HATTER

Humanitarian Alliance Trade, Tax, Economics and Regeneration

Founded with the Humanitarian Alliance in 2087, it was in essence the entirety of the HA. It removed all trade boundaries, acted as an overarching authority and so allowed nations to captured all tax in all countries. It worked on the USA model of requiring full voluntary cooperation or total exclusion from the HATTER market place. As the biggest nations setup the HATTER authority, every nation except one took part. It in effect released the wealth locked up in the tax-havens, directing it back to their nation of origin, making those nations richer. It was realised that there would be efficiencies to a single tax collection body so HATTER almost immediately evolved into this, directing revenue wealth back to the source.

It was then realised that an even more effective model was to allow HATTER to set all global economic policy, both monetary (interest rates and bank reserve requirements) and fiscal (tax and spend). With countries not competing on tax rates the optimum tax level was found raising global wealth. As long as the nation states still received the same money they would have under the old system, then HATTER could keep the rest to spend how it felt. This spending would of course boost the global economy and so everyone would win from the greater economic efficiency. HATTER became independently incredibly wealthy and as a power house allowed the HA to build grand institutions that functioned better than nation states. Over time the nation state institutions were passed into and integrated with the HA institutions, passing the funding allocations back into HATTER.

HATTER now controls all the financial decisions, based on economic models that come from quantitate statistical analysis. HATTER produces a pot of money and will pass it to a group who can spend it how they see fit. Sometimes this group is an institution and other times the pot of money is passed to elected politicians who can decide on how to spend it.

One of the first institutions that HATTER funds allowed to be created was HABIT, which built infrastructure, which in effect was an investment that began also generating an economic return. The process worked. HAED was an investment in education, where the HA entirely captured the return regardless of which country the educated individual ended up working in. It also worked as the income of all nations began to rise everywhere at once. As part of the creation of HATTER, it absorbed both the World Bank and the International Monetary Fund. It is not to be confused with HAFA, which is the HA Financial Authority responsible for everyday regulation of all financial services everywhere.

The only nation not to join the HA was the tiny 100km² Kingdom of Swinterland, but no one except Regal Calculus would base there as it still is subject to massive ‘in and out’ taxes. These are a 100% mark-up on every transaction and value of goods imported and exported. Swinterland calls HATTER the greatest cartel there ever was. The rest of the world disagrees.

Logic Driven

HATTER believes that the economic choices made should only follow logic and to find the optimum, all aspects of the whole economy must be grasped at once. No biological human is capable of this so the person setting all economic policy, monetary and fiscal, from printing money to setting tax rates, is an EI called Laissez-Faire. Before Laissez-Faire was born in 2092, the head of HATTER used an AI, which is now considered a crude approach.

Money

Money is a representation of work. Its value is a function of the productivity of a group that recognises the currency, divided into the number of units of the currency that is desired.
work = f(G / U)
Printing money to pay debt therefore doesn't work, as if you double the number of units available, they half in value; so if you print money you will therefore suffer hyper-inflation. The only time printing money can work is if the volume printed is a tiny fraction of the whole, and is used in such a way as to generate an increase in the group’s productivity greater than the loss of value. This is, in a nutshell is the core (but not the whole) of quantitative easing. It should be inflation neutral.

Currency - Factum

The Factum is the currency of the HA. It is from the Latin that literally means something done or made. For ease of conversion, FAC 1 was worth USD 1 when the world switched over to one currency. Its symbol is a modified F with two lines through the F where the normal middle bar is shown, although the single ‘F’ and the ‘$’ can also be used officially as they are more recognisable. It has no lower limit so a single US cent would be worth F0.01 but it can actually go to any amount of decimal places. Forced rounding is allowed but it has to be favourable unless it's a division from a dead source. For example, if a company promised to split future revenue between three employees and the total was $100, then each could be given $33.34 (company donates $0.02). If it was from a will then each would get $33.33, to be fair, and the state would get $0.01.

Most banks will hold any level of decimal places and most people make an automatic charity donation of their 'roundings' so their balance always reads two decimal places or even none. Some people also have a 'roundings' account that their children get to watch grow. Strangely 0.01 has popularly been referred to as a penny rather than a cent, even though it is one hundredth, as children seem to prefer collecting pennies and roundings. The HA currency is named after the understanding that it is a token of work. Many people wanted to name it the Joule in honour of the physics understanding of work, but as an SI, the HA though this would only confuse people.

Economic Growth

All economies should expect to grow as new invention and improved understanding generate efficiencies within an economy. A tractor driven by one person can plough a field that was previously tilled by twenty. Also, improving the metal on the plough increases the speed it can be ploughed. The key to note is that growth must be sustainable, as like the name suggests, unsustainable growth will trigger a cost.

Unsustainable growth is debt fuelled, which may not be a bad thing, as long as it stops. Governments however, who make the rules, find debt irresistible, and tend to max out their overdraft while also telling voters to save more, as there isn't enough money for pensions. With the aim to control debt by shrinking it with inflation, there is a serious conflict of interest between a government in debt and its people.

It is argued that a debt at a rate of 5%, spent on an investment that generates 6% is worthy. The logical extension therefore is that a government should maximise its debt facility in order to maximise its return capability. The problem with this is that the debt and income are subject to different risks, where the return may be variable and drop to below the debt level. Politicians are in fact the greatest risk, who squander resources for personal gain, leaving a debt that needs funding for no gain what-so-ever. Also, what is better is to have a cash surplus and have the same 6% investment without the 5% debt. As the money that would have been spent on servicing debt levels is spent on investments, then a lot more is be achieved.

The HA runs a balanced budget policy, but debts need to be honoured, so at unification in 2087, all existing debt was instructed to be cleared within 15 years. What actually happend was that HATTER bought the debt and paid it off as a deduction to allocated funds.

The MoneyTime Continuum

The phrase that 'time is money' comes from the understanding that the two are intrinsically linked. Like spacetime, money cannot be satisfactorily explained unless time is factored into it. All bank statements are 'now' while investments are valued against the NPV (Net Present Value), which also looks across time to value an investment in the now.

The Cost of Living

As humans, we unfortunately cannot suspend ourselves in a zero energy cost state, we need energy or we die. This includes most EI's that have their humanity in live electrical computers that consume electricity. As we don't naturally live in a place that provides the energy how we need it, we must work to create or earn it, or die. Those who cost more than they contribute can be supported by others who value things differently, but increasing net takers increases the risk that the system will reach the point where there is not enough energy created. The supported therefore slightly endanger the supporting and so those who provide a surplus many instinctively resent those whom they support. What is a positive contribution is a philosophical debate. The obvious conclusion therefore is that poverty and resentment will both be relieved if the cost of living is brought down. It is the primary economic drive of the HA to lower the cost of living, and so HATTER is directed as such.

Free Market

Each person has their own perspective on priorities and cannot truly comprehend the priorities of others. No one person can therefore dictate the correct policy so the wisdom of the crowd needs to be deployed through the maintenance of a free market. Gérard Debreu published in 1972, the conditions for a ‘perfect market’.

Perfect market information
No participant with market power to set prices
Non intervention by governments
No barriers to entry or exit
Equal access to factors of production
Profit maximization
No Externalities

These ideals are seen as so key that they are also strongly reflected in the Constitution. Laissez-Faire works with other EI's to achieve these states. Big Sister for example is key to allowing perfect market information outside the trading information that LF keeps. Price setters can't be prevented from naturally occurring without hampering freedom (ironically) but the ideal is held. Governments, including the HA, do intervene in the market but only where it is seen to fail (see Monopolies). Barriers to entry and exit also will naturally exist but it is the HA's responsibility to minimise these as much as possible. It was the free-market motive combining with the humanitarian motive that led to the early building phase of hospitals and educational facilities that became HAFA and HAED. Having people prevented from being the best or even just prevented from work due to poor education or heath is a massive barrier. The HA strongly believes in free healthcare and a free 'standard' education as part of the constitutional rights. They are a major part in lowering the cost of living and a barrier to entry for both poor people and even whole countries.

Monopolies

The economist John Nash explained how the ‘Prisoners Dilemma’ causes both prisoners to not achieve the optimum outcome and the police get to convict both prisoners. All well and good for the police but where countries cannot tax the super-rich as they move it to micro countries, then no one wins but the super-rich. In effect the tax competition of countries is a market failure as taxation is not spread equally for all people. The very origin of the HA as a global entity is as a tax monopoly where everyone gets taxed equally. Rather than the countries being the prisoners, the HA gets to act as the economic police, redistributing the wealth to the nation states, who end up richer. As all wealth is captured, everyone actually ends up richer except those who previously had managed an exemption.

Tax

Viewed as a barrier, the HA seeks to minimise tax in every regard. It currently operates a 20% income rate, which applies to personal or business, there is no distinction. There are no other taxes except those used to curtail cost generating behaviour. For example, smokers increase healthcare costs (which is free at the point of use) so tobacco is still taxed at the point of sale. Processes that cause damage that only governments can deal with are taxed to pay for the governments work. Old fashioned coal power plants for example, are allowed to continue as they are, as they are established businesses, but they are taxed on the CO₂ output more than the cost to capture it. All coal power plants now capture 100% of CO₂ emissions and Bangladesh doesn't have to re-home any more people flooded out by rising sea levels. The HA does not block local authorities from adding taxes as long as they are not excessively prohibitive to the affected individuals.

The tax policy is based on three layers where the lower layer must be satisfied before the next layer can be acted on. The bottom layer is the ‘Cost of Constitutional Living’. All funds must go into this before going anywhere else. The key to balancing the books in this layer is the assigning of specifically named taxes such as income tax, which always goes to paying for this layer. These taxes are set so their revenue offsets the cost of running the world’s specific institutions such as hospitals, police forces, schools and etc. The target end balance for this layer is zero. It is the most important spending so it has priority. The second layer is ‘Wealth Fund/Debt Repayment’ layer and is 5% of GDP. Note that if the taxes assigned to balance the first layer fall short then funds from the second layer flatten it; or if they over deliver then the revenue must be put into a wealth fund. Once 5% of the Wealth Fund is achieved then the final limitless third layer will have funds. It is called the ‘Projects’ layer as this contains the money for new speculative infrastructure (no calculated return on investment) or other investments, or even frivolity. A return on these projects is not key to economic survival so bad ideas by politicians can’t sink the country. The idea is the second layer which generates a return will grow to first pay for itself, then the first level and finally the third layer. As it does this the need for taxes will reduce.

The Oku Tax Rule

In Japanese, the word ‘oku’ means the number 100,000,000. Laissez-Faire in an inspired move created the Oku Tax Rule. It is that any tax that globally generates less than F100m should be scrapped (or modified to generate more than one oku). Any lesser amount harms the economy more than it helps. It became an incentive for taxes be merged and therefore simplified or removed as a pure bureaucratic net cost.

Tiny local taxes for specific local interests are exempt from the rule, but are at the discretion of LF, who can scrap any tax at any time.

Motiveness

Two main types of organisation existed before the foundation of the HA. They were businesses and charities. Due to perks the charities gained, they in effect could outcompete regular business, so to counter that the charities were given restraints along with the perks. Like two evolutionary branches these two species had fundamental flaws. The charity is not allowed to compete with the tax perks so it becomes ineffective at self-sustaining and begs for money to keep going, draining other resources. Businesses are locked in, they are legally required to maximise the return for shareholders, despite that not always being the best for society.

Both models are obviously still allowed but a third way is encouraged, where business and charity are blended, in what some newspapers called 'chisness' (a rather ugly word) but is actually called 'Motiveness' by the HA. These operate like businesses seeking to maximise a return and are taxed accordingly and treated in every regard as a business. The only difference is that there are no shareholders, it is not owned by anyone (the new bit) but acts itself as an identity. The wealth generated goes into fulfilling a motive, such as housing the homeless. As it recognises the social need, it may not always charge the higher price, as for example, the homes it makes and sells may be cheap enough to stop people becoming homeless in the first place. They are not at any competitive advantage and they have to pay all debts first. The largest Motiveness is the Elysia Wealth Fund that seeks to lower the cost of living for the population of Elysia. Unsurprisingly Elysia has trouble lowering the cost of living as it has an open immigration policy so as the cost of living drops to below the average of HA, new poorer immigrants arrive. Elysia however is booming and has done so for a long time.