The Parallel Parliament

by Glen Pearson

Tag: wealth

The Real Creator of Jobs

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IN RESPONDING TO NICK HANAUEER’S observation that “the pitchforks are coming,” one of the .01% noted that the democracy has successfully “tamed” the masses, to the point where violent responses to growing economic inequality are no longer likely.

One wonders what that person must think of the millions marching in the streets of Paris in response to a brutal attack on Charlie Hebdo, or the hundreds of thousands marching in streets across the world seeking change in the world’s financial system. These demonstrators might not carry rudimentary weapons like pitchforks, it’s true, but on the other hand, armed with smartphones, websites, petitions, cameras, and powerful texting abilities has meant that they can actually enter into the consciousness of the world in ways never seen before.

Hanauer understands the distinction, saying forcefully that modern revolutions come gradually, then suddenly. He believes his financial peers just don’t get it, despite all their supposed acquired intelligence.

But his greatest frustration is reserved for just how unnecessary it all will be.

“If we, the elites, do something about it, if we adjust our policies in the way, say, Franklin D. Roosevelt did during the Great Depression – so that we help the 99% and preempt the revolutionaries and cries – that will be the best thing possible for us rich folks, too. It’s not that we’ll escape with our lives; it’s that we’ll most certainly get even richer … My suggestion to you is: Let’s do it all over again. We’ve got to try something. These idiotic trickle-down policies are destroying my customer base. And yours too.”

It was when he realized this that Hanauer decided he wanted to try changing the conversation. He calls it “middle-out economics,” and it’s compelling stuff. It simply asserts that if workers have better jobs and more money, businesses have more customers.

In this he hits on a great truth that has been overlooked. The financial elite is fond of saying that governments don’t create jobs. Well, if recent years are any indication, neither do corporations. It is, in fact, middle-class consumers, not rich businesspeople, that are the true job creators. When businesses have more customers, they require more workers to fill the demand. It is a thriving middle-class that created the rich, not the other way around. Endanger that middle-class and it’s inevitable that fabulous wealth will prove fleeting.

Hanauer is compellingly effective when exposing the underlying fallacies of elite assumptions. For those calling for smaller government, it will never happen, he claims, if so many people keep falling through the cracks. “You have to reduce the demand for government and that hasn’t happened under conservative Republican leadership – in each case, the size of government and debt has mushroomed under their watch.” He isn’t trying to be partisan, he maintains, but it should be obvious to all sides of the political spectrum that the more people out of work or facing financial insecurity, the greater will be the call and need for government intervention and support. It’s inevitable.

Governments are in the crosshairs of the 1% not because they are big or small, but because they can legislate regulatory control and nothing scares the wealthy class more. And so the assault on government continues. Yet despite this reality, Hanauer believes that both the right and left sides of the great political divide are slowly finding common ground on the need for a common approach to save capitalism from itself. “Perhaps that’s one reason the right is beginning, inexorably, to wake up to this reality as well,” he says. If he’s right, then unbridled capitalism doesn’t have much time left. In the next post we’ll examine if politics can actually begin to formulate a plan to pull it all back from the brink.

Pitchfork Democracy

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THE DAVOS MEETINGS HAVE CONCLUDED AND, as always, we await the results. Warnings were coming from everywhere prior to the exclusive sessions – possible recessions, the lowering price of oil, global inequality. But as far back as last summer, one of those in the world’s most elite financial club was already sounding the alarm at various levels.

Nick Hanauer helped launch 30 businesses, including Amazon, owns a bank, his own plane, a huge yacht, and qualifies, not as a member of the 1%, but of the .01%. He says that one of his keenest strengths is to possess a kind of instinctive sense of what the future will bring.

What is his sense picking up now? “I see pitchforks,” he states confidently.

“Our problem is that inequality is at historically high levels and getting worse every day. Our country (the U.S.) is rapidly becoming less a capitalist society and more a feudal society. Unless our policies change dramatically, the middle class will disappear, and we will be back to late 18th-century France. Before the revolution.”

Did the folks at Davos hear this message? It seems likely, and from numerous sources. The problem is that many of those who attended the World Economic Forum last week are of the investment kind. They attend because they sincerely want to hear of the problems in order to know where to place their funds. They aren’t out to solve the problems, but to stay clear of the greatest risk to their resources. Hanauer knows this reality and so put his challenge in plain terms: “And so I have a message for my fellow filthy rich, for all of us who live our gated bubble world: Wake up, people. It won’t last.”

Many in the financial order actually appreciate his forthrightness and candour, but figure they can avoid the troubles he speaks of. What they don’t comprehend is that Hanaeur is saying this great challenge before them isn’t financial but democratic and human. Just so they wouldn’t misinterpret him, he defined it for them:

“If we don’t do something to fix the glaring inequities in this economy, the pitchforks are going to come for us. No society can sustain this kind of rising inequality. In fact, there is no example in human history where wealth accumulated like this didn’t see the pitchforks eventually come out. There are no counterexamples. None. It’s not if, it’s when.”

We’ll explore more regarding his reasonings in the next post, but for now the contrast between his language and that used in Davos is profound, even exasperating. The jargon largely used in Davos is of the corporate style – technical and vaguely antiseptic. While organizations like Oxfam were providing a clear contrast, speaking with pathos and urgency, the prevailing language is always one of neutrality and a morally numbing kind of objectivity. It focuses on the great problems of the day by analyzing their implications rather than solving their harsh realities. Yes, the great needs of the world are there – poverty, women’s rights, climate change, poor governance, even greed – but they are gathered effectively on the outside, looking in. The fundamental driving force of meetings like those in Davos is how to grow prosperity in order to overcome these problems rather than clearly solving them in human terms.

Just one other thought. If, as presented at the Swiss village last week, over half of the world’s wealth is about to be owned by the 1%, how can we expect them to tackle the great challenges of the age if it would necessarily cut into their profits if more effective measures at reducing inequality were to be undertaken?

This is where Hanauer is helpful, because he speaks from inside the gates, reminding his peers that if they have the most of the wealth, then they will have to apply themselves to the solutions. If democracy is not merely about deregulation, supportive corporate legislation, or access to hordes of capital, but angry citizens coming together, then a day of reckoning might indeed be on the horizon, the modern equivalent of pitchforks everywhere.

Christmas Opposite

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YOU WON’T BE SURPRISED TO HEAR THAT the number of those who are homeless has increased in recent years. What does irk us somewhat is the discovery that the numbers of those homeless in the upper 1% is also going up. It’s not that they don’t have homes – the average number is three for this group, and that doesn’t include holiday homes or yachts – it’s that they increasingly avoid settling down anywhere. They often put more importance on their means of transport to all these various places than they do in the temporary habitats they reside in.

Those in the upper crust have always been characterized by their possession of opulent homes. But in previous times, at least, they actually lived and worked out their lives in their communities. Where the rich once boasted of their mansions, they now boast of their constant movement. The meteoric rise of yachts and private aircraft supports this trend. The idea of the historic form of civic membership is quickly waning in this group.

Such a development is also mirrored in various aspects of the corporate sector. For a significant part of our history, where we worked often formed a kind of status. The larger a contribution a company made to its community, the more prestigious it was to work there and be highly regarded by the community.

But that’s all changing now, as companies continue to move their headquarters and plants quickly and adroitly to other locations. As author Rosabeth Kanter put it: “For cities as well as employees, this constant shuffling of company identities is confusing and its effects profound.” Kanter goes on to say that the damage to the social and economic fabric in a community when a business departs is like “tearing holes” in community identity and confidence.

And then there is growing disenchantment within what we might term the “anxious” class. At best, it’s about not knowing if there will be a job next month; at worst it’s about not knowing where the next meal will come from. And eventually they become labelled by the very economy they can’t bend to their circumstances. They become known primarily by their relationship to the economy. Their abilities, faithfulness, intelligence, dedication to community, or their responsibility to their neighbours are totally passed over in favour of how they compare to the wealthy. They might be pulling off the minor miracle of holding down two or three minimum wage jobs, but the sum total of all their efforts might mean they still can’t afford a house. Despite their uniqueness, they find themselves coupled with the poor, or lesser off, or marginalized.

For such people Christmas loses much of its magic. In a world where the rich, like Ebenezer Scrooge, or the devilish Mr. Potter in It’s A Wonderful Life, had to work out their lives and reputations in a settled community, there were always possibilities for the rich to turn their lives around, or for the poor to achieve some sense of relief and hope. But what if the rich aren’t there, but instead on a holiday isle somewhere or in their Asian headquarters for a few weeks? How do the upper and lower segments of community meet in a fashion that makes renewal possible in such a situation?

Author Lee Rainwater, in his book What Money Buys, outlines the kind of life those struggling to make ends meet inevitably face:

They are engaged in a constant implicit assessment of their likely chances for having the access and resources necessary to maintain a sense of valid identity. People’s anticipation of their future chances, particularly the young, seems to affect quite markedly the way they relate to others and the way they make use of the resources available to them. By reducing their chance, chronic poverty blocks economic and political participation, and consequently weakens the capacity to develop confidence and sustain enduring relationships.

And so there we have it. Lacking the identity and resolve that an economic sense of stability would bring them, these “anxious” citizens become vulnerable to a kind of financial domination that generations believed they had escaped following the Second World War. Though rich in spirit and potential, they are necessarily allied to their lack of income and consigned to a kind of “dead space” of emotional drudgery.

This is the very stuff that Christmas in any community is meant to overcome. But when we feel helpless to change the economy or to even locate those needed to be held accountable for the growing gap between rich and poor, the holiday season becomes a dull ache, and incessant reminder that Christmas miracles must be meant for someone else.

Recalling his own tenure in poverty, author Charles Bukowski noted, “What a weary time those years were – to have the desire and the need to live and be respected but not the ability.” This is the opposite of what Christmas is supposed to be – the belief that goodness would outweigh greed, peace could overcome economic oppression, and that our employment could be an extension of the talented people we are. There is no Santa Claus on this one; we must dedicate ourselves to creating the conditions of Christmas in our own communities.

Firms of Endearment

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I LOVE THIS TITLE, BUT IT DIDN’T ORIGINATE WITH ME. It came from Raj Sisodia, professor of marketing at Bentley University and formed part of the title from his book, Firms of Endearment: How World-Class Companies Profit From Passion and Purpose.

Sisodia is a firm believer that modern capitalism has departed from its early tenets and principles and is suffering a global meltdown in reputation as a result. He co-founded the Conscious Capitalism Institute in order to promote a dual message that capitalism has gone off course but that its recovery is essential if humanity is to progress.

His is a voice we need, in part because we have too frequently castigated capitalism as the great culprit of all our ills when in reality we have also been blessed by it. In our search for solutions as citizens we have taken to simplifying our problems. We have done with capitalism what we did with church, politics, and the media – been so universal in our condemnation that we forget the better qualities of people involved in such institutions. Before we go completely overboard in such an outlook we need to bear in mind some history of what the capitalist movement has accomplished. Consider:

  • Since 1800, average income per capita globally has increased 1600%. The standard of living for average Westerners has increased 10,000% in that time.
  • 200 years ago, 85% of the world’s population lived in extreme poverty – a number now reduced to 16%.
  • In that same period, as a result of better material lives, the average life expectancy across the world has increased to 68 years from its historical average of 30 years or less.
  • In the past 40 years, the percentage of undernourished people in the world has dropped from 26% to 13%.
  • In 1800 almost the entire world was illiterate. Today, 84% of adults globally can now read.

All of this forms something of a revelation to many of us and we have overlooked the part the capitalism has played in such development. Today, it is popular to pit capitalism against democracy, but lets remember that it was only 120 years ago that no one lived in countries with governments elected by universal suffrage. As of this year, 53% of people now live in such countries. Most researchers give a large portion of the praise for this development on the economic freedoms provided by capitalism itself.

Clearly there are significant problems in the modern capitalist movement that have had almost universal tragic effects on humanity – environment degradation, the resurgence of the widening gap between rich and poor, the refusal to respect standards and legislation. These are the things that so much define capitalism today and our communities are feeling the effects. Our task should be to call for the reformation of the financial order as opposed to merely condemning it.

These recent posts on the need for such a new enlightened age for capitalism have been predicated on the belief that there is much inherent good yet within the system and that conscientious workers, leaders and investors are attempting to make change – just like churches, democratic parties, governments, and media contributors.

We must begin the process of finding out just who these companies and their leaders are and joining their efforts for a more responsible and community-centered way of doing business. Those seeking reform from within civil society itself must locate and partner with those inside the business community fighting for the same ends. It’s time to stop falling back on the adage that time changes things. Things are so serious at the moment, and the implications so ominous, that it’s time we changed them ourselves.

Do You Hear the People Sing?

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FOR THOSE POLITICAL AND FINANCIAL LEADERS who don’t necessarily like hearing that the status quo is under deep suspicion by citizens, communities, and groups worldwide, here are a couple of other headaches for you. Your problems are growing.

Universities have always been seedbeds of reform and activism, but many will be surprised to learn that on campuses across Europe, in Tel Aviv, and New York, students of economics have gained ground in raising their opposition to their peers and mentors who feel that their field is a science and that there is little can be done. Not so, says the International Student Initiative for Pluralism in Economics – a fancy name but with a gutsy mandate.

We want to ultimately create a space in which economic solutions to society’s problems can be generated.  United across borders, we call for a change of course in economics.

You can’t get much more resolved than that and I trust capitalist leaders are listening.

The student’s movement, and those like it, are saying it’s time to take economics out of the sterile lab and into the highways and byways of where people actually live. And they are driven by anger. Following the economic crash of 2008 and the financial sector’s quick return to business as usual, these movements called for change, only to be ignored across the board by those in the very field they were studying in universities across the globe. Of course economics is something of a science and these students are learning their craft, but it is also about people and populations, environmental degradation and poverty, community decline and the lack of political will. They are marching to the call that it’s time science and humanity came together for economies that actually work and don’t just leave these challenges in stasis.

In another development, on May 22, a conference titled, “The New Populism” is being held in Washington D. C. and features the highly popular Senator Elizabeth Warren as its keynote speaker. It’s a tough conference for the financial and political elites to ignore when people like Warren are participating.

Two years of polling has revealed that Americans are becoming increasingly more populist in political outlook and community-driven in their economic priorities. They, too, are angry and starting to fight back over what they perceive as huge indulgences among the elite when so many citizens have fallen by the wayside following the economic meltdown. It was their hope that things would change following the financial calamity, but when corporate and political leaders managed to protect their increased financial rewards from legal scrutiny, people began organizing at significant enough levels to capture national attention.

In so many ways, Elizabeth Warren has unleashed the floodgates of populism and is a rarity – a popular politician prepared to take on the system and call it to account. Her bestselling book and frequent pointed questions at committee hearings have given confidence to citizens who previously stood on the fringe in their anger, but who now have come together to accomplish exactly what Warren has called for – a citizen’s alternative to the prevailing elitism. The website populistmajority.org unveiled some polling that, if true, speak to new tensions ahead. Among the findings:

  • More than half of those polled think the problems that led to the financial crisis have not been fixed
  • Two-thirds believe that Wall Street financial institutions actually make it harder to find good jobs
  • Two-thirds believe there should be more government oversight of financial institutions
  • Nine out of ten believe it is important to regulate financial services in order to ensure fairness toward customers
  • 83% believed financial leaders should be held accountable for actions that result in considerable negative effects on society in general

It’s no accident that most of the interest in the movement finds its source on the centre-left side of the political spectrum, yet the targets of their outrage including well-known Democratic and independent leaders like Bill Clinton and even President Obama for coalescing around the financially comfortable when so many have been thrown under the financial juggernaut.

As you would expect, there are many naysayers, and yet these two movements – students of economics and populism – are gaining a level of attraction and attention unseen in years. And they are going right after the heart of economic and political indifference. Their real power might not be in their astute arguments but in the sense of fervor they can create in societies growing restless for economic and political change. Even if they are doomed like those manning the ramparts in Les Miserables, shouting: “Do you hear the people sing? Singing the song of angry men? It is the music of a people who will not be slaves again,” they will ultimately usher in a movement of social and financial equality that can yet capture the hearts of a citizenship remained dormant too long. The next generation is coming and hopefully it gains success before we have wasted our human future.

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