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The Daily Paradox

The Wars of Dependence

The world is dividing itself into two parts, and not only geographically. There are the rich, defined as those who have more than enough to live on and provide reasonably for their old age, for family disasters and for unexpected jolts to the world’s economies. Under present legislation they have every right to be rich as long as they have traded fairly and paid their reasonable share of taxes honestly. Trading at all, let alone fairly, in a highly sanctioned world is difficult. Some rules for the rich appear rather unfairly beneficial.

There are the poor who have less than a reasonable amount for living and making the provisions already mentioned. This group had many destitute people in it thirty or forty years ago. Lots of them have been lifted out of that state by skilful politics, successful businesses and improvement in the world’s economic condition. Debt has enabled some of that. The poor may be poor as a matter of luck, circumstance of birth, or bad judgements for which they cannot – or even can – be blamed. The poor are very conscious that they are not rich.

The rich are generally dependent on the present exercise of capitalism which has developed from astute risk-taking to be more a lottery with unpredictable outcomes. This is not to say that capitalism as originally conceived – the exercise of investment, judgement, competition, skill and hard work – is bad. It has been responsible for the economic growth and therefore the wellbeing of the world. We would be much less comfortable without it. Today it is fuelled by debt for which the borrowers, both individuals and corporations, are less personally liable than is necessary to promote responsible risk taking.

Investment is an acceptable risk since the investors know they may lose all the money ploughed into a business. Debt is a borrowing against collateral that guarantees its payback. Increasingly debt is failing but it is still treated as different from investment. The dependence of wealth on debt is sensible when it is certain that the debt has a 100% chance of being paid back – or even a 98% chance. Debt that has a low chance of being paid back is not debt but risk investment. It is on such debt that much of today’s wealth is based. When it is unpayable it is financed by further, usually more expensive, debt. Unless there is personal risk attached to debt, it becomes an undisciplined source of funds.

The poor are becoming more dependent on charity and this will increase significantly as AI, robotics and automation take over the heavy lifting work. Technology is already starting to take over the thinking work. Capitalism, as practised, is not equipped to deal with a charity-based society because dependence on gifts is not ‘being equipped’. So the relatively poor appear to be heading for an existence based on handouts from rich people’s tables.

The non-existence of jobs is not the fault of the jobless, nor is it the fault of the rich. It is caused by technological development – progress. The poor, or let’s call them simply ‘the not-rich’, are aware of both the wealth of the rich and the joblessness of many of the rest. They hear it minute by minute due to the fast communications we now enjoy.

So the rich depend on subsidised debt – a mortgage of the future and a liability for the next generation – and the poor depend on freebies, to which they now, not unreasonably, lay claim by right. If there are no jobs you still need to feed the family. This polarises itself into political ideologies which, if they were debates with useful, actionable outcomes, would be perfectly acceptable. But today’s debate often becomes violent. In the process of doing so it destroys masses of the material and social advance we have achieved, leaving everyone poorer and the not-rich again receding into poverty.

The manifestation of this conflict is primarily the United States but blaming the US is a pointless exercise. As the largest and most successful economy it has done more for the world’s success than any other country. It cannot alone redefine capitalism because the capitalist system is already entrenched everywhere, even in the most autocratic countries.

Capitalism must therefore be redefined to suit the world of technology rather than the world of the trans-Appalachian West. New objectives to handle fewer jobs, an ageing society and a planet groaning with the overload of energy needs must be agreed.

This will only happen if each of us, within our intellectual capability, helps to fathom what sort of a society we want to be. And expresses our thoughts rationally and calmly.

If we don’t, the Wars of Dependence will destroy us as surely as any pandemic.

If we do, the paradise we all search for could be right here, soon.

Good morning

John Bittleston

Your views on this would be more than welcome at [email protected].

Thank you.

29 May 2024