Monday, November 21, 2011

A New Low For Ford

Today the Mayoralty of Rob Ford will hit a new low. If you've been following Toronto politics for the past year (and then some) then you know how incredible an achievement this is -- the bar had already been set astonishingly low! More specifically, it will take place tomorrow at 12:01 AM.

Toronto will follow the dismal leadership displayed in Vancouver, New York and Oakland in dismantling the local Occupy Movement in St. James Park. Occupiers in Vancouver peaceably left their territory after a court ordered them to vacate. New York and Oakland instead saw violence as police forced the issue. The members of Occupy Toronto have indicated that they won't leave voluntarily so a confrontation is looming. The Occupiers have stated that they will utilize passive resistance methods including linking arms and lying down rather than cooperating with any attempt to forcibly remove them.

Is it remotely surprising that the Occupy Movement is being dismantled worldwide? Of course not! The generation of people responsible for the protests in the 1960s are now the wealthy people being protested. It was OK for them to protest against the powers that be then, but now that they are on the other side of the equation they are exerting their political muscle to quash peaceful protest today.

Decades ago economists and social critics cited the 80-20 rule, where 80% of wealth was owner by 20% of the population and vice versa. Today, the number is closer to 88% being held by the top 20%. In the past 3 decades the average pre-tax earnings of the 'least' 90% of American citizens actually dropped by $900. When you factor in inflation, wealth and earning power has actually dropped much, much more. The top 10%, on the other hand, saw their average pre-tax earnings grow by an amazing $700,000! If allowed to continue soon enough we will reach the 99-1 rule, where 1% of the population has 99% of the wealth and 99% of the population has to fight tooth and nail for their share of the final 1%. There won't be enough to go around. We are headed for Armageddon and it has nothing to do with religion or even with any god...unless of course you worship money.

Perhaps the most distasteful of all the economic statistics regarding the dangerously increasing concentration of wealth into fewer and fewer hands is that the Global Economic Crisis actually accelerated the problem! This is completely understandable even without complex statistics and mathematics. Consider what happened during the crisis. The typical citizen saw their home taken away due to foreclosure, leaving them with debts and no collateral assets. Jobs were lost and unemployment rose. Jobs increasingly converted from full-time jobs with benefits to lower paying part-time jobs without benefits.

At the same time, the people responsible for the crisis literally laughed all the way to the bank! The financial institutions that mismanaged money and paved the way for their own insolvency were bailed out by the government. That means tax money taken from the poorer 90% went to support institutions largely owned by the richest 10%. So, instead of taking losses for mismanagement and malfeasance the public took a bath instead. Isn't that a tenet of capitalism and evolution for that matter? (What is capitalism if not financial evolution? Survival of the financially fittest.) Shouldn't the dinosaurs have been allowed to die off? Making matters worse is the answer to the question, "What did these companies do with all that money?" For the most part, we don't know! When the government handed it out in haste they neglected to put in place adequate measures to track its disbursement and subsequent use!

What do we know for certain? The CEOs, senior Executives and Boards of Directors that were most responsible for the workings and policies of these institutions received huge bonuses on top of the salaries that they hadn't earned! Their argument was that their talent was necessary to recover from the crisis and had they given them even a penny less they would have left to go to other corporations leaving them rudderless during a crisis. When the 'talent' was steering the ship directly into an iceberg and they threaten to go I say "let them!" The lowest mail-boy couldn't have done any worse! If these companies had chosen to relieve the greedy and foolish responsible for the crisis of their duties it would have cost even more! Their contracts almost always include massive "golden parachutes" that trigger even if they are terminated for cause! So getting rid of the dead-weight would have cost a fortune AND left the companies leaderless.

In the case of the Credit Rating Agencies like Standard and Poor's, who more than any other person or group are responsible for the financial meltdown had their bottom lines completely untouched by the crisis. (Why are they responsible? The are the ones that rated the securities based on distressed mortgages as AAA must-buys right to the bitter end. If they had given these securities a rating appropriate for the level of risk that they represented then the entire disaster would never have happened. But, what do you expect when the people that pay you to do your job are the ones issuing those securities? That's right, the financial houses that issue the securities pay Standard & Poor's and other CRAs to rate their securities. Given who is paying their bills, is it any surprise that CRAs rated garbage as top-notch investments? What if they had been honest? They'd lose their funding and disappear, allowing another, less honest company to do what they were ethically unwilling to do. Scruples are an extremely expensive thing to have these days.

The only way to fix the problem is regulation. America and most other democracies are allergic to regulation and the allergy is getting worse all the time. Somehow, the powers that be, also known as "the 1%" in Occupier terms, have managed to convince the other 99% that capitalizm is a benevolent entity that will look after everybody. In practice nothing could be further from the truth. Even in theory this isn't true! People misquote the father of modern economics, Adam Smith, as having stated in his landmark work "The Wealth of Nations" that "the Invisible Hand" will look after the less advantaged. Nowhere in the entire book is this stated even once. The only mention of "the Invisible Hand" is in terms of guiding businesses and investors. What I mean by that is that should a need arise, i.e. a market, the Invisible Hand will guide investors and businesses to direct their money and efforts to meeting that need. If they are the first, only and/or best at meeting that need they will be financial success stories. Similarly, if a market starts to dry up, the Invisible Hand will guide investors and businesses out of that market into more profitable ventures. Nothing about charity, nothing about social consciousness, nothing of the like...at...all! It's a big fat lie.

But this big fat lie has taken root in our society and is widely accepted as 'fact'. The vast majority of people that believe it have never even heard of Adam Smith or "The Wealth of Nations", but they consider themselves experts when it comes to understanding capitalism. Ignorance is rampant. Who fosters this misinformation? The 1%, who largely HAVE read "The Wealth of Nations" and known damned well that it says nothing about capitalism being fair or equitable or having mechanisms to help the desperately poor. It behooves them to delude the public into thinking that the system looks out for them. And we trust them, because we lack the knowledge and sophistication to disbelieve and because it is easiest to just eat what we are being fed indiscriminately. Politicians are split on this matter. Some are educated and are part of the conspiracy and others are ignorant and therefore can't help. The few that know the truth are seldom elected and even less often re-elected as the hype- and propaganda-machines operated by the 1% work to purge them from positions of leadership.

The other major secret of capitalism and economies is that the concentration of wealth kills economies. The wealthy can't spend what they earn. It just isn't possible. Most of what they earn just sits and doesn't contribute (directly) to the economy. Indirectly, some of it gets invested in business ventures, or private bonds, government bonds, T-Bills, or a dozen other kinds of investment. Investment in and of itself does nothing for the health of an economy. You can fund a billion new businesses if you really wanted to, but they would nearly all fail. As things are most businesses fail! In other words, much invested money is thrown out the window as far as the economy is concerned. Yes, in the very short term there are jobs created which may lower unemployment which DOES grow the economy. But this is a short term change.

What happens to this 'wasted' investment? Much of it is erased in the form of bankruptcy. Bankruptcy is terrible for the economy. For every dollar of debt that is wiped out by bankruptcy there is a dollar of revenue/profit on someone else's financial books that gets wiped out. When businesses go bankrupt invariably private citizens are forced into bankruptcy, further shrinking the economy. When the banks foreclosed en masse on America, thousands of families went bankrupt erasing huge amounts of money from the economy. At the same time, investors like Donald Trump grew their empires obscenely.

(They bought thousands of properties at seriously depressed (i.e. fire sale) prices. Eventually, the market value of those properties will return to their 'true' value and their be sold for incredible profits. Why do they do it? Because they can? Why can they do it? Because we let them. Exploiting distress is the dark secret of wealth. Even playing the market is exploitation of distress. For every tycoon that sees their stock holdings go up, there is some schmo that sees the value of their modest holdings evaporate. On very rare occasion, the process works in reverse.)

But what is the net effect on the economy? The hit taken by the loss of homes, jobs and nest eggs is much larger than the gains made by tycoons. The economy shrinks.

At the same time that the ultra-wealthy have money doing nothing for the economy, the poor have needs that go unmet. If some of the wasted/idle money of the ultra-rich found it's way into the hands of the poor and even the middle class, it would be spent immediately! They would buy not just more, but also better quality items to replace inferior goods that don't completely meet their needs. This spending would directly grow the economy. The increased demand would force companies to expand their production or ability to provide services which would increase employment. Thus it is completely intuitive, and completely true, that the economy grows when the financial base is broader.

Looking at the economy from the supply side is pointless. Companies are not obliged to turn profits into jobs or to expand or anything else that might be beneficial to a society. They are perfectly within their rights to funnel that money into the hands of their owners, and many do! Giving corporations free money, which is exactly what governments are doing by reducing their moral and ethical social obligations by reducing taxes, guarantees nothing with respect to new jobs or growing the economy. The only guaranteed way to grow the economy is to grow demand/consumption. The only way to do this is to spread the wealth.

All Western governments of the past 40-50 years have been facilitating the flow of money from the middle class and poor to the rich. In the case of Left Wing governments it may have been in a naive and misguided belief that it would stimulate the economy. In the case of Right Wing governments it was a conscious and deliberate attempt to funnel money into the hands of the wealthy, their primary ideological imperative, and had nothing to do with growing the economy, though that is their official public political story. And we've been buying it like it was a 90%-off warehouse sale.

Related lies include the fact that taxes are inherently evil and uniformly crush economies by placing 'artificial', unnecessary and dangerous constraints on business. By the same logic, laws are 'artificial', unnecessary and dangerous constraints on human behaviour. Does anyone on the planet actually believe that? Does anyone actually believe that people would play nice together if there were no such thing as laws or punishment for crimes to coax them into playing fair? Even with laws there are those who think these rules don't apply to them!

What applies to laws applies to taxation and regulation. Businesses are self-interested and completely focused on profits. Nothing else matters. If businesses were allowed to, they would do things that were self-destructive in the quest for greater profits. For example, if businesses could operate without any labour costs they would! What a geat way to maximize profits! The fact that 99% of the population would have no income as a result of this free-labour operation falls on deaf ears. What difference would that make? Well, you'd have no one to buy your product/service because 99% of the population would have no money at all! It's really tough to make a profit without any demand for your product/service!

Taxes and regulations help shape a society into something of which it is worth being a part. For example, if there were no taxes there would be almost no roads. Those that did exist would run directly from the driveways of the most wealthy to their places of employment and a very small number of other favourite haunts, like their children's school, their church etc. There might be a road to their local airport. No other roads would exist because they would provide no benefit to the only people that can afford to have them constructed, the ultra wealthy. All other transportation would have to use corduroy roads, cobblestones or worse! Trucking would almost completely cease. Railways and airports would be the only forms of mass transportation. If you happened to live, work, learn or worship near this money monger you'd have the benefit of using their roads. But don't count on it being free! Those same people who are dead against their roads having tolls would apply tolls to 'their' private roads -- you better believe it! And if you can't afford their price, it's off to the mud roads for you! Did you think they got rich by giving stuff away?

Similarly, there would be no armies, navies, air forces, etc., only private militias. If a foreign power decided to bring war to domestic soil, you would have absolutely nothing to protect you. What private militias that did exist would be primarily focused on police-like actions, namely protecting property from trespassing, theft, vandalism, etc., not from stopping military actions. Good luck mobilizing those separate militias as a united defense against an enemy...there aren't enough roads for that to happen. Why will militias be law-focused rather than war-focused? War machines are brutally expensive and generally just sit around doing nothing. Protecting against the extremely unlikely event of foreign attacks does not do well in a cost-benefit analysis, so it most likely won't get done by any of the ruling class. If anything, they will all trust that one of the others will do it and they will receive the benefits of someone else's investment. So even with tax- and government-free anarchy the rich won't have their theoretical utopia.

Wait a second, why does there have to be no government just because there's no tax? Without taxes to fund them, what can a government do? Nothing. Nothing can be done without money. There's no point in having a puppet or figurehead government if they have no budget. Don't expect the rich to create a government. They don't need one. All the laws they need can be enforced by their militias. And the only power they recognize is that of money and raw capitalism. Government would be irrelevant.

Wouldn't the poor rise up? They'd try. They'd fail. Where would they get weapons? Ammunition? No one would see it to them. The only way they could get it is to steal it and they'd be seriously out-manned and outgunned when trying to do that, too. Smuggling? The rich would control the borders. Nothing they didn't want to come in would get in. Anything that might threaten their absolute power wouldn't get in, or it would be confiscated and be added to their arsenal. The dreadfully poor and completely powerless would once again be medieval serfs at the mercy of their masters, or worse. If the master has no use for them they would be reduced to savagery in whatever wilds remained, or they will be slaughtered outright -- why let them live as potential raiders and defilers of property when you can so easily be done with them?

The closest thing in "The Wealth of Nations" to social policy is the theory that "man has to work." In order for health, sanity, and self-esteem man must work -- because he is 'wired' that way. This is so steeped in Christian religious philosophy it isn't funny. This also happens to run completely contrary to the prevailing belief that the poor are poor because they 'want to be'! By that, the belief means that the poor aren't willing to do what it takes to better themselves. They are lazy. Sure they are...and so are fat people. (If you don't know, that, too, is a complete myth!) So, what we have here is a completely hypocritical elite that controls knowledge, information and culture to perpetuate the status quo since it benefits them exclusively. This has always been an accurate description of humanity.

The most accurate definition for capitalism is, "The economic system whereby greater and greater wealth is legally concentrated into fewer and fewer hands." That is capitalism at its core. Everything else it does is incidental. That core could be considered evil by people of good conscience.

Like virtually everything else in life, it is a matter of 'too much of a good thing'. Here's an analogy. We all need iron to survive but too much of it is toxic. We need to control our consumption of iron through the regulation of our diet and judicious use of supplements if we want to ensure the health of our bodies. Capitalism is like iron. We need to regulate and supplement it to ensure the health of our bodies (the economy).

Toronto's Mayor Ford isn't just rich, he's of the inherited rich. It's largely daddy's money. Sure, he runs daddy's company now, but he started with it all. His upbringing is deeply entrenched in the myth of capitalism and he probably believes all the lies he's been taught. So it is entirely expected that he will act in a heavy-handed manner to quash any effort to bring the attention of the 99% to the truth that is just waiting for their acknowledgement! His most loyal followers fall into the same categories as politicians -- some are in on it and want the message quashed (the well-moneyed Right-Wing voter) and others are completely ignorant and see the Occupy Movement as 'dangerous anarchists', just as the 1% wants them to think (the citizens of Etobicoke and others seduced by his "gravy train" mythology). Either way, his beliefs and his base both urge him to shut down the free, peaceful and legal protests by whatever legal wrangling necessary, or by force if it comes to that, and it probably will. Society would be in serious trouble if the truth became widely known!

Actually, that's nonsense! Only the stranglehold of the ultra-rich on all trappings of power would change. Taxes would go up, regulation would flourish, forcing businesses and industries into practices that approach being even remotely ethical, moral and environmental. Wealth concentration would slow down. I'm not sure there is anything that can be done to stop the concentration of wealth, or even possibly reverse it. We may have moved beyond the ability to stop it. But just slowing it down is a worthwhile goal! As we speak it is accelerating!

My final words are these. We in the West have looked at the Arab Springs with a combination of hope, disgust and pessimism. Just as we hope that changes in Egypt and Libya will create more egalitarian, possibly secular, democratic societies, we look on at the senseless violence and obsessive and illegal wielding of, or clinging to, power in Yemen and Syria with disgust and disdain. In all cases we wonder if the President-for-life, one-party systems will simply become Islamist States like so many other Muslim nations before them. Things aren't looking particularly good on that front, but that's not the point.

The point is what pathetic hypocrites we are! The Occupy Movement is our Arab Spring! They are EXACTLY the same! The oppressed are gathering to bring attention to their plight and are hoping that people are paying attention. We aren't! We look on at the activity in the Middle East with mild curiosity and interest but ignore what is happening right under our own noses.

Here are some truisms...

Familiarity breeds apathy.

Success breeds complacency.

Laziness breeds inaction.

Ignorance breeds contempt.

Fear breeds distrust.

Change is hard.

We have it pretty good compared to the Third World, and even though things are getting steadily worse for the vast majority of us, it is easier to bury our heads in the sand and hope it starts getting better than to engage and actually do something about it. We naively hope that someone else will solve our problems and then when someone actually tries, we deride them -- a form of self-inflation, leveling and bullying -- or worse, we completely ignore them. Either way, we doom ourselves to what we fear most. So long as things are even remotely comfortable in our lives we avoid action as it entails conflict, which we hate. Eventually, the window of opportunity will close and it will be too late to help ourselves -- we'll require outside intervention to improve our lives as was the case in Libya (or Afghanistan, or to a lesser degree, Iraq). As is the case in most of Africa, only there we aren't intervening and things are desperately bad. Can you say "genocide?"

In the Middle East, it is true that there is familiarity, laziness, ignorance and fear, but not so much success, and they have something that largely we don't have -- desperation. They are trying to get things done and they at least seem to be succeeding. They have met some resistance. That is unavoidable. There will always be slugs resistant to all forms of change including any form of improvement, including and possibly especially, self-improvement. There will also be people that are currently exploiting the situation to great success and fear that they will suffer if things change (either through loss of opportunity or through punishment for their crimes against their fellow citizens). But their fate is largely in their own hands. We have left our fate in the hands of those least interested in our well-being. To them, we are a means to an end (wealth and power), tools to be discarded once our function is complete (i.e. we're broke and can't make them richer anymore). We need to shake off complacency, reign in our contempt, conquer our apathy and inactivity and overcome our distrust if we ever hope to effect change and thrive as our parents and grandparents did. Opening our minds to the implications of messages that we are seldom allowed to hear would be an amazingly good start!

What are you doing about it?

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