Sunday, May 26, 2019
written 19 May 2019
published 26 May 2019
When a debt is created, it is treated as a real asset until it is paid off, without regard to fiscal integrity underlying its creation. A loan to pay for an expensive vacation is treated the same as a loan funding a hostile corporate buyout or loan to build a productive business. Once in the economic pool, debt is immortal and homogeneous.
Money is a place holder for value, with no actual use of its own. When money was tied to actual assets, like a bushel of wheat or an ounce of gold, the expansion of money was somewhat limited, and reflected value in the economy. For the last fifty years, money has been created out of thin air, decoupled from the tangible world. The value of this fiat money is defined by the creating agency. As long as everyone has confidence in the creating agency, the economy functions and the debt endures. The crash of 2008 showed there are limits to this confidence game.
The American government has a national debt greater than $20 trillion, about equal to the annual gross domestic product of the US economy. There is an additional $120 trillion in unfunded liability, in the form of Social Security, Medicare, and government pensions, which are contractual future obligations currently without the funds to support them. The problem is even greater when the costs of deferred infrastructure maintenance and environmental restoration are added.
The tradition economic solution is to grow the economy. Even if it was possible on this finite planet, our economic model funds expansion by increasing debt, which grows faster than the actual economy. Every economic sector is struggling to service their current debt load. Pensions are underfunded, student debt debilitates an entire generation, retail sales are down, store closings are increasing, wages have been stagnant for fifty years, and income inequity is increasing, so supporting more debt isn't possible. The classic alternatives at this point are hyperinflation, or total economic collapse.
Beginning 4000 years ago, debts have been forgiven as regular debt jubilees or in times of financial crisis. Today no banker wants to admit the debt they carry as asset is really junk, so writing off debt is avoided. At the peak of the 2008 crash, when it was obvious that banks had worthless balance sheets, they still resisted Federal bailouts which required them to write off their bad loans. In Europe, the banks dealing with Greece extracted ruinous pension cuts and privatization of public assets before they would consider writing off uncollectable debts. The fiction of debt value is hard to transcend, because it brings into question the judgement of the person or institution that loaned the money in the first place.
Modern Monetary Theory (MMT) is an emerging economic model which suggests that fiat money can be used to advantage. During the 2008 crash, the central banks created $20 trillion in "funny money" to buy up bad debts from the banking industry. This eventually ended the panic and avoided a collapse of the western economies. MMT suggests using the same kind of "funny money" to eliminate debts for the larger population.
Specifically, the government could issue vouchers to provide debt relief for mortgages, student loans, and credit cards, as well as funding a Universal Basic Income (UBI). For instance, the Treasury could send a voucher to each person with a mortgage, to be mailed to their mortgage lender, cutting the principle balance by 50%, tax free. The same kind of voucher could be sent to everyone with a student loan or a credit card, cutting their balance by 50%, all paid by the Treasury. This same source would fund a UBI for everyone with a Social Security number, dealing with the twin employment challenges of outsourcing and automation.
This might seem like foolish inflationary pie in the sky, but the current model is headed to hyperinflation or collapse, with increasing economic inequity, creating endless war and environmental devastation, without little benefit to the larger population. The MMT investment model would do for the 90% what the bank bailout did for the corporations and the 1%, giving a real boost to the real economy, unlike the Trump tax cut.
Sunday, May 19, 2019
written 12 May 2019
published 19 May 2019
President Trump believes that man-made climate change is a fake news hoax. However, the Pentagon has long identified climate change as a "threat magnifier," aggravating existing political fault lines and contributing to social upheaval and violent conflict, disrupting whole regions. Climate change destroys global agricultural production, increasing economic losses, farm failures, food scarcity, and migration pressures.
Syria experienced drought from 2006-2011, the worst in 900 years, killing 250,000 people. 75% of the farms failed, 85% of the livestock died, and millions moved to the cities. Food scarcity and extreme unemployment helped fuel the Syrian civil war, causing refugees to flood into Europe. Reaction to this influx fed support for fascist political parties, and helped tip the balance in the Brexit vote. The stalled British secession threatens to destabilize the economy of the entire European Union.
For the benefit of our corporations, America has long supported corrupt and violent governments in Guatemala, Honduras, and El Salvador, creating a large, poor, malnourished population of subsistence farmers, now threatened by increased climate variability. In the last decade, hurricanes with heavier rainfalls have destroyed 40 years of public infrastructure. When half a year's precipitation might fall in a week, and temperatures can surge unexpectedly, harvests have been cut by half. With no alternative, people migrate north to stay alive, fueling Trump's rabid xenophobic fears.
Cyclone Idai hit the eastern coast of Africa on March 2019, the second deadliest on record, affecting over 3 million people in Mozambique, Malawi, and Zimbabwe, killing over 1000. The storm destroyed 110,000 homes and 3,000 square miles of farmland, only weeks before harvest, requiring $2B to recover. Five weeks later Cyclone Kenneth made landfall further to the north of Idai, dropping an additional 13" of rain in 24 hours, and displaced 700,000 more people. The continued rain and flooding have prevented arrival of aid, and hindered replanting in this critical agricultural area, wiping out the main food source for half the population of a very poor area.
America is affected as well, with climate related losses of $350B in 2018, not counting the ongoing reduction in food productivity which can last for years. In October 2018, just before harvest time, Hurricane Michael came ashore as a category 4, affecting the Florida panhandle and southwest Georgia. It laid waste to cotton fields, pecan orchards, and pine forests, causing $1.7B in damages. It can take years for a cotton farmer to get out of debt from one lost crop, 8 years for a replanted pecan orchard to begin producing again, and 30 years for a pine forest to mature. This was the second hurricane to hit this area in 2 years, and tornados are more frequent, all delivering greater amounts of rainfall.
In March 2019, a strong "bomb cyclone", a storm where intensity increases rapidly over 24 hours, hit the upper American Midwest. The warmer atmosphere holds more water vapor, a 50% increase from 30 years ago, creating heavy precipitation events. The increased rainfall, combined with snow melt, created the worst flooding in decades, affecting 9 million people. 1.1 million acres of cropland were flooded, causing $3B damages. Trump's trade war has devastated commodity sales, so large quantities of grain, corn, and soybeans were in storage, which were ruined by the flooding and uninsured. It could be 9 months before agriculture production is fully restored. Farm incomes are down, expenses are up, and bankruptcies have already increased 19% in 2019.
Climate extremes produce not only flash floods, but recently identified flash droughts. A normal drought evolves over years, but a flash drought can form in a matter of months. Record high temperatures, combined with low and rapidly decreasing soil moisture, destroys agriculture and increases fire risk. A flash drought over 2 months in 2012 caused $30B in agricultural losses in the central US. Another event in 2016 cost $3B.
Climate change is already here. Oil companies identified the problem decades ago but chose to hide the information, so the easy solutions are long gone. This global problem requires a global solution. The longer the deniers are in control, the harder the task becomes. But if we have compassion for our grandchildren, we must rise to the occasion, even if it seems overwhelming.
Sunday, May 12, 2019
written 5 May 2019
published12 May 2019
Six weeks ago, a white supremacist shot up a mosque in Christchurch, New Zealand. A 19 year old white man in Poway, California, inspired by the Christchurch event, and influenced by hate sites on social media, decided to kill some Jews. Two weeks ago, after easily acquiring an assault style rifle, he posted his hate manifesto, entered a synagogue and began shooting. This was the 97th mass shooting in America in 2019: another lethal example of alienation, amplified by toxic social media, enabled by easy access to powerful weapons.
My exposure to guns is limited. Forty-five years ago, I walked into the Ace hardware in Fort Bragg, bought a .22 rifle and a box of cartridges and went out for target practice. A gun is a tool for extending one's will, and with any tool, practice improves skill and accuracy. I appreciate a good tool, and enjoyed improving my skill, but noticed that after expending the entire box of shells, everything that moved looked like a tempting target.
I decided I didn't need that kind of tool in my life, and gave the rifle to my brother-in-law. He is a hunter, proud that he cooks and eats what he shoots, and he enjoys feeding others. Another brother-in-law collects guns, and used to hunt. He has accidently discharged a round from an "unloaded gun" at least twice. One of my nephews was recently shot to death, probably with his own pistol, although ballistics and gunpowder residue were not verified. His girlfriend is now incarcerated. A gun in the house increases the odds of gun violence, and gun suicides outnumber gun homicides.
In 1871, the National Rifle Association (NRA) was chartered in New York as a nonprofit organization to advance marksmanship, firearm safety and competency. The National Firearms Act of 1934, the first federal gun control legislation, was supported by the NRA, whose president Frederick testified "I don't believe in general promiscuous toting of guns. I think it should be sharply restricted and only under licenses." During the 1970's, the NRA shifted from nonpartisan and aligned with the Republican Party. After a contentious leadership change in 1977, it began lobbying heavily against gun restrictions, with generous funding from arms manufacturers.
The NRA has recently suffered setbacks. Growing public reaction to mass shootings has put the NRA on the defensive, losing support from several sporting goods chains and banks. Their political lobbying activities, prohibited by their nonprofit status, are now being investigated by New York State, which could disband the organization. Last month, Maria Butina was sentenced to prison as an unregistered Russian agent, active in infiltrating the NRA to advance Russian interests. Butina's boss is suspected of illegally funneling money through the NRA to support the Trump campaign. The NRA leadership is in open conflict over their advertising agency, including questionable payments, conflicts of interest, and promoting policies unrelated to NRA original values.
The NRA argues that unfettered gun ownership is part of the second amendment of the Constitution, which reads "... the right to keep and bear arms shall not be infringed," but in 1776, "arms" were a handmade, muzzle loaded, black powder flintlock pistol or musket. Perhaps ownership of those arms should be unfettered, but our population density is 33 times greater, and powerful modern weapons must be regulated. Polls within the last year show that 2/3 of Americans support stricter gun laws, including background checks and mandatory waiting periods.
Modern weapons could be treated like automobiles, another powerful, dangerous tool. Most people have a right to own and operate a car, even multiple cars, but they are required to register them, take regular tests to prove they are safe operators, and have liability insurance to protect the larger public. Failure to comply with these regulations mean loss of rights. In addition, guns might be required to have clear indicators of being loaded, have digital fingerprint trigger locks, and have every part etched with the gun serial number. Ammunition might also have identification numbers on slugs and casings.
NRA president Frederick had it right in 1934. Promiscuous gun toting should be sharply restricted to preserve the right to life, liberty, and the pursuit of happiness for the general society.
Sunday, May 5, 2019
written 28 April 2019
published 5 May 2019
Individuals, and cultures, operate within a story that frames perspective and shapes responses. Changing the story, or perspective, changes the response. Picture a backyard where high fences block the view, and imagine rising up in a balloon. The limitation of the fences fall away by adding a new dimension of awareness. The Presencing Institute, investigating the "intersection of science, consciousness, and social change" at MIT's Sloan School of Management, recently released a paper called "Axial Shift", describing an additional perspective for examining the political, economic, and educational issues of the 21st century. The following is excerpted from that paper.
The traditional 20th century political division of left versus right is expanded with an orthogonal axis of open versus closed. We are familiar with the closed model, now dominant in countries such as America and Brazil (although election of Trump and Bolsonaro are symptoms of the closed problem, not the cause). "The closed model amplifies Fear (closed will), Hate (closed heart), and Ignorance (closed mind) through five behaviors: blinding (not seeing reality); de-sensing (not empathizing with others); absencing (losing the connection to one’s highest future); blaming others (an inability to reflect); and destroying (destruction of nature, relationships, and self)".
One example is mass shootings: "not looking at the real issues, such as gun laws (blinding); not empathizing with the real victims (de-sensing); claiming that the student activists are paid actors (absencing); blaming the victims for not defending themselves (blaming others); and putting the community on a path toward civil war (self-destruction)".
Another example is climate change: "not accepting scientific evidence (blinding); not empathizing with the increasing number of victims, particularly in the global South (de-sensing); dismantling the Environmental Protection Agency (absencing); actively undermining the credibility of climate science and climate scientists (blaming others); and pulling out of the Paris Agreement (putting civilization on a path toward self-destruction)".
The lesser practiced open model amplifies Courage (open will), Compassion (open heart), and Curiosity (open mind) with five complementary behaviors: seeing,sensing, presencing (capacity to connect with deep sources within), crystallizing (group commitment), and co-creating.
"Open versus closed is not new. What’s new today are three conditions: that the issue is now playing out globally; that we have only one decade left to transform our economies and societies in line with the planetary boundaries for sustainable development; and that social media are amplifying the toxic behaviors (i.e., the cycle of absencing) on levels not seen before".
Economic discussion traditionally focuses on growth, with debate between government intervention on one side and free market private processes on the other. But mushrooming debt limits government intervention and the 2008 crash showed limitations of the market process. The deeper question is "growth of what?" The convenience of financial quantification made growth of Gross Domestic Product (GDP) easy to monitor.
But GDP measures output, not outcome, and social well-being is not the same as more goods and services. Rising health care costs increases GDP, but reflects increased social misery, and increasing consumption on a finite planet is suicidal.
An alternative to the material growth paradigm is a focus on well-being for all. Some examples are Bhutan’s Gross National Happiness indicator or the United Nations Sustainable Development Goals (no poverty, zero hunger, good health, quality education, gender equality, clean water and sanitation, affordable clean energy, decent work, innovative industry, reduced inequality, sustainable cities, responsible consumption, climate action, and peace).
The old left/right discourse in education debated public versus private schools . "The new discourse focuses on the type of learning: memorizing facts vs. whole child approaches to learning that integrates head, heart, hand. The Montessori school system is a good example, as is the Finnish education system. Automation and the artificial intelligence revolution are already reshaping society, replacing jobs based on skills learned by memorizing figures, formulas, and facts, challenging humanity to cultivate human compassion, empathic human services, collective creativity, deep listening, generative dialogue, and collective presence."
"The difference is not ideology, it is consciousness, the quality of how we connect: shifting from ego-system awareness to eco-system awareness, from me to we. The Presencing Institute is an effort to transform our old civilizational structures through bridging the ecological, social, and spiritual divides." To read the whole article, go to https://www.presencing.org/transforming-capitalism-lab/stories/axial-shift.