Debt has been a very useful tool for growing the economy and society, and has been a fundamental aspect of capitalism. The downside of debt it is that it increases inequality, and that needs to stop. It is also crippling to many people in pandemics and recessions.

I have written a lot about future versions of capitalism that can free us of debt, but they don’t help existing debt. How can we get rid of it?

In historical times there was the concept of debt jubilees. In the Bible (Deuteronomy) it says that every 7 years debts should be forgiven. And in modern times we know that many impoverished countries have had their debt forgiven. Bankruptcies are bad for the entire economy and should be avoided.

Joe Biden has to some degree been forgiving student debt, and it has been suggested that he do the same with medical debts. In both cases the debts are excessively burdensome for many people, and if the debts are forgiven, few would accuse those people of gaining something unfairly / ripping off the system.

Biden can forgive such debts because he can just print the money to do so. Via modern monetary theory, any country that issues its own currency and do that, as long as they don’t put so much extra cash into the economy that inflation occurs. We saw that with the COVID pandemic…

So for many types of debt, government intervention works beautifully. Effectively the burden of forgiveness is spread across all taxpayers (people and corporations) fairly evenly. And when we are talking about capitalism failing 30 years from now, the forgiveness can be done slowly.

Debt is a type of investment, but not the only one. When debt is forgiven via the government, the debt holders receive cash to replace that debt. What they do with that cash is up to them, but typically it needs to be invested.

Removing debt increases the capital value of where the debt is removed from. If your mortgage is forgiven, then the net worth of your property is a lot more. Here’s a simplistic scenario showing how debt can be replaced with ownership.

Ron owns a house worth $100K, has a mortgage of $20K – his equity is $80K. The government forgives all mortgages – people will fully own their homes and banks get paid off with government money. Suddenly Ron’s home equity rises from $80K to $100K, and the bank now has $20K in cash instead of the $20K mortgage.

Ron would like some cash, so he sells 20% of his home to the bank for $20K. They are essentially back to square one except that Ron now has $20K in his pocket, from the government. And the bank has partial ownership of a home, and no interest payments.

Debt is lucrative, essentially unfair, and a driver of inequality. Those who used to own debts will no longer reap the same rewards. That has to be the way, post-capitalism. But they can still be rewarded, just not as as well as before.

For residential property, it is a good result. The bank still profits from the rise in property prices. If the house is rented out, the bank gets their share of that as well. But as long as the property is owner-occupied, bank profits are lower. That is good, as it will send us on a path towards more home ownership and less rentals – good for reducing inequality.

Come 2050 and beyond, when globally the population will start shrinking, there will be less demand for homes. The current system (get a mortgage) will no longer be viable, because the equity in houses is (on average) going to reduce year by year. No bank will lend if that is going to happen – they would never get their money back.

If we have ended mortgage debt by then, it won’t be a problem. People won’t lose their homes and become bankrupt. Banks won’t suffer losses. But we need to start the transition today, while the inevitable consequences for banks are less obvious. Their 20% share in homes will be OK (not as good as now) for homes that are still occupied post-2050. For those that are abandoned, that is a loss for banks.

This is how we could achieve this slowly. As with many ideas like this that I have had, we need to use stealth. We cannot just announce that mortgages are going to end.

Many advanced economies have a perennial housing crisis, and every new government promises to fix it. Typically that is incentivising new home building, or building social housing. I suggest that government very slowly starts buying mortgages from people who are suffering financially, in exchange for equity. It is the same scenario as above, but government owns 20% of Ron’s home, not the bank.

Ron still has 80% equity in his home, but the burden of debt is gone. If he loses his job, the threat of foreclosure is gone. And we will be financially better off because he no longer has to pay mortgage interest. We would of course provide a mechanism by which Ron could buy that 20% from the government any time in the future, if he had the cash.

The criteria could be a based on a ratio of income and mortgage amount. If your mortgage is more than 10x your annual income, for example, you can ask the government to buy you out. This can’t be gamed, because you don’t gain. You’ve simply stopped the mortgage process at a certain point of time, which means your equity gets stuck where it is.

The criteria would be based on say the worst 1% of income/equity ratios. So perhaps only 0.1% of homes are involved in any year. And then, every so often, the criteria loosens a little. And decades from now, a big portion of mortgages have been removed from the system.

Stealth.

It can be sold as a way of making sure that people with tragic circumstances – job loss or an expensive health crisis – do not lose their homes. It should be an easy thing to sell to the public.

Next up: the sharemarket.

NOTE, not for the purposes above, but the Victorian government in Australia has a shared equity scheme, where they pay for 25% of your home at the time of purchase, and they own 25%. With time you are meant to buy them out.

The post Ending Personal Debt appeared first on Unism.

…how about a Lotto where you choose the size of the first division prize.

This already exists in Australia, where at the Lotto outlets you can join a syndicate, and you will split all prizes between 5 or 10 or 20 people. So if you think winning $100M would be daft, you can share a ticket with 19 others, and the most you can win is $5M.

There is likely a way of doing this mathematically, without the need of syndicates. Actually, it need not be complicated at all. You simply buy fractions of a ticket for fractions of the price. Same odds of winning, just the outlay and prizes are fractions of what is nominated.

If you did win a major prize, the portion of that which you do not receive, simply goes into the next pool.

The beauty of this is that it can be announced. Someone in Sydney won first division, but chose to only win 10% of the prize. Such news could further the debate, especially if they were interviewed.

Unless you have an entrepreneurial or political idea that needs funding (me, to both), nobody has any use for $100M.

The post Choose Your Own Lotto appeared first on Unism.

For example, security companies, the sort who hire out bouncers to nightclubs. The business model is simplistic, it is labor-intensive, and the customers (the nightclubs) are very immersed and engaged.

A super-union is where all of the workers operate as a single entity. It is a higher-form of collective bargaining. It can work when what the workers offer is readily mobile and easily offered to a higher bidder. In a large city, for bouncers, that works.

(you might also find that business-types that suit this model might also be corrupt…)

A customer-collective is like a union of customers. They too operate as a hive. They make decisions collectively.

In this case, the customer-collective (the nightclubs) and the super-union (the security guards) jointly hire the security management. The management aren’t bosses, they don’t hire and fire. They operate the logistics – they order uniforms, they organise schedules, they do payroll. They are sub-ordinate to the other parties, instead of them being in charge.

Discipline (someone not turning up for work) is handled by the workers, collectively.
Fees being paid (a nightclub doesn’t pay their share) is handled by the clubs, collectively.

A fourth party, impartial and used to help negotiate on wages and conditions, completes the system. They are paid for by both parties equally. For this example industry, it could be one person, ad-hoc, part-time, is needed for that role.

What do we gain?

• Autonomy and the removal of a owner-worker hierarchy
• Lean, disempowered middle-management
• No profits to extract
• No power imbalance

The post Super-Unions and Customer Collectives appeared first on Unism.

Negative Gearing: If your rental property runs at a loss, that loss can be used as a tax deduction against other income. Effectively that means that the government & other taxpayers subsidise your loss-making.

While running at a loss sometimes will offset profits sometimes is valid for business taxation, that is when it is within the same business. With negative gearing, people purposefully operate at a loss to reduce tax on other incomes, like employment.

Capital Gains Tax Concessions: When you sell your own home, or the property you have “nominated” to be your home (no need to actually live in it…), your capital gains tax is halved. That explains in part why rich people sometimes own extraordinarily expensive homes – they get the regular rise in property values but only pay half the tax.

The government will tell you that these benefit mom and dad “investors”, who have the Australian dream of an investment property, and that it inspires more investment in the housing industry. What it actually does is help the rich pay lower tax rates than the poor.

The Age reports:

• 57 per cent of negative gearing deductions go to the top 20 per cent of income earners
• the top 10 per cent of earners claim more in capital gains tax deductions than the remaining 90 per cent combined

Negative gearing, is clearly being taken advantage of by the rich:

Under the Greens’ current policy of allowing just one investment property to be negatively geared, the Australian government could make a $63 billion saving over a decade

The post Negative Gearing: Tax Cut for the Rich appeared first on Unism.

…for example, arose each morning to pose himself the question, “What good shall I do this day,” but then, according to the daily schedule that he published in 1766, devoted no more than eight hours to work and fully four hours to “music, or diversion, or conversation”.

The post Work/Life Balance appeared first on Unism.

Consider our society in terms of the working life of an individual person. Up until the late 1800s we were in school. We were learning the processes we would need later – sharing of knowledge and capitalism. Since then we have been at work, hard at work, and with every decade lives (in general) have improved all around the world.

And now we are exhausted. We have exhausted ways of extracting wealth from nature. We have run out of ways to improve lives, unless you count buying more clothes than you could ever wear. And we have reached the end of what capitalism can provide for us.

It is widely documented that we are entering the age of leisure. While we will still work substantial hours to afford that leisure, because of silly-old capitalism, leisure is where the growth in jobs and revenue is. Entertainment, travel, experiences, hobbies and well-being. We are becoming retired people, and we simply need to get rid of the pesky need to pay for things.

Providing equality is not too different to being that grandparent who gives their granddaughter a $20 note and whispers “don’t tell your Mum”.

It is much easier to give, as many well-off retired people will attest, when you have everything you need.

And also fitting the retirement analogy in a way is feeling frail and vulnerable. Since the last world war and last pandemic, we have been worried about nuclear war and climate change but nothing massively bad happened on the scale of the Spanish Flu and World War Two. But now, with the coronavirus and increasingly unstable weather, it is time again to feel that bad outcomes do actually happen. So while an individual retiree might buy a Volvo for safety reasons, as a civilisation expect that some of our retirement savings will be spent on protecting us from nature.

It is time for our civilisation to retire and enjoy the fruits of our labours. It is time to give generously to our extended family and favourite charities. It is time work less, and enjoy life more. It is time to downsize our homes and invest in protecting ourselves from harm. We should all be spending more time gardening, literally and metaphorically.

The post It is time for humans to retire appeared first on Unism.

Those few who can imagine an alternative are those who hate capitalism, and wish to replace it with communism, socialism or anarchy. Rarely are such people from backgrounds where capitalism has benefited them.

Here are five reasons why the days of capitalism, as we know it, are numbered. To be considered collectively.

Population declining soon. While over-population has been a nagging issue, without an acceptable solution, for a long time now, it is a problem that will soon go away. Many experts suggest peak global population could be as soon as 2050, as all nations have less children when they become more developed. Most advanced economies only maintain population numbers through immigration.

For the first time in the history of capitalism, we will get to see if it works when there are less and less customers every year. Can permanent negative growth work? Who will buy Apple shares if they predict a decline in iPhone sales for decades ahead?

Wealth inequality growing. Occupy Wall Street highlighted inequality of wealth and income in the USA, which has one of the worst ratios in the world. That was almost a decade ago, and in the USA and globally, the problem is only getting worse. When 99% of the population are getting relatively less than the 1%, in a democracy, at some point enough will be enough.

Overall equality is growing. Meanwhile in all other aspects, equality is on the rise. In much less than a century we have seen new rights – equal rights – given to people who were otherwise mistreated or disrespected due to their race, religion, gender, sexuality or being less abled.

The trend suggests the few remaining equality issues will be fixed in the next decade or so. These are however the hardest, which is why they have been left to last. In the USA, despite being legally equal, minorities (especially the African-Americans) are not having anything like equal outcomes. The current Black Lives Matter protests occurring globally suggest that this has to improve. Likewise wealthy people are legally equal, but that has not stopped the wealth inequality growing. These are difficult issues, and they will be resolved, as per the overall trend. And they will be resolved economically.

Climate change is worsening. How we fight climate change and how we deal with climate disasters will both require all people to work together. Stopping pollution will only happen if people vote for it. Dealing with hurricanes and floods will require much more government welfare, in ways that will stretch current financial devices for dealing with them. Add to this the coronavirus pandemic which could linger for years, and we have nations turning to Universal Basic Income, or short-term varieties of it, to cope.

Quality of life is improving. Futurists from the mid-1900s told us to expect flying cars and 20-hour working weeks. If we had been happy with the standard of living back then, and stuck with it, we would indeed be working less hours per week.

We are running out of physical things to buy. And digital is cheap. Smartphone sales are dropping, electric cars will end up being much cheaper, and more affordable housing can’t be far off. Soon we should reach a point where we decide we have enough. In theory anyway.

When we collectively decide we have enough, the conversation will turn to how we share what we have. Capitalism is great when everyone wants more, because it rewards success and drives us forward. But when it has done its job, perhaps it is time for society to let go of capitalism, and, essentially, retire.

The post 5 Global Trends & The End Of Capitalism appeared first on Unism.

Why Unism?

Well, the predominant forms of economy are communism, socialism and capitalism.

It might simply be a placeholder name.

I wouldn’t be comfortable with Skeltonism – partially because the end result will be well beyond ideas I have – so it needs a made up name. Something not too defining…

It might mean un-ism – because it is less fixed and more anarchic than communism and capitalism.

Or it might mean unified-ism, because it contains aspects of socialism, capitalism and anarchy.

I don’t even know how to pronounce it. But it will do for now.

The Purpose. A place for news and ideas and teasers for the book I am working on – The Future Is Upside Down: The Reversal of Capitalism in a Declining World. I am trying to create a replacement for capitalism in a future of negative growth, primarily due to population decline from 2050 onwards. And how to transition. It is no small challenge!

The post Welcome! appeared first on Unism.

If unism is the next step up from socialism, communism and capitalism… that is very droll.

So we need funism to balance it. Terrible name, cringe-able. But good idea. Let other people call it that…

We need to counteract the mechanics of the economics of society with something less disciplined and more desirous. It cannot be based on numbers, or even social status. It cannot be based on anything, because there is no fun in that.

Funism is the opposite of control. Unism is heavy on structure and low on freeform. It needs a counterbalance. A place or time for rebellious indulgence, yet quarantined from everything else.

Available to all, a pressure valve.

Anarchy for those that feel they need it. In a sandbox.

Geez, a few moments after coming up with the name I am the dictator.

Needs work

The post Funism appeared first on Unism.