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The Pie Is Shrinking So Much The 99% Are Beginning To Starve

How much longer until the pitchforks come out?
Friday, January 26, 2018, 11:04 PM

Social movements arise to solve problems of inequality, injustice, exploitation and oppression. In other words, they are solutions to society-wide problems plaguing the many but not the few (i.e. the elites at the top of the wealth-power pyramid).

The basic assumption of social movements is that Utopia is within reach, if only the sources of the problems can be identified and remedied.  Since inequality, injustice, exploitation and oppression arise from the asymmetry of power between the few (the financial and political elites) and the many, the solution is a reduction of the asymmetry; that is a tectonic realignment of the social structure that shifts some power—economic and/or political—from the few to the many.

In some instances, the power asymmetry is between ethnic or gender classes, or economic classes (for example, labor and the owners of capital).

Social movements are characterized by profound conflict because the beneficiaries of the power asymmetry resist the demands for a fairer share of the power and privileges, while those who’ve held the short end of the stick have tired of the asymmetry and refuse to back down.

Two dynamics assist a social, political and economic resolution that transfers power from those with too much power to those with too little power: 1) the engines of the economy have shifted productive capacity definitively in favor of those demanding their fair share of power, and 2) the elites recognize that their resistance to power-sharing invites a less predictable and thus far more dangerous open conflict with forces that have much less to lose and much more to gain.

In other words, ceding 40% of their wealth-power still conserves 60%, while stubborn resistance might trigger a revolution that takes 100% of their wealth-power.

History provides numerous examples of these dynamics.  Once the primary sources of wealth-generation shifted from elite feudal landowners to merchants and industrialists, the wealth (and thus the political power) of the landed elites declined. As the industrialists hired vast numbers of laborers drawn from small farms and workshops, this mass industrialized labor became the source of the wealth generation; after decades of conflict, this labor class gained a significant share of the wealth and political power.

The civil rights and women’s liberation movements realigned the political and economic power of minorities and females more in line with their productive output, reducing the asymmetries of ethnic and gender privileges.

In broad-brush, progressive social movements seek to broaden opportunities and level the playing field by reducing the asymmetric privileges of dominant classes defined by power and privilege.  The core mechanism of this transition is the recognition and granting of universal human rights: the right to vote, the right to equal opportunity, and rights to economic security, i.e. entitlements that are extended universally to all citizens for education, healthcare, old-age pensions and income security.

Again in broad-brush, these movements have largely been categorized as politically Left, though many institutions deemed conservative (for example, various churches) have often provided bedrock support for progressive movements.

Social movements which seek to limit the excesses of state power tend to be categorized as conservative or politically Right, as they seek to realign the asymmetry of power held by the state in favor of the individual, family and the traditional social order.

The Expanding Pie Fueled Expanding Entitlements

Writer Ugo Bardi recently drew another distinction between Left and Right social movements: “Traditionally, the Left has emphasized rights while the Right has emphasized duties.

As rights manifested as economic entitlements rather than political (civil liberty) entitlements, rights accrue economic costs. As Bardi observes: “Having rights is nicer than having duties, but the problem is that human rights have a cost and that this cost was paid, so far, by fossil fuels. Now that fossil fuels are on their way out, who's going to pay?”

I would argue that the cost was also paid by higher productivity enabled by the technological, financial and social innovations of the Third Industrial Revolution, roughly speaking the interconnected advances of the second half of the 20th century.

These advances can be characterized as expanding the economic pie; that is, generating more energy, credit, technological tools, opportunities, security and capital (which includes financial, infrastructural, intellectual and social capital) for all to share in a socio-political-financial allocation broad enough to make everyone feel like they were making some forward progress.

This long-term, secular expansion of the pie naturally generated more demands for additional entitlements and rights, as the economy could clearly support the extra costs of allocating additional wealth and resources to the many.  From the point of view of the few (the elites), their own wealth continued expanding, so there was little resistance to expanding retirement, education and healthcare entitlements.

But in the 21st century, the expansion of the pie stagnated, and for many, it reversed. Adjusted for real-world inflation many households have seen their net incomes and wealth decline in the past decade.

Despite the endless media rah-rah about “growth” and “recovery,” it is self-evident to anyone who bothers to look beneath the surface of this facile PR that the pie is now shrinking. This dynamic is increasing inequality rather than reducing it.

The Shrinking Pie And Stagnant Productivity

It is a truism of economics that widespread increases in productivity are required to generate equally widespread increases in income and capital, i.e. productive wealth. To the consternation of many, productivity has stagnated since 2010; no wonder household income for all but the upper crust has gone nowhere.

If we glance at a chart of productivity, we see a strong correlation with speculative investment bubbles (the dot-com and housing bubbles 1995-2005) and speculative spikes fueled by central bank monetary stimulus (2009-10).  Absent bubbles and monumental excesses of central bank stimulus, productivity quickly sinks to its secular trend line: downwards.

Chart of US productivity growth since 1980

This next chart depicts the long-term trend line of productivity through all four industrial revolutions. Note the decline concurrent with the 4th Industrial Revolution (mobile telephony, the Internet, AI, robotics, peer-to-peer networks, etc.) and the depletion of cheap-to-access-and-refine oil:

Chart of declining GDP per capita over the past 2 centuries

The unwelcome reality is that the economy is changing in fundamental ways that cannot be reversed with policy tweaks, protests or wishful thinking.

Consider the percentage of the gross domestic product (GDP) that goes to employee compensation (wages and salaried). Labor’s share of the GDP has been in a downtrend since 1970, which not coincidentally was the peak of secular productivity:

Chart showing wages becoming a smaller percentage of GDP over time

In this below chart of the distribution of wealth in the U.S., we find the same correlation to the downtrends in productivity and labor’s share of the economy.  The bottom 90% of households' (the many) share of the wealth pie topped out in the early 1980s and has declined precipitously since, while the wealth of the top 0.1% (the few) has more than tripled since the late 1970s:

Distribution of Wealth In the US since 1917

This next chart depicts the remarkable (and recent) spike income growth the few have recently enjoyed, at the expense of everyone else:

Chart showing Soaring Income Inequality

The increase in wealth and income inequality and the decline of productivity and labor’s share of GDP are the result of structural changes in the economy, changes with far-reaching consequences.

While it’s appealing to identify policies endorsed by self-serving insiders and elites as the source of these changes, that is far from the whole story. Much of this growing asymmetry stems from profound changes in the global economy that depreciate labor (as conventional labor is no longer scarce) and increase the gains of the top few in a “winner take most” allocation that benefits speculation, leverage and new ways of organizing labor and capital that reward the organizers far more than the users/participants.

In this new era of a steadily shrinking pie, the sources of inequality and related social problems have also shifted.  As a result, the social movements that were effective in the past are no longer effective today. Attempts to address rising inequality with the old tools are fueling frustration rather than actual solutions.

In Part 2 — Social Unrest: The Boiling-Over Point, we examine why our existing models for social change have slipped into ineffectual symbolic gestures that fuel fragmentation and frustration -- and why that will lead to a dangerous boiling over of the 99% against the elites controlling the system.

When that happens (and it seems inevitable at our current trajectory), the rending of our social fabric will happen stunningly fast. The ensuing social disunity and disruption will be of the sort many alive today have never seen.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

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40 Comments

charleshughsmith's picture
charleshughsmith
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the differing sources of disorder and unrest

One topic that was outside the scope of the essays (parts 1 & 2) that I want to address here in the forum is the difference between the widely anticipated disorder caused by some systemic disruption/collapse of the status quo (what we might call the Prepper Scenario of Disorder) and the sort of disorder I'm trying to describe here--disorder caused by profound economic inequality and disenfranchisement that finally cracks the social contract.

In other words, everything will still work, but people will start acting out their frustration and anger in ways that won't be limited to the ballot box.  When people have hope, they are willing to put up with a lot. But as I describe here, the failure of the current social movement to grasp the real problems and come up with real solutions leaves people with little to hope for. This is a primary source of the opioid crisis IMO.

This heightens the appeal of the charismatic leader of a "new movement". Most people immediately think of Hitler, but there have been positive charismatics as well.

Much of my work is focused on explaining the intrinsic limits of the two "solutions" offered by conventional groups, pundits, etc.: the market (i.e. the neoliberal fix for everything) and the state (government can fix everything).  IMO the problems are now exacerbated by markets and centralized power, not fixed by these dynamics.  I've endeavored to lay out a Third System that is decentralized, democratic and not dependent on either the financialized, globalized marketplace or the centralized Savior State.

IOW there are solutions, but they lie beyond the status quo of stale, failed, out-of-touch ideologies.

sharonsj's picture
sharonsj
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inequality, etc.

I doubt the Trump administration will solve any of our problems because instead of draining the swamp he's filled it with alligators.  Rich alligators, who like Trump are only interested in lining their pockets and the pockets of their equally rich friends.  Then we'll see the usual next step of the revolving door, whereupon the alligators will be given very well paid jobs at the companies they've enriched.

I've said for years that what we need a a revolution--the French kind.

KennethPollinger's picture
KennethPollinger
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Brilliant, Charles

However, as I have said before and say now, sociology, at least, has put forth two solid principles: The Circulation of the Elite; and, The Iron Law of Oligarchy.

I get the impression, Charles, from your excellent writings that SOMEHOW the people (the masses) will rise and take finally get their fair share, or even take over.

My humble opinion is that we will just have a new set of elites (maybe better, maybe worse), and that oligarchy is here to stay, regardless of democracy PR.

 

Uncletommy's picture
Uncletommy
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Astute observations, however . . .

In the grand scheme of things, it appears to me that the late, Alexis de Tocqueville, noted a basic fact (quite prevalent in the 18th century) that property ownership will be the tipping point in whether change will happen.

I know of no other country where love of money has such a grip on men's hearts or where stronger scorn is expressed for the theory of permanent equality of property.

Or;

Democracy extends the sphere of individual freedom, socialism restricts it. Democracy attaches all possible value to each man; socialism makes each man a mere agent, a mere number. Democracy and socialism have nothing in common but one word: equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.

The ability of a man to change his circumstances or maintain his status quo, ultimately, will be tied to society's view of his right to direct his future. "Land" was the driving force behind America's development, (much to the chagrin of the aboriginals of North America). Where have there been major confrontations and social action? Land rights! Whether it's casinos, pipelines, treaty rights violations, etc., the indigenous peoples of NA have picked on this and recognition of land entitlement will be where the S(Will)HTF. The "Third system" will have to have a mechanism built-in to mollify this basic instinct of living things for territoriality if it is to succeed. Age and cynicism has tempered my opinion on that, however, to the negative outcome. Perhaps the opioid crisis or the legalization of weed may play a role in delaying the impending fray (as you suggest)!

Mark_BC's picture
Mark_BC
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The whole pretext of this

The whole pretext of this website is that overall human wealth and prosperity are directly linked to the availability of natural resources. Since we are nearing peaks in natural resources, overall human prosperity will also peak, and is capped at a certain maximum defined by those natural resources and how we use them. I agree.

So if the size of the pie is limited, why do we continue to tolerate a taxation system (income tax) that places zero limit on the amount of wealth that the elites can hoard? The elites can buy lawyers to avoid paying income tax, but even if they did pay 50% tax (which I’m sure none of them do), there is still no limit to the total amount of wealth they could hoard. At 50% tax they would just hoard it half as fast as with no tax.

It is obvious that the only taxation system that will work in a world of finite wealth opportunities is a wealth tax which limits the total amount of wealth a single person may hold. I find it odd that on one hand we lament the elites, but on the other hand we seem resistant to demand taxation systems that specifically target them and claw back what has been stolen from us.

I think this may be because a large portion of the alternative economics community comes from right wing backgrounds, and they erroneously equate a wealth tax with communism or socialism, which could not be farther from the truth. Or they think that a wealth tax would stifle entrepreneurship and private innovation, which again makes no sense and in fact the opposite would be the case.

In Monopoly, we all know how the game ends. That is exactly what we are living through now because income tax provides no way of limiting the wealth hoarded by the guy at the top.

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Mark_BC
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Having rights is nicer than

Having rights is nicer than having duties, but the problem is that human rights have a cost and that this cost was paid, so far, by fossil fuels. Now that fossil fuels are on their way out, who's going to pay?

Really? Human rights have a cost? Fossil fuels pay for human rights??? So Rosa Parks sitting in the front of the bus required fossil fuels? Wouldn't it have also had the same impact on a horse drawn carriage that didn't use fossil fuels? Women achieving the right to vote required fossil fuels??? That's a stretch IMO.

I’ve never bought the argument that as the pie shrinks, universal entitlements like medical care must take a hit, which I presume is one of the things the author of this quote is attributing to “rights”.

I would agree that if our entitlements, or "rights", included 200 gallons of free gasoline a year for everyone, then for sure in this era of decreasing energy we would have to take hits. But going to see a doctor? I have a really hard time understanding how it takes so much more resources for a doctor to do his job in a clinic versus being unemployed and sitting at home. He is still eating and breathing regardless. I guess the $1 syringes they use in the clinic require oil to manufacture, and his clinic uses energy, but I just can’t see how these minor extra costs beyond being unemployed sitting at home can lead us to the situation where we are contemplating cutting health care, especially when trillions go missing somewhere else and hardly anyone bats an eyelid. Maybe the high doctor salaries means they will consume more resources? I don’t buy it.

I have a different and simpler explanation for why all these so-called “freebies” are now facing the chopping block: because the government pays for them, and the elites don’t like paying taxes. Simple as that. As correctly pointed out, wealth and power are rapidly shifting to the elites. The elites can hire fantastic lawyers to avoid paying much or any income tax (and many can even rewrite the laws in their own favour, which seems to have just happened in the US). This leaves the increasingly impoverished “middle” class holding the bag on government funding as the elites have looted the whole system. It would be more telling to post charts showing how the percentage of government tax receipts coming from the elites has changed over the years: THAT will give you the answer…

All you have to do is look at all the poor (and rich) countries with universal medical care. It might not be the best medical care but it’s still universal medical care. Their per capita fossil fuel use is far less than ours but somehow they manage to do it. Their pills just cost 1% of what they do here.

The elites have again tricked the masses into thinking that universal medical care isn't affordable because it's so expensive, but it's the elites' own pet corporations that are working the system to extract even more illegitimate profits.

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MKI
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sources of disorder and unrest

CHS:...disorder caused by profound economic inequality and disenfranchisement that finally cracks the social contract...people will start acting out their frustration and anger in ways that won't be limited to the ballot box.  When people have hope, they are willing to put up with a lot. But as I describe here, the failure of the current social movement to grasp the real problems and come up with real solutions leaves people with little to hope for. This is a primary source of the opioid crisis IMO.

I think US mass immigration, breakdown of the family since the boomer era, and native birth rates far below replacement (and falling) make a pitchfork scenario unlikely. But after Trump & Bernie, I'll believe anything.

Further evidence of status quo: the opioid crisis, growing prison population, and declining marriage rates. These are not the stuff of a successful unified cultural response. So I think this will continue or maybe end with a whimper, not a bang.

CHS: I've endeavored to lay out a Third System that is decentralized, democratic and not dependent on either the financialized, globalized marketplace or the centralized Savior State.

I think the largest hurtle to this getting traction? Life is too good for intelligent people with their small, intact families, yet these are the people you need to convince to rock the boat. Not to mention the Savior State makes life too easy for the lower class as well. IOW TV, beer, and video games for the proles & Hawaii vacations for the upper class is a winning political combination for the status quo.

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gkcjrrt
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Mark_BC wrote: The whole
Mark_BC wrote:

The whole pretext of this website is that overall human wealth and prosperity are directly linked to the availability of natural resources. Since we are nearing peaks in natural resources, overall human prosperity will also peak, and is capped at a certain maximum defined by those natural resources and how we use them. I agree.

If PP believes that mankind has reached peak prosperity and its all downhill from here (or that mankind can't continue to improve its social and economic condition), well that would be news to me and I would have to disagree.

My take on the problem - an understanding helped greatly by the PP team is more simple:

A corrupted financial system base on non-limited credit growth will underwrite greed and massive misallocation of resources, e.g., oil, thereby accelerating the depletion and wasting those resources - and it is this that has the potential to diminish future long term prosperity.  It's the unlimited ability to "print" capital and (mis)direct that "capital" against finite resources that is the root of the problem, and it is this we must address.  

Grover's picture
Grover
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Us, Them, and Perspective
Mark_BC wrote:

I’ve never bought the argument that as the pie shrinks, universal entitlements like medical care must take a hit, which I presume is one of the things the author of this quote is attributing to “rights”.

I would agree that if our entitlements, or "rights", included 200 gallons of free gasoline a year for everyone, then for sure in this era of decreasing energy we would have to take hits. But going to see a doctor? I have a really hard time understanding how it takes so much more resources for a doctor to do his job in a clinic versus being unemployed and sitting at home. He is still eating and breathing regardless. I guess the $1 syringes they use in the clinic require oil to manufacture, and his clinic uses energy, but I just can’t see how these minor extra costs beyond being unemployed sitting at home can lead us to the situation where we are contemplating cutting health care, especially when trillions go missing somewhere else and hardly anyone bats an eyelid. Maybe the high doctor salaries means they will consume more resources? I don’t buy it.

I have a different and simpler explanation for why all these so-called “freebies” are now facing the chopping block: because the government pays for them, and the elites don’t like paying taxes. Simple as that. As correctly pointed out, wealth and power are rapidly shifting to the elites. The elites can hire fantastic lawyers to avoid paying much or any income tax (and many can even rewrite the laws in their own favour, which seems to have just happened in the US). This leaves the increasingly impoverished “middle” class holding the bag on government funding as the elites have looted the whole system. It would be more telling to post charts showing how the percentage of government tax receipts coming from the elites has changed over the years: THAT will give you the answer…

All you have to do is look at all the poor (and rich) countries with universal medical care. It might not be the best medical care but it’s still universal medical care. Their per capita fossil fuel use is far less than ours but somehow they manage to do it. Their pills just cost 1% of what they do here.

The elites have again tricked the masses into thinking that universal medical care isn't affordable because it's so expensive, but it's the elites' own pet corporations that are working the system to extract even more illegitimate profits.

Mark,

I sincerely suggest that you spend the next 8 years of your life (assuming you already have a 4 year BS degree) in pursuit of adding an MD to your name. Then, you can examine too many snot nosed kids and other entitled individuals, deal with restrictions from your local and national medical boards, and spend an inordinate amount of time fending off the lawyers who want to remove excess "wealth" from your pockets. You'll also need to employ a staff to handle all the mundane details. Then, add in lots of really expensive specialized equipment needed in your practice. All of this adds up to an enormous obligation to your educators, your financiers, your employees, and your family (oh, and don't leave out the various levels of government who want to tax all your efforts.) You are a cash cow to all these folks. If you still feel that universal medical care is a worthwhile goal ... you have 100% of my support (so far as your participation is concerned.)

Given a choice, I choose not to participate in universal healthcare. It isn't a right. Rights - like free speech - don't have a price tag associated. Benefits - like free medical insurance - end up costing someone. That's one of the huge differences. Should the elites be required to fund this? Ever wonder why they also have an "us" VS "them" attitude?

If government got out of it completely, medical providers would have to compete for business. If all they offered were plans that were too expensive, they'd go out of business. Some clever individual/company/corporation would figure out how to provide a service for a price that their customers would be willing to pay. In fact, there would be many types of these agreements, because one size rarely fits all. I can then choose to customize my coverage as I deem. If I choose to go naked (no coverage,) I should be given the option of not receiving medical attention if I choose not to pay when the time comes. Them's the breaks.

Since you (as a future practicing MD) and other bleeding hearts want to save idiots like me who choose (or are forced by circumstances) to be without medical insurance, please donate your time, resources, and efforts for a cause you believe is worthy. If it is just as you point out in your post, it really isn't a big deal. After all, only 1% of their costs are due to pills (according to you.)

I give of my time and resources where I see fit. Whenever I feel my heart needs to bleed, I do so through a needle into a bag. Nobody pays me to do this. It is strictly voluntary. I don't know who gets my blood. I like that model. If government required me to donate blood (because my blood is so red,) I doubt that I would ever do it again. It would change from a gift to a tax. It isn't the same and it doesn't impart the same feeling either.

If you really want universal health care, figure out a way to give elites the appropriate amount of kudos for giving of their time and resources toward this end. Then, instead of having an antagonistic relationship, you would have cooperation. Unlike negative reinforcement (taxes,) positive reinforcement is its own reward. Then, the situation will morph into us AND them.

Grover

Snydeman's picture
Snydeman
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Meanwhile.

Tick tock.

Mohammed Mast's picture
Mohammed Mast
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Solution?

Charles, I think the likelihood of any kind of revolution is almost nil. This is for reasons too numerous to list.

However my guess is that the pitchfork necessary to give a modicum of freedom to the proles exists in the blockchain. It is a global local currency. Goods and services can be provided with crypto compensation, without the use of fiat.

The power to rule the proles by the elites resides in one simple mechanism, the ability to create money out of thin air. Not just this ability but also by fiat to force everyone to use it. The incredibly rich white guys that started this country saw the danger in the unrestrained power of banks. One might very well plot the history of this country as the battle against the bank of England. As of this point in time it appears the Bank has pitched a shutout.

Of course cryptos are  a double edged sword. If the Banks cannot regulate it out of existence which they are attempting as I write, they will attempt to co-opt it ( which clearly they are doing as well)

I would be interested in your thoughts since you are one of the few here with an open mind about cryptos and are possessed of a unique vision of the future.

Thanks

 

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ezlxq1949
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The Saviour State

Interesting this increasing use of the term "Saviour State". (Did CHS start it? No matter. It's in use.)

Read the Wikipedia article on "Imperial cult of ancient Rome" and you'll find so many parallels to contemporary society that I can only marvel. History is not repeating but it sure is rhyming. Here's a few examples; the bold emphasis is mine.

To help chase prosperity, the form of government was changed from a republic (back) to a monarchy:

Augustus's reforms transformed Rome's Republican system of government to a de facto monarchy, couched in traditional Roman practices and Republican values. The princeps (later known as Emperor) was expected to balance the interests of the Roman military, Senate and people, and to maintain peace, security and prosperity throughout an ethnically diverse empire.

Today it's all about prosperity, isn't it? If the current system breaks down, what might arise to replace it? I have been reading opinion in PP that it could be some odd conflation of religion with economics under military control. Democracy will be assessed as having failed too, and will be let shrivel to nothing. Could that possibly happen in this day and age? Read on:

A deceased emperor held worthy of the honor could be voted a state divinity ... by the Senate and elevated as such in an act of apotheosis. The Imperial cult was inseparable from that of Rome's official deities, whose cult was essential to Rome's survival and whose neglect was therefore treasonous.

The world is not desperate enough yet to to start playing the treason card much — yet —, and it would be a major exercise of hypocrisy for Them to start doing so in view of the ISDS provisions built into "free trade" agreements like the TPP (to be signed by the rump nations in March). As you know, the TPP is not a Trade Deal, it's a Sovereignty Surrender Deal; the citizens of the affected countries most emphatically have not been asked if they want their sovereignty to be signed away like this, and hence the various national governments are all guilty of treason, treason by trade. But these deals are essential to our survival — aren't they? We need to replace the Westphalian nation-state system, don't we?

If the system breaks down in earnest, as one response we might see whence some radical, even weird, new polity might come:

There are several cases of unofficial cult directed at men viewed as saviors, military or political. In Further Spain in the 70s BC, loyalist Romans greeted the proconsul Metellus Pius as a savior, burning incense "as if to a god" for his efforts to quash the Lusitanian rebellion led by the Roman Sertorius, a member of the faction which called itself "men of the People"....

Keep reading the article. It's fascinating.

All hail "men of the People" ! They know what's good for us!

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jwanderson54
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rights to economic security,

rights to economic security, i.e. entitlements that are extended universally to all citizens for education, healthcare, old-age pensions and income security.

NONE of these are rights...these are privileges.

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jwanderson54
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"I have a different and

"I have a different and simpler explanation for why all these so-called “freebies” are now facing the chopping block: because the government pays for them, and the elites don’t like paying taxes"

- No one likes paying taxes.

- Medicare, Social Security, and Obamacare are UnConstitutional, FDR and the Federal Reserve warped and perverted the word Welfare into what it means today. Our Founders would have called it Poor Relief. 

 

"It might not be the best medical care but it’s still universal medical care. Their per capita fossil fuel use is far less than ours but somehow they manage to do it. Their pills just cost 1% of what they do here."

- Again it's UnConstitutional. 

- Other countries pills cost less because the US subsidizes them. (through our military complex; aka defense of those nations, and through our citizens paying high medical costs, because the businesses have to find the profit somewhere to continue creating new medicines and medical devices. 

jwanderson54's picture
jwanderson54
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"I have a different and

"I have a different and simpler explanation for why all these so-called “freebies” are now facing the chopping block: because the government pays for them, and the elites don’t like paying taxes"

- No one likes paying taxes.

- Medicare, Social Security, and Obamacare are UnConstitutional, FDR and the Federal Reserve warped and perverted the word Welfare into what it means today. Our Founders would have called it Poor Relief. 

 

"It might not be the best medical care but it’s still universal medical care. Their per capita fossil fuel use is far less than ours but somehow they manage to do it. Their pills just cost 1% of what they do here."

- Again it's UnConstitutional. 

- Other countries pills cost less because the US subsidizes them. (through our military complex; aka defense of those nations, and through our citizens paying high medical costs, because the businesses have to find the profit somewhere to continue creating new medicines and medical devices. 

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jwanderson54
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I never thought I would

I never thought I would actually find my twin. How are you doing, brother? 

I couldn't agree more, I get in argument with friends all the time over what actually started the Revolutionary War. 

- The Bank of England regulating the currency...this was the "Taxation without Representation"; but to get the commoners behind the cause (since they didn't understand what was happening) they had to blame the taxes. 

 

I see the same happening with crypto, and the possibilities if we can prevent the banks from joining..since banks aren't necessary with crypto

I really hope people wisen up to what's happening out there. 

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Afridev
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Responsibilities and rights

Responsibilities and rights (in that order) are what make a society function and livable. You contribute to make society what it is, in return for that you receive returns. That is what the social contract between state and individual is about. It is a give-and-take.

Why is it normal that your security is covered by enforced laws (i.e. if someone shoots intentionally at your car when you pass by, you'd expect that person to be stopped/ arrested by representatives of the state), why are roads and a minimal maintenance of these a given? Yet basic health care would not be? Security, access and basic public health level are all necessary for a productive society.

If we draw the logic that society has no obligations to its individuals and thus that they have no rights further, then we'd be living in a mad max society. Where do you put the cut-off line? Do you find the rights from the Universal Declaration of Human Rights http://www.ohchr.org/EN/UDHR/Documents/UDHR_Translations/eng.pdf optional? Some of these maybe? Been in too many countries where these were trampled all over to know that these rights are important...

The challenge is to find the sweet spot where individuals get enough minimum needs covered that allow society to function well against a reasonable 'price'. That should be the role of the state to guarantee this (either directly or by facilitating this). Whether it does that or not in practice is questionable, but the intent should be there. Interesting to read through the Universal Declaration of Human Rights, how many are actually respected in our societies at this moment?

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charleshughsmith
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a few additional thoughts

Good discussion, as always.  Please forgive the scattershot approach.

1. As the pie shrinks, the elites will experience a monumental reduction in their wealth and income, which are largely based on phantom "assets" (debt) that have been inflated by a decade of central bank magic. As many have noted, the stock/bond markets have detached from the real economy. Eventually these will reconnect, despite the central banks' efforts to dispense with reality.

2. In my book on Universal Basic Income, (Money and Work Unchained), I went thru the exercise of using IRS tax data and concluded that raising the needed $1+ trillion annually to fund UBI solely from the top .5% would require the top .5% to pay 80% of their income in taxes. This is politically unlikely, given wealth casts the only votes that count.

3.  Sadly, whatever is "free" (to the user) is squandered without thought. This is human nature. If there is no cost/price, then there's no inhibiting waste.

4. as far as I know, I coined "the Savior State" in my books, though maybe it has many parallel sources.

5. Mohammed, you raise an excellent topic--bypassing the status quo via blockchain and other decentralized systems. As Bucky Fuller said (not an exact quote), you don't change a system by fighting it, you change it by making it obsolete. IMO blockchain/cryptos could obsolete the intrinsically corrupt centralized issuance of currency, credit and wealth of the status quo.  I am especially interested in cryptos that are issued in exchange for useful work performed by participants in a community. One example is SteemIt, which issues currency for content. I expect to see more of these innovations, which I deem superior to bitcoin-type cryptos which naturally flow to elites, old or new (i.e. HODLers with mega-positions in BTC, so-called Whales).

6. Wherever I look in American society, I see staggering waste of capital, human effort and energy.  We could live comfortably on half the expenditure of energy, once we jettison the "endless growth is necessary to boost GDP or we all die" perversity known as the "economy."

7. "Healthcare" is Sickcare because it's tightly tethered to maximizing profit by any means necessary but untethered from the inputs to health: diet, fitness, mental health, stress from insecurity, etc. Profits are maximized by generating and then "managing" chronic illnesses. This is the only possible output of the system as it is.

8. If there is anything in my writing that is difficult to grasp, it's this: not everything that has value is profitable.  Yet our system is built on the assumption that anything that isn't profitable has no value, because if it had value it would generate profit. perfectly circular reasoning, and perfectly false.

9. I agree with the view that revolution is unlikely due to the distribution of Bread and Circuses, but my point in all my recent essays here on PP.com is that the pie shrinking will fragment the  various groups getting various levels of Bread and Circuses: tax havens for the top .01%, subsidies for favored cartels, UBI/welfare for the masses, etc.  Everyone has been trained to expect "more," and "less" generates an outsized response of indignation, anger and frustration that will generate conflict that cannot be resolved politically in the 20th century fashion, i.e. give everyone "more.".

10. Attempts to "borrow our way out of debt" and "printing our way to prosperity" appear to have worked for a decade, but at the cost of reducing the system's buffers.  Pushing monetary magic to new extremes will fail, and Venezuela is the model of what happens when you rely on monetary tricks to maintain the status quo.

11.  The core problem IMO is the status quo has disenfranchised the vast majority of participants but  has done so indirectly via the slow decay of opportunities to build capital in all its forms.  The decentralized system that would obsolete the status quo will only succeed if it actively encourages capital acquisition by every participant.

 

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Universal Misery

Charles is advocating Universal Basic Income, but at least he admitted that something unearned will be thoughtlessly squandered. So, how much should be given to the plebs to keep them happy? Whatever answer seems appropriate now will become insufficient very rapidly. Greed knows no bounds - particularly when it only takes voting to acquire more State supplied freebies.

Capitalists can buy materials, equipment, and buildings to produce useful products. Capitalists used to need labor to do all the work. It was an uneasy standoff between both groups. As artificial intelligence (AI) and robotics progress, less and less labor is needed to accomplish these tasks. When AI and robots are able to do everything that labor once did, there will be no need for labor. What would motivate a rich capitalist to work and risk their fortune only to have it taxed of nearly everything to pay "useless eaters" to consume dwindling resources? The only plausible answer is to keep the masses from revolting. So, what happens when there are no rich no more? (See title of this post for my answer.)

Grover

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Where did Charles advocate for UBI?

I read the book and got the distinct impression that he is advocating against UBI. Did I miss something? If so, let me know.

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Correct
Matt Holbert wrote:

I read the book and got the distinct impression that he is advocating against UBI. Did I miss something? If so, let me know.

Correct. I'm pretty sure Charles hates the concept of UBI almost as much as I do.

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Apology

Matt,

I didn't read the book. I gleaned that from a quick read of Charles' post. I apologize for misunderstanding his intent.

Grover

charleshughsmith wrote:

2. In my book on Universal Basic Income, (Money and Work Unchained), I went thru the exercise of using IRS tax data and concluded that raising the needed $1+ trillion annually to fund UBI solely from the top .5% would require the top .5% to pay 80% of their income in taxes. This is politically unlikely, given wealth casts the only votes that count.

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AKGrannyWGrit
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UBI

3.  Sadly, whatever is "free" (to the user) is squandered without thought. This is human nature. If there is no cost/price, then there's no inhibiting waste.

Sooo you mean, like free money to the banks and the rich?

Isn't it interesting give away's to the rich, as in Quantative Easing and "Bailouts" are "good/acceptable business practices but give-always to the poor are a bad idea.

I would bet those WITH a job are against UBI and those without a JOB are for it.  Just a guess of course.

AKGranny

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yes I'm against UBI, for many reasons

yes I'm against UBI, for many reasons, most importantly that humans need positive social roles, purpose and meaning via being needed by a group/community.  What we need is universal opportunities to contribute to our communities in meaningful ways, not "free money." UBI is superficially appealing but it's not what people actually need to be fulfilled, productive and happy. Nor is it even remotely practical to fund given the reality that the US budget deficit is already heading to $1 trillion just funding existing entitlements, interest and programs.

UBI is touted by the usual suspects, not because it re-enfranchises the laboring class but because it attempts to by them off on the cheap.  

You can read the first 36 pages of my book for free here: https://www.oftwominds.com/Money-Work-free.pdf

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free money, life, and purpose

While I don't think there is anything morally wrong in a society where robots do the work and everyone gets a UBI, I do feel that such a society will probably end up with a whole lot of problems having to do with experience, meaning and purpose.

What do we come to earth for?  I claim its to have a set of experiences that provides us a mechanism for expanding our consciousness in one way or another - i.e. learning things.  Part of that involves doing difficult things, or being in difficult circumstances or situations and having to sort out where to go and what to do next.  And right now, work provides a lot of that experience for all of us.

A tough experience is the best teacher ever.  There is no substitute.  A lesson learned in the school of hard knocks is never forgotten.  Passing through such an experience also provides confidence.  Take away such experiences, there is a loss of education - and at its core, a loss of the essential reason for coming here in the first place.  To the end that a UBI eliminates experiences that people encounter at work that is the reason people come here in the first place, the UBI is a bad idea.

You can tell a student something a hundred times, and they will not really receive it.  Yet when they encounter that same "lesson" through experience, they have the opportunity to learn instantly.  That's what life is - that set of real experiences that gives us the opportunity to learn.  Martial arts without sparring is like life without real experience - its all very theoretical and ultimately without any grounding in reality.  There's nothing like getting kicked in the stomach to make you fully appreciate the technique of blocking, the importance of distance, and/or stepping back out of the way.  "Ouch.  I guess I was too close."

Our experiences are the only thing we take with us when we die.  Well, if you believe in that sort of thing.  Which I do.  If we end up trading work (which is really just a set of experiences) for free money (which provides us no experience at all), its probably a bad trade.

Kind of like the "helicopter mom" who keeps her child safe and largely insulated from the real world, at the cost of the child learning the essential truth about life on their own through a series of never-forgotten (and hopefully non-fatal) experiences.

There is always a balance of course.  Experiences that are really harsh end up possibly teaching the wrong lesson.  Then again, the master in one life ends up being the slave in the next.  Well if you believe in that sort of thing.

Anyhow, I worry that a UBI risks robbing people of experience.  Is there a way to provide some amount of help without turning into a "helicopter society" that robs people of life experience?  That's the challenge.

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The evolution of thought?

Father: Son, you need to show better judgment!

Son: And how do I get that?

Father: From experience!

Son: And where do I get that?

Father: From poor judgment

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UBI bad idea

Agreed with most written here, UBI seems to be a bad idea. Addressing symptoms and not removing underlying issues, while creating a whole wad of other issues. How about using resources to ensure that society provides a good platform to work from and that the playing field is more level and can be used by people to launch their lives from: adequate security, quality education up to secondary school level, good basic public health care, good public transport, good child care services, support for sensible labour laws, initiatives that support social cohesion ...

Build the foundation that people can launch themselves from.

Socialist? No, if done wisely an investment and common sense it seems... And there are plenty of examples (admittedly with some of their own issues) that could be used for guidance on what could work

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I Disagree

Fortunately, in Alaska's past we had a few intelligent and honest politicians who set up our Permanent Fund.  It was believed that a big chunk of the oil money Alaska received should go into a special fund that would pay out a dividend to the citizens of the State.  After all the windfall didn't belong to the politicians but to the people.  It's akin to the UBI.

  • In a perfect world there would'nt be a need for UBI
  • In a perfect world a huge portion of our jobs would'nt have been transferred to other countries
  • in a perfect world we would have a government that actually representes the people
  • In a perfect world we would'nt financially reward those who speculate, manipulate and profit from the loss of others.  And we call that "work".
  • While those who seek honest work can't find it.
  • In a perfect world there wouldn't be So Very Much indifference for those who have NO job, are having trouble putting food on the table and keeping a roof over their heads.
  • In a perfect world people would be finding, creating and insisting on solutions instead of obsessing and declaring that giving to the poor is a bad idea.

Really, the solution is easy.  Every company that shipped jobs overseas, replaced workers with robots or automation needs to pony up and support the unemployed with some huge fraction of their profits.

Obviously it's not a perfect world when people are very much willing to let others suffer!!!

But hey, its the law of nature, as the poor die, the middle class dies, the species die and the planet can no longer exist in a state of homeostasis the rich and powerful will perish as well.  To everything a season.

AKGrannyWGrit

 

 

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Quote:  something unearned
Quote:

 something unearned will be thoughtlessly squandered

Yes, if you consider things like food, shelter and clothing for their kids to be "squandering".

In a sensible world we'd make sure that everyone could access basic levels of food, shelter, and other essentials, but they'd have to pay for their own beer.

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Grover wrote:Mark,I
Grover wrote:

Mark,

I sincerely suggest that you spend the next 8 years of your life (assuming you already have a 4 year BS degree) in pursuit of adding an MD to your name. Then, you can examine too many snot nosed kids and other entitled individuals, deal with restrictions from your local and national medical boards, and spend an inordinate amount of time fending off the lawyers who want to remove excess "wealth" from your pockets. You'll also need to employ a staff to handle all the mundane details. Then, add in lots of really expensive specialized equipment needed in your practice. All of this adds up to an enormous obligation to your educators, your financiers, your employees, and your family (oh, and don't leave out the various levels of government who want to tax all your efforts.) You are a cash cow to all these folks. If you still feel that universal medical care is a worthwhile goal ... you have 100% of my support (so far as your participation is concerned.)

Given a choice, I choose not to participate in universal healthcare. It isn't a right. Rights - like free speech - don't have a price tag associated. Benefits - like free medical insurance - end up costing someone. That's one of the huge differences. Should the elites be required to fund this? Ever wonder why they also have an "us" VS "them" attitude?

If government got out of it completely, medical providers would have to compete for business. If all they offered were plans that were too expensive, they'd go out of business. Some clever individual/company/corporation would figure out how to provide a service for a price that their customers would be willing to pay. In fact, there would be many types of these agreements, because one size rarely fits all. I can then choose to customize my coverage as I deem. If I choose to go naked (no coverage,) I should be given the option of not receiving medical attention if I choose not to pay when the time comes. Them's the breaks.

Since you (as a future practicing MD) and other bleeding hearts want to save idiots like me who choose (or are forced by circumstances) to be without medical insurance, please donate your time, resources, and efforts for a cause you believe is worthy. If it is just as you point out in your post, it really isn't a big deal. After all, only 1% of their costs are due to pills (according to you.)

I give of my time and resources where I see fit. Whenever I feel my heart needs to bleed, I do so through a needle into a bag. Nobody pays me to do this. It is strictly voluntary. I don't know who gets my blood. I like that model. If government required me to donate blood (because my blood is so red,) I doubt that I would ever do it again. It would change from a gift to a tax. It isn't the same and it doesn't impart the same feeling either.

Sounds like I struck a nerve...

You point out that it takes a lot of education and bureaucracy (resources) to go from snot nosed kid to practicing doctor. I agree. My response is, again: poor countries seem to manage to do it. If the assertion is made that we need to do away with universal entitlements as we run out of fossil fuels, my argument stands. This is an illogical conclusion, because poor countries can do it just fine. If the US has built an inordinate amount of waste into its medical system (as all the rats have come to feast on the freely printed reserve currency), well that's the US's problem. Once these excess natural resources, which have previously enabled the waste, go away (when the reserve currency ends), then the US will have no choice but to become more bureaucratically efficient and do things like anywhere else does.

The  reason the US medical system is so bloated is not because of the government, it is because it is a hybrid system where the corporations control the government and wedge their way in and do all the bad things you have outlined above (which is why the pills are so expensive in the 1st world). A government run system would work much better, as it does in many other countries.

If you really want to buy your own medical care, go ahead, in a two tier system. Or fly to Cuba or Mexico where it's cheaper.

Quote:

If you really want universal health care, figure out a way to give elites the appropriate amount of kudos for giving of their time and resources toward this end. Then, instead of having an antagonistic relationship, you would have cooperation. Unlike negative reinforcement (taxes,) positive reinforcement is its own reward. Then, the situation will morph into us AND them.

So you want to be the elites' friend? I have news for you: they don't want to be your friend. They don't care about you. They look down on you. I don't want a world of us AND the elites. I want a world with NO elites. Only middle class people who are privately rewarded through a fair market system for working hard, innovating, improving, and are able to receive a share of the remaining pie, however large that may be (I also do not agree with UBI for the same reasons others here don't. Instead, I argue for a reduced work week, wealth tax replacing income tax, and reducing food stamps and welfare.)

A wealth tax isn't negative reinforcement; it is a way for the 99.99% to prevent sociopaths from taking over the world.

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And I agree...

And I agree to most that you say smiley.

I think the solution needs to go deeper though (and thus isn't easy as it requires a change in the ways we think and function as society).

One large part is that we need to change the way companies work. Their responsibilities shouldn't be to shareholders only. We should get to a system where companies don't environmentally, financially, socially and politically strip-mine the society they operate in. The link between enterprise and society needs to be restored. Companies need to operate as responsible stewards of society they benefit from and are part of. Responsibility should be to the ones running companies, personally, and retrospectively. The company you run dumps waste in the river? You lose your house and you personally pay for solving the issue (very expensive with environmental issues)... Ensure costs of goods reflect the 'real' price they have actually costed to society and the environment.

Worker and environmental protection should be universal. The reason why producing an ethically made t-shirt in Sweden/ France/ USA/ Australia would cost multiples of the price that we actually pay, is that the social/ environmental issues are exported to countries that don't respect the standards we have. If a country doesn't buy into and respects this protection? Your products cannot be sold here.

It's not the silver bullet, but it would probably go a long way in addressing many issues we are now facing/ observing

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taking care of free stuff

 "something unearned will be thoughtlessly squandered."

Yes, if you consider things like food, shelter and clothing for their kids to be "squandering".

In a sensible world we'd make sure that everyone could access basic levels of food, shelter, and other essentials, but they'd have to pay for their own beer.

So Yoxa.  If someone gets free clothing, they probably won't take care of it.  Same thing for free food, free shelter.  If it was no effort for you to acquire, then it can't possibly be valuable.  That's just human nature.

For humans to value something (i.e. for them not to waste resources), the resource must be perceived as being scarce.  Our discussion on oil is a case in point.  When Americans experience low oil prices, they waste energy like crazy - because they can, with virtually no penalty.  Imagine if gasoline were handed out for free?  How much larger would the amount waste be?

The riddle is always: how do you help someone, without making them dependent on your help - and at the same time, having them perceive the resource they receive as being scarce and worthy of being cared for?

 

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Yoxa
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Valuable
Quote:

 If someone gets free clothing, they probably won't take care of it.  Same thing for free food, free shelter. If it was no effort for you to acquire, then it can't possibly be valuable.

That might be true for someone who already has a surplus of stuff.

Someone on the edge of survival would have a better sense of value. Some would even have a sense of gratitude.

UBI would replace some programs that are in place today. It wouldn't be a completely new cost.

Side comment: If society were smart, schools everywhere would restore shop and home economics classes which have been cut in recent years. Better knowledge of practical household matters would help a lot of people to manage better.

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Sweat equity

Habitat for Humanity comes to mind as a good  example of where people in need are provided with an opportunity to meet their needs (in this case, housing), but it isn't a freebie; they must contribute "sweat equity" into earning that asset.  You value something you have to work for. This seems like a good model to me.

Willingness to partner, ability to pay

Every parent, every person, should have the decent shelter they need to thrive. When families partner with Habitat, they start down a new path — one with far fewer barriers to a better, healthier, more financially stable life.

Habitat homeowners play a hands-on role in eliminating those barriers, beginning with the sweat equity hours they perform. With the help of volunteers, they build and renovate the places they will call home. They attend financial education and budget planning classes. Some help staff the local Habitat ReStore; others serve on committees or help out in the local Habitat office.

All of them are proactive, not passive. Investing, not receiving. They are seizing an opportunity, and — with a hand up — they are changing their own futures.

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Ironically enough...

The last position that I held (1996-1998) before "retiring" was with the State of Alaska. I was an investment officer with what was then the Alaska State Pension Investment Board. I fraternized with several individuals who worked for the Permanent Fund in the investment area and my boss had come from the PF and returned to the PF after I "retired." In fact, I think that my boss ended up with a pension from both the state and the PF and was probably the highest paid individual at both when he retired. He is definitely in the same illustrious camp as those Oakland employees that Chris highlights in his comment today entitled "California is scroomed."

The money was good, but the job was soulless. Many of those who worked for the public in the investment arena end up working in the private sector. However, all of those jobs are soulless as well. (It's because the basic nature of "the system" sucks.) I am much happier as someone who works at home as a house husband. Gardening, food processing, cooking, maintenance, etc. The problem is that my wife would be happier doing this as well and she more than carries her weight on the home front anyway. So the question is: How do we make the transition to a more sane world where we don't go off each weekday to an office where we play by the rules and are tormented by technology?

AKGrannyWGrit, I am mostly in agreement with what you write above. However, I think that we need to do all we can do to avoid UBI for the reasons that Charles describes in a comment below and in his book. You may spend your PF money on seeds, but the general feeling when I was in Alaska was that most spent the money on big screen TVs.

We should create organizations that help facilitate the transition from soulless to meaningful.

...

Some of you may have seen an article today about how JPM, Amazon, and Berkshire have joined forces to create a company that addresses high healthcare costs. Before you get a warm, fuzzy feeling about this endeavor, you need to note that this company will just serve those who work for JPM, Amazon, and Berkshire. This is only a way to keep these soulless companies competitive. It should be noted, however, that those of us with soul can create the same type of company.

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Reality
Mark_BC wrote:

Sounds like I struck a nerve...

Yes you did! From what you've written in this thread and elsewhere, your solutions overwhelmingly dig into others' pockets more than your own. You see no problem with using government force to take from others to do what you deem to be righteous. Regardless of the extent of your controlling motivations, government is always willing to expand to fill the "needed" role. Someone has to fund this expansion. We call that taxes. As long as the lion's share comes from others, you remain unaffected and on your righteous trek.

I doubt you've ever run your own business where you had to live by your wits - without someone else providing a comforting base salary. Imagine having to do everything - making a product to sell, marketing that product, selling the product, being available to service the product after the sale, keeping the books, complying with government regulations, paying taxes, etc. It doesn't take long before all those tasks are overwhelming. Your idea is promising, so you hire some employees. They take some of the duties off your shoulders, but add a whole new level of responsibilities. Now, you have to generate more income to support your employees. You've also crossed a Rubicon with government and have even more regulations to deal with. Now, you need more employees because there is more complexity.

Let's say you were really good, really shrewd, and/or really lucky. Over time, you turned an interesting idea into a fortune. By now, you're solidly in the 1% club. Because you make so much, you pay a high percentage of your income in taxes. You hire accountants/lawyers to minimize your tax burden. Because the political system is what it is, you make campaign contributions and hire lobbyists to give you an edge. (Remember, you are shrewd!) You know how the game is played.

Frankly, most folks are envious of your position and lifestyle. They don't see all the risks you took and hard work that led up to this fortune. They just see the fortune you've amassed and want to righteously distribute it to "the needy." They use the ballot box as a weapon. You see that they keep digging deeper into your pockets. They see it as an "us VS them" struggle. You see it as "them VS me."

You contribute to causes you consider worthy. Is it for the tax write-off, philanthropy, or adulation from the recipients? Maybe it is all of the above. You alone know your motives. One thing for sure, the more burdensome the tax load, the less you have to give and the less inclined you are to give.

Mark_BC wrote:

You point out that it takes a lot of education and bureaucracy (resources) to go from snot nosed kid to practicing doctor. I agree. My response is, again: poor countries seem to manage to do it. If the assertion is made that we need to do away with universal entitlements as we run out of fossil fuels, my argument stands. This is an illogical conclusion, because poor countries can do it just fine. If the US has built an inordinate amount of waste into its medical system (as all the rats have come to feast on the freely printed reserve currency), well that's the US's problem. Once these excess natural resources, which have previously enabled the waste, go away (when the reserve currency ends), then the US will have no choice but to become more bureaucratically efficient and do things like anywhere else does.

You are right that some poor countries do it just fine. You need to go deeper than that because some poor countries don't. What is it that enables the poor countries (that do it right) to do it right? I'm not arguing that there isn't waste in the US. There's also a political system and culture that allows it. Poor countries can't afford that. There isn't enough in their government system to make the abuse as profitable as it is in the USA. Bribing a government official is the bulk of corruption there. Our military/medical/pharmaceutical/agricultural industrial complexes have found far more profitable legal avenues to corrupt the system. We can't simply import their "better" system.

Your assertion (that I bolded) needs to be addressed. Where exactly do these entitlements come from? Is it manna from heaven or government obligations that have to be funded through taxes? This may appear to be a stupid question, but where do taxes come from? Taxes stem from profit. A profitable corporation can do enough to keep all the plates spinning - including paying taxes to support a government. An unprofitable entity will eventually go bankrupt - no taxes, no employees, no products that make lives better. Where does profit come from? Profit comes from the last units sold. If a corporation has a 5% profit margin and sells 100 units per month, the first 95 units sold paid all the costs to produce those 100 units. It was the last 5 that produced the profit.

There are fixed costs and variable costs involved in producing those units. Financing for the building and equipment is basically a fixed cost. You have to pay that whether you make 1 unit or 101 units. If you can't sell the product, there's no need to produce more, so you shut down the manufacturing line and turn off the power when you have enough product stockpiled. That means that you layoff some of your employees or cut everyone's time and paycheck. You also cut corners (known as improving efficiency.) If you're honorable, you'll cut your wages before (and much more) than those of your employees. That is good business sense for the long haul (if you think the slowdown is temporary.) It improves morale during tough times and retains good employees. The bottom line is: If you don't sell enough product, you aren't as profitable. As a result, taxes from your corporation, yourself, and your employees all drop somewhat. Meanwhile, because of the government unemployment entitlements, government need more taxes to balance the books while the taxes diminish.

I'm finally getting to the point. (I needed to give this primer so I wouldn't have to assume you knew how the real world worked. - Just so you know - that was a slam.) Once energy availability becomes constrained, it will affect the economy. If the price increases, it cuts directly into profitability. When there is enough constraint, the manufacturing lines won't be running - simply because there won't be energy to run the machines. There're other problems as well. What happens if a key supplier has to shut their doors and you can't find a product that serves as a replacement? The people who buy your product will be affected by the same energy constraints. Will they need to buy as many units as they did when the economy was humming along? Will they demand a discount that cuts your profit?

It's one thing to have a temporary slowdown. It's quite another issue to have a never ending slowdown. During a slow down, taxes diminish while entitlement payouts increase. What happens if the slowdown lasts too long or worsens significantly? At some point, entitlements need to be cut. As long as government can continue to borrow money, it will be fine. What happens when confidence collapses , nobody will lend to a deadbeat, and government has to print to cover its obligations? (If you want examples, look at Venezuela, Zimbabwe, or Weimar Germany.) The government will honor the dollar value of their commitment, but the real value will be close to zero. That's why I say that at some point, entitlements need to be cut.

I'm sure you consider yourself to be a person who is sensitive to the needs of the needy. Does it really make sense to addict the "needy" to entitlements when times are good ... only to have the rug pulled out when it is needed the most? Your argument is only logical if you expect the good times to continue forever on an infinite planet. Since both aspects fail, I say that your argument is illogical.

Mark_BC wrote:

The  reason the US medical system is so bloated is not because of the government, it is because it is a hybrid system where the corporations control the government and wedge their way in and do all the bad things you have outlined above (which is why the pills are so expensive in the 1st world). A government run system would work much better, as it does in many other countries.

Somehow, you are able to magically transcend from this current corrupt, expensive, hellish sick care system that is required by government ... to a government run system that operates flawlessly. I have to ask myself how naive you actually are? What makes you think that the people who unduly profit from the current system are going to allow a transition to a system where they see no undue profit? They will use every trick they can to make it even more expensive, worthless, and profitable (to themselves) than the current system.

Mark_BC wrote:

If you really want to buy your own medical care, go ahead, in a two tier system. Or fly to Cuba or Mexico where it's cheaper.

You are missing the point. I don't want any mandated government controlled system. Because of government interference, the options I really want aren't available to me in my own country. Because of political realities, we can't escape from the current system without going through purgatory first.

Mark_BC wrote:

 

Quote:

If you really want universal health care, figure out a way to give elites the appropriate amount of kudos for giving of their time and resources toward this end. Then, instead of having an antagonistic relationship, you would have cooperation. Unlike negative reinforcement (taxes,) positive reinforcement is its own reward. Then, the situation will morph into us AND them.

So you want to be the elites' friend? I have news for you: they don't want to be your friend. They don't care about you. They look down on you. I don't want a world of us AND the elites. I want a world with NO elites. Only middle class people who are privately rewarded through a fair market system for working hard, innovating, improving, and are able to receive a share of the remaining pie, however large that may be (I also do not agree with UBI for the same reasons others here don't. Instead, I argue for a reduced work week, wealth tax replacing income tax, and reducing food stamps and welfare.)

I was actually trying to get you to think outside the box (with the part you quoted. You obviously missed that.) More taxes isn't the answer. That will only lead to a more bloated government. We're as bad as we are with the bloated government we have now. Why make the condition worse?

Taxes reinforce the "us VS them" mentality that both sides have. If you get rid of the elites, who will provide the middle class people with employment? That's a really important question! Without the elites to provide the jobs, we'll all be dirt poor and we'll all be equally dirt poor. (Is that your dream, or the reality of your dream?) Have you ever wondered why you weren't motivated to be one of the 1%? Have you ever wondered what motivates people to do what's required to get enough wealth to be part of the 1%?

Let's address the bolded part: I'm glad you don't think UBI is a good idea. I also like that you would like to reduce food stamps and welfare. We're on the same page here. I'm assuming that you are arguing for a government mandated reduced work week. I'm also assuming the government will mandate that there won't be any reduction in pay. If so, we part ways here. Will government also mandate that a private enterprise remain profitable??? (That's easy for government to say, but hard for a private enterprise to accomplish.)

I really don't like the wealth tax or the income tax. Taxes are negative reinforcement; therefore, tax the things that need to be negatively reinforced. Tax pollution, resource consumption, and other impacts. Unfortunately, government gets addicted to taxes because they make too many long term promises. If private entities reduce negative behaviors as a result of negatively reinforcing taxes, government needs to find other sources. Like trees, government grows until it falls down.

Mark_BC wrote:

A wealth tax isn't negative reinforcement; it is a way for the 99.99% to prevent sociopaths from taking over the world.

I've got news for you. Sociopaths have already taken over the world. They are leaders in private enterprise and also in government. They are attracted to power. The more power, the more attractive it is. They can even feign emotions so you think they are on your side (as long as they see profit and power in using your emotions against you.) They don't fear risk and are willing to take risks to gain personal wealth, power, and prestige. It is likely that some of the people in your supervisory chain are sociopaths.

Some sociopaths have promoted the idea of a wealth tax (to people who actually think there is a cohesive 99.99%) so they can sell more free lunches. Idiots will always buy the idea of a free lunch - the freer, the better. Smart people will realize that there is no such thing. Again, the siren song sounds good as long as someone else pays the price  (meanwhile those "leaders" get what they really want.) What a philosophy!

Grover

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Snydeman
Status: Gold Member (Offline)
Joined: Feb 6 2013
Posts: 476
Free stuff and communism

A think a little frame-shift may be in order here. There is nothing wrong with "free stuff" given to us by the community, rather there is a lot wrong with community. Let me explain a bit and see if I can coalesce my thoughts well enough...

 

Paleolithic humans (of all stripes and colors) prior to the development of intensive agriculture lived in small, often mobile hunter-gatherer groups we often categorize as "tribes." The most defining feature of these tribal groups was their diversity - each had their own culture, religious views, myths, ways of doing things, etc - but for the most part, contrary to the popular image of tribal groups as ruled by a chief, anthropology shows us that hunter-gatherer groups are above all communal groups with "leadership" being more in the hands of the entire tribe than in the hands of one or two powerful people (most current views of tribes ruled by chiefs come from the colonial-era bias that there has to be a single ruler). In reality, the eldest of any given tribe might be given great leeway, and younger members of the tribe recognized it was wise to listen to those who had survived dozens of seasons over those who has experienced only a few, but they did not have the kind of authority and absolute power we think of when we say the word "chief."  If anything, tribal groups were either democratic or communist, depending on how those terms are defined. This was possible because tribal groups were small enough that joint decisions could easily and quickly be made.

 

Economically speaking, paleolithic humans were about as "communist" as you can get, if by communist you mean "everyone contributes, and everyone receives according to their need." Put bluntly, you did whatever you were capable of doing for the benefit of the community (hunting, gathering, caring for the young, making clothes, etc), and since roles as well as 'jobs' were extremely fluid, you might hunt today, care for young the next, and sew something the day after. In return, the community provided for you according to your need. If you had five kids, your shelter would be larger than the shelter of a couple that had no kids, and you would accept this because you understood that those five children were an integral part of your survival now, or of your future children's survival in the next generation. This is because every "hand had to be on deck" to insure the survival of all members of the community, and possessions were thought of as that which the group had given to you as a way to insure your survival. In short, we worked together because that was the best way for homo sapiens to insure individual as well as communal survival. So, you were given things for "free" in the sense that you didn't specifically earn that thing, but you were given it because you were part of the overall group and your 'work' was meaningful to the whole group. To quote an 80s sitcom, you had a place where "everyone knew your name" and where everyone genuinely cared for you and your well-being (I'd argue this is a reason that shows like Friends or Cheers gain such popularity in the first place). 

 

Now, paleolithic hunter-gatherer groups were far from perfect, and they certainly weren't some kumbaya Disney-esque Pocohantas-style paradise on earth, but for the better part of over 200,000 years this system of human organization allowed us to not only survive, but thrive, through ice ages, warming periods, drought, floods, and pretty much anything the world threw at us. We spread to every ecological niche and didn't  bring the world to a bloody or fiery end.

 

Enter intensive agriculture, and with it villages, towns, and cities. No longer did we move around. We produced more food than we needed, which led to specialization of jobs, the rise of writing, science, formal religion, bureaucracy, invention and innovation on a scale and speed not seen before in the history of our species. Because of the power inherent in such a system, settled peoples began the inexorable march of conquest and assimilation of their neighboring hunter-gathers, the putting of new lands under the plow, and unstoppable expansion. Yet with the benefits of civilization also came the demons of social hierarchy, inequality, war on a massive scale, famine, crime, poverty, and most importantly, living outside the natural boundaries the planet had imposed on all life forms up until that point. For those who know Daniel Quinn's work, it was at that point that humans were thrown out of the Garden of Eden, so to speak. In fact, we walked away from it when we began to think of ourselves as existing outside the natural world, and indeed antagonists to it. It is also, I think, the moment we began disconnecting from one another, because the "community" no longer existed for the benefit of everyone, and the work of each member was no longer valued as equally as others. We also stopped seeing the connection between ourselves, our work, and our natural world. In Marxist terms, we no longer saw the fruits of our labor - we were just a "factor of production."

 

To square the longest and most drawn-out circle I could possibly draw, we humans are a social species who thrive and survive when we operate in communities where we have a role, rights, and responsibilities we can see as beneficial to others. We are not, and have never been, "lone-wolves" (which is itself a stupid concept since wolves are also pack animals who survive in groups). So, we can totally be given "free stuff" if we are working in a meaningful way to the betterment of the community around us, because doing so gives us a place where we belong and where we are cared for. The more those two things exist, the harder we will contribute to the community. I think this is why the "hand-up" of the New Deal worked so well; yes, you were "given" money by the government, but you were paving roads, creating state parks, or doing something else in such a way as to feel you were contributing to the whole. The chief failure of today's social net system isn't in its goal of alleviating poverty, unemployment, etc, but rather that it does so in a way that disconnects us from meaningful existence. Chris and others have elaborated on this point in other ways before, but I don't think putting welfare recipients to work in some meaningless job will solve the problem either...but just handing out free money without finding some way in which the recipients can meaningfully contribute back is a recipe for disaster; disaster in society and disaster in the souls of those receiving the aid.

 

Looking back over this post, two things occur to me. First, I both agree with and disagree with the notion that free stuff is always bad, because the notion of what constitutes "work" doesn't always mesh with the notion of "meaningful." If you are contributing meaningfully to the group, what the group gives you isn't "free," but it isn't a "paycheck" either. It is the group including you in its material prosperity in exchange for you helping with everyone else's material prosperity.

 

The second thing that occurs to me is Charles, Chris, and others have said similar stuff much more elegantly and concisely, but I am apparently in the running for "longest diatribe evah" award and had to put in my best effort at winning. I also have essays to grade, and as every teacher knows, there is no time when a teacher is most productive at anything other than grading as when there is grading to be done.

 

-S

 

 

 

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Uncletommy
Status: Platinum Member (Offline)
Joined: May 4 2014
Posts: 511
And the "longest diatribe evah" award goes to. . .

 

 'Truly I tell you, whatever you did not do for one of the least of these, you did not do for me.

LesPhelps's picture
LesPhelps
Status: Platinum Member (Offline)
Joined: Apr 30 2009
Posts: 756
Paralysis of Analysis

One night, during a week long stay in a Canadian wilderness, we were looking at the stars and waxing philosophic in some, no doubt, profound fashion.  After a few minutes, one of the group proclaimed, “too much thinking” and walked back to the fire.

The brain is a wonderful tool, but just like other tools, it’s best if you put it away once it’s completed it’s job.

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KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1440
The Federal Reserve is the Culprit

From the book "The Everything Bubble" by Graham Summers.   Recommended read!

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