Tag: economy

The Great Reset

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During the coronavirus pandemic, the World Economic Forum (WEF) launched a plan, The Great Reset. It aims to rebuild the world economy more intelligently, fairer and sustainably while adhering to the United Nations Sustainable Development Goals (SDG). These SDGs include ending poverty, improving health and well-being, better education, equality, clean water and sanitation, affordable and clean energy, jobs and economic growth. That sounds great, but is it a reset? It would be up to so-called responsible corporations and international non-governmental organisations (NGOs) to implement the agenda before 2030. Not everyone thinks that is a great idea.

The change is supposed to be powered by the Fourth Industrial Revolution, a fusion of technologies in fields such as artificial intelligence, robotics, the Internet of Things, autonomous vehicles, 3-D printing, nanotechnology, biotechnology, materials science, energy storage and quantum computing. I get an uneasy feeling when I read that. It looks like an excuse for technology addicts to play with our future. Is it because I am against progress, or is it because of a rational fear that something is about to go seriously wrong even though I don’t know exactly what?

Under the umbrella of the Great Reset, so-called young global leaders of the WEF came up with new ideas. For instance, new technologies can make products like cars and houses cheaply available as a service, ending the need to own these items. A young global leader wrote an article titled, ‘Welcome to 2030. I own nothing, have no privacy, and life has never been better.’1 She hoped to start a discussion, and the article produced a slogan that also became an Internet meme, ‘You’ll own nothing, and you’ll be happy.’ There certainly is an economic rationale for sharing items like cars, most notably if they become more expensive to keep because of technological innovation.

Property, for instance, a home, can give you economic freedom. If you own a home, you don’t have to pay rent. And you own some capital when you retire. Some people think the WEF is a sinister elite club scheming to achieve a secret agenda where the elites own everything, and the rest of us ends up with nothing. And that might happen anyway if current trends continue because that is how capitalism works. Capital accumulates and ends up in the hands of a few because of interest. It is not a secret since Karl Marx figured that out. And it leads to a crisis when the impoverished masses can’t buy the things that capital produces. With negative interest rates, there is no need for that.

Property rights have become a semi-religious value in Western culture. That prevents us from taking the property of the elites and ending their stranglehold on our political economy. Marx advised that workers or the state would take over corporations. That might not be a good idea because workers and governments often do poorly at running corporations. Markets and private enterprises can efficiently provide goods and services, but it comes with wealth inequality and happens at the expense of future generations. Our societies must find the right balance. At some point, the disadvantages of the current political economy start to outweigh the advantages.

We use far more resources than the planet can provide, and wealth inequality is now so extreme that we might need a genuine Great Reset. Taking the wealth from the elites and discontinuing enterprises that don’t provide for our essentials is not communism, as long as there are markets and private property. People should prosper if their work benefits society and enterprises often do better at providing for our needs. But we don’t benefit from the corrupting influence of oligarchs. Their wealth comes from inheritance, criminal and shady activities, and, most notably, accumulated interest on their capital. That arrangement may have suited us in the past, but not now.

Economists believe property rights are essential for economic growth, and that business owners should be able to do as they please. For instance, Elon Musk has the right to ruin Twitter because he owns the company. Should employees and others suffer from the irrational behaviour of their owners? In the Netherlands, a series of interesting trials took place, where corporations tried to escape the influence of their majority shareholder Gerard Sanderink, who allegedly didn’t act rationally in the interest of these companies.2 Limited property rights and a collectivist attitude have not prevented China from becoming a large and advanced economy surpassing the United States and may have contributed to China’s success.

The degree of individualism currently existing in the West may do more harm than good. They promote political fights and litigation and prevent us from doing what we should do. And perhaps, less privacy can go a long way in reducing crime. Property rights and individualism were crucial to start capitalism and made the West dominate the world for centuries. And so, we have learned to see them as necessary, inevitable or even desirable. But once the European imperialist capitalist engine ran, these features became less important than economic stability. If you start a business, you must be able to estimate your returns, but you can lease everything and own nothing.

Individualism and property rights also play a positive role in society. The cultural heritage of the West is extensive compared to other cultures, for instance, if you express it in the number of books written or discoveries made. Self-interest and personal responsibility can inspire us to work harder and do a better job. The Soviet Union failed to produce enough food for its citizens while there was enough arable land. In the Soviet Union, farmers had to work on collective enterprises where they could not do as they saw fit and didn’t share in the profits. The tragedy of the commons is that we don’t care for public spaces as much as our possessions. Homeowners usually take better care of their houses than tenants. The same is true for car owners.

As they are now, property rights protect the elites. And the WEF plan is just a fart in the wind, not a Great Reset. We face unprecedented worldwide challenges while wealth inequality is at extreme levels, so individualism and property rights need limits. And we need a proper Great Reset, or a switch from economic to political control of the world’s resources if we intend to live in a humane world society that respects our planet. It is what a corporation named Patagonia did in 2022.3 We can do that on a global scale.

It begins with seizing the wealth of oligarchs and criminals and all hidden wealth in offshore tax havens, including their so-called charities, placing them in sovereign wealth funds, and setting a limit on what individuals can own or earn. And perhaps, we need to build our future on values rather than balance sheets. And everyone should contribute. Capital accumulates by interest, and people who live off interest don’t work for a living. That might be as bad as being on the dole while you can work. And peddling unnecessary products that harm life on Earth could be as bad as being a criminal.

Laws should prevent people and corporations from doing wrong, but they often fail to do that. Corporations pollute the environment or exploit employees to make a profit. But consumers desire excellence for rock-bottom prices. It is profitable to break the law if you can get away with it or when the gain is higher than the fine. And if there are loopholes, they become exploited. The anonymity provided by money, large corporations and markets turn us into uncaring calculating creatures. That is why big pharma, the military-industrial complex, the financial industry, and the Internet giants threaten us. If corporations do right out of their own, many laws and regulations become redundant. If moral values can replace the law, it could be better.

Less efficiency, poorer service and a smaller choice of products can be preferable if that doesn’t lead to deprivation and starvation. For instance, why must you get your meal from a takeaway restaurant instead of preparing it yourself? Or why do you need to dress up in the latest fashion if you have ample wearable clothing? And you must work to pay for these things, so if you don’t buy them, you have time to prepare your meal or mend your clothes. We don’t want to give up these things, so in a democracy, we can’t fix this problem. Perhaps we might accept the change if God sends a Messiah who tells us this is for the best.

That might be wishful thinking, but what else can make it happen if it is not religion? Do you believe we will come to our senses, become one humanity, and do right on our own? That is wishful thinking. God is our only hope. As we are heading for the Great Collapse in one way or another, the End Times could be now. We might live inside a simulation run by an advanced humanoid civilisation.4 Hence, God might own this world, and you might soon discover that you own nothing and be happy. God’s kingdom might be a utopian society as early Christians lived like communists (Acts 4:32-35).

So what can we achieve by taking political control of the world’s resources and means of production by seizing the elite’s wealth and placing it in sovereign wealth funds? You can think of the following:

  • We can direct our means to the goals of a humane society, be respectful of this planet, and plan long-term.
  • We can dismantle harmful corporations or give them a new purpose without starting an economic crisis with mass unemployment.
  • We can make corporations employ people in developing countries and give them an education and decent salaries.
  • We can fund essential government services in developing countries and eliminate corruption insofar as it is due to insufficient pay of government employees.
  • We can make corporations produce sustainably and pass on the cost to consumers.
  • We can determine the pay of executives.
  • We can halt developments like artificial intelligence, genetic engineering, and nuclear energy if we believe they are undesirable.
  • We can end the incentive to produce and consume more and stop the advertising industry from tracking us.
  • We can end stress in the workplace if we axe bullshit jobs and redirect workers to the needs of society. A twenty-hour working week might be enough.

Interest stands in the way of a better future. The economy ‘must’ grow to pay for the interest. We ‘must’ work harder in bullshit jobs to pay for the interest. Corporations ‘must’ sell harmful products to pay for the interest. Corporations ‘must’ pay low wages or move production to low-wage countries to pay for the interest. And because of interest, money disappears from where it is needed most and piles up where it is needed least. Interest is our tribute to the wealthy. If we hope to live in a humane world society that respects creation, ending interest might be imperative. That is where Natural Money comes in.

Latest revision: 28 April 2023

Featured image: You’ll own nothing and you’ll be happy. WEF.

1. Welcome To 2030: I Own Nothing, Have No Privacy And Life Has Never Been Better. Ida Auken. World Economic Forum (2016).
2. Zakenman Gerard Sanderink tierend in rechtszaal: ‘Deze rechtbank deugt voor geen meter!’ AD.nl (2023).
3. Patagonia’s Next Chapter: Earth is Now Our Only Shareholder. Patagonia (2022).
4. Are You Living In a Computer Simulation? Nick Bostrom. Philosophical Quarterly, 2003, Vol. 53, No. 211, pp. 243-255.

Earth from space

The sacredness of Creation

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Thus spoke Chief Seattle

In 1854, the native American Chief Seattle gave a speech when the United States government wanted to buy the land of his tribe. You can read it by clicking on the above link.

That was a great speech. Only, these were not Seattle’s exact words. Based on Seattle’s speech, a screenwriter wrote a text that became a religious creed within the environmentalist movement. I shortened it as it is quite lengthy. The message strikes at the heart of the matter. Nothing is sacred anymore. The pursuit of money destroys our planet and values. This version of Seattle’s speech aims to make Creation sacred. The white man may think he owns the land, but he does not. He may think he controls his destiny, but he does not. Whatever befalls Earth befalls the children of the Earth. We have no destiny, no dream we pursue. Things just happen, not because we intend them to happen, but because they are the outcome of a process over which we have no control.

Perhaps, you care for our planet, but what do you mean? If the last white rhino disappears, the Earth is still there. Most of us will survive the demise of the rainforests. Humans have finished off other species for thousands of years, so why stop now? Soon we might create new species using genetic engineering. And nature does not care. Predators kill prey all the time. So, why should we care? Mr Lind, a professor at the University of Texas, wrote an article, Why I Am Against Saving the Planet. He says, ‘Saving the planet has become the de facto religion of politicians, business elites, and intellectuals in the West, replacing Christianity’s earlier mission of saving individual souls.’1 He claims environmentalism is rooted in German 19th-century Romanticism, typified by a bias against society and civilisation and a pantheistic awe before an idealised Nature. In other words, environmentalists suffer from a religious desire for Eden.

In doing so, Mr Lind inadvertently tapped into another 19th-century German tradition, that of Friedrich Nietzsche. Nietzsche hoped to leave traditional morality behind, so he said, ‘God is dead.’ He meant to say that religions like Christianity were ruses to enslave us with a false sense of right and wrong under rules imposed by a priestly caste. Nietzsche favoured the values of the aristocracy of ancient civilisations, the values of the strong, to those of the enslaved masses, the values of the weak embodied in, for instance, Christianity and socialism. Slaves think in terms of good and evil rather than good and bad because they resent the ruling class. Nietzsche divided humanity into superhumans and slaves. He aimed to liberate us from our self-induced slavery and realise our potential. But what happens when eight billion people try to realise their potential and strive for wealth and power? We might all end up as free people in hell.

Mr Lind argues for doing away with false sentiments. He goes on, ‘There are costs to mitigating climate change as well as benefits, and rational people can prefer a richer but warmer world to a poorer but slightly less warm one. These individual policies benefit humanity, so there is no need to justify them on the basis of a romantic creed that defines the planet or the environment.’ That may appear nice and dandy from behind the desk of Mr Lind’s air-conditioned Texas room. If you live below sea level or in an area threatened by climate-change-related natural disasters, you might view things differently. Ten million Dutch live at or below sea level, and hundreds of millions more risk suffering climate-related disasters like floods, hurricanes and failed harvests. And Mr Lind is not planning to compensate them for that or invite them to stay in his mansion. And the rainforests and the animals and plants living in them might be better off if the likes of Mr Lind go extinct.

As our production and consumption increase, new problems emerge faster than we can solve existing ones with laws, technology, targets and other solutions. More technology, rules and controls do not solve these problems. In the 1990s, the environmentalist group Strohalm wrote a booklet named Towards a Philosophy of Connectedness.2 It lays out Strohalm’s vision for a sustainable and humane society. The principal founder of Strohalm is Henk van Arkel, a dedicated individual who remained its driving force for decades. Van Arkel is a moderate man who does not blame anyone in particular.

Everything is interconnected, so actions have consequences. We often do not know them and may not be affected ourselves. Wall Street traders who sold bad mortgages contributed to the financial crisis. Do you think there are no consequences if you dump plastic in a river or post hateful comments on a message board? Western thinking, reflected in the scientific method, deconstructs reality to analyse the parts. In doing so, it focuses on detail, and the whole can get lost. It makes us act irresponsibly. A few hateful comments don’t make someone take a semi-automatic rifle and shoot innocent people. But if we think like that, we remain locked in a cynical and uncaring world.

And God is not dead after all. This world is virtual reality. You may think you make your own decisions, but you do not. You play a role in a script. You say the lines and do the things the computer has written out for you. And so, we may soon find ourselves slaves in God’s Paradise. It is not slavery as we understand it, the exploitation and repression of one group of people by another. It is slavery in Nietzsche’s sense, which is living under a self-imposed moral system. God owns this world, so it is not ours to destroy. So yes, the sacredness of Creation is a religion.

If religious zeal could feed us, Mao’s Great Leap Forward would have been a success. Instead, thirty million people died of starvation. So, we should not get carried away. Jesus might have fed 5,000 people with five loaves of bread and two fish, but it is not prudent to bet on a miracle. For instance, if we switch to organic agriculture and do not deal with the lower output, for example, by curbing our meat consumption accordingly, the Great Leap Forward might look like a minor mistake in comparison. We can have goals, but let experts figure out how to get there. Dramatic lifestyle changes are necessary for people who have more than enough. Mahatma Gandhi once said, ‘There is enough for everyone’s need but not for everyone’s greed.’ The change will be painful. But once it is behind us, we will feel better.

You may think it is impossible, but acknowledging the problem is the first step towards a solution. Our belief that nothing will help can become a self-fulfilling prophecy. We need a new starting point, a new foundation for our culture, beliefs, thinking, and our place in the universe. Small steps cannot save us anymore. We need to change the way we live.2 That is what the people of Strohalm said. For a long time, I believed they were naive dreamers. I felt sure their vision of a humane world society that respects nature would never become a reality. As we head to an apocalypse, we cannot allow realism to stand in the way of what we should do. But then my life took an unexpected turn, and I figured Strohalm’s view could be God’s vision of Paradise.

Latest revision: 18 May 2023

Featured image: Earth from space. Public Domain.

1. Why I Am Against Saving the Planet. Michael Lind (2023). Tabletmag.com.
2. Naar een filosofie van verbondenheid. Guus Peterse, Henk van Arkel, Hans Radder, Seattle, Pieter Schroever and Margrit Kennedy (1990). Aktie Strohalm.

The only known photograph of Chief Seattle

Towards a spirit of connectedness

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A world without hope?

The future prospects for humanity appear grim. At best we manage to avoid a planetary ecological disaster. And that already may be too high an aim. So what will our future look like? Which direction should we take? Can we build a sustainable and humane world society? And what is wrong with our current way of living? Perhaps the answer can be found in a speech the native American Chief Seattle allegedly gave in 1854 when the United States government wanted to buy the land of his tribe. Here are his first words:

How can you buy or sell the sky, the warmth of the land? The idea is strange to us. If we do not own the freshness of the air and the sparkle of the water, how can you buy them?

Every part of the Earth is sacred to my people. Every shining pine needle, every sandy shore, every mist in the dark woods, every clear and humming insect is holy in the memory and experience of my people.

Only, Seattle never said this. It is fake history. It has been made up by a screenwriter in 1971. Still, the speech strikes at the heart of the matter. Nothing is sacred anymore. The pursuit of money destroys our values and our planet. For instance, it is argued that if we don’t allow the airport to expand, money and jobs will be lost. This is killing us. The speech contains some more interesting words:

This we know – the Earth does not belong to man – man belongs to the Earth. This we know. All things are connected like the blood which unites one family. All things are connected.

Whatever befalls the Earth – befalls the sons of the Earth. Man did not weave the web of life – he is merely a strand in it. Whatever he does to the web, he does to himself.

We know this deep down in our hearts but it is hard to deal with it. What can we do? The people from the environmentalist group Strohalm worked for decades on an outline for the society of the future. They were not hindered by established interests nor did a lack of perspective deter them from continuing their search. They tried to learn their lessons from history and were part of a small group of people that kept on caring and never gave up. Here is another take-away from the speech:

Even the white man, whose God walks and talks with him as friend to friend, cannot be exempt from the common destiny. We may be brothers after all. We shall see. One thing we know, which the white man may one day discover – Our God is the same God. You may think now that you own Him as you wish to own our land, but you cannot.

In 1991 Strohalm issued a booklet named Towards a Philosophy of Connectedness. It lays out their vision for a future society that is both sustainable and humane. It gives possible steering mechanisms that can help to achieve such a society. It is a vision that long seemed unattainable, not because it is impossible to do, but because vested interests stood in the way. Seattle also never said:

That destiny is a mystery to us, for we do not understand when the buffalo are slaughtered, the wild horses tamed, the secret corners of the forest heavy with scent of many men, and the view of the ripe hills blotted by talking wires. Where is the thicket? Gone. Where is the eagle? Gone. The end of living and the beginning of survival.

In 1994 I was an active member of the environmentalist movement. In this way I became familiar with Strohalm. For a long time I believed them to be naive dreamers. Most people I know do not like environmentalists. And indeed, they weren’t always realistic and sometimes decades ahead of their time. I kept on supporting their work because there is no alternative. You can’t allow realism to stand in the way of what needs to be done. And so this vision is here because of the hard work of environmentalist groups like Friends of the Earth and the Strohalm Foundation.

A new perspective

We need a new starting point, a new foundation for our culture, our beliefs and thinking and our place in the universe. There is no other choice. Small steps can’t save us anymore. We need to fundamentally change ourselves and the way we live. The planet we live on is given to us on loan to live off and not ours to destroy. Sadly, the fate of our planet does not compel us to do the right thing so God may be needed to make it happen.

As long as we do not completely change our approach to the major issues of our time, our societies will not become more humane and respectful of our planet. As long as production and consumption increase, new problems emerge faster than old problems can be solved with laws, technology, targets and other solutions.1

We are not confronted with an array of regrettable separate incidents, but with a culture that is on the loose. It is a throw-away culture in which not only materials and energy are wasted. Human relationships and values end up on the waste dump too.1

You probably know that but you may find it difficult to admit. It can make you feel hopeless. And so you may be inclined to ignore this, to focus on smaller and more concrete problems, or to withdraw yourself1 by fleeing into cynicism, new age spiritualism or conspiracy theories.

Most of us believe that massive structural changes are impossible and that we can’t influence the course of history in a meaningful way. And I can’t blame you for having what I for a long time believed to be a realistic view on this matter. And so we choose to manage existing developments with smaller measures. That is not going to help us in the end.

There is another way of looking at the situation. Acknowledging a problem is already solving it half. Our belief that nothing will help can become a self-fulfilling prophecy. As soon as there is a realistic perspective for change, many of us will let go of their cynicism and help to make it happen1 and then it can happen fast. Twenty years may be all we have left. And twenty years may be all we need.

Natural World Order

You do your job and perhaps you achieve something. Your activities do not only have the intended consequences but many others as well. If you succeed and get a promotion, a colleague might get jealous. If you go to your job by car, the exhaust gases can make other people sick.1 The unintended consequences of your actions hardly play a role in your decisions but they change our reality in unexpected ways.

The world is complex so the models we use can’t get a proper hold on what is going on. And so it appears that we can’t change our future in a meaningful way, and that at best we can anticipate what is going to happen. The failure of communism demonstrated that centralised planning does not create a happy society. That left us with capitalism and markets. They brought us prosperity while our living conditions are being destroyed.

Perhaps nature can show us the way. Organisms start relationships with each other. These relationships can become permanent if one organism makes something another organism needs and the other way around so that both benefit. For instance, plants and animals have such a relationship. Plants produce oxygen that animals need while animals produce carbon dioxide that plants need.1

Plants and animals are part of a self-sustaining cycle. They are connected. They are parts of a whole. If plants die then animals including humans die too. There are many of such relationships in nature. Such a natural order emerges spontaneously but it takes a long time. It starts with individual organisms starting relationships. These relationships can grow to a global scale as long as the external conditions allow for it.1

External conditions are like a dictate. If there were no fossil fuels then we can’t burn them. If there was no technology to build cars, we can’t drive them. External conditions are usually taken for granted but when they suddenly change then we must adapt and that can be brutal. For instance, the spread of the corona virus brought long-distance travel to a standstill. And climate change can become far worse than that.

Make no mistake. Running into the limits of our planet will be more brutal than anything that ever happened before in the course of human history. That leaves us with no other choice than setting global limits on human activities before the planet does it for us. But the sudden stop of air travel also teaches us that we don’t really need it. And there are many more things we do not need.

People, businesses and governments must deal with these limits. Once they are in place, communities, governments and businesses all over the world can reorganise themselves via communities, so that the Natural World Order will arise more or less spontaneously. Humans can make this happen fast because they can quickly change the ways they cooperate by changing their cultures. That doesn’t require planning every detail but it does require altering the steering mechanisms of our societies and economies.

One of the most important things we must change is the way we look at wealth and conspicuous consumption. Wealthy people are seen as great examples and their consumption is seen as good for the economy. If conspicuous consumption is frowned upon, there is less fun in being extremely rich, and a lot of crime becomes pointless. For example, what’s the point of risking your life by being drug dealer if you can’t drive around in your expensive cars any more? This way looking at wealth and consumption is essential to make the Natural World Order come to pass.

Steering mechanisms

Money is now the most important steering mechanism in society. Realising goals of any kind usually requires the cooperation of others and therefore money. That is understandable. Everyone needs money but it may be better that we are motivated more by our job or our contribution to society and less by money. Economic decisions are affected by interest as well. Interest is a steering mechanism. High interest rates promote short-term decisions while low interest rates promote long-term decisions. So how does that work?

If the interest rate is 5% then € 1,00 next year is worth € 0,95 now. That makes you prefer to get € 1,00 now rather than next year, even when you need the money next year simply because you can receive interest and will have € 1,05 next year. Interest reduces the value of future income and therefore the future itself. Interest makes people and businesses prefer the present to the future and short-term gains at the expense future generations.

This is why a sustainable economy requires low or even negative interest rates. Ending growth also requires negative interest rates otherwise the interest on debts can’t be paid. Interest is any return on capital so interest doesn’t depend on money but on capital. As the wealthy own most capital, interest is a flow from everyone else to the wealthiest. A humane society may therefore need to end positive interest rates. Central banks do not determine interest rates in the end. The supply and demand for money and capital do. But ending interest may soon be possible.

In markets competition is a steering mechanism. Competition promotes efficiency and progress but it also causes problems. Competition affects economic decisions.1 It can force corporations to produce as cheaply as possible or to produce stuff that no-one really needs because it can be sold at a profit. Some corporations faced with intense competion see little room to treat their employees well or to care for the environment.

If you desire that latest model, the best service, the lowest price, and want more money to buy even more stuff, you are part of the problem like many others, and that includes me. It may be strange to realise that you have enough, or even have far more than enough, and that you can do with less, older models, poorer service and higher prices, so that local businesses may survive.

Another important steering mechanism is the distribution of cost. Short-term gains are for corporations while societies deal with the long-term cost like pollution and unemployment. Education and health care are public costs that corporations often do not pay for. Taxing systems do not take into account the limits of the planet. They need to be changed in order to attribute the true cost to the products and services people buy.

Shifting taxes from labour to raw materials and energy can help. This measure can induce people to use items longer and promote repair and recycling. Corporations must be responsible for the entire life-cycle of the products they produce. Non-essential products that are harmful can be banned completely. The advertisement industry can be regulated to stop people from buying items they do no need.

Laws are a steering mechanism too. What is legal isn’t always fair. Unethical behaviour is often not punished by the law. A greater role for ethics in law is needed, most notably in matters of business. Savvy people and corporations use loopholes to their advantage or bribe politicians into changing the law into their favour. Exploiting people, misusing public funds, and harming the planet should be sufficient ground for persecution and conviction, even if the specific activity is not declared illegal.

Most people take the existing steering mechanisms for granted. A few people like the anti-globalists and religious extremists think of an alternative. Only most people would not like a reign of terror. And so we limit ourselves to taking small measures in order to reduce the fall-out. It is hard to believe that the steering mechanisms themselves can be changed. Perhaps technology will save us, we hope. That may not be the case.

The throw-away culture

Science, technology, society and culture are closely interconnected. It is fair to say that we live in a technological society and a throw-away culture. If we have a problem then we look at scientists and engineers to solve it. Even our emotional problems we address with therapy sessions and pills. This is also true for environmental problems.

A good example is perhaps a report of the Dutch research agency TNO in the 1980s about replacing milk bottles by milk cartons. Milk bottles were used many times while cartons are thrown away. The discussion that followed was about the number of times a bottle was reused, which determines whether or not the bottle is better for the environment. That depended, amongst others, on the number of times a bottles was reused.

These discussions can be useful. What was not discussed however, was the throw-away culture. Milk bottles were part of a culture of reuse that was disappearing. The cartons are part of the new throw-away culture. Discussions are about quantity, objectivity and efficiency, but not about fundamental questions about the way we live.

The things we use deserve more respect. Valuable resources and energy have been used to make them. We should not depart from them until they are worn out completely. If they are broken we should fix them until they can’t be fixed any more. And why should we buy frivolous items or make long distance trips for recreational reasons?

The fourth way

The damage done to our planet is escalating. There is a lot of excess. Nowadays there are more obese people than hungry ones. The end of our way of living is here. Communism and state planning have failed. Capitalism and free markets have failed too, but most people have yet to find out. Many countries have combined state planning with market economies and called it a third way. That didn’t change much either. Many people have become cynical. But there is no need for poverty.

It is not surprising that people distrust stories that have a claim to the truth like religions, ideologies and science. But it is the absence of great stories we can believe in that makes our societies directionless. Individuals and their desires are now at the centre stage. So is there anything left that binds us together? Sure there is. A soon as a crisis emerges people join and help each other. The future is not without hope.

There is a fourth way. It can be called the Natural World Order. It is setting limits on a planetary level and letting people deal with them via communities, governments and markets. It is not clear from the outset what will happen because this can’t be planned from the top. Developments can take different turns. For instance, if energy is to become expensive, international trade would diminish and local products would be favoured. If most people do what needs to be done then it can be done.

This is the time to act. The current order can’t be sustained. The limits of our planet should be respected. Administrating these limits would require a global government and the same laws everywhere around the planet. It can only work if people, communities and businesses help to make it become reality. It can work when we want to make it work whatever it takes. It all begins with admitting that enough is enough.

We want more stuff because the advertisement industry tells us that we need this or that product or that buying it will make us happier. Our current economic system needs growth. We must buy more to keep the economy from collapsing. That is why fundamental change freaks us out. There can be enough for everyone. Eve and Adam had everything they needed. And so we may enter the Final Gardens of Paradise that await for us at the End of History. The change is not going to be easy but there may be no alternative.

Featured image: the only known photograph of Chief Seattle taken in 1864

1. Naar een filosofie van verbondenheid. Guus Peterse, Henk van Arkel, Hans Radder, Seattle, Pieter Schroever and Margrit Kennedy (1990). Aktie Strohalm.

Jeep Grand Cherokee

The law of diminishing marginal utility

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Imagine that you are very fond of pizza and also very hungry. If I offer you a pizza, you will be very grateful. If after you have finished eating your pizza I offer you a second pizza, you will not decline the offer but you will be a bit less grateful. If I offer you a third you might still eat it in order not to offend me. The fourth pizza you would decline. Perhaps you would come up with some lame excuse like nausea to explain your peculiar behaviour. Before the fifth pizza is offered, you may already have left my home in a hurry.

Welcome to the law of diminishing marginal utility. It is an important law in economics. It states that the more you have of something the less useful an extra unit is to you.

This law can be expressed in terms of money. If you are at a pizza restaurant, you might be willing to pay € 12 for the first pizza. After eating it you are not so hungry anymore and you might not be willing to pay € 12 for a second pizza. But if the restaurant owner offers you a discount of € 6 on the second pizza, you might accept the offer. A third pizza you may only eat if it is on the house. A fourth pizza you won’t eat unless the restaurant owner offers you € 6 to eat it. Eating a fifth pizza might cost the restaurant owner € 12.

What might strike you is that the fourth and fifth pizza have a negative value to you. You are not willing to eat them unless you are paid for it.

The law comes with another consequence. If you have enough now, you may think about the future and save money for unexpected expenses and retirement. As we get wealthier, getting more stuff becomes less important to most of us while certainty about the future becomes more important. At some point we do not want more stuff and the law of diminishing marginal utility becomes an obstacle to economic growth.

If you are happy with what you have and care about the future, you may save too much for the economy to grow and capitalists won’t make enough money because they must at least make the interest rate. The law of diminishing marginal utility is therefore a grave threat to capitalism. And so is interest. This is where the advertisement industry comes in. The trick of advertising is to make us unhappy with what we have and to make us desire more. Buying this or that will make us happier, advertisements promise us.

Fashionable items with a limited life-span are part of the solution too. It is not always possible to make us desire more stuff, but it is still possible to make us desire new stuff. The dress you bought last year is out of fashion now. In order not to look stupid you have to buy a new one. And then there is technological development. Next year there will be a newer model, and by the way, the software on the old model won’t be supported any more. And of course, luxury items do their bit. Why go for a Volkswagen Polo if you can afford if you can afford a car with a low marginal sports utility value like the Jeep Grand Cherokee?

Yes, the Jeep Grand Cherokee is an ugly monster, but it is bigger than the Volkswagen Polo and if you can afford to drive it, why not? There is a reason why not.

We humans use far more resources than our planet can offer. That’s why capitalism is a grave threat to humanity. Capitalism nowadays is like making us eat the fifth pizza and pay extra for it even though that creates a health hazard while many people are hungry. And there may be no food tomorrow because we have eaten too much today. The Jeep Grand Cherokee is like the fifth pizza. We work hard to buy stuff we do not need. This is how humanity is committing suicide. This can’t go on. There is one obstacle. Businesses must make at least the interest rate, and interest rates below zero are still unthinkable.

In other words, we must learn to care about the future and interest rates may need to go below zero. We must learn to be happy with what we have and settle for less when possible. This may be a grave threat to capitalism for what will happen if we stop spending on excesses? Economists fear that the economy will collapse and that we will be without jobs when business profits decline and interest on debts can’t be paid. That doesn’t have to happen when interest rates are negative. In that case debts don’t have to be repaid and businesses with little or no profits can survive.

That may seem strange but it is already happening. The law of diminishing marginal utility is kicking in, and it is kicking in big time.

This law affects capital too. If there is only one pizza factory that can supply every pizza addict with one pizza per day, it would almost certainly make a profit. A second factory might make a profit but it might not. And what is more, if the second factory comes into operation, the supply of pizza increases, and according to the law of supply and demand, the price of pizza would drop. That would also cut into the profits of the first factory.

A third factory is even more likely to be loss-making and it could make the other factories loss-making too. At some point there is little use for more capital. That causes the demand for capital to drop and interest rates to go negative. Traditional economics would consider this unhealthy or temporary.

That doesn’t need to be and it can be desirable. Three pizza factories fiercely competing and without profits might be better for consumers than one that is profitable if we assume that pizza is a necessity. Everyone must eat something. There could be an ample supply of investment capital at negative interest rates so profits may not be needed for pizza factories to stay in business.

A problem is that excess investment capital can go to businesses that suicide humanity by using scarce resources to produce stuff we do not need. Negative interest rates can help to make the economy sustainable but only if the excesses do not happen. This would require governments to ban or tax excesses or to regulate their production so that these products don’t have a harmful impact. That would make them a lot more expensive.

But the fun of driving a Jeep Grand Cherokee, apart from giving environmentalists the middle finger, comes from the fact that you can afford to drive it, so the fun may be even greater when it is three times as expensive.

When people start saving more and businesses hardly make profits then where does the money go? It can be used to make the economy sustainable. It can go to people in need who still have use for money. The money can help to reduce poverty and it can be used to address pressing needs in society. And we could have far more leisure time. What’s the point of working so hard for things we do not need? We may only have to work for twenty hours per week and still have a good life. It seems possible that humanity will survive capitalism and that capitalism will be transformed into an economic model that can endure for the foreseeable future.

Featured image: Jeep Grand Cherokee. Jeep (2019). [copyright info]

Morality clause

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Legal is not always fair

What is legal is not always fair. The role of morality in law may be too small. People have different views about right and wrong, so the prevailing view in many Western societies is that people should be free to do as they please unless their actions harm others. Even that view can justify an increased role of ethics in judicial matters. And if moral viewpoints converge, this becomes easier. That begins with setting priorities.

We can get trapped in contentious issues. People reason according to their beliefs and political views. Debates are often framed to make the opposing view look evil:

  • Leftists might be concerned with the rights of criminals in jail but not of the rights of unborn children who are innocent of any crime.
  • Conservatives might be concerned with the fate of unborn children but as soon as they are born in misery their compassion suddenly vanishes.

Science indicates that the degree to which a fetus is a baby gradually increases during the pregnancy. If you are religious and presume that an unborn child has a soul, it becomes a discrete process. When the soul enters the fetus, it instantly becomes a baby. These are two fundamentally different views, so if you have one particular view, it may be hard to stay moderate. If there is a soul then abortion is killing an unborn child. If there is no soul, and a fetus has an awareness similar to a mouse, it is about the right of women to decide about what happens inside their own bodies.

Moral issues are often complicated. Euthanasia can be an act of compassion but it can also be a way of getting rid of undesired people. Perhaps criminals have had a difficult childhood or have mental issues that are not their fault, but making them suffer can give victims a sense of justice. This is about conflicting moral views. In economics, morality tends to take the back seat. In other words, you can do as you please as long as it is legal.

In some areas ethics are needed urgently. Research has shown that CEO is the job with the highest rate of psychopaths while lawyer comes in second,1 possibly because traders in financial markets were not included in the survey. Media came in third because it was a British research. Salespeople make a rather unsurprising fourth position.

Vulture capitalism

Rural areas in the United States are turning into an economic wasteland. Closed down factories and empty malls dominate the landscape. Communities are ravaged and drug abuse is on the rise. One reason for this to happen is that jobs are shipped overseas. Several factors contributed to this situation, but a major cause is CEOs not caring for people and communities. In many cases other solutions were possible.

Paul Singer is wealthy hedge fund owner. He made a fortune by buying up sovereign debt of countries in trouble such as Argentina and Peru at bargain prices and starting lawsuits and public relation campaigns against those countries to make a profit on these debts at the expense of the taxpayers of these countries.2

In the United States Singer bought up stakes of corporations in distress. He then fired workers so that the price of his shares rose. In the case of Delphi Automotive he and other hedge fund managers took out government bailouts, moved jobs overseas, and cut the retirement packages of employees so they could make a huge profit.2

Vulture capitalists prey on patients too. They buy patents on old drugs that are the standard treatment for rare life-threatening diseases, then raise the price because there is no alternative. Martin Shkreli was responsible for a 6,250% price hike for the anti-retroviral drug Daraprim. Many people died because of his actions.3 Perhaps he should be in jail for being a mass murderer but he is not because what he did is legal.

Profiteering at the expense of the public

In the years preceding the financial crisis of 2008 there was a widespread mortgage fraud going on in the United States. Few people have gone to jail because much of what happened was morally reprehensible but legal. Financial executives and quite a few academics share this view.4 And so nothing was done. Perhaps fraud can be proven some day but that may take years if it ever succeeds.

Healthcare is another domain for fraudsters and unscrupulous corporations. Patients are often not in a position to bargain. Perhaps that is why privatised healthcare performs poorly compared to government organised healthcare. In 2015 the Dutch government introduced the Social Support Act, making municipalities responsible for assisting people who are unable to arrange the care and support they need themselves.5

The municipalities were ill-prepared so fraudsters took advantage of the situation. Most businesses are legitimate but several private contractors enrich themselves at the expense of taxpayers and people in need. The Dutch prosecution is overwhelmed by fraud cases and it is not always possible to get a conviction because of loopholes in the law. Until these loopholes are fixed, several schemes remain legal.6

In the United States hospital bills are feared. A routine doctor visit for a sore throat can result in a $ 28,000 medical bill.7 And so many people in the US go without healthcare because they can’t afford it. Efforts to reform healthcare in the US haven’t succeeded, perhaps because those who send $ 28,000 bills for sore throats have plenty of money to bribe politicians into keeping the US healthcare system as it is.

Attributes of the law

First we have to recognise why it is so hard to prevent these things from happening. On the political front it is because once politicians are elected, they can do as they please until the next election. Lobbyists prey on them. Citizens have few means of correcting politicians, except in Switzerland. The Swiss have direct democracy. Swiss citizens can intervene in the political process when they see fit and fix laws if they think that is needed. Direct democracy might help to fix many of these issues.

Laws are often made with the best intentions but it is not possible to test them in a simulation to see how they will work out in practice. So once laws are enacted, unexpected problems pop up. The process of law-making is slow and it can take years before issues are fixed, at least if they are fixed at all because law-making is often political process, and that can make it rather complicated.

Even more importantly, the underlying principles of law benefit the savvy. The system of law is the way it is for good reasons. No-one should be above the law and people as well as businesses should not be subject to arbitrariness. The rule of law implies that every person is subject to the law, including lawmakers, law enforcement officials, and judges. It is agreed that the law must be prospective, well-known, general, treat everyone equal, and provide certainty. Only, in reality not everyone is treated equally.

Laws being prospective means that you can only be convicted for violation of laws in force at the time the act was committed. Legal certainty means that the law must provide you with the ability to behave properly. The law must be precise enough to allow you to foresee the possible consequences of an action. Businesses prefer laws to stable and clear. Corporations invest for longer periods of time. If laws change they may face losses. If laws are not clear, investments won’t be made, and a country may end up poorer.

With the rise of neo-liberalism came the era of shareholder capitalism. Making profits became a goal in itself. Greed was considered good. Wall Street traders and CEOs were seen as heroes even when they were just psychopaths outsourcing jobs for profit. There was little consideration for the planet, people and communities. Consumers preferred the best service at the lowest price so businesses were pressed into cutting costs and moving jobs to low-wage countries. Ethics in business were a marginal issue at best.

A bigger role for ethics

More and more people believe that ethics should play a bigger role in business. Activists pressure corporations. That may not be enough. Corporations must be competitive and can’t make real changes if that increases their costs. Levelling the playing field with regulations is an option but that may not be sufficient. The law needs a morality clause, making unethical behaviour unlawful, even though the action itself is not explicitly stated as forbidden in the law. That increases the cost of unethical behaviour.

A randomly selected jury of laypeople could make verdicts in these issues. Perhaps it is better that the legal profession stays out of these matters because it is not a legal matter in the first place. There are a few issues that come with a morality clause. Ethics in business can be a political issue. People may differ on what kind of behaviour is ethical and people may differ on what kind of unethical behaviour should be punished.

Introducing a morality clause to enforce ethical behaviour in business affects legal certainty. It will be harder for businesses to predict whether or not a specific action is legal. Business owners may incorrectly guess moral sentiment and believe they did nothing wrong. The uncertainty that comes from that might reduce the available investment capital for questionable activities. But that may not be so bad. And if immoral profits and bonuses from the past are to be confiscated, it affects the prospectiveness of the law.

International treaties like the Transatlantic Trade and Investment Partnership (TTIP) have been set up to accommodate the unethical practises of corporations and to protect those corporations from making those unethical practises unlawful. Because that is often what reducing the regulatory barriers to trade like food safety laws, environmental legislations and banking regulations often amounts to in practice.

In most cases it can be known on beforehand what actions are unethical. For instance, investors in corporations that extract fossil fuels should know that burning fossil fuels causes climate change. They are gambling with the future humanity. So if some countries decide to outlaw the use of fossil fuels then these investors should not be compensated.

Perhaps you have serious doubts about this proposal as it upsets the very foundations of the current system of law. And I can imagine that you think: “Where does this end?” But there is something very wrong with the current system of law. Business interests often take precedence. So do you want the law to protect the psychopaths who maximise their profits at the expense of people and the planet? And do you really think that the law can be made without failures so that corporations and savvy people can’t exploit them?

Featured image: Of course the laws are always functional. Loesje. Loesje.org.

1. The Wisdom of Psychopaths: What Saints, Spies, and Serial Killers Can Teach Us About Success. Kevin Dutton (2012).
2. The death of Sidney, Nebraska: How a hedge fund destroyed ‘a good American town’. Charles Couger, Alex Pfeiffer (3 December 2019). Fox News. [link]
3. Vulture capitalists prey on patients. The Sacramento Bee (22 September 2015). [link]
4. How Mortgage Fraud Made the Financial Crisis Worse. Binyamin Appelbaum (12 February 2015). New York Times. [link]
5. Social Support Act (Wmo 2015). Government of the Netherlands. [link]
6. Gemeenten starten onderzoek naar Albero Zorggroep. Eelke van Ark (31 October 2019). Follow The Money. [link]
7. How a routine doctor visit for a sore throat resulted in a $28,000 medical bill. CBS News (31 December 2019) [link]