Published On: Fri, Nov 22nd, 2013

A Lost Generation: why the personal story of the beautiful Yulia is also our story

Looking back…

Many years ago HFN spent a wonderful day in the company of a beautiful Russian woman.  She had a warm smile and long legs that never seemed to stop. She was also very smart and had a master’s degree in engineering.  I had met her the previous night at an expensive Moscow restaurant.

I say restaurant.  But that was upstairs.  Downstairs, it was a brothel.

This beautiful young engineer was a prostitute and her job was to have sex with any man willing to pay her.

The year was 1996. I was 21. Boris Yeltsin was President and would remain so for another three years.  He had become President of the Russian Federation in 1991, after the Soviet Union collapsed, and for five drunken years he had stuffed the country into a gigantic blender of economic reform, price liberalisation and privatisations.  Out of this emerged a shredded and mangled society. Corrupt, desperate and ruled by oligarchs and kleptocrats.

It was my first trip to Moscow. I was there for a finance conference along with my boss and a colleague from my office in London.  My colleague had lived in Russia as a teenager and spoke the language well.  After our first day he invited us out on a tour of the best places in town.

I had already spent some time living in Poland and Hungary so was reasonably familiar with life in former communist countries.  My father had been involved in the privatisation and the reform of their banking sectors.  Eventually he would move to Armenia, where I would visit him as well.

What struck me most of all was how topsy turvey society had become since the collapse of communism.  Our driver in Poland, for example, had once been a senior electrical engineer, with a PhD, and had worked for the railways.

Our Moscow destination was even more extreme. An eye opener to what can happen to a rich, well educated, western society in under five years.

We went to a restaurant.  The three of us had dinner upstairs.  We sat in a pen in the middle of the room.  All around the edges of the room, on elevated stools, sat beautiful women.  There were mirrors on the walls so they could look at us indirectly.  The food and wine was excellent.

The downstairs area had a long bar and a dance floor. It was filled with western men, mainly middle aged Americans and Europeans from the same finance conference, and beautiful young Russian women.  My eyes were telling me that I was in a brothel, but my brain was telling me that this could not be the case – why would my married boss and colleague have taken me here? They couldn’t seriously have taken me to a brothel?  Surely not?  No!

Well, yes.

At the time I was unfamiliar with the social etiquette of brothels.  Normally if you go to a bar and you are young and single and there are young and single people there that you find attractive you would go over and start up a conversation.  Perhaps tell a joke, or ask them about what they did.

But I knew what all these women did.  They were prostitutes.  I asked my Russian speaking colleague for advice.  “Ask them about their families and what they studied at university,” came the response.

And so I did. It emerged that most of these women were not just beautiful but also very well educated.  They were witty and spoke English with a delightful, soft, accent.  Most appeared to have a degree of some sort.  Many were engineers and scientists.  Many had husbands and children.

After the collapse of the Soviet Union people would work without pay for months.  That is if they had a job to go to.  Factories and whole neighbourhoods had been abandoned, as if taken out by some strange non-destructive bomb.  There were no science jobs.  No engineering jobs.

And yet while there was nothing that their men could do, there was one ancient profession that these women could resort to when no other option was available.  These women had collectively made a difficult choice.  Starve. Or lie on your back for a few hours a week.  Earn enough money to pay for food, the rent and to keep your family safe.  Maybe even find a nice western man who could suddenly take you away from this mockery of life and everything that you had hoped for.

The evening was over.  We got into a taxi.  My boss was in front, with the driver. I sat in the back, with my colleague.  In between us was Yulia, who was beautiful.  We arrived at the hotel and Yulia was ushered through the lobby.  The hotel staff looked at us disapprovingly.  They had seen her before.  They also knew what she did.

 

Looking around us today…

It is now November 2013.  The weather is cold, like it was in Moscow, and as I reflect on events seventeen years ago I have a terrible sense of deja vu.  Except I am not in Moscow, I am in London.

All around me are economic migrants.  The young waiters are Spanish, Greek, Portuguese and French.  They are dressed smartly and are hard working.  There are few jobs for them in their own country.  61% of young people in Greece have no job.  51% of young people in Spain have no job. 40% of young people in France have no job.

But these foreign waiters and nannies do have jobs.  They were smart enough to leave.  The unemployment percentages would be higher if so many had not emigrated.  Talk to them.  You will discover that most say that they were university educated.  When they were growing up they were told how exciting their futures would be.  They would leave university and get a great job and become upwardly mobile young professionals.

Instead they found that there were no jobs to go to.  No employer wanted them.  After a while they packed their bags and got a cheap flight to Gatwick and ended up living on the floor of a flat, rented by a fellow emigrant.  Friends told them of job openings and they put aside their aspirations and started to serve food instead.  Those with good English had more opportunities.  Young women with masters degrees got jobs as nannies or au pairs.  A few got jobs with professional companies, making use of their talents.  None of them expect to return home. Nothing awaits them.

Over twenty percent of young Britons have no job either.  This is not as bad as it is in other European countries.   But it means that the job market is very tight.  Those that do have jobs are aware of how lucky they are.  Wages are kept low and expectations of what they will be able to achieve in life are kept even lower.

Twenty years ago it was still possible for young people to leave university, get a job and shortly afterwards put a down payment on a small house or flat.  Thatcher had made home ownership for millions a distinct possibility.  Council houses were sold off to the private sector and financial deregulation had allowed banks to flood the housing market with cheap, no questions asked, mortgages.

Today that dream is dead for most young people.  House prices are so far in excess of normal salaries that the only way they can get onto the housing market is for them to be given big deposits by their family.  Most young people rent until their late twenties or early thirties.

This has a knock on effect on when they get married and when they have children.  In some European countries, like the Netherlands, renting and having children out of wedlock is not only acceptable, it is quite normal.  In the UK it is not.  Yet.

So young professional couples are waiting until their early thirties to get married.  Do they have a big wedding, or a small civil service and use the money that was going to be spent on the wedding towards a downpayment on a house?  If they wait too long it will be hard for many couples to have more than one or two children.  With heavy levels of debt and no decent jobs most couples will find stressful fertility treatments too expensive, unless they are paid for by a national health service that is already strapped for cash.

But this truncated dream of owning a small house late in life and having one or two children is only going to be available to those who can afford it.  There are two other options.

One is that you skip the whole job angst, live off unemployment and social benefits, and have as many children as you want.  This will work for a while.  But at some point there will be such a strong public backlash that those benefits will be taken away.  Hoping for charity when people don’t have the money to even look after themselves is risky.  Disappointment is likely.

Another option is to set your aspirations even lower.  Don’t expect to own a house or ever have have more than one child. This is what most Russians had to do after the fall of the Soviet Union.  They put off having children.  For twenty years, between 1965 and 1985 Russia’s fertility rate bumbled along at around replacement level, between 2.13 and 2.05 per woman.  The early Gorbachev era saw an increase in fertility as life seemed to be better and the fertility rate moved up to a high of 2.22 in 1987.  Then times became uncertain.  A mere 12 years later, when Yeltsin left office in 1999, the fertility rate had dropped to 1.17.  It gradually recovered under Putin and as of 2011 stood at 1.54.  Russia’s population is still going to contract.

Some people will do well in the new economy. Capital is becoming more important.  Capital buys robots that can do factory work.  Capital buys software and servers to siphon off many service sector jobs.  If your job enhances the use of this capital you should do well financially. If your job requires you to compete with this capital you will do badly.

Those that do well will be able to afford more “home help”.  But it is not realistic to hope that even the very rich will have lots of servants.  We will not be returning to a life of Downton Abbey.  Machines and labour saving devices take care of most servants’  jobs.  Houses are also no longer compatible with large numbers of servants packed into attics and cellars. But they may need one or two people to help with managing their affairs and children.  For many university educated people this might be a good option.  You might get to live with a family in a nice area. Even if they pay you a low wage, your discretionary income could be greater than if you had to commute and rent your own place with a more conventional job.

 

Looking forward…

This Lost Generation does not just affect young people.  If young people don’t have jobs or only have badly paying jobs they can’t afford to buy many things.  This is bad news for those that sell goods and services to this market.  Those companies will close down, laying off workers, making jobs harder to find and to keep. If younger people don’t have jobs they will pay very little in taxes – they will still pay VAT – and are likely to take out more in terms of unemployment benefits.

Everybody else will have to pick up the slack.  That means higher taxes for those that have incomes and lower levels of services as less money is available for spending.  If you are a pensioner who is going to pay for your pension? Don’t make the mistake in thinking that your government pension is going to be paid out of money that you put into your pension pot years ago.  That money was spent looking after people who were pensioners when you were young.  Your pension comes directly out of taxpayers today.  Populations were once described as pyramids – with a few old people at the top and lots of young people at the bottom.  They could afford to pay for the few old people. Now populations in developed countries are described as kites, with lots of old people and few young people.  Pyramids are stable.  Kites fall over.

Governments are currently in denial that the Lost Generation is a real problem. A little bit of growth and we will get out of this slump. Everything will be fine. Don’t worry. They are sleepwalking towards a cliff.  In their dreams all these problems will go away, as if life were a movie and some crazy plot device will be introduced which will miraculously make everything better.

Soon they will flounder around trying to find solutions.  The problem is that any solution will take time to work its way through.  Politicians will not have a lot of time.  With four year electoral terms they should expect to lose every election as a disgruntled electorate kicks them out for failing to resolve the crisis and for failing to meet their unrealistic electoral promises.   Political parties already lack credibility and legitimacy.

Another problem is that any solution will use the entire country as the experiment.  There will be a lot of pressure to fiddle with the solution on a continuous basis, meaning that the initial solution, which might have worked, won’t be followed through, making it impossible to tell whether the solution was good or bad.  Scientific experiments need a control – in democratic politics there is none.

One easy solution to this crisis is mass immigration.  This will be a tempting solution for many governments.  Large numbers of young immigrants will pay the taxes for the older people. The kite becomes a pyramid again. But if there are no jobs for the indigenous young people will mass immigration really fix the problem? Or make it worse?  Immigrants will come in, find no jobs and will stay.  It is almost impossible to discriminate against them in the European Union by not allowing them access to unemployment and social security benefits.  Deporting them is also next to impossible, for legal reasons.  And eventually they will get old and will want a pension too.  In the meantime the country will become unrecognisable for the indigenous population.

Another tempting solution is to get rid of annoying voters.  Change voting requirements to make it harder for young people to have a political voice.  The US already has clever ways of stopping African Americans from voting.  Many states make registration a requirement. And then make it next to impossible for African Americans to register.  Others make criminals ineligible to vote.  And then they lock up millions of African Americans for petty drug related crimes.  It would be an easy step to make owning a property a requirement for registering to vote. If you don’t own a property you can’t register, and if you can’t register you can’t vote. At a stroke most young people will have no official political voice. Older voters are wealthier, more reliable, own property and are more populous.  This will help ensure politicians protect the needs of older people over younger people.

But it won’t solve the problem.

 

Conclusion: Back to 1996

My short time living and traveling in former Communist block countries after the collapse of the Soviet Union demonstrated to me personally that wealthy, well educated, western societies can fall apart relatively quickly, even in modern times.  The collapse of the Soviet Union took everybody by surprise.  Russia still has not really recovered. In its aftermath political scientists could point to factors that made the whole soviet experiment unsustainable.  Hindsight is perfect.

The West and the world today have so many structural problems that, unlike the Soviet Union, it requires little imagination to forecast a collapse. Crises can take a long time to resolve.  The Great Depression that started in 1929 was a crisis of western capitalism that was only resolved by the Second World War.

This Lost Generation is a significant social crisis. Really bad things will happen to people that you know and love if it is not resolved.

The good news is that if you look at previous empires, ranging from the Roman Empire to the Byzantine Empire to the Ottoman Empire it is amazing how long systems that are broken can survive.  Sometimes not just for years, but for centuries!

 

PostScript 

So what happened with Yulia, the beautiful Russian engineer, the long legged prostitute?

I woke up the next morning, alone.

I knocked on the neighbouring bedroom door and my Russian speaking colleague opened it, tightening his dressing gown.  At the back of the room I got a glimpse of Yulia getting dressed. A silhouette against the window.  Since I had nothing on that day- my role at the conference was over-  he suggested that Yulia take me on a tour of the city.

For the rest of the day I wandered the streets of Moscow with this beautiful, long legged, woman who was wearing high heeled black boots, a short leather dress and fishnet stockings.  There was no mistaking it – she looked like a prostitute.

We were stared at by soldiers as I walked through Red Square, past the Kremlin’s red walls and St Basil’s Cathedral’s iconic multicoloured onion domes.  We were stared at by gnarled old women as we went down into Moscow’s absurdly deep subway system and got off at train stations that looked like rich palaces, fitted with chandeliers.  Finally, we were stared at by my Russian speaking colleague, in horror, as Yulia took me back to the office reception at the end of the day.

As I look back at my delightful day with Yulia I think how her story could have been the story of many of my female friends.  I could have gone to university with her.  She could have been my sister.

What frightens me personally about this youth unemployment crisis, this Lost Generation, is that time is running out to fix it.  Soon my daughters will be Yulia’s age.

What choices will they have to make? What choices will your daughters have to make?


History Future Now, ebook edition, is now available from the Apple iBookstore!  So if you have a iPad or iPhone click on this link to download it.  It is currently on at a special offer of 99c.   The Kindle version has been submitted to Amazon and should be available shortly.

About the Author

- Tristan Fischer is the author of all the articles on History Future Now. He is the Chairman of Lumicity Ltd, a company developing renewable energy infrastructure projects, Chairman of Fischer Farms Ltd, a vertical farming company using hydroponics, and a board Director of Fish From Ltd, an onshore salmon company. He previously worked for Camco International, Shell Renewables and Citigroup. He was educated at Cambridge University. If you liked this article and want to read more, the ebook edition of History Future Now, is now available from the Apple iBookstore!

  • themisanthrope

    The silver lining to this globally expanding black cloud of doom, for those of us nearing the end of life without hyper-wealth: we may just be able to check out before the defecation starts to really hit the ventilation.

  • Nick

    Brilliant! For some reason your description of Moscow and the inability of our young to procure a home reminded me of some lyrics Roger Waters wrote after leaving Pink Floyd – similar era:

    Could be Jerusalem, or it could be Cairo
    Could be Berlin, or it could be Prague
    Could be Moscow, could be New York
    Could be Llanelli, and it could be Warrington
    Could be Warsaw, and it could be Moose Jaw
    Could be Rome
    Everybody got somewhere they call home
    When they overrun the defences
    A minor invasion put down to expenses
    Will you go down to the airport lounge
    Will you accept your second class status
    A nation of waitresses and waiters
    Will you mix their martinis
    Will you stand still for it
    Or will you take to the hills

    It could be clay and it could be sand
    Could be desert
    Could be a tract of arable land
    Could be a house, could be a corner shop
    Could be a cabin by a bend in the river
    Could be something your old man handed down
    Could be something you built on your own
    Everybody got something he calls home

    When the cowboys and Arabs draw down
    On each other at noon
    In the cool dusty air of the city boardroom
    Will you stand by a passive spectator
    Of the market dictators
    Will you discreetly withdraw
    With your ear pressed to the boardroom door
    Will you hear when the lion within you roars
    Will you take to the hills

    I think the big question is how long the young will be fobbed off with bread and circuses, and how long the oldies can afford to provide these

  • Eric Harris

    As an ex Brit now looking at what I see of the ongoing collapse of both UK and US public institutions, I can associate with every word, opinion and thought behind this evocative essay. Thanks for posting it. The really scary issue is that this collapse is now global.

  • Diana

    One of the most brilliant articles I have read in a long time. Sadly, being a prostitute has a short time when one can command the big bucks.

  • Douglas Buck

    Phew! I hope this is not prescient for the US economy. We have always been able to rise above our difficulties.

    But, it is harder for a society to go from living under an autocratic or cumbersome bureaucratic regime to freedom, than from freedom to tyranny. I remember my Asian studies’ classes discussing the fall of Chinese dynasties. They ended when they became top-heavy bureaucracies, overtaxed their people, and failed to maintain public works or security. “There was too much water in some places and not enough in other places.” And they failed to prevent foreign invasions, whether military or excessive immigration.

  • Eric Harris

    When previous similar crises occurred then IMO there was always a charismatic leader risen to the top who had the ability to rally his citizens behind him. FDR, Churchill and DeGaulle come to mind. It takes the ability to think ahead (of the future) in order to recognize the truth of the oncoming train wreck described in this HFN essay. The Establishment would like for us all to believe that they know what they are doing whereas with QE the Fed admits that they are on untrodden ground. Even the infamous Weirmark’s hyperinflation in the 1920’s was different in that it was caused by WWI reparations to the victorious Allies rather than as a stimulus for their economy. But a crisis already here is the legions of unemployed youth who have already turned to welfare and crime in order to exist, as also described in this HFN essay. Where are our leaders who can persuade us ALL to tighten our belts as the halcyon days (that we want to come back) are long over. By ALL, I tongue in cheek include our financial elite and Congress. This same essay also points out the bandaid measures now being taken by governments do nothing to resolve the basic issue of our unemployed youth.

  • Douglas Buck

    A number of companies already pay their employees in part with stock or at least give them options to buy it at a good price. This is a good way to run a business. Some private companies share their profits with their employees at the end of the year. It helps them to feel they are a part of the company and gives them a good benefit when it does well.

    Eric, I agree with your last paragraph. There are fewer and fewer people pulling the wagon and more and more people riding in it. There are, furthermore, more and more people crowding into the driver’s seat. In our local school system, for example, only one third of our tax revenues for education go for teachers’ salaries and benefits, and another fifteen percent to build and maintain the buildings. Half of those tax revenues go for administrative salaries and who knows what else! This same excessive bureaucratization exists at all levels of government.

    I don’t know of a workable solution at this time. Too many are invested in the present system. It’s nice to pose theories. Workable plans anyone?

    • Aram Ausky

      “Workable plans anyone?”

      Eliminate payroll taxes but include a provision to preclude the owner/employee to siphon off profits in the form of wage expenses.

      Slowly reduce government services [cough] to the of the gov budget equaling gov revenues from other sources.

    • Eric Harris

      George W. Bush reduced payroll taxes with the promise that it would then stimulate the economy, then he had to spend any such gains on “The War on Terror”. Even so, IMO correct Keynesian monetary policy calls for the spiked punch bowl to be removed once the party gets going. But politicians know that happy party goers also make for favorable (to them) voters. Your bottom line concept of zero payroll taxes and later much reduced public benefits has a Cinderella quality to it as it is not a zero sum solution.

      My suggestion would be to convert all US Embassies into Consulates thereby shutting down our self appointed role of being the Global Policeman. Then reduce the size of our armed forces to a level sufficient for just Home Land Defense not needing 13 nuclear mega sized carriers. Those actions alone would raise unemployment figures by double digits. Then, as happened in Russia, people would have to find employment in new pastures (a pro Austrian School recommendation). On the plus side we still have a Democracy and a Constitution to fall back on.

      • Aram Ausky

        I like the Cinderella comment.

        But I don’t like the “13 nuclear mega sized carriers” reduction comment. The US military industrial complex is the cream of US industry. I don’t like it being a driver of US foreign policy but you can’t kill it. That would radically diminish both sides of the production/consumption equation. Maynard wouldn’t like that, LOL!

        IMO, the positive economic good of the US military industrial complex can be transformed over many years into useful things in addition to defense.

        • Douglas Buck

          Yep, it would be nice for Electric Boat to start manufacturing electric vehicles instead of so many atomic submarines.

  • Bright Harry

    Eric, I have a very busy schedule and will respond to your statements and questions about my write-up above, just before the Thanksgiving or just after. The solution to our current global economic quagmire which includes massive unemployment for all, not just the youths, globally, is very simple. I will try to explain my concepts as best and as comprehensible as I can.

    If we do not quickly shift from our current, deadly Feudalistic/Plutocratic Capitalism to Democratic Capitalism, we (all humans) will self-destruct. Democratic Capitalism is our only hope for survival on this Earth.

    Capitalism has always been, and still is the only Economic System of the World. It all depends on what type of Capitalism is being practiced. — Feudalistic, Plutocratic or Democratic.

    Socialism is a Political System and not an Economic System. Communism is also a Political System and not an Economic System. Even Marxism is a Political System — a subset of Communism and/or Socialism, and not an Economic System. For, Socialism, Communism, Marxism, all use Capital, the very basis of Capitalism. Hence, they are all Capitalist Systems

    All the Economic theories of Adam Smith, John Maynard Keynes, Joseph Schumpeter, Ricardo, Karl Marx, and many other renown and unknown Economists are based on Feudalistic Capitalism and Plutocratic Capitalism. And this is the genesis of our economic problems today. Our economic theories must be totally deconstructed from Feudalistic and Plutocratic Capitalism and then reconstructed towards Democratic Capitalism, which aligns perfectly with our current 21st Century Knowledge-Intensive Economy of very Advanced Technologie, in the midst of stupendous abundance, coupled with massive unemployment to free humanity.

    Will respond fully soon.

    • Eric Harris

      Bright, I needed to do my homework on what you mean by Plutocratic Feudalism or vice versa. I came up with

      “”Plutocratic feudalism, is what most “capitalist” systems operate on today. Unfortunately there never was and is not an actual capitalism in this world. Substitute “inept and excessive regulation” with ”plutocratic exploitation of capital by the rich ruling class who led the revolution that started the nation and made sure that the government continued to facilitate their cementation of power,” and you’ve got AMERICA!””

      This is a definition I can understand and agree with, even though it throws stones at Thomas Jefferson et.al. We are at last on the same page.

      • Douglas Buck

        Bright: I am not sure I understand what you mean by “democratic.’ Please clarify.

        With respect to political systems, democracies have always failed. They turn into mob rule led by a few forceful, clever and articulate men, or where the majority tyrannizes the minority. The Founders of the United States established a republic. Each level of government was supposed to be sovereign with respect to its internal affairs. The “Federal” government was to be involved only with things of national significance, like relations with foreign nations, national defense, coining money, interstate comity …

        Please forgive my ignorance, but I am also unfamiliar with the term, democratic capitalism and would also appreciate a clear definition of that.

        It seems to me, we presently have a mixture of several economic systems in the United States, and a federal government that is no longer “federal,” but “national,” in that it has an interest in every state’s, community’s and individual’s private affairs. Small businesses still operate somewhat as pure capitalistic entities except that they are strongly regulated. Some large corporations and banks are “in bed” with the government (crony capitalism). Most public school systems are owned and operated by the government with forced conscription and forced taxation to pay for them (communism). Then we have the non-profits (or NGO’s) that are strictly controlled or regulated by the government, whatever political system that is.

        Oh, for clarity on our political and economic systems! I don’t have it.

        • Eric Harris

          When I brought my family from the UK to Texas in 1980 I had the firm belief that an American could rise as far up the social ladder as his ambitions and talents allow. I also thought this to be a classless society with no Upper / Lower / Working classes to define other than Middle. I have long since learned that this is not so. Wealth defines ones status in America more than ones accent or education, as money can buy all sorts of privileges including corruption. This is what I believe Bright means by Feudalism. A rich family aka elitist, know how to preserve their wealth in a manner closed to the average US middle class. This has been done simultaneously for the past 30 years wen the government elitists have slowly but surely and intentionally destroyed the exchange value of the dollar in order to satisfy our national addiction to debt. In other words we have exported our inflation to the rest of the world by allowing the Fed keep its Keynesian policy that growth of GDP is dependent on 2% inflation. Then they fudge the national economic data to justify this policy. We all know that today’s inflation rate is much higher than the Fed admits to, if not then read John Williams ShadowStat.com web site.

          So now we have the inevitable final situation where the Pyramid can only stay upright by bringing in more immigrants in the hope that they will eventually pay their way in our society. In the meantime we also have a lost generation of existing American citizens without any hope of improving their standard of living above what they had enjoyed while living with their parents. That alone is a sign that we are in the final act of this play. The theater lights will come back on and we all head for the exits if we piss Saudi Arabia off so badly that they drop their demand that their oil exports be paid for only in USD. Kerry and Obama are now intent on doing just that in Geneva in order to get a 6 month stay on Iran’s Uranium enrichment program. The day we cannot pay our legitimate debt obligations without printing or borrowing the money to do so will be the final straw for the dollar as a fiat currency. Then we may be a lost nation too.

          • Bright Harry

            Douglas, the word Democracy originated from the Greek word, “Demokratia”. The original meaning of this Greek word, “Demokratia” is, the collective capacity of the whole Citizenry (All the People) to make good things happen in the public realm. Democracy is a qualifying word and has nothing to do with voting, majority rule or government. Democracy is the opposite of Dictatorship or Authoritarianism.

            Thus, you can have a Political Democracy or Democratic Politics, where all the Citizens are equal participants, through one person one vote or a Political Dictatorship, where a Tyrant or Dictator imposes his.her rules on the whole Citizenry.

            You can also have an Economic Democracy or Democratic Economics where all the People have equal opportunity and equal access to the means for creating wealth and the means of production of the goods and services they consume to live and enhance their lives. Or you can have Economic Feudalism/Plutocracy or Feudalistic/Plutocratic Economics (as we currently have) where only very few of the Citizenry have the opportunity for creating economic wealth, and also own and control the means of production of the goods and services we all consume to live and sustain our lives.

            Furthermore, Democratic Capitalism is an economic system where ALL THE PEOPLE have equal opportunity and equal access to FINANCIAL CAPITAL and the other CAPITALS that make up Capitalism, to participate effectively in the production and distribution of the goods and services they consume to sustain and enhance their lives. Democratic Capitalism is a subset of Economic Democracy or Democratic Economics and hence, can only function under Economic Democracy. It cannot function under Economic Feudalism or Economic Plutocracy.

            Even then, Economic Democracy functions only with its twin, Political Democracy, just as Economic Plutocracy functions well with Political Plutocracy or Political Feudalism.

            As you can thus see, Democracy is neither a political system nor majority rule or just one person one vote. It is a qualifying word and the opposite of Dictatorship or Authoritarianism.

            Now, with regards to the United States, it is supposed to be a Constitutional Democratic Republic — the ultimate goal of MOST of the Founding Fathers. It is not yet there. The United States has always been and still is a Constitutional Plutocratic Republic. It is also supposed to be an Economic Democracy. It is not. The United States has always been and still is an Economic Plutocracy. Only on the side of Culture can we say that the United States has a Democratic Culture or Cultural Democracy.

            In other words, the ultimate goal of every Nation to be the best it can be and unleash the creativity of each and every one of its Citizens for his or her betterment and the betterment of the Society as a whole, can only be achieved in a Truly Democratic Society of Political Democracy, Economic Democracy and Cultural Democracy. We Americans must quickly shift from our current Political Plutocracy (Constitutional Plutocratic Republic), Economic Plutocracy (within which is ensconced Plutocratic Capitalism) and Cultural Democracy, to Political Democracy (Constitutional Democratic Republic), Economic Democracy (within which is ensconced Democratic Capitalism) and Cultural Democracy.

            This shift must occur fairly quickly for us to save ourselves from ourselves and continue to be a limelight to the rest of the world.

            Thus, Douglas, we want our Federal, State and Local Governments to be Democratic (as in a Constitutional Democratic Republic), not just the Federal Government. We also want our current Plutocratic and Feudalistic Corporations to be Democratic Corporations, a very essential component of Democratic Capitalism.

            Your so-called Laissez-Faire Capitalism or pure Capitalism as you call it, is nothing order than Feudalistic/Plutocratic Capitalism that almost destroyed the United States in the 1920s. We must shift to Democratic Capitalism.

          • Douglas Buck

            Thank you, Bright. This helps. I would like to think we could all have an equal say in how to run the show and that we all have equal opportunities. However, given the realities of human nature, I still believe the Founding Fathers got it right. They believed in “natural rights.” This means that everyone should be able to do what they want as long as they don’t infringe upon the rights of others. To protect themselves from predators they enter into an agreement or “social compact.” In doing so, they give up some natural rights (including desires) in order to have peace and tranquility. I like this statement by Rousseau: “What man loses by entering into a social compact is his unlimited right to everything that tempts him and that he can reach. What he gains is civil freedom limited by the general will, and property secured by title.”

            When members of a social compact, commonwealth or community become too numerous to conveniently assemble for democratic action, they elect representative to a more general government. A proper constitution is supposed to be written to prevent the general government from dictating to the community what they ought or ought not to do with respect to their internal affairs. In other words, the Constitution is to prevent the general government from becoming tyrannical.

            What has happened, as I see it, is that people with money have used that money to influence those in government to favor themselves at the expense of their fellows. We have bad men bribing bad men to write bad laws. It’s not the Constitution that’s bad, at least as originally written, it is that society is losing its morality and drifting from it roots.

            You speak of economic plutocracy, an interesting concept. I do see that more and more of the producers among us are becoming indentured servants or serfs, if you will, hired by large corporations to produce for them at the lowest possible price. Fortunately we still have more freedom than any other nation I know of. Anyone, with gumption and a little imagination can start his or her own business, produce something independently, and contribute greatly to society.

          • Bright Harry

            Douglas, I will fully address Democratic Capitalism and the way forward for us all American Citizens, and people everywhere in the world in general, over the weekend. It’s quite simple, but the question is, do we American Citizens have the will to change our ways, thereby once more becoming the leading light to the rest of the world?

            Now, when you bring up social contract, especially with the concepts of Rousseau, Kant and others, you are dabbling in very treacherous waters. Their theories of social contract were all based on Dominator social contract, that is still pervasive throughout the world, including the United States. What we all need is a Partnership social contract where we all make decisions that are mutually beneficial to us all, and not a Dominator social contract where you either dominate or are dominated.

            This Dominator social contract which encompasses Political, Economic and Cultural Feudalism, and Political, Economic and Cultural Plutocracy, is what is destroying the very fabric of life in every nook and cranny of the world. We must shift to a Partnership social contract that encompasses Political, Economic and Cultural Democracy for all.

            We have no choice if we want to survive as a human specie on this our only Island called Earth.

          • Eric Harris

            The obvious question to ask now is what incentive would be needed to make our 1% Plutocrats give up their over-privileged position in our society in order to allow a Political Democratic economy to emerge from the ruins of what is now just Plutocratic Feudalism? Of course this requires a governmental impetus by some people that are part of the 1%. Can they take the Fifth Amendment to avoid this conflict of interest?

          • Douglas Buck

            What do you think of Karl Marx? I think Karl Marx’ analysis of economic conditions in Nineteenth Century England was brilliant. A similar analysis could be done today of conditions in early 21st Century America. The fix he proposed was way off base, though.

            I am anxious to read what “fixes” are proposed here.

          • Eric Harris

            I suspect that this question would make for any excellent new thread. Working backwards from what has been highlighted in this thread as being wrong, I suspect any “fix” that could morph into a “solution” would require a complete rewrite of our Tax Code and a new Constitution in order to dethrone or better humanize our 1% elite and make it more appropriate for this 21st century. Maybe even get rid of the Fed, and do away with guns without having a good reason to own them. I don’t believe we could be happy with going pure Austrian School Economics as it pertains more to the “Laws of the Jungle”, while Keynesian economics (like for the US dollar) too easily corrupts the self interests of those elected to work it. But of course the Devil is in the details.

          • Bright Harry

            Douglas, yes, Karl Marx correctly analyzed the problems of Feudalistic Capitalism with tinges of Plutocratic Capitalism in Nineteenth Century England but he had no solution. He assumed that Capitalism was just one flavor, like many Economists even today. Hence, all his angst against Capitalism, and his theories and suggested solutions to the prevalent problems of Capitalism at the time, were focused on Feudalistic Capitalism and Plutocratic Capitalism, but not on Democratic Capitalism.

            Just like Adam Smith, Keynes, Ricardo, Schumpeter and other Past and Present Economic Thinkers, Karl Marx did not know that Capitalism has three flavors — Feudalistic, Plutocratic and Democratic. This is why Marxism never solved the Capitalism conundrum.

            Democratic Capitalism solves the Capitalism conundrum Karl Marx was fighting against and looking for its solution.
            _________________________________

            Eric, the 1% Plutocrats can keep their wealth already in their possession. They do not need to share it with anyone under Democratic Capitalism. Democratic Capitalism is focused on new wealth creation for all. It means making the pie bigger for all, rather than fighting over a shrinking pie.

            Now, Keynesianism or demand-side economics is just one-half of the solution to our current economic quagmire, and supply-side economics is the other half of the solution. Democratic Capitalism unites both demand-side and supply-side economics, thereby obeying Say’s Law — Demand creates its own supply and supply creates its own demand. This is what makes Democratic Capitalism great.

          • Mark Borowski

            Eric,
            the REAL answer could be as simple as REVERSE Darwinism has taken over for any reasonable, rational thought process. Critical thinking is at an all time LOW.

            Reposted: The Darwinization of Law in America ( and Treason Defined under US Code 2381 )
            “The Darwinization of Law In America” was instigated by Charles William Eliot, the President of Harvard University for 40 years. That is when “darwinist law” took over.

            Excerpts from the author of that masterful piece of writing , Pastor David Whitney:

            “Law was to be studied as if it were a science that is guided by the evolutionary principle. The cases were the “original sources” of legal doctrines and principles. This was a seismic shift in the philosophy of law.

            Our Founders believed law was a fixed unchanging principle given to mankind by the Creator. Someone named Langdell ( a lawyer with practically zero real world experience, was actually named and hired as the first “professor” of Law at Harvard Law School, by Eliot) preached that because there is no Creator, law was always in flux, ever changing, developing and evolving. Therefore what was law at the beginning of one century may no longer be law by the beginning of the next.

            Studying case law is like a monkey studying his navel to discover why he exists. He will never find anything but lint.

            Studying by the case method condemns law students to learning law by examining the rulings of other judges. And we should always remember that a judge is nothing more than a lawyer who received the promotion to wearing a black robe. ”

            Added: THAT IMHO, is a large part of the problem. “darwinist” law students become “darwinist” lawyers.
            Diagnosis: Hillary Rodham Clinton, Wellesley College, Yale University School of Law

            “I have to confess that it’s crossed my mind that you could not be a Republican and a Christian.”- Hillary Clinton

            “God bless the America we are trying to create.”- Hillary Clinton

            “We are going to take things away from you on behalf of the common good.”- Hillary Clinton

            “You f***ing Jew bastard!” – Hillary Clinton

            USC § 2381 – Treason

            “Whoever, owing allegiance to the United States, levies war against them or adheres to their enemies, giving them aid and comfort within the United States or elsewhere, is guilty of treason and shall suffer death, or shall be imprisoned not less than five years and fined under this title but not less than $10,000; and shall be incapable of holding any office under the United States.”

            IMO-the “domestic economic terrorism” as currently “practiced” by the cultural marxists, Demunists, and “present” admin of cronyistas and crony crapitialists should be categorized as part of USC § 2381.

            A lot of the problems then created by the same culturax marxists would be solved, AND it would provide an incentive for “elected and appointed officials” to do their “jobs” correctly in the future.

          • Aram Ausky

            Douglas, Karl Marx was excellent at diagnosis but bad at prognosis or prescriptions.

            He talked about a collapse in demand when the coolies have no capital.

  • Douglas Buck

    This enlightened statement by John Marini (http://imprimis.hillsdale.edu/file/archives/pdf/2013_10_Imprimis.pdf) illustrates the problem: “The Great Society marked the beginning of the expansion of the federal government and a centralization of political and administrative power in Washington that had long been the domain of local and state governments… In addition to destroying the fabric of federalism, this centralization had the effect of undermining the separation of powers…”

    Of course to a lesser extent this expansion of the federal government began much earlier. The expansion of state and city governments has also been egregious; in other words, the problem is not only in Washington. Funding these huge bureaucracies takes money. Taking money from taxpayers lessens consumers’ purchasing ability and harms enterprise.

    The right answer, as I see it, is a return to federalism: People in communities deciding what goes on in their communities with no interference from any outside governmental agency; people in cities and towns deciding what goes on in their cities and towns with no interference from any outside governmental agency; and people in states deciding what goes on in their states with no interference from any federal governmental agency. (There is only one caveat: Courts need to protect individual rights. People in communities whose rights have been violated, for example, must be able to appeal to city or county, then state, then federal courts if necessary for redress.)

    This was the vision of the Founding Fathers. For the most part, they had it right.

    I rest my case.

  • Eric Harris

    The past 30 years spent creating a Nanny socialist state here in the USA has resulted in a significant portion of its people unable to provide for themselves or their families as productive members of its society. Probably the biggest yfactor is their lack of post grade school education as well as ethnicity. So now they are dependent on handouts and or crime to even obtain just the basics, like hamburgers or pizzas. As a result the US treasury is a federal bankrupt because it can’t meet the demands made by its fiat currency.

    The problem as I see it in reintroducing Federalism is how can the government wean these people off of the teat as that requires money not supported by sufficient revenues. How does one convert such inert persons into gaining ambition, a work ethic, etc as required by any employer? How deep has the rot set in? It is all well and good to define a better type of economy than the Plutocratic Capitalism that we have today, but we need a road map on how to get to the better system, which ever it is. A basic problem is that our work force is too uneducated to tackle an office or technical type of job. Pres. Bush instituted his “No Child Left Behind” program in his first 4 years in office, but now there is public opposition stating that testing students for proficiencies is just too tough on them etc. Do the young people today lack any backbone?

    • Douglas Buck

      You are right, Eric. Returning to federalism is probably a pipe dream. Term limits for representatives (two terms only) might be a start. It would be painful.

      • Eric Harris

        Douglas, IMO the problem goes much deeper than just term limits, which is where our law makers are corrupted by Cronyism and WA revolving doors. We need a paradigm shift in the way that our unemployed, but capable, people reconsider what their welfare state represents. Basically that after say 6 months that they are panhandling off of their working neighbors. Of course, as in every generalization, there are exceptions, but even these can reach a comfort level off of living on just their welfare payments. They can supplement this, as they have excess time on their hands, by turning to crime. But such a paradigm shift in attitudes will surely take a generation to achieve.

        IMO we now have a two tier class system. The educated, employed, resourceful and talented;,the other being the opposite even though maybe also educated and talented. The only way I can see to resolve this unemployment stalemate is for us all to have to deal with a new Great Depression where everybody then can appreciate what they have lost and become willing to do that necessary to get back to it. WWII federal military spending was the final salvation from the Great Depression of the 20’s and 30’s. This current sorry state has been reached from the past decades of our elected Congress being more concerned about keeping their jobs than doing what they were elected to do. But even if they had been more diligent about their responsibilities they could achieve nothing if their electorate had all become zombies. It is now a global social problem where welfare benefits are so generous that it negates the will to work. That the Fed now justifies QE to infinity is an obvious sign that the Capitalist elite carry more clout in WA than our remaining middle class as the only benefactors of QE are the Wall St. Fat cats. So the Wall Street finance indexes head for all time highs while the pct of unemployed hardly changes.

        Germany is an obvious example of how an educated, organized Western society can turn their fate around after landing in the gutter. After being on the losing side of WWII and their factories bombed to smithereens by the Allies, they with the help of the Marshall plan rebuilt and went on to now become Europe’s financial powerhouse with minimal unemployment. The difference being that their Deutchmark was not then the international reserve currency like the USD. So they couldn’t print, borrow or steal their way out of their financial crisis. Also N Europeans have a work habit built into their genes, unlike the southerners. So bottom line here IMO is that many in our legion of unemployed are quite content to leave it that way and only a severe kick up their ass will change them.

        • Douglas Buck

          YES! Absolutely. Having state legislatures elect senators would would protect federalism. One added suggestion here: A procedure must be in place to prevent some of the Shenanigans used by minority parties to thwart their election, which led to passage of the Seventeenth Amendment.

          And, inasmuch as states have gone the way of popular elections for state senators, they also should revert to their former practice of having their senators elected by county or city legislatures.

          • Les Aker

            I am not aware of state senators being appointed by county or city governments at any point since the founding of the country. At least not in the states where I have lived.

            Having US Senators appointed by the state government of the state they are representing would realign the states rights back firmly in all federal level decisions. It is a core element in why the Constitution was ratified in the first place. Otherwise we might have ended up with multiple unions where the larger colonies (VA, PA, NY) had a common confederation and the other smaller population states another confederation.

            Unfortunately Aram, much of US history is not taught in any depth in our schools anymore either. That is at least part of the reason we are having the problems that we are now.

          • Eric Harris

            What would I do now? Meet the future now by halting QE and passing laws requiring a balanced budget. OK this will cause massive pain in the short term but as we are continually plaiting ourselves into a corner, better to take our medicine now.

            As for repealing the 17th Amendment I quote a recent article on this topic in the Houston Chronicle.

            “”Even though the issue has become a hot topic for tea partiers across the country, it’s not a slam dunk with conservative groups across the state. The main reason: Those same tea party groups that distrust the federal government also are almost equally leery of state government.

            “We have so many issues in Texas to deal with about getting our own house in order that I’m not really sure having our state leaders choose our U.S. senators is something I’m interested in at the moment,” said JoAnn Fleming, an influential tea party activist in Tyler. “I trust the people to make decisions.””

          • Bright Harry

            Just perusing all the above commentaries, I can only chuckle with laughter. The Economics of Life is not about Money or return on Investment. The Economics of Life is about the choices we make every day on how to live our lives to the fullest and best, including the production and distribution of the goods and services we consume to live and enhance our lives.

            Employment is incidental to this production of goods and services for our consumption. Money itself is incidental to this production of these goods and services we consume. We humans invented money to make it easier for us to exchange our goods and services instead of trading by the cumbersome and loathsome barter. We humans did not invent money to make money on money. It is a totally useless venture that leads to destitution and economic destruction because money is not wealth. Money is just a transactional instrument and intrinsically valueless except at the point of transactional exchange.

            If Money is wealth, let every country print money and sit down and enjoy the wealth.

            This is why the so-called Federal Government Budgets or Central Government Budgets and useless Central Government Debts, all based on money, are not only phantoms but extremely deadly because they actually destroy the real wealth of goods and services we consume to live.

            It is simply shocking that in this 21st Century of immense knowledge, we humans still value Money more than Life, value Money more than the real wealth of goods and services we consume to live. A mere fictitious and useless electronic number, Money, is more important than a human being, more important than a home, more important than our cars, our roads, our infrastructure, our education system, our industries and our general welfare? This is simply insane.

            Those of you bent on balancing the Central Government Budget are on a suicide mission. It is not only insane, senseless and useless but extremely deadly. Any Central Government that balances its Central Government Budget for more than 10 consecutive years will not only go into a Depression but will collapse.

            From 1920 till 1930, the United States had a balanced Federal Government Budget. The deadly consequence of this folly was decimation of tens of millions of American lives and the advent of the greatest Depression on Earth in the US and globally, the 1929 Great Depression. This stupidity of a balanced Federal Government Budget continued until 1932 when Economist Marinna Eccles advised FDR to infuse funds into the American Economy and forget about a balanced Federal Government Budget. Marinna Eccles, the unsong American hero saved the United States from economic collapse and from the Budget Deficit Hawks.

            Now, FDR made a fatal error of balancing the Federal Government Budget again in 1937 and ushered in an even greater Depression than the 1929 Depression in 1937 and 1938. A greater Depression within the Great Depression of 1929, all in the name of balancing a phantom Federal Government Budget. All about the intrinsically valueless stuff called Money we invented for our convenience to exchange our goods and services.

            Money is not wealth and not that important in the Economics of Life. It is a mere transactional instrument for exchange, and should be made so. We must stop buying and selling money to make more money or we will all self-destruct. And we must never balance our Central Government Budgets unless we want to commit economic suicide.

          • Bright Harry

            DEMOCRATIC CAPITALISM

            There are three forms of Capitalism — Feudalistic, Plutocratic and Democratic Capitalism.

            Feudalistic Capitalism — Capitalism of Feudal Lords (Monarchs, Kings, Queens, Dictators, State Governments, Communist Party) by Feudal Lords for Feudal Lords. Under Feudalistic Capitalism, the Feudal Lords (Monarchs, Kings, Queens, Dictators, State Governments, and Communist Party) own and/or control the Capital

            Plutocratic Capitalism — Capitalism of Plutocrats (Few Wealthy Elites) by Plutocrats for Plutocrats. Under Plutocratic Capitalism, the Plutocrats (Few Wealthy Elites) own and/or control the Capital

            Democratic Capitalism — Capitalism of All the People by All the people for All the People. Under Democratic Capitalism, All the People own and/or control the Capital. Each and everyone is a Capital Owner or Capitalist. This is why it is Democratic – the Capital has been democratized for All, for each and every person.

            What then is Capital, from which Capitalism is derived? The Oxford English dictionary defines Capital as “that which confers wealth, profit, advantage or power”. A better definition of Capital is the following: an intangible force which takes resources and raw materials as input and converts them into useful output, thereby creating wealth for all Stakeholders.

            Now what types of Capital are involved in Capitalism? There are seven: Human Capital, Natural Capital, Intellectual Capital/Knowledge Capital, Social Capital, Cultural Capital, Infrastructure Capital and Financial Capital. All seven Capitals make up the Capital in Capitalism.

            These capital components forming the bedrock of Capitalism work together and interact with one another to form a holistic System. These individual Capitals cannot and must not be isolated but allowed to work in tandem for optimum wealth creation under Capitalism. Concentrating on just one component of the Capital at the expense of the others sub-optimizes the wealth creation process.

            Furthermore, an Economy is also a System of several economies — Household Economy, Natural Economy, Unpaid Community Economy, Government Economy, Market Economy and Underground Economy. All six economic components are always interacting with one another to form a cohesive whole. Once more, optimizing one component leads to the sub-optimization of the Economic System as a whole.

            The seven components of Capital in turn constantly interact with the six types of economy to form a larger, more robust and more complex Adaptive Economic System, for creating wealth for all Stakeholders.

            Thus, as you can all see, Economics is not solely about Financial Capital and Market Economy that have been the rage since the Agricultural Revolution and especially the Industrial Revolution, till date. The 21st Century Knowledge-Intensive Economics of very Advanced Technologies ensconced in stupendous Abundance and massive unemployment to free humanity from mundane jobs, goes far beyond Financial Capital and Market Economy that are all based on Money and Return on Investment.

            Continued….

          • Eric Harris

            Bright, were does the current profligate spending by our Congress fit in with these seven forms of Capital that you list above. You say that Financial Capitalism is the only undemocratic form of Capitalism (as it is perpetuated by those only interested in self gains?) but what is democratic about the way our tax payers money is spent on many frivolous items? I fact under which form of Capital does Federal spending on non essential services go?

          • Bright Harry

            Eric, the total US Domestic Debt over the years are as follows:

            1974 $1.967 Trillion

            1984 $5.824 Trillion

            1994 $13.069 Trillion

            2004 $31.794 Trillion

            2013 $42.991 Trillion

            You can see the massive Domestic Debt of American Households and Businesses in 2013 compared to 1994. Americans are drowning in Debt, while wages have stagnated since the 1970s. In other words, Americans do not have the purchasing power to consume the goods and services we have already produced, to rev up the economy. To be more precise, there is no demand because of this monumental Domestic Debt and this is what is killing the American Economy

            So, Eric, how in the world is the Federal Budget or Federal Spending going to reduce the $42.991 Trillion Domestic Debt of American Households and American Businesses, so that American can start to consume again to rev up the moribund Economy? If you can show me the connection between the Federal Government Budget or Spending and this huge Domestic Debt that is killing the American Economy, maybe I can answer your question about Federal Government profligacy or wastage?

          • Bright Harry

            Some additional information Eric. The Federal Government Budget for 2013 is $3.685 Trillion and for 2014, it is $3.778 Trillion. Furthermore, the Domestic Treasury Security Holdings touted as our Federal Government Domestic Debt as of September 2013 is $11.961 Trillion. The Foreign Treasury Security Holdings touted as our Foreign Federal Government Debt is about $5.4 Trillion. Thus, the total Domestic and Foreign Treasury Security Holdings touted as our total Federal Government Debt is about $17.4 Trillion.

            Now, compare this so-called Federal Debt (which is actually an Investment) of $17.4 Trillion to the above Domestic Debt of $42.991 Trillion. Also compare the Federal Government Budgets of $3.685 Trillion and $3.778 Trillion for 2013 and 2014 respectively, to the same $42.991 Trillion Domestic Debt.

            Furthermore, the Federal Government has the capacity and monopoly of Legal Tender to print money and pay off the so-called Federal Government Debt, if it so chooses. On the other hand, American Households and American Businesses do not have such legal authority to print money to pay off the humongous $42.991 Trillion Domestic Debt.

            As such, why is your focus on the comparatively much smaller Federal Budgets and Federal Government profligacy, and not on the gargantuan $42.991 Trillion Domestic Debt killing the American Economy?

          • Aram Ausky

            Bright Harry, there is no monopoly. There are many sources of legal tender and many methods of exchange other that USD or EUR. I don’t care if USD happens to be the trade or reserve currency at the moment. QE is abusing the dollar’s position in world economics, everybody knows it and will adjust to that.

            Eric, you said:

            “What would I do now? Meet the future now by halting QE and passing laws requiring a balanced budget. OK this will cause massive pain in the short term but as we are continually plaiting ourselves into a corner, better to take our medicine now.
            …..
            Aram, in the light of that which I last posted are you saying that US Dollars are the bad assets you refer to here? If so then a novel twist to the story. ”

            No, Eric. The new dollars are only “bad” because the dollars and Euros are a claim on stuff (assets, goods and services) and there isn’t as much new stuff to buy as there are dollars to buy is with. We aren’t producing more, we are simply bidding up the paper value of existing stuff.

            What you said in the first paragraph is a slightly different issue. You basically said that existing wealth on society’s balance sheet has hidden losses and needs to be written down. I agree completely.

            Rolling over bad debt would be OK if there was enough wealth production to shrink it down proportionally and to replace the lost “stuff”, e.g. the material used in Irish houses built for no one.

            Germany got over WWII’s losses by creating new stuff that people truly want. That’s wealth creation. I truly want to drive a Porsche to go dine in Freiburg.

            QE is bad for so many reasons. One of them is that rolling over and hiding bad assets has inherent costs and margins. The problem is increasing.

          • Bright Harry

            Aram Ausky, the titie of this thread is “17 years ago I spent the day with a Russian prostitute. Her story is our story”. This is Tristan Fischer’s personal story entitled, “A Lost Generation: the personal story of the beautiful Yulia is also our story – History Future Now”.

            It is about the Life of a young Russian Electrical Engineer who was forced into Prostitution by our current Political, Economic and Cultural System. It is not about your myopic and minuscule microeconomics and macroeconomics, both subsets of Financial Economics, which in itself is not of much relevance in the totality of the Economics of Life.

            Humanity can function very well using technologically advanced electronic barter, and finally get rid of the exploitative and deadly Financial Capital and hence, your Financial Economics as a whole. I have studied microeconomics and macroeconomics to such a level that I can educate you about their senseless assumptions and fallacious theories currently destroying the world and billions of human lives, just as Phlebotomy did for thousands of years.

            Once again, Capital is what converts raw materials and resources as inputs into useful outputs that create wealth for all Stakeholders. We have two main parts of this Capital, namely:

            A) Financial Capital which consists of your much beloved Money, Financial Credit and other Financial Instruments like Bonds, Notes Bills, etc., and

            B) Non-Financial Capital which consists of Human Capital, Intellectual/Knowledge Capital, Natural Capital, Social Capital, Cultural Capital and Infrastructure Capital.

            Only the Non-Financial Capital actually creates wealth while the Financial Capital facilitates the transactional exchange of this wealth before, during or after creation. Money and Financial Credit are not wealth but mere instruments for transactional exchange to create wealth. I do not know how to make this much simpler for you to understand.

            If you want to teach Eric your much beloved Microeconomics and Macroeconomics, you can do so privately. We are looking for solutions to our current intractable economic quagmire created by your Microeconomics, Macroeconomics and Financial Economics in general.

            Finally Aram Ausky, Yulia’s story is not about Microeconomics and Macroeconomics. It is about the Life of Yulia under our current Feudalistic/Plutocratic Political, Economic and Cultural System. Stop bottling the Totality of the Economics of Yulia’s Life into your myopic Financial Economics — a minuscule subset of the Economics of Life.

  • Douglas Buck

    Bright, please forgive my little brain, but it sounds like double talk when you say, on the one hand that the “well-connected Elites” have money; and, on the other hand that “the only thing scarce in the world today is money.” This sounds like bad distribution of money.

    Now, if I have a liter of water and pour it into 10 cups, there is still exists only a liter of water, water representing real capital. I think we can all agree that printing money (monetizing) does not increase the amount of real capital, it only multiplies the number of denominations representing it.

    The dirty little secret is that those who receive the newly printed money first are able to buy things at prices before the devalued money enters far into the general economy, while those at the end of the chain, so to speak, pay more for the same items they once paid less for, but which are now priced higher because the money is worth less. Now, I am guilty of double talk; but, I think you know what I mean.

    The other dirty little secret is that those who move the money around, take a cut. They drink the water in one of the ten cups, so to speak, leaving only nine for the rest of us. Thus the average citizen ends up in the end with less of the less. Now that is double talk!

    • Bright Harry

      Douglas, you asked the following question.

      “By the way, can unemployed persons create capital by volunteering? This country was founded by immigrants, working together to produce and to share”

      To answer your question, I repost my earlier post on Capital and the various types of Capital. Here it is,

      Once more, Capital is what converts raw materials and resources as inputs into useful outputs that create wealth for all Stakeholders. We have two major divisions of this Capital, namely:

      A) Financial Capital which consists of Money, Financial Credit and other Financial Instruments like Bonds, Notes Bills, etc., and

      B) Non-Financial Capital which consists of Human Capital, Intellectual/Knowledge Capital, Natural Capital, Social Capital, Cultural Capital and Infrastructure Capital.

      The components of Non-Financial Capital are by nature or human creation, Democratic. Each human being owns his or her brain and mind, and hence his or her tacit knowledge and intellect. No one can take away your thoughts or mind or even change them, unless you allow them. The combined intellect of the Community is the Intellectual Capital. Ditto Social, Cultural and Natural Capitals for the Individual and Community.

      Now, Infrastructure Capital needs Financial Capital to build but once built, it is open to the public and hence, close to being Democratic.

      On the other hand, Financial Capital, an artificial creation of humanity for easier transactional exchange of our real wealth of Life, and the goods and services we produce to consume to live, is not Democratic. The creation of Financial Capital is a monopoly of the Government, through Legal Tender. In short, only the Government has legal authority to create Financial Capital.

      It is thus the responsibility of any Democratic Government to ensure that each and every Citizen has equal opportunity and equal access to this commonwealth Financial Capital or Money it created on behalf of ALL CITIZENS, so that each and every Citizen can participate effectively in the production and distribution of the goods and services he or she consumes to live and enjoy life.

      The problem all over the world and in every country is the methodology of distribution of this original Government created Financial Capital or Commonwealth Money to each and every Citizen, to participate in the Economy of Life. There is no methodology as of today. A planned distribution of this original Commonwealth Money to the whole Citizenry is non-existent and even where there is a scintilla of such existence, it is haphazard and done through Debt.

      As such, your unemployed cannot create Financial Capital just be volunteering, unless he or she is paid some Money for the volunteer work. Then. it is no longer volunteer work. Your unemployed already has the other components of the Non-Financial Capital, directly or indirectly.

      FINANCIAL CAPITAL MUST BE DEMOCRATIZED JUST LIKE THE NON-FINANCIAL CAPITAL FOR HUMANITY TO SEE THE LIGHT AT THE END OF THE ECONOMIC TUNNEL.

      This Democratization of Financial Capital completes the picture for Democratic Capitalism.

      • Bright Harry

        Douglas, 70% of the Earth is Water and the remaining 30% is land. Why then do we have water scarcity all over the world — for agriculture and drinking in the midst of such abundance of water. Is it double-talk to state that there is abundance of water but no water to drink.

        Now, you and I do not have the legal authority to print money, especially the dollar, for our personal use. If we did and can, there will be no scarcity of money for us. Ditto every citizen of the world.

        Since all Governments all over the world made it a law to have the monopoly power to print money for their Citizenry, the million dollar question is how do they make this commonwealth money available to each and every Citizen?

        And by the way, printing more money does not cause the devaluation of the money or even the dollar. That’s totally false.

        • Douglas Buck

          I believe we all agree that one of the problems of modern economies is the poor distribution of money and other resources. Bright, what specific steps can be taken to “democratize” money? Who will do it? How will they proceed? Who would be in charge and how would they get authority to do it?

          I mostly disagree with your statement “printing more money does not cause the devaluation of the money,” unless the newly printed money matches any newly created capital. However, I know of no government that can keep its hands out of the till to pay themselves and their benefactors handsomely without creating capital in the process; or, of bankers, money traders and financiers who take their cut without creating needed and useful products and services.

          Without strict discipline, there will be inflation… later if not sooner.

          • Bright Harry

            Douglas, I was trying to proffer my solution before all the Economics Gurus, Pundits and Specialists imposed their beliefs and ideas about Money, Deficits, Debts, Price Inflation and all what not, all pertaining to Financial Economics, without offering any new ideas. So I stopped, to respond to their beliefs and ideas and in some instances to debunk their statements.

            Once more, Printing money or more money does not cause Demand-Pull Price Inflation or devalue the Money. Again, this is totally false. Demand-Pull Price Inflation is caused by too much money pursuing too few goods and services. We have all the goods and services in the world in the US but no money to buy them. Hence, why would printing more money and giving it to American Citizens to buy these goods and services already on our shelves cause Demand-Pull Price Inflation and devalue the dollar?

            Banks sitting on money or Wall Street Playing with money confined within its specific circle of Casino game, has no relevance to Price Inflation in the Real Economy of Main Street, where goods and services are produced for human consumption. This confined Money is what Economists call their liquidity trap. Hiding your money under the mattress does not cause demand-pull inflation, even when there is too much money under the mattress. The money under the mattress does not circulate in the economy and is totally useless.

            When you talk of strict monetary discipline to forestall Demand-Pull Price Inflation, whom are you talking about? The Citizens or the Government? American Citizens and American Businesses are indebted to the tune of $42.991 Trillion and hence, have no money to buy and consume the goods and services available in the US. What more financial discipline do you want from these American Citizens whose wages have stagnated for the past 40 years, and who are forced to borrow to live a normal life, with fewer and fewer jobs? A vicious circle with no end in sight.

            Now, the Federal Government is the only entity that can print money and infuse it into the economic system (Real Main Street Economy) to increase demand, but most of you Deficit Hawks are castigating the Federal Government for being profligate and must balance the Federal Government Budget. Hence, the Federal Government is forced to cut back instead of infusing more money into Main Street Economy to increase demand. We are thus making a very bad situation even worse. All in the name of loving Money more than Life and we call that Monetary Discipline.

            Douglas, when all these banters stop and my time is not constrained, I will proffer my solution to the equitable Distribution of Financial Capital to each and every Citizen, to participate effectively in the production and distribution of the goods and services he or she consumes to sustain and enhance his or her life. This is Democratic Capitalism or Democratizing Financial Capital, I am talking about.

          • Mark Borowski

            Bright Harry , although very articulate in approach, when “speaking” about The Soviet “Union” and/or communism ( lower case c intended), dictatorships/commie-like regimes in general, fails to mention what it was in actuality:

            a kleptocracy, something that most people with some kind of moral compass
            used to make fun of ( that is until the “modern” -day so-called “Democrat” “party” in America took kleptocracy and cronyista capitalism to “new” heights ( or LOWS).

            Contining to bring up tiny countries or various other regimes or systems – pro or con – for “comparisons” with no real application to America is tiresome at best.

            The better question is “Where has Socialism on a large scale ever worked?”

            The answer is: It worked well for a time for Mao – except for the 40 to 80 million that starved to death during the Great Leap Forward.

            It worked well for Stalin – except for the 8 million Ukrainians who starved to death and the millions more who died in gulags.

            – and of course it “worked well” – for most of the inhabitants of Soviet Russia and satellite states who lived like serfs – waiting in bread lines – but they had “free” healthcare – unfortunately, more like their postal service than our world class hospitals.

            The answer to the regressive/libtard question where has limited Govt worked is: America. For most of 200 years, prior to and during the onslaught of the regressive “Progressive” movement and things like the Marxist (1 of 10 planks of the Communist Manifesto) Graduated Progressive Income Tax, we managed to keep the Fed Govt limited.

            Even after the WWII, on average only 18% of the GDP went to fund the Fed Govt. Now with Obama, that number is up to 25% and climbing. And of course, the real insidiousness is unworkable legislation like Obamacare and the thousands of unelected bureaucrats issuing orders with the force of law.

            Obamacare will do almost NOTHING to solve healthcare issues brought up – but will succeed in growing the Federal Leviathan. The end game is to create a nation of dependent serfs – with numerous balkanized crony groups – keeping them and the average American – who only considers himself non-hyphenated “American” at each other’s throats: Gays, Blacks, Hispanics, etc.

          • Mark Borowski

            At first when Obama appeared to honestly win the 2012 election, I chalked it up to the fact that “the side” had won the propaganda war. Idiots who voted for this narcissistic empty suit did so because the “masterminds” that pulled Obama’s strings were just much better at the game than the feckless GOP.

            Well indeed that is true, but since the IRS scandal has come out, this game is now more than just propaganda. It’s the Chicago Gangster Politics writ large. Obama’s thugs used the IRS to target, intimidate and reduce the turnout of Conservative groups in the election. In the end, the 2012 election is illegitimate. We are indeed living in a post Constitutional America and the Statists and “masterminds” are winning on all fronts.

            America became the world’s lone super power partly because it was blessed with natural resources and two large Oceans that kept predator nations at a distance. But the real reason it became so successful and a South American country with similar resources and circumstances did not is our Classic liberal (conservative independent ) Heritage.

            It gave us the belief in Free Enterprise, Private Property rights, belief in God ( or Natural Law philosophy) , and the rule of law. This led to the Declaration and the Constitution and the Bill of Rights – that gave rights to the PEOPLE – not the Govt. The Govt is a necessary evil and our founders and framers knew this.

            Modern illiberals of the left see Govt as the solution. History tells us that the Socialist Utopians’ “solutions” start out with magnificent rhetoric and invariably end in slaughter and depredations. Modern illiberals of the left never learn from history. They always think that one or a few “masterminds”, the Collective, will always make the better choice for an individual than that individual himself.

            America’s success of limiting the size and scope of Govt is historical fact. Big Govt Utopias always end with failure and death. I’m just not quite sure just what the coming American conflagration will look like.

          • Douglas Buck

            I believe in freedom. I love America and understand her beginnings. Limited bottom up government is the only way to secure our God given rights of life, liberty and freedom to pursue our dreams. Although we did have a problem with slavery at the founding, along with just about every other nation at that time, we solved it although it cost many lives and much treasure.

            Now, the fate of America seems to be in the hands of “factions” or groups of influential, wealthy persons who want what they want no matter how they get it. Many of the common people are being paid by government not to think or take responsibility for their welfare; they have been educated not to think about freedom or America’s founding principles, and are divorced from good religious or moral underpinnings. Without morality and self-discipline, there is greater need for autocratic control.

            The direction the country is headed is the wrong direction, yet I believe we can turn it around. Indeed some good suggestions have been forthcoming in this discussion: Term limits for representatives; repeal of the 17th Amendment with the addition of a procedure to prevent problems that led to its initial passage; and, honest fiscal and monetary policies. Since we have mortgaged the lives of our children and grandchildren to pay for our lax spending and borrowing frenzy, correcting our bad habits will be difficult. Instituting proper reforms may indeed cause some of the hardships Tristan reported to us from his visit to Russia. However, I believe we can succeed. There are plenty of good, wise and honest men and women living in America with courage and true grit. When the cause of our present problems becomes obvious to them, they will leave their pastimes and rise to the occasion.

            This has been a fine discussion. Thank you all.

          • Bright Harry

            How small should the Federal Government be? What are the criteria for the size of the Federal Government? Who sets the criteria for the size of the Federal Government? How would the small Federal Government be funded and what is the criteria for this funding?

            With a small Federal Government, what entity will now be capable of protecting the Citizens from the negative activities of the humongous Multinational corporations spanning the globe, crisscrossing many Nations, and whose motive is simply to make a buck, no matter whose Ox is gored? What entity would now have the wherewithal to face these behemoths to create an even playing field? Who sets the limits for the size of these humongous multinational corporations? Or are corporations out of your small-sizing business? In other words, is it only governments that have to be small-sized?

            After small-sizing the Government to your required criteria, what is next? How would a small-sized Plutocratic Government turn into a Democratic Government? Democracy has nothing to do with size?

            As for your dream of repealing the 17th Amendment, it is just a pipe dream. Will never happen? You expect me in this 21st Century to give my State Legislators the authority to elect my Senators? You mean, I do not have the mental capacity or intelligence to choose and vote into power the person I want as my Senator? You must be kidding.

            Where then is your political democracy?Where is your universal suffrage?

            Now, the cause of our problems in the United States is not the Federal Government or our Legislators or our President?

            THE CAUSE OF OUR PROBLEMS IS THE MAN IN THE MIRROR. The President and our Legislators are a reflection of the “men” in the mirror. When the man in the mirror knows what he wants and where he wants to go, America will head in the right direction.

          • Bright Harry

            One more thing about repealing the 17th Amendment. Since many of the unintelligent, government-supported, welfare-free-loading, non-freedom thinking common American folks are incapable of electing their own Senators, how are they capable of electing their State Legislators who would in turn elect their Senators? It sounds oxymoronic to me.

            Why not stop them totally from voting at all, as was done in the 18th, 19th and even 20th Centuries in the United States. This is the problem in the United States. Recalcitrant ideologies and fundamental dogmatism in ones belief. One man’s meat is another man’s poison.

            THE MAN IN THE MIRROR IS THE PROBLEM OF THE UNITED STATES..

          • Douglas Buck

            Whoa, Bright. Untrue. I suggest you read some documents that explain the founding principles behind the Constitution for the United States. They were crafted after thorough discussion and serious debate by wise and intelligent men who knew from practical experience what works and what doesn’t.

            Madison’s Notes on the Debates in the Federal Convention:http://avalon.law.yale.edu/subject_menus/debcont.asp

            The Federalist Papers: http://avalon.law.yale.edu/subject_menus/fed.asp

            Elliot’s: The Debates in the Several State Conventions, on the Adoption of the Federal Constitution: http://teachingamericanhistory.org/ratification/elliot/

            Arguments for adoption of the Federal Constitution were so good and well thought out that all 13 Colonies at the Founding of the United States, formerly free and independent states, ratified it (11 the first year, the other two shortly thereafter). The main principle was that they would remain sovereign with respect to their internal affairs, with the general government strictly limited to taking care of national concerns, like international relations, coining money, inter-state comity, national defense, and establishment of a common market.

            The principles espoused will work anywhere, at any time. They have had a tremendous impact for good among all nations who have embraced them. Problems have occurred when we have deviated from them through ignorance, lust for power (We know what’s good for you better than you do), vanity (My way is better than your way), or greed (We will take care of you, just give us your money).

            This has been a fine discussion. Thank you, Tristan, for initiating it.

            The truth will speak for itself. Those who seek, and are unafraid, will find it.

            I’m outa here.

          • Eric Harris

            Having followed this thread from its beginning, and learning much from doing so, one of Bright’s eloquent statements re repeal of the 17th Amendment made me think of one of Winston Churchill’s more famous quotes. This is “You can always count on American’s to do the right thing – after they have tried everything else.”. Because of my previous misquote I did myself the favor of checking the details. Then I found this listing of his most famous quotes. It is almost like he was at Bright’s side in this discussion group.

            http://jpetrie.myweb.uga.edu/bulldog.html

            An example being “”The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.””

          • Bright Harry

            HISTORY DOES NOT REPEAT ITSELF, HUMAN STUPIDITY DOES.

            Here is the history of the 17th Amendment and why it was put into the constitution, and must stay there FOREVER.

            The 17th Amendment.

            Passed by Congress May 13, 1912, and ratified April 8, 1913, the 17th amendment modified Article I, section 3, of the Constitution by allowing voters to cast direct votes for U.S. Senators. Prior to its passage, Senators were chosen by state legislatures.
            print-friendly version

            The Constitution, as it was adopted in 1788, made the Senate an assembly where the states would have equal representation. Each state legislature would elect two senators to 6-year terms. Late in the 19th century, some state legislatures deadlocked over the election of a senator when different parties controlled different houses, and Senate vacancies could last months or years. In other cases, special interests or political machines gained control over the state legislature. Progressive reformers dismissed individuals elected by such legislatures as puppets and the Senate as a “millionaire’s club” serving powerful private interests.

            One Progressive response to these concerns was the “Oregon system,” which utilized a state primary election to identify the voters’ choice for Senator while pledging all candidates for the state legislature to honor the primary’s result. Over half of the states adopted the “Oregon system,” but the 1912 Senate investigation of bribery and corruption in the election of Illinois Senator William Lorimer indicated that only a constitutional amendment mandating the direct election of Senators by a state’s citizenry would allay public demands for reform.

            When the House passed proposed amendments for the direct election of Senators in 1910 and 1911, they included a “race rider” meant to bar Federal intervention in cases of racial discrimination among voters. This would be done by vesting complete control of Senate elections in state governments. A substitute amendment by Senator Joseph L. Bristow of Kansas provided for the direct election of Senators without the “race rider.” It was adopted by the Senate on a close vote before the proposed constitutional amendment itself passed the Senate. Over a year later, the House accepted the change, and on April 8, 1913, the resolution became the 17th amendment..

            http://www.ourdocuments.gov/doc.php?flash=true&doc=58

          • Bright Harry

            Douglas, we are not discussing the United States Constitution but the 17th Amendment of the Constitution you and your ilk want repealed. You need to study your American history thoroughly before espousing the reincarnation of past ideas that have been very destructive to Americans and the United States.

            THE 17TH AMENDMENT WILL BE IN THE UNITED STATES CONSTITUTION FOR AS LONG AS THE UNITED STATES EXISTS.

  • Todd Sterople

    As Mr. Harris originally stated, ” I can associate with every word, opinion and thought behind this evocative essay…” and I would add Pathos…

  • Douglas Buck

    With respect to your other concern: How can State Legislators elect senators who better represent the people than if the people elect them directly, especially with all the cronyism and political insiders’ plutocratic tendencies?

    Frankly, as it stands today, you may be right. Originally however the government was supposed to be a government of the people, run by the people for the people, not a government of career politicians and political junkies. This is why the first step is term limits, two terms only or no more than five years AT THE STATE LEVEL, as well as at the Federal level. I would rather have farmers, mechanics, business people and teachers, the average Joe who lives like the rest of us, take some time off to make or repeal some laws, than what we have today. I would trust them to choose from among their peers, those best qualified to be United States Senators.

    I have said enough.

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