Posts Tagged ‘ How the economy works ’

That Which Attracts Can Kill

I just saved a life; the life of a dragonfly. I was taking down my dry washing from the clothesline, when I spotted a dragonfly trying to escape from our drying shed. This is nothing but the space between our house and the next, with translucent roofing over the top of it.

The dragonfly was desperately trying to fly through this roofing, over and over. I took a piece of dry clothing and forced it to fly out the opening at the front. Even there I had to hit it with my hands as it tried once more to fly to its doom.

I cannot help but compare its situation to our own. Next door someone’s sound system is playing Christmas carols, over and over. The attractiveness of consumerism is irresistible to Latinos – but, as you know, this will have a similar effect on them, as it has on us. They will end up with nothing but an empty bag to show for their infatuation with things.

Greed With a Friendly Face

This is one of the interesting things about our new culture of greed – how friendly it is. It’s stated purpose is to make everyone happy. But as with any society that concentrates on making more of something, it ends up producing the opposite effect. This is very strange, and something we should be paying more attention to.

People instinctively understand that making quantity more important than quality is not the proper approach for making the good life. But they have learned to override this instinct. The manufacturing economy has turned them into consumers, where they must buy more and more.

Let us back up in time to before the Industrial Revolution. Goods and services were being provided back then, as they always had. The main product was food, which was grown on the land. And everything was based on control of the land in the feudal system. There was just enough food, on the average, to feed everyone – but not much more. Bad crops meant starvation. Transportation was poor, just enough to move food from the fields to the market.

By today’s standards this was a grim life – but as medievalists have pointed out, it was a lively society with its own values. Artisans flourished that could produce almost anything people needed - especially clothing, which was as fashionable as ever. There were plenty of festivals that everyone took place in. As in any traditional culture, people had optimized every aspect of their lives – and lived life to the full, emotionally.

Unfortunately, this life would not last. And the reason for this was simple: the manufacturing economy was more profitable than the traditional one. People were expelled from their lands, which were then used for grazing sheep to produce wool for the mills instead. People who could grow their own food before, now became penniless beggars wandering the roads, looking for work. The first stages of Capitalism were grim, resulting in a despoiled countryside and widespread poverty – but also untold wealth for a few.

The basic idea here was simple, as I will repeat again – the emphasis on quantity as contrasted to the quality produced by self-employed artisans. The overall effect was just the opposite to that intended – poverty. Something important had been overlooked – morality.

And something else: traditional cultures had been destroyed. These were not perfect, to be sure, but they were alternative ways of life – something that had always been part of human society – cultural diversity. There was now a drive towards cultural uniformity based on more of everything – more people, more things, but with an emphasis on the things.

Moral values were overlooked as other values became more important – namely, getting more of everything. Human values become less important, and were eventually forgotten.

But this posting is about Greed With a Friendly Face, what is this about? Two hundred years have elapsed since the Early Capitalism I just described, and things have changed considerably. A substantial Middle Class has arisen in America, but they are now threatened by the super-successful. These are anxious to pose as saviors of the world. And even as saviors of less successful Americans. Anyone can get rich if they just follow the rules, they say.

What are those rules? Here is where things get tricky, because no one wants to make these rules explicit. I think I know what they are, but these are only my guesses. One of these rules is social conformity – everyone must be like everyone else. And this means conformity to the uber-rule – that power is more important than anything else, and it must not be challenged. Another rule, that fits in with this, is that people are no longer important – unless they are rich and powerful.

What is the role of religion in this? Most religions stress the importance of the common people – however poorly they enforce this. And this includes, in America, Christianity – in the form of the mega-churches. What do they teach? Affluence, pure and simple. God wants everyone to be rich. Here is where their friendliness comes in. They want to help get you started up the ladder of success. Whether you will actually get to the top is another matter – but you have to try, and try hard. Above all, you must not question the way things are.

Actually, getting rich always been part of Protestantism – taking the Gospel (and affluence) to less-fortunate people. The super-rich now make this part of their life-style – spending vast sums on alleviating world poverty. How can you be more friendly that that?

But strangely enough, the results have been the inverse of those intended. I subscribe to the National Geographic, and their articles about Africa are sobering. In the November issue, for example, is Rift in Paradise, about the Rift Valley and its ecological and human disaster. It makes you wish that Africa would sink in the ocean and disappear – and take its people with it.

But let us limit our scope to America. What is Greed With a Friendly Face here? It is not about welcoming immigrants, for sure. American want to keep their wealth to themselves.

But you will find it inside the corporate life in any affluent area. A fake friendliness is alive and well. Everyone is forced to be friendly, it is part of the culture. It hides the ruthlessness also prevalent. It puts a friendly face on greed and conformity.

This posting needs to be rewritten, but these are my thoughts this morning. I hope they are useful to you.

Copyright isn’t working, says European Commission

ZDNet

My readers may not understand why I am going to the trouble of alerting them to this link I got from Slashdot. It is another example of how we have become unable to cope with our world.

People all over the world have become used to appropriating (or stealing) digital content, and can see nothing wrong with that. The owners of this content, on the other hand, are determined to enforce their rights of ownership – by copyrighting (or patenting) everything they can get their greedy hands on – by making ever more draconian laws, prosecuting every offender they can find – including nearly every company involved with the operation of the Internet. They are not interested in the rest of the world – only in themselves.

What do the people say? “Duh, I don’t understand any of this.” And they do the one thing they know how to do – do nothing, as their world slowly falls apart.

Ivan Illich on Machines and Man

I haven’t read anything by this guy before, although he is relatively well-known; there is too much good stuff out there, waiting to be read. This book is Tools for Conviviality and is part of the World Perspectives series. The author is a Catholic intellectual, who lives in Mexico.

I picked it up used from Amazon, which works with all kinds of tiny used-book stores. The cost was practically nothing, much less than the shipping cost. This is not the kind of book you can get for your Kindle; there is not enough demand for it.

From the Forward:

It is the thesis of World Perspectives that man is in the process of developing a new consciousness which, in spite of his apparent spiritual and moral captivity, can eventually lift the human race above and beyond the fear, ignorance, and isolation which beset it today.

From Chapter two: Convivial Reconstruction:

The symptoms of accelerated crisis are widely recognized. Multiple attempts have been made to explain them. I believe this crisis is rooted in a major twofold experiment which has failed, and I claim that the resolution of the crisis begins with a recognition of the failure. For a hundred years we have tried to make machines work for man and to school men for life in their service. Now it turns out that machines do not “work” and the people cannot be schooled for a life in the service of machines. They hypothesis on which the experiment was built must now be discarded. The hypothesis was that machines can replace slaves. The evidence shows that, used for this purpose, machines enslave men. Neither a dictatorial proletariat nor a leisure mass can escape the domination of constantly expanding industrial tools.

This crisis can be solved only if we learn to invert the present deep structure of tools; if we give people tools that guarantee their right to work with high, independent efficiency, thus simultaneously eliminating the need for either slaves or masters and enhancing each person’s range of freedom. People need new tools to work with rather than tools that “work” for them. They need technology to make the most of the energy and imagination each has, rather than more well-programmed energy slaves.

He defines conviviality:

I choose the term conviviality to designate the opposite of industrial productivity. I intend it to mean autonomous and creative intercourse among persons, and the intercourse of persons with their environment; and this in contrast with the conditioned response of persons to the demands made upon them by others, and by a man-made environment.

I consider conviviality to be individual freedom realized in personal interdependence and, as such, an intrinsic ethical value. I believe that, in any society, no amount of industrial productivity can effectively satisfy the needs it creates among society’s members.

He wrote this book in 1973, when it was already too late.

We were going to be hit with a new type of machine: the computer/software/internet – that changed everything. Of this, the handheld revolution (hand-held computers with extremely clever, addictive displays operating on a wireless network) is busy re-defining who we are. We do not know what we will become, but whatever that will be, we will not be more human – but some accessory to the Computer – which, in turn is an accessory for the Power Complex. Power now defines what is right (Might is Right, get it?)

Cannot individuals use this new technology to their advantage – as I am doing right now as I write this on my blog? Yes, of course, but the high-tech world – the world of corporations that produce these new miracles, care nothing about people, or their happiness. They only want to enslave them – as production workers (although most these are now in China) or as consumers, who cannot resist the latest high-tech thrill.

Until now, I haven’t talked much about slavery, but after reading Illich, I think I will use it more.

I will also continue to pound on an insight only I seem to have – that things have captured our attention and made us forget about ourselves.

With fatal results.

The Managers are Important, the Owners are Not

An American who bought a coffee farm near here found this out the hard way. He had a disagreement with the manager of his farm, probably because he had cheated him, and the manager must have told him “If you are going to boss me around, get another manager!” He was helpless; he could not run the farm by himself; his manager knew everything about it, and about that particular farm. If he hired another one, he would probably be no better off. He had to leave his farm with his tail between his legs – because he was only the owner.

It is just the same with American corporations. The owners in theory are the shareholders. But they have no control. The high-level executives (a professional managerial class) are in control, and with their grossly inflated benefits packages, milk the corporations for all they are worth. And quite often more than they are worth.

The Power of Power Itself

Any businessman knows what this is – that is why he is in business, or politics, or whatever – to get more power, and enhance what he already has. Nothing else matters.

The attraction of power even extends to those without it – even to those who have no hope or desire to become powerful themselves. Just being associated with it is the ultimate thrill.

This leaves us with the question: “Where is power now, who has it, and how is it exercised?” This overlooks the question of why all this struggle for power is going on. It is just taken as a given.

So where is it, and who has it? Looking at this question, you are immediately struck by one fact: wherever or whatever it is, it remains cleverly hidden. This is an important part of its strategy : to remain out of sight so it can operate unseen. Only important people know who the other important people are.

Everyone else has to guess, by watching what is going on, and noting who has their hands on the levers of power. These are usually only a few people out of thousands or millions in any organization.

What we have is simple enough: a totalitarian society, with the power elite hidden in secrecy – the Kremlin or the Chinese party being typical examples. But these were relatively easy to understand because everyone knew they existed.

In the West (which is dominated by America) the power structure is diffuse and informally organized – much like Al-Qaeda, in fact. And this is exactly what makes it so powerful and flexible. Any damage can be easily countered by an on-the-spot reorganization. There always plenty of new leaders waiting in the shade.

It is, in fact a network and cannot be fought by conventional means. It is the network, just as modern business is the Internet.

Which bring up a very important fact: the Internet (the computer/software/Internet complex) is what has made power, in its present incarnation, so powerful.

I immediately ask the question “Where does this leave the people?” The answer is simple “Nowhere, they no longer exist.” Power has eliminated them completely, and no one has noticed their passing.

Money and Me

I should really not be talking about this, since I have a poor feel for money personally – that is the main reason I am down here in Costa Rica: because I didn’t plan for my retirement, and only had my Social Security to live on. And my mind in many ways is suffering from old age – but in other ways it seems to be holding its own.

In a recent posting Deflation I wrote about the deflation of paper assets. But I did not explain it very well, and a reader questioned me about this. I wrote a long explanation of what I meant – and it turned out so well, I am reproducing it here.
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First of all, the economy consists of two kinds of things: (1) money and (2) the stuff money can buy: goods and services. When I speak of deflation I am referring to money, and not to the price of stuff, such as the price of gold.

What money actually is, is not easy to say, economists have debating this for years. For the purposes of this discussion, let’s just agree it is all the currencies out there – and further, lets limit ourselves to dollars, just to keep it simple.

People who have lots of dollars want to invest it somehow. Originally, they invested it fixed rates of return. But gradually this became inadequate. They then started to invested it in securities (such as stocks), expecting them to increase in value – as they did, on the average, for a long time. People expected this would last forever. Large retirement plans also invested heavily in them.

Businesses depended on the income from the sale of their stocks in order to function. More and more, stock options were used as incentives for more and more people – but especially for high-level executives.

In short, everything depended on an eternal bull market in securities. These became more and more complicated, until it was hard to determine what they were actually worth. And the banks gambled recklessly, in ways they never should have.

This house of cards is finally tumbling down, as all these paper assets lose their value simultaneously.

Not bad, huh?

The Passionate Pursuit of Productivity

We must become more productive – but we must not spend any time wondering what it is, or how to increase it. We must stay busy doing whatever we are doing. Being productive is simply following orders, and doing the same as everyone else. Which includes saying “We must become more productive!”

At one time we felt the same way about creativity. A person was judged by how creative he was. But creativity now sounds dangerous – not the kind of thing that should be encouraged in a corporation. Productivity is safer because it can be quantified and made impersonal. It is the ratio between profit and labor costs. Simple as that. The less is spent on people, while still getting the same output, the greater the productivity.

People must be worked harder and harder. Or they must be encouraged to be more and more devious – to increase profitability by dubious means – legally, of course.

All this carefully overlooks what productivity might really mean. Which is just as well, because it cannot really be defined. It’s an important concept in science and academia – which have all kinds of way of quantifying it – in order to decide who gets how much. But basically it depends on the esteem of one’s peers – which is, of course, entirely subjective.

This is not as shocking as it may seem. A jury, for example, can sentence a person to death based entirely on its subjective opinions. It is not supposed to be that way: they are supposed to be objective, but that is impossible. We are subject to our passions, and should be.

In the same way, our productivity is subject to our passions – and it cannot be any other way. For people to be really productive, they have to believe in what they are doing. At the present time, this means they must believe in the system – something almost no one can honestly do.

The result? We cannot be productive.

The Networked Economy

I thought this was something new to me – but a quick Google proved me wrong. Wikipedia has an article on it – but associates it with the information economy. What I have in mind is something simpler: it can apply to any economy – even Costa Rica, which doesn’t have much of an economy at all.

It’s just a bunch of circles of various sizes (indicating the money in each location) connected by lines of various widths (indicating money flow). That’s all: just money – where it is, and where it is going.

Naturally, everyone wants to know how to grab some of that money. Obviously, you have to be where it is – not where it isn’t. This simple fact is something my gringo friends here are trying to circumvent: they want to live in Orosi, because it is so nice here – but also make money. It cannot be done, because there is no money here to get.

I can live here because all my money comes from outside: from my Social Security retirement income. That is what they want: those lovely American dollars. To get those they will tolerate people like me.

But let’s examine a bigger economy: the American one, probably the biggest one in the world. What’s going on there? Exactly the same thing: some places have lots of money and everyone moves there, for all the jobs – and price of housing goes through the sky. And all that money attracts all kinds of other people, some of them not the finest.

In short, money attracts money and successful areas have to cope with this rapid growth. Big cities in developing countries usually cannot – and the network falls apart in social anarchy. This is directly contrary to the ideology of the market economy – which believes the market is the solution to all our problems. Not necessarily – in many cases, it just makes the situation worse. The economy should serve the people – not the other way around. But let me return to the real world: the US.

In the US, the banksters know very well where those money flows are. They tap into them and divert much of it for themselves.

Everyone one else is left holding the bag – and wondering why it is so empty.

Diseases of Society

Society has diseases which destroy its health – just as there are diseases of the body. But social disease is more of a problem because human society can tolerate them – and not even be aware of its existence. It can live with diseases so serious it can barely function – and be completely ignorant of them.

In the past, this usually resulted in a weak society being conquered by a stronger one. But for our present global society this cannot happen, unless we are invaded by people from a another planet. Our enemies are internal: our financial industry, for example, is bleeding our economy to death. The result will be a much weaker human society, with no awareness of its situation.

This unawareness will not be universal, society always has people in it who are aware of its problems – the Old Testament prophets come to mind – but contemporary society has developed an amazing ability to ignore them. It can ignore anything, and considers this one of its strengths. Society has developed a mental illness, a social insanity. To put it bluntly: it has become a gigantic loony bin.

Human society is now a paradox: it has never been more developed, and it has never been more dysfunctional.

Consider the statement above: we have a good idea what developed means – at least we think we do. But its contrast, which I have labeled dysfunctional, (when I was tempted to use degenerate instead) is a mystery. What the hell is wrong with us?

We have a social disease without a name for it; perhaps we should call it x. What are the characteristics of this disease? This is a big question, and we might was well start off with big answer: a lack of being. This, I know, will mean nothing to most, but that is just the point: if you don’t exist, you cannot be aware of existence.

Let me tackle this from another direction. I am listening to the book The Emperor of All Maladies: a Biography of Cancer.  From it I am learning about cancer, of course – but more importantly, about Americans, and how they react to social problems: they declare war on it, whatever it is. And steadfastly refuse to consider what their problem really amounts to. They insisted, over and over again, that cancer was cancer, and that a cure could be found for it. Decades later, when it became apparent that cancer was really just part of who they were, and there were many different kinds, they quietly folded their tents and left the battlefield – having learned nothing.

To me this is an excellent example of what is going on: the few who want to know – and the many who do not. The few have to suffer fools gladly – and just accept the ways things are.

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