A Conspiracy of the Rich

Thomas More’s life spanned a tumultuous era in European history during the Renaissance with many notable changes that included the emergence of the nation state. Europe and England were still founded on the economic models of feudalism, in which virtually all power resided with rich nobles while the peasants endured a backbreaking existence that supported the lavish lifestyles of their rulers but provided little more than a subsistence level of existence for themselves. Humanists often argued against feudalism, seeing it as a society dominated by the rich and exploitative of everyone else. In May 1515, More was sent to Bruges as part of a delegation to revise an Anglo-Flemish commercial treaty. It was during this trip he began to write Utopia. He coined the word ‘utopia’ from the Greek ou-topos meaning ‘nowhere’. But this was a pun – the almost similar Greek word eu-topas means ‘a good place’. The story of the fictional island society of Utopia was meant to contrast with the reality of European rule, divided by ideologies, greed and corruption.

During a visit to the Low Countries, the persona More was introduced by his friend Peter Giles to Raphael Hythloday, a world traveller who describes during a conversation the island of Utopia and its culture. In pursuit of his argument, Hythloday proceeds in a critical analysis of such things as the patterns of law, government, economics and mores among European nations, most particularly in England. He touched on the severity of the penal codes, gross inequities in the distribution of wealth and unequal participation in productive labour. For example, in Utopia workers are able to apprentice and learn more than one trade. They only work for six hours a day. No one is forced to work for unconscionable hours each day. However, nobody is allowed to lounge – the few that do are punished.

They do not suffer from lack of productivity, unlike the European population where there is a significant percent who do no productive work at all: rich gentlemen, all their retainers, and all the beggars. In addition, in Utopia they diligently maintain everything they build, thus have to spend far less energy undertaking rebuilding. With the general lack of Utopian vanity and understanding of utility and style, the goods Utopians use are also far less difficult to produce. The process through which their intellectuals are uncovered depends only on individual merit, a remarkable idea in an age dominated by privilege and birthright. Utopia is not ideal because its people are perfect, rather because its laws make it so that Utopian citizens must act perfectly despite their inherent failings as humans. Thus, utopian society is much more productive compared to any in Europe.

Hythloday believes Utopia to be the greatest social order in the world. As he says, ” I can have no other notion of all the other governments that I see or know, than that they are a conspiracy of the rich, who on pretence of managing the public only pursue their private ends, and devise all the ways and arts they can find out; first, that they may engage the poor to toil and labour for them at as low rates as possible, and oppress them as much as they please. And if they can but prevail to get these contrivances established by the show of public authority, which is considered as the representative of the whole people, then they are accounted laws.”1 Hythloday believes any other society than Utopia is merely a conspiracy of the rich whose objective is to increase their own wealth. Laws that they themselves established to protect their own interests support them.

Thomas More criticized the penal system in his book. In the 16th century there were few prisons. The only people incarcerated were for debt; such prisoner’s had to pay for board and lodging. The justice system was calculated to ensure tranquility. There was little need for prisons; the penalty for most crimes was guilty by death, while the innocent simply went free. Hythloday believes that it is unfair to create a society where the inequities are such that people have to steal in order to live, and then to hang people for merely trying to survive. He proposed as an alternative to death and execution to use imprisonment as a punishment. Thieves would work for the commonwealth, the vice is destroyed and people are permitted to live.

Faced with increasing populations situated outside the reaches of the disciplinary structure of the wage labor system, the neoliberal state reformed welfare into prison-fare to exert social control and to become a solution to structural economic inequality and political instability. From 1980 to 2010 the US penal population more than quadrupled during the same period when there was a massive drop in crime rate. The consequence of new mandatory minimum sentences for low level drug offences is the incarceration of a large population of non-violent, poor and mentally ill. The system affected black people disproportionately. In fact, black people were ten times more likely to be imprisoned for drug offences. Today the consensus is the system is broken; the only debate is how to fix it.

Today many need to work two jobs to make ends meet. This trend intensified in the aftermath of the Great Recession. The number of part-time jobs has increased significantly since 2007 while the number of full-time jobs dropped – corporations decided not to add full-time jobs that come with costly benefits. Now many workers find themselves stressed working 60-70 hours a week as the only way to survive. These long hours are mentally and physically exhausting and lead to stress at work and at home. Long-term stress can result in anxiety, high blood pressure, and a weakened immune system. It also contributes to depression, obesity and heart disease. People who experience excessive stress often deal with it in unhealthy ways such as overeating, eating unhealthy foods, smoking cigarettes or abusing drugs and alcohol.

Most of the wealth generated in finance is not even investment in the old sense of providing capital to productive or soon-to-be productive enterprises; it is just placing derivative bets on price fluctuations and nothing what ever to do with growing anyone’s business in the old text book sense. Greedy decision-makers on Wall Street with a sense of entitlement chose not to apply critical thinking but to intentionally take advantage of people, which led to the melt down of the economy in 2008. Many in the middle class saw their comfortable retirement, their home equity, and their dreams destroyed. Neoliberals emphasize that the role of government is to create a good business climate rather that look after the needs and well-being of the population at large. In a crisis conflict between the integrity of the financial institutions, on one hand, and the well-being of citizens on the other, the former was privileged. Deregulation has been, above all else, a means of reducing corporate business’s accountability to the public.

Neoliberal philosophy has a willful blindness to the connective activities of government and other social institutions. Neoliberalism is a class ideology – reduction of state interventions in economic and social activities and the deregulation of labour and financial markets. The pay back was to be the unprecedented creation of jobs and wealth. The application of these neoliberal policies has been responsible for a substantial growth of social inequalities within the countries where such policies have been applied. The major beneficiaries of these policies are the dominant class which have established a new aristocracy around the world who are primarily responsible for the promotion of neoliberalism. We need to recognize that factors like income inequality have far reaching implications and can undermine the economy everywhere in addition to the moral implications of one group’s comfort depending on the poverty of another.

The psychological defense mechanism used by the rich is splitting – a mechanism that diffuses the anxiety that arises from our inability to grasp the nuances and complexities of a given situation or state of affairs by simplifying the situation and thereby making it easier to think about; it also reinforces our sense of self as good and virtuous by effectively demonizing all those who do not share in our opinions and values. The combination of idealized markets and demonized government leads now during the current post-financial crisis austerity to a hollowing out of the government role in society and the economy. Neoliberals attack the connecting functions of society both through propaganda and through changes in government policies. The consequences of these attacks sets up a cycle of physical and social infrastructure crumbling under the false pretense that there is not enough financial resources to bring to bear on these vital social needs.

The dogma of deregulation and minimal government feeds the growth of globalization. Corporations are increasingly relying on outsourcing, acquisition and mergers, relocation of plant and equipment, and aggressive money management – all made possible by deregulation and computer communication technology. As the power of the nation state declines, sovereign power comes to be exercised by corporations – the welfare and security of individuals now depends on contracts with these organizations. These arrangements now mirror the political economy of the Middle Ages – ushering in virtual feudalism. The consequence of this exploitation is a middle class under attack with a growing economic gap between the wealthy and the rest of society.

In order to ensure the survival of the richest, it is democracy that has to be heavily regulated rather than capitalism. Poverty is socially constructed, not naturally created. Through virtual feudalism global corporations have engineered the economic decline of many individuals. Greed, weakened unions, and the effects of globalization drive inequality. Free markets are not really free – they come to be dominated by giants like Time Warner and Rupert Murdock. The greedy, the corrupt and the useless are as much in evidence today as they were 500 years ago. The present social order, a conspiracy of the rich, has lasted an extraordinarily long time. If a utopia is to be realized, one must refuse the transparent falsehood that the primacy of economics over politics is the best form of government.

1 Utopia: Top Ten Quotes. http://www.novelguide.com/utopia/top-ten-quotes

Posted in economic inequality, Uncategorized | Tagged , | Leave a comment

How to Fix the Democratic Deficit

Continue reading

Posted in economic inequality | Tagged , , , , | Leave a comment

Neoliberalism is a System of Violence

The elections of Margaret Thatcher in 1979 and Ronald Reagan in 1980 can be viewed as inaugurating the formal period of neoliberal economic policy dominance at the state level. A financial elite set in motion a process to reinvent government and have the market to serve as a model for structuring all social relations. Neoliberalism creates inequality in wealth and income and puts political power in the hands of ruling financial elites. Now 400 families control half of America`s wealth. A neoliberal ideology today defines the social relationships of poor people and the attitude towards them that supports an economic system that creates inequality. Key parts of neoliberal economic policy have increased inequality and risk stunting economic growth across the globe, economists at the International Monetary Fund have warned. Inequality is not only the natural state of market economics from a neoliberal perspective, but it is actually one of its strongest motor forces for progress. Neoliberals claim the concentration of income and wealth since the 1990s produces a more efficient and vibrant capitalism.

Neoliberals insist that they are agents of change. They aim to reform society by subordinating it to the market. Their goal is essentially to erase any distinctions among the state, society and the market. A major challenge of the neoliberals is how to maintain their pretence of freedom as non-coercion when, in practice, it seems unlikely that most people would freely choose the neoliberal version of the state. Their answer is to treat politics as if it were a market, and promote an economic theory of democracy while redefining the shape and functions of the state. In this manner, pretend one can replace ‘citizen’ with ‘customer’ and create a system based on market logic. In this system there is no special status of human labour. The human being is reduced to a bundle of investments and skill sets involved in an entrepreneurial strategic pursuit of advantage. The individual no longer has a special status; classes disappear as every individual is both employer and worker simultaneously. This vocabulary disarms discourse around such issues as social justice.

Neoliberalism directed its criticism against what was seen as an overextended role of the state in the economy and focused its discourse on defining the role of government in governance of society. The main thrust is to ensure the state provides the appropriate environment for the market to operate optimally. However, neoliberalism has negatively affected large numbers of people through retrenchments, degradation of work, misuse of the environment and increased poverty. It has been documented (in the UK) that social inequality is directly linked to public support for increasingly harsh criminal justice policy. It appears that over-representation of low status individuals might actually be perceived as justified because of stereotypes linking low economic status to perceived spiteful and insensitive disposition. Unsurprisingly, then, unemployment, inequality, and poverty have become increasingly blamed on the individual rather than on structural constraints. Many believe the simultaneous demise of the welfare state and the growth of the penal system are not a coincidence but rather a development designed to control marginalized populations.1

As austerity measures intensify in the wake of the most recent global financial crisis; it is becoming ever more clear that neoliberalism exhibits a distinct relational connection with violence. Following 2013 acquittal of Trayvon Martin’s killer and the killing of Michael Brown in Ferguson, Missouri, in 2014 Black Lives Matter (BLM) became a rallying cry for a new chapter in the long black freedom struggle. BLM is doing more than linking racism not only to police violence but also to poverty and economic violence, and the need for deep political and economic structural changes. Specifically BLM targets a failing system of public education which is virtual school to prison pipeline for many black youth. In addition BLM wants the government to dismantle the prison industrial complex, to address safe and affordable housing, food security, and address health issues such as the reproductive justice challenges affecting poor women of color. The BLM message is black lives tend to be undervalued and more likely ended by police. The movement is about ending the fear that many black Americans feel when it comes to interacting with law enforcement.

Poor people can spend over 30% of their disposable income on housing. Providing supportive housing for individuals and families and making rent affordable for households at risk of homelessness would address this. Single mothers represent a disproportion of those living in poverty. Providing access to subsidized childcare for poor families would allow women to further their education and/or make it feasible for them to work. The economic and social conditions under which people live, rather than the biomedical risk conditions and lifestyles choices are the factors determining whether one develops chronic conditions like cardiovascular disease, which develop primarily from material depravation (of poverty), excessive psychological stress and the adoption of unhealthy coping behaviors. The link from family household income and poorer social and health outcomes is well documented – the growing income inequality in Canada and the US associated with globalization poses a significant threat to the health of many.

Conditions for the neoliberal vision of a good society were constructed – “disorder” was defined in a manner conducive to private business and development. For the most part there was no meaningful community input to policing rather a full embrace of private business and financial section input. The result was the criminalization of “disorder.” Suddenly police became more concerned about panhandling, public singing and dancing, loitering, public drinking, bicycle riders, boom boxes, prostitutes, graffiti and street vending than they were about serious criminal harms. Criminalizing previously noncriminal acts resulted in a strategy of order-maintenance policing that was both punitive and judgmental in vilifying those who might be marginally annoying but in no way dangerous. This was pandering to corporate interests while waging a war on the poor. In concert with the severe cuts to social service programs and the new definition of “crime” as disorder, policing became a major policy initiative in dealing with structural poverty.2 Today it is an unmitigated failure, which has backfired. Now in many places police are afraid to get out of their cars.

Luhmann’s theory of communication – a system is defined by a boundary between itself and the environment, dividing it from an infinity complex, chaotic exterior. Social systems consist of communications. Only social systems communicate not humans. When a social system communicates there is boundary between itself and the environment, a zone of reduced complexity. This leads to differentiated communication defined as the permissible communication one is limited to in dealing with complex elements within a system. Differentiated communication is found in politics, economy and religion. It has a binary code: profit / no profit, for / against – creating a dogmatic verdict. The rebuttal to ‘black lives matter ‘ which is about erasing the vulnerability and dehumanization of black people has been ‘all lives matter’ pretending the choice is binary and act as the other side framed it that way – a handy dodge, but dishonest, if one group you are talking about is subject to particular peril.

Neoliberal ideology claims the market ensures everyone gets what they deserve. In the era of neoliberalism, human beings are made accountable for their challenges or conditions according to the workings of the market as opposed to finding faults in larger structural and institutional forces like racism and economic inequality. The market exchange is an ethic in itself, capable of acting as a guide for all of human action. In our neo-liberal societies, each person is their own undertaking as a self-entrepreneur, existing in a series of contractualised relationships that are governed by the logic of self-improvement. It is up to us to make ourselves better, we are told, and the system simply supplies us with the appropriate tools to use – tasks to undertake and ladders to climb so that we may realize our potential. All lives matter – appeared in response to BLM. On CBS’s Face the Nation, Rudi Giuliani observed: “Black lives matter. White lives matter. Asian lives matter. Hispanic lives matter,” the idea being that all lives matter just the same. To Giuliani who sees ‘black lives matters’ as “inherently racist” and “Anti-American” is part of the neoliberal script no laws should be written that take particular care of one group but not another. Giuliani is on message with neoliberal thinking that no one has special status.3 This makes it possible to ignore the fact racial bias exists even when it is no longer conscious.

The Great Recession was the wake-up call: neoliberal fundamental economics was an ideology that was never supported by economic theory nor supported by historical experience (based on the 2008 debacle). It is a consequence of restructuring of class power in favour of the elite. The rise of Bernie Sanders and Donald Trump in the US is a flag of the white middle class anger of those left behind by the economic inequality in the present economic system. The BLM movement is about interpersonal violence within the US increasing as neoliberalism expands. Neoliberalism has no vision of the good society or the public good and it has no mechanism for addressing society`s major economic, political and social problems. Economic conditions (i.e. inequality) are both the causes and the effects of violence with those on the poorer end of the spectrum experiencing the most violence.4 The restructuring of class power in favour of the economic elite sets up aggression, frustration and ultimately violence – confirming neoliberalism is a system of violence. As a result, neoliberal capitalism has nothing to do with democracy as justice is now linked to a market logic that divorces itself from social cost. What the movement is trying to address is state violence in all its manifestations – healthcare, the education system, in addition to police – to ensure racial equality.

1 How rising social inequality may be fueling public demands for increasingly harsh criminal justice policies. http://blogs.lse.ac.uk/usappblog/2016/01/28/how-rising-social-inequality-may-be-fueling-public-demands-for-increasingly-harsh-criminal-justice-policies/

2 Police Violence, Capital and Neoliberalism (15 Jan 2015) http://uprootingcriminology.org/essays/police-violence-capital-neoliberalism/

3 Kluger, Jeffry. Enough Already With ‘All Lives Matter’ http://time.com/4400811/all-lives-matter/

4 Smith, Candace. (6 Nov 2012) Neoliberalism and Inequality: A Recipe for Interpersonal Violence? https://thesocietypages.org/sociologylens/2012/11/06/neoliberalism-and-inequality-a-recipe-for-interpersonal-violence/

Posted in economic inequality | Tagged , , | Leave a comment

The Social Contract of the Neoliberals

We should not forget that the definition of poor people and the attitude towards them has always been one of the mechanisms of economic systems that create inequality. Once the status of the poor was part of a religious view of society – the poor person thought to be in a blessed state led to the cultural acceptance of poverty. The Church taught that giving alms to the poor was the most important good work that a layperson could do. The merit system of salvation not only depended on good works in exchange for forgiveness of sins but created ‘the social contract of the High Middle Ages’: the duty of the poor to remain poor so that the salvation of the rich could be secured. The poor person was the one who made it possible for the rich person to reach heaven, thanks to his generosity. The perpetuation of poverty was thoroughly entangled with the doctrine of salvation.

There was ambiguity in the ideology of the Church in defining and judging the ‘involuntary poor’. Theological and cultural attitudes to poverty gradually became more hostile, as ideas on the virtues of poverty receded. Furthermore, putting the blame on the poor led to the criminalization of poverty and the identification of the poor person as a delinquent. There was no standard interpretation of poverty among Reformers. However, the Protestant Reformers held an important conviction in common: they all agreed the Roman understanding of poverty desperately needed revision. This ‘lust for profits,’ Martin Luther (1483-1546) observed, had many clever expressions: selling on time and credit, manipulating the market by withholding or dumping goods, developing cartels and monopolies, falsifying bankruptcies, trading in futures, and just plain misrepresenting goods. Such usury, Luther argued, affects everyone. “The usury which occurs in Leipzig, Augsburg, Frankfurt, and other comparable cities is felt in our market and our kitchen. The usurers are eating our food and drinking our drink.”1

Jeremy Bentham (1748-1832) advocated utilitarianism as the basis for penal reforms in the early 19th century. He claimed that it was possible to decide by scientific means what was morally justifiable by applying the principles of utility. He advocated that actions were right if they tended to produce ‘the greatest happiness for the greatest number of people.’ In his day, the ‘people’ were individuals who could vote – workers at that time did not have the vote. While he died in 1832, his ideas were applied to the 1834 Poor Law Amendment Act, with the goal to reduce the rates of poverty in the country in order to reduce the cost to the landowners.

In 19th century England most members of the working class likely slipped into poverty at some point in their lives because of such things as unemployment, sickness or old age. They had to rely on their friends, children or credit in hard times, and this was considered proper as it encouraged the poor to work. Poverty was not seen as a social problem – destitution was felt to be the result of character weakness. The Poor Law reform that reorganized the workhouses was expected to have a very good effect on the moral character of the workingman, because it was believed that poverty was caused by the bad habits of the poor.

The Reform Act of 1832 organized workhouses based on utilitarian principles – paupers would be forced work in the poorhouses – the conditions of the inhabitants were not to be better than the conditions of the lowest classes not working in the workhouses. This Poor Law reform was expected to work wonders for the moral character of the workingman, while reducing the costs of the relief system. The choice to incorporate the principles of utilitarianism in this legislation created an unmitigated disaster.

Edwin Chadwick (1800-1890), a leader in sanitary reform, noted that it was necessary to address issues of sewage and good water supplies before actually being able to determine the contribution of crowded housing to health problems. He was appalled at the number of people admitted to the workhouses and became convinced that if the health of the working population could be improved then there would be a drop in the numbers of people on relief. Chadwick used an economic argument to drive change – loss of revenue to the government because of early death of so many people. He believed that a healthier population would be able to work harder and would cost less to support, and if all of his recommendations were carried out the average life expectancy for the laboring classes would increase by at least 13 years.

In 1984, Charles Murray published Losing Ground. Its central thesis was that all government welfare programs should be abolished, supposedly because welfare hurt the very people it was intended to help by “rewarding bad behavior” such as “illegitimate babies.” Murray also called for ending food stamp programs. The New York Times wrote in 1985 that Losing Ground became “this year’s budget-cutters’ bible” noting, “in agency after agency, officials cite the Murray book as a philosophical base” for slashing social programs. Also Murray observed, by lowering the punishment for criminal activity (which was deemed to be society’s fault and not the perpetrator – who was seen as a victim) it encouraged more criminal activity and longer criminal records. These ideas supported the neoliberal mantra: the market ensures everyone gets what they deserve.

Murray’s manipulation of data claimed to show welfare programs were the cause of minority poverty, rather than the cure. In order to get the numbers to work to “prove” that liberal social welfare spending created poverty, Murray excluded government spending on the elderly from his “evidence.” As Lester Thurow, former dean of MIT’s Sloan School of Management noted, 86% of federal social welfare spending went to programs to help the elderly; and the poverty rate for the elderly dropped from 25.3% in 1969 to 14.1% in 1983, refuting Murray’s thesis. (The welfare system was actually working.) Thurow’s conclusion: “The purpose of Losing Ground is to help President Reagan shoot a silver bullet into the heart of the monster called social welfare spending.”2

Under the cultural trope of ‘individual responsibility’ welfare for the poor is cut and restructured to make welfare recipients more responsible for their economic status. The first way that neoliberalism facilitates an expansion of the criminal justice system is that the rise of neoliberal ideology helps justify increasingly punitive government intervention into crime and punishment – incarceration becomes a solution to structural economic inequality and political instability. Faced with increasing populations situated outside the reaches of the disciplinary structure of the wage labor system, the neoliberal state reforms welfare into prison-fare to exert social control and regulation of poor and deviant populations and, therefore, limit social instability. However, poverty and socioeconomic inequality are both positively correlated with crime and particularly with violent crime.

The Bretton Woods Institutions (the International Monetary Fund (IMF) and World Bank) were actually designed with Keynesian policies in mind; to help provide international regulation and control of capital. As Susan George notes, “when these institutions were created at Bretton Woods in 1944, their mandate was to help prevent future conflicts by lending for reconstruction and development and by smoothing out temporary balance of payments problems. They had no control over individual government’s economic decisions nor did their mandate include a license to intervene in national policy.” This is very different from what they are doing today.3

Ronald Reagan facilitated neoliberalism becoming a mainstream ideology. It was in 1972 that the World Bank took up the theme of poverty, which more or less corresponds to the beginning of the neoliberal global political economy, later to be known as the Washington Consensus. With the passing of time and according to the intentions of the user, the vocabulary evolved. ‘Elimination’ of poverty became ‘reduction’ of poverty and, over the last few years the concept of extreme poverty appeared, associated with hunger. These, it was declared, must gradually be eliminated, while poverty must be mitigated.

Francine Mestrum arrives at the conclusion that poverty should be defined as ‘the lack of means to provide for one’s existence’, adding that ‘in a market economy this signifies the lack of financial means’. Thus, to understand poverty, it is necessary to know existing social relationships and the mechanisms for reproducing them, because poverty is socially constructed. It is not created by nature [Alternatives Sud, Vol. VI (1999), No. 4].

The World Bank and IMF documents – not to mention those of the World Trade Organization – are convinced about the best way to reduce poverty. They cite the evidence: growth must be increased because it is not possible to share out a cake if there is no product in the first place. The best way to trigger growth, according to this view, is to allow the market to function and thus to liberalize the economy and remove all obstacles to trading in goods, services and capital. Thus it is necessary to privatize state enterprises and the public services to the maximum, and to deregulate the social protection that is hindering the whole process. In the end, they say, this can only benefit the poor who can at least profit from the trickle-down effect.

As global demand for cheap clothing rises rapidly, Bangladesh’s position as the second biggest exporter in the world continues to hold strong, which is mainly due to its large population and low labour costs. Bangladesh rose to its position largely because of its lack of regulation and the low wages it pays its garment workers, most of whom are women. Bangladesh’s minimum wage for the sector is one of the world’s lowest – or according to some groups, the very lowest – even after the government raised it in response to fallout from the Rana Plaza disaster. As a witness has testified: ‘They work for 12 hours a day, very often 7 days a week for a wage of 15 to 35 euros a month. They are locked in, body searched when they leave, and are not allowed to talk among themselves. Union freedom is purely theoretical, as the ‘subversives’ are sacked…”[Le Monde Diplomatique, August 2005]. 4

The living wage is a wage that is high enough to maintain a family’s basic needs of living: food, clothes, rental housing, childcare, transportation and small savings to cover illness and emergencies. The minimum wage is significantly lower than the living wage. The two largest private employers in the US are Wal-Mart Stores with 1.4 million employees and McDonald’s (including franchises) with 420,000. In the year ended Jan 31, 2016, Wal-Mart generated $482.13 billion in revenue and posted net income of $14.69 billion, recently raised wages to $10.00 an hour. The challenge is many only get 34 hours a week work, and the $18,000 a year cannot maintain a family’s basic needs. The majority of MacDonald’s employees make less than $10.00 an hour in the US while in Demark they are paid $20.00 an hour. Since 1989 Mitch McConnell, presently the Senate Majority leader, has voted 17 times against minimum wage increases.

The rich persuade themselves they acquired their wealth through merit, ignoring the advantages – such as education, inheritance and class – that may have helped to secure it. The social contract of the neoliberals: the creed of docile respectful working poor to depend on inequality to drive the motor of the ideal market system. What is the mechanism behind the perpetuation of poverty in Canada and the US? Government social insecurity maintains the minimum wage – if you raise wages, jobs will disappear. This message disciplines various factions of the post-industrial working class. Of the 1.4 million Wal-Mart employees in the US, one million of them slip into poverty at any given time. It is a neoliberal ideology that defines the social relationships of poor people and the attitude towards them that supports an economic system that creates inequality.

1 Lindberg, Carter. (1987) Luther on the Use of Money. https://www.christianhistoryinstitute.org/magazine/article/luther-on-the-use-of-money/

2 “Project S.H.A.M.E: The Recovered History of Charles Murray.” (10 Jan 2013) http://www.nakedcapitalism.com/2013/01/project-s-h-a-m-e-the-recovered-history-of-charles-murray.html

3 Shah, Anup. (2010) Primer on Neoliberalism http://www.globalissues.org/article/39/a-primer-on-neoliberalism#FreeMarketsWereNotNaturalTheyWereEnforced

4 François Houtart Neoliberalism and Poverty http://www.spokesmanbooks.com/Spokesman/PDF/88Houtart.pdf

Posted in economic inequality, Global Economy | Tagged , , , , , | Leave a comment

Why Hillary Clinton Needs Elizabeth Warren

Nietzsche (1844-1900) rejected the power of reason, and the belief that science would automatically lead to progress. He claimed there was no objective fact about what has value in itself – culture consisted of beliefs developed to perpetuate a particular power structure. The system, if followed by the majority of the people, supports the interests of the dominant class. For Nietzsche the values (culture and traditions) of the dominant society (with an ideology consistent with its interests) were oppressing the emergence of a new generation of stronger individual and a more vigorous society and culture. Darwin has effectively shown that searching for a true definition of species is not only futile but unnecessary since the definition of a species is something temporary, something which will change over time, without any permanent lasting and stable reality. Nietzsche strived through his philosophical work to do the same for cultural values. He substituted Darwin’s adaptive fitness with creative power – for Nietzsche everything is in flux. Ideas should change as soon as information and inputs change.

Neoliberalism happens to be the ideology that has the fortune of coinciding with technological change on a scale that it makes its penetration into every realm of being – redefining the state, institutions of society and the self. Globalization has been facilitated by numerous technical developments and the spread of economic neoliberalism. Neoliberals like to focus on public debt, while private debt makes individuals more disciplined while narrowing the scope of opportunities further. What explains the neoliberal preference for private debt and aversion to government debt? Private indebtedness, unlike government deficit expenditure, binds the majority of individuals more tightly to the wage labour system. Workers with mortgages and other debt obligations will be more subservient in relation to their employers, and less likely to risk their present positions in negotiating over wages and conditions.

The neoliberal policies of deregulation, privatisation, user pays principle, and austerity all played their parts in weakening the position of the vast majority relative to the corporate capitalists, while pushing the general population into indebtedness. The labour market deregulation assisted corporations in the defeat of organized labour. Financial deregulation opened the way for credit fueled private consumption, the real estate bubble, and interest and service charges for rentiers. The user pay principle has loaded students with debt; lifestyles other than wage slavery are deliberately made less viable. Austerity plays a role, intentionally creating joblessness and insecurity for many. This process creates unemployment that is higher than before, and this is used as evidence that wages were too high, legitimizing stagnant wages, particularly minimum wages. In addition, to control unemployment, neoliberal principles dictate cutting unemployment benefits to remove disincentives to work.  Neoliberals are intent that persistent high unemployment exist alongside stagnant wages and weaker safety net.

The scale of and reasons for the global financial meltdown are posing questions that are every bit as intense as those posed to economists at the time of the Great Depression, and the 1970s oil shock. In both those instances, the inability of the dominant paradigm (of society) to accommodate the new realities led to major changes in ways people organized their societies around the world. Today, the fact that the economic crisis is coinciding with an unprecedented ecological crisis raises the stakes even higher. The rise of Trump and Sanders in the US prompts further skepticism in neoliberal market fundamentalism.

Many countries were running a budget deficit in the aftermath of the financial crisis. In Britain, neoliberals claimed an immediate risk for the country becoming another Greece unless it immediately began cutting spending and raising taxes. Such action, neoliberals declared, creates business-boosting confidence. In actual fact, with the global turn to austerity in 2010, every country that introduced significant austerity has seen its economy suffer – with the depth of suffering closely related to the harshness of the austerity. In 2012, the IMF chief economist, Oliver Blanchard, admitted the IMF now believes it massively understated the damage that spending cuts inflict on a weak economy. Even economic research that allegedly supported the austerity plan has been discredited. However, George Osborne and David Cameron boasted that their policies saved Britain from a Greek-style crisis of soaring interest rates.1

P. Thompson, among others, promoted the bottom-up approach to history – begin with the needs of society then build upwards to construct the economic climate that will provide for needs of the people. Top-down systems like fundamental neoliberal economics deal with the abstract while bottom-up systems deal with ‘facts on the ground’. Democracy is a bottom-up political system designed to displace dictatorships, theocracies, and oligarchies. The driving force is people want to be free and have opportunities to reach their potential. Economic systems are the result of human action, not human design.  Neoliberalism’s task, from this point on, is to mask and manage inequalities that are likely to befall humanity, and increasingly deflect issues on environmental degradation.

The Brexit vote has challenged the principles of globalization. Many Britons wanted to take back control of the country from the faceless bureaucrats in Brussels. However, the Brexit debate wasn’t about economics, it was about zenophobia triggered by an immigration surge. EU rules restrict the ability of a member state to bar immigration from other EU member states. The ‘Leave’ camp would have workers believe that uncontrolled emigration reduced job opportunities and suppressed wages in Britain. The ‘Leave’ campaign claimed Britain does not get enough benefits in return for monies paid into the EU system. David Cameron debated from the weakness of the abstract concept of trade advantages of a larger marketplace, while Boris Johnson appealed to the elemental fear in the country, torn apart by the abstraction of the market. Brexit became a proxy plebiscite on immigration.

In the 2016 US presidential primaries both Trump and Sanders are capitalizing on US citizens discontent with the inequalities resulting from neoliberalism.  Sanders organized along the lines of political polarization between big business and the working class. Trump promises to dismantle the so-called destructive free trade deals which have enabled many companies to move their production facilities to other countries to exploit cheap labour and make exorbitant profits under neoliberalism. Trump brushes aside how he amassed a personal fortune based on the very economic system he is criticising. He casts himself as a shrewd deal-maker who will get a much better deal for common Americans within a global economy (which US policies have themselves been instrumental in shaping).

Donald Trump feasts on social divisions and has perfected harnessing the rage of the workers driven by the failure of neoliberal market fundamentalism. For him this creates facts on the ground to incorporate into his speeches. Trump continues the unorthodox, controversial and successful campaign used to secure the nomination – target globalization and free trade in his speeches. To unify the social conservatives along with his supporters, Trump combines attacks  on Clinton’s character with promises to appoint judges who reflect their values such as pro-life, and to reduce immigration threats to American security, customs and values.  America is losing its independence through globalization, Trump claims, and he will vigorously go after trade violations to protect the jobs of American workers. Trump claims he is the change agent, in contrast to Clinton who he says represents the status quo.

On the other hand, Hillary Clinton is presented as calm and steady in times of uncertainty compared to Trump who comes across as a hot-headed demagogue. Clinton debates from weakness of abstract concepts of her economic plan, such as expanding employment opportunities, support for education, fund breakthroughs in scientific and medical research – essentially manage trickle-down economics more effectively. Clinton’s policies only tinker with the neoliberal economic system. Workers voting in the primaries declared a need for change – neoliberalism is not working for them. In short, she needs to avoid defending abstract concepts and introduce a bottom-up economic plan describing changes that people can relate to. The message from Brexit: belief in the ideology that supports the EU created a barrier to understanding the extent of the backlash among workers bypassed by globalization.

Nietzsche claimed facts cannot be separated from interpretations. Objectivity is beyond human capability because the mind cannot know ‘truth’ in an objective sense. Minds are useful, but according to Nietzsche invariably flawed because they cannot separate facts from human error and moral values, which inevitably are subjective. If all perspectives are subjective and hence flawed, what perspective is society to follow? Nietzsche’s perspective was that no source of knowledge was authoritative. Sources of knowledge won ascendancy based on which ones were backed by holders of power. Thus, perceived truth depended on power. Real truth, if it existed, was not bestowed by princely or divine power, but was relative and subjective. It depends on circumstances.

Recognition that moral values are subjective and that rights can only be interpreted in their social context frees the observer to break from the bondage of false views to see society more clearly, if still subjectively. In this system, with no absolute truth, one must evaluate one moral position in relation to other moral positions.

Nietzsche considered nihilism a transitional stage that accompanies human development. It arises from frustration and weariness. When people feel alienated from values, and have lost the foundation of their value system but have not replaced it with anything, then they become nihilists. Nietzsche saw that the old values and old morality simply didn’t have the same power that they once did.  He believed that there was no longer any real substance to traditional social, political, moral, and religious values, and science does not introduce a new set of values to replace the Christian values it displaces. Nietzsche rightly foresaw that people need to identify some source of meaning and value in their lives, and if they could not find it in science, they would turn to aggressive nationalism and other such salves as xenophobia.

Donald Trump is employing populist nihilism in his 2016 presidential campaign. The ideology of the dominant society, fundamental neoliberal economics, has alienated his followers from values such as the American dream. With this strategy he does not need a detailed jobs program before the election. Trump’s strategy is countered by evaluating one economic position in relation to another economic position. Hillary Clinton must describe the economic and environmental positions that she seeks to provide for the needs of the people in terms of countering the excesses of neoliberal economics. For example, to close the inequality gap, increase the minimum the wage and implement significant education  reform. Clinton needs a VP who can communicate these messages effectively to students and the working class. Elizabeth Warren battled the neoliberals over Americans’ retirement security. Warren knows the country should be run for the people not the corporations, and as unions weaken, the chances of getting progressive social policy also weakens. These are the type of ideas that excite  Bernie Sanders’ followers. This is why Hillary Clinton needs Elizabeth Warren.

1 Krugman, Paul (29 April 2015) The Austerity Delusion http://www.theguardian.com/business/ng…/2015/apr/29/the-austerity-delusion

 

Posted in economic inequality | Tagged , , , , , | Leave a comment

The Rise of the Neoliberals

Isaac Newton (1642-1727) discovered the natural laws of motion, which provided the final piece to the puzzle, establishing the Copernican theory of the Earth revolving around the sun, introducing  the spirit of individualism and the idea the study of human progress was at the centre of all things. During the following decades, his achievement was celebrated as the triumph of the modern mind over ancient and medieval ignorance. The 18th century Age of Enlightenment saw the intellectual maturation of the humanist belief – a system of thought that focuses on humans and their values, capacities and worth. With the introduction of new patterns of thought, honest doubt began to replace unreasoning faith. The ‘truth’ discovered through reason, would free people from the shackles of corrupt institutions, such as the church and monarchy, whose misguided traditional thinking and old ideas had kept people subjected in ignorance and superstition. The concept of freedom became central to the vision of a new society. Through truth and freedom the world would be made a better place.

Neoliberalism is an ideology and policy model that emphasizes the value of free market competition. As national economies became more interdependent in the new era of economic globalization, neoliberals promote free-trade policies and the free movement of international capital. While this political theory has been around since the late 1900s, the rise of the neoliberals occurred over the last 40 years to become the dominant ideology shaping our world today. Joseph Stiglitz observes, “Neoliberal market fundamentalism was always a political doctrine serving certain interests. It was never supported by economic theory. Nor, it should now be clear, is it supported by historical experience. Learning this lesson may be the silver lining in the cloud hanging over the global economy.”

Over centuries of development humanism emphasis shifted from the religious realm to the human realm. The neoliberals brought in their own vocabulary to control the debate: human beings became human capital, essentially reduced to an investment. The individual is no longer at the centre of discussion, having been displaced by the corporation. Government has no economic responsibility; only people have responsibility. Neoliberals maintain the pretense of freedom defined as non-coercion – less government means less coercion or control. The solution is to treat politics as a market and promote an economic theory of democracy. The citizen is replaced with consumer of state services. Following from the human-capital concept education is a consumer good, not a life-transforming experience.

To neoliberals the market is a natural state of mankind. The market can be made manifest in many guises. Natural science narratives are woven into the neoliberal narrative. For example, it can be considered an evolutionary phenomenon. The selective pressure seen in nature is also seen in market forces. Herbert Spencer (1820-1903), an English philosopher and economist, believed that society was evolving towards increasing freedom of individuals and held that government intervention ought to be minimal in political and social life. Spencer’s survival of the fittest concept was believed to be natural, hence morally correct. Neoliberalism that underpins the Bush Administration’s No Child Left Behind Act introduced education reforms promoting high-stakes testing, accountability, and competitive markets. The education system is largely seen as the ultimate arbiter of innate intelligence and ability, as well as the benefactor of hard-work and merit. If public schools fail it clears the road for voucher and charter schools (experimental publicly funded private schools with minimal regulation). Charter schools are neoliberalism’s logical conclusion for education, where schools should become for-profit institutions.1

Their vision of a good society is such that conditions for its existence must be constructed. On the other hand classical liberals reconciled freedom with authority and replaced authority with society. Neoliberals reject society and revive a version of authority under a new guise. The state becomes a core agency that actively fabricates the subjectivities, social relations and collective representation suited to making the fiction of the markets real and consequential. Neoliberals vigorously reject that there are ‘failures’ or glitches in the markets, rather, evolution or ‘spontaneous order’ brings the market to ever more complex states of self-realization that the human mind cannot understand. They reject any suggestion of ‘market failure’ with relation of the 2008 debacle.

Neoliberals extol freedom as trumping all other virtues. Their freedom is divorced from democracy, buttressed by the concept that all coercion is evil. This particular brand of freedom is not the realization of any political, human, or the ultimate aim of cultural success, but rather relying on a system to harness the selfishness of people and direct it to public good, thus freeing itself from the need to depend unrealistically upon the uncertain moral virtues of its participants. For neoliberals inequality is unfortunately a by-product of capitalism, but a necessary functional characteristic of their ideal market system. It is part of a strong motor to progress, hence the rich are not parasites, but a boon to mankind. In fact, the concentration of wealth since 1990s is part of the neoliberal script to produce more efficient and vibrant capitalism.

Neoliberals need the state, (it cannot be destroyed), it is necessary to redefine the function and nature of the state. While democracy is ambivalently endorsed as the appropriate state framework for an ideal market, it is necessary to keep the relationship impotent so that citizen interests are rarely able to change anything. It is necessary to restrict the state with numerous audit devices under the sign of accountability such as, convert state services to private and provision of government services on contractor basis. The privatization of the process of securitization of mortgages , which had started out in the 1960s as a government function has become a flash point in in explanations of how the financial sector lost its way. They mask their role in power by marketization of government functions – and in the process, shrinking state bureaucracies that become unwieldy under such neoliberal activities.

A corporation can do no wrong (as it was created for legal purposes only). Neoliberals were for introducing market forces into corporations. The reengineering of the corporation by separating ownership from control by such features as reduced vertical integration, outsourcing supply chains, outrageous compensation for top officers, incentives such as massive stock options, golden handshakes, and latitude beyond any oversight. Capital has a natural right to flow freely across national borders (labour enjoys so similar right). Offshore outsourcing of manufacturing in advanced economies is clearly a function of neoliberal doctrines concerning the unbounded benefits of freedom of international trade, combined with neoliberal projects to reengineer the corporation as an arbitrary nexus of contractual obligations, rather than as a repository of production expertise.2

Concurrent with the neoliberalization of America, the prison population in the United States exploded. Crime is defined as an inefficient attempt to circumvent the market. Neoliberal ideology helps justify increasingly punitive government intervention into crime and punishment – incarceration becomes a solution to structural economic inequality and political instability. Faced with increasing populations situated outside the reaches of the disciplinary structure of the wage labor system, the neoliberal state reforms welfare into prison-fare to exert social control and regulation of poor and deviant populations and, therefore, limit social instability. The precariousness bred by a welfare-averse politics maintains a steady flow of inmates. The main drivers of penal policy reform at the elite level are cost-benefit analyses and concerns about recidivism, not concerns of justice or human rights.3

Neoliberals have made efforts to have economic theories do dual service as a moral code. The best that they can achieve is intellectual accommodation with the religious right. They share the same freedom – the desire to follow one’s own moral conviction as a modern safeguard to individual freedom. Neoliberals notoriously use “wedge issues,” commonly known as “culture war” issues, such as abortion and gay rights, to divide Christians who might otherwise stand together against the neoliberal economic agenda. Republican neoliberals continue to have one thing in common with their evangelical protégés; they are unlikely to waver in their faith.

The market (suitably engineered and promoted), claim neoliberals, can always provide solutions to problems seemingly caused by the market in the first place. Basically any problem has a market solution. Suitably engineered boutique markets are promoted as superior method to solve all sorts of problems previously thought to better organized by governments: everything from scheduling space shots to regulating the flow through airports and national parks. The marketplace is deemed to be a superior information processor, therefore all human knowledge can be used its fullest only if it is comprehensively owned and priced. This is extrapolated to explain that the solution to perceived problems in derivatives and securitization is redoubled ‘innovation’ in derivatives and securitization, and not their curtailment. Essentially the best people to clean up the crisis were the same bankers and financiers who created it in the first place, since they clearly embodied the best understanding of the shape of the crisis. The revolving door between the US Treasury and Goldman Sacks was evidence that the market system worked, and not of ingrained corruption and conflicts of interest.2

The 18th century Enlightenment was a movement to displace the dogged adherence to established opinions and customs, and to enlighten a population that the system had kept in the dark. The Enlightenment introduced critical thinking to replace the dead weight of tradition and challenge the blind faith in institutions. In the 18th century the church was the dominant institution, while in the 21st century the corporation is the dominant institution. In the 21st century there is a need to challenge the blind faith and convictions in less government and regulations to understand the truth – increasing economic inequality between the rich and the rest of society over the past four decades is no longer acceptable. It is necessary to introduce interventions to reduce the influence of the dominant institution, the corporation, in government affairs. New social relationships need to be constructed, creating a system with increased transparency and accountability that allows individuals expanded opportunities for self-determination and freedom, making the existing model obsolete.

1 Leyva, Rodolfo (2009) No child left behind: a neoliberal repackaging of social darwinism. Journal for Critical Education Policy Studies, 7 (1). pp. 365-381. ISSN 2051-0969 http://eprints.mdx.ac.uk/14551/

2 Mirowski, Philip. Never Let A Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown. (2013) Verso London: New York p. 50-67.

3 Gottschalk Marie. The Folly of Neoliberal Prison Reform (08 June 2015) https://bostonreview.net/books-ideas/marie-gottschalk-neoliberal-prison-reform-caught

Posted in economic inequality, Enlightenment, Global Economy | Tagged , , , , | Leave a comment

The Death of Liberalism

Classical liberalism supported the notion that society as a whole would begin to prosper as the level of personal freedom or autonomy increased. Individuals left to their own devices to pursue their own goals, limited only by known and universally applied prohibitions against harming the same freedom for others, would produce superior results for all, rather than allowing one authority to dictate terms to everyone. John Locke (1632-1704) popularized the concept of natural rights and freedom. Human freedom meant being free from as many constraints as possible. For the following discussion liberal describes the view that humans are rational beings who should be left, as far as possible, to pursue their own purposes without compulsion or constraint. The word first appears in the English language in the 14th century and refers to free men as distinct from those who are not free.

Isaac Newton (1642-1727) discovered the natural laws of motion which provided the final piece to the puzzle to explain why the Earth revolves around the sun. Newton was aware of specific problems in the solar system that his laws did not explain which included the fact that Saturn was moving away from the sun while Jupiter was moving closer. To account for movements not able to be explained by his formula, Newton proposed the hand of God to guide the planets in various circumstances – providing long-term stability to the universe. Adam Smith’s efforts to discover the general laws of economies were directly inspired and influenced by the example of Newton’s success in discovering the natural laws of motion. Smith sought the natural law and harmony in nature in the economic sphere. Locke and Smith assumed an innate morality to support their systems of minimal government.

The Wealth of Nations (1776), Smith’s classical introduction to economics provided an ‘ethical’ rationale for the capitalist system explaining, “every individual necessarily labours to render the annual revenue of society as great as he can. He generally, indeed, neither tends to promote the public interest, nor knows how much he is promoting it… he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which is no part of his intention.” Simon-Pierre Laplace (1749-1827), a French mathematician, is recognized for his contributions to astronomy and statistics. He observed data about the actual position of planets to predict the motion of planets and was able to solve the error in Newton’s observation of planetary movement.

Friedrich Hayek (1889-1992), who admired Adam Smith and built on the ideas of his teacher Ludwig von Mises, explored the truths of the Austrian school. The Austrian school sees society as a complex of human interactions, in which prices act as signals for human behavior. The diversity of goods produced by many individuals is richer and more useful, ensuring greater and more widespread wealth than any system which attempts to control from the centre. A diversity of different attempts to predict future needs is what guarantees innovation. Market pricing transmits information about preferences and about relative scarcities. Profit is the signal which demonstrates that the entrepreneur is doing the right thing for people he cannot possibly know. Price is therefore the language of the complex or extended order of modern societies.

Hayek published his book The Road to Serfdom in 1944 with new ideas, sounding the alarm that the West was rapidly abandoning its inheritance of individualism. He claimed there was a slow process under way in which important personal liberties were being extinguished by the state. He looked backwards at the awful history of the first half of the 20th century, musing upon the nature of the enemy. With the success of his book he decided to create a movement connecting liberals scattered around the world who held positions in academic life. This society met in Mont Pelerin near Geneva in Switzerland most years since the end of World War II. They discussed the nature of liberalism and how it could be brought back from its decline. Milton Friedman was one of the attendees.

By the 1970s the Western world had to face a devastating new problem: inflation. It took a crisis to bring new ideas into government, and that was the price-inflation that followed the 1973 Arab-Israeli war. By the end of the 1970s both Ronald Reagan and Margaret Thatcher were seeking office with new liberal economic policies. These policies were adopted to deal with economies that were getting out of hand. Thatcher was elected to parliament in 1959, became leader of the Conservative party in 1975, and in election of 1979 became Prime Minister of Britain. Her administration was associated with the destruction of Britain’s traditional industries through attacks on organizations such as miner’s union, and massive privatization of social housing and public transport.

Martin Anderson (1936-2015), an economist and a special advisor to Richard Nixon 1969-1971, was instrumental in bringing into government Alan Greenspan, who like Anderson was an adherent of free-market philosopher, Ayn Rand. In 1971 Anderson joined the Hoover Institution, became the architect of Reagan’s new liberal economic policies. He identified five key elements to the policy: (1) reduce the growth of federal spending, (2) reduce taxes, (3) change and reform government regulation, (4) ensure a more stable monetary policy, (5) introduce stability – do not waver from the policy, keep it constant so that people get used to it and gain confidence in it. This policy was the basis of supply-side economics which was later rebranded trickle-down economics – linking the welfare of working-class Americans directly to the prosperity of the rich.

Under the patronage of  Ronald Reagan the liberal revival enjoyed some successes. To counter the Keynesian state planning to address unemployment, Milton Friedman developed the counter-notion of a ‘natural rate of unemployment’. That is the rate to which an economy naturally reverts unless it receives greater and greater fiscal stimuli and, in consequence, rapid and ever increasing inflation. Under Federal Reserve Chairman, Paul Volcker there was severe tightening of the interest rates. People were soon paying in excess of 15% on mortgages. The peak of the mild recession occurred November – December 1982, when the nation-wide unemployment rate was 10.8%, highest since the Great Depression. This bitter medicine cured the rampant inflation in the US.

The tax cuts came in 1981, Reagan’s first year in office. The tax results came up short of measuring up to the supply-side rhetoric. For starters, the tax cuts busted the federal budget. The federal deficit ballooned from 2.7% of GDP in 1980 to 6% of GDP in 1983, the largest peacetime deficit in history, and was still 5% of GDP in 1986. Tax revenues did pick up, especially after the 1983 payroll tax increase kicked in, reducing the deficit somewhat. Worse yet, most low-income taxpayers missed out on the Reagan tax cuts. The bottom 40% of households paid out more of their income in federal taxes in 1988 than they had in 1980. Increases in the payroll taxes that finance Social Security and Medicare, which made up a far higher portion of their federal tax bill than income taxes, swamped what little benefit these taxpayers received from lower income tax rates. In true trickle-down economics, the benefits of productivity and innovation would be shared fairly by all stakeholders, not just the select few with authority to dictate compensation and how the profits of a company are distributed.1

Milton Friedman explained the failure during the first term to reduce the size of government, “It is easier to bring that understanding to the world of ideas than it is to translate into the world of practice.”2 The problem shifted from reducing the size of government to a redistribution problem that came with the welfare state. After the 1984 Ronald Reagan landslide election, his second term set in earnest to dismantle the welfare state following the principles outlined in Charles Murray’s 1984 book, Losing Ground, described by the New York Times Review of Books as a “persuasive . . . new variation on Social Darwinism.” Charles Murray is a political scientist who is presently a scholar at the American Enterprise Institute (AEI). AEI is a conservative think tank founded in 1943 to promote the advancement of free market economics. AEI supported a 1980 study on the emerging ‘social cost’ arguments against smoking in support of the tobacco industry, and more recently supports various studies that cast doubt on global warming.

Albert Einstein proposed his general theory of relativity in 1915. Eddington’s observations and photographs during a solar eclipse on the African island of Príncipe in 1919 effectively confirmed Einstein’s predictions of a slight shift in starlight caused by the gravitational field of the Sun – exactly the results predicted. Hayek’s work involved recruiting more believers in liberalism to the cause. Hayek claimed that economic theories can, “never be verified or falsified by reference of facts”3. Friedman interpreted his version of trickle-down economics to the politicians. It became a fundamentalist (i.e. “must not and hence can not be questioned”) belief: the benefits of trickle-down economics of tax cuts for the rich create well-paying jobs for the middle class. The theory has a function – serving the interest of financial capital and globalized elites in the redistribution of wealth upward.

Decision-makers on Wall Street with extreme individualism and a sense of entitlement chose not to apply critical thinking, but to intentionally take advantage of people, which led to the meltdown of the economy in 2008. Many in the middle class saw their comfortable retirement, their home equity, and their dreams destroyed. With rising financial integration, world economic growth has lessened in the last three years. The threat to individual freedom and opportunities to pursue one’s goals today comes not from political oppression, but from economic failure. Because of  growing disillusionment and anger students and workers are voting for leaders outside the mainstream party candidates during the 2016 presidential primary elections – the consequence of  being left behind by soaring inequality and the failure of government to deliver.

1 Miller, John. Ronald Reagan’s Legacy. http://dollarsandsense.org/archives/2004/0704miller.html

2 Graham, David and Peter Clarke. (1986) The New Enlightenment: the rebirth of liberalism. MacMillan London p. 1-30.

3 A Critique of the Austrian School of Economics. http://www.huppi.com/kangaroo/L-aussm.htm

Posted in economic inequality, Enlightenment | Tagged , , , , , , | 1 Comment

The Republican Party – the Party of Cognitive Dissonance

Georg Hegel (1770-1831) who saw a world governed by individual self-interest believed that we are controlled by external forces, and are nothing but pawns in the game. Hegel believed that we do not perceive the world or anything in it directly and all that our minds have access to is the ideas of the world – images, perceptions, and concepts. For Hegel, the only real reality we know is virtual reality. Hegel believed that the ideas we have of the world are social, which is to say, the ideas that we possess individually are for the most part shaped by the ideas that other people possess. Our minds have been shaped by the thoughts of other people through the language we speak, the traditions and mores of our society, and the cultural and religious institutions of which we are a part. He sees the spirit or collective consciousness of a society evolving in a system called ‘a dialectic’, a progression in which each successive movement emerges a solution to the contradictions inherent in the preceding movement with the development of freedom and the consciousness of freedom. There can be no progress, according to Hegel, without struggle.

After November 2008, the tide seemed to be running against conservatism. In mid-February, an opportunity presented itself. From the floor of the Chicago Mercantile Exchange, CNBC reporter Rick Santelli burst into a tirade against the Obama Administration’s mortgage plan to help stop foreclosures by allowing a small number of home owners to renegotiate their mortgages. “The government is promoting bad behavior!” Santelli shouted. To protest giving public help to “subsidize the losers’ mortgages,” Santelli invited America’s “capitalists” to a “Chicago Tea Party.” Across the country, conservative activists used this opportunity to channel anger against the Obama administration. Operating at first through the social-networking site Twitter, conservative bloggers and Republican campaign veterans took the opportunity created by the Santelli rant to plan protests under the newly minted “Tea Party” name. Within ten days of Santelli’s theatrics, the first Tea Party rallies were held in Washington, DC, Chicago and other cities around America.

Hostility to the Obama economic agenda was already evident in the first weeks of the new administration. As seasoned activists organized local rallies, the video of Santelli quickly scaled the media pyramid, resonating in the conservative echo chamber of the Drudge Report and Fox News. In the aftermath of a potentially demoralizing 2008 electoral defeat, when the Republican Party seemed widely discredited, the emergence of the Tea Party provided conservative activists with a new identity funded by Republican business elites and reinforced by a network of conservative media sources. Untethered from recent GOP baggage and policy specifics, the Tea Party energized disgruntled white middle-class conservatives and achieved widespread attention, despite stagnant or declining favourability ratings among the general public. Tea Partiers are not totally hostile toward government; they distinguish between programs perceived as going to hard-working contributors to U.S. society like themselves and “handouts” perceived as going to unworthy or freeloading people.1

In several primary battles between ideological moderates who for the most part were establishment incumbents and more conservative tea party-backed candidates for the party’s nomination in the November midterm elections, tea party candidates were successful. In the 2010 November elections, forty-six tea party-backed candidates won seats in the House – Republicans gained control of the House as well as an increased number of seats in the Senate. In the 2014 primary House Majority Leader, Eric Cantor, was beaten by a a tea party backed opponent in a district he had represented the previous 13 years. The Fox news loop created the angry white guy. By 2015 there was now an unmanageable House caucus, many from safe gerrymandered districts, that answers to no party leader, cannot compromise and cares nothing for co-operative government – but unable to expand their appeal until the arrival of Donald Trump. Trump appeals to resentment that ultimately rests on economic failure: working-class whites have been left behind by soaring inequality (but they mistakenly blame emigrants taking their jobs).

During the 2012 election cycle, Tea Party anger over Obamacare was misread by the Republican Party elite as principled rejection of social welfare programs, despite evidence that those voters broadly supported spending what they believed they deserved – Social Security and Medicare. The Republican elite urged voters to blame the recession on excessively generous home-lending policies, while moving to roll back regulations of one of their biggest sources of campaign money, the financial industry. The Republican Party establishment misread the mood and organised to support tax cuts and deregulation. Exploiting the Citizen’s United decision, money poured into a super PAC that helped Romney overcome more populist challengers.

The ‘narcissism of small differences ‘ was Freud’s 1917 term for his observation that people with minor differences between them can be more competitive and hateful that those with major differences. This concept posits that human nature is essentially egoistic, capable of forming groups only by virtue of shared enemies, a prospect made more depressing because it posits group identities as fictitious, contrived on the basis of denial and distortion. Freud’s theory explains we tend to reserve are most virulent emotions such as aggression and hatred towards those who resemble us the most. We feel threatened by the ‘nearly-we’, who mirror and reflect us. Freud viewed this as a narcissistic issue because the stress comes from looking in the mirror. The narcissism of small differences can apply to politics as minor differences between individuals and groups are particularly prone to be the occasion of bitter dispute.

This phenomenon is particularly heightened in groups or communities that share more in common than the general population. There are two potential problems created by the narcissism of minor differences: (1) the tendency to define yourself by what you are not, and (2) a focus on trivialities over fundamentals. Humans are naturally drawn to conflict, and latching on to minor differences to bolster our sense of self is really just a submerged form of aggression and hostility. Standing out is essentially a competition for status – one that allows us to feel distinct and superior to others.

During the 2016 election campaign the Republican candidates desired a distinct identity, however, when they looked around, the truth was they were very much the same, and are not very special after all. To keep this dissonance at bay and protect their sense of self, it was necessary to buttress and artificially inflate the significance of minor differences to construct unique platforms. One area was their economic policies which were all based on reduction of taxes and deregulation. These policies where made unique by the various ways that this standard conservative economic policy would be introduced. Another area was security – all candidates were for increased border security and regulation of immigration – they all varied in the small differences in implementation.

However, one candidate, Donald Trump, is superior to the others in exploiting the narcissism of small differences to recruit the Republican base. His economic policy resonates with the Tea Party adherents who have seen good jobs disappear overseas – his policy has these jobs returning to America. He would do away with crony capitalism and favours to the donors. Trump’s plans to control the flow of illegal immigrants and block the entry of Muslims – build a huge wall along the Mexican border, and suspend the entry of Muslims into America (temporarily) – are more extreme than the other candidates. These actions energise Trump’s base that includes tea party members and growing number of others disillusioned by the Republican Party establishment and the failure of government to deliver.

The Reagan revolution accelerated the deregulations that put the banking industry at risk by investment bankers. Greedy bankers triggered the economic debacle of 2007 by enabling poor people to purchase homes through sub-prime loans. The years of less taxes and regulation led to corporations moving production overseas with the disappearance of good-paying jobs. The Tea Party was funded by the Republican elite in order to provide opposition to the new Obama administration and create a wedge issue for the midterm elections. The Tea Party was welcomed into the Republican Party, and went on to elect members to Congress who support tea party principles. Tea party members ignored the established leadership and created a dysfunctional legislature. The principles of the Tea Party remained alive, and Donald Trump has figured out how to harness their disillusionment and growing anger.

Hegel saw events always moving forward, in perpetual change, conflicting ideas with destabilization leading to a new situation. Once the potentialities of a particular society had been realized in the creation of a certain mode of life, its historical role was over; its members became aware of its inadequacies, and the laws and institutions they had previously accepted unquestioningly were now experienced as fetters, inhibiting further development and no longer reflecting their deepest aspirations. Thus, each phase of the historical process could be said to contain the seeds of its own destruction and to “negate” itself; the consequence was the emergence of a fresh society, representing another stage in a progression whose final outcome was the formation of a rationally ordered community with which each citizen could consciously identify himself, and in which there would therefore no longer exist any sense of alienation or constraint.

Cognitive dissonance causes the feeling of uncomfortable tension which comes from the brain’s inability to handle two conflicting realities, so it creates an alternative one that often defies reality. It appears in virtually all evaluations and decisions and is the central mechanism by which we experience new differences in the world. Many middle class white folks have become disillusioned and angry about wages stagnating and good jobs disappearing over the past two decades. The neoliberals knew from the beginning that the theory tax cuts for the rich along with deregulation would provide good jobs for the rest of society is a lie. The elite of the Republican Party now have uncomfortable feelings or dissonance  as the majority of their base express their anger of being left behind by soaring inequality by voting for leaders outside the mainstream party candidates.

While all men and women suffer from disillusionment, few know that their state of disillusionment is the result of the breakdown of an illusion they themselves had manufactured. Disillusion is never possible without fantasy – and the destructive strength of the disillusionment can never exceed the strength and energy that was used to create the fantasy in the first place. The adverse effect is that man places values on his illusions, and over values what is not true, or no longer exists. In order to clear these errors of thinking, man must release the emotion that keeps him tied to this false reality. The removal of illusion or fantasy involves understanding that expectations are not failed, but false. With this recognition comes an opportunity for change. Tea party adherents understand expectations that the Republican elite would deliver have not failed, but were false. Recognizing this, they seek change in the Republican Party. Donald Trump may very well be the individual who unites the forces necessary to turn America from a plutocracy back to a democracy.

Williamson, Vanessa, Theda Skocpol, and John Coggin. The Tea Party and the Remaking of Republican Conservatism http://scholar.harvard.edu/files/williamson/files/tea_party_pop.pdf

Posted in economic inequality | Tagged , , , , | 2 Comments

We Are Unable To Reach Our Full Capacity to Make Wise Decisions

We live in a world of illusion. While many believe they have special access to the truth, the reality is that we all see the world not as it is, but as we want it to be. What began in September 2011 as a small group of protesters camping out in Manhattan’s Zuccotti Park ignited a national and global movement calling out the ruling class of elites by connecting the dots between corporate and political power. The main message is the fact the economic system is rigged for the very few while the majority continue to fall further behind. This is an effort to make the middle class aware of what is really happening. “Sometimes people don’t want to hear the truth because they don’t want their illusions destroyed,” observed Friedrich Nietzsche.

Maintaining the illusion of prosperity, though, is critical to our economy as it is, because its foundation is built on consumption, fraud, credit and debt. The banking system itself has been engineered from the top down to create unlimited wealth for a few at the top, leaving the workers, the individuals who pay 28% on their credit card, at the bottom. True prosperity is connected to wellness. Wellness is associated with the social determinants of health, which are the conditions in which people are born into, grow up, live, and age. These conditions influence a person’s opportunity to be healthy, his/her risk of illness, and life expectancy. Social inequities in health, the unfair and avoidable differences in health status across groups in any society, are key factors. Differences in health follow a strong social gradient reflecting a population group’s position in society, which translates into differential access to and security of resources, such as education, employment, and housing, as well as differential levels of participation in civil society and control over life.

Cognitive dissonance is the discomfort of self-image colliding with reality. Such collisions are inevitable, as self-image tends to be based on values – what is most important to you – while behavior is routinely directed at short-term comfort, pleasure, and utilitarian goals. To put it simply, cognitive dissonance is the brain’s inability to handle two conflicting realities, so it creates an alternate one, which often defies actual reality. Evidently, cognitive dissonance is a fairly ubiquitous phenomenon, and can easily interfere quite badly with our capacity to make sound decisions.

With cognitive dissonance, a key issue is that the ego’s censorship departments step in whenever our (usually positive) self-image gets challenged, such as when a belief gets destroyed that we’ve invested a lot of our personal time, money, sweat, energy, or emotions in – because it would be painful to admit to ourselves that this investment was a stupid idea. We like to believe ourselves to be intelligent. When we believe that we are fully rational, we can be easily manipulated into doing stupid things that undermine human society.

Our ability to believe (or be convinced) that we are rational beings leaves us open to all sorts of manipulation and deception. On a strategic level, the tactic of divide and conquer is standard operating procedure for authoritarians and invading armies, but the illusion of separateness runs even deeper than this. We are programmed to believe that as individuals we are in competition with everyone and everything around us, including our neighbors and even Mother Nature. It is us vs. them to the extreme. This flatly denies the truth that life on this planet is infinitely inter-connected. Without clean air, clean water, healthy soil, and a vibrant global sense of community we cannot survive here. While the illusion of separateness or individualism comforts us by gratifying the ego and offering a sense of control, in reality it only serves to enslave and isolate us.1

Neoconservative pundits have a tendency to assert something is true even if it is not and then repeat the assertion over and over again to give it credibility. The “positive self-image” is linked to a fundamentalist (i.e. “must not and hence can not be questioned”) belief: the benefits of trickle-down economics of tax cuts for the rich creates well-paying jobs for the middle class. The idea is simple: The more money the people on top make, the more the people below will benefit from the dripping down of that prosperity. The hidden agenda here, of course, is the rationalization of inequality. What they want to be real doesn’t correspond to what is real, therefore instead of facing the stark reality that their whole political ideology is wrong, they’ve simply concocted some alternate form of reality. By linking the welfare of working-class Americans directly to the prosperity of the rich, the neoconservatives can protect the insulated interests of corporations and the wealthy without the fear of backlash.

The “free marketplace” is a grand illusion for those in power to promote in order to justify dominance over those who are less privileged. Of course, it is based on greed being a virtue, relying on a system to harness the selfishness of people and direct it to public good, thus freeing itself from the need to depend unrealisticlly upon the uncertain moral virtues of its participants. In the 1970s supply side economics, the doctrine that tax cuts could be had for free, (incentive effects would generate new activity so higher revenue) without causing budget deficits was promoted by neoconservatives. Supply side economics was a sleight-of-hand maneuver to convince the electorate that tax cuts were really in the interest of the middle class, not simply the super rich, because the cuts more than paid for themselves. Of course, it floats the boat of those in power. This makes it popular, to be sure, to those who are privileged, but not rational.

Cognitive dissonance puts blinders on people so that they cannot see the reality of what is going on. So, what happened when steel mills were killing those who worked there? In the 1960’s, even the unions fought against environmental and occupational protections for steel mill workers and their neighborhoods. To these people, the smoke and grit and stench were signs of jobs and people rising from poverty into the middle class. How could it be killing them? Obviously, that was not the case. The jobs were great jobs! Cognitive dissonance is often resolved in our short-term economic interests, ignoring competing concerns for long-term health and ethics. There is also a devastating presumption among the population that if a chemical inflicted cancer on many people it would not be allowed. Most educated people understand that is an illusion. However, it represents cognitive dissonance in which the strongly held value of our economic elites as responsible and humanitarian is pitted against the opposite reality, coupled with the need to see corporations as being law-abiding and contributing to a better future for everyone. This working class mythology needs to change.

Is there a cure for cognitive dissonance? Not as long as we have competing needs, interests and values! This is part of the human condition. Cognitive dissonance appears to be a feature of our human nature. Keeping our lives relatively simple and un-stressful is helpful, but we still tend to jump to conclusions and rationalize more than we are aware. Understanding our emotions is one of the keys to thwarting the destructive impacts of the illusions created by cognitive dissonance. To reduce cognitive dissonance we can acquire new beliefs or information that will increase the existing consonance (agreement between opinions) and thus cause total dissonance to be reduced. It is necessary to come to terms with the fact cognitive dissonance is a feature of humans that predisposes us to self-delusion, bias and blindness to our errors and biases. We can give up the struggle for truth and adopt the feel-good illusions that trap us in a matrix of lies and deceit. However, these illusions are dangerous.

Self-awareness is a cruel paradox, indeed, that most people do not understand cognitive dissonance because, ironically, it causes great discomfort to admit that humans are irrational and prone to profound illusions. Cognitive dissonance is inconsistent with our strong values of intellectualism, rational science and free will. So self-awareness of our attachment to illusions continues to elude us. Some believe that slowing down our overstimulated culture is another key to allowing our conflicting realities to reveal themselves to us. Yoga, Mindfulness, and other forms of meditation, exercise regimens, and other stress reduction techniques can open the doors of reality. Yet, it is up to each of us to step out of our roles as consumers/worker drones and claim the role of citizen. We must walk through the doors of illusion and stand firm, spreading the new awareness and reinforcing and supporting thoughts and actions that affirm our humanity and work for a better future.

Earon Davis asks, “Do we finally become rational when we recognize that we are irrational? Unfortuneately, no! We can be reasonable and intelligent, at times. We can have self-awareness and insight. However, we will not become fully rational. This is why we need to live in diverse communities. Being consistently rational is simply not in our nature. No matter how wise, we will eventually stumble. Our ability to deal creatively with reality also opens the door to illusions and self-deception. No matter how humble we may be, something will slip past our awareness, or our deeds or words will mislead others. No matter how we study cognitive dissonance and define it clearly, we will not always be aware when it is undermining our ability to reason. We are not computers or machines. We are human animals. Power and creativity both ennoble and corrupt us. We can’t consistently choose well, but we can try. We are each a work in progress, as are our cultures. We are creatures who flourish in balance, but yet always tend to push the envelope. When our cultures promote transparency and resilience and remain within the changing constraints of our natural world, our natural environment, we seem to do well. A society that creates” [ a milieu for extreme individualism, and the worship of wealth], “can self-destruct, especially through false choices, “logic” and “reason” that are distorted and empowered by cognitive dissonance.”2

However, Nietzsche believed, one should be conscious of the illusory nature of what is considered truth, thus opening up the possibility of the creation of new values. It is necessary to create the social environment or milieu to support good governance to control cognitive dissonance and the consequent balancing of perception that leads to misperception. Accountability is the key requirement of good governance. Accountability is about obligation to answer for one’s actions. In addition to being responsible for one’s actions, one may be required to explain them to others. Consensus orientation is part of good governance mediating differing interests to reach a broad consensus of what is in the best interest of the community and where possible, on policies and procedures. Processes and institutions must produce results that meet needs while making best use of resources. The effectiveness and efficiency of good governance requires honesty, integrity and fairness. Equity and inclusiveness requires all men and women have opportunities to improve or maintain their well-being. The well-being of the community depends on ensuring that all its members feel that they have a stake in it and do not feel excluded from the mainstream of society. This requires all groups, but particularly the most vulnerable, have opportunities to improve or maintain their well-being. Transparency in governance means that decisions made and their enforcement are achieved in a manner that follows rules and regulations. It also means information is freely available and directly accessible to those who will be affected by such decisions and their enforcement.3

As the illusions begin to crumble, more people will see the folly of allowing years of minimal government and deregulation feed the rise of an oliarchy in Canada and the US. When enough people become aware of the illusions our society operates under, we can use what remains of our democratic institutions to further change. Everyone must have the freedom and opportunity to reach their full potential. Until we restore the primacy of politics (management of the state) over commerce and address the disparity between the rich and the rest of society, we are unable to reach our full capacity to make wise decisions.

1 Fischbaucher, Thomas (19 Dec 2009) The Tricks of the Human Mind. http://permaculturenews.org/2009/12/19/the-tricks-of-the-human-mind/

2 Davis, Earon. (20 April 2015) Why Awareness of Cognitive Dissonance is so Elusive. http://www.slideshare.net/EaronDavis/why-awareness-of-cognitive-dissonance-is-so-elusive

3 Horsman, Greg. The Narcissist’s Vocation and the Economic Debacle, p 224-229. 2011

Posted in economic inequality | Tagged , , , | 1 Comment

Part 2 of 2: Creating Opportunities: A Comparison of Top-down and Bottom-up Systems

Top-down systems tend to deal with the abstract while bottom-up systems deal with ‘facts on the ground’. Darwin’s bottom-up view of evolution is part of the Theory of Natural Selection. Charles Darwin was not the first person to use the word evolution; others had used it in their writings previously. Darwin introduced a viable process, natural selection, to explain how it works, “It is not the strongest of the species that survive, nor the most intelligent,” Darwin observed, “but the one most responsive to change.”

The top-down system in Canada and the US today is a pyramid with the Central Banks (Fed in US) the large banks, a few rich connected individuals at the top, and the workers, the individuals who pay 28% on their credit card debt, at the bottom. Essentially 95% of the population works to make wealth move up the pyramid. The commercial banks are near the top with the foreign bondholders. More value in the market is likely created by farmers, and workers on the assembly line, but the elite bankers can borrow money more cheaply with greater leverage which translates into more power and control. The middle class has the illusion of money as the system inflates and creates cash for conspicuous consumption. The present top-down system is a wealth generator for the top 5%. The big bankers in this system are part of the financial oligarchy of the Wall Street-Washington corridor of power.

Darwinism includes a broad theoretical framework for the analysis of evolution of all open, complex systems, including socioeconomic systems. Detractors counter that natural selection does not account for human intentionality. The counter is that many choices are not intended, in fact, many intended decisions are under the influence of advertising, which introduces randomness.

Under ‘universal Darwinism’ a fundamental paradigm shift declares any complex system can be understood in terms of the same principles that are the core of Darwin’s Theory of Natural Selection, including socio-economic systems. The predictive power of the theory rests on its specification of systemic selective forces, based on the algorithm of variation, selection and retention. Selection works best on large populations. Market selection would ensure that banks with the best innovations survive. In a world of limited resources, this new theory connects the social determinants of health that include the conditions that influence an individual’s opportunities in life. Filtering social and economic policies through the lens of the social determinants of health before they are implemented will ensure they support actions that reduce the inequities in the system.

Core Darwinian principles include variation, inheritance (replication) and selection. For small populations, natural selection is not in play, because natural selection occurs in larger populations. Genetic drift (the change in the gene pool of a small population that takes place strictly by chance) can result in genetic traits being lost from a population, or becoming widespread in small population without respect to survival or reproductive value of the alleles (genes) involved. A change is prompted by random luck, rather than a need for adaption. Genetic drift is the reason we worry about African cheetahs and other species that have small population sizes. The more variation that exists in a population, the better prepared that population will be to adapt to change when it does occur. Drift is more pronounced in such populations, because smaller populations have less variation and, therefore, a lower ability to respond that favorably, that is, adapt to changing conditions. Thus it is not just the number of cheetahs that is worrying, it’s also the decreased variation in those cheetahs.

Genetic drift is the change of gene frequencies in a population from one generation to the next, due to chance events. Drift is only a strong source of evolutionary change in small populations, but is an important example of neutral evolution. In large populations genetic diversity is fairly constant and the loss or addition of some individuals has little effect on the total gene pool, hence genetic drift has little effect. However, genetic drift can cause big losses of genetic variation from small populations. In small populations this rapid change in gene frequency occurs independently of mutation (variation), natural selection, retention, and is due solely by chance factors. In small populations, changes associated with genetic drift accumulate over time.

The reintroduction of the bearded vulture into the Alps is another example of concern over genetic drift being most pronounced in small populations. In the 1970s biologists from zoos from around the world set about to try and re-establish a bearded vulture population by introducing captive-bred birds into the wild. Since 1986 more than 120 bearded vultures have been released from captivity; about two-thirds have survived and many have reproduced. However, the problem with the project is not the size of the wild population, rather, it is the size of the captive population. Throughout the world there are about 120 bearded vultures kept in zoos and breeding centres across Europe, Asia and the United States. With these low numbers mathematical models suggest there is not enough genetic variability in the captive birds to keep either the captive or the wild population thriving over the long-term. The population will actually lose genetic variation due to genetic drift. It is important in biology to retain as much genetic diversity in a population as possible. Without sufficient genetic diversity, there is always the risk that a population will not be able to respond very well to new selective pressures caused by environmental change.

The large banks on Wall Street and their equivalents around the world are akin to the small isolated populations of organisms in which genetic drift is the predominate process of change. Many of their products (mutations), or changes, are neutral, and by definition do not provide increased advantage. In fact, with small populations natural selection does not occur to weed out the maladapted. Deregulation allowed the big banks to create many financial instruments, however, in a small population selective pressure does not occur. Thus many changes in the large banks can be seen as equivalent to neutral mutations and without selective pressure one cannot tell whether they were beneficial.

For natural selection to work, there needs to be a larger population of relatively big banks. Applying Johnson and Kwak’s recommendation to roll the size of banks back to their 1996-levels would create a larger population. In this model, the banks could be allowed to fail, with the risk falling to share holders and managers, and not to taxpayers. In addition, a larger group of competitors (more banks) will make it harder for banks to direct large bonuses to their staff and there will be less money for political contributions. Reducing the size of banks would restore balance both to the banking system, and to the political system.1

The 2008 economic debacle was a top-down disaster. It was triggered by the consequences of policies championed by a small group of influential people. The financial sector took advantage of the system, empowered by reckless deregulation. The top-down economic system includes the Wall Street-Washington corridor that influences legislation – including tax bills. Without increasing the diversity and number (population) of banks, selective pressure will not work, and the taxpayer will continue to bail out the large banks when they make poor decisions.

In the past, the main criticism of Darwin’s natural selection was the requirement of multiple generations before change occurred, which did not fit with the business model. With the discovery of epigenetics, this thinking has changed. It is now known that genetic change can occur much more quickly than previously thought, responding from messages coming from other genes, hormones, and from nutritional cues and learning. The reactive oxygen radicals can modify, or turn off and on, genes that effect events further downstream. This can cause chronic diseases within a few decades. The great recession has created a perfect storm for poor health. To keep the global economy on tract, there is a call for less regulation. This political pressure occurs at the same time that we now realize the full consequences of exposure to toxins in our food, air and water.

Today younger people will have poorer health as adults, which will affect their economic status as they will earn lower wages as an adult, and this in turn, will affect the next generation of children who will thus be born into a poorer family. The link from family household income and poorer social and health outcomes is well documented – the growing income inequality in Canada and the US associated with globalization poses a significant threat to the health of many. The economic and social conditions under which people live, rather than the biomedical risk conditions and lifestyles choices are the factors determining whether one develops chronic conditions like cardiovascular disease, which develop primarily from material depravation (of poverty), excessive psychological stress and the adoption of unhealthy coping behaviors. The top-down system of trickle-down economics ensures the next generation in the workplace can not only expect to earn less than their parents, but are on track to enjoy poorer health.

In the US Democrats think regulations are necessary to promote safety and general welfare. Republicans think regulations should be relaxed to promote prosperity for business, which they contend eventually, benefits everyone in society. In 2016 Republican governor Rick Snyder of Michigan faces the consequences of weak state and local regulations and the lack of enforcement with respect to drinking water – lead poisoning of the children of Flint that will take years to determine the scope of neurological damage. In order to save money, water for the city was switched from Lake Huron to the Flint River and in addition, local authorities did not have anti-lead preventative added in the water supply as required by federal laws (at a cost $100 per day) that would have prevented 90% of the problems. Children with lead poisoning develop varying levels of brain damage and a subsequent drop in IQ. These children have been denied the opportunity to reach their potential that they could have had in the future.

There is a bottom-up system that will address such future challenges. In particular, epigenetic harms have the potential to affect every aspect of our lives. Harmful toxins have accumulated over the years, and many have been identified as epigenetic harms associated with chronic disease. Personal choices affect environmental exposures, especially with respect to cigarettes and food. The presence of chronic conditions has a greater impact on health care resources than aging. In Canada and the US obesity has become an epidemic in the past 15 years, and chronic disease now consumes a larger and larger portion of health care dollars. The realization that the epigenome is highly sensitive and responsive to environmental influences, including toxic exposures, dietary factors, and behavioral impacts, serves to focus future state priorities. Epigenetics explains how environmental factors can switch genes on and off, based on choices we make. Epigenetic studies will predict which environments need to be created womb to tomb in order to protect us, and minimize the risk of chronic diseases.

Wellness is about reaching one’s full potential. Controlling epigenetic harms, or environmental harms, is about treating an individual’s potential as a freedom. The environment, hereditary, chance, friends and luck (things over which one has little control) play a greater role in wellness than personal lifestyle choices. Governments have a role in protecting this newly recognized freedom of potential – the opportunities one has to reach his or her potential is the most important measure of freedom, not the amount of reduced government regulation and taxes enjoyed. Epigenetic risk is not merely a medical risk, but implicates the fundamental principles of fairness and justice underlying the present social contract.

1 Horsman, Greg. (2013) Evolutionary Economics and Equality: An Age of Enlightenment. p 173-187.

Posted in economic inequality | Tagged , , , | 2 Comments