A2: Collective Capitalism

Reduced Business Costs

Energy is an inexorable aspect of the costs of doing business today in our global economy. This is quantified across several key areas: energy costs of material and/or resource procurement, manufacturing, transportation, processing of both material and data, heating, lighting, etc. These factors each manifest one way or another into nearly all business sectors, and consequently are absorbed into the price of the product or service that’s offered at market. If reduced energy costs can provide a cost savings for residential households, the purchasing and consumption scale of incorporated business would see corresponding reductions on subsequently higher orders.

This is all the truer since the cost reductions would cascade across an array of business sectors and their interoperating supply and manufacturing chains. For example: if Scarcity Zero makes a raw material 20% less expensive to source at equal quality, reduces the energy cost to manufacture systems with it by 20%, and further enables a 20% cost reduction to transport the manufactured product to market – those cost savings combine across the supply chain. Across our national – or global – economy, the financial implications are enormous.

To determine just how impactful, we’ll take a look at figures from the Energy Information Administration, specifically their Commercial Buildings Energy Consumption Survey (CBECS) for the year 2012 (the last year in which full data is available).[10]

According to the survey, American business consumed a total of 1.243 trillion kilowatt-hours of electricity.[11] At a national average cost of 10.67 cents per kilowatt-hour for commercial enterprise and 6.92 cents per kilowatt-hour for industrial applications (heavy manufacturing),[12] that respectively totals $132.63 billion and $86 billion.

The CBECS survey further assessed that American business consumed 2.193 trillion cubic feet of natural gas in 2012[13] at a cost of $7.78 per thousand cubic feet for commercial enterprise and $4.21 per thousand cubic feet for industrial applications. That respectively totals $17 billion and $9.23 billion.

Now, we’ll take a quick look at fuel. According to the Department of Transportation, commercial vehicles (including trucks and busses) accounted for about ten percent of all vehicle miles driven.[14] Further data by the Energy Information Administration, as curated by Statista, estimates that the U.S. consumed 8.98 million barrels per day of gasoline and 3.13 million barrels per day of distillate fuel oil (which includes diesel).[15] That translates to 3.277 billion barrels of gasoline and 1.142 billion barrels of distillate fuel oil. Extrapolated into gallons (at 42 gallons to the barrel), these figures respectively translate to 137.66 billion gallons of gasoline and 47.98 billion gallons of diesel.

Leveraging the Department of Transportation’s estimate, we’ll assume that 10% of that gasoline consumption was from commercial and industrial applications. Yet since diesel is the fuel of choice for trucking and heavy machinery, we’ll assume 95% of diesel consumption came from commercial and industrial enterprise. This leaves a figure of 13.77 billion gallons of gasoline and 45.58 billion gallons of diesel that can be attributed to businesses.

At a national average price of $2.70 / gallon for gasoline and $3.06 for diesel,[16] that comes to a total aggregate cost of $176.65 billion.

With this established, let’s add up our totals. Based on the calculations above, we’ve estimated that:

  • American commercial enterprises annually spend $132.63 billion on electricity, falling to $86 billion for heavy industry.
  • American commercial enterprises annually spend $17 billion on natural gas, falling to $9.23 billion for heavy industry.

Added up, that comes to $149.63 billion for commercial enterprises and $95.23 billion for heavy industry that’s added on top of the estimated $176.65 billion shared by both for diesel and fuel costs.

This creates a total cost liability of between $326.28 billion and $271.88 billion depending on commercial or industrial application. If we were to split the difference, that would come to a figure of roughly $300 billion per year.

If that figure, for sake of argument, were subjected to an 82% cost reduction, that would present a cost savings of $246 billion per year. As this translates to $2.46 trillion per decade, such cost reductions present a capital abundance that can further enable businesses of all sizes to invest in their own growth and future success.

This approach can be scaled further through targeted tax incentives. When discussing Scarcity Zero’s management and implementation strategy in the previous section of the Appendix, mention was made of the possibility of dramatically lowering the tax liability for businesses operating in Scarcity Zero’s sectors, along with corresponding incentives for the employees and investors of such companies.

This is a key component of a “Collective Capitalism” mindset, hinging on the notion that industries and personnel that provide critical – and extremely beneficial – services to society’s long-term operation and improvement should face a correspondingly reduced tax liability to fund society’s public functions. It defies reason that a company making cigarettes or hawking payday loans at predatory interest rates should operate under the same tax burden as companies developing energy technologies for The Public Interest Company, growing food in vertical farms or building next-generation infrastructure to provide an improved quality of life for society.

The same is true for the employees of such industries, as well as their investors across equities, bonds and other financial products. If an industry provides empirical social benefits on a transformational scale, why should an employee face the same tax burden as an employee of an industry that doesn’t directly deliver the same degree of social improvements? Further, why should an investor seeking to inject capital into a socially beneficial enterprise pay the same capital gains taxes as someone seeking a quick profit by shorting the same stock, or by throwing their money into shadier organizations like private prisons or conglomerates with abysmal human rights records?

Here’s what this could look like in practice. Let’s say that we establish an empirical threshold (defined specifics, not abstract opinions) of social benefit within varied industrial sectors, and assign “classifications” to such industries using a transparent assessment criteria. Beyond participation in Scarcity Zero, this criteria could include a lower ratio of executive to average worker compensation, demonstrated ethical track record, external social outreach and investment, operational transparency, and/or quality of benefits offered to their workforce in aggregate.

Based on this corporate classification (not unlike a “B-Corp” designation), the company, its employees, and its investors could enjoy special tax incentives. An example might reflect the following table:

Corporate Classification Corporate Income Tax Rate Capital Gains Tax Rate
Class A Corporation 0-5% on a progressive scale based on income. Maximum tax rate is 5%.
Employee income tax is capped at 15% up to $1M.
Short term: 5%. Long term: 0%. After $1M, gains are taxed as income.
Class B Corporation 0-10% on a progressive scale based on income. Maximum tax rate is 10%. Employee income tax is capped at 20%, up to $1M. Short term: 15%. Long term: 5%. After $1M, gains are taxed as income.
Class C Corporation
(Current Tax Rates as of 2019)
0-21% on a progressive scale based on income. Maximum tax rate is 21%. Employee income tax rate unchanged. Short term: 25%. Long term: 15%. After $1M, gains are taxed as income.

Under this model, current companies do not pay any more in taxation than they do today, yet Class A and Class B corporations would receive significantly more attractive tax incentives to engage in business sectors earning such classifications – of which Scarcity Zero would be a primary qualifier. This reasoning can extend further to other industries that deliver an empirical social benefit: making bionic limbs for amputees, investing in next-generation medical research, building advanced transportation infrastructure, and so on.

In such reasoning, there is a clear distinction here between “picking winners and losers” and incentivizing investment and patronage to industries that make the world an objectively better place. Collective Capitalism doesn’t seek methods that punish industries, companies, or personnel that do not choose to invest in empirical social progress, but it does seek to reward them through the establishment of protocols and frameworks that makes this task easier and less expensive. In turn, this would incentivize and encourage a social impetus to continually invest and be part of industries that deliver a strong social benefit – and, further, seek to expand that benefit at higher rates of return than otherwise.

Consequently, these incentives could see reprioritizations across our economy. Defense contractors, for instance, aren’t really companies that specialize in building high-tech weaponry so much as they are expert engineering firms that specializing in building high-tech systems. There are few obstacles, in real terms, from shifting primary focus from military infrastructure to domestic infrastructure. If you can build a Generation-V fighter jet, you can build effectively anything. Providing both a public funding impetus and tax incentive to shift from weapons to, say, sophisticated energy technologies, next-generation rail travel, hyperloops or civilian aerospace can help facilitate this transition.

In conjunction with lower operating expenses from energy cost reductions and public funding allocations for Scarcity Zero and its underlying technologies, this can keep current flagship industries in play building critical American infrastructure, while also enabling opportunities for start-ups to gain a foothold and accordingly prosper. This would transform the “military industrial complex” into an “energy/resource industrial complex,” delivering cascading social benefits at only moderate costs.