The resources assigned to taking care of the core needs of the people of this planet should always be higher than for anything else.
The economy is going down.
It's their neoliberalism.
What is this game with virtual money?
They lost us.
These are the sentences that come up regularly when I talk with normal "regular" people who have made some real efforts to understand the real issues around The Economy, i.e. what the current political sphere calls Growth, and what the investors call The Market.
Quickly here is what we collectively understand of the current situation:
- At the beginning of the 1970s, OECD governments started a thing called neoliberalism. That includes the USA, and the then countries of the European Union. This was a replacement for Capitalism. Read that again: we're not in the era of Capitalism anymore. Capitalism was killed in the 1970s and replaced by Neoliberalism.
- Capitalism was about immobilising real money for months or years in order to start new businesses or develop existing businesses. It's a very old practice that existed in 1700 BC (look for Promissory note on Wikipedia and read the History section).
- Neoliberalism is all about making money with financial products within seconds (because more time is a loss of opportunity and an increased risk to lose). Employment and other forms of material investments are out of scope for neoliberalism.
Note: If you are tempted to use the words capitalism and neoliberalism interchangeably, on the pretence that the latter is the consequence of the former, then think about your ass as a consequence of your mouth, and try to eat with your ass and defecate with your mouth. Neoliberalism is worse than capitalism at its worse. Don't mix them up. I rest my case.
- I don't know why and how Neoliberalism replaced Capitalism. Yet we all know about stuff that helped economists (?) sell it to governments:
- From the 1960s, life expectancy started to grow significantly thanks to the progress of medicine. As a consequence pensioners who were often living in poverty were starting to live longer. Numerous states did their best to come up with a way to ensure that elder people would have a better time until their end of life. Money was coming from taxes on individuals and companies. If money is to come from the same source and more money is needed, then taxes must be raised.
- At the same time, the same governments were seeing lower birth rates in the population. Over time, that implied that the proportion of the active population (those in the age to work and pay taxes) to the pensioners was decreasing. So, now we have less taxes coming in over time, while more money is needed.\
- And to add insult to injury, the manufacturing world was automating the production lines, which meant that less workforce would be required over time, leading to higher unemployment and lower salaries, and even less revenue coming from the taxes...\
- As long as we reason with finite resources, the only way to create more money to care for more elderly people is to raise taxes or sell national assets to companies and other countries. There's so much that can be sold until all the valuables are gone, and the core problem remains.
- In order to solve this unsolvable problem, some economists suggested to do away with finite. Their concept was quite simple: decouple money from real life, and create as much money as needed whenever needed in order to pay those who make more money all the time.
- And it happened:
- In the book 23 Things they didn't tell you about capitalism, the economist tells us that by 2000 the worldwide value of the financial products was 2x the value of the manufactured products.
- By 2008/2009, the value of the financial products in the USA was 900x the value of the manufactured products in the USA, with the UK and France around 700.
- By 2023, France and Germany are at 500x (these are public figures available on one of the europa.eu web sites).
- States employ fund managers in order to manage the very financial assets that produce the money that complements the taxes in order to pay for all the public services (health, education, infrastructure, and recently more military spending). Connect to your local Ministry of Economy website and look for the job ads. It's there.
- Last June, as I was catching up with the TRIP (The Rest Is Politics) podcast, I heard at long last a politician (Edward Miliband, a minister in UK's current Labour government) taking issue with neoliberalism and the consequences of this doctrine on regular people like you and me.
There's no question that the growth was too unbalanced, too based on financial services, and eventually, obviously, as we saw with the crash, left us too exposed. And look, I think the great thing about the government was that we used the proceeds of growth to invest in public services. What we didn't do was change the fundamental sort of insecurity of the economy, and the sense of precariousness that people felt.*
- And yet, there's not enough money produced that way: all the public services are going down, all governments try to automate the delivery of public services through half-arsed web sites with minimum support.
- And to add more insults to more injuries, products and services get more expensive while wages get thinner and thinner. People just struggle to make ends meet. And obviously we people resent that state of affair.
- Neoliberalism doesn't work for people. To put it simply I think no economic system should allow any company (such as Google, TSMC, Samsung, Apple, and many many more) to have a higher value than the annual budget required to run the health and education system of any reasonably large country such as the UK, France or Germany (I checked for these 3).
The resources assigned to taking care of the core needs of the people of this planet should always be higher than those assigned to anything else, such as market capitalisation.
I am looking forward to read the manifesto of a political party that lays out a plan that empowers people to get out of this stupid neoliberalism system – together – for all of us.