Jonathan Brun

[:en]How to Save the World – Liquid Feedback, Basic Income and More Politicians[:]

[:en]Canadian Prime Minister Justin Trudeau recently announced he would not be reforming the electoral process despite making a very clear and unequivocal commitment to do just that during his most recent election campaign. He said, “election will be the last federal election using first-past-the-post.” But we all know campaign promises are meant to be broken, silly rabbit! Trudeau claimed that there was no consensus concerning the type of electoral system we should put in place and there was not enough momentum to change the current system. While both points are true, I believe the real reason he did not move forward with the change was simple: the return on investment was not there.

Parliamentary Westminster democracies and Republics are broken in too many ways to count. Political journalist Andrew Coyne wrote a great piece in the Walrus outlining the accumulation of power in the prime minister’s hands and the disempowerment of members of parliament, and therefore citizens, over the past century. He dives into more detail in his recent talk (“Our Broken Democracy“) and even proposes some solutions to our situation. He chalks up the failure of Canadian democracy to things like the nomination power that the Prime Minister has over each MP (the PM can choose not to sign the MPs card and thus disqualify the person), the nomination of judges and many other government positions, the lack of proportional representation and the tight party lines that are enforced by the whips and the prime minister’s office.

While Coyne’s points are valid, he makes a most common mistake: he is reasoning from analogy, not from first principles. His proposed reforms to our system assume that our system has the correct foundation and that Westminster parliament is still appropriate to our situation. Nearly all of his proposed solutions exist in other democracies in some form, Germany has mixed-proportional representation, the US elects its judges and France does not hold to party lines. The system is broken and Coyne is is trying to put Humpty Dumpty back together with pieces from other democratic systems.

Changing an electoral system is a huge undertaking, it requires discussion with civil society, bureaucrats, politicians from different levels, societal education and much, much more. I cannot think of any country that has made a significant reform to its electoral system outside of a seismic event such as an economic or political collapse. The reality is that any electoral system we could imagine – within the realm of the existing systems – is just not that much better than the current system. Preferential voting, mixed proportional, proportional or something else might improve our ‘democratic performance’ by a couple percent (whatever that might mean) – but the cost to implement the change would be massive.

As I discussed in my 2012 TEDx talk, Canadian democracy needs much more than a fresh coat of paint. We are talking about a system that was designed before electricity, the internet, cars, trains, and planes. The US Republican system, as an example, still has a number of procedural rules that are based on the travel time by horse and buggy to and from Washington D.C.! Coyne and many other democratic reform activists seem constrained by their assumption that radical change is not possible or desirable. Or perhaps radical change – that is, attacking the root of the problem – does not even enter their train of thought. Who knows.

Four Critical Books on the Structure of Society

A great book I read a couple years ago is A People’s History of the World by Chris Harmen. The book charts the rise and fall of societies from the points of view of the working classes. Written by a self-proclaimed Marxist who applies the lens of class struggle to world history, it covers a wide array of political movements and outlines some of the underlying trends. The book puts in perspective our own system and how much of our democratic institutions were built by the male and older middle-upper class to allow them to retain control of the system, while appeasing some of the democratic demands of the people. The systems put in place in the British, French and American revolutions were done to ensure an orderly transition from kings and queens to a political elite that could be controlled by the same, but slightly larger, entourage.

A book that goes well with this one is David Graeber’s Debt, which charts evolution of debt in society. Debt and the way we treat it determines much of our social fabric. Who owns what is largely determined by who owes what. This essential book compares societies around the world and across time and proposes some radical changes to our current financial framework. I cannot effectively summarize this masterpiece, but you can read the short essay that David Graeber wrote himself. If the book does anything, it shatters your view that the system we have today is inevitable or ideal. Debt and our indebtedness through mortgages, credit cards, medical debt and student debt is a massive burden on society that is killing the potential of billions of people.

The trend of accumulation of power in the upper classes has come back to the forefront with the blockbuster book, Capital in the 21st Century by Thomas Picketty. The central thesis of the book is that when economic growth is less than the return on capital, wealth moves towards the top of society. That is, a worker who is basically riding economic growth through wage increases can never catch up to a person who is earning their revenues through return on capital. The historic norm for return on capital, most of which is housing, is 5%. So growth below that leads to an accumulation of wealth at the top. Of course, the book outlines the case and the structure of capital in a much more detailed way that we should all try to understand. Growth in the west is currently just above 2%, but between WWI and about 1970, it was near or above 5%. Coincidentally that period saw the rise of the middle class, free education, universal healthcare and massive technological innovation.

We have now returned to a situation where owning a building is potentially more lucrative than riding on society’s innovative capability – this is a dangerous situation. Since wealth (specifically capital that can be leveraged or become liquid) is simply a storage unit for power, we seem headed towards a return to a plutocracy of some sort. Despite the common assumption that we live in a democratic society where the government is held accountable by the people, power – both political and financial – has actually shifted away from the population in the past forty years and into an elite of extremely wealthy individuals.

However, over the past fifty years a significant portion of the population has been made docile by television, video games and low cost products from emerging markets. Our own greed and sloth have led us to a situation where the good jobs are gone and the future does not look that great. While the majority of society’s situation has stagnated, our elite accumulates more power and a great deal more money thanks to globalization and the segregation of the supply chain of major corporations. The excellent book The Great Convergence explains how there are three key elements to a society’s economic structure: The movement of goods, ideas and people.

The first pillar, goods, was made much cheaper with the invention of the steam engine, allowing Europe to move its goods to markets around the world. Previously, you could only sell to local shops. The second pillar, ideas, has been made extremely cheap through the Internet and telephone, allowing companies to move their knowledge to emerging, low-cost markets. This has led to a convergence of salaries around the world. The cost of labour in Eastern China is now approaching the cost of labour in the United States. The last pillar, the movement of people has not been solved. It is still rather costly to move people around the wold, but telepresence systems, hyper loops and high speed trains may change that. For now at least, the book paints a clear picture of globalization and the impact it has had on the working classes in the “western world” – basically it has killed a lot of their jobs.

Moving back to politics, which is intrinsically linked to economics, we can see that the political trends around the world are only getting worse thanks to endemic corruption. In the United States, where unlimited political contributions by corporations are a sad reality, the situation is even worse. Super PACS, which allow money to be funnelled to political messaging, have taken over the political system. It is not just the paid advertisements that get set by a wealthy elite, the messaging in those paid advertising and the issues they focus on inevitably get carried over into the “mainstream” press and even the “fake news” sites. Larry Lessig of creative commons fame, is putting together a Super PAC to end Super PACs (TED Talk)). He is trying to raise a large amount money to change the public financing laws. We will see how that works out, I have my doubts. Countries such as Canada have strict donation systems and I am not certain that our political system is significantly better. On a side note, he who must not be named, was elected with a much smaller campaign budget than Clinton. This may indicate something as to the value of Lessig’s initiative.

From what I can tell, the only reasonable remedy to our current trajectory is a dramatic shift away from our current form of governance. If there is one country we should look to for recent inspiration, it would be Iceland. During the 2008 financial collapse, Iceland was plunged into crises due to capitalist cowboys who took out massive loans on behalf of unwitting taxpayers and gambled on the financial markets. During the collapse, creditors came calling and in response to attempts by bankers from the city of London and New York to claim those loans, Iceland nationalized the banks, wiped out the loans and re-wrote its constitution (which was later overturned, but hey, they tried!). While Canadian banks are in good condition, they are continuing to underwrite incredulous housing prices and credit card debt with little hesitation. We will see what recent interest rate hikes have on the market. We might want to have a public discussion on the subject of debt, profits and what role banks have in democratic society. As mentioned, money, the money supply and power are intrinsically linked. You cannot realistically meaningfully reform political power without reforming the capital structure of society. And reforming capital structures is even harder than reforming political structures!

Government Structure

The previous Canadian government applied massive budget cuts to our public broadcaster/educator, cut science research and reduced capacity of Statistics Canada – these are all ways to blind the electorate and future governments. In discussions with people in the current administration, they have pointed out the need to rebuild parts of the Canadian public service and that until this is done, certain policies and proposals have stalled.

With a reduced government, it is easier for to turn to private interests as a solution and privatize “underperforming” assets. You can see the evidence of this shift with the the now common public-private partnerships and the Greek financial crisis. Even in the sensible, polite and peace loving country of Canada, we have let both our provincial and federal governments remove democratic power and transfer it to closed door meetings and financial interests as illustrated by our recent international free trade agreements that were not discussed publicly until they were complete.

In terms of solutions, we need to leave our Westminster or Republican box and return to first principles. If we want a government for the people, by the people and of the people, we should start our thinking from scratch. A simple patchwork of mixed proportional representation, reformed prime-ministerial powers and reformed party leadership powers are not enough to fix our situation. We must think much, much bigger. We are facing massive environmental and economic challenges. The planet is warming faster than ever and countries we once laughed off as uninviting and non-competitive have taken over in technologically advanced industries such as high speed trains, electronics and satellites. In addition to our current problems, our society has stagnated – the United States can no longer send humans to space, a billion people are hungry, we have 27 million slaves in the world and full-time employment at minimum wage is below the poverty line.

A friend of mine once explained that you should wait for new technology to be 10 times or 1000% better before you change your machine. This is true of televisions, computers and other things. If it ain’t broke, don’t fix it… unless you have something that is 10X more powerful.

So in light of all that, we need to think seriously if we can reform our way to a solution or if we need to start talking about a major overhaul of our democratic system. Here are three ideas that might have an impact.

1. Dramatically increase the number of elected officials

With 338 federal MPs, about 100 MNAs per province and a few city councillors per city, it is too easy to control and co-opt the system. In the 1980s British television series, “Yes, Minister” and “Yes, Prime Minister”, the UK PM asks his political advisor for suggestions on how to reform the borough level political system.

She counsels a scheme recently put forward by a Professor Marriott, which would give power back to the people by making town halls genuinely accountable. This involves making each councillor responsible for just 200 local residents, which would then lead to a large local council that would report to a smaller executive committee. Councillors would then be in close contact with those that voted for them — and would have to listen to their concerns. By the end of the episode, the civil service, fearful of losing power to “the people” teams up with power hungry politicians, who think they know better than the average citizen, to convince the prime minister that the idea is ridiculous.

Scientific studies have shown that the average human has evolved to live in a community of 250 people, we are comfortable knowing and interacting with that many people. In ancient times when a tribe expanded beyond those numbers, they would break off and form another group. If one person can only know 250 people then I would propose we should have 1 representative per 250 people. In Canada, with 35 million people that would be 140 000 representatives – they could either be spread out across the various levels of government or we could enforce that ratio of 1:250 for each level of government. At that ratio, Québec would need 64 000 representatives and in Montréal, 6 000 representatives. Not that China is exactly a democracy, but the Communist Party does have 89 million members, or about 1 in 12 Chinese or probably 1 in 8 adults. Their way of functioning is fascinating and merits a closer look. The long term potential of the Chinese system is debatable (as is the West’s), but it is surely working for most Chinese right now.

Getting that many people to have a coherent discussion and make decisions was impossible before the Internet. The German Pirate Party has proposed an interesting solution to the issue of delegating authority in large groups. Their system called Liquid Feedback allows a person to offer your vote on a subject matter (i.e. Environment, Economic Policy,…) to someone else. However, you ca withdraw your vote delegation at anytime!

During election time, because of my involvement in politics, many of my less politically inclined friends ask me for whom they should vote. Many of them would happily hand me their vote if they could. The beauty of the Liquid Feedback system is that you can hand off your vote to someone else, but you can also withdraw it at anytime. So, if you really trust someone on copyright reform and someone else on agriculture policy you could hand off your votes on those issues to people you trust, but if you change your mind or if they change their positions, you can withdraw your vote. Such a system starts to approach a true democracy.

A combination of a radical increase in the size of representative bodies and the delegation of votes with withdrawal powers would make it much harder to lobby and co-opt the system. It would also force many more people to actively Think about public issues and consequently spend less time on items that do not contribute to the advancement of society.

Convince a larger group of people of the merits of a policy, rather than a small isolated group should inevitably lead to policies that benefit more people. To reach consensus in large groups, you actually need to propose sensible policy with facts and reason. Aboriginal groups’ decision making process was restricted due to the lack of a written language (see my post here). Their need to discuss and reach consensus rather than create a policy and enforce it through written directives, was an inspiration for the leaders of the American revolution.

2. Limit the number of terms

The initial concept of representative democracy was that a person would volunteer some of their time to represent their community and then return to their line of work. A true democratic politician cannot be a professional politician, they should be a member of society who wishes to contribute their time, knowledge and experience. I would propose that no representative should be allowed to serve more than two or three consecutive terms. In combination with the increase in the number of representatives, this would result in a tremendous churn of people through the democratic system. Interestingly, China cycles its top members between State Owned Enterprises (Crown Corporations), various governmental departments and actual positions in the party. China also has mandatory retirement ages. This shuffling of the political deck would result in two things – more people would familiarize themselves with democratic institutions and it would avoid the creation of power bases amongst a clique of people.

Admittedly, the downside to term limits is that it can create lame duck situations where civil servants and other pretenders to power know they can wait out a curent representative’s term. It is critical that this not only apply to the President, as in many countries, or else you end up having lame duck presidents while members of parliament or congress bide their time and build up political capital that can reach beyond that of the executive leader.

We have this inherent tendency to reason by analogy. In fact, we should reason by first principles – we should not say, “How can we make the current parliamentary system slightly better through the copying of another system such as mixed proportional?”, we should instead reason by asking, “how do we best represent the interests of society and ensure we collaboratively design a future where we all benefit the most possible in the long term”. A true democratic system would entail more fluid exchanges with policy makers and a larger representation of the population’s wishes in policy making. Part of the solution is increasing the size of the elected body to offset the growth of the number of employees in the public service and the wealth accumulation in private industry, both of which represent important forms of power in society as well as inertia that prevents any change.

3. Basic Income

To be clear, my criticism of our mixed-economy capitalism is not indictment of capitalism in general. Our current framework of liberal representative government and Keynesian policies has succeeded in providing massive amounts of material wealth to the majority of citizens. Despite the fact that many people have been left behind, a visit to a typical supermarket is a friendly reminder of our tremendous wealth. Who is not blown away by the quantity, variety and quality of the food available in your average supermarket?

Yet, most will also agree that society has not completely fulfilled its promise of equal opportunity and justice. How can we affect change that moves us forward? The way society functions is primarily dictated by the distribution of power and capital in that society as described above. The well-known Golden Rule says, “Treat others as you wish to be treated”, but there is a more sinister version, “He who has the gold, makes the rules”. Our current power structure has not changed significantly since the instauration of representative democracy in the 18th century.

In the 18th century and early 19th century, most of the western world transferred power from a land-owning aristocratic class to a body of elected representatives in the form of a Republic (i.e. America, France) or a Parliamentary democracy (i.e. UK, Canada). These representatives are elected through universal suffrage in one elector format or another. Despite the inventions of the steam engine, electricity, cars and the internet – the electoral model for distributing power in society has not substantially changed.

Money is a form of accumulated power. Currently, the vast majority of citizens are trapped by their financial situations. We are tied down by a combination of high property costs, the expense of raising children and overspending due to our consumer culture and advertising industry. Few of us have time to get involved in social change or in our communities. We do not contribute due to a lack of time, but for a lack of economic freedom which zaps our energy and motivation. Basic Income, a movement that is gaining traction around the world, is a potential solution to some of society’s ills.

To change the world, you must change the power structure. Yet, to change the structure within the current structure is extremely challenging. This is largely why it has not happened and why it took revolutions, blood and tears in nearly all countries to affect meaningful change. In his excellent Essay, “Enough with this Basic Income Bullshit”, Nicolas Colin outlines his criticisms of Basic Income. Largely, it boils down to a skepticism that people are willing to sacrifice life and limb for a Basic Income. He says “This is yet another reason why I’m skeptical about basic income: I simply don’t see the movement behind it. It’s intellectually seductive, a lot of people like the idea, but I’ve never met anyone for whom basic income is literally a personal question of life and death.” He is right.

From my point of view, the current electoral system will never implement a meaningful basic income unless a massive crisis hits society. In Switzerland, where a referendum on the subject was held last year, the results were interesting. At firs the elected officials were open to the idea, but once they understood that Basic Income was a transfer of power to the citizens, they unanimously voted against it. The population of the conservative country did vote for it to the tune of 30%, not bad for a first try!

The only type of basic income that elected representatives might support is one that simplifies bureaucracy and reduces government costs. This could be a either a low amount or a negative income tax. In other words, what our politicians might support is a program that transfers power from the bureaucrats to the politicians. As they say, the quickest way to be disappointed in someone is to expect them to act against their self-interest. Expecting our elected representatives to vote to remove power from their own hands is a recipe for disappointment.

Bearing this in mind, the only path to a real universal basic income (or a Citizen’s Dividend as I prefer to structure it) is through a Political Party. A political party must be born that holds at its core that a basic income is a fundamental right that allows for a decent standard of living to all. The party must have a clear net dollar figure and a clear proposal for changing the current tax system. Though they need this issue at their core, this party must not fall into the trap of being perceived as a one-issue party (i.e. Green Party) and must have concrete proposals for all areas of society – economy, environment, family, immigration etc. A basic income political party must rally a variety of actors to its defence, forming such a coalition would be a monumental task – not unlike the work of American or French revolutionaries. It seems the Germans, innovative as they are, have started the first Basic Income Political Party.

Forming a political party whose number one priority is a basic income would allow for a few benefits. First, it would allow basic income advocates and supports to center around a party. It would allow for political donations and related tax benefits to support a group of basic income advocates. And thirdly it would put pressure on existing parties to adopt pro-basic income positions to try and offset the movement.

A friend and well-known activist, Dmitri Roussopolous, recently brought to my attention a little known fact. He explained that most progressive initiatives start at the municipal level, not the national or state level. Accessing power at the municipal level is much easier than at the state level and the formation of a policy or political position at the municipal level is within grasp of a motivated group of citizens. Once established at one municipality, the policy can spread to other cities as it demonstrates it viability. A Basic Income Political Party may be best starting at a city level and creating a basic income at the municipal level through municipal taxes, congestion charges, and tourist taxes. The media attention this would create for the idea and the movement would be significant. Though a basic income at the municipal level would be lower due to the revenues available, it could be a real tool to convince others that it is a sound policy and that it will not lead to mass laziness.

The reality is that civil society is still trying to fight for change using 20th century tools – primarily protests, strikes, unions and other such mechanisms. In our globalized and technologically advanced world, civil society is struggling to compete with complex trade agreements, powerful and addictive technologies, a highly advanced advertising industry and a certain status quo that believes the defeat of communism marked the end of all major political discussions. To truly make an impact in everyone’s lives, we need a solution that will free citizens to participate in public life.

Ancient Greek democracy was based on slavery. Free men of Athens could participate in debate because they had slaves working for them. The slaves took care of the more basic tasks – construction, agriculture, food preparation and transportation. Today, we have the opportunity to create our own slaves through our technological innovations. Thanks to machinery from the steam pump to the washing machine to the airplane, we have and will replace a great deal of our drudgery with technology. Try to do your laundry by hand and you may realize how liberating that washing machine is!

Deep meaningful change can not come from a minority of society. The means of organization and communication of the masses are too powerful for any minority of a society to rise up and seize power. Additionally, due to the international economic system, markets and external relations, any attempt by a small minority of the population to change things will be crushed. As such, the only way to affect significant change in the structure of society is to convince a majority of people to follow us.

We must build an army of people motivated by their own personal interests, the interests of their children and a general desire to improve things. Humanity’s deepest and most powerful desire is to be free. As the late Robbin Williams said, when playing the Genie said in Aladdin, “But oh, to be free. Not to have to go “Poof! What do you need, “Poof! What do you need, Poof! What do you need?”. To be my own master. Such a thing would be greater than all the magic and all the treasures in all the world. But what am I talking about? Let’s get real here, that’s never gonna happen. Genie, wake up and smell the hummus.” No Genie, it is possible.

In my view, basic income is the most direct and powerful way to free ourselves and start a new form of society. A significant portion of society is caught between their revenues and their debts, they must meet their mortgage payments, accept less desirable jobs or compromise their decisions to satisfy their short term needs. If we can free people from short term anxiety and accompanying mental issues, we may be able to free the metaphorical genie from the bottle – and then who knows what will happen. As a side note, perhaps one reason many companies are started by upper middle class people – Gates, Musk,… – is that they have a certain freedom to experiment.

The list of society’s problems are long and complex. The list goes from overfishing, environmental degradation, sectarian wars, economic collapse, to populist nationalists! These issues are overwhelming to any of us and it is far easier to tune out than it is to engage. Basic income would enable us to confront many of these issues as we would free up parts of our brains to think about issues other than short term requirements.

What Next?

Capital structures of society are tightly bound with power structures. Changing one, changes the other. Which head do you tackle first? The answer is likely not easy, but if we can consider the idea of increasing the representation of the people in the power structure, offering a basic income and increasing the churn of elected officials, we should move closer to a society where the average citizen has a better shot at accomplishing their goals and society can make wiser decisions.

The only way to affect such massive change is to fight. In all likelihood, the fight will fail. But, it is worth it none the less. To keep our system and to keep switching from red to blue, blue to red, seems like an exercise in madness. It is challenging to consolidate these ideas into an essay, but the four books mentioned are fascinating and worth a read. If it were up to me, a basic income, liquid feedback and term limits would be the top three priorities for a society. With these three ingredients in place, anything is possible.[:]

Thoughts on China in 2017

The most desired thing in the world is respect. Everyone wants to be respected and to be proud of who they are and what they have done. This is what drives us to spend most of our money on a variety of goods we do not really need, it is what pushes some to spend great sums on weddings and it is what leads countries to war. Respect and the desire for it are a principal driving force at all levels of society. As Aretha Franklin said, “R-E-S-P-E-C-T, it’s what I want!”

I lived in Beijing in 2006 and returned in 2010 and now 2017, the changes are staggering. I write this post from a bullet train travelling at 303 km/h on a high speed rail network that is larger than the rest of the world’s combined. There was no high speed train in China in 2006. When I left Beijing, there were three subway lines, there are now 18. Shanghai moves 3 Billion people a year on its subway system. China has built a giant canal from the south to the north to bring fresh water, it has built thousands of kilometres of the most advanced rail system in the world and it is installing more solar panels every year than all other nations combined! China has achieved change on a scale few could have imagined. Alain Peyfritte, the French Sinologist wrote a book in 1973 titled “Quand la Chine s’éveillera, le monde tremblera” – translated to “When China wakes up, the world will shake”. The world is shaking.

On my most recent trip I met with lawyers, bankers, entrepreneurs, environmental and safety consultants, business owners and ordinary folks on trains. Many voiced criticisms of China and showed a real frustration with corruption in government and a lack of individual freedom, yet the general mood is extremely optimistic. Nearly everyone felt that China would continue to develop and it would turn a corner on environmental issues and transition to a consumer economy. They felt that the ship had so much momentum and the leaders, though not perfect, had a genuine and indomitable desire to make China a world power – that nearly nothing could stop China ascendancy.

Air quality in the major cities is a big problem. While I was in Beijing, the Communist Party had its annual gathering and magically, the air cleared up thanks to the shutdown of certain coal fired power plants and other factories.

The good news is that Beijing continued to operate and the economy was not harmed despite the plant shutdowns – meaning that China could likely safely shutdown many of its coal power plants and continue to operate. In fact, China plans to reduce its coal consumption by 800 million tonnes by 2020 (from about 3.4 billion) and install 103 GW of new solar power capacity (they currently have 74 GW). In 2017, Beijing announced that all city taxis that are bought or changed must now be electric, Shanghai has offered free licence plates for electric cars, and during the annual Communist Party meeting this weekend, Chinese leaders declared war on air pollution and promised a blue sky for all Chinese. China also introduced a much improved environmental law in 2015 that is progressively starting to take effect. China is poised to shift into a new greener gear that will firmly place it as a world leader. Already, five of the world’s six largest solar panel producers are Chinese.

Poverty remains very real in China, but we can find poverty everywhere and any visit to parts of the US will remind you that you can be both a Global Superpower and have tremendous poverty and exclusion. China may only have one aircraft carrier (a Russian one at that), but it is building up its military and the announcement by Trump that the US is scaling up their military does not sound good. Let’s be frank, China and the US are unlikely to go to war – at least not directly and if they did both parties would have major casualties. However, a critical part of establishing a sustainable world order that is beneficial to most people must include a newfound respect by the West for China. During the first League of Nations, the predecessor to the United Nations, the Japanese delegation and Asian people were not accorded the same rights as people of the western nations. This lack of respect for Japan and the Japanese led to a shift towards militarism and isolationism that contributed to the second world war.

The West is used to being in charge. This is despite the fact that China was the most advanced nation for most of human history. We will need to learn to live with a powerful China and to respect it or we will be doomed to conflict. This transition will be very difficult. It is one thing to tolerate a person or a nation, it is entirely different to treat them as an equal. Can the United States treat China as an equal? Or, is their pride and self confidence so high that they cannot consider China to be a true partner?

If you read western media, especially US, about China, there is often a very condescending tone. This is also true of coverage of countries such as France, the US is always better and the other countries are either too lazy, too corrupt, or cheating in some way. I recall reading an article a few years ago about how GE had re-engineered a water heater they made and was going to onshore production back to the US. The article implied that the Chinese did not understand great engineering and that these brilliant US engineers were able to outsmart the Chinese, simplify production and bring it back to America! There are great American engineers of course, but there are equally great Chinese engineers. To say otherwise comes close to racism. Regardless, GE sold its household appliance division to Chinese firm Haeir in 2016 for 5.4 Billion. Thinking you can outsmart China is a very dangerous position to have.

On the military front, the US actions in the South China Sea seem excessively arrogant and dangerous. The US has claimed certain islands to not be Chinese territory and they regularly navigate war vessels near Chinese territory, this cannot continue. Imagine if China had war ships, destroyers and aircraft carriers a couple hundred miles off the California Coast or near New York City, would the US tolerate that? As the golden rule says, “Do unto others as you would have them do unto you”. This is especially true when the person you are treating is growing in power and strength. Who wants China to come back in 25 years and say, “remember how you treated us in 2017, now it is our turn”. If the US and the west cannot implement the golden rule with China, we will be in for a big, complicated and unpleasant situation.

The West often criticizes China for human rights abuses and indeed there is much room for improvement. However, we should not forget that over 2.2 million people are in jail in the US, much of western wealth was built on extreme violence, expropriation of ressources and slavery, and the second world war led to the mass extermination of 6 million innocent jews, communists and other dissidents. So human rights is something the West has had to invent and adapt to over the course of the past 60 years or so – not exactly ancient history. The West does have a right to criticize China for human rights abuses, but we should perhaps look at the situation in a broader context. China’s priority is peace, stability and prosperity. This unfortunately probably requires some forms of coercion that are not ideal. To grow the economy in China, avoid mass uprisings, maintain some form of environmental progress, somewhat control corruption and keep the various political and financial interests satisfied is a task with a complexity that is hard to measure.

Where will the world go from here? With Trump in the US, Brexit in Europe, Xi Jiping in China and general economic stagnation in the West it is very hard to say. One thing is certain, if the West does not begin to treat China as an equal and with the same respect they offer other western countries, we will have a problem. China may indeed want to dominate their sphere of influence in Asia, but that is no different from the Monroe doctrine the the US domination of the Americas for most of the 20th century. Frankly, China has been far less active at organizing coups and propping up dictators than the US – yet. As a Canadian, I think there is an important potential role for Canada to play a peacemaking, educational and conciliatory role between China and the United States. This must be done if we are to avoid the words outcomes of a growing power that hits a wall set by the established power structure. We all want respect, China, Canada, the US included – if we can offer genuine respect for each other there is hope for a strong and prosperous future. Without respect, we are lost.

On Immigrants

Basic Income as a Solution to Capitalism’s Structural Problems

Thomas Picketty’s seminal book Capital in the 21st Century outlined some of the underlining principles of capitalism. His main thesis is that if the return on capital is greater than economic growth, wealth inequality grows. The rich get richer because they can earn a greater return on their investments than the growth of wages. This ensures that those without capital cannot catch up to those with.

This is a critical and structural problem of our current capitalist system and if left uncorrected, it will lead us back to an aristocratic world with elites too powerful to touch. The gap between return on capital and economic growth must be closed to ensure a level playing field for all.

Capitalism is fantastic. It has brought tremendous material prosperity, advances in science and technology and a general security to the world. While it is a great system, it needs adjustments, like any machine might. One adjustment that could very well save it from its own destruction is the institution of a basic income. A basic income in and of itself is not the solution, it is rather the effect it will have on the economy and the change to society’s power structure.

A principal cause of the post-war economic prosperity identified by Picketty was the destruction of capital during the wars. During WW1 and WW2, capital to income ratios – that is the amount of capital in society to the income of society – went from 8 to 1 to 3 to 1. The subsequent growth and accumulation of wealth at the top of the ladder has led us back to a world where capital to income in society is back at the dangerous levels of 8 to 1. The last time this happened, we had demagogues, fascists and dictators take over the most prosperous countries in the world.

There are other ways to destroy capital: inflation, a tax on capital or through economic growth that is greater than return on capital. All three of these would reduce the relative weight of current capital in society and thus encourage individuals and corporations to invest in productive assets – factories and such. One interesting analysis of this situation was presented by Oliver Heydorn at the 2015 North American Basic Income Guarantee (NABIG) conference in New York city. He explained how the difference in accounting practices for capital expenditures and operational expenditures (where you can depreciate capital expenditures) leads to the same gap between the return on capital and wages that we see with Picketty. Oliver is a social creditist and their political theories merit a closer look. Social Creditists stipulate that due to certain accounting practices and monetary policy, we inevitably obtain a growing gap between the revenues from labour (salaries) and the return on capital investments. This leads to a labour force with less and less purchasing power as the costs of goods increase faster than their wages do. This loss in purchasing power leads to less consumption which compounds into less jobs and a stagnant economy. We are living in that world now.

Social Creditists promote the idea of a central authority that monitors prices and cost of living and wages and issues currency in concordance with the gaps. Specifically, they advocate that “The solution to these problems is to create and issue a sufficient volume of debt-free money in the form of the compensated price and the National Dividend to equate the rate of flow of final prices with the rate of flow of consumer purchasing power.”

A National Dividend could very well be seen as a basic income. It would provide more purchasing power to the average citizen and rebalance the relationship between capital and income, bringing us back to a better situation not unlike that of the 1950s, 1960s and early 70s.

Bibliography

http://www.socred.org/blogs/view/a-national-dividend-vs-a-basic-income-similarities-and-differences
http://www.peoplescapitalism.org/presentations/PeoplesCapitalismpaper3.pdf
http://www.ssc.wisc.edu/~wright/Published%20writing/paper%20for%20basic%20income%20studies.pdf
http://www.pieria.co.uk/articles/how_basic_income_will_save_capitalism

On Trump and Revolution

Rome survived Caligula. Caligula, the roman emperor who named a horse senator, organized mass orgies and committed numerous atrocities and ruled over Rome from 37 AD to 41 AD. Rome, being a large and powerful empire with a bureaucratic system, survived and even grew under Caligula’s divine leadership. Similarly, America will continue to grow with Trump in power. The American Presidency, as Elon Musk said, is a captain-ship of a very large vessel with a small rudder. The impact of the president is completely blown out of proportion by the media. A good or a bad president has much smaller impact on American society than most think.

There has been more ink shed on Trump than perhaps on any other politician. I recognize the irony of my publication of year another blog post on the subject. Yet, his victory is a massive signal to those of use who are far removed from the reality of many blue and white collar workers. My brother lives in London and he was flabbergasted by Brexit. He and I had no clue of the levels of anger in the US or the UK that sent both countries down a path led by isolationist and nationalistic leads with dubious track records as members of the human race. People seem so fed up with the lack of progress by the establishment that they will overlook personal faults and outright lies. This is not the first time, nor will it be the last time that a person rises to power in an unexpected way. For a more in-depth analysis of the worldwide rise of populists and the actual electoral strategy of Donald Trump take a look at HyperNormalization by British documentarian, Adam Curtis.

An American colleague once told be a story. A private equity company bought a manufacturing company. The investors came out from New York to the plant and asked the workers to build a stage outside the factory for a big announcement. The staff built a big wooden stage, with a podium, and a staircase. The investors asked them to gather all the employees for an announcement. With the hundreds of staff gathered, the investors got up on the stage and promptly announced that the factory was being moved to Mexico and they were all fired.

This story is not uncommon. Part of the fault is our own, we want cheap products. Our societal dictate that the all powerful consumer must have a cheaper iPhone, a cheaper car, or a cheaper flight. Don’t get me wrong, who wants to spend more than they have to? But, the consequence of these moves to low cost countries is now truly hitting home. The people who worked at these factories, all across America, Canada and other developed countries are revolting. People who once had good unionized job with a good pension and a path to a home and two cars is working as a greater at Wal-Mart. Not only has this happened to line workers at a factory, it has happened to middle managers, executives and top earners who previously had a good quality of life and a path to success for their children. People are angry and rightfully so.

Some commentators said that Trump’s victory was Whitelash against progress on social and racial progress. They say that the vote for Trump was a vote against a black president and black lives matter. There is no doubt that the US is a very racist place, both in the north and the south. You can simply read books such as Between the World and Me, A Case for Reparations or The Arc of Justice to see how racism is very deeply embedded in US society (and most others too). The presidency tends to cycle between the left and the right, which is not surprising. One team wins, the other adjusts and comes back. Back and forth we go. The arc of history is long and may bend towards justice, but it is not straight. Southern pro-slavery president Hayes was a response to Lincoln and emancipation. Nixon was a response to Lindon B. Johnson and the Voting Rights Act and Trump is a response to Obama. However, I think that Trump was a response to the lack of change Obama brought, not the actual change that did occur. Obama did not get much done for black Americans, did not create high paying jobs or reduce the American deficit, or improve government services substantially. Many people who voted for the Hope of Obama, voted for the Greatness of Trump. People want progress and they will go where that is offered with honesty. Clinton represented nothing – just more of the same.

Trump, for all his numerous faults, really believes in himself and he makes a compelling case. I remember an interview during the primaries on Fox News where Trump really made an impact, he is an expert communicator – much like George W. Bush. He just speaks in a different tongue that the educated class, one that appeals to a significant portion of the US population who had to suffer through the US public school system. This video compilation, selectively chosen, certainly makes Trump look great and revolutionary.

Personally I am a horrible predictor of politics. I thought Clinton would win, that Trudeau had no chance and that George W. Bush would never win in 2004. So, my opinion is not exactly worth much. Will Trump be able to execute on his promises, such as his 100 day plan, unlikely. Congress, despite being Republican, is fundamentally pro-big business due to campaign finance laws. Corporations might bite on the tax cuts, the oil and gas exploration and other items, but it will be simply amazing if Congress goes along with term limits (an idea I actually agree with) or the destruction of NAFTA. I am sure they will work something out.

With Brexit and Trump, one thing has become clear. Our societies have been cleaved in two – educated urbanites working in open-space offices with espresso machines (I plead guilty!) and a working class in lousy jobs, diminishing purchasing power and no prospect of measurable improvement. In many ways, this actually reflects the natural tendency of capitalist societies and has been thoroughly documented in Picketty’s book, Capital in the 21st Century. His research shows that the period after WW2 was an exception and what Trump supporters or Brits or even the French refer to as the 30 glorious years after the war, was a historical anomaly that was only possible due to the massive destruction of capital during the war and very high tax rates.

As soon as capital can earn money faster than a worker can, society dives back into a world of the haves and have-notes where it is nearly impossible to cross the chasm between the two. Can we go back in time to the boom years of the 50s- late 70s. Yes, it is possible, but it would take a worldwide war on the accumulation of capital at the top and a massive redistribution or quantitative easing for the people along with a revolution in the electoral system and a new division of power. How likely is that to happen without war? Not likely, but not impossible.

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Also, this Munk Debate on the rise of Trump is pretty good.