On service-based economy

[Ken Avonts]

Hey, I'm very intested in this calculations of yours. Could you please explain it a little more?





There can also be people who have a government-position and a private company. Because also government-employees earn money, that will be taxed at the and of the month, so they'll have to invest it too.



About this wealth-tax: I think it is obvious that smaller amounts of savings should be free of it, otherwise people can never save any money...

Ken Avonts

Regent of the Islamic Republic of
Antverpia

http://users.pandora.be/ir-antverpia

[Trevon Andarosel]

Well, my calculations are probably full of flaws, but I tried to do this:



There is a private sector, and a public sector. The public sector contains one government, which only expenses are the salaries of it's employees. The government also runs services, and creates an income through those. To get a stable economy, the difference between the expenses and the income of the government has to be drawn through taxes from the private sector.

This can be put into formulas for the public sector



Furthermore, the total income of the private sector is equal to the salaries of the private sector + tax. This may sound strange, but it is not if you say that the profit of the company is in fact the salary for the person who founded the company (sorry, I don't know the juridical-economical words for company-types and such in English, eenmanszaken in Dutch). In other words, the private sector is self-supporting after having paid taxes. You can put that into a formula for the private sector.



If you now make assumptions about the height of the tax rate and the ratio between the income and expenses of the government, you can make some rough calculations for the size of the private sector.



I can try to program a simple economic simulator based on this, but that'll take some time. If setup correctly, it could be a useful tool to determine the height of the taxrate and such based on the economic situation of a country, but I'm not sure if I will succeed. A simulation simulation program .



I know that people paid by the government can run a private company, but only to a small extent, to avoid people getting too much power ( belangenverstrengeling in Dutch).



About the wealth tax or idle-capital tax (I forgot about that word, but I like it better), you can make a certain capital, let's say 500 FILL_IN_YOUR_CURRENCY_HERE tax free, and charge tax if a person has more. This is also ideology dependent, though, so perhaps countries want to make their own choice.



Trevon.

The storyteller of Ex, Umbagollah


Ilotim ilo arelisin il parduvile arelis te arelisin
The truth is just too true to be true for everyone

[Ken Avonts]

Thanks a lot for this explanation!

 

Ken Avonts

Regent of the Islamic Republic of
Antverpia

http://users.pandora.be/ir-antverpia

[Ken Avonts]

What about this?

Quote:   This is not a new idea, but is one of the best - theoretically.   I have never seen an economy based on services actually work. Well, it'd work for a few weeks, and then it'd die. The three major problems are thus: First is work. People are by nature lazy. We run into the Fundamental Problem of Micronational Economies: a macronational economy is driven by need. A micronational economy is driven by fun/volunteerism/whatever. A person will be a stockbroker or an attorney or news reporter because he wants to earn money to feed himself and get a better life. Ask him if he'd be willing to work for free for the rest of his life and you'll probably get a scoff. A person will be a micronational stockbroker or attorney or news reporter not because he has to, but because he wants to. Micronational money is fake money. Why work for free forever?

The second problem is demand. Not everyone is being sued, and not everyone is buying stocks in the stock market, and not everyone will want to pay to read a newspaper. Demand will therefore be very low, resulting in a slow economy, and often, death.

The third problem can be summarized as, "why pay someone else to do it when I can do just as well without losing money?" or "there is always somewhere where it is free". This is related to the second problem somewhat. If I'm being sued, I could pay somebody to help fight for me, or I could defend myself, or I could find somebody willing to do it for free for me. If you decide to charge for posting on a forum, people will simply pack up and leave for another forum where they don't have to pay. This problem can only solved by thorough enforcement (forcing everybody to charge fees for services) throughout the entire Internet, and that is way beyond our means.  

This was a reply made by DStryker at the thread on Intermicronational Economic System.

 

Ken Avonts

Regent of the Islamic Republic of
Antverpia

http://users.pandora.be/ir-antverpia

Edited by: Ken Avonts at: 5/29/02 1:34:42 pm

[Trevon Andarosel]

Scott said something similar in his "Wealth of Micronations*. Most of these arguments count for all type of economies. It's fun for a while to run a virtual factory, but only for a while. Then it gets boring, and the factory will grind to a halt.



On the side of offering services: people are now doing things, and get nothing for it. In a service based economy, people will do the same, and get paid for it in virtual money. So, not really a change here.



On the side of demand: you have to

offer services people really want. I agree that it is a problem that people can simply move to a place where it is really free.



The real economy is slow, yes, but is that a problem?



Micronational economies have always a fundamental problem:

- If the economy is an integral part of your micronational citizenship, like in a service-based economy, people are forced to get active. They may not like it and go to another place.



- If the economy is an additional part to your micronational citizenship (virtual goods economy) people don't have to be active in it. Only a small percentage will be active, and as soon as the activitylevel of these few people drops, the economy will die.



Still, the real economy has an advantage above the virtual economy: in the real-service type the more active people can gain themselves certain privileges, whereas in the virtual economy the active person can get only more virtual stuff.





Trevon.

The storyteller of Ex, Umbagollah


Ilotim ilo arelisin il parduvile arelis te arelisin
The truth is just too true to be true for everyone

[Sander042802]

I prefer a combinated real-virtual economy. You can make most money by  trading virtual goods, running virtual factories, but if there are real goods too (fe. webdesiging.. bombs ) you can actually "do" something with your virtual money.

	Sander Dieleman Chancellor of the Micronation of Pacary http://www.pacary.tk/ - http://www.pacaryforums.tk/ VP of Operations of Bobbesian Airways ICQ#104572163 - MSN sanderdieleman@hotmail.com - AIM SanderDieleman

Evil is the absence of empathy - umm.... I forgot, but hey, I'm not quotin myself anymore am I? yup yup - Commander Clark

[Trevon Andarosel]

The truth is always in the middle, huh? . If you can combine the advantages of both, that's probably the best thing to do. It also means the most work to do



I had another idea for the service-based economy. Instead of or in addition to the idle-capital tax, you could set up a  capital based income, at least for government functions. The more money someone has, the less income he gets. You can even go as far as stating a ceiling, generally or individually different, above which amount no one can get.



Trevon.







 

The storyteller of Ex, Umbagollah


Ilotim ilo arelisin il parduvile arelis te arelisin
The truth is just too true to be true for everyone

[Ken Avonts]

Is this just?



The Human Rights say that everybody should be paid the same for the same job...

Quote:  Article 23:

2. Everyone, without any discrimination, has the right to equal pay for equal work.

Since the Human Rights are very important to Antverpia, your proposal would not be possible here...  

Ken Avonts

Regent of the Islamic Republic of
Antverpia

http://users.pandora.be/ir-antverpia

[Trevon Andarosel]

You've got a point here, hadn't thought about that. I assume that most countries have a similar statement in their constitution.



Trevon.

[Brendig45]

Also, doesn't this discourage those active people to do things? Since if you already have money from performing a number of services in one area, you're hardly going to do more, and get paid less for it.  

Jeffrey Leong


Vizier of The Ministry of Trade and
Economics

Satrap of Kelestan

Sartip of the Imperial Babkhan Army

Ambassador to the LoSS


Kingdom of Babkha

[Kennendras]

I have to aggree...this will lead to inactivity in the wealthier people.

Emperor Kennendras

Foreign Minister

Webmaster

The Realm of Tallandor




"Talk softly and carry a big stick"

"Facts are chains that bind and fetter truth, for a man can remake the world if he has no facts to cloud his mind"

[Trevon Andarosel]

Ok, I see, it wasn't a good idea.



Trevon.

The storyteller of Ex, Umbagollah


Ilotim ilo arelisin il parduvile arelis te arelisin
The truth is just too true to be true for everyone

[Scott Siskind]

I'm very impressed with Trevon's calculation, because it shows a major problem. Luckily (in an ironic sort of way) the failure rate and inactivity of micronations does sort of prevent a cop-out. We could say that all the funds of inactive people or emigrants go to the government after a certain amount of time, which would get the government a bit richer and also get the money supply going. We could also have a very strong system of high fines and licenses.

I'm not good enough at advanced math to set up a full system of calculations, but it would seem to me that it would be possible to use statistics to determine how much money is likely to come from those two sources, then determine how much money we want generally within the private sector as compared to the government (I would say at this early stage something heavily biased toward government like 33/67) and then set a tax rate to make sure it stays that way.

Or we could let governments have lots of money as compared to everyone else and let it sit around collecting interest.

“I will have a foreign-handed foreign policy.”-G. W. Bush

[Trevon Andarosel]

For the latter option, you need to have shares or a bank who actually give interest on "investments". From which source would they draw the interest?



Trevon.

The storyteller of Ex, Umbagollah


Ilotim ilo arelisin il parduvile arelis te arelisin
The truth is just too true to be true for everyone

[eccanetrobh]

I am currently still creating the Republic of Eccanetrobh - a banna republic in N.Irelad - lol.



www.eccanetrobh.tk



I have been making ideas for my future economy, based on real services.  To create some cash for the state a service such a service press could provide some income say from "tourists".



www.cafepress.com



Secondly this money would be used to fund such industry as the creation of t-shirts(via printer transfer paper)or making of books, and guides for your citizens who use your currency to pay for it.  They recieve the currency as either a minimum citizen's income, working as an industry or in government etc or paying for currency via dollars, euro etc.  The products of the state, and in this case it would have to be a socialist economy run totally by the state, to begin with anyway.  The citizens would make currency by making products for the state which could be sold to other citizens for currency.  Foreigners would have to convert there cash into your currency to buy state products.  Also taxes would be induced, maybe in dollars etc, although I don't like this idea, it would defy the point.  I'm still working on a system like this, which seems, quite chaotic at the minute and would require a good bit of organisation.  In theory, after its finished the currency should evenually circle, the problem, but that always seems to rise is funding industry, such as t-shirt paper needs to be bought with normal currency, so do t-shirts.  I want to be able to make a system that means the currency circulates, obviously most of my system would require mailing of products and the issuing of tri-anual cash etc.



Regards



President Nicholas O'Hagan of the Republic of Anetrobh.