The horizon is not so far as we can see, but as far as we can imagine

Category: Prosperity Book

How the structure of everyday life creates sociopathic corporate leaders

We talked about how the structure of our upbringing teaches people to be passive and choose from choices offered from them, rather than creating their own, better choices.

But that’s only part of the equation. The other question is: How is our leadership created?

For this we must look at the structure that sorts out leaders from the rest of us. Today I’ll write about corporate leadership

A corporation exists to create a profit. It has no other innate purpose, this is embedded in the law. The corporation is structured so as to remove liability for criminal acts from its owners, and, in practical terms, it also somewhat shields those who control it (its executives and corporate officers) from liability for their actions.

A competitive market is one in which profits are steadily pushed towards zero. If anyone can do what you do (freedom of entry), if there are no information barriers (patents, copyright, secrets) and there are no scale advantages others cannot also achieve, there is no reason why any product or service you create cannot be copied by someone else, who then undercuts you if collusion is not allowed.

To make consistent profits higher, then, than inflation plus the rate of growth of the economy requires that you not be in a competitive market. This is explicitly recognized in strategic thinking, that in a fair market, there are no competitive advantages, and that therefore you need to create an unfair advantage.

Anything another company does which increases their profits, no matter how unethical, if not forbidden by effective law (as opposed to theoretical, aka. unenforced law) you must also do.

What is important about this is that the drive for profits above all and the requirement to gain an unfair advantage as dictated by modern strategic thinking (there are other ways to create an advantage that aren’t unfair, but that’s not what most companies concentrate on) means that you have to do evil. If your competitors use cheap conflict metals from the Congo, the control of which is gained by mass campaigns of rape, you must do so.  If an insurance company denies healthcare to people who are desperately sick, it makes more money.  If a power company doesn’t spend money on anti-pollution equipment, or dumps untreated effluents rather than treated ones, it makes more money.  If a clothing manufacturer doesn’t spend money on safety equipment for its highly flammable factories, it makes more money.

It is also in the interest of corporations to create barriers to entry: to enforce stringent patents and copyrights; to ask regulators to say that only some banks get access to the Fed window, giving them a massive advantage over others; to buy politicians who can use public money to subsidize them or bail them out; to insist that money go to them for bailouts rather than to ordinary householders, and so on.

At the lower executive level, the more you can get out of your employees, no matter how you do it, the more likely you are to be promoted.  And fear, terror and cost-cutting, while they aren’t the only way to do this, are easier to sell to higher management and pay back faster.  When they backfire in the long run, as is often the case, well, you’ll be gone, because you’ll have been promoted.

This leads to the common observation that corporate life is about the next quarter or year, not the next decade.  What matters is how much profit you’re making now and next quarter, especially to your chances of promotion, not what will happen in the future.  Corporate capitalism is largely incapable of planning more than a few years out, certainly not decades (there are exceptions, but even those exceptions, like insurance companies, have been losing that ability.)

High compensation is also an issue.  Once you ascend to the senior corporate ranks, your bonuses are based on short term performance and are large enough that after a few years, and sometimes just one, you have enough money you’ll never have to work again.  So you don’t care about the long term, because you don’t need the company to be there long term, only to make as much money as fast as possible.

As a low ranked boss, you terrorize your employees, treat them badly in whatever way is required to make short term profits and are promoted upwards.  As a high level executive you make strategic decisions that require you to hurt people you’ve never met through pollution, failing to invest in safety, or political corruption.

The summary of all this is that the structure of your life, of incentives, in the corporate world, sorts out people who are willing to hurt other people, now and in the future, for their own benefit and to corrupt their own system of government and law for short term advantage.  If you aren’t willing to do these things, you are unlikely to rise far in a modern corporation, and almost certain not to make it to the CEO level.

It is not that there are no other ways to run economic organizations, and it is not even that these things are necessary to gain a sustained economic advantage, but these appear to our current corporate leadership to be the easiest and quickest ways to make money.  It’s simple to make the argument “if we cut wages and make people work like dogs, our profits will go up.”  It is hard to make the argument “if we raise wages and treat our people well, our profits will go up”, even though the second is true.  And much of modern economic life is a hostage situation: if company A is using metals created through the terror of mass rape, well, you’re at a disadvantage if you don’t too.

Strong and ethical government takes those hostage situations off the table, but when you’ve bought out government, that’s no longer possible, so  you feel compelled to do evil.

People with strong ethical foundations will eventually balk.  There will come a point where they will say “no, I’m not doing that, I’m not rewarding people who rape hundreds of thousands of people by buying their blood-drenched minerals”, and that’s the end of their promotions.

Even people with weak ethical foundations may eventually say “that’s just too much, I know these employees and they’ve been loyal to me and I’m not laying them off.”  End of that person’s career.

The end result of this is Jamie Dimon.  You wind up with people who, if they aren’t clinical sociopaths and psychopaths, act like them.  At best they care for a few people close to them, their family and friends, and they hurt everyone and anyone else around them as necessary to get ahead.  People who get off on it are probably at an advantage, taking joy in your work is a competitive advantage after all: love what you do!

This isn’t necessary, in an economy where we decide to take certain behaviours off the table by agreement, legislative or ethical.  It isn’t necessary from an ideological point of view, since there’s plenty of evidence that happy employees are more productive, and it isn’t necessary even from a theoretical point of view because even very light protection of works plus happy employees allows you to create a sustained economic advantage by just creating teams of people who are better than the opposition rather than winning because they have a positional advantage.

But it is how we’ve chosen to do things.  Our society elevates functional sociopaths and psychopaths because that is not just the behaviour we reward, it is the behaviour we demand.

What is an economy?

Perhaps the greatest difficulty I have talking about the economy is that most people don’t understand what an economy is.

An economy is what people produce and the relations that make that production possible.

An economy is not money.  Printing more money does not automatically increase the size of the economy as various episodes of hyperinflation clearly indicate, but also as the giant printing of money in the last five years should have shown to people.

Money is created by printing in a fiat economy, whether it is physically printed or not.  When a bank creates a loan it simply adds numbers to various accounts, and it does not have to “have money to loan”.  The same is true of brokerages offering loans for stock purchases and so on.  There is no direct organic relation between the amount of money in the economy and the amount of economic activity.

Moreover it is quite possible to increase the amount of money in the economy while decreasing activity.  When a huge loan is taken out to buy a company, and then the company has employees slashed and plants closed, real economic activity decreases, even as the amount of money increases.  When you insist on 15% profits and obtain them by refusing to do needed maintainance, firing employees, doing stock buy-backs and so on, real economy activity decreases.

If you measure the output of an economy in money you get a very distorted picture of what is actually going on.  There is less employment in the US in percentage terms than there was at peak, and absolute numbers are only now about getting even, yet people have been blathering on about a “recovery”.

It is quite possible for people to be doing things that are, on net, negative.  Every dollar earned by the financial industry in the 2000s was lost and then more in the financial collapse: real damage to real productive capacity was done.  We were earning more money, GDP was increasing, and (at least) houses were getting built, but the cost was offshoring and outsourcing of jobs and decreased actual wellbeing (it is in the 2000s that American height, for example, began to decrease.)

Money is not the economy, and increases in money do not necessarily mean the economy is getting better or even bigger, let alone actually increasing the welfare of the population.

Now increases in money SHOULD reflect increases in the welfare of the people, or at least in the size of the economy.  Money should have an organic relationship to the economy.  But for it to do so we must want it to.

Take the classic post-war economy (pre 70s.)  You can borrow money if you have a house or a business.  The house is valuable not so much because you can live in it, but because living in it means you are close to a job.  It is the job that allows you to afford the house, and if you lose the job, the house still has value because there are other jobs nearby for someone else.  If you do not believe this, I invite you to look at what happened to housing prices in Detroit when the auto industry left that city.

The house is secondary, though, the jobs come first.  A farm has value because you can grow food and sell it, a business has value because it makes money.  All of these things, presumably, produce goods or services that people want or need, and if you no longer want to run your farm or business, someone else can.  A loan just allows you to take some of the future value of what you own, and use it today.

Economic financialization seems like an extension of this system.  If you have a money flow of any type, why not borrow against it?  Why not borrow against its appreciation? Why not then sell those money flows for money today?  There are three problems: the first is pyramiding. You borrow against a money flow, then you use leverage and buy other money flows and then you leverage on them, and soon the underlying asset is a tiny fraction of the money you have. (No leverage on loaned money is thus the first principle of avoiding problems, loaned money is already leverage.)

The second problem is printing money with no underlying asset at all.  When the Fed is creating 82 billion out of midair every month, half of which is spent on treasuries, there is no organic relation to the underlying economy.

The third is that some people get to borrow money for much less than other people.  Banks get prime (or less).  Large investors get close to prime, ordinary people get Prime ++, if they can get less than 20% on a credit card.  This is justified by “risk”, but the risk is mostly that the person doesn’t have access to essentially free (prime rate) money.  It also distorts the economy, because it favors financial companies since the interest rate is the cost of money, and the cost of money is a cost of business, which means financial operations are cheap even before you get to the fact that financial operations also have access to the highest amounts of leverage.

The problem here is that finance creates NOTHING of worth itself.  It exists (or should exist rather) only to facilitate creating goods and services with actual value: food, housing, entertainment, medicine, art, philosophy and so on.  Those goods and services, or rather the people, equipment and relationships that produced them, are the economy.  Finance’s purpose is only to help allocate money between those activities, and it is only one mechanism of allocation.  The market will not allocate money properly to many goods because it undervalues the future (so, for example, education, especially in the humanities and basic science), cannot account for externalities not embedded in the valuation system (that you are getting sick from my pollution is not the market’s problem), and cannot value anything that is not denominated in cold hard cash (like love, or friendship or a sunny day free of smog or the health of someone who doesn’t make money.)

Any society which makes all or most of its decisions about how to allocate money through the market mechanism will be hell on earth and will devalue those things most important to human happiness and meaning.  It is not an accident that the depression rate in the US has increased by an order of magnitude in the last hundred years.

If you give outsize money returns to finance then, it drives out actual productive investment in the real economy.  If you make the market your primary method of allocating funds, it doesn’t allocate resources to the future or to intangibles and ignores externalities which are key both to long term growth and avoiding negative outcomes (like your kid having cancer, or your spouse dying of cancer, or your sibling having a debilitating case of depression.)

But the problem is worse than this.  Money, as my friend Stirling Newberry has noted, is permission: it is the right to decide what other people do with their time.  Money lets you buy up people who spend all day lobbying government, it lets you create political movements, it lets you buy up think tanks and universities, it lets you create your own mercenary army.  If you are throwing off more money than other industries, it lets you take over those industries. It lets you buy government, and thus control the rules.

If some group, in an economy, has a consistently higher rate of return than other groups over a long period of time, they WILL become dominant in that society absent a reaction by violent men.  Period.  Because they can use that money to decide what other people do.  This is true not just of finance, it is true of any group of people controlling a bottleneck resource (see: oil, among others).

You can solve this one of two ways: you can make sure no one gets these consistent outsize returns in the first place (remember, basic economics, if an industry is making more than average profits, they are not in a competitive market, there is an inefficiency).  Or you can just take their excess profits away from them.

IF you choose not to do so, because they have bought the system and created an ideology that says it is unfair to take money away from people who are given a systemic advantage by being allowed to create money from thin air and/or borrow it at prime when no one else can; or that the people allowed to control oil production should be allowed to keep all its benefits because they created the oil, or some such, then those people WILL come to control your society and they will create it in their image.

I will discuss at a later day happiness and meaning (and even eudomania), which should be the sane goal of any political economy. I will discuss how to design an economy which works for everyone.  But the first thing to realize is that you must want that, and you must believe it is Just that your society be run that way.

If you do not believe that it is moral and right and just to tax people who have a structural advantage in your economy (and that structural advantage can and will exist if you remove the State entirely), if you do not believe you are allowed to redistribute, if you do not understand what the economy is for (creating the good life), if you do not believe in not allowing concentrations of private power based on position, then you will not keep whatever prosperity and good life you have, because those who win the game (and someone always will) will buy up the game and change the rules to ensure their continued wealth and power.  They will do so in a way that will cost you your liberty, your health and your prosperity.

There will always be winners and we don’t want to change that. Let them win, let them enjoy winning in their time, but do not allow them to buy the system, to destroy the actual productive capacity of the system, or to try and make money the sole determinant of how decisions are made.  Doing so, letting market mechanisms work until they don’t, then continuing to use them anyway: refusing to enforce competitive markets and keep markets doing what they do well and only what they do well, is why we had a financial collapse, why we’re in a depression, and why we have a catastrophic climate change episode coming our way which will kill a billion people or more.  It is why we are seeing a long term decline in happiness in market democracies, why we have soaring rates of depression and chronic disease, rising chronic unemployment, and a host of other social ills.

An economy exists to fill the needs of the people in it, material and non-material. It has no other purpose.

How to Create a Viable Ideology

The most important question about any ideology or social structure are: “Does it win?” and “Can it defend itself?”

Hunter-gathering, if the land-capacity isn’t close to carrying capacity, is usually a pretty good way to live. What we see in the archaeological record is that when the land gets close to carrying capacity, there is ton of violence, the number one cause of death of adult males becomes violence. Enough below the carrying capacity and there is very little violence. This is a generalization, there are exceptions, but the data seem to indicate it is generally true.

Hunter-gatherers are, generally speaking, healthier than agriculturalists and pastoralists. They live longer, suffer less from disease, are taller, the women have wider hips and suffer less from childbirth, they have better dentition and so on. The societies, again with some exceptions, are more egalitarian than most agricultural societies (though very early agricultural societies are more egalitarian than late hunter-gatherer societies, again, in general). They also have vastly more free time than agriculturalists.

Basically, being a hunter-gatherer is about as good as it gets for most of human existence. There are some better agricultural societies to live in for brief periods (certain periods of Roman history, say) but they are rare. Industrial society produces better medicine and goods, but we work harder and have vastly more chronic disease even at the same age, and industrial society includes, as its concomitant, things like the widespread rape in the Congo and African poverty–that’s a requirement of our society, it’s not incidental.

But hunter-gatherers lose confrontations with pastoralists and agricultural societies. It’s a great way to live, but more dense societies were better at violence, so hunter-gatherers were forced to the margins.

Whatever your society is like, it has to be able to win confrontations. However your ideology organizes your society, even if that ideology produces a much more enjoyable society in which to live than your competitors, it must be able to persist in either the long or short term against its competitors. Otherwise, you’ve got a problem.

Time-scale matters. An ideology that produces a society that lasts for 150 years of pretty wonderful life then loses to someone better at violence might look pretty damn good to most of us.

An ideology may also have internal contradictions which doom it. The Soviet form of Marxist-Leninism was vastly successful in its early years, something we forget now. During the Great Depression, the USSR was doing far better than most of the rest of the world (except the fascist bits). The USSR is the only country larger than a city state to industrialize using anything but mercantilism. I am aware of no other exceptions.

But the USSR’s control mechanism could not deal with the information problem. It worked gangbusters at first, but then parties formed who were able to control information flow to the central planners, doomed it. Mancur Olson, in his book Power and Prosperity, deals well with both the rise of the USSR and its fall.

Neo-liberalism has amongst its internal contradictions the complete inability to manage climate change. This contradiction comes from its insistence on short term interest and its refusal to deal properly with public goods. To neo-liberalism, the future exists only at the point a market starts discounting that future. Unfortunately for the world, markets suck at recognizing the future beyond a few years out, and by the time a market notices, the key decision points for heading off an undesirable future may well be long past.

(Neo-liberalism also has a pile of other internal contradictions, but this isn’t an article on neo-liberalism, so we’ll pass them by for now.)

Within an ideology are prescriptions for internal vs. external power relations. So a society must be able to win its fights with outside societies running different ideologies, but it also includes prescriptions for how power is divided internally. In the European Middle Ages, most of Europe was ruled by rapacious nobles, but the Swiss Cantons had male suffrage. This was based on the fact that Swiss Pikemen could beat the pants off feudal noble cavalry. But the requirement for Swiss Pikemen was economically prosperous men who could and would fight, not starved peasants. And men who could fight, and had to fight together, insisted on having power.  There is a direct analogy between this and classical Greek Democracy (made up exactly of the fighting population), and the Roman Republican period, where citizenry is divided into three classes, based in part on how they fought (the Equestrian class, above the Plebes, could afford to fight on horseback.)

Power comes in a number of flavors. You have violence. You have productive capacity.  You have consumptive ability. You have social ties. You have ideological production.  The more of each of these any group has, the more power they have. The more power they have, the more of the surplus production of their society (or, in many cases, the non surplus production) they are able to control.  If you want prosperity, you want power spread as evenly throughout your society as possible. You never want complete equality in outcome, because you do want some competition, it helps drive society forward, but right now our problem is the exact opposite: too much concentration of power, too little equality.

Each of those groups, and they will exist, will compete against each other. Different people have different interests. If one group or a coalition of groups gains more  power, they will also gain more of the productive surplus. Part of an ideology’s job is to make it so that, as much as possible, everyone’s interests in society are similar.

John F. Kennedy once said “a rising tide lifts all boats.” People took that as a descriptive statement, but in a society it is not, it is a prescriptive statement: if you want any increases in production to go to everyone, you have to make that happen, and to make it happen you have to believe it should happen. But the step before that is making sure that power is divided relatively evenly through society, so that it does happen. But, again, that is an ideological choice: many people don’t believe that everyone should have relatively equal power.

To have relatively equal power you cannot allow the means of production or violence to be overly concentrated.  Jefferson was making a profoundly practical statement when he warned that banks and standing armies were dangerous to a republic and democracy. Banks allow people to print money, those who print money make money, it gives them a powerful advantage over people who cannot do so. Those who control violence: well, I’m sure I don’t have to make that point.

It is for this reason, for example, that I believe everyone (male or female) should have military training.  It is not an accident that Switzerland, where every male has an assault rifle and military training, has such a high standard of living or voted on whether to have a guaranteed annual income. It is also why I believe in cadre armies and that no large standing armies should exist.  (The solution for money creation is more complicated, and I’ll go into it at a later date.)

If you want a society, then, which is prosperous and egalitarian, with the proceeds of increased production going to everyone and not just a few, you must have an internal structure of power which gives ordinary people quite a bit, makes concentration of power in private hands difficult, makes the government unable to use too much power against its own citizenry while (and this is the important bit) still being able to defend itself externally, and able to resist internal putsches. Egalitarian societies which cannot defend themselves get overwhelmed by hierarchical societies which are better at violence.

This extends to monetary matters. If outsiders with money can buy up your society and upset your internal political and productive relationships because they are more efficient, or just bigger, or have their capital more concentrated, if you will let them buy you up because some part of your society wants to cash out, then whatever internal relationships you have are vulnerable. This has happened to vast swathes of the third world, where Westerners come in and buy out traditional relationships. NAFTA pushed millions of Mexicans off their farms, made Mexico weaker because those people now needed to pay for food (often foreign, and also less nutritious), and made Mexico, objectively, worse off than before NAFTA. But some Mexicans got very rich by selling out.

This is a particular problem for smaller groups trying to create societies within larger societies. If you can be bought out, if some of you want to sell, take the money and run, you are not viable. Quakers and so on have an ideology which doesn’t allow for selling out this way, thus they are viable in the long-term, whatever one thinks of them.

So, an ideology, a belief system, among other things, tells you what is and isn’t legitimate to sell for money. A stable system says you can’t buy key parts of the social structure. In a functioning democracy, anything that comes even close to buying a vote, for example, is verboten. When we moved from late Feudalism to early industrialization, feudal rights were done away with–including the commons. Enclosure of land took away rights from people who had them before and gave those rights to other people. Serfs, for all we sneer at them, had rights. Those rights were taken away. The ex-serfs who flooded into early industrial cities after enclosure lived far worse lives than they had under late feudalism (this is WELL established). They lived shorter, unhealthier lives, worked harder to earn money which left them living in worse circumstances than when they were back on the land.

So when you’re creating a new ideology, or modifying an old one, you have to consider these points: the relation to the means of production, the ability to generate violence in defense or offense and the effectiveness of that violence, the question of whether the system can be capsized by money or if the key parts of the system are off-limits (due to irrational attachment, absolutely it must be irrational) to capsizing through money or equivalents. If you want an egalitarian prosperous society is power objectively divided up so that the masses have the ability defend their share of surplus production? How will those who do get a little extra (and they will always exist) or who control a little extra, try to capsize that system and seize more? What are the protections against what they will try and are those protections based on strong, irrational beliefs and backed up by a willingness to employ violence? (If you aren’t, and they are, you will lose. Period.)

Note, finally, the use of the word irrational. We think of irrationality as bad, but rational decision making leads to betrayal. If someone’s going to offer me more than I can otherwise earn to betray the rest of my people, a lot of folks are going to take that deal unless they have the irrational belief that it’s wrong, and a rational belief that if they do it, those who have an irrational belief in the system will hurt them, or even kill them.

This is ideology. Any ideological system that doesn’t produce people willing to die and kill for it, will lose to an ideology that does. The question is not whether violence is permitted, the question is when it is permitted. Most of us want to live in a peaceful society; I certainly do. But that peace is always and everywhere under-girded by rules about when to commit violence, a willingness to do so and an ability do it well. Societies and ideologies that do not do violence well exist at the sufferance of those who do, and live under the conditions and in the places that those good at violence permit. Generally very bad conditions.


If you enjoyed this article, and want me to write more, please DONATE or SUBSCRIBE.

The Keys to Prosperity

I’ve mentioned before that I’m writing a book on how to create prosperity.   Let’s run through the basics.

First, you have to produce enough.  Goods and services.  Everything from food and shelter, to music and philosophy.

Second, because prosperity means widespread affluence, you have to take what you produce and get it to everyone or as many people as possible.

Third, you have to be sure you’re producing the right stuff – food that makes people healthy, philosophy that doesn’t turn people evil, housing that keeps people healthy and in good social contact with each other, and producing in a way which doesn’t destroy the bases of prosperity, whether that’s the soil, water and climate you need to grow food, or the ethics which make prosperity possible.

The principles behind this aren’t that difficult, really.  Use the free market for what it’s good at (creating and distributing certain types of goods and services.)  Discourage rent-seeking.  Understand that how much money people get is largely unrelated to their contribution to society.  Remove bottlenecks to growth.  Don’t destroy your sinks (like carbon in the atmosphere), don’t overuse renewable resources, understand the obsolesence of non-renewable resources.  Keep the rich poor, so they don’t buy the political system, keep influentials independent as much as possible, keep the interests of the powerful alligned with the mass of society.  Don’t financialize.

Oh, to be sure, there are technical details, but the core is ethical.  The people who make up society must want to do the right thing, must believe in a particular conception of kindness and fairness.  It is not accident that after the Great Depression and WWII, when the majority of people in the West understood, deep in their bones, that life is unfair and that group effort is what makes nations great that the great general prosperity occured. It occured because the GI generation and the Lost Generation insisted on it, voted for it, worked for it.  It happened because they believed in general welfare, in looking after the least amongst them, and in the future, not the past.

Prosperity is ethical.  The ancient Greeks had a saying which ran as follows: “a society is great when old men plant trees in whose shade they will never rest.”

To repeat, don’t let any group get too powerful or rich, make the right stuff, then distribute it.  Sometimes the right stuff should be distributed by the free market (which is kept free by very strict government oversight), sometimes it is distributed by the government, sometimes it is provided by neither but by the social sector (parenting instead of daycare.)

Again, ethics are the most important part of prosperity, just as you can’t cheat an honest man, an ethical population will create prosperity.  As Machiavelli wrote, good laws will not save bad people, and good people can make bad laws work.  Nowhere is this more evident than in the United State, and its rampant contempt for its own Bill of Rights.

As soon as people become greedy, as soon as they want much more than their neighbour, prosperity will fade.  Contrary to the mantra of the greed is good free market fundamentalists, greed is only good in moderation, and a society with many billionaires cannot and will not stay prosperous.  Once we stop caring about the sick, the poor and the prisoners, once we become mean, self-interested and judgmental, we undermine the mass participation and the kindness which is required for prosperity.

The developed world will become prosperous again when societies pull together for the benefit of all, when greed is no longer glorified and barely tolerated, and when we decide to make the right stuff, the stuff that is good for us, instead of the stuff which we know is bad for us.  And we will find true prosperity when we commit to raising everyone in the world to prosperity.  Prosperity based on exclusion, whether that exclusion is based on where you were born, who your parents were, or what attributes you won in the genetic lottery, cannot and does not last.  If we want lasting prosperity, we must all come together, with apologies to Dumas, as one for all, and all for one.

The coming catastrophes and the Rawlsian veil of ignorance

A just society, according to Rawls, is a society whose structure, whose rewards and punishments, are set up before we know what position we will hold in it.  The Rawlsian veil of ignorance cuts deeper than most people realize.  Take for example old-fashioned meritocracy: grades, schooling, intelligence.  Should intelligence be highly rewarded?  Would you set up society to reward the smart heavily if you didn’t know you’d be smart?  Most of smart is your parents, in terms of nutrition, education and genetics.  You don’t choose your parents, you can’t know that you’ll be smart before you’re born.  Smart is mostly not a choice, neither is healthy, nor a type A personality, and so on.

The great problem we have today in improving our society, in fixing our economy, is that so many people don’t want to give up what they have.  If you work in the health insurance industry in the US, an evil industry whose job is to deny care in exchange for money, for example, your job needs to go away. It is a job which does more harm than good.  If you work in peteroleum extraction, well, most of those jobs need to go away.  If you work in a large bank or brokerage, well, your job needs to change in a way that will deprive you of your high bonuses, and which will leave many bankers and traders unemployed, because banking done in a way that build society rather than tears it down probably doesn’t need your skill set.  We need a lot less accountants, a lot less administrators at universities, a lot less soldiers, a ton less spies, far fewer people working in the military-industrial complex, and on and on.

But what the past 40 years have proven is this: if you lose your job, you’re on your own.  If you’re in your 40s and 50s and you lose a good job, you’ll probably never, ever, have a good job ever again.  People who are displaced by economic change, good or bad, aren’t taken care of.  We have reduced retraining, made welfare and unemployment insurance harder to get, increased university tuition, not made efforts to find or create new, good jobs.  We hire foreigners to take over the job of older techies, since they cost too much.

People know, they know and they are right, that economic change, in our society, could cost them everything.  Their job and any prospect of a good job.  Their house.  Their marriage.  Their health care and even their life.

So they grasp tightly to what they have, and everyone fights to make sure that nothing really changes.  Each person, with their little or big piece of the pie, fights viciously to keep it whether it’s good for society or not.  They are right to do so.

This is why we can only have change after catastrophe: after war and famine and revolution, because only in extremis, only when, as in WWII, people realize that everyone is in it together, will they be willing to take care of each other.  And only in time of catastrophe, when so many have lost everything, will they be willing to change society.  Catastrophe forms a Rawlsian veil on the future: you don’t know, after the age of catastrophe, what your position in society will be. Not knowing that, it behooves you to make that society as equitable as possible.

This is the argument for catastrophe: that we will not, cannot, make the changes required to avoid catastrophe until we have lost or truly, existentially, fear the loss of everything.  We will not be fair and kind to each other till we have no choice, we will not be fair and kind to others till we know we need that for ourselves.

This is sad, pathetic even, an indictment of humanity.  Does it have to be so?  I hope not, but I fear it does.

It is such issues I will discuss in my coming book.  Are we bound to the wheel of causality even in our own societies, or can we take control of our own destinies?

To know what to do is not enough

For the past year I’ve been writing a book on prosperity, by which I mean widespread affluence. It’s been slow going, not because I don’t believe I know the general technical requirements of prosperity (I do, if I didn’t, I shouldn’t be wasting anyone’s time, including mine, writing the book), but because the real problem isn’t the technical details like eliminating bottlenecks, or redistributing income, or setting up positive feedback loops, or avoiding fraud, or stopping financialization, or any of the dozens of other subjects I either visit at chapter length or touch on briefly.  The problem as with, say, stopping smoking, isn’t so much what to do, it is how it comes that we do it.  When do we make the decision we’re willing to do what it takes, sufferer the negative consequences of getting to a better place, and then push ourselves through those consequences?

This is a huge problem in individuals, as the weight loss, addiction, psychology, psychiatry and self-help industries attest.  There is, generally, more money in  not solving a problem, as drug makers with their palliatives understand, than in solving it.  The people who have power and money and influence in the status quo are not sure that in a new world, with a new economy, and the new ethics which must undergird that new economy, they will be on top.  They are right to believe so.  They are creatures of the current world, and in being created, have created the world they are unsteady masters of.  Their ethics and morals, their way of business, of living, of apportioning power and influence and money must go if there is to be widespread affluence.  Their methods have been tried for 40 odd years now, and if measured against the human weal, have failed.  They will not, they cannot adapt, not as a group. They were not selected for the skills it takes to create a new type of affluent society, they have not even been able to maintain the mass affluence of the old society, and not just because they have not wanted to.  They would be a different elite, made up of different people with different ethics, talents and skills if they did want to.

Ordinary people also have the wrong ethics, the wrong morality.  Much is written about why consumerism is bad, but the ultimate problem of consumerism is not how it makes us feel but that the consumer passively chooses from a menu created by others, not to fill the consumer’s real needs, but to benefit those who created the menu.  Such a passive people cannot understand that choosing choices without creating choices is not choice, it is the illusion of choice.

So while my book has a lot of general principles of the sort which books on prosperity often have, such as about trade, and productivity and technological change, that isn’t the most important part.  The part that matters isn’t about the technical requirements of prosperity, it’s about why and when people do what is required to achieve prosperity, and when they don’t.  And when, having obtained it, they throw it away.

Our society is ours.  A tautology, but one we forget too often.  As individuals we often feel powerless, as a mass, we have created our own society.  There are real constraints, physical constraints on what society we can have, based on the resources we have, the technology we have mastered and what we understand about ourselves and our world, but those constraints are not, right now, so tight as to preclude widespread affluence, to preclude prosperity.

They are, however, tight enough to preclude continuing to do the same thing, led by the same sorts of people, and expect anything but decline, repeated disasters and eventual catastrophe.  We can be affluent and prosperous, we can spread that affluence and prosperity to those who do not have it now, but we cannot do it if we insist on keeping the current forms of our economy, including our current forms of consumption.  This does not mean doing with less, it means doing with different things, valuing different things.  Those new values will be better for us, objectively, they will make us both happier and healthier, just as most addicts are happier once they’ve broken their addiction, or rather once they’ve gone through withdrawal and rebuilt their lives.

We can choose not to do so.  We have, in certain respects, already chosen not to do so, as with our refusal to do anything about climate change until it is too late (the two problems are combined, climate change is a subset of the political and economic problems we have).  We can, also, choose to make the necessary changes, not only to avoid the worst catastrophes (disasters are now inevitable, there are consequences to failure, stupidity and greed), but to create an actual, better, world, a world in which the vast majority are healthier, happier and doing work they care about.

The monster facing us, as usual, is us.  The monsters are always us, our brothers and sisters, and the one in the mirror.  And it is those monsters I’ve been wrestling this past year.

Page 2 of 2

Powered by WordPress & Theme by Anders Norén