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In reading, researching, and writing about a Resource Based Economy (RBE) over the last year my complete view of the how the world is and how it could be has radically changed. This post will cover how businesses and entire industries could be transformed while attempting to make the world a better place by attempting to fix unbridled capitalism towards a more ethical model for businesses.
The Three Most Powerful Steps
The primary issue with most global businesses and industries, especially in the US, is the callousness and mercilessness of unbridled capitalism whose undeniable motto is ‘Profit no matter the human or environmental cost!“. So, we will start by fixing that through the following three powerful methods:
- enact business entity reform that requires eco-humanistic ethical foundations
- add in monetary enforcement through taxation and government contract requirements
- finish it off with an oversight organization
Although such ideas may seem radical for those of us suffering through the horrors of unbridled capitalism in the US and other places around the world such as Africa, I want to say that there really is nothing new with this idea because some of the Nordic (and a few other) countries are doing this already (watch the video in my post Economies for the Common Good for more info). If they can do it, then we can also do it. Also, by enacting these steps, many of the other above steps as listed in my post Benefits of a Resource Based Economy for Industries and Businesses would follow as an extension and an ethical and philosophical necessity.
Require an Ethical Philosophical Foundation for Business Practices
Existing businesses laws and business entities (LLC’s corporations, etc) NEED to be reformed with the ethical, philosophical, and sustainability requirements and foundations built in, such as the things mentioned in the my above mentioned post. These changes alone should prevent most issues. Here are the two important items mentioned from the above mentioned post (RBE Benefits for Businesses) that will form the foundation for this:
As a part of this process, business owners, managers, and employees should be required to take an educational course covering the foundations for ethical business and require yearly recertification to ensure that such things are fresh in their minds and that there made aware of any updates in this foundation.
Require The New Ethical Business Foundation for All Businesses
- New Businesses: ALL new businesses created will be required to this new ethical foundation.
- Existing Businesses: Businesses created before passing this requirement have a year to create 5-year business plan to convert their operations to this new ethical foundation. This would also require significant changes in many of the industries that are egregiously violating these eco-humanistic ethics such as the fossil fuel industry, Walmart, those using sweat-shop or slave labor, and so on.
Taxation for businesses (and their top level managers) will be based on or modified through this Economies for a Common Good (ECG) taxation model; i.e. how well they conform to the ethical and philosophical framework will determine where they fall on progressive ladder of taxation. The more compliant and ethical, the lower the taxes. The less compliant and ethical, the more the taxes. A progressive taxation method will also provide a way to disincentive violating ethical practices as well as providing a direct and long term punitive method for those who choose to engage in unethical and harmful business practices.
When this process is first implemented there should also be a progressive increase (or decrease) in taxation based on compliance during the 5 year transition period to act as a motivation to transition. Those who comply with higher levels sooner will already benefit from lower taxation.
Now, just saying company must be a sustainable business is not enough, because that can be construed however the business or the auditor would like, so these ethical foundations must come with concrete measurable regulations to show that they are compliant. Here are some examples of such:
- ALL byproducts from manufacturing are 100% recycled
- minimum wage @ $75,000
- maximum income disparity between highest and lowest paid person is a 9x
- business is powered by 100% sustainable energy
Annual Taxation Increase for Flagrant Violation
An annual increase in taxes (beyond the base progressive taxation levels) of let’s say a cumulative 5% should also be included for each year that they are not compliant at or below the lowest level (Level 1) or are not showing some progress towards working for the highest level of compliance. This will specifically affect those companies which flagrantly violate the ethical requirements and just pay for it out of their vile accumulation of money through their horrific business practices. Eventually, with the ever increasing tax rate, they will have to comply or their company will go bankrupt creating a financial imperative to change or the company will be lost. The most vile violators can also be jailed for crimes against humanity as would be appropriate. Iceland had amazing success in jailing their bankers and has completely turned their economy around.
Example of Progressive Taxation for Compliance
For argument’s sake, I am just going to throw numbers out here with no thought behind them – just numbers to illustrate the idea here. Here is a quick example with Level 1 being the lowest level of compliance and Level 5 being the highest.
- Level 1 – 50%
- Level 2 – 40%
- Level 3 – 30%
- Level 4 – 25%
- Level 5 – 20%
Again, theses are just off-the-cuff numbers to give you an idea of what I am thinking here and how powerful it would be. I imagine that these numbers would be higher over all based on modifications for general progressive taxation with a 90%+ marginal tax rate. We would want to look to the countries that are already doing this to see how they are doing it to educate us and empower us as we move forward so we can prevent mistakes that have already been done by those who are successfully doing it now.
After 3 years of flagrant violation at Level 1 then they will be at 60% taxation for their base tax rate. Keep in mind this would not take effect until they after the law was fully in effect (the 1 year for planning and 5 years for implementation for existing businesses, then 1 more year or non-compliance).
As far as enforcement is concerned:
- Levels 5 and 4 should be very critical, hard-assed, and punitive
- Level 3 should be very critical too, but they are almost to a decent level
- Levels 1 and 2 can be more relaxed
Example of Progressive Taxation Plus Modifiers for Compliance
With this idea we start with standard aggressive progressive taxation ladder and then we add a compliance modifiers to that. Again, this is not an area I have studied, so I am just pulling numbers out of the air here so we have something to work with and so you can see what I am talking about.
Aggressive Progressive Tax Ladder
- $0 – $35,000 – 0%
- $35,001 – $50,000 – 5%
- $50,001 – $75,000 – 10%
- $75,001 – $100,000 – 15%
- $100,001 – $250,000 – 20%
- $250,001 – $400,000 – 30%
- $400,001 – $550,000 – 40%
- $550,001 – $750,000 – 50%
- $750,001 – $1,000,000 – 60%
- $1,000,001 – $1,250,000 – 70%
- $1,250,001 – $1,400,000 – 80%
- $1,400,001 – $1,550,000 – 90%
- $1,550,001 – $1,700,000 – 100%
- $1,700,001 – $1,850,000 – 110% (extra brackets available for higher levels of compliance)
- $1,850,001 – $1,900,000 – 120% (extra brackets available for higher levels of compliance)
Ethical Compliance Modifiers
- Level 1 = +20%
- Level 2 = +10%
- Level 3 = 0%
- Level 4 = -10%
- Level 5 = -20%
With an very aggressive base taxation ladder such as above these compliance modifiers really make a difference.
Perhaps an even more powerful motivator would be having governmental requirements for ethical compliance in order qualify for their lucrative contracts. This would get many industries and businesses moving quickly. However, these same businesses would also be raising hell during the process to stop these changes from becoming law because violating ethical standards is how they make their money and keep their managers rich while abusing its workers, the world, and the environment, as well as being some of the primary corporate owners of our government.
Another part of this solution would be to have an oversight organization to help guide and monitor these industries and businesses as they switching to this new reformed ethical business model to ensure things go as they should. It will be a rough start at first, but as they get their footing, a set of guidelines, best practices, an requirements, will be developed so that future businesses and industries created will have an easier time. This governmental oversight organization will also be in charge of the monitoring and providing the required input for enforcing the taxation model which is based on the Economies for Common Good model.
Activist Input and Review
This oversight organization should take in input from activist organizations who monitor the various areas of concern. This will provide a 2 fold benefit:
- The first being that it will be much harder for the corporations to buy off a pass, because they would have to pay off and influence all of the activist organizations.
- Second, these activist organizations will be very active in this because they want real change, so they will not mince words and will have a level of political insulation and objectivity that members of a government organization will not have due to potential internal politics and corporate influence and control.
These above three steps which start to enact an ethical foundation for businesses will solve many of the issues with predatory capitalism, because the primary issue with predatory capitalism which also includes monopolistic practices is due to a lack of ethics in business practices: abuse of the consumer through price-gouging, lack of choice, abuse of workers, destruction of the environment, etc. Having the ethical and philosophical requirements as well as taxation base standards built in will help to jump-start and enforce more ethical businesses.
If you have not read my previous posts on Resource Based Economies and watched those documentaries then you may want to do that. Here are links to those posts: