Use Value and Financial Reform

Everything we do can be reduced to its use value. Such a utilitarian aspect has moral import. It can provide a legitimacy of power. It can also justify activities that produce a detriment.

Liability for negative consequences can be relieved or mitigated based on use value, and the successful argument of that value can then become the measure (both the means and ends) of power, legitimately accomplished.

Congressman Yarmuth (D-Ky), for example, has proposed cutting the capital gains tax on commercial property from 15 to 5 percent. The property is not producing useful value because of the Great Recession.

According to Yarmuth, apparently, the tax expenditure will cause growth that outweighs the cost to the treasury as speculators churn property to produce a capital gain. Thus, the property gains useful value with more revenue being collected at 5 than at 15 percent.

Yarmuth's proposal is the trickle-down tax theory used to promote the value of the Bush tax cut program, which did not produce growth, it produced the Great Recession. Supporting a recessionary trend apparently has use value... in zero-sum.

Yarmuth identifies value not being used needed to reduce the value of the budget deficit. If the value is not used to produce growth, however, the value is being used in zero-sum with an accumulation of power in zero-sum. The accumulation commands the value of capital used at the lower tax rate or it will not be used with a deflationary effect.

The result of the useful value commanded, of course, however, then presents as the problem--a budget deficit and the need to tax at the higher rate. This "problem" is not a paradoxical trade off--an unsolvable puzzle that presents for philosophical amusement. It is a deliberate accumulation of value that commands the power to define its use and produce the value in zero-sum.

It is a linear accumulation. It is not a paradox of thrift, but a means of producing the power to sustain the zero-sum accumulation over time, to be applied at any time in the form of use value. (It produces the gamma risk which occurs at high frequency with a short wave length; kind of like high frequency trading in financial markets, indicating a critical concentration of power with an explosive tendency--a useful value-- that requires regulatory authority, or the need for government.)

In post-hoc temporal sequence, the anticipated benefit of the value defined as useful "ironically" transforms into the antecedent cost that is supposed to produce the general, distributive benefit. Thus, the constant accumulation in zero-sum (and the accumulative frequency of gamma risk over time).

Anticipating the proposed full-value of the useful benefit that follows and mitigates the cost is why, for example, we spent eight years trying to confirm the Bush tax-cut hypothesis into a miserable disconfirmation.

Now that the trickle-down tax cut hypothesis has been disconfirmed, where is the liability for the consequences?

There is virtually no risk of liability to the benefit accured at such a high cost. Rather, the hypothetical utility of the cost-to-benefit is being reposited as declarative knowledge, and is characteristic of especially bad politics, lacking empirical value.

Goldman Sachs executives provide another example. They claim their activities "liquify" the marketplace. Despite the damaging effect it had to "liquidate" the marketplace (hence the risk of liability), they argue to mitigate the liability, and the damage, with useful value.

While the cost of big-banking activity is huge (encouraged by tax policy Yarmuth is proposing), the benefit is also huge. Goldman Sachs now has more capital than anyone to liquify the marketplace. It literally has the power to pick the winners and losers. It is in command and control, with only the gamma risk.

In order to maximize its margin, a big bank will invest the highest return with the lowest alpha risk, liquifying economies of scale and liquidating anything else into a cyclical crisis.

Thus we have the arguable use value of "making markets" with particular types of trades and business practices that directly correlate with regressive tax policy and consolidation of industry and markets.

Financial reform needs to utilize empirical value: recognizing correlations, identifying causal relationships, formulating hypthotheses, and testing hypotheses with a new policy and program that disaggregates risk instead of recycling the old program, and the risk, post hoc.

The empirical measure of value will not be limited to public policy if financial reform ensures proliferation of alpha risk.

Instead of accumulating gamma risk, alpha distribution of risk extends empirical value into the private sector. The valuation of risk (and reward) can then be usefully measured with a confirmed accountability indicated by the margin of profit (the limited liability of risk) and less need for government.

Instead of relying on the eristic reasoning of use value, forever encumbered with the implication of every possible moral hazard, the financial reform we both want and need will rely on simple, verifiable hypotheses as the primary measure of value in use.

Financial reform that maximizes alpha-risk accountability coefficiently reduces systemic risk and the need for government. It is an easily verifiable hypothesis, for example, that could prove to be of highly useful value.

Reduction of the budget deficit and the public debt can be a veritable, positive measure of efficiency, rather than the absolute value of an accumulating deficiency.