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by John Brian Shannon | January 23, 2017
UK Prime Minister Theresa May has been invited to the White House on January 27 to meet with the new American president, Donald J. Trump.
It’s always an honour to be the first invitee of the new president, and the timing couldn’t be better as the Western economic order is beginning to churn.
In the West, the past 70 years have been a relatively stable era with increasing wealth (although since the Reagan-era tax cuts, obscene inequality has become a destabilizing force) and social mobility has increased dramatically since the creation of the internet.
This combination could prove extraordinarily useful to motivate leaders to provide the kind of leadership required of the times — or 2017 could prove to be the pivotal moment in the unravelling of the Western democracies.
President Trump wasn’t elected U.S. president because American citizens were bored by the Democrats.
Americans voted Trump/Pence to overthrow the existing plutocracy in Washington, not to overthrow foreign governments.
Regardless how many Middle Eastern conflicts the West prosecuted over the past 13 years, the rich keep getting richer and the poor keep getting poorer. But this time the problems are here at home, not in some faraway country.
Americans voted for Barack Obama (2008 and 2012) and now Donald J. Trump (2016) in large part to stop the unfolding economic disaster in the West. Britons may have held similar ideas to American voters about a sustainable economic plan when they voted for Brexit.
The chart below (from 2010) reveals the bottom 80 percent of Americans share just 7 percent of the nation’s wealth, but it’s much worse now (in 2017) and this phenomenon is no longer confined to the United States.
That trend will not change until politicians are bigger than the challenges that confront them, and actually do something about the record inequality sweeping the West.
It’s not a call to ‘do something, anything, anything at all’ — as some so-called ‘solutions’ might be worse than the problem.
But what citizens of the Western nations require is an acknowledgement by politicians of the sheer scale of the problem, and some initial steps to slow the rapid transfer of wealth away from the bottom three quintiles to the top 1 percent. (Even tiny baby-steps are preferable to the decades-long stony silence on the matter)
Inequality ignored, will only result in citizens ‘giving up’ on their governments and ‘giving up’ on democracy — and we know how that will end. Badly. For everyone.
Including powerful politicians who serve for amazingly short stints of time in office. Once you’re in politics, four years pass by like a long summer!
Today’s toxic combination of ultra-low taxes on the rich and unrestricted globalization aren’t working for 3/5ths of the population. In 10 years, it won’t be working for 4/5ths of the population. And let’s remember, all of them are voters.
Here’s how that looks
In 2016, more than 50 percent of the world’s wealth was owned by the 1 percent.
By 2030, more than 70 percent of the world’s wealth will be owned by the 1 percent.
By 2045, more than 85 percent of the world’s wealth will be owned by the 1 percent.
Put another way; Do you really want to live in a world where 8 billion people are fighting over the then-remaining 30 percent of the world’s wealth?
Can you imagine what it’s going to look like in 2045 when 9 billion people are fighting over the then-remaining 15 percent of the world’s wealth?
At that time, you’d better be living on an island in the mid-Pacific that doesn’t appear on any map, in a castle with 100-metre high concrete walls.
I respectfully suggest to Prime Minister Theresa May and President Donald Trump that if inequality isn’t addressed this year, it’ll be too late. Just look for a remote island in the Pacific Ocean… now, before the rush begins.
The time involved in getting new legislation passed, combined with the lag time involved for it to take effect during the following fiscal cycle, is years from the day it is first discussed.
Therefore, let’s hope that January 27, 2017 will come to be known as ‘the day the decline of the bottom-three quintiles was halted and reversed’ by these two great leaders.
by John Brian Shannon | November 14, 2016
After eight years of competent and relaxed rule by President Barack Obama, real estate tycoon Donald Trump arrived on the scene and swept Democrats and other Republicans aside to win the presidency of the United States. So obviously a protest vote — but a protest against what?
Pollsters and so-called ‘elites’ seem astonished at the Trump victory yet many saw it coming from afar. How is it that some people ‘never saw it coming’ while others saw it as a logical progression of the present societal moment?
The U.S.A. has a total population of 325 million people (November 2016) and when we look at the demographics of the country by quintiles, we see that there are five groups of 65 million people.
Each group is ‘one quintile’. The ‘top quintile’ are those who are the top income earners in the country, while the ‘bottom quintile’ are the lowest income earners in the country, etc.
The so-called ‘elites’ live in sumptuous luxury that few can imagine and tend to have stable lives which is a direct consequence of their high income levels and (usually) higher level of education.
Ninety-four percent of the people who live in the top-two quintiles are children of parents who also lived in the top-two quintiles.
(Yes Virginia, wealth is largely inherited and many studies attest to this — the myth of ‘work hard and you’ll get ahead’ represents only six-percent of the top-two quintile population in Western nations)
The bottom-three quintiles in America have been losing ground since the 1970’s when one person (the ‘breadwinner’ of the family) was able to earn enough to support a family, buy a reasonable home, and a new car every 2-3 years without needing to finance the purchase, take one vacation per year, and send their kids to college. All on the strength of one income-earner!
Nowadays, the bottom quintiles are barely working, many of their jobs off-shored to Asia. For those fortunate enough to have a job, it takes two income-earners to rent or buy a condo, buying a car means financing it for up to 8-years, and one ‘staycation’ per year (staying near home during vacations, with only daytrips to nearby sights) while their kids must obtain expensive student loans that can take decades to pay off.
It’s a different world from the 1960’s and 1970’s.
The major reason for this is the Reagan-era tax cuts that were designed to stimulate growth and investment in the U.S. economy (which were the right prescription for the times) and those tax cuts created a record number of billionaires — which eventually resulted in the creation of the so-called ‘1 percent’ who now invest their money in the ‘Asian Tiger’ economies which bring better financial rewards for those investors, but results in the off-shoring of millions of jobs in the Western nations.
At present, the 1 percent own more than 50% of the world’s total wealth. Leaving less than one-half of the world’s wealth for the remaining 7.3 billion people.
But by 2030, the 1 percent will own more than 75% of the world’s total wealth. Leaving only one-quarter of the world’s wealth for the (then) 8 billion people on the Earth.
And in 2040, the 1 percent will own more than 85% of the world’s total wealth. Leaving only one-sixth of the world’s wealth for the (then) 8.75 billion people to fight over.
World Wars have been waged over less!
People wrongly blame ‘Globalization’ for this sorry state of affairs but it was a profound change in U.S. tax laws that allowed wealth to flow upward to the 1 percent who simply take their money and invest it in Asia. It represents trillions of dollars (U.S. and Canada) and trillions of euros (EU) and hundreds of billions of pounds sterling that will never, ever, return. It’s money that has left the West forever.
And some people wonder why things like Brexit and the stunning repudiation of the status quo candidate in the U.S.A. (Hillary Clinton) have occurred? Really? Are you kidding me?
Politicians and so-called ‘elites’ who didn’t see this coming have no business leading nations, nor should they be calling themselves ‘elites’ — nor have they ever spent a minute talking with a member of the bottom three quintiles in any Western nation.
In democratic societies ‘The People’ are always right. Some 52% of Britons voted to leave the EU, hoping for a better democracy and a better economy, while in the U.S.A. millions of voters chose hope over the status quo.
Upcoming elections in Italy, the Netherlands, France, and other Western nations are likely to show similar results.
It’s startlingly clear. ‘The People’ aren’t looking for more of the same. They voted for real change — not talk about change!
Politicians like PM Theresa May and President-elect Donald Trump have garnered a huge mandate for change. For politicians, it doesn’t get any better than this. Whatever these politicians do as long as it looks like they’re attempting to meet the needs of ‘The People’ they will be generously rewarded for their successes and easily forgiven if a particular policy fails to meet expectations.
It’s a time of unprecedented opportunity for politicians who’ve upset status quo candidates, but failure to deliver meaningful change now will bring us uncomfortably close to a total breakdown of the social contract that has worked so well for citizens and governments in the postwar era.
For those politicians elected to bring change, but who subsequently fail to do so, will find themselves losing landslide elections four years on — while bringing the wrath of ‘The People’ against ‘The Establishment’.
Let us do our part to make it easy for newly-elected politicians to do the right thing, and to forgive them easily if perchance some minor policy point goes awry.
We all need to do our part to assist the change that must now occur — otherwise, by 2040, some 8.5 billion people will be fighting over 15% of the world’s total wealth — resulting in an apocalypse worse than anything we’ve yet seen.
by John Brian Shannon | August 19, 2016
Globalization has done much to lift the total GDP of many nations, except that inequality has increased by orders of magnitude (even within rich countries) due to the sloppy and sometimes corrupt implementation of the thing we call Globalization.
Read the prescient 2014 article by the New York Times’ Neil Irwin You Can’t Feed a Family With G.D.P.
‘Interdependence’ would be a better catchword to replace the word ‘Globalization’.
‘But aren’t they the same thing?’ some might ask. Well no, they’re not.
Globalization can best be described as ‘having the ability to export to other countries in exchange for goods or currency (and only if we must) accept goods from other countries, and pay for them in goods or currency.’
Whereas Interdependence could be described as ‘mutually beneficial trade between nations, where each block of transactions can be recorded as a ‘Win-Win’ for those trading partners.’
Yes, it’s a bit more complicated than just dumping your stuff in another country and getting the loot. (Globalization in a nutshell)
But if each block of transactions were properly engineered to produce the Win-Win result from the beginning, we wouldn’t have the follow-on effects of Globalization to deal with — inequality and the ‘trickle-up economy effect’ whereby in 2016 the 1% own 50% of the world’s total wealth and by 2030 will own 76% of the world’s wealth, and financial crises and trillions (globally) paid by taxpayers in corporate welfare over the postwar period, mountains of debt that will never be repaid, and deteriorating democracies as corporations take the reins from governments, and if TPP isn’t stopped soon the corporations will be taking governments to court for lost profit opportunities due to governments following the instructions of voters!
Originally, the North American Free Trade Agreement (NAFTA) was a great agreement designed to make North America more competitive vis-à-vis the other continents — but it was badly implemented by mediocre minds — which resulted in it being spoken of in the same tone of voice reserved for other words deemed filthy, such as that ‘Globalization’ word.
In regards to such agreements, it seems that no matter how noble and exceptional the original agreement (with the exception of the Montreal Protocol) it seems that proper implementation of these agreements fail. see; Kyoto Accord, see; hundreds of unfulfilled UN resolutions, etc.
But one step better than enforcing the terms and conditions of globalization’s international trade agreements, would be to have ‘Interdependence’ become the new catchword thereby superceding (Canadian spelling) Globalization.
Civilization must always advance.
That doesn’t mean that gadgets become more sophisticated (although some might think that’s the whole point of it) what it means is that our thinking must advance — all those shiny gadgets are merely a consequence of that higher thinking, not the purpose of it.
Our thinking about governance could move forward by a quantum leap if we’re advanced enough to grasp it.
Globalization = The ability to dump our goods in other countries and get loot for it, is one thing.
Interdependence = Ongoing, engineered agreements between nations (bilateral, trilateral, multi-lateral, as the case may be) where each agreement must result in a ‘Win-Win’ for each of the participant nations or there’s no signing ceremony.
Do you see the difference?
The difference is a more civilized world, fewer socio-economic problems generally and less inequality specifically, and fewer conflicts.
The reason we no longer live in trees and eat bananas is that we can grasp larger concepts; Hence, here we are, today.
The questions; Is this it? Is this who we are? Is Globalization our highest accomplishment? Or are we a people capable of better-yet?
Time will tell.