[P2P-F] Fwd: Interesting article

Sat Nov 21 16:41:37 CET 2015

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Thought this was an interesting article.

Kind regards,

Christopher

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Social Revolution To Continue ............

*November 17, 2015*

*The current world-system is as doomed as the Titanic.*

*We're like the passengers on the Titanic 10 minutes after the mighty ship
struck the iceberg:* there is virtually no evidence to those on deck or
those snug in their warm cabins that everything they reckoned was safe and
secure was doomed to perish.

Only those who witnessed the damage below the waterline and *who knew the
limitations of the ship's design* grasped that *the loss of the ship was
inevitable and could not be reversed.*

*The current world-system (call it whatever you like--cartel-crony
neoliberal-state capitalism, etc.) is as doomed as the Titanic, for the
same reasons:* the design of the system is the source of its failure.

I recently had the opportunity to discuss the inevitable systemic failure
of the current arrangement with Chris Martenson ofPeakProsperity.com
<http://www.peakprosperity.com/> and Cris Sheridan of the Financial Sense
Newshour <http://www.financialsense.com/financial-sense-newshour>. The
podcasts are:

With Chris Martenson: Fixing The Way We Work: Closing the wealth gap with
meaningful work
<http://www.peakprosperity.com/podcast/95323/charles-hugh-smith-fixing-way-we-work>
 (44:54)

With Cris Sheridan: Book Interview: A Radically Beneficial World
<http://www.oftwominds.comchs-interview11-15.mp3/>

*Why is the current world-system doomed?*

1. Automation will not just continue replacing human labor--the pace of
this trend is increasing exponentially.

2. The wishful thinking that technology always creates more jobs than it
destroys is, well, wishful thinking: just ask the music industry, which
"grew" in the era of digital technology from a $14 billion industry to a $7
billion industry.

3. The wishful thinking that taxing the owners of robots and software will
pay for guaranteed income for all: nobody who favors this seems to have
done any math. Current corporate profits (which are about to be eviscerated
by global recession and the commoditization of goods and services via
automation) are around $1.9 trillion annually, while current government
(federal, state, local) spending is $6.2 trillion.

So if the state took every single dollar of corporate profit (and how
realistic is that?), that would fund less than a third of current state
spending. And if the state is going to pay tens of millions of additional
households a guaranteed income, state expenditures will rise by trillions
more.

The idea that profits can support this enormous spending is simply not
realistic.

4. Since taxing profits won't work, let's tax wealth. Once again, this
isn't realistic. For one thing, concentrated wealth has captured the
political machinery, so politicos aren't going to impose wealth taxes on
the hands that feed them.

Secondly, wealth is increasingly mobile. When faced with high taxes, wealth
simply moves to more hospitable locales.

5. Well, then we'll tax land--they can't move that, can they? No, but as
economist Michael Spence and his colleagues have pointed out, profits and
gains are increasingly flowing not to traditional labor or capital
(financial capital, land, etc.) but to the *third form of capital*, which
is innovation, new business models, etc.

So taxing land may look promising on paper, but wealth will flow to
outsized returns, and if land starts getting taxed at a high rate, wealth
will migrate to the third form of capital, which is mobile and global.

*Remember that we're not talking a mere trillion or two here:* to fund the
existing government we need to lay our hands on $6.2 trillion every year,
and paying a guaranteed income to everyone replaced by automation will kick
that higher by a few more trillion.

6. The issuance of money and credit are not connected to the creation of
jobs. Very little of the vast sums of money and credit issued since the
2008 Global Financial Meltdown flowed into productive investments that
generated new jobs. Most of the money went into "investments" that are
wealth-skimming operations that don't create a single job: stock buy-backs,
for example, or buying rental units and raising the rents.

It doesn't require a single additional worker to maintain those rental
units under the new owner; the only things that changed were the rent
(higher), the profits skimmed by the new owner (higher) and the disposable
income of the tenants (lower).

7. We can pay for everything we want essentially forever with borrowed
money. More wishful thinking...

8. The system requires permanent growth of everything simply to keep from
imploding: more debt, more jobs, more wages (and payroll taxes on those
wages), more profits, more consumption, more taxes, more, more, more.
Unfortunately, there are limits on all of these, and the moment the system
stops growing it doesn't just lag--it implodes.

9. Nearly "free" credit/capital only further incentivizes the replacement
of labor (whose overhead costs are rising relentlessly) with
robotics/software.

There is much more in these two discussions; please give them a listen.

-- 
Check out the Commons Transition Plan here at: http://commonstransition.org

P2P Foundation: http://p2pfoundation.net  - http://blog.p2pfoundation.net

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