THE 20% – TAKERS, DESTROYERS, INHIBITORS, WASTERS.

“Be an admonisher to the rich..” Bahá’u’llah

In a recent community argument, it was offered that consultation would be favourable. I agree. However, consultation requires that both parties come to the table. In this case, one of the parties, a developer, has taken an attitude of ‘we want you to give us what we want, and we aren’t going to talk about what you want”.

There is an idea in the west that a thing, called capitalism, belongs to a western way of doing things. Capitalism is a term used by Karl Marx in the 19th century to describe a macroeconomic dynamic he was seeing. However that dynamic is a fractal social dynamic that can be observed since the agricultural revolution and, therefore, has its roots in prehistory.

Global_Distribution_of_Wealth_01Community research in the 1970’s in third world and first world communities, of all races, found that 20% of the community (usually certain families) tend to own 80% of the wealth. Zooming in on this, 20% of that 20% own 80% of the 80% of wealth I.e 4% own 64% of wealth and that fractal continues down to the most wealthy people on the planet. In line with this tendency, a recent report in “The Guardian” showed that 1% of the global population owned 48% of the global wealth.

Widespread poverty exists where there are no checks on the fundamental cause of this bias. For the fundamental cause lies in the shameless audacity of the few to assert their right to that wealth by any means available. There seem to be few internal ethical checks among this group and so only external checks in the form of human rights laws and taxes, maintains some favour in community. In countries where these laws are missing or malleable, poverty and injury is endemic.

Nonetheless, in all communities and nations as a whole, the economic bias exists, driven by the anti-community attitude.

Thomas Picketty (2013) has shown that only when heavy taxes apply to this 20%, does the whole community or nation thrive both economically and socially. Meanwhile it seems that, in every community and nation, it is important for the welfare of the community, to be mindful of those families who are organised to harvest the assets of the community for themselves. Without being mindful of these and creating community methods for redistribution, the gathering of the community assets, the destruction of the environment and the resources of the future, and the frittering of social capital, will continue until all is lost.

In the solution to poverty in the world, even if all the middle class people gave all their money to the poor, 80% of that money will end up in the hands of the wealthy 20%. In first world communities, the community spirit, the social capital, the aspirations, and the possibilities for improving welfare, continues to diminish so long as these groups remain unchecked.

Even of those who, having amassed incredible wealth and who then decide to provide some of that wealth to community through philanthropy, the question might be asked, “If your product, your profit, was more modestly priced, might not that product have been accessible to more, inspired more, opened more to the possibility of contribution, and therefore created vastly more innovation than the philanthropy that comes late to the growing problems.

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No More Namby Pamby

On this Christmas day of 2012, I am reminded of the moment that saw Jesus ben Joseph entered the waters of baptism, open himself to the Holy Spirit, and become to completely, wonderfully reflect the Glory of God. In every instance of His life, thereafter, He demonstrated that power through His unremitting stance for the spiritual requirements of all the people living in His moment, towards that day that ” shall come to pass in the last days, that the mountain of the LORD’s house shall be established in the top of the mountains, and shall be exalted above the hills; and all nations shall flow unto it. And many people shall go and say, Come ye, and let us go up to the mountain of the LORD, to the house of the God of Jacob; and he will teach us of his ways, and we will walk in his paths: for out of Zion shall go forth the law, and the word of the LORD from Jerusalem. And he shall judge among the nations, and shall rebuke many people: and they shall beat their swords into plowshares, and their spears into pruninghooks: nation shall not lift up sword against nation, neither shall they learn war any more.” Isaiah 2:2-2:4)

I am reminded that Jesus, forsaking every comfort so that He could establish the law of love with humanity and exact the promise of the Covenant of God with humanity, saying ” I have yet many things to say unto you, but ye cannot bear them now. Howbeit when he, the Spirit of truth, is come, he will guide you into all truth: for he shall not speak of himself; but whatsoever he shall hear, that shall he speak: and he will shew you things to come. He shall glorify me: for he shall receive of mine, and shall shew it unto you.” (Gospel of John 16:12 – 16:14)

And, even in that, He made it clear as he felled the tables of money veiling the sacred place, the place of worship, that there is necessity in the spiritual stance to go to the priests of rituals of the ego and yell loudly, “NO! NO! NO!, GET OUT! GET OUT! GET OUT!

For Jesus, that stance was completed in His recognition that they would, then, find an excuse to kill Him. For the money makers asked Him,” “What sign shewest thou unto us, seeing that thou doest these things? Jesus answered and said unto them, “Destroy this temple, and in three days I will raise it up.” Then they said, “Forty and six years was this temple in building, and wilt thou rear it up in three days?” But He spake of the temple of his body.” (King James Bible, John 2:18-2:21). His death would be the opening of the hearts of His disciples to the Holy Spirit and the establishment of Temple of Christ in the hearts of people throughout the world.

And, so, here, at Christmas 2012, my ego railing within, reminding me of the words that Christ gave us to use to put voice to that ego and its soothing, “if it be possible, let this cup pass from me: nevertheless not as I will, but as thou wilt.”(King James Bible, Matthew), I take this stand. I commit to the promise of love and peace. I commit to saying to the priests of rituals to the ego, war, and hoarding. “NO! NO MORE, NO EXCUSES!” I commit to turning guns into plough shares. I commit to turning violence into calm and peace. I commit to raising the children of the world with physical and spiritual nourishment. I commit to empowering the youth as peacemakers and community builders. I commit to turning prisons into playgrounds. I commit to caring for the planet for every living thing. I commit to the dance of extending love and justice across the planet. No more Namby Pamby. I take this stand.

The Innovation Renaissance

In his TED talk and Book, Alex Tabarrok, dispells the myth that patents are good for innovation. Rather, after spending a lengthy introduction to that problem his eye swerves to an obvious but lateral solution: education. In, what Tabarrok defines as the $40 trillion reward for the USA, he analyses the growth of productivity in the USA since WWII and the relationship between increased and decreased productivity to the educational progress. In short when educational progress stagnated, so did productivity and vice versa. Tabbarrok estimated that a 25% increase in overall educational scores across the workforce would result in a $40 trillion bonus over 80 years.

Tabarrok then goes on to define the solution to increasing these scores to quality in teaching. Explaining that the results are in on teaching with the best kindergarten teachers multiplying their effect to $320,000 per year for a class of 20 children. Tabarrok’s overall solution then is to have a policy of substituting the bottom 5% of teachers, with teachers of average (no the best) quality. And then, pay them more.

While educational systems seem hell bent on putting barriers in front of children reaching their fullest learning potential, by restricting their access to complex problem solving in society and the abstract, I suspect the best, even the average teacher in Australia well knows how to make this work. It is time to free learning for children. Freeing and rewarding excellence in teaching is the only way into the future for all humanity.

 

 

Capitalist Milk Wars Ruin Australian Dairy Industries.

When capitalism goes crazy, people get hurt. Milk wars between Woolworths and Coles in Australia are ruining people’s lives. Here is a letter from a dairy farmer,  Judy.

Dear All,

 I feel deeply compelled to write to you all about an issue that makes me incredibly sad and angry. Homebrand milk is literally driving dairy farmers around the country BROKE, OUT OF BUSINESS.

 For an excellent 5 minute snapshot of why $1/L milk hurts dairy farmers, please watch this story from today’s edition of ABC Landline. I beg of you to take 5 minutes to watch this story. Listen carefully to the reasons why cheap milk is killing farming businesses & milk processors.

 http://www.abc.net.au/iview/#/view/989906 (this will take you to the start of Landline on ABC IVIEW. Just skip ahead to 24 minutes into the show and the ‘Down Down’ story about the dairy industry will start).

 

The biggest issue with cheap milk is that is creates a perception that that is what milk is worth – that $1/L is the actual real cost of making milk, processing it and transporting it to stores. Whereas in fact, $1/L is not a real price. It is LESS THAN MILK CAN BE PRODUCED FOR. Dairy farmers are losing money on every litre of milk they produce at current prices. While it may make consumers feel good to be saving a few cents on their weekly grocery bill, in the long run it is doing irrevocable harm to Australia’s dairy industry. The scary thing is, that without dairy farmers, we won’t be able to buy fresh milk at the shops. If we as consumers want to be buying fresh milk (ie milk that was taken from a cow within the last few days, hopefully somewhere near where you live) we need to have dairy farmers. The alternative to fresh milk is dried milk, or maybe some form of rehydrated milk made from dried milk. At the current rate of exit of farmers from the dairy industry, in five years time there won’t be many left. Already, WA and QLD are TRUCKING milk from Victoria because of milk shortages. That’s right, QLD is short of milk so we have to get it from Victoria!!! Yet, my cousin and my good friend have been driven out of dairy farming in QLD because they aren’t being paid what it costs them to produce milk.

 

I have personally seen the impact of low milk prices. My cousin was a third generation dairy farmer who has now closed his dairy because he cannot keep farming at a loss. A good friend of mine is a third generation dairy farmer who has THIS WEEK sold his cows because, based on the forecast milk prices he will be paid this coming season he, his wife and their three children will LOSE $200 000/year (the same amount as the farmer interviewed in the ABC story) if they keep milking cows. He once had 5 people working for him, they are now unemployed, plus a farming family now has no income & a significant loan to service. My friend believes there will be a mass exodus of dairy farmers by early to mid next year once the next season milk prices are formally announced. Those farmers that stay in dairy farming will be either: going further into debt to survive, working off-farm to support the farm business, cutting staff, reducing costs (which means poorer quality feed, less vet visits, less antibiotics for cows etc etc) or, all of the above.

 

Have you ever been to a dairy farm at milking time? I spent many of my school holidays as a kid milking cows and I can tell you it is not a pleasant job to slop around in cold water, cow poo and milk at 5 am in the morning. This is done twice a day, 365 days/year. It is always a crying shame when we lose any farmer because he’s not being paid properly for his product but it’s even worse when it’s a dairy farmer because it’s such a difficult job and it’s a miracle we’ve got any people willing to do it in the first place! We can’t afford to lose anymore! Australia is heading for a milk shortage in the future and we will struggle to find people willing to do this work. We cannot keep underpaying farmers or we will all be using powdered milk in our coffee or paying ridiculous prices for fresh milk.

 

I beg of you to watch the Landline story above, and, if you’re feeling extra concerned, watch the story below about WA’s milk industry and see a retiring dairy farmer crying on national TV about what’s happening to the industry and the fact that his sons can’t farm because it’s unviable (http://www.abc.net.au/landline/content/2012/s3536466.htm).

 

Take action – don’t buy $1/L milk, please. Send a message to the big supermarkets that you don’t tolerate raping Australian agriculture for the sake of a marketing ploy. If you can, buy milk from small local companies so you know your milk is grown locally and fresh (not trucked from Victoria), but at least, buy branded milk eg Dairy Farmers, Pauls etc so that at least your dollar is telling the big supermarkets that you don’t want Aussie farmers to be paid less than cost of production for their milk. The next time someone asks you to donate money to cancer research or some other noble sounding cause tell them you can’t afford to donate because you buy the more expensive milk, because you value Australian dairy farmers and you value fresh milk for your kids.

If this issue concerns you too, please take the time to pass this email on to your friends and family.

 Thank you for your time,

Judy …

The Rich Don’t Create Jobs

Nick Hanauer is a venture capitalist from Seattle who was the first non-family investor in Amazon.com. Today he’s a very rich man. And, somewhat jarringly, he’s screaming to anyone who will listen that he, and other wealthy innovators like him, doesn’t create jobs. The middle class does – and its decline threatens everyone in America, from the innovators on down.

Apparently Hanauer gave a talk in March 2012 at the TED University conference and it is not uploaded becasue TED officials have declared it too politically controversial to post on their web site. Here is the transcript from National Journal.
“It is astounding how significantly one idea can shape a society and its policies.  Consider this one: If taxes on the rich go up, job creation will go down. This idea is an article of faith for republicans and seldom challenged by democrats and has shaped much of today’s economic landscape. But sometimes the ideas that we know to be true are dead wrong. For thousands of years people were sure that earth was at the center of the universe.  It’s not, and an astronomer who still believed that it was, would do some lousy astronomy.In the same way, a policy maker who believed that the rich and businesses are “job creators” and therefore should not be taxed, would make equally bad policy.  

I have started or helped start, dozens of businesses and initially hired lots of people. But if no one could have afforded to buy what we had to sell, my businesses would all have failed and all those jobs would have evaporated.That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is a “circle of life” like feedback loop between customers and businesses. And only consumers can set in motion this virtuous cycle of increasing demand and hiring. In this sense, an ordinary middle-class consumer is far more of a job creator than a capitalist like me. 

So when businesspeople take credit for creating jobs, it’s a little like squirrels taking credit for creating evolution. In fact, it’s the other way around.

Anyone who’s ever run a business knows that hiring more people is a capitalists course of last resort, something we do only when increasing customer demand requires it.  In this sense, calling ourselves job creators isn’t just inaccurate, it’s disingenuous.That’s why our current policies are so upside down. When you have a tax system in which most of the exemptions and the lowest rates benefit the richest, all in the name of job creation, all that happens is that the rich get richer.Since 1980 the share of income for the richest Americans has more than tripled while effective tax rates have declined by close to 50%.  

If it were true that lower tax rates and more wealth for the wealthy  would lead to more job creation, then today we would be drowning in jobs.  And yet unemployment and under-employment is at record highs.

Another reason this idea is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the median American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, we go out to eat with friends and family only occasionally.

I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or cars or enjoy any meals out. Or to make up for the decreasing consumption of the vast majority of American families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.  
Here’s an incredible fact.  If the typical American family still got today the same share of income they earned in 1980, they would earn about 25% more and have an astounding $13,000 more a year. Where would the economy be if that were the case?

Significant privileges have come to capitalists like me for being perceived as “job creators” at the center of the economic universe, and the language and metaphors we use to defend the fairness of the current social and economic arrangements is telling. For instance, it is a small step from “job creator” to “The Creator”. We did not accidentally choose this language. It is only honest to admit that calling oneself a “job creator” is both an assertion about how economics works and the a claim on status and privileges. 

The extraordinary differential between a 15% tax rate on capital gains, dividends, and carried interest for capitalists, and the 35% top marginal rate on work for ordinary Americans is a privilege that is hard to justify without just a touch of deification 

We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Rather they are a consequence of an eco-systemic  feedback loop animated by middle-class consumers, and when they thrive, businesses grow and hire, and owners profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.

So here’s an idea worth spreading. In a capitalist economy, the true job creators are consumers, the middle class.  And taxing the rich to make investments that grow the middle class, is the single smartest thing we can do for the middle class, the poor and the rich.”

While there is something a little clunky about Hanauer’s argument, including that the person who can make wealth, can also utilise that wealth for purposeful means that create jobs and assist the progress of civilisation. Nonetheless, there is sense in his demand for a democratic system of governance in which taxation rates are progressive according to wealth creation. If we take the principle that everyone in a democratic system admits to paying a equitable share of the wealth they have drawn from the nation of resources, then equity demands that the return from wealthy people to the commonweal will be proportionally greater than from the poorer people. In fact, the social contract in democracy would see people like Nick Hanauer increasingly volunteering their money to the commonweal. A progressive taxation rate might be based on a formula in which the lowest 10% income earners pay zero tax, the next 30 % pay 20% tax, the next 30% pay 40 %, and the highest 30% pay 60%.  This system pragmatically, as in the Australian system, precludes tax on that first increment (as per the lowest 10%) for everyone. Certainly I agree with tax deductions for the costs of running business and employment. And so, even at the upper level, the wealthier person is accumulating significant dollars.
Meanwhile the progressive tax system creates a huge feedback loop into public services and infrastructures, assisting the nation in times of downturning economic times, and in steering a nation’s socio-economic direction toward ‘greener’ pastures. Ironically, it is toward ‘greener’ pastures that all modern economies require steering this century.  How the taxation system can be used to steer that course is another important discussion. Regardless, I would suggest that the total taxes paid by an individual (including a company) should not be much less or at all higher than I have suggested here. It’s leverage would be only to create small percentages of rewards for change of economic behaviour. For the wealthy who need to lead economic changes, even small percentage changes amount to great increase in wealth, so any rewards must be discrete indeed.