The Debt Whirlpool

SUBHEAD: Visualizing the status of the whirlpooling increase of world government debt to GDP.

By Jeff Desjardins on 21 January 2019 for Visual Capitalist -
(https://www.visualcapitalist.com/visualizing-the-snowball-of-government-debt/)


Image above: Click to enlarge. Swirling around the drain-hole of history are the national economies in red with between 50% and over100% of government debt to Gross Domestic Product (GDP). From (https://www.visualcapitalist.com/visualizing-the-snowball-of-government-debt/).

Over the last five years, markets have pushed concerns about debt under the rug.

While economic growth and record-low interest rates have made it easy to service existing government debt, it’s also created a situation where government debt has grown in to over $63 trillion in absolute terms.

The global economic tide can change fast, and in the event of a recession or rapidly rising interest rates, debt levels could come back into the spotlight very quickly.

The Debt Snowball
Today’s visualization comes to us from HowMuch.net and it rolls the world’s countries into a “snowball” of government debt, colored and arranged by debt-to-GDP ratios. The data itself comes from the IMF’s most recent October 2018 update.

The structure of the visualization is apt, because debt can accumulate in an unsustainable way if governments are not proactive. This situation can create a vicious cycle, where mounting debt can start hampering growth, making the debt ultimately harder to pay off.

Here are the countries with the most debt on the books:

Rank	Country	Debt-to-GDP Ratio (2017)
#1	Japan	237.6%
#2	Greece	181.8%
#3	Lebanon	146.8%
#4	Italy	131.8%
#5	Portugal	125.7%
#6	Sudan	121.6%
#7	Singapore	111.1%
#8	United States	105.2%
#9	Belgium	103.4%
#10	Egypt	103.0%

Note: Small economies (GDP under $10 billion) are excluded in this table, such as Cabo Verde and Barbados
 
Japan and Greece are the most indebted countries in the world, with debt-to-GDP ratios of 237.6% and 181.8% respectively. Meanwhile, the United States sits in the #8 spot with a 105.2% ratio, and recent Treasury estimates putting the national debt at $22 trillion.

 Light Snow
On the opposite spectrum, here are the 10 jurisdictions that have incurred less debt relative to the size of their economies:

Rank	Country	Debt-to-GDP Ratio (2017)
#1	Macao (SAR)	0.0%
#2	Hong Kong (SAR)	0.1%
#3	Brunei	2.8%
#4	Afghanistan	7.0%
#5	Estonia	9.0%
#6	Botswana	14.0%
#7	Russia	15.5%
#8	Saudi Arabia	17.2%
#9	DRC	18.1%
#10	Paraguay	19.5%

Note: Small economies (GDP under $10 billion) are excluded in this table, such as Timor-Leste and Solomon Islands

Macao and Hong Kong – both special administrative regions (SARs) in China – have virtually zero debt on the books, while the official country with the lowest debt is Brunei (2.8%).

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Life after economic growth

SUBHEAD: We are remembering how to build a world in which there will be time for music.

By Shaun Chamberland on 15 November 2018 for Tikkun -
(https://www.tikkun.org/nextgen/the-sequel-life-after-economic-growth)


Image above: From ().

As Simon Mont wrote in Tikkun’s recent issue on the New Economy, “capitalism is collapsing under the weight of itself, and it’s not pretty.”[i]

Our globalised world finds itself caught on the horns of a seemingly impossible dilemma – either cease growing, and so collapse the economy on which we all depend, or continue to grow until we overwhelm and destroy the ecosystems on which we all depend.

As my late mentor, the historian and economist David Fleming, put it,

It is certain that there are no simple answers to this—none that could be proposed without proposing at the same time a transformation in the whole of the way we think, work and order our lives.[ii]

And yet, faced with this fundamental systemic conundrum, our leaders hold tight to their simple answer – growth.  Having worked supporting people with drug addiction for several years, it is hard to escape the parallels to the more tragic cases.  The dire consequences of our choices are piling ever higher around us, threatening the very continuation of our lives and those around us.

And the response is to double down on the current path and turn a blind eye – to sink deeper into denial.  It is just too difficult, too brave, to undergo that dark night of the soul – to admit the problem, to seek a new paradigm.

So we hear it over and over – we must keep growth high, keep unemployment low.  Donald Trump’s recent Twitter boast that U.S. GDP growth (4.2%) was higher than unemployment (3.9%) for the first time in over a century was both inaccurate and bizarre, but it betrays his allegiance to these numbers.
And of course, he is far from alone.  All his peers are junkies too.

Most people – even most economists – never question the desirability of these measures, as if mastery of them could somehow heal an economy so violently contrary to our human instincts and desires that it leaves epidemics of depression, loneliness and suicide everywhere it goes.  That sparks not only economic and environmental devastation, but cultural and spiritual annihilation.

As if there were not something deeper, something larger, going on here.

~~~

So let’s step back for a minute.  First, “keep unemployment low”.  The appeal is easy to see, but what’s really going on here?

Consider the great economist John Maynard Keynes’ prediction, in 1930, that by the year 2000 the onward march of technology would lead to an average 15 hour working week in countries like the U.S. and U.K.  Naturally he saw this as progress – not a doom-laden prophecy of mass unemployment – and this fact begins to expose the inherent contradiction in the aim of maximising employment.

What economists see as wastefully underutilised ‘spare labour’ is what most of us might call spare time—time enjoyed outside the formal economy—a welcome part of a life well lived rather than a ‘problem of unemployment.’[iii]

Of course, modern life is not noted for the utopian, leisurely daily routines enjoyed by the bulk of the population.

 So why was Keynes wrong?  Certainly not because the rate of technological advance over the past century failed to live up to his expectations.  No, rather because our economic paradigm literally makes widely-shared leisure time impossible.

To see why, Fleming invites us to take a further step back.  He notes the startlingly extensive holidays (five months of each year, in some places) achieved in medieval Europe.  How were the good folk of the Middle Ages able to enjoy so much more leisure time than we are in our technologically-advanced society?  He explains,

In a competitive market economy a large amount of roughly equally-shared leisure time – say, a three-day working week, or less – is hard to sustain, because any individuals who decide to instead work a full week can produce for a lower price (by working longer hours than the competition they can produce a greater quantity of goods and services, and thus earn the same wage by selling each one more cheaply).

These more competitive people would then be fully employed, and would put the more leisurely out of business completely. This is what puts the grim into reality.[iv]

So in an economy like ours, a technological advance that doubles the amount of useful work a person can do in a day becomes a problem rather than a benefit. It tends to put half the workers out of work, turning them into a potential drain on the state (or simply leaving them destitute).

In theory all the workers could just work half-time and still produce all that is needed, as Keynes predicted, and as is promised all over again by today’s latest wave of automation techno-utopians.[v]

But in practice workers are often afraid of having their pay cut, or losing their jobs to a stranger who is willing to work longer hours.

In the absence of a sense of community or mutual trust, and having been taught to seek their security in a wage, people instead compete against each other for the right to perform the pointless tasks that anthropologist David Graeber memorably characterised as “bullshit jobs.”[vi]
 
Meanwhile, governments see that the only way to keep unemployment from rising to the point where the system breaks down is through endless economic growth, which thus becomes a non-negotiable obligation – a dogma.  Ah, here’s our second simple imperative, “keep growth high”…

The problem here is elementary, brutal math.  Economists tell us that 2-3% growth annually, give or take, is necessary to stop avoid recession or depression.  Arithmetic tells us that if something grows at 2% a year, it will double in size in 35 years.  At 3% a year it will double in 24 years.  At Trump’s claimed 4.2%?  17 years.

~~~

Can we seriously imagine our world in just two or three decades with twice the economic activity – twice the oil extraction, twice the intensive agriculture, twice the manufacturing, twice the pollution?

And then in two or three more decades doubling again, to four times the size of today’s economy…  Even superabundance like that of the natural world cannot indefinitely support an exponentially growing parasite.[vii]

It’s a remarkably straightforward point; just arithmetic.  And yet it remains respected mainstream opinion that we should just keep growing, quietly crossing our fingers that somehow Nature – the economy upon which all others depend – will defy both physics and math and continue to bail us out forever.  As Fleming put it,

Civilisations self-destruct anyway, but it is reasonable to ask whether they have done so before with such enthusiasm, in obedience to such an acutely absurd superstition, while claiming with such insistence that they were beyond being seduced by the irrational promises of religion.[viii]

In this context, then, it’s no surprise to be hearing increasingly shrill, desperate alarm from scientists around the world as they observe the natural world crumbling under the impossible, ever-growing pressure.

As I write, the latest report announced that 60% of mammals, birds, fish and reptiles have been annihilated since 1970.  Put starkly, most of the wild nature that was here fifty years ago is gone.  And still we seek to grow the human economy, and cheer when that growth accelerates.[ix]

Similarly, the inherently conservative Intergovernmental Panel on Climate Change released their Global Warming of 1.5ºC report, which makes it abundantly clear that the unfolding physical realities studied by climate science are dramatically outpacing the policies notionally intended to address them.

They find that we must halve emissions in the next twelve years, and so feel forced to call for “rapid and far-reaching … unprecedented” transformation in the economy.[x]

Hence it has become impossible to be simultaneously realistic about both the political climate and the science of climate.  The two stubbornly refuse to reconcile, so we are forced to decide which carries more weight, and then be profoundly unrealistic about the other.

To take present policy seriously demands a total rejection of the science.  To take the science seriously demands a total rejection of the policy on the table.  And so grassroots movements like the Extinction Rebellion and Climate Mobilization are emerging – the realists of a larger reality.

They recognise that the dominant politico-economic paradigm leads to nothing but a literal dead end.  We are on the cusp of a fundamental shift, for better or worse – either we change direction or we end up where we are headed.

~~~

It’s interesting then that a change of direction is exactly what electorates have been voting for, or at least trying to.  Globalisation and neoliberalism are not only destroying our collective future, but have also all-but-destroyed the present for many, as the neofeudalism termed ‘austerity’ continues to bite.

The common factor behind unexpected election results like Trump in the US, Brexit and Corbyn in the UK and Bolsonaro in Brazil appears to be desperate rejection of the establishment and the status quo.

Unfortunately, in such times, when more and more people are struggling to support their families, and losing faith in the dominant stories of what is important, the far right has a track record of providing simple answers.  It is important to remember that fascists like Mussolini and Hitler didn’t only consolidate power on the basis of lies and fear—they also raised wages, addressed unemployment and improved working conditions.

To effectively challenge the drift into fascism, then, we need to present an alternative politico-economic vision that can restore identity, pride and economic well-being. We need to tell a beautiful story of how we will make the future better for the desperate, rather than a fearful one.  To provide a grounded, compelling alternative to a future I have no desire to live through.

This is what Fleming devoted his life to developing.  Fifty years ago he saw the central dilemma of our times approaching, and devoted his life to facing the inevitable question – what might a life-sustaining, nourishing economy look like, after the impending end of economic growth?
This culminated in his posthumous 2016 book Surviving the Future: Culture, Carnival and Capital in the Aftermath of the Market Economy.

Therein, he reminds us of just how unusual today’s ‘ordinary’ is, and how profoundly unrealistic it is to pin our hopes on market capitalism – an economic system that has existed for less than 1% of recorded history and is already not only destroying its own foundations, but those of life on Earth.  In his words,

The Great Transformation has already happened. It was the revolution in politics, economics and society that came with the market economy, and which hit its stride in Britain in the late eighteenth century.

Most of human history had been bred, fed and watered by another sort of economy, but the market has replaced, as far as possible, the social capital of reciprocal obligation, loyalties, authority structures, culture and traditions with exchange, price and the impersonal principles of economics.[xi]

This historical context is critical.  The New Economy that we need is, in many ways, the Old Economy.  It is time to rediscover the ways human beings related to each other for hundreds of thousands of years before we were ripped into isolation by the brief historical anomaly of market capitalism, into which all of us alive today happened to be born.  As Mont put it:

[The New Economy] is a groundswell to relying on a memory harbored in our hearts to make real a vision of humans returning to deep relationships with earth, spirit, and each other, that is constantly evolving and changing, while staying acutely cognizant of the fact that we must relearn how to keep ourselves alive without capitalism and extraction.[xii]

Fleming took that dear memory harbored in our hearts and wrote it large across the page.  “We know what we need to do,” he writes, “We need to build the sequel, to draw on inspiration which has lain dormant, like the seed beneath the snow.”

~~~

His sparkling, tantalising writing has become a touch-stone for thousands of communities around the world who are putting it into practice, with his startling seven-point protocol for an economics based in trust, loyalty and local diversity one of the key factors in the birth of the now-global Transition Towns movement.

Drawing on the work of the likes of Edgar Cahn, Fleming provides the radical but historically-proven sequel to today’s capitalism: focusing neither on the growth nor de-growth of the market economy, but on huge expansion of the ‘informal’ or non-monetary economy—the ‘core economy’ that keeps our society alive, even today.  This is the economy of what we love: of the things we naturally do when not otherwise compelled, of music, play, family, volunteering, activism, friendship and home.

Refreshingly – uniquely perhaps, among modern economists – he argues that the key to sustaining a post-growth economy is culture and community.  Those extensive holidays of former times were far from a product of laziness.  Rather they were, in an important sense, what men and women lived for.  ‘Spare time’ spent in feasting, performing, collaborating and merrymaking together formed the basis of communal bonding, membership and trust.  As one of his readers put it – when productivity improves, “in our system you have a problem; in Fleming’s system you have a party.”

These shared cultural ties then bind people together in cooperation, support and solidarity, the essential foundations for the communities which have thrived throughout history in the absence of economic growth or full-time employment.  As Fleming writes,

The [future] economy will depend for its existence on a deep foundation in culture. It is possible to live without it, but only for a time, like holding your breath under water.[xiii]

This is a key lesson for our organising and our community work.  With its rare blend of charm and rigour, Fleming’s writing reminds us that nurturing the core economy back to health – getting to know people, enjoying time together and helping to provide for each other’s basic needs – is not merely some quaint and obsolete sharing longing, but an absolute practical priority.

Over the past couple of centuries, this core economy has been much weakened, as the ever-growing stresses of precarious employment and rising prices have left people with less time and energy for friends, family and fun.

But as we in communities around the world spend our days relearning how to seek our security in each other rather than in money, we notice that the unfolding collapse of the omnicidal growth economy becomes less something to fear, and more something to celebrate.

We think less about what we might stand to lose and far more about the joys we had already lost and are slowly learning to regain, together.  At long last we are remembering how to build a world in which, as David put it, “there will be time for music.”


[i] Mont, S. (2018). Introduction to the next economy. Tikkun, Volume 33, Number 3:16-17.
[ii] Fleming, D. (2016). Surviving the Future: Culture, Carnival and Capital in the Aftermath of the Market Economy (p. 129). White River Junction, VT: Chelsea Green Publishing.
[iii] Keynes, J. M. (1930). Economic Possibilities for our Grandchildren.  Available at: http://www.econ.yale.edu/smith/econ116a/keynes1.pdf

[iv] Fleming, D. (2016). Surviving the Future: Culture, Carnival and Capital in the Aftermath of the Market Economy (p. 75). White River Junction, VT: Chelsea Green Publishing.
[v] These claims have a long history.  The Democratic Review, impressed by the new technologies, predicted in 1853 that by 1900, “men and women will then have no harassing cares or laborious duties to fulfil.  Machinery will perform all work – automata will direct them.  The only task of the human race will be to make love, study and be happy”.
[vi] Graeber, D. (2013). On the Phenomenon of Bullshit Jobs: A Work Rant. STRIKE!, Issue 3.  Available at: http://strikemag.org/bullshit-jobs
[vii] In the words of Prof. Albert Bartlett, “The greatest shortcoming of the human race is our inability to understand the exponential function.”  His legendary ‘Arithmetic, Population and Energy’ lecture is one of the most important ever recorded and widely available online, e.g. at: https://www.albartlett.org/presentations/arithmetic_population_energy.html
[viii] Fleming, D. (2016). Surviving the Future: Culture, Carnival and Capital in the Aftermath of the Market Economy (p. 180). White River Junction, VT: Chelsea Green Publishing.
[ix] WWF (2018). Living Planet Report – 2018: Aiming Higher. Grooten, M. and Almond, R.E.A. (Eds). Gland, Switzerland.
[x] IPCC (2018). Global Warming of 1.5ºC, Summary for Policymakers (p.21).  Available at: http://report.ipcc.ch/sr15/pdf/sr15_spm_final.pdf
[xi] Fleming, D. (2016). Surviving the Future: Culture, Carnival and Capital in the Aftermath of the Market Economy (p. 179). White River Junction, VT: Chelsea Green Publishing.
[xii] Mont, S. (2018). Introduction to the next economy. Tikkun, Volume 33, Number 3:16-17.
[xiii] Fleming, D. (2016). Surviving the Future: Culture, Carnival and Capital in the Aftermath of the Market Economy (p. 40). White River Junction, VT: Chelsea Green Publishing.

Shaun Chamberlin  authored the Transition movement’s second book, The Transition Timeline, and has served as both chair of the Ecological Land Co-operative and a director of Global Justice Now.  He is the executive producer of 2019 film The Sequel: What Will Follow Our Troubled Civilisation? and editor of several books, including David Fleming’s posthumous Lean Logic and Surviving the Future.  His website is www.darkoptimism.org

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Human Well-being vs GDP Growth

SUBHEAD: We must make what really produces human well-being and reduces our impact on Earth.

By Kurt Cobb on 5 December 2017 for Resource Insights -
(http://resourceinsights.blogspot.com/2017/12/human-well-being-economic-growth-and-so.html)


Image above "Utopien 04" (2007). Painting by Makis E. Warlamis. From (http://www.resilience.org/stories/2017-12-03/human-well-economic-growth-called-decoupling/).

Some people claim that humans—called breatharians—can live on air alone. Others claim we can have economic growth without increasing our resource use, so-called decoupling. Neither claim withstands scrutiny though here I am only going to deal with the second one.

Hidden beneath the claim of decoupling is the assertion that human well-being and economic growth are synonymous.

But, human well-being is far from a one-dimensional economic variable linked unalterably to more income and consumption. So, saying that economic growth must at some point come to an end to maintain the habitability of the planet is not the same as saying that human well-being must also stop improving.

On the contrary, a stable society in harmony with the workings of the natural world in a way that maintains the habitability of the biosphere for humans would seem to be an essential characteristic of a society which offers a high degree of well-being to humans. Destroying that habitability through endless economic growth then is contrary to human well-being in the long run.

All of this should seem obvious. But so often the advocates of growth or “sustainable” growth tell us that ending growth would destroy the chance for countless people to attain well-being in our modern industrial world.

While that has some truth within the narrow context that measures well-being as a function of economic output, it misses the point above. An uninhabitable world is really, really bad for human well-being.

The answer these advocates say is economic growth decoupled from increased resource use. But as two recent papers suggest, this is an oxymoron.

As “Is Decoupling GDP Growth from Environmental Impact Possible?” explains,while society has been getting gradually more efficient at producing goods and services, we are not anywhere near economic growth without increased resource use. The apparent decoupling in Germany and some other countries is probably due to the following factors:

1) substitution of one resource for another; 2) the financialization of one or more components of GDP that involves increasing monetary flows without a concomitant rise in material and/or energy throughput, and 3) the exporting of environmental impact to another nation or region of the world (i.e. the separation of production and consumption).

Moreover, there are limits to how efficient we can be. Each increment of efficiency becomes more and more expensive, rising steeply and prohibitively as we approach zero increase in resource use for any increment of growth—or as we move toward zero resource use from current levels while achieving the same level of economic output, a no-growth scenario. In short, we are never going to become breatharians.

A second paper suggests that matters are even worse because we are using the wrong measure. Instead of using output per unit of Gross Domestic Product (GDP), we should be looking at resource use per capita. By that measure resource use has become far less efficient, expanding by 60 percent per person between 1900 and 2009. Of course, the goods and services provided have also expanded greatly.

But here again we would be making a direct and proportional link between human well-being and consumption when well-being is much more complex.

The authors contrast this finding with one that claims that resource consumption dropped by 63 percent in that period—a claim that is true within the narrow context of output per unit of GDP, a measure of relative impact (relative to money) rather than absolute impact on the planet.

We humans would like to believe that we can achieve a society with all the material benefits we enjoy today widely distributed across the globe—but without the material. We can’t do that without destroying the habitability of the planet.

What we can do is focus on what really produces human well-being (and not just GDP growth) and make that the locus of our efforts while finding ways to reduce our impact on the planet on an absolute rather than a relative basis.

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Crisis point for American elites

SUBHEAD: The exploitive elites cannot turn back the tides of history, but they can immiserate millions.

By Charles Hugh Smith on 19 June 2017 for Of Two Minds -
(http://www.oftwominds.com/blogjune17/crisis-elites6-17.html)


Image above: In 2012 Los Angeles-based artist MEARONE was making a building mural in the UK and faced a lot of scrutiny about the piece. "I came to paint a mural that depicted the elite banker cartel". From (http://crpbayarea.org/2012/10/05/the-corporate-medias-response-to-mear-ones-latest-piece-on-the-banking-elite/).

The "fixes" to the stagnation of postwar Capitalism in the 1970s were financialization, globalism, and the sustained expansion of debt--all have run out of steam.

Many of us have written about cycles in the past decade: Kondratieff economic cycles, business/credit cycles, the Strauss–Howe generational theory (an existential national crisis arises every four generations, as described in their book The Fourth Turning), and long-wave cycles of growth and decline, as described in seminal books such as The Great Wave: Price Revolutions and the Rhythm of History and War and Peace and War: The Rise and Fall of Empires.

There is another Rhythm of American History that few recognize: the economic, social and political crises sparked by exploitive Elites. There are two dynamics that drive these crises:

1. The exploitation of commoners by financial/political Elites reaches extremes that create systemic instability as commoners no longer have the means to improve their conditions.
   
   
2. The economic mode of production that generated Elite wealth no longer functions, but the Elites cling to the failing system and enforce it with increasingly violent suppression of dissent.

Here are the previous Crises of Exploitive Elites:

A) American Southern Slavery: 1850 to 1865
Though the toxins generated by slavery are still with us, the existential political, social and economic crisis arose in the years between 1850 and the end of the Civil War in 1865.

In broad brush, the rise of the American West triggered a political crisis in the U.S. as the southern states realized the non-slave West's rising political power would doom the fragile balance between the non-slave Northern industrial-economy states and the cotton/agricultural slave-economy South.

It was a trend the South couldn't possibly win, but the South's exploitive Elites refused to concede any of their power--and that refusal to adapt to changing conditions guaranteed the Civil War.

The first Industrial Revolution radically transformed the source of wealth creation. The plantation agrarian mode of production of the South was eclipsed by the vast wealth-generating might of the rapidly industrializing North.

The Southern political and economic Elites could not win economically or politically, so they attempted a military solution--a war they might have won had it not been for the Westerners Lincoln, Grant and Sherman. (Lincoln was born and raised in the frontiers of Kentucky, Indiana and Illinois; both Grant and Sherman were born in Ohio and served in Army postings along the West Coast.)

The moral tide was rising against slavery. The Christian world had long been divided on the issue of slavery, but the tide turned against slavery in the early-to-mid-1800s, both in Great Britain an the U.S. Moral turnings are powerful instigators of political crises, and once again the Southern Elites attempted to stem this tide with military force.

B) The Crisis of Gilded-Age Exploitation: 1892 to 1914
The dates of this crisis are inexact and open to interpretation, but in broad brush, the Second Industrial Revolution (mass production, integrated industrial corporations, the rising dominance of Finance and Industrial Capital, emergence of monopolies and cartels, etc.) forced millions of commoners into the penury of wage-labor while concentrating the gains of capital and speculation into the hands of the few.

Adjusted for inflation, the wealth of the financier-industrialists in this era exceeds the wealth of today's billionaires, and is on par with the extremes of wealth concentration that characterize the last stages of the Roman Empire.

Commoners attempting to unionize were brutally suppressed by hired private enforcers and the police/military forces of the American government. Radical unions such as the I.W.W. (Industrial Workers of the World, a.k.a. Wobblies) were destroyed by coordinated, concerted government suppression, much of it by means that are visibly illegal by today's standards.

The conflict between exploited industrial labor and politically dominant Capital was eventually resolved by progressive anti-trust laws (aided by President Theodore Roosevelt) and the beginnings of social rights and welfare programs--universal education, limits on hours worked per week, etc.

C) Great Depression & Debt Capitalism: 1929 to 1941
Capital was increasingly concentrated in the hands of the Elites in the Roaring 20s, but the commoners had new access to the financial magic of credit: banks sprouted by the thousands, anxious to loan money to fund the purchase of more farmland, new autos, and all the other output of a consumerist economy.

But alas, credit is not collateral, nor is it wealth. When the debt bubble burst, so did the stock market, which was based on highly leveraged margin debt.

The Elite financiers resisted writing down the debt that had made them so rich, and as a result the Depression dragged on, immiserating millions who then turned to fascism or radical socialism as the political fixes to the systemic exploitation and dominance of Elites.

4) Civil Rights and Global Empire: 1954 to 1973.
The legacy of slavery's oppression had lingered on for almost 100 years, and the rising prosperity of the 1950s and 60s generated a social, moral, political and economic movement to throw off the most oppressive aspects of an exploitive social/political order.

At the same time, the costs of maintaining a Global Empire were raised to a boiling point by the war in Vietnam, which destabilized the moral, political, social and economic orders.

In response the Elites instigated waves of violent, suppressive state tactics designed to disrupt and destroy the organized dissent of social movements. These tactics included the FBI's COINTELPRO programs as well as other blatantly illegal, heavy-handed government enforcement of the dominance of exploitive Elites.

I've written extensively about state over-reach and illegal suppression of dissent: remember, the state exists to enforce the dominance of Elites: everything else is propaganda, misdirection and obfuscation.

Welcome to the United States of Orwell, Part 3: We had to Destroy Democracy in Order to Save It (March 28, 2012)
State Over-Reach: Stripmining the Citizenry for Fun and Profit (November 13, 2009)
When It Becomes Serious, First They Lie--When That Fails, They Arrest You (March 16, 2015)
For more on COINTELPRO, please read War at Home: Covert action against U.S. activists and what we can do about it.

Simply put: when lies no longer work, the government devotes its resources not to eliminating wars of choice, cronyism and corruption but to suppressing dissent and resistance to those extractive, exploitive policies.

Which brings us to the present-day Crisis of Exploitive Elites. The "fixes" to the stagnation of postwar Elite/state-dominated Capitalism in the 1970s were financialization, globalism, and the sustained expansion of debt in all sectors--state, corporate and household.

Now all three engines of "growth" have run out of steam. All three greatly exacerbated wealth and income inequality, as these two charts reveal:


Image above: Chart comparing American disparity of family income in 2002 and 20012. From original article.


Image above: Chart American asset prices versus Gross Domestic Production. Note Cnetral Bank bubble value veering uo and away from GDP. From original article.

Once again, the political and economic Elites are resisting the tides that are undermining their Empires of Debt and Exploitation. The Elite-controlled Corporate Media has been ordered to War Status, an DefCon-5 emergency requiring an endless spew of all-out propaganda designed to distract, disrupt and destroy organized dissent and any resistance to the dominance of Exploitive political and financial Elites.

The Exploitive Elites cannot turn back the clock, so they cling to their failed "fixes" and demand our compliance.

The Exploitive Elites cannot turn back the tides of history, but they can immiserate millions. That seems to be "solution" enough for them, but you cannot destroy rising moral revulsion to soaring inequality and the abject failure of debt-based global capitalism with mere media propaganda.

See also
The Automatic Earth: Coming Apart at the Brink
Bloomberg: The U.S. Is Where the Rich Are the Richest
Peak Prosperity: The Pin To Pop This Mother Of All Bubbles?

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Our Intellectual Bankruptcy

SUBHEAD: When the system itself is the source of our problems, changing nothing guarantees collapse.

By Charle Hugh Smith on 19 April 2017 for of Two Minds  -
(http://www.oftwominds.com/blogapr17/idea-bankruptcy4-17.html)


Image above: Painting of an alchemist attempting to turn lead into gold. From (https://ecstatic-darkness.com/2016/12/13/solar-transformation/).

Clinging to magical-thinking fixes that change nothing on the fundamental level hastens collapse. For esxample the religious belief in "Keynesian Economics", "Universal Basic Income" and "Medicare/Medicade for All".

Here we stand on the precipice, and all we have in our kit is a collection of delusional magical thinking that we label "solutions." We are not just morally and financially bankrupt, we're intellectually bankrupt as well.
Here are three examples of magical thinking that pass for intellectually sound ideas:

1. Mainstream neo-classical/ Keynesian economics
As economist Manfred Max-Neef notes in this interview, neo-classical/ Keynesian economics is no longer a discipline or a science--it is a religion.

It demands a peculiar faith in nonsense: for example, the environment--Nature-- is merely a subset of the economy. When we've stripped the seas of wild fish (and totally destroyed the ecology of the oceans), no problem--we'll substitute farmed fish, which are in economic terms, entirely equal to wild fish.

In other words, the natural world cannot be valued in our current mock-science religion of economics.

Other absurdities abound. Stripping the seas of wild fish adds to GDP, so it's all good, right? Dismantling newly constructed buildings and building a replacement structure also adds to GDP, so it's an excellent source of "growth."

As Max-Neef points out, conventional economists have absolutely no understanding of poverty. If you need a sobering account of just how this abject willful ignorance works in the real world, I recommend reading The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good.

Gail Tverberg (among others) has shown how the existing economic model no longer makes sense of the actual economy we inhabit: The Economy Is Like a Circus.

As for rising wealth/income inequality--there is a cure for that, but it's not in mainstream econ textbooks: The Only Thing, Historically, That's Curbed Inequality: Catastrophe Plagues, revolutions, massive wars, collapsed states—these are what reliably reduce economic disparities.(via Arshad A.)
2. Universal Basic Income
As noted in yesterday's essay, wages are no longer an adequate means of distributing the dwindling surplus of advanced economies. Wages as a share of GDP have been declining for decades, and only click up temporarily during massive speculative bubbles. Once these bubbles pop, which they inevitably do due to their instability and unsustainability, wage earners' share of GDP plummets to a new low.

The mainstream is enthusing about the "solution": Universal Basic Income (UBI). The solution to low pay and scarcity of middle-class paid work is to give everyone a basic income for doing nothing.

Delusional academics anticipate a flowering of creative talent akin to a new Renaissance as people are freed from work by robots and automation. But if we look at people already receiving the equivalent of "free money" UBI--disability-- studies find recipients are simply watching more TV and YouTube videos and pursuing opioids, not writing poetry and composing concertos.

They are not volunteering in their community or engaging their communities in any positive fashion. What actually happens with UBI is recipients become isolated and miserable because UBI strips their lives of meaning, purpose and the need to contribute to a community.

The real purpose of UBI is to chain every household to the state, and drain all social relations between the isolated "consumer" and the state.

As tragic as the delusion of UBI is to individuals, it is unworkable financially because profits will fall as automation becomes commoditized, and the surplus available to distribute to every household will diminish.

I explain this at some length in my books Why Our Status Quo Failed and Is Beyond Reform and A Radically Beneficial World: Automation, Technology & Creating Jobs for All.

Much of what is passed off as "corporate profits" is accounting fraud and the monetization of what was once free. For example, all that customer labor: now that we pump our own gasoline, check and pack our own purchases, do our own banking--who's skimming the output of our labor? Yup, the corporations.

Commoditization of software and tools + the Internet = loss of monopoly. This is a problem, for the core function of the state-cartel version of capitalism we inhabit is the state enforces a cartel-monopoly structure to guarantee steady surpluses it can tax for its own expansion.

As automation is commoditized, profits plummet as competition can no longer be controlled by cartels or even the state--just as Marx laid out.

Combine declining productivity and declining surplus (profits) (both for deeply structural reasons) and there cannot be enough money to fund UBI. Weirdly, proponents of UBI never even perform a back of the envelope calculation of cost and the source of all this free money (tax revenues and/or borrowing from future generations). Perhaps they intuit that such an exercise would reveal the bankruptcy of their magical thinking.

As we shall see below, the system can't even support the entitlements it has already promised to hundreds of millions of people, never mind an additional universal entitlement.

(Note to UBI enthusiasts: there are limits on what robots and automation can and will do: they will only perform work that is highly profitable. Since most human work is not profitable (or even paid), the idea that robots and automation will free everyone from work is delusional fantasy. I explain all this in greater detail in A Radically Beneficial World.)  
3. Medicare for all
I understand the desire for a single-payer healthcare system, and have published various proposals over the years for such a system.

The latest magical-thinking "solution" attracting widespread support (again, without any basis in actual numbers) is Medicare for all. The idea is: take a system (Medicare-Medicaid) that's already bankrupting the government and the nation and expand it from 70 million people to 320 million people.

Uh, right.

Shall we consult reality before embracing delusional "solutions"? Here's a chart of the rise of administrative costs in healthcare, public and private. Proponents of Medicare for All claim admin costs are lower in Medicare, but this conveniently overlooks the estimates that 40% of Medicare costs are paper-shuffling, needless or harmful tests, procedures, etc. and outright fraud.


Image above: Chart showing the growth in the number of physicians versus medical administrators. From the article.

We know a few things as fact
One is that the populations qualifying for Medicare and Medicaid (the elderly and low-income households) are expanding at a high and very predictable rate.

The other thing we know is that the Medicare-Medicaid costs are rising at a rate far above the growth rate of the economy that supports these programs (GDP), far above the growth rate of tax revenues and far above the growth rate of wages, which matters because payroll taxes fund Medicare.

It doesn't take much to extend these lines and conclude Medicare-Medicaid alone will bankrupt the federal government and the nation. The problem is these programs are bloated by fraud, defensive medicine, predatory pricing for medications, and every other costly ill of our healthcare system.

Like every other centrally funded/regulated sector, Medicare-Medicaid is optimized for maximizing private-sector profits and increasing regulatory costs. This is one manifestation of the diminishing returns on the entire centralized-control model.

We'd all like "solutions" that don't change anything, but when the system itself is the source of our problems, changing nothing guarantees collapse.

As noted in the article linked above, various inequalities and asymmetries get resolved by collapse. Clinging to magical-thinking fixes that change nothing on the fundamental level hastens collapse. In that sense, magical-thinking fixes are "solutions," but not the sort their proponents imagined.


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Too little Growth to grow

SUBHEAD: “Real GDP growth fell and leveled off in the mid-1970s, then started falling again in the mid-2000s”.

By Raul Ilargi Meijer on 18 February 2017 for the Automatic Earth -
(https://www.theautomaticearth.com/2017/02/not-nearly-enough-growth-to-keep-growing/)


Image above: Mashup of canoe paddling team dragging a water skier. No matter how hard they paddle it is too little energy to get the job done, or not enough ERoEI. Mashup by Juan Wilson.

It’s amusing to see how views start to converge, at the same time that it’s tiresome to see how long that takes. It’s a good thing that more and more people ‘discover’ how and why austerity, especially in Europe, is such a losing and damaging strategy. It’s just a shame that this happens only after the horses have left the barn and the cows have come home, been fed, bathed, put on lipstick and gone back out to pasture again. Along the same lines, it’s beneficial that the recognition that for a long time economic growth has not been what ‘we’ think it should be, is spreading.

But we lost so much time that we could have used to adapt to the consequences. The stronger parties in all this, the governments, companies, richer individuals, may be wrong, but they have no reason to correct their wrongs: the system appears to work fine for them. They actually make good money because all corrections, all policies and all efforts to hide the negative effects of the gross ‘mistakes’, honest or not, made in economic and political circles are geared towards making them ‘whole’.

The faith in the absurd notion of trickle down ‘economics’ allows them to siphon off future resources from the lower rungs of society, towards themselves in the present. It will take a while for the lower rungs to figure this out.

The St. Louis Fed laid it out so clearly this week that I wrote to Nicole saying ‘We’ve been vindicated by the Fed itself.’ That is, the Automatic Earth has said for many years that the peak of our wealth was sometime in the 1970’s or even late 1960’s.

Intriguing questions: was America at its richest right before or right after Nixon took the country off the gold standard in 1971? And whichever of the two one would argue for, why did he do it smack in the middle of peak wealth? Did he cause the downfall or was it already happening?

As per the St. Louis Fed report: “Real GDP growth fell and leveled off in the mid-1970s, then started falling again in the mid-2000s”.

What happened during that 30-year period was that we started printing and borrowing with abandon, making both those activities much easier while we did, until the debt load overwhelmed even our widest fantasies ten years ago. And we’ve never recovered from that, if that was not obvious yet. Nor will we.

As the first graph below shows, there was still growth post-Gold Standard but the rate of growth fell and then “leveled off”, only to fall more after, to a point where Real GDP per Capita is presently 0.5% or so -little more than a margin error-. How one would want to combine that with talk of an economic recovery is hard to see. In fact, such talk should be under serious scrutiny by now.

Still, the numbers remain positive, you say. Yes, that’s true. But there’s a caveat, roughly similar to the one regarding energy and the return on it. Where we used to pump oil and get 100 times the energy in return that we needed to pump it, that ratio (EROEI) is now down to 10:1 or less.

Alternative energy sources do little better, if at all. Whereas to run a complex society, let alone one like ours that must become more complex as we go along – or die-, we would need somewhere along the lines of a 20:1 to even 30:1 EROEI rate.

Another place where a similar caveat can be found is the amount of dollars it takes to produce a dollar of real growth. That amount has been increasing, and fast, to the point where it takes over $10 to create $1 or growth in the US and Europe, and China too moves towards such numbers.

Both our energy systems and our financial systems are examples of what happens when what we should perhaps call the rate of ‘productivity’ (rather than growth) falls below a critical mass: it becomes impossible to maintain, even keep alive, a society as complex as ours, which requires an increase in complexity to survive.

In other words: a Real GDP per Capita growth rate of 0.5% is not enough to stand still, just like oil EROEI of 5:1 is not; there is growth, but not -nearly- enough to keep growing.

One does not get the impression that the St. Louis Fed economists who wrote the report are aware of this -though the title is suggestive enough-, they seem to lean towards the eternal desire for a recovery, but they did write it nonetheless. Do note the sharp drop that coincides with the 1973 oil crisis. We never ‘recovered’.

Why Does Economic Growth Keep Slowing Down?

The U.S. economy expanded by 1.6% in 2016, as measured by real GDP. Real GDP has averaged 2.1% growth per year since the end of the last recession, which is significantly smaller than the average over the postwar period (about 3% per year). These lower growth rates could in part be explained by a slowdown in productivity growth and a decline in factor utilization. However, demographic factors and attitudes toward the labor market may also have played significant roles.

Long-run growth rates were high until the mid-1970s. Then, they quickly declined and leveled off at around 3% per year for the following three decades. In the second half of the 2000s, around the last recession, growth contracted again sharply and has been declining ever since. The 10-year average growth rate as of the fourth quarter of 2016 was only 1.3% per year. Total output grows because the economy is more productive and capital is accumulated, but also because the population increases over time.

The same dynamics (or lack thereof) are reflected in a recent piece by Chris Hamilton, in which he argues that global growth -as expressed by growth in energy consumption- has largely been non-existent for years, other than in China. Moreover, China has added a stunning amount of debt to achieve that growth, and since its population growth is about to stagnate -and then turn negative-, this was pretty much all she wrote.

Global Growth is All About China…Nothing but China

Since 2000, China has been the nearly singular force for growth in global energy consumption and economic activity. However, this article will make it plain and simple why China is exiting the spotlight and unfortunately, for global economic growth, there is no one else to take center stage.

China’s core population is essentially peaking this year and beginning a decades long decline (not unlike the world. The chart below shows total Chinese core population peaking, energy consumption stalling, and debt skyrocketing.

• China of 1985-2000 grew on population and demographic trends.
• China of 2000-2015 grew despite decelerating population growth but on accelerating debt growth…this growth in China kept global growth alive.
• China of 2015-2030 will not grow, will not drive the global economy and absent

Chinese growth…the world economy is set to begin an indefinite period of secular contraction. China ceased accumulating US Treasury debt as of July of 2011 and continues to sell while busy accumulating gold since 2011.

Unfortunately, neither quasi-democracies nor quasi-communist states have any politically acceptable solutions to this problem of structural decelerating growth and eventual outright contraction…but that won’t keep them from meddling to stall the inevitable global restructuring.

I can only hope that these data will convince more people that all the times I’ve said that growth is over, it was true. And perhaps even make them think about what follows from there: that when growth is gone, so is all centralization, including globalization, other than by force. This will change the world a lot, and unfortunately not always in peaceful ways.

What seems to have started (but was in the air long before) with Brexit and Trump, is merely a first indication of what’s to come.

People will not accept that important decisions that affect them directly are taken by anonymous ‘actors’ somewhere far away, unless this promises and delivers them very concrete and tangible benefits. In fact, many have lost all faith in the whole idea, and that’s why we have Trump and Brexit in the first place.

This turn inward -protectionism if you will-, in the UK, US and many other places, is an inevitable development that follows from declining growth and soaring debt. Entire societies will have to be re-built from the ground up, and people will want to do that themselves, not have it dictated by strangers.

At the same time, of course, those who profit most from centralization want that to continue. They can’t, but they will try, and hard.

Equally important, people who wish to try and save existing ‘central institutions’ for less selfish and more peaceful reasons should think twice, because they will fail too. It’s centralization itself that is failing, and the demise of the structures that represent it is but a consequence of that.

We will see local structures being built, and only after that possibly -and hopefully- connect to each other. This is a big change, and therefore a big challenge.

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GDP is the Big Wetiko

SUBHEAD: The mantra that ‘growth is good’ has been repeated so often that it has the feel of common sense.

By M Kirk, J Hickel & J Brewer on 11 February 2017 for Occupy -
(http://www.occupy.com/article/all-change-or-no-change-culture-power-and-activism-unquiet-world-part-iii#sthash.9SUPSI4i.AzGLRfif.dpbs)


Image above: Wetiko is a variety of native American evil spirit and a in our culture a form of insanity. Strangely enough, people under the collective enchantment of wetiko become fanatically attached to supporting an agenda that oftentimes is diametrically opposed to serving then own best interests. From (http://aetherforce.com/dispelling-wetiko-by-paul-levy/).

If there is one idea that has gained the status of true hegemony – dominant and unquestioned around the world – it is the idea that we need to perpetually grow our economies, and every part of them, in order to improve the quality of human life. This idea is so prevalent that we take it almost completely for granted, as though it is a law of nature.

But in reality, the Gross Domestic Product (GDP) measure was first developed in the 1930s by American and British economists. During WWII, it came into official use by governments keen to know the extent of wealth and resources available for their war efforts.

It is this war-time history that explains why GDP is so single-minded – almost violent. It counts money-based activity, but it doesn’t care whether that activity is useful or destructive. If you cut down a forest and sell the timber, GDP goes up; if you fish the seas to extinction, or start a war, GDP goes up.

GDP doesn’t care about the costs associated with these activities, so long as money is made. What is more, GDP doesn’t count useful activities that are not monetized. If you grow your own food, clean your own house, or take care of your aging parents, GDP says nothing.

GDP exemplifies the logic of wetiko by emphasizing material acquisition and encouraging a self-serving pattern of increasing consumption for every society that uses it as a principal measure of progress. GDP, then, is an instruction to power. In defining progress, it directs power to dedicate itself to more of the same, indefinitely and, if left unchallenged, without limits.

The problem is that this hegemonic theory of human progress is rapidly undermining the very conditions of our existence on this planet. Having pursued GDP growth with single-minded recklessness for the past few generations, we’re now overshooting our planet’s biocapacity by more than 60% each year – vastly outstripping the ability of the natural world to absorb our waste and replenish the resources we’re using.

There are no longer any frontiers where new growth doesn’t directly harm someone else, by, say, degrading the soils, polluting the water, poisoning the air, and exploiting human beings. GDP growth is creating more misery than it eliminates – more ‘illth’ than ‘wealth’, as Herman Daly put it.

And all of this is just at our existing levels of economic activity. Now think about what happens when we start to factor in the prospect of exponential growth. If the global economy is to expand by 3% next year, that means adding US$ 2 trillion to this year’s GDP.

To put that in perspective, this amount is more than the entire global GDP in 1970. Imagine all the cars, all the televisions, all the houses, all the factories, all the barrels of oil, and everything else that was produced in 1970 – not only in Britain and the US, but also in France, Germany, Japan, and every country in the whole world.

Everything.

Keep that mountain of stuff in your mind. That’s how much we have to add next year on top of replicating the amount we produced this year. And because growth is exponential – not linear – we have to add even more than that the year after, and so on ad infinitum.

But these policy-level parameters are really only the surface of the problem. The deeper force is the imperative of ever-increasing production and consumption, and this is what lies at the very heart of our culture – less as an addiction than as an unexamined assumption, an unquestioned ideological force.

The point here is that although there appears to have been all this change in the past year or even in the past 200 years, the deep wetiko logic of the system has not been questioned. People have turned to the likes of Donald Trump and Nigel Farage and Narenda Modi in hope of change, but the irony is that, of the political choices before us, these are the ones who are the most wetiko-ized in their belief system.

Donald Trump, for example, is practically wetiko personified – Jack Forbes would no doubt have called him a Big Wetiko. His conceptions of wealth and virtue and power, his complete comfort with the idea of profiting from the destruction of the natural environment, are all the stuff of pure wetiko.

Not that there are any truly non-wetiko politicians out there, in any national mainstream space we know of. Even Leftist populists, like Jeremy Corbyn and Bernie Sanders, stop far short of questioning the deep wetiko logic of the system. Their agendas, though far more progressive than their right-wing counterparts, still adhere to the basic economic orthodoxy of perpetual material growth.

When seen through the wetiko lens, then, it becomes apparent that all of the political warfare and upheaval of 2016 was mostly about surface-level differences in ideology. If changing the deep wetiko nature of our global political economy is what is needed – as we believe it is – we must acknowledge the limitations of electoral politics, and then work to overcome those limitations by changing the cultural environment and assumptions that define them.

Culture Hacking: A New Approach to Change

In light of the above, we advocate for an approach to social change that we call culture design or culture hacking. Addressing the systemic threats for humanity in the 21st century will require an intentional, open, and collaborative ‘design science’ for social change.

The elements of this approach include a variety of perspectives that will need to be integrated in both theory and practice. We’re not saying every group needs every perspective on this list, but a selection, ideally at least one from each of the following buckets, according to resources and requirements.

• People who study the long view – anthropology, cultural history, evolutionary theory, the rise and fall of empires, cliodynamics (the mathematical study of history), and other related fields.
  
• People who understand the cognitive and behavioral sciences – cognitive linguistics, social psychology, cognitive neuroscience, sociology.
  
•  People who understand the science of complex systems – nonlinear dynamics, system mapping, root-cause analysis, ecology, and so forth.
  
•  People who live an alternative cultural worldview from the bones out, as it were, rather than just the head down – Indigenous thinkers, leaders and activists, well-established post-capitalist communities.

When we look through a lens created by this sort of multi-disciplinary, multi-experience diversity, we start to see the world differently. Instead of framing policies as issues such as health care or climate change, we start to see cultural ‘anchors’, like GDP, as a measure of progress.

These anchors are the fundamental connectors that express the cultural logic baked into the system. They constitute the ‘common sense’ of a culture – the unquestioned filters of interpretation that give shape to political agendas outside conscious awareness. This is where the real power hides and, as always, it is in plain sight.

We see it as a task for 21st century social movements to ‘make the invisible visible’ by consciously deconstructing, analyzing, and re-constructing the cultural patterns of meaning that shape political and economic outcomes. This requires a systemic perspective about culture. And it only works when informed directly by rigorous research methodologies from the social sciences.

To give an example of where this sort of approach can lead:

When the Sustainable Development Goals (SDGs) were launched in 2015, practically every government, large non-government organization (NGO), corporation, and United Nations body signed up and celebrated them. We, at /The Rules, took a different view.

Rather than seeing their many laudable objectives, or the fact that they were, in traditional policy and process terms, a marked improvement on their predecessors, the Millennium Development Goals (MDGs), what we saw in them was more of the same.

More of the same basic cultural and economic logic that has created so much poverty and suffering, and brought us to the brink of climate disaster. We saw them sticking like glue to the ‘Plato to NATO’ logic of material progress being synonymous with actual progress.

Specifically, they hung entirely off the idea of GDP growth. All the good they hope to deliver is dependent on every single country – North and South – growing its GDP. And they are very specific about it: overall they are aiming for at least 7% per year in the least developed countries, and higher levels of economic productivity across the board. Goal 8 is entirely dedicated to this objective.

And so we saw the SDG moment as an opportunity to start to question and deconstruct some of the cultural narratives that underpin International Development ‘common sense’. We set ourselves the objective, ‘to open up the mental space for inquiry among development professionals and change agents working to address systemic threats to humanity’.
The strategy had two parts:

1. Weaken the core logic of development-as-usual by challenging its assumptions and revealing covert, unpopular agendas.
   
2. Ask questions designed to initiate people on a learning journey that reveals the structural causes of poverty and inequality  –  thus opening up the conversation landscape to a new set of stories that give meaning to these emergent understandings.
   

This was built on a Theory of Change informed by the science of cultural evolution, which has observed that people live within stories that make sense of their social world. These stories become entrenched as institutional structures and practices, making them difficult to dislodge and change. Telling a ‘better story’ is therefore a process of making the dominant stories less coherent and more difficult to understand, which opens up space for new meanings to fill in where they have broken down.

Our Theory of Change is to challenge the logic of the problematic narratives while facilitating a learning process that helps people craft their own new stories that make sense of the knowledge and insights gained along the way.

The questions we encouraged people to ask were:
How is poverty created? Where do poverty and inequality come from? What is the detailed history of past actions and policies that contributed to their rapid ascent in the modern era? When were these patterns accelerated and by whom? Who’s Developing Whom? The story of development is often assumed or unstated. What is the role of colonialism in the early stages of Western development? How did the geographic distribution of wealth inequality come into being? What are the functional roles of foreign aid, trade agreements, debt service, and tax evasion in the process of development? And most importantly, who gains and who loses along the way?

Why is Growth the Only Answer?

The mantra that ‘growth is good’ has been repeated so often that it has the feel of common sense. Yet we know that GDP rises every time a bomb drops or disaster strikes. Growth, as defined up till now, is more nuanced and complex than this mantra would have us believe.

Why must the sole measure of progress be growth (measured in monetary terms)?
Who benefits from this story? What alternative stories might be told?

We spread these questions through blogs and articles. They were woven into infographics and short videos, and we worked with a network of interested journalists who used them as a basis for reflection and commentary in as many media spaces as possible.

Our strategy was, of course, imperfect in both design and execution. But the intention was correct, and the level of cultural logic it targeted was roughly right. One way we know that is so is because it did not win us many friends. We were accused of naysaying, of undermining hard work of the people who developed the SDG framework (as if that is the point!).

And, of course, we were called naïve, because questioning something like GDP growth is akin to questioning the blue of the sky; it just doesn’t make sense in the ‘real’ world. We know that GDP growth is essential to healthy economies. Just as we know that international development is about developing all countries along the same capitalist, consumerist path. These things are simply common sense.

Tellingly, though, we received a fair amount of private, back-channel support. A number of NGO staff, for example, contacted us to say things like, ‘I know growth has to be challenged but we can’t do it [at x organization], it’s too radical’.

It’s impossible to know from the data we were able to gather how prevalent these opinions are, but it is safe to say we have a long way to go before the political mainstream develops the desire or the imagination to confront the deeper cultural logics that keep us locked into our current path to almost-certain environmental ruin and various forms of civilizational collapse that may ensue.

This does not mean that there are two binary options for historical perspective – the rationalist, linear Western perspective versus the holistic, cultural perspective that accounts for the deep logic to which our rules and laws give daily power. What we are saying is that without understanding the latter, we will be forever locked in by the very logic we are trying to change.

Culture hacking requires an expanded field of vision that includes a broad range of perspectives not traditionally found around the activism table, and that revels in the non-linear complexity that is the defining characteristic of culture.

In order for us to achieve lasting, structural change, a new generation of activists armed with the tools of culture hacking will have to deconstruct and de-program the dominant modes of action and analysis.

As we bear witness to all the changes that we are seeing in the outside world, a critical battleground will be our own conceptions of how activism works.

- See more at (http://www.occupy.com/article/all-change-or-no-change-culture-power-and-activism-unquiet-world-part-iii#sthash.9SUPSI4i.AzGLRfif.dpuf)

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The Money Cult

SUBHEAD: ZIRP and NIRP have coincided in first zero growth and now negative growth.

By Dmitry Orlov on  7 June 2016 for Club Orlov -
(http://cluborlov.blogspot.com/2016/06/the-money-cult.html)


Image above: Illustratio by Dennis Cristo of Zero Interest Rate Policy landing in catastrophic Negative Interest Rate Policy. From (http://www.silverbearcafe.com/private/10.15/recession.html).

Previously, I have written about the progression from positive interest rates to zero interest rates (since 2008) and finally to negative interest rates.

And I asked my readers a simple question: How will negative interest rates blow up the financial system? And apparently none of you knew the answer.

Now, I must confess that to start with I didn’t know the answer either, which is why I asked the question, and my first attempts at finding it were somewhat tentative. But now, having thought about it, I do seem to have found the answer, and it is that…

But first let us back up a bit and answer several preliminary questions:

1. Why did zero interest rates become necessary?
2. Why are negative interest rates now necessary? and,
3. Why are negative interest rates a really excellent idea?*

* if you ignore certain unintended consequences (which is what everyone does all the time, so let’s not worry about them just yet).

1. Interest rates went to zero because economic growth went to zero. If you are just now wondering why that happened, just google “Limits to Growth” by clicking this link. (A public notice about the scheduled end of growth has been on display at your global planning office for four decades now. It is not anyone else’s fault if people of this planet don’t take an interest in their global affairs. I mean, seriously…)

Interest rates and rates of growth are related: a positive interest rate is little more than a bet that the future is going to be bigger and more prosperous, enabling people to pay off the debts with interest. This is an obvious point: if your income increases, it becomes easier to repay your debts; if it stagnates, it becomes harder; if it shrinks, it eventually becomes impossible.

Yes, you can nitpick and split hairs, and claim that there was still some growth, but in the developed economies most of this growth has been in financial shenanigans, fueled by an explosion in debt, and most of the benefits of this last bit of growth accrued to the wealthiest 1%, and did next to nothing for anyone else. Did this growth help support a large, stable and prosperous middle class? No, it didn’t.

In fact, wages in the US, which was once the world’s largest economy, have been stagnant for generations. In response, the Federal Reserve has been continuously reducing interest rates, until they hit zero in 2008. And there they have stayed ever since. But now, it turns out, that’s not good enough. If the Federal Reserve wants to keep the party going, they have to do more, because…

2. Once you are faced with a continuously shrinking economy, just holding interest rates at zero is not sufficient to forestall financial collapse. The interest rates must go negative.

Here are just a couple of particularly striking examples.

Australia has amassed a huge pile of debt—over 120% of GDP—and most of it is mortgage debt on overvalued real estate. Now that Australia’s economy, which was driven by commodity exports to China, has tanked, a lot of this debt is being turned into interest-only loans, because Australians no longer have the money to repay any of the principal.

But what if they can’t make the interest payments either? The obvious solution is to refinance their mortgages as interest-only at zero percent; problem solved!

Of course, as conditions deteriorate further, the Australians will become unable to afford taxes and utilities. Negative interest rates to the rescue! Refinance them again at a negative rate of interest, and now the banks will pay them to live in their overpriced houses.

Another example: energy (oil and gas) companies in the US have accumulated a fantastic pile of debt. All of this money was sunk into developing marginal and very expensive resources such as shale oil and deep offshore. Since then, energy prices have fallen, making all of these investments unprofitable and dramatically reducing revenue.

As a result, energy companies in the US are a few months away from having to spend their entire revenue on interest payments. The solution, of course, is to allow them to roll over their debt at zero percent, and if you want them to ever start drilling again (their production has been falling by around 10% annualized) then please make that interest rate negative.

3. Are you starting to see how this works? Whereas before you had to be careful about taking on debt, and had to have a plan for how you will repay it, with negative interest rates that is simply not a consideration. If your debt pays you, then more debt is always better than less debt. It no longer matters that the economy continuously shrinks because now you can get paid just for twiddling your thumbs!

Image above: Chart of effective Federal Interest Rate From original article.

But are there any unintended consequences of negative interest rates? Unintended consequences are hard to think about, and most people get a headache even trying. How can it be that clean, plentiful nuclear energy will eventually pollute the whole planet with long-lived radionuclides, resulting sky-high cancer rates? How can it be that wonderful genetically modified seeds will render us sickly and infertile in just a few generations?

And how can it be that ingenious mobile computing technology has turned our children into zombies who are constantly twiddling their smartphones as they sleepwalk through life? It’s hard to think about any of this without taking some happy pills; and how can it be that taking those happy pills has… you get the idea.

The unintended consequence of negative interest rates is that they destroy money. This is true in an entirely trivial sense: if you deposit x dollars at -ρ% annual, then a year later you will only have x(1-ρ) dollars because xρ dollars has been destroyed.

(In case you prefer to count on your fingers and toes, if you deposit $10 at -10% annual, then a year later you will only have $9 because $1 has been destroyed.) But what I mean is something slightly more profound: negative interest rates erode the very concept of money.

To get at the reason for this, we have to ask a slightly more profound question: What is money? I think that money is the cult of the god Mammon. Look at the following symbols:

€ $ ¥ £
Don’t they resemble religious symbols? In fact, that’s what they are: they are symbols of faith in money. They are also units—dimensionless units, of a peculiar kind. There are quite a few dimensionless units in math and science, such as π, e, %, ppm, but they are all ratios that relate physical quantities to other, identical, physical quantities. They are dimensionless because the units cancel out.

For instance, π is the ratio between a circle’s circumference and diameter; length over length gives nothing.

But monetary quantities do not directly relate to any physical quantity at all. It can be said that some number of monetary units (let's call them "yarbles") is equivalent to some number of turnips, but that, you see, is a matter of faith.

Should the turnip farmer turn out to be an unbeliever, he would be within his rights to say, “I am not taking any of your damn yarbles!” or, if he were a polite turnip farmer, “Your money is no good here, Sir!”

Of course, if our turnip farmer were to do that, he’d land in quite a bit of trouble because, you see, the cult of Mammon is a state cult. You have no choice but to be a believer, because only by worshiping Mammon can you earn the money to pay your taxes, and if you don’t pay your taxes you get jailed.

Nor can you produce money on your own, because that right is reserved for Mammon’s high priests, the bankers.

Making your own money makes you a heretic, and gets you the modern equivalent of being burned at the stake, which is a $250,000 fine and a 20-year prison sentence.

But it goes beyond that, because the state insists that just about everything there is must be valued in units of its money. And the way everything must be valued is through a mystical legitimizing process that is central to the cult of money: Mammon’s “invisible hand” makes itself apparent within the “free market,” which is Mammon's virtual temple.

The “invisible hand” sets the price of everything as a mystical revelation and, as with any revelation, it is beyond criticism. It is a redemptive ritual, in which people acting out of their basest, most antisocial instincts—greed and fear—manage, through Mammon's divine intervention, to serve the common good.

The “free market” is also believed to have all sorts of miraculous properties, and as with all miracles it is all a matter of smoke and mirrors and suspension of disbelief.

For example, the “free market” is said to be “efficient.” But it sets the price of turnips, and the result is that fully 40% of the food in the US ends up being wasted. That’s definitely not efficient.

This sort of inefficiency can be tolerated while resources are plentiful. Should throwing away 40% of the turnips cause a shortage of turnips develop, turnip producers can grow more turnips and sell them at prices that turnip consumers can still afford. But when resources are no longer plentiful, this trick stops working, and what you end up with is something called market failure.

The current state of the global oil industry is a good example: either the price is so high that marginal consumers cannot afford it (as was the case until quite recently), or the price is so low that the marginal producers can’t break even (as is the case now).

And so a bout of supply destruction follows a bout of demand destruction, and then the pattern repeats. Everybody loses, plus this is terribly inefficient. It would be far more efficient to appoint some central planner to calculate the optimum price of oil once a month.

Then all the marginal producers would jump out the window, all the marginal consumers would slit their wrists, and equilibrium conditions would prevail.

As the oil supply dwindled (it is depleting at around 5% per year), some additional number of producers and consumers would need to sacrifice themselves for the greater good, and so on until the last barrel is produced and burned, leaving whatever producers and consumers still remained lying in pools of their own blood.

As natural resources dwindle, our faith in the cult of Mammon is being sorely tested. But what alternatives are there? Well, there is an even older, ancient cult that’s based on idolatry: the worship of precious metals. Gold has some industrial and aesthetic uses, but it is primarily useful for making a golden calf for you to worship (or, if you are former Ukrainian president Viktor Yanukovich, a golden toilet).

 Economists tell us that gold is a “pet rock” or a “barbarous relic,” and they are right, but what is one to do when there is a Götterdämmerung (twilight of the gods) going on? Nature abhors a vacuum, and in a Götterdämmerung older pagan deities sometimes emerge and demand virgin sacrifices—such as poisoning entire river ecosystems by mining gold using mercury, or squandering prodigious amounts of fossil fuels in mining, crushing and sifting through millions of tons of hard rock to get at just 3 parts per million of gold.

Negative interest rates are Mammon’s Götterdämmerung. The money cult is bolstered by the idea that its huge and all-powerful deity will be even more huge and all-powerful tomorrow; if the opposite is demonstrably the case, then people’s faith in it begins to falter and fade.

Negative interest rates are like an icy-cold bath for Mammon, causing its godhead to shrink a little more with every dip.

People see that, and think, “I don’t want to worship his shrinking yarbles.” Then they go and spend their own yarbles on anything they can find—fallow land, vacant houses, golden calves, boxes of brass knobs... They don’t bother investing their yarbles in growing turnips, because what’s the use of turnips if all you can do with them is sell them for even more shrinking yarbles?

Negative interest rates are an excellent idea—and perhaps the only way to keep the financial game going a bit longer—but, given these unintended consequences, they are also a terrible idea. The bankers know that. They want to preserve their cult’s status, and constantly talk about raising interest rates.

But they haven’t yet, because they also know that just a small increase will result in trillions of dollars of losses, triggering widespread business failures and ushering in the Greatest Great Depression Ever. This is not a problem for them to solve; this is a predicament.

They will delay and pray, and make pronouncements loaded with keywords designed to please the high-frequency trading algorithms that are in charge of artificially levitating the “free market” with judiciously timed injections of “free money.” But in the end all they can do is act brave, wait for a distraction and then… run for the exits!

And your job is to make it to the exits before they do.
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