Government and Taxes

As government is a heavy, albeit necessary, burden on civilization, it is most efficient to have the smallest government possible while still allowing it to perform its required function.

The required function of government being the optimization of cooperative behavior among individuals. This is something that does not happen voluntarily, falling farther from optimal the larger the number of individuals involved (see Chapter 2 of Mueller 2003 Public Choice III).

The optimum size of government is well researched, yet few people have any awareness of what the numbers actually are. So instead of using this optimum size as an input to the process of engineering the best government, they go by their gut feelings as to whether the size of government should be increased or decreased based on how it performs at its current size. Imagine replacing a bridge by this process: “We need to save money by cutting the size of the girders” or “I think the new bridge should use 10% larger girders than the existing bridge because then it will be safer”. An engineer would find out what the load on the bridge will be, then design it to match that load. The research shows that government consumption plus investment should optimally be around 30% of GDP, according to Davies 2009 and others. Unfortunately the US is currently at about 40% and many European countries are over 50%.

SDAP leadership is not only a poor match for The People within a jurisdiction, it is a serious potential threat to anyone outside that jurisdiction due to the SDAP penchant for aggression toward outsiders. It is therefore necessary that all SDAP governments eventually be replaced by Matchist government.

The only way any of us will be safe is to ensure that not only that we prevent SDAPs from wielding inordinate power in our own governments, but in any other government as well. In addition to the direct threat of aggression from any other SDAP-led government, any “saber rattling” behavior they exhibit will have the effect of raising the activation level of any Authoritarians living under Matchism, which will in turn cause them to act aggressively and irrationally. The only way to avoid that outcome is to eliminate SDAP leadership, conversion to Matchism being the most effective alternative. This means that Matchism is inherently a one-world-government design, although it differs from all existing world-wide organizations and most other proposals in that it is “bottom-up” instead of “top-down”.

Since there will always be differences in the needs and priorities of individuals based on their local environment, there must be at least two levels of government, local and global.

The head of government operations at each level will be a Manager selected by The People.

The Managers are the executives who direct and supervise government operations. Like mayors/governors/presidents they have complete authority over the execution of laws but do not make the laws themselves. Unlike most current political systems, however, Matchish Managers are not politicians but instead are specifically trained and talented in the areas of government operations. They are not elected, but rather selected, by The People. More on this process below.

The global government, or Globality, will be responsible for the national defense, implementing laws that must apply to all The People, building and maintaining infrastructure that benefits multiple Localities, and facilitating the interactions between them.

The Globality income will come from sales taxes which will vary based on the product, and from fees collected from users of government services and infrastructure, values to be reset periodically upon the recommendation of the Global Manager and then approved by The People.

There are three essential requirements of a tax system. The first of course is that it must generate the revenue necessary to run the government. The second is that it be efficient, with as little burden on the entities using it and as little enforcement infrastructure and other overhead as possible. The third is that it be fair, with all entities paying into the system in proportion to their benefit from it. As current income-tax systems fail to deliver on all of these requirements, they must be replaced with something that will. Anyone who’s read a newspaper about budget deficits and national debt is well aware of the failure of the first requirement, anyone who’s filed a tax return knows how the second isn’t working, but everyone knows that there are large numbers of individuals and corporations that are not paying their fair share of taxes via their ability to exploit loopholes in the tax code or cheat by not reporting all of their income. These evasions of taxes not only deny the government the revenue it requires to operate, it also shifts the tax burden onto honest citizens from the dishonest ones. This inequity is highly corrosive to the public’s opinion of the state, and creates a vicious cycle that makes it harder to collect taxes from anyone (see Hammar, Jagers, & Nordblom 2009).

A compelling case has been made to replace income taxes with some sort of national sales tax (e.g., the FairTax and the Flat Tax) which could solve all of these problems. These proposals would need to be customized to account for other features of Matchism, however. They also can be customized because as a direct democracy a Matchist government avoids by design all the corruption and gaming the system to which representative-based government is prone (awareness of which is why those other sales or consumption-based tax proposals have been limited to fixed rates).

For example, rather than a flat tax of 30% as has been proposed for the FairTax, which does not provide the optimal solutions available through social engineering, a Matchist tax rate will vary depending on the Goals of The People and the impacts of each individual product type. Taxes on recreational drugs (including tobacco and alcohol) could be higher than for food, because of the greater costs to regulate them and deal with individuals who end up abusing them. This is social engineering because it provide information to the consumer about the actual cost of these products to The People and apportions these costs specifically to those who purchase and use them and so are most likely to incur them. The People might also want to reduce the use of these substances based on current moral biases, although that would be an example of class 4 behavioral engineering and not really social engineering because it is not justified by any demonstrated benefit to society as a whole. Taxes on things like appliances and vehicles could take into account their impact on The People and their environment (safety, energy efficiency, embodied energy divided by projected lifespan, etc.)

An example, from the domain of auto sales: What should the tax rates be on supercars (e.g., Ferrari), luxury cars, and entry level models? All the same? This seems poor social and financial engineering: The Owners of the first two categories are relatively price insensitive (indeed, exploiting this feature is even a primary marketing tool used by Ferrari: By intentionally designing their vehicles to be very expensive they reduce the number of people who can afford them, this exclusivity being one of the main appeals of owning a Ferrari in the first place). So the sales tax rate on them can easily be made higher than for other products without substantially affecting the sales of those types of vehicles or the individuals who purchase them. So why not tax supercars at 30% and luxury cars at 20%, which would not only significantly increase revenue but also amplify one of the key features of these vehicles, their exclusivity? As for economy cars, they are generally not purchased out of any desire for status, but out of basic need. They could be taxed at a lower rate which would make them more affordable which in turn would raise the standard of living. This in turn would ultimately have the effect of decreasing taxes all around by reducing the percentage of taxes paid back out in social-support programs (welfare, pensions, etc.). So, for this example, the tax rate could be calculated as vehicle-cost^0.28, which would produce a 15% rate for a $15K USD economy car, a 22% rate for a $60K luxury car, and a 30% rate for a $200K supercar. This would be an example of social engineering using class 2 behavioral engineering: The idea is not to coerce individuals into particular types of behavior, but to provide a benefit to The People in general (a functional government) while having as minimal an impact on individuals as possible.

Now for a social engineering view of the issue that also makes use of more invasive class 3 behavioral engineering: There are several reasons why The People would want to influence the type of car an individual would purchase, or indeed the decision whether or not to purchase a car at all. The most important of these is the fact that the full cost of vehicle ownership is not borne by the individual purchasing it (i.e., a “tragedy of the commons”). Environmental impact including embodied energy from the production of the vehicle, its fuel economy, its projected lifespan, the amount of land required to drive and park it, and the cost of disposing of it all factor into the full cost to The People associated with a vehicle purchase. Note the difference in purpose here, which distinguishes class 2 from class 3 behavioral engineering: In the previous example the idea is simply to collect enough taxes to fund the government while having minimal impact on purchasing habits (i.e., individual behavior). If the goal was to behaviorally engineer purchasing habits, a even higher tax rate could be used. For example a power of 0.38 would result in a 100% tax rate on a $200K supercar, doubling the cost of that car. This would no doubt have a significant effect on the number sold. The downside, which would have to be taken into account in any social engineering analysis, is that it would put the makers of those car at risk, and the loss of these companies might have a negative impact on society in general (such as loss of jobs, and the intangible issue of whether the world a better place because Ferraris exist).

Anther factor that might come into play when making a social engineering design for vehicle sales taxes is the safety of the vehicle and its occupants: Some cars are more likely to be involved in accidents than others, and/or cause more more expensive damage in these accidents. These vehicles should be taxed more because the costs borne by The People are higher. We also design parking lots to accommodate the largest vehicles, wasting vast amounts of space and yet with no additional cost paid by those people driving those large vehicles. Although some of these may be accounted for in other costs the vehicle owner might be responsible for (insurance, fuel or carbon taxes, land lease rates, etc.), when you’re doing engineering the entire system must be considered to make sure there are no variables that are unaccounted for. This will ensure fair rates for all.

Finally, a behavioral engineering example that is actually not social engineering at all: For this we’d need a reason to try to influence an individual’s car buying behavior independent of any actual proven benefit to the individual or The People in doing so. Which is why, when you look at it that way, purely behavioral engineering is something that should generally be avoided if at all possible, and potentially even prohibited. The most common example of behavioral engineering is advertising, which is designed to manipulate customers into purchasing products that they usually don’t even need. Not only is this practice harmful to the customer, but is an inefficient use of resources (i.e. advertising that is not purely for informational purposes is a parasitic burden on the capitalist system because money spent on advertising could have been spent producing a better (or lower cost) product, and time and energy wasted by the consumer in viewing (or filtering out) this advertising could surely have been invested more effectively).

One especially egregious example of this type of behavioral engineering related to car buying is government funding of “Buy American” campaigns (directly via purchasing policies or indirectly via tax subsidies), and imposing protective tariffs imposed on foreign-produced products. Although these things are supposedly done to enrich “The People” by protecting corporations and employees in certain specified industries, the science shows that it seldom if ever actually works out to “The People’s” benefit even in any particular country, and always has a negative impact on The People as a whole. The “Buy American” example demonstrates another key difference between social engineering and most behavioral engineering, which often takes the form of conditioning (class 4 behavioral engineering). That sort of propaganda-based engineering not only lacks the scientifically valid principles and goal of social engineering, it also works by changing the individual rather than environment the individual is operating in. The problem with that being the unintended side effects, in this case a heightened sense of nationalism which leads to authoritarian activation which can lead to acts of prejudice and aggression against any outgroup (even if is just a neighbor who immigrated from another country).

Next: Localities