Regulations to Thwart Extinction

Kevin Cox
3 min readSep 14


“Regulation is the management of complex systems according to a set of rules and trends.” — Wikipedia

The Policy Symposium 2023: Extinction thwarted? asked the question of whether extinction can be thwarted and offered solutions.

Reducing wealth inequality can help reduce greenhouse gas emissions, and the following regulatory change alters the financial system to reduce inequality in any country that adopts it.

The Reserve Bank of Australia regulates inflation and unemployment by setting the interest rate Banks use for overnight loans. The regulations could be extended to vary the sharing of profits from different types of loans. Bank loans for greenhouse gas reductions are encouraged by making them profitable, while loans for fossil fuel expansion are discouraged by reducing profitability.

Sharing profits from loans also reduces wealth disparities by increasing the productivity of loans.

When a loan is made, interest is charged. The interest covers the bank's operating costs, the risk of unpaid loans, and a return on the capital to set up and operate the bank, including the cost of interest paid on deposits.

Today's loan practice is for no interest to be taken off the amount owed with each repayment. All the interest, including all the profit, goes to the bank. However, if a bank shares the interest by taking a percentage of the interest off the amount owed, the loan is repaid in less time and hence costs less. The resulting increase in loan productivity is shared between the borrower and the bank.

The change in productivity is surprising. For example, a 10-year loan at 5% with 80% interest shared with the borrower is 32.27% more productive than a 10-year loan at 4% with no sharing. It means the borrower pays 16.19% less while the bank receives 16.08% more interest.

If it is a 6% loan, the borrower costs are reduced by 15% while the Bank increases by 30.30% or 45.30% more productive.

For an 8% loan, the borrower pays 12.66% less, and the Bank gets 48.66% more interest or 61.32% more productive.

The Hope

A relatively minor regulation change in complex adaptive systems can cause large effects. The so-called butterfly effect. Governments and the Reserve Bank can work together to improve the productivity of new money loans and ensure that a share of the benefits goes to those with less wealth. The approach will reduce wealth disparity by ensuring new wealth is distributed across society instead of all going to the wealthier. How the changes are implemented will determine whether loans also reduce greenhouse gas emissions.

Rewiring Australia describes how local communities can leverage existing solar panels and some targeted government loans to make suburb zero a reality across Australia before 2030. The funds to Rewire Australia come from freeing up capital in expensive Australian homes. Rewiring Australia with community ownership will reduce household electricity costs by at least 50%.

Solving the Housing Crisis with a Productivity Improvement in Financing shows how everyone who wants to own a home can buy the place they occupy for 25% of their disposable income.

Funding Well-Being shows how governments can repurpose existing expenditures to involve communities in addressing health issues. In this example, community groups encourage walking using money already budgeted for improving footpaths.

This article on Obscene Wealth Inequality outlines how to make rich people pay the same amount for the same things as poorer people.

A plea for the government to rethink the Nature Repair Market Bill 2023. Unfortunately the bill as passed will result in the destruction of nature.

Please sign this petition to the Reserve Bank asking it to investigate sharing interest as a way to reduce inflation.



Kevin Cox

Kevin works on empowering individuals within local communities to rid the economy of unearned income.