Forms of Government. Came up with 5 forms of Government: Monarchy, Democracy, Oligarchy, Authoritarianism, and Totalitarianism.  What happened to Socialism?  Why is it not on the list?  Because each and every one of these is a version of socialism, 

Look up the term Socialism – “a political and economic theory of social organization which advocates that the means of production, distribution, and exchange should be owned or regulated by the community as a whole.” Along with the definition are more variations and use of the term than there are for forms of government. 

Found this quote quite appropriate.  “socialism entails the existence of a legislative body administered by people who would be elected in a representative democracy”. Sounds a lot like our current form of government. The term variation of socialism that fits us best is Social Democracy.

Social democracy is a political, social and economic ideology that supports economic and social interventions to promote social justice within the framework of a liberal democratic polity and a capitalist economy.

Our current president is harping that we will not become a Socialist country, but we already are. Every level of our government is an example of socialism.  From your local township, to your county, to your state and the federal government.  Our communities vote for representatives to control (own and regulate) assets for use by our society.  Be it snow plows to keep streets clear, schools to teach our children, social security to care for our elderly, etc.

Our Democracy is Social Democracy. We use it to provide justice as it runs in tandem with Capitalism.  They act hand in hand.  Right now our democracy is spending out of control.  Basically to provide for the social justice our society needs.  Welfare, food stamps, tax credits, etc. To pay for these we keep increasing the debt we are accruing for future generations with ever increasing limits, yet not seeing that there needs be limits applied to Capitalism.

Without limits on Capitalism a very few are amassing huge fortunes that eventually will crash our economy.  There are too many in need of basic minimums to survive.  The pressure on the lower and middle classes is manifesting itself in way too familiar issues: suicide, mental and general health issues, gun violence, drug addiction.  This list goes on and on.  Without an upper limit to what people can own and earn, all of these will continue to increase in frequency.

We all want to believe in the American Dream, we want our society to work for all, without leaving people behind.  It’s about time we recognize we are a Social democracy that cares for those in need, coupled with a free enterprise system that can provide real opportunities for entrepreneurialism, the American Dream. To make it all work we need to set limits and goals.

The information age and the imagination age.  We came through the industrial revolution, now  living in an age of information.  What is the imagination age?  “Imagination age – hypothesized successor of the information age: a period in which creativity and imagination become the primary creators of economic value.”  OK, we are not there yet, but we are solidly in the information age.

I included the definition of Imagination age, should probably also put in a definition of the Information age.  “The Information Age is a historic period in the 21st century characterized by the rapid shift from traditional industry that the Industrial Revolution brought through industrialization, to an economy based on information technology.”  Let’s use some of our creativity and imagination as we review some information available to us.
The chart below is from a website of world data. https://ourworldindata.org , specifically the page https://ourworldindata.org/income-inequality

They say a picture is worth a thousand words, so today is going to be long-winded. The words of this chart jumped off the page at me in glaring clarity.  The countries that reduced taxes on the rich in what is known as the “Trickle Down Theory”  have had significant portions of wealth transfer to the top 1%.  The following chart also from the world data website shows some of this correlation.  The page is https://ourworldindata.org/grapher/top-income-tax-rates-piketty

The United States and the United Kingdom dropped their top marginal tax rates by over half in the last 60 years.  Prior to those tax cuts the percentage of income going to the top 1% had been cut in half, since the tax cuts, the percentage going to the top 1% has doubled.  Appears to be simple math divide top marginal tax rate by two(2) equals amount going to the top 1% multiplied by two(2).  

A couple of Quotes from the verbiage associated with these pages strike me as being relevant.  First, “However, it would be wrong to think that increasing top income inequality is a universal phenomenon” This referencing the relationship between the first and second graph.  Secondly, “that the institutional and political frameworks in different countries also play a role in shaping inequality of incomes. This means that rising inequality is most likely not inevitable.” So, the problem appears to yet be solvable.
Back to using our imagination and creativity.  Assumption is the solution is possible.  If our equation was T/2=I*2, where T is top marginal tax rate and I is the percentage of income going to the top 1%, does T*2=I/2?  Or if we double the top marginal tax rate will we be able to reduce the direction of income going to the top 1% by half, thus allowing wealth to naturally spread more evenly to society.  Simple, but is it imaginative enough?  How about adding the “Wealth tax” to up the creativity.  We have a crisis, it is growing, we need a solution. 

Relevant Range.  Systems only work within what’s called a relevant range.  Currently, our economic system is not correctly functioning as parts of it now fall outside of a working Relevant Range.

Defining the range. There are basically only two factors in a relevant range.  Top end and Bottom end of the range.

The bottom end of our economy is constantly being dealt with.  Mostly called social programs. It’s how to keep the poor from having nothing.  Bottom of the range is keeping people at the minimum end surviving financially. If that sets the bottom end, where should the top be?

Top end of a functional economic relevant range cannot be infinity. There must be an upper end.  How to set it?  We  need to come up with this.  Where can an upper limit be set that there are real opportunities for hard work and entrepreneurialism to provide incentives,  yet prevent greed and gluttony from spoiling the range.

I think there are two current proposals that work towards this end.  Elizabeth Warren’s “Wealth Tax” on assets over $50 Million and Alexandria Ocasio-Cortez’s plan to increase the top marginal tax rate to 70%.

Where is the limit the top end of the relevant range should be set at?  At this point we don’t need to set it, but just acknowledge that such a limit needs to be attained.

Example Story - The Balloon.  This is a simple example story about the concept of  “Relevant Range”.  In this story there is a Very Strong self- inflating Balloon (our overall Economy).  Belief is, this balloon is this wondrous best of the world system.  Truth is, there are issues with the balloon.

Right now we have to keep blowing up the balloon, but it should be self-expanding, The issue is a set of tiny pin prick holes (the ultra-rich) allowing the self-expanding gas to escape the balloon (the upper limit of the relevant range).

As this gas escapes the balloon shrinks to compensate.  This shrinking causes pressure on the system.  This pressure manifests itself in many ways. Since there is no way out of the balloon (except the tiny pinholes),  all sorts of actions are required to prevent a collapse of the balloon. 

These actions do include entitlement programs growing at rates we cannot continue to afford.  Proof of this is what we have to continue to blow the balloon up with, our national debt. Do we want to continue to feed this debt, or come up with a real solution?

The solution, slow down and eventually plug the leaks. This entails setting a true upper limit to the relevant range.  Elizabeth Warren’s “Wealth Tax” on assets over $50 Million and Alexandria Ocasio-Cortez’s plan to increase the top marginal tax rate to 70% are starting points to slowing the leaks. Eventually we need to seal the Holes.

The balloon will eventually implode if we don’t fix the issue.  Not just address symptom after symptom.