Tax cuts during recession

It is obvious that government will announce tax cuts to corporates which seems to be the way to help economy, to put salaries in the hands of workers and increase liquidity. So, instead of giving tax cuts, let the government buy bonds of corporates for the amount of tax cut being announced. Say, if it's 30% corporate tax, i announce a tax cut of 10% or even more, which the government will buy corporates bond. And the corporate can accept it by choice and redeem the bond and give the money back to government at any time within 10 years, even in parts.

Government is benefitted by not just avoiding tax loss but gaining a bond amount which is generally higher than normal interest rates. At the same time, It also injects money into the system, which gives liquidity. It's like Government investing in private sector and making profits. Also, giving a boost to private sector. But just through a bond, which is safer.

Corporates are benefitted, because every company doesn't need to go and ask for a loan in the bank, which it may get or not. Not because, it is not eligible. But, banks may not have enough reserve. Tax cuts more than normal is expected, which will be converted to bond. This is not just for the first two years, but  any couple of years, till economy comes out of recession. Corporates need to pay more tax, only after making good income, after recession, but within  a time period of 10 years.

I hope that recession goes off in around 2 years, but still corporates should be allowed a time window of 10 years. This policy can be followed even after recession. Once, you pay back all the bond amount,  maximum 2 years of income tax cut. You can renew it. Businesses having huge incomes can be trusted and more tax cuts, converting it to bonds can be given.

How Banks can come to the rescue

To recover from a depression, which is imminent in the near future, obviously money needs to be pumped to the economy. How to effectively do it, i have a small idea. So, basically, banks have a fixed rate for deposit and loans. I want to restructure it, so that banks lend more to the industry, still keeping it safe from collapse, especially in a depression. There should be varying interest rates for deposits as well as loans, based on the following.

Deposits

1. If the deposit is low, below a lakh or 5 lakhs( calculate according to respective countries. Please bankers and fed calculate all the numbers.) , give the least interest. So that, it will encourage people to buy goods than simply put it in banks, that is i guess huge liquidity in the economy.

2. If the deposit is high, give a good interest. Because, if someone wants to put say a 10 crores in a bank for more than a month, surely he is not doing business with that money. Let bank make best use of that money, by lending it.

Loans.

First thing, difference between deposit and loan interest should be more. That means high interest for loans, since bank is taking a huge risk, in times of depression. It has to survive, not waste resources, making already rich people more and more rich.

The most important thing in this plan is we are introducing a new score, which calculates the risk factor, Banks are taking. Not based on someone else's views. But purely based on their own bank's remittances, loans, and deposits, a particular company has done with them. This should not be done by officers, as it will lead to malpractices, but by artificial intelligence and machine learning alone. Banks can share their score with other banks and legal lenders too. Every company's loan will have varied interest rates according to the score. The score will also take into account the amount they are demanding.

Least acceptable score will have a highest interest rate ( even 20% ) and high scores will have less interest rate. Fed only puts cap on lower and upper interest rates.

The most obvious thing is more money should be pumped in the economy and i guess banks are probably the best bet as of now to take. So, high interest rates for loans should not matter, for their survival.

Also, it will to some extent encourage SMEs to have their business transactions through banks, and avoid hoarding and evading tax, because, you will have less chance of getting new loans, the next time or loan at higher interest rates. Because AI is going to reward companies having higher profits, with less interest on loans. Since, it's a safe bet.

Banks should cover the whole spectrum of loans, from the least acceptable score ( high risk ) to high score ( lowest risk ). There should a new factor based on economical performance of a country. If the factor is too low in situations like recession, the least acceptable score should be increased. As the least acceptable score increases, loan's division among indutry should be more. If the least acceptable score decreases, loan's division can be flexible based on bank's wish.  

Example, if the score for loan is between 1 - 100. During normal times, we can make the least acceptable score 30 and give loan with higher interest rate, taking high risks. During recession, we can increase the least acceptable score to 50 or 60, and give loans with less interest rate, taking less risks. But , as the least acceptable score increases, loans should keep more distributed across different type of industry. Still, loans should cover from 60 to 100, not just 100. This factor ( based on least acceptable score ) should be decided by the Reserve Bank, in consultation with the government.

Dealing with Unemployment

Rule 1. If an unemployed person wants to get unemployment benefits from the government, he should constantly upgrade his skill with the latest developments in the industry or enter a new industry and acquire skills in that field. We should take this opportunity to make people more skilled and prepare for the next generation industries. Varying benefits can be paid based on the skill score they gain. Simple apps can be used to acquire skills and take tests in government centres, with the same app.

Taking education to the right destination

Honestly i am telling you, i don't know what problem Laplace tried hard to solve. Because, i just memorized the theorem. The basic problem with the education system is we just try to remember, what someone invented, not trying to invent or solve problems ourselves. High scorers, at the maximum understand how problems are solved by someone.

To encourage students to solve problems and be an inventor, we need industry to step forward, and start universities, which admit students not based on marks, but on their inventionS, eventually recruiting them in their companies. Private universities should also be allowed to fill a part of their vacancies, by themselves, who are inventors and problem solvers, with government putting a bar only on their fee structure. Industry and private universities, operate for profit and reputation accordingly, which will naturally give more important to quality students, admitting talented inventors and problem solvers. Private companies and universities know better than any government universities on technology, to admit the best students, hence should be given a free hand on admission. These students, after given admission, should be allowed to pursue their own research and not tied by marks again. If highly reputed private universities and companies admit students this way, there will naturally be decline in number of students studying for scoring marks, and instead understand what's in the syllabus and most importantly invent new technologies and generating great ideas that will change lives, taking the education to the right destination.

Track and stop Corona Virus spread

I want to suggest a simple device, to track and stop the spread of corona virus. We can mass produce a small RFID tag, which sends the person's mobile number or an alibi to that number, which can be found, from central database. A microphone should be attached to the Mobile phone, pinned in the collar, which detects whether it's a cough or sneeze, with the help of mobile app. Mobile phone will have a RFID reader attached to it. Suppose a person is identified to have corona virus, we can use his device to find whoever talked or stayed close to him for more than say 30 seconds. And the most important, whenever the infected coughs, microphone, pinned in his collar will sense that he is coughing or sneezing and records all other victims' RFID number( or mobile number directly ) near him in the mobile app, with the help of the nearby victims' tag, and RFID reader attached in the infected Mobile phone. So, we can completely track the spread of corona virus from person to person, contact them through their mobile phones and ask them to take a test. We can even segregate them, whether they are high risk, low risk, sure victims, by their time spent with the infected and whether they were with him, when the infected coughed or sneezed.

If we develop technology for this, we can simply create a smiley batch, with all the necessary technical products in that batch and people just need to wear the batch, connected to their cellphone, by Bluetooth or wireless. If we do research further, we can even develop smiley alone, which  works on battery, later retrieving the data, so that children can also wear this. Definitely this is not rocket science. It's just a simple device. Ateast in the future, we should be ready and act immediately, before such virus outbreak starts.

Rejuvenating the rural economy profitably

Giving money to rural dwellers unsustainably and unprofitably by schemes like MNREGA is not a good idea. Instead, we can make farmers earn money from their own agricultural land. That can be done by building small resorts in the centre of patches of agricultural land. These resorts should be branded, very good if star hotels collaborates and pay rents for the land use and sharing their profits with all the farmers covering the patch of land. This model is living luxuriously with nature and greenery all around. Also these patch of lands should do organic farming, sharing their crop produce with resorts for food, giving a great dining experience. More can be done by sharing their cultural and heritage, with those staying in the resort. Local food made in collaboration with resort chefs and going to local temples, enjoying festivals and rural dance and art forms will give a great experience for the resort customers. Their is no two views that more urban dwellers want to spend their life atleast in weekends in rural areas, living with nature. So, this is going to be surely profitable model, only we should be careful in keeping the brands good name, without compromising the quality of stay. That's why I prefer star hotels, collaborating with the locals.

Now, let's get to the benefits of this method. It will bring infrastructure to the rural areas. Roads, Clinics, Electricity, Clean water, Jobs for locals will all start to come beginning from the most connected rural areas, gradually getting into deeper rural areas. Sustainable power source, zero carbon initiatives will start like solar powered resorts. We can even make compulsory to ferry resort customers in and out of rural areas only through electric vehicles. Organic farming will become the norm in those patch of lands, not only serving the resort dwellers, but also the farming at large.

Labour reforms

Before I start, I must tell you that I am against Labor Unions. They make employees inefficient and irresponsible. But, still we should find a way where middle and lower level employees of an organization are fairly paid. Otherwise, there will be huge disparity in the society; with top few percentages of people holding much of their country’s wealth, with the disparity exponentially increasing in the near future.

              The Labor Reform, I am proposing is the salary level for the Primary Hierarchy of a Company, which is the main source of income and the core job, the Company does and for the Secondary Hierarchy of the Company, which does trivial jobs like housekeeping or security for a software Company, unrelated to the core job. Keep in mind that housekeeping is itself is a core job and in primary Hierarchy for super markets and that security is in Primary Hierarchy for Banks. The Primary and Secondary hierarchies never meet and are parallel to each other. The Company can be private or public, salary  in every level of the Hierarchy, should have a Range, whose Center, is twice, thrice or four times, the Center of the Salary Range immediately below its level. Banks may give 2 factor increase in Salary. Software Companies like Microsoft may give 4 factor increase in Salary. The Company can add as many Levels as it wishes, only that the whole Company’s Hierarchical Structure should form a Pyramid.

Example:

             

If in a Bank, Let’s say a Clerk gets a salary, whose Center of the Range is 4 Lakhs per Year. So, the next level in the hierarchy Probationary Officer will get their Center of the Range, the double ( or triple  or Four times, But should be same for the whole Organization ) of the Clerk, which is 4*2 = 8 Lakhs per Year. The Boundaries of Range in every level is calculated by taking multiplication of 2, ( triple or four times, the organization chose) and a constant 5. The Upper Range cut will be 2*5 = 10 % more and Lower Range is 10% less from the Center of the Range. Clerk’s Range of Salary is 3.6 Lakhs to 4.4 Lakhs per Year. Probationary Officers’ Salary Range is 10% less to 10% more of middle 8 Lakhs per Year, got by multiplying Clerk’s mid-Range with 2. Probationary Officers’ range is  7.2 Lakhs per Year to 8.8 Lakhs per Year. Accountant, Cash Officer and Field Officer will get between 14.4 Lakhs per Year to 17.6 Lakhs per Year.

              

Let’s study one more scenario, what if there are more than one Primary Hierarchies. As long as they are not irrelevant Secondary Hierarchies, they should meet at a point. What if , it has different number of levels. Example, There is a Manager for wrist watch in a watch company and he takes care of sales hierarchy, manufacturing hierarchy and research hierarchy. Sales hierarchy has 3 levels, Manufacturing 4 levels and research 2 levels. First, we have to take the vertical that has maximum employees. They will usually have maximum number of levels. Here Manufacturing.  It has 4 levels, replicate it across all hierarchies. Now, Research and Sales will also have 4 levels. In case, it doesn’t need that number of levels, create hypothetical levels. Like if there are Manager, Supervisor and Salesman for Sales Hierarchy. Add one more Level, Deputy Manager or Chief Salesman, wherever you want, only in theory. If you create Hypothetical Chief Salesman, Salesman will be directly promoted to Supervisor, with 4 factor ( in case the watch company chose 2 factor increase in salary in every level up ) increase in salary. You can introduce hypothetical levels anywhere. But the whole organization should form a pyramid.

              If you increase the number of Hierarchies, Mid-Level Employees will be benefitted. If you decrease the number of Hierarchies, Low Level Employees will be benefitted. Both ways, our objective is achieved. Legal system implementing this system just needs to check Income Tax Filing, if it forms a pyramid, that’s all it cares.