I was reviewing the OECD web site.  It claims income taxes add friction to economic activities.  I think it does but not for the reason stated.  If two companies produce the same goods but one produces the goods more efficiently the one that produces the goods more efficiently will pay more taxes.  The same is true of a value added tax.  It isn't that the tax burden changes one's behavior; it's that unequally applied taxes affect choices.

Governments need revenues to fund their activities.  The important part to remember when trying to craft a system that helps the most people to a better life is that a government that wants to help the majority will favor tax and spending policies that favor economic choices whose effect improves the lives of their citizens.

When people don't have expendable income they can't send the economic signals necessary to inform producers.  I don't know if there is an economic stable state where everyone has a living wage but we need to look hard for one.  We might need to adjust tax laws to make it happen.  Some care about what is fair and just.  I care about outcome.  We can deal with fairness later.

Most of us earn our living through our labor.  We don't have the savings to survive very long without a paycheck.  This puts a downward pressure on the labor market since we have to settle so we can survive. 

Retirees have been moved from defined benefit plans to defined contribution plans.  Retirees have to schedule dividends and interest sufficiently to provide living income or they have to sell some of their capital.  If they have to sell capital they have to settle on the price when they need to make the sale and this puts a downward pressure on capital assets

Only those who don't need to make a trade can wait for the markets to come to them.  They don't need to settle or either a buy or a sell so they can use a strategy to their advantage.  They can even play games with the market to their advantage.

What we are seeing in the US is the end game of unequal power.  Our economy is grinding to a halt as a smaller and smaller portion of the population has an ever increasing percentage of the nation's wealth.  We have to change the dynamics so these people have to make trades at least as urgently as those beneath them.  We don't need to be confiscatory and shouldn't want to be.  We merely need to adjust the conditions of the trade where the very wealthy isn't getting as great of growth as the economy.  The excess growth should be distributed most heavily to the poor then trailing off up the wealth scale.  The rate of growth should help inform us.

Economics is the study of the distribution of scarce resources.  When you hear, or read, "scarce resource" you might think of gold, silver, and other rare metals but the concept is more general than that.  From Scarce Resource the definition is a resource whose availability is less than its desired use.  The concept can be apply to potable water, clay, and even hours in the day.

In the United States we use market capitalism to distribute some scarce resources, goods, and services.  The idea is deciding how to distribute scarce goods and services is too complex to calculate but the markets closely approximates the best distribution by allowing people to make their own choices about which items they would rather have.  We hold the individuals feel themselves better off after a trade in a free market than they were before the trade.  Why would people trade things they think more valuable to themselves for things they think are less valuable?

Not all scarcity can be resolved through markets.  For instance there are only so many nice summer days in a year.  I know I would like more but I'm not going to get more than there are no matter how much I would be willing to spend for them.  Sure, I can schedule my vacations at times when it is more likely to be a nice summer day so I can fully experience them but I can't produce them on demand.

So there are the economic concepts of  public goods and private goods.  The main distinction is private goods are excludable however public goods are also non-rivalrous.   We focus on excludability because we are using market capitalism to distribute goods and there's no way to make a market when goods are not excludable.  I want to focus on non-rivalrous goods.

While some websites require subscription for access most of the websites we reference every day are basically free for us.  As long as the sufficient bandwidth we can think of them as non-rivalrous because my consumption doesn't (significantly) reduce your ability to consume them.

One of the major problems with market capitalism is the monitization of demand.  Even though all of us have some shared basic needs such as food, clothing, shelter, etc.  The monitization of demand means the desires of the wealth can overshadow the needs of the poor in the markets.  The markets are signaled by the effective demand produced by money.

If we want to create a better life for all we need to increase the market signals for goods and services needed by people and focus our production and consumption of goods and services beyond our needs on non-rivalrous goods.  We can still consume rivalrous goods but we should try to consume the least scarce of them for private gain and use the most scarce in producing the greatest good for the most.

On the way to work yesterday I talked with a guy who was a "sanitation engineer" but by description of his work, a janitor.  We got to talking about how he turned his life around through Christ.  Being an atheist(agnostic with a predisposition to disbelieve) I wasn't so concerned by that but by our life differences and similarities.

My talents let me learn many new and complex tasks quickly.  I don't do well in a university setting but I can pick up a book or follow some one doing a job and do it.  Being able to learn quickly gives me some advantages over most people in the labor force and consequentially I'm pretty well paid.

Many of the people in my circle of friends and relatives make comments about how I deserve my higher pay.  They say people who settle on janitor or store clerk or lawn care or any of many other jobs just don't deserve as much and besides the market sets people's wages.  Don't get me wrong, I like having money left over at the end of the month and not having to worry about a bit of splurging; I just don't know why I deserve more than other hard working people.

The problem is I feel I deserve some benefit for what I bring to the table even if others work a bit harder than I.  My talents provide benefits not just for me.  Others gain from me using my talents.  Why shouldn't I be compensated for what I bring to the table?

So here we are.  Some people work hard and get nowhere while others work less hard and accomplish a lot.  I have no desire to work hard so people who don't bring my talents to the table and don't work hard can bum around but I would really like people who put in the effort to benefit from the surplus of goods and services the community of us can provide.  Specialization provides benefits for all.  There are jobs I don't like doing and jobs others can't do.  OK, most people don't like doing jobs I don't like doing, I get it, but they need to be done and what do I get in return for sharing the benefits of my talents and hard work?  Aren't we equals?

Somehow we have to find a way where everyone helps out and people only have to do the minimum of what they don't like doing.  The labor markets are broken because some of us come to the table with more power than others even when we want to give everyone a fair shake.  I don't want to abuse you and I don't want you abusing me.  I want a fair trade for both our benefits.

During the day I realized just how perverse our system has become.

We have moved from defined benefit retirement plans to defined contribution retirement plans.  Sure defined benefit plans weren't always working the way they should--many plans went under and had to be picked up by the PBGC who reduce scheduled payments to the retirees--but a defined contribution plan leaves future retirees wondering if they've saved enough to retire.  Most haven't.

Most of us have a hard enough time getting our work done and having some time for ourselves.  We aren't trained to properly invest for retirement and don't have the time even if we are.  This makes us easy marks with lots of cash we aren't using right now.  We won't know if our "investments" have paid off until we try to retire on them.

Costs get pushed down the food chain.  While investments needn't be a zero-sum game most retirement investments are done in aftermarket transfers.  This means the money we use to buy a stock isn't increasing the investment dollars available to the company whose stock we buy but into the hands of the prior investor who sold the stock.  It's a zero-sum game as far as the company is concerned.  Those who have the time to make more informed decisions will win over those who don't have the time or skill to do so.  The effect is a concentration of wealth in the hands of those who can play the game from those who are just trying to prepare for their retirement.

This morning I was able to clear my mind a bit about how we compensate people.  It turns out we are using desperation to get the worst jobs done.  Sure many jobs are unskilled or low skilled but there is always some skills needed and some talents.  Instead of paying more for jobs we don't want to do and don't like doing we rely upon people getting hungry enough to do these jobs.  As long as we keep a ready supply of hungry people around these jobs will get done.

How can it be moral to rely upon desperation to get people to do things they wouldn't otherwise do?

It seems to me that we need to figure out how to support a minimum stipend so people don't feel forced to take a job then we need to let the market forces drive the wage up for jobs no one wants to do but need to be done.

While trying to start a new blog I found ScareResources.blogspot.com and WorkForAll.blogspot.com were both used.  I gave up and repurposed an old blog of mine.  I need a new URL but this will do for now.  I have to start focusing my efforts, I'm not getting any younger.

From now on I'll focus on participatory economics for a better tomorrow.

I'll need some help.  While I lean left politically I prefer working solutions to idological solutions.

ScareResources.blogspot.com when nowhere.

WorkForAll.blogspot.com led to www.WorkForAll.org.  This looks like a promising beginning.  http://www.workforall.org/drupal/references/WFA%20study%20English.pdf hasn't been updated since the global meltdown.  Things are never easy.  My left leaning notions tell me the story isn't quite as portrayed but I don't know.