PART SEVEN: Reconstitution
CHAPTER XXVI

ECONOMY AND SIMPLICITY

The central problem of conventional economics is to determine the laws of supply and demand for commodities in a market. But the central problem of kalotic political economy is to arrange that everybody in the world will have something with which to bid successfully for what he needs.

Furthermore, the solution of this problem must not prevent the simultaneous solution of other problem of "non-economic" wants. Reverting to the components of kalos, we say that not only must emos, the most economically relevant of the three sets of wants, be approached unconventionally but also the other needs - dikeos and pneumos - must be simultaneously satisfied; if their solution can be translated into economic language, well and good; if not, they must still be taken into account.

In picturesque terms, the situation is this, as described by Kenneth Boulding1 and excogitated by ourselves:

Primitive men, and to a large extent also men of the early civilization, imagined themselves to be living on a virtually illimitable plane. There was almost always somewhere beyond the known limits of human habitation, and over a very large part of the time that man has been on earth, there has been something like a frontier.......

Gradually, however, man has been accustoming himself to the notion of the spherical earth and a closed sphere of human activity..... The closed earth of the future requires economic principles which are somewhat different from those of the open earth of the past...... I am tempted to call the open economy the "cowboy economy"... associated with reckless, exploitative, romantic and violent behavior, which is characteristic of open societies. The closed economy of the future might similarly be called the "spaceman" economy, in which the earth has become a single spaceship, without unlimited reservoirs of anything, either for extraction or for pollution, and in which therefore, man must find his place in a cyclical ecological system which is capable of continuous reproduction of material form even though it cannot escape having inputs of energy... In the cowboy economy, consumption is regarded as a good thing and production likewise; and the success of the economy is measured by the amount of the throughput from the "factors of production".... The gross national product is a rough measure of this total this throughput.... In the spaceman economy, what we are primarily concerned with is stock maintenance, and any technological change which results in the maintenance of a given total stock with a lessened throughput (that is, less production and consumption) is clearly a gain. This idea that both production and consumption are bad things rather than good things is very strange to economists, who have been obsessed with the income-flow concepts to the exclusion, almost, of capital-stock concepts.

Old economics is "cowboy economics." It is for a world whose people do not relate to each other and to their resources. The ranch ranges are "open;" the cowboys exploit the land and gamble their earnings on Saturday night. "Social consequences" is a foreign concept.

The present is the "dude ranch" era. The real cowboy is gone and the cowboy economy has long disappeared. But most people (and economists) are acting in a tragicomedy. Everything is tamed and managed, but the scenario is still that of the cowboy drama.

The "dude ranch" is the age of the welfare state and socialism. Everybody and everything are dressed up to look like cowboy: unlimited markets are supposed to exist; full employment is supposed to be natural; the environment is still to be exploitable; there are no ultimate problems.

How false this all is ! We are in the "Spaceship Earth" era, the era of Kalos. We can show that history has been falsified. We shall be massacred by the hundreds of millions by our false historiography if we do not rewrite history and prepare it for the future!

In a few years, the physical environment will be exhausted.

The U.S.A. is draining the resources of the world. Five percent are taking 50%, they are not even enjoying it!

In the U.S.A. 1% of the families plus the various governmental agencies own most of the assets.

Macroproperty does not exist in the old sense of property. Forget it! Write it off! Reformulate it.

The total accounting of man is needed. A " Spaceship Earth Accounting System" is required.

A small proportion of Americans (about13%) produce most of the wealth of the country. The proportion is similar in other countries. But the "dude-ranch" psychology conceals this all in school-prisons, "early retirement", labor and capital monopolies, and non-kalotic production!

The "dude-ranch" economy is moving inefficiently and in competently to equal wages for all in a war of all-against all. Everyone who can organize can cripple society. Therefore there is no end to group pressures, no end to inflationary pressures, no possibility of a calm order, no rational solution of the problems besetting everyone.

In a few years, the electronic machine age of the computers will take the present-day jobs of another third of the American workers2 even while a third of the population (new women, new blacks, and other new unaccountables) demand a place on the "dude ranch".

The conclusions force themselves upon us:

The "dude ranch," the plutocratic world of today, can only continue its masquerade by letting the world be destroyed socially, environmentally, the perhaps physically.

Alternatively, it must set itself a global task, apply its resources globally, reorganize fundamentally its own constitution and practices.

The Kalotic Revolution intends this. Here, five new major proposals are added to the Kalotic Program. Then we shall go on and on, until by the end of this work, we shall feel complete: What it takes to redefine the new world will have been said; what it takes to reform it will be offered.

The present three proposals are: the Single Head Tax; the Personal Social Contract and Life Account; and Productive Dispersion of Wealth. We present details not as demands, but to show where we must go and what kinds of policies must be promptly adopted in the face of the impending world crisis.

The Single Head Tax

The activities of the several levels of government under kalocracy will require expenditures on a level somewhat less than at present. That is because must of the social system will be reorganized, decentralized, transferred to independent bodies and generally freed of the encumbrances of structure, interrelations, and administration that cause such costly friction today. But assume that all of the obligations that a given country will incur in a given year are on the order of present expenditures, even if the pattern of expenditures will be different. How will this sum of money be raised? Take the United States as an example.

Today all levels of U.S. government spend together over $300 billions on thousands of different activities. No one has estimated the costs of collecting these monies of described systematically the constraints imposed upon the society in the course of their collection.3 To the direct spending of all governmental units for revenue collection must be added the cost to the public of compliance with revenue laws. There are dozen of taxes and each tax has a great number of calculations involved in its determination, most of which are paid for by the taxpayer. A single taxpayer will spend many hours in the course of a year in compliance behavior. A corporation will spend vastly more. In the case of systems such as the social security system, very small amounts by the millions need to be assessed, recoreded,. adjusted, received, and paid.

Probably for every man-year of government employment given over to revenue work, several man-years of non-governmental compliance are expended. Abundant machinery, office equipment, and secretarial services are added to professional and tax payer compliance time, Rarely is a business decision made without a significant proportion of the time going into tax considerations. All of this activity probably costs in the area of $30 billions, or 10% of the total amount collected. It is also one of the most sterile forms of human behavior. The U.S. case is matched in complexity and cost by every other known system.

In general the justification of a tax system takes five forms:

1. The variety of taxes and schedules is believed to be needed to extract the largest total amounts.

2. No single tax, it is said, can take the place of the full variety of taxes, because its incidence would completely distort and wreck an economy.

3. The costs of compliance are thought to be roughly the same under one tax system as under another.

4. A given tax is often designed to be useful in performing operations other than raising revenues: it will restrain, encourages, equalize, select, publicize, conceal, and in many other ways modify behaviors in line with public policy.

5. In any event, the tax system is supposed to be so ingrained in the economic system that it can scarcely be changed without severe economic disturbances. That it, disease becomes the standard of health, since health is a pain to achieve.

In the face of these justifications of any existing tax system. it is useful to state the ideals of a tax system:

A tax system should:

1. Raise needed monies reliably.

2. Cost little to collect.

3. Convey its meaning and intent honestly.

4. Be flexible so as to expand or contract as more or less funds are required.

5. Pursue non-revenue policies that cannot be carried out by other, more direct means.

In kalocracy, what additional emphases should be placed upon the revenue systems?

6. It should be personalized, as part of a citizen's responsibility.

7. It should be simple, non-bureaucratic, and non- constraining.

8. It should avoid the entanglements that could result from several levels of autonomous government and several autonomous government and several autonomous types constituencies concurrently engaging in taxation.

The existing tax systems of the world, far from being a minor scar on the already blemished skin of society, form a large, distracting, demoralizing, and costly obstruction to kalocracy. Their justifications are close to denunciation. They are unable to perform according to more than one or two of the eight ideals just presented.

Therefore, a new tax system is proposed as more suited to kalocracy. It is a single tax system.4 Nothing that can be called a tax should exist outside of it. Any financial arrangements other than the tax should not bring revenues into the treasury of the government. The tax is a Single Head Tax. It is imposed upon every living soul within whatever toparchy has the largest domain - ultimately the cosmarchic region.

The tax is combined tax for all levels of government, collected by any agency of the government and forwarded to the regional treasury in toto, there to be allocated on the basis of pre-existing expenditures patterns to the nation-states and thence to the subdivisions of government. Funds newly appropriated under kalotic legislation, whether by the World Congress, the Regional Congresses, the Metropolitan Council, or the Associations Boards, will emerge from the regional treasuries after they are collected as part of the single tax.

The single tax is calculated by dividing the whole number of the population by the total amount of spending planned for the year. This budget is the addition of the new increments planned for the year to the expenditures of the past year.

As an example, the approximately 200,000,000 Americans must deal with an all-government general budget and revenue of about $300 billions. This comes to $1500 per capita. This is each person's tax for the year. He and she must pay it or owe it to the common treasury. There are no deductions.

Presently the governmental treasuries of the United States receives their $200 billions of collections from the following sources.5

When the Head Tax system is established, practically every tax form of the present time will be promptly and readily available for transfer to individual incomes to help people pay their Head Tax. Consider the following transfers:

1. Of the 200,000,000 Americans involved, 30% will already be able to pay their $1500 because they pay it or more today.

2. Of the remaining 70%, 15%, who are not already counted, work for corporations that now pay 52% of their net profits as the federal corporation tax. These companies can promptly and readily raise the pay of their employees on a sliding scale that will permit them to pay some of their Head Tax.

3. The reform of corporate organization whereby employees are paid one-third of the stock as their capital gain on their labor will introduce a new income-earning factor and thereby a new tax-paying capability to the extent of an additional 5% of hitherto uncounted Head Tax payers.

4. Besides the above categories that amount to 50%, 30% will have their taxes paid by husbands, by parents, and by employers who are not making a profit or paying a corporation tax for various reasons but who can still afford to raise wages to pay this tax.

5. Of the remaining 20%, 10% will be studying (and poor), or sick (and poor), or jailed (and poor) or otherwise disadvantaged (and poor). These will draw a debit on their Life Account and repay the obligation whenever and if they can. Pressure will be naturally exerted to allow for their taxes in granting them fellowships, medical insurance, or penalties.

6. The balance is 10% of the population. A large number of person will be told that they must pay the tax without a pay raise (equivalent or part) because the groups for which they work cannot pay so sizeable an increase. These will often be poor workers. The tax will tend to have the same negative effect as the present minimum wage law but more so.6 They too will draw on their Life Accounts until the economy adjusts to the point where they are rehired at higher wages.

The person who will have substantial temporary difficulties directly attributable to the form of the new tax will be more than compensated for from the standpoint of the kalotic level of the new society (and therefore justify a temporary increase in tax) by the 10% of all taxes collected that are dissipated in anti-kalotic taxfulfillment activities, by the more efficient operations of corporations, and by the greater initiative and productivity of the full range of those engaged in work.

The advantages of the system are reinforced by a parallel general plan for reorganizing the pay structure of the economy.7 This is called the Personal Social Contract and Life Account. It is distinct from the Single Head Tax System but connected with it as a balancing mechanism for the individual throughout life and the society as well. It expressed on the one hand the most profound philosophical validity of the person in relation to society and on the other hand the means for continuous year after year reciprocity of precise function.

The Personal Social Contract and Life Account (PESCALA)

The Personal Social Contract is the system by which every person and his society acknowledge and affirm every person's worth. Every living person is worth the price of his kalotic existence. Each person at birth receives an account, a drawing and depository account. To pursue an example in the U.S.A., he or she may draw (or have drawn for him) $3500 per year (in 1972 dollars) whenever he pleases. If under 16, this money has to be accounted for to his benefit by a trustee, usually a parent. His account is continually debited. When he works or receives income, he may make deposits to his account. At the least, he will deposit the amount of his Head Tax.

In a seventy-year life-span, he may draw $245,000. During the same lifetime he would pay $105,000 in Head Taxes. The total debits to his account will therefore amount to $350,000.

We see that he has a Basal Kalotic Minimum of $3500 for all of his dependent years, even though this money occurs as debt to his account.

He may work as the average worker does now from the age of 20 to the age of 65 for forty-five years. Suppose that he averages $13,000 per year. This produces a lifetime income of $585,000. Subtract from this his total lifetime social obligations of $350,000. He has $235,000 of income that he may dispose of flexibly. This brings him about $5220 per year, plus the $2000 that represents the difference between his Drawing Account and Head Tax (3500-1500), or a total disposable income of $7220 during his working years, even while his childhood and old age are cared for.

We move away now from this average worker to the dependent person and the affluent person. The affluent person is one who earns as much or more than the average as he can, who inherits money, who invests it and receives returns, and so forth. He or she can gain without limit.

The dependent person is one who, for a combination of reasons, finds himself continuously losing money on his life account. If he is totally dependent for life and lives for seventy years, a practically impossible case, the kalocracy absorbs $350,000 in costs. The present toparchy would pay out not much less and probably more in the same situation; that is, the $300 billions of 1972 dollars represents such payments already up to a high proportion of the total, and the $1500 Head Tax includes them, signifying that the Head Tax would be considerably lower than assumed for these calculations.8

Now here is what happens to a family of four persons over a twenty year period from 1972 to 1992, when the father is aging from 25 to 45. The father is an average worker of $13,000 annual income (which will be soon explained).

Actually, in the present illustration the family would in most years decide probably not to draw on their life-accounts, and the income and debit items would therefore cancel each other. Two critical question arise:

Disposable Income = $27,000 -- $6,000 = $21,000. Accumulated L/A Deficit for year = $14,000 (allocated to each life account) If family lives at $7,000 spending level, then Deficit = 0.

Disposable Income = 476,000 (596,000 - 120,000). Disposable after Repayment of L/A Debits = $196,000 or $9800 per year).

1. How would people earn on the average $13,000?

2. Why would people voluntarily choose to balance their life accounts?

People now earn on the average $13,000. But they are not paid for their work.9 The costly and inefficient tax system takes some of their money, corporations and employers hold back some on orders of the government for unemployment reserves and for old age payments, but even more, the surpluses created by the workers are partially misappropriated by the system of corporate ownership and consequent income distribution. Moreover, as already indicated, employers would redistribute their former corporate or business profits taxes and all the costs of tax compliance in the form of increased wages.

People would wish to balance their life accounts because the balancing is obligatory. The Head Tax payment is mandatory out of current assets and earnings, like any other tax today. The balancing obligation is taught in the schools, and audited by a personally-chosen "social doctor" at five-year intervals during life. This "social doctor" can be called "Counsellor". He is a family affairs consultant trained in home economics, psychotherapy, preventive medicine, and family law. He is a professional agent, chosen voluntarily by a person, as a lawyer, medical doctor, or teacher might be chosen. Many occupations and semi-professions are veering toward the center of gravity of this professional need already, so that the actual creation of the profession will not be difficult and its emotic and dikaic results would be highly significant.10 It is the Counsellor who would advise a person or family group how to balance their accounts and who would send a copy of their five-year balance-sheet report to the Accounts Agency.

The Accounts of 200 million people would be computerized and easily and cheaply kept.11 Each year, a certain number of warning signals would emerge from the automatic examination of the records file, showing that various persons were venturing into excessively heavy obligations. These signals of troubled persons would have to be defined by the legislature of the toparchy, that is, transformed into general laws, before they would be used by the agency to ask for a special audit from the person's Counsellor.

People would also work, as they do now, to improve their own lives and property, and to extend benefits to others. They will work to earn an expendable surplus, as they do now. They will work because they like to work; in order to be with others; because there is not much else that they would prefer to do with their lives; because their work is socially useful, and in order to avoid moral reprobation.

In the first several years of the Life Accounts system, perhaps 20% of the people (excluding those under 20) will be running deficits. There might also occur a serious dislocation of the U.S.A. economy as a result of which either the Head Tax accounts or the Life Accounts system would fall into a heavy debit condition in favor of the government. Government budgets will have been reduced and can credit the imbalance. Non-inflationary borrowing should be resorted to in order to carry the system past its possible early deficits. The government might discount in the financial markets the debts owed it by individuals up to the point where the liquidity of the system were confirmed.

Government budgets in the United States will have a much different form, and of course the changes that they signify will be profound. They will be part of a total kalotic societal budget, which itself will be more of a prediction than a compulsory directive to the people. The clumsy, deceitful, and incomprehensible present government budgets will be replaced by simple plans with wide-ranging meaning.

The best budgeteering minds today are moving rapidly in this direction. Already, the programming-planning-budget with measures of cost-effectiveness is a rapidly growing movement that is reaching out to meet the concepts of national accounting.12 Everything of wide consequence is public to the new thinkers, and as a result more can be deliberately made private. They need only to be helped and encouraged to slide over to the new overall kalotic budget concept.

The advantage of the kalocratic social accounting system with its Life Accounts and Single Head Tax can be made explicit:

1. The human person has an environment structured for his maximum self-developments and self-responsibility (Pneumos).

2. Man can spend more of his life and resources on better activities (Emos).

3. Corporation and group will become more the property and creatures of those for whom they are established (Emos).

4. A person will know what he owes, why he owes it, what he gets, why he gets it, and be backed up by Counsellors who work for him rather than the bureaucracy (Dikeos).

Let those who say these principles are unworkable explain why. They will claim on the one hand that "people are irresponsible" but that it precisely the case under the present economic system and it is getting worse; more and more people are becoming dependent, poor, harassed, trivialized, and impersonalized.

Here is only one instance, Fraud on the welfare rolls is frequently denounced in today's metropolitan "welfare" economies. It is one area where the social indignants of olden times can come out of their sheds banging their pots and pans. Never mind that a nationwide investigation in 1968 showed fraud in about 5% of relief cases. Never mind that the 5% "enjoyed" a miserable standard of living anyhow. Never mind that most of the frauds were pathetically minor. To uncover the kind of isolated case that can be made to appear shameful, the press and bourgeois politicians seek with the avidity of dirty old men in burlesque houses.

And then the well of humane feelings is poisoned. The poor are denigrated. And none of characters think back upon themselves and judge how they survived their spans of life-sucking in their own ways from the teat of public benefits. Are there not 5% of them who are "frauds" - who inherited wealth, are featherbedders, crooks, and even useless "charity workers?" The 5% or even 20% that might be this figure, if redistributed, would give luxurious care to the dependent poor. The sole reason to fret about the pittances given to the poor is that the similar pittances earned by the independent poor and ordinary middle classes will cause social jealousy and resentment.

In any event, the poor and rich alike will now receive their social credit each year and can draw upon it if they wish. The government of the country will be saved the problem of its corrupting moral interference in the lives of the poor plus the money that is being paid out in the name of the poor. If one is asked "where will the government get $3,500 (at most) to credit the poor?" the answer is "By transferring the very large sums of governmental programs now used in many complicated ways to pay the dependent poor and that often end up paying the independent poor and rich as well." Probably $150 billion go to these accounts now (by legislative intent) and that is enough to credit all the poor and more in America.

Our aim must be to lift by great draughts of power the real incomes of independent poor and middle classes to the level at which whatever is given the poor is beyond cavil. The productivity of the whole society and the revolution of its economic, social, and political reorganization needs to be elevated until the income of the mass of direct producers puts them well beyond the level where they might be obsessed by invidious comparisons.

But now, what shall be done with the dystrocratic countries, assuming that the momentum of these kalotic reforms would quickly penetrate the defenses of taxocracies and stratocracies; can they institute the Head Tax and the Life-Accounts system? The answer is "Yes." They will not attain American standards until they are as kalotically productive and organized. But one of the most wretched features of dystrocratic governments is the multiplication of regulations as a means for escaping their lot; they do not succeed, of course; they aggravate it. And one can see how vicious will be the resistance of dystrocats to the prospect of granting every person an equality of right to basal kalotic existence and how they will hate to erase the multitude of absurd taxes, excises, stamps, monopolies, and the myriad of accompanying devices that have been invented to torment the productive and innovative man and to give jobs to the surplus clerks and petty officials of the country.

Examine a dystrocratic country and see what may occur. India is the example: a. Total expenditures, all levels of government13 = 75 billion rupees less tax cost savings, 5 billion rupees.
b. Population = 500,000,000.
c. Head Tax = 140 rupees.
d. Minimum kalotic Level (L/A) = 1,000 rupees per capita.
e. Present work/wage per annum = 1,000 rupees.
f. Full-kalotic wage (postulated) = 3,000 rupees per annum per worker.
g. Family Budget (20 years (four members))

After-taxes Income = 140,800 rupees (152,000 - 11,200). Disposable after Repayment of L/A Debit = 60,800 rupees. Disposable Income per year = 3,040 rupees.

But India is not U.S.A.; one can grasp that an American worker earns more than he is paid; how can the Indian wage be raised to 3,000 rupees? Three quarters of the population earn less than the kalotic wage (actually the American condition is similar). The answer is to repeat the American kalotic formula: the new tax system; the participation of industrial and agricultural workers in ownership; the reorientation and redirection of management and officialdom; the translation of commodity-value into cash-value; the total reconstruction of credit system concept; the upsurge in work moral and initiative. Also, aid from the world government would be available to raise standards sharply.

Thus, the dystrocratic Indian economy can be reformed directly with respect to these highly important features. It need not go through any more phases of development. It needs the same Kalotic Revolution as does the United States. The results will be more striking in India, where the frictional costs of the tax and income-earning system are greater, proportionate to their functional value, than in the United States.

The Fate of Wealth

The inheritance of kalos should generally be in society rather than in the individual. The advantages that will normally occur in a generation to some person more than to others, over and beyond the Basal kalotic Levels, should not occur to any descendent or favored person of the next generation. However, it is well to admit modest differences (by present standards), if only because their eradication leads to continual strife with an anti-kalotic net effect.

Therefore, the inheritance law, early in the kalocratic era, can prevent large fortunes from being carried into second generation. A person may accumulate and spend at pleasure during his lifetime, but at death he must pass his accumulation only to certain categories of beneficiaries. He may leave no more than one hundred and fifty times the sum set for the annual Life Accounts credit. In the U.S.A. and India using the previous examples, no person might inherit more than 525,000 (1972) dollars or 150,000 rupees. This sum will permit a person to invest in a small new enterprise; it will be enough for a minimal lifetime stipend for three persons should the beneficiary wish to spend a life of leisure with two dependents. The number of persons who may inherit the sum (150 L/A) may be twice the number of natural children of the benefactor but no more than 6 in all; thus, a surviving spouse, four children, and one friend might each receive the inheritance.

All sums above this amount should be distributed at death to certain eligible beneficiaries willed during life, or, in the absence of a last will, to non-governmental groups in the line of a person's lifetime benefactions as administered by a permanent court-appointed board of trustees. The government is not to accumulate wealth by death. The eligible categories include new or old corporations as a gifts to their capital, including university corporation, charitable corporations, and other groups, but not excluding gift to ordinary corporations that a person admires but holds no stock in.

The aim is to disperse large fortunes among beneficiaries who are normally engaged in useful social activities. No attempt is made to distinguish foundations and educational institutions from ordinary corporations for there should be no distinction: it is a hoary but unacceptable myth that a college deserves privileges that a soup-maker does not. With the disappearance of corporate taxation and the capacity for self-maintenance and education given a person by the Life Accounts system, the main pretexts for favoring the one over the other disappear. We stress, moreover, that the estates of the rich should not go to aggrandize government. Instead, they will continually refresh the voluntary and independent sectors of society.

To disinherit the plutocracy will incite hostility, not from a majority of them but from a few. But it must be remembered that these few are like thosuands. Four or five rich plutocrats will suffice, given the means at their command, to threaten a fairly strong political movement. Accordingly the very first of the plutocrats to oppose the movement should become object lessons. They must be blocked from using their resources to coerce, to manipulate public opinion, or to strangle the processes of law. Hence the vivid technique of demonstration is important. Their activities have to be focussed like a laser and reflected upon them in all the places that they frequent. At the same time, it must be realized that those who help lead the revolution, like Bhave of India, become by that fact heroes in the history of Kalos.