Aggravating the Disease

It should already be obvious to most observers that tosoc.org's analysis of what is wrong with capitalism is not particularly original. It is time to give some credit to one of the thinkers who have influenced our thinking:  John Maynard Keynes. The following is from his monograph The End of Laissez-Faire, 1926.

"Many of the greatest economic evils of our time are the fruits of risk, uncertainty, and ignorance. It is because particular individuals, fortunate in situation or in abilities, are able to take advantage of uncertainty and ignorance, and also because for the same reason big business is often a lottery, that great inequalities of wealth come about; and these same factors are also the cause of the unemployment of labour, or the disappointment of reasonable business expectations, and of the impairment of efficiency and production. Yet the cure lies outside the operations of individuals; it may even be to the interest of individuals to aggravate the disease."

This is largely what we have been saying in our blog. For whatever reasons, some people become very rich under laissez-faire capitalism. These people are capitalists, but not generally supporters of capitalism at the expense of their own capital. Therefore they generally do not care about free markets or general prosperity. As Keynes said, "these same factors are also the cause of unemployment of labour, the disappointment of reasonable business expectations, and the impairment of efficiency and production."

Since it may be "to the interests of individuals to aggravate the disease," therefore, the individual decision-making which is such a central part of laissez-faire capitalism is not necessarily the socially-benevolent principle that Adam Smith envisioned. In fact, "the cure lies outside the operations of individuals." In other words, the cure lies outside of capitalism.  There we have in a nutshell the reason why capitalism is unstable and why capitalism does not correct itself when it goes wrong.

However, Keyne's solutions were limited by the technology available at the time. We propose solutions that are different mainly because they are heavily dependent on current technologies. Read our other blog posts for more details.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

Divide and Conquer

We will be very brief this week.  One article of note is a Reuter's report by Ernest Sheyder about the US Amish in Ohio:  To Flee Ohio Oil Boom. It perfectly describes the divide-and-conquer technique that we have referred to on occasion.

Several oil companies are spending billions to develop Ohio's Utica shale formation, buying up drilling rights in areas that have been quiet, bucolic farming regions for many years. Some Amish, who tend to live simple lives and tend not to use anything but human- and animal-powered tools because of their religious beliefs, are living right on top of these oil and gas reserves. The encroachment of oil and gas technology with its noise, crowding, oil rigs, and storage tanks, is changing their way of life. Roads that used to carry many Amish horse-and-buggy vehicles are now dominated by trucks and equipment. Oil trucks have already been involved in several fatal accidents with these buggies. The Amish are faced with an unpleasant choice:  move away from the homes they have developed for many years or adapt to the destruction of their way of life. Fortunately for some of the Amish, the oil companies are offering enough for drilling rights so that they can afford to move.

When the rich set their sights on a region, it is difficult for the poor to resist. Sure, if they could stand together and none of them sell out, they could maintain their way of life. But they will not because some of them need the money more than others. Perhaps they have special health issues that require more money than they have.

Once a few of them sell out, it is easier and cheaper for the rich to pressure the rest. The Amish are easy targets because they do not like environments filled with dangerous motor traffic, noise, and overt technology. All the rich have to do to run the Amish out of Ohio is let oil field development take its course. As the region becomes more and more unpleasant to them, the Amish will have less and less bargaining power for royalties. Eventually it will cost hardly anything at all to force out the last of them.

At the same time that the rich are making what may become an industrial wasteland out of parts of rural Ohio, they appear also to have plans for San Francisco. We talked about the protests against Google and other high-tech companies in our post Revolt in District 4. The effort in San Francisco is to run off the people who have lived there "forever" and change the nature of the neighborhoods into higher-priced, higher-profit tenant-in-common and condominium arrangements. San Francisco is to become the very pleasant and safe suburb of Silicon Valley.

Are these kinds of changes to rural Ohio and to San Francisco really what our society wants? We do not know because the question never gets asked. In our economic system, the rich make these decisions and make their plans without reference to the poor. The poor get bullied and pushed around without much recourse, or even public comment. Most people do not even realize what is going on.

Another advantage of tosoc.org's multiple exclusive currencies and markets, therefore, is that these plans could not be carried out in even a semi-secret fashion. Such large deals would have to be negotiated in public view because the rich could not make private deals with poor individuals. They could not use their divide-and-conquer technique in secret. Whatever the final results of these deals would be, the decisions would not be made by the few for the many as they are today. Support tosoc.org.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

Revolt in District 4

The title of this post, Revolt in District 4, is an intentional reference to Suzanne Collins' Hunger Games series. The protests this week against the buses in San Francisco that carry high-tech workers to their jobs evoked in us a mash-up of The Hunger Games and Tyler Cowan's 2013 book Average is Over. We are taking liberties by assigning San Francisco to District 4 (the presumably poorer fishing district) and assigning Mountain View and Silicon Valley to District 3 (the richer technology district). Please note that we do that just for the purpose of illustration since San Francisco is more about fishing than Silicon Valley.

The reason this mash-up works for us is that Dr. Cowan suggests that workers will segregate more and more into those who can deal with high technology and those who cannot. (See our post That Sounds Pretty Bad.) The fifteen percent or so who can work with high tech will become relatively rich. Many or most of the remaining 85% will become relatively poor and will be relegated to "shantytowns." That sounds like the Hunger Games' poorer districts to us.

Therefore we think it is reasonable to expect protests if we actually proceed toward Tyler Cowan's dystopic vision of the future. Perhaps the protests in San Francisco are some of the first of these. The dislocations, displacements, and evictions related to the wealth differentials between high-tech workers and the average San Franciscan is beginning to cause friction. High-tech workers may become the bad guys because they are driving out the "Old San Francisco," buying up housing and raising prices.

Adding to the friction is the attitude of the "techies." Some of them have made unfortunate public comments that they later have to apologize for. We think that is only natural. High-tech workers experience rapid change and high stress. If you cannot keep up, you are out. Like soldiers charging a hill, they have to focus on the objective. The wounded get left behind. Tough, but that's the way it is.

High-tech workers will also say, with perfect truth, "If you are jealous of us and our higher salaries, there is nothing stopping you from competing with us. Try doing what we do all day and see if you are good enough. Of all the jobs there are, high tech jobs are the most open to everyone. You just have to prove that you can do the work and keep up."

Perfectly correct, but we say that sometimes you can be right and still be wrong. Wrong in how you say the truth. Wrong because of the context. Wrong because of the emotional content. Wrong because of your purpose. If you use the truth only to bully others, then the truth content gets lost in the attempt to create a dominant/submissive relationship. If you say that "We are the best of the best of the best, and we prove it every day. If you cannot keep up with us, then too bad," then you can only expect resistance to you to increase over time. An "Eat dirt and die!" attitude is always wrong even if your facts are perfectly correct.

Returning now to the economic aspects of this, we think it is true that relatively wealthy high tech workers also act as proxies for the rich. Encouraging them to occupy certain areas is a way, perhaps, to "spruce up" those areas and drive out the riff-raff. All without a rich person having to say or do anything publicly, or even privately. When you occupy a middle level in an organization and are paid a bit more than others, one of the unspoken things you are paid extra to do is take the heat off your employer by taking the blame. Taking a "bullet" for your employer is a major component of what is today called "loyalty."

What this means is that we (tosoc.org) are on both sides of this dispute. As the system is set up now, on "this side of capitalism," there is no resolution to these kinds of disputes. The reason why this protest captured our attention is that it is a microcosm of the larger disputes across the US. The rich are driving the poor, arbitrarily changing their lives and causing conflicts; invading "their" territory. More conflict is inevitable. Again, there is no solution. That is because the system is fundamentally flawed.

The flaw is that the rich and the poor participate in the same markets and with the same currency even though the markets are no longer competitive. If the rich decide to use their economic power to drive the poor out of San Francisco, our "free" markets allow that. Whatever social and physical capital the poor have built up will be taken from them or destroyed.

In the tosoc.org system, however, the rich would not be able to arbitrarily destroy entire poor neighborhoods that have long-standing social structures. That is because the rich and the poor would be in different markets and use different currencies. Divide-and-conquer techniques could not be used against a neighborhood because the rich could not make offers directly to individuals.

It is important to recognize that there is a huge difference between trying to preserve jobs in buggy-whip factories and trying to allow the poor to save and preserve capital. The buggy-whip factory is outdated technology and workers with outdated skills. On the other hand, a nice San-Francisco neighborhood might be destroyed not because it is outdated and useless, but because the rich cast envious eyes upon it and maneuver to take it away from its less-competitive owners. Where is the social or even economic value in that? Tosoc.org is proposing a way to fight the arbitrary destruction of the poor by the rich. Support tosoc.org.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

Unfortunate if Unavoidable

"It is with great sadness that we must impoverish you more. So sorry. So very, very sorry." We seem to hear this kind of thing more and more as an explanation why the poor must be made poorer. See for example the following editorial piece about Detroit's bankruptcy and it effect on pensions in a recent Wall Street Journal: Detroit's Painful Pension Lesson. Here is what it says.

"This week's legal decision on Detroit's bankruptcy means Motown pensioners will take a hit, which is unfortunate if unavoidable. But there's a lesson in this for government workers who have been told that defined-benefit pensions are safer than 401(k)-style defined-contribution plans.
"...
"We sympathize with the Detroit retirees who will now suffer after years of service. But they ought to aim their ire at the politicians and union chiefs who told them the lie that government pensions are forever."

At tosoc.org, we find this kind of attitude deplorable in the current economic situation. For several reasons, we think it would be better for the editors of the Journal to just say nothing at all about the shabby treatment of Detroit pensioners. First, your vaunted private companies lie about the safety of their pensions, too. Holier-than-thou attitudes are not called for. Second, your sympathies would be more believable if you advocated bail-outs for pensioners like the bail-outs that saved US banks. But you do not have anything useful to suggest. You just accept that additional suffering by the poor is "unavoidable."

Finally, the editors of the Journal suggest that what is going on is that workers unwisely trusted politicians and union leaders. We think that what is really going on is that the Great Recession has blown the US "social contract" apart. Trillions extra are spent to save the rich but the poor get only crocodile tears. The idea used to be that years of service in the US would be rewarded by financial security. Not everyone could be rich, but most could at least build up a secure retirement.

That is no longer true. The idea now is that the rich will inherit the earth, including the pensions of the poor. The idea is that the rich will continue to create conditions, crisis after crisis, under which it will be unfortunate but unavoidable that the savings of the poor will be transferred to the rich.

There is no reason for us to stand idly by and let that happen. We must take control of our own financial security and stop entrusting it to the rich. As tosoc has said before, the best way to do that is to separate ourselves financially from the rich. They should not control our currency. They should not be able to buy our politicians. We should deal with them collectively, not individually, and with the same shrewdness that they deal with us. Multiple exclusive currencies and markets is the way. Support tosoc.org.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

The Real Problem is Us. Really?

Today we read How Complainers Wreck the Economy by Rick Newman on the Daily Ticker. The article says this:

"     Something’s wrong with the U.S. economy. We all know that. But maybe the real problem is us. ...

"     It’s easy to disregard what’s going right and highlight nothing but the challenges we face—which seems to be a lot of people’s preference. ...

"     What’s missing in all of this gloom-mongering is the optimism and initiative we like to associate with America. ...

"     There are plenty of Americans, needless to say, who haven’t let a weak economy or a few disappointments slow them down. ... At some point, you either stop complaining and pick yourself up, or people stop hearing your complaints."

Oh? So now we are supposed to fear that "people" will stop hearing our complaints? Mr Newman, rich people already ignore our complaints. Or did you miss the Australian mining heiress Gina Rinehart, who gave us the uplifting advice to stop complaining and work harder?

Listen, Mr Newman.  Once we were optimistic. The market was going up up up! and we were buying real estate like crazy. We thought our investments were "safe as houses." Our leaders told us how smart and hard-working we were. No one was complaining then, not even about us.

Then the economic hammers started flying and we got hammered.  We lost our jobs. Our investments imploded. We were kicked out of our houses. Every time we optimistically picked ourselves up, we got hit by another hammer. A lot of us lost everything in spite of our optimism and initiative. Optimism and initiative were punished.

Meanwhile we saw the rich bailed out by doubling and more than doubling our national debt. We saw our "lawmakers" pass legislation they had not read. Is ignorance of the law an excuse now? For them maybe, but not for us. We are required to comply with regulations that are made up moment-by-moment. The regulations are constantly tinkered with because the regulators and legislators do not care to figure out the right things to do in the first place. They have just been throwing dog's dinners of policies into the legal system and then finding out which bits cause enough public outrage that they have to be withdrawn.  That is, they no longer even try to get it right, they just throw things out ("try and stop us!") and figure that if they tinker with a policy long enough, they can make it work eventually.

So Mr Newman, our complaints are not really for the ears of the rich, although they should pay attention. What is really happening is that we are still processing the fact that a crisis caused by rich screw-ups caused us to lose a lot of our money and opportunities. What does it mean for us to try to accumulate wealth when it is so easily taken from us? What does it mean that we have to clean up our balance sheets and pay off our debts, but our government is spending like a drunken sailor? Has the government not borrowed more dollars for us and on our backs than we have paid off for ourselves? Are we making any progress or are we still falling behind?

These questions started us thinking. What we are really thinking about, Mr Newman, are fundamental changes in the relationships between ourselves and the one percent (including the government). We do not trust them the same way we did before, yet we do not have the unity yet to hold them accountable. Despite ongoing proof of their incompetence, venality, and power-mongering, they still rule us. (Not lead, rule.)

What you see as complaints are really public discussions and analyses that will probably take years to work out. Very few realize that yet. Once the American people come to a consensus on the changes we need to make, then you will see less of what you call complaints and more initiative. Political gridlock will disappear.

Tosoc.org has taken the initiative to analyze the current situation in a new way and offer a truly original solution, one that has never been tried before because the technology was not available. We do not have to pick ourselves up, Mr Newman. We were never down in the gloomy way that you mean it. We are just trying not to be fooled again.  Instead of complaining about our complaining, you should help us. Support tosoc.org.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

Human Resources

The question, always, is whether one is a human or a resource. A resource is a thing but a person is not. Dealing with a person is more expensive than dealing with a thing. In the interest of controlling costs, therefore, organizations are always tempted to treat most members as things rather than persons. This principle applies to the public sector just as much as to the private sector.

Take for example the medical professionals of Cuba who are sent overseas. The official explanation is that they are doing humanitarian work and at the same time, they earn hard currency or goods for their country. Yes, they do humanitarian work, but are they themselves being treated humanely?

Credible reports say that they are not. Take for example the Being Latino article Cuban Doctors. Is this Cuban practice equivalent to "modern-day slavery?" Decide for yourself. The medical professionals have no choice in the matter. They are not allowed to travel except by government order. They are overseen by Cuban "minders," the local police, or the local military, who use force to keep them in their roles. They are paid ten percent or less of the money they earn for their country. Regarding a recent deal with Venezuela, the article says

"Effectively, Cuban people were exchanged for oil."

Is a person just a fingernail on the body of society? To be cut off and thrown away as needed? That seems to be the attitude of Cuba toward its doctors and nurses.

Tosoc.org believes that persons should never be treated as chattel. We believe that any economic "efficiencies" gained by slavery would be more than offset by the inefficiency of the "slave" attitude, or even the "serf" attititude. Since slaves and serfs have no voice and no choice, they will do the minimum necessary to avoid punishment. They can never develop fully as inspired and energetic individuals. To tosoc.org, setting up a system of stunted individuals is a gross failure of leadership.

However, the example of Cuba simply illustrates the common problem of universal healthcare systems. The basic problem is how to set up a competitive healthcare marketplace in which resources are available to all and affordable for all. The highly-tempting alternative is to use force (like Cuba) to make healthcare workers obey.

Tosoc.org has already touched on this issue in The Other Side of Healthcare, but we think the reason for the skewed distribution of healthcare "resources" in the US is more similar to the problem discussed in Take from the Poor. That is, in reality, resources tend to move from poor areas to rich areas in our current system. That includes healthcare professionals.

Basically, only a fraction of doctors are willing to give up the income, lifestyle, and professional opportunities available in the "big city" to practice in rural areas. The rural lifestyle has to appeal very strongly to them and their families to overcome all the other considerations. The actual behavior of doctors in our system demonstrates that the advantages of the rural lifestyle are not enough to attract an adequate supply of physicians to rural areas.

Another issue is that physician training generally takes place in an urban center with access to the best equipment and support. Expecting physicians trained in this way to want to adjust to rural medical limitations after finishing their training is not reasonable.

Third, physicians as they are selected and trained today are highly motivated and highly competitive. They are not inclined to settle for positions they consider appropriate for second- or third-rate physicians if they can avoid them. That is, rural healthcare is for second-raters. Prison healthcare is for third-raters.

Finally, each state enforces a single uniform marketplace for healthcare education and licensing despite the fact that the healthcare markets in any state are numerous and different from one another. We are suspicious of any attempt to enforce extreme uniformity, so we believe this is a problem for the healthcare market.

This is where tosoc.org's advocacy of multiple markets comes in. Training and and licensing of healthcare professionals could be different for the different markets. For example, an apprenticeship system might be more suitable for remote rural areas than sending trainees to study for years in big cities. Forcing trainees to adapt to the big city may ruin them for work "back home." The big city has become their home.

Multiple exclusive currencies and markets would allow healthcare professionals to do what they want to do, which is to make as much money as they can with their efforts, rather than attempting to make them do what they do not want to do via law and regulation. Rather than trying to restrict their rates, let them compete in separate markets that are suitable for each individual. It is dumping them all in the same market with a single currency that causes the problem. No amount of law and regulation can truly fix that.

That is why laws and regulations often fail. Laws and regulations that fight human nature are as unrealistic as ordering water to flow uphill. There will be limited success and ultimate failure. It is better to go with the downhill flow, redirecting it where possible.

Instead of hobbling the lives of healthcare professionals by telling them where to go and how much they can charge, let us set them free within a market that is suitable for them. Let us tell them that they can earn as much as they are able and that if they prove themselves, they can move "up" to a more-competitive market with a different currency. If they cannot do that, then they can only look to themselves for the reason. They will not resent the government for its interference. In the tosoc.org system, individuals will be encouraged to grow rather than deliberately stunted like the slave doctors of Cuba. Support tosoc.org.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

How Many Have to Suffer?

Nobel Laureate economist Paul Krugman writes in his recent blog post on the New York Times (see Summers' Speech) regarding a presentation that former Fed Chair candidate Larry Summers recently gave before the IMF Research Conference. It seems that Summers had a unique take on current economic conditions. Quoting Krugman,

"     ...he [Larry Summers] works from the understanding that we are an economy in which monetary policy is de facto constrained by the zero lower bound [to interest rates] ..., and that this corresponds to a situation in which the “natural” rate of interest – the rate at which desired savings and desired investment would be equal at full employment – is negative.
"     And as he [Larry Summers] also notes, in this situation the normal rules of economic policy don’t apply. As I [Paul Krugman] like to put it, virtue becomes vice and prudence becomes folly. Saving hurts the economy – it even hurts investment, thanks to the paradox of thrift. Fixating on debt and deficits deepens the depression. And so on down the line."

Krugman goes on to say that under these conditions, any kind of spending is better than none. Productive spending or wasteful spending. However, he says, "... a lot of people hate, just hate, this kind of logic – they want economics to be a morality play, and they don’t care how many people have to suffer in the process."

This comment is a bit rich coming from a man who modestly titled his blog The Conscience of a Liberal. He is nothing in his blog if he is not all about making economics into a morality play rather than a science, so what is the real difference between him and those he disparages? Presumably that his conscience and his morality are superior to theirs. He cares how many have to suffer while they do not.

We bring this up not so much to ding Krugman but to use him as an example of what happens when one is firmly stuck on the the "wrong" side of capitalism, as we believe Krugman is. What happens is that one's proposed solutions become more and more peculiar because, as tosoc.org has pointed out, there are no solutions on the "wrong" side of capitalism. There are only temporary and ultimately unsatisfactory policies that just "kick the can down the road." As a result, Krugman's suggestions are very peculiar indeed, as we shall see in a moment. (And if you need another example, google the phrase 'krugman trillion dollar coin'.)

Krugman has a lot of sympathy for Summers' point of view regarding the possibility that we are in a permanent state of secular stagnation. Tosoc.org does, too, but we see it very differently than Krugman or Summers. Before we get into that, however, let us continue with how Krugman would approach permanent secular stagnation. Despite his dislike of austerity policies and concern for suffering, Krugman suggests a form of austerity. (At tosoc.org, we always translate "austerity" as "poverty" or "increased poverty," because that is what it means for the poor.) Krugman says,

"     One way to get there [to the potential salvation of strongly negative interest rates] would be to reconstruct our whole monetary system – say, eliminate paper money and pay negative interest rates on deposits. ...
"     Any such suggestions are, of course, met with outrage. How dare anyone suggest that virtuous individuals, people who are prudent and save for the future, face expropriation? How can you suggest steadily eroding their savings either through inflation or through negative interest rates? ...
"     But in a liquidity trap saving may be a personal virtue, but it’s a social vice. And in an economy facing secular stagnation, this isn’t just a temporary state of affairs, it’s the norm. Assuring people that they can get a positive rate of return on safe assets means promising them something the market doesn’t want to deliver – it’s like farm price supports, except for rentiers."

With this Krugman has entered a topsy-turvy, head-in-the-clouds academic world where virtue becomes vice and right becomes wrong. If virtue is variable, what meaning is there to it? If virtue is variable, there is really no such thing as virtue. There is really only cold, calculated policy that is adjusted moment-by-moment. The negative interest rate policy is one that would cause suffering because it would take money away from the poor as well as the rich. This is really what makes the suggestion peculiar, coming from Krugman.

Krugman's problem, as tosoc.org sees it, is that he is stuck with trying to implement policies through only one currency. For example, he suggests negative interest rates and inflation in order to encourage corporations to put their "hoards" of money to work. (Presumably hiring more people at the same time.) Unfortunately, because there is only one currency, he cannot take from the rich without also taking from the poor. There can be only one interest rate policy for one currency, and it affects everyone who uses that currency. This applies to inflation, too. Inflation for the rich would also impose inflation on the poor.

The better alternative, of course, is tosoc.org's multiple exclusive currencies and markets. Our original blog post On the Other Side of Capitalism is probably still the best single introduction to these ideas. With separate currencies and markets for the poor, Krugman's plan could be implemented in the wealthy markets without making the poor suffer, too. The way we see it, Krugman's suggestion only makes sense in a tosoc.org world.

It is worth noting that it is one thing to have austerity suggested by laissez faire, Ayn-Randian types like Harry Binswanger (see our post Thanking the One Percent). It is quite another for a pedigreed liberal like Paul Krugman to do so. Krugman's covert defection to a form of austerity is why tosoc.org is concerned that perhaps all sides now seem to agree that some form of poverty is in our future. Granted, Krugman might deny that any significant poverty would result from his plan because of full employment and because he would make up any losses to the poor with tax credits and handouts. This ignores the time difference between losing the money (immediately) and getting a check from the government (pie in the sky bye and bye, with a ton of paperwork). First you hurt them and then you fix it? Why not just keep from hurting them in the first place? Also, if Krugman's form of capitalism is so great, why would it need permanent government policy patches to make up the money taken from the poor? A truly excellent implementation of capitalism would not need all that government fiddling to make it work.

Under the tosoc.org system, full employment plus protection and support for the poor is not a patch, it is built in. But despite his liberal conscience, it is not built into Paul Krugman's economic models. He is a one-percenter, after all, and his supply/demand curves, IS curves, and equilibria do not tell him how to protect the poor. In his world, no matter how important it is, morality is still an afterthought. We would rather have it built in.

Finally, tosoc.org finds it disturbing that our world economic system is so fragile that it could be brought to its knees by the failure of one firm, Lehman Brothers. Would we truly have crashed the system and starved perhaps billions of people just because banks stopped trusting each other and credit froze up? Are we so perverse that we would stop doing the things that we all know we need to do to survive just because of the numbers on bank balance sheets? As it turned out, we did not starve, but the price charged by the rich was high. Take the Great Recession as a warning. We need a system that is reliable and robust so that we are not put in that position again. Support tosoc.org.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

Thanking the One Percent

OK. We will do it, Harry Binswanger! Here goes: Thanks so very, very, very much, you awesome and magnificent One Percenters!!! Was that humble enough? Are you happy now, Harry? Do you think the One Percenters are happy now?

As if thanks and praise from us, the 99%, means anything—we who without the One Percent would starve in our "hopeless ineptitude," to paraphrase John Galt in Ayn Rand's Atlas Shrugged. (Quoted in Harry Binswanger's comments at this Forbes magazine link: It's Time for the 99% to Give Back to the 1%.)

On The Daily Ticker at The 99 Percent Owe a Debt of Gratitude to the One Pecent, Dr Binswanger also says:

"The point I was making with the tax [exemption for the rich] is that we owe a debt of gratitude. We of the 99% owe a debt of gratitude, and I mean a humble moral gratitude. Thank you, thank you! Steve Jobs. Thank you! Warren Buffett. Thank you! Bill Gates. Thank you! Henry Ford. These are the people who lifted us out of the cave and gave us our standard of living. So as a symbolic gesture I want them to be exempt—the really great achievers, to be exempted from all taxes. And I propose that the highest earner each year be given the Congressional Medal of Honor."

There has been a rash of these kinds of comments lately in reaction to the Occupy Wall Street movement. Harry Binswanger, Ph.D. is a philosopher who worked with Ayn Rand and is a professor at the Objectivist Academic Center of the Ayn Rand Institute. He is also on the board of directors of the Institute.

We also see the following from Alex Epstein on FoxNews.com: Let's Give Thanks for the One Percent. Mr Epstein says:

"Look at the industries that have dramatically improved over the past several decades, and you’ll see a pattern: certain super-productive individuals have led the way. These individuals invariably fall under the 1% of income earners--often the 1% of the 1%. "

One problem here is that if all the rest of us are chopped liver compared to the One Percent, then our opinions do not mean anything, anyway. At best our praise is schlock if not kitsch. Best we keep our mouths shut, really.

Another problem is that maybe the One Percent do not need our thanks and praise. They might consider it a loss of their own time and a waste to listen to choirs of angels singing their praises. Also, those angels might be better off spending their time working.

These obsequious attitudes are in line with economist Tyler Cowan's comments that we (tosoc.org) mentioned in our post That Sounds Pretty Bad. To quote Dr Cowan again, 

"... making high earners feel better in just about every part of their lives will be a major source of job growth in the future. ... Better about the world. Better about themselves. Better about what they have achieved."

That looks like a pretty ugly and demeaning future to tosoc.org. Are the 99% not to have any dignity remaining at all? Are we all supposed to become lickspittles like Harry Binswanger, Alex Epstein, and Tyler Cowan?

Tosoc.org says that we all have value and should demand to be treated with dignity no matter how much more productive some of the One Percenters might be. It is also a good idea not to forget that some of them, maybe most of them, did not even earn their wealth, but inherited it like mining heiress Gina Rinehart of Australia. (Who has made disparaging comments about the rest of us. See our post No Sauce For The Gander.)

The fact is that the One Percent have had their reward already. They dispose of enormous resources and are able to jerk other people's lives around pretty much as they wish. They do not need the praise of those they may see as lower forms of life, like us 99 Percenters, unless it is a megalomaniacal whim. In which case, perhaps they should see a psychiatrist. Such whims seem crazy to tosoc.org.

Even if the One Percent do not have an insane desire for unending praise in surround sound, they may want a less expensive and more obedient 99 Percent. Tosoc.org sees no reason for that. The One Percenters dominate more than enough already. This might be resisted by adopting "rugged individualism," but that seems impossible. We all rely on society too much to be truly individualistic, and many of us are not very rugged. Rather we might adopt the attitude of what might be called "free-range humanity," where we refuse to cage our minds as Binswanger, Epstein, and Cowan apparently have done.

Unfortunately, the corporate-government combination may have the power to overcome this sort of inner resistance by individuals. Tosoc.org thinks we need more than that. We believe that the 99 Percent need collective action to resist these pressures. The form of that action should be multiple exclusive currencies and markets so that we can "firewall" the One Percent away from the 99 Percent. Read the other tosoc.org postings for more details. Support tosoc.org.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

Take from the Poor

Buy low, sell high. This age-old advice is as good now as ever. It is as easy as letting water flow downhill. The trick is that you have to take what you bought in the cheap market and sell it in the expensive market. That is called "arbitrage." It takes long arms to reach from one market to another like that. That is one of the advantages of the rich – they have the long arms to make it work.

Michael B. Sauter and others reporting on 247wallst.com recently listed the U.S. states in order by median household income. See Richest and Poorest States. The richest state by median household income is Maryland at $71,122 per year. The poorest state is Mississippi at $37,095. The difference is $34,027. Quite a difference. Median Marylanders earn close to twice as much as median Mississippians.

Some might say that this difference is unfair; that it is an injustice. The cost of living may be lower in Mississippi, but for many things Mississippians must pay the same global prices in the global markets that the rest of us do. They also pay the same percentage of their earned income for Social Security and Medicare taxes that Marylanders do. That means that most Mississippians have to do the opposite of good sense. They have to buy high and sell low. (That is, they have to sell their labor low in the local markets but then pay national or global prices for what they need.) The poor pay a price for not having the reach of the rich.

Mississippi does receive some compensation from the federal government because its poverty rate is over 24%. However, this is offset by the fact that income inequality in Mississippi is very high, ranking third in the nation. That is behind only New York and Connecticut. What this all means is that neither the "free market" nor government programs are working very well for Mississippi. The fact that non-capitalist transfer payments are required just to keep Mississippi in the national economy demonstrates how our allegedly-capitalist system has broken down.

Free flow of capital is supposed to be a good thing because capital is supposed to flow to places where it will do the most good (from an economic standpoint). One might therefore be deceived into thinking that money will flow from the places where it is concentrated to places where there is less of it, like Mississippi. That is, one might think that money will move from high-cost locations to low-cost locations. The example of Mississippi compared to Maryland or New York shows that that is clearly not true. Money does not work that way. The truth is that in unrestrained capitalist systems, money becomes more and more concentrated. What arbitrage really seems to do is take from the poor and give to the rich.

It should be obvious at this point that the markets in Mississippi are already quite different from those in Maryland. It should also be obvious that the main reason why capital leaves poor Mississippi to go to rich Maryland is that the currency is the same. The capital flows freely. With exclusive currencies, the markets would really be separated and the capital flow could be controlled. The earnings of the poor would not so easily be transferred into the pockets of the rich.

If we really want to do something about poverty, we need to build up capital in the poor markets. That means that we have to do something about capital flowing away from the poor and concentrating too much in the pockets of the rich. If the rich cannot own the currency of the poor, then the capital flows can be controlled. That is a major part of the tosoc.org program. For more information, read tosoc.org.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

They Are Not Asking

See this recent Melanie Hicken/CNNMoney.com report: Pensions Ask Retirees to Pay Back Tens of Thousands. Hah, such a headline! They aren't asking. The very first line of the report says "Some pension plans have overpaid retirees for years -- now they're demanding their money back."

According to the report, the pension plan for American Water Works Co. is demanding about $45,000 from 67-year-old Carol Montague as a result of more than five years of over-payments.

Sheet Metal Workers Local Union No. 73 Pension Fund is demanding "recoupment" from nearly 600 retired sheet metal workers and their spouses because of miscalculated pensions from 1974 to 2004. Not only is the Pension Fund cutting the payments to the correct amounts, but then cutting even more to recoup the losses caused by their own mistakes. Then they demand yet more for interest. Then they demand up-front payments if they calculate that the victims will not live long enough to pay back an adequate amount.

For example, 75-year-old Carole Grant was told that she owed almost $61,000 for nearly 20 years of over-payments on her deceased husband's pension – she was paid $349 per month when she should have been paid $249. She has been "asked" to make a $54,000 up-front payment.

Miscalculated payments since 1974? It seems to tosoc.org that there is a statute of limitations for even the most serious crimes, but it does not appear that the poor are ever off the hook to rich pension plans. Ms Grant's husband probably thought he was helping provide for her with his pension plan.

According to the report, Karen Ferguson, director of the Pension Rights Center in Washington, D.C., believes that imposing a statute of limitations and other measures would help.

Finally, 63-year-old Ed Cochran has been told that he owes the fund nearly $100,000, of which over $42,000 is interest. Mr Cochran paid years of inflated federal taxes and child support based on his miscalculated pension payments. We wonder what his chances are of getting his excess tax and alimony payments back?

As far as tosoc.org is concerned, these cases are just additional examples of the exploitation of the poor. That is, those who can defend their wealth taking ever more from those who cannot. Here is the deal: The rich make the mistakes and the poor pay for them.

These cases are so obviously unjust. However, if you think that additional laws and regulations will fix these problems, we have to ask why they have not been implemented already. We will not speculate about that right now. We will simply point out that these injustices would not happen under the tosoc.org system.

The reason is that on the other side of capitalism, the basics would already be covered for Ms Montague, Ms Grant, and Mr Cochran. Every participant in the internal markets would get a basic living. Individuals could improve their retirement by saving money in the internal currency, savings that would never end up in the coffers of the rich because they could not own it. It could not be transferred into an external currency account.

Furthermore, the internal currency accounts would be protected by the ability of the government to print the internal currency at will to make up for Bernie Madoff-style fraud or John Corzine-style misunderstandings. 100% of such losses, if it ever became necessary, would be made good.

Finally, there would no longer be any huge unexpected debts created for poor pensioners because of someone else's mistake. There would no longer be attempts to collect on loans that have been forgiven or discharged – so-called zombie debt.

We have only touched the surface of how rotten our economic system really is. We cannot fight these kinds of things as weak individuals against strong groups organized by those who want to exploit us. We have to join together, separate ourselves from them, and get the government on our side. Support tosoc.org.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

Working As Designed

We have to say again that we are disturbed to see so many comments about government "dysfunction" regarding the debt ceiling debates in the popular press. The fact is that our government is working as designed. Tosoc.org's concern is whether the attitude of the popular press reflects a widespread dissatisfaction with the processes of democracy in the U.S. We are concerned whether it reflects a true desire to enforce political "function" by any means – ultimately meaning giving up democracy. How long can real democracy last if the people do not want it anymore?

Just as the purpose of capitalists is to make money, the purpose of political parties is to win elections. Do not expect a capitalist to save capitalism if it costs too much. Capitalism is nice in theory but capitalists are about the bottom line. Who cares what the economic/political system is as long as the money is pouring in? The ultimate goal of a capitalist is to make ever more money and keep doing it until everyone else is run out of business.

In the same sense, do not expect a political party to save democracy if it costs too many elections. Democracy is nice in theory but parties are about winning elections. Who cares what the political/economic system is as long as the party wins elections? The ultimate goal of a party is to win ever more elections and keep doing it until everyone else is run out of politics.

If a party succeeds in this, they may still call their system a democracy or a republic because they continue to have elections. In any meaningful way, however, their democracy is dead – it has become a zombie democracy like they have in Zimbabwe. They can have as many elections as they want, but they cannot change anything.

Another example is North Korea. There are elections in North Korea, too, but as we pointed out in The Rich You Will Always Have With You, the Kim family is really a dynasty. This became official last August when it was announced that the "Democratic People's Republic of Korea" legally had made the Kim family hereditary rulers in its "constitution," or 10 founding principles. See the UPI article Hereditary Rule. Far from being an egalitarian system, the fundamentals of scientific evolution force Communism to adopt the idea that some people are better than others and some bloodlines are better than others. Egalitarianism in Communist systems is an illusion and genetic superiority is the reality, however hidden it might be by the illusion. The only surprising thing is that North Korea has now thrown the illusion away and publicly proclaimed the reality.

All the above means perhaps that Democracy/Republicanism has the same problem that Capitalism does. When one or a few participants become enormously powerful compared to the others, the system becomes competitively unbalanced and the very people who are representatives of democracy and the republic actually work to destroy it.

Therefore, instead of wanting our representatives to join together, pick a goal, and march unified in one direction, we should cherish it when they publicly disagree. We should cherish the fact that they are still able to publicly disagree. We need tolerance and diversity, not hardline people who will never negotiate. Beware of monolithic, single-party systems in which everyone by law must agree with the party line.

Tosoc readers, we say again that the problem facing us is not the debt ceiling or the sequester or the fiscal cliff or the rising national debt. The true problem is that we are chained to the rich by the dollar – the single currency. All those other issues are just manifestations of the rich jerking the dollar chain to make the rest of us pay more. This will continue to happen and we will become increasingly impoverished until we divorce ourselves from the rich by divorcing ourselves from the single currency. Support tosoc.org.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

That Sounds Pretty Bad

"The world will look much more unfair and much less equal and indeed it will be.
That sounds pretty bad and maybe it is."

This quote is from the last chapter of Tyler Cowan's 2013 book Average is Over. Tyler Cowan is an influential economist and a professor of economics at George Mason University. (See also his 2011 book The Great Stagnation.)

Let us get this straight: the U.S. will lose what fairness and equality it has left and Professor Cowan can only muster up enough feeling about that to say that it might be bad – maybe. This and other "decline and fall" predictions we have seen cause us at tosoc.org to ask if economists and MBAs are required to go through dehumanization courses, or treatments, before they get their degrees. See our posts No Jam Ever Again and No Jam Ever Again II, for example.

In essence, Cowan predicts that the Übermensch will inherit the earth. In the future only those with enough intelligence, drive, and computer skills will really prosper. He says, "We will move from a society based on the pretense that everyone is given an okay standard of living to a society in which people are expected to fend for themselves much more than they do now. I imagine a world where, say, 10 to 15 percent of the citizenry is extremely wealthy and has fantastically stimulating lives ... Others will fall by the wayside."

If a large percentage of the population "falls by the wayside," Professor Cowan, it will not be some unfortunate natural event – it will not be what used to be called "an act of god." It will be because we deliberately drop them there to, as you say, "fend for themselves." It will be our responsibility.

Cowan does a fine job of representing and justifying the attitudes of the uncaring rich, but we have to give him some credit. By uncritically praising the rich he at least is living out his own vision of the future. In chapter 2 he says, "... making high earners feel better in just about every part of their lives will be a major source of job growth in the future. ... Better about the world. Better about themselves. Better about what they have achieved."

Whether his prediction turns out to be accurate or not, there is something slimy and slavish about these comments. There is not a word about accountability or community. According to Tyler Cowan, it seems, ask not what the rich can do for their country (to paraphrase the newly-elected President John Kennedy in 1961). Ask what their country can do for them.

Tosoc readers, the more of this kind of thing that we see, the more we believe that the rich really do intend to reduce our wages and make many of us live in Cowan's proposed "shantytown" environments. We need a way to keep the rich from ultimately forcing the rest of us to live at subsistence levels.

Tosoc.org's multiple exclusive currencies and markets will prevent that from happening. Our proposals are designed to keep it from happening. To us, the level of exploitation by the rich is already too high even without Tyler Cowan's ever-increasing exploitation in the future.

See our previous posts. Like the rich, we must be able to defend our wealth. The reason we cannot do that now is that we deal with the rich as individuals rather than collectively. This gives them the ability to use divide-and-conquer techniques against us. We use the same currency that they do, so they can vastly improve the finances of any group of individuals by giving them relatively small amounts of money. In effect, the rich can buy out any set of leaders that look like they might actually unite the people against exploitation. That is why the rest of us need our own currencies and why we must collectively agree not to use the same currencies as the rich. Support tosoc.org.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

Economic Football

We are breaking precedent by publishing more than one post this week. The reason is that we are always searching for new ways to explain why multiple currencies really are necessary. Here we will try the sports metaphor. (At the same time, do not forget to see our "regular" post this week: Non Sequestitur II:  Fair Play.)

Think of any sport that you are familiar with, a team sport or an individual sport. Some people are just better at it than others. That is a natural consequence of human diversity. We celebrate this diversity because it is such a pleasure to watch the best players play at their best.

Now think of all the diverse sports there are.  Those who are professional level in one sport may be -- they probably are -- just amateurs in another sport.  For example, Michael Jordan was arguably the best player and team leader of his time in NBA basketball, but he failed in his attempt to play professional baseball.

Then there is diversity by age, level of development, and experience. We find the best players by introducing sports to children in grades K-12. Then we groom the best of them and give them experience in environments that gradually become more and more competitive.  It takes years to develop the top professionals in any sport.

Later, when the top professionals lose their edge because of age, health, or injury, they either retire from serious competition or play in "senior" tournaments.

Contrast our sports world with our economics. In our capitalist economy, there is no gradual progression of competitive environments to help learners survive while they learn to play. There is only one game and everyone has to play it. The game never stops and there is no escape. There is only one kind of ball, the dollar, and there is only one kind of playing field.  Unless you have someone playing on your behalf, like a parent taking care of a child, there is no protection. Young and old, educated and uneducated, pros and novices, strong and weak -- we are all thrown together to see who comes out on top. This is barbaric and crazy. It makes the sports world seem perfectly sane.

If we have Pop Warner football for kids, we should have Pop Warner markets for them, too. If we have junior high, high school, and college teams, then we should have different levels of markets, too.  The key is that the teams at the "higher" levels are excluded from playing against the teams at the "lower" levels. The reason is that games should be competitive rather than destructive. There is no point in allowing the high school kids to regularly "destroy" the junior highs.  Yet that is exactly what we do in our economic system.

Our capitalist system is destructive rather than competitive.  It will remain that way until we can prevent the rich from exploiting the poor. You do not lose your house when you lose a sports game, but it is easy to lose your house when you make a mistake in our economic system. In fact, in a sense that is what the financial pros try to profit by -- making other people lose their houses. We need to stop trying to ruin one another, yet that is "fair play" according to the rules of capitalist markets.

That seems like a reason to eliminate capitalist markets, but we at tosoc.org do not see it that way.  History shows that there have been many such attempts, but they have all failed.  What might work instead is to separate the rich and the poor into different markets in order to mitigate the advantages of the rich.  Different exclusive currencies are also needed because it is so much easier to keep the rich out of the the markets for the poor if they do not have any currency to use in them.

As long as rich people have dollars, we cannot keep them from screwing up our dollar markets. That is because markets and their currencies are tightly linked. Anyone who has the right currencies can buy and sell in those markets. Currencies must be exclusive in order to control where the rich can trade.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

Non Sequestitur II: Fair Play

In our last post Non Sequestitur we made the case that our version of capitalism is fundamentally broken. The markets are terribly distorted by the extreme and growing wealth of the rich in comparison to the rest of us.

The markets are also terribly distorted by government policies that impossibly must attempt to please everyone at the same time.  At this very moment the government is partially shut down because none of the factions can compromise.  Any faction that compromises, loses, because at this time what is good for one faction is bad for another. There is no middle ground.

That is what happens when everyone has to compete in the same arena -- the big and the small, the strong and the weak, the skilled and the unskilled, those with hope and those without it.  Some will lose and some will win. Those who lose constantly must find ways outside the system to win enough to survive. To the winners that is cheating, so they take steps in turn to avoid "anarchy" by strengthening the rules that serve them so well. No faction believes that the market is quite fair.

One side or another in the U.S. will eventually break our deadlock and dominate for a while, but the fundamental problem with our system will not be resolved and therefore the period of economic stability will be short.  That is what will happen if we remain on this side of capitalism.

If we were on the other side of capitalism, the situation would be very different. For one thing, there would never be a government shutdown because the government would operate on an independent, internal currency. The main competition would be external, not internal. Every internal participant would have a stake in the success of the system no matter what their differences, so there would always be a middle ground based on the internal currency and markets. Compromise would always be possible.

For another thing, we could have an honest budget.  As it is now, it would serve few of the factions well to demand that our true economic situation be socialized.  They find it better to set up obscure sequesters, fiscal cliffs, and debt limits. However, when everyone's financial interests are similar, these things will not be necessary and we will be able to discuss a real budget again.

Finally, on the other side of capitalism, basic economic fear would no longer be a factor.  This would greatly reduce the energy fueling demagoguery and the bitterness of disputes. It is a lot easier to keep your head, and to remind others to keep theirs, when we all are confident that our value to society will never become zero.

That is the key. On this side of capitalism we still allow the strong to drive the value of the weak to nothing. Only when we have a currency that is managed for the benefit of the poor, and the markets to use it in, will we be able to keep that from happening.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

Non Sequestitur

Tosoc.org created the concept of multiple exclusive currencies and markets last year in the midst of bitter budget debates. Now our nation finds itself in the same position once again. The arguments about the sequester, the debt ceiling, and possibly shutting down the government are complex, but at heart the issues boil down to this: Shall we favor the lenders (the rich) or the borrowers (the poor)?

Our situation is not surprising, really. Half the nation wants to get more than it can pay for and the other half wants to take ever-greater advantage of the first half. Half the nation wants their debts to be forgiven if they cannot pay them and the other half wants debt to haunt debtors forever no matter what their situation. Using Europe as a metaphor, half our nation is Greek and the other half is German. Since everyone's vote counts the same, half our politicians represent the "Greek" view and the other half represent the "German" view. There is no real consensus on much of our legislation, so the legitimacy of our very laws and the level of interest in enforcing them are now open questions. That is why it is hard to get anything done. Can a house divided stand?

Let us note also that our politicians are mostly rich people. Even the solutions provided by the "liberals" have a tint of the rich to them. Take student loans, for example, which were touted as a "liberal" policy. Yet the money comes from loans, not grants, and they are meant to be paid back. They are immune to bankruptcy, so no borrower will be forgiven of them anytime soon. Yes, the easy terms help and eventually the loans will be forgiven, but there is no getting around the fact that when students borrow from the government to go to school, they are signing up for twenty years or so of economic servitude to the government. That does not seem very "liberal."

Before we became tosoc.org, we struggled with the issues of borrowing and lending along with the rest of the U.S. On the one hand, it seems only right that competent adults should be required to obey the terms of the contracts that they freely commit to. On the other hand, we have also seen the rich take advantage of this system, negotiating their way out of their own obligations because they are "too big to fail." At the same time that they wiggle out of their own commitments, they speak of the "moral hazard" of letting the poor out of theirs -- and their minions lay off millions. Then the rich and their minions take the homes of the poor away because they no longer have jobs and cannot make their payments.

The military now speaks of asymmetric warfare between regular armies and terrorists. Similarly we may now be able to speak of asymmetric market competition and asymmetric enforcement of contracts and the law. In the U.S. we like to think that we are free and equal with one another before the law, but that is now and has always been an illusion. (Consider the African American experience, for example, if you doubt this.) The rich are more equal than the rest of us.

Once we realized that an asymmetric, unbalanced market like ours can never truly be competitive or "capitalist," we also realized that our economic system will never really work in the sense of providing the masses with ways to work, produce, earn, save, and retire in economic safety. The rich just have too big a competitive advantage. When we realized that, we became tosoc.org.

Therefore, on "this" side of capitalism, the capitalism of the U.S. and the Euro Zone today, there are no solutions. We are trying to patch a fundamentally broken system. Our people and our politicians are arguing about which band aid to use on the surface when under the skin, the bone is broken. That is another and more fundamental reason for our current economic and political confusion. We are arguing about the wrong things. The pieces will never fit together and consensus is impossible.

These thoughts caused tosoc.org to re-frame the question. The question is not really about creating jobs or government spending or debt ceilings or gold standards or even shutting down the government. The question is how to re-balance our asymmetric, unbalanced markets. Why are we letting the sharks eat up the little fish? Why are we letting the rich take advantage of the poor? Of course we should not allow it.

Once we asked ourselves the correct question, the solution was simple and obvious. Separate the sharks from the little fish. As long as both the rich and the poor "swim" in the same pool of money, they cannot be separated. The next step in the solution, therefore, is to create separate pools of money, some for the rich and some for the poor. Create barriers so that the sharks cannot get into the pools of the little fish. That is what the concept of multiple exclusive currencies and markets is all about.

Read the other tosoc.org posts for more. We have been developing these ideas for more than a year now, so there is plenty of material to stimulate thought.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism

Tosoc Update 20130922

This is one of those weeks where nothing quite came together in time, so we are falling back to a simple update.  For example, we think there are many lessons to be learned from the recent strike by Bangladesh garment workers.  (The link is to the Yahoo!  Finance report on this event.)  In fact, the problem is that short blog posts require focus, but we are having trouble picking from among the many lessons we see here.

To pick just one possible focus, the labor cost for Bangladesh's entire $20 billion garment export industry is less than 10 percent.  Where does the other $18 billion go?  Why is it so hard to pay workers more?

We believe that the issue is a matter of "keeping up with the Jones's."  The rich and the bureaucrats of each nation do not compare themselves with their local workers.  They compare themselves to the rich and the bureaucrats of the Western capitalist nations.  Each of them has to control at least the equivalent of several millions of U.S. dollars just to feel that they are socially competitive with Western business men and women. The same is true of government bureaucrats who deal with Western bureaucrats.

Therefore we think that the many people around the world who hate "Western imperialism" in it military form are incorrect.  It is not Western aggression that keeps them poor, it is Western wealth and the jealousy it breeds in local leaders -- leaders who must take advantage of their local populations in order to feel that they are significant players in the international community.

The way capitalism should be.

Socialism for the socialists and capitalism for the capitalists.

TheOtherSideOfCapitalism (admin@tosoc.org)

Copyright © 2013 TheOtherSideOfCapitalism