Congratulations Uncle Sam...

It's official, it has been counted and it is on the news world wide: 49 million Americans live below the poverty line. This means a slight adjustment to a chart I saw earlier:

In itself this graph tells two stories:

The percentages ("Hey it's not as bad as the late fifties!")

The Numbers ("Nope it's worse, especially now that we also calculate medical expenses etc")

If we measure from the 1950s, never have there been so many people in the US living in poverty. Mind you, I have based my two poorly rendered graphs on data from the National Poverty Center.

There is no shame in being poor. However, it is terribly impractical both for living a good life and for being competitive as a nation. Have a look and see what poverty does for health. Now look at what it does for education.
Boy, am I making a big fuss about this?
Well, yes. Health and Education are key pillars for a nation to maintain its competitiveness in the Global Economy.
Other pillars are well-functioning Private and Public Institutions, Infrastructure, Market Size (Domestic/International) and others. I am not doing a lecture here, but I would like to make the point that for a country to be competitive, it must have its basics in order.

And these seem out of whack currently, more so for the US than for Europe though Europe is learning quickly how to destroy its health and education infrastructure.

Let's look at this from another angle: the middle class is disappearing.
Having a middle class is important. Some may think it is so bourgeois, but that's just it! Having a middle class is 'increasingly looked upon as a precondition of stability in the social structures, as a means of softening social inequalities, as a way of retaining the status quo, as an instrument of achieving confidence in the future'.

I didn't have to think here but this is what you get: social stability, less aggravation over wealth inequality since middle class is a means to upwards mobility, a more relaxed way of being meaning that you can hang loose, and confidence in the future.

All this seems to have been taken away. Not given away, taken away.

So we now see the reason that the Occupy movement is not very defined as it points out an incredibly complex set of parameters that have brought us to where we are now.

Now the question is: how to move to a better place? I guess that one thing to do is to move away from hack-block austerity. And listen to Einstein:

Insanity: doing the same thing over and over again and expecting different results

This has been tried again and again: trickle down economics, and it hasn't worked for a variety of reasons. In my view mostly because it was ideological in nature and did not take into account factors like companies not investing nationally but off-shoring internationally, increasing government corruption, the negative impact of social and income inequality on national competitiveness, and so on and so on.

This doesn't mean that government can do all the work like FDR once proposed. Right now, the government just does not have the money. But things will need to be fixed, and fast.

The trouble with social unrest is that even when people try to be non-violent, the message they bring may cause other people to feel threatened and respond with violence. This may trigger real revolt or cause the nation to strike. Worst case: the country becomes a dictatorship.

People need to get started at disentangling the web that has been woven over years. All the strands need to be taken apart, government needs to do what it was designed to do, banks and corporations need to start working at recreating the country, which means that shareholder value for the coming ten years does not need to soar (I believe this is an important one), and economies need to realize that there is a time for growth and a time for relaxation: as I pointed out, there is a fine line between too much and too little regulation and valid representatives of the people must set the boundaries for businesses and banks to operate to help restore this world. This also means that everybody does what needs to happen at this moment to make sure we don't end up like this.

And this means that all sides need to give up a sacred little thing: that pointing finger.
Sure, Marx was right and Das Kapital as shown us the root of all evil. Have we read it?
Sure, Adams was right and his Inquiry into the Nature and Causes of the Wealth of Nations is the sexiest thing next to Pamela Anderson. Is it as up to date?

Occupy protesters are hippies! They use drugs! They do...

Police brutality! Bankers are nazis! They do...

The finger (pointing and occasionally middle) needs to go if we want to find a way out of this. We have the challenge of a lifetime:

• To save our sanity
• To save our selves
• To save our planet
• To save our children
• To save our souls

Time to get to work dudes and dudettes

Scylla and Charybdis

The deregulation of the market in the past 30 years has enabled corporations and banks to grow to a size which has started to destabilize the fabric of not only society but of capitalism itself. This shows itself in a number of ways.

Mass Extinction through Gravity

Because of their size, certain banks and corporations have started to destroy the competition ecosystem in the sense that their gravity makes it virtually impossible for competitors to even get a footing in the market: Competition is vital for the health of any ecosystem as it creates incentives for out of the box innovation. This innovation is driven by consumer demand. If consumer demand is controlled via mainstream mass media, and any alternative messages are drowned out by massive marketing campaigns, smaller companies and/or start-ups will quickly default. Compare this to putting earth close to Jupiter: though earth has technologically reasonably advanced civilizations compared to Jupiter (according to current knowledge), it will be ripped apart by the sheer gravity of Jupiter.

If the market is to stay healthy, it is necessary to create a more level playing field in the market where smaller companies can compete with the big boys.

Government Influencing through Gravity

Corporations are now in a position to severely influence and destabilize governments through the fact that they pay well for certain services. This former lobbyist describes in detail how just mentioning ‘that his company could be interested to offer a job to a government official when he stops’ was usually enough to own this person. Some people will object that this official should ‘just say no’, and in general I would agree that if somebody wants to serve the people, he should do exactly that: serve the people. However, should it be legal (or unregulated) for the company to just waltz in and try to bribe a government official? Many people refer to such regulation as ‘big government’, I rather see it as civilized government. If the United States want to evolve to a real democracy, such interfacing with the public should be regulated to battle the 3^rd world-type corruption that is witnessed nowadays.

Corporate Welfare through Corruption

Though corporations and banks maintain that they operate on the basis of ‘real capitalism’, I have some doubts: if real capitalism had been applied, most of Wall Street, the US automotive industry and many others would have folded. Instead, these companies have been bailed out with public money without even the constraint of transparency in how this money was spent.

Now this is a situation that 99% of us would like to be in…

This is not capitalism, it is not even socialism, it is a scam. Naomi Klein has described the principle of this scam in ‘The ShockDoctrine’: move public money to private entities' accounts.

Translation: taxpayer’s (public) money, meant for e.g. infrastructure, healthcare, environment etc, is taken and given to private companies where these companies have no result obligation.

Some people would get hanged for doing so in earlier centuries. We would call them highway robbers.

These are strong statements, but so is a foreclosure notice from Bank A to someone who did not make payment to Bank A because he was fired from his job at Bank A which he bailed out. 

If anybody wants to play in a capitalist market, they should be able to deal with adverse times by themselves. As companies in general do not want to make the investment to get to this state, the government should regulate and monitor this and be empowered to sanction non-compliancy if only to protect citizens against wild west style shoot outs.

Foreclosures by Companies on Welfare

This is adding insult to injury. What we see happening is that Bank A is bailed out by the government after losing at gambling with ‘products’ consisting of doomed mortgages (mortgages sold under false pretenses, i.e. we know the people that received the mortgage had a high likelihood of defaulting). Note: I am simplifying here and make no pretense that I understand such scams. The professionals don’t even really understand the Frankenstein monster they created.

So, Bank A is saved, and CEOs, sales managers and so on at the bank continue to receive their millions in bonuses, stock options and what have you. They now have time to look at the mortgages. Because of the crisis which Bank A partly caused, people start defaulting on their mortgages, and Bank A does not hesitate: foreclosure, get those people out. Let the state take care of them…

Again, public money to cover for private mis-management.

If banks can be saved from ‘toxic assets’ and be allowed to make a profit despite just having basically defaulted to the state, shouldn't citizens be saved from those same toxins?

Or should we just kick them out and see where it ends?

This is back to Corporate Welfare through Corruption. If the public bails out banks, this should mean that the banks have no claim on such mortgages.

Quick Conclusion

Am I saying that government should regulate everything? Am I pushing for ‘big government’?

Nope, I am just saying that it is time to find that thin line between a state-controlled market (does not work, the Soviet Union collapsed because of that) and a completely free market (as per above: does not work and is collapsing). Basically, the challenge is to navigate in between Scylla and Charybdis.

And that is something that some Greek dude was good at some time ago...

[To be continued...]