Tag Archives: Poverty

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.

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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.

The Bitter Pill: A Mea Culpa

oops

Russ Roberts responded via Twitter regarding my recent post title Russ Roberts’ Bitter Pill. Much respect to Roberts because he could have just ignored it altogether, especially if he thought I was way off the mark. His response caused me to revisit my post and view it with fresh eyes.

The $10 miracle pill in Roberts’ example was simply the object he used to illuminate how innovation and globalization naturally displaces certain classes of labor. Fair enough. But I liked using the miracle pill example for my own purposes because it was a perfect metaphor for what many economists and pro-Capitalists think of innovation and globalization: that the benefits outweigh the costs. You could phrase this an entirely different way:

The ends justify the means.

Here’s the thing about the miracle pill of Roberts’ example: it would likely be devastating to the world. What would be the effects of 7 billion people suddenly in perfect health, each living an average of 40-60 years longer than they do now? By definition, we would not become wealthier, we would all become much poorer as a result of the increased demands on resources. This is on top of the displacement of the millions of people in the medical field. The problem with innovation many times is unintended consequences. Indeed, if a pill actually existed that could provide perfect health and 120 years of life, it would probably never see the light of day.

As for how the world deals with the displacement of workers via innovation and globalization? That begs the question:

What is the purpose of our economy?

Is it to bring the most benefit to the most people? And, if that is indeed the case, is our current economic system the one best suited for that? Has innovation or better knowledge made it possible to improve that process?

How do we create an environment that allows full labor mobility? What do we need to do that would allow those displaced by innovation (or the market system in general) to continue to provide for themselves in a dignified manner?

My answer was to shift the power from banks to create money to the individual and tie the process directly to their productivity. If people are directly responsible for creating money, then business and governments are motivated to utilize them as the first source of capital. In a world where everyone produces money through their efforts, wealth is created directly as a result of human productivity. Rather than displacing workers, innovation would then be utilized to sate the far greater demand that would exist under those circumstances.

The same could not be stated in a world of Capitalism and the miracle pill. There is evidence that the displacement of workers by innovation and capital is accelerating and the quality of jobs being created is declining. Some economists are now arguing the merits of Universal Basic Income (UBI) versus a Universal Job Guarantee (UJG). The problem of human displacement in the process of productivity is shaping up to be one of the main challenges of this century.

My argument against Roberts’ piece was unsound and I myself committed a straw man fallacy. I have no problem admitting when I’m wrong. However, the challenges faced by the world remain the same. How do we create a world that can provide for all?

We are reaching the limits of Capitalism. Debt has far exceeded its ability to be effectively serviced. People are being displaced by capital and innovation at an accelerating pace. The environmental impact is on the verge of catastrophe. Discontent is simmering worldwide and has started to boil over in many places where populism and intolerance are on the rise. “Motivated self-interest” is unlikely to correct these problems and will likely make them much worse.

We are reaching the end of Capitalism as an effective economic system. UBI and UJG will not solve these issues because neither solves the asymmetric relationship regarding bargaining power between the individual with either business enterprise or the state. To correctly address this imbalance, the individual must be truly empowered.

My solution is for each person to have the ability create their own money through their own productive effort.

What is yours?

“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.