How would I change the US economy, taxation, and work if I had a magic wand?
I have all kind-of conversations with my friends. And obviously, questions about the economy, taxation, work, and retirement come up. And gradually, I learned, borrowed, and came up with all kinds of ideas which I think would have created “a more perfect Union” (for people outside of the US., This is a phrase from the first paragraph of the constitution).
Let’s start with my most leftist ideas. I think at this point in history, we generate enough value that we (as a society) should guarantee that people don’t die from hunger, homelessness, and the absence of basic healthcare (both physical and mental).
Yeah. It was impossible a hundred(s) years ago. And it’s still not possible in many countries, but it’s possible here and now in the US (except that changes are way too big to be appreciated by most).
The two things that would help achieve this are Universal Basic Income and Universal Healthcare.
The funny thing is that although the idea is on the left on the spectrum (especially UBI), it would benefit many entrepreneurs (who are often right-wing constituents). It helps immensely when you are trying to build a new business not to worry about what you will eat tomorrow or whether a ruptured appendix medical bills will bankrupt you. So, these changes are not only to tickle my humanistic views, but also they are very pragmatic steps to encourage entrepreneurship and upward economic mobility.
Just a side note. You can go through the list of biggest companies in US by market cap, and you will find that pretty much none of the recent (last 50 years) companies were founded by a hungry person, risking the last penny of his livelihood. It’s much easier to swing for the fence when you know there is a safety net (BTW. This is one of the reasons why angel or venture capital is used to build a business).
Kill all stopgaps
Let’s continue with the changes that I envisioned. As we introduce these two things (UBI and universal healthcare), we can cancel A LOT of other programs which are just stopgaps. Here is an incomplete list — unemployment insurance, Medicaid, Medicare, government retirement program, low-income assistance, etc. Also, a great side benefit is that it will eliminate tons of inefficiencies (read management overhead) and the need to fight fraud around these programs. Giving a check to each US person is trivial, but managing these complicated programs is not.
More freebies
However, let’s not stop there. Another thing that should be available is free education (specifically for in-demand, high-paid professions). So, if you decide to study middle french, that’s on you. If you choose to become a pediatrician, it’s on the community (through taxation).
Many people are locked in poverty and spend decades putting enough time into education to get a better profession. Many of them will jump at this opportunity. Instead of being stuck at a dead-end job, they will learn and start creating more value and earning more. And oh… this will increase the tax base and offset the spending on UBI of people who decide to work less.
BTW. I am not naive. I know that there will be people who will be happy never to work and rely on UBI to cover their basic needs. However, I think the percentage of them won’t be that big. I would rather see a country where let’s say, 5–10% of people do nothing, and the next 30–40% have tons of upward mobility than say: “screw this 5–10 %” and, as a side effect, let’s condemn the next 30–40% to work some menial work and next 40% be stressed out of their mind to slide down to previous 40%.
Birth control
Since we talked about healthcare. There should be free/easy access to birth control. (Kids are amazing. However, people should deliberately decide to have them). Having to jump hoops to get birth control is a great way to get unwanted pregnancies. And having kids is one of the most expensive decisions which people make. )
BTW. This is my general theory. The best combo is funding to survive + education + birth control. This is a great combo to lift communities out of poverty.
School
Ok. Let’s go to the next one. Schools follow an utterly outdated model designed to create good manufacturing workers back in XIX. It’s crazy how ancient it’s and mainly revolves around letting adults work and way less about making children smarter, more educated, and better prepared for life and work. There are great teachers, and there are good schools, but the majority of them of incredibly mediocre and pretty much just burn kids’ time and try to shove some information in their heads, which could often be googled in seconds.
One thing I would do is start blending play, school, and work. You can easily expose kids from ages 10 to actual work experience. A lightweight vocational school type of experience. It will both be entertaining for them, education, and also give them a taste of what they want and don’t want to do.
Teach older kids — how to file taxes, manage finances, task management, basic psychology, and so on, which you 100% will need in your life (vs. knowledge about, let says, botany, which will probably be needed by 1%). On the other hand, give kids more time for unstructured learning, mix kids of different ages, and let them teach each other (ahem… they do it often better than we adults do). School should not be a place to _only_ force kids to memorize many things but rather a way to find something that interests them and prepare them for adult life.
That being said, I think this one is one of the most complex issues. These ideas are hard to scale.
Work
Another thing which I would try to wish away is a hard-set 40 hours week. There are so many things that are attached to it now. It’s tough to have a job with just 30 or 20 hours now (immediately, you got disqualified for healthcare, retirement plans, and a bunch of other perks). Yeah… yeah… You can become a consultant (I did that). However, it creates a constant need to search for clients, do your accounting, track hours, and other overhead.
Hours per week should be more fluid. People may be happy to work 50 hours/week in their late 20s but need to cut down significantly in hours in their later 30s-early 40s when their kids are small. Also, if you can gradually cut down hours, many people of pre-retirement age will continue working (and continuing to provide value), just doing it less and less. So, instead of working from 25 y/o to 65 y/o, 40 hours a week, it could become from 10 y/o to 75 y/o with more fluidity in hours to follow some natural changes in life.
Taxes
And last but not least. I think people should have more say in how taxes are spent. There is a long chain between who I vote for and the final allocation of taxes. It’s crazy. I understand that direct democracy could be too much for the whole budget. However, let’s say 30% of tax revenue could be decided by direct democracy. For example, when I file taxes, I can choose between a dozen categories — education, healthcare, defense, etc.
Also, the whole US tax code is ridiculously complicated. It is crafted through generations of incentivizing and disincentivizing behavior, loopholes, and closing them. Frankly, this complicated tax system adds a huge amount of friction for 99% of the population and is a great way to find loopholes for the top 0.1%. I would rather have a much simpler and shorter tax code and some temporary laws (emphasis on temporary and expiring) that incentivize some aspects.
I know the list ends up being long and winded (BTW., I probably covered half of my thoughts and didn’t have a chance to cover all caveats, thoughts, and notes). However, at the end of it, there are three main ideas which kind-of drive this list:
- a better framework (that allows a better, healthier society)
- removing cargo cult elements that accumulated over a century and replacing them with a no-nonsense approach
- remove friction
BTW. I realized that I mentioned “value” multiple times. Unfortunately, anything “free” is not actually free but instead paid by our taxes. So, there are some prerequisites for all of this to work. There needs to be some additional value created (which will be redistributed through taxes). This will move us from our current local maximum to another one. In this case, if no value is added, it will be perceived as making the middle class poorer to make poor people just a bit less poor.
