Showing posts with label Leverage. Show all posts
Showing posts with label Leverage. Show all posts

Saturday, October 28, 2017

Quatras Politicas, A Muslim suggestion on how the West can end its debt crisis

What is it, Westerners should let go of, in order to become a less indebted society? That would be the fear of self-reliance; the exaggerated specialization; the fear of individualism; the fear of small-scale; the fear of humble labor. Is there a thing as humble labor, anyway. They should let go any glorification of co-operation and doing things 'together'. All-in: Developing a more positive, proud concept of human nature, and their own populations, in general. Many, many nations on this Earth, have survived with small governments that don't plan an entire economy and have less bureaucracy, though their people have had to rely on their own capcacity to take care of their families and property. This is possible, because individual citizens are allowed ownership more than food, cloths, furniture, books, and decorations only. They can inherit their family home, or family business, and the land on which it is built, without having to pay huge taxes. They are allowed to build their own home and business, even if it's only as simple as a tent of a shed. They are allowed to be self-reliant and humble, in other words. Let's remember, that a humble start, even more so with family or neighborhood support, may very well grow and develop into sophistication. The West should, really, abandon centralized housing and real estate. It's former colonies, such as countries in the Islamic world; Africa; Latin America; Asia, have carried out landreforms, in many cases. They dismantled large landownership and gave the land back to those who live and work on it: The average citizens. It's true, that this hasn't always been a peaceful process. Zimbabwe is example of a country that made the right choice at great cost and with much bloodshed. They should have allowed white landowners a reasonable patch of land for themselves, like everybody else, and others could have put their expertise to good use. This is a valid question to ask. Yet, Zimbabwe made the right choice, towards genuine independence, in spite of the difficult transition it no doubt had to go through.

Arriving at sophistication, starts with hard work and building experience, and it can't always be delegated to others. The fashion industry is a good example. It's for a reason, that some Asian peoples are the world's clothes manufacturers: They realize, good clothes come with a price, which is hard labor and gaining skill, in small-scale business. In the West, many people receive several years of education to become a fashion designer, but what happens, after they finally get their degree...? Usually, they haven't got a clue, how to produce and sell the cloths and other fabrics they design. And end up doing something, they weren't educated for. Such a pity! This is, because actual production, is an overlooked aspect in all those years of education. The West should arrive at a better balance between education and gaining skills in work. This needn't be cruel or abusive. More manual work and more trading skills, would be needed in this example. Humility, is overlooked.

What kind of society and governance, will land reform lead to? 

It will lead to a society with more personal freedoms. That, is sure. But, also, with more personal responsibility. One may choose between producing themselves, or buying. It will create markets with many participants, both suppliers and buyers. Prices will lower. There's more space for competition. There will be healthy chaos: The chaos of an active and roaming population. This can be an envigorating force in society. People are allowed to develop themselves freely and keep more benefits to themselves. And because they don't have to pay half their earnings to the state, or more, they can also affort to not work. Those who own a  modest estate, can afford to reduce their work efforts. This is beneficial in times of illness, and may lead to more modest spending. Or, if they want to spend time and effort on another business, job, or hobby, as well. This, is good. It may lead to less stress -- whereas Westerners can't easily take a break from work, because they live in debt.

A society with small-scale ownership, needn't be a society wholly without regulating or protecting government, but government can be smaller. Also in a society with less difference between those who own nearly everything and those who own nothing but debt, Satan is still roaming. There still is crime and abuse. And, there may be threat from abroad. So, a government is still needed. Government exists to make sure, that existing legislation for economic life, is carried out. That those who enherit, buy, own, sell, initiate, produce, etc, indeed get what they are entitled to. That truthful standards are maintained. For instance, that people indeed sell the product they say it is, in quality and in quantity, and that sanctions exist to those who transgress. A product can be an apple, but also a complete college education. Government is there for those jobs that can't have owners: Communal tasks, such as infrastructure, the military, protection of the environment, geographical planning. And, government is needed for those tasks, where the private sector cannot always step in. It needs to take care of those vulnerable people (and other creatures) who have nobody to take care of them. It's good, that state education and health care exist. But, is it necessary to keep all education and health care in state hands? I'd say, it isn't. Quality of institutions, isn't always a matter of size or finance, nor of private versus public. So, a society with small-scale ownership, will still need taxes and bureaucracy, but considerably less than in the West. Not the entire people, needs to be kept hostage by the sheer thought, that there's always a small group of truly vulnerable people who need protection. That thought, is neglected in the West.

There will be a sharper separation between public and private tasks. Also that, is a good thing. Montesquieu invented trias politicas: A separation between legislation, governance, and justice. This plan isn't completed, yet. Montesquieu was child of a feudal society. Not even the French Revolution, has ended the feudality, for the French and other Westerners. Let's introduce something else: Quatras Politicas. Legislation, Governance, and Justice belong to the State, and Business, Residence, and Production belong to the Citizens :) @}}- A sharper separation between citizens and state in economic life, will lead to bringing back tasks to those where they naturally belong: The direct users and producers. It will lead to market balance, because monopolies and oligopolies will be broken. Markets will have many participating suppliers and buyers. Prices will lower; choice will multiple; there will be freedom of choice. And, specialization needn't end. Those who are trained for the job, will have success in their efforts. So at the individual's level, specialization will continue. But, it may also be easier, to have other, extra activity. There will be more separation between public and private money flows. The advantage of this is, that public debt has smaller impact on the private sector. State money creation stays within a smaller circle. Now, Westerners have lost sight of everything that matters to them, because there's huge conflict of interest between public and private tasks. And high taxes, make state money creation indispensable. The state would swallow its own citizens, otherwise.  Government is everything, does everything, either directly, or through privatized institutions, that have one owner only: Government. Noted should be, that not all Western nations are full feudalities, or welfare states. South European nations have much small-scale ownership and business, have a smaller welfare state, and lower taxes.

Also in democratic systems, government needs to go back where it belongs: In the ivory tower. Let it be three ivory towers, the smaller angles of the green, brown, yellow and blue cube of life and nature.

Western Economics Are Based On Fear, And Fear Creates Debt

What are economics, at all?

Economics aren't so much about the fact, that humans need to satisfy their survival needs at all, nor about how much it is they need. Those questions, can be answered by natural sciences. Economics answer, in the first place, HOW to satisfy survival needs. It's about humans working with figures, but it's also about behavior -- as an individual and as a group. Economics have three components: Granting and taking opportunities, and setting boundaries. Economics are, in the very first place, and in every sense of the word, a question of balancing duality. Secondly, economics naturally never stand still, and, thirdly, difference without judgment, is perhaps key component.

To name a few of the many examples of economic dualism that like to be balanced:

Full Stomach - Empty Stomach
Much - Little
Complex - Simple
Intelligent - Stupid ...?
Large company - Small Business
Macro - Micro
National - Local
Altruism - Individualism (Selfishness?)
You - Me
They - Us
Hunter - Prey
Receiving - Paying
Giving - Accepting
Group - Individual
Debt - Claim
Movement - Stillness
Global - National
Debit - Credit
Male - Female
Old - New
Risk - Security
Dynamism - Stability
Mind - Body
Mind - Heart
Thought - Feeling
Capability - Shortcoming
Self-reliance - Co-operation
Eating - Being Eaten
Solidarity - Individualism
Birth - Death
Blue - Yellow
Competition - Cooperation

All these, are natural dimensions of life. They all deserve their own merit. Westerners, however, ran into huge trouble, when they started classifying natural dimensions into a moral classification, and then try to fit in humans -- when it should be the other way round. Moral classifications of economics are only justified, when there aren't any conflicting interests -- not only between people, but also between people and any other creatures, and even objects. This is a situation, where no difference exists -- which isn't possible. And, if choices existed. But, nothing is more complex than life and the universe. 'Good <--> Bad' isn't a conclusion we should, each and every time, draw from difference. It's about eating and being eaten. Each creature is programmed in a certain way, with a certain role attached to that. A cat catches a mouse, but never vice versa. That, isn't possible. Does that make the cat a bad creature? And, is the mouse really a victim? What is a victim, at all? The concept 'victim', excludes any thought of a future. Who knows, whether the mouse, or its soul, is better off, being eaten? 'Work' isn't necessarily worse or better than 'not work', if no one gets hurt on its way. Same goes for the difference between rich and poor. Maybe, the poorer person is thankful, being deprived of the stress of large property and responsibilities. What is poor, in the first place, as long as people are able to fulfill their, and their family's, needs. Yet, the average Westerner, is brought up to think, that certain economic situations are better than others. Not being affluent, in this view, is intolerable. It's compulsory to function in a big, formal environment and be organized, whereas an informal environment may yield better result. Economics don't answer or judge questions like which activity is superior. Yet, Westerners strongly believe in an ideal, large-scale, economic structure with ideal jobs, designed into detail by a government or representative. People have to fit into this model, also when they can't, and if they can't, they must change themselves. The ideal person, reinvents him- or herself, or is rejected and stays at the sideline.

The second problem, Westerners created for themselves, as a group, is their low appreciation of the individual person. How does this effect average people? 'An ordinary person isn't able to take respondibility for his, and more so, her own life.' 'Only extrodinary people can take responsibility for fullfilling the people's needs'. 'Competition causes unemployment'. 'Only cooperation leads to secure improvement'. These thoughts, or rather, fears, led to economic specialization, as I said in my previous economics-blog: A work- and society concept, where people fill their daily task with only one, same assignment. If they want something else, be it a job or a product, they must outsource, against payment. The hope is, that everyone doing the best they can in their specific job, leads to a perfected group performance as a society. It leads, however, also to a society, where people need a lot of cash to fulfill almost all their personal needs, because they can't, or aren't allowed, to self-produce those items that don't belong to their job description. A society based on patronage, has thus emerged. Specialization and patronage, are main components of a feudality, because specialization isn't restricted to work only, but also to ownership. Only a few people own a nation's real estate, and the mass of the people and businesses, must rent their residence from this small group of owners. The deal is, that these owners have the specialist knowledge to maintain and improve the estate. And the problem is, one or two ordinary persons, take decisions for thousands of people. These thousands of people are perfectly capable of taking decisions for themselves, and these one or two leaders, are usually ordinary people with average character flaws. Sometimes, those flaws make them loose, or run off with, large quantities of money or property. The whole group is left empty handed, then. They must take decisions for too many people. In many cases, that's above their league. This structure has had great consequences for the West itself, but also for other parts of the world, as I said in my previous economics-blog.

Truth is, the average Westerner, has very little property. A Westerner, firstly, in many cases, is unable to continue an inherited family business. It must be sold, because inheritance tax must be paid first. The 'poor' and the huge state bureaucracy that takes care of the citizens, must be paid, after all. Same applies to many other investments, Westerners face this problem in many of their decisions, in order to lead a regular, natural life. A big example, is buying a house. The price of that house is huge, because of the taxations that come on top of it. And, because construction real estate is often government monopoly, or in the hands of large landownership. And, usually, because less than half the nation's land is available to small-scale, individual, private owners. So, a Westerner, usually, has to start his or her working life from scratch, without much help from a family estate. And, in many cases, then fails. Result is, that Westerners must receive back from the state, what they had to pay for: A rent house; social security money; a state-created job; food handouts. This is, how redevision of wealth works. People are forced to buy or rent at a price, and, if they can't afford it, they must receive state income support. Those in good health, or those who finish their education well, may very well succeed in finding a job or income source, and, thus, sufficient income, but those who fail, end up under financial state protection. Truth is, that latter group is economically bankrupt. And, this is a big group -- not a small group. It may very well be half the population, if we are honest enough to really face reality. The problem isn't limited to individual cases. Because many thousands of people rely on only a few employers, or on the state, they end up in serious financial debt, should the employer, or the state, suffer loss of income -- which is part of economic reality. So, in Western economy, times of decreased income, lead to severe crisis of the entire economy. In the West, recession is a disaster.

The West's third problem, is that economics are perhaps the only field of human activity, where it thinks, it can't learn from foreign systems and cultures. Call it a last remnant of superiority-ideas. Or, difficulty to identify with outlandish philosophy. So, those who want to make suggestions, should also use names from Western culture.






Thursday, February 18, 2016

Why the West has essentially always been a Feudal Society

I'll do my best to be brief here, on the topic of Feudality @}}-

'The West' as we know it now, started its history among Kelts, Romans, Greeks, and among the Germanic peoples in South West Asia. Those latter gradually invaded Europe; then settled down all over Europe, sometimes fully submitting to Roman rule and sometimes co-operating with it. This, until the Roman empire was unable to keep its rule over large parts of Europe, in 395 AD. Most authors define a Feudality as a system where a military leader, as a deputy of a King or an Emperor, owns a vast area of land, and allows the majority of the people to live on that land. The people living on that land either pay rent to or work on the land for a landlord, in exchange for military (and other kinds of) protection. The landlord, not having to work otherwise, could fully focus on defense. The king (who owns his own estate as well,) appoints new landlords to estates, or, at least, is the landlords' patron. This is the Feudal System known among the Germanic tribes. Its power was at its height from the 8th century till the 15th century AD. Feudal Society is seen as a collective, where the individual is supposed to serve the whole group. There's always some group ideal, for instance, God, the Nation, the King, or Independence, and to attain that, each person has a specific role of service, in exchange for another service. The Roman Empire, was a Feudality, too. Feudalism is a system of paid group patronage in any form. Serving oneself, or one's own family, is seen as undesirable, nepotist behavior. Self-reliance is impossible for most people living in a feudal system. Self-reliance is only possible for those who, thanks to good income or large estate, can own their means of production and housing, and also then, only up to a point. Sooner or later, also those with their own means are to contribute heavily to the collective state. The core of any feudal system, is leverage between owned property and debt. Not being owner of a production tool, house or land, means not carrying the risk of it, and, at the same time, enjoying the benefits of using it. Thus, having debt is seen as an advantage and not a liability. It's a temporary enlargement of a personal estate. This, in spite of having to regularly pay for using the borrowed or rent property. The reason behind favoring leverage, is a wish for specialization: If workers, individuals, and also organizations apply their talents and work force to only one activity, their skill, and hence their productivity, will increase. Fragmentation is seen as potential loss. Leverage is Feudality's main strength, but it can easily turn into its main weakness, once income slows down. This may happen to entire groups of households and businesses, and then lead to a major financial crisis of a whole society.

More varieties to the military Feudality exist. Western philosophers have spent many thoughts on them. Plato was inventor of an ideal feudal system. Philosophers should fully govern this society into detail, because they were considered morally outstanding. Society should be a hierarchical, communal system where individuals and groups had a clear role. Vertical mobility was possible in this utopian Platonic Community, but wasn't encouraged. Property, family life and marriage, were communal. The Romans had their own feudal system; many people had no property at all, and formal slavery also existed. Slaves lived with their masters. Big owners had the right to political and religious leadership. The Roman feudal system involved a lot more than only military patronage.

The Germanic peoples largely integrated the Roman feudal system into their systems, also after the end of Roman rule in Europe. Their feudal system changed over the ages. It started as a military system. Then, the Church entered as another feudal owner of land and real estate, and could never be disowned. A formal class society was introduced; top - down it looked like this: Church, Nobility, Free Citizens, and Serfs. With the Monarch and the Pope on top. Free citizens were those not part of both top classes, yet affluent and educated enough to afford their own estate or business. Serfs were those who lived in rent homes owned by the large landowner. Mostly, they weren't allowed to move out; they had to work and, or, pay to the landlord; and when the land changed ownership, they were part of the sold package deal. The landlord, in exchange, had to look after their safety and welfare, also after change of ownership. In business and production, the Guild System was aimed at disabling competition from newcomers on the market. It also wanted to organize the production chain top - down for more efficiency. Women, except for a few who managed to impose anyway, made no independent appearance in society; their status was defined by fathers and husbands. Women had no right of ownership, enterprise, education, inheritance, leadership, or free labour. And, in every society, a small group of non-committed nomads, gypsies, and homeless people persisted. Those who couldn't afford a residential existence, always risked to end up in that latter group. Society as a whole, was a top - down model, where the Church provided moral leadership, and Nobility and Monarchy provided economic and military sustenance. Free Citizens consisted of artistic, entrepreneurial, philosophical, and engineering persons, who couldn't be silenced by the top classes, and who gradually gained more and more influence and power on societies.

The feudal system changed from the eighteenth century. The third class of free citizens had gained enough strength of argument over Nobility and Church to raise their voices and change society into a place where all inhabitants could participate on a more equal basis. Philosophers like Adam Smith wrote works on how to arrive at change. Why was it seen necessary to come to a more equal distribution of wealth and distribution? Not only because it wasn't understood, why some individuals were more worthy of property, enterprise, leadership, inheritance, education, and free labour -- those rights didn't necessarily correspond with their capabilities -- but also because a hierarchical society wasn't able to fulfill all practical needs of all its inhabitants. A healthy market, after all, gives free access to all who can and want to participate. Only then, market forces can work efficiently and reach every supplier and customer. Every need will be met, at the right price. In a feudal system, there's only a handful of suppliers. They can't keep in touch with every 'customer'. They don't know, nor are they able, to fulfill every need. And, most people aren't allowed to fully participate. There's always something they are barred from: Be it work, selling, ownership, or production. And the reasons aren't always objectively justified. Prices are set by the small number of suppliers, who have insufficient knowledge of the real value of the product, in buyers' eyes. And buyers aren't allowed an alternative. There's enough alternative thinkable, such as home production or finding another supplier, but that's impossible in a feudal system, because of the compulsory patronage relations. This leads to severe shortages, when market supply slows down. And to severe debts among the many whose monthly rent duties to their landlord continue. And, landlords have resembling monthly or weekly wage duties to their workers.

During the Middle Ages, population didn't grow much, in Europe. Epidemics kept populations small. The problem of goods supply became a problem, when populations started to grow, as a result of new, improved farming technologies. The elite had to fulfill a much larger number of dependents' needs, and of course it failed. The West's traditional answers to this friction, have always been new Technology, Interest, and Occupation of Foreign Lands with Natural (and Other) Riches. Latter is called Colonialism, or Imperialism. Also Colonialism, Interest, and Technology failed to properly connect supply and demand, and also failed to keep all of its working population involved in its society. The cost of providing for everyone and of finding the necessary supplies to do so, has been immense, and cruel. Even the sincerest, most compassionate elites are never mind readers, nor providers, for an entire people. Then -- what happens, if the people's fate falls in the hands of tyrants? The problem, that the traditional feudal system didn't allow bottom - up feedback, had to be solved. Free Civilians have tried to find answer in replacing Church and Nobility by equalitarian legislation. More people had to be allowed to participate in society. But, that was only possible after a lengthy process of violently removing Church, Nobility, and Monarchy, in most countries. Those elites didn't voluntarily give up their positions. And those countries that were spared of violence, finally weren't necessarily better off (That is, they didn't reach the aim of equal opportunity.)

What did the struggle towards Equality result in? Three main roads were chosen:  Communism; Fascism; and our present, more complicated, inexplicable road, called Planned Market Economy, also called, sometimes, Social Democracy. Briefly, those three systems have in common, that a small group of outstanding leaders are responsible for engaging the population in making One Society. Work, especially a group working activity, is considered key component of a society where all work for one, and one for all. These three systems are a direct inheritance of the ancient feudal society, with its patronage system, meant to build a society. However, only the third route, Planned Market Economy, has survived so far, and also that system doesn't look like it has a good permanent survival chance. Communism and Fascism couldn't survive their self-created ravages. Both teachings are naturally autocratic systems that don't allow divergence from the mainstream. In practice, this led to extermination of minorities: Those smaller groups who don't fit in the collective workforce of the state. Those minorities were specifically mentioned groups and those who didn't fit in anyway: The most outstanding and most humble groups of people. Not only people of color, homosexuals, gypsies, or people with a handicap, but also investors, intellectuals, or outstanding artists, were typical victims of Communist and Fascist regimes. They were killed. There are many differences between Communism and Fascism, the most important two being their fierce competition over the same target group they aim to service, and the ownership of large property. Those matter less for the topic at stake here: The Feudal Patronage. The violent destruction of those minorities has been rejected now, which is the main reason, why most countries have turned their back on Communism and Fascism. It is perceived, that any state, at least, should uphold some sort of non-violent economic standard for all. Destruction of minorities obviously clashes with that standard. Therefore, the West thought that Democracy finally could overcome all inequality. Then, why did it fail?

Democracy aims at answering the general human need for justice, freedom, and equal opportunities for everybody. The traditional Feudality, after all, clashed with those values. The Church, Nobility, and Monarchies were, in most Western nations, seen as the main oppressive culprits to hinder them. Democracy rejects, that society's top classes should develop values and standards for everybody. Those powers were either overthrown, or they were given a much smaller, symbolic function in their nations. In the course of the twentieth century, also legislations were adjusted. Ownership, enterprise, leadership, inheritance, and labour were opened to everybody of sane mind and body and above certain ages. Same for the right to participate in politics. So, apparently, a society of freedom and equal right to participate had finally come. However, in many Western nations, large landownership persisted, and its population hence was still unable to provide for themselves. Technology had transformed Society in an industrialized, urbanized environment. Yet, in reality, the Feudal State moved with its people from the country to the city. In the city, and in villages with urban lifestyles, Social Housing Corporations and Local Authorities now became owners of most estates. They housed the people now, largely under very similar rules as in the Medieval days of the Feudal Estates. Because the people have to pay heavily for these Social Homes, a new patronage system needed to be established. How to achieve at that? Communism and Fascism were only partly able to arrive at that, because citizens were unable to freely express their needs and opinions. Since the Church and Nobility were dismantled, a new patron had to be found, and it was found in a depersonalized welfare and insurance system. The Nation's Tax Office and Government Insurance Institutions had key roles, here, in collecting funds from each citizen, as a percentage from their personal income, estate, or inheritance. Those funds had to be transferred to citizens without income, and to care institutions such as schools, hospitals, homes for the elderly and disabled, prisons, universities, and many others. An elaborate protective legislation for labor, housing, health care, education and several other fields of interest was developed. With the fall of Communism and Fascism, the Democratic political process took over the legislative role. In the past, Guilds, Nobility, and Church organizations had these tasks more informally. Guilds nowadays have resurrected as Organizations for Employers and Worker Unions -- to keep it very brief. Democracy granted the average citizen the opportunity to ventilate needs and opinions, but the basic economics hadn't really changed, in spite of the advancement of technology and medicine. Most people still have no access to work, property, etc. And they must carefully balance leverage, and if the balance heads towards the debt side too much, homelessness still is a real threat. Homelessness in the West may even have increased in several countries, especially in the Netherlands, because they don't allow nomadic lifestyles nowadays, and because only the state is allowed to build homes. I hate to say so -- I once had to call the ambulance for a homeless man in my own street. And we know, how monopolies and oligopolies lead to increased prices. The reality is, that the majority of people have no property, no independent source of income, and can, therefore, be considered economically bankrupt -- like the Serfs, in the Middle Ages. Democratic rights haven't given those people a lot more economic right than to express their needs. 'Redivision of property' may very well mean ending up without property, to many, as a consequence of the duty of surrendering a large part of their property and income to the Tax Office. This may mean loss of a house or a business, a situation that also effects those people who do have property. In times of low income, this threat is very real to many people. Economic rights, such as ownership or inheritance, exist on paper, but for many, not in reality, also today.

Because the Feudal State in economic reality persisted, also in today's Western Democracies, loss of income may, to many, lead to a large debt crisis of a whole society. Technology and Interest haven't led to the answer; they may even worsen the problem of scarcity and redivision, and it didn't put a stop to Imperialism and Colonialism. The many large State Institutions and Social Housing have to be paid. Some Western States have experimented with a newcomer on the Market Place: Money Creation. Money Creation had to become a declutter tool. Could Money Creation be the all-in solution, or is more needed ...? And, why and to whom, is the Feudal State such a problem?

Sources:
Plato - The Republic http://classics.mit.edu/Plato/republic.html
The Germanic Peoples - Odin's Volk http://www.odinsvolk.ca/GermanicPeoples.htm
Feudalism https://en.wikipedia.org/wiki/Feudalism
History of Feudalism http://www.historyworld.net/wrldhis/PlainTextHistories.asp?historyid=ac35