12. Some Suggested Financial Reforms

Some Suggested Financial Reforms

Please note that, I am not an economist by education or profession. I think it is right to state that value systems and philosophies are reared and felt at heart whereas scientific subjects and subject dissertations are analysed in the brain before being presented. Eventually the stronger the dissertations are, easier it is, for the subject matter to persist in the heart as part of the individual’s value systems. I think, for me, the subject of economy benefitting all the species on this planet is something of paramount importance (the right principles can even avoid an existential crisis for the mankind and/or this planet) and not just a critical higher order subject. Based on the convictions of my adopted value systems, I treat economy so and hence I can be considered more as a philosopher tackling economy and not necessarily a SME in the economic field.

Please refer to my other blogs at the below links before reading further on this topic:

https://www.mayoan.com/economy/01.-an-alternate-view-on-economics

https://www.mayoan.com/economy/06.-transformation-of-money

https://www.mayoan.com/economy/09.-administering-the-economy-in-novel-ways---part-1

https://www.mayoan.com/economy/10.-administering-the-economy-in-novel-ways---part-2

https://www.mayoan.com/economy/11.-administering-the-economy-in-novel-ways---part-3

https://www.mayoan.com/grc/06.-more-on-the-fictional-iron-clad-constitution

1. Cap on Personal Wealth

A properly designed iron-clad constitution should ensure that insane accumulation of personal wealth to an individual is avoided. An inflation adjusted correct cap on personal wealth (represented as sum total of all possible forms of assets that an individual possesses) as a guidance value should be announced by the nation’s central bank at a given cadence. This guidance value should be appropriately implemented by legal strictures. This can be a new additional fiscal policy tool since it can generate additional revenue for the government.

2. Affixing top-to-base Wage Ratio

In order to avoid the scenario where the executives pay themselves hefty salaries, in alignment with the above point, a ratio of the top-to-bottom salary in a given organization should also be stipulated by the central bank as a guidance value. This guidance value should be appropriately implemented by legal strictures.

I recollect reading in one of the analytical news articles that the top-to-bottom wage ratio of an average organization in the USA in the 60s was about 60-80 and in recent years it is topping 200! Though I do not recall all the exact details, the numbers were scary enough that it got stuck in my mind. So, this ratio can be used to regulate the basic minimum wages and the top salary.

This can be a new additional fiscal policy tool as it can influence the income tax component.

3. Foreign Investment – Source

For an individual or an organization to explore the investment opportunities, the welfare of the nation and the trade-blocks that it belongs to should be considered to avoid undesirable flight of economic resources including money out of that country/trade-block(s). To this effect government bodies/departments like the national environmental agency, central bank, finance ministry and the planning commissions and such bodies should layout a multi-approval policy for investments destined to be deployed in foreign shores.

This can be a new additional monitory policy tool as it can stop/start the capital flight.

4. Foreign Investment – Destination

Similar to the above point, the nation receiving the foreign investment should be very mindful about the source of the funds (not forgetting the action of law of karma enacting at the group level). Dubious funds always bring its own problems with it. Hence before accepting foreign investments (Yes, I know how difficult it is to say no to an incoming fund), the national environmental agency, , the nation’s central bank, planning commission the finance ministry and the foreign investment board and such bodies should carefully consider the proposal before green lighting it. The approval should be based on all-to-approve strategy and not any-one-approval strategy.

5. Cap on Company Reserves

How much can a company hoard resource such as cash reserves citing future growth plans? It should not be to insane levels. The nation’s central bank can suggest an inflation-adjusted guidance value which should then formally be stipulated in legal terms as the cap on holding reserves. This guidance value can be absolute or on a percentage basis of some indicator.

This can be a new additional fiscal policy tool since it can generate additional revenue for the government.

6. Wealth Distribution as a National Policy

Ignoring utter poverty is a shame on humanity. Like I said before, I think that God has not created all the representations of wealth to be enjoyed by a very few individuals. Wealth distribution should be enshrined as one of the founding principles of the adopted iron-clad constitution.

7. Universal Basic Income (UBI) as a National Policy

Similar to the above point, another founding principle of the iron-clad constitution should be the implementation of the Universal Basic Income. Because of its sixth-sense, humans are considered to be a higher order species. Hence, a nation should ensure that all its citizens are in pursuit of a higher order excellence and are not getting stuck in the muck of poverty. I find it strange that a dog can travel in Rolls Royce while a fellow human on the street is worrying about where his next food is coming from. I definitely do not hold any grudge against that dog, but definitely we can do better and take care of such fellow humans. UBI can go a long way in not just sustaining humaneness but also to repel evil manifestations like exploitations, human-trafficking, prostitution and such crimes.

This can be a new additional fiscal policy tool since it increases government expenditure.

8. Tier-1 Professionals to be Salaried by the Government

I talked about Tier-1 professions in my blog on ‘Varnashramadharma’. These are the professions that face and impact a large set of public members sometimes running into thousands. I also tried to enlist some of the potential candidate-professions of this kind – Doctors, Nurses, Lawyers, Police, Teachers, Government Employees including Politicians, Church (or any Place of worship) Leaders and Facilitators, Recognized Artists etc., In aligning with the serious nature of these jobs, and its accorded importance, the professionals of this job should be a polymath covering a wide area of knowledge starting with their core competence and knowledge of their profession and covering fields such as psychology, social psychology, constitutional guarantees, economy, project/program management etc., Keep the importance and the strive that comes with the profession in mind, the government should extend them the right salary so that there is a healthy competition to join this tier-1 professions among the general public. To maintain top notch quality of these professionals and the commitment that comes with these professions, it is important that the government have an appropriate screening mechanism/policy.

To avoid misuse of the power that comes with some professions, new innovative roles can be created like – public defender who defends the public from incarceration during the initial stages of the purported crime. Once the crime is wetted, then the public prosecutor can take over.

9. Tier-1 Professional Infrastructure Capacities to be Nationalised

In alignment with the above point, hospitals, schools, universities should be either nationalised or they be funded by the government with appropriate monitoring and control. Government can build professional complexes for lawyers practising law (with appropriate filter criteria) and representing public, living quarters for Teachers, Police men/women etc.,

10. Supporting the High Tax Paying/Contributing Good Samaritans

In tune with the point-1 above, considering the continuous contributions of a good tax paying and contributing (considering point-1, assuming that his excess wealth is given to the nation) Samaritan, appropriate conventions can exist in the constitution that takes care of these Samaritans when they fall in bad times and become destitutes.

11. Supporting the High Tax Paying/Contributing Good Companies

In tune with the point-5 above, considering the continuous contributions of a good tax paying and contributing (giving the excess wealth to the nation) company, appropriate conventions can exist in the constitution that takes care of these companies when they fall in bad times and become debt ridden. Government can also suggest and participate in proper merger with another healthy member. Thus, we keep the cogs of the economy intact. In long run, problems of the companies will become the problems of the nation itself, hence government participation in mergers and acquisitions should be encouraged where appropriate.

12. Financial Investments to Consider Trade Blocks that Share Geographical Boundaries

I wrote about the importance of the trade blocks that share a common geography and an eco system. Hence the planning commissions or any such national bodies should consider not just the nation’s interest but also the interest of the trade blocks that it is part of, before allowing any investments to come-in or go-out. The consideration is complete only when the nation has the complete knowledge about the potential impact of the eco-systems that it is part of and about the potential impact of the eco-systems permeating the trade-blocks that it is part of. The latter part is needed to register our respect for the co-habituating species that share the same living space.

13. Tax Credits due to Green/CSR/ Initiatives and for Demonstrating Compassion to Other Species who are Co-habitants of the Shared Living Space

This is also a wonderful gesture on part of us humans to register our compassion to the environment and to the co-habituating other species.

14. Removing Fiat Money

Since fiat money generates fictional money leading to lots of evil manifestations, it is important that we print our currency based on critical reserves like gold and by considering the GDP of the country.

This can be a one-time additional monitory policy tool and hence can be carefully timed for better outcomes.

15. Removing Spurious Derivatives from Exchange Markets

Needless to say, spurious derivatives like the CDOs should be done away with and the national bodies like FCA in UK and the SEBI in India should tighten the norms around the nature of the financial instruments of investments. In fact, a simple sane rule could be to allow only those financial instruments that is backed by a solid asset class/principle.

16. Standardisation of International/National Financial Discipline

By standardising, terms and conditions becomes clear to all and removes any grey areas of operations. This standardisation should be on the vocabulary to be used, processes, frameworks and guidelines practiced in the nation, trade-blocks and in the international community. A global body like UN (World Bank) can lead in this effort of global standardisation and could leverage any solid existing knowledge bodies.

17. Reserves Mandate for Nations

Since we are treating nations like a large organization these days, we can stipulate certain reserve requirement mandate to nations. Probably a UN financial body like world bank can take the deposits from nations that are related to reserve mandate. This can be used to great effect to cure a nation's financial state and also to do a credit check.

Hari Om!

S-T-F

12. Some Suggested Financial Reforms