Archives for category: Money as goal

Dis de dimineață, în hală la Obor, o ‘babă PSD-istă’ le povestea unor vânzătoare impresii de la manifestația împotriva lui Iohannis.
Vânzătoarele, cu vreo 25 de ani mai tinere dar mult mai puțin ‘hotarâte’, i-au promis totuși ‘sprijin moral’.
Rămași între noi, le cunosc de cel puțin 5 ani și glumim de fiecare dată când cumpar de acolo, am continuat discuția. Prima pe teme politice, în toți anii ăștia. Foarte repede a devenit clar că ele nu se uită niciodată la știri și că se informează doar din ‘gură în gură’. Cu toate astea știau câte case are Iohannis și li se părea extrem de ciudat ‘cum de a putut el să strângă 6 case din meditații?’. ‘Sigur a mai făcut și altceva’. Adică ‘ceva necurat!’

Pe de altă parte au fost foarte receptive la observația mea ‘Păi da, dar pe el nu l-au prins încă!’
‘Da, aveți dreptate’, a spus una dintre ele. ‘Hoțul neprins, negustor cinstit’, a recunoscut ‘precupeața’.

De unde și nedumerirea care face obiectul postării de astăzi.

Segmentul +60ani a votat masiv cu Năstase 4 case și împotriva lui Iohannis 6 case.
Care să fie explicația?

Să fi fost OK să ai 4 case dar prea mult să te lăcomești la 6?

Au învățat între timp să nu mai accepte nici măcar un pic de corupție?
Ce bine ar fi…

Aș explora totuși și alte variante.

În primul rând trebuie să ținem cont de faptul că această categorie de oameni depinde în mod hotărâtor de ‘bunăvoința’ statului.
Și de ‘amănuntul’ că dinspre dreapta vin tot felul de mesaje cel puțin amestecate. De la ‘statul nu are de unde să dea pensii mai mari’ până la ‘voi l-ați făcut pe Iliescu președinte, acum tăceți odată din gură’.

Numai că astea două sunt insuficiente. Mai este ceva.

„Bogatul nu crede săracului” dar nici invers.

Oamenii de rând știu foarte bine ce este acela un profesor de liceu. Aproape toți au avut copii și au plătit meditații. Dacă nu ei, atunci măcar prietenii și/sau cunoscuții lor.
Nu e chiar același lucru ca un instalator sau un zugrav, dar tot cam pe-acolo. Un meseriaș ceva mai spălat.
Idea că un astfel de om – nu foarte diferit de ei, până la urmă, poate să ‘strângă’ 6 case e un fel de afront personal.
‘Dacă el a putut înseamnă că eu am fost un prost toată viața. Trebuie că a făcut el ceva necurat, altfel n-ar fi reușit!’

Năstase, pe de altă parte, a fost văzut cu totul altfel.
Ceea ce Iliescu îi reproșa ca fiind ‘aroganță’ a fost perceput ca ‘prestanță’.
Impresie întărită de abilitatea lui Năstase de a vorbi foarte elegant și, în același timp, suficient de inteligibil.
Pe cînd maniera oarecum ‘didactică’ folosită de către ‘sas’ îi indispune pe câte unii. ‘Ce ne tot dă asta lecții?’
Trecând la lucrurile care ‘nu se văd’, destul de mulți dintre oamenii din acest segment de vârstă nu prea înțeleg ei foarte bine cu ce se ocupă, și mai ales ce venituri are, un profesor universitar. Sau un ministru. Fie el și prim.
Pentru că Năstase așa a intrat în conștiința populară. Ca ministru de externe – care a repurtat câteva succese destul de notabile, ca prim-ministru pe vremea căruia lucrurile au mers – din punctul lor de vedere, destul de bine și, în tot acest timp, ca profesor universitar și om de cultură.
Oamenilor nu li s-a mai părut chiar atât de exagerat ca cineva cu o asemenea ‘statură’ să aibe 4 case. Sau, în orice caz, nu chiar atăt de greu de acceptat din punct de vedere emoțional.

OK, și dacă am ajuns la concluzia asta… acuma ce?

Păi hai să începem prin a nu le mai ‘înjura’ atâta pe ‘babele PSD-iste’. Nu de alta ci pentru că asta este echivalent cu a-l ‘înjura’ pe Iohannis pentru cele 6 case. Nu știm cum le-a agonisit – deocamdată e încă ‘negustor cinstit’, așa că ar fi mai normal să îl lăsăm în pace până ce situația va fi lămurită de cei ‘în temă’.
Tot așa nu e cazul să-i ‘înjurăm’ pe cei care au o părere diferită față de a noastră. Putem să fim în dezacord cu ei dar dacă vrem să asculte argumentele noastre am face mai bine să îi tratam cu respect, nu cu ironie sau chiar cu dispreț.

Abia după ce vom fi învățat să ne respectăm cu adevărat unii pe ceilalți, din ce în ce mai mulți dintre noi vor avea curajul de a încerca să își depășească condiția.

Și va înceta să li se pară ciudat ca unul dintre ei să aibă 4 sau chiar 6 case.
Dar vor veghea ca acestea să fi fost agonisite cinstit.

donald-trump-grab-them-by-the-pussy-cartoon

Or is it the (unforeseen?) consequence of some very ‘intelligent design‘?

Until not so long ago it was possible to buy unlimited coverage against the risks that scared you.
After things became too complicated and fraud a too widespread occurrence even the Lloyd’s gave up and started to introduce caps on insurance policies.
In fact Lloyd’s of London was the only place – that I knew of – where risk was understood, at least in part, in a ‘functionalist’ manner.
Risk is something that can be seen in two ways.
As yet another opportunity for making profit or something that has to be mitigated for the profit of the entire community.
Let me deal with the latter ‘option’ first.
Somehow I don’t buy it that Bismarck was primarily motivated by the well-being of the workers.
But what the German industrial barons of the day needed in order to catch up with the British ones – the Albion was the industrial power house of that time, o tempora…- was more and more people willing to leave the relative safety of the country-side and come to the city to work in the newly built factories.
In order to appreciate the huge difference between these two situations we must remember that in those times families were a lot larger than they are now and that their members used to help each other in times of need. But this could happen only if the members of the same family remained in close vicinity and worked on very flexible schedules – agriculture or family owned shops. You cannot go help your ailing mother if you work in shifts and live two hundred miles away from her.
So, in order to ‘lure’ more and more people out of the fields, and in a very short time, Bismarck had to offer them a ‘safety net’.
OK, let’s accept the idea that, maybe, there are some risks that the society, as a whole, should concern itself with.
But how to fulfill this ‘social need’?
How to identify which risks should be dealt with in a collective manner and which should be left alone. Then how to manage the whole process?
‘State-wide’ or through privately owned/operated initiatives?
Does it really matter?
I don’t think there is a universally valid recipe here.
The Bismarck’s social insurance system worked in Germany.
Lloyd’s has functioned almost seamlessly for 3 centuries. In England.
Both systems, one centered mostly on profit and the other on the safety of those who took part in it, worked because they spread out both the risks and the profits.
Current systems, where only the risks are being mutualized while the benefits tend to become more and more centralized – by ‘design‘, by corruption or both – are no longer functioning properly.
Take ‘Obama Care’, for instance. Most people, including Donald Trump, agree that something has to be done about ‘public health’ but the whole thing isn’t yet working properly.
Instead of fighting among ourselves on whether the state/government should have anything to do with risk management how about considering for a moment where our current infatuation with ‘profit‘ has brought us?

Abraham Maslow, the initiator of ‘humanistic psychology’, has been described as being “concerned with questions such as, “Why don’t more people self-actualize if their basic needs are met?” and basically why don’t people try to reach their full potential.”

“To over simplify the matter somewhat it is as if Freud supplied to us the sick half of psychology and we must now fill it out with the healthy half. Perhaps this health psychology will give us more possibility for controlling and improving our lives and for making ourselves better people. Perhaps this will be more fruitful than asking “how to get unsick”. (A. Maslow, Toward a Psychology of Being,)

In a sense Maslow follows in the footsteps of J.J. Rousseau.

“Although, in this state [civil society], he deprives himself of some advantages which he got from nature, he gains in return others so great, his faculties are so stimulated and developed, his ideas so extended, his feelings so ennobled, and his whole soul so uplifted, that, did not the abuses of this new condition often degrade him below that which he left, he would be bound to bless continually the happy moment which took him from it for ever, and, instead of a stupid and unimaginative animal, made him an intelligent being and a man” (J.J. Rousseau, The Social Contract)

In more than one sense.

Both consider that society presents its members with almost endless opportunities for self em-betterment, both wonder how come so few make good use of those opportunities and both have been accused of things they have never done.

Rousseau has been falsely accused of being the father of the ‘Noble Sauvage’ – and the quote above proves his complete innocence, ‘stupid and unimaginative animals’ can be mistaken for ‘noble savages’ only by those ‘abused’ by their ‘new condition’ – while Maslow’s detractors – who have failed to scientifically validate all aspects of ‘the hierarchy of needs’ – are questioning the scientific nature of Maslow’s ideas instead of reconsidering their own positions. (The truth being that Maslow had stated upfront that “I yield to the temptation to present it (his notion of a ‘Psychology of Health’, which includes the concept of ‘self-actualization’) publicly even before it is checked and confirmed, and before it can be called reliable scientific knowledge“)

Unfortunately it is rather obvious that while Maslow has successfully detailed what it takes for an individual to ‘ripen’ into the situation of being able to ‘reconsider its own self’, he failed to reach as far as Rousseau was able to. While the latter deplored the fact that ‘the abuses of his new condition often degrade him below that which he left’ the first blindly entertained the notion that self-actualization is necessarily a positive process.

I’ll use only two examples to illustrate my theory, even if by doing so I’m presenting myself as a target for the ‘science-nazi’.
First take a glance at those who founded/were involved in running LTCM. All of them had very respectable careers behind them at that moment. Why did they feel the need to get involved in such a risky business? For those of you unfamiliar with the financial world LTCM was a hedge fund which had to be bailed out in 1998 after losing $4.6 billion, a huge amount of money for those times.
Then tell me what drove Bernard Madoff, an already very successful ‘operator’ in the financial market  to transform the wealth management branch of his company into a huge Ponzi scheme that eventually lost some $18 billion of actual money ($65  billion if the fabricated gains are added to the total)? Not to mention the fact that he involved his family into the daily operation of his company, leading to his brother being sentenced to 10 years in prison and one of his sons committing suicide… – the other one died of lymphoma a few years after Madoff had been incarcerated.

Could it be that this ‘self-actualization’ business depends on two things, the character of the individual involved and the kind of interaction that exists between him and the community of which he is a member? Meaning that if the ties are weak the character of the individual becomes the dominant factor?

And since nobody’s perfect…

“It is not power that corrupts but fear. Fear of losing power corrupts those who wield it and fear of the scourge of power corrupts those who are subject to it.” (Aung San Suu Kyi, Freedom from Fear)

But also

All governments suffer a recurring problem: Power attracts pathological personalities. It is not that power corrupts but that it is magnetic to the corruptible.” Frank Herbert, Chapterhouse: Dune

I’ll end up saying that it’s not the governments that have a ‘recurring problem’ but the peoples themselves. By definition governments come and go, it’s the peoples that stay behind and must suffer the consequences of ‘self-actualizations’ went wrong.

row your boat

While discussing with a FB friend the last video posted by Price Ea – you can watch it by clicking on the picture above – something hit me.

We were exchanging ideas about how much control each of us has over his own life when I realized that our very insistence on using precisely this term is what causes a lot of trouble.

The notion of control divides the world in two.
The controller and the controlled.

And since we are social animals, things become very quickly very complicated.

Being ‘animals’ means we that we have ‘animalic’ needs. Air to breathe, water to drink, food to eat, shelter from the elements… The first floors of Maslow’s pyramid, as you surely remember.
Being ‘social animals’ means that we not only depend on having access to enough physical space and resources but also on the cooperation of the people who happen to be in our vicinity.

The control hypothesis ‘leads’ us into a competition for both space and authority above those around us.
Our world becomes divided into what ever space we already control and the rest. Meaning the (yet) uncontrolled areas from where it is very possible that a challenger might spring up anytime so that the controller must somehow extent his control over those areas as well, as soon as possible.
Our neighbors become divided into our ‘slaves’ and our direct competitors. Who have to be, sooner or later, subdued into slaves – lest they do the same thing unto us.

In conclusion, the ‘control hypothesis’ sees the world as a constantly busy battlefield where each of the dwellers is in constant conflict with everybody else.

Luckily, even the most perfunctory  glance down the history teaches us that human success is more about cooperation than about conflict.

Only the conspiracy theorists believe that most wars are started by business people trying to sell their wares to the warring parties. The reasonable business people know that while a certain amount of tension is good for their business – tension sells guns, among other things – an actual war exhausts both parties and destroys solvent demand.
While it is possible that some callous business people or political actors might try to foment war, for various reasons, that doesn’t mean they are behaving reasonably.

Which brings us to the alternate hypothesis.

How about we replace the concept of ‘control’ with the idea of ‘autonomy’?

How about we give up the ‘tiresome’ notion of control and replace it with the peaceful concept of cooperation?

Since we have already figured out that we depend on both those around us and on whatever resources we can identify, how about we enroll the cooperation of as many of the like minded that surround us as possible and search together for those resources?
Instead of each of us simultaneously trying to run faster than everybody else and to hold back as many as possible – the true meaning of generalized conflict?

Which brings me to the notion of ‘autonomy’.
Being autonomous means being engaged in a special kind of relationship. It means being part of a flexible structure. One that is strong enough to resist but flexible enough to allow a variable amount of leeway for each of its components.
The very concept of autonomy recognizes the mutual dependency that exists between the autonomous members of the said structure and also the fact that the very strength of the structure comes from each of the members being able to solve problems on his own.

Autonomously, that is.
Drawing resources from the structure, sometimes enrolling the negotiated cooperation of some other members but, on the whole, most of the problems get to be resolved ‘under the radar’. To the great benefit of the entire structure.
The vast majority of the structure not even noticing the huge numbers of situations that get solved this way.

Compare this situation to the one described in the first scenario, the one where everybody fights, openly or covertly, with every body else and tell me what you prefer.

“Control” or “Autonomy”?

An all out incessant war for ultimate control or a continuous process of negotiation?

The New York Times, from the other side of the Atlantic Ocean, has found out that Calin Popescu Tariceanu, currently the second most important political persona in Romania, as the Speaker of the Senate, is being investigated “for giving false testimony to aid suspects in a wider real estate graft case.

Prosecutors said Tariceanu made untrue statements under oath in April when he was called to testify in an investigation in which …

OK.
So he isn’t investigated for anything he might have done then but for something he had (not?!?) recently said about the whole thing, now.

“Tariceanu denied wrongdoing and fired back at magistrates, saying “we live in a republic of prosecutors based on the politics of dossiers and handcuffs”.”

At this point it is very important to remember that Mr. Tariceanu has been at the fore front of the Romanian political stage for the last 25 years – for instance he was the Prime Minister from 2004 to 2008, and to mention that he is only one amongst  the many Romanian politicians being criminally investigated who deplore the growing importance of the role recently assumed by the Romanian prosecutors.

I’m not going to discuss here the individual merits of each of the corruption cases that have been investigated recently. It is very possible that some of them were started, or closed, because ‘somebody’ had made specific ‘recommendations’. The prosecutors are human beings themselves.

But isn’t it rather strange that so many of the people who have actually honed the finest inner wheels of the contemporary Romanian state are now complaining about the way it works?

During the last 26 years this rather small group of people had countless opportunities to put things on the right track.
It seems that they didn’t succeed. For various reasons.
But it also seems that some of them, at least, had ‘ulterior motives’ for not succeeding.

Some of which are now being unearthed by the prosecutors.

The point being that we shouldn’t become mesmerized by the process.

Let the prosecutors do their job. Under close supervision, of course.
Learn the appropriate lessons.
“Do not steal” is important not so much because it is one of the Ten Commandments but because no society that has condoned theft on a large scale has ever thrived for long long enough to really enjoy the spoils.

Coming back to the Romanian political class – and to the people itself, everybody eventually gets to sleep in the bed each of us has prepared for itself.

If corruption wasn’t so widespread as it is today the prosecutors wouldn’t have been able to launch so many investigations.
If corruption wasn’t so widespread as it is today the ordinary people would have undoubtedly enjoyed a way better life. Maybe one close enough to the point where they wouldn’t have minded so much ‘a little’ corruption.

I have to end this by quoting Traian Basescu, the former President, also a very controversial figure:

“Corruption rests with two sides. I do not want to change responsibility, but it must be shared and assumed. A corrupt civil servant cannot be corrupt if they do not have a partner to put money into their hands, a ministry cannot pay by 50 percent more if there is not a consultant to sustain what the constructor says: ?Yes, we’ll raise the bill’. The ministry finds it impossible to act, because anyone wins in court if one also has the consultant’s advice that they should increase the public works price by 50 percent’, Basescu said at the launch of the Report on the Competitiveness of Romania, an event organised by the Romanian-based American Chamber of Commerce.

The President went on: ‘I believe we must, first and foremost, leave hypocrisy behind. The state alone cannot be corrupt, it has a partner, if there is corruption. The state alone cannot be non-performing, it has a partner. Let us together assume what we have to do. The easiest thing for the private sector to do is to criticise the state and the easiest thing for the state to do is to show indifference to the problems facing the business environment. I believe we are not in such a situation. We all want to have performance, to be competitive.”

Those of you who are interested in learning more about how we got here might start by reading this report by Oxford Business Group.

The ‘Panama Papers’ rekindled the public interest in the subject of ‘what legitimate goal could anyone have in setting up a company in a fiscal paradise?’.

Taxes, stupid!

Actually it’s quite simple.

Let’s pretend you are an alien from the outer space who has a business idea backed up by enough capital and you want to put it in practice somewhere on Earth. Aren’t you going to shop around for the best environment you might find? So that your business would have optimal conditions to grow? And when the business ripens wouldn’t you want to be able to cash on it – and end up with as much money as possible?

Rather conflicting demands, isn’t it?

First you want an ‘operational base’ with relatively low costs but secure and full of whatever amenities your business might need in order to thrive. Next you’ll need fast access to a market where to sell your wares. Last but not least it would be important for you to incorporate your business in such a way/place that you’ll end up pay the least amount of tax, both while operating the business and after the cash out moment.

While all these are legitimate demands there are a right and a wrong way to meet them.

I’ll refrain myself to discussing exclusively about the tax part, the rest being relatively easy to balance.

In this respect you can choose to incorporate the business in the same place you have selected for your operational base and pay whatever taxes are due in that place, under the rationale that those taxes cover the cost of doing business there and are nothing but a compensation for benefiting from the conditions present there at the time. After all, when you have chosen a particular place as the home of your business you have entered into an informal arrangement with that place. It lets you make good use of whatever is there to be used – exactly the things that convinced you to select that particular place, and expects you to fulfill your side of the bargain. Provide enough compensation so that that place can continue to be a good place to conduct business and, if possible, improve itself. Pay the local taxes.

Or, equally legitimate, use two different places for each thing. Organize your operational base where it would work best and incorporate your business in a place where you’ll be able to pay as little tax as possible.

And here’s the catch. No matter where you incorporate your business you’ll still have to pay some taxes in the place you have chosen as your operational base.

Then why bother?!? you might legitimately ask.
Since this is not an accounting dissertation I’ll just tell you that there might be serious financial advantages in making this choice, not the least of them having to do with the cash out moment.

And this is the very point where some people get greedy. They try to avoid altogether the taxes tied to the ‘operational base’ – by employing various semi, or even completely i-legal stratagems, and by doing so completely transform the very nature of the entire operation.

From one of fiscal optimization to one of money laundering.

There are a lot of rationalizations for this course of action. From ‘the state is a thief that uses force in order to part me from the fruit of my efforts!’ to ‘why give it to the state since the money will be squandered by the inefficient government?’.

Now let’s please remember where we started from.
OK, you are not an ‘alien from the outer space’ but what’s stopping you from conducting your business where ever you want on the face of this Earth? (My bad, this question is not valid for exactly everybody, there still are countries that don’t allow for people, or capital, to exit freely, but I’m sure you get my drift)
Oh, you like it where you are but you hate paying taxes and/or you’re disgusted by the way the government handles its finances!

Then let me remind you of two things.

First, you probably live in a democracy. Speak up. Make your concerns known. Loudly. Make sure you are listened to. Vote wisely.

Secondly, you are probably fed up not only by the fact that in your country taxes are really high but also by how little you get back in return.
Well… that’s because there are so many people who do not pay their fair share and that your government has to take more from those who do pay in order to make the ends meet.

Savvy?

iceland prime minister resigns over Panama papers

It depends on the meanings we attach to these two concepts.

Yanis Varoufakis, Greece’s ex finance minister, is convinced that ‘Capitalism will eat democracy – unless we speak up.

Since he has some experience in this matter I’ll follow his line of thinking – for a while.

His point being that you can have successful capitalism in undemocratic societies – like Singapore and China – and that effective power has slowly shifted from the political sphere of the society to the economic one – which is undemocratic by definition.

Can’t say he’s entirely wrong, can we?

But we can say he’s somewhat confused…
So, he mentions Lee Kuan Yew’s Singapore and China as capitalistic success stories and then says that  the political sphere is gradually falling  under the yoke of the economic one… Well, last time I looked, in China the state was still in full control of everything that moved and the state was firmly in the hands of the politicians. Same thing was happenning during Yew’s tenure as Singapore’s good willed dictator.

Unfortunately there is some truth in his words when we look at what’s going on on the both sides of the Atlantic and that’s why I’m going to examine whether we have the same kind of capitalism in both situations.

By Google-ing the word I got two definitions for the concept.

The first definition that was offered by the search engine came from Oxford Dictionaries, “An economic and political system in which a country’s trade and industry are controlled by private owners for profit, rather than by the state” and the second one came from Merriam Webster: capitalism is “an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market“.

Putting them together we have private ownership, private decision, free market and profit as a goal.

Are these enough to describe a reasonably well functioning economic system?
I’m afraid not.

Let me give you some examples.
The French state has a controlling interest in Renault and the land of Bavaria quite a sizeable one in VW. Renault is in good shape and VW was too, until very recently. So private ownership is not an absolute necessity.
In the US we had quite an interesting situation. Two out of the three big car manufacturers  had to be bailed out by the state. All three were privately owned so we must look somewhere else: the Ford family still has a powerful word in the management of the single one which didn’t had to be bailed out. In Europe the best run auto company seems to be BMW – again controlled by a single family, the Quandt’s. It seems that it helps a lot if those who call the shots have a long time interest in the well being of the company versus the situation in which the top management has (short time) profit as the single/obsessive target.
Coming back to Renault and VW, they can be compared to Singapore, China and, maybe, Spain. Singapore was able to develop a ‘capitalistic’ economy despite it being an authoritarian society simply because Lee Kuan Yew was a very special kind of ‘dictator’ – one that not only cared sincerely for the greater good of his people but also didn’t loose his head during his long stage at the helm. A similar thing happened in Spain – Franco was the sole dictator who had made preparations for a democratic evolution after his demise, while China had to wait for another good-willed dictator to grab the power – Deng Xiao Ping – before it could steer towards the present course. No other authoritarian regimes but these two have ever managed to replicate this feat – we still have to wait a little before pronouncing Vietnam as the third, and very few other publicly owned companies fare so good as Renault does.

So, we have rather strong evidence suggesting that ‘skin in the game‘ trumps blind insistence on short time profit and that a free, democratic, society offers greater chances for economic development than a authoritarian one. In fact the politicians that need periodic confirmation from the people they govern do have some skin in the game while the authoritarians are in a position that is somehow equivalent to that of the CEO’s of the huge corporations whose stock owners are so disspersed that practically don’t count much – the members of the board practically slap each-other on the back and are able to do practically what they want with the companies. Look what happened at GM, Chrysler and, for example, ENRON.

But how free should be that society in order for capitalism to thrive?

Could it be so free that a guy could come from the street and claim your house as being his own? No?

So we need a free but orderly society. One where private property changes hands only when its owner says so – or has previously entered into a contract which stipulates that in certain conditions that transfer has to take place.

Meaning that in order to have a functioning capitalist society we need not only private ownership but also private owners who have enough trust in each other to start making business together.

You see, the feudal lords of the Dark Ages did have a lot of private property but capitalism couldn’t take hold in earnest as long as the (absolute) monarch could strip a man of his property and give it to somebody else. They couldn’t enter into (longish time) contracts because the era was dominated by huge uncertainties regarding various aspects of the social and economic life.

In fact it is exactly this well tempered freedom that is the crux of functional capitalism. Enough freedom so that everybody could feel confident that he is his own master but tempered by rules enforced in a pwerfully enough manner to give everybody sufficient trust that most contracts will be executed faithfully.

In this sense for capitalism to work properly we need to have a market that is free in more dimensions that one.

It has to be free from political intrusion in the sense that the government should leave it alone as a rule of thumb but also that the same government should keep it free from becoming cornered by a single group of interests.
In fact there is no difference from a market that is run by a governmental agency or by a monopolistic corporation – no matter if the latter is private. As soon as decision making becomes concentrated in too few hands mistakes starts happening. And their effect accumulate until the system finally collapse. Or is dismantled by some ‘exasperated’ more powerful agency – as Standard Oil and  ‘Ma Bell’ were dismantled by the US government. Which, by doing so, created the premises for  the huge development of those two respective markets – oil and communications.

Only this freedom of the markets can seldom be preserved by an authoritarian regime. Yew’s Singapore and contemporary China are exceptions, not the rule. Most authoritarian regimes cannot resist temptation and start meddling in the economic life of their countries. By doing so, they introduce a lot of ‘noise’ into the system. Eventually, this noise drowns the useful signals and ‘blinds’ the decision makers.

Same thing happens – and here Varoufakis has a valid point – when economic agents become so powerful that they can dominate the policy makers. The politicians can no longer preserve a balanced stance towards the economy and give in to ‘special interests’. This way the markets loose their freedom, with all the malign consequences that come with this situation. Among them, the lack of trust that slowly creeps in the souls of those who have to do business in the no longer free markets. Which lack of trust is very bad for all those involved.

And another thing about which Varoufakis is absolutely right. A lot of money are not being moved through the ‘front doors’. Not that they are not invested at all but because they are kept somewhat hidden they do not contribute as much to the well being of the world economy as they could/should.

2.1 $ trillion have been accumulated, as of  October 2015, in off shore accounts by the top 500 American companies in order to avoid taxes and
Between $21 an $32 trillion have been hiding in 2012 in various offshore jurisdictions.

Why is that? Simply because those who are called to decide about these money do not ‘trust’ that by bringing these money home and by investing them there, after paying the taxes, will be able to generate profits equivalent to those produced by leaving them off shore?

So what should we do? Tell them ‘democratically’, by electing somebody who is crazy enough to implement such a measure, to bring them home? Or even  confiscate them, one way or another?

I’m afraid that here I part again ways with Mr. Varoufakis. And with Aristotle: the way I see it democracy is not ‘the constitution in which the free and the poor, being in majority, control government‘. That would be ‘mob rule’.
A truly democratic process starts before the vote. When every stakeholder can make its point known to those who are going to cast a ballot so they’ll be able to do that having a reasonably clear understanding about what’s going on.

Frankly I’d rather rephrase Varoufakis’ message. ‘Corporatism has a tendency to disembowel democracy and transform it into ‘mob rule’ – the situation where the poor are no longer that free simply because they are convinced through ‘unholy’ methods to vote one way or another.

What can be done? Explain, loud and clear, that if jobs disappear the same thing will happen with the aggregate demand?
Explain that by giving their workers as little money as they can in reality the results are way worse than if the wages were as high as the companies could afford?
Ford didn’t give his workers more money because he loved them but simply because he had understood that in the long run he would be better off himself by doing this, you know!

“When the last tree has been cut down, the last fish caught, the last river poisoned, only then will we realize that one cannot eat money.”

Some people attribute this quote to the Apache Leader known as Geronimo.

Quoteinvestigator.com says it is highly probable that it belongs to a guy called Alanis Obomsawin.

But what is more important?
Who said it or what we make of it?

Dede Suryana

I recently shared this meme on my FB wall:

when_i_was_poor_and_i_complained_about_inequality_they_said_i_was_bitter_2014-07-23

This is what happened next:
No two people are the same.“”That’s why I prefer equal opportunities instead of equality.
No two opportunities are the same. What you might consider an opportunity I might pass up. It’s a very diverse world we live in, a wide one in which hopefully everyone can be accommodated.

‘Can be’ or ‘will be’?

And who is the real looser here?

Let’s see what the broad picture looks like:

The world’s super-rich have taken advantage of lax tax rules to siphon off at least $21 trillion, and possibly as much as $32tn, from their home countries and hide it abroad – a sum larger than the entire American economy.”

Meanwhile

education debt

And what’s wrong with that?!?
Everyone has the right to do what ever he wants with his money and why should anyone expect to be educated for free?!?

OK, let me put it differently.

Every society is like a big community, even if its members do not share an intimate knowledge of each-other.
At least theoretically an overwhelming majority of any nation share the same set of values and the same goal – the long term survival of both the population and the afore mentioned set of values.

Now please consider which society would be better at the game of survival:

One which would make it easier for as many of its members to develop as much of their individual potential as possible or one that would make it easier for a small number of its members to spirit away so much wealth that the rest would remain crippled?

One which would use the very concept of a ‘free market’ as broadly as possible – make sure that as many as possible of its members enjoy the widest possible autonomy – or one that would allow the ‘never as free as advertised’ market to degenerate into the ‘winner takes it all‘ situation we are bound to reach if we continue on our present course?

How could enough people afford to ‘wander around’ for long enough to find the opportunities that would fit them if they are saddled at birth with a huge burden – the ever burgeoning national debt?
Would enough people risk to take on any additional debt (in order to prepare themselves to make better use of the opportunities they might find) if too many of those opportunities, even if met diligently, do not pay enough to ‘eat’ AND pay back the debt?

How is a society going to survive, let alone thrive, if a lot of ‘opportunities’ (social needs) end up being ‘plugged’ by unfitting/under-skilled/’less than enthusiastic’ individuals? Or not at all?

On the ‘supply side’, what do you think of those who choose to dodge paying taxes?
On the ‘demand side’, what do you think of those who squander public money as if there is no tomorrow?

So what should we be talking about? Equality or Equal Breadth of Opportunity?
About the Bed of Procrustes or about a ‘Free Market’ where all participants are simultaneously autonomous and fully aware of their responsibility for their children’s future?

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