and has been lost in draft form.  I think I originally planned to add more list items, and elaborate further on all of them, but of course I don't remember what exactly I had in mind]


-War: Some of the largest corporations, (Boeing, Lockheed Martin), profit enormously from war

-Civil Rights: Corporations are not citizens, and therefor should have no civil rights - they are granted right anyway.  They violate the rights of individuals without consequence.  Income and wealth inequality are the single largest factor for the different life experiences of American whites and blacks, and wealth inequality is a direct result of our economic policies.

-Gay rights, abortion, etc etc: Directly mutual relationship between corporate political power and the religious right, as they are both "conservative".  The only reason the religious right is taken seriously is because they support the politicians who are funded by corporate money.

-Environment: EPA doesn't work on shutting down your backyard BBQ.  It is corporations which cause massive pollution.  Corporations decide which power sources to tap into and what type of cars are manufactured.  It was corporations which deliberately destroyed public transit across America.

WTO / NAFTA / etc: this should go without saying

35 hour work week petititon

I tried this once before, but wasn't able to build enough momentum in time.

Different platform this time.

Click, sign it, make the world a better place:

http://petitions.moveon.org/sign/a-35-hour-work-week-will

Read more about why this is a fantastic idea on my post about the first attempt:
http://biodieselhauling.blogspot.com/2011/10/dramatically-reduce-unemployment-by.html

If I Were Elected King of the Country

My new friend asked me a few weeks ago, "what would you change about the world, if you had the power to?"

She said she tried to ask all new people she met that question.

She said it was surprising how many people didn't have an answer because they had never thought about it.

I couldn't answer, but for a very different reason.

I just couldn't sum up, couldn't choose from the list what to say first.

I've been thinking about it ever since then, and I still can't find any way to tie all the various things together, so, instead of going into the detail about how and why for each one, I think I'll just list as many as I can think of.

(and if anyone wants elaboration on any in particular, ask me as a comment, and maybe I'll make that one its own post)

These are in no particular order:

----------------------------------------------------------------------------------------------------------------

Election day would be a national holiday.  No one could be forced to work more than a 4 hour day on election day. 

Anyone not registered to vote would pay a small annual penalty with their taxes.

Judges would be subject to recall by popular vote.

Congressional, presidential, and governor terms 6 years.

All term limits would be eliminated.

All elections would be instant run off type (or another equivalent to eliminate "lesser of two evils" votes).

Party, primary, and electoral college systems eliminated.

Voter initiative process on federal level, and all 50 states.

All campaign related ads would be banned from TV, radio, print, direct mail, and billboards, starting 1 year prior to any election.  Each candidate or initiative would receive expanded space in the official election guide.  All statements made that could not be verified by an independent 3rd party fact checker would be marked with an asterisk.

No individual could donate more than $500 to any campaign or political organization in a year.  No company or corporation could donate any amount to any campaign or political organization.  No union, church, or other group could donate without 100% unanimous consent of all members, and then no more than the equivalent of $100 per member.  For any amount an individual spent out of pocket for a campaign, they would have to contribute an equal amount to the public campaign fund. 
All of this would be less important, giving the ban on media ads.

Media (of any form) which reports any mistaken information or error as factual, would be required to report the correction with equal or greater prominence and length of time as the original mistake (if error was headline for 3 days, retraction must be headline for 3 days)

Public school would be paid at the national level, by number of students (regardless of performance).  Any outside income (gifts of cash or supplies by parents for example) would reduce funding by 50% of the amount of income (i.e. parent donates $100, then federal funding is reduced by $50), used for the pool, to benefit schools with less generous parents.

Teacher training and classroom curricula would be evidence based

No multiple choice test could be used for assessment.  Guiding principal should be teaching for understanding, not just retention of facts.

Preschool and kindergarten would both become mandatory and free.

2 and 4 year college / university would be voluntary, free for any family below median national income.

All college finals would be administered one semester after the end of the class (to test for long-term retention)

Public school teacher salaries would be cut by roughly 5-10% (approximately the amount private school teachers make), principals and administrators by 25-50% (to be within 25% more than teachers).  All of this extra money would go to hiring more teachers to reduce classroom size. 

Teachers would have at least 15min of prep time for each 55min of instruction.
They would be eligible for overtime after 112 hours per month(equivalent annual hours to other jobs, considering summer and other breaks - after reduced work hours, (see below))

Cognitive biases, logical fallacies, and predictable irrationality would be a required course in middle school, high school, and college (beginning, intermediate, and advanced, respectively).

Drug use would be decriminalized.  Selling without a license would not be.  Prostitution and gambling would also be legal, (though regulated and taxed).

No law or regulation could stay in effect unless it can be shown to tangibly benefit some individual or society as a whole.

No censorship of "indecency" (nudity, sex, language)

Sex ed would be taught in preschool, 5th grade, and 12th grade, each class more advanced and in-depth (the first would be similar to current Jr High level, the last would be equivalent to college Human Sexuality course).  It would be a graduation requirement, so no opt out.

It would be illegal to formally teach any child below the age of 18 any form of religion, (other than in a historical or sociological context).  This would include attending services.

Churches would no longer be tax exempt.

No government recognition of religion or God, even in a neutral, non-specific way (e.g. "...One Nation, Under God..." or "In God We Trust")

All pronouns would be replaced with gender neutral ones.

All restrooms and locker rooms would be unisex (with individual stalls, and/or separate areas of the room optionally)

Combat and infantry roles would be available to women in the military.

No government or business could mandate different dress codes by gender.

This would include that women could be topless anywhere that men could.

Public beaches and parks would be clothing optional.

All laws on sexual assault, age of consent, marriage, etc would be gender neutral (this would, among other things, inherently legalize gay marriage).

No cosmetic surgery (including circumcision and pierced ears) before the age of 18

All subsidies and price controls for feed crops would be eliminated.

Minimum standards for animal welfare would include daily access to outdoors and a diet resembling a "natural" one - i.e. herbivores could not be fed animal by-products, nothing would be fed manure, nor its own specie, nor a reciprocal specie (i.e. Animal A is fed animal B, and animal B is fed animal A)

All new cars would be governed to a maximum of 65mph, or to the maximum of the state is is sold in, whichever is lower.

Each lane on any highway with 2 or more lanes in each would direction would have specified lane speeds. A two lane would have a maximum speed of 65 and minimum of 55 in the left lane, and max of 55 and minimum of 40 in the right. 
For a 3 lane, from the left, the speeds to maintain would be 60mph, 50, and 40 (each +/- 5mph).  A 4 lane would be 60, 55, 50, and 45 (+/-5).  A 5 lane would be 60, 55, 50, 45, 40 (+/-5). 

Speeds on all highways would be monitored by randomly placed, (and periodically moved) radar machines - a combination of the radar systems that say "your speed is:" and the camera detection system that catch red light and toll violators.  Like the latter, they would look up registration by plate number, and mail you your ticket.

The first 2 violations would be warning.  The 3rd would be a $100 fine.  The 4th would be a $500 fine.  The 5th would be one week mandatory community service.  The 6th would be license suspension for a year.

No one could get a drivers license without an intensive driver's ed class (50 hours minimum).  It would cover all the basics, plus: changing oil, checking tire pressure / fluid levels, changing a wheel, and safety check - cone tests, parallel parking, driving in reverse - calculating speed, distance, and time, as well as braking distance and impact force at different speeds - fuel economy, basic hypermiling - safe and legal bicycle operation - auto crashes, causes and prevention - practical accident avoidance, using simulator - poor weather handling, rain, ice, snow, fog, and glare - driving with manual transmission.  The final test could not contain any multiple choice questions, and would cover all topics, some as hands on skills tests.

Driving class (as above) would have a 2-3 day mandatory refresher course every 10 years - every 5 years before age 25 and after age 60, as well as after every moving violation or accident

No communication device while driving (including hands free) except 2-way radios used in the course of a job which involves driving (truck and taxi drivers, emergency services)

Public safety tax based on weight for all motor vehicles, added to annual registration (i.e. one pays for the additional risk to everyone else caused by their choice to buy a 3 ton SUV rather than a 1 ton car) - based on the grand total public cost of all accidents, divided by the total number of registered cars, proportioned by weight.

Anyone found to be 1% or greater at fault in any auto "accident" would be automatically charged with criminal negligence.

Revoke mandatory airbags, seatbelts, crash rating standards.

Traffic lights would flash green before turning yellow (as in Mexico).  They would flash red before turning green (so you know to turn your engine back on)

Stop signs would be considered yield signs for bicyclists (as in Ohio)

All 4-way stop sign intersections would be converted to either a 2-way stop, a traffic circle, or a stop light.

All major one-way streets would have timed / synchronized stop lights.

50% tax on retail gasoline, money used to subsidize public transit.

At rush hour, instead of a carpool lane, the left most lane would be for commercial vehicles (being used for work, not for commuting), transit, emergency services, and people with permanent disabilities only.  On highways with 3 or more lanes, the next one over from the commercial / handicapped lane would be for carpools of 4+ people, plus toll road paid by electronic RFID tag

Upper limit of inheritance or gifts of $10,000.  The government income from estates would replace all (or at least most) of the income tax.

The rate for any remaining income tax would be at least half for earned income (wages / salary / commission) as for unearned income (dividends, capital gains, gifts, prizes).

The tax rate on unearned income would be steeply progressive, with a maximum rate of 99% after $100,000.

One may only own land which you personally live and/or work on - i.e. a maximum of two parcels (one for work, one for home) per person.  They can be any size, so long as they are a) continuous and b) actively and directly used by the owner in some way.

No one could have more than 2 households as tenants, and then only if the tenants share the same parcel that the landlord lives on.

Corporate charters would only be granted for very specific circumstances, where it is demonstrated that the product or service offered could not be provided by a privately held company, and that it is of overall benefit to society.  Any charter application which met those standards and was granted would be for a specific and limited time period - 1 year by default, 5 years with requested extension, 10 years considered with an explanation of the need for a longer time period.

Patents and copyright would be good for 10 years, or until a 25% return on investment was made by the patent/copyright holder, or until the applicant dies whichever came first.

Business licenses and fees would be by percentage of net income, not flat amounts.

Business insurance companies would be required to offer a broad range of coverage and deductible amounts, so that small scale and hobby businesses with low maximum potential risk could afford coverage.

Any form of business could be run out of one's residence unless a specific risk or harm to the neighbors could be demonstrated.  "Lowering property values" would not in-and-of itself be a valid form of harm.

Employers would not pay for the employees' payroll taxes.  The employee would cover the full amount of their own social security and medicare taxes.

Employers would also not cover medical insurance, but that would be irrelevant, because there would be nationalized, single payer, health care.

1/2 of company profit would be distributed equally among all employees, without regard for title or position.  Any increase in efficiency due to improved technology that were not passed on to the consumer would be distributed to employees either in the form of fixed hours and increased salary, or fixed salary and decreased hours.

No one could sue for loss of profit.

A company with more than zero profit could not lay off employees.

Overtime would be anything over 86 hours per month, would pay time and a half, no exceptions by profession, would apply to salary and commission as well.  Double time after 172 hours in one month.

No company or corporation could buy another.

No company could have more than one location, except in those cases where the nature of the company required multiple locations (such as delivery service).  Exception could be made on a case by case basis, if the expansion could be shown to benefit society as a whole enough to offset the anti-competitiveness.

Any company based in the US, or with a majority of US shareholders, or with 1% or more of product exported to the US, must follow all US wage, safety, and environmental laws and regulations, regardless of the location of production.  (For example, if a company builds a factory in China, they still must pay US minimum wage if they want to export the product into the US)

No US military protection of private property, on US soil or abroad.  For example, US oil companies would have to pay for their own private security to guard pipelines.  Private corporate interests could not be considered "national interests", even if the product they produce is of value to the nation.

Any action of military or CIA is automatically war, whether or not it is officially declared.

Any action longer than 5 days must be approved by congress.  Any action longer than 60 days must be unanimously approved by all 50 states (via senators and/or governors).  Any action longer than one year requires majority vote of all US citizens.

Military budget reduced by 90% (give or take).  It could never be increased to more than 10% less than whatever nation has the highest military budget.

Universal conscription of all citizens at 18, both genders, deferments for medical issues, but no other reason.  Everyone must attend bootcamp.  After that, choice of 2 years of either military service, or civil service.

In middle school, high school, and college, reversible long-term birth control would be provided at no cost to both genders (yes, the technology exists).  This would be voluntary, and either child or parent could choose to opt out for any reason, however it would be the default - everyone would get it unless they actively choose to opt out.

(Voluntary) permanent sterilization would be provided at no cost to all adults.

All forms of contraceptive would be covered in full through health care.

Child tax credits would be eliminated.

Welfare would provide a fixed amount per household - it would not increase with additional children.

Universal, single payer healthcare - however, in order to engage in certain high risk activities, you would have to opt out.  You would present your opt out card before buying cigarettes, and to get a registration sticker with a stripe which indicates you may drive a car without a seatbelt of ride a motorcycle without a helmet.  Possibly also for purchasing more than a certain quantity of alcohol at one time, and certain foods.  Anyone who opted out could be refused service at any hospital unless they pay in full in advance, even in emergencies.  They could still purchase private health insurance, if any private insurer wanted to cover them.



Citizenship would not be automatic:
At age 18, each person would need to pass the same citizenship exam that immigrants have to pass (this would be covered in high school). 
They would  have to go to military bootcamp, and then either serve in the military or in civil service for 2 years.  They would have to register to vote. 

Anyone choosing not to apply for citizenship would be considered a native resident. 

Native residents would not have to pay any taxes.

They also could not vote or run for office.  They would not be eligible for public assistance, including health care and (college level) education.  They could not drive motor vehicles on public roads, nor sue in court.  They would be responsible for the labor, fuel, and expenses if using emergency services such as police or firefighters. 

One could apply for citizenship at anytime, up to age 40, however, once revoked, you could not get it back for 15 years, and would have to begin the process from the beginning.