Future of Work

work future

This is the last chapter of my book. To those who have read this far, I am forever grateful. (If anyone wants to read the Introduction and Conclusion, just leave me a comment and I’ll email it to you. For now, I won’t be posting it online.)

Sub-chapter #20, of Chapter #5, Technology, of my ongoing rewrite and open editing process Random Rationality: A Rational Guide to an Irrational World. I would greatly appreciate any feedback, corrections, criticisms, and comments. If you want the full PDF of the book, then you can download it by clicking here—if you provide constructive criticisms in return, and live in the US, UK, or EU, then I’ll ship you a paperback copy of the book free of charge when it’s published. If you wish to read the previous chapters in one convenient place online, please follow this link, and lastly, thanks for reading!


 

A FUTURE OF WORK

Last but not least, what might become of our jobs? If we play our cards right, one day in the near, or far, future, jobs—as we know them today—will become obsolete. Let’s find out why, and why this will be a good thing, perhaps the best thing to ever happen to humanity.

We are partway through a trend that once concluded, will result in a new renaissance (last time, I promise). An event that will be remembered for all time as the defining point when the potential of our creativity was unbounded by the limits of society and a new global culture was born.

First off, a bit of history. For all of humanity’s existence, we’ve had to work to survive, just as all other animals do. Whether that meant hunting for food, tending to crops, trading for goods, foods, or gold, and so on until we find ourselves working the 9-to-5 in the here and now—well, the lucky amongst us. By the way, this is how work will change. It will move from becoming a necessity to a leisure.

During this epoch, a trend has slowly, quietly and unnoticed, unfurled in the background: the ratio of man-hours relative to productivity or work done. From the start of civilization until the Industrial Revolution, a span just shy of some seven-thousand years (depending on which history book you read), this ratio has stayed fairly constant. That is, the amount of man-hours vs. work accomplished didn’t deviate far from the historical norm.

Of course, civilization still prospered in some cases and progress was evident. This progress, while not increasing the work done per person, increased the quantity of workers in a concentrated area, often resulting in slavery, the moral black mark on our history, and all those extra hands were able to carry out those gigantic tasks, such as building Rome, Washington DC, and other such cities of antiquity. Though contrary to popular belief, the pyramids of Egypt were not built by slaves, but paid Egyptian laborers.

When the Industrial Revolution kicked off in the mid-to-late nineteenth century, this ratio started positively increasing. That is, the same amount of man-hours constituted increased work, otherwise known as Productivity Growth (PG). This was due to the machines and industrial processes created: steam engines, coal plants, light bulbs, medicines, and factories that became extensions of our hands and minds allowing us to work smarter, travel farther, more productively, and in better health.

This trend is responsible for almost everything we have today. Technology started replacing human labor and this trend has continued to this day, allowing us to have that little thing we call comfort, and this trend, unhindered, will continue to progress further and exponentially faster with time as it has been since it began. None of the tragedies of the 20th century even put a dent in exponential increase of computational progress—that includes WW1, WW2, The Great Depression, and others.

We went from manual labor farming to horse-drawn ploughs to tractors, to automatic irrigation and soon to underground farming. From hauling stone slabs on sleds, to the wheel, to the horse-drawn cart, to the electrical car, to the internal combustion engine, and hopefully back to the electric car soon. I know what you’re thinking, yes the electric car was invented first and these are just a few examples among many thousands.

This positive increase, or negative depending on your viewpoint (either short or long-term), which depends on the type of job you have, has an ugly consequence. People have been losing their jobs for the last 150 years as machines replaced their profession; from the elevator man to the soot-shoveler, to the autoworker to many, many others.

Though so far, there has been a technological caveat. As society has progressed, new jobs have been created, continuing economic expansion. However, this trend of new jobs replacing old jobs is beginning to stutter. In 1993, there were 194 million Americans in the labor force, and by 2000, this number had increased to 213 million. During these eight years, 22.7 million jobs were added along with the 19 million new workers leaving a surplus of 3.7 million jobs. Between 2001 and 2008, labour participation went from 215 million to 234 million people, but with only two million jobs added in that same time period. A deficit of 13.7 million jobs, and since 2008, we have lost just over half-a-million more jobs (4.317 million lost vs. 3.765 million regained in mid-2012). So the total deficit is 14.25 million jobs, and this is just in nineteen-years.

Every month, the labor force expands by approximately 125,000 people due to population growth, so that’s 125,000 new jobs that the economy needs to add, just to keep the unemployment rate steady. By 2050, the labour force is projected to be 45% larger than today, or approximately 339 million people. That’s more than 100 million new jobs that need to be added by then, just in the USA. In the rest of the world, the population is projected to increase by at least two-billion, and perhaps three-billion according to UN projections. Where are the jobs going to come from? From nowhere it seems.

Counter to the population increase, the technology we are creating (and which shows no sign of stopping but increasing) is only getting exponentially better, smaller, and smarter to the point where it will literally be able to out-think and out-flex us. This shift, this realignment, this relentless progression of automation will continue until the only thing left for the human mind to do will be to wonder, imagine, and explore the Universe—which also happens to be the things that we are best at. Eating, drinking, and sex not withstanding!

[Carl] Bass points out that we are now at a great inflection point in the automation of labor. Extraordinary breakthroughs in the areas of artificial intelligence, robotics, and digital manufacturing are all converging upon one another yielding a world full of technologies plucked right from the world of science fiction.” [Emphasis mine] ~ Aaron Frank (Writer)

We are going through an epoch unseen before in human history. We are in the midst of transitioning from a manual-labor society to a knowledge-generating, machine-operated society. We‘re currently in the transition period, because as is plainly obvious, we still have billions of people working, though many of them struggling to scratch a living out what they are given, or able to take. But the underlying trend is undeniable.

But there are those who wish to roll back the dial, or want to stop the buck here creating a static society. Of course, being oblivious to the fact that every static society has collapsed, because problems invariably crop up and a static society cannot hope to innovate their way out of them. The American economist Robert Solow earned a Nobel Prize for showing that economic growth does not come from people working harder, I.e, just working longer hours, but from working smarter. By getting more from less, and in the process freeing up time to do other things impossible beforehand. Stopping or slowing technological growth, and implementing employment for employments sake is a straight path to disaster, reminiscent of 20th century communism.

Back to basics. The reasons for the increasing mechanization in society are simple. It costs much less to have a machine do a person’s work than a person, especially with the increasing cost of labor, and companies having to contend with trillions of new currency units floating around the world and doing everything in their power to not raise their prices, so they decrease costs. Machines have no health insurance bills, don’t get sick, need vacation days, smoke breaks, and aren’t distracted by their inner monologue, along with various other factors that retard productivity. These are all ancillary reasons, however. Many of the background processes of our world today can only be done by machines and  artificial intelligence, such as aviation, computer science, heavy industry, and even in finance.

While the main rationale often used to replace a person with a machine is to improve a company’s profit margin and time to market, and not the automation of society, does not make the result of these decisions any less real (or inevitable).

In the past, as people have become displaced from one profession, they have moved to other professions that could not be automated or that were created due to new technologies invented.

In the twentieth century, as manufacturing jobs were becoming mechanized, factory workers moved en masse into the services sector. For the last fifty-odd-years, the services sector has exploded, most notably in the USA, but also in much of the developed world, be it the restaurant industry, or the financial services world. The services sector is now beginning to bloat, and it simply cannot absorb the mass numbers anymore. Parallel to this, the wheels seem to be coming off the major world economies, and fourteen-million jobs have been lost in the last eleven years alone in the USA, putting an extra squeeze on companies who now see automation as a way to reduce costs and improve their profit margins.

Foxconn, manufacturer of Apple’s iPads and iPhones, are planning on introducing one million robots to replace 100,000 workers in the next three years. The irony in this is that as more and more people are laid off and replaced by machines, the fewer products the company can sell in the long run. For a period of time, the company might improve its profit margins, as the rest of society hasn’t yet succumbed to this transitionary period, but this can only be temporary in nature.

As more and more of society’s jobs are automated—and it will happen one way or the other, for the consequences will be worse than allowing it but I’ll get to that soon—has the effect of removing the employees as consumers from the market. In a free market, employees, consumers, and employers are interchangeable; they are all one and the same. These former employees will no longer have the earnings to buy these increasingly mechanized products or services. Thus, we (theoretically) will reach a point where we can produce almost everything via automation, but there will be no one to buy the products (of course, we’ll never actually get there, as something will give beforehand).

What is going to happen to the millions of factory workers when 3D printing becomes affordable, fully capable, and factories a twentieth century relic? To miners when nanotechnology is economical and we can turn any material into anything else, and build anything we dream of? To farmers when we start growing our food; fruits, vegetables, and IVM underground in luminescent rooms, allowing it to grow at a fraction of the time needed above ground, not to mention land owners (40% of the arable land in the world is used for farming or meat consumption, which will become  essentially valueless), and then to the pesticide companies we’ll have no more use of, as food production now moved underground is out of the reach of insects? Not to mention the transportation companies that ship foods to market, and the factories that wrap and prepare the food?

These are all questions we need to be answering now instead of when the time comes. Otherwise, we’ll do what we always do when we come to something different; we’ll try to destroy it or vote into office, goldfish who want to destroy it for political gain. We aren’t exactly the brightest bunch when it comes to making decisions with our guts, instead of our brains, which is why history so often rhymes. I don’t think that any society could stop it or destroy this trend, even if it tried. If America were to outlaw technological progression, after a little while, the Chinese would be so far ahead that the American people would get shaky feet living under the yoke of a seemingly ever-increasing Godlike country on the other side of the world marching forward. Bullet trains, towering skyscrapers (they’ll be building the worlds tallest tower: almost 3000-feet, in ninety-days around the end of 2012, moon base, space station, electric cars and the list will go on). Short of full-scale nuclear war, or a worldwide dictatorship, the inexorable march of technological progress will continue. However, politics will stand in the way, and that may be a difference of maybe years, or a decade, between the society that was, and the society that will be. In the society that will be, where disease, cancer, and death are all history, a delay of even a few years could mean millions of people who should have lived but came up short. Consider for example, the controversy met with Golden Rice by anti-GMO activists and environmentalists around the world. Golden rice is a strain of rice modified to carry vitamin A (Beta-Carotene). A lack of vitamin A is estimated to kill one to two million people per year, of which 670,000 are children, as well as producing 500,000 cases of blindness, where one cup of golden-rice is enough to supply them enough vitamin A. Rice leaves naturally produce vitamin A due to photosynthesis, but the endosperm (edible part) does not, so scientists transferred two genes to make it do so. The new breed of rice had scientific tests performed, and was found that the vitamin A absorption was as good, or better, than other forms of the supplement. But anti-GMO activists successfully stopped its adoption and distribution to the parts of the world where it would have saved millions of lives per year! Think of the absurdity and stupidity of such a position. We were willing to put two modified genes inside a strain of rice, before the lives of millions of people per year, every year, until the situation is remedied because of some idealistic, bombastic, and shortsighted view of nature. Again, as we saw in the chapter, Future of Food, almost all our food today has been upended from natural selection as it is; it has been shot with radiation, hand-selected for breeding, and saved from extinction because of human intervention. The very process of planting crops is a slap in the face of mother nature, but no one is protesting farms, just the future of food, which they do not understand. And after all this, genetic engineering has not been stopped, nor can it, but the lives of those poor souls were indeed wasted. This is the inherent danger in rolling back or just delaying the wheels of progress; accidental genocide. There are many people who advocate the relinquishment of technological progress (as if such a thing were possible anyway).

The costs of many services, products, and food will continue dropping until one day they hit zero in terms of human energy input, and shortly after, almost zero from a material perspective. Once we are  at that point, we will have a choice to make, the biggest choice any society of humans has ever had to make, and with consequences that will span centuries and affect billions of human lives.

We can transition to a resource-based economy, where people are simply given everything they need or want at no cost since it doesn’t cost anything to produce from a labor standpoint, and with very little energy due to Moore’s Law of energy use—as computers increase in power, doubling every 18 months while halving in size and staying at the same price, the amount of energy consumed by them is going in the opposite direction, e.g., if the 2011 MacBook Air, had the efficiency of a 1991 computer, it’s battery would last all of 2.5 seconds, instead of seven hours. The difference is algorithmic in nature: better, more efficient algorithms doing more work in fewer cycles. What will be the point in money if nothing costs anything?

Or, the elite, or whichever section of upper-society comes into their momentary hold of power, whom are narrowly short-sighted to their own benefit (and think they know better), much as the rest of us are to our own benefit (and think we know better), will invent some other form of currency and keep the charade going round and round, convincing us that it is a necessary function of society to have government and classes. Go watch the movie In Time and you will get an idea of what could pass. I don’t personally think this will happen, but the situation cannot be entirely ruled out in advance, especially given what we’ve fallen for in the past. Just think of the French Revolution, they threw out Louie, and installed Maximilien Robespierre, who gave the world his ‘reign of terror’. Then they threw him out too, and installed the power-hungry Napoleon.

In such a world, where scarcity is no longer a natural function of the world, economies built on scarcity will (or should) break down. The function of price is to assign value to a scarce product; the more expensive the price, the more scarce the product, either by way of overwhelming demand, scarce materials, or high cost of production. Aluminum used to be worth more than gold, even though 8.3% of the Earth’s crust is infused with its ore, but the means of production were amazingly expensive and energy intensive, until electrolysis came along. The sciences and continually improving technologies have been nibbling away at scarce materials and the means of production for the last hundred-fifty years, making once-scarce resources plentiful. It doesn’t matter whether it is food, metals, silicon, electricity, or anything else. You name it; it is more bountiful today than yesteryear (perhaps except human reason).

So when we have the technology to remove the human element and increase yield to such a degree as to remove all elements of scarcity, what purpose will the free market have? What purpose will private industrial property have? Or any (by this point outdated) technology that allows you to have sway over another persons right to life? The key technological trend that has accompanied our evolving society, is that technology is both a resource-liberating force, and a democratizing force du jour. When the gun was invented, the poor peasant suddenly had a way to thwart the armored knight harassing him. Gutenberg’s printing press broke the stranglehold the Catholic Church had established for itself for over a thousand years, and the fax machine broke the Soviet Union’s monoploy on information.

Much in the same way that the threat of violence is illegal in almost all cultures today, so it will be so with the means of production in the future. There will be no benefit for a man or woman to own a technology that holds sway over others save for the sake of power, which may very well come to be regarded as a mental disorder in the future: a disruption to societies balance that cannot and will not be tolerated for the inequality, fear, and violence that may spring forth from it.

Think about crime today, almost all of which is motivated in one way or another, by money. Either directly in the acts of stealing, drug turf wars, or actual wars between nations over resources. Or indirectly, through the emotional suffering inherent in unequal societies, and the stress, cortisol, and lost family time to name a few effects. What will happen to crime? Person-on-person violence is at an all-time low, the twentieth century was the most peaceful century of human history (accounting for both World Wars), as shown by Steven Pinker’s TED talk, The Myth of Violence, and there is no reason, given future projections and technological progression, that it won’t dive even further.

Technology is accelerating at an exponential rate and will continue in such a manner for as long as human co-operation continues. Our current forms of politics, governance, and society cannot, perhaps will not be able to transition into such a futuristic society. We need new ways of governing that don’t conflict with the fast-changing means of production that will start changing in increasingly smaller periods of time, with each cycle bringing with it greater change than the last (the Law of Accelerating Returns).

Transitions are painful, an unfortunate fact of life. Especially for local and linear oriented biological life as are we. Not to mention we don’t deal well with change, which is why we tend to end up in societal systems for far longer than we should, and why history repeats itself with dictators, tyrants, monarchies,  economic fantasies, and republics of the people who end up serving the state first, the people enough to placate, and war after war needlessly conducted to the detriment and distraction of said placated people. As remarks one of America’s literary genius’s, Mark Twain “It’s easier to fool people than to convince them that they have been fooled.” A sad fact of the human condition. However, this will be the first time in the history of civilization that we will truly have an alternative, an option not bound to the fallacies and falsities that are inherently created when millions of people converge on a society with their dreams, desires, ego’s, and jealousies. Once we arrive at that critical juncture, we will have the ability to free everyone from the confines of manual labor and mindless repetitive work and set people free.

We will be able to truly provide everyone on this Earth with life, liberty, and the pursuit of happiness, instead of having them as words on paper paraded through the wheels of time as if they actually meant something.

A common point made in response to such claims, is that people derive meaning and purpose from work. Assuming that in a world where mindless work is not done, people would sit about the couch all day watching television re-runs of an age gone (since apparently people will stop making media). But this is a shortsighted notion. For one, people today do all kinds of things without the incentive of a monetary reward. Wikipedia and Linux are just two visible examples of thousands of volunteers contributing millions of man-hours freely to building something of considerable value. Aside from those, people of all stripes and colors regularly and without want or need of reward regularly read and write books, gather knowledge, learn, collect trinkets and widgets, exercise their body and mind, create art and media, and contribute to many millions of activities and hobbies. In a world free of the unnecessary (and time-sucking) jobs of today, we would have far more energy and time to focus such activities, as well as with our family and friends, and on other efforts we truly enjoy. Lifelong learning may become the new universal occupation.

“The role of work will be to create knowledge of all kinds, from music and art to math and science. The role of play will be, well, to create knowledge, so there won’t be a clear distinction between work and play.” ~ Ray Kurzweil (Inventor)

There is a lot of unnecessary pain and suffering in this world today, and there probably will be more before this transition is over, and yet more still if we collectively make the wrong choice. Though the pain of this transition, if done right, will be infinitely less than the pain of stopping or rolling back the wheels of progress.

Money may very well be a thing of the past one day. Here is to the future, and to the people and technology that will abolish human suffering once and for all. We can only dream for now, but the future is fast upon us. Without knowledge, wisdom, and a steady resolve, we cannot push into the future for there will always be those holding us back, either for immediate personal gain or an irrational fear of the unknown.

“Our species needs, and deserves, a citizenry with minds wide awake and a basic understanding of how the world works.” ~ Carl Sagan (Astrophysicist)

The Future of Food

Future of Food

Almost at the end, then my readers can stop getting annoyed at my incessant posting as I go back to my bi-weekly or monthly schedule. (Even I’m looking forward to that.) This is sub-chapter #18, of Chapter #5, Technology, of my ongoing rewrite and open editing process Random Rationality: A Rational Guide to an Irrational World. I would greatly appreciate any feedback, corrections, criticisms, and comments. If you want the full PDF of the book, then you can download it by clicking here—if you provide constructive criticisms in return, and live in the US, UK, or EU, then I’ll ship you a paperback copy of the book free of charge when it’s published. If you wish to read the previous chapters in one convenient place online, please follow this link, and lastly, thanks for reading!


A FUTURE OF FOOD

Food security is a very big deal these days, with many countries, most publicly the UN, trying to fix it to ensure future food security. Even my dad and girlfriend are helping, working at the UN Food and Agriculture Organization (FAO).

According to projections by the UN, by 2050, there will be at least nine billion people on this planet. Water demand will increase by 70-90% with current crop technologies. Agriculture, as it stands today, accounts for thirty-percent of human green house gases (more than the transportation, electricity, and manufacturing sectors, making it the single-largest contributor, as well as accounting for 70% of sustainable water use).

Each of these statistics is scary in and of themselves, and taken together, paint a bleak picture of the future of food and by extension, humanity. As a result, many countries around the world are actively implementing more of the same policies to ensure they get their slice of the pie, instead of embracing smarter technologies so that everybody gets a slice of the pie. (Did we need more evidence government is ill-equipped to deal with the problems of the 21st century?)

The Chinese, the Saudi’s, the Egyptian’s, and the Emirati’s, among others are buying up farmland in different areas of the world to supply food to their own populations. It almost sounds like they are trying to placate their people for fear of social unrest—undoubtedly the biggest motivator in revolutions past, and those ongoing in 2012 and 2013.

So where is all this extra food going to come from to feed these two billion extra hungry mouths, let alone the billion hungry people we have today?

It’s not like you can just grow food anywhere; you need certain types of soil, climate, sun-exposure, fresh-water, fertilizers, pesticides, tractors, plows, farm hands, trucks, and last of all, seeds. And those are only the vegetables. Animal-meat requires far more in resources: 15 oz of meat on average requires 100 oz of vegetable protein. None of that is easy.

Running any farm is a lot of work. Then there is the added factor that food today travels an inordinate distance before reaching its destination. Every one of the above factors is linked to the price of oil; from the petrochemicals in the fertilizer to the diesel that runs the tractors and trucks, to the delivery of goods to factories, to the packaging of those foods and re-delivery to distributors and then to supermarkets. Food is going to get very expensive the further we move away from peak oil, unless things are drastically changed. Thankfully, this is beginning to happen.

It is not a reasonable course of action to simply rely on big corporations and governments to solve the problem of these essential services. Especially as they mismanage our remaining resources and politically misprioritize urgent national agendas—well, from our perspectives, at least (climate-change has been on the agenda since 1992 with little—some may say, if any—progress since then).

On governments, people who usually don’t have a clue how things work have a funny habit of running for office in the latter stages of democracy, and people who want to use that ignorance to further a private agenda tend to surround them like leeches. Governments are also wasteful and prone to unending expansion, as Mother History tells us. As such, conscripting government is usually a dead-end, at least until after results are demonstrable by the private sector, where they’ll swoop in and claim some of the credit. This makes it easier to justify spending. It’s very similar to a tragedy that cost lives spurring legislation to be voted on. Before the tragedy; no politician cared. After the tragedy, they had to show they cared.

On corporations, let us not believe the over-generalized meme that all corporations are evil. The truth is more likely that some might be evil, others are good, and most are benign. However, individual corporate philosophies tend to favor maximizing profits in an ever-competitive and increasingly economically troubled world, and this does not bode well from a qualitative perspective with what we will want to put into our bodies. You are what you eat, and this author doesn’t want to be cheap genetically modified anything (without the relevant long-term scientific studies attesting to its safety), unless superpowers come with it. However, I make that statement with a caveat. Most people don’t realize that most food, even organic, is genetically modified. To be more exact, the process of natural selection by random mutation (evolution), has been co-oped by humans for ten-thousands years. We’ve been effectively breeding what we want into the plants, and leaving out undesirable traits. Genetic Engineering is merely the same process done on a condensed timescale. With our selective breeding, some of the plants we routinely eat would not have survived in the natural world; such as corn, which without us, would have gone extinct, though I hear of no anti-GMO activist pushing to let natural selection run its course for corn. In the beginning of the 20th century, mutation-induced radiation was all the rage (and still is), beginning in 1920 by Dr. Lewis Stadler at the University of Missouri and continuing still to this day in dozens of countries around the world. And thanks to this process, we now get to enjoy new varieties of rice, wheat, barley, pears, peas, cotton, peppermint, sunflowers, peanuts, grapefruit, sesame, cassava, and sorghum. In the words of William J. Broad of the NYTimes, “The mutations can improve yield, quality, taste, size and resistance to disease and can help plants adapt to diverse climates and conditions.” Radiation breeding co-opts natural selection and accelerates it (not adding or removing anything that nature wouldn’t add or remove herself), and has saved hundreds of crops around the world from disease, potential extinction, and thus people from famine. GMO however, involves silencing genes (nature often does no different), or inserting foreign genes, which is what scares everyone. However, there is nothing inherently wrong with the process, it is how it is used. Technology has always been a double-edged sword; it can be used for good or bad. But since it exists and is not going away, we must endeavor to push the corporations using it to focus it on the good side, not merely to ban it. This chapter may at times seem anti-GMO, though I have endeavored for it not to, but that is just selection bias—I talk more about the bad GMO’s than the good ones.

Cost-cutting of corporations is the biggest issue we have from a nutritional standpoint, with the plethora of unhealthy foods so prevalent in the western world and working their way into the developing world, causing obesity and diabetic health problems that ‘encourage’ economic expansion in the form of insurance and medical expenses—hardly frontier pushing. It is rather disturbing that eighty-percent of the 600,000 items in the US food supply are laced with added sugar. (I can’t help but feel that most anti-GMO activism is rooted in the false equivalence of cheap, unhealthy food with GM food. Indeed, you can engineer unhealthy garbage, loosely refer to it as food, and sell it, though that in no way, makes the case that all GM food will likewise fit under such an umbrella.)

In the end, a corporation’s goal is to reduce the cost of production, in the process undercutting competition. In food production, the methods used to achieve such aims (so far and in the majority) are deleterious on all save the short-term economic viewpoint our capitalism has seemingly devolved into.

On the production of meat: animals are kept rounded up in factory-farms their whole lives, never see the sun, are injected with antibiotics, often live in their own feces, and are pumped full of steroids and growth hormones. All while eating an unnatural diet that makes them fat and sick instead of strong and healthy. While these methods are detestable, it’s all part of cutting costs and providing to the consumer a cost-effective product. It’s up to the consumers to vote with their wallets. As far as the corporation can tell, their product is selling. And so far, it seems, people either don’t know yet,  are ok with it, or are unable to afford better-quality food. Not to mention that the practice of giving animals antibiotics (as well as human abuse of antibiotics) is causing normal bacteria to evolve into antibiotic resistant super-bacteria. In the next decade or so, if we are lucky, our current crop of antibiotics will cease being effective worldwide. (That is almost the only reason needed to overturn the meat industry: worldwide pandemic? No thank you!)

On the plant side, it’s much more cost-effective to plant a lot of one variety of plant than a multitude of different varieties as the industrial process can be streamlined to fit one crop type. As we produce more and more food, and as the farming business becomes ever more dominated by big agriculture (Big Ag), crop diversity is decreasing. And as we increase usage of arable land due to geographic reorganization, companies like Monsanto are genetically engineering plants to increase yield and resistance to insects to stave off naturally declining yields, which are only adding to the problem (think of the soil as a drug addict: petrochemical fertilizers are added to increase yields, but more has to be added every year as the soil becomes even more dependent on the fertilizer, as improper crop rotation is not allowing the soil to replenish itself naturally, and ever more amounts of fertilizer are needed). In India, 200,000 farmers have taken their own lives since 1997 because of the debt they have to take on to afford these seeds and fertilizers, and unable to pay back their debts, they end their own lives instead.

Decreasing crop diversity is dangerous in so many ways, as it is inherent in nature for a reason; everything in this world is susceptible to something else. The less variety there is within a particular species, the more likely its extinction is. There are billions of different types of fungus, bacteria, and insects that eat, affect, or infect different types of plants; some plants are resistant to some but not all. The danger in reducing our crop diversity is that it increases the chances that a singular cause can wipe out a huge proportion of our food supply, and mass famine would ensue.

Small farmers, such as the Indian farmers, contribute to this important crop diversity by virtue of being decentralized relative to each other and they are being driven out of business due to the economies of scale that work in favor of Big Ag. And Monsanto isn’t helping by not allowing farmers to re-use their seeds, eating into their already razor-thin profit margins, thereby increasing the dominance of the handful of companies that can afford them and the Roundup pesticide that only Monsanto sells, which only works with their seeds.

These few companies will—and basically pretty much already do—control our food supply with present processes and methodologies, and have little incentive to update their processes for as long as it is profitable.

A few examples of cost-cutting strategies used today:

  • Honey is cheap, ultra-filtered, and pollen-less to mask its origins. Pollen-less honey is not considered honey by the FDA (hint: shady companies in China)
  • Plumping chicken-meat with saltwater solution to increase the weight and therefore price (average weight increase is thirty-percent)
  • Meat scraps which would otherwise be thrown away are being glued together and sold as prime meat (yes, glued. Though the glue is not the problem, but the leftover scraps being misrepresented)
  • Farmed salmon are artificially dyed to make them pink, making it appear to be wild salmon that is considered healthier
  • Majority (75%) of the world’s olive oil is diluted with sunflower oil. Real olives only making up between 10-30% of the product

It’s all a bit depressing, but this chapter is titled, Future of Food, so let’s move on to the optimistic side for the positive news.

There are three new and exciting technologies and methodologies that will allow us to feed everyone with healthier, cheaper food while having a drastically smaller environmental footprint, perhaps even a surplus of food, which would alleviate the motherly induced guilt of having leftover food on the plate when there are starving kids somewhere else. In time, it might even lead to the demise of the multinational conglomerates of the food industry if implemented correctly, as food production would (or should) naturally move into the local arena. All of the following three solutions to be discussed are parts of what is called Vertical Farming (farming upwards in skyscrapers as opposed to outwards in land).

First up, the low-tech solution: aquaponics. It is, at its simplest, merely two pools of water, one with small fish in it and the other with floating pods in little pods, with plants growing out of them. The water circulates through the two pools in a circle-of-life manner. It can be in a spare bedroom, outside in a greenhouse, or on acres of space outside. It can be as small or as big as you like.

The fish poop in the water, and that water is routed to the plants, where the plants use the poop as fertilizer, cleaning the water to be circulated around back to the fish. In this manner, the fish aren’t poisoned by their own feces and have clean water to live in, and the plants receive free fertilizer, filtering the water, and grow.

Water is only added to compensate for what the plants themselves use, or the small amount of evaporation that happens. Aside from this, it is essentially self-maintaining and uses very few resources. It also becomes in time, an organic environment that supports itself, much as a lake does, creating a thriving ecosystem of bacteria and other life forms that support the healthy development of both plant and fish.

An aquaponics system uses about five-percent of the water that in-ground farming uses for the same output, has 90% less land requirements, uses electricity instead of diesel fuel (so it can be coupled with renewable energy if need be), eliminates waste, and even with the right kind of fish, can eradicate mosquitoes in a large surrounding area if its usage is widespread. All the while growing dozens of different types of fruit and vegetables from bananas to lettuce to tomatoes and many more.

Aquaponics is a cheap, economical, sustainable method of food production that anyone can learn and set up, either in a spare bedroom, backyard, skyscraper, or on a farm. No stage of production is utterly reliant on oil or fossil fuels unless that’s where your electricity comes from, and this can be just as easily converted to run using renewable energy sources. On top of aquaponics, there is also aeroponics (pioneered by NASA). Instead of plant pods floating on water and sucking up the nutrients expelled by the fish, a watery mist is used to deliver nutrients to the plants in an indoor environment that has the same benefits of aquaponics, using UV lights for the plants to perform photosynthesis. They are similar processes, though aeroponics requires more high-tech equipment than does aquaponics.

The second solution is a little on the high-tech side. In the Netherlands, a company called Plantlab has created an entire underground farm lit up by blue and red LED lights specifically tailored to each plant, such that it instigates the fastest growth possible.

It turns out that plant cells are more effective at converting certain wavelengths of light (in combination with carbon dioxide and water) to energy than others. The underground setup of this Dutch company is designed to maximize those wavelengths of light tailored specifically to each plant, providing the perfect conditions in every respect in order to get us the food we need faster, with less energy, no pesticides, reduced fertilizers, no tractors, no plows, or pollution, ninety-percent less water, and a fraction of the required labor. They also use plant science, mathematical models, and carbon dioxide models to regulate the fresh weight, dry matter, and developmental speed of their plants. They also use automation to control the climate so it stays perfect, and record thousands of data points for each growing cycle to distill and capture the most efficient patterns of growing. Pretty much a farm on steroids, using Big Data to create ever more efficient models of plant growth, nutrient feed, and food quality.

It looks like the effervescent fauna from Pandora in the movie Avatar, with fluorescent vegetables, herbs, and fruits abounding.

Above-ground farming is dependent on nature, and is surprisingly inefficient; from the water runoff, soil depletion, inability to grow at night, vast land requirements (forty-percent of the world’s land surface), geographical reorganization (contributing to desertification and droughts), and the oil-dependent machinery to plow, seed, and harvest the food. Then natural photosynthesis converts approximately nine-percent of the available light into energy, while Plantlab is able to currently convert approximately twelve to fifteen-percent, with a goal of eighteen-percent—doubling the yield, using a tenth of the land requirements and water, and no negative environmental impacts. Amazing!

Lastly (and luckily scientists didn’t forget about us meat-lovers), current research is pointing towards the inevitability of In-Vitro Meat (IVM) to accommodate those who will never, or can’t ever, give up their meat.

First, let’s look at the price we pay for meat today. The full price, not just the supermarket price, which doesn’t account for externalized costs such as CO2, environmental degradation, and so on:

  • Worldwide meat consumption was approximately 326,200,000,000kg of meat in 2011, and increasing every year, expected to double by 2050
  • Each kilogram of meat (2.2 pounds) requires 6.6 kilograms (14.5 pounds) of plant protein
  • Eighty-percent of the worlds antibiotics are used on livestock, and seventy-five percent of those antibiotics are not absorbed by the animals, leading to the evolution of super-bacteria, which will render conventional surgery obsolete in ten-years
  • Factory farms contribute negatively to surrounding environments by creating dead-zones in rivers and oceans (killing millions of fish), and are known to poison fresh-water supplies
  • Worldwide, livestock accounts for eighteen-percent of greenhouse-gases, 40% of methane gas emissions (twenty-five times more potent than CO2), and sixty-five percent of nitrous oxide emissions (three-hundred times more potent than CO2)

There is a growing organic movement in the West to move towards more sustainable practices. With meat, that entails switching to pasture-raised animals that have been fed real food (by real, food that they are evolutionarily programmed to eat, i.e., grass, not corn or grain) and have been given freedom to wander around in the sun. While this is a step-up for human health, it is not for environmental health. These animals generate more emissions (per animal) than those cooped up in the factory farm hell hole, and require even more land. We currently use forty-percent of the world’s arable land for farming and raising animals for meat consumption. If we switched to pasture-raised animals in the West (where we eat the most amount of meat), that forty-percent would most assuredly increase along with the environmental consequences that go with it.

So let’s start with IVM; first by detailing what it is. It involves growing meat using stem-cells that envelop and grow around a string of animal-tissue (this is what nature does if it sounds gross, using DNA instead of tissue). Scientists take a string of tissue from an animal painlessly (and without killing it), from an area such as the rump or breast or any such desirable area. Simultaneously, they’ll extract the animals own stem-cells, or reverse-engineer stem-cells from other cell-types (a Nobel prize was given out for demonstration of this process in 2012), and put the two together in a scaffolding that binds them. The stem-cells naturally take on the exact genetic properties of the meat, and begin to grow out onto a biodegradable or edible scaffolding, which feeds nutrients into the meat, and stretches and twists it, stimulating muscle development and increasing tissue-strength. The result? A steak, chicken breast, or pork sausage indistinguishable from a cut of meat that came from a living, breathing mammal. And this is where some get a bit confused, it will actually be indistinguishable at a genetic level; it won’t be imitation meat, or fake-meat, but real meat!

Once we get over the fact that IVM is oddly disembodied, we’ll be thankful that it doesn’t shit, burp, fart, eat, over graze, drink, bleed, or scream in pain.” ~ Humanity+

The only way that this process differs from nature, is it’s done without the biological machinery of two parent animals, using human-engineered machinery instead. Otherwise, it is the same process that nature uses. The mother and father animal pass on their DNA via egg and sperm, and nature employs stem cells and nutrients to grow a new animal that’s a genetic variant of the inputted DNA. We’ll take a tissue sample of an animal along with its stem-cells, and create more tissue just like that without artificial chemicals, antibiotics, possible transmission of disease (bye-bye mad cow disease and salmonella), and without the waste and pollution that current practices emit.

In-Vitro Meat Facts:

  • Reduce energy use by 7-45%
  • Reduce greenhouse emissions by 96% (the emissions that remain can be used to generate electricity potentially allowing 100% reduction)
  • Reduce land-use by 99%
  • Reduce freshwater use by 96%
  • Genetic manipulation to speed up life-cycle or ratio of edible meat to weight would be unnecessary
  • No more outbreaks of swine flu, mad cow disease, avid flu, tuberculosis, brucellosis, or any other animal-to-human plagues
  • No more unnecessary suffering for animals and people like. There’ll be no need to kill animals, and the transmission of diseases to humans will essentially cease

Coupled with agricultural vertical-farming, forty-percent of the Earth’s arable land currently utilized for agricultural and livestock purposes, could be returned to nature increasing biodiversity, pollution sequestration, and perhaps put a damper on the sixth great extinction, occurring overwhelmingly due to habitat-loss (a Belgium-sized chunk of the Amazon rainforest is cut down every year to be used as grazing grounds for cows to name one example among many). All that is being done with IVM is the same process and outlook humanity used to invent and propagate agriculture some twelve-thousand years ago. That is, appropriating nature’s laws in such a way as to be conducive to humanity, and which will, unlike with agriculture, reduce our ecological and environmental footprint. Healthier humans. Better off animals (and less disease). Happier planet! Who could object to that?  More pointedly, who’d want object? There will come a time soon when IVM becomes economically competitive with slaughterhouse-steaks, and I’ve a feeling people in the future will look upon us as barbarians for killing our food. Even Winston Churchill saw it coming six-decades ago.

“Fifty years hence, we shall escape the absurdity of growing a whole chicken in order to eat the breast or wing, by growing these parts separately under a suitable medium.” ~ Winston Churchill (Former Prime Minister)

Very soon, we will be able to economically grow any type of food locally using climate-controlled, 24/7 underground/indoor farms and save all that energy we currently use shipping exotic foods from one side of the planet to the other, on more productive pursuits.

This food revolution is long overdue. Above-ground farming has a cost, from increasing desertification, to agricultural runoff creating dead zones in our oceans, plus the inordinate amount of energy required from start to finish that drives up the base product that our economies run on: oil.

In late 2012, Singapore unveiled its first Vertical Farm (VF), growing half a ton of vegetables per day, at just 10-20 cents higher than conventionally farmed produce shipped in from overseas, with a goal of two-tonnes of fresh, local chemical-free produce by mid-2013. The VF uses 120 twenty-feet tall rotating cylinders, and is rated at between five to ten times more productive than agricultural farmland per square foot. With just a small-scale implementation, the price differential is astoundingly small. Imagine how cheap it would be on a larger scale, when economies-of-scale takes over?

The traditional farm may very well become a distant memory, as it moves into skyscrapers, people’s homes and into underground basements in various locales around the world in cities providing fresh, chemical-free, cheap, and local organic food all year round without the waste or the environmental degradation that accompanies traditional agriculture. This will simultaneously alleviate the concerns, often unfounded, of anti-GMO activists, of our bodies, of our dear planet Earth, and our wallets.


Note: the book is fully sourced, but because of the writing program I use, the links don’t transfer over to WordPress, and I can’t be bothered inserting them in one at a time. The final book will have all the relevant sources in the proper locations.

Crony Capitalism

This is sub-chapter #16, of Chapter #4, Economics, of my ongoing rewrite and open editing process Random Rationality: A Rational Guide to an Irrational World. Would greatly appreciate any feedback, corrections, criticisms, and comments. If you want the full PDF of the book, then you can download it by clicking here—if you provide constructive criticisms in return, and live in the US, UK, or EU, then I’ll ship you a paperback copy of the book free of charge when it’s published. If you wish to read the previous chapters in one convenient place online, follow this link.


CRONY CAPITALISM

Getting depressed yet? Hold it in; we are almost at the positive chapter. Let’s talk socioeconomics. The social system that we live in today is not the free market, otherwise referred to by its derogatory term of capitalism, given it by Karl Marx, father of communism.

So what are we living in? To determine that answer, let us go through the options one by one and see if we can find out.

The free-market is an anarchic system where capital is deployed with the intention of producing more capital. Individual liberties regarding to purchasing, selling, and trading are all legal, with individuals taking responsibility for their own actions with their capital, and economic decision-making decentralized with government ensuring rule of law, enforcement of contractual obligations, and foreign policy.

In socialism, there is a belief in equality via redistribution. The people (government) own or heavily influence the means of production, but individuals are allowed to own property.

Then there’s communism, where the people (government) own both the means of production and everything else too.

Finally, we have fascism. An extreme right-wing form of nationalism, predominantly militaristic in nature, and with industry and government in collusion, with preferential treatment given to a military-industry complex at the expense of the citizenry served with a cherry of forced national identity on top.

Now, before some get their knickers in a twist. What I am referencing above are not the textbook description of these ideologies, of which none have ever existed in the entirety of our history. There never has been a government-less communist state, nor a perfect socialist state, and we inch ever further away from the free market day by day (though the fascist governments seem to be the closest). Rather what is referenced is the layman’s viewpoint, the distorted ideals that are alive today in the minds of billions around the world, including myself. I do this because very few people actually know what Communism is, likening it to the USSR, ditto for Socialism, likening it to Europe, and likewise for the Free Market, thinking it is America. Of course, the above descriptions are also drastic oversimplifications, but given one line to describe them, I believe they are apt.

So to bring it full circle, and as is plainly obvious, we live in the stepchild of all four of the above models:

  • Communism for the bankers in the form of the free $7.7 trillion dollars they received
  • Socialism for a few corporations (e.g. auto companies) and the poor via redistribution of wealth
  • Fascism for the military industrial complex using deceit and obfuscation to justify, or prolong ongoing wars
  • Free market for the middle class

Before continuing, I want to say I’m not complaining about the poor’s social net. They need help, most of them are there through no fault of their own, and most of them are kept there by the policies of the political class exacerbating and the extenuating economic hardship bought about resultantly. Society essentially functions as a singular super-organism, with each cell dependent on other cells. That is, there is no such thing as an individual doing everything on their own, so keeping everyone in health is beneficial to the super-organism overall (humanity). Now back to my main point, it’s the rest that is problematic, save for that last one—but first, let us go on a separate but related tangent.

Death is a very crucial part of life, as it is also in the free market. Quite fitting that the best economic model we have created mimics the nature we live in. With death comes the opportunity for change, to evolve, to update, and to attempt to cross the Rubicon that perhaps once was impassable, with the tips, tools, and tricks that we learned from our forefathers trying, and dying.

The role that death plays in evolution and the free market cannot be overemphasized, and this may not do it justice.

Without death, evolution is meaningless, and, therefore, single-celled life would not have evolved into multi-cellular life and everything else here today. So if we have a system that favors a select few, such as the bankers, the military industrial complex, etc., which prevents them from dying or instigates growth beyond what would be naturally possible; it creates rot, distortions, impedes natural progress, and consolidates money where it wouldn’t ordinarily go, thereby preventing access to it via honorable means, exacerbating poverty, joblessness, and wastes resources on problems that don’t exist. As such, lessons aren’t learned that need to be learned, and progress isn’t made that would ordinarily be made.

We are experiential creatures; we learn through the act of experience. This has always been the case, and will be for a very long time; there’s no going around it, and there is very little difference between that fundamental truth on an individual level, or at the level of an economy full of many millions of people.

The invisible hand of the free market is not perfect, but neither are we; and it is damn sure better than the central hand of bureaucrats who think they know better, but invariably don’t.

The status quo that they perpetuate is very dangerous. Keeping the status quo in place is actually, in real terms (since nothing on this planet exists in isolation), a regression. Much in the same manner that a bank’s savings account might pay one-percent interest, but if inflation is three-percent, then your yield in real terms is −2%. You’re going backwards. That’s the status quo!

The rot of stagnation is the downfall of empires. It begins when access to opportunity depends more on existing wealth and connections than hard work and talent, as economist Daniel Altman writes (though I am putting my conclusion on top of his analysis). Think about the Roman Empire, or the Ottoman Empire, or any other past empire. Think about their beginnings: nimble, fast learning, quick to adapt, and above all, persistent and meritocratic. All qualities responsible for their ascent to greatness, or at least, contextualized superiority.

Think about where they were at the end of their reigns: gigantic governments with bloated bureaucracies preying upon the lower classes, viewing them as inferior, and stifling the innovative, free forming of ideas and inventions, and penalizing criticism for fear of losing their momentary hold on power.

Not a single empire in the history of civilization has stood the test of time. What is the single factor present in all of them? People, many of whom relish the status quo—whether the empire is religious, communist, socialist, royal, feudal, or republic in nature, it has been bound for failure as soon as one individual successfully makes the case that static (stagnation) is preferable to dynamism!

It’s this pathological need to control (and corrupt) the normal, changing environment. It’s the existential threat with our constant desire to meddle (meddling involves both stopping change or changing stability, though here I am referring to the former), which carries with it both positive and negative consequences. Positive in that we build civilizations, technology, medicines, and everything else that makes life easier to live now than was the case 100, 1,000, or 10,000 years ago.

Yet be that as it may, we are, and always have been, easily corruptible beasts, and you need only look to our seven-thousand year civilized history to see that every governmental model ever tried has failed with disastrous consequences for all involved, with the brunt of the pain upon the lower classes, due to the self-serving nature of the upper classes, the so-called educated class, due to their futile  efforts to elongate their momentary ascension, and of course, also hurt themselves in the act, yet, our politics has scarcely changed in thousands of years. Does not Einstein’s quip ring true?

“Insanity: doing the same thing over and over again and expecting different results.” ~ Albert Einstein (Physicist)

Quick note: our democracies have evolved, however the role of the politician has not. We like to think that we are smarter than those who came before us, and in some regards we are, but we remain just as greedy, ignorant, and oblivious as our predecessors concerning the singular issue that affects us all the most and by which a society lives or dies; government (more specifically, political control of), its responsibility, and the status quo it futilely holds onto.

This is why we live in this crony capitalist society, moving ever further away from the free market, the one thing responsible for our quality of life, undergoing a slow death as we move ever closer to the distorted reincarnations of socialist/communist models, and why a movement akin to Occupy Wall St is long overdue by several decades, though some of their ideals are a bit distorted. We shouldn’t move to overthrow the free market; we should aim to re-instigate it, with social policies rooted in empirical study and objective analysis, as opposed to bias and pandering (following on from the social sciences and AI component in Fixing Politics).

The more numerous the laws, the more corrupt the government.” ~ Gaius Cornelius Tacitus (Historian)


Europe’s Achilles Heel

europe's achilles heel

This is sub-chapter #15, of Chapter #4, Economics (Three-Quarters of the way there), of my ongoing rewrite and open editing process Random Rationality: A Rational Guide to an Irrational World. Would greatly appreciate any feedback, corrections, criticisms, and comments. If you want the full PDF of the book, then you can download it by clicking here—if you provide constructive criticisms in return, and live in the US, UK, or EU, then I’ll ship you a paperback copy of the book free of charge when it’s published. If you wish to read the previous chapters in one convenient place online, follow this link.


EUROPE’S ACHILLES HEEL

The Euro, the official currency of the European Monetary Union (EMU) has been in place since 1999, and up until 2008/09 was functioning pretty smoothly. Countries that participated in the EMU (seventeen countries out of twenty-seven countries in the European Union) saw their overall GDP during that decade rise, everybody got along, and politicians were celebrating their grand experiment in unification and big government.

Of course, this wasn’t because bigger government is better, but because economically weaker parts of the EU, like Greece and Portugal were able to borrow more money with the ‘apparent’ credit of Germany, allowing for debt-based growth, which is always short-lived. Another factor was in part the removal of congestion and barriers between the EMU nations that facilitated the exchange of goods. There were no more borders and the free flow of goods and people was accelerated, saving huge amounts of time and money.

That party came to a close during the Global Financial Crisis and a fundamental flaw was exposed. To understand the flaw, first we need to understand the EMU.

As part of the makeup of the EMU, national governments keep their national sovereignty, but allow an open border policy with other EU nations and give up their sovereignty to print new money. That last point is the crux of the flaw. You have seventeen nations that make up the EMU that must all use the centrally issued Euro.

Now, the manner in which a central bank sets the price of money, aka the interest rate, goes much like this: The central bank (CB) takes into account the fiscal habits of the nation’s people, and enacts policies that can have the greatest benefit to the economy for the well-being of all, in relation to those spending habits. They do this by setting the price of money (the interest rate).

For example, a nation of savers would have a low-interest rate, and a nation of spenders would have a high interest rate—a drastic simplification, but for the purposes of this example, fitting and easier to digest.

Digging a little deeper: a nation of savers would create excess capital; which can be used to create new businesses, industries, and jobs. Access to new capital from the CB would not be as necessary, and when it would be, the resulting inflation would be manageable growing with economic expansion in the process creating prosperity by naturally increasing as required by the new jobs and businesses brought into existence with the money multiplier effect—win-win for everybody. Another way to look at it is, the low-interest rate is an indicator that the necessary sacrifice and thrift have been achieved that shows that long-term investments can be funded with minimal risk by borrowing; hence the price of money is cheap (low-interest rates).

On the other hand, a nation of spenders could not have such a low price of money as spenders in such an environment would spend beyond their means and create lots of private debt, and pay off that existing debt with new loans and more debt—which is what our governments are currently doing, ramming it into your skull for the forty-fourth time (it’s simple mathematics that is cannot go on forever). In a low-interest environment, this creates a vicious cycle that creates lots of inflation and economic pain for everyone, without increasing the jobs and business that go with it, as it does in a nation of savers, so inflation spins out of control and everyone who hasn’t diversified into commodities (and even they often get the short-end of the stick due to reactive government policies) are worse off. It is in this scenario where totalitarianism usually arises; such was the case with Hitler in the aftermath of the Weimar Hyperinflation. So a nation of spenders would need a higher central bank interest rate to disincentive new loans and the money creation that goes with it.

Here we come to the crux of the problem. There are seventeen countries together in this economic union; countries like Germany, a nation of productive savers who couldn’t imagine life without work, and whom work until the age of sixty-five before retirement. And at the opposite end of the spectrum is a country like Greece, a nation of spenders, some of who retire at fifty, and the majority at sixty, the lowest rate in Europe. Yet both have access to the same line of credit from the European Central Bank, and nobody saw this disaster coming, why? The subprime mortgage in the US that triggered the Global Financial Crisis was due in part, to giving anyone and everyone interest-free loans without even bothering to do credit checks or even see paperwork. Many argued that it was immoral or unfair to not provide such credit, but is it unfair and immoral now that the entire nation (perhaps even world) is worse off?

This caused huge distortions and misallocations of capital, which can’t now be paved over with the current round of bailout after bailout after European Central Bank bailout (not that it stops them from trying), but a problem can’t begin to be solved without solving the underlying cause that begot it.

This gaping, foundational crack in the base of the EU isn’t even being looked at. Brussels is just throwing money at it, hoping it disappears (which it won’t and cannot), essentially trying to solve the problem by doing the same thing that the problem caused in the first place, a misallocation of capital that is only being magnified by these suit-wearing monkeys, further misallocating current savings, and creating future debt burdens in the name of keeping the status quo.

The solution is, or would have been, to charge a variable interest to the varying countries that make up the monetary union depending on the macro-economic behaviors of their people. That is, what would an individual central bank in each of the countries set its interest rates at, so that, to the best of its ability, prices remain stable and the economy remains strong? Then charge that interest rate to each country. Sure, they will cry foul and whine like babies as politicians have a habit of doing, but so what? Let them bitch and cry until their cheeks turn coarse, and eventually they will swallow it up or they’ll end up in their own currency, which may just happen anyway with the current system.

Is it fairer that the now richer, more prudent countries that produced excess capital now have to essentially give free money to these countries whose politicians and people had the foresight of five-year olds at a candy store? It’s fairer to get what you have shown the world you are responsible with. Anything more puts the wellbeing of other people into irresponsible hands, which potential outcomes worse than people or nations making do with what they have. Anything else simply perverts and distorts incentives without the necessary financial intelligence (learned slowly and surely), which all too often, creates more problems than what one (person, country, or supra-bloc) began with, except now they have less wealth with which to deal with the problem, not to mention that it only renews calls for the cycle to begin anew, which again, all too often, historically at least, ends up in totalitarianism. (With the internet-connected world we live in today, this scenario is extremely unlikely but it is enough that economic well-being is so connected to livelihood, quality of life, and cost of living that to embark on such a path regardless of the social cost is utter folly.)

On an individual level, you have to earn other people’s trust before you can be trusted with their friendship, babysitting their child, or taking a loan. The same should be true on an international level, but politicians are the most self-serving people on this planet and they think they deserve everything because we have put them on a pedestal.

Perhaps the monetary union would never have gotten off the ground in the first place, as such legislation required unanimous support from all countries involved. The poorer countries, always wishing to spend beyond their means, would have struck it down immediately. But that would’ve been the first warning sign.

An equal-across-the-board interest rate might seem fair to the socialist-leaning tendencies of the left-dominated societies of Europe, but remember in the real world, life isn’t fair. A wolf isn’t guaranteed a rabbit to eat, the slowest antelope will be eaten, and injured birds are met with the fatal clasp of a cat’s fang.

The only institution we are equal under (or should be, since in practice its fuzzy) is the law. Whether poor or rich, we are to be treated equally in justice. But try going to a bank for a loan with bad credit. You can’t, and for good reason; the likelihood of you paying it back is slim, and the bank, a vital component in society, loses money that than can’t be loaned to a business to build a bakery, a clinic, or an apartment complex that would otherwise increase economic activity, prosperity, and quality of life.

The advancement of society comes only when capital, created in excess [savings], is used to create new businesses, investments, jobs, and the consumption of more products. It may come for a while under such liberal make-believe equality, but that doesn’t last long, and the economic reality of such decisions eventually rears its ugly head and we, the people, usually suffer.

Everything comes down to economics, one-way or the other, whether you acknowledge, understand it, or don’t. Everybody will one day reap the fruit of their economic decisions and if not, then the burden falls to the next generation, much as it is being done so today.

Governments can only temporarily alter this balance, and only to our detriment (by borrowing from the future). This is a big reason communism doesn’t work, as capital is squandered and we are too shortsighted to work for the common good while subsisting on beets.

It’s a European Union of economic failure, of mass unemployment and of low growth.” ~ Nigel Farage (Politician)


Debt Crisis 101

debt crisis 101

This is sub-chapter #14, of Chapter #4, Economics, of my ongoing rewrite and open editing process Random Rationality: A Rational Guide to an Irrational World. Would greatly appreciate any feedback, corrections, criticisms, and comments. If you want the full PDF of the book, then you can download it by clicking here—if you provide constructive criticisms in return, and live in the US, UK, or EU, then I’ll ship you a paperback copy of the book free of charge when it’s published. If you wish to read the previous chapters in one convenient place online, follow this link.

 


DEBT CRISIS 101

Imagine an eighteen-year-old rich college kid named Jack whose parents are rich. He goes to an Ivy League college with a credit card, and spends his college years buying everything he needs and wants: big screen TV’s, nice furniture, etc. He has his share of parties and his generous parents pay for all of it, no questions asked because their emotions get in the way of their rationality.

Four-to-six years later, he graduates college and becomes an apprentice lawyer, not earning much money at the beginning, though now he has his own credit card and is on his own. What do you think his spending habits are going to be like?

We all realize that most young kids would continue their spending habits as before, and rack up a bit of debt. Even adults do it now. “Oh, he’s just trying to keep up with the Jones, lame.” So Jack racks up a bit of debt, but because he wants to seem independent and show his parents he can take care of himself, he makes the minimum payments each month, which is all he can afford.

Now after a payment or two, he might think his debts are under control; he’s confident and proved that he is independent (to himself.) Jack goes on another spending spree to celebrate. Same process—he might make the minimum payments again or get a second credit card and pay off the first credit card. Rinse and repeat.

Eventually, his initial debts, still accruing interest each month, will no longer be affordable, and he won’t be able to make those minimum payments. Or he might not be able to get a third card due to bad credit. He is not yet making enough money and might not for a few years, but he’s confident that one day he will, so there’s no immediate problem, and he maintains the status quo. Imagine that…

Now look at the American and European governments and ask yourself, what’s the difference? You will realize there is very little difference in how fiscal responsibility works in an individual or in a government. In order to lend to governments; investors, other countries, central banks, or big institutions, need some assurance they can get their capital back with a bit of interest above inflation to turn a profit. If there is no assurance, foreign capital will slowly dry up, as is beginning to happen today.

The credit crisis we found ourselves in a few years ago was, of course, the precursor to this debt crisis we find ourselves in now. As during the credit crisis, all that toxic debt carried by private companies was going to sink the ‘too big to fail companies,’ and so governments bought it all up and carried it onto their books, increasing their own debt portfolio dramatically. But these governments were swimming in debt to begin with and were already running deficits every month of every year, and of course, paying the minimum repayments on their interest and paying off existing debt with new debt. At the prior levels, however, it was manageable, and there was no cause for immediate concern.

Then the constant stimulus and bailouts began, and they continued to accrue ever more debt. When they couldn’t sell enough debt, they printed it. Even money printed out of nowhere is loaned at interest—right now from the Federal Reserve at between 0 and 0.25% and in the EU at 1.5%, as of Jan 2013—and that extra money inflates the currency, robbing people who had the prudence of saving of their purchasing power, and worsening income inequality.

So with all this extra debt streaming in, plus the already running deficits that governments were, and still are running, you begin to see how similar they are to our dear and stupid Jack. Eventually, they will not be able to repay even the minimum repayments as interest rates eventually rise. And then what happens?

This moment could be happening soon. Japan is over 225% debt-to-GDP ratio, the USA is above 100% and climbing each month, and some of the European ratios are well over 100%. What’s going to happen when these governments can’t pay back their debts? That will be a major strike in the confidence of the global economic system, where trillions of dollars of government debt are held around the world in pensions and other benefits.

Trillions upon trillions of dollars are invested in these government debt traps, and the global economy is going to sink if anything ever happens to them. That capital needs somewhere to go, and when it doesn’t have any place to go to, bad things are going to happen (and a lot of it will disappear).

I’m sure that politicians know this; they have legions of economists and other smart people working for them. There is no way for them not to know. Yet, because the global financial system is based on confidence, no politician can tackle any of these problems for the following reasons:

1:

An electorate that will immediately vote them out of office. People know cuts have to be made—well some do—but no one can touch their entitlements, so of course nothing is cut.

2:

Their comrades won’t support them for fear of their electorate voting them out of office, too, which again shows the self-serving nature of politicians. Rather than taking one for the team, they pretend they don’t know.

3:

The global economy and all the stock markets in it, are based on confidence. A company can have great financials, profits to earnings (P/E), and other good financial indicators but still have a poor stock price. Or it can be the other way around; Enron, Lehman Brothers, and Facebook (when it first IPO’ed) make fine examples. Stock earnings and prices are based on future expected growth, so today matters less than tomorrow, or in economic parlance, the (theoretical) present value of discounted future cash flow. The same goes on an international basis and for fiat currencies. The value of a dollar today is based on future value it can bring, with next year’s expected tax revenue to repay that borrowed dollar with interest, along with demand for its bonds; and to make matters worse, emotion plays just as large a part, if not larger, than logic, which throws common sense even further into the black hole of financial markets.

This is a fundamental flaw in fiat currencies and the stock market; confidence is essentially a zero-sum game. There are very few things that we can remain confident in over a long-span of time: the moon, the sun, the stars, the comings and goings of the seasons, our need of food and water and sexual urges. What else can you say with absolute confidence will be around for all time?

So when confidence disappears, and the biggest economies are unable to borrow enough money to fund themselves and their entitlement programs, what will happen?

Look what happened in 2008. Lehman Brothers, which insured America’s mortgages, went belly up, and the global economy was brought to its knees because all the fancy derivative packages they sold couldn’t cover the payouts when growth in the housing market stopped, because the price of oil was too high.

Then western governments picked up all that debt, so what will happen when the government stops being able to absorb that toxic debt? Currently the US government pays $220 billion in debt repayments per year (six-percent of the government budget), and this number may rise to $1 trillion by  2020. (Note: the repayments are artificially small because the Federal Reserve has set its interest rate between 0 − 0.25%. If these rates ever rise, and they must once, or perhaps if, the economy starts recovering, the repayments will become even larger. Keeping interest rates at 0% is not possible forever, so sooner or later, those rates must rise.) In such a scenario, that of the government being unable to finance its obligations; stock, bond, and derivatives markets will tank everywhere. Politicians have shown us repeatedly that they will do everything to keep the status quo going. History is replete with such examples. Thus, we can almost be assured that no course of action will be taken to prevent this calamity until it’s too late to do anything, not that they have many options at this point anyway, short of political suicide, and an economic reset.

At the end of the day, it’s not the government’s fault alone. While they hold their fair share of blame in this circle of madness, we are equally to blame for allowing them to do as they please. Politicians are an extension of the society they represent. They are paid too much, get freebies others slave for, are put on a pedestal, are allowed to receive bribes in the form of lobbying, and are rewarded by the masses for saying what they want to hear instead of the hard truth they need to hear (this is really the only problem that needs fixing). So at the end of the day, the types of people who are attracted to these positions tend to be more leeches than public servants, paint rosy pictures where roses don’t exist and aren’t afraid to lie for the perceived “public good.”

All lies and half-truths eventually see the light of day; it is inevitable (especially with the internet). Lying for the sake of short-term stability forsakes the long-term march of human progress. This is what our civilization is seemingly transforming into: a self-serving, shortsighted engine of crony capitalism barely capable of thinking past the next quarter, long-term prosperity be damned. Our economics, so rooted in political dogma and ideology can, and should do better, but only if politics loosens it grip. As in the past, the separation of Church and State heralded a new era in human civilization, so to will (for the second time no less), a separation of Bank and State. (You’ll notice that the conjoining of Bank and State abbreviate neatly and poetically to BS. Indeed, BS is exactly what follows when the orgy of political malfeasance meets the relentless greed of Wall St.)

If I owe you a pound, I have a problem; but if I owe you a million, the problem is yours” ~ John Maynard Keynes (Economist)


Infinite Growth Fantasies

infinite growth fantasies

This is sub-chapter #13, of Chapter #4, Economics, of my ongoing rewrite and open editing process Random Rationality: A Rational Guide to an Irrational World. Would greatly appreciate any feedback, corrections, criticisms, and comments. If you want the MOBI, ePub, or PDF, then please let me know in the comments—if you provide constructive criticisms in return, and live in the US, UK, or EU, then I’ll ship you a paperback copy of the book free of charge when it’s published.


INFINITE GROWTH FANTASIES

Keynesian economics, upon which most public economic policy is based upon (despite it being a distortion of what Keynes himself stipulated),  carries with it, in the hearts and minds of our politicians and central bankers, an illusion of continuous economic growth year upon year. These public officials believe that government intervention only results in prosperity, and that without growth or government intervention, big problems will abound—the latter being true, but only within this model they have created for us. This is not the width and breadth of Keynesianism, but it’s all we need to dissect to realize its futility.

We’ll get into the ridiculousness of the infinite growth fantasy in a little while, but first let’s go over a few things; such as where money comes from, fractional reserve banking, why governments are bailing out the big banks, and why growth is so vitally important in today’s economic model.

Money, as I’m sure everyone knows, doesn’t just pop out of nowhere. Before we had the printing press and Wall Street, we used gold, silver, and various other tangible goods such as tea in Siberia or cheese in parts of Italy way back when. Though they differ to todays fiat standard, as they are naturally occurring and unable to be created at will.

Once the printing press arrived and we moved to the modern incarnation of the fiat standard at the beginning of the last century, we had to have a limit on our ability to create this money, otherwise what was to stop the printing rendering the value of its own money worthless (inflation)? The era of debt-based growth was born.

The modern economic debt instrument was born out of a need to put a limit on how much money could be put into circulation. For a government or private bank to borrow credit from the central bank, it had to be borrowed at interest, whether that interest was one-percent or five-percent made no matter.

So what effect does this interest rate have in restricting the money supply? As we all know, a loan has to be repaid eventually, so you don’t keep taking and taking: the principal and the interest. As the more astute among you may have figured out by now—I didn’t until it was shoved in my face—is that the principal plus interest is greater than the original loan amount of just the principal, and since all money can only come from the central bank, the amount to be repaid is always greater than the amount of money in the economy.

Compounding this, private banks that borrow this centrally issued credit can re-loan and multiply that credit via the process of fractional reserve banking to citizens and private businesses at further interest.

Fractional reserve banking works on the premise that not all people need access to their money all the time. So the bank loans out ninety-percent of your money to other people and businesses while you keep it parked in a savings account—this is where your interest comes from, other people’s interest repayments. This theoretically allows the efficient use of money to expand an economy, and is also why a run on a bank ends in bankruptcy of the bank, as there isn’t enough money to cover all the deposits. This is where confusion sets in as the average person sees terms such as M1, M2, and M3 bundled about in reference to this. Let me briefly explain them: M1 is the total amount of cash/coins outside the private banking system (there is also M0 which includes cash/coins inside the banking system), plus travelers cheques and other checkable deposits. Then there is M2, which is M1 plus savings accounts, money-market accounts, and some term deposits. Lastly, there is M3, which is M2, plus all other term deposits, institutional money market mutual funds, though M3 has not been used in economic analysis since 2006.

As they loan out part of your deposit, the new loan holder deposits his or her new money into another bank account, where it is regarded as an increase in the money supply (M2). This is called the money multiplier effect and is used as one of many signals in assessing the health of an economy. It is theoretically possible to turn $10 into $90 (not that the limit is always reached), which is a reflection of added credit into M2 over M1. (Only central banks can add to, or subtract from, M1 as that is minted cash and coins, and not electronic cash which a bank can create.)

When the money supply is being multiplied, the economy is seen to be expanding, and when it is not, it is perceived as contracting. This is why in a lot of recessions, money seems to disappear, it actually is disappearing. This is also why wealth has become extremely consolidated in the 1%. The fiat system is literally, accidentally or not, a way to funnel money upwards. The poor pay off their loans for their entire lives, while the rich park their money into savings accounts, and the interest from the lower and middle classes flows into it. Of course, they are good economic reasons to do this, but it is easily abused.

Generally, this system works well if left to its independent vices and machinations, as even the money multiplier effect only comes into effect when new businesses and consumption is required, but it can’t work forever, especially with the human desire to meddle. Since the dawn of time, people have always tried to bend their surroundings to their own will, and this may help you to understand why politicians and bankers manipulate the system to favor their friends, donors, and families—worse still, this susceptibility is actually magnified in a position of power, where they delude themselves into believing they deserve such power. (This probably explains why there are so few good politicians, and why politicians are caught, figuratively and often literally, with their pants down.)

The number-one abuse (or distortion) is the bailout system, even when given as a loan. Inflation has a twelve-to eighteen-month lag time once new credit is introduced into the system and all other currency units are affected. So the big banks that get bailout money are essentially getting a portion of it for free (if it isn’t free to begin with), and can turn around and use it to pay down debt, buy smaller banks, etc., before the inflationary effects of this new funny money erodes the purchasing power of every other currency unit in circulation. By the time it has circulated its way to the lower classes, it has lost some of its value as prices have risen while wages have not, hitting the poor especially hard.

The monetary system isn’t fair by nature, and that’s normal because life isn’t fair. Not all lions will be the head of a pride, not all trees will receive the same quantity of sunlight, and some Gazelles are unlucky enough to feel a cheetah’s jaw clenched around their necks. Some people are tall, some have brown eyes, others blue, and a few are born in rich countries, while most are born in poor countries. Nature isn’t fair, and since we are a part of nature, neither are we. (Though we are gradually overcoming this bias, but we shouldn’t try to do it via economics, more on this in Technology.)

This cruelty, if you can call it that, is part of the diversity of life, and without this diversity there wouldn’t be any life to begin with, since diverse conditions are what allowed for the formation of life, and its continuance is an underlying driver of evolution, never allowing the rot of stagnation to creep up. Fairness is not an inherent quality of nature. Although this extra kick in the face to the poor and middle class in a fiat currency system is a step beyond Mother Nature’s system of fairness, which begets change and freshness of ideas through diverse and unequal opportunities. It amounts to a cruel joke making the poor poorer and the rich richer in a system rigged beyond necessity to the upper echelon, and as history has shown us, is one of the biggest contributors to social unrest and revolution, and that’s where we are now. A recent study out of Cambridge has correlated the price of food, as the foundational issue (affected by politics, regulations, and inflation) which has instigated riots all over the world, most evidently in the recent Arab Spring, allowing them in a sense, to be predicted. (It was first published four-days before the start of the Arab Spring in Tunisia.) The study stipulated that when the price of food, by the FAO food prince index is above 210, conditions are fertile for social unrest (Of course, there are dozens of other factors that people will point to; such as freedom, censorship, jobs et al, but a hungry public is, in the words of the lead economist Bar-Yam, leads to the “range of conditions in which the tiniest spark can lead to riots.”)

Moving on to necessity of growth, there is a very specific reason that economies must constantly keep growing. Recessions happen when economies stop growing, or contract due to burst bubbles.

Here I must briefly digress. Sometimes central banks try to preemptively boost the economy in anticipation of worsening economic indicators by lowering interest rates and encouraging increased borrowing, but it only delays the recession, as the new funny money creates a further misallocation of capital, which requires a recession to fix (a bigger one now) than would have otherwise happened. The reason why is it gives false signals to businesses, imbuing them with a false outlook on things like consumer confidence and spending. Lower interest rates allow riskier projects, many of which, in the false environment, are more reliant on increased consumer confidence, and when the delayed recession hits, results in more money lost if the new project/s, contingent on a false outlook, breaks down. In this way, government, or central bank intervention, only delays and intensifies the problem. Just as we saw before with drugs, making them illegal only pushed the market underground and squeezed its undesirable effects invisibly onto a smaller subsets of the population, with larger negative ramifications for all.

This is why governmental intervention into an economy is a drag instead of a boost, as Keynesians boast. How could it be anything but? The politically connected rich get free money, while the purchasing power of the poor and middle class erodes. So left-leaning parties try to redistribute tax-money to the poor to compensate for the rising inequality, coupled with the inefficiency of the government wasting a portion of it. Simultaneous to this, increasingly, money is consolidated in the upper classes vis-a-vie interest, thereby restricting honest economic opportunities for the middle-class and poor, making them dependent on the handouts, which elevates the party politics of handouts for votes, and making the situation ever worse—and round and round the Ferris wheel we go.

The reason that an economy needs to grow is so that new credit can be issued and circulated throughout the economy to pay down the debt of the old credit. Every currency unit in every economy is owed to someone by someone else. So if you have no growth, when loans come due, there is not enough money to pay them down. You must always borrow more new to pay down the old. Depressions happen otherwise.

The Great Depression is the only recession in modern history in which the central bank restricted the money supply thereafter (note that they didn’t do nothing as they should have, but restricted), and the American poor welcomed with open arms the thirty-percent unemployment that came with it. This action, coupled with many other government interventionist policies at the time: confiscation of private property such as gold, constriction of money supply, new tax increases, and a plethora of regulations increasing business uncertainty and thus their reluctance to hire and expand workers, coupled with extreme investor uncertainty, exacerbated the situation and turned what would have been a normal recession into the Great Depression. Gross Private Investment during the thirties did not reach pre-depression levels until 1946-1950. In fact, from 1930 to 1940, net private investment was negative $3.1 billion. This is why the money supply must always grow in order to pay down the old debt, whilst still having an increased money supply—and Keynesians today boast the government saved us from the depression! As the economist Benjamin Anderson wrote in 1949, “The impact of these multitudinous measures—industrial, agricultural, financial, monetary, and other—upon a bewildered industrial and financial community was extraordinarily heavy.”

Finally, we arrive at infinite growth. Most economists’ wet dream is continual five-percent year-on-year expansion, and since humans have the funny habit of thinking that they live at the apex of civilization, especially those of us in the West, as a result we tend to project that our institutions and economic models will be around for all time. So let’s play with the numbers of compounded economic growth and see what happens. The results will definitely surprise you.

For the following example I am going to use two-percent year-on-year growth. Just try to imagine five-percent growth. (Hint: it will be an exponentially higher exponential increase.)

If we had an economy of $1,000,000 at the time of the crusades, approximately 1,000 years ago, and it grew at two-percent compounded year-on-year. Today, that economy would have grown ‘5,368,709,120,000’ its original size. Remember, this is an economy  only 0.00000015% of current world GDP (approximately seventy-trillion dollars). I’m afraid to even run the numbers for today. That’s a five-trillion percent expansion. Today, that seventy-trillion dollars of global wealth is supported by just three-percent equity.

Compound Growth Methodology:

To arrive at that number, you take seventy and divide it by the percentage growth per year, in this case two-percent, so seventy divided by two gets us thirty-five; this is logarithmic math and beyond the scope of this chapter to discuss, but it’s can easily be googled. Therefore, at two-percent yearly growth, the economy will double every thirty-five years. One-thousand years divided by thirty-five doublings means that the economy doubles 28.6 times. Then it’s a simple matter of algebra.

Just to further nail the point home, the following is from an essay by Jeremy Grantham, a hedge fund manager with $97 billion in assets. The scenario he describes is a fictional re-telling on what would’ve happened to the ancient Egyptians if they’d had the same economic fantasy as us.

Let’s try 1% compound growth in either their wealth or their population. In 3,000 years the original population of Egypt —let’s say 3 million—would have been multiplied 9 trillion times! There would be nowhere to park the people, let alone the wealth.”

Raise your hand if you still think we are at apex of human civilization? The very way our economy is designed to work ensures that it either destroys us, or the planet, or both. Though more likely, and luckily one might say, is that it simply fails before either of those scenarios takes place. This model guarantees eventual failure: that’s how not smart we are.

Both Option Status Quo and Option Yes We Can stand in stark contrast to reality. As it stands today, we are reaching the limits of this economic expansion. That’s why, one way or the other, the current status quo of bailing out the banks with taxpayer money is only going to hurt us in the end, and the banks are still going to collapse eventually. So…what’s the point? Why not just reset the system now and save us all the bother. This Keynesianism of public policy is delusional. When people talk about having—or needing rather—a sustainable economy, how about we listen to them instead of calling them tree huggers. Our future well-being depends on it. Without economic well-being, nothing else matters. (Note, this does not mean big numbers in a bank account, but the real, productive capacity of a society to make food, deliver clean water, build shelters, and everything else that contributes to well-being.)

“Depressions and mass unemployment are not caused by the free market but by government interference in the economy.” ~ Ludwig Von Mises (Economist)


Fixing Politics

fixing politics

This is sub-chapter #12, of Chapter #3, Politics, of my ongoing rewrite and open editing process Random Rationality: A Rational Guide to an Irrational World. Would greatly appreciate any feedback, corrections, criticisms, and comments. If you want the MOBI, ePub, or PDF, then please let me know in the comments—if you provide constructive criticisms in return, and live in the US, UK, or EU, then I’ll ship you a paperback copy of the book free of charge when it’s published.


FIXING POLITICS

Since we are stuck with the obsolescence of politics for the foreseeable future, here are some solutions, though I’m sure they are many more, that aim to make gaming the system more difficult if implemented, and allow a freer society for a longer period of time.

Granted, this will not stop the political subterfuge that seemingly always, undermines the democratic system. (Politicians are a creative bunch.) It merely serves to make the process much more difficult, and thereby allow a greater functioning of democracy on a longer time-scale, which will allow the making and creation of the science and technology that will eventually rid us of this insidious process that is retarding our progress (I’ll elaborate more in the last chapter). Please forgive me any generalizations in this chapter, though it is hard to find an honest politician these days, I’m sure a few exist somewhere.

“Many forms of government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.” ~ Winston Churchill (Former Prime Minister of GB)

Career Politicians

The career politician (CP) is a virus in the democratic system, and his or her major concern is re-election. Thus, their every decision, policy, and recommendation is acted upon in context to their re-election chances and not necessarily to the people’s or nation’s benefit. They may have started out with the best of intentions, and with a big heart, but people are mortal, and the leviathan (the government as named by Thomas Hobbes) is all-powerful in the bewildering eyes of a mere mortal.

The CP rarely, if ever, leaves his or her bubble distorting their view of reality, much as a goldfish living in a curved fishbowl believes that everything travels in an arc instead of a straight line. Politicians are human goldfish, observing things that seem real and committing words to paper that rarely fix them, when often times, the best solution is to let the super-organism that is society self-correct. (This is usually the best course of action for recessions.)

As a result of being in the game for the long term, they are beholden to the people (and to the political game itself), for the choices they make. But the people, like most people everywhere whom are not well versed in all matters of running a society—hence the need for democracy in the first place—end up looking to their own short-term interests. (An evolutionary mechanism where for 99.9% of our hominid history, our only concerns were food, water, shelter, and sex. If only modern society were so simple.) Likewise, since a politician cannot develop, write, read, or legislate on their own, they are dependent on their fellow politician and staff, in a system that favors ideology, and breeds resentment, distrust, subterfuge: which are ideal conditions for short-term decisions that generate political capitol, even, if not especially, to the detriment of long-term planning. All this does is handicap the CP’s toolkit.

As with most things, we earthly beings have a tough time of grasping the bigger picture, and the decisions we make on a day-to-day basis are usually personal in nature. Politics, politicians, and elections generally get thrown into this mix, when they eventually roll around, inconveniencing our day-to-day lives.

Since idle brainpower is usually spent entertaining one’s self outside of work, we often make the quick, easy, and emotional decision when it comes to electing a person for office. Politicians are elected based on how likable they are, how catchy their sound bites are, or how opposed to their opponent’s policies they are and various other trivial, non-important factors that excite us and make us like that person. Politicking is an emotional event, not the logical and rational event the Athenians intended it to be.

This personal decision to elect a politician is usually based on how the politician personally benefits the voter, or how emotionally pleasing they are, instead of to the nation, for it is easy to forget there are others who are also in trouble. How quickly do you forget about starving children in Africa after you watch one of those commercials? How much easier do you think it is when you live in a relatively advanced democratic nation where you don’t see those people starving and entertainment only shows you the high life? It’s so very easy to lose focus today.

It’s hard to blame any one person, as we spend most of our adult lives providing for ourselves. It’s second nature and a paradigm in itself. But therein lays the major problem with politics: we should not look for the person who excites our emotional self, but to someone who strains the limit of our rational self, and who requires us to think and come to a logical rational conclusion of his or her own abilities, as their ability to govern will affect our future wellbeing. The media doesn’t help but they just give us what we want; negative, short-term, often irrelevant, and anecdotal news.

Due to this self-serving, short-sighted nature, CPs, even when genuine, end up having a tough time doing their jobs because they do not have the leeway to make the tough decisions that need to be made to move society forward, neither to say the things that need be said, as an ignorant populace can and will remove them from office if the ramifications of their decision affects them negatively; even if it might be beneficial to the nation in the long-term. The majority of voters rarely take the latter into account. Again, it’s emotional instead of rational. It’s always, me and mine, instead of ours and yours, or here and now, instead of there and then. In most nations, most people are for universal healthcare and looking out for each other, but in order to do that, a government and nation must be fiscally responsible and prudent in order to provide that economic foundation which allows them to spend the money to look after everyone. To not allow politicians to fix broken entitlement systems, or raise or lower taxes (whichever is necessary), then they cannot provide proper services and benefits for those few issues where everyone does agree. It’s akin to driving to another city…without gas. Your car will run on fumes for a while, but it will conk out far too short of your destination. Or Wile Coyote running out over a cliff, unawares he’s running on air, looking down, giving us the viewer, a sad face, and falling to his temporary doom. Wile Coyote is the government hoodwinked by the public, and the Road Runner is where society wants him, but won’t allow him to be. This is the story of todays economic; a debt , governance, and austerity cacophony.

This often has the consequence of politicians catering to the lowest common denominator of the varying social groups, doing the minimum necessary, staying away from controversial issues even if they need to be overhauled or addressed, and rarely, if ever, straying outside of this niche for fear of the ramifications. (Farm subsidies, War on Drugs, the Military Budget and so forth. Though occasionally, ideology or flat-out bribery, I.e., lobbying, will inculcate the public-fearing goldfish against any protests such as the bailouts, the republican war on women, and batting on behalf of the rich and un-needy, though notice none of them ever benefit society at large. How rather pathetic.)

But here’s what people seem to forget. Politicians are there to manage the big picture and they are supposed to be smarter than us, and routinely, when they have to make those hard decisions that require short-term pain but will result in long-term gains, we punish them. Effectively saying we demand the best of now and the best of then—which in all but theory, and probably even in theory, is impossible. So the politicians give you exactly what you want, except by giving you the now that you want, they ignore your future, and you still have to live it.

With this conundrum gaining strength as time progresses in every democracy since the Athenians invented it to the present day, the caliber of politician, in time, is reduced as people who talk a lofty game and who pander to the now crowd are voted in, and the future slips ever further away.

Life isn’t that simple. Politicians are but an extension of society, and they reflect the society from which they came—the needs, wants, and the aspirations of that society. It’s a very sobering thought when put into perspective. We are responsible for our politicians, as thieving, conniving, lying, ignorant, and arrogant as a lot of them may be; they are there because we created the right conditions for their prospering.

“That which starts sweet, ends bitter; and that which starts bitter, ends sweet.” ~ Unknown

The Fix:

Politicians should be limited to one term of five years. (Differing term limits may be justifiable based on continuity purposes and requirements, but I’m an idiot and prefer simple answers like five.) This is enough time to settle into a very difficult job; access, analyze, and study the socio-economic picture; implement programs that benefit the nation or eliminate programs that are a detriment; and then get the hell out of office without need of pandering, lobbyists’ money, or playing Mr. Nice Guy with the media and populace. An individual can only run for office once in his or her life, and upon running, their immediate family is precluded from running. Politics should not be about pandering, but doing what needs to be done, they should absolutely have their feet to the fire, but in overdoing such reactiveness as it is done today, they will merely shy away from fixing issues that do need fixing.

Much like jury duty is a requirement of a just republic, so power cannot be consolidated into too few hands; the political process should almost be mandatory, and taught in schools as our children grow up so they can understand its significance and importance, much as we teach them now of jury duty. and if not mandatory, which would be a tough sell, limited as I have just outlined.

A one-term politician can lend itself to abuse and this will be addressed soon with ‘Social Science.

“One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors.” ~ Plato (Philosopher)

Revolving Door

The revolving door between big business, or businesses of any kind to be fair, and government has to be stopped, as it creates biases and prejudices that influence the equal rule of law that should be, though often isn’t, the law of the land.

When I worked in Saudi Arabia, my contract had a government-mandated stipulation, a clause that stated that should the company and I part ways, I could not work for any other company inside Saudi Arabia for a minimum of two years. While in the private sector this is a silly rule and should be left individually between each company and employee (and even then it’s harmful, but hey, free-market), in the revolving door between public and private sector, this is extremely necessary and long overdue.

All too often, you see officials from big companies with huge influence in the halls of power, moving into regulatory positions overseeing the industry, which the corporation they just came from resides in. This puts them in a position of power to provide favorable circumstances for their recently departed company. Oftentimes, they will re-join that company after their stint in the government, provided their time in office proved fruitful for said company. Examples here are too numerous to list, though it is especially prevalent in the biotech and military industrial sectors.

This is unacceptable and creates a clear conflict of interest. Another strategy that lobbying firms apply is to offer government employees high-paying jobs once they finish their time in the government. This effectively puts the government employee in the pocket of the firm, as they will rarely do anything to risk a multi-million-dollar job that is waiting for them on the outside.

This practice simply must stop. A two-year gap between any private sector switches to a government position that oversees regulations of the recently departed corporation will help reduce such circumstances. Obviously, there would need to be qualifying conditions for this, and not an outright ban, and it should be handled by the Justice branch, not by another government office.

The Fix:

Both of the following conditions must be met for a two-year gap to be enforced:

From Private Sector to Government

i) The corporation lobbies the government, or has spent money doing so in the past two years
ii) The government position in question will have some part in regulating or overseeing the industry from the corporation the individual recently departed from

It should still be illegal to provide the government official any type of gift to sway him or her, in any capacity, present or future, and the loopholes that allow some gifts should be removed.

Social Science

Politicians by their very nature are disconnected and cut off from the rest of us. They get free travel, free healthcare and many other perks, and invariably, they are lawyers and business majors instead of scientists and technologists. As a result, they never really feel the effects of recessions and other pains that we normally feel, some of those pains because of their policies. This develops in them, a certain laissez-faire attitude to introducing new regulations and laws to fix perceived ills in an economy, the national budget, or the business world instead of just letting the economic dislocation play out and reset. As they say; to a man with a hammer, everything looks like a nail, even apparently, people.

They always have a need to fix things, even though it may have resulted from their policies to begin with, and by doing more, may only exacerbate the situation further. But they do it anyway for fear of being labeled ‘idle,’ or maybe because they do not understand the notion of ‘cause and effect,’ but I put my money on the former, and that’s usually the fault of the public.

Counter to this, the people they are exposed to tend to be the rich, politically connected folks who lobby for their time. This means that they are really only exposed to new and different ideas by the folks with the means, money, and power to get audiences with them, and who, like us, are self-serving in nature, caring or thinking little of others.

So it is no wonder that most regulations and laws are created at the behest of this politically connected class of people. We tend to act like and become like those who we surround ourselves with, a basic human function that evolved because of social interaction.

A nasty byproduct of this human condition is that a lot of the laws and regulations that are passed are influenced by those who stand to gain from them and who don’t have the greater good at heart. Whether or not they are intended to be destructive to the rest of us, most of the time, is unknown, but a majority of regulations end up doing just that, especially when an industry or country is overloaded with regulations. Eventually, it stifles and suffocates that which it touches. For example, it costs twice as much to install solar power in the US than in Germany, and this price differential is solely government red-tape. Think about how much more solar power would be prevalent if that red tape was reduced, and how much more competitive solar would be against other forms of energy by now?

Politicians have carte blanche to introduce any kind of bill they want, and with political maneuvering it’s possible to get many kinds of bills passed in the ‘I scratch your back, you scratch mine next time’ manner that seems to work so well in politics, and coincidentally, in groups of chimpanzees.

This is arcane, scarcely different from kings and queens of old enacting anything that they wanted. It is only more difficult to do so now, but all too possible and getting increasingly easier as more and more funding comes from big business, and politicians become ever more isolated from us, and the people clamor for more government intervention.

The Fix:

In almost all countries, there are dozens of universities that do hundreds of studies each year on all matter of subjects far and wide to educate their students and make the world a better place, not mentioning the scientific institutions that could use more funding and science at the same time, but I’ll continue using only universities to make my point.

For each program that a politician wants to implement, three randomly assigned universities must carry out the relevant social, economical, engineering, and statistical studies on the impact of the program/s in question to the general population, national budget, and attempt to assign a statistical risk to eventual outcomes so that contingency plans can be drawn up.

At least two of the three conclusions should be in agreement for the bill to be presented to Parliament or Congress, and perhaps even a follow-up study to find out why the outlier did not conform. The universities’ bills should be paid with tax money, and this would have the added bonus of creating a sense of accomplishment and achievement in aspiring young adults to learn more about the functions of their countries in an unbiased way, protecting them for decades to come from unsubstantiated political propaganda (as well as perhaps going some way to reduce tuition costs, though this may be wishful thinking).

For example: if a politician wants to implement a program that at face value wants to impose a tariff on a foreign product to support a local industry that creates a similar product and save jobs in that industry, then three different economic teams from three different universities selected at random will study the proposed plan and all possible outcomes. None of these three teams will be aware of the other two teams, so collusion cannot be possible and will be illegal, much as it is for a jury to discuss a trial outside of the courtroom.

The teams, in this case from what little I know of economics, would more than likely come to the conclusion that the imposition of such a tariff would simply drain consumers’ wallets as a cheaper, equally well-made product is taken off the market and an uncompetitive industry is propped up at the expense of people’s savings, essentially taxing some consumers, and keeping the employees of said industry from being let go and put to greater use in a competitive industry that would need their labor to compete for those extra savings that the consumers would have, without the tariff. Death begets life, in nature and in the free market.

“Death is very likely to be the single best invention of life because death is life’s change agent.” ~ Steve Jobs (Businessman)

Yet bills like these pass all the time, as the members of the senate/parliament/house are economically illiterate (well, at least at this late-stage cycle of democracy, the founding fathers knew all too well the dangers of government involvement in an economy, which is why they went to so much trouble to limit the powers of the federal government in such matters—not that it worked; politicians are a crafty bunch).

We don’t all have the time to study economics in university, but we can easily have universities help us, which they would be happy to do (because they’d get more funding: it’s in their best interest too). This applies to all cross-sections of a nation. No one person is an expert on everything, but everyone is an expert on at least one thing. We can recruit the smartest people from the best colleges to give us the best, most relevant, most up-to-date and need-to-know information so that the nation can move forward.

The names of the universities, and the research teams would be kept secret from all until the conclusion of the study, and the outcomes of all three studies should be published to the public domain, warts and all, to remove doubts of bias and allow rational discourse and further peer-review from others.

Lobbying

With the inclusion of the social sciences into politics, lobbying has no place and would probably disappear all by itself. If a donor was to donate millions to a politician in exchange for, let’s say, deregulation in a certain industry, the politician would not be allowed to simply push it onto the floor for voting; a study would have to be done that actually verifies the potential outcome and whether that outcome is positive or negative. All of a sudden, you would find that nefarious bills pushed by the corporate world would all but disappear. Donations should stay legal, capped to a certain number per individual, and since corporations are ‘people,’ they shouldn’t be able to exceed that limit, though of course they do, because some ‘people’ are more equal than other people.
Artificial Intelligence

We are entering the boom-time of artificial technology (AI). Before I begin to discuss the role that AI may take, let us see in reality just how difficult it is to know everything at one time, especially with the gargantuan set of laws that the US government has implemented. The current code-of-laws of the United States of America, clocks in at two-hundred-thousand pages. The US tax code alone clocks in at 3.8 million words (four-times the length of all of Shakespeare’s plays, and sonnets). How could any one politician, or even 435 representatives, or one-hundred senators with all their support staff ever manage to unwind, let alone understand, such complexity?

So while I routinely disparage politicians in this book, by way of their corruption, shortsightedness, and idiocy. It’s really a byproduct of the real cause; an unyielding and unending complexity of words and actions that no human being could ever fully know. It is all but impossible to not take shortcuts through the endless complexity and nuance of language, and in relation to events. This doesn’t forgive politicians, due to the reason for their existence being to overcome as best as possible this shortcoming, but they, like us, are creatures of habit, and being such creatures, always look for the most bang for their buck (shortcuts) on how to do more with less, and this is what sets them astray. Considering we cannot change human nature, we should do what we’ve always done when faced with a human limitation. That is inventing technology that alters the environment in the process alleviating said limitation. A cavemen once co-opted a stick to reach an unreachable branch. Early civilizations invented the wheel to take heavier or more numerous objects further in less time and effort. We invented agriculture which used less energy than hunting and gathering food every day—which led to the creation of cities and civil society. Today, we are creating AI’s that can remember everything and understand the meaning and nuance of language at the speed of light, but most importantly, objectively.

In 1978, CBS, embroiled in a case with the Justice Department, had to examine six-million documents at a cost of $2.2 million (almost all for the cost for lawyers and paralegals). In January of 2011, Blackstone Discovery, helped analyze 1.5 million documents for $100,000 in a fraction of the time. The latter was done with software parsing through the documents and extracting relevant keywords inserted by a much smaller team of lawyers, perhaps only a handful, in a process known as E-discovery. In 2011, an AI, Watson, beat the best two human players in the world on the game-show Jeopardy, a game based on the nuance of human language, using as his brain, wikipedia and a few encyclopedias. He wasn’t taught what any of the information meant and had to figure it out on his own, which he did by assigning probabilities to outcomes based on his inputs—which is what we do by the way though we are not aware of it. The AI techniques are capable of both linguistic (keyword and phrase analysis) and sociological (deductive) reasoning. Another company, Clearwell, has developed software to search for concepts rather than keywords, so searching for ‘dog’ will also yield results such as ‘man’s best friend’ and ‘walk’. It’s estimated that one lawyer with these powerful softwares can do the work of five-hundred lawyers from decades prior. (Not to mention that the work of hundreds of lawyers barely result in an above-average accuracy of just sixty-percent. All that money for slightly better than a coin toss in the words of Mike Lynch, founder of Autonomy.) Together, with these powers combined, Captain Planet is born! Actually, the field is called ‘legal informatics.

Clearly, the same problems that impacts the world of law, impacts even more so the world of government, where even more considerations have to be taken into account: foreign policy, citizen responses and other nations (what actions they took as a result of this and that), and so forth. I imagine E-discovery, coupled with general AI, like that of Watson, will be used in the political sphere in the coming years (perhaps decade or two). This is not too say that an AI will make decisions, but will provide objective analysis and statistical possibilities infinitely better than even an army of experts could do. And the politician, who, now able to see the myriad possibilities a law, regulation, or action may take, or how similar laws effected change in the past, will be better informed to make the right choice.

Think of the significance of this. All too often, our economic forecasts take into account only first and second order events, which are highly visible and which favor shortsighted policies so that politicians can point to it as proof of their success. But third, fourth, and fifth order effects such as reduced quality-of-living, rising prices, under or unemployment, and dozens of other factors wallow in the background along with all the noise of society, and which usually outweigh the first and second orders, are ignored, though work tirelessly to demoralize and upend society on longer timescales. Let’s use an economic example, namely, the deterioration of per-capita wealth: In 1791 (using the price of gold as a barometer as it’s less susceptible to inflation), per-capita GDP was 2.6 oz. per person per year (PPPY). It doubled by 1811, reached 12 oz. by 1892, climbing to 23.6 in 1916, sailed past 41.1 in 1929, and hit a peak of 139.5 oz. in 1970. Then a disastrous economy policy of fantasy started with Nixon who uncoupled the dollar from gold, then hitting its doltish stride with Reagonomics, culminating in the simple-minded policies of Dubya (George W. Bush), America is now at 28.4 oz. PPPY.

Watson trained as an economist, having total recall, with the deductive powers of a Milton Friedman on steroids (and since it is an Information Technology, doubling in capability every year), and trillions upon trillions of bytes of data points could immediately inform the politician of all the destructive benefits of any such law (or in this case, economic fantasy dressed up as nonsense), perhaps offering up alternatives backed up by empirical research, instead of wishful thinking.

We already use AI’s in airports, planes, finance, fraud detection, security, warfare, and many other areas in which a human being could not adequately manage the multitudes of information and these areas have boomed as a result. I see the same happening for politics, though just as in warfare, the trigger man will always be human. But unlike in warfare, everything a politician does is a matter of record. As more and more of the world is going digital—a trend otherwise known as Big Data—we will gain unprecedented insight into the human condition, and gain the ability to track causes and their effects, backwards with ever-increasing accuracy, and forwards with statistical probabilities. Think of a politician who is warned by their Watson that passing a certain legislation will increase the likelihood of a recession, that will put millions out of work, but ignores his artificial assistants warning and proceeds with his gut instinct. Then the forecasted outcome does indeed happen, and now Mr. Goldfish is on the record for the world to see, and for his citizens to demand his resignation off (or to turn the election to his opponents favor). What will happen on that day? That will be an interesting day…
In conclusion, I’m sure that even if all these were adopted, there would still be some way to game the system. There always is. That’s why after two-thousand years of democracy, it always ends in failure and dictatorship. However, the above conditions are intended to make it more difficult to engage in the necessary connections, power plays, and the scheming that negatively affects a country over all.

Democracy is still the best governmental model we’ve come up with so far, but that is much like saying that riding a three-legged horse is preferable to riding a two-legged horse. Either way, you’re falling over. If we were falling forward, that would be fine, but we’re not, and a recently released study by Cornell University psychologist David Dunning in 2012 has shown just that, that we are too dumb for democracy; namely, because we are inherently inept at assessing other people’s competence and expertise. This results in most political leaders, in terms of competence and intelligence, registering barely above-average from a cross-section of the public. The one redeeming factor of democracy is that it usually limits less-than-average candidates from being elected, though occasionally they slip through the cracks.

In the internet and information age, the role of politics in a society must evolve, there is no way around that. With our global problems today being unmet by our politicians: climate-change, pollution of the air, water, and land, and resource management, the political system has to evolve, and Big Data in an increasingly digital world is making all the difference, illuminating once dark corners of the governmental (though it may be more prudent to label it the human) sphere. We do not live in a static society, but a dynamic knowledge-building society, and our government must reflect this.