The Pie Is Shrinking So Much The 99% Are Beginning To Starve

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Social movements arise to solve problems of inequality, injustice, exploitation and oppression. In other words, they are solutions to society-wide problems plaguing the many but not the few (i.e. the elites at the top of the wealth-power pyramid).

The basic assumption of social movements is that Utopia is within reach, if only the sources of the problems can be identified and remedied.  Since inequality, injustice, exploitation and oppression arise from the asymmetry of power between the few (the financial and political elites) and the many, the solution is a reduction of the asymmetry; that is a tectonic realignment of the social structure that shifts some power—economic and/or political—from the few to the many.

In some instances, the power asymmetry is between ethnic or gender classes, or economic classes (for example, labor and the owners of capital).

Social movements are characterized by profound conflict because the beneficiaries of the power asymmetry resist the demands for a fairer share of the power and privileges, while those who’ve held the short end of the stick have tired of the asymmetry and refuse to back down.

Two dynamics assist a social, political and economic resolution that transfers power from those with too much power to those with too little power: 1) the engines of the economy have shifted productive capacity definitively in favor of those demanding their fair share of power, and 2) the elites recognize that their resistance to power-sharing invites a less predictable and thus far more dangerous open conflict with forces that have much less to lose and much more to gain.

In other words, ceding 40% of their wealth-power still conserves 60%, while stubborn resistance might trigger a revolution that takes 100% of their wealth-power.

History provides numerous examples of these dynamics.  Once the primary sources of wealth-generation shifted from elite feudal landowners to merchants and industrialists, the wealth (and thus the political power) of the landed elites declined. As the industrialists hired vast numbers of laborers drawn from small farms and workshops, this mass industrialized labor became the source of the wealth generation; after decades of conflict, this labor class gained a significant share of the wealth and political power.

The civil rights and women’s liberation movements realigned the political and economic power of minorities and females more in line with their productive output, reducing the asymmetries of ethnic and gender privileges.

In broad-brush, progressive social movements seek to broaden opportunities and level the playing field by reducing the asymmetric privileges of dominant classes defined by power and privilege.  The core mechanism of this transition is the recognition and granting of universal human rights: the right to vote, the right to equal opportunity, and rights to economic security, i.e. entitlements that are extended universally to all citizens for education, healthcare, old-age pensions and income security.

Again in broad-brush, these movements have largely been categorized as politically Left, though many institutions deemed conservative (for example, various churches) have often provided bedrock support for progressive movements.

Social movements which seek to limit the excesses of state power tend to be categorized as conservative or politically Right, as they seek to realign the asymmetry of power held by the state in favor of the individual, family and the traditional social order.

The Expanding Pie Fueled Expanding Entitlements

Writer Ugo Bardi recently drew another distinction between Left and Right social movements: “Traditionally, the Left has emphasized rights while the Right has emphasized duties.”

As rights manifested as economic entitlements rather than political (civil liberty) entitlements, rights accrue economic costs. As Bardi observes: “Having rights is nicer than having duties, but the problem is that human rights have a cost and that this cost was paid, so far, by fossil fuels. Now that fossil fuels are on their way out, who's going to pay?”

I would argue that the cost was also paid by higher productivity enabled by the technological, financial and social innovations of the Third Industrial Revolution, roughly speaking the interconnected advances of the second half of the 20th century.

These advances can be characterized as expanding the economic pie; that is, generating more energy, credit, technological tools, opportunities, security and capital (which includes financial, infrastructural, intellectual and social capital) for all to share in a socio-political-financial allocation broad enough to make everyone feel like they were making some forward progress.

This long-term, secular expansion of the pie naturally generated more demands for additional entitlements and rights, as the economy could clearly support the extra costs of allocating additional wealth and resources to the many.  From the point of view of the few (the elites), their own wealth continued expanding, so there was little resistance to expanding retirement, education and healthcare entitlements.

But in the 21st century, the expansion of the pie stagnated, and for many, it reversed. Adjusted for real-world inflation many households have seen their net incomes and wealth decline in the past decade.

Despite the endless media rah-rah about “growth” and “recovery,” it is self-evident to anyone who bothers to look beneath the surface of this facile PR that the pie is now shrinking. This dynamic is increasing inequality rather than reducing it.

The Shrinking Pie And Stagnant Productivity

It is a truism of economics that widespread increases in productivity are required to generate equally widespread increases in income and capital, i.e. productive wealth. To the consternation of many, productivity has stagnated since 2010; no wonder household income for all but the upper crust has gone nowhere.

If we glance at a chart of productivity, we see a strong correlation with speculative investment bubbles (the dot-com and housing bubbles 1995-2005) and speculative spikes fueled by central bank monetary stimulus (2009-10).  Absent bubbles and monumental excesses of central bank stimulus, productivity quickly sinks to its secular trend line: downwards.

This next chart depicts the long-term trend line of productivity through all four industrial revolutions. Note the decline concurrent with the 4th Industrial Revolution (mobile telephony, the Internet, AI, robotics, peer-to-peer networks, etc.) and the depletion of cheap-to-access-and-refine oil:

The unwelcome reality is that the economy is changing in fundamental ways that cannot be reversed with policy tweaks, protests or wishful thinking.

Consider the percentage of the gross domestic product (GDP) that goes to employee compensation (wages and salaried). Labor’s share of the GDP has been in a downtrend since 1970, which not coincidentally was the peak of secular productivity:

In this below chart of the distribution of wealth in the U.S., we find the same correlation to the downtrends in productivity and labor’s share of the economy.  The bottom 90% of households' (the many) share of the wealth pie topped out in the early 1980s and has declined precipitously since, while the wealth of the top 0.1% (the few) has more than tripled since the late 1970s:

This next chart depicts the remarkable (and recent) spike income growth the few have recently enjoyed, at the expense of everyone else:

The increase in wealth and income inequality and the decline of productivity and labor’s share of GDP are the result of structural changes in the economy, changes with far-reaching consequences.

While it’s appealing to identify policies endorsed by self-serving insiders and elites as the source of these changes, that is far from the whole story. Much of this growing asymmetry stems from profound changes in the global economy that depreciate labor (as conventional labor is no longer scarce) and increase the gains of the top few in a “winner take most” allocation that benefits speculation, leverage and new ways of organizing labor and capital that reward the organizers far more than the users/participants.

In this new era of a steadily shrinking pie, the sources of inequality and related social problems have also shifted.  As a result, the social movements that were effective in the past are no longer effective today. Attempts to address rising inequality with the old tools are fueling frustration rather than actual solutions.

In Part 2 — Social Unrest: The Boiling-Over Point, we examine why our existing models for social change have slipped into ineffectual symbolic gestures that fuel fragmentation and frustration -- and why that will lead to a dangerous boiling over of the 99% against the elites controlling the system.

When that happens (and it seems inevitable at our current trajectory), the rending of our social fabric will happen stunningly fast. The ensuing social disunity and disruption will be of the sort many alive today have never seen.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

This is a companion discussion topic for the original entry at https://peakprosperity.com/the-pie-is-shrinking-so-much-the-99-are-beginning-to-starve/

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One topic that was outside the scope of the essays (parts 1 & 2) that I want to address here in the forum is the difference between the widely anticipated disorder caused by some systemic disruption/collapse of the status quo (what we might call the Prepper Scenario of Disorder) and the sort of disorder I’m trying to describe here–disorder caused by profound economic inequality and disenfranchisement that finally cracks the social contract.
In other words, everything will still work, but people will start acting out their frustration and anger in ways that won’t be limited to the ballot box. When people have hope, they are willing to put up with a lot. But as I describe here, the failure of the current social movement to grasp the real problems and come up with real solutions leaves people with little to hope for. This is a primary source of the opioid crisis IMO.
This heightens the appeal of the charismatic leader of a “new movement”. Most people immediately think of Hitler, but there have been positive charismatics as well.
Much of my work is focused on explaining the intrinsic limits of the two “solutions” offered by conventional groups, pundits, etc.: the market (i.e. the neoliberal fix for everything) and the state (government can fix everything). IMO the problems are now exacerbated by markets and centralized power, not fixed by these dynamics. I’ve endeavored to lay out a Third System that is decentralized, democratic and not dependent on either the financialized, globalized marketplace or the centralized Savior State.
IOW there are solutions, but they lie beyond the status quo of stale, failed, out-of-touch ideologies.

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I doubt the Trump administration will solve any of our problems because instead of draining the swamp he’s filled it with alligators. Rich alligators, who like Trump are only interested in lining their pockets and the pockets of their equally rich friends. Then we’ll see the usual next step of the revolving door, whereupon the alligators will be given very well paid jobs at the companies they’ve enriched.
I’ve said for years that what we need a a revolution–the French kind.

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However, as I have said before and say now, sociology, at least, has put forth two solid principles: The Circulation of the Elite; and, The Iron Law of Oligarchy.
I get the impression, Charles, from your excellent writings that SOMEHOW the people (the masses) will rise and take finally get their fair share, or even take over.
My humble opinion is that we will just have a new set of elites (maybe better, maybe worse), and that oligarchy is here to stay, regardless of democracy PR.

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In the grand scheme of things, it appears to me that the late, Alexis de Tocqueville, noted a basic fact (quite prevalent in the 18th century) that property ownership will be the tipping point in whether change will happen.

I know of no other country where love of money has such a grip on men's hearts or where stronger scorn is expressed for the theory of permanent equality of property.
Or;
Democracy extends the sphere of individual freedom, socialism restricts it. Democracy attaches all possible value to each man; socialism makes each man a mere agent, a mere number. Democracy and socialism have nothing in common but one word: equality. But notice the difference: while democracy seeks equality in liberty, socialism seeks equality in restraint and servitude.
The ability of a man to change his circumstances or maintain his status quo, ultimately, will be tied to society's view of his right to direct his future. "Land" was the driving force behind America's development, (much to the chagrin of the aboriginals of North America). Where have there been major confrontations and social action? Land rights! Whether it's casinos, pipelines, treaty rights violations, etc., the indigenous peoples of NA have picked on this and recognition of land entitlement will be where the S(Will)HTF. The "Third system" will have to have a mechanism built-in to mollify this basic instinct of living things for territoriality if it is to succeed. Age and cynicism has tempered my opinion on that, however, to the negative outcome. Perhaps the opioid crisis or the legalization of weed may play a role in delaying the impending fray (as you suggest)!
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The whole pretext of this website is that overall human wealth and prosperity are directly linked to the availability of natural resources. Since we are nearing peaks in natural resources, overall human prosperity will also peak, and is capped at a certain maximum defined by those natural resources and how we use them. I agree.
So if the size of the pie is limited, why do we continue to tolerate a taxation system (income tax) that places zero limit on the amount of wealth that the elites can hoard? The elites can buy lawyers to avoid paying income tax, but even if they did pay 50% tax (which I’m sure none of them do), there is still no limit to the total amount of wealth they could hoard. At 50% tax they would just hoard it half as fast as with no tax.
It is obvious that the only taxation system that will work in a world of finite wealth opportunities is a wealth tax which limits the total amount of wealth a single person may hold. I find it odd that on one hand we lament the elites, but on the other hand we seem resistant to demand taxation systems that specifically target them and claw back what has been stolen from us.
I think this may be because a large portion of the alternative economics community comes from right wing backgrounds, and they erroneously equate a wealth tax with communism or socialism, which could not be farther from the truth. Or they think that a wealth tax would stifle entrepreneurship and private innovation, which again makes no sense and in fact the opposite would be the case.
In Monopoly, we all know how the game ends. That is exactly what we are living through now because income tax provides no way of limiting the wealth hoarded by the guy at the top.

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Having rights is nicer than having duties, but the problem is that human rights have a cost and that this cost was paid, so far, by fossil fuels. Now that fossil fuels are on their way out, who's going to pay?
Really? Human rights have a cost? Fossil fuels pay for human rights??? So Rosa Parks sitting in the front of the bus required fossil fuels? Wouldn't it have also had the same impact on a horse drawn carriage that didn't use fossil fuels? Women achieving the right to vote required fossil fuels??? That's a stretch IMO. I’ve never bought the argument that as the pie shrinks, universal entitlements like medical care must take a hit, which I presume is one of the things the author of this quote is attributing to “rights”. I would agree that if our entitlements, or "rights", included 200 gallons of free gasoline a year for everyone, then for sure in this era of decreasing energy we would have to take hits. But going to see a doctor? I have a really hard time understanding how it takes so much more resources for a doctor to do his job in a clinic versus being unemployed and sitting at home. He is still eating and breathing regardless. I guess the $1 syringes they use in the clinic require oil to manufacture, and his clinic uses energy, but I just can’t see how these minor extra costs beyond being unemployed sitting at home can lead us to the situation where we are contemplating cutting health care, especially when trillions go missing somewhere else and hardly anyone bats an eyelid. Maybe the high doctor salaries means they will consume more resources? I don’t buy it. I have a different and simpler explanation for why all these so-called “freebies” are now facing the chopping block: because the government pays for them, and the elites don’t like paying taxes. Simple as that. As correctly pointed out, wealth and power are rapidly shifting to the elites. The elites can hire fantastic lawyers to avoid paying much or any income tax (and many can even rewrite the laws in their own favour, which seems to have just happened in the US). This leaves the increasingly impoverished “middle” class holding the bag on government funding as the elites have looted the whole system. It would be more telling to post charts showing how the percentage of government tax receipts coming from the elites has changed over the years: THAT will give you the answer… All you have to do is look at all the poor (and rich) countries with universal medical care. It might not be the best medical care but it’s still universal medical care. Their per capita fossil fuel use is far less than ours but somehow they manage to do it. Their pills just cost 1% of what they do here. The elites have again tricked the masses into thinking that universal medical care isn't affordable because it's so expensive, but it's the elites' own pet corporations that are working the system to extract even more illegitimate profits.
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CHS:…disorder caused by profound economic inequality and disenfranchisement that finally cracks the social contract…people will start acting out their frustration and anger in ways that won’t be limited to the ballot box. When people have hope, they are willing to put up with a lot. But as I describe here, the failure of the current social movement to grasp the real problems and come up with real solutions leaves people with little to hope for. This is a primary source of the opioid crisis IMO.
I think US mass immigration, breakdown of the family since the boomer era, and native birth rates far below replacement (and falling) make a pitchfork scenario unlikely. But after Trump & Bernie, I’ll believe anything.
Further evidence of status quo: the opioid crisis, growing prison population, and declining marriage rates. These are not the stuff of a successful unified cultural response. So I think this will continue or maybe end with a whimper, not a bang.
CHS: I’ve endeavored to lay out a Third System that is decentralized, democratic and not dependent on either the financialized, globalized marketplace or the centralized Savior State.
I think the largest hurtle to this getting traction? Life is too good for intelligent people with their small, intact families, yet these are the people you need to convince to rock the boat. Not to mention the Savior State makes life too easy for the lower class as well. IOW TV, beer, and video games for the proles & Hawaii vacations for the upper class is a winning political combination for the status quo.

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Mark_BC wrote:
The whole pretext of this website is that overall human wealth and prosperity are directly linked to the availability of natural resources. Since we are nearing peaks in natural resources, overall human prosperity will also peak, and is capped at a certain maximum defined by those natural resources and how we use them. I agree.
If PP believes that mankind has reached peak prosperity and its all downhill from here (or that mankind can't continue to improve its social and economic condition), well that would be news to me and I would have to disagree. My take on the problem - an understanding helped greatly by the PP team is more simple: A corrupted financial system base on non-limited credit growth will underwrite greed and massive misallocation of resources, e.g., oil, thereby accelerating the depletion and wasting those resources - and it is this that has the potential to diminish future long term prosperity. It's the unlimited ability to "print" capital and (mis)direct that "capital" against finite resources that is the root of the problem, and it is this we must address.
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Mark_BC wrote:
I’ve never bought the argument that as the pie shrinks, universal entitlements like medical care must take a hit, which I presume is one of the things the author of this quote is attributing to “rights”. I would agree that if our entitlements, or "rights", included 200 gallons of free gasoline a year for everyone, then for sure in this era of decreasing energy we would have to take hits. But going to see a doctor? I have a really hard time understanding how it takes so much more resources for a doctor to do his job in a clinic versus being unemployed and sitting at home. He is still eating and breathing regardless. I guess the $1 syringes they use in the clinic require oil to manufacture, and his clinic uses energy, but I just can’t see how these minor extra costs beyond being unemployed sitting at home can lead us to the situation where we are contemplating cutting health care, especially when trillions go missing somewhere else and hardly anyone bats an eyelid. Maybe the high doctor salaries means they will consume more resources? I don’t buy it. I have a different and simpler explanation for why all these so-called “freebies” are now facing the chopping block: because the government pays for them, and the elites don’t like paying taxes. Simple as that. As correctly pointed out, wealth and power are rapidly shifting to the elites. The elites can hire fantastic lawyers to avoid paying much or any income tax (and many can even rewrite the laws in their own favour, which seems to have just happened in the US). This leaves the increasingly impoverished “middle” class holding the bag on government funding as the elites have looted the whole system. It would be more telling to post charts showing how the percentage of government tax receipts coming from the elites has changed over the years: THAT will give you the answer… All you have to do is look at all the poor (and rich) countries with universal medical care. It might not be the best medical care but it’s still universal medical care. Their per capita fossil fuel use is far less than ours but somehow they manage to do it. Their pills just cost 1% of what they do here. The elites have again tricked the masses into thinking that universal medical care isn't affordable because it's so expensive, but it's the elites' own pet corporations that are working the system to extract even more illegitimate profits.
Mark, I sincerely suggest that you spend the next 8 years of your life (assuming you already have a 4 year BS degree) in pursuit of adding an MD to your name. Then, you can examine too many snot nosed kids and other entitled individuals, deal with restrictions from your local and national medical boards, and spend an inordinate amount of time fending off the lawyers who want to remove excess "wealth" from your pockets. You'll also need to employ a staff to handle all the mundane details. Then, add in lots of really expensive specialized equipment needed in your practice. All of this adds up to an enormous obligation to your educators, your financiers, your employees, and your family (oh, and don't leave out the various levels of government who want to tax all your efforts.) You are a cash cow to all these folks. If you still feel that universal medical care is a worthwhile goal ... you have 100% of my support (so far as your participation is concerned.) Given a choice, I choose not to participate in universal healthcare. It isn't a right. Rights - like free speech - don't have a price tag associated. Benefits - like free medical insurance - end up costing someone. That's one of the huge differences. Should the elites be required to fund this? Ever wonder why they also have an "us" VS "them" attitude? If government got out of it completely, medical providers would have to compete for business. If all they offered were plans that were too expensive, they'd go out of business. Some clever individual/company/corporation would figure out how to provide a service for a price that their customers would be willing to pay. In fact, there would be many types of these agreements, because one size rarely fits all. I can then choose to customize my coverage as I deem. If I choose to go naked (no coverage,) I should be given the option of not receiving medical attention if I choose not to pay when the time comes. Them's the breaks. Since you (as a future practicing MD) and other bleeding hearts want to save idiots like me who choose (or are forced by circumstances) to be without medical insurance, please donate your time, resources, and efforts for a cause you believe is worthy. If it is just as you point out in your post, it really isn't a big deal. After all, only 1% of their costs are due to pills (according to you.) I give of my time and resources where I see fit. Whenever I feel my heart needs to bleed, I do so through a needle into a bag. Nobody pays me to do this. It is strictly voluntary. I don't know who gets my blood. I like that model. If government required me to donate blood (because my blood is so red,) I doubt that I would ever do it again. It would change from a gift to a tax. It isn't the same and it doesn't impart the same feeling either. If you really want universal health care, figure out a way to give elites the appropriate amount of kudos for giving of their time and resources toward this end. Then, instead of having an antagonistic relationship, you would have cooperation. Unlike negative reinforcement (taxes,) positive reinforcement is its own reward. Then, the situation will morph into us AND them. Grover
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Tick tock.

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Charles, I think the likelihood of any kind of revolution is almost nil. This is for reasons too numerous to list.
However my guess is that the pitchfork necessary to give a modicum of freedom to the proles exists in the blockchain. It is a global local currency. Goods and services can be provided with crypto compensation, without the use of fiat.
The power to rule the proles by the elites resides in one simple mechanism, the ability to create money out of thin air. Not just this ability but also by fiat to force everyone to use it. The incredibly rich white guys that started this country saw the danger in the unrestrained power of banks. One might very well plot the history of this country as the battle against the bank of England. As of this point in time it appears the Bank has pitched a shutout.
Of course cryptos are a double edged sword. If the Banks cannot regulate it out of existence which they are attempting as I write, they will attempt to co-opt it ( which clearly they are doing as well)
I would be interested in your thoughts since you are one of the few here with an open mind about cryptos and are possessed of a unique vision of the future.
Thanks

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Interesting this increasing use of the term “Saviour State”. (Did CHS start it? No matter. It’s in use.)
Read the Wikipedia article on “Imperial cult of ancient Rome” and you’ll find so many parallels to contemporary society that I can only marvel. History is not repeating but it sure is rhyming. Here’s a few examples; the bold emphasis is mine.
To help chase prosperity, the form of government was changed from a republic (back) to a monarchy:

Augustus's reforms transformed Rome's Republican system of government to a de facto monarchy, couched in traditional Roman practices and Republican values. The princeps (later known as Emperor) was expected to balance the interests of the Roman military, Senate and people, and to maintain peace, security and prosperity throughout an ethnically diverse empire.
Today it's all about prosperity, isn't it? If the current system breaks down, what might arise to replace it? I have been reading opinion in PP that it could be some odd conflation of religion with economics under military control. Democracy will be assessed as having failed too, and will be let shrivel to nothing. Could that possibly happen in this day and age? Read on:
A deceased emperor held worthy of the honor could be voted a state divinity ... by the Senate and elevated as such in an act of apotheosis. The Imperial cult was inseparable from that of Rome's official deities, whose cult was essential to Rome's survival and whose neglect was therefore treasonous.
The world is not desperate enough yet to to start playing the treason card much — yet —, and it would be a major exercise of hypocrisy for Them to start doing so in view of the ISDS provisions built into "free trade" agreements like the TPP (to be signed by the rump nations in March). As you know, the TPP is not a Trade Deal, it's a Sovereignty Surrender Deal; the citizens of the affected countries most emphatically have not been asked if they want their sovereignty to be signed away like this, and hence the various national governments are all guilty of treason, treason by trade. But these deals are essential to our survival — aren't they? We need to replace the Westphalian nation-state system, don't we? If the system breaks down in earnest, as one response we might see whence some radical, even weird, new polity might come:
There are several cases of unofficial cult directed at men viewed as saviors, military or political. In Further Spain in the 70s BC, loyalist Romans greeted the proconsul Metellus Pius as a savior, burning incense "as if to a god" for his efforts to quash the Lusitanian rebellion led by the Roman Sertorius, a member of the faction which called itself "men of the People"....
Keep reading the article. It's fascinating. All hail "men of the People" ! They know what's good for us!
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rights to economic security, i.e. entitlements that are extended universally to all citizens for education, healthcare, old-age pensions and income security.
NONE of these are rights…these are privileges.

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“I have a different and simpler explanation for why all these so-called “freebies” are now facing the chopping block: because the government pays for them, and the elites don’t like paying taxes”

  • No one likes paying taxes.
  • Medicare, Social Security, and Obamacare are UnConstitutional, FDR and the Federal Reserve warped and perverted the word Welfare into what it means today. Our Founders would have called it Poor Relief.

“It might not be the best medical care but it’s still universal medical care. Their per capita fossil fuel use is far less than ours but somehow they manage to do it. Their pills just cost 1% of what they do here.”

  • Again it’s UnConstitutional.
  • Other countries pills cost less because the US subsidizes them. (through our military complex; aka defense of those nations, and through our citizens paying high medical costs, because the businesses have to find the profit somewhere to continue creating new medicines and medical devices.
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“I have a different and simpler explanation for why all these so-called “freebies” are now facing the chopping block: because the government pays for them, and the elites don’t like paying taxes”

  • No one likes paying taxes.
  • Medicare, Social Security, and Obamacare are UnConstitutional, FDR and the Federal Reserve warped and perverted the word Welfare into what it means today. Our Founders would have called it Poor Relief.

“It might not be the best medical care but it’s still universal medical care. Their per capita fossil fuel use is far less than ours but somehow they manage to do it. Their pills just cost 1% of what they do here.”

  • Again it’s UnConstitutional.
  • Other countries pills cost less because the US subsidizes them. (through our military complex; aka defense of those nations, and through our citizens paying high medical costs, because the businesses have to find the profit somewhere to continue creating new medicines and medical devices.
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I never thought I would actually find my twin. How are you doing, brother?
I couldn’t agree more, I get in argument with friends all the time over what actually started the Revolutionary War.

  • The Bank of England regulating the currency…this was the “Taxation without Representation”; but to get the commoners behind the cause (since they didn’t understand what was happening) they had to blame the taxes.

I see the same happening with crypto, and the possibilities if we can prevent the banks from joining…since banks aren’t necessary with crypto
I really hope people wisen up to what’s happening out there.

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Responsibilities and rights (in that order) are what make a society function and livable. You contribute to make society what it is, in return for that you receive returns. That is what the social contract between state and individual is about. It is a give-and-take.
Why is it normal that your security is covered by enforced laws (i.e. if someone shoots intentionally at your car when you pass by, you’d expect that person to be stopped/ arrested by representatives of the state), why are roads and a minimal maintenance of these a given? Yet basic health care would not be? Security, access and basic public health level are all necessary for a productive society.
If we draw the logic that society has no obligations to its individuals and thus that they have no rights further, then we’d be living in a mad max society. Where do you put the cut-off line? Do you find the rights from the Universal Declaration of Human Rights http://www.ohchr.org/EN/UDHR/Documents/UDHR_Translations/eng.pdf optional? Some of these maybe? Been in too many countries where these were trampled all over to know that these rights are important…
The challenge is to find the sweet spot where individuals get enough minimum needs covered that allow society to function well against a reasonable ‘price’. That should be the role of the state to guarantee this (either directly or by facilitating this). Whether it does that or not in practice is questionable, but the intent should be there. Interesting to read through the Universal Declaration of Human Rights, how many are actually respected in our societies at this moment?

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Good discussion, as always. Please forgive the scattershot approach.

  1. As the pie shrinks, the elites will experience a monumental reduction in their wealth and income, which are largely based on phantom “assets” (debt) that have been inflated by a decade of central bank magic. As many have noted, the stock/bond markets have detached from the real economy. Eventually these will reconnect, despite the central banks’ efforts to dispense with reality.
  2. In my book on Universal Basic Income, (Money and Work Unchained), I went thru the exercise of using IRS tax data and concluded that raising the needed $1+ trillion annually to fund UBI solely from the top .5% would require the top .5% to pay 80% of their income in taxes. This is politically unlikely, given wealth casts the only votes that count.
  3. Sadly, whatever is “free” (to the user) is squandered without thought. This is human nature. If there is no cost/price, then there’s no inhibiting waste.
  4. as far as I know, I coined “the Savior State” in my books, though maybe it has many parallel sources.
  5. Mohammed, you raise an excellent topic–bypassing the status quo via blockchain and other decentralized systems. As Bucky Fuller said (not an exact quote), you don’t change a system by fighting it, you change it by making it obsolete. IMO blockchain/cryptos could obsolete the intrinsically corrupt centralized issuance of currency, credit and wealth of the status quo. I am especially interested in cryptos that are issued in exchange for useful work performed by participants in a community. One example is SteemIt, which issues currency for content. I expect to see more of these innovations, which I deem superior to bitcoin-type cryptos which naturally flow to elites, old or new (i.e. HODLers with mega-positions in BTC, so-called Whales).
  6. Wherever I look in American society, I see staggering waste of capital, human effort and energy. We could live comfortably on half the expenditure of energy, once we jettison the “endless growth is necessary to boost GDP or we all die” perversity known as the “economy.”
  7. “Healthcare” is Sickcare because it’s tightly tethered to maximizing profit by any means necessary but untethered from the inputs to health: diet, fitness, mental health, stress from insecurity, etc. Profits are maximized by generating and then “managing” chronic illnesses. This is the only possible output of the system as it is.
  8. If there is anything in my writing that is difficult to grasp, it’s this: not everything that has value is profitable. Yet our system is built on the assumption that anything that isn’t profitable has no value, because if it had value it would generate profit. perfectly circular reasoning, and perfectly false.
  9. I agree with the view that revolution is unlikely due to the distribution of Bread and Circuses, but my point in all my recent essays here on PP.com is that the pie shrinking will fragment the various groups getting various levels of Bread and Circuses: tax havens for the top .01%, subsidies for favored cartels, UBI/welfare for the masses, etc. Everyone has been trained to expect “more,” and “less” generates an outsized response of indignation, anger and frustration that will generate conflict that cannot be resolved politically in the 20th century fashion, i.e. give everyone “more.”.
  10. Attempts to “borrow our way out of debt” and “printing our way to prosperity” appear to have worked for a decade, but at the cost of reducing the system’s buffers. Pushing monetary magic to new extremes will fail, and Venezuela is the model of what happens when you rely on monetary tricks to maintain the status quo.
  11. The core problem IMO is the status quo has disenfranchised the vast majority of participants but has done so indirectly via the slow decay of opportunities to build capital in all its forms. The decentralized system that would obsolete the status quo will only succeed if it actively encourages capital acquisition by every participant.
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Charles is advocating Universal Basic Income, but at least he admitted that something unearned will be thoughtlessly squandered. So, how much should be given to the plebs to keep them happy? Whatever answer seems appropriate now will become insufficient very rapidly. Greed knows no bounds - particularly when it only takes voting to acquire more State supplied freebies.
Capitalists can buy materials, equipment, and buildings to produce useful products. Capitalists used to need labor to do all the work. It was an uneasy standoff between both groups. As artificial intelligence (AI) and robotics progress, less and less labor is needed to accomplish these tasks. When AI and robots are able to do everything that labor once did, there will be no need for labor. What would motivate a rich capitalist to work and risk their fortune only to have it taxed of nearly everything to pay “useless eaters” to consume dwindling resources? The only plausible answer is to keep the masses from revolting. So, what happens when there are no rich no more? (See title of this post for my answer.)

Grover