Tobold's Blog
Monday, July 25, 2016
Dealing with the disaffected

An economy is a system to create value. Some of that value creation is direct from individuals, the builder who builds, the inventor who invents, the service provider who provides a service. Other created value can't be traced back individually to a person as a source, but rather comes from synergistic effects that makes the whole economy create more value than the sum of its parts. Trade creates value, but it is hard to see where exactly that value is created, which is why trade is sometimes so controversial. And because not all created value has a direct source, since the beginning of time people have fought over how to distribute the overall created value amongst the people in that economy. Not just among those who contributed, but also among those valued for previous contributions (pensions for the elderly), for their future contributions (education for the children), or those who can't help but consume without contributing at all (the severly handicapped for example).

From all the economic systems that humanity has tried, the free market economy with capitalism, globalisation and democracy has proven to create the most overall value. But on the question of how to distribute the created value the system has been shown to be far from perfect. Typical example for that would be bankers, who are overpaid while often failing to fulfill their economic role of getting capital to the place where it would be most productive. Other professions are probably underpaid, for example nurses. In general the current system tends to favour a well-educated elite to an extent where  the top one percent earn and own orders of magnitude more than the average citizen. Such inequality tends to upset people and make them disaffected with the system. That is a problem when the disaffected become the majority, because in a democracy a disaffected majority can vote for extremists, in an authoritarian regime they can start a revolution, and in an anarchy they can just string the rich bastards up on the next tree and loot their mansions.

The ancient Romans dealt with the problem by organizing games in which the disaffected would kill each other for the entertainment of their peers and the elite. The elite of the late 19th / early 20th century occupied the disaffected by evoking national pride and going to war. Of course that somewhat backfired, because the resulting two world wars were of such destructive power that even most of the elite lost much or everything. After the Second World War a period of much greater equality evolved, fueled by benefits for war veterans (G.I. Bill) and generosity towards the victims of war, even those on the losing side (Marshall Plan). But starting from the 80's inequality was back in fashion, and it appears the elite don't have much of a plan on how to deal with the disaffected this time.

Of course one thing that worked since the Romans is to have the disaffected fight each other. In what the New York Times calls tribal politics in a post-fact era, there is a very clear attempt to have the disaffected "tribes" fight each other by blaming all problems on foreigners and people of different religion. But just like people learned in 8 years of Obama that no, the can't, they would learn in 8 years of a possible President Trump that he didn't make America great again, didn't build that wall, and probably barely managed to get a question on the I-94 entry form to ask visitors whether they are Islamists. That isn't a question of left or right, as both parties are led by members of the elite and apart from Bernie Sanders the left doesn't stand for more equality any more. Liberal intellectuals appear to be more worried about political correctness in speech than about economic equality, which is only logical because the current system favors them more than equality would.

When I read news about some young man of a religious or racial minority having run amok or strapping a bomb to his chest, I don't just see an act of terrorism; I also see a suicide, an act of desperation from somebody disaffected with the system and life. While far more extreme, ultimately him and the person voting for a populist both end up with a bad solution to a shared problem. And as long as the root cause of inequality isn't addressed, those bad decisions will only become more frequent and things will go from bad to worse. Maybe the politicians who are of the elite and have run things in favour of the elite should consider whether everybody including them wouldn't be better off if the distribution of the created value wasn't a bit more even. Not equal, but like it was 50 years ago, where the median income was still a living wage. It is better to be rich and secure than richer and under threat of a systemic collapse. It ended badly a hundred years ago, and it will end badly this time one way or another if a solution for inequality and disaffection isn't found.

"From all the economic systems that humanity has tried, the free market economy with capitalism, globalization and democracy has proven to create the most overall value."

This points out the flaw with the system. "most overall value" isn't necessarily the "best overall value"

Until we figure out that constant growth to create "the most overall value" and cheapest manufacture to create "the most overall value" are not the paths to sustainability, we are doomed to repeat the failures of the past.

And, as noted, the failures of the past always correct by purging the population in a war. However, we might be past the ability of the system to be reset anymore.
I more or less agree. I tend to glibly summerise it as "angry poor people are the worst thing that can happen to a society"
The problem (in the US) has never been about value within our supposed capitalist system. The problem is that the laws, protection measures and other mechanisms that tend to favor those at the top, and tends to ensure a typical oligarchy where wealth, control and power are tightly controlled by a small group.

A recent major study by Princeton and Northwestern Universities, looked at over 1800 policies that were enacted in the US between 1981 and 2002. It found there were significant differences between the expressed preferences of average Americans (50th percentile of income), affluent Americans (90th percentile), and large special interests groups. Researchers concluded that the U.S. is dominated by its economic elite and represents a solid form of biased pluralism. The data from the studies suggest that the wealthiest Americans exerts greater political influence than average citizens and that a very small group of the wealthiest (the top tenth of 1 percent) has sufficient power to dominate policy in key areas. Completely antithetical to any perceived notion of democratic capitalism.
The solution is called "Basic Income".

I think there is one simple truth humankind has to aknowledge and do something about: there isn't enough labor to do to have everyone working.

With all the automation and progress in science we are at a point were we actually can afford to have millions of people sitting at home doing nothing. We just have to redistribute the wealth. I know there are a thousand arguments against Basic Income, but they al don't count in my eyes. Yes it is financable, you just have to want to. And yes even the most lazy moronic slacker deserves to get Basic Income because after all s/he is still a human being.

If we really mean pretty much the first sentence in our constitution (Germany: "Human dignity shall be inviolable"), Belgium: "Everyone has the right to lead a life in keeping with human dignity.") Basic Income is a no brainer. Even in the most developed "first world" countries people are living in poverty and our societys answer to "why" is always "they deserve it" in one way or another. No, they don't.
@Bryksom: this is the dumbest thing ever. There is infinite amount of labor out there, as labor is "doing something to serve yourself or another man expecting payment from him". Unless you claim that there is nothing to do to serve people, it's nonsense. The reasons of unemployment are being uneducated or having too high salary expectation.

@Tobold: more equality is impossible because of migrants. If you give "the poor" money, you get more poor flooding your country. Unless you plan to kill them, the only way to keep them out is not giving ANY poor more. The root of the problem is that if we equalize the population of the whole World, we'd all be poor by European standards.

The only solution is forcing the poor to stop being poor: force them to learn, force them to work and force them to not spend on booze, drugs and other forms of entertainment while they are in debt and can't eat at the end of the month.

The reason of the "good old fifties" was lower education expectation: an illiterate could do useful work by digging. You can't bring it back.

Finally: Trump CAN make America Great(er) again, just by stopping the negative-sum series of conflicts that Bush and Obama did in the name of democracy, especially against Russia. We can agree that everyone was happier if America left Syria, Iraq and Afghanistan alone. Simply not attacking countries for ideological reasons isn't that hard to do and this is one of the few things Trump promises again and again without ever talking against it.
The jihadis are hardly motivated by any of the issues you talk about here.
There is no such thing as "jihadis". Nobody who has hope and a bright future with visibly good prospects around him goes and straps on a suicide explosive belt. Once you remove the economic conditions that makes young men consider suicide, you eliminated the jihad. Don't believe the propaganda from either side, we really don't know the exact motivation of suicide bombers. It might well be that the jihad is just an excuse to make the decision of suicide socially acceptable to his peers.
Tobold, are you seriously claiming that Islamic Terrorists are the victims here?
I think every "Islamic Terrorist" is different, you can't simply bunch them all together under the same label and ascribe the same motivation to them. The people who put an organised effort over months into making 9/11 happen are not the same as the lone wolves we see in 2016. They didn't enter the country with the express purpose of committing a terrorist act there, but were either born in that country or had been living there for many years. And they all lived somewhere at the fringes of society, with years of various problems behind them, minor scuffles with the law or psychological problems. These are people who first decided to kill themselves and *then* chose to do so in the form of a terrorist suicide attack. Islam only contributed in as far as there an extreme version of it in which a suicide while killing infidels is considered a good thing, and there are role models for it.

By the way, sooner or later you'll get Christians and Atheists starting suicide killings. The angrier the hopeless and disaffected are, the better the idea sounds to go out with a bang and try to hurt the people they think are responsible for their hopelessness and anger. You can imagine a police organisation able to stop another 9/11, but nobody can stop the lone guy driving a truck into a crowd.

Nobody who has hope and a bright future with visibly good prospects around him goes and straps on a suicide explosive belt.

You might want to reconsider that statement.

Bin Laden was a son of one of the wealthiest non-royal families in Saudi Arabia. Mohamed Atta was the son of a wealthy Cairo lawyer. The Flight 253 bomber was the son of one of the richest men in Nigeria. Faisal Shahzad, who was arrested and convicted of the attempted Times Square bombing in 2010, was from a wealthy family and was the son of a Vice Air Marshal in the Pakistani Air Force.

In addition, the infamous MI5 study that was leaked in 2011 found that of 90 suspects that were being investigated, roughly two thirds of them came from middle or upper middle class families.

The notion that jihadi terror is driven by poverty is absurd. It's actually the other way around. Certain attitudes encouraged by radical Islam actually act against and prevent prosperity. Look no further than Sudan and Somalia for proof of this.
Read above. Bin Laden and today's terrorist aren't even playing in the same league.
So you do in fact think these terrorists are the victims. And to state "there is no such thing as 'jihadis '" I find to be shockingly naive on your part.
I would say that the value of trade is clear and taught in the first quarter of an econ course; it is just the politicians and lobbyists who try to obfuscate the clarity.

In particular, I don't see much of the current terrorism coming from countries/regions with democracy or capitalism. IMO, things would be better if they were.

IDK, but perhaps immigration will affect socialism.

I am persuaded that automation will figure in this. Some US locales are raising the minimum wage, the resulting drop in employment was exacerbated by fast food executives already discussing machines that were now cost effective. Moore's Law means automation will continue to be cheaper each year and, even without Eurosclerosis spreading, labor costs will go up. Foxcon is even buying machines to replace Chinese workers to make iPhones. I recently read an article about Spain having high unemployment and a worker shortage. Some of the biggest automation articles talk about 30-50% which hopefully is too high. Still, if you raise a lot of the labor costs, sometimes that means not a better job but replaced-by-a-machine unemployment.

People are different. Some people are more or less talented, educated, intelligent, competitive, attractive, and capable. Given those differences, some people will be able to achieve better outcomes than others, which is just. Someone more capable should be more valued, and live a more comfortable life.

Pushing for greater equality is essentially advocating for an injustice. We have a moral responsibility to be fair and just, to be discerning, not to treat everyone equally.
Less inequality is not the same as everybody being totally equal. The more capable person could be twice as rich as the less capable, ten tomes as rich, or a hundred time as rich. We are approaching the latter, and that is simply injust. We have a moral responsibility to be fair and just, and that means foregoing the third Rolls-Royce and leaving a living wage for the common worker.

@Gevlon: You don't need to give the poor money for nothing. But you make sure that the people who work earn decent wages, and create some social safety nets. The Scandinavian countries have quite a great success with that (and very few problems with terrorists), so you can't claim that is impossible. A lot more countries should be like Sweden rather than trying to emulate the USA.

Bin Laden and today's terrorist aren't even playing in the same league.

Of course they are. All that has changed is the name. al-Shabab simply rebranded itself after al-Quaida's losses in Iraq. al-Shabab recruits globally, and their stated agenda is quite clear. Right now they are active in trying to overthrow the western backed government in Somalia and to promote their fanatical interpretation of Sharia law. They target anyone who deviates from their extremist interpretation of Islam. Just last year, and within days of the Kenyan university attack, one of the gunmen was identified as the son of a Kenyan government official. He was educated in top Kenyan schools and studied law at the University of Nairobi.

It isn't about poverty. It's about what well educated and well financed individuals of the region perceive as government corruption, especially when it's a western backed government. They then use this government corruption as the catalyst that drives their recruitment. Corruption provides a source of popular anger that fuels insurgency, and it creates a climate of distrust that prevents effective policing.
None of the terrorists in France or Germany this month even remotely fit to the description of "well educated and well financed". Nor was the Orlando shooter.

And believe me, that is a bad thing. You can stop organisations. Bin Laden is dead. You can't stop the lone man who decides he had enough and kills people without an organisation you can track.
@Tobold: there were always desperate young men. They always caused trouble. But mass murder was usually not the trouble they caused (though sometimes they did, see Columbine).

The Islamic State is something new in the long history of Islamism. They offer a positive worldview and role models. Instead of "become a martyr for the right cause and then you'll have women in the afterlife" they say "join the IS and you'll have a slave girl today". Instead of "one day we'll defeat the infidels" they say "kill an infidel today and enjoy victory in his terrified eyes". The former Islamists were moralizing sad men. The IS is "cool" and offers a "fun" life to the members (just read any game chat and you'll know how much fun some people could have with a slave girl).

No doubt that these terrorists are marginalized, UNSUCCESSFUL young men (their family being rich is irrelevant, none of the wealth is their gain so offer them no self esteem). They don't go to IS to end their desperate life. They go there to become winners, even for minutes. They die with the TRUE belief that the whole World will learn of their exploits and fear, hate or respect them but they won't be ignored like they were.
Thanks for a word of reason, Tobold.
A common sentiment, although not universal.
If the “cutthroat leader” – the United States — were to switch to “cuddly capitalism, this would reduce the growth rate of the entire world economy,” the authors argue, by slowing the pace of innovation.

Everyone has different values. It also has to do with outlook. Dr Pangloss will see no problem with European economies having 1% GDP growth in a world where China has 7%. Hobbesians who lived during the Cold War will be more cautious in hobbling the economy.
That argument rests on wrong assumption that the elite profiting from the current system are the same people that drive technology and innovation forward. As I have 32 patents to my name, I can assure you that this simply isn't the case: Inventors today are frequently wage slaves, while the people reaping the benefits are bosses and financiers. And the world would have been much better off without the last 20 years of "innovation" in financial instruments.
"And the world would have been much better off without the last 20 years of "innovation" in financial instruments."

This is a result of a top down system. Top down systems always result in the "little guy" getting hosed as they invariably evolve to a state where the people able to affect the people running the system (The well connected lobbying the rule makers.) do so for their own profit.

Here in the US, we have the worst of both worlds... a top down federal system that essentially allows major corporations to write laws and 'regulate' themselves, and a welfare system that drives towards a top down system. One builds the other... you have to eliminate both.
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