The new fairness doctrine as proposed by Congressional Candidate David Esrati

I believe the first thing we need to do if we want to have the representation we deserve, is change the way we elect Congress. We have to change our auctions for office into elections.

There are two parts to leveling the playing field and balancing the power of the Congress with the power of the people.

The first is to take the money out of politics- entirely.

Rootstrikers, are looking to get to the root of the problem- by introducing a new way to finance political campaigns. Their leader is academic superstar Lawrence Lessig who has a new book out: Republic, Lost: How Money Corrupts Congress–and a Plan to Stop It

1. Provide that public elections are publicly funded;

2. Limit, and make transparent, independent political expenditures, and;

3. Reaffirm that when the Declaration of Independence spoke of entities “endowed by their Creator with certain unalienable Rights,” it was speaking of natural persons only.

via Rootstrikers – Fighting the corrupting influence of money in politics.

One of the proposals is to allow unlimited donations, but they have to be routed through the Federal Elections Commission so that candidates have no indication of who supported their positions.

Another brilliant solution is the so called “Patriot dollars:”

The best solution we have heard of is called the “patriot dollars” plan, put forth by Yale law professors Bruce Ackerman and Ian Ayres. Basically, it eliminates all hard contributions to candidates. Period. Instead, each voter is given a $50 ATM card so that he or she can literally vote with their dollars and contribute their $50, in part or in whole, to their choice of federal candidates. Simple enough. Let’s do the math. We spend about $5 billion to $6 billion collectively on all federal elections. If the approximately 131 million who voted in November also had voted with $50 worth of patriot bucks, the donations would have equaled — surprise — $6.5 billion! That money would cover presidential, Senate and congressional races.

via ‘Patriot dollars’ to reform politics – latimes.com.

Both of these solutions would transform our current system that creates a culture of congressional corruption- where our representatives spend at least half their time either begging for money- or spending it campaigning.

Republic, Lost from Daniel Jones on Vimeo.

Once we’ve solved the influence-peddling conundrum, we need to look at bringing some sanity back to our economic ecosystem. There is wealth and there is greed. Having a nation with a small number of people who control most of the wealth creates a system that is unsustainable. This isn’t a new phenomena, Justice Brandeis talked about this at the turn of the last century- his thoughts have been revisited with another solution (and it also mentions the problems of bought elections):

Over the last three decades, income inequality has again soared to the sort of levels that alarmed Brandeis. In 1980, the wealthiest 1 percent of Americans made 9.1 percent of our nation’s pre-tax income; by 2006 that share had risen to 18.8 percent — slightly higher than when Brandeis joined the Supreme Court in 1916.

Congress might have countered this increased concentration but, instead, tax changes have exacerbated the trend: in after-tax dollars, our wealthiest 1 percent over this same period went from receiving 7.7 percent to 16.3 percent of our nation’s income.

What we call the Brandeis Ratio — the ratio of the average income of the nation’s richest 1 percent to the median household income — has skyrocketed since Ronald Reagan took office. In 1980 the average 1-percenter made 12.5 times the median income, but in 2006 the latest year for which data is available the average income of our richest 1 percent was a whopping 36 times greater than that of the median household.

Brandeis understood that at some point the concentration of economic power could undermine the democratic requisite of dispersed political power. This concern looms large in today’s America, where billionaires are allowed to spend unlimited amounts of money on their own campaigns or expressly advocating the election of others.

We believe that we have reached the Brandeis tipping point. It would be bad for our democracy if 1-percenters started making 40 or 50 times as much as the median American.

Enough is enough. Congress should reform our tax law to put the brakes on further inequality. Specifically, we propose an automatic extra tax on the income of the top 1 percent of earners — a tax that would limit the after-tax incomes of this club to 36 times the median household income.

Importantly, our Brandeis tax does not target excessive income per se; it only caps inequality. Billionaires could double their current income without the tax kicking in — as long as the median income also doubles. The sky is the limit for the rich as long as the “rising tide lifts all boats.” Indeed, the tax gives job creators an extra reason to make sure that corporate wealth does in fact trickle down.

Here’s how the tax would work. Once a year, the Internal Revenue Service would calculate the Brandeis ratio of the previous year. If the average 1-percenter made more than 36 times the income of the median American household, then the I.R.S. would create a new tax bracket for the highest 1 percent of income and calculate a marginal income tax rate for that bracket sufficient to reduce the after-tax Brandeis ratio to 36.

This new tax, if triggered, would apply only to income in excess of the poorest 1-percenter — currently about $330,000 per year. Our Brandeis tax is conservative in that it doesn’t attempt to reverse the gains of the wealthy in the last 30 years. It is not a “claw back” tax. It merely assures that things don’t get worse.

via Don’t Tax the Rich. Tax Inequality Itself. – NYTimes.com.

While any combination of the above ideas would be game changing, the real issue that needs to be addressed first and foremost is how to create living wage jobs in this country and get people back to work.

It’s not going to happen by lowering interest rates, government spending or by crony capitalism/corporate welfare, nor is a “payroll tax reduction” going to solve any long-term systemic problems.

What we need to look at is linking the ability to gain wealth directly to how many jobs you create in this country. It’s time to stop rewarding corporate raiders like Mitt Romney and the Wizards of Wall Street who think that owning a stock for less than 12 seconds is “investing.”

There are two ways to do this: one is to limit all compensation in publicly traded companies to a ratio of highest to lowest paid employees and or payroll. A formula would be put in place that requires at least 51% of your payroll be spent in America for you to have patent protection and other rights, and that the top compensation be directly tied to total payroll and a ratio. The more people you employ, and the higher their average wage- the more you can take home. No more billion dollar plus salaries for creating new financial junk paper- the only financial paper that would count is your payroll report.

The second option is that the Federal Government, the largest purchaser of goods and services no longer does business with any company that breaks the ratio. Things would change very quickly.

The costs of inequality and poverty will destroy our country. When people can’t find meaningful honest work, survival mechanisms kick in and crime kicks in as civility walks out.

Without approaching our problems in a new way with new thinking as outlined above, democracy as we used to believe in it, is doomed if not already dead. It’s why I’m running for Congress in OH-10, and hope that you will support me.

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24 Responses

  1. Mark December 21, 2011 / 1:08 pm
    Regarding the editorial you quoted by the New York Times advocating a new tax on the rich:

    $10,000 of New York Times class A stock on Dec 20, 2001 was worth $1745 yesterday. This total return loss of 82% in the last 10 years is far worse than the comparable results of the S+P 500 and the publishing industry as a whole.

    Watch out about taking financial and tax policy advice from the New York Times.

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  2. David Esrati December 21, 2011 / 1:40 pm

    @Mark- the writers of the editorial weren’t from the NY Times- they were academics:

    Ian Ayres, a professor of law at Yale, is the author of “Carrots and Sticks: Unlock the Power of Incentives to Get Things Done.” Aaron S. Edlin, a professor of law and of economics at the University of California, Berkeley, is co-editor of “The Economists’ Voice: Top Economists Take On Today’s Problems.”

    Brandeis was a supreme court justice- from 1916-1939, through the first great depression. He was also really smart. Take a lookL http://en.wikipedia.org/wiki/Louis_Brandeis
    If you’d follow the links- and read the whole thing- instead of just the parts I quote- you’d get your facts straight.

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  3. Mark December 21, 2011 / 2:04 pm
    Oooops. Let me correct my previous post:

    Regarding the op-ed article you quoted from the Opinion pages of New York Times advocating a new tax on the rich:
    $10,000 of New York Times class A stock on Dec 20, 2001 was worth $1745 yesterday. This total return loss of 82% in the last 10 years is far worse than the comparable results of the S+P 500 and the publishing industry as a whole.
    Watch out about taking financial and tax policy advice from the Opinion pages published by the New York Times.

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  4. David Esrati December 21, 2011 / 2:09 pm

    @Mark-

    In case you didn’t notice- you left your comments on a blog- it’s on a thing called the Internet. Are you saying that because the ideas were published in an industry that’s being brought to it’s knees by a new technology that the thinking is somehow wrong?

    Or is it that the Wizards of Wall Street- who had done so well with AIG – and the major banks- value a company that’s able to influence millions of people for over a century below what it’s really worth? Hmmmm.

     

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  5. Mark Manovich December 21, 2011 / 2:09 pm
    David
    Your solution to the current situation is more government, not less,and that is the last thing we need.  The 1st Amendment guarantees free speech, which means that your cannot dictate what people can spend their money on, including political campaigns.  As a taxpayer, the last thing I want the government spend more money on is elections.  I think that disclosure of contributors is a much more effective means educate voters as to who is supporting who.

    As to your idea about legislating the compensation of large corporations, I totally agree that most CEO’s and CFO’s are overpaid.  Again, the solution is not a government law mandating what can be paid to such employees or a refusal of the government not to do business with corporations that don’t follow the requirement.  The DDN’s articles on Alaska Nation Corporations (AKN’s) and Minority Owned Businesses show that these types of directed efforts don’t work.  Your platform, if you want to be truely radical would be 1) elimination of the corporate income tax, 2) direct income taxation of corporate income on the shareholders of the corporation, regardless of whether the cash is distributed to the shareholders, 3)  elimination of the charitable contribution and 4) an asset tax on all foundations.

    Corporate power grows because shareholders have little control over corporate spending.  You will know that this approach is radical because no corporate executive will support it, even though it elminates the corporate tax.

    Finally, the only way to get money out of politics is to reduce the amount of money that the federal government collects.

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  6. David Esrati December 21, 2011 / 2:22 pm

    @Mark Manovich- thanks for weighing in. I don’t consider buying elections free speech. I believe free speech is when everyone has an equal opportunity to be heard.

    You don’t do anything to stop greed with your formula- or put people back to work. All government isn’t bad- and the government does happen to employ a lot of people (note- the CEO makes $400K a year- and all employees have health care).

    It can easily be argued that the government- us- funding elections- is much cheaper than the current system- where we end up paying for cronyism and pork projects.

    I believe the only way we can effectively collect taxes- is by creating a universal payroll system- where employers enter in the data- and the payroll is automatically handled with taxes collected- at all levels. It would also simplify things for small businesses- who still hire more people than the big corporations who play in the Congressional pork arena.

    You can take out petitions and run for Congress right now- as an independent you only need to get 2650 good signatures the day before the primary. Best of luck.

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  7. Mark December 21, 2011 / 2:57 pm
    Mark Manovich wrote:

    “Your solution to the current situation is more government, not less,and that is the last thing we need.  The 1st Amendment guarantees free speech, which means that your cannot dictate what people can spend their money on, including political campaigns.  As a taxpayer, the last thing I want the government spend more money on is elections.  I think that disclosure of contributors is a much more effective means educate voters as to who is supporting who.”

    Hear! Hear!
    Huzzah!
    Right on!

    Smackdown!. What do you think? Thumb up 7 Thumb down 4

  8. Mark December 21, 2011 / 3:05 pm
    David, regarding your comment that the print newspaper industry is being brought to its knees by the internet, today is a good example.

    Today on esrati.com: discussion about ways to improve federal elections.

    Today in print edition of Dayton Daily News: one full page of discussion on the topic: Merry Christmas! vs. Happy Holidays! Debate.

    :-)

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  9. Robert Vigh December 21, 2011 / 3:19 pm
    If elections are publicly funded and I am a billionaire, what is to stop me from making commercials for my candidate? I would not give him the money, I would just advertise on his/her behalf. This is how the money would shift making the change to publicly funded elections a full on waste of time and energy.
    If the government then decided to go so far as to say no one can take out political ads …………………. well now we have diminished our 1st amendment as Mark M. points out above. That seems like a really bad idea.
    We always have to question why is it so valuable to acquire an elected position in our government? Largely it is because these officials are making policy and regulations that were never meant to be made by our government. We the people have given in to this idea and a very mercantile culture has followed. If my company contributes X amount of dollars to this candidate and he gets elected, then makes policy or regulation that gives a market edge and we realize a return of Y. Well, if Y > X, then we made a wise investment.
    Diminish the scope of government, try to eliminate the things they were never intended to do and the value of acquiring said position will fall. Making dollars mean a little less and votes mean a little more.
    But, seeing as how almost every candidate simply has a preference on what they are going to do with my dollars as opposed to letting me keep them, no one really excites in me politics. 
     

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  10. Bubba Jones December 21, 2011 / 6:01 pm
    >>> I believe the only way we can effectively collect taxes- is by creating a universal payroll system- where employers enter in the data- and the payroll is automatically handled with taxes collected- at all levels. <<< – DE
     
    Well, David, before I say that this is the dumbest idea that you’ve ever come up with, why don’t you explain to all of us exactly what you mean by this and how you envision that it would work.

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  11. David Esrati December 21, 2011 / 7:48 pm

    @Bubba-

    we currently have multiple levels of taxation portals. Federal- EFTPS, State: Ohio Business Gateway and then a multitude of local taxing authorities with different rates- plus different filing deadlines.

    Currently- the “solution” is to pay for software like Intuit’s Quickbooks- and then pay a rental for a “payroll subscription” that costs more than the software- or use a payroll service or an accountant.

    Instead- we could have one portal- linked to your EIN, that handles all levels. Integrating all payroll and tax deadlines. The fact that the IRS runs around like the Mob when they think you missed a deadline or didn’t make a payment- and that collect huge fines- has to stop. There has to be a better, more user friendly way of doing this- and to simplify small business record keeping. It also would reduce business overhead – and mistakes. Linking payroll to SSN – and reporting etc- would make filing taxes much simpler- and error free.

    Of course you, Bubba, think this is a stupid idea since you are a CPA and make a living out of helping people deal with our convoluted taxation and reporting system. I wrote about this here: http://esrati.com/how-to-get-small-business-moving-mr-immelt/6719/ you only bothered to talk about Sarah Palin’s legs on that one…

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  12. Dan December 22, 2011 / 12:33 pm
    ewww. Sarah Palin makes me vomit in my mouth a little whenever I see her.

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  13. joe_mamma December 22, 2011 / 1:46 pm
    “What we need to look at is linking the ability to gain wealth directly to how many jobs you create in this country.” DE
     
    Wealth is created by producing something of value that another person wants, not by creating jobs. 
     
    “While any combination of the above ideas would be game changing, the real issue that needs to be addressed first and foremost is how to create living wage jobs in this country and get people back to work.” – DE
     
    Then why advocate for arbitrary regulations?  Excessive regulations stifle creativity, innovation and competition.  High wages are the result of creativity and innovation.  Not the other way around.
     
    There are two ways to do this: one is to limit all compensation in publicly traded companies to a ratio of highest to lowest paid employees and or payroll. A formula would be put in place that requires at least 51% of your payroll be spent in America for you to have patent protection and other rights, and that the top compensation be directly tied to total payroll and a ratio. The more people you employ, and the higher their average wage- the more you can take home. No more billion dollar plus salaries for creating new financial junk paper- the only financial paper that would count is your payroll report. – DE
    Why would a company subject themselves to this?   I could see this preventing many private companies from going public and causing many public companies to revert to private equity.  The federal government has shown zero ability to manage its own expense line, why on earth would anyone think they have the ability to manage the  payroll incentives of every publicly traded company.  Never mind the fact that  regulations like this favor large corporations that have the resources to throw at them.  It’s the same old song and dance even if it is not what is intended…government picking winners through regulation and/or subsidies. 
     
    …yeah, but those are really great legs…. – Old Bandito
    Nice eyes  too…    http://www.huffingtonpost.com/2010/06/09/sarah-palin-breast-implan_n_606596.html

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  14. David Esrati December 22, 2011 / 2:44 pm

    @Joe_mama

    ” Wealth is created by producing something of value that another person wants, not by creating jobs. “

    And what was produced of value with AIG? Goldman Sachs? The whole Credit Default Swap scandal? Not a damn thing..

    Government regulation is capable of stopping that kind of criminal behavior- as it could have also caught Bernie Madoff- but, no- we let the industry self regulate.

    Publicly traded companies have access to the public trust- they need to behave properly. However, if you want a privately held company- do as you wish- just don’t do business with the Federal Government if you can’t make enough with a 35 to 1 ratio.

    Cheers

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  15. bobby December 22, 2011 / 4:37 pm
    “Government regulation is capable of stopping that kind of criminal behavior”

       – Sept. 2, 2009 Business Insider -“What’s pretty clear is that in the case of Madoff- the SEC was just clueless, gullible, incompetent and yes, plain stupid…. As is typical for the SEC, to many of the staff lawyers lack any financial industry expertise or training to conduct investigations.”

      – Nov. 11, 2011 Yahoo Finance – “The Securities and Exchange Commission says it has disciplined eight employees for failure to uncover 
    Bernard Madoff’s pyramid scheme over a 16 year period. None of the employees were fired. SEC spokesman…says the disciplines varied. Three employees had their pay reduced. Two received thirty day suspensions without pay, one of whom received a pay cut. The others received shorter suspension or counceling memos.”

      There was no self regulation here. Existing laws were on the books that weren’t enforced by the government regulators.
      Who is regulating them?  
     
               

     

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  16. Gary December 22, 2011 / 8:56 pm
    DE, Are you really willing to leave the comforts of working in your home to become an OH Congressman?

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  17. Ice Bandit December 23, 2011 / 12:30 am
     
    When people can’t find meaningful honest work, survival mechanisms kick in and crime kicks in as civility walks out. (David Esrati)
     
    …well, dear David, it may be the result of the ravages of time on an old man’s grey matter, but the Old Bandito seems to recall a whole lotta’ rapin’, robbin’, rougein’, cattle rustlin’ and car stealin’ even when the economy was running full bore. Yessir dear David, even when the unemployment rate is almost zero, many can’t find meaningful honest work because many never seek nor prepare for meaningful honest employment. The temptation of sleeping until noon and smoking good reefer all day and afternoon delights is a lure many just can’t forego. One of the Old Bandito’s Criminal Studies profs, Dr. William Reckless, used to describe this underclass as the “spurious aristocracy” a defacto leisure class who used their government benefits as safety net for their extralegal activities. Making, of course, Uncle Sam a criminal enabler and unindicted coconspiritor. Methinks, dear David, you are falling for the liberal fallacy that forgives criminals as economic or societal victims. Fact is, a scan of your typical holding cell doesn’t contain too many Phd candidates…

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  18. David Lauri December 23, 2011 / 10:23 am
    The Bandito attempts to wax eloquently about “the ‘spurious aristocracy,’ a defacto leisure class who used their government benefits as safety net for their extralegal activities.”
     
    Ah, yes, let’s just abolish the safety net and all the criminals who became aristocrats on food stamps and Section 8 vouchers will see the error of their ways and become law-abiding productive members of society.
     
    In the good old days if you wanted to be an aristocrat of the poor, you had to do so in a poorhouse.  The website The Poorhouse Story is a good place to read about how great life used to be.  The site’s overview says:

    Yes!  There really was such a thing as a Poorhouse! It was not just something your parents made up, like a boogeyman, to frighten you into saving your money and spending carefully and to discourage you from making excessive, greedy demands on the family budget. County Poorhouses dotted the United States throughout most of the 1800s.

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  19. Gary December 23, 2011 / 12:55 pm
    Sounds like Ice may have really been an ol’ bandit and/or bandito back in his hey day!  :-)  I’m wondering, too, if he has a Ph.D. from an accredited on-line program, generic, and if the Feds paid for it for being a Mexican?

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  20. Dan December 23, 2011 / 3:35 pm
    Ice –  You’d believe that because all the the “news” reports on is “rapin’, robbin’, rougein’, cattle rustlin’ and car stealin’”… not so much people who go to work everyday… even during boom times. There is a correlation between lack of employment and crime… waaaay too many facts and studies to back that up. Despite safety nets… it would be very difficult to support the drinkin’ and smokin’ and leisure lifestyle on food stamps and welfare alone. The funny thing is is that the people at the bottom who take advantage of society’s loopholes go to jail when they’re caught… the people at the top just make more money.

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  21. Ice Bandit December 24, 2011 / 1:09 am
     
    In the good old days if you wanted to be an aristocrat of the poor, you had to do so in a poorhouse. (David Lauri)
     
    …the poorhouse, dear DL? Thanks for the tip. The Old Bandito’s gonna’ book a room there News Years Eve thru Expedia.com. Fact is DL, we still have poorhouses, but instead of a central one at the outskirts of town they’re scattered everywhere. And they have names like the projects, section 8, the senior city high-rise, the county workhouse and the state pen. Writers like Tom Wolfe observed of the underclass that they are obsessed with “leisure and aristocratic poses” that has evolved in what even the mainstream media refers to as the “pimp style.” And the pimp lifestyle, which is praised in countless rap songs and in the popular culture, doesn’t exactly have a high reverence for education…
     
    I’m wondering, too, if (Ice Bandit) has a Ph.D. from an accredited on-line program, generic, and if the Feds paid for it for being a Mexican? (Gary)
     
    …no dear Gary, the Old Bandito got his sheepskin from a state university back when four years of tuition cost less than $4,000. Mexico, dear Gary? Hardly. The blood of Teutonic warriors flow thru these veins, and the Old Bandito  feels no greater affinity than for an ice surface of at least 17,000 square feet. Been high sticked by a guy named Blake, cross-checked by a dude named Bjorn, and broke his right hand on the face of a homme named Jean-Claude, but has yet to encounter any skaters named Jose, Juan or Joaquin…
     
    There is a correlation between lack of employment and crime… (Dan)
     
    …the Old Bandito believes in Santa Claus, the Tooth Fairy and has the Easter Bunny on speed dial, but doesn’t believe there is a correlation between lack of employment and crime. There is, however, a correlation between crime and lack of employment: nobody wants to hire someone who can’t be trusted around a cash register, the drug counter or the boss’ teenage daughters and weekends on the 400 block of West Third Street. And thanks to the recent trend of drug testing, background checks and posting of bonds, most miscreants have rendered themselves unemployable. And this doesn’t even address the lifestyle choices of neck and facial jailhouse tattoos, which many employers find abhorrent…
     
    The funny thing is is that the people at the bottom who take advantage of society’s loopholes go to jail when they’re caught… (Dan)
     
    …and that’s the point Dan. Society is tired of being taken advantage of…
     
     
     
     

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  22. Ice Bandit December 27, 2011 / 12:14 am
    Here’s how the tax would work. Once a year, the Internal Revenue Service would calculate the Brandeis ratio of the previous year. If the average 1-percenter made more than 36 times the income of the median American household, then the I.R.S. would create a new tax bracket for the highest 1 percent of income and calculate a marginal income tax rate for that bracket sufficient to reduce the after-tax Brandeis ratio to 36…(David Esrati)
     
    …unless of course if the tax is calculated on a Thursday during a full moon in a month containing the letter R. Then the taxpayer would stand on one leg and roll two dice….

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  23. Best food dehydrator 2014 September 11, 2014 / 10:38 pm
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    I’m kinda paranoid about losing everything I’ve worked hard on. Any recommendations?

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