Redrawing Democracy: A Vision

I've been thinking today about my personal vision for the kind of society I would like to live in, a sort of "ideal picture" of an ideal country. It's actually pretty specific, and I think I am finding words to describe this picture. The first part is unabashed utopianism. The second part is serious "political science-fiction" as I like to call it.

Physically, visually, it looks somewhat like a plant, with each part being of equal importance, though some parts are more visible than others. The roots would be in the countryside, where much of the population growth would occur and a reserve of unspecialized yet hardworking people would be maintained, where both new population and raw materials would originate. The stem would be a network of incrementally larger transportation arteries and commercial hubs, from an unmanaged network of dirt and gravel backroads linking rural communities to more paved roads and rails, to factory towns that process the raw materials, finally to the flower of the society: the cities. The cities would be clean, dynamic places, where the great variety of cultural, commercial, and industrial forces that originate in the countryside would shine, hybridize in ever changing ways, as people, products, and ideas moved in and out.

The Root (Country)

The roots would be an essentially unorganized countryside. There would not, in this society, be an organized, State-driven effort to extend the amenities of urban civilization to the farthest reaches. In other words, tax dollars would not be spent to directly extend or subsidize the extension of things like transportation and communication networks to these places. If the phone company sees no profit in extending phone lines to a particular community (and the people of that community are unwilling and/or unable to finance the extension of the network to their community), the lines would not be extended. If the only way to build a paved highway to such a place is coercive finance, the road would not be built.

Th result of this would be that unique rural communities would be more able to continue their existence. Places where labor specialization is less, where jacks-of-all-trades flourish, where traditional values are under less pressure by a ubiquity of instant communication with the rest of society. The various communities would be highly diverse, with some being ethnically diverse, others ethnically homogenous. Some places would host things like free-love hippie communes, while others would host more religiously motivated communities. Some would be essentially commercial operations, focused on profitably providing raw materials for a market. Others, particularly ones further off the beaten path, could be more idealistically founded. There would be a government over this all, but the primary purpose of this government would be to ensure that no particular group of individuals could either monopolize the available resources or impose their communal visions on others.

From these places more adventurous souls could come, migrating to the cities with no particular specialization but a well developed work ethic, revitalizing urban cultures that all too often lose sight of the value of hard work and perseverance in favor of blaming their neighbors for their woes. To these places could go the world-weary of the urban world, who would have a wide range of communities to choose from, and be able to revitalize rural cultures that all too often lose sight of the value of innovation in favor of a dogmatic adherence to tradition.

Ultimately, the character of the root would be a spectrum of degrees of connectivity to the world market, ensuring that there are always places where the value of hard work and personal perseverance is always apparent, unlike in urban societies where the value is often more abstract, hidden as it is by layer upon layer of business-controlled access to capital and other resources.

In our current society (Western civilization and the more urbanized Asian civilizations), the root is undervalued, weakened by well-meaning but misguided efforts to extend the benefits of modern civilization to these places by any means necessary. The result is a sort of grafting-on of the rural societies in other parts of the world, as population growth slows in over-urbanized societies and are are gradually replaced by alien populations. The civilization I describe would be a more balanced civilization, accepting its less incorporated rural populations as kin (being linguistically compatible with their urban counterparts), with an economically resisted but politically free flow of individuals between the root and the flower. Urban civilization would also be more evenly distributed, as opposed the overconcentration of urban communities in the geographic West, with rural populations on the outside.

The Flower (Shining City)

Cities would ideally be clean, prosperous, diverse, and well-engineered, with multi-use buildings being the norm, "zoning" being minimal. These would be the places to which raw materials would flow, both physical and cultural, and from which refined materials would be released, from manufactured products to novel cultural movements. Populations would be dense, and the ubiquity of mass transit would make it possible to travel by foot alone (auto accidents would be few, with most of the drivers being those who have no choice due to their professions). Further, most of the cities would be linked by advanced mass transit (high speed rail?), allowing convenient, almost seamless movements of people and goods between the most advanced cities. Travel between the cities and less urban communities would have a continuum of convenience, from being able to reach the larger towns via older rail systems, the smaller towns via less developed roads, to remote communities that one can reach by inconsistenly maintained gravel roads... at best. And there would yet be places the hardiest of urban tourists would have to themselves, reachable only by foot (whether human or equine).

To these places would come the more adventurous persons of rural origins, hungering for a faster paced and more competitive life than exists in the countryside. From these places would depart those who are weary of that same fast pace and high level of competition, and they would have a wide variety of places to choose from. Thanks to the equitable distribution of access to natural resources (most chiefly, access to physical space, to be described in a later section on the political institutions defending this society), "captive" populations mired in urban poverty would not exist. Further, due to those same institutions, city boundaries could shift and move periodically, to account for changes over time, speeding the decomposition of the dead institutions of dying cities.

Branch and Stem (Everything In Between)

The cities would not be walled; the country would not be isolated. The chief characteristic of the connecting tissue would be variety, variety, variety. There would not be one single plan defining the nation's transportation system. Larger towns, serving as hubs of trade and manufacturing between the two extremes, could be connected by robust transportation systems. But there would yet be places connected by only the most tenuous threads, with minimal (but still present) commercial connection to the urban flower. The further one got from the most rural communities, the more diverse the communities would become. While the great megatropolises would connect with others around the world, the smaller cities would connect regionally. But new transportation systems would be established in an organic fashion. Megatropolises could shrink to more regional status; new cities could rise (though this happens less often than one might think, with the oldest city sites having been continually occupied).

I'm not sure what else to say about this.

Bark and Thorn: Government

There would be, constitutionally speaking, two levels of government: the national and the local. Local could be big in some places, representing the populations of entire cities or wide-ranging territories. It could also be small in other places, representing entirely independent villages or even individual homesteads.

The concept would be that all individuals have an equal right of access to the land. By default (due to the absence of equally distributed "ancestral estates" in most of the world), this right would be exercised by equal and inalienable ownership of shares in a single corporation, which would function as the national government.

This government would collect "taxes" in form only. In substance, they would simply be rents paid for the privilege of excluding others from use of land resources, which would include everything from physical, geographic space, to the limited capacity of the atmosphere (locally and globally) to process the byproducts of human activities, to exclusive use of segments of the electromagnetic spectrum. It would always seek to collect the most it could, keeping rents at revenue-maximizing levels (seeking neither to raise them so high it hurts productivity, nor lower than necessary). It would spend these revenues on whatever the board of directors, elected by the population at large, decided was necessary. Any extra would be returned to the shareholders (read: again, the population at large) as a dividend.

Ideally, in my opinion, this government would focus primarily on defense of people against aggressors, both foreign and domestic, keeping the peace and leaving more in-depth governing to the lower levels of government, and thus returning as much of its revenues as a dividend as possible (this practice is what is meant by "geolibertarianism"). This is what I would advocate as a participant of the political process. However, the actual results could be whatever the citizenry enabled via the board of directors.

Local governance would not be set in stone, and would be formed in the following manner. Groups of shareholders would have the right to redeem, temporarily, their corporate share in exchange for a physical share of the land equal in value to their share of the corporation. Essentially, segments of the population could "secede" from the level and govern themselves in whatever manner was mutually agreeable to the participants. They would, first, have to had legal occupancy of that land; they would have to already "own" it and be paying the appropriate rents for it (which would tend to be higher per square foot in urban areas, and potentially nearly-free in the most remote rural areas). The value the population would receive back as a dividend if the rents could somehow be collected without bureaucratic overhead and the government returned the entire amount as a dividend would have to equal the rents that would normally be paid for protected occupancy.

From that point until the expiration of the charter, no more than fifty years later, the national government would not collect physical land rents from this area, nor would they exercise jurisdiction over internal affairs in this area. (They would still collect, and its people would still participate politically, in a limited fashion as joint-owners of overlapping broadcast regions and pollution basins.) At expiration, the population would be re-issued their shares in the national government, the land be returned, and if they so desired and the re-assessed rental-value still matched the re-counted population (and they all still wanted to participate), the charter could be re-established. I suspect, however, that people more often would take this opportunity to adjust borders, try entirely new divisions, or even return to direct national governance.

Examples of how this might work include cities that make the decision to become "free cities", establishing independent political institutions (particularly independent of more tradition-bound rural populations), collecting local revenues more efficiently, spending them locally on urban priorities, and so on. It could include a small town that wants to defend it's unique local character from what it perceives as an overbearing national government. It could include an individual homestead, the members of which want to attempt a fully "market anarchist" type of political life. It could include a pioneering community, who believe the rental-value of an area could be substantially higher given some work, and who could use this institution to secure the benefits of putting in that work and taking the risk over a period of fifty years... but not allowing their descendants to perpetually place themselves over the remainder of the population.

Most importantly, it would include a great variety of different sizes and types of local governance, making such a country, overall, into a true "laboratory of democracy." Successful experiments could be easily extended and imitated; unsuccessful experiments would liquidate by default after a time. Populations that wish to break away could do so peacefully; others that wish to join together could do so without dragging their neighbors into it. THINGS COULD CHANGE... and nobody would have to fight a war to make it happen.

The national legislature could even be bicameral. One house would be the board of directors elected by all who choose to be governed directly by, and participate directly in, the national government. The other could be the representatives of voluntary contributors (a version of the "openly sold Senate" I described nearly a decade ago).

Anyway, that's what the vision of this particular brainstorm looks like.

Animal Spirits Pt. 3: Natural Wage Theory, Money Illusion, and Wages

I just finished reading Chapter 9 of Animal Spirits. Now I see the point of criticizing Natural Rate Theory. I mentioned in an earlier installment that I suspect that, over the long time, wages will tend to track inflation, but lag behind. Akerlof and Shiller appear to be saying that this is precisely the point. Steady inflation holds wages at a lower level, one which allows a lower level of unemployment. Employers can grant employees raises for the financial purpose of keeping it in line with the purchasing power of money, while still giving the employee the feeling that they are being rewarded for their efforts. In the absence of inflation, the employer can't afford to give so many raises, the employee feels he's not being treated fairly, and worker productivity falters. So, in their analysis, because of money illusion and fairness, a certain level of inflation is required to keep productivity up.

Outside factors they failed to take into account (which I will get into below), I can find no fault with their analysis. Particularly in a world in which people have, over multiple generations, come to regard raises as a regular obligation, perceived unfairness (that very phrase is redundant, given all fairness is subjective) could well result in productivity losses in the absence of inflation-motivated raises.

Of course, this likely leads to the recommendation that a level of inflation should be maintained at all times. Further, it makes something like a commodity money seem untenable. However, there is something else to put into the analysis: the credit cycle. Wages are downwardly rigid, therefore deflation can damage employment levels, as falls in wages fail to keep pace with falls in other prices. But what if "fractional reserve" banking were abolished, and therefore the bank created inflation that ultimately leads to deflation never occurred in the first place? The downward rigidity of wages could become irrelevant, in this scenario. But then, it could also lead to an extended (possibly multigenerational, meaning it would be politically unsustainable in reality) period of adjustment, until people finally realized psychological satisfaction is not going to come from making the numbers bigger.

It's a big hurdle to get over. From a strictly logical standpoint, wages generally rising over time, but lagging behind prices is not as good for workers as wages falling slowly but lagging behind prices. But falling prices, though it is good for a person whose wages have not yet fallen, is an impersonal phenomenon. Rising wages, though, feel like a personal reward, even if the employer is only keeping the wage in line with rising prices, and even lagging behind. The gradual price drops of a stable money supply may be better for workers materially, but rising wages, even insufficient to cover rising prices, are more emotionally satisfying.

Were it not for the dangers inherent in a fiat token-based (whether paper or digital) currency (which we are seeing today, as the results of bad monetary policy hit the economy like a hurricane), a fiat currency would definitely be better... IF the money supply expanded evenly. Unfortunately for fiat money supporters, it does not. Industries grow beyond what they should because of investment bubbles, and then people lose their savings, workers lose time building knowledge and experience in bad industries (not to mention their jobs for no good reason), people lose confidence (which the authors just spent a chapter talking about). I'm presently convinced the negatives of fiat money and an inflationary policy outweigh the negatives.

That, and I have moral difficulties with the idea of a monetary elite making things better by deliberately deceiving laborers.

Land Justice: Yet Another Model

Lately, I've been thinking about the models I've promoted in the past: a periodic disbursement of rents to the public on a per capita basis, whether by the government via taxes on rents (land values, electromagnetic spectrum, etc.) and a partial or complete citizen's dividend, or via a regular stock dividend from a separate corporation that acquires rental opportunities on behalf of the public over time. It occurs to me that one advantage to the way things are now is that, for the most part, people have to work. It is theoretically possible that, under public distribution of rents, you might end up with more people who choose not to work than are unemployed under the current model, and while that looks neat if you'd rather not work, it may have a significantly negative impact on overall productivity. If you consider society standing by itself, this isn't necessarily a bad thing... but one society never stands alone. More productive societies sometimes overcome less productive societies, wiping out such models.

I find myself returning to the model presented in Leviticus 25: 8-17, wherein the distribution of the land is reset every fifty years. It occurs to me that, even in the absence of "ancestral lands", there is a way to implement a similar model in our own society. In this case, I'm not considering how one would get from here to there... though the slow accumulation of land by a foundation established for this purpose could perhaps implement this as well as my earlier model. Simply put, rather than collecting and disbursing land rents yearly, it would be done every fifty years.

The advantage of this is that it while still freeing people from the mistakes of earlier generations, it would do less to protect people from the consequences of their own actions... which is a desirable outcome, in my opinion. This corporation, jointly owned by every inhabitant of a country, would lease the land (and other rent collecting opportunities) to individuals on a fourty-nine year contract. In the fiftieth year, the lease would expire, and everyone would have to renew their leases, from the owner of a small city plot to the owners of large tracts of agricultural land to the owners of rights of way for privately owned infrastructure. The proceeds would then be disbursed to the shareholders (the People) on a per family or per capita basis.

I believe that fifty years is a short enough period for every generation to get access to these proceeds at least once (and in many cases twice) during their lifetimes. It's also long enough that I suspect that, if someone is in danger of losing their lease to a higher bidder, replacement of capital improvements on a different site could be built into a business plan (everything needs to be tore down and rebuilt every now and then, after all). In the case where this isn't feasible, if the activity is productive, I suspect the current occupant would value that location higher than any other... and thus not be outbid.

These funds, once received, would do much to alleviate the disadvantages of those whose opportunities are restricted by the mistakes of the previous generation. Such funds could be used to educate oneself or one's children, take advantage of investment opportunities (including starting businesses of their own), move to more advantageous locations, and, yes, it could be blown in a few years on a licentious binge. The advantage of doing this semicentenially is that those who chose to spend the money foolishly would rather quickly end up having to work for a living again... returning to the ranks of the productive. Doing it annually runs the risk of creating a class of men who are chronically unemployed by choice.

"Consumer Time Preference"

The three words above sound like some forebodingly complex economic term... but what it means is really quite simple. An individuals "time preference" simply refers to how patient one is, whether one is willing to wait through hard work to reach a better result, or whether one is impatient and demands pleasure and leisure NOW, and damn the future. The later is an attitude many commentators decry about Americans in general. In economic jargon, the level of "consumer time preference" in America is very high.

What does this means? Imagine some kind of small community, living on a temperete island with about a hundred people, cut off from the world. Their future prospects are very dependent upon the level of "consumer time preference" found within the community. If they spend spring and summer just taking what food is available from the local environment, eating and wasting it all, saving nothing for later, when winter comes, there will be no food (or at least, not any food that doesn't come without extreme hardship). They will starve to death. If, however, they work a little harder, consume a little less, storing up preserved foods, when winter comes, they will have more and better to eat.

Even if the island is tropical, their future prospects are still dependent upon time preference. If they work to create a store of goods to draw upon, tools and structures to make living easier and more pleasant, in exchange for hard work earlier, they will have a more pleasant life later. If all they do is lounge about on the beach, eating what comes their way, they'll just have to suffer through the gaps in the food supply, and won't have good shelter against the occasional tropical storm. Time preference is important.

What is true of the small, aboriginal community (which can only advance beyond the aboriginal state by thinking beyond a single year), is also true of a civilized, industrial community. If people are willing to wait for the larger, more efficient factory, their future quality of life will be better, with consumer goods made more efficiently (and thus consumers paying lower prices and able to buy more of everything). If they're not, prices remain high.

It's worse is if a generation arises which has a lower aggregate consumer time preference than the previous one. Such a generation might neglect the maintenance of the large factory (prefering to be lazy and just let things fall apart than maintaining a high standard of quality) and actually reverse the community's standard of living. An industrial community has much farther to fall than an aboriginal one: they can spend considerable time consuming their capital structure before their standard of living falls as a result. An aboriginal community that neglects its minimal capital structure feels hardship rather quickly, a much swifter correction.

(A good way to imagine this at a very low level is to envision how one keeps his house. A clean, organized house is both more pleasant, and easier to navigate. Its easier to find things. It's less likely to have actual sanitation issues. It is evidence of a low time preference: the inhabitants are willing to spend their time now so they might enjoy the benefits of a clean house in the future. A high time preference person would rather goof around now and deal with the consequences later, even if it means he spends more time overall looking for things. Anyone who sees the way I keep my living space can see that, personally, I am a very high time preference kind of guy.)

Is consumer time preference something that can be shaped? Can a community which displays a low time preference be made to change for the better? Or is it purely random, or even static? Can it be measured? If it can be changed, I would imagine the method would involve some sort of encouragement or reward for those who have low time preferences (and thus are building the community up), perhaps some sort of penalty for those whose high time preference potentially erodes the community.

This is long enough for one entry, so I'll continue next week, with the shape of an institution that does, in fact, reward low time preference and offer a measure of a community's overall time preference.