The world has changed enormously since the day when the
folks in past centuries put down principles to take into account while
determining how the state ought to interact with its people in matters
concerning citizenship and the distribution of wealth. The difference between
then and now is that we now understand social and economic realities better
than ever before, and have developed tools to deal with deficiencies that were
unknown to previous generations.
But we also realize that the issues have become more complex
both from the social and the economic points of view. Thus, our current task is
to untangle the issues, deal with them separately, and rewrite the
socio-economic compact in a way that will be equitable to all participants – as
well as be conducive to the kind of society we strive to become. What follows
are only a few ideas; not the entire compact.
Two realities, one social and one economic, stand as the
most complex factors among those we encounter when putting together the compact
that we want. The social factor stems from the reality that we now live mostly
among strangers in an urban jungle ... as opposed to living on the land among
family and friends the way things used to be. We also tend to live long, which
means that we spend many years in retirement; not always in the best of health.
And all these realities require that we strengthen the social safety net lest
our society degenerate to resemble the most unfortunate of primitive societies.
As to the complex economic factor, it stems from the reality
that the use of fiat money has become the predominant method of doing
commercial transactions. And so, while we continue to produce goods, and
continue to deliver services by the “sweat of our forehead,” the way we used to
do it in the past, those goods and those services are not considered assets
till someone bids on them a definite monetary value. This is the unfortunate
reality of our times even though the said goods and services make up the wealth
of the nation.
The problem with the current situation is that no one but
the central bank has the authority to print money, a reality that made it
necessary to build a network through which money flows from the bank to all the
members of society where it should be delivered to each according to merit. The
trouble is that real value in terms of goods and services is created all over
the country at different levels, but the way that money flows never gets to
match those levels. Instead, money tends to accumulate more readily in places
where little is produced while neglecting to go to the places where much is
produced.
This is a reflection of the mismatch that exists between the
reality of the economic situation on the ground, and the fact that the network
is operated by people who care more about their own welfare than they do about
upholding the sense of justice which requires them to distribute the money
equitable. The net result of this mismatch is that those who produce wealth for
the nation by making things or by delivering services, receive just enough
money to get by while those who produce little or nothing but handle the money,
get to keep most of it. And this is how the makers get to be called takers even
though they make a lot and take very little; and how the takers get to be
called makers even though they make near to nothing and take just about
everything.
So then, what must we include in a modern socio-economic
compact to remedy the situation? The first thing we include is a recognition
that civilization has advanced so much, it would be a grave dereliction of duty
on the part of the government to have a shortage of labor in any of the service
industries. Thus, the first priority of the government should be to ascertain
that there are schools and training centers producing enough workers in those
fields.
The next item to be included in the compact is recognition
that most of those who require assistance are the very young and the old. What
these people usually need are services rather than hard goods. Thus, a nation
that has an adequate supply of service workers can easily handle the cost of
the safety net, turning it into a useful sector of the economy without becoming
a burden.
There must also be mention that the self-serving part of the
financial services does not count as part of the economy. It must nevertheless
be reported; and anything that exceeds one tenth of one percent of the national
income will be shaved by taxation. This will be done on a progressive, pro rata
basis among the individuals who work in the financial services and make gains
by serving themselves while serving the public or pretending to do so. There is
no reason why these people should make more than 20 billion dollars in
ill-gotten gains in an economy that is worth 20 trillion dollars.
Another item should specify that in the interest of keeping
a check on inflation, the service industries as a whole must not exceed 75
percent of the national income. If it goes beyond that value in a given year, a
tax surcharge is automatically activated at such level that it will shave the
excess.
As to the production of hard goods, the government should
encourage self-sufficiency in the industries where it is possible to make
gains. But where the country needs to import raw material, semi-finished goods
or complete products, the government must strive to maintain a fairly even
balance of payment with the world by making sure that the imports are offset by
exports. To this end, it will further encourage the industries where the
country has an export advantage by subsidizing them if it must.
These provisions in the social compact will insure that
there is an equitable distribution of the wealth among those who produce it;
each receiving as much as he or she produces or close to it. Those provisions
will also make sure that while the needy among the current generation will be
cared for, they will not be a burden on their contemporaries or future
generations.