Yes, you can eliminate worldwide unemployment and poverty in less than 1 year, with no additional debt. Part 2.

 The solution:

 

Now, let’s change the model, using simple principles of Economic Democracy.

Political Democracy => Everyone has the right to vote

Economic democracy =>  Everyone has the right to a fair income earning job.

 This is surprisingly easy to achieve, based on the issues observed in Capitalism.

Economic Democracy works on the following principles.

              Everyone gets at least a fair minimum wage.

              Accumulation is controlled: All income has to be spent in a month, to minimize accumulation and some accumulation is permitted with oversight.

              Income has a floor and ceiling, whereby the floor ensures a minimum fair wage for everyone whereas the ceiling ensures people are motivated to be more productive thereby earning more income.

              There is only Sales tax and Savings tax. All other tax is abolished.

              All are ensured good health: Everyone in a country is enrolled in medical care with no co-pay or deductibles.

              All are ensured good skills: Job oriented education is paid by the system when such an education is approved and the person does well in college.

              No services are free. Everyone works to create and consume their services to the best of their ability.

              There is no coercion. People can participate in either an Economic Democracy or a Capitalist system and move freely between the systems.

 

Let’s distribute the 1000 people into 5 countries. Country Food, Country Medicine, Country Housing, Country Education, and Country clothing. The names convey the purpose of those country residents.

Each country has a new and special type of Bank account, called a Digital Economic Democracy account or DEDA. This is special in the sense that income in such an account has to be spent in 30 days.

The digital Bank account was created for a reason. If people don’t spend the entire money, the balance is returned to the system, for reuse in the next cycle.

If the Bank account is not digital, people can take out paper money, and hide it under their mattress, thereby reducing the amount of money in the system, which starts a vicious cycle of lower consumption, which leads to sales, which leads to lower jobs.

Each country also has a limit on the minimum income and maximum income each citizen can get. Let the minimum be 0.5 and the maximum be 5.

Each country has 1 cooperative that employs the entire population of that country. Why cooperative? A cooperative is a special kind of company where the worker is the owner and the owner is a worker. The psychology of an owner is very different from the psychology of a worker. Owners are more motivated and give their best.

So, unlike Capitalism where only 500 were employed as workers, now an entire 1000 are employed.

So, they are also more motivated since all of them are owners.

So, now the 5 countries make 2000 pizzas. Remember, these pizzas represent food, medicine, housing, education, and clothing.

It is entirely possible that some residents only made 0.25 pizza and some made 20. Different people have different productivity.

The cooperatives pay the entire 1,000 dollars as wages to their 1,000 workers. Now, the workers have to turn around and spend those 1,000 dollars in 1 month, which they use to buy those 2,000 pizzas back, which means the cooperates earn back their 1,000 dollars.

The average pizza price is $0.5. (1,000 dollars / 2,000 pizzas).  

Yes, some coops will earn more and some will earn less.

But the system ensures that each resident gets at least 1 pizza to eat as minimum wage is $0.5, which ensures the minimum amenities of life. The maximum a resident can eat is 10 pizzas (the ceiling is $5 and the cost per pizza is $0.5).

It is possible that some cooperative does so bad, that it can’t even afford to pay $0.5 to its residents. Then the remaining cooperatives step in to provide financial help, management oversight, and training and either restore normalcy of the struggling cooperative or split/merge it so that its economic health is restored.

This cycle repeats each month.

All 1,000 people are fully employed. They have good health, good education, and good skills, and therefore the productivity keeps improving.

They make more pizzas each month, so in month 2, they make 3,000 pizzas, in month 3, they make 4,000 pizzas, and since the money in the economy is fixed at $1,000, the cost of the pizza drops, even though the income floor and ceiling does not change.

This means that residents can buy more pizzas, each month, improving their quality of life.

With additional automation and technological progress, they continue to make more pizzas while working even less and less each week, and yet, all continuously enjoy more amenities and those producing more enjoy even more amenities.

The system eliminates the fear of unemployment, poor health, education handicaps, and debt.

Strange enough, the actual number of dollars doesn’t matter!

What matters is that everyone works, there is a floor and ceiling, rational distribution of income, good health, and good education.

Some accumulation is required since people want to splurge a little on marriage, go on a sabbatical, follow some charitable cause, etc.

So, the people can decide that number, for example, no more than 10% of monthly income can be saved, and total savings cannot exceed 5 times the income of the person.

This is where savings tax comes into the picture. A savings tax is created to ensure people use their savings.

In this example, there is a Sales tax, and this is required to fund the government. Let’s say the sales tax is 10%.

But a small twist is required.

When citizens produce 2,000 pizzas a month, they price it such that 1,800 pizzas cost $1000. Residents will have to buy the pizzas and end up paying $1,000 for the 1,800 pizzas. The cooperatives collect a 10% sales tax, which is $100, which is given to the government. The government turns around and buys the remaining 200 pizzas for those $100, therefore restoring the cooperative economic funding of $1,000 per month.

The government ends up getting 200 pizzas every month to consume. This is what the government uses to provide for retirement income, government departments, and its other functions.

 

I will summarize it as this concept is so simple, that most people miss it.

 

Accumulation of wealth is the root cause of unemployment, debt, and poverty.

Economic Democracy does not give anything for free. There is zero coercion.

Everyone is given good medical care and education. This is a must for any healthy society.

Then everyone is employed in a system where they are owners and workers at the same time.

If their cooperative does well, and someone else is failing, they need to assist the failing cooperative.

If their cooperative is failing, then others have the right to step in and help.

The goal is to ensure each cooperative can earn enough to provide the minimum fair wage to all its workers and then distribute the rest based on its productivity.

Workers are free to move from one cooperative to another.

Workers can reskill themselves and this ensures cooperatives are getting people with strong skills.

Cooperatives proactively indicate their skillsets and adjust education availability based on that and people are motivated to get an education in those fields that are in demand and guaranteed to provide employment.

There is no exploitation of one group by another.

Since no one can accumulate massive wealth, there is no motivation to make unnecessarily risky decisions or sell products and services that are harmful to people.

 Larger economic regions can be treated like independent countries and engage in balanced trade. Local people have the first right to local resources and jobs. Only the surplus can be traded. The goal is NOT the lowest price, but balanced trade of surplus to benefit from efficiencies of local economies.