Tag Archives: Inequality

The End

finish-line

A strange thing happened after I finished my last post, The Joker. I realized that I was comfortable with it being my last article on this blog. It felt like my “mic drop.”

There were times when I stopped writing for different reasons. But I always left the door open. There was a part of me that knew there were things left to say, ideas left to express. I still feel that way but I realize that there is no longer anything left for me that needs to be expressed. I could continue on. But, like all good things, the end is a vital part of the experience. That moment has come for me with this blog.

I’m proud of what I’ve done here. For over three years, I personally explored a subject most people aren’t even willing to contemplate. My understanding strengthened and I discovered things that people immersed in the subject only learn through the writing of others. I haven’t been shackled by someone else’s understanding. I never read the books or papers of the experts. Instead, I wrote my own. It started with an essay, and it culminated with this site. This is The Currency Paradox, a single volume. I really don’t need anything more.

There are some who will be pleased that this day has come. “At last,” they’ll think, “his  self-importance has ended.” “At last, this idea can die while the serious work of Capitalism continues.” There may even be some who think that I fake these discoveries, that I regurgitate words written by those with greater understanding and eloquence. They won’t believe that I could have been able to cognize some of the most important works of economics and philosophy on my own. I was never going to earn their approval and I definitely won’t try now.

There are some who will read this site and see nothing but error and those who, due to their own arrogance, will not read it at all and assume error. I took this journey to learn. I have no regard for those who may know but will not teach, will not challenge, will not express. If you refused to engage, out of fear, or doubt, or spite, your judgment means nothing to me. I came for your ideas. I challenged you all in turn. None of you stepped up. So who truly failed?

As time went on, my original essay proved to be the very definition of “anti-fragile.” It has only gotten stronger as time has passed, has only been validated. Indeed, the vast majority of the ideas I’ve presented here have not only withstood the test of time but have invalidated ideas still considered sacred in other circles. The sacred cows may still be sacred but they no longer live; they’re “zombies,” dead ideas that will persist in the minds of people too afraid to let them go. That’s only going to make the transition to come that much more painful.

I want to end here with this quote:

“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.” – Adam Smith

Adam Smith missed the greater point. It is only by acting in good faith that the butcher, the brewer, or the baker can succeed. Therefore, it is not their own interest which guarantees their success, it is the morality imposed upon them by their need to serve others for their own benefit that does. None of them could prosper if they violated the trust necessary for them to benefit by offering their service to others. It is only by valuing the needs of others that they can prosper. What do they gain if their wares are poisoned? If their wares are inferior, economics states they will be supplanted by others who will provide better goods. It is only by servicing their clients greater needs that they can guarantee their own prosperity. It is only by respecting, valuing, and cultivating trust that they can actually satisfy their own self-interests. It is never a one sided exchange. It is always a symbiosis.

However, when there is monopoly power, it is easy to violate that trust. Without the check of arbitrage or competitors, the social contract of trust can be violated without regard. That is one of the main flaws of modern Capitalism. As a system built on the premise of the commitment of capital to ventures that may either succeed or fail, the elimination of arbitrage and competition is a fundamental force. It is only when those things are eliminated that markets are “captured.” By definition, that capture involves the destruction of the symbiosis of trust agents. In other words, monopoly destroys the need for social trust in the exchange of value. It becomes a form of coercion. That is why it is, ultimately, socially destructive. However, it is also the means by which Capitalism works best.

Our society cannot sustain this contradiction indefinitely.

Marx tried to prove that Capitalism’s contradictions would destroy it. What he didn’t factor in was technology’s ability to improve living standards so quickly and so pervasively. Many economists think that he was wrong. However, it is more likely that Marx just hasn’t been right yet. Capitalism is a system that fundamentally undermines social trust, particularly at its most efficient. It’s a feature of the system, not a bug. The complete elimination of arbitrage and competition is always in the best self-interest of those involved in commercial exchange, especially done on the scale which it is today.

I undermined that premise with The Currency Paradox. In a society where money is created by time/effort, it behooves those with capital to fund opportunities for competition and arbitrage, particularly in a world of seven billion people. The tremendous demand coupled with the direct value creation of the populace would spur massive innovation and scale without the destruction of social trust by monopoly. Indeed, monopoly would largely be impossible. Equitability of opportunity would be a built-in feature of the economy and greater equality would be a direct result. More importantly, those things would be achieved without sacrificing economic growth. The world would continue to become richer and more prosperous. Because time would become valuable, healthcare would become a global priority. As a result, poverty, and its attendant physical, mental, and emotional health risks, would be completely eliminated. As prosperity increased, the population would drop precipitously, tremendously lowering demand for natural resources. It is likely that almost all the major problems faced by our world would be eliminated within only a generation or two.

As time has gone on, The Currency Paradox has only grown stronger. I end this particular journey with one final, likely unassailable argument:

Capitalism may create wealth but, ultimately, it destroys social trust.

Goodbye friends. Maybe I’ll have more to say. But, if I don’t, consider what is written here and use it to strive for a better world.

The Truth About Tax Cuts

cashme

This kid is gonna be POTUS one day.

Let me ask you a question: for what do you think your taxes pay? Is it better roads, good schools, social services, like firemen and police?

Maybe, probably at the state and local level. But, at the national level, your tax dollars really don’t pay for anything.

Let me repeat that: your tax dollars really don’t pay for anything.

In the U.S., our government can literally print as much money as it wants. It can completely eliminate its liabilities more or less at will. So why collect taxes?

The truth is that, at least when it comes to taxation on a national scale, our tax dollars don’t “pay our bills.” Our government can literally print as much money as it needs to cover any entitlements, military spending, or pretty much any other bonafide social safety net expense or ridiculous boondoggle it decides to fund. Imagine if you had your own printing press that could perfectly reproduce Federal Reserve notes. And it was completely legal. Would you ever be short of cash? No? Well, that’s pretty much the way our fiat currency system works.

Politicians play on the fact that, as a controlled commodity, it’s difficult for most people to accumulate money in significant amounts. So they talk about “deficits,” ”debt,” ”spending,” etc., referencing metaphorically what most people live very much literally. The government never has to worry about running out of money. Think of it as having a bank account with infinite dollars.

When it comes to money, the government is concerned about something else entirely: debasement. It’s more worried about printing so much money that it becomes worthless. A debased currency makes everything tremendously more expensive (except debt, which would actually decrease in value).

So there are mechanisms within the fiat currency system to prevent an excessive accumulation of money. In other words, our monetary system contains mechanisms for destroying money. Fractional reserve banking is one such method.

The other is taxation.

The purpose of taxation is to remove the “extra” dollars from the economy. However, as it functions, this system is profoundly flawed.

If the purpose of taxation is to remove excess money from the system, consider what happens when taxes are “cut.” When the government cuts taxes, it has decided to remove less excess money from the economy. Why would it do that? Because, at least theoretically, the additional money could be used to spur innovation and productivity, which we call “economic growth.” That economic growth translates as societal wealth, in the form of better goods and services. Economic growth is what propels us all into progressively higher standards of living, at least materially.

However, what happens if that additional money does not create economic growth? What happens if major new innovations are not created and productivity doesn’t actually increase? What happens when the options for monetizing new products and services simply don’t materialize? Think of the “unicorns” of Silicon Valley… what would happen if Uber flamed out? What would happen if the public ends up rejecting augmented reality (AR) or virtual reality (VR)? What happens if self-driving cars end up being a dead end?

The key for tax cuts is that, if they don’t spur growth, they exacerbate the problem of currency debasement. Rather than allow the government to get those dollars back, the wealthy prefer to hold on to them by whatever means, legal or illegal. Our laws and force apparatus give those dollars real worth even though they are inherently worthless. As a matter of status, the rich want to keep those extras dollars to buy the bigger house, the bigger boat, the bigger jet, etc. More houses, more boats, more cars. At a certain level of wealth, it’s all ego tripping.

Which brings me to this point: have you ever noticed how tax cuts go almost exclusively to the wealthy? Why don’t they go mostly to those lower on the chain? The simple answer would be because that would defeat the purpose. People further down the chain will simply spend the money into the economy. “What’s wrong with that?”, you may ask. “Aren’t the rich going to get the money anyway?”

Yeah, but there’s a problem with that… it’s called “price inflation.” When merchants and businesses know that there is more available money in the economy, they tend to raise prices. Since taxes can’t be cut enough for most of those lower down the economic chain to make a material difference in their incomes, the effects of “tax cuts for everyone else” will likely simply translate to higher prices. So the money will indeed “trickle up” (actually flow up), but then everyone will be stuck with higher price levels for goods and services. Oddly enough, funneling the money directly to the rich prevents that outcome.

The real question is “Does it work?” My best answer is that it has to, at some level. At least materially, our standard of living continues to increase. There are a few large bets on the horizon technologically that could have a major positive impact on living standards, such as AR, artificial intelligence (AI) and machine learning (ML) , and autonomous vehicles. Will tax cuts help those big bets pay off? It’s possible.

But, in the wake of that, a potentially dangerous condition is also developing: the increased displacement of human labor in the value chain. Labor is the method by which most people acquire the means to participate in the economy; simply put, it’s how they earn money. However, globalization and increased technological automation is leading to an increased deprecation of Labor value. At the more developed end of the spectrum, employment is either shrinking or progressively moving to lower wage work. All signs are that this trend is accelerating. So far, Capitalism has not found a way to address what it perceives as a short-term transition that could easily become a long-term crisis. Tension is already rippling through the most advanced economies in the form of increased populism. The world is changing and Capitalism so far has shown little capacity to manage that change effectively.

If you look at taxation from the perspective of its intended purpose, then you can understand how disingenuous the arguments of the wealthy are against higher taxation. The rich want those further down the chain to shoulder more of the tax burden. The reality is that such a proposition will almost certainly have a profound effect on economic growth. As the middle class evaporates, those lower on the chain can barely afford to make their way in the modern economy as it is. If the purpose is to get the “excess” dollars out of our economy by getting it from those who can least afford to give it, I don’t see how that is going to have a positive outcome. The reality is that we tax the rich because they have the excess dollars. Their argument is that they are the ones who fund innovation and enterprise. But it’s just as likely that they will devote their money to financialization; in other words, they’ll use safe financial instruments simply to make more money rather than making riskier bets that may spur much greater growth. Even worse, a lot of that money will be used simply for indulgence, avarice, and status-seeking. As displays of opulence and decadence become more visible in our more socially connected world, the potential for backlash increases substantially, the outcomes potentially catastrophic. Remember the French Revolution?

The truth is that our economic system is fundamentally unbalanced and likely to become more so. Money is being kept out of the hands of the very people who need it most and given in wheelbarrows to the very people who need it least. The worst part is that this is probably our economy’s optimal condition; it is unlikely that the system can be made more equal, or even more equitable, without running the risk of high price inflation at least, and, potentially, economic collapse. As it stands right now, the only way the system continues to function is if it continues to become more and more unequal.

I don’t see how that ends well.

Trump Has Already Won

kingdonald

There are few things that provide as much bang for the buck as outrage. It’s free and grants the person who indulges in it a smug sense of self-worth that few other emotions can offer.

There’s a lot of outrage going on right now regarding Donald Trump and his colorful executive orders. He definitely has taken a running start toward turning the U.S. into a totalitarian state, though few people seem to get that it was already halfway there.

Few people also seem to understand that this outrage, particularly against what is called the Muslim Travel Ban, plays right into Trump’s hands. Trump knows a whole lot about bang-for-the-buck himself. His ban affects a relatively small handful of people yet its symbolism is huge. More importantly, it plays great for his most die-hard fans. Though a small gesture in the grand scheme, it shows Trumpletons that Donald is indeed a man of his word, unlike other politicians. He said he was going to curtail immigration and he took a small but highly visible step to do that right out of the gate. And I guarantee that his core constituency, and more fence-sitters than most people are willing to admit, loved it.

The more bleeding-heart liberals, Social Justice Warriors, and “coastal elites” ride for immigrants, the more it shows Middle Americans, Rust Belters, and anyone else disaffected by the current economic system that the priorities of Americans already in this country are not a concern for them. The people outraged by Trump don’t seem to understand that it fuels him. He is not a man prone to bouts of conscience or sentiment. More importantly, he knows that he is playing a winning hand.

As long as the bleeding hearts are unable to provide a viable alternative to the economics that have harmed so many of the so-called “middle class,” Trump is running downhill. So far, the same people who have been so willing to write off huge swaths of Americans and others worldwide as simply neoliberalism’s collateral damage have been the most vocal about the injustice of banning immigrants. This may play well for the peanut gallery but, to many, it just seems like a whole lot of hypocrisy. Where was this outrage when middle America lost their jobs? Where was the handwringing when Rust Belters turned to drugs, alchohol, and, more importantly, suicide to deal with their marginalization?

As long as the bleeding hearts refuse to deal with the core issues of our economics and create a better value proposition, Trump has already won. He’ll continue to stoke hate and fear like a fire because he knows that his opponents don’t have the resolve to change a system from which they benefit. He knows that every time he appeases his constituency that their support for him will only grow. And he knows that everyone who opposes him without providing better solutions are becoming their own worst enemies.

The mark of the gifted totalitarian is not the ability to make common sense seem evil but to illuminate the natural hypocrisy of their opposition. Trump has shown that the bleeding hearts only care about certain types of people, the others, instead of the ones suffering in their own backyard. As time goes on, he’s going to forge that hypocrisy into a sword and drive it right through the heart of democracy.

By then, it’ll be considered a mercy killing.

Fixing Bitcoin Part II: Pricing with Bitcoin Units

will-work-for-bitcoin-560x325If I had to sum up Bitcoin, I’d have to say that it is a remarkably great thing tied inextricably to a remarkably bad thing. My criticisms of Bitcoin as a currency are pretty extensive at this point, so I won’t rehash them.

However, I personally think the blockchain could be completely game changing, which is why I attempted to “fix” the Bitcoin currency problem.

I wasn’t sure that what I proposed would work so I decided to see if it was possible to create a method for pricing based on my concept. Using the variables I created, it is indeed not only possible but easy to use Bitcoin strictly as mostly whole units. Indeed, what I’m about to show is that it is pretty simple to make Bitcoin just as easy to use as fiat money.

What I’m proposing allows Bitcoin to be used mostly in whole units irrespective of what it is trading for. This system easily moves from Bitcoin to fiat currency and vice versa. Let’s start with the variables:

  1. Price of item in fiat currency;
  2. Maximum Exchange Rate (= 10 units of correlated fiat currency);
  3. # of expansions of the Fractional Rate. This correlates to demand and is equal to the number of times Bitcoin exceeds the Maximum Exchange Rate. For instance, a Fractional Rate of .000000000000001 means that demand for Bitcoin has caused its exchange rate to “turn over” 15 times. This number is easily determined simply by counting the number of places to the right of the decimal point. In the above example, the # of expansions of the Fractional Rate would be 15.
  4. Price of item in bitcoin units.

The formula for converting fiat pricing to Bitcoin pricing would be as follows:

((price in fiat currency) / (maximum exchange rate = 10)) * (# of unit expansions) = (price in bitcoin units)

Let’s say you want to sell an $899 PC in Bitcoin units. Using today’s current Bitcoin exchange rate in $USD, here’s how it would look:

($899 / 10) * ($221.20/10 = 22) = 1977.80 BTC units

Note: “221.20” is Bitcoin’s exchange rate in $USD as of this very instant; to approximate the Fractional Rate, this number is simply divided by my proposed Maximum Exchange Rate of 10 units of a correlated fiat currency. In this example, this would be equivalent to $10USD.

Conversely, the formula for converting Bitcoin pricing to fiat pricing would be as follows::

((price in bitcoin units) / (# of unit expansions)) * (maximum exchange rate = 10) = (price of in fiat currency)

Using the previous dollar figure of $899, let’s convert Bitcoin units into fiat currency:

(1977.80 / ($221.20/10 = 22)) * 10 = $899

Lets say the fractional rate is 71 instead of 22. Using the same $899 price from the previous example, here are the conversions:

($899 / 10) * 71 = 6382.90 BTC units

or

(6382.90 / 71) * 10 = $899

In this fashion, it is possible to price items in units of Bitcoin relative to fiat currency or the reverse.

This system also reveals some interesting facts about Bitcoin:

  1. It is completely possible to make Bitcoin as easy to use as fiat currency;
  2. As previously stated in my post “Bitcoin and Divisibility,” the demand factor for Bitcoin has an inherently inflationary effect. Simply by increasing the Fractional Rate (which reflects a demand increase), the number of BTC units needed to purchase the same $899 increased proportionally;
  3. Bitcoin and fiat currency are indelibly linked. Without fiat currency as a correlative, pricing in Bitcoin is just as arbitrary as it is using fiat currency.

I will admit that I was wrong about another aspect regarding Bitcoin… it does have tremendous potential as a store of value. The thing I underestimated is how much information has a correlating dollar value, such as deeds to homes or cars and other contracts associated to assets or paid services. While I do not think these things have much value in a pure survival aspect, they obviously have a great deal of value for running a modern society. In other words, I don’t think Bitcoin has the intrinsic value of food, water, medicine, plumbing, electricity or a host of other essential life components. However, its ability to greatly simplify, store, and secure huge swaths of information with corresponding value is profound. Such a development could tremendously simplify many legal and financial processes.

I’m still greatly opposed to Bitcoin as it exists right now and would rather see it fail, regardless of its potential benefits, then have it manifest as another tool for inequality. Should Bitcoin the currency ever be fixed, then I would gladly support it as a technology and platform. But I can’t, in good conscience, support it until then.

The Tone-Deafness of the Bitcoin Community

hands-over-earsI can’t say I was surprised by the recent Bitcoin crash. Indeed, I was expecting it. I’ve written extensively about what I view as its challenges and have even attempted to correct one of its most significant. As it stands, Bitcoin isn’t much of a solution for any problem related to currency.

What has amazed me the most about the reaction to the recent crash has been the tone deafness of the Bitcoin community. The mentality has been what I’d call “defiant denial.” The whole notion is that Bitcoin token value doesn’t really matter, the network will go on. This is pretty much a technicality; yes, the Bitcoin network will continue as long as the marginal costs to produce them is less than their exchange value. The difficulty in producing Bitcoin adjusts based on the number of active miners in the system; difficulty increases when there are more miners and decreases when there are fewer. My assumption is that these fluctuations in difficulty allow the marginal costs of Bitcoin to almost always be low enough for there to be an incentive for them to be produced. However, the trade-off is that, as the total computational power of the network decreases as economic considerations force some miners to stop participating, the network weakens and becomes more susceptible to a “51%” attack.

When Bitcoin crashed, Silicon Valley venture capitalist Marc Andreesen trotted out his New York Times op-ed titled “Why Bitcoin Matters” to rally the troops. I had intended to do a complete deconstruction of it but I thought “Why bother?”. I figured there wasn’t much I could say that a total bottoming out of Bitcoin wouldn’t state more eloquently. Needless to say, Bitcoin sank to under $180 and has since stabilized in the $200 range, down roughly $150 per coin in less than a month. I think that will get much worse over time.

What’s apparent is that the Bitcoin community isn’t looking at it realistically and doesn’t seem to truly understand why no one could really give a rat’s ass about it. There seems to be this arrogant sense of inevitability about it; technologists and Bitcoiners seem to think that it is only a matter of time before the rest of the world opens its eyes to the wonders of Bitcoin. Maybe that is the case, but chances are much better that they are sadly mistaken.

Rather than a complete dissection of Andreesen’s position, I’m only going to address three essential areas. By the end, it should be sufficiently apparent why Bitcoin is not only far from an inevitability, it is currently well on its way to complete failure.

First point: if you’ve read anything about why Bitcoin is supposedly so great, you’ve read about something called the “Byzantine General’s Problem” but more accurately referred to as the “Two General’s Problem.” I won’t go into any more detail about it because:

Neither consumers nor merchants give a damn about it.

The first, and most essential, error Bitcoin fans make is in thinking the Two General’s Problem means anything to anyone other than a software engineer/cryptographer. Third party trust (TPT) is not something to which most people are particularly hostile. To the contrary, TPT is something which generally makes people feel more secure when doing sensitive transactions over the Internet. The notion of an arbiter, even an imperfect one, gives people the sense that, should a problem occur, there is an objective third party capable of solving it.

Since almost no one cares about the Two Generals’ Problem, what actual problem is Bitcoin truly solving for anyone other than computer geeks? Merchants want to make money, consumers want to save it. Bitcoin provides a small way for merchants to keep more of the money they bring in, so a few have adopted it. There is no evidence that Bitcoin saves consumers money (and the volatility of it as a currency practically guarantees it doesn’t), so there is no compelling reason for them to use it… and they don’t. In either case, Bitcoin’s utility is either negligible or non-existent.

This brings me to my second point. In this respect, many Bitcoin supporters think remittances will be Bitcoin’s immediate “killer application.” But here’s the deal… there are only two outcomes possible in the best case scenario. The first is that the value of Bitcoin tokens will increase as transaction demand goes up. For the average person, this will become a problem (I’ll elaborate on this later). The other alternative is that, though low now, transaction fees will increase significantly very quickly. Why? Energy costs, which will increase directly in proportion with transaction demand. The “proof of work” system utilized by Bitcoin is extremely energy intensive as every node keeps a perfect record of every transaction. To cover these additional costs, either the value of the tokens or the transaction fees must increase to compensate. If transaction fees increase, then any price advantage derived from utilizing the Bitcoin network for remittances will dwindle as demand increases.

Which brings me to my last point: let’s say that Bitcoin token values increase and transaction fees remain stable (and low)… what are the economic dynamics of Bitcoin as a currency? For instance, let’s say you purchase .1 of a Bitcoin for $5 and then the value increases such that you can purchase .01 worth of Bitcoin for the same $5. Bitcoin fans marvel at the potentially high deflationary power of Bitcoin but what they won’t tell you is that this is only relative to its relationship with fiat currency. In absolute terms, the purchasing power of every subsequent Bitcoin acquirer decreases as demand increases in a very inflationary way. Pay attention to the fact that your $5 purchases less of Bitcoin’s total purchasing power when demand increased in the example. In other words, as demand increases, the average person’s percentage of Bitcoin in absolute terms will decrease as more people want it. Bitcoin fans will tell you this isn’t a problem because, relative to fiat currency, you can only control whatever amount of Bitcoin you can afford to acquire regardless.

However, what they won’t explain to you is that the increase in demand will cause the values of those who control significant amounts of Bitcoin to explode. Early adopters who have accumulated Bitcoin in large amounts will just be able to sit back and watch their fortunes go through the roof as increased demand shoots Bitcoin values relative to fiat currency into the stratosphere. The result is a form of economic inequality between early adopters (most of whom are already fairly wealthy) and those who acquire Bitcoin later that would make current economic inequality look positively egalitarian. To put this in perspective, as of Feb. 2014, almost 94% of Bitcoin wealth was controlled by about 7% of the addresses. Contrary to what the media would have you believe, this is not a populist movement.

It is on this basic premise that I oppose the concept of Bitcoin as a currency. It fuses the worst aspects of fiat currency and commodity currency into an amalgam which practically guarantees a state of economic inequality that would be orders of magnitude worse than the current fiat currency paradigm. This is not hyperbole, simple mathematics bear this out.

As a technology, Bitcoin is truly amazing. While the average person may care less about the Two Generals’ Problem, solving this issue has long been the Holy Grail for many computer scientists. However, as a currency, problems related to Bitcoin will increase in direct proportion to its utility. It will solve none of the problems of today’s fiat currency paradigm and will increase some in ways that will prove far more destructive.

In the near future, the blockchain may well revolutionize computing. But, in the end, I expect Bitcoin the currency, at least is it operates now, to wind up in the dustbin of history.

Is Capitalism Creating a Better World?

There are many people, particularly economists and technologists, who are making the claim that the world is becoming a much better place and that Capitalism is the reason why. Is that true? Well, a few have been able to make some pretty compelling cases based on quantification that the answer is a resounding “yes.”

As for me, I look at the data and think, “This can’t be right.” Now why would I think that? Even I can see that, in many instances, the numbers make a pretty good case. In terms of the more gruesome aspects of life, life has probably never been better, particularly for humans. So why am I not more enthusiastic about the progress that has been made under Capitalism? For that matter, why do millions, if not billions, of people see the world through the same lens through which I do? Why aren’t people more optimistic about both our present and our future under a system that has obviously done so much good?

The simple answer, at least in my case, is “overwhelming evidence to the contrary.”

If I shop for an item or purchase something, I’ll encounter a retail salesperson or barista or greeter or some other person in a low level service job. Some are pleasant, some are not, but most are people who are just routinely getting through their day. If I asked any of them if they were satisfied with their jobs or their lives, my guess is that the overwhelming answer would be “no.” I could be wrong about that but I’ve been in similar positions over the course of my life and that would have been my answer.

In the developed world, we have it pretty good but, if you look around, you’ll see a reality in which most people are doing what they have to do to survive. It’s rare for me to come across a person who truly loves what they do. I don’t envy them. To the contrary, I think it’s amazing when a person discovers their niche and finds complete satisfaction in a way that also allows them to comfortably make ends meet. To paraphrase the saying: when you love what you do, you’ll never work a day in your life.

But I’d venture that, for the overwhelming number of people in the world, their work doesn’t provide them with a great deal of fulfillment. In fact, I’d make an educated guess that the work of millions, if not billions, of people ranges from boring to tedious to dangerous. You could also add involuntary; there are still millions of slaves as well as others who work in viciously exploitive situations. And, for most people, it is not really a matter of choice; there’s a large body of research that supports the premise that the place you start in life is most likely the place in which you’ll end.

Considering how important quantitative analysis has become, I think it’s somewhat hypocritical that the same economists who parade around numbers extolling the virtue of Capitalism are more reluctant to provide honest statistics regarding any one person’s chances of becoming financially successful. I, myself, don’t have any, but, if 10% of the population can be said to be financially prosperous, then each person at least starts with a 1 in 10 chance. I bet that the odds are actually a great deal worse when you factor in external circumstances.

So, I’m surrounded every day by people who are surviving but who are not finding fulfillment in their lives. Capitalism really doesn’t care about that, it only cares if the trains run on time. However, when you get past the numbers and look at the reality, life still isn’t very pleasant for the most part. Sure, we may not have the threats of plague or roving bandits anymore (at least in most parts of the world). Odds that you’ll be raped or murdered by a pillaging band are now mercifully low and a great many people no longer face the daily threat of starvation (though many millions still do).

But, when it comes to work, the world is still full of a tremendous amount of tedium and drudgery. Whether its endless meetings, office politics, racism, sexism, customers with terrible attitudes, mean bosses, etc., there’s still much in life to make the common person unhappy. It’s a bit patronizing to tell a person they should be happy they no longer have to be subsistence farmers. Many of them could be called “subsistence workers,” enduring the day-to-day challenge of trying to support themselves in a world that is constantly attempting to commoditize their efforts.

In many regards, life is much better now than it has ever been. But when it comes to human fulfillment, I’d posit that we haven’t made anywhere near as much progress as we have materially. Many people went from having to scrabble a living out of the dirt to having to scrabble a living out of the concrete. Now we have to overcome a lot of noise only to be locked in a global competition with one another. We live much longer lives but often spend a big part of our newfound time just trying to get to the next great moment, such as the weekend, a vacation, happy hour etc. Life is the moments we live before and after work rather than our work being a meaningful part of our lives.

Now this isn’t the case for everyone and I strongly suspect this isn’t the case for those who have found success, happiness or fulfillment under Capitalism. If you’re great at a game and also enjoy it, you’ll want to play it all of the time and try to get your friends and associates to play as well. It takes a great deal of both luck and skill to gain financial success under Capitalism; those who beat the odds tend to be very proud of their achievements.

Now, from the flip side, would such people want the rules of their game to change, especially if they are exceptionally gifted at playing it? What NBA basketball player would want to hear that his league has merged with the NHL and now he’s going have to re-learn how to play the game skating on ice? Winning at Capitalism means never wanting to play a new game. While that’s understandable, what happens when enough people decide they don’t want to play anymore?

What I think many Capitalists miss is that, in the end, it is the quality of life that matters to most people. While some people may be pleased or sated with new, high-quality, inexpensive possessions, some people judge their lives by more qualitative measures. Do they enjoy what they do or at least feel empowered or appreciated? Are they respected for their efforts and compensated in a relatively generous fashion? Can they be assured that, given that their efforts are productive, they will be treated fairly and have some reasonable level of income security? While the jobs have changed, the feelings mostly haven’t. We may not have to be subsistence farmers anymore but much of the work is still pretty unsatisfying. And that’s when you can find it.

I suspect that those who champion Capitalism have mostly found their niche and many have experienced levels of success which have provided personal fulfillment. Maybe they simply don’t understand that the game doesn’t work the same way for everyone. Or maybe they simply don’t care. However, I doubt it is an imbalance that will be able to be sustained forever. Capitalism is a game that has been shown to be stacked in the winner’s favor. Their children gain resources and connections which give them an indelible advantage. At some point, people are going to understand fundamentally that the game is rigged.

I think things may get quite a bit worse before they truly start to get better.

“Global Equality” is a Non-Sequitur

Port Area by Roger Alcantara courtesy of Flickr

Port Area by Roger Alcantara courtesy of Flickr

I recently had the misfortune of reading an article written by Tyler Cowen titled “Income Inequality Is Not Rising Globally. It’s Falling.” Cowen is a professor of economics at George Mason University and, presumably, an actual economist.

GMU being the hotbed of conservative political and economic thought that it is, it doesn’t surprise me that such an article would emerge from it. Indeed, the university is one of the primary recipients of largesse from the Koch brothers, notorious libertarian industrialists and ultra-right wing political hatchet men. Chances are, if you’ve been exposed to any ultra-Capitalist thought or advertising, it came from the Koch brothers (indirectly, of course). My instinct is to view Cowen as a simple minion and mouthpiece of the Koch machine, but he may actually be sincere in his beliefs. If that’s the case, it’s a shame.

The article provoked a spirited exchange between me and Ben Thompson of stratechery.com on Twitter. As a writer and qualitative analyst in the tech field, I think Ben is one of the best in the business. But when it comes to his views on Capitalism, it’s apparent that he and I really don’t see eye to eye.

Though I think my stance on Capitalism is pretty apparent, I want to address a few of the themes that have recently framed the discussions around it, particularly the belief on the part of staunch Capitalists that critics of it are simply negative cynics. They believe that “capitalism and economic growth are continuing their historical roles as the greatest and most effective equalizers the world has ever known” (Cowen) and that critics are not seeing The Big PictureTM. However, as far as I’m concerned, the devil is in the details.

Proponents of Capitalism recently have been vehement in attempting to frame the dialogue by asserting that global economic inequality is falling. Sure, in absolute terms, it is. What they are more reluctant to discuss is how that falling global inequality is increasing inequality in the developed world. Unemployment rates world-wide are skyrocketing. Unemployment among the young (ages 16-24) is so high in the European Union (EU), officials are concerned they are becoming a “lost generation,” not just unemployed but unemployable. The U.S. is currently plagued with a severe long-term unemployment problem that strongly suggests it is structural rather than cyclical in nature. Even positive employment numbers have not moved the needle on wage growth, which is still stagnant or negative by most accounts.

It is the claim of its supporters that Capitalism is not “zero sum.” They are correct. The top 1% are making money hand over fist. If I was an oligarch, I’d think the system was working too.

However, the view from the trenches is a lot different. Sure, I think it’s great that people are less poor around the world. Poverty sucks. But am I happy that the only way for them to become less poor was for the wealthy to engage in a systematic process of slowly impoverishing the developed world with a promise of “great jobs to come, just hold your breath”? Hell no.

What’s ironic about the whole matter is the hypocrisy. I live in a country in which the rich whine daily about taxes and “wealth redistribution.” However, these same people have little problem with wealth redistribution when it’s other people’s money that is being redistributed. Then Capitalism is working fine. The way I see it, the rich aren’t willing to fund the rise in global economic equality with their own profits, but with the middle class’s incomes and then pat themselves on the back for their supposed virtue. That’s the epitome of hubris.

I have a saying: You have no right to judge the quality of another’s life unless you are willing to trade places with them. There’s a notion floating around that the poor in developed countries are somehow spoiled, that they are not appreciating that being poor in a wealthy country is way better than being poor in a developing country. The thinking of the rich is that the poor in developed countries live better than the aristocracy of days past, with their fancy refrigerators, HDTVs, smartphones, and indoor plumbing.

But let’s introduce a bit of perspective. A serf in the Dark Ages had a better quality of life than a pre-historic caveman, but I highly doubt that would have made a difference to the serf. It’s good practice to appreciate the improvements to life that have resulted from progress from which we all benefit. That’s common sense. But we also have a right to judge the opportunity costs of attaining those benefits. Sure, a woman with a job at McDonald’s who lives in a roach-infested apartment in the U.S. is likely better off in both relative and absolute terms than a woman who is a prostitute in a Brazilian favela. But what right does anyone have to make the determination that such a state is suitable for either in relation to the other or even to a pox-ridden doxy of the 18th century? It’s a stupid comparison because it isn’t relevant.

What matters is the ability to live in a dignified manner. In that regard, it doesn’t matter what you do as long as you can do it in a fashion that doesn’t result in shame or humiliation. I don’t think it is a matter of people feeling ungrateful for the improvements in life that progress has provided. I think what is bothering people is the trade-offs in personal dignity that must be made to survive even in developed countries. The mistake often made by Capitalists is thinking that the poor should define themselves by what they have. However, the poor want the world to define them by who they are: industrious, frank people who deserve to lead financially secure, dignified lives.