Part I - We control our reality and I have proof

(This will be at least a three part series of posts over the next few weeks where I will identify a solution to a majority of our economic and social issues, not only in the world, but within the United States. Capitalists and Socialists alike will most likely agree on this solution as it successfully incorporates both ideals. And before anyone thinks it is impossible, the solution I propose that takes no money to implement is already in practice in the USA, just reserved for certain classes of people).

Many months back I entered a contest on put on by the bankers in Ireland called YourCountryYourCall.com Some of you may remember that contest, some of you may remember a certain idea that was removed from the submission process. It was not the only idea removed, my personal idea was removed as well.

Upon removal I received the following e-mail it was rejected.

Dear ______,

Thank you for your enquiry. Regretfully your proposal did not meet the Competition Rules, our Acceptable Use Policy or was regarded as not being in the spirit of the competition, which is to unearth a winning proposal of significant scale and potential that would generate employment opportunities and prosperity for Ireland.


Thank you,

Your Country, Your Call Team

You may ask what my suggestion was. It was not derogatory, it was a proposal for a new type of business structure that would effectively end all unemployment, and solve many social problems in society. What I proposed was a business model that could be implemented right away and begin a period of great growth for the country and would set a standard for the rest of the world to follow. I did not realize that bankers were the sponsors of the award money and contest.

My proposal was a new economic system based off a new business model and as the main highlights included:

- All people who work in the business would be owners of the business
- The business, as the result of 100% ownership, would not be subjected to labor rules nor lawsuits over labor issues
- The share in business could not be sold to people who had not worked in the business
- If a person left the business they could not take their share of the business with them, unless allowed by the business owners
- All profits of the business would split amongst the owners in accordance with their operations agreement
- If the business wanted to expand it must bring on more owners to compensate for the growth
- Any loans given to these types of businesses were payable on a fixed percentage basis of the income generated by the business (in essence a business that set their loan repayment at 10% would pay back the loan at 10% of it's total revenue; depending on the success of the business loans would be repaid quickly or over long times).

My idea involved using vacant store fronts, and the unemployed to create teams of individuals whom had the skills or desire to run certain types of businesses. I envisioned that people motivated to put a team of people together would be the only one allowed to leave the business and become a silent partner collecting a small share of the income. This would be for the purpose of allowing the creative individual the ability to create and coordinate new business types while still collecting some income.

In my hometown there are so many storefronts closed with vacant signs on them, and there are thousands of unemployed with skills to run these businesses. Restaurants sit empty and could be serving people. Hotels vacant and boarded up. Humans and a little funding is all that would be needed to open these places back up. Instead we sit around milking the system while we fight for a few jobs that are available. If there were a business model such as the one I proposed, that was available to the average American, we would all be much better off.

So why is this business model only available to highly educated people and generally affluent occupations? It is because, if this model was available to everyone nobody could be controlled and forced to work for less than they are worth. All could partake in directing production of their company, and taking time off, or as much or as little as the group of owners decided. No more 40 hour work weeks. Come and go as is necessary to run your business. Owners could take turns running the business, or automate functions of the business so the owners could take more time off.

We control our reality because we have accepted the current corporate system, and we can control it by demanding a business model that benefits all the people involved. Capitalists will enjoy freedom from overbearing taxation and employment regulations, and Socialists will be assured that most everyone in your community will be making a lot more money then they do currently, giving rise to charitable giving and community projects as peoples time frees up.

I think the reason they did not use your idea is purley tax, beause it is perfectly logical apart from the government loosing out on tax.

If all the workers owned the business that they work for, would that make them all self-employed?? This means that they can claim VAT back on work equiptment, and generaly pay less tax. Also with that many people self employed it may cost the government more to hire people in the revenue to keep track of all these people, and try to get the taxing right.

Im not much of a business man but i think that could be how it works. Shame becasue it was a good time

reply to post by Trolloks


You are exactly spot on why they do not allow it. It would mean that the tax revenue of the government would be decreased, people would have more disposable income, and would not be dependent on the government for their needs. Life in general would become more slower paced, and people would actually find work they wanted to do, not that which they had to do. It would also mean stability to many. A person would become valued on their ability to create, rather than the ability to suck up to a bosses demands. Automating business equipment or functions would also not destroy the economy, as the owners of said company would simply work less. In this way, it wouldn't take long for people to really start innovating their business to ensure they didn't have to get up and go to work everyday. No more 1 person owns 50 restaurants, as it would be required a person worked in the restaurant to own it.

Basically, it would mean the people would be free. Capitalism would become localized and not global. Social programs would become less and less, until they are no longer needed as people pay off their homes, buy their vehicles with cash, and pay for their kids college with cash. The money would return to the people. Charity would flourish and a greater sense of community would emerge.

Maybe I made this post too long (1 reply 3 flags). Feel free to comment about your views even if it is just a show of support.

I have always said Simplicity is Complexity at its best, and I think you have achieved that. You know you were denied because it was to simple, made to much sense, and of course took money out their pockets. Now if the Bankers that denied you had to work under the same rule of thumb, it may have had a different outcome.

I am curious, do you know what the winners idea was? I will star and flag you because I like the fact you used your brain and sadly that has been lacking lately in the world of things. At least you Tried to thinkof Something. More then a lot of folks are doing besides just complaining... Good job

[edit on 20-7-2010 by yigsstarhouse]

As someone who has started, run and exited from a couple of businesses, two thing come to mind immediately. First, where is the start up capital for these businesses to come from? An empty store does not a store make -- you need to have inventory, pay salaries until the income can cover it, pay for marketing, improvements, etc. Underfunding is likely the #1 reason that small businesses fail in their early years.

Secondly, you say something about "people taking turns in running the business." While that sounds egalitarian, the reality is that some people have that sort of skill, and some people do not. Not having consistent management would likely be a very bad idea, and poor management is likely the #2 reason that small businesses fail, both in the early years and in later years, when growth poses challenges and if the management is slow to either adapt or leave (I opt to leave) rapid growth can be the worst thing that can happen to you.

reply to post by adjensen


You are thinking of a traditional business model. In this business model, there is no overhead or payroll to pay. There is no manager, unless someone through contract is appointed as such. There is no Human Resources as nobody is employed they are owners. If there is no revenue generated for the business, then nobody gets paid. However, just like any sort of business structure this is a risk any owner takes.

Funding is another matter and can be accomplished just like any ordinary business. You go to a bank and get a loan based on the business plan you write. Remembering when you start the business you are picking a team of people that will own the business with you, you have to be smart about who is chosen and what skills will be needed. If individual owners want to bring money to the table as a loan they can, but it is treated like a loan, not an investment. The owner that is also a loan giver, gains no extra interest in the company simply because of the loan.

Like I said, we control the reality we want to see. It is only a matter of changing the rules in which our reality is formed. Those against a business structure such as the one I describe, are lodged in the current reality. I personally, see major flaws in how business operates...and this solution can compete alongside any other business model with greater success than a traditional business.

Imagine a Starbuck's ran with incredible amounts of overhead, people with investments to make more money, hourly employees paid low wages to make it all possible. Then take those Starbuck's employees and give them their own coffee shop next door. Each one is vested in the business as they receive increased value from the business the more people come in and purchase something. They can decide amongst themselves to undercut the competition, specifically because they can cut their own income to accomplish drawing business to them. They can provide superior products than the competition, specifically because they can cut their own income to accomplish that goal. They can work as long as they want, or as short as they want depending on their goals.

What happens if a team puts together a business that finds no market, or twenty teams put together businesses that compete directly for a very niche market in a small region - making each business a non-viable enterprise?

Who decides what kind of business can be created within a finite area or market, and by whom? You model requires some kind of "traffic cop" to prevent an endless stream of bankruptcies as a result of teams of very talented people forming to offer layers of redundant products and services to markets that are already saturated with those products and services.

As in, how many coffee houses does one city block really need?

This might be the buzz kill on your idea.

reply to post by NorEaster


Everything you brought up, could happen with any business model. It is a risk business owners take when they research where to put their business. It is no buzz kill. This type of business model already exists in the United States. Next time you drive downtown in your city you are passing several of these business types. My proposal is to extend this model to the people and not just the rich and elite occupations.

Originally posted by ExPostFacto
reply to post by adjensen

 

You are thinking of a traditional business model. In this business model, there is no overhead or payroll to pay. There is no manager, unless someone through contract is appointed as such. There is no Human Resources as nobody is employed they are owners. If there is no revenue generated for the business, then nobody gets paid. However, just like any sort of business structure this is a risk any owner takes.

Funding is another matter and can be accomplished just like any ordinary business. You go to a bank and get a loan based on the business plan you write. Remembering when you start the business you are picking a team of people that will own the business with you, you have to be smart about who is chosen and what skills will be needed. If individual owners want to bring money to the table as a loan they can, but it is treated like a loan, not an investment. The owner that is also a loan giver, gains no extra interest in the company simply because of the loan.

You have two very significant misnomers / challenges here. Neither is insurmountable, but if you want to be taken seriously, you will need to consider them.

First, it is very difficult, if not impossible, to get a bank loan based on a business plan, unless you are willing to put down collateral. You may be able to raise money through individual investors, but it doesn't sound like you're interested in external investors (the root of Capitalistic evil, of course.) This means that you either need to find a group of people who will equally contribute capital, or will equally put up assets against the loan. Very tricky, but not impossible.

Secondly, those contributors will need to be a staff of employees who precisely fit the bill (a restaurant that has nothing but cooks or servers will probably have problems) and are willing to, essentially, work for free for an extended period of time. The ironic thing about business is that, as an owner / manager, I've spent more than my fair share of time not drawing a paycheck, but my employees have rarely missed getting paid. The reason being that most people, in the face of not getting paid, will go find something else to do, because they lack the resources to go for an extended time without a check.

I love small business. Aside from two years at McDonalds in high school and early university, I've always worked in small business settings, my own or someone else's. But it's a tricky thing, even as is. Your proposition, while interesting and noteworthy, presents significant challenges that you need to think about in order to be taken seriously.

reply to post by ExPostFacto

Why do you need someone to approve your idea?
Why not just start it.

I am part owner of a small business which is worked only by owners...
...it is a good model...
...but you don't need government approval to apply your idea.

Originally posted by Trolloks
I think the reason they did not use your idea is purley tax, beause it is perfectly logical apart from the government loosing out on tax.

If all the workers owned the business that they work for, would that make them all self-employed?? This means that they can claim VAT back on work equiptment, and generaly pay less tax. Also with that many people self employed it may cost the government more to hire people in the revenue to keep track of all these people, and try to get the taxing right.

Im not much of a business man but i think that could be how it works. Shame becasue it was a good time

I know in the US I pay more taxes (well idk if Im payin my taxes next year TBH) because I am self employed, its 15% on top of income taxes, but its only on the first $100,000 of your earnings(which sucks for people like me).





[edit on 20-7-2010 by CREAM]

reply to post by CREAM


Sorry i should of mentioned im in the UK. Two of my uncles are self employed, one photographer and the other plumber. I remember the plumber telling me how he is on £70k a year, and most of that was because of how the tax is done (like i said, im not very business orientated so the facts on how it works most likley will be abcent) however he was doing very well for himself when he was self employed, however had to find an empoyer due to the break down in the trades market.

In the UK, the self employed can claim back on certain VAT that they need for their business, so if so many people was self employed and ran a huge company in the scale of a privite company, imagen the amount of VAT the inland revenue would have to refund at the end of the tax year? Just on things such as paper and pens? This was the point i was trying to make in my original post, if so many people was self employed within the same company in a scale such as this, the VAT that will be claimed back would be huge, revenue would have to employ more to sort it out, so they loose yet more money, have to increase the VAT on fule and alcohol/tabaco, uproar, fule strikes, weaken the economy, etc etc. In a way, it would seem to ruin the economy that we use even more.

Originally posted by CREAM

Originally posted by Trolloks
I think the reason they did not use your idea is purley tax, beause it is perfectly logical apart from the government loosing out on tax.

If all the workers owned the business that they work for, would that make them all self-employed?? This means that they can claim VAT back on work equiptment, and generaly pay less tax. Also with that many people self employed it may cost the government more to hire people in the revenue to keep track of all these people, and try to get the taxing right.

Im not much of a business man but i think that could be how it works. Shame becasue it was a good time

I know in the US I pay more taxes (well idk if Im payin my taxes next year TBH) because I am self employed, its 15% on top of income taxes, but its only on the first $100,000 of your earnings(which sucks for people like me).

The "Self Employment Tax" is kind of misunderstood, but it's just the Social Security and Medicare taxes that everyone pays, plus the "employer match" part of those two taxes, which every employee has paid for them. You'd pay the Social Security and Medicare anyway, but the match has to come from you because there is no employer to pay it. And you don't stop paying it at $100,000 it just significantly goes down, because the larger amount of the two parts, Social Security, has an annual limit (currently about $106k) but you still pay Medicare, no matter how much you make.

See www.ssa.gov...

There are ways to shelter income against these taxes, but I would advise you to not simply skip paying them. "Tax avoidance" is legal, "Tax evasion" rarely ends well for the evader.

reply to post by adjensen


As i previously stated, im in england and not the US, different tax system.

2nd line

reply to post by Trolloks


I know, I was replying to CREAM, who said that he was in the US. Some people are put off by the term "self employment tax" because they think that if you work for yourself, you have to pay extra taxes. Just wanted to clarify the point.

There is a word for what you are suggesting. It is "partnership". Or if you are of the politically correct persuasion, a "collective". And what happens when the some of the partners or as you term them "owners" decide to call in sick all the time or spend company time playing with their phones? How you gonna get rid of them? Majority vote to expel them? Then they aren't owners. Please don't say it's in their interest not to. Correct, it is not, but it's also -in- their interest to get as much as they can for as little as they can. There are people in this world who when they can get someone else to work 120% so that they can take one day off a week, they will.

reply to post by christianpatrick


The arguments raised against this type of business model is exactly why I posted this in Philosophy and Metaphysics section of the forum. Does anyone realize WE create the rules? We can argue all day within a box of thinking that says, there would be problems, yet all the problems listed so far are raised because of thoughts within the confines of rules in existence. This business model is not a partnership. In a partnership, an owner can cash out or sell off their portion of a business. I am not advocating for that model at all as it would defeat the purpose and is something that can already be done by anyone.

I see thread after thread on these boards arguing, the system is not fair on both sides. Capitalists argue they are being over taxed and they work harder than their employees. Socialist argue they are being paid slave wages barely able to feed their family, keep a roof over their head, or their employers treat them with inferiority. Do we not get it yet? The system as it is designed creates division and disparity. What I advocate is a system that balances the two.

Worst yet this business model is already practiced in the United States and probably in other developed countries. It is reserved for the elite occupations. Laywers, Doctors, Accountants, Financial Firms, IT consultants, can all form the business model I propose. It is called a Professional Corporation, or Professional Limited Liability Company (PLLC). None of these people have any problems making it work. So why all the nay-sayers?

A Professional Corporation is regulated by government because to give the benefit of this model to regular citizens, would mean less taxes paid to the government. Additionally, the traditional single owner enterprise or share-holding corporation would never be able to compete with this type of business model. They would all go out of business. The simple fact is that owners are not governed by labor rules and regulations. Labor rules were designed to give the appearance that there is fairness when you work for someone else.

What a Professional Corp, or PLLC allows:

A professional corporation is taxed like a C corporation (unless they make the S corporation election). However, some professional corporations do not have the advantage of graduated corporate federal income tax rates. Professional corporations that are "qualified personal service corporations" pay a flat federal income tax rate of 35 percent. "Qualified personal service corporations" provide services in the fields of health, law, engineering, architecture, accounting, actuarial science, or consulting. Professional corporations are allowed to file for S Corporation status, this election allows for the entity to have pass-through tax treatment. With pass-through taxation, the income to the entity is not taxed at the entity level; however; the entity does complete a tax return. The income or loss as shown on this return is "passed through" the business entity to the individual shareholders or interest holders, and is reported on their individual tax returns.

Many states restrict who may be a shareholder or a director of a professional corporation. The stock must be owned by either: employees performing the professional services, retired employees who had performed such services, the estate of someone who had performed such services, or someone who inherited the stock from a deceased employee who had performed such services (but only for two years after the date of death). Note, in some states only licensed practitioners of the specific service that the corporation provides may own stock in the corporation and serve on the board of directors. Other states require at least 50% of the shareholders and directors to be licensed professionals.

Now the question is would this be beneficial to be able to form a business like a law firm does? Bringing on partners to expand operations and giving pay according to the success of the business? Could this model be adapted to farms, coffee shops, hotels, retail outlets, etc.? Where a group of people decide to work a farm and they all share in the profit and expense though not directly. Would anyone become unemployed if business was bad one year? Or would they all simply make a cut to their lifestyles and do what was needed to drum up business, and virtually no human labor cost? Would it be more fair to workers in a business model such as this?

reply to post by ExPostFacto

Would it be more fair to workers in a business model such as this?

There's nothing preventing people from doing that now. My last company was an LLC, which is similar to an LLP. It gets rather icky from a tax perspective, to be honest with you, and toward the end, I was promoting switching to a C-corp. The structure of a company is largely for tax and legal reasons, not "fairness".

To say that employees / partners would simply "change their lifestyle" if the business fell on hard times is a bit naive. If you stop paying people, most will stop coming to work. In a sense, your "can't sell your stock" angle makes them almost indentured servants, as much of their assets would be lost if they left the company.

People are inherently different. Different talents. Different work ethics. Different tolerances for things like not getting paid. Different capital assets. Building something that just assumes none of these are true, or seeks to overcome them by simple expectation, is just a recipe for failure.

But, like I said, nothing to prevent you from trying. Find a few other people that think the way you do, pool your assets, open one of those shops and give it a go. Pretty much every business that you can think of originated in a similar fashion (if you go back far enough.)

reply to post by adjensen


A partnership is not what I am after here. Partnerships are messy businesses as they are designed currently. I am trying for a different approach not the same thing. There is something preventing me from doing this type of business model, and it is the legal roadblocks placed around this business model. To answer your question, yes I do believe if a person is not paid in their own business they will work. I hear stories all the time of business owners having to live on scraps until they have developed a successful business. I do not think it is naive at all to think that people with a common interest in success will work toward that goal, without being paid for it. Understandably, the right people would have to be chosen, like you said, that understand the concept and purpose. I will agree with you that most people would not be ready for this type of business model. They are latched on to their employers nipple for a job.