Destruction not Disruption – The New Economy Serves Only the Elite
“I don’t want a nation of thinkers. I want a nation of workers.” – John D. Rockefeller
Congressman Larry P. McDonald (who was later shot down on a Korean Airlines 747 by the Soviets) said in 1976, “The drive of the Rockefellers and their allies is to create a one-world government combining supercapitalism and Communism under the same tent, all under their control.. Do I mean conspiracy? Yes I do. I am convinced there is such a plot, international in scope, generations old in planning, and incredibly evil in intent.” Watching the dystopian Hunger Games series, one can’t help but wonder how this supposed fiction is in substantive ways different than our modern, ‘developed’ world. Both contain large, underdeveloped regions dominated by (coastal) elite cities where the wealthy, powerful and most beautiful live. Both offer those unfortunate enough to not having been born into wealth the opportunity to rise up the ladder, with a variety of bizarre ‘talent’ competitions (American Idol, The Voice, etc.) and other, often physical feats of exceptionalism, yet statistically speaking the upward mobility of both societies is much less than advertised. In the United States, the percentage of people earning more than their parents by generation has dropped from over 90% in 1940 to less than 50% today. Compared to other counties, the United States has one of the highest shares of wealth held by the top 10% households, at 79%, ahead of Germany (60%), the UK (52%), France (51%), Italy (43%) and Japan (41%). The odds of becoming a startup billionaire are about as low as making it into the professional sports leagues, yet millions still try, although increasingly this is done by immigrants, as Americans lose confidence in democracy and capitalism. The main difference between America and Hunger Games is arguably the hunger, given how Americans are one of the most obese people on earth, indicating the ruling elite may realize hunger foments revolution..
This stratification is also happening in places like historically egalitarian France. “Métropolisation has cut French society in two. In 16 dynamic urban areas (Paris, Lyon, etc.), the world’s resources have proved a profitable complement to those found in France. But cities that were lively for hundreds of years – Tarbes, Agen, Albi, Béziers – are now, ‘desertified,’ haunted by the empty storefronts and blighted downtowns that Rust Belt Americans know well.”
“The most powerful force in the world is compound interest.” -Albert Einstein
Historically, the Catholic Church has taught the taking of interest on loans is sinful. Looking at the size of debt in the world, however, would indicate this lesson has gone unheeded. The world’s debt, combining private and public (government) obligations, has reached a record $244 trillion in 2019, more than three times the size of the global economy. In a world still recently recovering from a financial crisis that nearly destroyed its banking system in 2008, the major central banks sit on ever larger balance sheets they used to bail out the banks, with the US Fed quintupling its holdings to $4 trillion. According to Robert Gore, 30 year bond trading veteran, bailouts have been getting progressively larger, and they barely managed to contain the 2008 crisis.
Much of this liquidity was poured into tech stocks and buybacks by major corporations, pushing valuations and the overall market into yet another equity bubble. Chamath Palihapitiya, “one of Silicon Valley’s most outspoken investors slams the ‘bizarre Ponzi balloon’ of the start-up economy.” Yet financiers continue to maintain outsize influence over economic policy making, with Gary Cohn, President Trump’s chief economic adviser and formerly of Goldman Sachs, reportedly lifting papers off Trump’s desk to stop the president from leaving NAFTA. Highlighting the primacy of finance over goods-producing sectors, Morgan Stanley asserts “US stocks drop when the US Dollar weakens”, which would boost manufacturing exports.
Former British Prime Minister Attlee stated, “Those who control money can pursue a policy at home and abroad contrary to that which is being decided by the people.” Britain depended on finance for nearly 10% of its GDP before the 2008 financial crisis. Economist Michael Hudson continues, “The British Banks, just as in the 19th century, don’t put their money into British manufacturing. They put their money into real estate speculation, financial speculation, foreign currency trade, so the financialization of London has helped de-industrialize the country because it has enabled Sterling to be supported by this huge inflow of hot money. This inflow of drug dealing money and criminal money and tax evasion money from all over the world.”
In the Trenches
“I’m destroying the American economy.” -former co-worker who outsourced their department to a cheaper country
A Mexican janitor once asked me if I had a family. We had become acquainted after exchanging friendly hellos around 10 or 11pm when he made his rounds at the office, presumably then because everyone would be done for the day and away from their desks. I guess I was exceptional in that sense, but in another I wasn’t at all. Because none of my friends, with a small percentage of exceptions, had what my acquaintance was asking about – children and a stable homelife with a spouse. I remember mumbling something to him about “well, in America you have to make a lot of money to impress a woman”, but obviously he was here and had a family – doing some pretty low-paid work – so what I should have said was in American ‘culture.’ Some culture.
In America, it’s become increasingly high-low. There is very little middle. Once known for its enormous middle class, years of offshoring factories, ‘right’-sizing, mass streamlining through automation and work-process improvement, low union membership, and financialization has left a country that worships the billionaire while ignoring the growing line of homeless camps on the streets underneath the skyscrapers. Keynes predicted a 15-hour workweek in the 21st century, creating the equivalent of a five-day weekend, writing “For the first time since his creation man will be faced with his real, his permanent problem how to occupy the leisure.” [Economic Possibilities for Our Grandchildren, Keynes (1930)] Yet he grossly underestimated the human need to fight for rank – leaving most scrambling to make it to the top even while those opportunities are leaving. Anon writes, “The biggest irony is that education becomes ever more costly while knowledge becomes ever more abundant. Every book I read in 15 years of school is now out there in one click, and in my country private tuition for kids and online training for adults is a huge and growing industry, covering everything you would do up to a masters degree minus the internship and the degree certificate and maybe the hands on part. Contrast this to the corporate world – where you need 4 damn years of undergraduate college, maybe a masters on top of that, or a PhD in some fields like data sciences, and then it might take an MBA and then a few more years of crazy, crazy grind (like Amazon) before you’re even OK to consider settling down and thinking of starting a family.”
Unviable at any Price – A History of Labor and Capital
Pope Pius XI described communism and capitalism as “twin rocks of shipwreck.”
“Globalization is about selling more toilet paper.” -Steve Sailer
Small business formation used to form the backbone of the American dream, offering people from anywhere the chance to open up a small grocery store, farm, or metal working shop. With the massive economies of scale of globalization, however, these small business have been increasingly marginalized. According to JP Morgan Chase, the average annual number of small business formations from 1977 to 1982 was approximately 150,000. By 2009-2013, the average was negative, after trending downwards steadily since the 1980s.
“It used to be that every town had a local hardware store or welding supply company with the Mom in the back doing the books and the Dad in the front with the trucks. Their value add was location. With financialization, Wall Street would buy up the most successful shop in the area, and finance him so he could put all the other guys out of business. They’d do this with debt, so would they would standardize everything and layoff employees to cut costs. (e.g., Mitt Romney with Staples) The result is all the wealth flowed to New York City and hollowed out the local small business base.” -ZMAN
Immigrants to America now serve as direct consumers and cheap labor sources for large businesses, filling jobs in construction, fast-food and retail that American teenagers used to do prior to immigration reform in 1965. Amazon, who “refuses to build tech for US immigration” control, has joined other tech giants to support removing caps on high-tech H1-B visas.
Sir James Goldsmith, corporate raider who saw what his business was doing later in his career, remarked,“Who benefits? I’ll tell you who benefits. The big major corporations. There’s a divorce between the interests of major corporations and society. How do they operate? They’re no longer linked to the United States or to France or to Britain, they operate by farming out their production to whatever country produces the cheapest labor. Wherever they can get the biggest return on capital and pay the lowest part to labor. We will create on a scale unheard of in mass migration. What we saw in Rwanda, two million people turned to nothing. And the result is we are destroying the stability of our society because we are worshiping the wrong god – an economic index.”
When the US passed NAFTA, it put millions of Mexican family farmers out of business by sending cheap grain south (Mexico was the most obese nation in the world in 2013), encouraging northward migration. Like Rome before it whose senators stole the lands of its farmer-soldiers as they fought in the empire’s campaigns, America seeks to sell the native populations of countries it invades with promises of becoming part of the greater empire. Government benefits, education, healthcare, and promises of status await those willing to serve. And now Europe is facing a similar onslaught of millions of foreign migrants, turning it into yet another Americanized place with deracinated peoples and cultures, a slave race united only by the basest desires of food, song, and material possessions offered by the globalist consumer brands. The drive to homogenize the consumer class, which arguably began in America after the second World War with the busting up of ethnic Catholic neighborhoods to drive them into the deracinated suburbs has now gone global. We now all worship at the altar of McDonalds and Coca-Cola.
The Left Abandons the Working Class
“For decades, Democrats have suffered continuous and increasingly severe losses among white voters. But preparations by Democratic operatives for the 2012 election make it clear for the first time that the party will explicitly abandon the white working class.” – The New York Times
According to the US Census, 40% of young Americans were living with their parents or siblings, the highest since 1940. Estimates say 200,000 homeless live in the West Coast of the United States, with concentrations in major cities as stagnant wages and skyrocketing housing prices leave people with fewer options (on the East coast, New York City alone has 74,000 homeless.) 2.5 million children were homeless in 2013, three times higher than in 1983. Stories of 4th-generation Californians, working as teachers who end up living in cars are becoming typical. And there is no guarantee of employment no matter how low wages drop. In the ruthless logic of capitalism, your skills just may be unviable at any price – just look at the story of the American farm horse. No longer needed as a work animal after the internal combustion engine made it uncompetitive, the population of horses in the United States dropped from 22 million in 1900 to 3 million by 1960, for a country with a substantially higher human population.
In the 1990s, NAFTA began doing to American manufacturing what trade with Asia had been doing for decades prior. According to Robert E. Scott of the Economic Policy Institute, “In the treaty’s first decade the U.S. Department of Labor tracked claims for unemployment benefits for workers who could show their employers had moved their jobs to Mexico. When the total passed 500,000, however, President George W. Bush ordered the Department of Labor to stop counting. By 2010, trade deficits with Mexico had eliminated 682,900 good U.S. jobs, most (60.8 percent) in manufacturing.” In 2009 the second Bronfenbrenner report ‘No Holds Barred’ found 57% of employers facing a union election threatened to close their worksite. The impact on union membership has been predictable. In 1960 membership peaked near 33% of Americans. By 2018, membership hit a record-low of 10.8%. The share of income going to the top 10%, however, has risen from 33% to nearly 50% today. According to the AFL-CIO’s Thea Lee, “Bill Clinton did sell out his traditional blue collar workers, and a lot of people haven’t forgiven him on that.”
“When I was growing up all of America used be high tech. Now it’s just shoved into a sliver of Silicon Valley.” -Peter Thiel
America’s role in the global economy has declined by nearly 50% since 1960. With manufacturing industries comprising their highest share of sector employment by the 1950s and 60s at approximately 35%, the middle class never enjoyed a greater time whereby a man with as little as a high school diploma could get a job and earn enough to buy a house and support a family. Since then, however, manufacturing’s share of the labor force has declined precipitously, to just over 9% in 2018. ‘Services’ have come to dominate employment, favoring women and the highly educated over physically strong men. The result is many of these men can no longer support a family, with single motherhood becoming more common. For African-Americans, only 36% of parents are married, a community traditionally over-represented in physically-demanding jobs like manufacturing. By contrast, Asian parents, traditionally strong academic performers, are married 85% of the time.
The share of manufacturing’s role in GDP has followed a similar downtrend to employment, although at a slightly slower rate, indicating automation has played a role. The US chemical industry, being more capital than labor intensive demonstrates this trend, representing roughly half of all investment in American manufacturing. Yet the decline in labor’s share is directly attributable to offshoring of manufacturing, with Apple’s “Designed in California, Made in China” trademark illustrating. Commenting on NAFTA in 1992, Ross Perot famously said, “If you’re paying $12, $13, $14 an hour for factory workers and you can move your factory South of the border, pay a dollar an hour for labor,..have no health care – that’s the most expensive single element in making a car – have no environmental controls, no pollution controls and no retirement, and you don’t care about anything but making money, there will be a giant sucking sound going south.” The evidence has proven him right, with innovation taking a hit as well. “I’ve seen the greatest minds of my generation making toys and working on the problem of how to get someone to click a link 1% more often.” -Pax Dickinson
The Invisible Hand and the Moral Redress
When Adam Smith first wrote Wealth of Nations in 1776, he was critiquing a system of mercantilism that restricted trade, favored national monopolies, and enabled a corrupt oligarchy that used the power of empire to enrich itself and sought to keep wages low for workers. Writing at the beginning of the industrial revolution, Smith noted the tremendous wealth being generated by a new class of producers – the industrialists – operating under an ‘invisible hand’ that harnessed the self interests of market participants to more efficiently produce at the lowest price possible to satisfy a growing class of consumers. Without government intervention, he saw consumers rewarding the best producers of goods with their business, thereby incentivizing producers to work harder to be faster, better, and cheaper. This virtuous cycle of competition was at the root of the capitalist model. As the industrial revolution took hold, Smith’s Wealth of Nations became the bible of the new industrial elite. More conveniently overlooked, however, was Smith’s earlier work The Theory of Moral Sentiments, published in 1759, that argued that man acts in a way in which he considers just. Sympathy exists when a community shares notions of justice, but fails to achieve the benefits of trade and a common market when man does not care for others. Pope Leo XIII argued that is is “incontestible,” that “the wealth of nations originates from no other source than from the labor of workers.” [Quadragesimo Anno, Encyclical, On the Condition of Workers, 51] The Benedictian monk’s motto was ‘ora et laborum’ – to ‘pray and work’.
Without moral restraint, a market devolves in producers trying to cheat their customers, and customers trying their best to steal from the producers. In societies that do not consider it immoral to cheat on tests, cut corners, and use deception, one sees phenomena like that in China where mothers were inadvertently feeding their newborns contaminated milk the manufacturers had laced with melamine. Competition had become so fierce between farmers that in order to cut costs they had added low priced yet suspect protein additives to their milk that likely contained melamine from ground up plastic used as filler. Even for China, which has a long history of callous etiquette and corruption at the highest levels, as 54,000 babies were hospitalized and 12 died from melamine contamination, this marked a new low in their surging capitalist economy that to this day reinforces the notion that people cannot fully trust one another.
In Europe and America, many believe capitalism developed in such a way that wealth was more evenly distributed and scandals such as that seen in China were less common (although certainly not absent) was Christian morality. “The farmer knows that man, by his labor, is to control material things; that material things are not to control man.” – Pope Pius XII, 1946. Being able to trust one’s local baker not have to poured sawdust into the bread, and not having to haggle over every small transaction like in many market stalls elsewhere in the world not only made doing business much more pleasant – it was simply more efficient. In the words of Nicholas R. Jeelvy, “religion is beneficial for many reasons, chiefly its skill at moderating the excesses of human behavior, providing structure and support to the various members of the community, and lending God’s strength to the average man so he can face the daily challenges of life.” As Europeans have moved away from Christianity, and replaced it with a vague notion of Enlightenment individualism and moral relativism, the hesitation manufacturers might have once felt about moving factories out of the country has been replaced by Ford Motor Company attempting to move its production to Mexico.
Solidarity, not Socialism
“Being able to sustain a family on a working wage is the ultimate criterion of being in a just society.” -E. Michael Jones
Absent a moral redress, what ultimately stopped Ford from moving its manufacturing was putative threats from the government (i.e., Donald Trump.) Tariffs and restrictions on large multinational corporations setting up in regional areas would can economic efficiency (total production output), but the gains to local business and opportunities for workers allows the value added to be shared more evenly. Looking no further than how the Amish conduct their communities, which are largely self sufficient in food, building materials, and most major furnishings for equipment and small-scale industry demonstrate how this approach is not only possible, but preferable, given how consistently happy and prosperous the Amish are. Growing from a small population of around 5,000 in the 18th century to over 300,000 now, the Amish model has proven both sustainable, successful in terms of growing territory, and equitable, giving opportunities for family growth and genuine happiness and comparable life expectancies to most Americans even without all the “advanced” medical care.
The Catholic concept of subsidiarity offers some solutions. “Subsidiarity is the idea that things should be done at the lowest level competent to carry them out. It would suggest that if hamburgers can be flipped effectively by a man with a small amount of capital, then it is unnecessary, and in fact dysfunctional to use a multinational corporation to do the same job.. Large scale production robs the business of supplying human wants of its personal and social functions by having machines produce massive amounts of goods while simultaneously minimizing the number of workers required in the endeavor. While this is appropriate where the workers so displaced can be gainfully employed elsewhere, especially when those that remain maintain a strong connection to the activity of production, it is seldom the case in Western practice.” [Small is Always Beautiful: E.F. Schumacher and Catholic Social Perspectives in the 21st Century – Culture Wars, April 2017]
Distributism, a concept developed by Catholic thinkers G.K. Chesterton and Hillaire Belloc, advocated for a widely distributed allocation of capital, utilizing guilds and antitrust legislation to limit the concentration of capital and large monopolies. “Where there is concentration of ownership of the machines, there is concentration of the incomes from production in the owner’s pockets and an almost constant threat of unemployment for the disenfranchised. Despite amply supplying the products for consumption, it fails to supply the other objects of work leaving workers ill equipped to provide for their families. It increases the average GDP per capita, as the apostles of capitalism are keen to point out, but very little GDP gets into the average capita pocket. Too often development aid exported the same unfortunate mechanism into the third world. Nigeria’s total textile production could be increased by building a $10 million mill, but it may put 10,000 Nigerians out of work in the process. Schumacher would suggest instead spending $1,000 on each of those 10,000 Nigerians to give them hand looms, to achieve a similar national result.” [Small is Always Beautiful: E.F. Schumacher and Catholic Social Perspectives in the 21st Century – Culture Wars, April 2017]
Reigning in Finance
Control of ones own currency and by extension the monetary supply is critical to a healthy economy and society. Keeping large banks, which have the power to buy and sell governments though their politicians, at bay is critical. The Federal Reserve of the United States, which has debased America’s currency by over 95% since its creation, is owned by the private banks of America, despite its deceptive sounding name. And it effectively gives them free money today at next to zero interest rates, which is then loaned out by the banks to the people at many multiples higher of interest rates. Banking is not necessarily a corrosive industry, but when the banks today are given virtually free money, have the power to lend out money they do not have in the form of fractional reserve banking and then repossess any assets their borrowers have as collateral when then fail to pay the bank, and finally have the backstop of the federal government to bail them out when things go badly, bankers seemingly cannot lose. And when businesses cannot lose, they become reckless, seeking to capture nearly unlimited upside and handing over any downsides to others. It’s a corrosive incentive structure, and one which nearly destroyed the global economy in 2008/2009. Lending to the poor, needy or desperate – as what was happening prior to the ’08 financial crisis in the form of NINJA loans (No Income, No Job Applicant) for home mortgages used to be called usury, and it was outlawed in the bible.
The Western banking system of collateralized debt, charging interest on unpaid amounts, and ultimately getting paid almost no matter what with the options to reposses assets or government bails outs and you have a recipe for disaster. Banking has become so powerful that the Treasury Secretaries of the United States now operate in a revolving door model between Washington and New York Banks like Goldman Sachs. “In the old days, you could control a country through military force. Today that is not necessary, you can simply lend them money and you turn them into a colony.” – former Malaysian Prime Minister Mattahir Mohammed. In Islamic banking, fees are legitimate, which are a one-time thing, while compound interest is not. Interest on interest is viewed as fundamentally immoral, as it rewards something for no work or risk.
Alternative models of investment do exist in the West, however. In contrast to the New York dominated banking system, the Silicon Valley model of venture capital equity financing offers an alternative to the banking model by sharing risk and reward. In venture capital, investors seek to back promising entrepreneurs with capital in exchange for ownership stakes in the nascent company. If the venture goes poorly, the VC investors lose out, but do not harm anyone else but their own fund investors. Because they are not lending money they do not have (as is with fractional reserve banks), there are not catastrophic and cascading knock-on effects in other companies’ balance sheets as what happened when large credit institutions like Lehman Brothers went belly up (and Citibank almost did short of a government bailout.) In the VC world, this align incentives with the entrepreneur, and if the business creation success of Silicon Valley is any indicator versus debt-based finance of New York, it is also a more prosperous one in the long term.
Countries of Note
- Japan – The Economy Should Serve the People
“Some years ago someone asked why the Japanese wouldn’t loosen their rules on American exports, since it would give the Japanese cheaper goods (although it would cause some Japanese to lose their jobs). A Japanese friend remarked Americans think like Coolidge: ‘The business of America is business.’ By contrast, the business of Japan is the Japanese. My libertarian mind was blown. You mean the economy should work for the people and not the other way around? You mean economic growth isn’t your main purpose in life? You mean my life can be improved by adopting government policies that might lower my material standard of living?” – Citizen of a Silly Country. In Japan, where the population is projected to shrink in the coming years, immigrants are largely disallowed, as they would displace Japanese workers and divide the society. Yet Japan is one of the few technologically advanced societies that has embraced automation – particularly in dangerous industrial work and in medical applications requiring care for the elderly. When a society ultimately asks “is this good for us” and has a government that embraces this, technology is not necessarily the menace it has become in places like America, where automation threatens millions of jobs to little or no response from government and business officials.
The Japanese way is largely to cut costs through productivity – not by firing workers. The story of the 47 Samurai tells of piety as the highest virtue – to family, to lord, to the emperor, to the company, to the country. During downturns, all clean the factory, and take pay cuts to avoid layoffs. The distribution system in Japan serves a certain social benefit. Rice, for example, has massive tariffs, but protects farmers, warehouses, etc. With a highly competitive export sector and a ‘Buy Japan’ mentality, Japanese view their companies as part of the social contract. During the 1990s Japan slump, Americans and others like ‘The Economist’ or Ben Bernanke got off on telling Japan to ‘restructure’, ‘close zombie companies’, etc. In the 2008 Western financial crisis, Asia stopped listening.
- Germany – Every Man Has His Place
From early age Germans are given one of three educational and employment track that matches their ability after 4 years of Grundschule. Hauptschule (for unskilled tradesmen, 9 years), Realschule (for skilled tradesmen, 10 years), and Gymnasium (12 years, for engineers and the like.) Additionally, Germans are known as efficient and punctual workers, starting and stopping work on a consistent schedule. Unions and management work closely together, and during economic downturns the KurzArbeit program reduced hours worked for everyone to avoid layoffs. To own an automotive repair shop in Germany, you have to go to school for several years, then you can apprentice for 7 years until you become a Meister (Master), only then can you own a shop. This keeps people serious about their craft, and world competitive.
Unlike the United States, which has the worlds largest trade deficit at around $800 billion a year, Germany has the second largest trade surplus in the world, close to $400 billion per year. It’s products are sought after globally, whether in the automotive, chemical, or machine tooling industries, Germany stands out. Its government actively seeks to promote its exports and having a positive trade balance, and during the 2008/2009 downturn the government implemented the Kurzarbeit program, which gave employers incentives to cut work hours across the board to lower costs, rather than laying off workers. In general, the German model is labor and management have (nearly) equal say at the decision table. The result is Germany has low unemployment, great apprenticeship programs, and an extremely prosperous society.
- Singapore – Rule by Pragmatism
Once considered a small backwater in Asia, overshadowed by its much larger neighbors of Malaysia and Indonesia, depending on them for water and oil, Singapore has rocketed forward since its independence after the Second World War to become one of the most prosperous nations in the world, having a higher median income than Americans. Considered one of the ‘Asian Tigers’, Lee Kuan Yew, Singapore’s multi-decade ruler, cannot be overlooked. His strong oversight, harsh punishments for corruption, and willingness to work with multinational corporations (provided they offer jobs, training, and capital to Singaporeans) set his nation apart from almost all others in Asia. His philosophy of aggressively trying ideas, having alternative approaches, and ultimately adopting ‘what works’ regardless of ideology or origin allowed his country to develop rapidly. As an effective city state of only about 4 million people, Singapore also demonstrates the advantages of having a small country, where strong, non-corrupt governance can go an extremely long way – as opposed to the unwieldy and often ‘mob-rule’ of the world’s large and ‘great’ democracies.
Leadership – Tripartist Corporatism
A Chinese friend once asked me why there were so many potholes in America. In China, he said there were hardly any, because the government would give the unemployed jobs to fix them. I’ve often wondered why America can provide similar work programs to the hundreds of thousands of homeless in tent cities in major urban centers. Instead of giving them tens of thousands of dollars to live in cities like San Francisco, where each homeless person is estimated to cost $40,000 per year in public services like police, meals, medical care, and temporary housing. I’ve never been against helping people, but it’s my conviction that if someone cannot afford a home or find work, the government should give them a job. The Dutch gave their homeless the job of sweeping the streets in their neighborhood, something anyone can do. In Quadragesimo Anno, the Catholic encyclical described a social structure whereby the government, industry and labor worked together to achieve a third way between the alternatives of communism and capitalism. These theories were widely adopted in fascist countries of Catholic Europe in Portugal, Italy, Spain and Austria, but also were praised in America by Franklin Roosevelt. [Franklin D. Roosevelt and the Third American Revolution, Dinunzio (2011)] Germany built the first sections of its Autobahn when many Germans were out of work in the 1930s. In Canada in the 1960s, Pierre Trudaeu had the unemployed building trails in the Canadian frontier. The difference is America and much of the West today is dominated by financial powers who use the countries as disposable and replaceable bases for production and consumption. The governments are in their pockets, paid off to open borders to free flows of capital, goods, and people. It wasn’t always this way, however, as America showed in the Great Depression with public works programs like the Hoover Dam and the Civilian Conservation Corps to alleviate unemployment while building infrastructure that to this day still serves the people.
Nations Forged in Winter
In many ways, a successful economy comes down to having the right people. The contrast between Norway and Venezuela – two oil rich nations – illustrates this perfectly. Oil, being a global commodity, trades at a price that is nearly identical worldwide when adjusting for transportation and refining costs. As such, the fluctuations in the oil market arguably effect oil producing nations relatively equally. Norway, being historically a relatively poor European country used to harsh winters and relying on dangerous work such as fishing and farming in extremely short growing seasons, has a people acclimated to saving and planning for the future. Venezuela by contrast, a tropical and also historically poor country, has a relatively forgiving climate that allows food collection year round. Without the need to plan for winter, however, the people there have seemingly lost the ability to properly save their wealth for bad times. In Norway, which maintains the largest and most successful sovereign wealth funds in the world (for a nation of only 5 million people), weathered the slump in oil prices starting around 2014 extremely well, and maintains the third highest GDP per capita in the world and the highest Human Development Index score out of any country. Venezuela, by contrast, which overspent during the boom years of oil prices, has seen its country devolve into near cannibalism as government food runs out and anarchy has descended upon the people unaccustomed to saving properly. In the final analysis – get the people right – and the rest will follow.
Balancing Labor and Capital
To protect honest, hard working individuals and encourage thrift, government protections must be in place to protect the principles of private property. Without this theft and warlordism can overtake a society, discouraging anyone from investing and relying simply on joining the gang that will have them to survive. Countries like those in Latin America, Africa, and much of Asia live like this, fighting corruption on a daily basis and thus struggling to attract investment. Western society mostly takes for granted the principles of private property, but to the outsiders pouring in from the third world, they see it as a prime opportunity to exploit the system and steal from it, ultimately creating the situation we have today where increasingly native-born Americans are viewing the system as rigged and dropping out. This destroys a society and eventually brings about its collapse. By the same token, work must be performed by the citizens, and not by slaves. One of the reasons white South Africans lost control of their country was because they continued to rely on cheap black labor during Apartheid, refusing to live as they should have truly separately and thus creating the conditions for resentment that have continued to this day that has led to the thousands of farmland murders and outright expropriation of white South African farms by the black controlled government. Arthur Kemp reflected that “all societies collapse when they begin relying on slave labor.” The residents of Orania, a Boer separatist community of several thousand focused on farming and traditional living, placed on their community’s banner an image of a young Afrikaaner rolling up his sleeve, reminding the people that they must do their own work if they wish to remain free and independent. This should be a lesson to anyone hoping UBI will save them. Instead of receiving a handout, people should seek the ability to provide for themselves. Malcolm X warned about the dangers of welfare, forcing his community to rely on outsiders for their existence, and giving incentives for single mothers to abandon the fathers of their children. Families need work for their fathers, not only to provide, but also to give them a sense of pride and a reason for mothers to stick with their marriages. If libertarianism was about the state just upholding property rights (voting is tied to property), Catholic economics is about the state upholding Christian morality (family, fidelity, working wages.) People do not operate in a vacuum, and in the absence of any moral or government oversight, greed and avarice will rush to fill the void. Communists tried but failed to outlaw greed, and capitalists embraced it. Perhaps a third, more balanced approach is to recognize greed is part of the human condition, and to overcome it takes personal courage, a culture that upholds morality, and a system that rewards fellowship for those in your community.
This is the sixth in a series of excerpts from the book Exit Strategy – Navigating the Decline of the American Empire from the Myth of the 20th Century crew