The market system merely provides the setting in which you get what you deserve

ah sweet mystery of life – at last I’ve found you.

Im sure Joe Stalin would have agreed wholeheartedly with the sentiment and the ultimate end game.

What with all the baby selling, organ harvesting and general placing of a pricetag on everything, I’ve been inspired by a new idea:

The government should set up “PriceHeadWatch”.

Basically, it’s a central repository for the appropriate price for a citizens head. Base it on some formula the tax office dreams up (say income times three years, with welfare payments being negative).

That way, you could scan “PriceHeadWatch”, purchase them on the open market (kind of like Ebay for contract killing), then by initiating an auction over seven days, either pay the market their price, or receive money from the government for the killing of a welfare mother, with the bonus of harvesting the children.

So, it would cost a million to buy (say) Morris Iemma so you could legally wander into his office, contract in hand and mercifully (for the rest of us) terminate his premiership.

But for Sally Slutmother, who’s an unmarried mother of three children, you would receive $90,000 for sending her to an early reward, with the children ending up in your custody to sell on or harvest their kidneys for resale or whatever.

I think it’s a winner.

Maybe, but then you’ve got to factor in the rising cost of crack cocaine, fishnets, hourly hotel rates…

I wonder because I don’t think that saying “We will award a prize for X breakthrough in Y technology” would be entirely wise, since that presupposes the direction that technology should take. Our record of picking winners is a bit poor in the arena of innovation.

Were we offering prizes in the mid 20th century, we may have had hundreds for various details of space travel, but none for microprocessing, less for software and none for networking, but the latter categories have been more fruitful.

So how on earth do you offer a prize when the fruitful innovation often only become apparent (to individuals) ex post facto?

Maybe you could have a online registry of ideas run by the government (filled with income contingent loan funded research why not?) free for exploitation by anyone, but should an innovation become exploited, the government could reward it after the fact.

This is replete with problems of course. There will still be litigation over whom “originally” came up with an idea, there is still a huge amount of uncertainty on the part of the innovators, since they also can’t pick winners (although they may have a better idea than others), but it might make the government’s choice of what innovation to reward less distortionary, whilst also removing the impediments patents place of utilisation.

As the man said and it applies equally to us-

Americans misunderstood the nature of capitalism itself. It is not an economic system that makes people automatically richer. It is a moral system a system that rewards virtue and punishes error. You dont get richer because of Free Enterprise. Indeed, as the economic history of the last quarter-century shows, you can get poorer. The market system merely provides the setting in which you get what you deserve. You could get rich- if you were to do the right thing: work hard, save your money, innovate, take chances, forgo consumption. But do the wrong thing and you will pay for it.

When you spend more than you can afford, you get poorer. Thats the rule. So it should come as no surprise that Americans are getting poorerthough they are just beginning to realize it.

That’s the underlying problem I have with so called ‘working’ your asset Nicholas.

That’s gains from trade old chum. I think you’re having fantasies about how trade is ‘win-win’. It’s win-win between countries – mostly. Not between providers.

Japanese motorbikes wiped out most of the British motorcycle industry. Britain a winner, but Triumph wasn’t.

You fail to see the fundamental flaw that the asset of one that should be ‘worked’ as you call it is the liability of ‘work’ for the other so called gainer from trade. This is clearly not a win win trade situation.

Obviously it would not be good to have the government just giving money to anyone with a Biochemistry degree. You would prevent that by making it a scheme that only gives money to enterprises that are first able to attract money from the private sector. So if a biotech startup is able to get $100k in funding from a private investor the government matches that with another $100k. This would turbocharge the existing market. It is open to fraud but simple accounting and auditing would make it pretty easy to detect someone putting money into Porche’s instead of lab equipment. The requirement of attracting real capital rather than just government grants would ensure that someone has made an objective decision about the prospects of the technology and is watching that money is spent effictively.

The net effect would be to improve the risk profile of biotch investments. If an investor can put in half the money to get the same result then they can put their money into double the number of biotechs, effectively doubling their chances of a win. Then when one of them wins the lottery and signs a hundred million dollar deal with big pharma the government takes a big cut and ploughs the money back into further biotech startups.

This is not a new suggestion, and not a HECS style scheme, however…

With respect to funding retirement, longevity risk is a very real risk, and one that the government is much better placed to deal with than the individual.
It is possible to purchase a lifetime annuity from a life insurance office to offload the longevity risk, but the market is very thin and capital requirements, moral hazard and prudent investment policies mean that they are very expensive.
The government already has the system in place to pay a fortnightly pension, so why not get into the business of selling pensions? It would be possible, and perhaps desirable, to make the first call on all retirement lump sums the purchase from the government of a pension equivalent to the age pension.
This could also be dove tailed in with Jonathon’s suggestion on a reverse mortgage on a home – the purchase price could come from a lump sum superannuation benefit or from the transfer of a share of the equity in the retirees home.
If such a scheme were introduced, the means test for the pension could become a once only test at age 65 – buy the pension if your assets are sufficient or get granted it for life based on assets at that point – rather than an ongoing affair, which would probably result in immense savings in bureaucracy.

Quite. A consumable non-durable good cannot properly be so described.

Legalise the sale of babies and children under 6 and include the value of these items in the assets tests for pensions and allowances.

Get the hell off my internet!

Children are not chattels.

I’ve certainly got no problem with HECS on prison stays, but I never did like the idea of gentlemen’s prisons – so call me new age, but I’m a bit of a trendy in being against two tier prisons.

However, with the babies, you neglect to mention that you can more for them when they’re disassembled (which is the wrong way to put it of course, since they were not strictly speaking assembled – but rather grew). The same goes for children of course.

Thus points 4 and 5 could be integrated.

I’m so glad you asked. I have a number of suggestions which I am sure will be of considerable benefit to the community.

1. Replace the age pension with a government operated reverse mortgage scheme.

2. Replace Medicare for the aged with a government operated reverse mortgage scheme.

3. Introduce pay-to-stay prisons. Create a two-tier prison system. Tier one will will be a basic service with only a minimum investment in inmate comfort and safety Tier two will be fee for service option with greater attention paid to inmate safety and comfort. Fees can be paid upfront or through a HECS-type arrangement.

4. Legalise the sale of organs and body parts and include the value of these items in the assets tests for pensions and allowances.

5. Legalise the sale of babies and children under 6 and include the value of these items in the assets tests for pensions and allowances.

Or you could just privatize the universities a bit more, which would let them out of the weird limbo they sit in now (especially given the “large” proportion of public money universities are dependent on that you refer to keeps on shrinking — last time I checked some universities were claiming only 30% of their funding was directly from the government, although I am not sure what exactly this includes). In this case HECS makes much more sense.

Yes you can say there’s moral hazard with a HECS style loan for drought relief. But if you begin with the idea that at least where people do well after the event these things should at least in principle be repaid, then any repayment rate is an improvement on zero which is the case with a grant.

It is not obvious to me why a good with a large public good component – education – should be taxed more heavily than other things people do to boost their income.

And if you think that the highest levels of public good come from people who make the most use of their education (including to earn income), then one of the weird things about HECS is that it taxes the people providing the most benefit to the public, and lets off those who decide to do nothing with their education.

I’m really not sure at all that HECS-type income-contingent loans are a good policy solution to many of the things they have been proposed for over the years. HECS works pretty well for the thing it was originally designed for – university education for people, most of whom fairly naturally go on to earn higher than average incomes as a result of that education. But even with something like university education you end up with a fair amount of bad debt because people choose not to use their education to earn sufficient money to pay back their HECS debt (or choose to earn their money overseas).

Once you start extending the principle into areas where lots of people don’t have the capacity to earn high incomes or can choose even more easily not to (eg unemployment, farm or small business support, vocational education, maternity leave, even fines for heaven’s sake), the level of bad debt increases significantly and can even become a large disincentive for people to earn above whatever threshold has been set for repayment.

So, I don’t really have a problem with the Government being a lender of last resort for people who couldn’t otherwise borrow, but a loan should be treated as a loan and people should be expected to pay it back. (And as DD said, there should be a good reason for making it a loan rather than a grant in the first place.) Otherwise it seems to me that the moral hazards are too great, especially for people who are not ‘naturally’ high income-earners.