He took his coffee cup, filled it, spooned sugar into it, and stirred it serenely. John noticed what calm hands Rawburne had, hands of a musician or artist, which made for an odd contrast to his otherwise rustic appearance.
“In the eighties, I got hold of a report describing the economic balance of Costa Rica that looked promising at first glance, but a closer look was a pure horror. These people had cut down about forty percent of old growth forest — centuries-old trees — and exported the timber. What shocked me so much was that this reflected positively in the calculation of their gross national product. Judging by these standards, it would have been best if they had cut down and sold every single tree in the country. That would have conjured up an agricultural disaster during the following years, which the numbers simply did not and could not show. I thought a long time about that and came to the conclusion that this was the root of all evil: all the calculations are simply being done incorrectly.”
John was about to life his own cup, but stopped in mid motion. “Miscalculated balances? I don’t get it.”
“Oh, the balances itself were correct, that’s not what I meant. The formulas used to create them were wrong. The definition of gross national product is nonsense, because they don’t put such factors as environmental damage and limited resources into the calculation. In the mean time there is another parameter, the gross domestic product, but this is not much better.”
“You are actually criticizing economic science itself, if I understand you correctly”
“There are prominent people who deny that such a thing like economic science even exists.”
“Are they the same people who deny the moon landings?”
“I was not present during the moon landings. Were you?”
“I was two years old.”
“The difference here is that I don’t have to believe what I’m being told, I can calculate it myself. And since this has become clear to me I’ve learnt that every calamity starts with someone’s miscalculation.” He finally took a sip of coffee. “Take nuclear power as an example. Regardless of all arguments for and against the use of nuclear power, which are usually dominated by emotions rather than nourished by rational thought, it is a fact that not even a single civilian nuclear power plant would have been built if the correct calculations had been done. The alleged cheapness of nuclear energy was only cheap as long as the cost of disposal of highly contaminated waste was left out of the calculations. Since nuclear power was politically desirable, they knew they could palm it off on the general public, particularly in those days when there was little chance of them ever being called to account for it. If any power company had been left with the choice to build a nuclear power plant or something else, they would have realized that nuclear power simply does not add up. That is what I meant with not calculating correctly. If your bookkeeper did something like that, Mr. Fontanelli, he would go to jail.”
He put down his coffee cup. “So I put some thought into calculation methods and how such aspects like Costa Rica’s loss of forests could be integrated into them. I found out that the mistakes made in such calculations are that natural resources are considered unlimited and only the acquisition costs are considered. That's about as reasonable as if a merchant had a store with a large stock of, say, toasters, and calculated the costs simply by the effort of going into the warehouse and getting a toaster from the shelf. But that’s exactly what’s being done. There is a forest, the warehouse if you will, but they calculate only the cost of cutting down the tree, in other words the labor, the equipment, fuel, the transport to harbor, and consider whatever is left to be profits. Our economics lessons even encourage us to think this way, to calculate this way, and to act this way. We can see that this cannot be completely correct when dealing with a forest, but as soon as something is extracted from the earth, such as oil, ore and whatever, we stop thinking about this.”
Because Rawburne had paused and was looking at him expectantly, John said: “I understand.”
He was satisfied with that, and continued. “That’s what I was contemplating for some time, as I’ve mentioned, and finally, after ten years of working away at it, I realized that I had found the right approach to this problem.” He made a short dramatic pause before going on. “How would it be, I asked myself, if all taxes were abolished except those levied on natural resources?”
“What?” John yelped. “But that would be highly … oh?” He paused. “I wanted to say that it would be unjust, because this would hit only those processing raw materials, but…”
Rawburne lifted a finger like a teacher. “Take note, such taxes would have to be regulated on a worldwide basis to prevent industries moving to other low-tax jurisdictions. And it would be whoever does the extraction — the oil company, coal mining company, the iron ore company, or whoever — would pay the tax. Naturally, they would all pass the costs on to the next tier of industry or customers, and in the end we would all pay. Only there would be far less bureaucracy than today. There would be no income tax forms to be filled out, no taxes levied on income, only items of daily life would cost more.”
“Because, the prices that the manufacturers calculate for their products contain the taxes on the raw materials.”
“Exactly.”
John let this sink in for a while. Was this the greatest nonsense he ever heard, or an ingenious line of thought? Like the egg of Columbus? “It would make everyone more careful with the use of raw materials and energy,” John said. “It wouldn’t be worthwhile to transport canned food across half Europe, or be sold for only a few cents. The packaging would be more expensive, so people would choose products without so much packaging.”
Rawburne nodded. “It would pay to recycle. Today we must force the manufacturers to take back used cans and such. Why? Because raw materials are far too cheap, and because their prices don’t reflect the true costs, neither the economic costs nor the ecological costs. But if you raise a tax on raw materials, you would suddenly have people ringing your door bell looking to buy your trash.”
“It would also be a way to make it worth manufacturing things that lasted longer,” John added to the line of thought. “Even if they cost more, it would still be good business.”
“That’s right. If raw materials were expensive, there would be far more careful consideration whether or not they were distributed in the environment in the form of pollutants.” Rawburne raised a hand. “And keep in mind that all forms of value-added taxes would be abolished. This means that labor would be cheaper because it would no longer be burdened with taxes. Services of all kinds would get cheaper too. Unemployment would cease to be a problem.”
John nodded thoughtfully. Then he remembered something. “But would this be fair? I mean, we need a certain amount of resources simply to stay alive. Does this sort of tax not burden the poor more and give the rich an opportunity to spend their money on environmentally destructive activities?”
Rawburne stretched out his arms. “You, Mr. Fontanelli, have surely already noticed that all forms of inconveniences hit the poor harder than the wealthy, except maybe a crisis in caviar production. Isn’t this our definition of wealth?”
“Sure, but I don’t have to make it worse with an unjust tax. Think about those countries with different levels of resources. Japan, for instance, has virtually none, so it would take in almost no taxes.”
“This argument is indeed a good one,” Rawburne admitted. “And I have a possible solution to this problem too. As I mentioned, taxes on raw materials would have to be homogenous worldwide, but I would allow certain countries or even regions a free hand to tax peoples’ wealth at their discretion. This would hit the wealthy and assure a more just social structure. Furthermore, this way it would be possible to remove many of existing obstacles to real freedom of movement — borders, immigration quotas, work permits and so on — because the differing levels of attractiveness of certain regions would regulate migration by itself.”
John had to admit that thi
s sounded good, and suddenly he had to think about his first visit to London, in another office, under different conditions, and about how good all that sounded, even downright awesome. How long ago was that? So much had happened in the meantime, but yet … nothing had really happened. Then John asked, “But won’t you have the same problem again? How do you determine how much taxes a certain raw material should cost?”
Rawburne nodded as if he had been waiting for this argument. “It is the same type of problem, but the difference that there is a solution to it. It’s practically a brutally simple mathematical solution. You must, in fact, account for a correct turnover, using exactly the same standards that apply in a company. Take coal or petroleum, for example. No one will deny today that they are limited raw materials. There are different theories how large the reserves are, but the fact that they are limited is accepted by everyone. Well, in business management, inventories are part of the active capital and should therefore be accounted for in the costs for replacements. And that’s exactly what you must do here too.”
“The replacement value?” John asked. “But how do you replace crude oil?”
“Oil is a fossil fuel, and fundamentally stored solar energy. To determine the replacement cost, you must start with the costs that it would take to recover the corresponding amount in solar energy. Since the combustion of a given amount of crude oil also causes a measurable reduction in air quality, it would, admittedly, be somewhat difficult to determine the surcharge for air purification, but that would still have to be added to the calculation. Voilà, a tax on fossil fuels.”
John frowned. “This would mean that solar energy would be far cheaper than any other form of energy.”
Rawburne smiled shrewdly. “Congratulations. You’re beginning to realize what great benefits my deductions would bring humanity.”
“But how do you calculate the replacement costs for, say copper? That would have to be brought in from another planet, or what?”
“Sure it would, but here we can allow ourselves to think pragmatically. As you probably know, practically every element that is found in the earth’s crust is also dissolved in seawater, and in such breathtaking quantities that the reserves will last longer than we can hope to survive as a species on this planet. The only problem is the high amount of energy required to extract them. For energy, as we said earlier, we found a cost approach. We’ll do the same thing here, and that will give us our tax on copper.”
“But that sounds like raw materials could become terribly expensive.”
“Which would create great incentives to develop technologies that save raw materials,” Rawburne explained. “There are great stories about how a lack of certain materials stimulated the development of alternative technologies.”
“But if the oceans have more than enough of all the needed resources,” John realized, “then there really are no shortages … only energy, maybe.”
The aristocratic journalist pointed a finger at him. “The candidate gets one hundred points. We’re approaching the core of my concept. Taxes on raw materials won’t preserve them. Our reserves won’t run dry as fast, except crude oil and natural gas. But what we will run out of is the ecosystem’s capacity to absorb our waste products and excessive energy. We could turn the entire planet into a giant garbage dump and there would still be enough metals in the earth’s crust to keep our manufacturing processes going. The decisive point is that raw materials and energy inevitably have an impact on the environment. The principles are the same as in my book, only the other way around, which makes things easier. The fundamentals are the same: tax whatever does environmental damage to redirect the economy in another direction. The beauty of my concept is that people would change direction of their own accord. You won’t need rules, no ten-year plans, no environmental police force, nothing of the sort. You can let the market handle such details. The market will solve these issues as it always has done. One must only create the appropriate circumstances for it to work this way. Get rid of tax on human labor and levy it on resources instead, and you will save humanity automatically.”
After Rawburne left, John paced around like a tiger in a cage, like the thoughts going around in his head. The conversation had given him hope for a new idea to fulfill the prophecy. But, instead of a clear concept and confidence, he was filled with confusion and trepidation.
“How should I do this?” he had asked. “I don’t levy any taxes — governments do that.”
Rawburne only shrugged his shoulders. “You are the mighty man, they will listen to you.”
Would they? Would they listen to a businessman who wants the tax system changed? Never.
“I can only provide the concept,” Rawburne had told him. “It’s up to others to put it into action.”
And that was that.
John stared at the snow covering the windows. Would it even work? It all sounded good enough, but he was no expert and could not be the judge of that. He could get his economists to work on it. Or he could initiate a study on the matter with some university. Or invite people from the IMF or World Bank for talks, people who had experience in such matters. “I just can’t do it,” he said to himself and listened to his inner voice. “I can’t,” he repeated and it sounded true enough to him. He was no longer able to embrace someone else’s plan for the salvation of the world, no matter how promising it sounded. McCaine had also sounded so convincing at the start. John sensed himself running out of steam for engaging any plans of fulfillment with the required enthusiasm. He slowly balled his right hand into a fist and watched his fingers as they closed. “I only wish I could have my own idea just once in my life,” he said to his reflection in the window, through which nothing of the outside world could be seen anymore, as the world outside sank into bleakness and cold.
Later on he called Paul Siegel, and said, “I need you.”
“Again?” Paul responded.
“I want you to take over as CEO of Fontanelli Enterprises.”
Something like a long lasting breath could be heard from the other end of the line. "John, that's nice of you and certainly well intentioned and it’s absolutely an honor. But I'm an economist, not a business administrator."
“Paul,” John said, “my firm’s turnover is larger than most countries’ GNP. I have more employees than Finland has people. Who other than an economist could deal with all this?”
There was a moment of silence. Then Paul Siegel said, “That is indeed an argument.”
$45,000,000,000,000
THE TEMPLE TOMORROW Society sent out invitations to a congress with the slogan “Planet Management”. They contacted Nobel laureates, U.S. ex-presidents, graying former heads of state and those who, in its opinion, were the most influential business leaders from around the world. The congress was to be held over three days at San Francisco’s Fairmont Hotel, that symbol of affluence, and would have the theme The roadmap into the 21st Century, and the path towards a New Civilization. Soaring upwards in the glass elevator on the outside of the hotel tower to the Crown Room Restaurant there is a grand view of the Golden Gate Bridge, the distant hills of Berkeley and Silicon Valley,; the society felt the venue both appropriate and inspirational. The fact that John Fontanelli was not among the invited business leaders did not seem to bother anyone.
“I’m not offended or anything like that,” John told Marco as he came in with the dossier put together by the people from John’s security organization. “I only want to know what’s going on there.”
“Of course, Mr. Fontanelli,” Marco said.
John looked at him. “You do believe me, don’t you?”
“Yes,” the bodyguard said and inserted the slide into the projector.
The Temple Tomorrow Society had been formed just before Christmas 1997. Founder and honorary chairman was Bradford C. Temple, up to then the CEO of Morris-Capstone, who retired when Malcolm McCaine took over his post. Temple was a blond, big-bellied man from the Midwest, according to the few photos of him. He looked more
like someone interested in horse racing or young naked pole-dancers than in a foundation dedicated to the future of humanity.
“So McCaine is behind all this,” John said. Now it was crystal clear why John was not invited.
The "Planet Management" congress met in conclave, strictly shielded from the media. Only a small, hand-picked crowd of journalists was admitted to a number of semi-public meetings, all reports had to be submitted before publication and any sound or video recording had to be checked.
Marco played one of the videos. It had cost a small fortune to get it from San Francisco to London so fast. An economics professor was talking about free trade and its future development. A billionaire explained investment schemes in new markets. No one spoke more than five minutes, and everything was kept as short as possible. A top executive of a computer company described how their software developers from around the world worked via networked computers anytime, anywhere, around the clock, when they wanted and for as long as they wanted, without the hassle of traveling, and were independent of national governments and their labor laws. “The employees are hired by computer, work with computers and are fired by computers.”
A trade magnate from Southeast Asia prophesized that due to the increased productivity of labor, twenty percent of the world population would at some point in the future suffice to keep the entire global economy going. One fifth of the world’s population would be enough to produce all wares and perform all services that the world can afford.
Then Malcolm McCaine stepped up to the lectern, looked around with a grim expression on his face and asked the question that needed to be asked: “But what about the other four fifths of population, the surplus people?”
John could not believe his ears. McCaine really did use the term “surplus people”. And no one complained. There was not even a whisper in the audience.
One Trillion Dollars Page 67