Property impairment poker

I've been trying to find ways to better illustrate an alternative approach to taxation when one popped up on television: my city is beginning another round of what appears to be a game of property impairment poker. It consists of picking the winning hand of property rights rhetoric to determine whether to issue another Conditional Use Permit. This time the unit is in a condominium complex where nearly two thirds of the units already have permits.

Like many cities in America, we broadcast our city council meetings so that residents can watch from home. Because Avalon is so small, it's easy to just walk up there and join the meeting if you see something you want to comment on. So when no one seemed to have a straightforward way to reach a decision, I decided to walk in and offer a rather rambling and fragmented summary of what I explain below.

Avalon's city council reviews each player's hand (seek-able video)

It's an interesting issue to me because it represents an opportunity to use the tax code to fairly resolve a conflict of interests between neighbors in a community. It is to everyone's benefit that all property be as useful as possible because that maximizes its value. In a resort community, like Avalon, this means a substantial fraction of residential properties are vacation homes owned by people who use them infrequently and rent them out like timeshares between those visits.

At the same time there are others who live here year round. Obviously the folks who come here to vacation are, well, on vacation. They're apt to party rather late into the night, wake up early to fish or hike, and generate a far greater disturbance than any normal use of that residence would. That's the conflict; allowing one person to use their property in a commercial way has an unavoidable consequence for nearby residents. Not letting them use it that way isn't fair either.

Our state government did what I think is the right thing to address this issue. It granted each city the power to decide whether or not any particular residential unit is suitable for this sort of commercial use and allows that use to be taxed. These two powers give a city government the means to regulate this sector of its economy.

Prior to our electronic age, it would have been too expensive to employ the people necessary to measure the impact that this policy has on our community. Each event is a tiny inconvenience for very few people, the overhead of even reporting it is in most cases more of a hassle than the event itself. But that is no longer true. Pressing a single button on your phone and going back to sleep isn't much to ask. Nor is emailing a cell phone photo of some minor vandalism, trash, or other nuisance. Especially when you know its because your city is trying to measure the impact that their policies are having on you so they can pay you back for it.

The Transient Occupancy Tax (TOT) is intended to repay the community for the additional costs it incurs from a more commercial use of its residential property. Part of doing that must include some redress of the additional cost to residents, not just their city. I can think of no other way that genuinely treats both forms of residential property rights (income generation and use as a residence) equally. Even if we assume we'll never be able to do an adequate job of resolving the conflict between residents and permit holders, this step is still necessary to avoid the exact situation we find ourselves in now--facing yet another contest with no real basis for evaluating whether a permit should be granted or refused.

If the city commits itself to using a portion of the TOT to measure and redress the actual impact the permitted units are having on residents then there is no reason why permits could not be issued by a completely automated process that didn't require anyone to judge a particular application. The map created by measuring the impact these units have will answer that question for us. It will tell us if there are any critical densities (where the impact starts to scale nonlinearly with the number of permits, peaks, or even declines.)

Keeping track of these incidents and analyzing them periodically will allow us to estimate the true cost in dollars experienced by the residents most disturbed by these units and provide for repaying them. Whenever that cost is less than what the TOT generates to repay the neighbors, a permit should be granted. And wherever it is more the city should refuse the permit, but add the application to a list of those pending, and inform the applicant that they will be issued as soon as the TOT can be raised enough to fairly compensate the community.

This approach gives the city council a fine degree of control over the sector without having to address the individual applications. The smaller the fraction of TOT they allocate to redressing its impact on residents, the fewer units will qualify for permits, the less revenue the city will receive from the TOT, and the less incentive managers have to police their clients. Conversely, allocating more to repay the residents would have an inverse effect, enabling more properties to qualify, increasing the incentive managers had to rent only to responsible clients, and increasing the revenue raised by the city.

But best of all, this mechanism allows the city to automatically monitor all such units and maintain a map anyone can view to see the data. Such a map will give the homeowners associations and managers a greater incentive to become fiercely intolerant of rowdy clients and the basis to compete with each other more vigorously because such a clear measure of their performance is visible for all to see. Finally, it will create an objective basis for revoking permits that consistently generate the highest payments to neighbors. Perhaps all such permits should come with expiration dates or need periodic extensions.

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Additional Comments, Notes, and Links to related information

The impact on neighbors

It seems unreasonable to expect residents to just endure this trauma. Yet it must be what we expect because we have no mechanism to redress such minor injustices as being repeatedly disturbed at odd hours by partying vacationers. But why not? Because when it happens frequently enough it can become a significant but difficult to quantify impairment of a residence. The only remedy, not issuing a permit, is too severe as well.

This predicament effectively bars residents from any meaningful civil remedy and is the sort of needless systemic injustice that does a great deal more harm than we can notice. Until you experience a repeated inconvenience like this first hand it is difficult to appreciate how much stress, frustration, and anxiety it can add to one's life. But much worse than that is the way it undermines our expectations of and respect for justice and our community itself. It diminishes our interest in even looking for genuine solutions to other problems too because so much about our infrastructure is unjust it hardly seems worth fixing tiny parts of it. And it makes adversarial relationships between residents and owners more likely simply because we neglected to redress the civil as well as civic externalities with our TOT. This is an extremely expensive and socially dysfunctional dis-ease to accept for lack of the small amount of prevention it would take to fix it.

The bottom line is that to deny someone a permit may potentially cost the applicant thousands of dollars a year in lost income. While to grant one may potentially cost their neighbors a nuisance that has a very difficult to quantify cost that is easily undervalued. I think both of these options are simply unacceptably unfair and we must develop the means to better understand what effect this use of property has on all members of our community.

What is being done isn't enough

There is no doubt that the managers do their best to mitigate these problems by educating their clientele, posting rules, inviting complaints, and issuing 24 hour response numbers to residents. They live here too, and the sort of clients that are rowdy do more damage than they're worth in revenue, so they have similar interests in avoiding these problems. But none of these things compensate the folks for being repeatedly disturbed. Instead, those nearby residents are effectively drafted into doing surveillance service for the managers; forced to notify the managers when unruly clients break their rules if they want anything done about it. This is unreasonable to ask of someone in a residential neighborhood or housing unit--mainly because our local government could fix the problem with something like the mechanism I'm proposing.

Suppose a thoughtful management company wanted to simply share a small fraction of the rental income from each unit with the neighbors as an acknowledgement of the impact and a sort of payment for their unavoidable role in helping to police them. I'm guessing a lot of us, and perhaps some of the the city council, would actually misinterpret that as a bribe. Or at least be deeply skeptical of their motives. It would most likely seem wasteful to their property owners and disadvantage that management company in competing for properties to manage. It is really only our local government itself that can mitigate the inevitable impairment the various properties experience as a consequence of its policies. Forcing the handful of residents most inconvenienced by this to suffer so that all of us can enjoy a larger economy is exactly the kind of thing our government is supposed to prevent. A just society would either fix or abolish it.

Our goal is a parity of opportunity

Suppose the city set aside a tiny portion of the Transient Occupancy Taxes collected to create both a more compelling incentive for managers to avoid the complaints, and a resource that can pay residents for the damages incurred. All the city needs is a data gathering answering machine or web site to log the complaints. At the end of each year the city council could review a summary of the events recorded that year and come up with fees for each type of incident that would redirect some portion of the refund due managers to those injured neighbors.

The whole purpose of the TOT is to redress the extra costs the commercial use of residential property imposes on the city, but it does nothing to redress similar costs faced by the nearby residents. The very purpose of government is to protect our rights. The means to do so is available and the consequences of not doing so seem very significant:

• an unavoidable nuisance befalls a very few members of our community
• a great deal of our city council and staff's time is consumed to evaluate each application
• a capricious, complicated, and expensive process awaits property owners seeking permits.

By setting aside a small portion of the TOT revenue to use as I describe, the city ensures it will collect the data needed to craft sensible and mechanical guidelines for evaluating permit requests. It gives the city a measure of the impact of different concentrations of transient housing, permits a more objective evaluation of the performance of management firms, and generates a map of the units most affected. These are the tools needed to craft a fair and objective mechanism to resolve these conflicts in property rights.

I'll bet the size of the cheque that affected residents end up receiving isn't as important as the knowledge that our city is tracking their complaints. Even if it was only a letter summarizing the impact on that resident and how it compares to the average it would go a long way towards making them feel heard, acknowledged, and offer hope that a fairer solution is in the works.

We should have a strategy that promises to get continuously better at mitigating the impact over the long term. We must convince residents that we are seriously committed to engineering solutions that protect all of our rights as efficiently and effectively as possible. Over a ten year period, I believe this approach will lead us to a permanent, simple, and extremely fair infrastructure for everyone involved. I'm only 54. But I've already noticed that people make a lot more progress when they cooperate rather than compete. Wise leadership finds a way to get everyone on the same team fighting the same enemy--in this case its the injustice. I believe this approach better aligns the interests of both the residents and managers.

Are there any reasonable objections?

In a discussion of this issue with someone after the meeting, he made the point that someone would have no recourse in dealing with a neighbor who's young children create a similar noise problem much more frequently. (I should note that his kids can scream at a pitch and volume that would easily drown out a smoke detector.) I don't regard this as a reasonable challenge for a number of reasons. Most notably that the TOT exposure is in addition to the normal noise of living in a small community of very densely packed housing.

But that example seems particularly inappropriate because children represent a tremendous positive externality as well--they are our future and, whether we realize, acknowledge, or even resent it--we are all part of their education. Thus we have a completely natural obligation to all children as a consequence of being adult human beings and that includes dealing patiently with issues like the noise they make. Even in the case of a recklessly inconsiderate adult neighbor, the common challenge we all face as members of a community to find ways to get along well with our neighbors seems incomparable to the uncommon burden of being forced to simply accept the consequences of the commercialization of adjacent housing.

His other objection was that it would encourage people to complain just for the compensation, and over issues they would otherwise not have considered a nuisance. I suspect this is true to some extent but would both fall off rapidly with time, and tend to reveal the unreasonable residents rather than become an intractable problem. (The city could discourage them by adopting a policy that penalized false reports by withholding the funds that person would have earned for their legitimate complaints.) I think there are also many people who don't bother to complain now because they don't like being nuisances themselves, and it doesn't really help--the noise generated by a security response might even extend the duration of a disturbance, and will almost certainly anger the visitors being interrupted and increase the potential for vandalism. A phone number where residents could leave a message (or send an email, text, or photo from a phone) without having to notify the managements security would give the city a much better idea of exactly how much impact the transient rentals are having on residents, as well as the tools needed to effectively redress that impact.

Related Information

• City of Avalon
• Council Meetings and other videos
• Catalina Island Property Owners Association (CIPOA)
• Catalina Island Vacation Rentals, Inc.
• Catalina Getaway Rentals
• tripadvisor (reviews of vacation rentals)
• California Revenue and Taxation Code Sections 7280-7283.51

Using taxes to earn respect

Taxation is the single most tangible aspect of government in most of our lives. Is it any wonder we've got a love-hate relationship with our nation--loving the theory while hating the implementation? It seems insane to me because it appears so needless and harms us so much. We have the know how to reverse that merely by tweaking the geometry of our economy. Today we tax productivity the most, and consumption the least, but why? Because by doing so we are throwing away the most powerful tool we have for evolving a more robust society. And by so recklessly and unfairly levying taxes we are needlessly alienating our own citizens and hindering the growth of our own economy and prosperity.

Taxes are disincentives. They can't help but be discouraging. Given this single fact doesn't it suggest we should tax those things with large positive externalities (like productivity) less at the expense of taxing those things that have large negative externalities (like crime) more? The very success of our society completely depends on our governments ability to define and maintain a suitable marketplace, or foundation, for us to develop commerce. This is an essential part of any serious attempt to do that. I want our leadership to connect the process of paying taxes to a new mechanism designed to protect our privacy and create a new income stream for us. Because it is necessary and because it is fair.

Taxing crime and our underground economy are easy things to accomplish in our modern world. Most of us both receive and spend most of the money we ever control electronically. The system we use today gives the banks and merchants a great deal of information about us that they can and do use to look for ways to motivate us to spend more, at best. The steps our government has taken to protect us from this exploitation are so pathetically inept they do little but add insult to injury.

Defending our privacy and property

But suppose our government allowed us to keep that information to ourselves. Suppose an agency of the government effectively stood between you and every entity you do business with. The seller gets no information from you other than what they actually need (usually just the fact that you paid,) and a code that identifies the transaction for all time. You get all of the information in a form that is completely accurate and verifiably unalterable after the fact. Rather than become a source of income for merchants, that information, or parts of it, can be sold by you in an open market of entities doing market research currently with information they purchase from merchants and banks, or by your doctor to get a sense of your lifestyle, recent travels, or other relevant data. And you also get a credit rating that is calculated by the government to open standards that academia can continuously critique and refine.

Why should our government do this? Because only it can. Because only it is in a position to craft legislation that defines such an organization in a way that convinces us it can't be abused, even by our own government. Only it can declare such a payment scheme as legal tender. And only it has the responsibility to protect our property as citizens in the first place. It currently fails badly at this, if not in a technical sense, at least in spirit. We constantly fall prey to the present accumulation of information about us by private enterprises with nothing but lip service paid to redress it. Creating an artifact to represent us in commerce is a simple, cheap, and very robust way to fix that problem immediately. It does more as well, from protecting us from pricing errors and shoddy merchants, to giving us a lot of insight on whether warranty coverage is worth buying, for example.

Constructive taxation

It's one of the reasons I think taxing the black market is such a good idea, because to do it requires that a number of other protections, like the above, be engineered into the economy all of which promise to leave us with significantly less overhead by adding a lot of negative and positive feedback in logical ways. By taking this approach to taxation we can vastly simplify the overhead necessary to pay for things (for both seller and buyer) while ensuring better information is collected and that no party (buyer, seller, or government) can be as easily defrauded or exploited.

I've mentioned several things in this blog that have this property, like our medical records, that are handled somewhat recklessly today for mostly historical reasons. This is a mechanism similar to the universal health care transactor I proposed to protect and maintain the privacy and integrity of our medical records and reduce the overhead of providing medical care. Throwing in our consumption data benefits everyone significantly. It gives medical researchers more information to look for correlations between lifestyle and health. It makes the information we have to sell more valuable to scientists, market researchers, and most of all us.

You might wonder why I'm so anxious to associate taxation with protecting your privacy. It's because I believe it's the right place to begin reforming the very soul of taxation--how we experience it. I want it to become something we take great pride in and feel wonderful about paying. I think the government should be giving us awards each time we achieve a new milestone in overall taxes paid. Starting with something as simple as a t-shirt proclaiming that a grateful nation thanks you for your first $10,000 contribution, to an annual parade for whomever manages to pay the most taxes concluding with an honorary dinner at The White House. I think there should be an academic industry that studies nothing but the externalities created by the way our taxes are apportioned and how perfectly they are collected, and a department of government independent of all the others for adjusting the tax code to match spending. It is an inherent conflict of interest to allow the people deciding what and how to spend to also decide where to get the funds. That seems unwise because it can only pollute the perspective they need to objectively decide what and how to spend. Only an independent and transparent agency is fit to determine how to most fairly levy the tax burden. It's an ongoing academic issue that can only be refined via careful study.

A bill for services

The deep fix for taxation is to transform it from a vague cloud that funds government into a bundle of connections that link benefits with the party enjoying them in ways we can explore and verify. This gives us so much more than the mere ability to feel better about paying them--it helps us make lifestyle choices and craft enterprises that are more inherently synergistic. It creates a whole new way to address issues like health care, social security, and welfare. It also forces government to come clean about how it uses it's non-tax revenue (which is probably a lot more than you might expect, easily more than $500/person/year today.)

The synergies go on. When all of these things are combined new opportunities are created. For example, with this approach the income from things like leasing the nations airwaves would ultimately become a credit in our tax accounts. For a minor it can do nothing but accumulate while compounding interest. This is an asset the state could use to fund incarceration of that individual should it become necessary, or to recover damages. Or it could fund a zero interest loan for education or to buy a home. It's a better way to incentivize good behavior from citizens; a carrot instead of a stick. It if was never allowed to go higher than what it would cost to purchase an insurance policy that covered your potential future liability to society, then it would become a source of income fastest to those of us who didn't get into trouble. And protect society from the cost of dealing with those that do.

Engendering love with respect

When it is possible to see exactly how our taxes are apportioned, managed, and spent--in great detail--we will be a position to feel better about paying them. When we can see that the apportionment has been carefully crafted to be as fair as we're capable of achieving then I believe people will honestly feel good about paying them. And when we experience taxation via a mechanism that is creating an income stream for us and protecting our privacy, then I think we'll actually look forward to it as a sort of score--or measure of our value to those who don't know us.

I believe a government that defines itself as being of the people, by the people, and for the people would realize that making all taxes voluntary is a relatively easy way to ensure that happens. And such a government would look for a way to make paying most taxes collectively voluntary simply because it realized that any government that isn't loved enough by its own citizens to compel them to pay for it really shouldn't last. This is a step towards unwinding the very need for as much government as we have now because it embeds some of the function of government into the process of just doing business.

Cornering rascals

I wish President Obama would realize that he needs to look for better ways to motivate congress. He needs to make it easier for us to directly pressure our legislature. Take health care for example. Congress's vested interest is to structure all legislation to best suit the industries that most support them. These are the ones that generate the most profits and will always be things like financial services, or insurance, and never things like health care.

To overcome this tendency Obama must find a very straightforward way to measure their performance. In the case of health care reform this seems easy. Ask the GAO for a pie chart that shows all of the things health care dollars are spent on; from doctors, nurses, and hospital administrators, to marketers, insurance brokers, financial analysts, lawyers, and lobbyists. Color every slice with either blue or red depending on whether it represents an activity that actually delivers health care. Put in on a prominent web site with the simple promise to veto any legislation that does not leave us with a significantly smaller red area--at least 25% smaller.

Directly below it there should be two pie charts, one for each party, that represent how the allocation would change under the solutions they're each proposing (according to the GAO.) That would leave them with few options but to look for ways to outdo each other cutting the fat out of health care infrastructure or risk being replaced by people from the other team in the upcoming election. He should make it easy for us to email our representatives to let them know we're watching them via the web page and do indeed intend to replace them if they lose the contest.

And he should advertise the site relentlessly begging us to let them know that this new mechanism is going to be steadily refined and gradually evolve into something that enables citizens to more objectively measure the performance of their elected representatives and find out what they are presently working on. He should challenge congress to do the same thing to him as well; find ways to objectively record the alternatives he faced for each choice made.

Finally, don't clutter any site with a lot of distractions, like ads, pleas for campaign contributions, links to irrelevant affiliates or party propaganda, etc. Keep it simple, bipartisan, and deeply focused on the specific major issues presently before congress. If you give the American people a tight enough set of reins, I'm almost certain we could get some useful work out of those unbroken beasts on the hill.

Let's call it The Civilitary

Every year there are natural disasters and accidents all over our world that do more damage to lives and property than any other kind of external threat. Yet we spend a tiny fraction of what we spend on the military to mitigate that far greater exposure. And many of those lives are lost simply because we cannot respond massively enough, quickly enough, or lack the logistics, technology, or equipment necessary to prevent it.

At the same time we have a world of nations growing ever more intwined and interdependent economically after having emerged from a long competitive adolescence of imperialism, nationalism, and xenophobia. They seem today more like a group of young adults impatient to thrive. There is a lot of rivalry, past grudges, and ideological bickering still going on, but its as if they've realized the only lasting way to settle their differences is to prepare to make some compromises and work them out. Fighting terrorism is police work; it should never be perceived as war because that legitimizes it as a tactic when it is nothing but a heinous crime. (If you hadn't noticed, the bushwhack blowback boondoggle backfired. Badly.)

We are presently looking for clever ways to collectively rid ourselves of the most aggressive and indiscriminate weapons because they honestly have no real utility for any nation anymore. (It may only be because killing enemies indiscriminately loses some appeal when they become customers, but lets count our lucky stars no matter what the reason!)

The first generation of kids to have grown up with the internet are starting to emerge into to a world with far less respect for the ideological baggage of their cultures. They see a world filled with avenues for creativity, enterprise, and discovery rather than sufficient reasons for conflict or hatred.

And we have a military-industrial complex that represents an enormously valuable intellectual property--a highly organized, coordinated, and deeply empowered team that could build a lot more than weapons. They could apply that expertise to engineering ways to save lives just as easily as take them. Well, okay, so maybe it's not just as easy. They'll still rise to the challenge and we'll have a more valuable MIC after they've mastered engineering things like levees that can be setup in minutes, spill containment and recovery systems, emergency structure reinforcement, massive rescue/evacuation and temporary housing deployment, mine collapse recovery equipment, etc. Whatever they can imagine that would be useful to save lives or property.

We should be looking for ways to create more meaningful connections between the people of all these nations and I started this blog by noting one of them: the need for an independent international organization to hold all free elections. (I think we need it here in America just as much as Iran apparently does--I'm not convinced our elections are completely kosher.) And if we're going to build an organization that we trust enough to conduct our elections, doesn't it make sense to add emergency response and recovery as well?

The world as a whole can afford a far better response capability than any single nation. There is no easier time to overcome one's prejudices than during an emergency when something clicks and people instantly morph into something more like ants--willing to give their all to work together with someone they despised just a moment earlier. It's an amazing thing, an emergency. Because a bond formed that way doesn't break very easily. The respect earned in those moments seems to permanently undermine the ability to restore any prior alienation.

There has never been a time better suited to form an organization like the civilitary I'm trying to describe here. A sort of mirror image of the military. Instead of a bunch of competing enterprises looking for the best ways to defeat each other, they are one cooperating team of people independent of all nations and looking to protect mankind as a whole. I imagine it would be more rigorous, lower paying, and even riskier than a military career. Because we won't need a lot to attract people. A civilitary would most likely become the most sought after employment there is because of the enormous honor that serving in and later being a veteran of it would convey. If there is honor in being willing to die to defend your nation by preparing and standing ready to fight its human enemies, there must be more in taking the same steps to defend all nations and people against the many natural enemies our world periodically manufactures. I'm betting that engineering better ways to save lives is just a lot more fun than looking for more efficient ways to destroy them.

I see it as an enterprise designed to train and deploy some fraction of the world's young adults for two to six years after high school, keeping the best of them for permanent roles. For them it's an unbelievable chance to travel around the world, get to know many cultures from the perspective of an ambassador of aid, form lasting ties with other young people from all over the world, and learn skills that will remain useful all their lives. For the rest of us it's a better solution to a threat we all face every day. We benefit the most by having a lot more response for the same or lower cost. We benefit from the cross pollination of perspectives, ideas, and cultures that the returning veterans will bring back with them. There will be more marriages between peoples from different nations, and a steadily growing awareness of the entire community of mankind by all nations. It would be a large step towards engineering a new world order that finds cooperation enormously easier than conflict.

Lastly, it generates a deep and meaningful hope across mankind just by proposing it. And at a time when such a jolt would do a lot all by itself to stimulate the world's gloomy economies and spark a more intense flame to illuminate other opportunities to engineer peace. It would be many months before talks could even begin to flesh out the form and legal status of such an organization. And many years before all the treaties and physical infrastructure necessary to deploy it could be ready. But from day one the economic impact would kick in, from simply uplifting the spirits of everyone on earth, to mobilizing the entire world's current rescue and recovery infrastructure into studying how to make such a transition. And periodic stories of the progress would renew that optimism throughout its development.

The crisis in Iran proved something fundamental has already changed about our world--those lines you see on the map are beginning to fade. The vast bulk of humanity is growing weary of all the many ways our ancestors found to artificially divide us. They can see we're all the same. We all just want the opportunity to live in peace and pursue our dreams. Let's seize the genuine reasons we have to work together by more aggressively developing them.

My mother's main meme

“Everything brings about its own opposite”

That single idea pretty much sums up my mother's entire philosophy. I was about six or seven when I first heard it, and had no idea what the hell it could mean. But there was definitely something very special about that particular bit of knowledge and somehow that was communicated to me by the way she said it. I can't remember how I knew it was enormously real and significant to her, like a treasure. I just did.

Her home always has fresh flowers.

I remember how much it bothered me though. How can you get anywhere if everything you head towards leaves you somewhere you didn't want to go? It seemed so unfair and irrational for the world to be this way. How could my mother drop a bomb like this so casually? I'm sure I didn't know about the word cryptic at that age, but I can still remember the resentment created by feeling short changed by all of her explanations. I could tell this bothered her more than me too. Sometimes I think my mother's greatest burden is that she knows so much more than she knows how to say.

She said it so often too, offered usually as an answer to some question I'd asked that most parents answered with god only knows. I did like her answer better than what essentially means don't bother asking because no one will ever know. And my interpretation of what it meant gradually took shape--it was a template that I could use to explain many things; like a NAND gate for the phenomenological.

I noticed the process at work almost everywhere I looked for it. From our perspective, we own our stuff and totally control it. But from our stuff's perspective, it owns us in more or less the same way. We'll do what we must to clean, maintain, house, protect, and utilize our stuff all on its terms. Likewise, and far more sobering to contemplate, with what we think we know. It seems to own us far more than we own it--it shapes the way we see things, what we'll choose to do, what will be interesting to us, all sorts of things. We are, in a very real way, the unwitting robots of whatever knowledge has taken up residence in our brains.

It is probably going to take many months or years of blogging to fully reveal the enormous impact those six words had on my life. That poem on the right was written in my late teens. But I didn't even see the connection when I wrote it. The meme had already buried itself so deeply in my consciousness that I didn't even notice the way it was organizing all the knowledge in my head. Or how it had drifted to accommodate everything I had learned. Today it's more like a loose sort of faith that most things really are deeply entangled with their opposites, and that looking for those relationships is usually a fruitful approach for understanding something well enough to model in your minds' eye. It is the most useful heuristic I know.

But there was something even more wonderful and beautiful hidden unstated in that screwball meme and reflected in everything my mother did. Its the premise that explanations for everything exist and merely need to be discovered or deduced. And that they are fully understandable and very worthy of trying to understand. It more or less forces you to be as objectively observant as you can be. It's a lot easier to have the courage to keep looking for something very hard to find if you're absolutely certain it must be there. Just ask the folks at CERN.

I started this essay hoping to explain how to leverage the utility of a mechanism that taxes the underground economy into a gentle selective pressure that leaves everyone more predisposed to find an attractive productive niche for themselves in society, but ended up only explaining how my mom's main meme made me. (They're probably opposites somehow!)

I guess I must think you're entitled to know a lot more about me if I'm expecting you to take such unusual suggestions seriously. Her name is Elliette by the way. Most people know of her from the dresses she designed and manufactured for many years mostly under the Miss Elliette label. A Google search produced 3,640 references. If you ever need either a tomato, or a picture of a tomato, she's the lady to ask.

After writing this, I asked her for some photos to put in it, and she balked out of modesty. Then, she sent me the photos above, pointing out how rare it is to have a single stem with sixteen roses all blooming simultaneously. Most of our ensuing conversation was about the flowers and tomatoes, and whether I could use the photo from the cover of her autobiography. I thought it better suited to a wikipedia entry about her company, which I plan to do when I get the facts and photos rounded up. Then yesterday someone else wrote about my mother in their blog. So I thought I should post this one now, rather than wait for a more typical photo of her since he's posted one.

Who we should tax first

Whomever said macroscopic things can't be entangled hasn't looked at our tax code. It is so ludicrously complex that it actually achieved independent conscious self awareness some years ago and the best we can do now is actually just fight with it. It wins every time too.

Yet despite all that, and the best intentions of our wisest leadership under advisement from our finest minds over a period of many decades and we haven't even begun to tax that which is arguably the most important thing to tax. (I want to say you're kidding me but I'm the one writing this.) I want to scream it in their ears: THE BLACK MARKET. Tax that for a change.

The Economist calculates that the world underground economy is worth $9 trillion, which is about 20% of the total. In 2000, the National Center for Policy Analysis (NCPA) estimated roughly one per dozen Americans earned a substantial part of their income underground. And that means we're each taxed about 9% more than we would be if those deadbeats just paid up.

Well, I'd like to find a way to make crime pay. At least its taxes. And I think tax avoiders should be taxed at an even higher rate than voluntary taxpayers (seeing as they're criminals and we should probably try to discourage them.) Now you might think that if we do find a clever way to tax them they'll just start using a different currency or some commodity or other means of exchanging value to avoid the tax, after all, they're criminals. But that has fairly high costs and additional risks. As long as our constructive tax is somewhat less than that, they'll accept it as the cost of doing business and we'll have created an environment less favorable to underground economic activity without needing anything fancier than a little economic geometry.

We have the technology and infrastructure already to support what is effectively an unreported income tax. Your assets are linked to your identity where the IRS maintains on oversimplified bank account for you. When you report enough income to leave you with three dollars, after the government takes their cut, it adds one dollar to your tax account. That account is used solely to pay the new unreported income tax which is a 33% tax on purchases. This all happens automatically for credit or debit card users. But even if you forget your wallet, and have to pay cash, the receipt would enable you to recover that money at a web site, even if you had to earn more income legitimately first before you could do so.

The intent isn't to punish, merely to impose a fairly high tax on the underground economy which should lead to a lot less of it, and we won't have to be doubly injured by it, since it's at least paying something significant.

Tourists, and anyone else not subject to US tax code would actually benefit as well because a more formal mechanism would be created to recover all their sales taxes as well as the new unreported income tax from their purchases. For those here illegally however life gets a whole lot more expensive.

Now why is our government even thinking about taxing its honest citizens more when it hasn't even begun to tax the dishonest ones? Is this really such a radical idea? Stuff like this makes me wonder if I really might be just plain crazy because it all seems to doable, reasonable, and wholly constructive to me. What stops stuff like this from happening?

25 Miles off the Coast of Indifference

If you haven't noticed already, I'm somewhat prone to spontaneous outbreaks of thoughtful musings about our nation, culture, and species. On one such occasion quite some time ago I must have emailed our state Senator, Barbara Boxer, because I received a letter from her office last Friday, July 10th informing me that a representative from her office would be in Avalon and available for me to see between 11:00 and 12:30 today (Wednesday, July 15th.)

I couldn't even remember what I'd complained about before, and don't even know if I have any basis for considering myself a part of the community just because I live in it. I don't get a paycheck from any employer here, nor own any part of any enterprise here, nor does any member of my family. I do own the home I'm living in. And am building another I hope to live in some day. (I was creamed by the collapse more than most so that's become a real challenge.) I have helped, or tried to, a few members of the community here with advice and loans and consider myself friends with many people here.

Plus Avalon is an unusual place. Many of the locals have been here for literally generations. (You'd think they were shooting for speciation.) One company, The Santa Catalina Island Company, dominates the community of Avalon because it owns most of the useful property in it (as well as every bit of the island that is not part of the Conservancy.) Most of the residents seem to have a love-hate relationship with SCICO (pronounced the island company.) I think the love part comes from the fact that this would just be a rock without the Wrigley family wealth to keep it operating with losses year after year and it really is a beautiful place to wake up every day. I think the hate part comes from the fact that the Wrigley family wealth doesn't leak out a bit faster.

It is therefore with some trepidation that I share the following letter I plan to give the representative from Senator Boxer's office later today because I don't really have standing to raise these issues. But I know people that do, and feel that someone should speak out about these issues because they really do affect us all. Even people who've never heard of Avalon or Santa Catalina Island.

Greetings,

I come before you today as a citizen of a community in economic crisis. Over the five years that I've lived here I've come to see why. Avalon suffers from a lack of the very lifeblood of capitalism--the opportunity to generate the goodwill value that is the hallmark of every successful enterprise.

I believe this often unnoticed aspect of our capitalistic system is what makes a community special to the people who own and work in these enterprises. Without that chance, people living here really don't have the control over their destiny necessary to plan and invest in their community wholeheartedly. Instead of being owners of their community, they are forced to be more adversarial; doing their best to get what they can each month because next month may never come. (When a large fraction of your population has an exit strategy it is a sign that your community may have a systemic problem. Or an active volcano.)

I am not trying to imply anything about the Santa Catalina Island Company (SCICO) except that by owning most of the commercial property it is difficult for them to avoid creating this situation. I know there are businesses here that are difficult or impossible to sell simply because they have no lease. I know the terms vary, and there are some leases, but it is usually just an initial lease for enough time to recoup construction costs. Most of the longstanding business seem to be month to month.

A consequence is that most of the employees work for a company they aren't quite as free to openly criticize as our national ideals suggest they should be. And a great many others work for companies that depend on friendly relations with SCICO in lieu of a lease. None of them are here with me today, but I know of some that wish they could be. It simply isn't worth risking their business, or jobs, or working environment to complain about because they don't see a remedy.

I want to make it clear that I've never even heard a rumor that SCICO abuses or does anything that might be considered exploitive of their enormous political and economic power here. I do not see them as villains in anything but the unavoidable consequences of their heritage and size. Avalon is like a lifeboat designed for 24 people. You could accommodate one or more people that weighed two to four times average by leaving some of the seats empty and balancing the load. But one person that weighs 10 to 20 times average renders the entire lifeboat unusable by everyone else regardless of how accommodating that huge person is struggling to be.

A few years ago the Justice Department attempted to get Vons to sell the smaller of their two locations here because it determined they were exploiting the community. Vons has that monopoly still because no one could compete without having the other location and necessary other infrastructure it takes to operate both. I remember this well because I was part of a group bidding for the site to open a competing market. SCICO wasn't interested in selling the land, just a 6 year lease that would have made it difficult just to recoup the cost of redeveloping the site from a run down annex type location to a full market. The only reason we were even considering it was because we felt connected enough in the community to make up for the inherent disadvantages of competing with such a large and well established market.

I believe the Justice Department missed the forest for the tree. The only reason Vons has no competition is because only SCICO owns enough commercial property to host a market large enough to compete with Vons and they aren't presently looking to fill any of that property with a market. If the commercial property was more widely owned then the use it was put to would better serve the community rather than the very gradually evolving agenda of SCICO.

I don't particularly like the remedies that government has for situations like this. But I believe the damage is real and quite serious. It undermines the will of the citizens of Avalon to develop a plan for their collective future. It limits the opportunities Avalon offers for entrepreneurs to create new businesses and develop a more diverse economy here. It makes our town less attractive to the most empowered and capable of people because there are such limited opportunities to deploy their talents. As they leave, our schools lose the parents with the most resources and time to participate in the educational process. Our children lose the role models most likely to inspire them to appreciate the utility of knowledge, attitude, and determination.

There is no good reason for this to be the case. The inherent potential of Avalon to become a profitable place to live and work, and an extremely attractive community to raise a family is enormous. We are so close to so many people who would appreciate a simpler lifestyle, not even needing a car, a healthier environment, and vastly more time to spend doing wholesome things together with their families. The internet has created many opportunities to earn a good living working from home. Many of those individuals would choose to live here if we hadn't passed that critical threshold where the infrastructure becomes a deciding factor. The school simply has too few children of upper and middle class families for most parents in that category to feel comfortable. I know of two cases specifically where it was exactly this issue that prevented one family from moving here and was a big factor in motivating another to leave.

An in depth study of our economy would reveal many of these externalities and explain why Avalon falls so far short of its potential to enjoy a vibrant growing prosperity. Being so isolated we are well suited to be carefully studied and could become a useful laboratory for exploring alternative strategies for everything from primary education to best incentivizing greener lifestyles and preventative medicine.

I believe our state and nation is facing many challenges but they all boil down to a single fundamental reality: our greatness as a society flows from our ability to harvest more of the competitive productive spirit of our humanity than other nations can from their humanity. We know that arming our children with the best education we can, the freedom to follow their passions, and the opportunity to keep their wealth is all it takes to end up with highly motivated and empowered citizens doing wonderful things for each other. Avalon is a place where all parts of that process can be carefully studied and where ways to improve, better incentivize, or even more wisely use taxes and subsidies can be explored and measured. I believe a very small project for California or America would yield enormous benefits for all of humanity by revealing more cost effective ways to better empower people to breath life into their dreams. I think it would help us develop better ways to measure both the positive and negative externalities of all enterprises and thereby reveal more elegant strategies to encourage the positives and avoid the negatives in communities all across our nation.