More on TWPS

A few more comments on That Worst Possible System (TWPS), whilst I’m still bashing the ideas around in my head.

It’s interesting to look at some of the other artefacts and distortions of TWPS, aka the ‘normal’ money-based (or more accurately possession-based) framework for societal economics.

One is inflation: it only exists because of price-to-value mismatches, and the resultant endless juggling-acts to try to re-position my worth as being more valuable than yours. It’s exactly like the happy kids-game slapping one hand on top of another, which always ends in a frenzied faster-and-faster piling-on of hands and a collapse into silly giggles – except in this case there’s none of the silly giggles, nor of the happiness either…

Another is ‘economic depression’: it only occurs because labour is deemed to have no worth – or more accurately, no ‘marginal value’ that can be extracted by some ‘entrepreneur’ or literal ‘between-taker’, as classic Marxist economics would put it. People’s labour becomes ‘worthless’ when nothing can be ‘excised’ for a self-selected third-party – a commercial ‘entrepreneur’, or a government, through taxation – a point which underpins the common misconception that women in general, and mothers in particular, do no significant ‘work’.

Another artefacts related to both of these is what’s known in Australia as ‘bracket creep’. Income tax is supposedly proportional to income, but in practice is set in percentage-bands, with quite steep jumps between bands at particular income-levels: income below $35,000 taxed at 15%, for example, below $50,000 at 35%, and that above at 50%. With inflation running at a fairly low 3% or so, it doesn’t take long for someone earning $30,000 to need to be earning $50,000 to buy the same nominal goods. But because they’ve now gone up two tax-brackets, they’re now paying 50% income-tax instead of 15% – which means that their effective income has gone down, not up.

Related to these is the ‘poverty trap’ arising from welfare payments. Because multiple benefits and ‘concession’ discounts are linked to income, welfare-recipients frequently find that they lose well over a dollar in effective income for each dollar earned. In other words they cannot afford to come off welfare. Most insidious of these is single-parent welfare, because this is linked not only to income but to relationship status: as soon as there is a live-in partner, all welfare-payments cease – yet (in Australia at least) the single-parent ‘pension’ may well provide an effective income considerably higher than the local median take-home pay. The result is a tawdry, demoralising twilight-zone of pseudo-relationships – incidentally also greatly increasing the welfare housing-costs, since the economies-of-scale from people living together are also not available.

In short, totally bloody daft – and incredibly wasteful. But in effect a ‘necessary’ outcome of a possession-based economy…

And for your next exercise… 🙂 …go down the high-street or the mall or whatever, and count up the total space (and cost) taken up by banks and insurance-offices and pension/superannuation/whatever funds and mortgage-brokers and the like. For a more accurate estimate, include about half the space occupied by real-estate brokers and high-pressure sales outlets and anything of that nature. Add those all together. Now, in your mind, discard them – because they are completely unnecessary in a functional, responsibility-based economy.

Yet in a functional economy, probably half of the shops would remain much the same (though the way they operate would be somewhat different), and probably most of the non-financial services too.

So look again at your high street or mall or whatever – and imagine those changes. It’d look kind of different, wouldn’t it? But perhaps a bit more human?

Interesting, isn’t it… 🙂

3 comments on “More on TWPS
  1. Linda says:

    Two thoughts:

    In the USA the system is that you are taxed at the higher % only when your income is over the next level. (Making up numbers here) in other words you might get your first $7,000 tax free. Then the next $5000 is taxed at 10%. The next $5000 taxed at 15% and so on and so forth. So if you earn $17000 you’re not being taxed on everything at 15%, only the bit above $12,000 and until you hit the next bracket. That seems to work better.

    Regarding subsisting, the book “Nickel and Dimed” and the documentary “Waging A Living” take the same tack as you, and while depressing are worth a look.

  2. Tom G says:

    Yup, agreed, and it’s the same tax-bracket system in Aus and UK. The point I’m making is that the combination of inflation and fixed tax-brackets means that income adjusted only for inflation (e.g. taxable index-linked pensions, such as my mother has) slowly reduces in value over time because the ‘increased’ income (to compensate for inflation) gets bumped into higher tax-brackets (taking a proportionately larger chunk of the ‘increase’).

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