Sunday, 28 July 2013

Day 243: Living Income Guaranteed and Communism

Whenever a new way of organizing society and our economic system opens up, one of the comments that comes to the surface is :"But isn't that communism?"

Now, communism in itself as a word has become a word of Terror. It is used specifically to instigate fear reactions within people, where you do not want to be linked or involved in anything that may be deemed 'communistic'. But what is communism really? Nobody knows anymore. It's one of those terms -- just like the Inflation concept -- that has taken on a life of its own. In the case of communism, it's become a boogieman story. I mean, when people talk about communism and 'fighting communism' it is done from an assumption that communism is 'one clearly defined thing' and ‘it’s clearly evil’. Truth is, there were many various different concepts that developed that could be deemed 'communistic'. It's the same with Religion, you can talk about for instance 'Christianity' but then within that you have various variations and adaptations of Christianity. Forms of communism were adopted in Spain in the 1930s which were highly effective, yet you don’t hear about it anywhere.

So when you talk to people and ask why they are against anything that could closely be related to communism, they go "oh but just look at Russia, and all those people that died it was a total failure, it’s never going to work". What is not being done is putting communism that took place in Russia (or what actually would be more correct is to say 'the communism that DIDN'T take place in Russia) into context.

What must be understood is that Communism as an idea and Communism as ‘what happened in Russia’ are two different things. You see, people were angry, people then had an idea and then they went into a Revolution to try and implement that idea. The thing is that once they were in power – they had no practical plan or way of implementing their idea in a way that would actually work. They had no knowledge of things like politics and economics and were completely inadequate and incompetent to actually run a country. So, they tried things out, it failed, they went into fear and established a form of authoritarianism and all in all the story did not have a happy ending.

To go back to the Christianity example – the way Communism is treated is the same way the Jesus message and Christianity is being treated today. We have what Jesus said, being one thing – as principles of ‘Love thy neighbour’ and ‘Give as you would like to receive’, which is very much a principle of Equality and Harmonious Living. And then you have Christianity in all its various ways as what is ‘supposedly the Jesus message’ – but when you look at what is actually being lived out, is a message of fear, hate and inequality. So just like ‘what Jesus said’ and what ‘Christianity does’ are two completely different things – you can’t say that ‘Communism as an idea’ and ‘How communism took place’ are the exact same thing.

If you look at what happened in Russia, this is exactly one of the reasons why we never promoted any type of ‘Revolution’ to bring about change within any of our proposals, because they are impulsive and short-sighted. So yes, communism in Russia failed because there was no practical common sense reasoning or research that had gone into what they were doing. And because they failed big time, communism now has forevermore been branded by the mark of the Devil, and we should fight it in any way we can.

So now, each time something comes up that even in the slightest way could disturb the way things currently are and can in the slightest way be interpreted as ‘communistic': fear rises and it gets boxed away. All communism has been reduced to in this day and age is a form of fear induced superstition to keep people from actually thinking for themselves, kind of the same way Parents will tell their children that the boogieman’s gonna come for them if they don’t eat their veggies. Come up with any idea that will bring about a change in the way the current system works and people will come at you with the big C-Word to scare you into shutting up and conforming.

It’s come to a point that anything that doesn’t fit and support the status quo is labelled ‘communism’ and ‘socialism’ and anything that does support the current system is called ‘democratic’ and ‘free’. It’s just a word used as one pleases – if you don’t like it, call it communistic – if you do like something, call it ‘democratic and free’. I mean, you can have two countries who both to some extent operate within a form of Nationalization – but depending on how much they threaten the status quo the one will be called Communistic and the other one won’t. It’s just a word of convenience. Take Chile for instance whose economy is based on the nationalization of copper, copper being one of their main exports. They nationalized it and they did it effectively – and yet Chile is not deemed communistic. In fact, the World Bank will tell you that they are very proud of Chile and that Chile is an example for other South American countries in terms of adopting the Free Market System. But if you’re a different country and you nationalize say your oil and you adopt policies that are unfavorable to the United States = now you’re communistic = You are evil, your president is the Devil, you must be stopped.

It should actually become a rule that you can’t use the word ‘Communism’ in any form of argument or way to make a point, because the word has gotten abused so much that it’s just a joke. If you can’t make a point without resorting to terms like Communism as a form of Propaganda to terrorize people, then you just shouldn’t bother.

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Friday, 26 July 2013

Day 242: The EFF and Land Redistribution in South Africa

The EFF (Economic Freedom Fighters) in South Africa, under the leadership of Julius Malema, are placing some very cool points on their political manifesto. One of them is to nationalise resources, including financial intermediaries and the South African Reserve Bank. Reserve Banks being the institution that steers monetary policy in an economy should by principle be in the hands of the people and not an independent point where so-called experts apparently have the right to do what they think is best. Such points are too important to exclude from public decision-making.

Another point they insist on is the redistribution of land as land is so extremely skewly owned in SA at the moment as an outcome of colonisation and apartheid. To pretend that such huge disadvantage will simply 'fix itself' is delirious. Herein, the EFF wants a full audit to find out how much land is available and what it is being used for - where, land that is wasting away would be re-appropriated and put to proper use. Having this information mapped out would obviously be able to significantly speed up the process of equitable land distribution.

The problem comes in with the call to start occupying land as a statement of 'taking what's ours'.

"The position is that we are expropriating without compensation. We want that to be an act [of law], and before it becomes an act, our people should begin the process of occupying the land.”

Encouraging and enticing people to take the law in one's own hands will inevitably lead the country into disorder, chaos and conflict. Taking such route to increase the popularity vote without consideration for the repercussions is only a sign of immaturity and a lack of understanding of what true leadership entails. Within the international community no-one would take such leadership seriously as it undermines the very political and legal system that it is supposed to derive its legitimacy from.

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Friday, 19 July 2013

Day 241: Will Inflation be a Problem with Providing a Living Income Guaranteed?

infeco ‘Inflation’ is one of those big posh words that people like to use when they want to show off that they’re “in the know” of economics and money mechanics. You hear it on the news, tv, the internet and when you listen to other people talk about it, it never really becomes clear ‘what it is’ or ‘why it is so important’. But you won’t ask about it because you don’t want to appear like you’re “not in the know”. It’s kind of like the story of The Emperor's New Clothes, where only ‘smart people can see’ the clothes and where everyone pretends that they can see his wonderful clothes while he’s actually walking around in his undies (or naked depending on your source )… It’s just something everyone has agreed upon has ‘great importance’ but no-one really knows the “how’s” and “what’s” and no-one questions it.

So is inflation really this ‘big’ and ‘complicated’ concept that only our economists are in the know about? Not really. I mean, one of the first things you will learn when getting to the topic of inflation is that there is very little known about the exact causes of inflation and how good or bad it is for the economy. Most of the time, the concept will be used to suite the authors ideological standpoint and so you get a lot of conflicting answers to the same question.

So what is inflation? Inflation (because no-one really knows how it works) has been given a very simple and broad definition – so that you can’t really ‘go wrong’ with it:

Inflation simply refers to the continuous increase of prices in an economy. So - two points are important to note: if prices go up and then remain stable for a while, we don't refer to it as inflation, as inflation only applies to a continuous increase in prices. Secondly - if the price of petrol keeps rising, but all other prices remain somewhat stable, we're also not dealing with inflation, because in the case of inflation all prices keep rising.” 

This is taken from one of our previous blogs we made which was on the topic of Inflation, so if you want to read up about it you can do so here: Day 64: Inflation - Part 1 (also read the comments).

So you see, inflation is nothing scary or complicated, it’s just prices of all things going up and up over time. When the ‘issue’ of inflation is brought up, it’s not so much the rising of the prices that is an issue – but the wages that lag behind. Because what happens is that you used to be able to buy say a thousand breads with your monthly salary, and with the prices going up and your wage remaining the same – you can now suddenly only buy 800 breads. So here, you have a problem because your purchasing power has been diminished. Because obviously so long as you keep the variables on either side of your equation in proportion – you won’t have a problem and you’ll be able to buy just as much. It’s only when one variable goes up and the other one stays the same or lowers – that you get a problem in your proportions. What happens then is that people will start buying a lot and hogging things because they fear the future prices which will be higher, but then within this increase in consumption place the products in ‘higher demand’ and thus up the prices again – so it becomes a self-fulfilling prophecy to the point where you get hyperinflation.

So with putting into place a Living Income Guaranteed to ensure everyone’s Living and placing in a Minimum Wage amounting to double the LIG – yes, your prices will go up and so yes, that could be considered ‘inflation’. But remember that inflation in itself a neutral manifestation – meaning, it just is what it is as pricing going up. It doesn’t mean anything else. It only starts meaning something else when we fail to adjust ourselves where nominal wages remain the same while real wages go down. So yes, there will be inflation but it won’t be a problem from the perspective that your prices are directly linked and interconnected to your wages where at all times your Living is Guaranteed and thus your wages / living income will adjust to the prices to make sure everyone is able to live decently and vice versa where your prices will adjust to ensure that you get a decent wage. Here one must also consider that we will have Bureaus of Standards in place managing Quality Assurance and Control where there will be a move from obsolescence and disposability to quality and durability – which means that you will have to buy less.

So from that perspective – the whole “inflation” horror story will become something of the past as it simply won’t be able to affect anyone to the point where it does damage, as your wages and prices are no longer separate bodies but closely connected and intertwined. You will thus at all times, be protected.

Another point where inflation becomes a problem is when it is linked to a growing money supply without a matching growth in economic activity. So when the government for instance decides to finance its debt simply by printing money – you suddenly have an increase in your money supply which makes money ‘worth less’ (because ‘scarcity’ makes things ‘more valuable’ and so the opposite happens). Because this money came out of nowhere without originating or being connected to any form economic activity of real value such as labor and production – your system / equation gets thrown out of balance and all these money born out of ‘no value’ in turn has the effect devaluing / tainting all other money already present.

This type of situations will not be occurring within a Living Income Guaranteed as proposed by the Equal Life Foundation, as you will be able to discern for yourself from our previous blog on banking: Day 240: A Bank for the People, as banking/financing will always be directly related to actual activity, actual growth and actual value – and will thus not be able to throw the system out of balance.

Also check out Will the Living Income Guaranteed cause Inflation?, to get a new perspective on Inflation and to see and realize how inflation it its traditional use of the word has become a distraction of the actual Inflation taking place in our lives and in the economy – where inflation is an actual problem.

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Sunday, 14 July 2013

Day 240: A Bank for the People

We have an interesting point being taught in economy books - which is that an increase in investment spending has an expansionary effect on the economy - because money is invested in certain products and therefore, people are being paid or jobs being created, which means an increase in income, which means more consumption spending and so a multiplier effect sets in - because, in turn, consumption spending increases income, which increases consumption spending, where of course the increase each time becomes smaller and smaller and eventually 'dies out'. However, on the flip side - what is not spoken about in the text books, is how, at the same time as a multiplier effect is in progress - there is also a growing debt - because interest rates cause a debt to increase over time as well. And this debt, which is eventually a multiple of the initial loan, must be repaid, and so money again disappears from the economy, causing the economy to shrink.

So, within Living Income Guaranteed, we suggest banking will still be relevant from the perspective of big capital investments such as housing or cars. In some countries, we see a rising trend of loans being taken out, not for such big capital expenditure, but for day-to-day living costs, such as food and clothing. Such points will stop within Living Income Guaranteed, because one will be guaranteed to have an income that is sufficient to provide oneself with these basic necessities.

So - when it comes to loans, banks will herein make money through asking for a once-off fee rather than an interest rate - where this fee must cover labor costs and a profit markup - where the fee is reasonable from the perspective of what is required for banking to be profitable without creating a monopoly on money. And of course loans must only be undertaken if the capacity exists for the debt to be repaid.

The creation of money through fractional reserve banking would have to be revised and a way of money-creation be devised so that it stands in relation to supporting the rate at which the economy is growing - which must take into account population growth as well as available resources.

So - herein, banking becomes an actual life-support system where big investments can be paid over time and where it will increase and support the value of the citizen in terms of their life. And thus, the banking system becomes a means to truly supports economic growth as well as the growth in value of a citizen's life.

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Tuesday, 9 July 2013

Day 239: Sustainable Pricing with Living Income Guaranteed

sales-marketing-pricing-planning When we have a look at how prices have been determined throughout history, we can see that that for most throughout time (up to until the last 50-100 years), prices were set in the interest of the owner of the product / service, whereby those who labored on the products were given miniscule wages. Back in the day, we had so many people living in absolute poverty and hardship that any wage – even if it was next to nothing – was ‘good enough’ for them to take the job.

When people would start getting tired of their ridiculous wages and crappy working conditions, the business owners could always just fire them and replace them with people who were worse off and thus wouldn’t ‘complain as much’. With our tendency within society towards division and discrimination, there was always some form of group lower on the ladder, whether they were from a different race, newly emigrated, different gender, lower class,… -- there’s was always some chap in a more horrible condition that would take the job – and so never any real change came about in terms of everyone together standing for a living wage. Much of this same scenario is still taking place in the world – where it is taking place ‘out of sight’ and thus ‘out of mind’. Where slaves and minorities have now been replaced with alienated workforces abroad. As long as it’s ‘not us’ and ‘not in our face’ – we don’t seem to care.

If we have a look at the minimum wage concept, this is a fairly new concept when placing it into context of our entire history. Not so long ago, the idea of a minimum wage was even ruled to have been ‘unconstitutional’ In the United States, because it limits the scope of ‘freedom’ within contracts. So the freedom involving someone entering a contract, was deemed more important than the freedom to one’s Life, to the freedom of earn a living wage whereby you can sustain yourself.

So even though we now have certain protection points in place like the Declaration of Human Rights, and all sorts of Bills that are supposed to safeguard and protect our dignity and well-being – we still seem to shift in our ‘old way’ of doing things, where we care more about the freedom of contract, the freedom of the business environment than we do about the freedom of our own Human Rights. After all these years of so called ‘progression’, we have still failed to see and understand the simplistic connection that exists between prices and wages.

Many of us who do earn some kind of wage, still have to be careful about our spending. Because our wages are not secured, and very likely to be lower than what we’d like – we are picky with our spending and will look for the ‘cheap stuff’. The more cheap stuff we buy, the more stuff we can get for our money. It seems like a rational decision, following that ‘since I have so little money, I better buy things that cost little money, so that I can at least ‘maximize’ my purchases with the little I have’. Because we are purchasing and buying from a starting point of fear, a starting point of lack – we look for what is cheap. Yet, we fail to see that things can only be ‘cheap’, if somewhere down the production line, other things were made ‘cheap’ – which in most cases would be = the wages. So because we have cheap wages we buy cheap stuff and maintain our cheap wages because that is what we are supporting through buying cheap things. It’s a cycle that feeds itself.

When we do our shopping and purchases, we only look at prices in relation to our own pocket. We forget that there is another party involved as those who participated in its creation process, whose wages are to be paid and included within the price of goods and services. We only care about ‘getting the best deal’ where we are happy when we got something very cheap, and then feel cheated if we find out we paid more for something, where we could have paid less. We don’t get that for us to have our happy/winning experience when getting a ‘good deal’, someone else has to be cheated on --- where they are now being paid less than their actual value as a living, breathing, laboring, contributing human being.

In modern society, most of us are both the consumers and the workers. We are the ones feeling like we’re winning when we can buy cheap things and we are the ones feeling like we’re losing / being cheated on when we get our paycheck.

The only way for us to have a healthy relationship towards consumption and our own dignity as a human being as being intricately involved in the creation of products for consumption – is by directly connecting prices to sustainable living wages. Prices should not be set first, where only afterwards we give the ‘leftovers’ and ‘scraps’ to the workforce. Living wages should come first, and not be up for negotiation when setting and calculating prices. It should become downright illegal to price any product or service in a way that diminishes the wage level of an individual to lower than that of a sustainable / minimum living wage – because this would be a direct infringement on someone’s Right to Life.

As part of the implementation of a Living Income Guaranteed, Prices should thus firstly serve to sustain living wages and should only secondarily (if at all) be used towards the purpose of furthering competition in the name of business. If everyone lives on a Living Income or at least a Minimum Wage, everyone can afford this form of sustainable pricing (unlike in the current system, where for many households ‘fair trade’ products simply exceed one’s budget) and we can have system where we support others’ labor as a contribution to society the way we would like to be valued and
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Friday, 5 July 2013

Day 238: Advertisement vs Rational Informed Decision-Making

One of the premises of the argument for Capitalism as the most Effective means of distributing goods and resources is that consumers make rational and informed decisions. In such a system, every person's purchasing decision is a vote that is cast - where, the amount of purchases shows what the demand is for a certain product. Spending patterns then are supposed to show what people want and expect to be supplied with. Herein, the logic goes that between two products of the same price but of different quality - consumers will buy the better-quality product and in so-doing, will signal to the market that inferior quality goods are not wanted, according to which the supply then is supposed to adjust.

As such - the economy is supposed to be demand driven - where it is the consumers who vote on what should be done with the resources the Earth provides.

HOWEVER - we have developed a very lucrative business - which is the marketing industry, for which tons of research has been done - actual scientific research - to determine how to convince and persuade people that they want or need something that they actually don't. The advertising factor has reversed the production-relationship from demand-determined to supply-determined. For instance - I don't have cable, so I never watch advertisement. When I buy products, I have to actually test the product and from experience, determine whether the product is effective or not and accordingly, I adjust my spending patterns - so that I spend money on that which is actually supportive and worthwhile. Yesterday I was sitting in a waiting area and there was a TV playing. I saw a bunch of commercials, one of which was about a product that I myself had tested. The product was an 'instant soup' powder and the entire focus of the propaganda was to make the viewer believe that there are actual, real ingredients in this power - as in real vegetables, real meat and what have you. And - if I had been sitting at home, watching this commercial over and over - I have to sadly say that I may have been swayed by the information presented, and that I would have bought the product in the perception that 'there is real food in this powder - it said so on TV'. However, I happened to have tested this product before seeing this commercial and my experience showed that my body reacted adversely to it - in a way that it doesn't react to 'real soup'. Herein showing - that: No - this powder is not equivalent to 'real food'.

See - what advertisement does is brainwash viewers to such an extent that the memory of the picture of the commercial that has been seen over and over - overrides one's own actual physical experience - even to the extent that we don't even pay attention to the actual physical experience - because our memory is already 'telling us' what we are supposed to be believing about the product. Advertisement shapes our opinion of a product to the point where we can't distinguish between what's real and what's make-belief.

Herein - obviously - there is no rational decision-making. I could clearly see that if I were to be exposed to advertisement over and over - I may actually be influenced by it when I go through the shops - even if it is just because of familiarity - feeling like I 'know' this product - just because I've been exposed to the brand-name and logo over and over.

And so - advertisement is the way in which consumers have been robbed of their vote. It doesn't matter whether there is an actual demand for a product. Random products that have no life-supporting value and that have the lifespan of a few weeks, are continuously being produced - and it doesn't matter if there was no market for it - because the demand will simply be CREATED through advertisement. So - what we see today is an economy that is run by suppliers, profit-makers and NOT by consumers. Resources are wasted on the production of crap and consumers by the crap because they are too brainwashed to know better.

As such - we don't live in a capitalistic system in the true sense of the words, and any argument raised raised in the context of capitalistic theory is a scam - because we are not adhering to one of the basic principle of capitalism - which is that every individual needs to have the ability to make rational and informed decisions. As such - this ability requires to be protected if we want to truly live in a system that is sustainable and allocates resources most effectively.

Herein - I would suggest to either abolish advertising entirely - so that consumers are obliged to actually test the product for themselves, and based on real physical observation and experience, can influence the production-side of the market through changing spending patterns - OR - that advertisement becomes purely informative - listing the facts in terms of ingredients/materials utilized and the basic purpose of the product. No smiling people, no bright and colorful sparks, no music, no symbolism, no lies.

This would go a long way in preventing the wastage of resources that would now no longer be able to be used in the production of products that no-one actually wants or needs, relieving much of the pressure we have placed on our environment. Furthermore - together with the implementation of a Living Income Guaranteed - individuals will gain back their freedom - equipped with both money and rational decision-making - individuals will truly be empowered in the ability to determine what is valuable and what is not - and as such, capitalism can in fact be used to enhance and enforce democratic principles through economic means.

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