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Second Floor Economy

Corporations would not have the rights of an individual, but individuals would have the right to organize around the purpose of creating economic goods and services. Corporations serve as a fig leaf that is designed to obscure the fact that the economic system currently serves the function of moving and concentrating financial resources in the hands of a few individuals. Investment in the economic entities that follow the elimination of corporations, as we know them today, could continue as long as the market calculated the positive and negative externalities generated by the economic activity of the new economic entity.

For each type of industry the positive and negative externalities will be calculated as a ratio of units of production to the particular externality. The company will pay the cost of negative externalities to the effected individuals via a cost redistribution tax at the end of each year. The benefit of positive externalities received by others will be returned to the company via an end of year tax that returns 50% of the benefit to the company. The remaining 50% benefit of the positive externality will remain with its indirect beneficiaries creating generalized wealth outside the immediate scope of the transaction.

Companies would remain largely free to make any choice that maximized their profits. The people who are paying the real cost of negative externalities and in effect providing subsidies companies with large negative externalities would no longer be burdened with paying the cost of an externality. Companies that have benefited from others paying the cost of their externality would be freed from the burden of their perversely incented business environment and would be freed from the pain of having to respond to the system imbalance.

Transition externality tax breaks could be given on a time limited basis for businesses that aggressively pursued a transition plan that was intended to restore their externality to a positive balance. This would result in a rapid change in many industries based on competition and would be very dynamic. The net effect of this system would be to provide an incentive for the generation of economic activity that generated positive externalities and transfer money to the generators of those externalities. The money that negative externalities would transfer to the public would rest half in their hands as wealth and half in the hands of the generator of positive externalities. Choice would remain in the hands of the individual but the interconnectedness of the individual would be valued in the economic system that views the individual as 100% individual and 100% non-individual.

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