Worthy or unworthy?

What are we? Just an accident of nature (but then what is nature?) or is there some design and purpose behind the creation of life? Nobody knows!

And further to this conundrum I add that we human beings, generally, seem to be hell-bent on destroying the very environment that allowed all life to propagate.

I know I have written about this before but when it comes to understanding the “Tragedy of the Commons” it is well worth reiterating the facts. These “commons” are those resources which benefit all and that we all rely on, water (including those species that live in and on the water), the soil and the air. Free access and unrestricted demand for finite resources (minerals) ultimately reduces those resources through over exploitation. This exploitation occurs because of the financial benefits that accrue to individuals or groups, hence a desire to maximise the use of the finite resource without regard to the deleterious effects borne by all – even those unaware that such voracious exploitation is taking place.  

The fact that money appears to take precedent over what is best for all is pure greed. I am thinking particularly of the current, apparently intractable, divide between the political Left and Right and the socially unacceptable imbalance between the very wealthy and the vast numbers living in poverty, together with the deniers, generally those whose affiliated to Right-wing politics, who oppose political reform and who have an apparent inability or unwillingness to accept the we, humans, are destroying the very environment essential for survival.  

It would be well for all to reflect on the fact that all wealth – the economy that politicians love to invoke – is totally dependent on the air; the soil and water, both fresh and salt. Without these there would be nothing.  

“The way we see the world shapes the way we treat it. If a mountain is a deity, not a pile of ore; if a river is one of the veins of the land, not potential irrigation water; if a forest is a sacred grove, not timber; if other species are biological kin, not resources; or if the planet is our mother, not an opportunity––then we will treat each other with greater respect. Thus is the challenge, to look at the world from a different perspective.” (David Suzuki)

I will now quote extracts from a speech attributed to Chief Seattle of the Suquamish and Duwamish people in what is now the State of Washington DC (though there is some dispute as to whether or not this was “ghost written” for him):- 

“What is man without the beasts? If all the beasts were gone, man would die from a great loneliness of the spirit. For whatever happens to the beasts, soon happens to man. All things are connected ….. 

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

….You may think now that you own Him as you wish to own our land; but you cannot. He is the God of man, and His compassion is equal for the red man and the white. The earth is precious to Him, and to harm the earth is to heap contempt on its creator. 

The whites too shall pass; perhaps sooner than all other tribes. Contaminate your bed and you will one night suffocate in your own waste. ….

….Where is the thicket? Gone. Where is the eagle? Gone. The end of living and the beginning of survival.”

And so it seems to be. The sea ice is retreating; the permafrost is melting; much of the World’s ground water is contaminated. Many millions of square kilometres of the land is now so degraded that huge quantities of chemical fertilizers are required to get anything to grow. Many square kilometres of cropped land is sprayed with insecticide and weed killer. Many millions of square kilometres of forested areas are burning in drought-ravaged areas. Many millions of tonnes of waste, of all types, now pollute the oceans. Many millions of tonnes of chemical and noxious gasses are polluting the very air we breathe. 

But all this is accepted because of money; because of the “need” to grow the economy; that same “economy” which only exists because of people whose very lives depend on clean air, unpolluted, productive land and unpolluted water.  

 Makes me wonder!

Probable Future

COVID19, Robots, Artificial Intelligence and the future of Australian Society. 

In relation to recent comments about the Australian “economy” and the budget, it is necessary to acknowledge that the “economy” is actually the people, the citizens, of Australia. Without people, there would be no “economy” and therefor by default no need for a budget (in surplus or otherwise). Pursuing the logic of this it would seem very obvious that people are the important factor – look after people, first and foremost.

Now, I understand that many are considering the benefits of either a Universal Basic Income (UBI) or Negative Income Tax (NIT) to counteract the economic effects of the current COVID19 pandemic. There is also the effect of Robotics and the adoption of Artificial Intelligence (AI) to consider, that will also have long term effects on the economy and society (people) here in Australia.

It would appear to be indisputable that the robotic and AI future has implications not only for commerce and industry but more especially for society in general. Many of the jobs that have been lost in Australia to low wage countries will never return to these shores. The days of the old unskilled, labour intensive jobs are numbered; the mining industry has quickly adopted driverless ore trucks; there are advanced plans to use more driverless trains to transport iron ore; there are farmers using drones and driverless machinery and there are other uses of these technologies, now a reality, that were unimaginable just five years ago. 

Now COVID19 just adds to the confusion roiling world trade and the well-being of hundreds of millions of people.

The world is changing – what was, will no longer be – the status quo has evaporated. The vista of unending employment growth is no longer a likely, or even probable, future. 

While it must be acknowledged that not all jobs will be automated or impacted by AI – for those that are, restructuring workplaces, educating and retraining employers and the remaining employees to adapt to and manage the new technologies will be a necessary long term requirement. 

This is no light matter and needs to be seriously considered. If a large percentage of people in Australia  – or any country for that matter – become unemployed and are unable to see any possibility of future long-term employment, what are they supposed to do? 

The consensus is narrowing down to introducing either a UBI or an NIT.

Many, if not most politicians, and those in business may be horrified at such solutions – giving everyone, and I mean everyone – employed or unemployed – giving everyone a UBI or access to NIT. The universal basic income is already in place, as in Alaska a scheme similar to an NIT has been in place for years. 

In an economic environment that is unable to provide long term paid employment for all, there will be, as an urgent necessity - a requirement - for a population that is underpinned by a universal basic income or a negative income tax. This would open up the possibility of a life without poverty and reduce the vexed problems arising from income inequality.

The gross inequality of incomes world-wide resulting from current globalization impacts unfavourably on the health and well-being of millions of individuals (including here in Australia). Unless this is alleviated anger and frustration will consume many people and overwhelm governments. I am sure you will be aware that currently (2018 figures) the gap between the wages of the typical worker and that of the typical Australian CEO is at least 45 times the average fulltime wage. The disparity is much wider overseas. In the USA, where minimum wages are less than half of Australia’s and CEO salaries above $20 million are common, the difference is more than 200 times. This disparity is economically and socially unsustainable. 

Without some basic assistance it is suggested that people – millions of people – will swamp the Australian Government with pleas for help. If the Government adapts and is proactive it will plan for this eventuality and the only safe option is to pay everyone, repeat everyone – employed or not - pay them a Universal Basic Income or provide the benefits from a Negative Income Tax. There are no other viable options, particularly with an aging population. 

Many will object to such policies claiming they are unsustainable. They will, however, be outnumbered by the millions of educated, unemployed, destitute, poor, frustrated and angry people clamoring at their doors, clamoring for assistance. Clamoring to have enough money to just exist. Again the question needs to be asked, what else are they supposed to do? 

{Note: Negative Income Tax - For people who do not earn enough to pay tax (or earn below the minimum wage or some other agreed amount) their income would be supplemented to arrive at the agreed amount or the minimum wage. Everyone, working or not, would be obliged to lodge a tax return and any supplement would be “refunded” via the ATO, similar to the process for a normal tax refund.}

Both the UBI and NIT would do away with the plethora of welfare payments currently in place; both would be funded, it is suggested, by adjustments to current programs and/or adjustments to marginal tax rates, investment allowances (negative gearing and capital gains?) and corporate taxation, or possibly a very small (.001 percent) financial transaction levy (colloquially known as a “Tobin” Tax).

Any additional funding for the UBI or NIT involves a simple principle: go where the money is. “Since money has been increasing going to the top, that’s where the additional revenue will have to come from. It is really that simple.” (Quote is from The Price of Inequality (2013) by Joseph E. Stiglitz – former World Bank chief economist and 2001 winner of the Nobel Prize for Economics).

Political will aside – what is it that the future unemployed are supposed to live on?

I suggest this is the future - and it’s coming soon – get used to it. Plan for it. Now.  

The Sorcerer's Apprentice

This is a very old tale about the unforeseen consequences of hubris, believing that partial knowledge is adequate and general ineptitude is of no importance. 

Possibly the best known version of this tale is the poem by Johann Wolfgang von Goethe, written in 1797. This tells of a sorcerer’s apprentice who is meant to carry out various tasks while the sorcerer himself is temporarily absent. 

While cleaning, the apprentice becomes tired of carrying pails of water. So he uses his (limited) powers to enchant a broom to carry out the work. 

The trouble begins when the apprentice doesn’t know how to stop the broom. He tries to stop the broom by splitting it in half but the two halves now increase the speed of their activities by carrying in so much water that the room is flooded.

Fortunately the sorcerer returns and breaks the spell. 

The moral of the story is that only masters, with the requisite knowledge, should invoke powerful forces.

Goethe’s version is a possible rewrite of a very similar ancient Roman story narrated by Lucian (about 140 CE) that follows a similar theme which emphasises the power of magic or technology turning against the insufficiently wise or knowledgeable person invoking it.  

Now, in today’s world with technology of previously unimaginable power, Man’s moral and ethical capabilities to harness it for the good of the World in general is found to be wanting or so I believe. 

These old tales are worth recalling. I think particularly of the “World’s” response to the inescapable effects of changes to the climate brought about largely through the unfettered use of fossil fuels. 

The use of these fuels are supported because they are “good for the economy”, therefore are to be considered as “good” for all. Especially for the wealthy – the shareholders that invest in the companies that produce or use these fuels. 

It apparently matters not that “science” informs us all that the environment, the “world” that supports all we know, is being damaged at an ever increasing rate.

Ignore the science - it’s all about “money” you see!  

The trouble is that if the environment is damaged further, it will become increasingly difficult for life in general to exist. Only then will it become apparent that without people (and all that supports life on Earth), there will be no money, no companies to invest in and no shareholders demanding ever increasing dividends from evermore profitable companies. 

To me, it is blindingly obvious that PEOPLE and the ENVIRONMENT that supports all Life forms should be the focus of all – not money, however useful this may be in certain circumstances. 

Now, today, we have the COVID19 virus that is roiling the “economies” of all countries and killing thousand of people. The astonishing difference in the response is that “science” is apparently now paramount in informing us how to contend with this devastating outbreak.    

The blatant hypocrisy evident in this about face is extraordinary.

The “economy” is going to suffer you see! Simple.

What now?

Maybe it is because I am at that stage of life often termed (politely) as being of “advanced years”, I tend to look at what is going on around me with a different outlook.

There seems to be a great deal of “hot air” being expended on what to do about the economy, as if the “Economy” was the beginning and end of life. I know that I have mentioned this before in other posts but it is necessary for all to acknowledge that the “Economy” is not some esoteric, alien “thing” somewhere out there. The economy IS the people - the citizens of this Country create the Economy with their labour.  

Money is not self-emergent, it doesn’t arise by itself.

Without PEOPLE there would be no money and no economy. There is an old Roger Whittaker song– one called “From the people to the people”, and the lyrics certainly apply today:

“You take it from the people, you give it to the people. 

Its people who reap and people who sow.

You work with the people or you gotta go.”

These words express very well my philosophy. It is PEOPLE who are of paramount importance. Not MONEY. Not the ECONOMY.  Not the BUDGET. It is people – without people there would be no money and therefor no economy, and by default no need for a budget (in surplus or otherwise) or for a treasurer.

So it’s PEOPLE, stupid! People. Look after people!

The problem, in my opinion, is that what is termed the “middle class” is being hollowed out. The divide between the rich and poor is getting wider. The rich are getting richer with the top 1% owning the wealth of the bottom 70%. These are Australian figures but are typical of a world-wide trend. 

The best solution (in my humble opinion) is not to reduce the rate of income tax to the wealthy but to increase it and so provide a better income distribution via a Negative Income Tax- For people who do not earn enough to pay tax (or earn below the minimum wage or some other agreed amount) their income would be supplemented to arrive at the agreed amount or the minimum wage. Everyone, working or not, would be obliged to lodge a tax return and any supplement would be “refunded” via the ATO, similar to the process for a normal tax refund.

More money in the pockets of those with a low-income means they will spend more. This gives rise to what is termed the “multiplier effect”. In Australia this is about 5. This means that for every additional dollar spent the “economy” benefits by 5 dollars. Retail trade in particular would get a boost – more money spent, more employment, more taxation revenue … etc.

To me it’s a no brainer. Increase the “dole” and everyone will benefit. 

Strange economics

I was listening to an old Roger Whittaker song the other day – one called “From the people to the people”, and the ideas and emotions engendered by the lyrics struck home:

“You take it from the people, you give it to the people.

Its people who reap and people who sow.

You work with the people or you gotta go.”

These words express very well my philosophy and what I have been trying to say in these posts, for many years. It is PEOPLE who are of paramount importance. Not MONEY. Not the ECONOMY. It is people – without people there is no money and therefor no economy.

The IMF seem to have come to their senses and have realised that what they promoted after the 2008 financial crisis – domestic financial austerity and repaying the loans provided  from internal resources and so “balancing the budget” – doesn’t work and leads, inevitably, to economic and social crisis. 

Just look at Greece, Portugal, Spain and Italy.

Cut wages and increase taxes and what do you end up with? People with less income and without the ability to purchase anything other than essentials - this is no way to “stimulate the economy” and promote the growth that is so necessary. And certainly no way to balance anything!

Superficially, and very simplistically, a country’s budget and economy may seem the same as an individual’s budget, potential income and wellbeing (their “economy”). But it is not. An individual can do nothing to stimulate his wellbeing if his wage is reduced – it is illegal for an individual to print money. All any individual can do is to try and get another job – very difficult if the general economy is depressed – look at Greece, and not good for their wellbeing.

All that cutting wages does is to, temporarily, boost profits and thus benefit shareholders. But there is an old saying, “you can’t get blood from a stone”. Now I understand this to mean that when something is “dry” no matter how hard you squeeze nothing will come out of it.  Sooner, rather than later “squeezed” individuals “dry up” and the governing authorities (and shareholders) are left with nothing except a society that is poor, desperate, frustrated and angry.

This is not good for anybody’s wellbeing!

The words of the song that opened this post are very appropriate – 7Eleven, McDonalds, Walmart and any other organization (market gardeners?) or government, anywhere, that promotes low wages take careful note!!

It’s not the Economy, stupid – it’s people!

Homelessness in any society is a measure of its Moral Compass and Social Conscience. In Australia, where I live, the latest figures provided by the Australian Bureau of Statistics (ABS) in 2011, record that there were 105 237 homeless people (49 out of every 10 000 people in the country). In the Northern Territory this reaches the staggering figure of 700 in every 10 000! This astonishing number reflects the very poor status of the Original People of Australia - the Aboriginal. We should hang our heads in shame.

In the USA – the wealthiest country in the world – on any night in January 2013 the US Department of Housing and Urban Development (HUD) reported there were 610 042 homeless people (19 out of every 10 000 people in the country). According to the Walking Shield website that caters for Native Americans there were 90 000 Native American families that were homeless - using the U.S. Commission on Civil Rights 2003 figures. This is now 2014 and, with respect, I suggest that there will not have been much improvement since 2003.

These figures – statistics – are an appalling indictment of the way current economic theory and capitalism are disconnected from “real” life.

Everyone is worried about the “economy” but they forget or ignore the fact that the “economy” would not exist without people. People ARE the economy. Look after people – pay them a liveable wage – and the economy will prosper. The low paid will have more money to spend after the essentials have been catered for. This is both the ethical and the morally correct thing to do.

The “multiplier effect” is, I understand, something like 1.5 – for every $1 in increased basic wage (for the low paid) there is a $1.50 benefit for the “economy”; increased spending power, increased taxes for governments, reduced requirement for social security benefits and generally better health and well-being for the recipients. This is the “churn” effect that money has - what goes around comes around and then some!

I remind my one loyal reader that over one hundred years ago Henry Ford said that every worker should be paid enough to buy what he makes!

It is not the “economy”, stupid – it is people!!

The Australian version of Democracy

It is difficult to gauge how democracy is travelling in “democratic” countries. I speak particularly about Australia (where I live) which is touted as one of the strongest democracies in the world.

That I (and my wife) are pensioners (I am 73 and retired only one working day before my 72^nd birthday) and have no income other than the Government provided Age Pension, is incidental to my concerns.

My concerns are about what it is we are forced to vote for (on pain of a penalty for NOT voting).

For those who may be unaware of this curious fact, Australia has compulsory voting –whether you like any of the candidates or not, whether you like their policies or not, whether you like it or not, you have to vote – or face a fine for NOT voting.

I personally am not sure that compulsory voting is actually democratic, but this again is incidental to my concerns.

My concerns are about what we are told (promised?) prior to an election but then are told after the election that what was said is not going happen; that these promises were not “core promises”. What is a “core promise” pray tell? Why bother to say something (“read my lips”) but then conveniently forget or ignore or use “weasel words” to deny that it was said at all?  Surely a promise is a promise in any language?

My concern is about what it is that we are actually forced to vote for – a lie? Is this an example of being a good role model? Is this how leaders are supposed to behave? Is this an open, accountable and “mature Government”? Is this a Government that can be trusted?

Trust takes a long time to develop but can be lost in an instant. To understand what I am getting at it may help to recall what Confucius had to say about this some twenty-five centuries ago:

 “If you govern the people by laws, and keep them in order by penalties, they will avoid the penalties, yet lose their sense of shame. But if you govern them by your moral excellence, and keep them in order by your dutiful conduct, they will retain their sense of shame, and also live up to this standard.”

In light of the astounding lack of trust and moral leadership shown - and admitted – by many leaders (political, business and religious or in fact any position with monetary significance), I truly believe that it is time for everyone to stop, even take a step back and look, I mean really examine, their actions and see whether they make any sense. For example, just look at the corruption, the appalling moral and ethical short comings exposed by the various commissions of enquiry currently underway in Australia (into child sexual abuse and into corrupt union activities). Think about the financial scandals in England and the USA (LIBOR, Wall Street and “banks too big to fail”); the International Olympic games organization (athletes and performance enhancing drugs and also bribes being paid to officials); the International Football Federation (“ditto”); international cycling (“ditto”); international pharmaceutical companies (using corrupt methods to enhance sales of products with doubtful efficacy); using children as slave labour to produce low priced garments - the list just goes on and on and on!   

And then as a further Australian example, I was told in a letter (dated  9^th January 2014) from Malcolm Turnbull ( the Australian Minister for Communications) that, and I quote:-

“I would like to take this opportunity to assure you the Government does not have any current plans to privatise or reduce the ABC’s funding. The Government understands the significant relationship the ABC has with the Australian public and is committed to maintaining its quality, performance and efficiency.”

The ABC is the Australian Broadcasting Corporation, which is owned and fully funded by the government - but three months later Turnbull cuts hundreds of millions of dollars from their budget allocation (possibly out of spite – the ABC, in the past, has dared to criticize the current government).

And we HAVE to vote for these people? Please!!

I believed Prime Minister, Tony Abbott when he said, before the recent general election, that there would be no changes to the Aged Pension or to Medicare, but there are changes. In light of the 2014 Budget cuts are these the words of a trustworthy man? All the cuts to health and education, and the reductions to benefits and allowances are, ostensibly, designed to “improve the economy” and balance the budget.

The trouble is the “Economy” is not some esoteric, alien “thing” somewhere out there. Without people there would be no economy – the economy IS people, the citizens of this country. The Prime Minister (Tony Abbott) and Treasurer (Joe Hockey) may well “balance the budget”- the Federal Budget - and help the “economy”, but they cannot ignore what the States do because they affect the “economy” as well. We are supposed to be the Commonwealth of Australia after all. But if they, the Treasurer and the Prime Minister, hand-ball the hard work to the States (funding health and education) why do we need a Federal Government – or if you prefer why have State Governments? Having both, singing from different hymn books, does not serve.

If people have less money to spend (because of the afore mentioned budget constraints) how is the economy supposed to grow? It is worth repeating that the economy is made up from people – more money and confidence and it grows; less money and less confidence and it contracts.      

Who do we trust? No wonder there is a rise in the number of independents and micro-parties – if we HAVE to vote might as well vote for something or someone novel.

It is worth asking what we ACTUALLY vote for – what politicians SAY they will do or what they ACTUALLY do – which is discovered only after the event?

And Australians are penalised for not voting. Democracy indeed!

Henry Ford was right!

I believe it was Henry Ford who famously said that “workers should be paid enough so that they could buy what they make”. This is actually quite a profound statement. It certainly applies today when retailers and manufactures of consumer goods are complaining that people are not spending money. And economists are lamenting the fact that the “economy” is not growing fast enough to reduce the rate of unemployment.

In business circles today wages are a bone of contention. The unhealthy imbalance between the highest paid and the lowest paid is causing concern worldwide. There is a widespread push to increase the minimum wage to a more reasonable level; fast food companies in the USA are being pressured to increase minimum rates of pay. This is being resisted by business and industry leaders as “unaffordable and unreasonable” (we hear the same argument in Australia).

Economists speak about the “economy” of a country as if it were some disembodied entity. They forget that the “economy” is made up of people – alive, breathing, hungry people. Economists develop "statistical models" that use a mythical "rational consumer" to test their theories. There is no such animal as a "rational consumer" - it doesn't exist!!

Now, as I understand what Henry Ford was getting at is that if retailers and manufactures of consumer goods want people to spend money and buy what they are trying to sell they (the people), rather obviously, have to have money to do so. Right?

But, if the economy is skewed (as it is in many countries, including the USA and Australia) with 5% very rich; with the, previously, large middle “class” shrinking in numbers because of the economic down turn and manufacturing moving “off shore”; with the current “minimum wage” kept low (at possibly a level arrived at many years ago) – where is the purchasing power going to come from? 

Who will buy the goods and what with? The wealthy don’t buy expensive items and consumer goods every day. Sure they buy food, but what they buy does not compensate for the reduced purchasing power of the rest of the population. In any country.

So to carry on with Henry Ford – pay those who are at work enough to buy what they make and Bingo, money starts to circulate. People start buying, factories are re-opened to start manufacturing again – more employment – more money – more items purchased. The housing industry picks up – more consumer goods – more money – more items purchased.

The problems are created by people who “hoard” money; people who want more than they need. This creates a “blockage” which reduces the amount of money in circulation. The less money in the economy, the more the “hoarders” resist spending and the more they try to hold on to what they have, at any cost. Employers reduce staff numbers or reduce wages and so the cycle starts all over again!

Henry Ford was right! And don’t believe the economists. Economists read statistics not the mood in the streets!