Friday, December 14, 2012

Poverty Is Too Good

Financial pundits use the word "austerity" as if it were a happy word – a word describing the positive and inspired state of former financial hard cases finally living up to their obligations – the repentant wrong-doers agree to live a diminished future to make up for a spendthrift past. The rich are only seeking justice, after all. Debts must be paid.

In the eyes of, this view has a nauseating resemblance to the happy workers pictured in communist art from around the mid-twentieth century. Nauseating because the communist vision was impossible and it is sickening to be reminded of the very many who struggled, suffered, and died under the lash of the imaginary communist future.

Today, in the justice system of the rich, the greatest crime is being unable to pay one's debts. Deadbeats are scorned, and the rich essentially complain that "Austerity is too good for them!" when they grudgingly agree to new debt deals.

The trouble with the justice of the rich is that the rest of us will be paying off debt forever. The capitalist system today is arranged so that becoming debt-free is an impossible dream on the wide social level. A few manage to do it (or are allowed to do it) to provide hope for the rest. A few become chronic deadbeats (or are made into deadbeats) to encourage the others. Most of us trudge our treadmills every day, stretched between heaven and hell, freedom and slavery, lashed by economic insecurity and hoping for the impossible.

Tosoc has mentioned before that capitalism has become more like a lottery. The propaganda is extravagant, most of the money is taken by those who own and run the lottery, the winners are very few, and the vast majority of participants are losers.

Greece is now in the unenviable position of being the world-wide example of losers -- the loser nation. They were lured into the Union with promises of European unity, equality, opportunity, and rising wealth. The problem was that they could not keep up with the Germans, and attempting to do so on a national level caused them to borrow too much. The Germans obliged, and now the Germans want to be paid back. So much for unity, equality, opportunity, and prosperity.

Therein lies the trap into which the rich winners lure the poor losers. Sales and marketing create unrealistic expectations, and loose lending standards allow the losers to borrow too much. The rich professionals also use the divide-and-conquer technique, taking advantage of their access to individuals. If they can convince enough individual amateurs to make mistakes, then they can loot the entire society.

One sad part is that the losers get to think of themselves as winners for a while, feeling middle class and believing that things are improving, but the good times do not last for very long. The losers have been sold the financial rope with which to hang themselves, and they obliging loop it around their own necks. A sucker is born every minute, as they say.

Now the Greeks see the results of the trap. They get the poverty ("austerity") and the Germans get the wealth.

Another sad part of this is that many Greeks are probably very careful with their money and objected to the borrowing by their government. To no avail. Now they are suffering, too, even though they are innocent even in capitalist terms. (This is just one example how the justice of the rich breaks down.)

A similar process is happening in the United States, though we are in the position of the one who just jumped off the tall building. Like the old joke, when asked how things are going, we can honestly reply that things are going OK so far. Greece has already hit the sidewalk. If we will just look ahead, we will see the sidewalk coming.

The problem is that we are still in trouble because we are still borrowing. Some of us have voluntarily cleaned up our personal balance sheets (that is, paid off our debts), imposing austerity on ourselves to get it done. Unfortunately that will not do us much good. Our thriftiness is offset by government borrowing. Even if we have paid off our personal debt, the government is still raising our collective debt. We are all in debt trouble together. Share and share alike. (Except, of course, for the rich, who can run away and protect their wealth.)

A large percentage of US government income is based on taxes on jobs. (Just for illustration, let us say 80%.) If you have a job, then dividing the debt per job makes your part of the national debt about $84,800 and is going up each year by over $5,000. In only a few years, the debt per job will be over $100,000 per job.

Depending on interest rates, we are paying about $2000 per job a year in taxes to pay just for the federal debt and the payment per job is going up each year by almost $100. Of course, interest rates are very low right now. This is part of the trap we are in. The total debt is less important than the interest rates because the payments rise with the interest rates.

If interest rates are 1% now and rise to 6%, then the payment per job each year will be roughly six times the current amount, or about $12,000, and will be going up by about $600 each year. Attempting to raise taxes and cut government spending enough to pay such a burden (which is the austerity solution) would cause an enormous recession if not a depression. This is exactly what happened to Greece and is on the way for the US.

No matter how thrifty you are, no matter how well you hew to the economic ethics recommended by the rich, then unless you are already rich, your economic destruction lies in the collective economic decisions of the rich, the US government, and your fellow citizens.

Another way we are in trouble is that collectively we are taking on new debt in order to make payments on old debt. For example, on a personal level, you know that is happening when you have to borrow on one credit card in order to make a payment on another credit card. This signals that the end of your prosperity is near.

On a national level, this is harder to detect, but roughly speaking, it is when the collective debt is growing at a faster rate than the collective income (that is, taxes). That is what we are doing, and that is why the current administration is so desperate to raise taxes and tax rates. They have already borrowed and spent the money, and now they have to raise the collective income to pay for it. First they put us in an untenable position, then they require us to sacrifice in order to fix things. These days, that is considered leadership.

The situation is even worse in Greece, where on top of a depression-level economy and more poverty, the Greeks are called irresponsible deadbeats, even those who individually worked hard, did not go into debt, and tried to save money.

At we are not pleased with the rigged debt game of the one-percenters, and we are not impressed with either their standards of "justice" or their "poverty is too good for them" attitude toward the Greeks and the rest of us. We believe that justice as practiced by human beings is generally as harsh and unfair as those who demand it, and we also believe that what goes around generally comes around. Those who demand justice should be careful because they themselves will be judged.

"We all got it coming, kid." Will Munny, Unforgiven.

Tosoc believes in mercy instead of justice. We do not judge the Greeks. We sympathize with them because we bought into the propaganda just like they did. We borrowed money on visions of wealth just like they did, and we know how easy it is to fall into that trap. The rich are always busy smoothing and beautifying the wide and pleasant road to hell.

If nothing else, the Great Recession should have taught us that many of us will fall into debt traps if they are set for us. That is what the housing crisis was all about. Many of the rich will explain this away, saying that we are all adults here, after all. Poor decision-makers get what they deserve. It's a "dog eat dog" world, after all.

That sounds fair, but it is not. In reality, there is no contest. The giant dogs eat the little dogs.

Instead, tosoc says that amateurs should not be forced to compete against professionals. Tosoc says that the mistakes of the few should not be allowed to become general economic meltdowns that keep almost everyone poor. Tosoc says that the poor should not be looted through government debt to support the debt traps set up by the rich. We do not glory in a "dog eats dog" world. We would rather see a "dog helps dog" world.

We say all this in part to reinforce the idea that the common currency is the means by which the rich take advantage of the rest of us. The debt traps for the Greeks were set up in euros and our debt traps are set up in dollars. We amateurs are forced to compete against the professionals, and the currency is their playing field.

Multiple exclusive currencies would make it much more difficult for the professionals to set their traps for us and multiply the mistakes of the few into mass profits looted from the many. Our turf would be different from their turf, and we would not be forced to compete directly against them. Also, the divide-and-conquer technique could not be applied because our markets would meet their debt threats collectively from the start, before any economic disasters could unfold.

With multiple exclusive currencies we can defeat the economic tricks and traps that keep most of us poor. After all, if economic security is good for the rich then it must be good for the poor. We should start widening economic prosperity rather than narrowing it. "We all got it coming, kid." can be taken to mean deserving of mercy and prosperity.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (

Copyright © 2012 TheOtherSideOfCapitalism

Sunday, December 2, 2012

The Guilty Innocents

"A penny saved is a penny earned." Hard work and thrift. Cooperation, creativity, charity, adaptability, and integrity. Proper sleeping habits are supposed to make us healthy, wealthy, and wise. Genius is 1% inspiration and 99% perspiration. This is what we are told.

Did you believe in these principles, work hard all your life, and still end up being retired early so your company could cut your pension? Some have. Maybe these principles are supposed to apply to you, but not to those you work for.

Even so, the rich largely conform to these ideas and firmly believe that they are good for everyone. Personally they almost never treat employees or customers badly and frequently act with real compassion and understanding. They keep themselves innocent.

The people they employ to run their businesses are not so innocent. They often operate by different principles. "Never give a sucker an even break." "If you ain't cheatin', you ain't tryin'!" "The squeaky wheel gets the grease." "No good deed goes unpunished." "Never leave any money on the table." "Behind every great fortune is a great crime." "Genius is 1% inspiration and 99% stealing the ideas of other geniuses."

In your vision of the future, what do you want to see? A society of charity, integrity, and abundance? Or a society of cheating, "squeaky wheels," and austerity? Based on the evidence so far, it seems we are headed for more cheating and squeaking.

The rich remain innocent of this, however, because they are not personally involved. Often they are absentee worklords. They do the best they can and shake their heads sadly at the condition of society. The masses are just not as ethical, disciplined, sensitive, and creative as themselves. They look down on us from their high places and are disappointed.

This way of thinking is a real barrier to change.

The rich choose our managers, and that is where their hands get dirty. They do not realize it, however, because they think that they can delegate responsibility at the same time they delegate operational details. At heart, however, what really matters to them are results – return on investment. Oh, ethics are important, too, they say, but make sure those results are good.

If there is any truth to the idea that the profit motive is bad or wrong, this is where it applies. Managers are strongly exhorted to produce results, but rather weakly exhorted on charity and integrity. A manager making great returns without any serious evidence of wrongdoing is cheered and rewarded. Great returns obscure bad behavior and discourage investigation.

The breakdown of ethics works this way. In a world of ever-increasing expectations, managers eventually run out of ethical options for improving performance. To maintain their position in their peer group, they have to turn to unethical options. All keeping their integrity will do for them is allow them to keep their head up as they are kicked out. What does it profit you to keep your integrity if you become a loser? Economic and social fears tempt managers to cheat. And after all, in our society, "If you ain't cheatin', you ain't tryin'!" Everybody does it.

We can imagine that in the mortgage industry before the Great Recession  managers were encouraged to sell more and more mortgages. As the market started to plateau, it became more difficult for managers to meet their numbers. Economic and social fears started to kick in. Managers began to push their subordinates to take on riskier and riskier applicants. They themselves started approving worse and worse applications. After all, the increasing risks were being managed by AAA-rated mortgage-backed securities and collateralized debt obligations, right?

We know now how badly it ended for all of us, but at the time, those managers were cheating and straining every sinew to keep their world going for just another year, maybe just another quarter.
Only losers refused to cheat. They were kicked out of the system early.

After the fall, the rich, looking down from their high places, sadly shook their heads again and made sure that the government borrowed trillions to save their bank accounts and investments. This had to be done to keep the worldwide credit markets from freezing up.

Hearing reports that so many were losing their jobs and being kicked out of their homes, the rich wept another tear and commented how sad it was that so many people lied on their mortgage applications and showed so little financial responsibility. Those poor people just took on more debt than they could handle.

That is how the rich see it, but another interpretation is that they set a giant trap for the whole country, whether consciously or not. Just let people be the way they are, and some will become hard-driving managers. Their subordinates will do their best to do what the hard-driving managers tell them. Still others can be convinced that houses are guaranteed investment winners. They will buy more house and more houses than they can afford, telling everyone they know how smart they are. Don't be a loser – borrow as much as you can and buy houses.

The rich simply spread their nets and eventually money falls into them. There is nothing particularly wrong with anything they do, but the results can be wrong. No one has economic security but them, and no cheerful platitudes will save the poor from their poverty. In a sense the rich are guilty without having committed a crime. That is what makes their guilt so hard to detect and so easy for them to ignore.

The only way to detect it is with broad measurements of wealth and security. It is when the rich get richer in both good times and bad while the poor go bankrupt over and over again. It is when the poor fall behind and cannot catch up. It is when the rich can bring down the national economy simply by playing with their money, overwhelming and ignoring any warnings or attempts to limit their behavior. It is when self-control is seen as fear – as a middle-brow excuse to limit oneself, avoiding risks. All these things are happening now.

It is hard to punish and deter when there is no crime. The Great Depression was bad enough to teach a lesson even to the rich, but that was a special case. The Great Recession does not seem to have made much impression on the rich. If they will not restrain themselves, the question is whether the government will do anything significant to prevent this kind of thing in the future. So far it appears that the answer is no. All we are doing is more of the same kinds of policies that have failed before.

What we really need is a radical economic re-organization like nothing that has come before. The rich should be given their own currency to play with. The rest of us should have a separate currency that the rich are not allowed to own. They can create a debt crisis and lock up their own credit system if they like without affecting ours very much.

Since they cannot directly pay us, they cannot lay us off. Since they cannot directly own our mortgages, they cannot foreclose on us. Since our managers will not work directly for them, the rich cannot threaten them. Since they cannot own our debt, they cannot bankrupt us. Since they cannot sell directly to us, it will not be so easy to trap us.

It is time to defend ourselves and our nation from those who have power over us but whose interests are worldwide. They exert their power through our own currency, and it is time to take that power away from them. Multiple exclusive currencies are the best means to separate ourselves from them.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (

Copyright © 2012 TheOtherSideOfCapitalism

Saturday, December 1, 2012

Vision Loss

One of the problems in the U.S. today is that the rich no longer seem to know which way to go. We are having a crisis of leadership.

Does this mean that wealth and leadership are linked? Yes. At, we see wealth and leadership as inseparable. Anyone who has the time and resources to plan for the futures of many is a member of the "one percent." This includes both businessmen and politicians. Businessmen implement their plans through their businesses and politicians implement their plans through their policies, so we believe that both the top politicians and the top businessmen make up the one percent.

The President of the United States is always a one-percenter. Generally, every U.S. Senator is a one-percenter. Many members of the U.S. House of Representatives are one-percenters.

This is a problem because no one plans for their own, voluntary downfall, or for that of their associates. Plans are limited to those without any significant self-sacrifice, so some alternatives are excluded no matter how good they might be. In fact, an important part of any plan is how to make someone else bear the cost if the plan goes wrong. That is what is meant by "managing risk." It is also what is meant by "blaming the innocent."

So one primary reason why our government borrowed trillions of dollars was to save the one-percenters (including themselves) from the consequences of their own actions. It did save them, but now the one-percenters do not seem to know what to do with all that money. They are not lending and they are not investing. They do not know where to invest. Steve Jobs is dead and even Apple does not seem like a sure thing any more. Everyone is waiting for the next great commercial concept that will set off a wave of ideas, investment, employment, and profits.

(That is, if there is another great commercial concept. More on that later.)

Even in the political realm, there seems to be a lack of ideas. When progressives controlled all parts of the U.S. government for two years, the best they could come up with were plans to control health care costs and increase regulations on businesses. This was all very well, but despite the propaganda, these are basically conservative concepts (save money), and frankly, they are boring. They hide it well, but the progressives are intellectually dead right now.

At least the progressives have something superficially different to offer. On the conservative side, it is still "get a job, work hard, save money, and everyone can be rich!" No one believes that any more after the Great Recession. The conservatives are more obviously intellectually dead than the progressives. The truth is that you get a job, work hard, and save money just to survive – not in the service of any greater conservative vision.

So there is some question whether the world economy has fundamentally changed. It may be that the technical revolutions are over and the human race has nearly reached its maximum productive potential. If so, then this will have a huge effect on our planners.

If economic growth is dying, leadership will have to plan on a plateau economy, in which things do not change very much from year to year. It will be an economy where evolution is slow and there will be no competition for the big dinosaurs. They will get bigger and bigger at the expense, of course, of the little dinosaurs. Popular culture already feels it – the future may be one of scarcity. Humanity may literally become the new dinosaurs, doing nothing more than surviving until a big meteor comes along and ends the repetitious boredom.

This is where our economic expectations and our visions of the future intersect. If the future is expected to be expanding and abundant, then the rich will be open-handed and encouraging. Things get better for everyone, and everyone gains wealth. People at all levels will feel that their efforts are valuable and going towards valuable ends. Freedom, democracy, and free market capitalism work best in these circumstances.

Right now the rich are not open-handed and encouraging. They are socking away the trillions we borrowed in order to save them. This indicates that they already believe that we are moving into a plateau economy. It may be that even the capitalists privately are beginning to doubt freedom, democracy, and free market capitalism.

Another indication that leadership has lost its vision is that the social messages to us the poor are all about scarcity, not abundance. The are about conservation. Smaller populations. Using fewer resources. Using less and being less.

These ideas strike a chord with the poor because their lives are filled with hard work and hard choices that bring only limited returns. We tend not to think about abundance, but about austerity – that is, poverty. If we are poor, we believe that we can all at least be poor together. That is fair.

Except, of course, that the idea is nonsense. In a plateau economy, for the rich to maintain their consumption, it is important that the poor be convinced or forced to reduce consumption. That is all that our sacrifice will really mean because remember – the rich we will always have with us. believes there is a way to break this pattern. We offer a plan quite different from the ideas of either the socialists or the capitalists. So long as we the poor share a common currency with the rich, the rich will always rule us to their own advantage. Multiple exclusive currencies can be used to break the chains they use to bind us.

For one thing, if we pay ourselves and our politicians with internal currencies from which the rich are excluded, then the rich will no longer own our political processes. Their money will be no good for that any more. Politicians' interests will align with the rest of us who use internal currencies and they will no longer be co-opted by the rich.

The rich will also have to contend with the rest of us collectively rather than individually. It is easy for the few to rule the many using divide-and-conquer techniques in a one-currency system. Any effective opposition can simply be purchased. In the best case (for the rich), this will be done in secret so that the opposition can remain opposed, but simply lose its effectiveness. It is hard for a rich person to maintain strong feelings of injustice, but a harmless, organized opposition provides a good outlet for the strong feelings of others.

What if instead the rich could not buy anyone off. It would not automatically right all wrongs, but it would allow political discussion to be made in a less-volatile environment and largely exclude those whose interests and therefore political beliefs are most divergent from the whole.

It would also allow us to punish rich wrong-doers where it really hurts them – in the marketplace. The collective economic power of the U.S. is now being used to hurt Iran, for example, to discourage Iran from developing nuclear weapons.

So long as there is a single U.S. currency, however, we cannot focus our economic power on those who develop derivatives of mass economic destruction. The reason is the common currency. We cannot hurt our rich without hurting ourselves. That is why they were able to hold the masses hostage in the Great Recession and extort trillions out of the U.S. government.

With multiple U.S. currencies, we could focus our collective economic power on rich wrong-doers with lower risk to ourselves. The separation of the internal from the external currency provides a firewall. This may be the only effective way to discipline the rich.

At, we know which way to go in order to improve society. Our ideas are so different from what has been traditionally taught that this may not be apparent right away. We simply ask you to keep multiple exclusive currencies in mind. When you read or watch the news, start looking for ways in which they can be applied. We believe that after some time and thought, you too will come to see things from the other side of capitalism.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (

Copyright © 2012 TheOtherSideOfCapitalism