Fairness Matters

9 Mar 20241 Nov 2026 nivtricLeave a comment

Working and sharing in groups

The greatest welfare recipient in the United States is Jeff Bezos, worth $279 billion, who pays wages so low that his workers rely on food stamps and Medicaid. He sailed his $500 million yacht to his $55 million wedding to give his wife a $5 million ring while his tax rate was less than 1%. He thinks that people are vilifying the rich. Other corporations like Walmart do the same. It is one of the reasons why our civilisation is failing. How could this have happened? It is because capitalism is our religion, and money worshipers think it is fair, and that the real injustice is the existence of food stamps and Medicaid. A communist has a very different view of fairness. Is there no objective measure of fairness? Sadly, the answer is no, but by investigating the issue, we can get a better understanding.

Humans are social animals cooperating in groups. We divide the workload and share the fruits of our efforts. How we do that is a matter of economics. The group might be a band of hunter-gatherers, a corporation or a society. We agree, either by negotiation, custom or force, on who does what and who gets what. Otherwise, we can’t work together. In a society, this agreement is called the social contract. It helps if we think the arrangement is fair. Violations of fairness provoke strong negative feelings. What is fair isn’t always straightforward. Some people contribute more to the effort than others, either because of willingness or ability. And some people have more needs than others.

Monkeys also have a sense of fairness. During a study, researchers found that if one ape received less valuable rewards for the same work than its partner, such as less tasty foods, it could become angry and reject the reward. You can become frustrated if your colleague gets a higher reward for the same job. Children have a sense of fairness early on. Giving one person more than another without reason can surprise toddlers. Children also wish to see you help those they like and harm those they dislike. They already prefer people similar to them (the in-group) to children who are different (the out-group).¹

We believe that those who contribute more to a group’s success deserve more. If a venture’s success hinges on a single person’s efforts, we may reward this person more. It is an excuse for high pay for CEOs of large corporations. In a competitive environment, a CEO can make the difference between failure and success, while a factory worker can’t. When we cooperate, we are more willing to share, but in competition, we are more willing to accept inequality. In sports, the winner gets everything. Yet, if a team wins, the members share the prize, even if the team’s success depended on a few talented players.¹

Moral fundamentals

The golden rule says you should treat others the way you want to be treated. Yet, the treatment people desire varies, depending on character traits or culture. For example, some people desire attention while others wish to be left alone. That may be an individual preference or a cultural trait. Apart from individual preferences and culture, there are general rules. Contributing to the group and not harming others in the group are the most basic ones. Yet, we may differ on the practical implications.

A most crucial issue is the groups we identify with. We cooperate and compete in groups, and what we consider good is good for the groups we identify with. The group can be a family, gang, organisation, tribe, nation, or humanity. And we can identify with multiple groups, so that you can run into conflicts of interest. Something can be good for business but bad for the community. We also differ on what is beneficial and harmful. Groups may face questions such as whether it is a good idea to go to war with another gang.

An interesting question is whether moral rules are innate or learned. If our sense of fairness is innate, moral rules apply to everyone. If it is learned behaviour, fairness is a matter of taste. If someone is helpful, we react positively. If someone acts harmfully, we react negatively. Infants already do that.¹ And so, some of our moral conduct appears innate, and relates to being helpful or doing harm. Being helpful and not causing harm are the most basic moral rules, despite our disagreements in practical situations.

Ideas regarding fairness can be learned or cultural. Researchers tested children from several cultures to see how they would react to unequal rewards between them and another child when they were in control and could either accept or reject the deal. They always rejected deals that were unfavourable to them. In some cultures, older children rejected options that would have unfairly benefited them. Refusing a bad deal seems a natural instinct, but forgoing an unfair good deal is learned behaviour.¹

Another, very fundamental, rule is might makes right. The powerful make the rules. What we believe is right and wrong greatly depends on power structures. The West conquered the world because of its cultural values, which included an entrepreneurial spirit driven by greed and inquisitiveness. The medieval Christian values were quite different. Its success leads many to believe that the liberal world order of capitalism and liberal democracy is good, even though we now face its failure. And so, only might can fix this issue.

The mistakes we make

Are we responsible for our choices? What is the influence of choice on fairness? During an experiment in which pairs of students performed a task together, one student received the pay. The one receiving the pay was randomly picked. Those who received the pay could choose how much they would give to the other. Receiving pay was a matter of luck, and most people believed it was unfair and were willing to share the pay.

Adding a choice, for instance, between getting a small reward or participating in a lottery to get the full reward, changes the picture. That made the participants less willing to share. If both participants opted to participate in the lottery, we think it is fair that one of them wins. People often think poverty is a choice, as poor people decide not to get an education or divorce, and, as a result, can’t work full-time.¹

They made these choices, but sometimes they lacked better alternatives or believed that they did. Possibly, the small reward was not enough to live off, and participating in the lottery gave a chance of getting enough. The alternative to a divorce can be living with an abusive spouse. But then again, you could have paid attention before marrying. Perhaps a good education was too expensive, or you were unqualified, but you still have options and may even have a significant influence on your life.

If we don’t face the consequences of our choices, choices stop mattering. The unfairness of that becomes clear if two individuals with similar opportunities make different choices. If one decides to spend his money while the other saves for retirement, we think it is unfair to tax the latter to pay for the former’s retirement. In this case, it might be better not to have options and implement a mandatory retirement savings scheme.

In nature, there is no excuse for failure. Those who fail bear the consequences. It has a disciplining effect. Shielding people from the consequences of their failures is problematic. Their failure may be due to bad luck, like having a poor upbringing. And that is unfair. A society could help these people. Yet, the disciplining effect of bearing the consequences of your actions is essential to keep societies from collapsing.

Progressives focus on equality and seek to promote equal outcomes for everyone, but disparities in health, education, and wealth persist. Wealth inequality is partly due to the accumulation of capital and partly to individual circumstances and life choices. Conservatives think that working hard and making the right choices should make you better off.¹ Some societies invest in equal opportunities, for instance, by investing in the education of underprivileged children.

Luck is everywhere

Luck is never fair, but it is everywhere. Some live long, some die early, some have love, some remain alone, some are healthy, and some suffer from severe illnesses. It isn’t always possible to fix that. Your place of birth, the upbringing you received, your education, and the opportunities you had in life affect your success in society. Successful people often think that their brilliance and hard work are the reasons for their success. Efforts and talents matter, but your success is also a matter of luck.

If we could eliminate luck, that would be fairer. Yet, not rewarding success, even when it comes from luck, results in undesirable outcomes as it promotes failure. If a group’s success depends on the risk-takers, the hard workers, or the talented, an extra reward can inspire them to do their utmost. Low-skilled labourers receive low wages because they are interchangeable. A minimum wage can help to reduce inequality.

The economy works with the forces of nature, which are cooperation and competition. We cooperate in groups, such as corporations, to compete or cooperate with other groups, which can also be corporations. These corporations operate in markets, so they sell their products at market prices and pay market wages. In a village economy, villagers can distribute the fruits of their endeavours in ways they see fit. Yet when markets exist, people may seek better deals outside the village, thereby undermining the community.

The shadow of the past

The past casts a shadow over the present. We live with the consequences of past developments. Your country of birth, as well as the family you grow up in, affects your life opportunities. The emergence and spread of capitalism have transformed the world. It brought a dramatic increase in wealth, but it came with exploitation. Today, there is a massive wealth inequality driven by economic relationships that some classify as exploitative and others as voluntary agreements.

Organisation and trade contribute to surplus value, but those in control take that surplus. Trade practices could turn into outright theft. An example is what the British East India Company did. It collected taxes in India and used a portion of them to purchase Indian goods for British use. Instead of paying for them, merchants obtained these goods for free by buying them from peasants and weavers with money they had taken as taxes. Through this scheme and other scams, the British stole from India.²

Had that theft not occurred, the Indian peasants and weavers would have been better off. Yet, they didn’t have a capitalist mindset like the greedy English merchants, and they wouldn’t have invested their money into new production methods and facilities to increase India’s capital. The wealthy British traders invested part of the proceeds of their thievery in the London Stock Exchange in ventures such as steam-powered factories. That capitalist spirit eventually raised living standards around the globe, including India.

History advantages some people and disadvantages others. In India, the caste system determines what jobs you can do. Some women in India have to clean toilets for $1,50 per month because of the caste in which they were born.² The Indian caste system is a relic from the past. Those who inherit estates may think they deserve them because their grandparents wisely invested the money taken from poor Indian farmers, while those who have no such parents inherit nothing. Inheritance looks a lot like the caste system.

It may seem strange that we think that the caste system is unjust, while we think that inheriting large estates is okay. Yet, rules exist to make a society functional. If you can hand over your assets to your children, it can stimulate you to save or build a business, which can be beneficial to the economy. The caste system brings no such benefits. Yet, in a time where we face a capital excess combined with billionaires running politics, the inheritance of large estates has become a serious problem that needs addressing.

Latest revision: 5 May 2026

Featured image: Confucius (possibly the inventor of the Golden Rule)

1. The Price of Fairness (film). Alex Gabbay (2017).
2. Independence Day: How the British pulled off a $45 trillion heist in India. The India Times (2023).

Stocks of sectors and flow chart of money, energy, and materials of a Stock-Flow Consistent Input–Output Model. Matthew Berg, Brian Hartley, Oliver Richters. CC BY 3.0.

Model Thinking

13 Feb 202416 Oct 2026 nivtricLeave a comment

Minimising surprise

A model is a simplified representation of reality, not reality itself. For example, a map is not the territory itself. The same goes for our language. The word tree is not a tree. Now, if there is a tree on the map, it says little about the scenery, except that there is probably a tree at the location designated by the map. What we think of as reality is also a model. Our brain doesn’t register reality itself but merely processes it. The outside world generates inputs via our senses, such as seeing, hearing, and touching, which the brain integrates with our memories and emotions. It is what we call consciousness. What we experience as reality is a model. A dog experiences that same reality very differently, and the dog’s experience centres more around smell. We may see a couch and notice its colour, while a dog smells that a cat has been lying on it recently.

The brain generates our perception of reality, and our consciousness is an integrated experience shaped by that brain, informed by its own expectations and the senses. The brain works with an expectation and adapts it when the senses disagree. We imagine reality, and correct it if contradicting information emerges. It is efficient because it greatly reduces the need for information processing. The brain aims to minimise surprise by having the best possible representation of reality. If our brain fails, for instance, when we are sleep-deprived, the world begins to look unreal. And so, intense stress can cause psychosis. During dreaming, the integrated experience of consciousness remains active, except that the information may not come from the senses but from the brain itself.

We employ models of reality to explain the world. Together, they form our worldview. We try to minimise surprises because we depend on our worldview to survive. Models are imaginations. We may believe that X causes Y because after X occurs, Y happens. We infer our models of reality from our observations and thoughts, as well as those of others. Scientific models are more formal and, if the scientific method is properly applied, have passed some formal checks. Models have a wide array of uses, including weather and economic models. Using multiple models can help us to reduce surprise, because different models have different strengths and weaknesses. It is, however, crucial to understand that models are not true or false but aim to minimise surprise. And that is because we cannot know the truth. Yet, we can minimise surprise, which helps us to survive.

Your model of reality may say that all swans are white, perhaps because you base it on the swans you have seen. Once you see a black one, you may change your view to minimise future surprises. That seems a rather straightforward case. You can also reduce surprise by ignoring evidence, as we have trouble handling complexity and contradictions. We may also do that because we are group animals who cooperate and survive based on shared fantasies. Faced with an unknown future and an uncertain role, my aim in conducting research was also to minimise future surprises by looking for evidence that contradicted my views and seeking better explanations, so that my guidance would at least be in the right direction. That is already ambitious.

Often, I wrote down my views on relevant subjects. Every time new information came to light, I adapted my texts accordingly. The more accurate the direction is, the more straightforward the execution becomes. It made me focus on demonstrating that this universe is a virtual reality, that God is an artificial intelligence that may present itself as a woman, that we can have a global usury-free financial system, and that we need to socially engineer the future world society to be the most socially advanced. That requires fine-tuning, but if the direction is incorrect, we will end up in the wrong place. And so, this model of reality has undergone over 17 years of work, with numerous revisions, and is far from complete. As minimising surprise seems essential for our survival, this supports the case for simplicity and stability. This finding is a crucial element in my model of reality.

Limitations of simplicity

Proverbs state contradictory things. One proverb says that two heads are better than one, while another says that too many cooks spoil the broth. How can both be right at the same time? In this case, the answer is that there is an optimal number of people working on a project. It is a simplistic view, but these proverbs were drawn up in a time when life was simple and predictable, so that they worked better then. Today, building teams has become an expert affair. The qualities of the individuals working on the project also matter, as do the available tools and countless other factors. It can be hard to get it right. Headcount is just one of many variables you need to manage if you run a business or a government. If you decide on these matters, you don’t open up a book with proverbs for guidance. Life has become complex and unpredictable.

A one-dimensional spectrum, so a line, with two opposites, ranging from one participant to a large number, can make you fail to see the solution. Perhaps it lies outside that line, so this way of thinking keeps us from seeing it. Maybe the project isn’t worth undertaking in the first place, or perhaps success depends on the right tools. The number of people working on the project may still matter, so you have to consider that also. The debate about capitalism versus socialism has dragged on for over a century and has dominated world politics during the Cold War. So, do we need more or less state interference in markets? Yet, markets and states don’t create agreeable societies on their own.

That is also why economic models include multiple variables, such as employment, inflation, consumption, business investment, and government spending. You can add more, such as workforce education, market flexibility, foreign competition, and regulations. There are countless variables to consider. If you have identified variables, you need data to estimate their impact. The available economic data is usually insufficient to achieve certainty, as changes can have multiple causes. How do you know that some other variable didn’t interfere with the outcome? Despite all the models central banks used, they didn’t foresee the 2008 financial crisis. Models can fail, and often do. Are they wrong? The financial models did get countless other things right, but missing one crucial variable can already produce an epic surprise. Chaos theory might explain why.

Here we run into the issue of planning errors. We make our plans based on the available information and our models of reality that give that information meaning. We all plan because we must make important decisions, like investments which tie us up for a long period. If you own a business, you must recoup your investments. Otherwise, you will go bankrupt. Yet that may take years, and conditions may change, such as costs, consumer preferences, or regulations. You have to adapt your plans along the way. Still, some investments may turn out worthless. We all plan for futures that don’t materialise. You may buy a home with your spouse, and then you divorce because something unexpected happened, such as infidelity. It is also the problem with models. Surprises remain.

Still, models can be helpful. The more models we use, the more surprises we can eliminate, but even then, we may still miss something crucial. Our minds have constraints. We often take a perspective and reason from there. A socialist economist might be good at pinpointing why capitalism fails but may not see what is wrong with socialism. Economic theories explain specific phenomena under certain conditions. You might find additional explanations in psychology, sociology, or even history. You might want to check your ideas before trying. You can run the idea through several economic theories. That might give new insights. You can’t be sure you are right, but models help you eliminate errors.

That was also my approach to designing a usury-free financial system. Natural Money draws on economic theory, monetary economics, banking, psychology, and history. There was not much to go on, so I reviewed that idea using existing theories and historical evidence to investigate how it might work in practice. During a real-life experiment, unforeseen issues came to light. Once interest rates in Europe fell below zero, resistance to negative interest rates emerged. Savers are irrational. They prefer 2% interest and 10% inflation over -2% and 0% inflation, it turned out. That is normal human behaviour, so humans are not, as standard economics may suggest, rationally calculating individuals.

We measure our gains and losses in currency units rather than purchasing power. And behavioural economics says we give more weight to losses than gains. It is why inflation and money printing meet little resistance, while negative interest rates make people go berserk. A 4% loss in interest income impresses us more than the 10% reduction in inflation because we count our money units. Emotions can be intense and lead us to act irrationally. It is pointless to try to convince savers that they are better off by appealing to their rational thinking, which was obviously absent. Once that became apparent, I could look for a fix by making negative interest rates appear as inflation.

Insights models give

The use of models yields fewer surprises than uneducated guesses, and combining several models yields fewer unexpected outcomes than using a single model. Models tie us to a mast of logic so that we are not carried away by our thoughts and can figure out which ideas are useful to us under what circumstances. Using data, we can calibrate our models, so if our model is wrong, we can investigate why and correct the error. Scientific disciplines such as economics, sociology, linguistics, and biology use models. According to a leading expert on the matter, Scott Page, models share the following characteristics:

They simplify by omitting irrelevant details and focusing on the essentials. Models abstract from reality.
They formalise by making precise definitions and providing a framework for logical thinking to explain and predict.
They are somewhat wrong because they simplify and omit details. Using multiple models can reduce errors arising from that.

Weather models make calculations, such as predicting that the maximum temperature in Amsterdam will be 26°C in 8 days. That is a precise calculation, but it is likely inaccurate. Yet, most likely, the temperature will be between 22°C and 30°C. Weather forecasters use up to fifty models to reduce surprise outcomes. The average of these models is more reliable than the individual models. People who use a single model do poorly at predicting. They may be correct occasionally, just like a clock that has stopped is sometimes accurate, and then tout their few successes while forgetting about their impressive list of epic failures. Experts know that their models have limitations. When constructing a model, we can choose from the following approaches:

Aiming for realism by describing relevant parts and relationships. Climate models work with CO2 levels and their effects on temperatures.
Using an analogy by describing a process as similar to another. You can compare the ruinous growth of human activities with a cancer.
Exploring possibilities if limits change. You can explore what will happen when unlimited energy becomes available at no cost.

When devising a plan for humanity that lasts a thousand years or more, numbers and mathematics become meaningless, and we have to do it with words. We can’t measure culture, but it is a central ingredient in human conduct. And still, we must try to pin down things by modelling humans to predict what we can do and how it might work. And then we must get it right for eternity. That forces us to dig deeper even. We then arrive at observations like religion can save us because humans are imaginative creatures who cooperate based on myths. This is a precise and meaningful statement without any mathematics. Still, it has seen no failures in the entire history of humankind. And so, it might help us when working on a plan for the future.

Two examples from Scott Page’s Model Thinking course on Coursera illustrate the use of models. They investigate why people of the same ethnicity often live together, and why revolutions are difficult to predict.

Sorting and peer effects

Groups of people who hang out together tend to look alike, think alike and act alike. If you look at the map of Detroit, you see people of the same ethnicity living together. Blue dots represent black people, and red dots represent white people. We can’t change our skin colour, so if we hang around with people who look like us, that is sorting. We also adapt our behaviour to match that of others around us. When you hang around with smokers, you may start smoking too. Alternatively, if you hang out with people who don’t smoke, you might quit smoking. That is the peer effect. Both sorting and peer effects create groups of similar people who hang out with each other. Models can help us understand how these processes work by modelling them.¹

Schelling’s segregation model offers insight into the segregation process. It says nothing about why people move. That we seek out people who are like us is an observation. Why would people move? That is an interesting question, most notably if it points to problems. If we believe that skin colour shouldn’t matter, then why does it matter? Maybe income plays a role. Yet, the model doesn’t say anything about that. So, that is a limitation. Schelling developed a model in which individuals follow simple rules. Suppose income is the segregation criterion, and that everyone lives in a block with eight neighbours. Red boxes represent homes where rich people live, and grey boxes are homes where poor people dwell. The blank box is an empty home. Assume now that everyone has a threshold of similar people who will make them stay.

A wealthy individual might stay as long as at least 30% of his neighbours are rich. Assume a rich person lives at X. In this case, three out of seven or 43%, of the neighbours are rich, like the person living at X. If one of the wealthy neighbours moves out, and a poor person takes that place, 29% of the neighbours will be rich, and the person living at X will move.

A computer can simulate how that works out over time. Assume there are 2,000 people. Of them, 1,000 are poor, represented by yellow dots, and 1,000 are rich, represented by blue dots, while black spots are vacant homes. Suppose that rich and poor people are randomly distributed at the start, and everyone wants to live among at least 30% similar people. In that case, the average is 50% alike, and only 16% are unhappy because less than 30% of their neighbours are alike. As a result, the unhappy people start moving. Yet their relocation makes some others unhappy, as the number of similar people falls below the threshold. And so, relocations continue until everyone is happy, and you end up with an average similarity of 72%.

Even when everyone likes to live in a diverse neighbourhood where only 30% of their neighbours are like them, segregation occurs. Segregation may not be the intention of the individuals involved, as they might be tolerant people requiring only a minority of similar people living in their neighbourhood.¹ Whether that is indeed the case remains to be seen, and the issue is not always intolerance. It can also be conduct. Now, wealthy people may not like scoulding and men drinking beer in the front garden. But if the assumption is correct, and if we believe segregation is undesirable, socially engineering the ethnic or wealth characteristics of neighbourhoods by mixing homes for different income groups makes sense. Some countries plan neighbourhoods that way to prevent the emergence of ghettos without economic opportunities.

Peer effects cause people to act alike. Contagious phenomena are peer effects. They often start suddenly, seemingly out of nowhere. In uprisings and revolutions, extremists frequently determine the course of events, as seen in the American, French, Bolshevik, and Maidan revolutions. History could have proceeded differently. It is difficult to predict revolutions. Usually, a revolution requires widespread discontent. Yet reasonable people don’t storm buildings and set them on fire. And so, the question remains: when do extremists get the upper hand? The answer is that we can’t predict it.

Granovetter’s model offers possible insight into why that is so. Suppose there is a group of individuals. Each individual has a threshold for participating in an event like an uprising and will join if at least a specific number of others join. If your threshold is 0, you do it anyway. If your threshold is 50, you start if you see 50 participants. The outcome varies depending on the thresholds of other people who might get involved.

Suppose there are five individuals, and the behaviour is wearing a suit. One individual has a threshold of 0, one has a threshold of 1, and three have a threshold of 2. The following will happen: one extremist starts wearing a suit because her threshold is 0. The second individual joins because his threshold is 1. Then, the three remaining individuals join in because their threshold is 2.

If the thresholds had been 1, 1, 1, 2, 2, nobody would have worn a suit despite the group, on average, being more open to the idea. If the thresholds had been 0, 1, 2, 3, 4, and 5, everyone would have worn a suit after five turns, even though the group, on average, was less keen to do so. And so, the model suggests that revolutions come by surprise. And so, it should not surprise us that they do. Otherwise, we might end up surprised, and to achieve that outcome, we might as well have employed no model at all.

Peer effects cause people to act alike. Contagious phenomena are peer effects. They may start suddenly, seemingly out of nowhere. In uprisings and revolutions, extremists often determine the course of events, as in the American, French, Bolshevik, and Maidan revolutions. Things could have proceeded differently. It is difficult to predict revolutions. Granovetter’s model might offer an insight into why that is so.¹

Yet what motivates people to join a movement greatly determines the thresholds, and the model offers no insight into it. Is it hardship? Is it beliefs? Is it political agitators? The British Tea Tax, which sparked the outrage that led the Americans to declare independence, was actually a good deal for the Americans, as it would lower tea prices. The Americans had a good life, only no influence on British policies. They didn’t suffer as the Russian labourers, soldiers and farmers who supported the Bolshevik Revolution did. Yet many risked life and limb for independence and ideals, such as the right to pursue happiness, in the American War of Independence.

Proof in the pudding

Do similar people hang out together because of sorting or the peer effect? That is the identification problem. Sometimes, it is clear. Segregation by race occurs through sorting, since you can’t change your skin colour. Other situations are less clear, and you can’t tell whether it is sorting or peer effects, since the outcomes are the same. Happy people hang out with each other, as do unhappy people. Both sorting and peer effects may have caused this.1 Happy people may seek each other’s company because they don’t like to hear the whining of unhappy people. That would be sorting. Alternatively, the company of happy people could make you happier. That would be a peer effect.

Models can provide insights as to why similar people hang out together and why revolutions are difficult to predict. Yet, they don’t tell the whole story. Other models help us investigate what might happen under which circumstances. Thus, models explore the dimensions of complex questions and help us identify the spots where the best solutions hang out. These best solutions tend to hang out in spots where humans don’t look. Models can assist us in finding them. If we intend to get people to contribute to a cause, we might want to model human behaviour to see how we can do that. We are conditioned into thinking in particular fixed patterns. Burdened by these patterns and hampered by limited imagination, I spent decades on the theory of Natural Money. At the same time, an artificial intelligence might have figured it out in a matter of seconds.

If we envision humans as rational beings, we may try to convince them with arguments to do the right thing. If we see humans as myth-believing creatures, an inspiring fairy tale about their country’s greatness can prompt them to act. If we think humans are calculating individuals, incentives and punishments can make them do the right thing. If we see humans as social animals seeking recognition, we might achieve the objective by telling them how great they are. And if you believe that money motivates people, bribing them might be an approach you may entertain. You may get the best results by employing a combined approach with multiple models. Not everyone is the same, so the effects of the listed approaches may vary per individual and cultural group.

Latest revision: 16 October 2026

Featured image: Sector stocks and a flowchart of money, energy, and materials in a Stock-Flow Consistent Input–Output Model. Matthew Berg, Brian Hartley, Oliver Richters. CC BY 3.0.

1. Model Thinking. Scott Page. Coursera (2014).

Dark Side

31 Jan 202430 Jul 2026 nivtricLeave a comment

Trade and finance

Capitalism has lifted billions out of poverty, but there is a dark side. Trade and finance, thus the profit motive, drive the system we live in. And that will eventually kill us. Now, we are almost there. Most notably in the past, ordinary people regarded merchants and bankers with suspicion. In popular culture, trade and banking were the domains of people of questionable ethics. It is hard to pin down the issue, but they do not only bring the good things in life. Everywhere you see the death and destruction they cause. The ethic of the merchant is profit, nothing else. We think we can’t do without trade and finance, but can we do without moral values? The distinction between trade and crime is elusive. When governments fight the drug trade, they intervene in the market for opioids and prevent businesspeople from doing business.

Supply and demand always equalise at a given price, thanks to entrepreneurs. Hermes, the Greek god of trade, was also the god of thieves. Like thieves, traders don’t like toil and produce, but live off other people’s work. That is a caricature. Trade can be useful. Competition can be tough. And we can’t live without trade anymore, because we buy everything we need in the market, and many things we don’t need as well. Still, as the number of unnecessary products and services increases, trade proliferates. The pace at which we transform energy and resources into waste and pollution hastens as traders facilitate a competition, so we end up supporting an ever-expanding class of traders with our labour. The alternative is to produce as much as possible locally and accept a lower standard of living. That was Mahatma Gandhi’s advice.

Jesus Christ chased the money changers from the temple. Yet, in The Parable of the Talents, Jesus said that you must put your qualities to work. Talents were money, so it could mean putting your money to work. Jesus also said that it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God. And so, you can take your pick and pimp your argument with Jesus’ words. Was Jesus a socialist or a capitalist? It is silly to think in such terms. Jesus lived 2,000 years ago, when economics as a field didn’t exist. Someone claiming to be Paul added that the love of money is the root of all sorts of evil. The Jewish writer Jesus Sirach noted, ‘A merchant can hardly avoid doing wrong. Every salesman is guilty of sin.’ Sirach made a few other peculiar remarks, like, ‘A man’s wickedness is better than a woman’s goodness. Women bring shame and disgrace.’ And so, you’d better take his words with a grain of salt.

Trade is a brutal force, and eliminating it might require drastic measures that few people have the stomach for. The Taliban are among the exceptions. You get the idea. You must first define what is good and what is evil, and then do whatever it takes, believing that the alternative is worse. And that is a belief because we don’t know the future. The prohibition in the United States led to increased crime. Is the drug problem in the Netherlands, where they are more relaxed on the issue, worse than in the United States? The opposite might be true. Yet, lax enforcement made the Netherlands a hub in the international drug trade for a while. And drugs are ruining millions of lives. Is eliminating the drug trade worth the effort? Perhaps, if we succeed. But then, we may have to learn from the Taliban.

Markets have no morals, and the ethic of the merchant is no ethics at all. The individual businessperson may have moral values and refrain from a trade, but traders as a group never do. Whatever you desire, it is for sale. Greed, or the pursuit of profit, drives trade. Still, you can’t run a business if the operations don’t cover the costs. Yet, if the business doesn’t provide anything essential, and consumes energy and resources, it had better not exist. Traditional moral systems accept that you should be able to make a living, but they hold that greed is wrong. We have gone a long way since then. Today, we see trade as mutually beneficial, so we believe that those who engage in a trade do so voluntarily because they all benefit, or believe they do.

The pursuit of wealth, regardless of the consequences, became not only the foundation of our economic system but also of our moral values. And so, Friedrich Hayek could write, ‘The disdain for profit is due to ignorance and to an attitude that we may, if we wish, admire in the ascetic who has chosen to be content with a small share of the riches of this world, but which, when actualised in the form of restrictions on others, is selfish to the extent that it imposes asceticism, and indeed deprivations of all sorts, on others.’ Our ethic is that we can do as we please, as if consequences don’t exist. And the ascetic is selfish when he says everyone should live like him. It is moral depravity at its finest. And so, what was once good has become evil, and what was once evil has become good.

Economists would even say that someone who is altruistic maximises personal utility, so that altruism becomes a selfish act. And the ascetic tries to maximise his personal utility by attempting to force others to live like him. An economist can’t imagine that we would do something good for the sake of goodness. The problem is not self-interest as such, but greed or the merchant’s ethic, and the difference isn’t clear. In any case, we have a suicidal appreciation of wealth. Had we looked down on riches and luxury and aspired to have just enough and do with less, this world could be a much better place.

Many merchants are people like you and me without evil intent. Shop owners make a living by providing their customers with a service. They are often people who care, not the greedy, evil kind that run Wall Street or sell weapons to warring factions in Africa. Still, something is profoundly wrong with trade. Individual merchants may have ethical values, but markets never have them. And trade drives the creative destruction that will ultimately destroy us. Yet, suppressing trade promotes illicit markets and crime. And so, we accept the drawbacks, thinking the alternatives are worse. And that is a fatal mistake.

A pragmatic approach is that outcomes matter more than intent. If the result of evil intent, such as greed, is good, it is good. And if the outcome of good intent is terrible, it is wrong or perhaps even evil. If factory owners destroy artisans’ businesses and pay their employees low wages, but overall opulence increases as clothing becomes cheaper, then it is good. Likewise, if a country switches to socialism out of good intentions, but the population starves, it is evil. Before the Industrial Revolution, nearly everyone was as miserable as today’s poorest. Capitalism has lifted billions out of poverty. So why bother?

Trade and finance became the engine of growth, bringing industrialisation, modernisation, colonisation, the slave trade, mass migration, the loss of livelihoods for craftspeople, and the depopulation of the countryside. Various movements, such as socialists, anti-globalists, religious groups, small-is-beautiful, environmentalists, and also the Nazis, attempted to provide alternatives to the current order with their visions of Paradise. They all failed. The system is a brute force driven by our sentiments and urges. As consumers, we crave the best service at the lowest price, and as investors, we desire corporations to increase their profits. And we don’t think about the consequences.

Usury: the destroyer of civilisations

Money is to the economy what blood is to the body. It must flow. Otherwise, the economy will die. If we stop buying stuff, businesses go bankrupt, we become unemployed, the government receives no taxes, and everything comes to a standstill. That never happens because we spend money on necessities like fast food, smartphones, and sneakers. When we buy less, the economy slows, and we enter a recession, or if it gets worse, a depression. Businesses disappear, and people become unemployed and depressed. Usually, the economy recovers, but it may take time, sometimes decades. It is why we must keep buying stuff, and even more, to make the economy grow.

In the past, when borrowers couldn’t repay their debts, they became the moneylenders’ serfs. It is why several ancient civilisations had regular debt cancellations and why religions like Christianity and Islam forbade interest on money or debts. Usury is paying for the use of money, which is a profoundly evil practice. The evil of it lies in the money flows. We all need a medium of exchange. A simple explanation helps to clarify the issue. Imagine the Duckburg economy running on 100 gold coins. With these 100 gold coins, everyone has enough money, and the Duckburg economy operates smoothly. Scrooge McDuck owns ten, but he is a miser and doesn’t use them to buy items from others.

The economic flows of Duckburg now suffer a 10-coin shortfall. Products then remain unsold, and several ducks lose their jobs. To prevent that, Scrooge McDuck can lend these coins for one year at 10% interest to ducks who come short, so the money keeps flowing. At the end of the year, the economy is 11 short. Scrooge McDuck then lends 11 coins at 10%. In this way, he will own all the coins after 25 years. Scrooge McDuck can implode the Duckburg economy by keeping the money in his vault. When the citizens of Duckburg become desperate, Scrooge McDuck can buy their homes, let them pay rent, and become even richer. If you think that is smart, you have the ethics of a merchant. It demonstrates why, in traditional popular culture, merchants and bankers were evil.

Two things have changed since then. Starting with the Industrial Revolution, economic growth picked up, which helped to pay for the interest charges. The nature of money has also changed. It isn’t gold anymore. Nowadays, banks create money from thin air, so the nature of usury has also changed. When you go to a bank and take out a loan, such as a car loan, you get a deposit and a debt that the bank creates on the spot by creating two bookkeeping entries. The deposit becomes someone else’s money once you purchase the car. When you repay the loan, that bank deposit and the debt disappear. You must repay the loan with interest. If the interest rate is 5% and you have borrowed € 100 for a year, you must return € 105.

Nearly all the money we use is deposits created from loans that borrowers must return with interest. Banks might pay interest on deposits. The depositors of a bank act like Scrooge McDuck. They have more money than they need and keep it in the account at interest. If they have borrowed € 1,000,000 at 5% interest, they must return € 1,050,000 after a year. Where does the extra € 50,000 come from? Here are the options:

borrowers borrow more;
depositors spend some of their balance;
borrowers don’t pay back their loans;
the government borrows more or
the central bank prints the money.

Problems arise when borrowers don’t borrow and depositors don’t spend their money. In that case, borrowers are € 50,000 short, and some can’t repay their loans. If many borrowers can’t, you have a financial crisis. Borrowers can reduce their spending to pay off their debts, leading to a slowdown of the economy. The economy is also unstable due to investor expectations. They expect more in the future. If debts remain unpaid or people stop spending, they incur losses and may lose trust and stop investing.

If they lose trust, they stop investing, less money flows into the economy, businesses go bankrupt, people become unemployed, and more borrowers get into trouble. As a result, even less money flows, causing banks to go bankrupt. Economists call it deflationary collapse. That happened in the 1930s, causing the severest economic depression in modern history. There was no money in the economy because lenders feared losing it. To prevent that from happening, governments run deficits and central banks print currency whenever there are shortages in the money flows. With interest on debts, these things are hard to avoid. But if the system never collapses, debts and interest payments only grow.

The 2008 financial crisis could have been much worse than the 1930s, potentially leading to the collapse of civilisation as we know it. That was due not only to the accumulation of far more debts but also because most people now live in cities, where they have become dependent on markets and governments. In the 1930s, most people still lived in the countryside. Central banks prevented a collapse by printing trillions of US dollars, euros, and other currencies. The shortfall was that enormous. We now buy our necessities in shops and rely on the government to keep the system running. We have not only become the usurers’ hostages, but also the hostages of markets and governments.

Barataria: an economic fairy tale

Money equals power, and the lure of riches corrupts us, so the alternatives to the system of trade and usury have failed. They can’t compete. A few people step out, but it is like a rehab from a consumption addiction. It is a sober life while everyone around you keeps on living the good life. After us, the deluge is the prevailing mood. The deluge is already taking off. Storms feed on the warming sea water and leave their burden on our shores. But what are our options anyway? In the early 1990s, the Strohalm Foundation published The Miracle Island Barataria, an economic parable by the Argentinian-German economist Silvio Gesell.¹ I rewrote the narrative somewhat to better highlight its message. Gesell explores three options: (1) communism or socialism, (2) a market economy without traders and bankers, and (3) a fully capitalist economy.

In 1612, a few hundred Spanish families landed on Barataria, an island in the Atlantic, after their ships had sunk. The Spanish government believed they had drowned, so no one searched for them, and they became an isolated community. They worked together to build houses, shared their harvests, and had meetings in which they decided about the affairs that concerned everyone. It was democracy and communism. After ten years, the teacher, Diego Martinez, called everyone into a meeting. He noted that working together and sharing had helped them build their community, but the islanders had become lazy. They came late to work, took long breaks, and left early. They spent their time at meetings discussing what to do, but much work remained undone.

‘If someone has a good idea, he must propose it in a meeting to people who don’t understand it. We discuss it but usually we don’t agree or we don’t do what we agree upon. And so, nothing gets done and we remain poor. We could do better if we have the right to the fruits of our labour and take responsibility for our actions,’ Martinez said, ‘The strawberry beds suffered damage because no one had covered them against night frost.’ He mentioned several other examples. Martinez said, ‘If the strawberries are yours, you protect them. And if you have a promising plan you think is worthwhile and you can keep the earnings, you do it yourself and hire people to help you.’

He proposed splitting the land into parcels and renting them to the highest bidder to finance public expenses. Fertile lands would fetch a higher price than barren ones, giving everyone an equal opportunity to make a living. He also proposed introducing ownership so the islanders would feel responsible for their property. But with property, you need a medium of exchange or money. The islanders decided to use potatoes as money. Everyone needed potatoes. They had value, so they were good money.

Potatoes are bulky, thus difficult to carry, and they also rot. At the next meeting, Santiago Barabino proposed setting up a storehouse for potatoes and issuing paper money, which could be exchanged for potatoes when needed. So, you had banknotes of 1, 2, 5 and 10 pounds of potatoes. The Baratarians agreed. The notes had a date of issue and gradually lost their value to cover the storage cost and rot. If you returned the banknote to the potato storage after a year, you received 10% less. And because the issue date was on the banknote, buyers and sellers knew its value.

For several years, Barataria had banknotes representing stored potatoes. Their value declined over time to pay for the storage and the rot. Borrowers didn’t pay interest. If you had savings, you would lend them to trustworthy villagers if they agreed to return notes representing the same weight. The notes lost value, making everyone spend their money quickly and store items and food in their storehouses. The general level of opulence rose, but there were no poor or rich people. There were no merchants buying things at a low price to sell them at a high price. Businesses didn’t pay interest, and there were no merchants, so things were cheap in Barataria. The chronicle notes that the islanders acted as good Christians and helped each other.

Then Carlos Marquez had a new idea. He addressed Baratarians, ‘How many losses do housewives suffer from keeping food in their storehouses? We shouldn’t put our savings in perishable products, but money with stable value. We can back our money with something we don’t need and doesn’t deteriorate. The Pinus Moneta is a nut we can’t eat, and doesn’t rot,’ he said, ‘We don’t have to back money with a commodity of value like potatoes. The things we buy and sell give the money its value. If we do that, we can buy things when we need them and don’t have to store them ourselves.’

What a great convenience that would be. It seemed too good to be true. Diego Martinez argued against the proposal. He told his fellow islanders that a medium of exchange passes hands. It remains in circulation. But savings stay where they are unless those who are short of money borrow them and pay interest. You end up paying interest to use the currency you need to buy the things you need. His argument was to no avail. And that is the price of democracy. People often decide about questions they don’t understand.

Most islanders preferred to spend their time getting drunk in the pub instead of studying the issues of government. And if you are doing well, you can’t imagine that seemingly insignificant errors can ruin you. Marquez spoke passionately, while Martinez warned cautiously, saying things were fine as they were and he couldn’t foresee the consequences. That swayed opinions. The islanders switched to money backed by the Pinus Moneta. This money didn’t lose its value. That made it attractive to save money.

Suddenly, everyone tried to exchange their supplies for the Pinus Moneta, causing mayhem in the marketplace. Everyone brought everything they had to the market. But no one could sell their goods because everyone wanted money. That was until the company Barabino & Co came up with a plan. Barabino & Co. set up a bank with accounts that Baratarians could use for saving and making payments. Everyone could bring their money to the bank and receive an extra 10% after a year. The naive Baratarians agreed. They could have known there weren’t enough nuts of the Pinus Moneta to pay the interest. And they didn’t ask themselves how Barabino & Co. would generate the profits to pay that interest. With this borrowed money, Barabino & Co. bought goods from the islanders and deposited money into their accounts, but Barabino & Co. only purchased food and seeds.

The following spring, Barabino & Co. hiked food and seed prices. Most islanders paid more for food and seeds than they received in interest. They went into debt with Barabino & Co. With the profit, Barabino & Co. bought the next harvest and cranked up food prices even further. Soon, Barabino & Co. owned everything. Most were in debt and worked hard, but a few wealthy people lived off interest income. They didn’t work and lived a life of luxury on the interest on their accounts. The Baratarians needed money to pay for the items they bought from Barabino & Co. They had to borrow this money from Barabino & Co. and pay interest to use it. There weren’t enough nuts to pay back all loans with interest, so the islanders went further into debt year after year. They paid interest on money the bank created out of thin air, giving it to the wealthy. That is usury.

The Baratarians worked harder and grew more creative in earning money. The islanders invented, produced and sold more products, most notably wooden items made from the trees on the island. Not everyone could keep up, and more people lived in the fields. At least, the economy grew, and the Baratarians grew accustomed to luxuries they hadn’t had before. They had wooden chairs, boxes, ornaments, toys, outhouses, carts and tables. The islanders had managed without these items before, but now, they believed they needed them.

The change came with other unfavourable consequences. The Baratarians became agitated, deceitful, and immoral. Crime rose as everyone desired the luxuries that the rich enjoyed, and for which they didn’t have to work. Of their Christian faith, not much remained except an empty shell. They were busy making money. Then came the day the Baratarians had cut down all the trees on the island. They suddenly lacked the wood needed to make the tools for harvesting their crops, and they starved. That was the day the Pinus Moneta lost its value. After all, you can’t eat money.

Adam Smith and the Wealth of Nations

The tale tells how devious acts contributed to an outcome most of us now deem desirable. By selling our souls to the money god, most of us have a better life than people in the Middle Ages. That improvement came with wars, colonialism, the slave trade, pollution, and miserable working conditions, and ultimately, it could bring the end of human civilisation. With the help of saving and investing, capitalists build their capital. Capitalism is about making sacrifices in the present by saving to have a better future via investing. It also led to a mindless process called competition via innovation and economies of scale. Economists call it creative destruction.

In the original tale, the wood didn’t run out, but the British rediscovered the island to find a class society much like theirs. The story tells how devious acts contributed to an outcome most of us now deem desirable. By subjecting ourselves to this system of trade and usury, most of us live a more agreeable life than people in the Middle Ages. It came with wars, colonialism, the slave trade, pollution, miserable working conditions, the destruction of communities and societies, and, eventually, the end of human civilisation. With the help of saving and investing, capitalists build their capital. Capitalism involves making sacrifices in the present by saving to have more in the future via investing. You can always do better. It promoted competition via innovation and economies of scale. But there is no ultimate goal, a vision of Paradise, only creative destruction without end.

The Baratarians were in debt, worked hard and were creative. Those who couldn’t keep up became homeless. As there was never enough money to pay back the principal with interest, the Baratarians went deeper into debt, worked even harder and became more creative by inventing and selling new products, producing an economic boom that ended in starvation once the trees were gone. It looks like the problem we face. The Earth’s resources are finite, and interest accumulates to infinity. Our money becomes worthless once there is nothing left to buy or sell.

Adam Smith, the founder of modern capitalist thought, claimed that pursuing our private interests promotes the public good. A baker doesn’t bake bread to serve the community but to make a living. It is why we have something to eat. The baker doesn’t want to lose customers, so he bakes what they desire. Otherwise, they go to his competitor. Smith believed it would work out well as humans are moral creatures. We temper our behaviour as it affects others. Therefore, moral relativists could argue that we don’t need public interest. The private interest will do just fine. But it is not how markets operate. We may have ethical values, but markets never have them. The least scrupulous usually wins the competition, so the greater evil usually wins in the markets. We have found that out and now want governments to oversee the markets.

Factory owners didn’t consider the plight of the artisans they put out of business or the miserable working conditions of their workers. They would have gone out of business if they had done so. Moral considerations don’t drive business decisions, so psychopaths end up in high places in corporate management.² These psychopaths in business provide us with harmful products like cigarettes, prostitution, gambling casinos, and semi-automatic rifles. They expand their market by advertising their wares. A merchant will say, ‘If I don’t supply the market, someone else will, so why not profit from death and destruction myself?’ The merchant then claims liberty is the highest value, and restricting markets equals oppression, thus the ultimate evil. Why not let everyone buy cocaine and semi-automatic rifles? It increases GDP. These are the morals of the merchant we now live by.

Without self-interest and trade, we would be poorer, and poverty was Smith’s primary concern. Increasing production was the way out. Self-interest and trade were the tools to achieve that. It succeeded marvellously. Since the Industrial Revolution, production increases have lifted billions of people out of poverty. Adam Smith argued:

The division of labour drives production increases. If you specialise in a trade, you can do a better job or produce more at a lower cost.
A market’s size limits the division of labour. Transport costs limit market sizes. Energy cost drives the volume and distance of trade.
Merchants preferred precious metals as money. It enabled them to store their gains, allowing them to wait for opportunities to make financial profits.

Producers produce items at different times, in different locations, and in different quantities than consumers need. That is why we trade. Traders bridge those gaps by storing, transporting, and dividing goods. Trade promotes large-scale production and labour efficiency, so fewer people provide for our necessities. That allows for more fanciful products and services and industries, thus a higher standard of living.

The evil empire of trade and usury

Economic and financial power translates into military power. The Europeans didn’t finance their conquests with taxes but with the profits from their colonial enterprises. No one likes to pay taxes, but everyone loves a profit. The scheme thus became an unprecedented success. Venture capitalists paid for the first ships, hoping to find new trade routes and riches. And they found them. The Europeans reinvested their profits, so their capital grew, and their financial and military strength increased.

After the bourgeoisie had taken control of the British government during the Glorious Revolution, the British state became a venture of the propertied class, like the Dutch Republic already was. The Dutch Republic, run by merchants, was the most successful and wealthiest nation at the time. The British imported knowledge of Dutch governance by appointing a Dutch governor as their king. In the following centuries, Great Britain became the world’s largest empire.

The British bourgeoisie benefited from a functioning state and was willing to pay for it. The storyline is that taxation became legitimate as it had the consent of the taxed. The British bourgeoisie didn’t like to pay for corruption or ineptitude, so the state’s performance improved.³ With its secured and enlarged tax base, the clamp down on corruption and ineptitude, the invention of modern banking, including a central bank, trust in British financial markets improved, and Great Britain could borrow more at lower interest rates.

It helped Great Britain to defeat France, a country with twice as much wealth and twice as large a population. In France, the wealthy didn’t pay taxes, and the government was always short of funding. France defaulted on its debts several times. The French government was inept and corrupt, which made lenders unwilling to lend to it. The British economic successes, thus having a large market, low interest rates, and high wages, helped to ignite the Industrial Revolution.

During the Napoleonic age, several European countries modernised their governments into modern bureaucracies, with career paths based on qualifications and merit. The British later also modernised their administration, aligning it more with the rational principles of government that other European countries had adopted after the French Revolution.⁴ The benefits of the division of labour imply it is better to let bureaucrats run bureaucracies and businesspeople run businesses. You don’t let government bureaucrats run a business, nor do you allow your businesspeople to run the government.

The United States followed a different path. When the Founding Fathers set up their new state based on the modern principles of their time, they were ahead of Europe. They introduced regular elections for the president and parliament and a separation of powers between the administration, parliament and the judiciary, thus creating checks and balances to prevent dictatorship or mob rule. The US also became the first democracy. All free men had received the right to vote by 1820.⁴ Several European countries later followed suit.

The US administration, however, didn’t become a modern professional bureaucracy at first, and the US government remained plagued by corruption, cronyism, and the presence of unqualified individuals. Politicians gave their supporters government offices when they won the election.⁴ In 1881, a disgruntled man who had campaigned for US President Garfield and sought a diplomatic job as compensation shot the president. Appointing people for political reasons had become unthinkable in most of Western Europe. Modernisation efforts in the US began in the 1880s, took decades, and never fully succeeded. Political appointments are now making a comeback.

The founding fathers had set up the United States as an oligarchic republic run by the propertied classes, similar to Great Britain and the Dutch Republic. Rather than leaning on a clean government like the British elites, the American elites learned to employ corruption, for instance, via campaign financing, bribing judges, and funding think tanks that advise the US government. After World War II, the United States emerged as a superpower, and the gold-backed US dollar became the currency used in international trade. To finance its military, the US began to run deficits in the 1960s and ended the exchangeability of the US dollar for gold in 1971. The US dollar then became the de facto reserve currency, most notably because oil-exporting countries continued to accept the US dollar.

The US dollar’s reserve status allowed the US elites to employ the productive capacity of the rest of the world for their empire. Foreign countries delivered goods and labour in exchange for US dollars, which the United States printed out of thin air. The US financial elites in institutions like the World Bank and the IMF pushed developing countries into US dollar debts, which made them depend on exports to serve the US empire. As a result, the domestic economy of the United States began to suffer from the Dutch disease. The Dutch natural gas exports created a demand for the guilder, which drove up the Dutch currency and made Dutch industries uncompetitive in the 1970s.

The Dutch remedied the issue in the 1980s by making a collective national agreement between the government, employers, and unions to keep wage increases below those of its competitors for several years. Demand for the US dollar, however, increased, not because of exports, but because of foreign nations being dependent on it, pushing up its value and eroding the competitiveness of American manufacturing. And the US didn’t need to correct that issue, because of the US dollar’s reserve status.
The US dollar has become an international store of value, and so has US government debt. There was even pressure to go into debt, to satisfy the global demand for US dollars. As a result, deficits have escalated further, and the American economy depends on controlling the world’s financial markets. The American empire is now the Evil Empire of Trade and Usury, the Babylon of our time. However, the end of an empire doesn’t always turn things for the better.

Latest revision: 7 August 2025

Featured image: cover of The Miracle Island Barataria

1. Het wondereiland Barataria. Silvio Gesell (1922).
2. 1 in 5 business leaders may have psychopathic tendencies—here’s why, according to a psychology professor. Tomas Chamorro-Premuzic (2019). CNBC.
3. The Origins of Political Order: From Prehuman Times to the French Revolution. Francis Fukuyama (2011).
4. Political Order And Political Decay. Francis Fukuyama (2015).

Learning Opportunities

6 Jan 20246 Apr 2026 nivtricLeave a comment

In 2005, my employer embarked upon an ambitious systems renewal project. The IT director aimed to make a mark by replacing our existing IT systems with a brand new solution. As the story goes, the IT director had visited Oracle headquarters near San Francisco. He could get a steep discount on the Oracle ERP solution. I wasn’t a firsthand witness, but several colleagues gave similar accounts. And so, it could be the truth. ERP can administer an entire business. It is a total-for-everything solution, but only if you model your business the way ERP prescribes. In other words, every department must change how it conducts its affairs. It is like a straitjacket. That makes ERP awkward to use.

It wasn’t a good idea to purchase an enterprise solution without first considering whether you need it. But instead of the IT director admitting he had bought the ERP on a whim and writing off the license fee, which would have been a minor loss of a few hundred thousand euros, perhaps, he sought to justify the purchase. Possibly, the IT director wanted to save face, but you wouldn’t expect that kind of vanity from a religious person like him. Business consultants came to assess the quality of our IT systems and to write a report proposing a solution. Unsurprisingly, the report stated that our systems were obsolete and that we should switch to Oracle ERP to save lots of money. And now I spill some beans. These outdated systems were still doing fine fifteen years later.

A strategic information planning phase preceded the project. Cap Gemini business consultants organised brown paper sessions where employees could help identify the business requirements. It was different from what I had learned as a student. I had a good grade, but as a student, I was naive and believed good grades mattered. We had to list our components by writing them on brown paper and sticking them to the wall. The consultants would then call them ‘services’. I wrote the word database on brown paper and stuck it to the wall, and the Cap Gemini business consultant concluded that we needed a database service. That didn’t seem like a proper strategic business analysis to me. Anyone could paste the word ‘service’ after a component’s name. It dawned upon me that it might not end well. Cap Gemini charged over €150 per hour for its consultants, who dressed in suits, leading managers to believe it possessed expertise in strategic information planning.

There were political troubles early on. A Cap Gemini project leader left because she didn’t share the IT director’s vision. He surrounded himself with yes-men. And you can’t have competent people standing in the way. In the Information Planning course at the university, we learned that you must first define the business requirements and then select a solution based on these requirements. It can save you a lot of trouble. The business consultants did the opposite, trying to justify a choice already made. Over time, it grew into an all-encompassing megalomanic plan. Most departments didn’t want the IT department dictating their operations. And so, the consultants planned to supplement the Oracle ERP with several special-purpose modules. Making special-purpose software would render ERP pointless, as the whole point of using ERP was to avoid building such software.

We didn’t dive into the deep end without first testing the waters, so we initiated a pilot project to develop a basic ERP-based system. It was a brand-new system for administering Plukze, a law that allowed the government to confiscate criminals’ assets. Plukze was a straightforward bookkeeping system, and ERP can keep books well, so the pilot succeeded. It was like sending a rocket into the sky and then, after a successful test, deciding to put a man on the Moon. That is an entirely different ballgame.

They trained me to become an ERP system administrator, and then I started as a junior under the guidance of an experienced administrator who was a temporary hire from a software consultancy firm. Once, I made a mistake by putting a database index on maintenance while the ERP system was running. The ERP proved more sensitive to regular database maintenance than the Designer/2000 systems, so it began to malfunction. I mentioned my index maintenance as a likely cause. We restarted the system, which resolved the issue. I remarked that I hadn’t anticipated the problem as regular systems could handle such an operation, which implied criticism of the new system. For all kinds of ordinary operations, the ERP had lengthy instruction sets that you could find on the Oracle support website.

You couldn’t do maintenance work while the system was operational, not even simple, unintrusive things that other systems could deal with. The situation is comparable to Windows failing after moving a file to another directory, and the solution is to restart the computer. You wouldn’t expect it. I had yet to learn that. Yet the ERP was the IT director’s pet project, and it hung in the balance, so everyone was on edge. The project leader, likely fearing for his career, complained about me to higher management, labelling me unfit. I had been open about my mistakes and views, but that is quite problematic in a politically charged environment. They took me off the project. Fear was in the air. A circulating story was that the IT director had once threatened a manager in the lift who had openly disagreed with him during a meeting.

After the pilot proved a success, the enterprise systems renewal project took off. Once it had started, Oracle began to determine its direction. Oracle consultants soon found that we needed additional solutions from Oracle and, of course, the latest technology. Some of these technologies were still in the marketing phase and had not yet proven to work. Our decision-makers, the architects and managers, agreed. So when the special-purpose software proved cumbersome and inadequate, they tried new ideas, such as using BPEL, a business process model language, on top of ERP. This way, the business model could be tailor-made while still using ERP, or so they promised.

No one had done that before, for good reasons, as it turned out. Captain Kirk might have ventured there, but more cautious captains who cared for their crew and ship wouldn’t have. The consultants were there to make money for their employers by making the customers happy, so they tried the idea. Those who were critical would undoubtedly be first in line for a Professional Skills course. Despite working in information technology, I was never keen on using new technologies. Do not use them more than necessary. And so, I had no smartphone until 2020, and I only got one because my employer gave me one to log in to systems from home during the coronavirus pandemic lockdowns. By then, functioning in society without one had become practically impossible.

The project’s pointlessness began to demoralise me. Goals were constantly changing as ideas were always failing. IT employees became stretched to their limits for years in a row. Software releases that took one person and a few minutes with Designer/2000 took hours or even days, and required a dozen specialists working according to a script of up to fifty steps. Working late or on weekends became a regular occurrence, including ordering pizza, Chinese food, or other food, since you can’t bring the system down for so long during office hours. The database administrators bore the brunt of the pressure as the job role expanded to everything related to Oracle. Everything we did was Oracle, so database administration became the focal point for all the advanced stuff. And that began to take its toll, and I started to suffer from stress and repetitive strain injury.

My colleague Kees, the tech genius, was kind and always helpful. You could call him at home anytime, and he would help you. One evening, a year before the system renewal project had started, it seemed that I had messed up a database during a maintenance operation. I called him at home. He came over and helped me check it. But Kees was too helpful. He enthusiastically jumped on every crazy plan our management came up with. He was an innovator and loved new technologies. That made him the darling of management. I lagged behind Kees, but the other database administrators couldn’t keep up at all. It was like having a Trojan horse in our department as the project pushed more and more unmanageable technology into it. Kees didn’t look after the department’s interests but the project’s. The things he invented and built had to be kept up and running by the others. Kees didn’t take many notes, but was always willing to help us. Indeed, the entire system’s renewal project might have collapsed had Kees gone missing.

Our managers had no clue what they were doing and believed that more advanced technology like Oracle RAC clusters would fix things, but that only aggravated our troubles. RAC was pointless, required additional knowledge, and was still prone to failures, even though much less than previously, as the technology had matured and the new systems were on Unix. And so, I would sometimes sarcastically note, ‘The most reliable RAC cluster is one with one machine.’ That was the same as not having RAC at all. Pesky problems piled up on my desk. I constantly had to learn new skills. Project leaders pressured me to work on plans that were bound to fail. That couldn’t go on. I wanted to help people, but it was better not to fix other people’s problems or work on ideas that would fail. People were creating problems at a much faster pace than I could fix them. There was too much work, and most of it was pointless.

The escalating stress compelled me to make radical changes, focusing on the most critical issues while avoiding those that were pointless or doomed to fail. Whenever multiple project leaders pressured me, I referred them to my manager, saying, ‘He should set the priorities.’ Whenever a colleague tried to bequeath his pesky problem to me, I explained how he could fix it himself. ‘It begins with using Google,’ I said repeatedly. At the time, not everyone used search engines. Many still relied on their knowledge, manuals, and support from Oracle. Google has helped me solve more issues faster. Often, someone else has had the same problem and posted the solution on the Internet. But if you solve more problems, you get even more. It was a learning opportunity. If you solve other people’s problems, they stop thinking for themselves. I had to stop doing that.

As things spiralled out of control, our management decided we needed more qualified database administrators. Our salaries were too low to attract the right people, so they gave the new hires and Kees a higher salary grade while leaving me out. They also increased the number of temporary positions. The headcount went from four to fourteen database administrators. And still, we couldn’t handle the workload. Kees was a brilliant technician, and despite that, or perhaps partly because of that, things went downhill.

Kees was quicker on the job than I was, except for one notable occasion when a system administrator had wiped out a disk containing several crucial databases. It caused a crisis, prompting all the database administrators to scramble and restore the data, bringing the systems back online. I was the first to develop a working procedure for restoring databases and getting them back online, which the others then used. It doesn’t seem a mere coincidence. It was the third major crisis that the database administrators had to fix.

Temporary hires came and went. One of them was Ronald Oorlog. His last name means war, and he was ill when the World Peace temporary tattoo from the candy vending machine ended up in my hands. Rene H was the one who often joked about a master copy of the ERP system containing the settings, quoting a line from The Lord of the Rings, ‘Master precious… master precious…’ Another, Chris, told me he had met Jesus in his effort to evangelise me. He said it as if he had encountered Jesus in person. In hindsight, it was a noteworthy coincidence.

Yet another colleague, database administrator Raoul, had roots in the former Dutch colony, Suriname. He once made a surprisingly frank statement. He worked for his uncle, he told me, who also came from Suriname. Apart from him, his uncle only hired Dutch people. ‘That is because the Dutch are more reliable,’ he added, ‘They do the job as agreed. You don’t have to check on them.’ That probably was true. Otherwise, he wouldn’t have said it. Surinamese don’t take life as seriously as the Dutch. The Dutch might call the Surinamese relaxed or even lazy, as many of them seem to think you can do what you failed to do today tomorrow. Don’t read this as only criticism. Doing nothing is better than doing something stupid, which we were busy doing at the time.

The year 2008 neared its end, and things took an unexpected turn. God seemed to have a message for me. Long-lasting stress can cause psychosis, so here is the probable cause. My perspective on what mattered changed profoundly. The job became a sideshow, and most of what we did at work was pointless. It was time to set the right priorities, cut my working hours and work on the project I gradually came to name ‘The Plan For the Future.’ Despite that, my performance at the job remained acceptable. We had so many database administrators that database administration became a separate department, headed by a manager who knew the job because he had previously been a database administrator.

This manager held me in high regard because I tried to manage the workload by focusing on what mattered and halting foolish plans. In 2011, he called me an example for all the others in front of everyone. He shared my view that Kees acted like a Trojan horse, causing trouble for the database administration department. Even fourteen database administrators couldn’t handle the workload, indicating that something was seriously wrong. Still, Kees was only a facilitator, not the culprit, because it was the IT director’s pet project, and our systems architects let Oracle drive the agenda. The focus was on new technologies rather than building a functional system. Everyone else went along with it, so sometimes it felt like being the only rational person in an insane environment.

After several years and over 100 million euros spent, the new system finally went into operation. That brand-new system, which had cost so much effort, accepted only incoming messages and acknowledged their receipt. Over a hundred people had worked on it for years. An experienced programmer might build a programme capable of doing only that in one day. It was a bloated set of software and machines with the latest technology, including RAC databases, but it was capable of nothing. The IT director had organised a party in which he proudly announced that we finally had a system made ‘under architecture.’ By phrasing it that way, he made it seem as if architecture was the project’s main objective. It made me think that our architects were incompetent. Those I saw in meetings didn’t dispel that impression, as they spoke vaguely and made simple things seem complicated. It would take me years to nuance that prejudice.

Again, as the story goes, our board then made a politically brilliant move by selling the project to the government in The Hague as a success, arguing that after spending more than 100 million euros, they needed a few million more to fix a few remaining issues. It worked. Appearance can go a long way to hide the facts. The board used that money to hire a software company to rebuild everything in Java. From then on, the ERP handled only financial administration, but they succeeded in making it appear that the new Java software was just an add-on to the ERP. There was so much lipstick that you couldn’t see the pig anymore. The budget was tight, with little money for testing and fixing bugs.

Unsurprisingly, the new Java systems crashed nearly every day, and the problem lists grew so long that no one could keep track of them. The Java systems consumed massive resources and generated large volumes of data, including millions of messages that no one dared to discard. Perhaps you could use them to find out what went wrong. And so much went wrong. These systems were dreadful, not only for us but also for those who used them. They split the database administration department into Oracle Designer 2000 (Boring Old Stuff), the ERP and Java systems (Enterprise Architecture), and the problem-generating department (New Developments), where the cool, advanced stuff happened. We had a say and could give our preferences. I didn’t want to work on the problem systems of Enterprise Architecture, but ended up in that horror show with Sico, since no one else wanted to. So much for having a say in matters. Sico was our ERP specialist, and I had some ERP knowledge, so my fate was sealed.

Over the years, I had grown cynical about everything our board and management were doing. During the crisis and the strategic information planning phase, they had proven to be a bunch of clueless clowns. The systems renewal project confirmed that impression. Only one project succeeded in those years, building an old-fashioned Designer/2000 system. Had we made the other systems using Designer/2000 or its successor, APEX, from the start, it might have cost less than 5% and succeeded. But then again, that was old technology without a future. We switched to Java, which seemed a good choice. My problem was that I looked too far ahead. With Java, you could do much more than with Oracle Designer or APEX, allowing the systems to grow more complex, which would eventually bring us down, or so I surmised. Fifteen years later, that premonition is gradually materialising.

The new Java systems used a hundred times as much memory and disk space as the Designer/2000 systems for doing the same job. That was an understatement. Making a fair comparison was difficult. The outcome of my calculation was 3,000 to 16,000 times as much. However, the new systems initially processed low transaction volumes and would scale up over time. Our architects didn’t see resource consumption as an issue. The price of memory and disks went down over time. Cheap resources make us wasteful. We can do without over 99.99% of the data we store. Imagine that sending an email costs €0.10 per recipient. That would eliminate all wasteful email and spam. And over 99% of the emails I receive, either at work or at home, are not worth reading.

Unsurprisingly, the data storage became overburdened. We were too far ahead of our time. The IT director then fired the manager responsible for data storage, citing that corporations like Google and Facebook can scale up quickly. Only, we weren’t Google, but an insignificant government agency with a few hundred IT employees. I was on leave when it happened, learned about it the following Monday, and thought, ‘The IT director is responsible for the mess. He is the one who should be fired.’ A few hours later, a soccer club, VVV from Venlo, fired its trainer, who had the same first and last name as our IT director.¹ Now that is a remarkable coincidence.

The failed systems renewal project became a learning experience. The government in The Hague had smelled the rat and had sent someone to oversee the CJIB and reorganise it. The IT director had to go. Geert replaced him. He was the manager who had promised to restore my confidence in my employer, but left me out for the promotion that the other senior database administrators received. Geert didn’t have a bureaucratic mindset. Rather than depending on procedures, he gave us responsibility and confidence.

We began working in smaller teams, handling a few systems owned by a single department. As a side benefit, there was less hassling between business units competing for resources. And we began working in smaller steps. That makes software development manageable. This way of working is agile. The symbol of agile is a snail. You know, as agile as a snail. Just kidding. Twenty years earlier, the insurer FBTO had already organised its IT department in a similar fashion, which worked well.

The IT department got its act together under Geert’s leadership. Most other government offices have yet to catch up. Red tape still makes our work harder than it needs to be, but rules aren’t an excuse for evading your responsibilities anymore. This story comes with a few learning opportunities. First, if your vision is wrong, hard work can’t make up for it. Second, you can’t change everything at once. It is better to work step by step. Third, things hardly ever go according to plan. You must make adjustments on the way. Fourth, giving people responsibilities with confidence helps to get the best outcomes. We all make mistakes, and if we can be open about them, we can learn from them. Only those who keep making them are unsuitable for their job.

Latest revision: 6 April 2026

Featured image: Grapevine snail. Jürgen Schoner (2005). Wikimedia Commons. Public Domain.

1. VVV-Venlo ontslaat trainer Van Dijk. Nu.nl (20-12-2010). [link]

Satan and Judgement Day

14 Dec 202310 Feb 2026 nivtricLeave a comment

Satan has always been God’s trustworthy servant. Some experts on the matter say he began his career as a serpent in Eden and later took charge of the furnaces that burn the evildoers for eternity. Others disagree and claim he is a fallen angel named Lucifer who didn’t do any grovelling in Eden. His task was to make God look good. We like to believe God cares for us, but prayers often remain unanswered while bad things transpire, such as misfortune and unpleasant neighbours. How can an almighty, good God allow this to happen? The obvious answer is that there is no god, or God doesn’t care. That is not what we like to hear. Once the Israelites had done away with Baal, Astarte and the others and switched to monotheism, they had to address this uncomfortable issue.

Suddenly, they had no one to blame for their misfortune except themselves. How could that happen? After all, the Israelites were God’s chosen people. Did they do something wrong? So, if things went wrong, it was time to repent, prophets like Isaiah and Jeremiah claimed. There usually was some idolatry or depravity occurring in their midst. That must have made God angry, the prophets proposed. But even when the Israelites prayed relentlessly, lived according to the Ten Commandments, and did all the prescribed rituals and offerings, things often didn’t improve. Why? It was a tricky question.

The Israelites dedicated an entire book, the Book of Job, to the issue, dubbed the problem of evil. Job was a particularly pious and virtuous man who was doing well. But on a fateful day, Satan challenged God by claiming that Job’s devoutness was due to his prosperity. His belief was insincere, Satan argued. God could not allow the mere possibility of insincerity and agreed to test Job and let Satan ruin Job. Even after the loss of his possessions, his children, and finally, his health, Job still refused to curse God. Job did everything God could expect of a faithful servant and more, or so it seemed.

Job’s friends tried to comfort him and figure out why he was suffering and what he could do about it. They suggested Job might have done something wrong. But Job proclaimed his innocence and complained about his fate. In the end, God showed up, telling him to shut up. His sin was hubris because he thought he didn’t deserve to suffer. Everything happens for a reason. It wasn’t entirely satisfactory, so Satan’s role gradually enlarged over time, and he came to do the dirty work so God’s hands remained clean. Still, in the Bible, God killed millions, while Satan only murdered a dozen. And nothing ever happens without God willing it, so God is responsible for Satan’s mischief also. The problem of evil remains unresolved and continues to boggle many minds today. How can a good God let evil happen or even do evil? That we are mere amusement was something few could think of, let alone accept.

The Quran says Satan is a fallen angel named Lucifer (Iblis) who, unlike the other angels, refused to bow to Adam. It alludes to Isaiah, where the morning star fell from heaven (Isaiah 14:12-14). Isaiah probably referred to a Babylonian king, but Luke says that Jesus saw Satan falling from heaven (Luke 10:8). A scribe probably noticed the similar phrasing and had his eureka moment. He could explain how Satan popped up and couldn’t resist sharing his findings with the other scribes, so it became the Christian interpretation of Isaiah’s words, which Islam took over. Also, Satan’s unwillingness to bow to Adam comes from an obscure Christian source. The Quran notes, ‘The angels prostrated themselves, all together. Except for Satan. He refused to be among those who prostrated themselves.’ (Quran 15:30-31) Then follows a conversation between God and Satan (Quran 15:32-42),

God said, ‘O Satan, what kept you from being among those who prostrated themselves?’

Satan said, ‘I am not about to prostrate myself before a human being, whom You created from clay, from moulded mud.’

God said, ‘Then get out of here, for you are an outcast. And the curse will be upon you until the Day of Judgment.’

Satan said, ‘My Lord, reprieve me until the Day they are resurrected.’

God said, ‘You are of those reprieved until the Day of the time appointed.’

Satan said, ‘My Lord, since You have lured me away, I will glamorise for them on earth, and I will lure them all away except for Your sincere servants among them.’

God said, ‘This is a right way with Me. Over My servants you have no authority, except for the sinners who follow you. And Hell is the meeting-place for them all.’

Like in the Book of Job, God and Satan appear to be on speaking terms, or even better, work together on a grand scheme and discuss what to do. Many Jews see Satan as an agent of God who tempts us into sinning so that he may accuse us in the heavenly court. That is also what the Quran says. A Christian might ask why the angels should have prostrated themselves before Adam. Jesus was the second Adam, so God made Jesus, the firstborn of the world, superior to the angels and made the angels worship Him (Hebrews 1:1-7). Satan is an imaginary character like Spike or Suzy. Satan is not the only red herring. The End Times are another. Suppose there will come an End Times. What can we know about it? So, what is the worth of the prophecies in the Bible and the Quran?

The book ‘The Virtual Universe’ addresses the consequences of predestination. A prophecy is like a premonition. Why can fortune-tellers sometimes make accurate predictions? And why are their predictions unreliable at the same time? The answer is that the scriptwriter knows the future, but we don’t. And so, the script can make predictions come true to the point that we notice that something is off, while the proof of foreknowledge remains elusive. Furthermore, and that is a warning, a God who wrote the script is far more powerful than one who can merely send plagues and smite us for being ungrateful or disobedient or for any other frivolous reason. It is indeed next level.

We can’t know the future because our knowing will alter it. If I know I will have a car accident tomorrow, I will stay home, and the accident will not happen. If I am to have that accident, then I shouldn’t know. I may pass a sign saying, ‘You will have a car accident tomorrow’ and laugh about it, and the next day, I will find out it was a sign. As long as I don’t believe it is a sign, it can be precise.

And so, the prophecies of the ancient Greek oracles only made sense in hindsight. In 1914, no one could have guessed that the licence plate number on Franz Ferdinand’s car, in which he was assassinated, referred to the end date of the upcoming world war triggered by that same assassination. The prophecy in Revelation can’t be accurate because too many people take it too seriously. If many people expect the End Times, they can’t know the specifics about that event. And no one knows the hour, not even Jesus knew. The specifics mentioned in the Bible may turn out to be correct in unsuspected ways, such as the prophecies of the Greek oracles. But we will only know in hindsight.

Latest revision: 10 February 2026

Featured image: Photo of a sign in Hell, Norway, taken by Matthew Mayer in 2001, released under GFDL. ‘Gods’ means cargo or freight in Norwegian, while the old spelling of ‘expedition’ has since become ‘ekspedisjon’. God’s Expedition, however, is a popular reading with English-speaking tourists.

The Plan For The Future

There is a plan