Wages in a Resource Based Economy

Compensation in resource based economy will be underlined by energy accounting



The main question that technocrats all over the world are asked is "how will we get a herd of 7 billion monkeys to transition away from the current fiat monetarist system towards a real economy based on resource and electrical energy quantities? How will they be motivated beyond promise of self-aggrandizement and greed?"

Simple answer is that transition to a resource based economy will involve all the same gimmicks used by rulers since the dawn of civilization: greed, fame, honors, and promise of some inequality (although much more reasonable and controlled than currently). Some key differences from the present system are an ever rising safety net baseline to meet basic needs of the populace and compensation in material/energy backed units. Late 20th century methods of artificial scarcity management, central bank printing presses, and Soviet rations have run their course.

Here is one basic outline among many: ( sidenote: The Pragmatist is not an unofficial media arm of any existing technocratic organization even if I provide a link to a wonderful technocracy video introduction at the top right corner of the blog. Check it out! There will be many competing energy accounting and resource accounting systems in the coming decades and they will begin to converge in basic themes eventually.)

1) 10 wage compensation levels with level 1 wage as guaranteed minimum income and level 10 wage as maximum income (10 is used here for metric system style simplicity, it could very well be 6 or 8). There are physiological limits to how equal humans are but there are also physiological limits to how unequal they are. One human receiving no more than 10 times the amount of reward, living space, fame, and electrical output is about right. No human, no matter how strong or gifted is more than 10 times smarter, stronger, productive, "better", than the weakest (multiply IQ of 20 by 10 as an example).

2) At the age of consent everybody starts as a level 1, receiving say, 10,000 units of electrical energy as a basic living stipend (in addition to minimum level 1 modular housing unit, level 1 simple food ration, and provision of equal baseline education and healthcare for all). A level 10 would receive a stipend of 100,000 electrical units to do with as he/she pleases since amount and increase in top compensation is pegged to level 1 baseline.

3) Although transition period may involve brief return to deflationary "sound currency", income eventually will be provided in amount of electrical energy available to you for a certain amount of time. For example, a level 3 person may get 30,000 units of energy a year or 576 units a week. If he or she doesn't spend these 576 units that week on art supplies (or additional non-stipend clothing, grooming supplies, level 8 rare food, etc) then the units don't roll over. They "expire" and return to communal use to provide extra kick for energy intensive infrastructure projects. Nobody could thus hoard up or create a banking lending system with their saved up energy within the common grid. Obviously on the side shenanigans can be done with off grid energy supplies and batteries but common grid can be easily kept separate from it. A person trying to compete with common grid and create "energy banking" would be like a mom and pop store creating water/food banking. The energy wage system is a communal and very macro safety/incentive net.

4) Societal honors, social pressures, education, societal attention, and better mating opportunities are the incentive to educate yourself further to qualify for higher wage level compensation. Some may prefer to marry or have sexual relations with apes of only certain levels just like currently. It is relatively easy to create social mechanisms to encourage personal growth, especially when basic needs of shelter, good nutrition, and healthcare are met (one just has to look at how people are compelled to improve themselves and pursue various non-graduation/non-wage related interests on some of the better college campuses).

5) The rise of maximum income wage is tied to rise in minimum income stipend to create incentives for strongest people to improve conditions for the whole herd. Thus if level 10 leadership builds enough new power source infrastructure to raise the amount of electrical power they give themselves from 100,000 units annually to 200,000 units annually, the provision of minimum stipend for level 1 people will also double from 10,000 to 20,000. This way, the gifts of the strongest create a real and automatic trickle down. An enterprising level 10 living in a house 10 times larger than level 1 house may ask his or her level 8-10 colleagues to contribute their energy towards a new experimental project or an idea.

6) This is very easily calculated by seeing and tracking the total amount of electrical energy available within relatively decentralized global "energy Internet" power grid. Amount of energy flux density within any given area is readily seen as well as deficiencies by relating the energy amount to population per square kilometer. Energy accounting is thus the base of the resource economy superstructure. Calculating energy production and distribution is essential for all other material production, material rationing, and distribution. This is a no brainer and rapid construction of new and better energy sources will be the primary societal and leadership task of level 10 people.

7) Electrical compensation is tied to the amount of schooling that was needed for the task and amount of hours spent on the task. Thus a level 10 after years of training, has to work the entire 20 hour workweek until retirement at the age of 40 (yes those aren't typos, think about the technology enabled progress in leisure time that occurred over the last 100 years from 16 hour workday turning into 8 and so on).

8) To repeat, 20 hour workweek and retirement at 40 (with a generous stipend to almost match the wage level) to allow fresh talent to take control in a fast paced 21st century environment where exponential progress in technological gadgets, implants, biological and pharmacological augmentations makes late retirement a danger to the whole planetary herd. Gerontocracy at all levels is a public safety risk of enormous proportions. The elderly should be comfortably and rapidly retired with allowances for extra talented ones to continue working without societal coercion that presently exists (like losing a home). A level 5 would work 10 hours a week correspondingly. We should see surprising amount of volunteering at this stage of human development by people who are restless to utilize their training after years of school. We already saw rise in mass scale volunteering in Anglo-American space in 1960s-2010s period and in Soviet space in the 1920s-1950s period. If there is a grand exciting societal construction project, a new wave of volunteering will automatically be generated considering the new 21st century incentive structure, safety net support, and moral encouragement.

9) Level advancement can also be provided as honors for certain heroic tasks, extra special inventions, contributions to the herd, etc. This can be democratically decided to prevent corruption. Corruption itself at political level greatly reduced by systems such as examination with democratic popular input for highest scoring candidates. 

10)  Systematic targeting of land monopolies that currently exist in the form of landlordism to prevent too much centralization in energy production and distribution and to eliminate last remnants of feudalism. Modification to underlining land ownership structure from private to communal  is essential to prevent creation of unhealthy regional patchworks where areas with access to harder energy supplies (fission reactors) are able to browbeat neighbors. Eventually, with enough globalization and agreement on level 1 stipend standards for continents, some agreement needs to occur on global level 1 stipend goals.

Upon closer examination, none of this is utopian since controlled inequality and greed/sex based reptilian brain incentives are preserved. If one appreciates the sheer technological potential that humanity is looking at with transhuman augmentation, nanotechnological mass production, AI, AND if one understands that the time horizons we're looking at stretch into the 2050s, THEN the simple replacement of monetarism with more rational energy accounting described above is definitely not utopian. Current 2012 living standards enjoyed by more enlightened human wage slave plantations of Japan, Scandinavia, and Germany would have sounded similarly rather "utopian" to people in the 1850s. Yet we don't have to wait till 2150s due to the technological progress in means of production and distribution continuing to accelerate.

Some unanswered questions

"So will level 4 person get 4 times the food or 4 times the quality of the food or combination of both? Will shelter and food on higher levels also be provided on a stipend basis or will the additional electric units will be required to pay for it? What happens to rich people and their mansions currently? I can already visualize ways to abuse the system, what do we do with the shameless scoundrels? I certainly would like to spend my annual 50,000 units after my 10 hour workweek not on a level 5 shelter but maybe on three level 1 shelters in different sectors and a new kitty cat and maybe 2 cars instead? Can I forgo a stipend in clothing to get more energy units and what happens if..."

It is... too... early... for that.... First it is important to understand why we're on this road to begin with. 

Land Value Tax in the 21st Century

Georgism (breaking the power of last remnant of feudalism, the landlords) presents the most important point of contact and agreement between far left, far right, and centrist liberals throughout the world. Such agreement is key during transition to a new world economic system.


H.G. Wells, in The Shape of Things to Come, appears to have been correct (if off by a number of decades) when it comes to predicting Land Value Taxation becoming a fundamental cornerstone of a saner future world system. Whether the landlords are private or public in the form of a government, the unearned rents they collect will be redistributed to all living on the land. This allows most private corporations and individual capitalists to: 


1) Redirect increasing anger against them onto a relatively small number of individuals (buying time).


2) Buy off the poor without incurring too much personal cost (buying time).


3) Eliminate critical inefficiencies remaining from the dark ages and allocate capital more effectively in a world where capital accumulation has been slowing down/stagnating for decades (buying more time).


4) Push governments (that they always indirectly control when not being fused with them) of key great powers in the northern hemisphere to reinvent themselves. This allows the European continent to take the torch from United States in becoming a fortress of safety for capital via even better high tech welfare states (buying time once again by providing livable stipends to elderly and those displaced by machines).

Although it is popular to focus on either financial cartels or inefficiencies of the public sector these days, the sheer absurdity, inefficiency, and tyranny of landlords is often overlooked. It is too much part of background scenery. However, landlordism must be tackled first and directly since it is an older structural problem from a pre-capitalist world system. As we approach an end of a global debt supercycle (with governments of key military powers having to reconstruct social order to continue to function), landlordism should be emphasized as having been the primary cause of the crisis. This would create a convenient (and very necessary!) scapegoat and allow many corporations, oligarchs, unions, and governments to save face during transition to a new world system. Obviously it is one of many causes but singling it out has critically important benefits for humanity in terms of saving political energy expanded this century.


A few words about the global transition. It will either be orderly (Bretton Woods 2.0) or disorderly (trade disruptions and corresponding hunger related political violence primarily in the southern hemisphere). 


For it to be more orderly, the states will need resources. Resources will be scarce (factories shutting down, balance sheets of governments and corporations in disarray, etc). Tapping private landowners the world over and forcing them to pay rent will free up resources to minimize these conditions of chaos. Since new land can't be created readily, since it can't be hidden, and since private landlords control most of the surface of the earth, it will be easy to find what/who we need and redirect the rent these people normally collect towards infrastructure/welfare of a new world system. 


Although not all landlords have the same parasitic pull, the argument of "what about mom and pop landlords" is much like the 19th century argument about "mom and pop slave owners" who just had 1-3 slaves rather than the hundreds of the large plantations (large corporation equivalent of the day). Having said  that, the small landlords of course will not be physically touched and will become beneficiaries of the new system that they now help provide for. Some countries already implement a partial Land Value Tax system to great benefit. Taiwan is best example today. Future merger of China and Taiwan will hopefully "infect" a large planetary role model with a more futuristic tax code.

Problem of governments as landowners


Writing in 1976, Arthur Selwyn Miller in The Modern Corporate State, articulated the rise and decay of FDRist Social Democratic arrangement in United States from 1937 onwards. What started out as a roughly coequal coalition of large unions, large corporations, large universities, and large welfare government (with emphasis on job creating benefits of the military) has deteriorated. 40 years after the book was written, we are left with large military, large corporations (private governments), large universities subordinate to these private governments, and hollowed out central "public" government subordinate to these private governments. Combined with ever present institutionalized landlordism, this heady brew can only be described as neo-feudalism (especially with the 20th century decay/stagnation of newer dynamic progressive industrial capitalist system). 


Richard Nixon, the last strong relatively-autonomous American president, tried to prevent this and wanted to develop some executive government led (as first among equals) developmental authoritarianism. Franco's Spain in the 1950s springs to mind. Nixon was shown a lesson and now we have a major problem on our hands. How do we prevent the current, mostly privately led neo-feudal arrangement from transitioning to a mostly publicly led neo-feudal arrangement? How do we go forward towards new rather than backwards (only now with a glossier high tech patina).


Tapping and tackling only private landlordism will concentrate so many resources in the hands of the state that potential for mismanagement and confusion (see Soviet and modern Chinese examples) becomes all but a certainty. It will still be a better, saner, and more comfortable social order but one that would rapidly decay unless people in public governments are also viewed as much a (potentially parasitic) landlords as private landholders. This is especially important to keep in mind considering that most states in the world are effectively fused with large corporations to different degrees. Decreasing potential for corruption should be correlated to increasing complexity of civilization since preventing social unrest is difficult as is in such a densely populated world.

taxing land monopolies has no inefficiencies since supply of land is perfectly inelastic

The more proactively humane solution will only be in a legal rabidly institutionalized framework that ties the productive resource benefits derived from the land to each individual homo sapien living on the land directly. This means that governments can no longer serve as self aggrandizing “representatives” with final authority on how to allocate the stipends in the 21st century. This means structurally and legally binding governments, these entities with monopoly on violence in a given area, to only act as middlemen service providers and enforcers of justice. For instance, individuals in a private cooperatively owned and democratically managed private corporation in the future will pay legally mandated “rent” (whether money, electrical energy, resources, etc) to a public government land"lord" (people actually owning the land via planes, guns, and missiles) who will in turn be legally bound to transfer these resources to all people on the land. With cutting edge communication and transportation infrastructure, the line between decentralized and centralized governance will increasingly be blurred.

Sounds straightforward and surprisingly libertarian in the American sense? Yes, this brings us to a prior article on Left-Libertarianism in United States as a “glue” for the opposition. North America will be the hardest hit by the global transition since the people on that continent have utilized cutting edge technology to exhaust the current system first. This also means that most cutting edge and novel experiments in creating a new social order will happen there first. Land Value Tax provides a seemingly sensible yet ridiculously radical point of agreement towards a foundational platform of political coalitions of the future.

The planetary transition (whether orderly or disorderly) to a new international social order will span a number of decades and at first the leadership in constructing and developing it will pass to elites in the eastern hemisphere (Berlin-Moscow-Beijing-Tokyo-etc). However, once US begins to (hopefully) economically recover in the late 2020s and becomes role model for South America again (continent with the worst landlordism problem in the world), leadership should swing back to the land where both hope and world crisis began.

Comparing Deflationary and Inflationary Collapse

Both mainstream and dissident observers are coming up with "biflation" as an explanatory term to describe where we are as a planetary economy. That is a signal we're in a conceptual dead end (considering biflation has always been with us for the past half a century at least).



Some reactionary factions in the Western world desire a global return to a system of deflationary non-fiat industrial capitalism. I've began to write how "sound money" advocates are actually biting more than they can chew since deflation leads to collapse of capitalism a lot quicker than inflationary fiat funny money system. There's other very serious structural problems with the current world production and distribution system (such as machine efficiency rising faster than demand for workers) but lets focus on inflation and deflation first to see why there isn't a simple escape from current international fiat casino.


DEFLATIONARY COLLAPSE-
Caused by: Wage prices falling less fast than prices of goods
Result: Crisis of overproduction and profit collapse leading to shut downs of industry due to insufficient funds to run it, bringing corresponding misery.
Illustration of Industry versus "Consumer"/Worker deflationary cycle: 
                                                              

Industry makes KitchenBots (representing needed durable goods in general) and exchanges them for "sound" commodity backed currency. Consumers benefit in the mid stage of the cycle until overproduction leads to insufficient capital accumulation and horrendous social disturbance                                




 
1) Industry cycle begins


Pricey and new KitchenBot exchanged  >>>>>>>>>>>>>>
                                                    <<<<<<<<<<<<<< for 100 SoundBucks

Trickle in supply of KitchenBots begins some profit generation,  "consumers"/workers on average spend 2/3 of their total money on needed goods. Wealthier people/ early adopters create trickle of demand for the pricey good


2) Midstage of the industry cycle

Affordable and well known KitchenBot exchanged  >>>>>>>>>>>>>>
                                                            <<<<<<<<<<<<<< for 50 SoundBucks

Lots of supply as mass production slashes the price of the useful and desired KitchenBots yet profits increase on volume, workers on average spend 1/3 of their total money on goods (since their annual salary cuts are less drastic than cuts in the price of goods)


3) Final destructive stage of the industry cycle

Old and busted stamped out KitchenBot exchanged  >>>>>>>>>>>>>>
                                                            <<<<<<<<<<<<<< for 10 SoundBucks

Super supply and insufficient demand leads to inability of industry to make razor thin margins profitable. Profit collapses, capitalists cant afford to run factories and close them, laying off workers/"consumers". Workers on average spend 1/10th salary on goods yet they are now without income stream to afford the oversupply of goods all around them

Conclusion/Possible Solutions: We start out great on at least the light industry level and end up in a brutish destitute 1930s style depression (think of overproduced livestock being butchered instead of sold/given away to keep some profits). Everything grinds to a halt just as post-scarcity is within reach. One must keep in mind that life cycles of various goods overlap yet the general cumulative tendency is what is illustrated above. Possible remedies include introducing fiat inflation (see below) with serious state provided safety nets, war to destroy surplus goods/industry, and the state taking over some production to run factories without a profit motive (see 1930s-1970s socioeconomic experimentation in Europe)

And now lets turn to our current problem,

INFLATIONARY COLLAPSE-
Caused by: Wage prices rising slower than prices of goods
Result: Crisis of overproduction and profit collapse leading to shut downs of industry due to insufficient funds to run it bringing corresponding misery.
Illustration of Industry versus "Consumer"/Worker inflationary cycle:
                                                            

Industry makes KitchenBots  (representing needed durable good) and exchanges them for "fiat" faith backed currency. Consumers don't really benefit at any stage of the cycle until overproduction leads to insufficient capital accumulation and horrendous social disturbance 





                                
1) Industry cycle begins

Pricey and new KitchenBot exchanged  >>>>>>>>>>>>>>
                                                              <<<<<<<<<<<<< for 100 FiatBucks
Trickle in supply of KitchenBots begins some profit generation,  "consumers"/workers on average spend 2/3 of their total money on needed goods. Wealthier people/ early adopters create trickle of demand for the pricey good

2) Midstage of the industry cycle


Well known, yet still pricey KitchenBot exchanged >>>>>>>>>>
                                                              <<<<<<<<<<<<<< for 200 FiatBucks

Industry greatly increases supply of KitchenBots and KB price even briefly dips to 80-90 FiatBuck range. Yet soon enough new KitchenBots appear for 400 FiatBucks while the older generation ones are sold for 200. Industry is now trying to plan production in batches to prevent strong technology generated deflationary trends from surfacing even now. For the average "consumer", industry also designs shoddy goods that need constant replacement. Profit remains precarious yet stable with proper application of monopoly, cartel, and state ties. Workers meanwhile now spend 9/10th of their income on goods

3) Final destructive stage of the industry cycle

Old and busted KitchenBot exchanged >>>>>>>>>>
                                                              <<<<<<<<<<<<< for 1000 FiatBucks

At this stage we see normal consumer market destroyed, leaving only the luxury consumer market left standing. To overcome relentless international competition and fiat related higher prices on building materials, Industry goes all out to create super supply for ordinary people and hope to make money on mass production (whether technologically induced or using outsourced wage slave labor). These efforts fail as total mass production for KitchenBots was never fully developed due to sneaky attempts to prevent overproduction in the mid stage of the cycle. Workers now spend 10+/10 of their income on goods and increasingly only buy essential goods before gradually beginning to run out of those as well. Run away commodity inflation is the final straw of the fiat cycle. Since the rich do not need too many KitchenBots and since the rest of the workers prefer food and fuel instead, Industry begins to shut down factories and lay off people due to inability to fund further operations.

Conclusion/Possible Solutions:

We start out not that great and end up in the same poverty amongst plentiful resources scenario just as we do in the final stage of the deflationary cycle. We have witnessed what happens to a global system and its peoples under shocks from deflationary financial capitalism in the first half of the 20th century (historically, international financial cartels appear to take over the international industrial cartels regardless of fiat or sound status of the currencies).

We have not yet seen a planet wide inflationary fiat chain of collapse yet. This would imply all major currencies on the planet being affected relatively simultaneously via some failure on the part of Bank for International Settlements strategists to react quickly enough to systemic shocks. In many ways, inflationary monetarism allows Industry a variety of tools and more breathing room to play around with prices and thus survive a while longer. Inevitably, prices rising faster than wages destabilizes the whole system as surely as wages rising faster than prices.

Implications and alternatives

It appears that BOTH paths described above eventually lead real industry into a profit collapse and corresponding large scale social crisis (factory management not having the funds to keep production and distribution running and paying the workers). This would occur even if we minimized the influence of capital allocation industry (global banking cartels) on global industrial cartels. Symbiosis and convergence of finance and industry is as organic and essential to the system as is symbiosis between industry and state, banks and state, etc.

Austrian economists have done a good job continuing where original old school Marxist economists left off (when it comes to expanding a critique of capitalism in general). Namely, they ripped into the disastrous consequences of credit growing faster than real productive economy and the "statism" that often allows this. It is rather hilarious that both Marxists and Austrian economists really rely on victory by default. That is, the former group gets legitimacy by saying the planetary capital accumulating system we had for the past few hundred years is unstable, inefficient, and ultimately unworkable even with mass state subsidies. The latter group get their legitimacy on saying the fiat version of the same planetary system is unworkable due to statist interference. "If only we could purge statism from the world system!" This absurd cry rings forth from various corners of the Western dissident movement.

One way to proceed would be to expand the credit supply at exactly the rate at which expansion of the real physical economy occurs. Some dissident thinkers believe we can bypass the inflation/deflation debate by having the state provide credit for high technology infrastructure (thus creating real economic growth). Another way to proceed would be to overlap the dying capitalist system (whatever form it'll take in the next 10 years) with energy accounting. Both can easily function in parallel for a time. Indeed, if we think of the global socioeconomic transition and experimental period in the decades ahead, overlaps and diverse systems running in parallel will be a must. Which of these experimental sandboxes will expand to swallow the imagination of the whole globe will be left for us to determine.

Economic Development Alternatives for United States

The swelling dissident movement in United States will have to start shopping for ideas concerning socioeconomic alternatives in order to make itself viable. What does it have to work with?




The global financial crisis has clearly illustrated that there is a serious vacuum of ideas on what to do next as a civilization. Majority of the public senses (on various levels) that key leaderships of many Western states do not offer much more beyond printing more money, socially brutal austerity, etc. Playing for time and looting are not solid ideas and everybody knows it. This inevitably opens up society to ideas from below which will eventually result in part of the elite siding with these ideas to co-opt them and ride them to power.

In United States, we saw the libertarian critique meme and the reactionary "going back to FDR policies" meme rapidly become dominant online over the last 2 years. Collapsist and neofeudalism memes are also about to become dominant. Collapsism in particular forces future oriented thought. The non-Internet world is quickly following behind since it took researchers a year or so to educate themselves about the fraud that caused the crisis, to put their books out, and then another few months for people to read the books. Various socially visible pundits can now defer to books as authoritative sources in speaking up. The market for new type of demagogy (talk radio being the old type) is nowhere near to being saturated.

This awakening resembles a sort of a popular front in the making since people from diverse ideological backgrounds are creating a consensus of what they are against (federal reserve corruption, military eating most resources, financial oligarchy and its personal lawyer/butler [US congress]). A marriage of convenience of this sort is usually created when all other options are exhausted and it will split into petty infighting once the current regime is changed.

All the accelerating muckraking and massive corruption exposures going on currently will begin to create a dissident critical mass in the near future. This is due to the gently exponential curve that is word of mouth communication and most importantly due to some elites sensing that popular sentiment now allows certain things to be safely discussed on a national level. Like in a jury herd dynamic, a minority of consistent and tireless individuals can swing the entire group whether at elite level, the level of a bar or church, or national level. The vacuum of workable ideas in leadership allows such informational waves to spread and take hold rapidly. It may have taken Christianity 300 years to become a dominant meme but with present communication technology, informational "viruses" can do the trick in just years.

In interesting times like these, small but very narrative consistent groups have disproportionate amount of influence. Notice how quickly Ron Paul's faction went from being an ignored laughing stock to being a respected dissident movement (the mere fact that some oligarchs partially co-opted it with funding demonstrates level of genuine popular support). The great budding coalition of groups who usually don't want anything to do with one another (but who realize they got a common enemy) is gaining strength by the week. The awakening process does not even need to take hold of most people. A society historically needs maybe 1/4 to 1/3 of people to substantially switch their world view in order for real transition to start happening. 1/3 of the population can always be counted on to defend status quo to the last while 1/3 can be counted on to be an apathetic mushy middle that joins whoever seems to be winning or is more popular.

How will ideas be judged, what determines which will win out?

Market of ideas is limited by two things. 

1) Practicality of an idea. This means the degree to which an idea is compatible with unfolding social and physical dynamics of human civilization (can't have genuine feudalism, monarchies, or theocracies in 21st century with hundreds of millions of educated people). In a way, the strongest idea is one which is predictive of where we're pretty much headed anyway. This criteria can be said to be desirability of the good (functionality determining desirability).

2) How quickly it can be internalized by the public at large. If one needs to read too many books to understand and accept an idea, then it really is not that great. An idea having been popular previously at some point in history greatly helps with this. This criteria can be said to be the knowledgeableness of the buyer to determine which good is desirable.

So what's on the market presently?

I am going to focus on United States since in many ways the problems of United States show to the world the problems that they themselves will face very soon. The ideas that the American people adapt to resurrect themselves will eventually (if not immediately) be influential on a planetary scale after a couple of decades. The following are listed in no particular order of importance.

a) Reactionary "going back to FDR style" Keynesian monetarism, sound money, and rapid infrastructural development

b) Reactionary "going back to the John Quincy Adams style" American credit system, sound money, and rapid infrastructural development

c) Reactionary "going back to industrial robber baron style" brief and unstable period of something resembling what the libertarian faction wants. Some haphazard and rapid ego driven infrastructural development.

d) American version of Leninist New Economic Policy and very rapid infrastructural development

e) Emulation of Chinese style oligarchic dictatorship and rapid infrastructural development

f) Post-monetarist energy accounting Technocracy and very rapid infrastructural development


SPOILER ALERT:

It'll end up being f) eventually but not before one or more of the others are torturously tried, muddled through, combined, and recombined. In effect, a)-e) are a connecting bridge of experimentation that will make f) possible in due time. Some areas of the country and the world may experience de facto libertarian c) environment due to only the local oligarchs having developmental resources (see Abramovich in his post as governor of Chukotka). Such frightful old school oligarchy should not really spread too quickly before rapid backlash into other choices. There is also the matter of deflation stifling its development. Therefore the libertarian faction is primarily useful as a vibrant "rural power" part of the popular front. They will quickly fade as America's socioeconomic failure discredits capitalism (fairly or unfairly) in the eyes of humanity at large.

Emulation of Chinese police state e) and industrial worker exploitation may be preferred by one wing of American oligarchy (while the other wing seems to want perpetual banana republic style oligarchic military dictatorship with sprinkles of c)). This is due to China already combining various structural characteristics of a)-d) in one package. American version of Putinism is the other "softer" alternative to this. Neither are sustainable long term since they do not address the problem of exponential progress of technology consistently increasing planetary unemployment. There will also be the issue of China entering it's "America in the 1930s" period of industrial depression and crisis of overproduction (which in turn stands to discredit that country briefly in the eyes of the world).

We can begin to see how process of elimination reduces the extent to which the current ideas on the market will be utilized. For the older generation, some elements of a) can be used to provide them peace of mind, continuity towards the end of life, and as marketing to politically sell rapid increase in state intervention. Then, for the younger generations, the mythical elements of b) combined with the edginess of d) may follow to demonstrate that rapid infrastructural progress really is occurring and to provide the future American regime with legitimacy (it'll definitely be needing it). Transition period of the next 30 years will definitely be turbulent and interesting for all involved. We must consistently remain vigilant throughout the process to make sure the rich do not derail the experimentation into something truly frightening (which would make us wish for the old USA back).

The current projected neofeudalism is to be avoided at all costs

                                                                            VS

Return of Class Warfare

The super rich suffer from acute nihilism and are vastly outnumbered by newly Internet literate aggressive personality types. They will lose badly if they don't preemptively and radically modify present socioeconomics

Considering all the negative attention that the global oligarchy has been getting recently, one interesting fact often left unmentioned is that the super rich are outnumbered 9,999 to 1. Let's briefly define what we're dealing with.

When one really filters rich people overall, it's evident that the number of decision makers is actually rather small. Out of 7 billion people on earth in the near future (6.8+ billion now), less than 1% are trend setters within social hierarchies. This is the socially visible merchant class that makes money purely off capital investments. That is less than 70 million capitalists scattered about. Majority of this group have relatively insignificant pools of investment money which doesn't expand much (mom and pop small business owners who may have some political pull locally but not too much nationally and internationally).

Within this group, there is 1% (<700,000) that makes the rest look like paupers. Here is a detailed article showing the sheer inequality among the capitalists in United States. These are the people so far removed from the rest of the world materially that they usually end up oppressing the lesser capitalists (through stock market swindles, cartels, and disproportionate buy outs of political lapdogs). In other words, majority of those within richest 1% are fighting their own battle against the 1% in their ranks.

The 700,000 super rich are trend settlers among trend setters. At this point real oligarchic activities become possible. An oligarch is simply anybody with enough disposable wealth to influence politics. Although actions (like paying 2 thousand dollar ticket at a candidate's fund raiser and donations to think tanks of one's choice) technically qualify, in the international arena influence really requires funding/owning think tanks with a global reach.

Finally, perhaps around 50,000 individuals (a few thousand families really) within the 700,000 have the power to culturally pull the rest of the international oligarchy behind them through role modeling and proactive moves. This small number of key oligarchs makes it very easy to hound them politically. Conceivably, people can protest in front of rich people's gatherings rather than in front of gatherings of politicians in the future.

The 700,000 are buffered by millions of loyal and very well paid proletariat patsies. They are the cream of the crop of the wage laborers who often defend the caste above them to the bitter end. One can compare them to house slaves who got it pretty good (200,000 - 600,000 a year paychecks). They can be found writing state propaganda articles for such oligarchic mouthpieces as the Harvard Business Review, The Economist, The Atlantic, and similar rags. This richest proletariat caste appears the most brainwashed due to its complete adoration of the ruling caste (desire to mingle and get interviews) and contempt for the caste right below them. Here is a good example of the type of apologist garbage they tend to write. It pretends to be a serious criticism on the surface while actually being staunchly defensive (avoid if you have a weak stomach).

The good news.

Out of 7 billion people on the planet, almost 500 million people are ENTJs and ENTPs, many of whom are getting Internet for the first time. If you include all relatively unemotional and intuitive homo sapiens such as INTPs and INTJs (perhaps even more dangerous to the rich through behind the scenes work), then the number goes to 700 million uppity proletariat. These 700 million people are the most likely to self educate themselves by utilizing new informational technology and to subsequently find out about their exploitation at the hands of the 700,000. Now, they cannot all be bought off, suppressed, and co-opted. There just isn't enough room in the upper circles for so many comfortable house slaves. Even if 20% of them are co-opted into status-quo hierarchies worldwide, that leaves over 500 million on the outside looking in. This means that the enemies of humanity at large are outnumbered roughly 500-1000 to one (by people who got the drive and the oversized ego to try to bring them down).

The richest 0.01% cannot always count on the loyalty and constant support of the 10% of the population internationally (those who are assumed to have too much invested in the system and who are "too comfortable" to rebel). As much as petty capitalists and top notch white collar professionals defend the oligarchy on a day to day basis, as much as they want to be the people above them, their adoration can nevertheless rapidly transform into burning resentment and jealousy (since they realize that there are tangible limits to meritocracy and social mobility even in the upper circles). Therefore, roughly half a billion energetic, excitable, self educated, and newly politically aware individuals on the "outside" got people and supporters on the "inside" who can sabotage the oligarchs up close and feed valuable information (leak data, provide whereabouts of gatherings, provide funding, and share strategic input).

Besides being outnumbered they are also overcome with nihilism which can be exploited

Just as was the case over 100 years ago (when Nietzsche first described the phenomenon in detail), it appears that the most powerful individuals on the planet have not developed a common and coherent moral system for themselves and their offspring. Even as the elites are becoming increasingly culturally homogenized via cosmopolitan modes of consumption, Internet communication, international think tanks, common ivy league education, and jet travel allowing frequent dinners together, the majority of them have not officially agreed upon a life expanding moral framework of the future.

The future necessity and inevitability of some centralized governance on a planetary scale combined with the psychological need of rulers to overcome nihilism in a permanently atheistic world (when hedonism, Buddhism, socioeconomic ideology, and attainment of power to highest offices in the land fail to provide psychological comfort), will lead to such moral concoction eventually. However in the meantime, the lack of a relatively uniform belief system to indoctrinate elite's children (future planetary leadership) into is leading to severe infighting when it comes to paths towards planetary unification. This in turn allows for international paralysis and deference to the default mode of predatory corporate globalization overlapped with petty nationalisms.

Out of 700,000 super rich, the combination of thirst for both knowledge and power over others is mostly prominent among the NTs in the Myers Briggs typology. That leaves us with roughly 70,000 individuals who'd like to tinker with humans in new ways on a global scale and who have the financial means to do so. The ESTJs, who are 10% of the population, can add people to this group but only for managerial non-productive (in terms of building a new system) positions. Oligarch ESTJ spawn is likely to engage in something seemingly unnecessary considering their money such as military service. ESTP ofspring would get their kicks from flying balloons around the world or hunting lions (the traditional venues). Other personality types would not really be interested in possibilities of planetary governance. Many would consider politics in general beneath them (since politicians are just butlers) and boring. Even fame loses its appeal since it is not a means to get ahead and brings attention of the peasants to the wealth. If politically engaged at all, their donations would just go towards supporting the status quo of current predatory globalization.

Most of the world's proletariat are so busy just trying to survive that they have overestimated the potential of psychological fulfillment that hedonism can bring. For children of the oligarchy, sex, travel, and partying stop providing the same kick when they reach their late 20s. That's when they go their separate ways as determined by what neural breed they are. The financial means of the oligarchic NTs do a number on their egos (and the egos of the clinical psychopathic minority most likely overly represented within the ENT group) as a type of world conquest becomes possible.

One may argue that power may be sufficient to fill that void but only a minority of elites have the extroverted and emotionless traits to be inclined towards active involvement in politics. Even if they attain positions in high office, the satisfaction from power gained is not great considering most modern legislative and executive branches in the Western world are trapped within crushing interconnected oligarchic corporate power networks. Thus, even if a son from the capitalist class gets into high public office, his real satisfaction will stem mostly from drinking, talking, and dining with fellow political junkies rather than remolding the world with his will. If some legislation does get passed, it'll mostly benefit his fellow top 1% peers and have a less than pleasant feel that he is their secretary. It could very well be that political backers who actually try to get the poor peasantry educated are doing so out of resentment against their overbearing aristocratic fathers and/or their more extroverted political friends. This certainly has happened before when some children of the aristocracy in imperial Russia and Britain flirted with communism.

Conclusion:

They are much weaker and more psychologically paralyzed than they appear. Their patsies can be turned against them and millions of people throughout the world will go about doing just that. The goal is to target key oligarchic financial structures (federal reserve and various major banks) and create informational critical mass in the minds of the wage laborers at large. The super rich have grown too soft and comfortable and the intellectual oligarch strategists among them are overwhelmed by group think and cultural inertia of their peers. As this brilliant article suggests, sociologists should refocus from studying the least well off members of society to those best off in order to properly analyze what we're up against. To understand it is to find ever better ways to fight it. In the near future, the political class can be made to serve the general population again. Politicians are notorious for being able to smell blood in the water and the oligarchs present very juicy cows from which to milk political capital and fame (those politicians who stand up to the robber barons tend to get into history books).

Sound Money and Deflation

"With the enormous leaps in industrial productivity over the 20th century, shouldn't a penny now buy me at least 10 Snickers bars instead of nothing?" 

(Or how fiat money serves to prolong the life of capitalism while libertarians are ironically fighting to make capitalism disappear)


A great question, considering world's population rose 4.2 times from 1900-2010, annual copper mining output rose 30 times in same time period, and industrial/agricultural mass production technology (for making candy) has made exponential efficiency leaps. To investigate this serious matter lets look beyond the screams of "federal reserve and fractional lending robbed us all with depreciating overprinted fiat currency!" and delve into the underlining physical dynamics.

A one ounce Hershey's bar cost 3 cents (9 grams of copper) in 1918 whereas a 1.45 oz Hershey's bar in 1982 (last year to have 95% copper pennies) was 20.6 cents/62 copper grams per chocolate ounce. As of 2010, the Hershey's bar approximates 65 fiat cents an ounce but since the imperial authorities diluted the penny with mostly zinc (making current pennies a harder to quantify mix of zinc and copper), I'll use the 1918-1982 period for simplicity.

If one adjusts for inflation, 3 cents in 1918 is 19 cents in 1982 (539% depreciation in purchasing power). An 80 year old, lets call him Bob, getting his favorite childhood candy treat would have seen his under the mattress savings buy 6.3 less Hershey's chocolate. Now this may not seem too bad IF Bob was in a theoretical situation where his real income growth was pegged to inflation the entire life and his fiat currency grew in a bank under inflation pegged interest throughout the 20th century. Considering the candy's probable mild price buoyancy due to brand recognition, on the surface it looks like the company is only charging Bob 8% more than they did in 1918 (20.6 cents to 19).

Looking through an Austrian economics lens of inflation being an increase in the money supply, since most people do not have their finances perfectly adjusted to inflation, Bob is being continuously ripped off and impoverished via inflation tax. He may not get exactly 6.3 times less chocolate but even 2-3 less Hershey's towards the end of life is a criminal swindle.

A defender of the socioeconomic status quo in 1982 may partially agree but counter this via a pseudo-Austrian angle, "If anything Bob is lucky to only be paying 62 grams of copper per ounce instead of 9 grams in 1918 since copper is mined faster than people are breeding. He looks like he is getting a deal when using this depreciating physical metal! Copper is as fiat as paper!" (Authorities saw the copper content in penny spike more than a fiat cent in 1980-1981 period and thus changed the content, the price of copper in penny then collapsed to just under 1 fiat cent again in 1982-1984).

This is an interesting response and lets take a look at it without distracting ourselves with multitudes of other serious issues such as the government ending the use of silver in currency, going off the gold standard, stagnation of real incomes, etc. Some of these issues will begin to be resolved indirectly by the end of the article.

If one tries to look at Bob's situation via Marxist economics lens of commodity exchange, then we see that the poor fellow is being swindled in another way. This investigation is a little trickier considering technological productivity cannot be readily quantified and since the concept of productivity itself is culturally determined. What is very safe to say is that mechanical efficiency in producing an ounce of Hershey's has risen a lot more between 1918 and 1982 than the 260% rise of human population in same time period. That is, if copper production/demand magically froze in place, a 1982 Hershey's chocolate ounce should cost not 9 grams but substantially less. Surely, they've figured out ways to stamp out these chocolate treats by the millions in ways not dreamed of before (even taking into account employee salary operating expenses).

Of course copper dynamics were not frozen but they also end up benefiting Bob. If you consider the borderline exponential and evolving industrial demand for copper for electrical/water purposes throughout the 20th century, then it is clear that the 530% rise in copper production in 1918-1982 does NOT devalue 62 grams (needed to buy one 1982 Hershey's ounce) by half.

In other words, even though the copper money supply rose at twice the rate of human population, we did not see 100% inflation of the penny since the industrial demand for copper kept up pace with the human population at the very minimum. Therefore, a Hershey's bar ounce in 1982 should have cost at most 6 cents (1918 price * population growth) instead of 20.6 cents. Therefore, Bob doesn't just get ripped off through expansion of the fiat money supply but by value of goods not reflecting the breakneck pace in development of production and distribution of Hershey's bar. Considering a pre-1982 copper penny is approaching 3 fiat pennies in worth at the end of 2010 (and many countries having pulled copper from their currency in last 30 years), it may well be that a Hershey's bar should cost a lot less than a copper cent today. This makes more sense if one remembers that a silver dime from 1964 is worth over 2 dollars presently (even though annual silver output expanded 35 times in 1900-2010 period).

It appears safe to say that fiat currency was haphazardly introduced by business leaders in first half of the 20th century (via their political appointees) to prolong the life of capitalism via inflation. Ironically, the financial robber barons ended up doing the same thing that rural agricultural interests wanted in late 19th century America. 19th century saw various deflationary collapses and farmers wanted silver/gold bimetallism since rapid mining of silver would have introduced inflationary pressure on the dollar and thus prevented profit loss. Banksters 100 years ago were gold bugs since they made money from loans and deflation benefited the loan sharks. Since financial capitalist take over of industrial/agricultural capitalism was mostly complete by 1900, bankers tended to win political arguments.

During the great depression, there developed a compromise and some convergence of thought between financial, agricultural, and industrial interests concerning the benefits of inflation. Biggest bankers by that time, found a way to profit while expanding the money supply via modern money mechanics and farmers ended up getting governments to pay them to not produce too much and thus prevent deflationary profit loss. FDR managed to reconcile the key parasites, preserve capitalism, and artificially prolong the profit taking of major monopoly industries at the long term expense of the consumer (in a very humane developmental manner). Yes, he also did a lot of great things and is one of the kindest masters people saw in the last century (no sarcasm).

If the price of an 1982 Hershey's bar reflected the real amounts of hard money (commodity) availability PLUS availability of Hershey's ingredients (commodities) PLUS the cutting edge technological ability to produce and distribute the Hershey, then we'd see the company experience the periodic deflation born crisis of overproduction that the communist manifesto summarized. One can imagine what will happen to corporate bottom line if a copper/silver/gold/rare earth metal commodity money coin buys more consumer goods every year than the previous one. On paper, Austrian utopian capitalism is too efficient and benefits the consumer too much (so much in fact that it quickly implodes in deflationary collapse horror show, massive unemployment, and technologically driven socioeconomic evolutionary leap towards post-scarcity society).

It is little wonder that Trotsky sided with Austrian economists when he wrote of pre-requisites of United States going communist. They being commodity backed hard money utilized to barter for consumer goods. This is especially true for gold since gold production only rose 5.5 times in the 1900-2010 period, barely above population growth. Ironically, the current wave of libertarians are fighting to make capitalism disappear (since non-fiat currency would fully unleash the post-scarcity potential of means of production and distribution that have existed around us since at least the 1950s and that Buckminster Fuller and King Hubbert described in detail). I will leave with a few 1934 quotes from Leon Trotsky regarding the absolute necessity of ending the federal reserve. ;)



"-This system will be made to work not by bureaucracy and not by policemen but by cold, hard cash. 
-Your almighty dollar will play a principal part in making your new soviet system work. It is a great mistake to try to mix a “planned economy” with a “managed currency.” 
-Your money must act as regulator with which to measure the success or failure of your planning. 
-Your “radical” professors are dead wrong in their devotion to “managed money.” It is an academic idea that could easily wreck your entire system of distribution and production. That is the great lesson to be derived from the Soviet Union, where bitter necessity has been converted into official virtue in the monetary realm. There the lack of a stable gold ruble is one of the main causes of our many economic troubles and catastrophes. It is impossible to regulate wages, prices and quality of goods without a firm monetary system. An unstable ruble in a Soviet system is like having variable molds in a conveyor-belt factory. It won’t work."

Maximum Wage and the Limits of Human Inequality

Pegging the rise of maximum compensation to the rise in the minimum will go a long way towards avoiding global disruptions





The appropriate maximum wage that society should have will be a critical issue in this century. It is generally agreed upon at this point that a neurosurgeon should get compensated more than a tour guide. The Soviet experience of a relatively narrow gap between highest and lowest compensation (top company manager officially earning 3-5 times the entry level worker) shows that society's progress stagnates if tangibly unequal abilities and contributions are rewarded with compensation that's perceived as relatively equal. Yet various banana republics (United States included) around the world demonstrate that stagnation also sets in when wage inequality gets sufficiently monstrous.

It is not enough to look at relatively egalitarian societies like Japan or Sweden to try to find some golden maximum/minimum ratio. What is needed is a common sense and/or philosophical framework that 1) justifies a certain income ratio
and 2) creates conditions compatible with human nature and self interest that allow the set ratio to be maintained.

1) Justification for capping the difference between top and bottom incomes should be grounded in reality and pragmatism and not idealistic popular desires of how a world should be. Theorists like Nietzsche spent considerable time elaborating that humans aren't equal. Yet in an ironic twist, the same reasons (that he gave for not having a leveling system where everybody is assumed to have the same value) can be used to set limits to difference in valuation.

click to enlarge

Like many characteristics of a population, the natural abilities to be exchanged for money are spread along a bell curve. Natural ability is anything that gives a physiological edge in addition to training. An example would be the hyper sensitive and rare taste buds of a top chef or a fighter pilot with remarkable reflexes and fast twitch muscles. If you take a person with poor taste buds and a person with exceptional ones and provide both with identical intensive high quality training on food preparation, there will be a certain intangible limit to how much better one chef is than the other. This applies to all professions. What is known for sure is that one is not 1000 times better chef after the training (or 100 times). Such numbers are simply ludicrous mathematically.

Napoleon Bonaparte is not 100 times superior person to say, a gas station manager and neither does Napoleon deserve 100 times more cars, 100 times more houses, 100 times better quality food, 100 times the salary, 100 times the size of personal land, etc. Think about it. Even without the leveling of military training, if you take the brain of the gas station manager and multiply its function by 10, the gas station manager would give Napoleon a run for his money in most if not all areas of life. Whether intelligence, speed, personality, patience, if you take an ability on one low end of the bell curve and multiply it by no more than 10, you automatically get to the other end of the bell curve (ex: IQ of 30*10=300).

I am using a multiple of 10 for simplicity here since the actual difference cannot be readily quantified (one perhaps can argue better for 15, 20, or 8). Considering the outrage over the bankster bonuses in the last 2 years, it appears the general public intuitively knows that there are limits to salary compensation. What remains to be done is to draw some line in the sand. A person earning 10 times as much as somebody earning 50 grand a year is getting half a million and automatically gets into top 1% income bracket. 10 times the compensation is an enormous leap. This perhaps sounds shocking, the way explaining that a duke does not have divine right to all the local land might have sounded shocking 300 years ago.

"But isn't compensation also determined by social importance of an ability (usually allocated by market forces)?"

As far as social importance, it is a very valid point. In today's absurd dying socioeconomic system, we don't see prime ministers and military generals receiving the same incomes as Lloyd Blankfein or other wall street criminals. We also don't see the operators of nuclear missile submarines getting 400 times the amount a waitress or a new army recruit gets (the way a modern CEO does compared to entry level workers in his/her organization).

Certainly the argument from social importance would indicate societal leaders, augmenters, and protectors to be the most vital. It is a tricky subject which should be properly studied with in depth examination of what professions benefit society the most (hint: engineers and scientists in political power). There are various ways of determining social importance with length and difficulty of educational training being one of them and critical examination of what makes real physical economy grow being the other (to filter out people who spent 13 years in intensive study of psychoanalysis or Gregorian chant from the top compensations).

This leads us to the idea of a free market competition, a concept as utopian and disconnected from reality as pure communism. The unregulated "market" is and will remain a diverse collection of political power centers that evolve the rules of the global private casino as they see fit. The obvious examples of the market giving top rewards to athletes, pop stars, and organized crime (Citigroup, JP Morgan Chase, etc) shows that it is a very poor determining mechanism of socially important tasks. This is where we see a difficult social divergence happening between perceptions of important jobs (nuclear power plant director) and consumer determined rewards for not-so important jobs (national talk show host). Obviously we'd like for both the public and infrastructural demands (that allow the public to live) to have a say in compensation without too much divergence.

If incomes could be broken into 10 levels, it very well could be that a top entertainer should be a level 7 worker (earning 7 times more than the minimum income of level 1) while the nuclear power plant director gets to be level 8. This will be up to the politicians and the needs of the crowds as long as they maintain the ratio system (in this case, based on maximum wage difference of bottom income multiplied by 10).

2) How does one make the maximum wage system stable and compatible with human nature? The simplest solution is to make the rise in maximum salary dependent on the rise in minimum salary. This means that if level 1 worker earns 100 units a day while the top level 10 worker earns 1000, the level 10 would only be able to get a raise of 10% to 1100 units if the salary of level 1 goes to 110. If you are beginning to suspect we are moving beyond capitalism to a more high tech welfare system of the future, then you are correct. Notice how the maximum salary gets to grow while being tied up to the minimum.

Pegging the material progress of the highest compensated to the material progress of the poorest can easily work within the capitalist system but it begins to work even better in a post-monetarist technocratic system. The strongest and richest must be given a personal incentive to improve the lives of the weakest and poorest through an income peg. They will still remain 10 times better off (10 times the cars, 10 times the living space, 10 times the clothing) but at the same time, if they work in their self-interest they will be lifting all boats. This dynamic inevitably puts more technically oriented people into top positions of society where they are most needed anyway. We're talking people who understand how to improve infrastructure, logistics, and basic structural economic welfare provision.

These matters will continue being a major concern as we gradually transition to a post scarcity transhumanist world of the future. It is important that we start discussing the limits to human inequality early on before social disturbances on a planetary scale have a chance to really develop.