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What poverty is good for

by on March 5, 2014

Isn’t it obscene we need a big-cheese study to tell us inequality is bad?
And does that mean if someone else comes up with a (sponsored) conclusion that it is in fact good, are we going to keep this system going on a little longer?
What’s the difference between 40m gift to Bangladesh and the money one used to be able to pay the church in order to wash one’s sins away?

now for the real post:

Newsflash: Inequality hampers healthy economic growth.

A twelve-year-old could prove this on the back of an envelope:
– When people have money, they might spend some.
– Unless they are grossly mislead by marketing, it’ll be useful.
– More demand for useful goods and services.
– Better organisation of the economy, rise in useful productivity.
– Positive feedback loop!

If you prefer to hear this from respected thinkers at the IMF:
Equality is good, fair distribution rules
(provided it isn’t too extreme)

This stands in contrast to a popular lie that we need thriving elites.
Again, let’s see our twelve-year-old for a second opinion, shall we?
– As society drifts apart, consumption splits too.
– Some revert to bare necessities, or resign to living off junkfood.

(Junkfood, mind you, that is only so cheap because production is subsidised, i.e. we all pay, as we do for harm to health and the environment.)

– Others revel in increasingly useless luxuries.
– Allocation is in a muddle, useful production dwindles. Hoarding.
– No one really hoards money – they put it to work.

(We’ll accept for now that money can work – dealt with elsewhere.)

– Productivity becomes less important than turning money into money.
– Vicious cycle with a constant need for the parasites to find new hosts.
– Owners and their claque equate “economic health” with “growth”.*

(But it’s gotta be their kind of growth!)

Another no-brainer: the easiest way to obtain funding for your business plan is to structure it in such a way that it gives more money to those who already have too much.

Apart from staying in touch with unbeatable common sense, we must study Lady Margret’s mindset, practice empathy for the enemy. Personally, I find the question of how we got this far, and how manipulation works (incl. PUA) almost as interesting as the ongoing crisis and its possible solutions. So let’s spell out the Iron Lady’s remarks, to see if a twelve-year-old can spot the fallacy:
– Beating down the unions is “protecting employment”.
– Stealing from the poor is called “wealth creation”.
– This wealth will by some law of nature “trickle down”.
– Said law of nature needn’t be specified – it’s a given.
– It might be unfortunate that there are poor people…
…but we need to keep redistributing upwards…
…because it means downwards distribution.
– Hence: poverty is good for you!

Or as Thatcher seemed to believe:
Taking from the rich means taking from the poor.
So to reduce poverty is to increase it.
If you can believe this, you are 100% more likely to join the in-crowd** – that’s irony!
…and you’ll have people like Newt Gingrich calling you “one of the best”.

If it were true that anyone can get rich, provided they work hard enough, then being poor is your own fault, because you just didn’t try (tx HZ). The American Dream is a worldwide LIE.

In fact, precarious conditions are good for exploiting people, as seen in…
…Ask a Twelve-Year-Old 4.0

– The well-fed, educated and housed are less likely to submit.
– So the “best” workforce is a hungry and frightened one.
– Well-Fed Alan Greenspan concurs!

Or, in IMF-speak: “inequality continues to be a robust and powerful determinant [of growth]” ibid. p. 25, from the conclusion paraphrased above.

It’s paradoxical that insecurity is a major driving force in keeping the current system secure. Would you go to work tomorrow, if you knew you could live off capital for a few months, and then easily find something equally rewarding in October? One reason you can’t – at least not if you care about your career – is because potential employers check CVs for gaps. You might do it again. Same reason woman still don’t receive equal pay: they could vanish for nine months, and then decide that life is not all about working for the man.

The real Axis of Evil.
To pick a more dramatic example, see the review in The Economist of The Corporation: the film is a “surprisingly rational and coherent attack on capitalism’s most important institution”, but fails to mention “the immense damage that can also flow from state ownership”. Don’t get me wrong: I love that publication for its simple and clear language, but sometimes you need the eyes of a twelve-year-old to see beyond ideological blinkers. “Alignment of the state with the public interest” is something we just haven’t figured it out yet. Democracy is new, that’s the problem. Eventually, people will laugh out loud when an otherwise serious publication says it’s either USA or North Korea! But for now, communist dictatorships (which aren’t really communist, but that’s another story…) are very valuable to our owners, because they can be used periodically to scare people, and nip good ideas in the bud.

(The film is already two-and-a-half hours long. Here’s my first effort as a screenwriter, just to make The Economist happy. Addition to The Corporation, by Michael K: “We don’t want to imply that state control would automatically make everything all better. That is the topic for another film entirely, which would have to deal with (a) how we use state intervention today, e.g. bailouts, tax advantages, corporate welfare, (b) the heritage of McCarthyism, and (c) the definition of democracy.)

The grass isn’t greener.
Let’s not be fooled that those supposedly on the sunny side have it better. Hanks can’t just go for a walk, he isn’t free. Bieber can’t even get laid without it turning into a military operation. Besides, for most star actors, musicians, politicians, comedians and drug dealers there are ten who just didn’t make it. “The [XYZ] business is a cruel and shallow money trench, a long plastic hallway where thieves and pimps run free, and good men die like dogs. There’s also a negative side.” Yet they are the carrot that’s dangled, to keep a generation of waiters-cum-actresses working for tips. Coming up, you take the shaft, do free overtime, pay for extra training – small wonder if one ends up shafting others once one hits the bigtime. Cor che sanguina vuol sangue. And if anyone dares to suggest there might be a way out of this vicious cycle, he’s probably a radical pothead hippie.

((The real moneybags are out of the limelight, by the way. More common sense: if you could buy anything, the first thing you’d buy is invisibility, innit? I’m not talking about trust funds in tax havens – just the regular Quants, or people like me who you simply NEVER hear of…”comfortably off” is the euphemism. It means you have a portfolio and a portfolio guy, own a bit of this, a bit of that, and then you sell it in time, before the hammer drops – usually on the public. You talk to the guy, and he listens politely, then does whatever he thinks might keep the scam going a few more years. Meanwhile he hates your guts of course, because if he could afford to, the account he’s worrying about would be his own. You don’t trust him either, and in fact we all hate ourselves to a certain point, not least because there’s all this negative energy accumulating due to how the money is made. And all of it is invisible to the common man, becase there’s next to zero education about it. In fact, just for amusement, I sometimes DID try to call a spade a spade…telling perfect strangers during the usual small talk that I haven’t done an honest day’s work all my life – they just blanked! It’s so not part of the official narrative that the mind boggles. I’m not kidding. Even people who got to know me pretty well just kept asking “Are you still doing that thing you once did for a living?” But we exist: people who buy what they want, when they want, and decide on their own steam what they’re going to do on any given day, with no hard economic decisions but for the Sword of Damocles. I did it for ten years, and I’d still be doing it a while longer, if my conscience could take it. Thanks, by the way!))

Here, we can milk endangered Bangladeshi workers for extra value: (a) there’s competition to point to, divide and conquer (God forbid the workers of the world unite!), and (b) peanuts for a PR photo-op. What are we going to do once the oceans decide that Growth is God, and the whole country gets flooded? Stupid question: We all feel sufficiently terrible for about two weeks, until the next big sports event, and Nike coughs up some free diving gear.

Personally, I made an odd decision to re-define wealth on my own terms°° ((see above)), but have yet to acquire that skill commonly attributed to those we call “poor”: inertia. Over 200 blog postings in a year didn’t write themselves. While I met many who were sad, bitter, angry, confused or restrained, I’d be hard-pressed to name a single person who is truly lazy. People will do practically anything to seem useful. As with chimps, everything has a social meaning.

(Disclaimer: there can of course be legitimate upwards distribution of wealth, namely when someone who is already rich produces or does something so useful that people happily give a sizeable share of their holdings for it. However, this type of merit is achieved by the person doing the actual work, and not by politicians who are little more than hired thugs to manipulate framework conditions so that one is rewarded for work that is neutral, useless or even counter-productive. – In fact, if you take a look around, you might share my subjective impression that it is now the most destructive “production” that yields the most explosive rewards. Thatcher’s son knew this.)

If most of us agree that society benefits from a good standard of living, before you know it some power whore will try to hijack our definition and replace it with their own. Take the stock-market ticker for example. Only one German in ten owns stock, while one in five is neck-deep in debt. Yet there are zero debt reports°, and we’re bombarded with umpteen market updates every day! This is called “stealing the frame”, and while it shouldn’t be technically illegal, it’s vital we come to understand it. Such knowledge can help face horny alphas or worse. (How to immunize oneself against the negative effects of fake praise, see opening remarks of CAI.)

In the pursuit of health and happiness, it makes sense to explore every option. In 2014, I feel it’s safe to tick “robber barons” and file them under “been there, done that” – now possible with a little help from within the IMF.

For more on the IMF paper, see
…or subscribe to (weekly) updates from Tax Justice Network, where I first heard of it.

Sign our petition at

* There is, of course, a certain truth to this – especially if you keep the system whereby interest creates liabilities, but not the money that would correspond to it. P.S. Survival of the species is an ‘externality‘. So we must consider that the right kind of growth could involve some shrinkage!

** This is one of the points where I agree with the neo-cons, neo-this and neo-thats: the highest reward should be paid to that work which eliminates work itself. However, I strongly disagree with the idea that we should then turn our backs on the workers. This takes us full circle to Human rights, not banking plights!

° This part is now being challenged – with considerable success, hooray! – by (part of Banks need Boundaries!) We’re still working on how to translate this into English. See remarks in our New Year’s Post.

°° The wealthy-healthy lifestyle for me personally includes not being dependent on cut-throats who commit acts of savagery on my behalf. Alas, the individual can only do so much. When it comes to the bulk of our retirement money, we all have to pull together before there’s significant change. This is how it should be: solidarity for more solidarity!

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