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A mountain lake in British Columbia

Compassionate economics

Are the words compassion and economics compatible?

Absolutely. If we were to exchange goods and services without interference from legislation which restricts competition we would have an economy with a high degree of equality, fairness, environmental sustainability, peace and compassion.

Major evidence for this comes from the hunters and gatherers who used to inhabit this planet and especially the bushmen of the Kalihari Desert who lived a peaceful and sustainable lifestyle for close to 200,000 years

This writer has come to this conclusion after a lifetime of interest in current affairs and relationships, through a first class degree in economics from the University of British Columbia and lots of informal reading in economics, economic history, history, ancient history and anthropology.

That I feel it necessary to start this book with this question indicates how poorly so many people, including economists, understand economics and money. At least since Marx many people have equated economics with the evils of the current economic system and shut off whenever the word economics is used. This is sad because economics is about the relationships involved in the exchange of goods and services and most of us have to exchange with at least a few people. Money is a tool to facilitate this exchange. Both economics and money involve a lot of distortions of the truth which makes it easy for some people to exploit the rest of us.

As we work through compassionate economics the issue of the resource base hangs over us and makes life difficult for all of us.

Economics professors often start their lectures by drawing a simple x graph on the black board. One line represents the physical side of the economy and the other line represents the financial side of the economy. This is a very important distinction as ignoring it diverts our attention from the reality of economics.

As we mostly discuss economic problems in terms of money we ignore the physical side of the problem. For example, pensions are very important for most of us but we always talk about saving enough money rather than having enough energy and mineral resources. Two things could and probably will happen to most of the money people save for their retirement – inflation or bankruptcy. Our standard of living in retirement will depend upon the quantity of goods and services we are capable of producing relative to the number people making demands on that production. A key factor in this ratio will be the energy and mineral resources we have. There are still lots of these on the surface of our planet but we have consumed the most easily accessable.Those that are left will require a lot of energy to extract and may not be feasible.

The cost of solar energy has recently been falling quickly and has some potential. I also like that solar has the potential for each of us to make decisions about adopting it. It is great that individuals can make these decisions instead of bankers. The down side is that most of our money supply is based on debt and will disappear if a lot of loans have to be written off. I fear a lot of our money is based on loans made to support petroleum.

We need to exchange goods and services because we are social creatures. It may be this is what distinguishes us from animals. In some circumstances it may be possible for an individual to live alone but for most of us we must live with at least one other person and this means living in a relationship. On the Canadian Prairies the early explorers found they needed a female partner for survival because the division of labour was too much for one person. Later the settlers found that during harvest labour requirements were such that they needed to help each other and took turns at several farms. Now, with modern equipment one person can seed, fertilize and harvest up to 7,000 acres. But he still needs a huge support staff of suppliers. These he pays in cash rather than return labour. Economics is about how we exchange goods and services and the relationships which are a part of these exchanges.

Decision making is an important part of compassionate economics. When we make decisions for others we can and often do make those decisions by what is best for us rather than them. As there is no place for exploitation in compassionate economics we should as much as possible exchange goods and services so that individuals can make decisions for themselves. In capitalism bankers and government make decisions about what and how much is to be produced. In socialism bureaucrats in the form of central planners make those decisions. The only way I know to allow individuals to make economic decisions is the perfect competition model upon which the formal study of economics based.

At least since Marx economics has been defined as either capitalist or socialist. Both of these are very vague terms which is good for people who want to control or exploit others but meaningless for those of us who want to understand how we exchange goods and services. The main feature of capitalism as we know it is that governments pass legislation which restricts competition and we call it a market economy. The main feature of socialism is a matrix known as central planning and they say it is “by the people and for the people”. Both concepts are the idealogical equivalent of the stuff through which one would walk if one visited a cattle feed lot.

For four years this guy lived on a British Columbia coastal Indian reserve. One evening a old timer told us about the time consuming process his people used to make themselves a sweet treat,

“Do you still do this,?” I asked?

“No,” he replied. “It is a lot easier to go to Dairy Queen.”

These people did most of their hunting at the local supermarket but they still fished and they still had a few of their old traditions. One of these traditions was the sharing of fish and we had a lot of salmon, halibut, crab and oolichans (a very small, oily and smelly fish.)

It appears that in a lot of hunting gathering cultures sharing mostly with family or clan members was the predominant way of exchange. This is a major difference from our culture where it is assumed the exchange of goods and services should yield a profit. I would like us to plagiarize the hunters and gathers and make sharing the key concept in our economy. This is somewhat radical and would open the door to some major changes in our economy – a guaranteed income policy, a new way of creating money and a zero growth economy. All of these are important for resource and environmental concerns. All of these are important if we are to have a compassionate economy.

One of the major issues we have to deal with is the incompatibility of economic growth and environmental issues such as global warming, pollution, mono culture agriculture, health and overpopulation. The need for economic growth is sold as a fix for unemployment although its main purpose may be to further increase the wealth of the one percent. As compassionate economics is based on sharing rather than profits there is no need for further economic growth. With a guaranteed income scheme people will not need jobs to survive and we can deal with environmental concerns. We will also no longer need to support the greatest of all make work schemes, the arms industry. Lets opt for peace and sharing with all peoples. The goal of compassionate economics is to get the population to a sustainable level and live in peace.

Compassionate economics will allow us to replace our commitment to the work ethic with a commitment to a leisure ethic. In future we should get our self identity from the leisure activities in which we engage whether they be acting in a play, writing a book or even drinking beer.It is relatively easy for me to sit here in a comfortable chair and a nice view out the window and think out solutions to economic problems. But economics involves people with emotions and special interests. A lot of people will find it difficult to see the need for changes and those with special interests will be very vocal in protecting themselves. However I believe the future of most of us is seriousl

It is a pity that so many people shut off when they hear the word “economics.” A few years ago I read a book on green economics which promoted small businesses. I laughed and cried because economic theory is based on the concept of small businesses. One of the key assumptions of economics is that no firm is large enough to influence prices by restricting production and by restricting the quantity purchased.

A key feature of a true market economy as described by economic theory is that there are no profits. If there are profits to be made in an industry new firms will enter until prices drop to the point where there are no more profits. Firms can make wages and a return on investment (maybe) but there will be no profits. Thus a perfect market economy with competition is what is needed for a compassionate economy. A lot of people need to be studying formal economics.

It is relatively easy for me to sit here in a comfortable chair and a nice view out the window and think out solutions to economic problems. But economics involves people with emotions and special interests. A lot of people will find it difficult to see the need for changes and those with special interests will be very vocal in protecting themselves. However I believe the future of most of us is seriously threatened and we must at least try for compassionate economics.

 

Good relationships and good economics

 

Economics is the most fundamental of social sciences because it is about relationships. The study of economics should be about the ways in which we can organize the exchange of goods and services. As this involves interacting with others it is largely about how we deal with family, friends and neighbors. The study of economics should include economic history, the economies of previous civilizations and economic anthropology. It also means we should be trying to organize an economy based on good relationships.

As exchange involves dealing with other people in a variety of different ways from theft to giving, economics involves the study of how we deal with each other.

A fundamental of relationships is that for a relationship to be satisfactory there must be a more or less equal two-way exchange. Sadly our current economy is based mostly on exploitation. The culture of a lot of businesses, especially large ones, is to make as much profit as possible, even if it means taking advantage of customers.

The challenge is to organize our economy so that our economic relationships qualify as being good – equal exchanges. This writer suggests two sources of inspiration; the bushmen of the Kalahari desert in Africa and the perfect completion model of economics.

There is archeological evidence that the bushmen have sustained a stable society for up to 200,000 years. Survival has been without wars and exploitation. This is an incredible accomplishment. We owe it to ourselves to examine their society to see what we can copy. Genius is 90 per cent plagiarism.

These hunters and gathers have been well-studied. My reference is Affluence without Abundance: The disappearing world of the bushmen by James Suzman published by Bloomsbury in 2017.

The Bushmen were hunters and gathers living from hand to mouth and relocating frequently. As they had to carry everything when they moved they developed a mindset that had little need or use for material things other than a few basics. Their knowledge of their environment was such that they always had sufficient food available with a minimum of “work”. They worked for survival rather than to satisfy their own or other people’s ambition.

As they always had adequate food, surpluses and savings were not part of their lives or their thinking. This was important as surpluses and saving must be controlled and this can lead to unequal relationships and exploitation.

Leadership was very low-key and social control was mostly verbal via teasing and ridicule. As they lived in small groups the size of which changed with the seasons it was easy to get away from social conflicts. (This is a major problem for Canadian native people many of whom live on reserves and cannot easily relocate.)

This blogger does not want to adopt a total hunting and gathering lifestyle especially as the size of the world’s population makes it difficult if not impossible. However I believe these people have a lot to teach us about relationships and economics and values. It could be we are the ones who are uncivilized.

We often lie to ourselves and the greatest lies are about economics. The greatest lie is that our economy is based on capitalism and markets. This is a falsehood to cover the fact our economy is based upon legislation that restricts competition. So long as we believe the lies we can continue to promote an economy that is unequal and exploitive.

I believe if we really want an economy which encourages good relationships we should use the perfect competition model as a guideline. All legislation which restricts competition should be repealed. This includes patent and copyright legislation and licensing. Subsides should be given to consumers rather than producers in the form of a guaranteed income scheme. Businesses would be mostly small-scale; so small that participants would be unable to control prices with spending and purchasing decisions. These changes would do away with huge profits and most high incomes. Economic growth would not be needed as people would not have to have jobs to survive. These changes would also cause a lot of screaming from the people who benefit from competition.

Another good feature would be better relationships as people would be able to interact without trying to exploit each other.

One of the differences between hunting and gathering societies and the “civilizations” which have dominated history is who makes decisions. When people are working for survival rather than to satisfy ambitions they make their own decisions. When they are working for ambition decisions are made be the owner of the ambition.

Force is one of the ways people get others to work for them. Other ways are psychological – the work ethic, marketing techniques, limiting free speech, limiting voting rights, making people feel guilty and using logical fallacies to influence thinking. The last two have been and are being used to great effect by feminists. My experience of this world and my observations of this world tell me feminism is mostly BS and a control issue. Feminists want to control men and their thinking. They do a lot to discourage good relationships.

A lot of us have been so indoctrinated with the “capitalist” way of thinking we do not realize the extent to which we are being exploited. Some studies of people on their death beds have found that the greatest regrets are for placing profits above relationships.

Most of us have been raised in a culture which places material things above all else. This blogger believes we should learn from the bushmen to adapt to a non-growth economy and focus on good relationships. The perfect competition model of economics provides some good guidelines as to how to get there.

 

Free trade; not trade wars or negotiated trade

With a lot of Americans fearful for their jobs and their president saying he can protect jobs with tariffs, international trade has become a big emotional issue.

Trade is such an emotional issue because our economy is organized such that our physical and psychological well-being requires us to have steady employment. At the same time economic changes require employment flexibility. One way to deal with this conflict would be to have a guaranteed income scheme so that individuals can cope with changes. My committment to such a scheme stands behind the rest of this post and indeed all the posts on this weblog. If people can survive comfortably without employment then this fear should no longer be a factor.

We should also analyse economic issues in physical or real terms rather than financial terms. Trade is the exchange of goods and services, not money which is a tool to facilitate the exchanges. It is very easy to get a distorted picture of the economy when people analyse economic problems in financial terms.

For all we talk about the market economy and our devotion to competition, we have a long tradition of restricting competition. One of the ways we do that is by imposing tariffs on imports from other countries. Other ways we restrict competition with subsidies and legislation.

The economics law of comparative advantage says countries are better off to specialize and trade, even if one country is more efficient in the production of all items. This is attractive to people who want economic growth. This blogger also likes the idea of efficiency so that we can have more time for leisure activities.

I also believe the best way to do free trade is unilaterally. To do free trade and get the full benefits Canada should abolish all tariffs and restrictions on foreign goods and services coming into the country regardless of what other countries do. If other countries want to subsidize our lifestyle, then that is up to them. If they do not want to buy from us, then that is saving our resource base for the benefit of our children.

The free trade agreements of which governments are so fond are in reality negotiated trade agreements. They are negotiated for the sake of special interests of producers. These are the same interests as those who want legislation to restrict competition – patents, copyright, licensing – and who want subsidies for their firms. To get a feel for the complexity of these negotiations look at this article in The Economist. Trying to negotiate to satisfy the special interests of multiple countries must be an impossible challenge.

International trade is not such an important issue for Americans because the United States is one large free trade zone and they are or have benefited from the law of comparative advantage.

Economics is a social activity and like all relationships, to be satisfying for all parties there needs to be a more or less equal exchange. Those Americans who promote trade wars are being anti social. To me that sounds un-American.

Lots of politicians and commentators worry about the dire consequences of American tariffs and the resulting trade wars. Yes. we are headed into some even more serious economic problems but they will not be caused by tariffs and trade wars. The basic problem is that we have used up the most easily accessible energy and mineral resources. Increased efficiency from free trade will help us cope with this issue but will not solve it.

The evidence for a long-term economic decline

This blogger thinks the economy is into a long-term down trend. It could be that not everyone sees this; it may depend upon the color of hat you wear. If you are retired with a good defined benefit pension it may be more difficult to see a down trend than if you are a young person trying to find an unskilled job that pays enough to cover rent, food, entertainment and a little saving to get married and buy a house.

Some of the evidence relates to the resource base. There are lots of energy and mineral resources left on the planet. The problem is that we have used up the easiest accessible resources and what is left is difficult to extract and will take so much energy they are useless. Another type of evidence is geographic and long-term in nature. This includes famine, epidemic, uncontrolled migration, state failure and climate change.

One of the difficulties is that we are used to seeing the economy as a straight line going up. Economics students learn about regression analysis which takes a number of data points and calculates the best straight line that indicates their direction. Using the slope of this line one can project the trend into the future. It is assumed the trend is up.

Another approach about which I did not learn until after I had completed my formal study of economics is fractal analysis. Fractals are lines that go up and down with a series of ups an downs within each. Like a seashore. Fractal analysis tries to identify major turning points in the ups and downs. The mathematics is not well-known. It involves the concept of fractal dimension which can be calculated by the formula two minus the Hurst exponent. If economists used this approach it would be much easier to accept the possibility our economy is going into a long-term down trend and their forecasts would be more accurate but not always what most people want to hear.

What then is the evidence for the long-term future?

In economic theory changes in prices are signals to producers to increase or decrease production. Increasing prices also indicate a shortage of a good and we have been experiencing a lot high prices for some basic goods. It may be that we need more information about prices relative to each other. Maybe our economic data collection has been to support our views on economic growth and is not sufficient to give us a clear picture of relative prices.

In recent discussions about energy a lot has been said about peak oil and solar. Maybe we do not have to worry about oil shortages because the cost of solar has been coming down and will soon be able to replace oil. This may well happen and it may have an interesting effect on economic decision-making. We as individuals will be able to make the basic decisions about solar use in place of bankers who now decide what oil projects go ahead and who gets to do them. The down side of this is that if a lot of oil infrastructure becomes obsolete and has to be written off a lot of the money supply will disappear and the lack of money will cause a lot of suffering to a lot of people.

In spite of all the talk about a service economy we still need lots of minerals for food, shelter and transportation. High prices indicate we have used up the most easily available mineral resources. The future may depend upon recycling and here the picture is cloudy. Recycling takes a lot of energy and the high cost may force us to reduce our use of minerals. Water is another issue. There are parts of the world where water shortages are becoming a serious problem.

Another indication of a declining economy is the trend to tiny houses, shared accommodation, young people continuing to live with their parents and even homelessness. It used to be that non-union working people could expect to live in a detached house with a front and back garden.

Most of the evidence for a down economy identified in the first part of this post has to do with the availability of energy and mineral resources. There are also some long-term geographic trends which could also cause mankind some serious problems.

The guideline here comes from a book by historian Ian Morris called Why the West Rules – For Now: The Patterns of History, and What They Reveal About the Future.

Morris’s book is a good summary of the long-term history of the world. Using evidence from a number of disciplines he shows how geography has influenced the rise and decline of civilizations. His perspective is much longer than most of us are familiar with.

He identifies what he calls the five horsemen of the apocalypse – famine, epidemic, uncontrolled migration, state failure and climate change and shows how these have combined to produce disastrous, centuries-long collapses and dark ages. Are we exempt from the consequences of these problems?

We are already familiar with these trends. The question is are they strong enough to cause us problems or are they gaining strength?  For me, a retired person living in Canada, they are mostly academic but for many people around the world they are very real and very serious.

Some people argue this planet is capable of providing enough food for the current population, especially if we reduce waste. Even so the situation is rather precarious and we should be paying a lot more attention to what is happening in agriculture. Monoculture, factory farming of animals and the use of pesticides could easily threaten our food supply.

The threat of epidemics is always with us and the more people are crowded onto this planet, the greater is the threat. We are lucky public health practitioners have been able to quickly control recent outbreaks.

Migration has been a big problem for Asia, Africa and Europe. It is also an enough of an issue for some Americans to want to build a fence and take children from their parents.

Climate change was a major issue until we realized how many plastic straws we are using. Stopping the use of plastic straws will be a lot easier than dealing with climate change but will not stop the changes from taking place. At least people will be doing something.

This blogger has found the concept of state failure difficult, fascinating and intriguing. It is a complex issue because justice is one of the most important functions of government. At the same time many people demand of government legislation that is exploitive because it restricts competition. This is a conflict of government responsibilities in which the exploiters tend to win. The balance between the two is by degrees and changes through time.

You will notice I said justice rather than law and order. I believe one of the indicators of state failure is that so many people, including The Economist and the Supreme Court of Canada, talk of law and order rather than justice. Law and order is easier to define and enforce. If some government were to pass legislation saying police are required to kill a thousand people at random each year, would we still be supporting law and order. The president of the United States has been quoted as encouraging police brutality and to me this sounds like encouraging them to kill at random. Maybe Trump is an indicator of American state failure.

There are lots of laws that are not just. Anything that tries to force the values, morals or religion of one group on everyone has to be unjust. There are lots of laws that are not written but which are enforced ruthlessly by the public, the media and the courts. For example, men are evil and any expression of male sexuality should be punished. Fathers are expected to walk away from their children without emotions. Men should not be emotional under any circumstances.

Governments like to reward their supporters and to purchase votes and/or support. It is easy to get governments to pass exploitive economic legislation and to get them to provide handouts to protect people from natural disasters and their own stupidity. A lot of government is supporting and encouraging special interests, often at the expense of everyone. Some people want minimum government but want their own interests protected,

As the economy goes more and more into decline it will be more and more difficult to provide handouts and this will be seen as state breakdown. Governments around the world are facing riots as fuel and food subsidies become difficult to maintain.

This conflict between justice and the exploitive demands of special interest may be pushing all governments into a state of failure.

In this post we have looked at a number of resource based and geographic indicators that the economy is on a down trend.

Here are some other indicators:

Unemployment

High public debt

The rise of radical left and radical right political movements

High interest rates

Non-performing loads held by banks

Falling standards of living – however one defines them

Expensive education

High crime rates

Crowded public transportation

Homeless people

People are losing confidence in their banks

Business people are will to exploit their customers for the sake of profit

Every time I read a news report at least one item supports the idea that the whole world is going into a long-term down trend. There are loads of problems with the resource base and if we go short we will not be able to sustain the standard of living to which we have become accustomed.

There are always positives and negatives. In terms of economic growth the negatives appear overwhelming. This guy has read about hunters and gatherers and believes it is possible for people to arrange their production of goods and services for long-term sustainability. It will require a major rethink of values. It will be a challenge.

 

 

 

 

This blogger thinks the economy is into a long-term down trend. It could be that not everyone sees this; it may depend upon the color of hat you wear. If you are retired with a good defined benefit pension it may be more difficult to see a downtrend than if you are a young person trying to find an unskilled job that pays enough to cover rent, food, entertainment and a little saving to get married and buy a house.

Some of the evidence relates to the resource base. There are lots of energy and mineral resources left on the planet. The problem is that we have used up the easiest accessible resources and what is left is difficult to extract and will take so much energy they are useless. Another type of evidence is geographic and long-term in nature. This includes famine, epidemic, uncontrolled migration, state failure and climate change.

One of the difficulties is that we are used to seeing the economy as a straight line going up. Economics students learn about regression analysis which takes a number of data points and calculates the best straight line that indicates their direction. Using the slope of this line one can project the trend into the future. It is assumed the trend is up.

Another approach about which I did not learn until after I had completed my formal study of economics is fractal analysis. Fractals are lines that go up and down with a series of ups an downs within each. Like a seashore. Fractal analysis tries to identify major turning points in the ups and downs. The mathematics is not well-known. It involves the concept of fractal dimension which can be calculated by the formula two minus the Hurst exponent. If economists used this approach it would be much easier to accept the possibility our economy is going into a long-term down trend and their forecasts would be more accurate but not always what most people want to hear.

What then is the evidence for the long-term future?

In economic theory changes in prices are signals to producers to increase or decrease production. Increasing prices also indicate a shortage of a good and we have been experieincing a lot high prices for some basic goods. It may be that we need more informtation about prices relative to each other. Maybe our economimc data colllection has been to support our views on economic growth and is not sufficient to giive us a clear picture of relative prices.

In recent discussions about energy a lot has been said about peak oil and solar. Maybe we do not have to worry about oil shortages because the cost of solar has been coming down and will soon be able to replace oil. This may well happen and it may have an interesting effect on economic decision making. We as indiivuduals will be able to make the basic decisons about solar use in place of bankers who now decide what oil projects go ahead and who gets to do them. The down side of this is that if a lot of oil infrastructure becomes obsolete and has to be written off a lot of the money supply will disappear and the lack of money will cause a lot of suffering to a lot of people.

In spite of all the talk about a service economy we still need lots of minerals for food, shelter and transporttation. High prices indicate we have used up the most easily available mineral resources. The future may depend upon recycling and here the picture is cloudy. Recycling takes a lot of energy and the high cost may force us to reduce our use of minerals. Water is another issu. There are parts of the world where water shortages are becoming a serious problem.

Another indication of a decling economy is the trend to tiny houses, shared accommodation, young people continuing to live with their parents and even homelessness. It used to be that non-union working people could expect to live in a detached house with a front and back garden.

Most of the evidence for a down economy identified in the first part of this post has to do with the availability of energy and mineral resources. There are also some long-term geographic trends which could also cause mankind some serious problems.

The guideline here comes from a book by historian Ian Morris called Why the West Rules – For Now: The Patterns of History, and What They Reveal About the Future.

Morris’s book is a good summary of the long-term history of the world. Using evidence from a number of disciplines he shows how geography has influenced the rise and decline of civilizations. His perspective is much longer than most of us are familiar with.

He identifies what he calls the five horsemen of the apocalypse – famine, epidemic, uncontrolled migration, state failure and climate change and shows how these have combined to produce disastrous, centuries-long collapses and dark ages. Are we exempt from the consequences of these problems?

We are already familiar with these trends. The question is are they strong enough to cause us problems or are they gaining strenth? For me, a retired person living in Canada, they are mostly academic but for many people around the world they are very real and very serious.

Some people argue this planet is capable of providing enough food for the current population, especially if we reduce waste. Even so the situation is rather precarious and we should be paying a lot more attention to what is happening in agriculture. Monoculture, factory farming of animals and the use of pesticides could easily threaten our food supply.

The threat of epidemics is always with us and the more people are crowded onto this planet, the greater is the threat. We are lucky public health practitioners have been able to quickly control recent outbreaks.

Migration has been a big problem for Asia, Africa and Europe. It is also an enough of an issue for some Americans to want to build a fence and take children from their parents.

Climate change was a major issue until we realized how many plastic straws we are using. Stopping the use of plastic straws will be a lot easier than dealing with climate change but will not stop the changes from taking place. At least people will be doing something.

This blogger has found the concept of state failure difficult, fascinating and intriguing. It is a complex issue because justice is one of the most important functions of government. At the same time many people demand of government legislation that is exploitive because it restricts competition. This is a conflict of governement responsibilities in which the exploiters tend to win. The balance between the two is by degrees and changes through time.

You will notice I said justice rather than law and order. I believe one of the indicators of state failure is that so many people, including The Economist and the Supreme Court of Canada, talk of law and order rather than justice. Law and order is easier to define and enforce. If some government were to pass legislation saying police are required to kill a thousand people at random each year, would we still be supporting law and order. The president of the United States has been quoted as encouraging police brutality and to me this sounds like encouraging them to kill at random. Maybe Trump is an indicator of American state failure.

There are lots of laws that are not just. Anything that tries to force the values, morals or religion of one group on everyone has to be unjust. There are lots of laws that are not written but which are enforced ruthlessly by the public, the media and the courts. For example, men are evil and any expression of male sexuality should be punished. Fathers are expected to walk away from their children without emotions. Men should not be emotional under any circumstances.

Governments like to reward their supporers and to purchase votes and/or support. It is easy to get govenrments to pass exploitive economic legislation and to get them to provide handouts to protect people from natural disasters and their own stupidity. A lot of government is supporting and encouraging special interests, often at the expense of everyone. Some people want minimum government but want their own interests protected,

As the economy goes more and more into decline it will be more and more difficult to provide handouts and this will be seen as state breakdown. Governments around the world are facing riots as fuel and food subidies become dificult to maintain.

This conflict between justice and the exploitive demands of special interest may pushing all governments into a state of failure.

In this post we have looked at a number of resource based and geographic indicators that the economy is on a down trend.

Here are some other indicators:

Unemployment

High public debt

The rise of radical left and radical right political movements

High interest rates

Non-performing loands held by banks

Falling standars of living – however one defines them

Expensive education

High crime rates

Crowded public transportation

Homeless people

People are losing confidence in their banks

Business people are will to exploit their customers for the sake of profit

Everytime I read a news report at least one item supports the idea that the whole world is going into a long-term down trend. There are loads of problems with the resource base and if we go short we will not be able to sustain the standard of living to which we have become accustomed.

There are always positives and negatives. In terms of economic growth the negatives appear overwhelming. This guy has read about hunters and gatherers and believes it is possible for people to arrange their production of goods and services for long-term sustainability. It will require a major rethink of values. It will be a challenge.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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The British Labour Party and economic decision making

It appears the British are getting ready to elect a Labour Party government which is hoping to introduce some “structural” changes to economic decision-making.

This blogger believes economic changes are urgently needed but also figures the changes proposed by the Labour Party will only change the faces making decisions and will do nothing to change the well-being of English people.

When socialists realize that central planning does not accomplish what they want they try to reform by decentralizing the central planning. To see how the British are likely to try this, see this article in The Economist.

The main issue in capitalism versus socialism is who gets to make decisions about what economic projects are undertaken and who gets to do them.

There are three main ways in which this decision-making can be done.

The first is that major decisions are made by bankers who get to do this via their control over money creation. Fractional reserve banking means bankers create money when they make loans and this gives them a great deal of power to decide what projects go ahead and by whom. The capital in capitalism comes from the money created when loans are made. Even small decisions like who gets to build housing and who gets to buy the houses are made by bankers when they approve the loans and mortgages. Any meaningful reform will require changes in the way in which money is created. There are ways to do this. Not only will bankers object to the loss of power but a lot of people have an emotional committment to money and will fiercely oppose changes. Another strong feature of this system is that governments pass legislation that restricts competition and allows some people to make profits. This system we call capitalism.

The second approach to decision-making is called socialism or central planning. Decisions are made by political leaders or their bureaucrats. Socialists like to use words such as “democratic” and “public interest” but in reality make decisions according to their own values and interests. Because of this socialist economies tend to be an inefficient use of resources. Decision making is still made by a few people even if they claim it is on behalf of others.

The third way of making decisions is a true market or perfect competition. We like to think our economy is based on markets but a lot of it is based on legislation that restricts competition such as patents, copyright,licensing and tariffs. In North America one area of life in which competition is allowed is religious services. As we are committed to freedom of religion the government does not interfere. One often hears of people who go church shopping.

Greens often say they want an economy based on small business but they also automatically reject everything said by economists. This is unfortunate because economics has worked out the theory of small business and can say exactly what to do.

In order to have perfect competition all participants in a market, sellers and purchasers, must be so small that no one can influence the price by increasing or decreasing the amount they buy or sell. There must also be perfect knowledge. All participants need to know all prices. Entry to and exit from an industry needs to be easy which means there can be no patents or copyright.

For the purposes of this post decision-making is made by customers who vote with their buying decisions. Price changes are signals to producers to increase or decrease production.

One of the reasons this blogger likes the true market economy is that it allows a lot of decisions to be made by individuals. One of the problems is that individuals to not have a lot of power. People with common vested can form powerful lobbying groups and can get governments to pass legislation which restricts competition and provides them with excess profits.

Socialists talk of giving workers influence over economic decisions, but their proposals give decision-making to boards or councils. Workers are also consumers and with a market system they will have the same influence as all consumers. A market system also allows for a great variety of products. For example, if schools were based on a market there could easily be schools based on different educational philosophies and parents could choose which they wanted for their children. A voucher system could ensure that all children got an education.

Socialists also argue that capitalism encourages greed. This may be true when decisions are made by bankers, but in a true market there are no profits, just wages and a return on investment. If there are profits being made in an industry, more people will go into it until there are no profits.

If the British Labour Party gets elected and is successful in changing the “structure” of their economy, they may change the size of a few of the units for which decision are being made. However, they will still be steering the same ship in the same ocean. Jeremy Corbyn is not radical or brave enough to change the way in which money is created or to drop a committment to economic growth, both of which are urgently needed to protect people from an economic collapse.

 

 

 

 

 

 

 

 

 

 

 

Fake promises in the next presidential election

It appears the next American presidential election will be a battle of fake promises as Donald Trump and a left-wing democrat appeal to American emotions.

Trump will almost certainly bases his campaign on the formula that worked last time; vague general promises (make America great again) and some easy to keep promises that appeal to his core supporters (move embassy to Jerusalem.). Most of his promises will be appeals to emotions.

The democrats will base their campaign on a promise of full employment as reported in this recent article in The Economist. Full employment has been an American policy goal for a long time, If it were possible it would have been attained a long time ago. To promote it now is an emotional appeal to counter Trump’s emotional promises. And it is destined to failure and will probably destroy the economic future of a lot of Americans.

One could probably predict that both Trump and the democrat will come out of the election with DBS degrees. (The D stands for doctor and the rest all English speakers should know).

The main issue, which will not be acknowledged during the campaign, is the size of the resource base for future economic activity. This blogger believes there are loads of energy and mineral resources left on the planet. However, we have cherry picked those which are readily available. Those which are left are so difficult to extract they are for the most part useless for future economic development.

If this analysis is correct then promises of full employment will be impossible to keep. Attempting to keep them will accelerate the use of the remaining energy and mineral resources and bring forward a major economic collapse.

Another factor when employment is an issue is our commitment to the work ethic. Some people believe their salvation depends upon their working hard and others worry that some people will receive benefits which they have not earned or to which they are not entitled. Everyone must do their share.

This blogger believes the material standard of living to which we have become accustomed is based on the agricultural surplus which allows a few people to produce enough food for everyone. As this surplus is the result of several millenia of technological development it should be a part of our inheritance. All of us should be entitled to a standard of living equal to everyone else regardless of what we do with our time.

With our standard of living dependent upon jobs and with our psychological well-being also dependent up on our having a job, promises of full employment will have a very strong appeal to many Americans. The success of the promise depends upon the ability of the economy for even more growth. This blogger has serious doubts about that. I am old enough to remember when people were saying we will just have to get used to an unemployment rate of three per cent.

The economic challenges facing the people of this world are overwhelming. Solutions will required a major rethinking of values about work and economic growth. An American presidential election would be an ideal time for a serious debate about the economic future.

The toughest part of this issue is how to deal with it. In the past I have voted for candidates with the least chance of winning because they have been the most honest. I have also deliberately spoiled by ballots. Both of these seem like a cop-out. I do not have the personality nor the skills to be a candidate let alone convince people of my economic policies. I do not even have the skills to go to election meetings and challenge the candidates. I also believe any candidate who tried to be honest would be nailed to the cross by fake election promises and appeals to emotions.

 

 

 

 

 

Even more fake news

Friends, Romans, countrymen, lend me you ears;
I come to bury fake news, not to praise it.

Whenever you have war, whenever you have conflict, whenever you have disagreement the first casualty is the truth. This has been the case since the start of civilization but we are now more conscious of the issue since the American president started using the term “fake news”. Not only has he become a master of using it but he also claims others use it against him. He is not the first to distort the truth but he may be more blatant than his predecessors. His success is sickening.

It may be the challenge of fake news is to use the truth to overcome emotions.

A lot of us dislike being lied to and a lot of us dislike hearing the truth, especially if it is not what we want it to be. This provides opportunities for those people whose desire for power over people is stronger than their ethics.

Most politicians quickly learn to use distortions of the truth to avoid upsetting people. My experience is that municipal politicians are less likely to say untrue things than those who stand a chance of being elected at a provincial or national level. As a journalist I frequently voted for the candidate with the least chance of winning because they were the most honest.

When a politician is as blatant with distortions of the truth as is the current occupant of the White House it is tempting to hold him responsible. But there is a more serious problem in that a lot of people are believing his distortions. He is saying what a lot of people want to hear. When so many people want to hear and believe things which some of us believe are not true there must be a serious problem facing our society. Rather than criticizing the messenger we should be trying to identify and correct the problem.

In my days as a reporter I tried hard to be accurate and was sometimes in trouble for being too accurate. They mayor did not like being quoted as referring to the Queen of England as “Liz”. Most of my reporting was for small town newspapers.

An issue for me was the accuracy of what people said. A British Columbia cabinet minister said the gypsies from Quebec were sent to B.C. to encourage separatism. I did not believe it but I reported it and the editors wrote an editorial criticizing the minister who later went onto become the premier. I still feel guilty for my very small part in helping him become premier. I would not want to be covering the White House.

In our society court cases are the ultimate situations of conflict. Most witnesses in court cases take an oath to tell the truth and the whole truth and nothing but the truth. I never heard a lawyer take a similar oath. Frequently they try to hide the truth. In Hereford, England, the prosecutor in the magistrates court was a police inspector and was much admired for ensuring the magistrates knew anything in favor of the defendants. He once told us he kept quiet until he became an inspector. After that there were no more promotions.

Distorting the truth is an ancient activity. We know that because we have the word sophistry. On a day-to-day basis I hear lots of arguments which are good examples of the art, often from the female of the species. I figure most of the arguments presented by feminists are highly sophisticated. Google logical fallacies.

The Economist points out that some publications reflect the beliefs of their readers rather than their owners. This is because some owners are more interested in profits rather than the truth.

Maybe there is a market for fake news because we are all emotional people and we do not like things that will cause us suffering. With the economy on a down trend it is likely a lot of people are going to experience unemployment and suffering and maybe even hunger, There will be fertile ground for politicians who promise things they cannot deliver.

It is our responsibility to evaluate the truth of what other people tell us. A part of the evaluation should be asking what are the special interests of that person. Will they benefit by distorting what they say?

Most of us feel betrayed if we discover somebody has lied to us. Probably the best defense is a commitment to tell the truth.

 

 

 

 

 

 

 

 

A simple market solution to internet privacy

The issue of internet privacy is easy to solve and in a way which should appeal to those who claim to believe in a free market economy.

Governments should pass legislation that all computer data should be publicly available without charge. This means we should be able to see what information about us is available and any business should also have access the same information. We should also be able to see who has accessed the information.

We would be responsible for deciding what personal information to make public realizing that it would be out there forever. We would also see who was using that information and would be responsible for protecting ourselves from exploitation.

Those of us who live in small communities are already used to others, including some business people, knowing quite a bit about us. It is now a question of scale. Once upon a time I worked on a small town newspaper in Ontario. As the junior reporter one of my duties was to write obituaries. Each day at lunch the elderly couple with whom I boarded wanted to know who had died. They also wanted to know which funeral home as Conservatives and Liberals were buried by separate undertakers

We often want and expect governments to protect us from people who would exploit us. But in the long run we all have to take responsibility for our behavior and our own protection. We are the ones who take the consequences.

Internet privacy is an issue because some people can make lots of money if they have exclusive access to the data. Making data free would change the dynamics of social media and some of it might become subscription based.

One of the biggest current economic fallacies is that we have a market economy. What we really have is an economy in which governments legislate to restrict competition so that some people can make profits. One of the fundamentals of a market economy is that knowledge, technical and market conditions, is known to all participants. Another fundamental principle is that customers pay the full cost of the goods or services they consume. Subsidies whether from the government, advertising or the sale of data make for an inefficient economy. What I am suggesting in this post is that we make the internet a part of a market economy.

In a true market economy there are no profits as competition keeps prices such that people can earn a wage and a return of investment but no profits. Therefor a market economy would take care of another current issue – equality.

I do not expect this idea to be taken seriously as those who profit from a noncompetitive economy have a lot of political power. Therefore internet privacy will provide a lot of work for lawyers and that Mark guy will become even more exploitive, richer and more powerful.

 

Why we need free range kids and free range education

There is an ancient wisdom saying that happiness is the result of right action. Therefore, if one wants to be happy one should be careful in chosing one’s actions. This blogger would also say we should choose our actions ourselves rather than letting others do it for us.

These thoughts were prompted by an article in The Economist about educating bright children so that they can contribute the most to society. The issue is who decides what is “the most”.

My concern is that The Economist is evaluating education by the incomes and the numbers of patents that people produce in their careers. This is from a magazine whose writers are dedicated to continued economic growth at a time when further growth may be difficult. It may be that in the future success will go to those capable of coping without a lot of material things.

As this post is mostly about values I should state I value highly individual thought and decision making. People should be encouraged to have different life and educational experiences. Children should be raised “free range” and education should cover a variety of topics including cross discipline. One of my concerns about educational trends as reported by The Economist is that the goal is to have every body thinking the same – with a common devotion to economic growth. If we are to cope with negative growth we must have people educated to think outside the box represented by The Economist.

How do we define success? How do we measure success? Is economic success the responsibility of schools? For some people success is living a long time, or ending life with lots of money and/or toys, or having done lots of travel, having done lots of things or having had lots of sex. Each of us should define success for ourselves rather than going with another person’s definition.

Economics is about relationships and economic success should be about good relationships rather than resource exploitation. One of the fundamentals of good relationships is that there should be a more or less equal exchange between those involved.

Sometimes it feels as if a lot of people are prepared to sacrifice ethics for profits. Corporate culture appears to encourage this. That some major Canadian corporation (banks and telecommunications) encourage their sales people to use exploitive techniques is an indication that our economy is not based on good relationships

When the economy is on a down trend education is so young people can get good marks on exams. Some people spend large sums of money hoping to give their children a slight edge. If we were not so competitive we might find a greater happiness in co-operation.

The future is going to be difficult because we do not have the energy and mineral resources to support continued economic growth and even more people. To survive we need to educate children to think outside the economic box; we need free range children and free range education. We need people who will not accept the status quo and who will think independently of Bill Gates and Mark Zuckerberg, both of whom are dedicated to conning us into buying more stuff – or voting for candidates of their choice.

 

 

 

 

 

 

 

 

Economic growth, sustainability and degrowth

A lot of people realize there are problems with the economy but few if any understand what is happening. Therefore we have varied reactions. Many people cling to faith in economic growth, some are exploring the concept of sustainability and a few are looking at “degrowth”. This blogger thinks of the three approaches as points on the ray of a matrix.

Predicting the future is difficult although the shorter the term the easier it is. Economists are little help because most are paid directly by business people or indirectly through government. Very few people get away with telling the whole truth to the people who pay them. Most economists find it expedient to say what their employers want to hear and that is mostly that the economy will continue to grow and that there will be continuing profits.

Nor can we expect the truth from political leaders as their positions depend on maintaining the support of the people. It is hard to think of any government leader telling us we will have to tighten our belts and remaining in power. Are citizens mature enough to listen to that? It would be interesting to see a political leader try.

Our recent economic memory is based on a tremendous use of energy and mineral resources. Not only have we fought two world wars we have also had the resources for an incredible standard a living in which the rich have grown richer and the rest of us have done okay. The result is we have a strong committment to economic growth and a belief that it will continue forever.

Many economists are fond of regression analysis because it assumes constant economic growth. It is a mathematical formula which takes a series of data points and calculates the best fitting straight line through them. It is generally assumed this line will angle up.

This guy thinks we would get a more truthful picture of what happens in the economy if we were to use fractal analysis. Fractals are series of ups and downs each with a subseries of ups and downs within them. The sea coasts are often used as examples. The mathematics of fractals is not as clear as regression analysis but there are some useful concepts. I am fairly certain those people who do “black box” analysis of stock markets are using fractal analysis. They are apparently having some success. The concept of fractal dimension can be calculated (two minus the Hurst exponent) and changes indicate a change in direction.

If we were to apply fractal analysis to economics it would be easier to see and accept ups and downs in the economy and easier to develop mechanisms to deal with them.

The word “sustainable” as applied to economic growth is a buzzword in some circles but I find it challenging as its meaning is not clear. I suspect it is mostly a cover for continued economic growth.

To the extent that some people use fewer energy and mineral resources it is good but I suspect that sustainable development maintains a committment to economic growth. Sustainable to me means going on forever and that is what a lot of people believe about economic growth.

The reality is that the quantity of goods and services we can produce and exchange depends upon the quantity of energy and mineral  resources we have and can retrieve with a reasonable expenditure of energy. The concept of sustainable development is probably 100 years too late.

Our committment to economic growth is so strong I am not aware of any career economist having thought about what happens when the economy goes into decline. This is unfortunate as the economy regularly goes into recession and this time it may be extended.

This blogger figures current economic problems are because we have used up the most accessible energy and mineral resources. Sure, there are lots left but they require massive amounts of energy to retrieve them. Solar may help but not yet. I fear that we will be forced into degrowth.

If so the challenge will be to figure out how do distribute fairly the goods and services we have, how to cope with leisure, how to create money that will not disappear during a crisis and how to not fight over the available resources.

Money will be a special problem as fractional reserve banking works only in times of economic growth. When growth stops and banks stop making loans  the money supply goes down and because it is fractional reserve the money supply goes down with a multiplier effect. Ouch. A super big ouch.

There are lots of anecdotal evidence from around the world that we are going into a down economy. This could easily be an explanation for a lot of the negative news, both economic and non-economic, to which we are becoming accustomed.

If we could get away from our committment to economic growth we could focus instead on happiness. This concept is impossible to measure although there is some evidence that people do not need a lot of material things to be happy.

What ever happens and wherever humanity ends up it looks as if we will experience a lot of human suffering. I would like for us to minimize the suffering and maximize the happiness.

 

 

 

 

 

 

 

 

 

 

 

 

 

Self-driving cars: promises and some problems

Self-driving cars will be an incremental but disruptive step into science fiction in that we will be abandoning a major part of the economy and replacing it with something different. Science fiction will become a reality. Do we really want to go there? Probably we have no choice but to drive down this road.

A recent special report in The Economist discusses some of the technology and outlines the promises of autonomous vehicles. There are also some economic problems of which we should be aware – the resource base, marginal cost and potential disruption in the money supply.

The promises are mostly based on a continuation of the North American growth economy. We will be continuing to use machines to move individuals or small groups mostly to places of employment. Probably self-driving vehicles will be used in combination with mass transit, especially if vehicle sharing comes into its own. Great benefits will accrue to a lot of people in the form of greater inexpensive mobility which will also allow us to contradict Facebook with more direct social activity.

Self-driving vehicles may add to the over population problem if there are fewer accidents and fewer fatalities.

One of the problems will be the availability of resources. This blogger figures the economy is currently on a down trend because we have used up the most easily accessible energy and mineral resources. Sure, there are lots left in the crust of this planet but the amount of energy required to retrieve them makes them mostly useless.

The exception is solar energy, the cost of which has been dropping and will probably continue to drop. This could mean a major change in economic power as it appears solar will become cheap enough for individuals to make their own decisions about using it. No longer will bankers and governments be deciding which power provision projects go ahead and by whom.

The replacement of the current fleet of internal combustion vehicles with electric and driverless vehicles will probably mean a lot of the current infrastructure will need to be replaced. This will require large quantities of mineral resources which may be very expensive. Henry Ford realized that in order to sell automobiles they had to be inexpensive enough for working people to buy them. Since then we have extracted a lot of the most easily accessible mineral resources. It is not clear we will able to retrieve or recycle enough resources for the transition.

The economic concept of marginal cost creates a couple of problems for the introduction of self-driving vehicles. This states the price of an item is equal to the marginal cost of producing the last item. As the cost of solar energy is falling and is likely to continue falling at some point solar will determine the price of electricity. When that happens all those firms currently producing electricity from hydro, gas or oil will find their facilities and investments worthless. Not good news for bankers or for the rest of us when all that debt has to be written off.

Recycling may be another source of problems. Most of us accept that recycling is a civil responsibility and believe that doing so will help to save the environment and the economy. However we may find marginal cost interferes with some things. Suppose a pound of copper can be recycled for half the cost mining new stuff. Does this mean manufacturers will be able to purchase recycled copper for half the cost and their customers will benefit from the cheaper prices? Not likely. Copper prices will be set by the last pound mined and the recycler will make a windfall. So the benefits of recycling will likely go to the recyclers rather than the rest of us. This is what happened in the oil industry as prices rose. We all paid higher prices and those producers who could extract the stuff at lower cost did very well. Recycling may be a joke on us.

Most of us know how to manage our money but few understand how money is created in our economy. Most of the money we use to exchange goods and services is based on the debt created when bankers make loans. This works so long as the economy is growing and bankers make more and more loans.

Economists seldom if ever talk about what happens when the economy stops growing and loans have to be written off. Loans are being written off all the time but so long as the economy is growing they are replaced with even more loans. However, when large amounts have to be written off such as the recent mortgage crisis the money supply goes down and without money it becomes difficult to exchange goods and services and lots of people lose their savings and their employment. Because of the fractional reserve system we use the money supply goes down with a multiplier effect.

I do not know how much of the current money supply is based on debt to the automotive and energy firms. The introduction of self-driving electric vehicles could hit the banks and us with a double whammy if firms in both industries cannot repay their debts. We could lose a lot of the money supply as well as a lot of people losing their savings and pensions.

A lot of changes are likely to be forced upon us. Some of those changes we may not appreciate.

Through the millenia of history when there have been major economic upheavals up to 90 percent of populations have died. If something like that happens in the near future, the technology of self-driving electric cars will not be lost and the promises may be available to the survivors.

Money creation by bankers, central banks or individuals

That the Swiss are going to have a referendum on changing the way in which they create money is great news. That the referendum is certain to fail is even greater news.

(First link and second link.)

As regular readers of Economics 102 will know this blogger is extremely committed to reforms in how we create money. You will also know that I am strongly opposed to state control over the economy. I also believe there is an urgent need for reforms in the way we produce and exchange goods and services. There is a 99.99 percent probability of economic turmoil as the economy continues its downward decline and without major changes there will be a lot of human suffering.

The Swiss proposal is that the creation of money be restricted to the central bank rather than the current fraction reserve process in which money is created when banks make loans. The authors of the proposal should be lauded for recognizing that there are big-time problems with money based on debt and that charging interest on money created makes our economic problems even worse.

My problem with the proposal is that it wants all money creation to be in the hands of the central bank. The central bank would have direct control over lending. “The money created by the monetary authority would be transferred to the Treasury and would come into circulation by public spending; thus, it would benefit the public purse and contribute to the reduction of national debt. ” Money creation and this type of spending would also mean a lot of economic control by the government.

The essay about this proposal lists private control as one of the problems with the current system. Control is a major economic issue and I can see where a lot of people are strongly opposed to anything but “public” control.  However “public” control is just control by different people with slightly different interests from the bankers. They will still be acting in their own interests – such as getting re-elected. I want an economic system in which control and decision-making is by individuals and I believe the way to get this with a true competitive market economy which we do not have. I also figure the current system is marginally better than money creation in the hands of a government agent.

The authors also point out there is a need to “secure the independence of the monetary authority.’ This is a serious concern as the people who control money creation get to determine which economic projects go ahead and by whom. There are very few prime ministers of any political leanings who would allow that kind of power into any hands but their own.

There is an alternative to money creation by a central bank and that is to combine money creation with a guaranteed annual income scheme. This would solve the problems of lots of people without jobs and it would put primary economic decision-making into the hands of all of us as individuals.

This guy has written extensively about this on this weblog and in an e-book Funny Money: Adapting to a down economy. The book is available free by following the link on the sidebar.

Any changes in how money is created, whether to a central bank or to an income scheme, would hit the profits and power of bankers. Expect them to be more than just vocal in their opposition if either becomes a serious threat.

I figure economics is largely about relationships and to be satisfactory relationships need to be based on a more or less equal two-way exchange. I also believe money should be considered a tool to facilitate the exchange of goods and services and it should encourage good relationships rather than be an instrument for exploitation. To maintain good relationships money should not give power to some people over others. I fear that giving a central bank the sole right to create money would make it easy for governments to exploit their citizens.

There are lots of serious problems with the fractional reserve way of creating money and there is an urgent need for reform. The big question is what the reforms will do to the way in which we exchange goods and services and how we relate to each other.

Justice for minorities

Suppose Donald Trump were handicapped (physically) would life become easier for all the handicapped people in the United States?

This question is in reaction to an opinion piece in the Guardian defending the leaders of the British Labour Party’s youth movement for organizing a conference from which straight, white, and able-bodied men were barred because “Luckily for them, they are not oppressed in politics.” As an older, white, straight and formerly able-bodied male this blogger feels uncomfortable with this article not because I am not eligible to attend but because I think it is a misguided way to solve problems.

I have three concerns.

The first is a fundamental problem with a parliamentary system, that of asking one person to represent a group. Most electoral areas have within them a range of interests and opinions. The person who gets elected may represent some of them but maybe not even everyone who voted for him or her. Some representatives use their position to support the interests of just a few friends. Most of us wear several different hats and it is expecting lot to expect an elected representative to wear all the hats worn by his/her  constituents.

A second concern is that I like to make distinction between speaking for and speaking about a group. This came up in Canada recently when it was found that a writer who had written novels about native people had a minimum if any of native blood in his body. He was being asked by media to speak for native people some of whom objected to this. This blogger lived on an Indian reserve for four years and knows the truth is that nobody can speak for all natives because they are a diverse group of people with vastly different life experiences. However some people, myself included, can speak about natives and some of us may see things differently from how they see themselves. When these young people exclude some people from their conference they may be excluding some very caring and knowledgeable people. Some of the excluded people may be hurt by this policy. Two wrongs do not make a right.

My third concern is that we all have disabilities and there is lots of injustice in this world. Probably most of us experience some injustice during our lives. Who is to say one person’s disabilities or injustices are worse than another’s? We should be sympathetic to all disabilities and oppose all injustice. Is it legitimate to ask governments to correct all injustices? That is asking for a lot intrusion into our lives.

An article in a recent The Economist about women in the board rooms of European corporations says there is little evidence that wide-spread quotas for directors has either improved corporate performance or done anything for women at lower levels of the corporation. This is not promising for those who want minorities to be more represented in government.

It appears this conference was trying to address two issues by not allowing some people to attend. Politics is highly competitive and complex. One way to win any competition is to eliminate the opposition. The other issue is injustice which most of us have to deal with. That too is a complex issue . There may be more rewarding ways to deal with injustice than trying to win elections.

If Donald Trump lived in a wheelchair my guess is that he would still be Donald Trump and about half the people would still hate him.

Who is afraid of nuclear war?

The Economist recently published a series of articles about the potential for a nuclear war between great powers.  A nuclear war is a major threat to the existence of mankind on this planet but it is only one of several threats and some of the others may be greater, in part because they are less well understood.

Other threats  include famine, climate change, overpopulation, uncontrolled migration and disease.  All of these have been a part of human history.  The most intriguing threat comes from the potential for an electromagnetic pulse which could wipe out all of the computer chips in the area it hits.  This could come from a solar flare or from the discharge of a nuclear weapon in the atmosphere above the target.  For more on this  read the novel One Second After by William R. Forstchen .

Probably the greatest risk of nuclear war is that some lunatic will push the button.  My sense is that the current occupant of the White House is more interested in saying things that will please the people who voted for him and are likely to vote for him again and doing things, like opening parks for development, that will please his business friends.  Unfortunately there are other lunatics in this world with different interests.

This writer is not terribly worried about a nuclear war between the United States and Russia because I can not see either country gaining anything.  Both countries have used up their most easily accessible resources and modern technology is such that slaves are redundant.  A few people might get some enjoyment from bullying, terrorizing or raping the losers but would probably not get away with it for long.  In any case there are adequate opportunities at home.  Both countries have considerable social problems and I doubt any leader would want to take on the others problems as well as his own.

Since the end of the Second World War there have been no wars between great powers.  There have been lots of internal and regional conflicts and there will probably be enough more to keep the threat alive and allow the generals to test their toys.

The main benefit of war is in the preparation. A lot of people have well-paying jobs supplying military kit.  Not many politicians will vote to reduce arms spending in their constituencies.
The world economy is on a down trend and lots of spending agencies are competing for funding – education, health, transportation and military.  The military can makes a very strong case with the threat of nuclear annihilation.  It is sad that Canadians and other people around the world are going hungry and sleeping rough so that generals can play games.

Nuclear war is very much a possibility but it is just one of several things that could destroy the world as we know it.  The danger in focusing on any one threat is that another one may sneak up on us.  We need to be watching all of them and seeking ways to protect ourselves.

Let’s put some ‘civil’ in civilization

Over the past few weeks I have been reading some anthropology about hunters and gathers and have decided these so-called primitives are really the most civilized Peoples of all times.  I absolutely do not want for myself or anyone else to go to that life style but I do think we should evaluate their cultures for ideas we could adopt.  We need to put the civil in civilization.

In this post I propose to look at some of the things that make our society uncivilized and contrast these with what we know about hunters and gathers. A lot what makes us uncivilized are sources of in justice –  overpopulation, forcing people to do things according to the values and morals of others and exploitation of people and resources.  Generally these injustices are not a part of the lifestyle of hunters and gatherers.

This guy used to think that violence was a natural part of human nature and we  just have to live with it.  After reading about hunters and gatherers I am not so sure.  These people are generally known for being peaceful and non-violent.  One group, when threatened by some war-like neighbors just disappeared into the forest.
It would be interesting if an anthropologist would do a detailed study of this aspect of their lives.

Hunters and gathers must be expert psychologists as they have to teach their young to kill animals while remaining non violent in their human relationships.  There often appears to be a spiritual aspect to their hunting.  Apparently a lot of social control is with verbal tactics such as teasing or ridicule.

In contrast most civilized countries maintain standing armies, sometimes used for social control of populations and in some places it is acceptable for agents of the state to execute innocent people who happen to be in their way. Some people claim the right to force others to live by their values and morals and are often very successful at getting state support in the form of legislation.  Our civilizations are also very tolerant of psychological violence. In spite of all the feminist propaganda we hear, women are very skilled at this type of violence.  Violence is so pervasive in our societies that very few people get through their lives without experiencing some of it.

History tells us that so far all civilizations have failed although many people believe our own will last forever.  As so many civilizations have failed this is a major issue.  One theory is that previous civilizations have failed because they have depleted their topsoil.  If this is true we need to proceed with caution as a lot of our food supply is dependent upon adding chemicals to the soil.  We need to put a lot of effort into studying agriculture.  It is too important to leave to people who make their living from it.

This blogger believes the major threat to our way of life is that we have used up most of the easily accessible energy and mineral resources on the earths crust.  Yes, there are lots of resources left but cost of extracting them is such they are mostly useless unless we have some major technology breakthroughs.
In  contrast there is archeological evidence that the bushmen of the Kalahari desert have maintained their civilization for up to 200,000 years.  They did this by living hand to mouth, seldom  having more than a day or two of food on hand and not over exploiting resources.

A significant feature of hunting and gathering is that most decision-making is by individuals.  Leadership is low-key and individuals can easily move from one small group to another. The bushmen’s  time came to an end when their territory was taken over by farmers and herders with the help of modern technology such as boreholes to provide reliable water supplies.

It is not clear if there was a natural transition from hunting and gathering or if farming and herding developed independently.    What is significant is that the latter made for different social dynamics in that some people could make decisions that affected others.  As these other types of food provision involved food storage they also led to residence mostly in one location, more and more complex tools and a more material lifestyle.  This was probably the start of the decline into our uncivilized history.

Probably the most important of all freedoms is the right to make decisions according to our own values and morals. In our society this is a complex issue with many limits.
The first limitation, shared by hunters and gatherers, is the need to provide ourselves with food and shelter. We must spend some time on this although most hunters and gatherers devote far less time to this than we do. Anthropologists have found that a lot of them devote only 15 to 20 hours a week to this basic activity. The rest of the time they spend socializing, performing rituals, doing crafts or sleeping and being lazy.

The rest of the limits on freedom to make decisions follow from our economic organization often with religious sanctions. Modern technology and the use of oil in agriculture probably means we only need to work two or three hours a week but the work ethic requires us to work 40 to 60 hours a week. If one does not do this much work one is a deadbeat on not doing ones share. This is great for those people who want others to support their empires but not so great for the environment and the resource base and our right to decide for ourselves what we want to do.

Possession of money gives us freedom to make decisions but the way in which it is created is a limitation. Most of the money used in our exchange of goods and services is created when banks make loans in what is known as fractional reserve banking. This is a complex but easy to understand process that is fully explained in many places on the internet including this weblog and the e-book by this writer, Funny Money: Adapting to a Down Economy. As money is created by bankers they determine who gets it and what projects are undertaken. Creating money with an income scheme and national exchange trading scheme as proposed in my book would mean a major transfer of decision-making power to individuals.

Another limit on our ability to make independent decisions is the extensive use of marketing techniques by major corporations. I have often thought the best psychological insights come from marketing people and they do not hesitate to use their knowledge to influence how people think and what they do. Sadly, we have got to the point where a lot of people consider exploitive marketing to be normal, legitimate and even desirable. Some major Canadian companies have recently made the news because of the pressures put on their sales people, like to sell expensive internet or phone services to people who will never use them.

It is amazing how easily so many people get hooked into agendas set by others. It is easy to avoid being influenced by the marketers; just avoid television and social media. It is also easy for me to say that as I left home before my parents bought a television.
Not only are hunters and gatherers known for their peacefulness, they are also known for their equality. If people are not trying to aquire lots of material things, then economic equality becomes natural.

In our own culture we are aware of increasing inequality as more people suffer from the falling economy but we do not know how to change things. I believe everyone should have the opportunity to have the same standard of living as everyone else. It is painful to see people homeless and having to rely on food banks.

This writer believes inequality could be corrected with an income scheme and a true market economy. One of the features of a market economy is that competition wipes out the profits that allow some people to become rich.

The books I have read say little about sexuality but it appears most hunters and gathers are casual and accepting. Nor do they appear to have the sexual problems which plague so many people in our societies. It could be that we have something to learn from them about sex .

The key to what we call civilization is the agricultural surplus which is the food production in excess of what the producer needs for his own survival. Generally hunters and gathers do not have an agricultural surplus because once they have enough food for a day or two they stop working knowing that more is easily available when they need it.

The agricultural surplus is a two-sided coin. It releases people from food production to do other things some of which are positive and some of which are destructive. It can be the start of the decline onto the slippery slope into uncivilized behaviors,
The agricultural surplus presents a people with two questions; what to do with it and who makes the decision. These questions open up opportunities for people whose personality is to tell others what to do. This writer believes each of us should have to right to decide how his/her share of the surplus should be used.

Some economists like to tell students consumers control the economy in their spending decisions. This is correct so long as we make the right decisions. Many people want to go off the grid and live the simple life in the bush but that is not easy to do. The people who create the money want the rest of us to work at their projects rather than our own.

We have good material standards of living because our economy has been labor intensive and the demand for bodies has allowed us to extract from the elite a nice portion of the agricultural surplus. As technology increases and robots do more and more of the labor we are losing our bargaining power. The rich get richer and more people become poor. Frightening and uncivilized.

There is a slight ray of hope in our two or multi party electoral system. Some politicians are realizing tha to get votes they have to allow voters some share of the agricultural surplus.

There are lots of anecdotal evidence that our economy is on a down trend. Lots of people are suffering and lots more are likely to suffer. There are many unknowns in the future and most of them are frightening. Our goal should be to minimize the suffering and maximize the enjoyment of living.

We are unlikely to ever get consensus on how to deal with this situation as many people have a strong vested interest in the status quo. However, if we do not try, there will be no progress.

I once heard an engineer say, “If it is working, it is not complex enough.” I was not impressed with his engineering and I do not want to apply his principle to economics. Let us keep it simple. The challenge is to get the best out of technology without the technologists telling us how we should live to meet their goals.

This post has focused on some of the negative features of our civilization. I want to continue to enjoy the positive things, like being able to write this weblog, but I also want to correct some of the injustices and uncivilized behaviours. Genius is 90 per cent plagiarism and we should look for good ideas wherever we can find them.
The hunting and gathering lifestyle appears to be a lot simpler than what we have and it also appears to be a lot more civilized. Let’s put the civil back in civilization.

Note: Once upon a time this blogger took a course in Economic Anthropology and since then I have frequently read books on anthropology and especially economic anthropology. Prior to writing this post I read the following books:

Affluence without Abundance: The disappearing world of the bushmen, By James Suzman, 2017.

Hunters and Gathers: History, Evolution and Social Change, Edited by Tim Ingold, David Riches and James Woodburn, 1988.
Politics and history in band societies, Edited byEleanor Leacock and Richard Lee, 1982

Daydreaming reform: basic income, money and work ethic

To say we face an economic crisis is hardly controversial but the crisis is so severe that the reforms needed make Karl Marx look a part of the establishment.   The changes needed are radical beyond the comprehension of many people as they require more than just tweaking what we already have.

The basic problem is that we have used up most of the easily accessible energy and mineral resources.  Those that are left require so much energy to extract that they are almost useless.  There have been other times in economic history when humans have had to cope with resource shortages but these were temporary as more resources were waiting to be discovered.  This time the problem is not knowing where the resources are located but the cost/energy required to extract them.

The three basic changes are a basic universal income, the way in which we create money and overcoming the work ethic.  To accomplish anything all three reforms will be needed at the same time.  As there are so many conflicting vested interests this will be an impossibility.  Prove me wrong.  While these appear to be radical ideas, this writer did a degree in conventional economics at the University of British Columbia and has a strong commitment to a market economy.   The radical comes from wanting a market economy when a major feature of the current economy is that competition is restricted by government legislation.

The basis for an income scheme is the agricultural surplus resulting from all the technology which has developed at least since a farmer discovered he could produce more by using a collar on a horse rather than a harness on an ox.  Through the centuries the elite have confiscated most of the surplus with the use of force. Since the industrial revolution psychological tactics such as legal restrictions on competition,patents, copyright and the work ethic have been less messy.  The need for labour to man the empires has allowed workers to claim a share of the surplus.  As robots replace workers it will be interesting to see what happens to the agricultural surplus – and workers.

This writer would like to see the agricultural surplus treated as an inheritance to be shared equally by all the people of the world.  The way to distribute this inheritance is with a basic income scheme.  Some ideas as to how to do this are in the free e-book, Funny Money: Adapting to a Down economy, available from this weblog.

One of the advantages of an income scheme is that individuals would be able to take action on social and environmental issues related to their employment.  Workers would no longer have to work for exploitive employers and people who disagreed with a firm’s social or environmental policies would not have to bite their tongues for the sake of a pay check.

There is an old saying that money is the root of all evil.  When I studied the economics of money and banking I decided it was the lack of money that is the root of all evil.  I now think the way in which we create money is the root of all evil.

In most of the world’s economies money is created when the banks  make loans and because banks are generally required to keep a fraction of their deposits on reserve most loans become additional deposits in the banking system.  This is called fractional reserve money.  It is a problem because loans that have to be written off reduce the amount of money available, with a multiplier, and because interest is charged on the loans.  A sudden reduction in the money supply is the most difficult of all economic crises.   If all the loans outstanding had to be repaid at the same time there would not be enough money to repay the principle and the interest.  We would recognize the problem as a financial crisis.  This is why I titled my book Funny Money.  I encourage you to get a free copy from Smashwords for an explanation of this problem.

Money is useful because it is a tool which facilitates the exchange of goods and services especially when a lot of our exchanges are with strangers.  We have traditionally used gold or other material items as a basis for money.  Some people still talk about the gold standard although fractional reserve money is based on faith rather than gold.

A few small groups around the world have established what they call Local Exchange Trading Systems.  These people base their exchanges on credits.  You get a credit when you sell a good or service to another member and use credits when you purchase something.  I like this system because the credits are a form of money without the problems of fractional reserve and interest.  In my book I propose we adopt a national exchange trading system and combine it with credits from a guaranteed income scheme.  This would be using money as a tool rather than a commodity.  See the book for more details.

Adopting this system would be revolutionary because it would be a transfer of decision making power from bankers to individuals.  Under fractional reserve bankers get to make decisions about what projects get funded and who gets to do them.  A National Exchange Trading System would allow individuals to make these decisions as they decided what to do with their share of the agricultural surplus.  Some of us would use our share to vote for zero economic growth and more leisure activities.

Many people feel guilty if they do not work continuously.  The work ethic and a distribution of the agricultural surplus via employment are the main motivators that keep our economy going. But the truth is that we do not need everyone to work full-time to provide foods, shelter and entertainment to everyone.  Most of the work people do is work for the sake of work and to maintain the empires of the one per cent.

The bushmen of the Kalahari desert in Africa are/were known for not being interested in material things and for not working hard.  But as hunters and gatherers they had no need to store food.  Any day of the year they could go out and collect the food they needed for that day.  When our ancestors moved to agricultural pursuits, they had to store food and this meant working at least at some times of the year.  We have now taken this need to an extreme.

One of the reasons work is so important is that most of us get our self-identity from our employment.  To save our resource base and to preserve the environment we will have to get our self-identity from other activities.  How about a leisure ethic which encourages people to perform operas, write poetry, write economic weblogs or many other useless things.

This blogger keeps by his computer a little statue of the Laughing Buddha to remind him not to take life too seriously.  Most of the time it works but when thinking about the current economic outlook it is hard to laugh.  Most of us think and act in our own short-term interests as opposed to the long-term in interests of our selves or our communities.  So long as that holds true the outlook is for a lot of human suffering.  But  what does it matter.  To quote a famous economist, in the long term we will all be dead.

 

The next economic crisis: financial or real?

A few people are prepping themselves for the next economic crisis and speculating about what will cause it.  This blogger thinks there are several possible causes.  It is about 99.99 per cent certain there will be another crisis.

Even if somebody does make an accurate prediction it will probably do no good because there are so many vested interests there will be no consensus about the cause and about what to do to prevent it.  However, for some of us there is some fun in trying to think out economic problems and we might be able to improve our understanding of economics.  So, here goes.

The possibilities are for the cause to be within the financial system or for the cause to be within the physical or real side of the economy.  As the two are interconnected it may be difficult to determine just what is happening.

Problems within the financial system relate to money. Either there is too much money or not enough.  Ideally the available money supply needs to be just right for the quantity of goods and services exchanged and as this varies it needs to be flexible.  When there is too much money available there is potential for inflation and this is a problem for people with invested savings as they lose some of their purchasing power.  Deflation is a problem for lenders as the money they have loaned out will have less purchasing power when it is returned, if it is returned.

The really serious problem comes when there is not enough money as this curtails economic activity.  Most of the money supply is based on loans made by the financial industry and involves a multiplier.  When the industry has to write off a large quantity of loans, as with the recent subprime housing crisis, the money supply goes down, again with a multiplier effect.  Without money the exchange of goods and services becomes difficult and lots of people lose their jobs. Big time suffering.

Currently it appears there is lots of money floating around the economy.  Lots of firms are reported to have piles of cash on hand and are probably unable to see investment opportunities.

On the real side of the economy, many people assume there are lots of energy and mineral resources available and therefore no physical restraints on the exchange of goods and services.   This may not be true.

A common argument is that as resources are consumed higher prices will bring on a greater supply which happened with oil and lots of minerals.  The problem is that they also require more energy to extract which reduces the energy available for other activities and at some point the value of the energy exceeds the value of the resources.  This blogger figures there are lots of energy and mineral resources available on the earth’s crust,  but the cost of getting them makes them useless.  This could be changed by technology and the decreasing cost of solar energy will make the high cost of oil irrelevant.

Children, workings in a vegetable garden.

However there may be some economic  disruptions in the transition.  How much oil infrastructure will have to be written of and what would that do to the money supply? Also there are all the other minerals for which there are no clear cheap substitutes.

This guy fears the greatest threat to our economic well-being is from resource restrictions on the physical side of the economy.  An even greater threat is that too many people will not see the problem because they analyse problems only in financial terms and will be looking for solutions on the financial side.  Changes in how much money is available or even in the way in which we create money will not add to the resource base or make it cheaper to extract them.

I fear for the future of my grandchildren.

 

 

 

Recycling is not enough

In this corner of the world recycling is almost universal.  Plastics, glass, metals, compost and drink containers are separated from the rest of the garbage.  Some people also take their own shopping bags to the supermarket.  The exceptions are that we have not mastered the technology of recycling energy and most of us continue to drive a lot

Unfortunately we are still experiencing environmental degradation, inflation and unemployment.  Recycling is not enough.  Its main function is to allow us to feel we are doing something. It allows us to ignore the real issues –  population levels and values.

I believe the most important way in to protect the environment is to reduce the number of people trying to live on this planet.  There are just too many people and I do not like the idea of saying some people should not have the same standard of living as others.  Who is to decide who gets shorted?

I also recognize it is a near impossibility as we cannot tell people not to have sex and not to have children.  What are the consequences of not taking action to reduce the population?  When the Europeans came to North America they brought with them some new diseases and close to 90 per cent of the native population died.  I understand there is some archaeological evidence that there was a similar population reduction in the Mediterranean some millenia ago.  If these precedents hold for us, then there is likely to be one hell of a stench.

We also need to get over our fear of death as so much energy and resources go into prolonging life.  Quite a few years ago The Economist reported that 80 per cent of health care spending is in the last six months of life.  I do not want to go into the 80 per cent and I hope that when my time comes I and those close to me will be able to accept it gracefully.

The other big challenge to protect  the environment deals with values many of which are a part of our committment to economic growth.

According to anthropologist James Suzman who recently published the book Affluence without Abundance, the most successful and long-lasting civilization was that of the Bushmen of the Kalahari desert.  These hunters and gatherers “worked” only ten to 15 hours a week.  As they relocated up to ten times a year they had little interest in material things and their society had high equality.  We cannot all go back to being hunters and gathers but we can choose some of their values and apply them to our daily lives.

If we really want to protect the environment then we should have fewer children, live in place, live a healthy lifestyle, have fewer and smaller toys, drive less, go easy on the travel and work as little as possible.  Recycling may make us feel we are doing something but it is not enough.

 

 

Trade, foreign exchange and big hamburgers

Foreign exchange and trade is hardly a sexy subject and it is one most of us would prefer not to think about. However, when people get excited about globalization or fear their jobs are threatened by trade, then we need to take it seriously.

Foreign exchange involves the financial transactions which go with trade with other countries.  Economics is a social activity and involves relationships even if some are very fleeting.  For any relationship to be satisfactory there needs to be a more or less equal two-way exchange.  This applies to trade with people from other countries.  Trade should be a two-way.

In analysing economic issues it is important to distinguish between physical transactions and financial transactions because sometimes the physical analysis gives a clearer picture than the financial analysis.  If this world had a perfect market economy each physical trade with a foreigner would be matched by a financial transaction.   Changes in prices would reflect changes in supply and demand and would be signals to producers to increase or decrease production or to even stop producing an item. This is true for domestic trade as well as international trade.

As exchange rates are based on supply and demand for currencies, financial only transactions distort the exchange rate and therefore distort prices. Not good.

An interesting approach to foreign exchange is the Big Mac index created by The Economist. I like this because it is based on a physical item, the big mac hamburger,  sold around the world.  If we had international perfect competition and everything were equal a big mac would cost the same in each currency.  The Economist compares the costs at current exchange rates to determine if a currency is over or under valued.

Obviously the world is not equal. Different countries have different values, different resources and different access to energy and mineral resources.

What happens if money is loaned or gifted from one country to another.  If the recipient uses the money to purchase goods or services from the first country, then the money becomes a part of the foreign exchange calculations.   If it is kept in foreign currency reserves,  it is removed from the money supply of the first country until it is used. If the money is exchanged and used to purchase local goods and services, it distorts the exchange rate.  If the money is kept and used to purchase local goods and services, it adds the second country’s money supply and subtracts from that of the first country.

Another complication is that a lot of people speculate about what will happen to the price of one currency in terms of another.  These transactions will be financial only in that they do not match exchanges of goods and services.  It could be that speculation smooths out fluctuations or they could distort prices.  It is hard to know as we do not know which transactions are speculative.  We do know that the volume of foreign exchange trades is massive. This writer suspects that if all financial transactions matched physical trades there would be little fluctuations in exchange rates as changes would take time.

This blogger has spent a lot of time and effort in trying to understand the economics of money, including a degree at the University of British Columbia.  Foreign exchange and trade are difficult probably because there are problems in the way in which we create money.  For more on this please get a free copy of my e-book Funny Money: Adapting to a Down Economy.  One of the problems is that our way of creating money gives some people a lot of power and control over others.  Vested interests are difficult to deal with.

 

 

 

 

 

Why the joke should not be impeached

The biggest problem now facing Americans is the emotional fears of those of them who elected the joke currently occupying the oval office.  Getting rid of Donald Trump by impeachment or otherwise will solve nothing and may be even worse.

We have to give Trump credit for having the brains to get himself elected.  He identified some of the emotional issues which are giving Americans nightmares and promised to deal with those issues. Emotional fears are  difficult to deal with and it is probable that his proposed solutions will not solve anything.  But at least he is trying and people appreciate that.

This blogger thinks the fears are legitimate.  I believe the current economic turmoil is because we have used up the most easily accessible energy and mineral resources.  We are going to have to adapt to life without the abundance to which we have grown accustomed.  Most of us realize something not good is happening but we do not know what.  Many people are afraid.

One of the ways to deal with fear is to blame other people, especially people who are different.  Lots of people around the world, including Americans and Canadians, are doing this.  It is unfair and morally wrong but it is also natural to blame others for our problems. It is not only right-wing people who are afraid.  Bernie Saunders in the United States and Jeremy Corbyn in Britain have also attracted a lot of support with emotional appeals.

The best way to deal with these fears is to deal with the source problem.  However the problem is so serious and so difficult there is probably no solution.  We might be able to relieve things a little by changing our values, the way we create money and introducing a basic income plan.  These things would have to all be done at once and that is expecting a lot of human beings.

Another alternative might be to attack emotions with emotions and try to point out how people will themselves be hurt by blaming others.  Fighting fear with more fear could be dangerous.

Americans have very clear rules for replacing a president whose term is incomplete.  Whoever replaces him will be looking for support from the same people with the same emotions.  It might be better to have a joke in the Whitehouse rather than a serious far-right conservative.

The best way to deal with Donald Trump is to ignore him.