Stop whining. Everyone should be rich. Vote for the Tegenpartij (Opposition Party), together for ourselves. It was the motto of the fictional Opposition Party in the Netherlands, run by two shady characters, Jacobse and Van Es. The creators of the fiction, Van Kooten and De Bie, intended to mock populist politicians and their promises. An opinion poll revealed that the party could have won a few seats in the Dutch parliament in 1981, if it had been genuine. But why isn’t everyone rich? Perhaps it is because poor people don’t have enough money. It can’t be that simple, or can it? Some people think it is.
So, why not hand out money for free? It is a scheme known as Universal Basic Income (UBI). There are reasons to consider a UBI. Perhaps, machines and computers will soon do everything. If so, how can we keep humans alive? The wealthy own most of the capital and already get money for doing nothing, while the working class fights over the scraps they leave behind. We can distribute that money more fairly. A UBI might be too expensive, but many countries already have the dole for those who don’t work. And if there are no jobs anymore, everyone must go on the dole.
Some believe that it won’t happen, and if it does, that it will be a nightmare. Most people work for a living, and without them working, we wouldn’t have food on the table or the other things they produce. And so, we should receive a reward for doing something worthwhile. And there is our problem. In ‘advanced’ economies, most people entertain themselves in the bullshit economy, transforming energy and resources into garbage and pollution, while not producing anything we need. A UBI is a more resource-efficient and ecologically friendly way to keep these useless eaters alive.
We run out of resources, so getting money for free is not as stupid as working arse off to leave a wasteland for your children. We should contribute to society if we can. Being redundant is not good at all, as you have no reason to exist. But in the current arrangement, the most wasteful get the highest rewards for transforming energy and resources into waste and pollution. So, it is a bad idea to pay people for doing nothing, but what we do now is worse. If we are to terminate the bullshit economy, a UBI can allow us to adapt to the new situation and survive until we have found sensible employment.
Nightmare scenario?
Until recently, machines mainly did simple tasks. That has already put many people out of work. So far, the surplus of workers has found employment in the bullshit economy. Robots and artificial intelligence may soon make human workers obsolete. And that could be all human workers. When robots can perform the same physical tasks and artificial intelligence surpasses human intelligence, there will be no job that machines can’t do, and humans will be redundant. In that case, we may all retire and live off the dole. A UBI would be the fairest arrangement, because we would all be equally useless.
AI will be better at making decisions than humans. Past experiences are no guarantee of the future. We may have heard the phrase ‘this time is different’ so often that we no longer believe it. But you only have to jump into a time machine to find out that every time is different. Horses may have laughed at the first cars and horseless agricultural machines, thinking that humans would continue to need them like they did since time immemorial. They all ended up in slaughterhouses. So, what will happen to all those redundant energy and resource-consuming humans? We will know once it has happened.
Realising our full potential
Proponents of a UBI tell us that handing out money will make our lives wonderful. Once we get money for nothing, we will be free to realise our dreams and achieve our full potential. If you have always wanted to become a blogger or vlogger, you can accomplish this with a UBI, as you don’t have to work for a living. The opponents of the scheme paint a dismal picture of people sinking into an abyss of idleness, filled with writing blogs nobody wants to read and making videos nobody wants to see, while essential jobs remain undone.
Doing a job is about making yourself valuable to others, not about realising your potential. That is how humans have lived and survived since time immemorial. People helped each other. Essential jobs are not always attractive. In countries with benefits, immigrants often do the unattractive, low-paying jobs. These vital jobs, such as harvesting crops, need to be done. The problem is that the production of essentials is often subject to intense competition, so that these jobs are often hard work for low wages.
A game of Monopoly
The game of Monopoly is a model of capitalism. Proponents of capitalism argue that it isn’t, but that is because this model, like any model, is a simplification and not perfect. If you have played the game more than once, you may have noticed it usually goes like this. At first, players buy streets and create capital by building houses and hotels. You can get rich by making the right investments. You also need luck. You need to be at the right place at the right moment. The game ends when most players are bankrupt.
At that point, there are more houses and hotels than players, but few can afford to stay in them. Like any model that has some merit, it says something about the real world. If you see that billionaires own everything and you can’t afford the rent, the game of Monopoly explains what is happening, to some extent, because no model is perfect. Capitalism is a scam against you, and the rig is interest, or profit on capital. Capitalism only works for the masses when enough of that money gets handed out to them.
Monopoly has a property tax on houses and hotels. If you are rich, you have to pay up. The money ends up in a jar, and if you are lucky, that money is yours. If you happen to be poor, the money transfer can keep you in the game. Monopoly also has a UBI. Every time you finish a round, you receive a fixed sum of money. It keeps the game going. Otherwise, it would end sooner as players would run out of cash. If the game ends, the players can wipe out all the houses and hotels and start anew.
For a game of Monopoly, that might be okay, but in the real world, that is like destroying everything, which is a highly inefficient way of reducing wealth inequality. The alternative is taxing the rich and handing out that money to the poor. In reality, the rich pay little in taxes and leave it up to the middle class to support the poor. The underlying cause of this problem is that interest makes wealth accumulate in the hands of a small rent-seeking elite. Without interest, the need for redistributing income might abate.
Bullshit jobs
For most of history, most people worked a few hours per day on average, but they were dirt poor. The Industrial Revolution changed that. Factory owners wanted labourers to work long hours to increase production and their profits. That is still how the economy operates today, even though we don’t need to. In ‘advanced’ economies, only a third of the people do things we truly need. The remaining jobs are pointless bullshit jobs. These occupations range from trading securities to taking orders at a fast-food restaurant. Once resources are gone and the Earth is a wasteland, these jobs will be gone.
For most of history, most people worked a few hours per day on average, but they were dirt poor. The Industrial Revolution changed that. Factory owners wanted labourers to work long hours to increase production and their profits. That is still how the economy operates today, even though we don’t need to. In ‘advanced’ economies, only a third of the people do things we truly need. The remaining jobs are pointless bullshit jobs. These occupations range from trading securities to taking orders at a fast-food restaurant. Once resources are gone and the Earth is a wasteland, these jobs will be gone.
Working is doing something useful for others or society. While doing our jobs, we consume energy and resources, so if our jobs aren’t useful, they aren’t work, but entertainment. We drive our cars to heated or air-conditioned offices. We work hard, so we believe we deserve a holiday and consume energy and resources for relaxation. If we axe all the pointless jobs, we can divide the remaining work, relax more, so we don’t need to waste energy and resources on holidays. The anthropologist David Graeber estimated that at least one-third of all jobs are pointless.1 In advanced economies, it is probably two-thirds.
So, which jobs can we do without? Graeber mentions a receptionist at a publisher in the Netherlands. She had nothing to do except for taking up an occasional telephone call. Another employee could have done that alongside other tasks. Without a receptionist, no one would take the publisher seriously. And so, the publisher needed a receptionist. It made economic sense. But we can do without the publisher and over 99.99% of the books ever published. Graeber vastly underestimates the inefficiency of the modern economy in terms of the energy and resources it consumes relative to our needs.
In our economic system, a job has economic value when someone pays for it. I could hire you to dress as a rabbit and hop on the street. Perhaps that brings a few smiles to a few faces, so who is to tell this job is pointless? Okay, the cost of making the rabbit suit could have saved a few children from starvation, but that has less economic value. And that is precisely the problem. Think of consultants, managers, salespeople, lawyers, and financial advisors. They don’t make anything we can eat or use to keep our bodies warm, and a small percentage of what they consume could feed those who still go hungry.
These highly peculiar views come from a belief that money is the supreme measure of value and that we need to engage in a rat race to produce and consume as many non-essential items as possible to prevent businesses from becoming unprofitable, as that would collapse the economy. In other words, we commit suicide because economists believe that negative interest rates are impossible. And so, they keep on telling us, like Jacobse and Van Es, that if we just work harder and waste more energy and resources, so that the capital owners can make more money, everyone will become rich.
And so you can see the extent to which usury controls our thinking and makes us do stupid things. Things will collapse, and when they do, Earth will be a wasteland, and money will be worthless. Choosing to do nothing and be on the dole while you can work is not as bad as transforming energy and resources into waste and pollution by working in a non-essential bullshit job. Being a leech is less harmful than being a destroyer. And so, a UBI can help us to make the transition from a wasteful and destructive economic system to a sustainable one that centres on providing for our needs.
Income guarantee
A UBI can become expensive, most notably if the payment is sufficient to live off. An income guarantee is cheaper. Why hand out money to people who have enough? And there should be an incentive to work. Existing welfare schemes often make it financially unattractive to take on a low-paying job. A simple example can explain what an income guarantee scheme might look like. Assume there is an income guarantee of € 800 per month and a 50% income tax.
gross income
tax
net income
€ 0
+ € 800
€ 800
€ 1000
+ € 300
€ 1300
€ 2000
– € 200
€ 1800
€ 3000
– € 700
€ 2300
€ 5000
– € 1700
€ 3300
The income guarantee gets settled with the income tax, so you receive money when your income is low. If your gross income is €2,000, you pay €200 in taxes, and your net income is €1,800. There is an incentive to work as you gain financially from doing a job. When the income guarantee is sufficient to live on, there may be no need for minimum wages, making the job market more efficient. If the income guarantee replaces existing welfare schemes, there may be limited additional costs.
Denmark has an income guarantee, combined with a duty to seek employment if you are unemployed. It makes the Danish labour market flexible. Corporations can adapt their workforce to market requirements. Employment security, education and generous benefits compensate for the lack of job security.2 Denmark has a functional social contract and a competent government, which are prerequisites for such a scheme to work. The Danish state offers free childcare, so parents face fewer obstacles to working.
An income guarantee can improve workers’ bargaining position, even when it is not sufficient to live on. If the income guarantee is €500 and the living wage is €1,000, someone doing a cleaning job can work fewer hours, taking labour out of the market, which can result in higher pay to attract workers. An income guarantee might affect employment and income as follows:
Machines will do unattractive jobs that machines can do cheaply.
Those who do unattractive jobs that machines cannot do will be paid well.
Attractive jobs that machines can do cheaply fetch poor pay.
For other attractive jobs, the pay is hard to predict.
Latest revision: 21 October 2025
Other images: Monopoly game.
1. Bullshit Jobs. David Graeber (2018). Simon & Schuster. 2. Danish Employment Policy. Jan Hendeliowitz. Employment Region Copenhagen & Zealand, The Danish National Labour Market Authority (2008). https://www.oecd.org/employment/leed/40575308.pdf
Here comes another joke about economists. Suppose you just have found a tenner on the street. You are very excited about your windfall and tell the next person you meet about your find. You say, ‘I just found a tenner on the street.’ Now, this individual happens to be an economist. And he replies, ‘That is impossible. If there really was a tenner on the street, someone would have picked it up already.’
Economists also say, ‘There is no such thing as a free lunch.’ Some people get a free lunch, but someone else has to pay for it. If you find a tenner, someone else paid for it. If there is money for free, people will take it and let others pay for it. Economists call it arbitrage. It is also what trade is about. Traders try to make money by finding money for free, but in doing so, they work and take risks.
Economics assumes humans are rational in economic matters and do not leave tenners on the street. We make the best of our money by choosing the right products. And we make as much as we can with our abilities. If we get cash for free, many would not work or only do jobs they like to do. And even though we often are not rational, it explains much of our behaviour, most notably what happens in markets. If there is a tenner on the street, it will not be there for long.
If gold costs € 50 per gramme in France and € 40 in Germany, traders can make money by buying gold in Germany and selling it in France. The demand for gold in Germany will rise, as will the supply in France. The law of supply and demand says that the price goes up when demand increases and goes down when supply increases, so the price in Germany and France will be the same.
Economists call it arbitrage. Smuggling comes from the same principle. Cigarettes are more expensive in the United Kingdom than on the European continent. You can make money smuggling cigarettes into the United Kingdom and selling them there illegally. The price difference promotes smuggling. The difference between arbitrage and smuggling is that arbitrage is legal.
Markets without morals
Even though most individuals have moral values, markets do not have them. There are always people willing to market a harmful product. Their excuse often is that if they do not, someone else will. Laws can illicit smuggling and black markets. It helps if laws and enforcement are the same everywhere. Still, supply always equals demand at a specific price. So, if you outlaw harmful substances or practices, say alcohol, prostitution, cocaine, gambling, or cigarettes, you promote crime and violence because criminals make more money.
And so, the War on Drugs is a failure, like the prohibition in the United States in the 1920s. If selling cocaine is legal, the price difference between Colombia and the United States would be close to the production and transport costs. In that case, a gramme of cocaine might cost $ 5 in Colombia and $ 6 in the United States. But if it is illegal, and governments enforce the law, a gramme of cocaine might cost $ 10 n Colombia and $ 100 in the United States, and criminals make lots of money in the trade.
As crime-related violence engulfs more and more countries, gangs of criminals undermine governments and societies by giving poor people an income, bribing officials and hiring hitmen to eliminate those who stand in their way. Seeing it as an economic problem might help to find solutions, for instance, undermining the criminal business model by letting governments supply harmful substances and gambling and regulating prostitution. If governments keep repressing the drug trade, they make the criminal enterprise unprofitable by bringing their cost above the price for which governments sell.
It brings moral dilemmas, but unlike criminals, governments do not do marketing, for instance, by giving drugs to children to turn them into addicts. Governments have no profit motive, which allows governments to help drug addicts and give them treatments. But this does not stop the fentanyl crisis in the United States. This drug is too cheap and too deadly. Only unconventional measures like taking all the addicts off the streets and locking them up might end the suffering. To solve this issue, we might need to be as committed as the Taliban and accept the human cost. The human cost will be higher if we are lax. If an addict dies because of these measures, this person would have died anyway, and the gain is in the people we save.
Trust but verify
Similar issues arise when governments tax, punish criminals, give subsidies or provide social benefits. If that elicits the desired behaviour, that is good, but that does not always happen. Businesses shift their profits to tax havens. Wealthy individuals do the same with their assets. If there are social benefits, people who do not like to work or dislike their job try to get on the dole. Many people need those benefits, but fraud undermines their legitimacy.
Reasonable people are willing to pay taxes for people who need help but not for fraudsters. Tax and welfare fraud may get understated or overstated for political reasons. If you can commit fraud and gain financially, some will do it. And if they get away with it, more will do it. That undermines trust. Regulations need enforcement. For instance, not enforcing building regulations allows contractors to make money using inferior materials. And that happens with devastating consequences.
When private contractors perform public tasks, and the government pays for them, there is an opportunity for fraud. In the Netherlands, the government decentralised several forms of social work to the municipalities. Since then, criminals and fraudsters have set up businesses in those areas. The choice is either for governments to do these tasks themselves or to work with reliable suppliers by vetting them, perhaps even licencing them, and monitoring their performance.
Trade as finding tenners
Trade is like looking for tenners on the street and keeping them, even if you know the previous owner. You might call it pickpocketing. The difference is not always clear. Hermes, the Greek god who was the protector of the merchants, was also the refuge of the thieves. Popular culture views traders with suspicion. Value is subjective. If you bought an item for € 50 but could have bought it elsewhere for € 40, did the seller dupe you, was the item worth € 50, or were you stupid?
And we cannot do without trade. Few people have the time to go to all the producers for the things they need, nor have these producers the time to handle each individual that needs their product. If you had looked around, you might have found the same item for sale for € 40, but perhaps, you were too busy and happy to get the item instantly without looking around. Trade performs the following functions:
Goods are made in one place and used somewhere else. Trade bridges distance.
Goods are produced first and consumed later. Trade bridges time.
Goods usually are made in large batches and used in smaller ones. Trade matches volumes.
Crucial to trade is information. A trader must know what is on offer for what price and where, and for what price it might sell when and where. Gathering that information costs time and effort. If you trade potatoes, you buy them in large quantities from farmers during the harvest and sell them in smaller quantities to greengrocers throughout the year. You must offer an attractive price to the farmers and the greengrocers. Otherwise, they will go elsewhere. And your business must make a profit. Otherwise, you might as well have stayed in bed to watch television.
Financial markets
A tenner dwells more likely on streets where others do not look. Wall Street firms hire the brightest minds on the planet to find these places. For instance, Apple stock may be for sale for € 150 in Australia while it is doing € 151 in Germany. If you want to pick up that euro, you must be there and act quicker than everyone else. Wall Street firms thus invest in the fastest computers and networks.
So if a tenner falls out of your pocket on the stock market, Wall Street firms have already picked it up before it hits the street. They may soon apply artificial intelligence to look inside your pocket and fetch the tenner before it falls. So if you are willing to sell your stock for € 150 and someone else is willing to pay € 151, Wall Street banks may snatch the securities you offer for € 150 and sell it to the other for € 151.
If the interest rate in one country is lower than in another, you can profit by borrowing money in the first country and lending it out in the other. It can be attractive to borrow yen at 1% to buy dollars to lend them at 5% and pocket the difference. Economists call this a carry trade. You might expect that, like the price of gold, interest rates would converge because the yen interest rate would rise because of the borrowing in yen, while the dollar interest rate would fall because of the lending in dollars.
That did not happen. The central bank sets the interest rate and can create money. The Japanese central bank kept lending yen at 1% and buying dollars because the Japanese government did not like the yen to rise. That could hurt their exports. If the US central bank held the interest rate at 5%, and the Japanese central bank prevented the yen from rising, that meant lots of free money for banks. The Japanese paid for it. They could have bought more with their money if it had been worth more.
One of the most troubling issues with trade, markets and capitalism, is that value is subjective and often depends on irrational emotions. The market value of an empty Gucci bag is higher than that of a shopping bag filled with potatoes. And even though we cannot establish objective value, we need food more than designer bags. The appreciation of subjective value is what makes the current economic system suicidal. A happy shopper today can be a dead one tomorrow.
Lately, I found a tenner on the street. Economists can be wrong. Well, indeed.
Latest revision: 19 August 2023
Featured image: A tenner on the street. Free Shutterstock image from Blackday.
Our greatest challenge at present is dealing with the limits of the planet. The second greatest challenge is to provide for an acceptable standard of living for everyone. The third may be reducing differences in income and power. To a large extent these are economic questions. The order is important. For instance, what’s the point of achieving a higher standard of living when our planet is destroyed in the process? And it may be good to reduce differences in income and power but not if everyone ends up poorer.
New technologies can make these goals easier to attain. Information technology and the Internet made it possible for people everywhere around the globe to connect and to work together. This created jobs for millions of people in countries like India and China and it provided them with a better standard of living. Imagine nuclear fusion becoming available and energy becoming really cheap. That could halt climate change and make our lives easier. But we don’t know what kinds of technology there will be in the future.
The challenges we face are of an economic nature so a model of the economy can be helpful. Economics is about deciding for what we use the limited means we have and for whom. The distinction between economics and politics is not always clear because economic choices are often of a political nature. Even when you believe that everything should be left to markets then this is a political opinion.
The economist Kate Raworth came up with the idea of doughnut economy. It can be used to assess the performance of an economy by the extent to which the needs of people are met without overshooting Earth’s limits.1 Assessing is not the real challenge here. Making it work is. Raworth did some suggestions but this model outlines a comprehensive global solution.
Much of economics is drawn from experience. Often from experience supposed economic laws were formulated. The supposed laws don’t always work so we need imagination too. Experience may be a good guide to predict human behaviour and it can help us to see how far we can make our imagination become reality.
We can’t continue to live like we do. New technologies alone will probably not save us. The changes we need most likely are a shock for most people, except the poorest. On the bright side there is the 20/80 rule. It states that if you set your priorities right, you can achieve 80% of what’s possible with 20% of the effort needed to achieve the 100%. So if we stop the 20% most resource consuming and polluting non-essential activities then we might achieve 80% of what we can possibly achieve. That may be enough so life may still be acceptable in the future.
This plan contains ideas that ignore political borders like combining environmentalism with supply-side economics. This is a comprehensive solution. People may take their pickings based on their political views but you can’t cherry pick and expect it to work. This plan doesn’t include specific proposals like building windmills nor does it dwell on sustainable development goals. It is an economic model only.
This model gives a general outline as to how to deal with the challenges using underlying economic mechanisms. Many issues have to be resolved along the way, for instance mitigating the consequences for those who suffer the most. In short the model is:
The limits of our planet should dictate economics. That is just plain survival. Everything else should be of a secondary nature.
Ending poverty should be the second goal in economic thinking. That is our moral obligation. All other goals come after that.
People organise themselves in different ways. Organisational flexibility is the feature that made humans so successful as a species.
Setting these limits will bring severe dislocations in the economy that have to be addressed in the short term as well in the longer term.
Money is power. Ignoring money and the profit motive won’t produce acceptable outcomes. Still, it may be possible to reduce the power associated with money.
The economy has a short-term bias. An important reason is interest. Negative interest rates can lengthen the time horizon of investment decisions.
Capital represents wealth. Capital can help to make the economy sustainable and to end poverty. Destroying capital usually is not a wise course of action.
It is probably easier to build the required capital via investment than via taxation as most people love to invest but hate to pay taxes.
It may be better not to tax capital but to tax conspicuous consumption of the wealthy instead and to ban harmful activities if that is feasible.
Caring for our planet should be central in economic thinking. In traditional economics the consequences for the planet are delegated to a marginal role. The approach so far has been that products and services can have hidden costs like the usage of scarce resources and pollution. The proposed solution is that bureaucrats calculate these costs and tax harmful products to the point that their price reflects their true cost.
The government is supposed to use the proceeds from these taxes to repair the damage done, which often doesn’t happen. Still these taxes increase the price of harmful products so people can afford fewer of them. That may help but it is a proverbial drop-in-the-bucket. Economic growth is exponential so measures to reduce resource consumption or pollution are overtaken by the growth of production and consumption.
It is hard to calculate the true cost of products and services. Another problem is that green solutions use scarce resources too. To build a windmill energy is needed, which often comes from non-renewable resources like fossil fuels. Subsidising these solutions can be inefficient. A better way out may be setting hard limits on resource consumption and pollution. That could allocate resources more efficiently and set higher rewards on solutions that really contribute to a sustainable future.
Ending poverty is not always an explicitly stated goal of economics but economics is about making the best use of limited resources. Economic thinking can help to reduce poverty. Capitalism can create wealth efficiently but doesn’t distribute it equally. An important obstacle is interest rates being limited to the downside. Negative interest rates can help to reduce poverty but poor people are often poor for other reasons too, for instance a lack of opportunities or their own behaviour.
Human organisation
The political economy describes how humans organise themselves. Humans are social animals that can cooperate on a large scale in a flexible way. It made humans the dominant species on the planet. There are three major forms of human organisation:
communities
markets
governments
Traditionally humans lived in communities and villages where people help each other. They contributed to their community and expected their community to care for them. Money hardly played a role and trade with the outside world was often barter. People were born into a community and it was difficult to leave. Communities are still important in modern societies but leaving is easier. Many communities are communities of choice that you can join and leave as you like. These are often based on shared interests, for instance a soccer club or a message board on the Internet.2
Markets can distribute goods and services efficiently. This is what is meant by the invisible hand. If people work in their own self-interest, this can benefit society because products and services are made according to the desires of individuals. The theory of supply and demand explains how that is achieved. This is done with the use of money in market transactions. In many instances markets fail to bring desirable outcomes. Markets are flexible but they do not think ahead so they do not take into account the limits of the planet.
Governments set the rules in societies and enforce them, often with the consent of the citizens. They provide public services that markets do not provide efficiently or in an acceptable manner. The organising agent is money too, in this case via taxes and government expenditures on public services. Governments can think ahead but they are less flexible. The limits of the planet aren’t flexible either so it may be a task for governments to enforce them.
Dealing with the consequences
The flexibility of the ways in which we humans organise ourselves allows us to set limits on a global scale and let governments, businesses and communities all over the world deal with them and reorganise themselves accordingly. These limits must be set from the top down like a dictate because the size of the planet can’t be changed. Being too flexible on this issue can be a greater mistake than not being flexible enough.
This requires a global authority. If adequate measures are taken, severe dislocations in the economy can be expected. For instance, if recreational air travel is to be ended, that will affect poor countries depending on tourism. The same is true for people working for businesses that use scarce resources produce non-essential goods and services. Millions of people will lose their jobs and their means of existence.
In the short run they have to be helped out with food and money. In the longer term people, communities, businesses and countries must adapt to the new reality. Multinational corporations may have to relocate jobs to areas that have little to offer to international markets. Ideally everyone has a useful role in society and feels secure but the economy requires a flexible labour market.
Money makes the world go round
Humans have social needs and varying motivations but most people are motivated by money, at least to some extent. Even when people are not motivated by money, those who are often determine what happens. That is because money represents power. Reforming the economy based on ideals and moral values will have little effect if money and financial markets are ignored. We need the goods and services money can buy.
People can be motivated by their jobs but most people work to make a living. Money plays an important role in this process. If you are not rewarded for doing your job well that can demoralise you, most notably if others receive the same reward for doing a poor job. A great experiment called the Soviet Union has proven that beyond reasonable doubt. Markets can help to eliminate businesses that are useless or inefficient.
Sadly the amount of money individuals acquire doesn’t always represent their merits for other people and society. The politically connected can enrich themselves at the expense of taxpayers. Business owners can exploit labourers and enrich themselves by moving jobs to low wage countries. And criminals can become very rich too.
Rich people can buy the respect and cooperation of others. They can make others do what they want them to do. This comes with social status. People like you when you are rich because they hope to benefit from your spending. Social status also comes from the products you can afford. Differences in power and social status can lead to social instability, most notably when many are poor and the rich didn’t deserve their wealth.
It is easier to finance a great endeavours like making the economy sustainable and ending poverty from investments than from taxation because nobody wants to pay taxes but everybody is happy to invest. People may work hard to build some capital for themselves through savings and investment but they won’t work so hard to pay taxes.
This was the secret of the success of the European empires that conquered the world. England, France, Spain and the Netherlands were much poorer and smaller than China, India or the Ottoman Empire, but they didn’t finance their conquests with taxation, but with investment capita. European conquerors took loans from banks and investors to buy ships, cannons, and to pay soldiers. Profits from the new trade routes and colonies enabled them to repay the loans and build trust so they could receive more credit next time.2
Reducing the power associated with money is possible. For instance, if there is a tax on currency, interest rates can go below zero, and owners of money can’t demand interest when there is a capital surplus and positive interest rates aren’t beneficial to the economy. Redistributing wealth via wealth taxes may reduce differences in wealth and power but it can also lead to capital destruction via higher interest rates.
Capitalists save and invest while ordinary people borrow and spend. Wealth taxes divert money from investment to consumption so interest rates may rise and the effect may be a reduction of capital rather than more tax income. And it is consumption that harms the planet. Wealth taxes can be useful but they aren’t part of the solution. It may be better to reduce the consumption of the wealthy instead as they often consume the most.
This would reduce the privileges attached to wealth as it reduces the options for the wealthy to use their riches. At the same time it allows capital to be allocated via markets so that efficiency considerations apply. Hence, more investment capital may become available and the excess may be transferred to governments, people and businesses via negative interest rates.
In other words, it may be smarter to ‘milk the capital of the rich’ by giving the rich fewer options to spend their wealth than to tax their wealth. In this way their capital may grow to the possible maximum and interest rates go lower to the benefit of everyone.
In the neo-liberal era government spending was constrained by interest payments. The public sector was neglected. The price paid was often poor health care, bad roads or an overstretched police force. Once interest rates are negative, we may enter an era of abundance, and interest payments may be added to government budgets. This is to be expected when resources are diverted away from the consumption of the rich.
I want it all, I want it all, I want it all, and I want it now.
– Queen, I want it all
Short-term bias
These words of Queen express the mindset behind an economic system that encourages people to buy as much stuff as possible. More is preferred to less and now is preferred to tomorrow. If we stop buying stuff, or even when we buy less, businesses go bankrupt, people become unemployed, debts can’t be repaid and money becomes worthless. And so there is a quest for economic growth that’s killing us.
Economics teaches that our needs and wants exceed the available goods and services and that we always want more. This is called scarcity. Economics also teaches us that we want stuff sooner rather than later. This is called time preference. And so we must be encouraged to save for the investments needed to make more stuff by promising us more stuff in the future. And so there must be interest, economics teaches us.
To be fair, economics goes beyond this simple caricature, but the short-term bias caused by the belief in scarcity, time preference and positive interest rates, is still everywhere in economic thinking, and also in our thinking because we are influenced by economics. The existence of negative interest rates signals that the basic assumptions underlying economics may not be correct. People keep on saving without the promise of more stuff in the future. And that is a good sign.
Our way of living has to change in a fundamental way. We need to recycle more, buy second hand stuff and forego frivolous consumption. In the future employment may come from addressing needs in society. For instance, former salespeople may care for the elderly. There is an abundance of capital, and if those who have enough constrain their desires, even more capital can be available to meet the challenges humanity is facing.
To make that happen we need new ideas about wealth and poverty. It may be wiser to see wealth as the amount of time we can to sustain our current standard of living. For instance, someone who owns € 50,000 in assets and needs € 10,000 per year to live off may be wealthier than someone who owns € 100,000 and needs € 50,000 per year. This also applies to humanity. The resources of the planet can be considered as our assets. On the basis of this measure we are becoming poorer by the day.
Interest rates are important here. They affect the time horizon of investment decisions. That is because of discounting. When investment decisions are made, this usually comes down to discounting the future income stream from the investment against the interest rate. Higher interest rates promote shorter time-horizons. This can be illustrated with an example from the Strohalm Foundation:
Suppose that a cheap house will last 33 years and costs € 200,000 to build. The yearly cost of the house will be € 6,060 (€ 200,000 divided by 33). A more expensive house costs € 400,000 but will last a hundred years. It will cost only € 4,000 per year. For € 2,060 per year less, you can build a house that lasts three times as long.
After applying for a mortgage the calculation changes. If the interest rate is 10%, the expensive house will not only cost € 4,000 per year in write-offs, but during the first year there will be an additional interest charge of € 40,000 (10% of € 400,000).
The long-lasting house now costs € 44,000 in the first year. The cheaper house now appears less expensive again. There is a yearly write off of € 6,060 but during the first year there is only € 20,000 in interest charges. Total costs for the first year are only € 26,060. Interest charges make the less durable house cheaper.3
In reality things are not that simple. The building materials of the cheap house might be recycled to build a new house. And technology changes. If cars had been built to last 100 years, most old cars would still be around. This could be a problem as old cars are more polluting and use more fuel. Nevertheless, the example shows that long-term investments can be more attractive when interest rates are lower.
The interest rate is not the cause but the consequence of the time horizons of individual borrowers and lenders in financial markets, which are people, businesses and governments. The economy doesn’t magically become sustainable because interest rates are low. Interest rates are low for a reason. If we don’t buy things we don’t need, interest rates go down. The time horizon of the economy lengthens because our economic time horizon lengthens.
Capital and wealth
The painful reality of what our wealth really is has such dramatic consequences for the economy that it is hard to foresee what a future sustainable society might look like. But capital will still represent wealth in the future. The traditional definition of capital is buildings, machines, technology and knowledge to make the products and services we use. This definition ignores the planet and that is not helping us to survive.
Only if we think of the planet Earth as our main capital and believe that we have to keep that capital in tact and that we have to sustain ourselves from the interest of this capital then economics can help us to survive. We must reduce our consumption to the point that the planet can regenerate itself. A true capitalist doesn’t consumes his or her capital either. He or she lives of the interest and saves whatever he or she can for the future.
Traditional capital can help with that. For instance, internet and video conferencing allow us to meet other people without travel. If most traffic is to disappear that would greatly reduce resource consumption and pollution but that may only happen if travel is restricted. Knowledge to make artificial meat from plants can reduce the need for fertilisers and pesticides. If we don’t have to feed livestock any more, lower yields in agriculture are acceptable. This can help to make agriculture in harmony with nature.
We may need more traditional capital in order to sustain ourselves within the limits of the planet even though much of our existing capital may prove to be worthless. For instance, if research is done to make artificial meat taste better then people will find it easier to switch. In that case factory farms may become redundant. We may need massive investments in renewable energy and recycling as well as pollution reduction. If we set limits on our resource consumption and pollution then the capital that can make us live within these limits can be profitable.
As capital represents wealth, lower interest rates can increase wealth. That is because investments must at least generate returns equal to the interest rate. If returns are lower then it makes no sense to invest as it would be better to put the money in a bank account. Hence, with lower interest rates more investments are profitable and more capital can exist. It may explain why wealthy countries often have the lowest interest rates.
The requirement of making at least the interest rate in the market has enormous consequences. A corporation that makes a product people like can go bankrupt when potential customers don’t have enough money and the corporation can’t make enough profit. In other words, if an investment in this corporation yields less than the interest rate in the market, it must fail. That’s why corporations don’t make products for poor people. There is no profit in that. Some economists think this is healthy and natural.
In a similar vein a coal fired power plant that returns 6% is considered efficient and useful while a windmill that makes 2% is seen as inefficient and wasteful at an interest rate of 4%. This logic can be suicidal because of climate change. Something is terribly wrong with this. But if investments don’t make the interest rate in the market, no-one would make them voluntarily. Nowadays windmills and solar energy are profitable because the technology has improved and interest rates have fallen.
In a market economy capital exists for profit. Capital can exist for other motives too. A community can make an encyclopedia or a software product freely available on the Internet. A government can build a road or operate a library or a hospital. But history has demonstrated that people are motivated by money and profit and that a market economy is an effective way to build capital. In order to live within the limits of the planet and to end poverty, markets may need more guidance from governments.
With lower interest rates it may be possible to make investments in ending poverty and making societies sustainable profitable so that people will make these investments voluntarily. Perhaps it is better to make a distinction between what should be done, for instance making the economy sustainable and ending poverty, and what can be done, which depends amongst others, on the interest rate. At an interest rate of 0% the windmill could be profitable and fossil fuels can be phased out. That’s why lower interest rates can be beneficial.
Indeed, there are other measures for usefulness than profitability. Perhaps the requirement to make a specific interest rate may not seem particularly useful to humankind but it can help to allocate capital more efficiently. Hence, for the benefit of humankind capital markets must continue to exist and interest rates may need to be as low as possible to generate the investment capital needed for making the economy sustainable and ending poverty.
Governments should guide this process by defining what is legal and what is not. The investment options for capitalists depend on the products and services that are legal. As the number of options are reduced, for instance by banning resource consuming non-essential consumption, the remaining alternatives can become more attractive, most notably when the excess of investment capital drives interest rates lower so that sustainable production processes with low returns become feasible.
If there is a market
Banning harmful products can elicit black markets, most notably when these products are addictive or save you from a lot of trouble or hard work and if you can use them without being noticed. It would be hard to stop the use of alcohol and drugs because people will use these products anyway. It may be easier to limit air travel as it will be difficult to fly a plane without being noticed.
Black markets and fraud are likely to arise if limits are set on the extraction of resources like fossil fuels and basic materials. The price of these resources could rise and it could be lucrative to extract more than is allowed. It might a good idea to look for places where effective control can be established. That may be on the demand side by banning or limiting certain activities or on the supply side by monitoring production.
Distortions in the markets for resources can produce losses or profits. Governments may need to take ownership of resources and compensate the owners. A government can then contract a miner to mine resources based on quota under specific regulations, and the miners can then be paid for extracting the resources. If markets become distorted by forward-looking planning then governments must intervene.
Perhaps different arrangements are possible. When interest rates are negative then future income discounted against the interest rate will have a higher net present value so it can make economic sense to keep resources in the ground.
Global competition drives down prices and it allows developing nations to build their economies too. Free trade can benefit humankind because it allows people and countries to specialise in what they do best so more and better products can be made at lower prices. Regulations aim to increase the quality of products by setting minimum standards. Regulations can favour large scale operations if they require large investments.
If the economy is to become sustainable the energy cost of producing items as well as the cost of transport may change and affect the scale of production. Regulations can stand in the way of scaling down and localising production but in many cases regulations, for instance regulations about food safety, exist for good reason. Investments to make production processes sustainable may be costly and may also favour economies of scale.
Confidence in money and trust in the financial system
Confidence is key in the capitalist economy because credit is based on confidence. The availability of investment capital comes from confidence in financial system and the economy. Actions that erode trust affect the available credit. Bank failures shatter confidence and stop the circulation of money. The Great Depression really took off after banks went bankrupt. The financial crisis of 2008 escalated once Lehman Brothers was allowed to go bankrupt.
To ensure that businesses can prosper credit must be available. A lack of trust in financial markets results in a destruction of capital. It is not a coincidence that economic crises are often preceded by a financial crisis. That’s why governments and central banks stand behind the financial system and support it at all cost. That’s why we seem to be hostage of the financial system. It doesn’t have to be that way.
Interest on money and debts makes the financial system unstable and prone to crisis because incomes fluctuate while interest payments are fixed. And because there is currency at an interest rate of zero, investors can flee to the safety of currency at no cost whenever there is some trouble. But interest rates are poised to go negative. This may be the opportunity to make the financial system more robust by charging a holding fee on currency and banning positive interest rates on money and debts.
Trust in the financial system and debts is reflected in the interest rate. If the interest rate is negative then investors prefer a certain loss to other investment alternatives. That might happen because of confidence in the currency as a store of value, for instance when inflation is non-existent. It is imperative that governments promote confidence in their currencies by limiting their primary deficits to the point that they are paid from the interest received on their debts.
Interest is the price paid for distrust so governments must be reliable and transparent to inspire confidence in financial markets. If a government is not honest to its creditors then the interest paid on its debts can rise. People like entitlements and do not like taxes so citizens may elect politicians who promise more entitlements or lower taxes. The interest rate on government debt can therefore also reflect the confidence of creditors in the citizens of a country.
A robust financial system that inspires confidence can meet the challenges that lie ahead as they will on the one hand require an unprecedented amount of capital in form of knowledge, new products and new ways of producing and distributing them, while on the other hand there will be severe shock and dislocations in the economy that only a robust financial system can withstand.
A holding fee on currency can ensure liquidity in financial markets so that the economy will not fall apart in times of economic stress. The situation in Wörgl demonstrated that even a deep depression can soon end with negative interest rates. The transformation to a sustainable economy requires an unprecedented amount of low yielding capital that may only be made profitable when interest rates are negative.
Investment guidance policies
For markets to do their job properly, capitalists should deploy their capital in the way they see fit within the options that are available. Additional measures may be needed to guide investments into desired directions like developing countries, recycling, and affordable housing. Wealthy individuals should realise they have a moral duty to make their capital contribute positively to society and the well-being of others. And even if the wealthy do not live up to their moral obligations, the laws and the financial system must channel their efforts in the right direction.
Financing the challenges of the future by investors may work better than financing them from taxes. Investors tend to chose the options that generate the most profits. In doing so they may be able to realise these goals more efficiently and generate more investment capital for the purpose. Favouring desired investments, for instance by excluding them from a wealth tax, can be a way to make them more attractive.
Products should cause as little harm as possible to the planet. Nature should be able to regenerate itself and undo the harm done. To make that possible, corporations should be responsible for the lifecycle of their products. Even when they work with contractors, the responsibility should remain with the corporation that markets a product.
During the neoliberal area businesses were often allowed to regulate themselves. This is didn’t work out well as businesses can gain an advantage from evading responsibilities in the form of reduced costs and higher profits. Governments have a responsibility to make and enforce the law. That may not be enough so journalists and activists have a duty to press businesses into sticking to the rules and governments into enforcing them.
Summary
This is an economic model meant to identify the economics to make the economy sustainable and to end poverty. There will probably be consequences that aren’t fair and they should be addressed where possible. Capital represents wealth. To make the economy sustainable we need a different view on wealth as it not being the amount of assets you currently have but the time your assets can support your lifestyle.
The planet should be seen as our main capital, not the buildings, machines, technology and knowledge to make the products and services we use. If we use more than nature can replenish, we use more than the interest of our main capital, and we become poorer as a consequence, even when the interest rate on traditional capital is positive.
To make the economy sustainable and to end poverty while maintaining an acceptable standard of living requires an unprecedented amount of traditional capital. The effort can better be financed from investments than taxes. Lower interest rates can make investments in making the economy sustainable and ending poverty more attractive.
Limiting our production and consumption will depress interest rates. Low interest rates require trust in the financial system and currencies. The financial system is based on debt, hence the integrity of debtors. A maximum interest rate of zero can improve the quality of debts. A holding fee on currency can ensure liquidity in financial markets.
Instead of spending on frivolous consumption everyone who can afford it should become a capitalist and invest in his or her own future. That can help to make the economy sustainable and to end poverty. Governments can support this process by legislation that bans harmful products and supports investments in areas that are beneficial.
Featured image: Doughnut economic model. Kate Raworth (2017). . CC-SA 4.0. Wikimedia Commons.
1. Doughnut economics: seven ways to think like a 21st century economist. Kate Raworth (2017). Vermont: White River Junction. 2. Political economy. Wikipedia. [link] 3. Sapiens: A Brief History Of Humankind. Yuval Noah Harari (2014). Harvil Secker.
For centuries, the Jewish people have lived as a minority in the lands of others. Their relationship with the others has often been problematic. The Jews lived separately in dedicated quarters and were second-rate citizens. And from time to time, they had to flee from murderous mobs. What to do with the Jews? It was a question asked by thinkers and leaders alike. Martin Luther and Karl Marx expressed their views on this matter, called The Jewish Question. Adolf Hitler sought a definitive solution by trying to exterminate the Jews.
As the founder of Zionism, Theodor Herzl, wrote, ‘The Jewish question persists wherever Jews live in appreciable numbers. Wherever it does not exist, it is brought in together with Jewish immigrants. We are naturally drawn into those places where we are not persecuted, and our appearance there gives rise to persecution.’ In folklore, conspiracy theories blamed the Jews for all kinds of things, ranging from spreading diseases, sacrificing children, and conspiring to dominate the world, and this tradition continues into the present. A few examples:
People who oppose interest and usury often blame the Jews as they have been money lenders for centuries, and many are still working in finance.
Jews have taken a piece of Arab land that is now called Israel. They expelled many Arab inhabitants. That is why a lot of Arabs hate Jews.
You sometimes hear that the Jews determine what you hear on the radio and see on television because they control the media.
Perhaps you have read that Jews cause wars and revolutions, often with the help of the secretive Freemasons and the elusive Illuminati.
There is a worldwide trade in illegally harvested organs, and Jews are also involved. But it is not only Jews doing this.
Perhaps you cannot trust Jews because they are more loyal to Israel than the country they live in. And what about people from other nationalities?
The United States has a corrupt and dysfunctional political system. The Jews use it to their advantage. So, follow the money.
The same goes for poor-quality Hollywood movies. The Jews did it.
And Jews can be blamed for other things too, of course not the ‘good Jews’, only the ‘evil Jews’, but it is hard to tell the difference, so do not trust them.
It is a painful history. The truth can only set us free if we let go of hatred. There is a relationship between ethnicity and conduct that goes through culture. Cultures emerge out of history and circumstances. You can’t blame someone for being raised in a particular tradition, but these traditions can harm society. And that isn’t only Jews. Just think of the damage white Europeans have caused all over the globe. Other particular traditions can also be harmful, for instance, ethnicity-related organised crime like the Italian mafia.
Closer inspection reveals that things are not always what they seem. If antisemites allege Jews do this or that, look at the facts and don’t get carried away. If a US politician doesn’t unconditionally support Israel, you know what happens. Money rules our world. But hatred doesn’t solve the issue. Karl Marx wrote:
What is the secular basis of Judaism? Practical need, self-interest. What is the worldly religion of the Jew? Huckstering. What is his worldly god? Money[…] The Jew has emancipated himself in a Jewish manner, not only because he has acquired financial power but also because, through him and also apart from him, money has become a world power, and the practical Jewish spirit has become the practical spirit of the Christian nations. The Jews have emancipated themselves insofar as the Christians have become Jews[…] Money is the jealous god of Israel, in the face of which no other god may exist. Money degrades all the gods of man – and turns them into commodities[…] The bill of exchange is the real god of the Jew. His god is only an illusory bill of exchange[…] The chimerical nationality of the Jew is the nationality of the merchant, of the man of money in general.1
Marx had Jewish roots, so he knew what he was talking about. He equated practical Judaism to huckstering and money and claimed that Christians have become Jews and that humankind, both Christians and Jews, needs to emancipate itself from this practical Judaism. Money rules our world. Money is our God. And that is the core problem we face today. How this situation came to be is a long history.
There has been a long Christian tradition of intolerance towards Jewish people. Only Christians were even more intolerant towards all other religions, including diverging versions of Christianity. Christians only tolerated Jews, first because the Pope said so and later because they proved helpful for trade, tax collecting and moneylending, which were activities Christians found morally reprehensible and didn’t like to do themselves.
Muslims were even more tolerant. Apart from Jews, they also tolerated Christians. And they did not persecute Jews as much as Christians until the Jews founded the state of Israel and expelled the Muslims. That infuriated many Muslims, so they often returned the favour by expelling the Jews. Despite all this tolerance, Christianity and Islam were among the most intolerant religions ever. That proved to be crucial for their success. The owner of this universe, commonly known as God, did not provide sufficient proof of Her existence, so convincing people with reason was not always possible. The Jews did not get that. They preferred to hold on to their exclusive relationship with the all-powerful Creator of this universe. And so, they were not so kind to try to save others from eternal damnation by forcefully converting them.
The plight of Jewish people was not much unlike that of other minorities that did not adapt and integrate into society. The Jews had their religion, and the claims of Christians about Jesus did not make sense to them. Being beaten up regularly is the least you can expect from peasants if you differ from them. And it was often worse than that.
Map of Canaan from around 750 BC
A short primer on Jewish history
Between 1200 BC and 900 BC, a few small nation-states emerged in an area now covered by Israel, Palestine, Jordan, Syria and Lebanon. Among them were Israel and Judah. These small states appeared because Egyptian power in the area was waning. It took a few centuries before new strong powers emerged and overran these small states. Israel fell into the hands of the Assyrians in 720 BC. Judah was destroyed in 587 BC by the Babylonians, who had taken over the Assyrian Empire.
These small kingdoms had a national deity for fortune and protection. Their kings may have adopted this deity to promote a sense of a nation to assert their authority. Yahweh was the national deity of Judah and probably also of Israel. At first, Yahweh’s worship may not have differed much from the worship of other national deities, such as Chemosh, the god of Moab.
After Israel and Judah had ceased to exist, their inhabitants faced an identity crisis. The new powers defeated their uprisings, and the Babylonians took many Jews into exile in Babylonia. Jewish priests then began to write down the Torah (Old Testament) to define a sense of nation around their national deity, Yahweh, without a king or a territory.2 In this way, the Jews became a people without a land. Their promised land, Israel or Zion, remained central to their religion.
Around 450 BC, many exiled Jews were allowed to return. From 164 BC, there was an independent Jewish state for 100 years until the Romans conquered it. At the time of Jesus, tensions were growing between the Jews and their Roman overlords. It led to several uprisings between 66 AD and 136 AD. During these revolts, the Romans destroyed the Jewish temple. Over time, the majority of the inhabitants of the area became Christians and later Muslims. Jews remained in scattered communities around the Mediterranean.
In ancient societies, only the elite received education. The Jews introduced mass education for their people. The Torah became the pillar of their national education system. Divine knowledge, rules, and regulations became open to the public.2 The value of education thus became embedded in Jewish culture.
Nations came and went, but the Jews remained, so becoming people without a land was a successful long-term survival strategy. The Jewish people have been around for more than 2,500 years while not having a homeland for nearly 2,000 years. That was why not all Jews supported the Zionist project of creating the state of Israel. A Jewish state might endanger the Jewish people if they cannot defend their land.
The Jewish religion became the basis for Christianity and Islam. Christianity and Islam both tend to see Judaism as a legitimate religion. Christians and Muslims allowed Jews to live in their lands, albeit as secondary citizens. Living together was not easy. For instance, Christians sometimes blamed the Jews for killing Jesus.3 The Jewish high priests had accused Jesus of blasphemy as he claimed to be the Son of God. According to the Gospel, the Jewish high priests and a Jewish mob demanded the crucifixion of Jesus. And the Gospel, which means good news, by the way, says:
When Pilate saw that he was getting nowhere, but that instead an uproar was starting, he took water and washed his hands in front of the crowd. ‘I am innocent of this man’s blood,’ he said. ‘It is your responsibility!’ All the people answered, ‘His blood is on us and on our children!’
Matthew 27:24-25
The Jews are forever responsible for the death of Jesus, the wording implies, and it became a justification for Christian anti-Semitism.
German picture of 1493 depicting human sacrifice by Jews
In the Middle Ages, rumours spread from time to time that Jews abducted Christian boys for their secret rituals. It is known as the blood libel. So when a boy disappeared, it was time to kill some Jews. There was no basis for these beliefs, but little did people know about the Jewish religion and its practices.2 And because of their ritual hygiene, the Black Death did not hit Jews as much as Christians. Rumours spread the Jews were behind the disease. Medieval peasants often freaked out because they were superstitious and lacked education. And so they burnt witches at the stake when the harvest failed.
In popular culture, Jewish people had a low standing. They worked in trade and finance. These activities were often seen as reprehensible as trade and finance often coincide with questionable ethics. Some languages still reflect this. The English language has the term Jewish stock take, referring to a shopkeeper destroying his shop in a self-lit fire to claim insurance. The Dutch language has the word ‘jodenbod’, which means Jew’s bid, to indicate bids below a reasonable price which people in a desperate position have to accept. Jews living from trade and finance and little love existing between Christians and Jews might lead to that kind of situation.
After the French Revolution of 1789, Jews in Western Europe received citizenship. In Eastern Europe, and most notably in Russia, they faced pogroms or riots that included robbery, destruction of property and sometimes killings. Around 1870, the first Jewish settlers entered Palestine. In 1896, Theodor Herzl published The Jewish State. He claimed that the solution to The Jewish Question was a Jewish state. It marked the beginning of modern Zionism.
In 1873, the Vienna stock market crashed. A lingering recession followed that lasted until 1896. It was the first global economic crisis. Economic growth was lower than previously. Anti-Semitism rose in German-speaking areas and France as people blamed Jewish bankers and industrialists for the situation. It was the time when Silvio Gesell was a businessman. He experienced the poor economic conditions first-hand. It made him investigate the underlying causes and later write the Natural Economic Order.
In 1894, Captain Alfred Dreyfus, the only Jewish member of the French general staff, was convicted of spying for Germany. He was innocent and rehabilitated a decade later after vigorous protests. During World War I, many Jews fought for their nation-states. After the war, a myth emerged in Germany, suggesting Germany lost because of leftists, republicans and a Jewish conspiracy.
A Jewish state
In 1917, the British offered Palestine to the Jews to establish a national home for the Jewish people. The declaration was part of a letter from the United Kingdom’s Foreign Secretary Arthur Balfour to Lord Rothschild, a leader of the British Jewish community. Shortly after the start of World War I, a Zionist Cabinet member, Herbert Samuel, wrote a memorandum proposing to back the Zionist cause to enlist the support of Jews in the war. The Arabs living in Palestine had no say in this, which soon led to tensions and Arab resistance, which the British repressed. Between 1920 and 1940, 300,000 Jews migrated to Palestine, often to escape persecution. The Arabs revolted between 1936 and 1939. The British subsequently restricted Jewish immigration.
After World War II, large numbers of Jews entered Palestine, many of them Holocaust survivors. The Holocaust became a trauma in the collective memory of the Jewish people. Nearly six million of them died in concentration camps and mass executions. It gave credibility to the case of the Zionists, who believed that the Jewish people could only be safe once they had a country of their own. The atrocities the Jews had suffered from raised support for the Zionist cause in the West, most notably in the United States. The Zionists started a guerrilla war against the British. It included 70 terrorist attacks between 1937 and 1948, including the King David Hotel bombing that killed 91 people and the devastating bomb attack on the British police headquarters in Haifa.
In 1947, the United Nations planned to divide Palestine between the Jews and the Arabs. The plan allotted 62% of the land to the Jewish state despite the Palestinian Arab population numbering twice the Jewish population. The Zionist Jews accepted it as it was a favourable deal for them. The Arabs rejected it because, in addition to the Arabs forming a two-thirds majority, they owned a majority of the lands. The Arabs were also unwilling to accept a division and aimed for Arab rule of Palestine.
When Israel declared independence in 1948, a civil war broke out. The neighbouring Arab countries attacked Israel, but the Zionists were prepared and well-trained, and the Arabs lost. Around 700,000 Arab Palestinians, or 80% of the population, fled or were expelled from their homes. The Palestinians call it ‘The Catastrophe’. The Catastrophe greatly influenced Palestinian culture and helped to create a separate Palestinian identity. The Catastrophe means displacement, dispossession, statelessness and fracturing of Palestinian society. It is much like the Jewish diaspora.
During the Six-Day War of 1967, Israel conquered the remaining Palestinian territories. Israel started this war after Egypt blocked Israeli shipping through the Egyptian-controlled Strait of Tiran and brought military forces close to the Israeli border. An Israeli surprise attack caught the Egyptian forces off-guard, causing Egypt to lose nearly all its military aeroplanes. Jordan and Syria came to Egypt’s aid but were also defeated. Whether this pre-emptive war prevented an Egyptian attack on Israel remains a matter of debate. Israel captured and occupied the Golan Heights from Syria, the West Bank from Jordan, the Gaza Strip and the Sinai Peninsula from Egypt.
Around 300,000 Palestinians and 100,000 Syrians fled or became expelled from the West Bank and the Golan Heights. Many others came to live under Israeli occupation. At the same time, Zionist settlers began colonising the remaining parts of Palestine, most notably the West Bank. In 1973, Egypt and Syria launched a surprise attack against Israel with the support of other Arab nations in the Yom Kippur War. After initial Arab successes, Israel repelled the attack. Syrian and Egyptian forces killed and tortured captured Israeli soldiers. Over time, Israel achieved peace with several Arab countries, but the Israeli-Palestinian conflict remains unresolved. Palestinian resistance often comes in the form of terrorist attacks while Jewish settlers keep on colonising Palestinian land.
Conspiracy theories
The anti-Semitic conspiracy theories range from crazy allegations to well-documented research like the investigation into the Israel lobby by John Mearsheimer and Stephen Walt. There is a large grey area in between. And it is a minefield because of the Holocaust. No sensible person would like to see pogroms or worse. The Jewish people are a small nation with an enormous impact on world history. That fuels speculation. Before going into the conspiracy theories, it might be good to come up with a few general explanations for the remarkable successes of the Jewish people. These are:
The Jews invented mass education twenty-five centuries ago (it took twenty-four centuries before Western Europe followed suit) because they felt they all had to understand their scriptures to discuss them intelligently.
Due to restrictions imposed on them in the past, Jewish people often went into occupations like trade and finance, which are activities that can make you rich without a lot of toils.
For centuries, the Jewish people lived under marginal and uncertain conditions which required resourcefulness that may have become part of Jewish culture.
There might be a script running all that happens in this universe, and the Jews may be God’s chosen people, even though that was not always a blessing for the Jews themselves. The parallel with the sacrificial lamb Jesus is eye-catching.
Anti-Semitic conspiracy theories have done tremendous harm and helped to make the Holocaust possible. It may nevertheless be better to view them more objectively as theories for which there might be evidence and the understanding that cultural differences are a source of trouble because the behaviour of one group can harm others. That may require emotional distance as the truth is not always politically correct.
There is a joke that goes like this, ‘Why does Israel not become a state of the United States? Well, if Israel does, it will have only two Senators.’ Israel has the unconditional support of the United States. Senators and members of Congress who hold different views face the powerful Israel Lobby. The lobby will fund the campaign of their opponents, which likely means losing the election. Jewish interest groups have a lot of power, and a book claims there is a secret Jewish plot to gain world domination.
The Protocols of the Elders of Zion is a fiction made up by the Russian secret service around 1900. The Russian tsarist regime was hostile towards Jews. Some people took the protocols seriously, and it subsequently became a guidebook for blaming Jews for everything. The Protocols claim the Jews form a secret cult conspiring to gain world dominance via plots and schemes hidden from the public eye. Adolf Hitler and the automaker Henry Ford believed it, as did many others. And somehow, the work became a bit prophetic. That might be called the irony of history or perhaps the plan of God.
The main themes of the Protocols and related conspiracy theories are Jewish control of world finance, Jewish organisation of radical movements and Jewish manipulations of diplomacy to cause wars that kill white Christians. There are racist, political and religious aspects to these claims. You can definitely read ‘evil Jews’ between the lines. Anti-Semites use so-called whistle words, which means that they mean ‘evil Jews’ even when they do not say so. But using that as an argument can become a way to dismiss legitimate concerns.
Mearsheimer and Walt investigated the power of the Israel Lobby. They claimed that if you criticise Israel in the United States, you will be branded an anti-Semite. It means that you are a racist Jew-hater. Major newspapers subsequently published editorials calling their research anti-Semitic. AIPAC is the most prominent organisation in the Israel Lobby. Mearsheimer and Walt concluded:
AIPAC’s success is due to its ability to reward legislators and congressional candidates who support its agenda, and to punish those who challenge it. AIPAC makes sure that its friends get strong financial support from the myriad pro-Israel PACs. Those seen as hostile to Israel, on the other hand, can be sure that AIPAC will direct campaign contributions to their political opponents. The bottom line is that AIPAC, which is a de facto agent for a foreign government, has a stranglehold on the U.S. Congress. Open debate about U.S. policy towards Israel does not occur there.4
Stranglehold is a whistle word as it might imply that ‘evil Jews’ control US politics, but if you leave out the word ‘evil’, you arrive at a well-documented conclusion. And so, the anti-Semitism argument increasingly fails to convince people. It is apparently forbidden to say the truth in US politics. If you think of the consequences of anti-Semitism in the past or that millions of Jews face displacement or worse if Israel collapses, you might understand why Jewish interest groups go to such great lengths to keep American support.
Suppressing the truth is a self-defeating strategy in the long run while dealing with it is like opening a can of worms. Several powerful lobbies operate in the United States, some representing foreign national interests, but few attract as much attention as the Israel Lobby. So why is the Israel Lobby so powerful, visible and aggressive? There are some possible answers:
Unlike other foreign interests, the Israel Lobby long had broad popular support. Anti-Semitism led to the Holocaust, so the Israel Lobby could more easily claim the moral high ground.
Jews in Israel do not feel secure because of the Holocaust and because Israel is on land taken from the Arabs. Criticism of Israel provokes the fear that the legitimacy of the Jewish state is at stake.
Israel ignores international law by colonising Palestinian land. The unconditional support of the United States helps Israel to do that.
The Israel Lobby is the most visible in the United States but has significant influence in some other countries as well. When a public figure demonstrates a one-sided sympathy for the Palestinian cause, like the former Dutch Prime Minister Dries Van Agt, the lobby brings in anti-Semitism allegations. Former labour leader Jeremy Corbyn faced a similar fate in the United Kingdom. He associated himself with anti-Jewish figures, including Holocaust deniers. His personal views on the matter became of secondary importance. Pro-Israel figures do not face the same kind of scrutiny.
Powerful lobbies undermine democracies, most notably when they suppress dissent, which most interest groups did not do as much as the Israel Lobby. The Woke copied these tactics inspired by the Frankfurt School. In his book Critique of Pure Tolerance, Herbert Marcuse claimed that freedom of speech limits freedom. He proposed a liberating tolerance, which is intolerance to right-wing movements and toleration of left-wing movements. That thought emerged within a context. The Frankfurt School is from Germany and was preoccupied with preventing the reappearance of Nazism.
Usury
The Jew as usurer is a well-known theme in anti-Semitic folklore. The Roman Catholic Church forbade Christians to charge interest to fellow Christians. During the Middle Ages, Jews were excluded from several professions and pushed into activities that Christians deemed reprehensible. One of them was money lending. The Torah allowed Jews to charge interest to Christians. Their principle was, thou shall not lend at interest to your brothers. Christians believed in that same principle. But Christians and Jews did not see each other as brothers. The long-term consequences of interest are not well-understood in modern times as economic growth and price inflation mask them. Interest charges can destroy people, businesses, nations and even entire civilisations.
The financialisation and indebtedness of Western societies, most notably that of the US and the UK, can be traced back to interest charges. The mere pursuit of profit, or making money with money, undermines the moral fabric of society. That may not be obvious as people have different views about right and wrong. There are supposedly nihilist philosophies that are either the outcome of despair or the acknowledgement that we are animals and that our moral values are not absolute but relate to our human nature. But apart from that, the love of money is the root of many kinds of evil.
In the Middle Ages, interest rates were high, sometimes as much as 20% to 30% annually. And so, the misery caused by interest charges was more visible. And Jews often received the blame because they were moneylenders. The official lending by Jewish money lenders mandated by the Church allowed for interest rates below 10%. Persecuting Jews was also profitable for their debtors. For instance, in 1290, King Edward I expelled the Jews from England, confiscated their assets, and defaulted on the loans he had received from them.
In the 16th century, short-term interest rates dropped to around 10% annually because financial markets became more developed and efficient. As interest rates went down, and because of the Protestant Reformation, religious objections against charging interest waned. Once Christians could charge interest on fellow Christians, the Jewish role in money lending was reduced, but it remained significant. Interest became an essential part of the capitalist economy, and Western culture became ignorant about the problematic nature of interest charges. Usury is an insidious process leading to a possible endgame of financial collapse or hyperinflation once economic growth falters.
Jews play a prominent role in the financial sector in the United States. They have served as chairmen of the Fed, including Alan Greenspan, Ben Bernanke and Janet Yellen. The exploitative nature of finance and the bailouts feed the conspiracy theory of Jewish usury. Real wages in the United States have hardly risen for decades, but the US financial sector comprised only 10% of total non-farm business profits in 1947 but grew to 50% by 2010. Finance does not produce food or widgets but merely extracts its profits from those who make real things. At the top of the financial and economic food chain are relatively many Jews. While many ordinary people in the United States struggle to make ends meet, the top 1% is doing well.
Influence on the media and opinion
In 2012, six corporations owned 90% of the mainstream media in the United States. Most of these corporations have Jewish CEOs and owners. Journalists are also often Jewish. How much that affects the reporting remains to be seen. In 2008, Philip Weiss remarked that in a few months, several serious people suggested that Jews predominate in the American media. For instance, at a forum at the Nixon Center, the former high-ranking government official Dov Zackheim said, ‘Jews don’t dominate the policy-making process, but the media is a different story.’ From his personal experience, Weiss claimed most editors were Jewish.6
The real issue is, does it matter? Weiss thinks so when it concerns the Israeli-Palestinian conflict. He cites a few Jewish journalists who admitted to having a bias.5 J.J. Goldberg wrote in The Forward that, although Jews hold many prominent positions in the US media, they do not prioritise Jewish concerns and that Jewish Americans generally perceive the media as anti-Israel.6 And what about the Jews dominating Hollywood? That is such a Jewish stereotype. Joel Stein of the Los Angeles Times mocked the efforts of the Anti-Defamation League (ADL), which is another part of the Israel Lobby, to educate the American public:
I have never been so upset by a poll in my life. Only 22% of Americans now believe “the movie and television industries are pretty much run by Jews,” down from nearly 50% in 1965. The Anti-Defamation League, which released the poll results last month, sees in these numbers a victory against stereotyping. Actually, it just shows how dumb America has gotten. Jews totally run Hollywood.7
The Internet is more difficult to manage. Anti-Semitic and anti-Zionist messages can be found on many message boards. Israel has tried to counter that by paying students to post pro-Israel messages on social media.8 It was part of a public relations effort named ‘hasbara’ that some call propaganda.
In October 2007, about 300 academics issued a statement calling for academic freedom from political pressure, most notably from groups portraying themselves as defenders of Israel. In 2009, sociology professor William Robinson sent an email to students in which he compared the Israeli occupation of Gaza with the Nazi-controlled Warsaw Ghetto during World War II. The ADL started a campaign to discipline him for violating the faculty code of conduct.
Linguistics professor Noam Chomsky, a left-wing political activist, claimed the ADL had compiled a 150-page dossier on him. He is highly critical of US and Israeli policies. Chomsky also defended the right to deny the Holocaust as freedom of speech. The ADL called him a Holocaust denier, describing him as a dupe of overweening intellectual pride who is incapable of distinguishing between totalitarian and democratic societies and between oppressors and victims. Apparently, the ADL collected information to use against him. Chomsky said that an ADL insider sent him the file. It included conversations, correspondence and other materials. Chomsky added that it read like an FBI file. He further noted:
It’s hard to nail this down in a court of law, but it’s clear they essentially have spies in classrooms who take notes and send them to the ADL and other organisations. The groups then compile dossiers they can use to condemn, attack or remove faculty members. They’re like J. Edgar Hoover’s files. It’s kind of gutter stuff.9
In January 1993, the city’s police department raided the San Francisco ADL’s Northern California office. It kept files on more than 600, predominantly leftist, civic organisations and over 10,000 individuals. The police estimated that the ADL had illegally obtained 75% of that information. By November, District Attorney Arlo Smith appeared close to indicting the ADL. Fearing to lose the support of the influential Jewish community for his election, he dropped the case. The police investigation uncovered information about the ADL’s spying operations.10
In recent years, the influence of the Jewish lobby on public opinion in the United States waned because of the simultaneous rise of the woke left and the white supremacist right. The Woke favour the marginalised and oppressed and support the Palestinian cause, while white supremacists are open to anti-Jewish conspiracy theories. The woke people use the tactics that the Jewish lobbies have used previously, for instance, cancelling those with different views. The 2023 Gaza War eroded Israel’s standing further. For Hamas, the coverage of the Israeli brutality in Gaza was a gift that kept on giving. The terrorist attacks were over after a few days, but the misery in Gaza dominated the news for months.
Causing wars and revolutions
The French revolutionaries decided that Catholics, Protestants and Jews became full members of society. In 1797 and 1798, a French Jesuit and a Scottish physicist published two remarkably similar books claiming secret societies were undermining the social order and had started the French Revolution. Both named the Freemasons and the Illuminati as the main culprits. And Jews were also seen as conspirators. They benefited from Napoleon giving them equal rights, so they must have organised it. Much of contemporary conspiracy thinking still centres around these secretive groups and Jews.
And Jews supposedly started the Russian Communist Revolution of 1917. Anti-communists brought up the idea during the ensuing civil war to use existing anti-Semitic sentiments for their political aim. There was a high number of Jewish Communist Party leaders during the revolution. The anti-Semitism in the Russian Empire may have induced them to join radical political movements.
That does not explain why many Jews joined radical movements in other countries. Milton Friedman tried to shed some light on this issue. He found that Jewish people wrote a significant part of the revolutionary anti-capitalist literature and ran and disproportionally filled the ranks of Communist parties in many countries.11 A conspiracy theorist would like you to believe that the Jews seek to control both sides.
Friedman did not think Jews were seeking world domination. He gave two reasons why they joined radical movements. First, the left provided the Jews with equal citizenship, while the Christian right did not. Second, the stereotype that Jews are profiteers and usurers may have persuaded them to show themselves and the anti-Semites that they are not selfish and heartless but public-spirited and idealistic.11 A third reason, which Friedman did not mention, was that many intellectuals were Jewish causing them to have a significant influence on both socialist and capitalist thinking.
Anti-Semitism did not disappear in the Soviet Union. In 1948, Stalin started a campaign against the so-called rootless cosmopolitans, a euphemism for Jewish intellectuals. During that campaign, the Soviets killed leading Jewish writers and artists and removed Jewish scholars from the sciences.
After 1968, the left gradually alienated from its traditional base of workers in favour of disadvantaged groups like ethnic minorities, women, and LGBT people. The Marxist Frankfurt School played a significant role in this development. The Cultural Marxism conspiracy theory claims Marxists of the Frankfurt School undermine Western civilisation with civil rights movements, feminism, multiculturalism, LGBT propaganda, and above all, pop music, causing a breakdown of traditional Christian values. Several prominent thinkers of the Frankfurt School were Jewish, so some see Cultural Marxism as an anti-Semitic conspiracy theory.
The recent American wars in the Middle East are, to a significant extent, the outcome of the neoconservative ideology. They based their thinking on The Clash of Civilisations by Samuel Huntington. Huntington wrote that Western nations will lose predominance if they fail to recognise the irreconcilable nature of cultural tensions. He thus questioned whether multiculturalism would ever work. Huntington considered Islam a fundamental problem for the West.12 Only, Huntington himself believed that the West should adapt to a new era in which it is no longer dominant.
The neoconservatives held a different view. Leo Strauss, the founder of American neoconservatism, proposed a restoration of the vital ideas underpinning Western civilisation, such as classical Greek philosophy and the Judaeo-Christian heritage, and promoted faith in the moral purpose of the West. It is one of the reasons why the neoconservatives pressed for war to bring liberal democracy to Iraq. It was mainly due to the personal efforts of the non-Jewish Vice-President Dick Cheney, who had links to the oil industry, that this war came about. The Iraq War caused at least 300,000 civilian fatalities.
A conspiracy theorist could allege that, apart from undermining Western civilisation, the Jews also spread it by orchestrating wars and revolutions. The Protocols inspire this kind of thinking. If take the Protocols seriously, you might conclude that the Jews of the Frankfurt School and the Jewish neoconservatives secretly coordinate their actions to achieve Jewish world domination. And that the absence of evidence for this claim would be solely due to the secrecy of the operation rather than its non-existence.
Blood Libel 2.0
In 2009, the Swedish newspaper Aftonbladet ran an article about Israeli organ harvesting with the sensationalist headline ‘Our sons are plundered of their organs’. That was bad publicity for Israel. The allegations bore some similarities to the blood libel. Dead Palestinian children had been returned to their families by the Israeli army with organs missing.13 In the 1990s, Israeli doctors had taken skin, corneas, heart valves and bones from deceased Israelis, Palestinians and foreigners without permission.14
Organ trafficking is widespread. China, India, Pakistan, Egypt, Brazil, the Philippines, Moldavia, and Romania are among the world’s leading providers of trafficked organs. And China harvested organs from political prisoners. Trafficked organs are either sold domestically or exported to be transplanted into patients from the US, Europe, the United Arab Emirates, Saudi Arabia and especially Israel.15 Israel faces a shortage of organ donors because Jewish religious law requires the body to be intact in burial.16
Illegal organ trade is a questionable business but it can save lives. For poor people, the choice may come down to selling a child or selling an organ. Not allowing organ sales may make their situation even more miserable. Stealing organs from the dead is reprehensible because the deceased nor the family have given permission. These practices probably existed in Israel on a wider scale even though they likely have ended by now. It is telling that a stolen heart may have been used in Israel’s first successful heart transplant.17
Allegiance
The loyalty of Jews is another theme in conspiracy theories. Every minority in a foreign country faces the question of allegiance. It isn’t a big issue when the minority and the host country don’t have a serious conflict of interest, or when the minority has little influence. Jews have significant clout in the United States and elsewhere. In his book By Way of Deception, Victor Ostrovsky, a former operative for the Israeli intelligence service Mossad, claimed this service recruits helpers among the Jews outside Israel for its operations.18 Other secret services also enlist compatriots for espionage abroad, but the Mossad is legendary for its daring operations on foreign soil.
One of the most well-known helpers was Jonathan Pollard. As a young Navy intelligence analyst, he had claimed that the United States withheld information from its close ally, Israel. He took it upon himself to correct this injustice. He sold classified US documents to Israel. Sensitive documents stolen by Pollard ended up in the hands of the Soviet Union, putting the lives of US intelligence assets at risk. A few other cases of Israeli espionage in the United States attracted publicity, such as the arrests of former AIPAC officials Steve Rosen and Keith Weissman.
A noteworthy incident that raises questions is the Israeli attack on the spy ship USS Liberty during the 1967 Six-Day War, killing 34 Americans and wounding 170 others. The attack consisted of an air attack followed by a sea attack with gunboats. The official story is that Israeli forces mistakenly identified it as an enemy vessel. A story reported by former US Ambassador to Lebanon, Dwight Porter, who recounted a conversation between an Israeli pilot and the Israel Air Force war room picked up by an NSA aircraft and inadvertently cabled to CIA offices around the world, tells a different story:
Israeli pilot to war room: This is an American ship. Do you still want us to attack? War room to Israeli pilot: Yes, follow orders. Israeli pilot to war room: But sir, it’s an American ship – I can see the flag! War room to Israeli pilot: Never mind; hit it.
It was clear to the Israelis that the ship was American. Israeli reconnaissance planes had already identified the ship as an NSA intelligence vessel earlier that day. The exchange between the pilot and the war room raises questions. What reasons could the Israelis have had? And why would they risk angering their ally, the United States? The journalist Peter Hounam claimed that President Johnson, fearing he would lose the election, sought a pretext to let the United States join the war on the Israeli side and had asked the Israelis to stage a false flag attack. That would also have been in Israel’s interest.
The intriguing coincidences surrounding the terrorist attacks of 11 September 2001 have kept conspiracy theorists on edge. One of them is that a New York housewife spotted five Israelis filming the attacks on the World Trade Center from a rooftop just after the first strike had hit the Twin Towers. The Israelis appeared full of joy as the World Trade Center burned and crumbled. The police arrested them with $4700 in cash, foreign passports and a pair of box cutters of the type used by the hijackers. Two of them were Mossad agents. The FBI believed they were spying on Islamic extremist networks.19
The FBI interrogated them for weeks and concluded that there was no evidence they had foreknowledge of the attacks. The Israelis were uncooperative. It was impossible to extract much information from them. Later, some of them discussed the events on an Israeli talk show. One said, ‘We come from a country that experiences terror daily. Our purpose was to document the event.’19 The evidence suggests the Israelis knew more, likely some specifics of the attack plan. An Israeli official told the Associated Press, ‘Everybody knew about a heightened alert and knew that bin Laden was preparing a big attack.’ He said the Israelis had passed on this information to Washington and denied Israel had concrete intelligence that could have prevented the attacks.20
The Mossad is known for its daring operations. In the aftermath of the Hamas terrorist attacks of 7 October 2023, Israel scored some remarkable successes against Hezbollah and Iran with the help of its secret services. Mossad agents had duped Hezbollah into buying thousands of explosive pagers and walkie-talkies. When Israel attacked Iran in 2025, it immediately struck a slew of high-value targets, killing senior commanders and nuclear scientists and disarming Iran’s air defences. Israel’s successes stem from intelligence operations conducted inside Iran. Commando forces operated in Tehran and across the country, while Iran’s security and intelligence agencies remained unaware. Mossad teams targeted air defence missiles, ballistic missiles, and missile launchers. Israel had already assassinated several Iranian nuclear scientists and acquired Iranian nuclear information. These attacks occurred almost immediately after the UN watchdog had declared Iran in breach of its non-proliferation obligations.
Influence on the United States government
An evangelical Christian desire to return the Jews to the Holy Land has promoted the Zionist cause in the United States, as they believe it to be a prerequisite for the Second Coming of Jesus. Consequently, there is strong support for Israel amongst Evangelical Christians and Republicans. Jewish Americans often back Democratic candidates, so Democrats pay close attention to their Jewish voters. It ensures support for Israel in both political parties. US politicians need donations to fund their campaigns. Corporations and wealthy individuals buy influence, which is bribery. Jews generously donate to political campaigns. In 2006, 60% of the Democratic Party’s fundraising and 25% of the Republican Party’s fundraising came from Jewish-funded Political Action Committees.
Several Jewish Americans found their way into influential positions in the United States government. Some were also citizens of Israel. In 1994, the Israeli paper Ma’ariv wrote that the Clinton Administration allowed more Jews in sensitive positions than any government before. The article noted that this was not a design and that their achievements had brought them there. The Jewish component of the Democratic government was significant, but there were also Jews heading for top positions in the Republican Party, for example, Paul Wolfowitz.21
Wolfowitz was one of the neoconservatives, a political movement whose ideology played a significant role in American policies after 11 September 2001. In 2000, he was one of the supporters of the Project for the New American Century (PNAC), which promoted the removal of Saddam Hussein. After 11 September 2001, the PNAC pushed for an attack on Iraq. The security of Israel played a role in the considerations of the neoconservatives, but there is little evidence that protecting Israel was a principal reason for starting the Iraq war.
Mearsheimer and Walt wrote that pro-Israel figures have established a commanding presence at the American Enterprise Institute, the Center for Security Policy, the Foreign Policy Research Institute, the Heritage Foundation, the Hudson Institute, the Institute for Foreign Policy Analysis, and the Jewish Institute for National Security Affairs and that these think tanks are all decidedly pro-Israel.4
In most cases, the US supported the position of Israel, but there are a few instances in which the US government did not. The Eisenhower administration forced Israel to withdraw from the Sinai after the Suez Crisis. The administration of Bush Sr delayed support to Israel because of the settlements in the Palestinian territories. The Israeli government and the Obama administration differed on the settlement issue and how to deal with Iran, and the Israel Lobby organised resistance in Congress and the Senate.
Protocols of the Learned Elders of Zion cover
The irony of history
Perhaps the Protocols of the Elders of Zion are worth reading to see how the most bizarre conspiracy theories can appear convincing if you look at the evidence. If the Protocols had been for real, then the situation in the United States today may not have been so different. There is no grand conspiracy of Jews aiming for world domination, but what difference does that make in practice? It is the irony of history and perhaps God’s peculiar sense of humour. And so Manny Friedman wrote in the Times Of Israel:
We have, for example, AIPAC, which was essentially constructed just to drive agenda in Washington DC. And it succeeds admirably. And we brag about it. Again, it’s just what we do. But the funny part is when any anti-Semite or anti-Israel person starts to spout stuff like, “The Jews control the media!” and “The Jews control Washington!” Suddenly we’re up in arms. We create huge campaigns to take these people down. We do what we can to put them out of work.22
Did Friedman write that Jews determine who is allowed to govern in Washington DC? And perhaps the Israel Lobby has taken advice from the Protocols:
And let’s not forget AIPAC, every anti-Semite’s favourite punching bag. We’re talking an organisation that’s practically the equivalent of the Elders of Zion. I’ll never forget when I was involved in Israeli advocacy in college and being at one of the many AIPAC conventions. A man literally stood in front of us and told us that their whole goal was to only work with top-50 school graduate students because they would eventually be the people making changes in the government.22
Did he write that the Jewish interest groups act as if the Protocols were real? Perhaps the anti-Semites who believe the Protocols are real are not that imaginative. Then Friedman draws the following conclusion:
The truth is, the anti-Semites got it right. We Jews have something planted in each one of us that makes us completely different from every group in the world. We’re talking about a group of people that just got put in death camps, endured pogroms, their whole families decimated. And then they came to America, the one place that ever really let them have as much power as they wanted, and suddenly they’re taking over. Please don’t tell me that any other group in the world has ever done that. Only the Jews. And we’ve done it before. That’s why the Jews were enslaved in Egypt. We were too successful. Go look at the Torah — it’s right there. And we did it in Germany too.22
Did Friedman imply that Adolf Hitler had valid reasons to fear the Jews would take over Germany and that the proof of it is that they did so in the United States? It may be the personal opinion of a Jewish writer, but he made these comments in good spirit and as an expression of pride about his fellow Jews, and he writes what many people think. And you can plausibly interpret the evidence that way. Friedman could say it because he is a Jew, but if you are not, you are an anti-Semite. And you cannot call him a renegade or a self-hating Jew.
Jews excel in many fields, for instance, academics and finance. But pride comes before destruction and an arrogant spirit before a fall (Proverbs 16:18). The Nazis went down with their musings about Germans being a superior race. If the upper class of society coincides more and more with a small ethnic minority, ethnic tensions arise. The situation needs attention. Otherwise, this can end badly. History has taught us that too.
The Jewish people always lived at the margin and had to be resourceful to survive. These skills could have become part of Jewish culture so Jewish people could come out on top once they could operate without restrictions. And that can be at the expense of others and elicit resentment. That is not to say that there should be restrictions applying to Jews that do not apply to others. It is an instance of cultural differences causing trouble in multicultural societies. A fairer and more equitable society can also solve this issue.
Latest revision: 26 January 2024
Featured image: Blame Jews For Everything For Dummies. Found on Reuvera.hubpages.com. [copyright info]
1. On the Jewish Question. Karl Marx (1844). 2. The Bible’s Prehistory, Purpose and Political Future. Jacob L. Wright (2014). Coursera.org. [transcript] 3. Practising Tolerance in a Religious Society: The Church and the Jews in Italy. Bernard Dov Cooperman (2014). Coursera.org. [transcript] 4. The Israel Lobby and U.S. Foreign Policy. John J. Mearsheimer and Stephen M. Walt (2006). London Review of Books. 5. Do Jews Dominate in American Media? And So What If We Do? Philip Weiss (2008). Mondoweiss.net. [link] 6. Jewish power: inside the American Jewish establishment. Goldberg J.J. (1997). Basic Books. pp. 280–281. 7. Who runs Hollywood? C’mon. Joel Stein (2008). Los Angeles Times. [link] 8. Israel to pay students to defend it online. USA Today (2013). [link] 9. Israel lobby descends on UC Santa Barbara. Committee To Defend Academic Freedom at UCSB. [link] 10. ADL Spies. Jeffrey Blankfort (2013). Counterpunch. 11. Capitalism and the Jews. Milton Friedman (1988). Foundation For Economic Education. [link] 12. The Clash of Civilizations. Samuel P. Huntington (1996). Simon & Schuster. 13. ‘Our sons are plundered of their organs’. Donald Boström (2009). Aftonbladet. [link] 14. Israel harvested organs without permission, officials say. Kevin Flower and Guy Azriel (2009). CNN. [link] 15. Organ trafficking: a fast-expanding black market. Janes Defence & Security Intelligence (2008). 16. A mitzvah called organ donation. Efrat Shapira-Rosenberg (2007). Ynetnews. [link] 17. 40 Years After Israel’s First Transplant, Donor’s Family Says His Heart Was Stolen. Dana Weiler-Polak (2008). Haaretz. [link] 18. By Way of Deception: The Making and Unmaking of a Mossad Officer. Victor Ostrovsky (1990). St. Martin’s Press. 19. Five Israelis were seen filming as jet liners ploughed into the Twin Towers on September 11, 2001. The Scotland Herald (2003). [link] 29. Context of ‘August 23, 2001: Mossad Reportedly Gives CIA List of Terrorist Living in US; at Least Four 9/11 Hijackers Named’. Cooperativeresearch.org. 21. The Jews Who Run Clinton’s Court. Avinoam Bar-Yosef (1994). Maariv. 22. Jews DO control the media. Manny Friedman (2012). Times of Israel. [link]
Democracies are often called liberal democracies. So what is a liberal democracy and why might it be the best way of government? There are no easy answers to these questions nor is there agreement on these matters. Liberalism emphasises the value of individuals while democracy is rule by majority. These two principles can be at odds.
Liberal democracies have elections between multiple political parties, a separation of powers into different branches of government, the rule of law in everyday life, an open society, a market economy with private property, the protection of human rights, civil rights, civil liberties and political freedoms for everyone.1
Liberals believe that individuals and social groups have conflicts of interest. The social order must deal with these conflicts and resolve them in a peaceful manner. To achieve such a feat, all parties must be reasonable and there should be a balance of powers. No party should be able to force its will upon others.2 It is an important reason why liberals stress the importance of individual rights.
Democracy means that government decisions require the consent of the majority of the citizens. In most cases the citizens elect a parliament that does the decision making for them. Sometimes citizens can vote for individual proposals in referendums. In reality many democratic countries aren’t fully democratic because not all government decisions are supported by a majority of the citizens.
Principles
Liberal democracy is based on a social contract, which is an agreement amongst the members of society to cooperate for mutual benefits. For instance, labourers may accept capitalism if they get a share of prosperity. That deal turned out to be more attractive than state ownership of the means of production.
Liberalism has two principles that can be at odds, namely non-interference with people’s lives and realising everyone’s potential. In this vein there are two branches of liberalism:
Economic liberalism promotes freedom of the markets as well as free trade and claims that the state should be of minimal size and not interfere with people’s lives.
Social liberalism claims that the state should help to realise the potential of people by promoting their freedom to make choices, which includes ending poverty.
Each liberal democracy more or less embraces these values. Liberal democracies come with a market economy and respect for the rights of individual citizens. Governments interfere with the lives of people and try to promote their happiness and to realise their potential. The conflicting nature of both principles makes liberal democracies differ with regard to freedom of markets and government interference.
In the United States liberalism has a different meaning. There it is another word for social liberalism or democratic socialism. In Europe the definition of liberalism is broader and this is also the definition used here. In the 17th century liberal ideas began to emerge in what is called the European Enlightenment. Around the year 1700 the philosopher John Locke came up with the following basic principles for a liberal state:
a social contract in which citizens accept the authority of the state in exchange for the protection of their rights and property and maintaining the social order;
consent of the governed, which means that state power is only justified when the people agree;
separation of church and state, which means that the state doesn’t favour a specific religion and does not require a religious justification.3
Is it the best form of government?
Liberal democracy is part of the European cultural heritage. Proponents claim that it is the best form of government. These universalist claims are sometimes contested on the ground that they are a form of western cultural imperialism. Another argument is that there is no guarantee that liberal democracy leads to better decisions. From a religious perspective people argue that our Creator may prefer a different kind of social order and government, possibly even a theocracy.
The argument in favour of the universalist claims is that liberal democracy emerged out of a historical process that took centuries in which rational arguments played a decisive role. The European Enlightenment challenged existing practices in government on the basis of reason. Ideas that emerged out of the European Enlightenment were tried out in different ways and refined further. Europeans also invested heavily in educating their citizens. This produced a culture of reason and compromise as well as a massive body of practical experience and best practises.
There is also no guarantee that other forms of government lead to better decisions. In an open society better information can be available so well-educated citizens in a culture of reason and compromise may make better decisions. There are a few democracies that live up to these expectations so it can work out that way. And we may not be able to determine what kind of order God desires. If our Creator is all-powerful then the emergence and spread of liberal democracy may not be God’s plan.
One of the biggest problems facing liberal democracy is high expectations. Liberal democracy itself does not guarantee a reliable government that is both efficient and effective nor does it ensure a flourishing economy. This has led to disappointments. A failed and corrupt government can’t simply be turned into a success by allowing elections. Liberal democracy works best with a well-educated population in a culture of reason and compromise that doesn’t allow for corruption and abuse of power.
On the moral front there are a few issues too. Liberal democracy promises equal treatment for all people. In reality people aren’t treated equal nor do they have equal opportunities. There is discrimination based on ethnicity, gender or sexual preferences. And poor people have fewer opportunities than rich people. Still, the goal of equal treatment and equal opportunities can be something to strive for. It may be better to aim for such goals and fail from time to time than not having these goals at all.
If liberalism promotes tolerance then how to deal to intolerant people? Should their intolerance be tolerated? If people do not accept liberal values, should they be educated or should these values be imposed? And are free markets the best way of organising the economy or is government involvement advised? If the economy is served by stability, should dissent that causes instability be suppressed? An excessive or unnecessary use of force can undermine the foundation of liberal democracy as liberal democracy is based on reason and convincing people by argument. And indeed it is possible that liberal democracy can be overturned.
History
The preconditions for liberalism had already emerged in Western Europe during the Middle Ages. There was a larger degree of individualism than elsewhere. Liberalism itself emerged during the sixteenth century. At the time Europe was ravaged by devastating religious wars. After several decades of warfare Europeans grew tired of the conflict and began to tolerate religious differences. Some catholic countries accepted protestant minorities while many protestant countries accepted catholic minorities. Germany was almost equally divided. At the time Germany consisted of small states that had either protestant or catholic rulers.
This religious tolerance was at first more or less an uneasy truce. No party had been able to gain the upper hand. Religious minorities at first didn’t receive equal rights. They were only tolerated. Over time the case for religious tolerance became more widely accepted. It was based on two major arguments.
The argument of ignorance which states that only God knows who is on the right path and who is doomed so humans shouldn’t judge others.
The argument of perversity which states that cruelty is at odds with Christian values and that religious persecution strengthens the resolve of the persecuted.1
The concept of tolerance expanded into a general concern for the rights of individual citizens. In the 17th century liberal ideas were spreading. The Glorious Revolution of 1688 in England limited the power of the king. The rights of individuals were written down in the Bill of Rights. Parliament became the most powerful political institution based on the principle of consent of the governed. The 1776 Declaration of Independence of the United States was based on liberal principles too. It states that all men are created equal and have certain unalienable rights like life, liberty, and the pursuit of happiness.2
The founding fathers of the United States were also early liberals. The United States Constitution reflects this view. The aim of the United States Constitution is, amongst others, to safeguard the rights of individuals against the state. A large group of Americans believe that individual rights should prevail against democratically elected governments. The widespread support for gun ownership in the United States comes from a distrust of the state as a protector of life, liberty and possessions.
Democracy had not been a seriously considered since classical antiquity. It was believed that democracies are inherently unstable and chaotic due to the changing whims of the people.1 The violence during the French Revolution supported these views. It began as a popular uprising incited by liberal ideas but it soon turned into chaos and bloodshed. Order was restored by a despot ruler named Napoleon Bonaparte who did much to spread liberal reforms throughout Europe by ending the feudal system, emancipating religious minorities and imposing a liberal code of law. The spread of liberal ideas proved to be lasting and democracy was to follow a century later.
The Industrial Revolution started a period of accelerated and constant change that was disastrous for many who found themselves on the losing side. The ruling class changed. Nobility was replaced by a new elite of business people. The position of craftsmen was undermined by factories. And workers in factories laboured under miserable conditions for low wages. There were three major ways of confronting these changes:
Conservatives tried to hold on the old order of community, religion and nobility.
Socialists tried to overturn the elite of business people by giving power to workers.
Liberals tried to manage the change, thereby implicitly supporting the order in which business people were the ruling class.
Liberalism often coincides with the interests of business people. They have possessions and some are rich. They feared that the poor might vote for handing over their possessions to the poor. Socialism became the embodiment of this fear. Liberals were at first inclined to limit the right to vote to people who pay taxes because this excluded poor people from voting. When the threat of socialism became subdued and socialists were willing to compromise, liberals came to accept democracy based on the principle of one person one vote.
In the 19th century European countries held vast colonial empires. These colonies were kept for profit. It was generally believed that the people in these colonies had to be educated before they would be able to govern themselves. The colonial era helped to modernise these countries and most Europeans at the time believed that the oppression and the economic exploitation were justified on these grounds. There were only a few dissenters, for instance the Dutch writer Multatuli.
Liberal democracy faced a few major crises like World War I, the Great Depression and World War II. World War I demonstrated that liberal democracy and free trade weren’t a guarantee for peace and stability. The Great Depression once again challenged liberal democracy as the Soviet Union remained unaffected while Nazi Germany was able to recover and achieve full employment while other countries were still struggling. And during World War II Nazi Germany overran most democratic countries in Europe.
After World War II the European colonies became independent. The Soviet Union came to dominate Eastern Europe and China became a communist country. The United States became the protector of liberal democracy but also a number of dictatorships. This era is called the Cold War and it lasted until the Soviet Union dismantled itself after allowing the peoples of Eastern Europe to make their own choices. Major challengers of liberal democracy nowadays are the one-party system in China and political Islam.
The citizens of Hong Kong and Taiwan don’t like to lose their freedoms. Chinese too probably prefer freedom if they have a choice. And the Islamic State has shown Muslims all around the globe that political Islam can easily turn into a reign of terror. The foundations of liberal democracy may be strong, but a collapse of the global economy may turn be a more serious threat to liberal democracy than the alternatives. Reason can easily disappear once people become fearful of the future.
Reasons for success and limitations
The success of liberal democracy is therefore not a historical necessity. Liberal democracy might never have been invented or dictatorships could have gained the upper hand. That didn’t happen. Communist and fascist dictatorships came and went. Perhaps liberal democracy is a temporary phenomenon but we can’t know that now. Only the future can tell. There are a number of causes that might explain the strength of liberal democracy.
Liberal democracy is based on the consent of the governed so it is has the consent of the governed by default while other forms of government do not.
Science greatly contributes to the success of states and science is best served with an open debate that liberal democracy provides.
The economy greatly contributes to the success of states and the economy is best served with individual rights that liberal democracy provides.
A despot ruler or a ruling party in a one-party system might have the consent of its subjects, but if not, only force remains for the ruler or the party to maintain power. Liberal democracies usually resolve such issues peacefully through elections, making liberal democracy more stable by default. Intellectual freedom is helpful to science while economic freedom is helpful for the economy, so liberal democracy can be a potent force. Only when leadership is required, liberal democracy might not always be adequate.
Liberalism has no higher moral value than the individual, which is peculiar because the individual human is an insignificant part of this universe. And individualism may be at odds with human nature as humans are social animals. Humans are not atomic beings that choose to cooperate for mutual benefit like liberalism supposes. Cooperation is part of human nature and not a choice individuals deliberately make.
It is the success in cooperation that makes a society win out. Liberalism gives a framework for living together in peace as long as all major parties are reasonable and willing to compromise. This makes larger scale cooperation possible and that can make a society successful. For instance, the United States integrated people from different cultural backgrounds, which contributed to the success of the United States as a nation.
It is said that history is written by the victors. Strength may be the reason why liberal democracy prevailed. Liberal philosophers have tried to provide a moral justification for liberal democracy or they may have opposed it or they may have tried to improve it. Liberal democracy emerged out of thought and action, experiment and failure, and it was a process that took centuries. Philosophers like Locke contributed to its success as they set out the goals people could strife for.
Apart from individualism, liberal societies lack a higher purpose. From a scientific viewpoint there is no higher purpose to this universe. The moral codes humans live by are not more than an agreement. Only when this universe is created for a purpose there is a reason for our existence. But moral individualism can be dangerous. The challenges humanity is currently facing, most notably living within the limits of this planet, most likely requires making individuals subject to a higher causes like the survival of humanity and caring for the planet.
1. Liberal democracy. Wikipedia.
2. Liberalism: The Life of an Idea. Edmund Fawcett (2015). Princeton University Press.
3. History of liberalism. Wikipedia.
The Plan For The Future 