Business of risk

There is so much risk in life where people can pool resources with businesses which will pay out when needed, up to a point, if needed. And such businesses are called insurance companies.

So strangers will take care of your needs, because you've given them money along with enough other people, if you have a problem covered under a contract, which limits liability of the strangers.

And have posted about money and limited social trust before.

Business is about limiting liability to others, while community at its best will save you with its every breath, like if your nation goes to war. The United States as a community has fought. Like with other allied nations as a community of nations more than once to save our world, and community at the highest levels has no limits. And yeah, even family should not, though reality is that is not always true.

As a community the nation has a duty to its citizens, while to be a business an insurance company should only pay to the limits of a contract. But what if a person is sick and still needs care?

If your insurance runs out? Then your community, if you have it, should still care for you. And when it comes to health insurance, your nation should bear the responsibility, and that is probably best paid for at the national level, but could also be at the state level in the US working together with the federal level.

If an insurance company keeps paying past the contractual limits or takes on a person already sick?

Then that insurance company is NOT acting as a business.

Here's a tweet I made recently talking a subject have discussed here before:

Under my healthcare plan ANYONE can have any health insurance provider. Health insurers direct insure only their choice. Administer others. https://t.co/05LHNDrYYV

— James Harris (@jstevh) July 13, 2017

And the tweet links back to a prior tweet where I gave a rather simple healthcare plan which could fit into 140 characters. And will post the text here:

My healthcare plan: Preventive Care--everybody, Core Care--insurables, Expected Care--not easily insured, Elder Care--quality of life at end

Where explain all in a post, from 2009: My Healthcare Plan

That insurance companies can administer insurance even if they are NOT paying from the pool paid into to handle risk is not a wild idea.

Wealthy people will have an insurance company, when they will pay if, for instance, in a car accident. The insurance company has more expertise than a wealthy person who presumably rarely gets in an accident, with handling accidents, and that expertise is worth a LOT.

There is no reason for a person to stop receiving care if they reach caps in their health insurance!!!

And politicians know it.

The government can simply pick up the tab from that point on, while the insurance company continues to handle administration.

It's a simple idea folks. Harder to do in the past because administration was very expensive too, until computers made it very manageable.

So why would such a simple idea, which I put forward in 2009, not be part of the national discussion?

I can speculate. More than likely is about TAXES and POWER.

For instance, single payer healthcare would give vastly more power to the US Government, and some seem to desire it. While others seem intent on cutting their taxes by any means possible, and somehow have figured out a way to do so with healthcare a mess.

Some may wonder about the details, like what if people refuse to pay for insurance and just wait till they are sick, knowing is guaranteed? Well I explained one way to handle with a post I called health insurance responsibility back in 2012.

But limits of liability to be a business are just a reality. Without limiting liability, insurance companies can't act as true businesses, but with it they can focus on their strengths, without people caring as they still GET care.

Do you care with your health insurance, who pays if you need care, like if you're in the hospital as long as payment is guaranteed?

So if it switches from your insurance company paying direct, to the government paying you STILL get care. And don't even have to notice as still interact with same insurance company.

Why would you? Main thing for you is to get medical treatment and get well, not worry about who pays.

Why would anyone think you would?

James Harris

Uniform taxation proposal for web entities

The question of taxing activity on the web has been deferred for quite some time but as someone who has thought about gaining revenue on a global scale will admit am very interested in a uniform solution so have ideas for one.

To me the simplest solution is to have a global body tasked with gathering taxes at a globally decided percentage of revenue per user, or per transaction above flexible minimums which nations could set. So a web entity would simply report same to that body which would also collect those taxes and then distribute to nations.

Nations then would be tasked with further distribution, like here in the US down to the state level, where the state might then distribute down to the local level.

There is still some big data in there so that enough information is available for that to happen, but other than sharing that data the web entity has a simplified taxation position, and can be protected from worrying about granular distribution.

So the web entity would see only one taxing authority. That global taxing authority would only see nations for distribution. And then those nations would worry about the rest.

Some might wonder why such a system would be best but in my case for example am lucky enough to have a product in over 100 countries which is an open source software product so don't and won't have to worry about taxes, as is freely shared! That's cool and feel lucky is an option. Open source is one of the greatest things that thankfully arrived with the rise of the web.

But producing something for profit is daunting enough a prospect that will admit I'd just as soon not worry about lots of things, especially how could one handle just the taxes from a few nations let alone over 100?

The web by easing distribution means that web entities that are relatively small companies could potentially sell valuable products on large scales but be incapable of handling vastly different taxation rules. And even large corporations am sure find that burdensome though guess some may be facing it now. But nations just want the money, right?

Having globally agreed upon taxation levels could facilitate collection of tax revenue while removing impulse to cheat, facilitate business creation so a small company anywhere in the world could potentially handle worldwide product sales, and leave up to nations to still work through how they wish the money to further distribute.

These ideas are just some that occur to me pondering things, without claims of expertise with it noted am looking at my own interests in potentially having a company with a global product which operates for profit with the belief that in time there will be widespread taxation. It should not be construed as a claim of expertise in any related area. Nor do I claim it is the best solution or that it will lead to a solution as am simply putting forward ideas. If these ideas have been shared by others already, great!

Am not currently looking at anything on this subject though so as far as I know am putting out ideas that are products of my creativity, but I read a lot from all over. Besides the concept is simple enough I'd be surprised if not similar to ideas out there.

These ideas I consider open source, freely given to the world for its use, or can just be ignored. Benefit to me if used greatly outweigh any other so would make no further claims against anyone who used them. And further do not even ask for attribution back to myself.

Well that was fun. And yeah am NO expert in legal things, so I have to guess at things to handle potential areas where yeah, someone might get excited when there is no reason. These are just some ideas occurred to me today I wanted to share, and they are freely given.


James Harris

Work really fascinates me

Realized have some simple concepts about work, outside of physics, and what it is. So figured should just write out to see.

To me work is when a person provides a service under some kind of contract to some entity.

So you could work for your mother by doing the dishes, and she could be said to have put you to work. Or you can work for your nation, in service to your country, at any number of tasks.

And employment to me is when you work for some entity for remuneration.

And to employ someone you establish a contract for them to work for you for some remuneration.

What fascinates me about looking at work simply is the idea of some kind of contract within its definition, which then carries over to others. But employ is a verb which I think still needs contract stated when trying to define simply. And why abstract to this level?

Because how we define work defines so much about how people give back value to their society usually in exchange for value in return, which is how you make a living. And with my idea that money is most efficient as a return on a favor, the favor of work is interesting to me as well. But are you doing your mother a favor by washing the dishes?

And contracts are a huge subject where you can have social contracts and written ones, but guess all reflect some kind of future obligation. Contracts indicate you will DO something, not that you have done something.

Whether your work can be considered to be a favor to some other entity or not is a lot about community. Having a friend favor you with a cup of coffee is great. Having a stranger do the same at a coffee shop is commerce, as you return the favor with money, which I see as a social IOU. You return the favor of the cup of coffee with money which will be used later in exchange for some other favor.

But defending your nation? Is not a favor to that nation but can be about duty, honor and country. So the nation figures out how to value employment for national defenders on a community basis and for instance in the United States, the US Congress works out how to pay soldiers in the US military.

Found myself almost shifting from saying they work in the US Congress but of course those elected to represent the interests of their constituents are to do a service for their nation under a social contract. They get people to vote them into office with expectations they will do valuable service to the nation.

Our expectations as voters are about future work.

Looking at work simply helps me consider how to work best. But for instance, is this post work? I don't think there is a contract involved, unless am working for myself? The post definitely reflects effort, am sure. Am trying to do my best, and to communicate things I feel are important for myself and for others, maybe.

So to me, no this post isn't work. It IS fun.

It's an opportunity to share ideas others may find useful and help me clarify my own thoughts and set them down in a way meant to help freeze them in place.

Decided not to put links to other posts in this one, but it has labels: business, employment and money and can click those below to get other posts related.


James Harris

How will we work?

Considering what work is has intrigued me and in our times people have to ponder the question of automation and wonder what might be left for humans to do? And I was comforted to note that there was a time when most people did agriculture while now in major countries like my own few do. So huge shifts in how humans work have been ongoing for millennia.

And another huge one actually is about done as factories changed so much as our world industrialized and I think much of the idea of work as a horror came with factories as well. Sure farm work is hard, and can be difficult but the idea of dehumanizing labor, outside of slavery should add, I think really came with factories. And robots and automation are changing that story.

Took it for granted that our education system was long designed to create good factory workers. And the needs of the factory may have pushed more education for everyone, so should add that as well.

Now information technology is pushing for a different kind of worker in many areas, while many are also more likely to go into services.

In US manufacturing has approximately 10.3% of civilian employed over 16. Interesting. https://t.co/TPcOqY86tz

— James Harris (@jstevh) October 3, 2016

That reality of 10.3% of workforce over 16 in manufacturing in the US tells the tale I think, and so much was focused on factories, but reality now is few people work in them. And thankfully today here in this country at least such jobs are not the horrors they were in the past, when humans were treated like, well like machines.

Technology has transformed how humans work for a long time. But the one constant is that we work for each other.

I think what humans do for other humans is where focus should be, and in the past to feed each other was in agriculture, and later for a bit factories needed human effort. Now? Well we're figuring that out.

It is important to value human effort though. My own view based on my analysis of money as best thought of as a return for a favor where that favor is abstracted is that it is important to return that favor in equal exchange. The idea that businesses can cheat workers with less pay than deserved I think will go away, as a challenge to nations.

If you want your people employed? You can't let them be cheated as you discourage your workforce, limit your economy and in a world where information travels well, you are likely to be held accountable.

Wealthy individuals in the past could rely on gatekeepers to hide information for their benefit, while today the web zips information around with great facility.

And if your people find out they should be paid more, why should they like you?

The reality I think is that with the collapse of the factory system, and the growth in shared knowledge, we will do well in valuing what we do for each other.

Just like machines took over much of farm work and still have more to take, and are taking over factories, with a freeing of humans to do other things for each other, so will technological innovation stress more and more, giving value, so you can make that money for value returned.

Money facilitates commerce between strangers, helping us appreciate the input of others and think about how we can bring value to others. Sure it's had its problems lately, but with our species? Figuring things out is what we do.

Human beings seem to have a joy in figuring things out, which I think is so grand.


James Harris

Speculation including office supply theft

One of the more remarkable things to me in American work culture for those who work in offices is routine theft of office supplies, and found myself with speculations that offer a simple explanation which trace back to what I see as wage theft, gender inequality in pay, and slavery.

To me money is a social IOU as society guarantees payback, as for instance US currency is backed by the US Government. And when employing someone is given usually in exchange for a favor, typically called labor, where works best with strangers. That means community is another area, where for instance volunteer firefighters presumably are not pay motivated, but work for their community.

With wages occurring best between strangers in non-community arenas, I think it easy to explain why pay problems can occur in more community focused occupations like police work, firefighting, teaching among others.

Communities have to figure out how to value the work, versus in other areas, as for instance your community is MUCH better off if your firefighters are less busy putting out fires than not.

And for example with the president of the United States pay is set by the US Congress, but the president doesn't need it during time in office as things needed are supplied by the people of the United States of America.

Oh yeah, and soldiers are in a community focused area. You do not volunteer for service in the US military to get rich, I would think. And wages are set in a way that is about what the community assesses as should be given, versus in direct compensation for legal services or products as favors in exchange for money.

However, in other areas pay is supposed to be about value of work received and I think there are legitimate concerns by many that often workers in non-community focused areas can simply be exploited, forced to either accept less value in return for their work, or fight relentlessly against employers who may see theft through wages as just a way of doing business.

I speculate that attitude that thievery from workers is just part of business arose in areas where slavery had existed and slaves were not paid, of course, but once institutional slavery ended, those who had been slaves were to be paid. I suggest their work was not properly valued as many were in a situation where their employers were those who had been slave-owners. Those people I doubt highly valued their work, and didn't pay properly, and as their attitude gained traction it spread throughout the United States and around the globe, until we get the modern system, which includes a known tendency to underpay women generally known as the gender pay gap.

Which to me is high level thievery, as workers in such a system can find it very difficult to force proper pay levels. And it occurs to me that some may retaliate with low level thievery, considering office supplies to at least be something.

Which is why am sure former military can be surprised in that system. For them work was separated from pay, while in the military, and no reason for hostility against a system they volunteered for and understand.

Community can be exploited too unfortunately by unscrupulous business owners. In a work environment where people are contractually providing their labor as services in exchange for pay, a ruthless employer might push a sense of community to extract beyond the contract.

In contrast for a community oriented entity, like a non-profit or the military, of course community services IS the thing. And someone unethical might lust after that ability to extract work from a sense of community, while underpaying, which is also simply theft.

Figuring out what the job is, and why then matters a lot. People who are providing service to their community are dependent on that community properly valuing their services, like military members whose pay is simply set. While people working for employers at jobs where their efforts get direct compensation, have to be sure that they are paid properly for those efforts.

People should work to make sure there is no snarl between efforts for community, like coming together for protection of your community say with sand-bagging efforts to protect against rising flood waters, and those involving work between strangers where favor should be equally exchanged, where money allows enumeration of value of a legally provided service.


James Harris

How to define success?

Coming up with the simple approach to money as a social IOU for a favor that is guaranteed by society turned out to be extremely useful to me. And that approach was one I posted back August 2014 and have been working with it ever since. While how I present the idea has shifted a bit, while focus on favors is constant, and helps explain why things like teaching or firefighting, or being a soldier can have pay problems as those involve things NOT favors.

While in contrast, someone favoring you with a beautiful song? Well that can garner that person millions of dollars or more if millions of others see it as a favor to hear as well. And the social IOU is guaranteed by society! That person favors you with a song, say at a concert, in exchange for an abstraction enumerating the value of that favor, we call money.

And money is best to keep up with favors from strangers, as people in communities do each other favors all the time, and the people who keep up with those very carefully? Can be kind of obnoxious. But a stranger can walk into a store, talk briefly to another stranger, and in exchange for social IOU's, have the favor of useful items or just wanted ones. In other words, you walk into a store, find what you want, and buy it. Seems so simple, as in much of the world, it is.

Looking back at ancient human communities knowing who was doing what was probably easy most of the time. You could see the leaders organizing the community around things like food gathering, caring for members of the group, and even if necessary defense. You were together with members of that community doing things. And people could have a rough sense of favors as well, who was doing what for whom. And also keep up with those not pulling their own weight.

In contrast with vastly larger numbers of people in our times money can give a number on value people are bringing to their community to some extent. And societies can grow to vast sizes, and it is very granular who is watching whom, so that an employer can look over work being done, to see who is doing what.

The greater value in getting work from strangers, as hiring family or close community can cause problems in and of itself, can help build social cohesion, give greater independence, and push human beings to be more communal on the large. Yes, some families will admit do apparently work well for each other as employees or bosses of each other, but society as a whole can see greater benefit in the linking of strangers by work bonds.

People are usually pushed by the need for employment to make connections outside of their family or close community.

Without the connections between peoples that money facilitates it's hard to see how modern civilization could exist.

However as efficient as it can be in principle, money does run into problems, like with things valued by community NOT favors, like teaching and caring for children, putting out fires or police work though I didn't mention that above, and also national defense. Soldiers are not doing you a favor by protecting their nation! And without perspective, societies can struggle to pay properly in important areas.

The favor system can also be deliberately broken by deceit. People can quite simply steal money, as the abstraction in hand in the form of the concrete like with cash can imply something that was not actually done. And on bigger scales entire nations can simply print money, running up deficits that can be more about politics than national necessity.

Thankfully the web, which allows me to push these thoughts out to those willing to read them around the globe easily enough, also helps us keep up with information that helps bring money back to its greatest efficiency.

That person who manages to use means harmful to society to get the appearance of value can be undone by an informed public.

People understandably prefer that money to be earned. And will accept inherited to some extent, even though there can be battles over how much should be passed to a next generation of favors earned not by them, or even won, like with lotteries, but few tolerate simply stolen, or counterfeited.

Money is a way to do a favor for a stranger, or receive a favor from a stranger in a way that limits social trust I argue. It is a great system, and can help see those who are helping society by being of use to others.

Still I'm sure that communities will also use the web to see those people who are great at organizing their community, regardless of how much paid, or very good in helping others, even if not amply compensated, as well as so many others who are NOT doing favors for social IOU's as successful as well.

And in fact, some of those who don't charge could be the most successful of all, not from the favors for which they are paid, but for the duty which causes them to serve.

Finding success I think is something a lot about what we see in each other, so will be so much about communities and what they value. And the fate of those communities?

Well that fate is what will happen, as decisions are made, and consequences follow.

The human story is always a work in progress. And that progress I am certain will always be so much about what people do for each other, and why.


James Harris

Ways our modern money is funny

One of the things am glad I did a while back is sit down and come up with my own explanations for money. So yeah figured some things out on my own and you can click the money tag at bottom of this post to chase down that path. In essence though I concluded that money is a social IOU which society guarantees, which is given at best in exchange for a favor. So money enumerates the value of a favor in my opinion.

In the past though before the modern monetary system, money I think was just one thing, like gold itself could be made into money, but was also just gold. And like, there were jewels. Ok there still are lots of things for riches, but today people focus on money. So people could have riches, where money was just a part of it, and how did the nobility gain riches in feudal societies as shift to a particular political system?

Sitting here typing this post can guess, so not saying did the research, but wars for riches were one way, as well as selling things from things owned by the nobility, but also think a lot of their money came from taxes.

So could the nobility go bankrupt? My understanding is, yes.

And the idea of simply minting money probably was abhorrent but not researching for this post! But today with modern money, of course, governments have figured out ways to simply make money, which typically involve government bonds.

Original ideas for government bonds were temporary funds, but lots of nations now have a constant supply of government bonds which allows them to run immense deficits, which to me is how modern money can get funny.

My own explanation for endless government deficits is that there were wealthy people who realized that if they bought government bonds and pushed governments to fund that way, they could avoid taxes. Though it actually simply pushes taxes down the road, though for some wealthy that could be enough to live a lifetime with a much smaller tax payment than otherwise.

In my opinion we have wealthy members of society willing to completely destabilize the social order ONLY to limit their taxes. No other motivation is necessary to explain a tremendous amount of problems of modern government.

These wealthy avoiding taxes in my opinion lack any moral guidance in this behavior.

And recently, some managed to get governments to bail them out around the concept of "too big to fail" which is something even the nobility couldn't do in the past.

We have modern rich who have pushed themselves beyond past nobility by controlling governments in such a way that they are rescued even when financially stupid.

And not against wealth at all, but do think that people should earn their money or I guess inherit it, is ok.

The nobility in the past did not have the same option of funny money.

If they were running out of riches, they could raise taxes, and possibly lead to rebellion, or they could go on a war to go grab riches.

In our time, we had demonstrated recently how some of our wealthy can just have the government make money for them, bail them out, and go on living in luxury.

I've seen no shame in their manipulate the government to save them game either. And I dare say, there are wealthy who probably have actually en toto earned nothing, who are in essence some of the greatest government welfare recipients in human history.


James Harris

My opinion on money, risk and stagnant wealth

Found a need to talk out my opinions on money in various posts, and mentioned stagnant wealth in a post where I speculated that it can be a key component in generating unemployment. To me that's just fascinating to consider, but if I go back to some of my thoughts for my idea of money as an abstract enumeration of a favor, there is the wonderful question I've not yet tried to answer, how does money get created?

Trying to find a simple explanation for money, I came across the notion that it is really just a social IOU, where your society promises to pay you back for some favor you did some other entity, but how does that entity get the money in the first place to give you?

Seems simple enough if I think about banks. Let's say a person with lots of valuable things goes to a bank and has them keep some of those things in a vault, like say, piles of gold bullion. The bank hands what was for a time called bank paper to that person, and off he goes and uses it in a way we would associate with money. But it's NOT money.

In the United States, long ago, a federal bank was created, and banks were pushed to using federal reserve notes instead of always issuing their own bank notes as their notes were more risky--if the bank failed their notes were worthless!

But the federal reserve notes are backed by the federal government of the United States of America and are money. So money removes most risk, so that the entire nation has to fail versus some bank for it to be worthless. That's much better, now isn't it?

So the money flows through collateralized loans. Easy. Federal Reserve System loans federal reserve notes to banks, which loan to other entities through collateralized loans, and the money flows into the system, which most of us just call the world. Technically the flows are into the nation, but reality is the currency of the United States travels the planet. Other flow is through salaries to federal employees, of course, but that's negligible compared to the loan flow.

Now on to how wealth can be stagnated. Imagine a well-known and successful individual in a community needs someone to do something but for the moment has nothing but an IOU to give in return! The other person agrees, does the favor, and accepts the IOU. And imagine these IOU's from this high status individual are used in a way we might associate with money. And the person with the IOU gives it to someone else in exchange for a favor. And this goes on indefinitely, but eventually someone decides to call it in. And the trustworthy high status person gives something in return as promised, in exchange for the IOU. But what if at some point in this process some person just sits on it? Then there is no return on the favor. Someone did something without getting anything back for it.

Notice plenty of people can get a return on favors as the IOU travels, but the last person to do something, for some reason sits on it, and the original person has to pay nothing in return, even though he would. The original favor stagnated.

So something like money can be created very easily and people generate IOU's to each other routinely. For instance I think of corporate paper, where I found out just now with a search there are corporate bonds which are long-term and others with shorter terms called commercial paper as an example where there is a HUGE market. But it's still NOT money. What makes money is the IOU is from society itself with a guarantee from that society, so the risk is lessened greatly.

Now imagine some wealthy person does enough favors to gather a lot of money, and sits on it. For instance puts piles of actual cash money all in a vault.

The social IOU's are not fulfilled and are removed from the monetary system. That is stagnant wealth.

Notice if instead the wealthy person buys gold bullion with the money and puts THAT in a vault, it's not the same thing, as the favor was repaid. That is, if you do someone a favor, and they give you money, and you buy some gold with it, then the favor was repaid. You can do what you want with the money as long as you do SOMETHING. If you do nothing with it, then it stagnates.

Money is to be used. And society has to see that it gets used.

Notice that savings are use of money as long as the money is saved in a bank or with investments, as the bank loans the money out, or the investments are a loan in and of themselves.

Without banks you can't have a modern monetary system, as then there is no bulk way for the government to inject new notes into the system. That new money flows out from the banks through collateralized loans only.

There is no way to get the bulk of monetary flow to the people without banks.

Loans are critical to the modern monetary system in getting money into that system in the first place and in maintaining liquidity of the monetary instrument.

Wow that sounded fancy, but I'm no expert. But I like writing things like that here and there.

When money dries up, people have less money with which to pay strangers to do services as explained with my idea of limited social trust. So they may instead turn to close community or do without some services. For instance, you might rely on a close family member to fix something--or try to fix something--versus taking to a repair person. Or build a garden in your backyard to allay costs in shopping at the grocery store.

That pulls more money out of the system and maybe the repair person is no longer employed, or someone working at the grocery store gets laid off, and the impact expands outward causing higher unemployment.

Flush with money though the middle-class which drives most economic activity can hire someone to do repair work. Shop at the grocery store. And may even get pedicures. I've never had a pedicure, but I find them fascinating to contemplate. To me pedicures explain so much about why you need a robust money supply for a healthy economy where most people are gainfully employed.

In the modern era you can collapse an economy easily--just convince enough people to be prudent, do as much as they can without money, like grow gardens for their food, and eliminate expenditures like pedicures. You can crush an entire nation that way.

Money is a powerful tool, but it comes with consequences.

A healthy economy in the modern world requires that we depend on others and have a much larger community in many ways than at any other time in human history. That's a great thing.


James Harris

Pushing to unemployment theory?

By my own admission ideas I have around curbs in monetary flow leading to unemployment are speculative, as I don't see a sufficient framework as of yet to consider these ideas to be a science. But it is fun to consider them more and see if the outlines of one can emerge.

First off, the concept is incredibly simple: money represents an abstraction for a favor and monetary flows are required for people to employ each other, where unrealized abstracted favors lead to unemployment.

That is, if someone just sits on cash, for instance, rather than spend or invest it, then they drive up unemployment, is the speculation which I'd like to see lead to scientific theory.

And I noted in a prior post that you can look at agriculture, where if necessary the bulk of a human population can be employed by it, but the rise of modern agriculture and agricultural machinery means that few people in the US, around 2% of the workforce, are needed for it! So clearly people simply shift, which is good news as it means robots will not drive up unemployment, if these speculations are correct.

So let's push this speculation and imagine a person in the US makes $100 million US in some way, and imagine avoids mostly paying taxes, and proceeds to sit on $50 million US in cash.

Only a very wealthy person could do such a thing, as consider someone making $100 thousand US, which would be middle-class, though upper levels. That person would pay a certain amount in taxes, and spend or invest the rest, possibly in a 401 k, so that the entire amount goes to the US economy, and helps support it.

If we speculate a direct relation to the lost $50 million US that is stagnated by the wealthy person, on a one-to-one basis, roughly five hundred people are blocked from employment at the $100 thousand dollar level by this person's behavior. Or one thousand lose employment at half that level, where $50 thousand US is still middle-class.

But where do you draw that wage line then? My guess is that in a full theory it will follow a mathematical curve. So a mix of people at various levels will be unemployed as a result of the stagnated wealth. Usually one starts with the gaussian distribution, which most know as the bell curve. But I'm not going to play with any math here.

That this concept can be mathematized though could mean that economists could.

Interesting, then you could potentially look at a spike in unemployment to get numbers with which you could actually calculate how much money is being stagnated.

Of course there may not be a one-to-one but that's easier to consider for admitted speculations. If this line of questioning is correct, then the actual correlation would be of extreme interest.

So there is an easy to discuss practical use then for an economic theory of this type as if these ideas are correct, they could tell you how many people become unemployed when a wealthy entity stagnates wealth by sitting on it. Governments might penalize such behavior.

And I'm all for a person keeping what they made, and getting a benefit from it, so I'm not someone who looks to higher taxes as a solution! But the tax argument may be far less relevant anyway.

Another way that curbs in monetary flow can lead to higher unemployment is when a worker is underpaid, like say someone makes 80% of what they should make on a job, based say on what others generally make doing the same work, assuming no drop in quality simply that the person is unable or unwilling to get proper pay for his or her work. From this concept that 20% that should have flowed into the monetary supply for the community is simply destroyed money. So it's not even locked up like in the prior example, it's simply destroyed. Which is weird.

But imagine a small village where a wealthy powerful man, has armed some as he begins to slowly stop paying other villagers until he pays them nothing, but his armed ones force them to work, so that they are now his slaves. And not surprisingly the village store goes out of business! Because none of them have any money.

So that thought experiment to the extreme helps to understand at the 80% level.

So underpaid workers actually directly destroy money, under this speculation on the basis of that thought experiment. So they lead to unemployment whether they wish to do so, or not, and governments should work to ensure they don't do that whether they wish to work for less or not.

It could also mean that criminalizing deliberate underpay of workers is an option for governments as underpay directly destroys money, and in so doing leads to higher unemployment, by shrinking the money supply.

So that was fun. It may take a while to firm this up into a consistent framework. But also need some real world information. Theory is worthless without supporting data.


James Harris

Contemplating work, agriculture and our employment future

For most of humanity's existence, finding food occupied the bulk of human activity, and was surprised when researching this post to read that four years ago agricultural activity still accounted for 1/3 of human employment globally. But less than 2% in countries like my own, the United States:

As of 2011, the International Labour Organization states that approximately one billion people, or over 1/3 of the available work force, are employed in the global agricultural sector.

Source: Wikipedia Agriculture--Workforce

Doubt much has changed since, though guess there's a lag in someone actually figuring out such information, so will go with those figures.

Less than 2% of the workforce needed in my country for agriculture? Versus the bulk of humanity if you go far enough back? And it occurs to me that what most people call "work" has changed dramatically.

So what is work?

While I would like to call it human effort, especially difficult human effort like writing something that people find informative, I think functionally employment is needed for a useful definition, and money. So I'll say that generally when people use the word "work" when it comes to employment, they mean efforts done in some kind of socially limited contract for someone else, for some amount of money.

When you consider how societies shift as to employment it makes sense to me it's driven by: who pays whom for what?

You could find someone making lots of money restoring antique furniture, or writing, or making a lot less, restoring furniture, or yup, writing. Actually you often see people making nothing for writing. Like me here.

When people DO make money for writing it's all about the market.

The good news with this assessment is that employment in the future will be driven by what people with money need other people to do for them, and how much they monetarily value it, as well as, of course, what other people are willing to do on a limited contractual basis.

So robots will no more necessarily unemploy everyone than agricultural machinery did.

What does unemploy people?

Other people unwilling to release favors.

I came up with a favor definition for money, seeing it as merely a social IOU, which is an abstraction enumerating a favor. But if a group of people simply gather IOU's without releasing them by using them--that is, buy something or hire someone--then that system is broken.

That doesn't impact normal savings like a rainy day fund or retirement savings though as eventually the bulk of that will be released. Only a tiny percentage of people can just lock up vast sums of money indefinitely with no pressure to release that money. That is, have vast hoards of wealth which they do not need. And that doesn't include investments either, like into new businesses, as that helps drive the system. Am talking about money that is in essence simply locked away.

People who somehow gather favors without ever releasing them, end the system, for those favors.

So vast concentrations of stagnant wealth may reflect a flaw in the abstraction of the monetary system, and apparently lead to vastly higher unemployment, presumably because fewer people are able to pay other people to do things for them.

What people do for each other on a limited social contract seems to expand as possibility expands, if unconstrained. Which is what happened as agriculture dwindled as the bulk employer and you can see the vast array of jobs available today.

So then I can postulate that unemployment is actually an indicator of a problem in the flows of the monetary system. It reveals it. Fascinating.

That's not really intuitive. But IS consistent with prior ideas, as I considered how Henry Ford greatly helped the global economy.

And it really is kind of odd, as I'm saying that those who give favors doing things for others, and receive the social IOU that we call money in return, if they don't allow others to do them favors and hand them money in compensation at a high enough level, they shut down the monetary flow for those favors. It's kind of an odd thing to contemplate.

So there can be a hitch in the monetary system. Vast sums of abstracted favors can be received by some entities which not releasing them back, constrain job creation.

Good news though is that even in a totally automated society people can be fully employed--finding things that strangers can do for each other on a limited contractual basis.

So each of us simply must find things we wish to do, which someone wants done, to establish limited social contracts which both parties find agreeable, to get to a monetary exchange. Yeah, people will keep doing that indefinitely.


James Harris

Reality check on government bonds

My understanding is that the primary way governments raise revenue for government services is with taxes, but also there is the issue in our modern world of government bonds.

One way bonds can be convenient for a government is if there is a sudden need for revenue, but it's not feasible to rapidly raise taxes on its population, so instead it issues bonds--letting its citizens loan it money, temporarily.

So what if some of those citizens loan the government money for continuing operations on a longterm basis, yet receive services?

Imagine some situation where the government instead, say, rose taxes by $1 trillion US instead of issuing bonds, then it would take that money directly from its people, where in a progressive tax system that means the wealthy would pay the bulk and just lose that money.

Money paid for taxes is just gone. When you pay your taxes, just say bye-bye to that money.

Instead, let's say the wealthy loan the government that $1 trillion US, and get the services anyway, so now they didn't lose the money! The government owes them for services it provided to its citizens, including them.

So the government still provided the services! In one case they just taxed people to pay for them, while in the other some people got to loan the money in, meaning they can get it back!

See how that works? If it were taxed, they'd just lose the money, though they would also get government services in return. But if instead, they have a government run deficits, they can get it back!

Understand why the wealthy might prefer such a system?

But can it work forever? No. The government is providing services! Those cost money, which have to come in taxes, so it's deferring the costs to later generations, or the government will default down the line.

That means the total national debt rises. But guess who get most of the interest payments?

The wealthy who own the bulk of it. For instance most of the US debt is owned by Americans, so don't get distracted by which foreign power owns a chunk of it. Most of it is owned by American citizens.

That money is owed to them where to pay it the government needs to tax, where presumably they would pay the bulk of it, to get the money owed, yup, to them!  Unless they can live to a ripe old age and die first, of course.

However, if you're some wealthy person who has your taxes cut down by a huge level, do you necessarily care who has to pay for services you received along with others?

I'm not wealthy, so I don't know if they consider that or not.

But, if money is your focus, I wonder if you'd care who has to finally pay for those government services you loaned money to the government to have, versus being taxed for them.

Government services have ballooned under this system. It's not clear to me, if it's fixable, as I see it as a problem. Conceivably we could balance budgets, and run surpluses until national debts are eliminated, but I'm not seeing evidence of a movement in that direction around the world.

Like, our politicians seem remarkably uninterested in making that happen, despite talking about it quite a bit, but um, anyone notice how many of them are rich?

James Harris

Money and resource allocation

Have spent a lot of time talking about money, and I think for many there is the idea that money has its greatest benefit in helping societies allocate resources. After all, it lets us put a monetary amount on the value of something, but I have already spent some time talking about limited social trust and how people tend to use money for things they value LESS, which is not something only I noticed.

When searching on the web I came across a Wikipedia article on the paradox of value, which brings up water, which is great, as water is an important resource.

Not surprisingly in my country water is SO important, most people pay very little for it, though others pay more by buying bottled water.

In fact, water is so important that I suggest to you that the only reason people pay any money for it at all in the United States, is to limit overuse.

However, there has been corporate interest in the area, where water rights can be bought up in some communities, where conceivably people could be unable to pay the corporation for water down the line, so what would happen then? Well the government would step in of course and simply take the water rights back--without regard to money.

People can't live without water. And in fact if you take water from a person for only a day, he will be in distress. If you keep it away from him for over a week, he will die.

Even if he's a billionaire, what good is his money if no one will give him water? Like if he were kidnapped?

Yet water is one of the most important resources where money clearly is NOT good at allocating, and in fact, I think most resources in society are actually allocated on community needs.

More than most may realize I'm saying societies allocate most resources, especially important ones, by other means than money, and then may simply slap a monetary value on something after the fact, which can be entirely arbitrary. For instance, how much is a nuclear weapon actually worth? Or any medical cure? Or a college education?

Why? Because money is NOT a system for resource allocation as water demonstrates, but is a way of enumerating the value of a favor. It has limited utility, as it requires limited social trust. And in fact, when things get VERY important, people act without any regard whatsoever for money, as it is then irrelevant.

After all, paper money is just scraps of paper with stuff written on them. It is, in and of itself, utterly worthless. But it is a symbol of a favor which can have value. But very limited value in carefully socially circumscribed areas!

Resource allocations in society actually follow different rules, like how do you pay firefighters?

You can't pay them per fire put out, right? You can't give incentives for setting fires so that firefighters can get paid by putting them out.

If you ponder how a community figures out how it should pay people like firefighters, police officers, and political officeholders, it doesn't take long to realize that mainly you want to give them enough to live, support a family, and have a certain amount of social stature within the community.

Which means, of course, that people who want to get rich don't take such positions, though in corrupt societies, unfortunately, they may take such roles which is a CLEAR sign of corruption. So, someone becoming a police officer to get rich, may do it to take bribes from drug dealers. And a politician may get elected in order to parlay political favors for wealth from wealthy people or corporations.

People who are more community oriented, who treasure family, friends, and human beings working together for the good of all, are NOT going to be money motivated.

While people who are money motivated are unlikely to be any of those things, as their focus is on gathering favors from others.

For instance, it is cliche to talk about a man pursuing his fortune utterly ignoring wife, family, friends, community needs, etc. in his relentless pursuit of it. His focus is NOT on community.

Can a society operate without money? And the simple answer is, not if it's a big one, as money provides the important mechanism of limited social trust. It limits how much we need to trust people. And in so doing allows business as we know it in the modern world which has given so many in our world so much. Reality is that trust is a BIG DEAL. Being able to limit it, is the foundation of the modern monetary system.

Your community has to trust that firefighter. So you do as well, and if your house is on fire, you do not have the right to question his orders, as he tries to save your life and property. Which he may do at great risk to his own life and personal safety!

But that guy just out to make a buck? Need to trust him? Thankfully, not nearly as much.


James Harris

Want a PDF? Trying out sharing from Google Drive. Just click this link.

Money and limited social trust

Been pondering the subject of money for many reasons and realized recently that we tend to NOT use money for plenty of things where deep trust is important, like personal relationships, but find it most useful in areas where trust needs to be limited.

For example in many civilized countries you can meet a stranger, have them sign a written contract, give them some money, and expect that person to do very important things for you, without fear.

That trust in the situation is backed by the machinery of your society, which will work very hard to ensure that such transactions can take place, for the good of the society. You do need a business trust that the person will fulfill the contract--but it is a limited social trust.

In contrast if I meet a nice lady, and we fall in love, there is a deep trust. And there is no written contract in the world that can cover all the bases, so most people go with simple vows in a public wedding.

That trust is so deep that society expects a couple in love to care enough to die for each other if necessary, which is as deep a level of trust as you can get. It is then, unlimited trust. Pick the wrong person for unlimited trust and God help you. (Though it occurs to me should add, wealthy often rely on a prenuptial agreement as well.)

So money is most effective in areas where people need limited trust, and means you can do work for someone, say, in the state of Georgia, USA, and get a promise of value in return in the form of scraps of paper called money, which you can use just about anywhere in the world you might travel as long as US dollars can be exchanged for local currency or are accepted.

That is a HUGE thing which allows the world economy to function, as money allows people to trust each other, even complete strangers, in a way that is limited versus the potentially unlimited trust of members within your community.

So for instance firefighters are willing to give their lives in defense of their community as are soldiers, and we wouldn't even think of allowing that to depend on monetary reward! While the best people willing to do it, wouldn't either. So there is a deep social trust involved.

In contrast, we happily give money in limited social trust situation, where contracts of various kinds specify exactly where those limits might be! And in society there are written contracts and verbal ones, as well as socially understood ones, so for instance, if you go into a store, and make a purchase you don't have to sign a contract to have legal protections.

Why emphasize these basic points? Because the web has created seemingly muddled situations where people can do things of great importance to community, with very little or NO money in return.

And others get very wealthy, where it can seem very unfair.

However, consider that person who does things for others for the benefit of humanity, versus that guy who maybe becomes a billionaire looking out mostly for himself, whom would you rather be?

Different people may have different answers.

Better might be to be that billionaire who does things for others for the benefit of humanity, but really, how many do you think there are?

And how many billionaires can there be? But how many can do their best for the benefit of humanity?

Each of us can ask ourselves questions, and see how it shifts how we look at people in our world.

Like can you imagine if firefighters arrived at a burning house and started a bidding war for how much you'd be willing to pay before they put out the fire?

Or what if top US Army generals informed you that pay up, or defend yourself?

And what if--what if our military leaders were the wealthiest people in our society as they made you pay for what your life is worth before they would defend you?

Would you give control of nuclear weapons to such people?

I wouldn't. Bad enough anyone has such weapons, but think of how much worse things could be, if the people controlling them cared only about money, and God help you if you didn't pay them what your life was worth to you.

Seem like too much? Well those things are out there whether you like it or not, or think about it or not, and there are people who control them. It matters what kind of people they are.

Throughout human history I think MOST people have figured these kinds of things out on their own, after all, deep social trust has been around as long as humanity, while money is a recent invention. But lately I think there has been quite a bit of advertising pushing the notion that money is what truly matters. People with lots of money kind of have a lot of ability to push things on others you may have noticed.

But that's not necessarily a bad thing. We need modern society.

Modern societies can push things that I say are about limited social trust as that is required for them to function, so they need you to plunk down your hard earned cash and buy something. That helps fuel the vastness of modern human enterprise which has done so much for so many. But there must be a balance. Most of us also treasure deep trust, and the unlimited nature that can make it terrifying, but without it...well go back to that part about firefighters.

We are so very lucky to have people who will put their lives on the line for us and yes they should be well paid, but money is not the reason.

Whether you accept it or not, I'm certain that deep social trust will define how well your life is lived, while limited social trust through the invention of money, helps your society to function, but will never guarantee you the best that life has to offer.

So yeah, sorry, but you can produce something of tremendous value to VAST numbers of human beings who will thank your commitment to community, and not pay you anything at all, as it's not about money then.

The most important things in life are about our humanity.


James Harris

So what is capitalism?

People can toss a word around where the meaning can get a bit fuzzy and hearing lots of talk about "capitalism" I thought it worth it to post about what it is. And will start with what the Wikipedia claims it is:

Capitalism is an economic system in which trade, industries, and the means of production are largely or entirely privately owned and operated for profit.^[1][2] Central characteristics of capitalism include private property, capital accumulation, wage labour and, in many models, competitive markets.^[3] In a capitalist economy, the parties to a transaction typically determine the prices at which assets, goods, and services are exchanged.^[4]

Source: en.wikipedia.org/wiki/Capitalism

For instance, if you make money from a store you own in a neighborhood, you are a capitalist. Your store is your capital, as well as the products it sells, which you presumably buy on the free market. And the living you earn from selling goods to others from your store is your profit.

For a country, the alternative in general to private ownership is that the government owns, for instance the store, and provides goods to a population.

And that's it.

So what if the neighborhood owns the store? Then the owners in the neighborhood are capitalists, if they operate for a profit. If they don't then they aren't.

Is there any scenario where people other than the government own the store which does not make the owner's capitalists?

Yes. If they don't make a profit from the store. But no, if they do.

That is, if you follow the definition, then the neighborhood store is capital. And those who own it, if not the government, are capitalists, if they make any money from it.

If they don't, then no.

And you can build from there.

The alternative from private ownership is ALWAYS the government owns.

So how can people operate something without a profit? It depends on how you define "profit".

My own view is that what you call profit is a matter of community.

What's interesting to me is that if you go with a person owning a store in a neighborhood who does NOT make a profit, then I guess that person would need to be independently wealthy to run the store.

But a community might be able to run a store without profit, assuming members of the community have income from some other sources.

While the government can run a store without profit, as it can rely on taxation.

And we can see an example where primarily the government runs things, where also there is private enterprise with education.

Here in the US below college level, schools are primarily run by the government, though there are private schools. At the college level, there are government run colleges and universities, as well as a lot more private ones, but even those are still for the most part non-profit.

And government pays for running schools at all levels primarily through taxation, though students are also at the college level often asked to pay fees.

And it can show how a community can move something outside the realm of profit motive as American society sees a benefit in educating its children. Yet things shift a bit with young adults, who aren't guaranteed a free college education. Though some have suggested such a thing.

But at this point in time, it's not clear what the value is, as college isn't for everyone, while EVERY American child needs school. Where I'm sure there is no real debate in this country as to whether or not that is true as it's a cultural value of this country.

James Harris

Non profit funding organizations?

Was reading through a recent post of mine again, where I tried to explain the disparity in money given for certain things by continuing with the notion of money as an IOU on a favor. But that was kind of a depressing conclusion to me, as it means weirdly enough that groups of people may naturally give more for a triviality than for something very important to them.

But it may not be as grim as I think. Of course there are important non profit organizations out there that DO get funding.

And fundraising is a big deal for lots of things and I really started thinking in this direction after watching Wikipedia make appeals for funds, and also the Mozilla foundation through its Firefox browser making similar appeals.

I highly recommend giving them money. They do an awesome job for lots of people.

However, I wondered: why couldn't there be fundraising companies that just did fundraising, who say could only take 5% or less of funds raised and had to distribute the rest to non profit organizations?

Then people who are just really good at raising money could specialize and maybe some non profits could quit worrying about raising the money themselves.

That's one of those fantasy ideas as I don't know if you could build a non profit web company around that idea.

A non profit whose only goal was to raise funds for other non profits? Has that been done?

If not, I think it should be.

It could be forced to be focused--only distribute to other non profits with no other distributions allowed, including no direct distributions to individuals.

At first I'm thinking there'd have to be lots of rules to keep it from being abused, but transparency is the most powerful tool: such a company would have to reveal all its distribution financials--who it gives money, and how much.

And along with transparency it would, of course, also simply have to comply with existing laws.

But total transparency is what would make it a 21st century web company. And that's what would give donors greatest confidence their money wasn't being misdirected.

Really like this idea and the post seems to be popular here, but wondering what to do next.


James Harris

When money is too abstracted

Was a relief for me to sit down and process basic thinking on money, where I found myself focusing on favors, somewhat to my surprise, as I concluded that money lets you give an IOU that society makes good in exchange for someone doing you a favor. So at its simplest it's not that big of a deal so why do so many have issues with it?

I think the problem is that money is too abstracted. We need to bring money back to concrete reality.

One of those sayings that I ponder now is the claim that money is the "root of all evil", and I'm like, huh? Doing people favors is the root of all evil? I don't think so.

How did things get so distorted? How do you have people who will kill for money? Lie, cheat and steal for money?

Well, it's what you can DO with those owed favors. Like, feed yourself. Or have a home. Or buy luxuries. Or impress other people. Among many, many other things!

The monetary system allows society to have many people doing many things and facilitates transactions between people without which our modern world society could not operate as it does, and I don't think anyone has come up with a better way to do things.

Money lets you separate your action from the reward.

You can mow your neighbor's lawn, get paid some amount, and then get the return on that action, months later when maybe you use the money to take your wife to dinner. You then give that restaurant an IOU from which they can get their reward when they so choose.

That flexibility is unrivaled. It's a great thing.

The alternative is that you return the favor immediately. Or that they trust you to return it at some later date. But such trust is best between people who are close, like in a well-knit community.

Money lets you trust society to guarantee you will get a return on your efforts--not each and every individual within that society with whom you have a transaction, as they just hand you an IOU, which we call money.

So for you to lose a return on the favor your society would have to fail you.

That's why for instance legal tender in my country is backed by the US Government.

We need to talk more about money, and about doing things for others, and why giving a lot of other people something they want and getting an IOU in return is not necessarily a reason to flaunt it, put yourself above others, or do any number of things that really have nothing to do with money.

Like, imagine, you sing to a crowd of thousands and they show their appreciation with an IOU for you to use later, and that was a lot of people to whom you gave something of value so their appreciation has a great value as well!

If you see it that way, how might you think about how you get a return on what you gave?

And from there it's easy to consider where I think money does distort things, where my emphasis on money as an IOU on a favor really works well to explain some striking distortions in monetary distribution, as is a schoolteacher doing you a favor by teaching your child? Does a police office do you a favor when she protects you from robbers? Or a soldier protecting you from enemies foreign or domestic?

I don't think most consider serving your country as a soldier as doing a favor.

But with the money system someone who can do favors or as more people might consider it, give a service like a catchy song, can make much, much more than people who save a nation.

I think societies do try to make an adjustment though for those areas money is not designed to handle well.

That explanation isn't satisfying to me either, though I guess it makes sense. It's kind of unsettling so I find myself talking it out more. A person with a well designed product might sell it nationally. Today, because of the web it's easier and easier for products, like songs or movies, to go international, allowing so much more money in return. You're just doing that many more people a service and getting a return on it. It's about sheer numbers.

But for a schoolteacher? Even when lessons go online aren't they usually free? I think people just don't see lessons as a favor. So society still has to step into the breach to provide some form of support?

So community rises in importance yet again.

So much of how you see things is about community, and what values your community has given you.

To me, considering money less abstractly and concretely as an IOU from society as a return on a favor is very useful in explaining what it can bring, and also what it doesn't.

But maybe that explains why people can be most satisfied with their community regardless of money, when that community is supportive, well-knit, and most importantly its members know and trust each other.


James Harris

Community values and money

Having had some time to ponder my ideas for a predictive framework around money in my post Money Matters, I found myself thinking about community. And that is such a huge arena in terms of its importance that again there are a lot of disclaimers. I'm expressing my personal opinions and not claiming to be an expert on money matters nor am I giving monetary or legal advice.

To introduce ideas around community and money I think it will be good to use an example I used from my prior post about two neighbors where one mows the lawn of the other who returns the favor by trimming his hedges. Where I also supposed hypothetically about the value of that behavior being potentially enumerated by money, if for instance the one neighbor could pay $50 US to have his lawn mowed and the other neighbor found he could have his hedges trimmed for $35 US.

The disparity of course is $15 US and represents a potential profit in the exchange for one of the homeowners and I suggest that how you think of that reality has a lot to do with the values of your community.

Stressing community values versus individual values makes sense here, as for instance non-profit corporations are a phenomenon of community, where supposedly they do NOT profit from their efforts presumably for the good of the community, where what the community is, can vary.

That profit is a matter of community values may seem strange. But different communities can vary a lot about how people should relate to each other even when it comes to favors. In one community people might feel it's your job to know the value of your efforts and others. While in other communities there might be a feeling there should be a fair exchange. So for instance in such a community with our hypothetical example the homeowner who did the hedges maybe should also give $15 US to his neighbor to even the exchange.

If your community values business exchanges more highly it might expect people to be aware of the value of their work, and even reward others for taking advantage of a lack of information--profiting from other's mistakes. That could be seen as an incentive to learn.

Community can mean a lot of things and I'm going to not try and define it, but I will offer the idea that community can offer support for members who need help.

So support of community has a value in insuring that a person has the potential of support later, and that social insurance is something that can be monetized to some extent as well which is the purpose of the insurance industry.

Many people may be surprised to learn that at least in the US, insurance companies are not to profit from premiums, and seek to balance the money received in premiums exactly with the money paid out in claims.

So where are they supposed to make profit?

Insurance companies are supposed to make profit on the return from investing the premiums paid into them, which represents a community value of the United States of America. People don't like the idea of someone profiting from the misfortune or potential misfortune of others. But it's quite fair to invest the money people pay to be insured, and make your profit there, as it doesn't hurt them one way or the other, as long as the money isn't lost on bad investments, and it's better than the money just sitting to the advantage of no one waiting to be paid out in a claim.

Profit can be win-win, or win-lose.

In a win-win profit situation both entities in a transaction walk away with an equal benefit. For example in our hypothetical situation if the one homeowner who receives the greater value in the exchange evens it by giving $15, the other homeowner technically "profits" by that amount, but in actuality the money merely balances the exchange and both homeowners win--they each get a needed service done. One person's lawn is mowed and the other has his hedges trimmed.

In a win-lose profit situation, one entity in a transaction walks away with more than given. Which is the situation if neither homeowner cares to balance things or one is unaware that mowing his neighbor's lawn is monetarily more valuable than having his hedges trimmed.

Communities can actually value either exchange. They can even go further and value charity, where one person simply gives benefit to another with no expectation of anything in return. Then "profit" is simply removed as a concept.

Hypothetically the win-win profit situation is the optimal one. Then both parties get as much as they give, in an even exchange, which notice betters each of them without harm.

Also notice that the win-lose situation depends on a disparity in the exchange. Whether that disparity is addressed or not can be about will or information. If one party is unaware of the disparity then that person can give more than received in return from lack of sufficient knowledge.

Information then can be seen to be the key to willful exchange outcomes, where people get to make a decision about how to address exchange disparities. To make that decision they must first know the exchange disparity exists!

My assessment that profit is a matter of community values is a personal opinion. Others may disagree, but I like that I can fit it so nicely with prior concepts already discussed as I work further in what I see as a functional science of money.


James Harris

When prestige has merit

The web is a vast distribution network which moves information around the globe, and the quality of that information will I think move the world to a merit measure for prestige.

Like consider the Wikipedia. If you want to know a lot about its potency you can check studies. As much as I'd like to link to independent ones the most definitive source is, yup, the Wikipedia itself:

en.wikipedia.org/wiki/Reliability_of_Wikipedia

That is a bit irritating as I prefer independent sources, and didn't see any that seemed suitable when I did a search on Google for this article. Some government or something should have something up, if they knew what they were doing. But a lot of governments today clearly do not.

Prior to the ability to have a world pick for itself, institutions gained prestige by many means and carried that over time. But notice the ignominy now hovering over the prestigious news agency The New York Times, which in my mind is that group of people who with President George W. Bush helped more than most to lead the United States into war. That may sound harsh, but why sugarcoat it?

To me then there is what I'll call classical prestige, and functional prestige.

The Wikipedia has functional prestige: people know it works as they use it, and some people have checked it against other prestigious sources.

While The New York Times has classical prestige: it retains prestige despite some of the greatest press failures in recorded history. People see it as prestigious with it debatable as to whether or not it is functioning at that level.

But that appears to be a learned response. And as new generations arise without being taught that a particular institution has prestige then they are more likely to switch to functional prestige.

The difference with functional prestige is people know the value from moment to moment from what they can use in their daily lives.

That has practical importance to me, as I have various ideas out there in prestigious areas, like my own definition of science, and my own ideas for a science of money.

Those are functional ideas in areas where far more prestigious sources have a lot of dominance. But the web lets me put forward new ideas where I can rely on the discretion of many people.

If the ideas are valuable because they work, then they can gain their own functional prestige, which then is entirely about merit.

The science of money by itself can change the world, not because the original source--me--is prestigious. But because the functional need is so great.

People need to understand money in our modern world. It's just that simple.

In the old world people or organizations could build prestige over time, becoming reliable sources, who could lead the world down dark and wrong paths based primarily on that prestige alone.

The new world pushes your ideas to always work, and catches you immediately when you slip up, and then keeps reminding you constantly of your failure.

And that is how civilization will work best.

It's a new way of doing things. It's the best way of doing things.

Prestige should have merit. Now thanks to the inexorable progress of science and technology which connects people in a way that allows constant checking and accurate reporting on those checks--it can.

And I do think that most prestigious institutions around the world are ready for that challenge and are meeting it.


James Harris

Money matters

As much as I have tried to explain money in various posts another seems in order and my motivation is to understand an important area where I think simple concepts can help.

These are just my opinions as I sit here typing them up. Nothing here should be construed as money or legal advice or as a claim of expertise in money matters. Terms may be defined by me for the purposes of this discussion without claim that they are used the same way by anyone else. Money for many reasons is an extremely complex area and it is not necessarily the case that I succeed here in simplifying understanding as I try talking it out. But I'm going to have fun trying. So if you're still here, no promises, as we continue.

Like consider two neighbors where one does a favor and mows his neighbor's lawn, and that neighbor later returns the favor by cutting his hedges. In this hypothetical example we can ask, is it equal reciprocation?

Now in contrast, consider one neighbor pays $50 US to have his lawn mowed, and the other neighbor pays someone $35 US to trim his hedges, and we can say now in this hypothetical scenario that one thing is worth more than the other where money has enumerated the cost of the favors.

So, money is consideration received in exchange for doing a favor, which abstracts the value of the favor and it's a better system than simply guessing at what roughly equals in some other kind of reciprocal exchange.

Use of the word "favor" here may seem odd, as some may think the idea is that a favor is done without expectation of something in return. But I think the reality is delayed return. Generally decent people will return the favor. But there is a delay which can be indefinite.

In contrast, it sounds very different if I say, two neighbors barter where one says he'll mow his neighbor's lawn in exchange for having his hedges done.

Maybe some neighbor might mow lawns as favors without any expectation of any kind of return, but what kind of people would accept it without giving anything back? Maybe if he were rich? Nope. Most people would want to give something back. Decent people return favors. People who never return favors are not liked.

Notice a direct trade of mowing lawns in exchange for doing hedges is not as free floating as the favor. Say you mow your neighbor's lawn as a favor, and know he'll do something in return, and he does your hedges. That has a completely different feel, as he could do something else.

That freedom in the return is what I think can be missing and is encapsulated by talking about a favor. Someone does something for you, so you wish to do something for them in return.

On that level then money is extremely simple and has been a valuable invention as it allows us to figure out the numerical value of favors, store favors for later use, and even transfer the value of a favor to someone else.

Money actually takes the indefinite nature of the favor to the limit. A person may get a return on the favor hundreds of years later with inherited money.

But what about a sheriff who saves a person's life from an attacker, possibly facing danger in that action?

Well the sheriff has a job, for which there is consideration given in the form of some type of monetary compensation where such an event is considered part of that job. And we really don't think of it as a favor! That is part of the job.

Here the notion of favor assumes a desired need and request of some kind. That then would also preclude someone trying to push a favor on you! (People pushing favors on you can be really annoying.)

Doing someone a favor is doing them a service. Handing someone a product is a favor as well, where equal reciprocation would involve a favor in return of equal value.

Now we can figure out just about everything related to money with this simple framework.

So the abstracted value of a favor can be correct, too much, or too little.

For instance a person may get paid $10 US for a service that is actually worth $100 US. Or a person, say a banker on Wall Street, may get millions US for a service which can cost the US economy billions.

Every dollar theoretically traces back to some kind of favor under this framework unless it is counterfeit. So counterfeit money can be said to be an attempt at stealing favors. Like if you told someone you'd actually done something you had not, and they did you a favor in exchange, and you were long gone by the time they found out you had lied.

Information then helps tremendously, so you can know how much a particular favor is worth. Which means I can make a prediction that the web helps monetary efficiency by allowing people to check the value of services.

Which I know is useful as I'll go check now to try and see what things cost in comparison at different places which I suggest has done a weird thing, it has lessened something called inflation.

Now that's a powerful claim, which I think is easily explained in this framework. Theoretically if people could establish accepted values for all favors then that value would not change. Inflation would not exist.

Different cultures use different money, for instance the United States where I live uses the US dollar. Whereas in the Eurozone they use the euro. The value of these currencies relative to each other shifts in an attempt to balance them so that a favor in the US costs roughly the same as a favor in the Eurozone. That constant balancing act can be impacted by a vast array of things, which can change the relative value that people see in exchanges which are about money used to buy money. So it's still set by transactions.

It can be easier when people just use one currency, like the US dollar, which is considered a global currency as lots of people in many countries use it.

Transactions for this discussion are when at least two parties make a buying decision, where there is consideration given in exchange for a favor.

Where that consideration is enumerated by money. So money just lets you put a number on it.

Now we can talk policy, and for instance, to the extent that money is in return for favors as a society I think it is problematic to limit the favors people can do for others! And I think in the US especially the feeling is people should make as much money as they can, as long as they earned it.

We can now say that earning your money involves an appropriate exchange in consideration for a favor within a desired transaction. That is, someone wants something, you provide it, and get a number on that value which is the money you receive.

However, it can be problematic if some people are getting more money than they really earn, though try to get anyone to admit it! Or which may be more common, people are working for less than the value of their work, which I addressed in a prior post.

Reality is, I think, people can have a hard time figuring out what their work is worth! And companies don't help and even try to exploit, like by going to some other country where wages are traditionally low. The web helps there as those people can talk with others and find out what they should be making so I think that problem is temporary, but great harm can be done when people work for far less than they should.

Some people see unions as a solution, but in my country unions are associated with the least common denominator, and forcing equal pay or a lower limit on pay ignores when some people aren't worth it.

The inability to negotiate an appropriate wage is the primary justification for forcing a minimum wage, in essence, saving certain people from their lack of knowledge about how much their work is worth.

I support wage understanding. Figure out what your work is worth. That is what you should get paid. And don't let yourself be cheated as you make it harder for others. Women especially are problematic in terms of getting their proper wage, which drags down tax revenue. People have a duty to be paid appropriately.

That doesn't remove responsibility from companies, but there are traditional views in this country that see underpaying workers as ok for a company, if you can get away with it. This mentality is hard to break even though it's actually stealing.

People need protection for a wide variety of reasons, and at the highest levels government is tasked with protecting its citizens, but I don't think that covers enough.

My full position is that governments have a duty both to protect and enable citizens. For instance, governments may regulate exchanges enabling citizens to feel safer about engaging in transactions.

So governments by necessity provide services to their citizens.

Government now can be seen to have a cost, and taxes represent what people are forced to pay as otherwise they just take services without giving anything back! Trying to not give anything for government services is something often seen where this behavior seems to be built into the human animal and is immune to reason.

People who have obtained the most by presumably giving the most favors to others, tend to bear a greater weight because they have disproportionately succeeded--your success is not just about you but also about your environment--and they have greater ability to pay without distress.

Distress is very important. One man can only give so much before he's starving. While another can give much more and still not cut into luxury. But both need the society that makes that possible.

Some wealthy are functionally insane: they work to pay nothing back to the society without which they could not have their wealth, and pride themselves on this behavior. There is no fix for this particular insanity so government must simply pursue them and force them to pay.

The simple way of looking at things here leads to rather specific prediction which kind of surprised me, but now lots of things make sense to me that I didn't understand before.

With the idea of a favor enumerated with money, one can say that in an ideal situation every unit of money would trace back to a favor, and would represent a desired transaction between two entities.

Since people will always be doing each other favors that means that money will always be here as long as there are people which really surprised me, as I'm a fan of science fiction including the Star Trek franchise where money is no longer used within the fictional Federation in that idealized view of a possible future.

Now I know, as I bring science to money, from a simple methodology--that bit of science fiction will never happen.


James Harris