H. Court Young

Saturday, July 23, 2016

The Wonder of Transparency – Missing in Banking and Politics

As we progress (?) from one political party’s convention (Republican) to the next convention (Democratic), I saw a comment about the Republican Convention that got me to thinking about transparency. These conventions were designed to delineate policy for each of the party’s candidates, regardless of the political level. Candidates from the vaunted dog catcher of a local municipality to the presidential and congressional candidates, are defined by their adherence to these policies, called platforms, if they take on the “R” or “D” label.

So what does this have to do with transparency? First, I will present some background.

One area which has become very opaque is the financial sector. There is much deception, fraud and corruption, just like in politics.

The business relationship between commercial and investment banking and insurance, known as the financial industries, is a complex one. Early in another depression (yes we are currently also in a depression), the American leadership tried to clarify the relationship between and legislate these financial industries in 1933. A major piece of legislation, the Banking Act of 1933, became known as the Glass-Steagall Act. It is explained as follows:

“Congress saw the need for substantial reform of the banking system, which eventually came in the Banking Act of 1933, or the Glass-Steagall Act. The bill was designed “to provide for the safer and more effective use of the assets of banks, to regulate interbank control, to prevent the undue diversion of funds into speculative operations, and for other purposes.” The measure was sponsored by Sen. Carter Glass (D-VA) and Rep. Henry Steagall (D-AL). Glass, a former Treasury secretary, was the primary force behind the act. Steagall, then chairman of the House Banking and Currency Committee, agreed to support the act with Glass after an amendment was added to permit bank deposit insurance.¹ On June 16, 1933, President Roosevelt signed the bill into law.” - Glass Steagall Act - http://www.u-s-history.com/pages/h1504.html, http://www.federalreservehistory.org/Events/DetailView/25,

It seems that during that previous financial crisis our country’s leadership were also “under extreme pressure” by their “constituency” to “do something.” Based on the nature of this Banking Act, increased public and regulatory transparency was deemed to be needed. It was manifested as a separation between traditional banking and more speculative commercial and investment banking.

I recently watched a documentary on YouTube about the use of technology in investing entitled Wall Street Code – https://m.youtube.com/watch?v=GEAGdwHXfLQ. The introduction to this video shows the “sleepy” very passive nature of mortgage banking prior to the leveraging of technology in investing. At that time, mortgages were thought to be the basis of our financial society and security. As such, they were “rock solid,” highly rated and very low risk. After all, people never defaulted on their homes because they were checked financially and could not get a mortgage if they didn’t “qualify.” Mortgage banking was presented as extremely boring, as nothing ever changed since the implementation of the 1933 legislation.

However, in the early years of the 21^st century, these rock solid investments were modified to make them more “sexy” due to changes in this 1933 legislation. Yields increased and the investment community started making “big” bucks with very low risk. To fuel this massive “cash cow”, more and more people had to be able to get mortgages, regardless of financial qualifications. While the financial ratings of the mortgages stayed the same, increased risk was introduced via non-qualified buyers.

Part of this change was brought about by the Gramm-Leach-Bliley Act, signed into law by President Bill Clinton in 1999. The following history is noted by Dave Manuel on his website, dated July 23, 2016.

“On November 12th, 1999, Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed SOME of the provisions of the Glass-Steagall Act. … So, as a result of the Gramm-Leach-Bliley Act, a commercial bank would be able to buy an insurance company, or a commercial bank would be able to buy an investment bank, etc.
The three co-sponsors of the Gramm-Leach-Bliley Act were:
Sen. Phil Gramm - R
Rep. Jim Leach - R
Rep. Thomas J. Bliley, Jr. – R
In 1999, the Republicans held a majority in both the Senate and the House of Representatives.
The final version of the Gramm-Leach-Bliley Act passed the House by a vote of 362-57 and the Senate by a vote of 90-8. This made the bill "veto proof", meaning that if Clinton had decided to veto, the bill would have been passed anyways. Having said that, if Clinton truly didn't want the bill to become law, he could have vetoed the bill in a symbolic gesture, but this did not happen.
Many people point to the Gramm-Leach-Bliley Act as a major reason why the financial sector imploded in 2008.
When it comes to pointing fingers, both parties get the blame. The Gramm-Leach-Bliley Act was co-sponsored by three Republicans, signed into law by a Democratic president and had the overwhelming support of both parties when it was eventually passed.” - http://www.davemanuel.com/fact-check-did-bill-clinton-repeal-the-glass-steagall-act-120/

Both Republicans and Democrats in positons of leadership and power benefitted greatly from these changes in the financial system. Massive transfers of wealth from the bottom 99% to the top 1% took place due to this change in legislation. Anyone in management of a bank such as Goldman Sachs, or the financial system, such as Ted Cruz’s wife, obviously benefited immensely.

Two distinct positions have been taking form since the financial crisis of 2008. The pro-Republican position is that one of the main causes of the financial meltdown of 2008/2009 is reported to be the repeal that separated commercial banking from investment banking. A USA Today article by James Rickards entitled Repeal of Glass-Steagall Caused the Financial Crisis, dated August 27, 2012 notes:

“The big bank boosters and analysts who should know better are repeating the falsehood that repeal of Glass-Steagall had nothing to do with the Panic of 2008.
In fact, the financial crisis might not have happened at all but for the 1999 repeal of the Glass-Steagall law that separated commercial and investment banking for seven decades. If there is any hope of avoiding another meltdown, it's critical to understand why Glass-Steagall repeal helped to cause the crisis. Without a return to something like Glass-Steagall, another greater catastrophe is just a matter of time.” - http://www.usnews.com/opinion/blogs/economic-intelligence/2012/08/27/repeal-of-glass-steagall-caused-the-financial-crisis

Mr. Rickards states the cause of the financial meltdown in simple terms:

“It was Glass-Steagall that prevented the banks from using insured depositories to underwrite private securities and dump them on their own customers. This ability along with financing provided to all the other players was what kept the bubble-machine going for so long.”

A more liberal and moderate position is as follows. Aaron Klein of the Brookings Institute writes in his July 19, 2016 article entitled Why is Glass-Steagall so politically popular and what does it really mean?

“Glass-Steagall separated the commercial and investment banking and the business of insurance from each other. Firms had to specialize in one of those areas and could not cross business lines. Separating business lines was a response to the factors that caused the Great Depression.
The surprise last-minute addition of a plank in the Republican platform embracing Glass-Steagall Act mirrors a call in the Democratic platform inserted by Bernie Sanders’ supporters to do the same, in spite of the fact that Hillary Clinton has explicitly rejected it.
Including it in the GOP platform is surprising and is a major about-face for Republicans. It contradicts House Financial Services Chairman Jeb Hensarling (R-TX), who just weeks ago proposed an alternative financial regulatory system of increasing minimum bank capital in return for less regulation. Repealing Glass-Steagall in the Gramm-Leach-Bliley Act of 1999 was a signature victory of the conservative movement’s deregulatory agenda, which was also supported by President Bill Clinton. Why is Glass-Steagall now so politically popular and what does it really mean?
Bringing back Glass-Steagall is good politics and bad public policy, as is often the case. It is good politics because it taps into the belief by the American public that the Depression Era generation, faced with their financial crisis, made smart reforms that worked. Those changes did work and many of them still do, such as federal deposit insurance, the creation of the Securities and Exchange Commission to police Wall Street, and a series of investment laws designed to protect investors. At some point, the thinking goes, we strayed from the wisdom of our grandparents, and in our zest to harness the powers of markets we made critical mistakes, unleashing a tide of forces that created our own financial crisis. Almost a decade later after the Great Recession, the American public is still extremely angry at Wall Street and wants change.” - http://www.brookings.edu/research/opinions/2016/07/19-why-is-glass-steagall-so-politically-popular-what-does-it-really-mean-klein

However, along came the election cycle of 2016. With an increasingly “ingrown” political elite, distinctions between the candidates and political parties are required, whether they exist or not. As such, the financial system became one of those distinctions. Needless to say, the repeal of Glass-Steagall is a very politically charged issue in today’s political climate. Both political parties are jockeying for position on this economic issue in the election of 2016. The following quotations make this very apparent.

While I am not taking a position on the reinstitution of the Glass-Steagall Act issue, it is important to note the Republican “plank.” The following was noted about Donald Trump’s speech to the convention on July 22, 2016. It is as follows:

“No mention of efforts to cut financial regulation. Nothing about the Republican Party platform's new aim to break up the big banks. And not a word about Hillary Clinton's long-standing ties to Wall Street kingpins and the tens of millions she's accepted in donations from them.
Trump's failure to mention banks was all the more surprising considering that one of the few tidbits of actual policy news to come out of the Republican gathering in Cleveland was a plank in the party platform to reinstitute the Glass-Steagall Act. Since the Great Depression, that regulation had installed a firewall between commercial and investment banking, but its repeal in 1998 is often cited as helping cause the financial crisis.”
Source: http://www.msn.com/en-us/money/markets/the-one-key-word-that-trump-left-out-of-his-rnc-speech/ar-BBuFKK5?li=BBnb4R7

My perspective on this issue, as we go into the Democratic Convention is similar to that of my previous blog, entitled American Infrastructure – One of the Things Which Defies Logic, http://hcourtyoung.blogspot.com/2016/07/american-infrastructure-one-of-things.html. Regardless of the statements to the contrary made by the long standing politicians such as Hillary, Cruz, McCain, Romney, Christy and others, they have benefitted by keeping the status quo. They clearly are the problem, not the solution.

How and why is this so?

It is fairly simple, maybe even transparent. There have been very few “new” faces in leadership in Washington D.C. for a long time. Those that say they are new, typically come from the “political” or “economic” elite. Many, such as the Bush family, are from “political dynasties” formed from years in power and are accustomed to wealth. They, and their colleagues, Republican and Democrat, have had years to resolve the economic and political problems. However, the same problems remain with very little happening except those same people amassing immense wealth for themselves and their heirs. How can we continue to think about electing people like Hillary, Jeb, Ted or Chris, as well as, many of our candidates who currently reside as fixtures in Congress in Washington, D.C., when we truly need both fresh ideas and a different view of the world?

Candidates like Donald Trump, the current Republican nominee, and the deposed Democratic candidate Bernie Sanders, are truly fresh faces on the political scene. While you may not like their ideas, policy positions or personalities, either of these men would bring a different perspective to the office of President. Mr. Sanders was truly marginalized by the Democratic party, and they tried the same with Mr. Trump. These are not the only people this has happened to. One great example from previous elections was Ron Paul. He had the support of many of our youth in his campaign but was totally marginalized by the Republican party in favor of the candidate of the Bush dynasty.

As you watch the upcoming Democratic convention, take heed of the candidate’s statements and party positions. Ask yourself several questions. Where have you heard these statements before? How many times? For how many years? What has changed? If you are truly honest with yourself, you can’t escape the fact that the vast majority of politicians are saying the same things in 2016 that they were saying in past election cycles. For example, Hilary Clinton’s positions are very similar to that of her husband President Bill Clinton. You might counter that this is only “party politics” which she must adhere. But still, what really do you think will change with her in office?

You have a unique opportunity to change this political structure. Donald Trump, truly, is a new face in American politics. Is he the ideal solution? Probably not. I definitely don’t think he will accomplish anywhere as much as many people would like to see. However, the real opportunity is twofold and probably longer term.

First, he will bring new ideas and a new business perspective to the Washington beltway, and to the political and economic elite, which has been in power for these many years. While the changes may be slight, it doesn’t take much of a directional change in thinking to alter the course of leadership over a generation. Hopefully, he will bring a measure of transparency to our current political and economic (banking) systems.

Secondly, and maybe more importantly, his children, who are in business with him, seem to be very bright and well educated. With a Trump presidency, may come a completely new, more business oriented (as opposed to crony capitalistic) dynasty to the American political scene. American politics, just like the politics of Russia, China and all the other first world countries of the world, seem to require the development of dynasties in order to continue in leadership positions for more than a few years [note President Jimmy Carter]. I suggest it is time to introduce a new political dynasty to the American political scene. Who knows, it might be much more transparent than those we currently have.

Sincerely,

H. Court Young
Author, publisher, speaker and geologist
Promoting awareness through the written word
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Sent by Windows 10

Saturday, July 9, 2016

American Infrastructure – One of the Things Which Defies Logic

As America just celebrated its 240^th birthday on July 4, 2016, I noted that I have been seeing an increasing number of articles about the state of the United States water and electrical infrastructure. As I reviewed these articles, both current and historic, a pattern which defies logic (at least in my opinion) is clearly apparent. Before I explain this statement, I need to present some background.

When I wrote and published my two books involving the water infrastructure (Understanding Water Rights and Conflicts, Second Edition, 2004) and (Understanding Water and Terrorism, 2010), I was very concerned with the state of America’s water and electrical infrastructure. These books were written with the intention of presenting a simple, easy to understand explanation of these two infrastructures and the relationship between them. Both books are available in EPub and Kindle format at the links above.

Following is a select list of a few of the many articles which I have scanned and organized since the years I published these two books. Note this list is not at all comprehensive but it does reflect the tone of the engineering, electrical and water professionals who understand the problem. It also reflects the variety of publications which touch on these very critical infrastructures.

Article Title	Publication	Publication Date
Denver Firm’s Mine Poisons River	Rocky Mountain News	August 23, 1995
The 138 Billion Dollar Clean Water Solution	NUCA Magazine	April 1997
EPA Forecasts Clean Water Treatment Needs	Environmental Marketplace News	October 1997
Nation’s Water Costs Rushing Higher	USA Today	September 28, 2002
Congress Trims State Revolving Funds	WaterWorld	Feb 2012
New Report Highlights Staggering Costs Ahead for Water Infrastructure	WaterWorld Magazine, Waterworld.com	April 2012
How a Smart Water system can save money	Water/Wastewater Magazine	April 2012
Troubled Waters	Christian Science Monitor Weekly	December 3, 2012
The Pending Water Shortage	Chemical Engineering Magazine	June 2013
The Power of Water	Net Zero Magazine, www.nzhmagazne.com	September 2013
Water Wise	Emergency Management Magazine	Sept/Oct 2014
Americans’ Deeply Concerned about Water Infrastructure	WaterWorld Magazine, Waterworld.com	March 2016
Billions Pledged to Improve US Water Infrastructure	WaterWorld Magazine, Waterworld.com	May 2016
Senate Panel Eyes Water Infrastructure Needs	WaterWorld Magazine, Waterworld.com	June 2016
Poor US Infrastructure Could Cost $1.4 Trillion in 10 Years	Material Handling and Logistics (NHL) Magazine, MHLNews.com	June 2016
National Infrastructure shortfall continues to grow	Logistics Management Magazine, Logisticsmgmt.com	June 2016

The June, 2016 Logistics Management magazine article entitled National Infrastructure shortfall continues to grow sums up the challenge very well. It states:

“An ongoing and ever-mounting deficit for U.S. infrastructure continues to be the norm., according to the most recent edition of the “Failure of Act” report by the American Society of Civil Engineers (ASCE). Lack of sufficient investment into infrastructure will result in U. S. businesses being less efficient, with business productivity and GDP falling, coupled with drops in employment and personal income. From a financial perspective, ASCE said that from 2016 to 2025, each U. S. household stands to lose $3,500 in disposable income annually because of infrastructure deficiencies, with that loss pegged to rise to $5,100 annually from 2026 to 2040 if not addressed. And if it goes unattended by 2025, the U. S. economy is expected to lose nearly $4 trillion in GDP with a loss of 2.5 million jobs. As for the current state of U. S. infrastructure, ASCE was clear that the U. S. infrastructure is not making the grade, giving it an average of D+.”

Given that this is the case, and that the ASCE gave the infrastructure the same “D” grade back in 2002, and before, things have not changed much. As I note in my book Understanding Water and Terrorism:

“Humans can live only minutes without air, several days without water and weeks without food. Yet, for most of us, the thought of not having “a drink of water” when we are thirsty is foreign. Very few of us would deliberately forgo a drink of water for even a day. The average amount of water used per person (depending on activity) is .2 to 15 liters a day (3.7 liters=1 gallon) with the average drink being .2 liters.
Because water is so important to our survival, our water supply systems were identified as one of eight critical infrastructure systems in Presidential Decision Directive 63 (PDD 63). This Directive issued on May 22, 1998, was intended to achieve and maintain the capability to protect our nation’s critical infrastructure from intentional acts of terror.”

However, even with numerous books and an increasing number of articles about these two critical infrastructures, the electrical grid and the water supply system, Americans don’t appear to comprehend the reality of the problem. The following is from my blog entitled “Heightened Awareness” presented in October 2006.

“Only heightened public awareness of issues like energy, water and terrorism will really make a difference to the survival of this country. While very few of us need to be experts, a good working knowledge about these extremely important topics allows us to exchange meaningful ideas and question the experts and leadership. For some reason our politicians are unwilling to lead us. So the general public needs to take the lead. Need we continue to be puerile about these issues?
Sadly, it seems to me that our country’s leadership actually reflects us very well. We all seem to want instant answers and quick fixes. It seems that both major political parties, Republicans and Democrats, are more motivated by self-interest than whether America survives as a country. The latest public outcry is often designed to deflect our attention away from key survival issues. The economic bottom line seems to be the most important issue in our lives and our society.
Worse, we do not seem to realize the need to know more about these critical survival issues. We seem to be satisfied with the information contained in 60 second sound bites, unwilling to make an effort to become informed to have meaningful discussions, find viable solutions and insuring that we can maintain our way of life.”

Clearly this problem of a rapidly declining infrastructure has transcended four, if not more, presidential administrations. Starting with the Clinton Administration, and continuing through the current administration, the ASCE infrastructure grade has remained at a level of “D.” This clearly is not a “Republican” or “Democratic” issue, since it spanned both types of administrations. The minor changes / improvements made over the last 30 years do not even begin to address the problem with either of these infrastructures. They don’t even keep up with the degradation due to the passage of time.

You might say the improvement / replacement of these infrastructures is purely in the hands of the utilities which own and operate them. If they were completely a private enterprise, that might be true. However, these utilities are public-private entities. They are governed by federal regulation and take “public money” for operation and maintenance. This quasi-municipal status puts them directly into the public arena, and subject to the whims of the political elite and ruling class.

So how do these two infrastructures defy logic? Let me explain.

Given that we need both the water and electrical infrastructure to survive (both personally and as a society), and that the decline of these infrastructures has been consistent and constant over the last four administrations, why do we keep electing the same class of people to both Congress and the Presidency? Yes, they may be different because they have an “R” or “D” behind their names, but they state the same old platitudes, positions and espouse the same policies. The people we have put into office (president and congress) over the last 30 years have clearly been totally ineffective with respect to leadership involving our water infrastructure and electrical grid.

These two infrastructures are critical to the survival and sustainability of our society, yet presidential administrations and congresses come and go, and there is no change. Waiting for them to make the necessary changes via their leadership clearly is not working. Things are actually getting worse, as the engineering life of the components are ebbing away. The majority of the water infrastructure is definitely beyond its engineering life of 50 years. The electrical grid is continuously being overtaxed due to the exponential advance of technology and the use of the cloud. How can we continue to re-elect the same people to “leadership” positions given the fact that they are unwilling to make the changes that are so critically necessary to sustain our society? It seems logical to me that we, as the electorate, would at some point in time, take notice that our survival is actually at risk, and demand change by putting people in leadership positions who have a chance of making the necessary changes in focus, or at the very least, actually talk about making changes.

Take the current election cycle for the U. S. President. Why are we, as a society, even thinking of electing someone who is a member of the “political class”, such as Hillary Clinton. She has been a “political insider” and member of the “1%” ruling elite since her husband was president. How can we truly expect any change beyond some minor fixes around the “edge” of the problem, with people like her in office? They seem to want to keep the “status quo” because they are being enriched by the current system and see no reason to change.

This is probably the best reason to vote for someone like Donald Trump or Bernie Sanders. Clearly they are not “political insiders,” nor have they been in political leadership. It stands to reason that, while we may not like their stated positions, there is a possibility that they may bring a new psychology to the top “ruling elite” and political class. Their election to office has a chance to slightly shift the course of this country. For example, both of these men espouse positions far different than that of the “political insiders.” This is clearly the case, otherwise there would not be the extreme push from the Republican and Democratic leadership, and their financial supporters, to have both candidates marginalized and discredited, in favor of more “traditional candidates.”

We have, for the last 30 years, been “shooting ourselves in the foot” with respect to our most important critical infrastructure components the water infrastructure and electrical grid. By electing and re-electing these same people to political office and leadership, we have lost time, expertise and opportunity to make the changes necessary for converting 19^th century infrastructures into 21^st century infrastructures. It defies logic to believe that anything will change with respect to the water or electrical infrastructure based on past performance, if people like Hillary, Jeb or Ted, as well as the many other “political insiders”, are kept in “leadership” roles in this country.

Sincerely,

Tuesday, June 14, 2016

Perfect 2016 Presidential Team?

In a year of political firsts, the United States presidential election of 2016 has been unique. This has been, in large part, the result of the Republican candidate Donald Trump. Mr. Trump has intrigued American voters and heightened interest in the American presidential campaign of 2016. This interest in the campaign has been the highest that I remember in many years. In fact, it has actually, at times, been amusing. That, it itself, is almost a first.

However, Mr. Trump has been considered a potential candidate for several years. His political visibility since the 1988 presidential election has been summarized as follows:

“Since the 1988 presidential election, Trump has been considered a potential candidate for President in nearly every election.^[23][24][25] In October 1999, Trump declared himself a potential candidate for the Reform Party's presidential nomination,^[26] but withdrew on February 14, 2000.^[27] In 2004, Trump said that he identified as a Democrat in many cases and expressed support for Hillary Clinton's ability to negotiate with other nations.^[28] Trump rejoined the Republican Party in 2009.” - https://en.wikipedia.org/wiki/Donald_Trump_presidential_campaign,_2016

This current and most successful Trump candidacy started in 2015.

“Trump formally announced his candidacy for the upcoming race for president in the 2016 election on June 16, 2015. His announcement was held at a campaign rally at Trump Tower in New York City.” - https://en.wikipedia.org/wiki/Donald_Trump_presidential_campaign,_2016

Part of Mr. Trump’s success has come from his previous stardom on the reality television series “The Apprentice.” His catchphrase “You’re Fired” is known and quoted around the world. Many hope that he will be able to use that catch phrase (“you’re fired”) (at least metaphorically) to the entire United States Congress at his first state of the union address.

“Mr. Trump is the Emmy-nominated star and co-producer of the reality television series, “The Apprentice” which quickly became the number one show on television, making ratings history and receiving rave reviews and worldwide attention. “The Celebrity Apprentice” has met with great success as well, being one of the highest rated shows on television. The Apprentice’s record fourteenth season premiered in January, 2015. “You’re fired!” is listed as the third greatest television catchphrase of all time. In 2007, Mr. Trump received a star on the Hollywood Walk of Fame, and he is among the highest paid public speakers in the world. The Apprentice has raised over $15 million for charity.” - https://www.donaldjtrump.com/

Mr. Trump’s campaign seems to have been modeled after his reality television series. He has made what seem to totally outlandish statements, which would be unthinkable to other “traditional” candidates (Republican or Democrat). There are many blogs and articles discussing why this campaign has been so successful. But the crux of the issue is that he seems to be stating what many Americans are thinking but refuse to say. This tactic certainly works on reality TV, and, in fact, seems to be the essence of reality TV. I believe that this is the year of the “reality TV presidential candidate.”

This unique campaign is in reality a “populist campaign,” as well. The term “populist” is defined by Oxford Dictionaries as:

1. a member or adherent of a political party seeking to represent the interests of ordinary people. (noun)
i. a person who holds, or who is concerned with, the views of ordinary people.
ii. (Populist) a member of the Populist Party, a US political party formed in 1891 that advocated the interests of labor and farmers, free coinage of silver, a graduated income tax, and government control of monopolies
2. of or relating to a populist or populists. (adjective)

Another aspect of Trump’s campaign which seems to be catching on with American voters is the idea of having a truly “outsider” in office. This is happening in both the Republican and Democratic parties. On the Democratic side, candidate Bernie Sanders has been very successful running for the presidency against a very well-known Hilary Clinton, former first lady and Secretary of State. This “outsider” concept seems to have been rolled into the “populist” concept with the line blurring between the two.

Candidates such as Jeb Bush, Rick Santorum and Ted Cruz all appeared to pale when compared to the “outsiders” Trump and Sanders. Their message was “flat and uninspiring.” It had the flavor of the “same old time worn political clichés and platitudes.” Even Clinton, with her wealth, political connections and notoriety, is struggling when compared to Sanders, especially among the younger voters.

It is easy to see that the American voters are truly “fed-up” and “disillusioned” with the existing “political elite.” These people, just like their masters, the top 1% (or 20% as shown below) have come close to killing the “golden goose” (the bottom 99%) from which their wealth has come. It is no coincidence that the top 1% (globally) have amassed over 50% of the world’s wealth and power in just a few short years.

“In 2014, the 1 percent held 48 percent of global wealth. But that doesn’t mean the other 52 percent was for the rest of us; most of it was controlled by the 20 wealthiest percent, leaving just 5.5 percent of global wealth for 80 percent of the world.” - http://www.pbs.org/newshour/making-sense/wealthiest-getting-wealthier-lobbying-lot/

The following is from an excellent video relating to wealth inequality in America (From: http://inequality.org/wealth-inequality-america/).

Both the Trump and Sanders campaigns have made it very clear by their popularity that the 99% want a change. Both men are “outsiders” and “populist” candidates. On the surface, it seems that they have very different messages. However, is what they are saying really what they believe, or what they need to say in order to be the “reality TV / Populist candidates.”? Without the outsider and populist label, neither candidate would be able to compete with the political elite entrenched in their respective political parties. They would not get noticed by the elite controlled main stream media (MSM).

Clearly, Mr. Trump and Mr. Sanders have much more in common than is apparent by a casual glance. They both want to take office to change the political system. They are both clearly populist candidates, which do not necessarily espouse the views of their underlying parties. They both want to upend the existing control of the political system by the political and global elite.

It is also apparent that both Mr. Trump and Mr. Sanders, as candidates, want to fundamentally change the economic inequality in America. They seem to want to reverse the Actual Distribution of Wealth in America (top line of graph) back toward what Americans Think the Distribution is (center line of the graph).

To accomplish both of those commendable goals, I propose that candidates Trump and Sanders combine forces, regardless of apparent political differences, and form one political team. To do this, I propose that Donald Trump ask Bernie Sanders to be his Vice Presidential running mate in the 2016 election. Besides being the Perfect 2016 Presidential Team, this would keep the 2016 election amusing for all of us, while we voters watch the political and economic elite, along with their main-stream media, scramble. Such a Presidential Team would be very appropriate and fitting in this year of “reality TV elections.”

Sincerely,

Thursday, June 9, 2016

Congressman X and the “Politics of the Moment”

As you ponder and probably argue about who to vote for, and ultimately cast your vote in the United States elections this fall, this is apparently what the “other side,” i.e. the voted for think about you.

I believe the following quotations are as applicable to the Presidential race as well as the Congressional races. That being said, I do admit to having my “favorite,” in the presidential race.

The following quotations are from an incumbent known as “Congressman X,” and are aimed directly at United States voters.

==========================================

“But they are too faint-hearted to even dare think about what is really going on.”

As further stated by Congressman X:

“The voters… naïve, self-absorbed sheep who crave instant gratification. Most are mentally lazy and bore easily. It’s all about style, not substance. Memorable slogans, catchy metaphors, bite-size non-thoughts. Entertain their emotions and you’ll win their hearts.
The average man on the street actually thinks he influences how I vote. But unless it’s a hot-button issue, his thoughts are generally meaningless. I’ll listen politely. But I follow the money.”

Source: http://dailyreckoning.com/congress-really-thinks-voters/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+dailyreckoning+%28The+Daily+Reckoning%29

==================================

This "person" is still apparently in office and will retire with "full" benefits and "perks." Congressman X is also apparently unwilling to change things or rock the [gravy] boat despite the above quotes.

Two Mark Twain quotes sum up the situation in this "highly important election year":

Suppose you were an idiot, and suppose you were a member of Congress; but I repeat myself. Mark Twain
Read more at: http://www.brainyquote.com/quotes/authors/m/mark_twain.html
“If voting made any difference they wouldn't let us do it.”
― Mark Twain

This is just a caution against getting too wrapped up in the “politics of the moment” during this election year. While I do think that everybody able to vote should do so, this year will probably be very volatile and ripe with strife.

As a society, it is not in the best interest of any of us to make the “politics of the moment” an emotional issue to the detriment of our fellow citizens, either before or after the election This is especially true in light of the above thoughts by those we believe we are electing.

Sincerely,

H. Court Young
Author, publisher, speaker and geologist
Promoting awareness through the written word
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Monday, March 28, 2016

Tribute to a War Hero

With the passing of my late Dad’s 99^th birthday, I want to pay tribute to warrior’s past and present. They all gave much and got very little in return. Dad was a true war hero, but he decried World War II as “Roosevelt’s war.”

It is to this topic which Mark Twain wrote one of his more dramatic and moving essays, entitled “The War Prayer.” He was one of America’s most notable authors of the 19^th century. He was, in my opinion, very politically astute, as well as being “in tune” with the changing culture (industrialization and globalization) of his day.

The following is a section from that essay (published sometime after Twain’s death in April 1910):

"O Lord our Father, our young patriots, idols of our hearts, go forth to battle -- be Thou near them! With them -- in spirit -- we also go forth from the sweet peace of our beloved firesides to smite the foe. O Lord our God, help us to tear their soldiers to bloody shreds with our shells; help us to cover their smiling fields with the pale forms of their patriot dead; help us to drown the thunder of the guns with the shrieks of their wounded, writhing in pain; help us to lay waste their humble homes with a hurricane of fire; help us to wring the hearts of their unoffending widows with unavailing grief; help us to turn them out roofless with little children to wander unfriended the wastes of their desolated land in rags and hunger and thirst, sports of the sun flames of summer and the icy winds of winter, broken in spirit, worn with travail, imploring Thee for the refuge of the grave and denied it -- for our sakes who adore Thee, Lord, blast their hopes, blight their lives, protract their bitter pilgrimage, make heavy their steps, water their way with their tears, stain the white snow with the blood of their wounded feet! We ask it, in the spirit of love, of Him Who is the Source of Love, and Who is the ever-faithful refuge and friend of all that are sore beset and seek His aid with humble and contrite hearts. Amen.”

The above section, (and the entire essay which is a satire by Twain), describes the psychology of “continual war,” and became increasingly important in America’s foreign policy starting with World War I and continuing to this day. It certainly marks the latter part of my life in a country, and world, which is so different from the one that I grew up in. Both Dad’s life and my life have been changed radically by these increasing policies of “continual war”.

Many of the proponents (typically right wing, conservative neocons) of “continuous war” seem to take their ideas from the World War I concept of “making the world safe for democracy.” It’s as if “American democracy” is a form of government so “enlightened” that we (America and its allies) need to force it on other countries even if we have to destroy those countries and kill their citizens to make it happen. Witness, Iraq, Syria, Libya, Ukraine and Vietnam as examples. During my lifetime, I watched as it took Vietnam 30 years to recover from “America’s war of liberation.” I am delighted to see that country finally flourishing and prospering in the global economy despite the destruction inflicted during 15+ years of war.

However, there is, in my opinion, a more sinister motive (if not several) to all of this. Once destroyed, a country can be rebuilt, which can be highly profitable, if you have the resources and money to do so. America learned this lesson very well after World War II. It is what propelled this country into a global economic powerhouse.

It can be argued that the rise of America as a leading industrial and economic power was indeed a blessing. However, the following Mark Twain quote seems to be very applicable to America’s foreign policy since the end of World War II, and in particular, since “9/11.”

“If you beseech a blessing upon yourself, beware! lest without intent you invoke a curse upon a neighbor at the same time.”
- "The War Prayer" - http://www.twainquotes.com/Prayer.html

As to the group perpetuating this policy of “continuous war,” I blame the current controllers of more than 50% of the wealth, power and resources in our global society, which I term “the 1%.” While this term may not actually reflect all of that class of people (it may be more like the top .1% of people globally), it is, in my opinion, a reasonable descriptive term to use.

It is no wonder that the political and private elite (1%) are at wits end during this 2016 political season. They clearly want to continue and expand this state of “continual war.” Clearly, “continual war” profits a few, in particular the top 1% as well as the largest global mega-corporations.

A general officer by the name of Smedley Butler knew in the 1930’s what Dad learned a few years later. A quote from Major General Smedley Butler’s essay (War is a Racket) comes to mind.

“A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small ‘inside’ group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes.”

As a tribute to my Dad, the war hero, I hope and pray that during the lifetime of my son and daughter, and my two granddaughters that a global reign of “continual peace” breaks out. We have been fighting “Roosevelt’s War” far too long.

Sincerely,

H. Court Young
Author, publisher, speaker and geologist
Promoting awareness through the written word
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Sunday, February 21, 2016

What Did CES-2016 Tell Us About the Future?

About a month ago, I watched CES 2016 (Consumer Electronic Show) from my computer. As a fan of technology, I am always fascinated about new technology which “pops-up” almost by the Nano-second, or so it seems. I noted some of the issues in my blog entitled Automation – Where do you fit in, dated June 2015 (http://hcourtyoung.blogspot.com/2015/06/automation-2020-where-do-you-fit.html). As I thought about this show and the newest in technology, I wondered what this may tell us about the future.

Much of the CES show in 2015 revolved around the introduction of Microsoft’s new Windows 10 platform. These were truly revolutionary changes in the hardware and software arena. Advances by Microsoft, Apple and Google over the last few years have opened up a new future with respect to automation. Technologies such as facial recognition and the entire spectrum of bio-metric identification are coming into the mainstream. I am using the new Windows 10 “Hello” capabilities of fingerprint recognition to log into my Surface Pro 3 computer. It is very quick and secure.

However, CES 2016 presented something different. One article entitled What can CES 2016 tell Companies about Tech Trends, by the Boston Consulting Group, ( http://www.weforum.org/agenda/2016/02/what-can-ces-2016-tell-companies-about-tech-trends ) noted:

“The breadth of industries represented at CES widens every year as connectivity solutions are applied in sectors as diverse as automotive, health care, food, and logistics.”

One of the comments I noted from a journalist/techie during the show was that much of what was exhibited at CES 2016 was “silly” as compared to previous shows. This was in no way denigrating the show, as many of the technologies being demonstrated were truly “fantastic” according to the same commenter, as well as others. What I believe he meant was instead of demonstrating revolutionary technology as in the past, many of the exhibits were more esoteric (out-there).

One excellent example of an esoteric use of technology was the array of automated and connected pet feeders. One article entitled At CES You Can Even Find a Connected Gadget for your Dog, by Stacey Higginbotham, January 8, 2016 ( http://fortune.com/2016/01/08/ces-cleverpet/ ) gives the details. Who would have thought that you could set up a device which would allow you to monitor your pet’s needs remotely using your cell phone, tablet or computer across the cloud (Internet of Things)? Not only, who would have thought this possible a few short years ago, but who would have thought there was a need for such an idea or product. However, think of what this may mean for the “dog kennel/boarding” industry.

There were numerous other examples of this “far-fetched,” “out of the box” thinking at CES 2016. It was almost as if developers were going out of their way to connect things (which I believe they were). There were numerous automated automotive concepts. A question in the Tech Trends article centered on those born in 2016. What will their experience with driving be?

“It’s becoming increasingly likely that children born in 2016 could operate rather than drive their vehicles when they reach driving age in 16 or 17 years. Who knows? Getting that first driver’s license may no longer be an adolescent rite of passage. The convergence of automotive and digital technology is real, far-reaching, and accelerating at a pace of 0-to-60 miles per hour in less than four seconds.”

CES 2016 shows us that many things we thought couldn’t be automated certainly can be. While many of the devices at the CES 2016 show may have been “silly” and “frivolous” compared to previous shows (at lease that is the opinion of several viewers including me), the automation of our world continues. That is the point of this discussion. The Luddites of the 19^th century (1811-1816) are not going to win.

As you can see, the race towards connecting almost anything to the “Internet of Things (IoT)” is increasing. Some of these things will not be wanted but many will lead to even more connectivity and innovation. However, advances in connectivity and innovation in computing, not just consumer electronics, are changing rapidly. Much of the world’s manufacturing and production is starting to rely on robotics.

The following article entitled Robotics at Boeing from the Mish Talk blog site gives a sense of what the future holds from an employee perspective.

“Hello Mish You are 100% correct about the impact of robots in aircraft manufacturing and elsewhere. I spent 37 years at Boeing as a design engineer (1967-2004). I have a MSME (master of science in mechanical engineering). This is what I know. The new 777X composite wing plant in Everett shocked the IAM (machinists’ union) as to how few new jobs were needed. The same happened at the new Propulsion assembly plant in Charleston. On opening day, IAM was greeted by a huge, giant robot welcoming them. In 2015, 79300 Boeing employees delivering 700 airplanes. That’s 113 employees per airplane. When I joined Boeing in 1967, Puget Sound had 120,000 employees and Boeing delivered about 300 airplanes (from memory). That’s 400 employees/airplane. Since 1967 there has been a 72% reduction in the number of people it takes to build an airplane! People I know in the robotic business tell me 60% of today’s jobs will be gone in 20 years. You have covered them: trucking, strawberry/cabbage picking, etc. Ex-Boeing Employee” -- Source: http://mishtalk.com/2016/02/20/robots-at-boeing-ex-boeing-employee-chimes-in-on-robotics/

In the same blog, a local newspaper article (Seattle Times) notes what the employees (at least the actual workers and not the senior level management) of Boeing are thinking.

“Local assembly plants are cranking out airplanes, pushing Boeing way past Airbus in jet deliveries. Yet the morale of the local workforce doesn’t match the boom, with employees troubled by continued job losses and by the fear of more to come. As of Nov. 30, Boeing had 1,424 fewer workers in Washington than it had at the beginning of the year. Its workforce here is down nearly 7,700 jobs, almost 9 percent, from the most recent peak in October 2012.”

So what is the solution for these Boeing employees? Well, maybe Boeing can use an additional 1,424 robot mechanics and programmers (or even a few more top management). On second thought, maybe not. Well at least these formerly “well paid” employees can get great paying jobs with top benefits at the local coffee shop or retail store.

Corporate use of robotics is advancing at a rapid pace across the globe. An article entitled North America robot sales set record for 2014, from the Robotics Industries Association in the March 2015 issue of Control Engineering magazine give some statistics on robotic advancement in the corporate world.

“Robot orders and shipments in North America set new records in 2014, according to the Robotic Industries Association (RIA), the industry's trade group. A total of 27,685 robots valued at Sl.6 billion were ordered from North American companies during 2014, an increase of 28% in units and 19% in dollars over 2013. Robot shipments also set new records, with 25,425 robots valued at Sl.5 billion being shipped to North American customers in 2014. Shipments grew 13% in units and 6% in dollars over the previous records set in 2013.”

Clearly this trend in robotics, as well as the IoT, is not going to slow down. In fact, the newest trend is to have robots design, build and fix other robots. The idea of an extremely profitable corporation owned by the top 1% with virtually no employees is very much the ideal, (at least from the management and owner perspective). At first thought, you think this is “impossible”. Yet, tell that to the 1,424 Boeing workers who lost their jobs in 2015. This was not due to corporate cutbacks or lack of product orders.

Boeing reported the following (Boeing fourth-quarter profit surges: sees cash rise in 2015, by Alwyn Scott and Sweta Singh, Jan. 28, 2016 - http://www.reuters.com/article/us-boeing-results-idUSKBN0L11EP20150128 ):

“Boeing Co (BA.N) reported a 23 percent increase in core fourth-quarter profit on Wednesday, topping analysts' estimates and sending its shares up 4.3 percent. Boeing forecast a rise in cash flow to $6.2 billion in 2015, at the top end of expectations, from $4.3 billion at the end of the year. “

Note, those jobs lost to robots will not come back when the economy “improves” as was typical in past decades.

So what does the future portend?

Part of this issue has to do with the following question. How does the ruling “elite” keep the “masses” (in what used to be the “middle class”) from revolting by this rapidly changing technological landscape, and declining economic and social system? It is my belief that many of the corporate and government “welfare” programs, decried by many of the ultra-conservative republicans and neocons, as well as others, are one stop gap answer, designed by those in that same ruling elite to resolve this advancing technology/employment problem.

Instead of having a meaningful long term discussion about the future, how it impacts the generations and how to prepare, the elite and their political “lapdogs” took a simpler approach to the problem. They found it is easier to “print” money from nothing and distribute some of it to the “masses” so they feel “wealthy.” Some of this wealth fabrication takes the form of increased government jobs in first level countries around the globe.

However, this presents a significant ideological problem to those same “small government, pro-business” conservative republicans and neo-cons. Clearly, it is not possible to “cut” the size of global government in an era of decreasing corporate jobs and increasing population. They want to maintain their power and prestige by keeping the “masses” happy and content.That is why you see the same old solutions presented by tired “old” men and women (such as all of those running for higher political office [President and Congress] – picked and approved by the ruling elite / top 1%).

As I have noted in past blogs, there are few discussions on a meaningful level about the advance of these technologies, especially where it relates to employment. The 1,400 Boeing employees would love to know what they are to do now. Do they go back to school to become programmers, robotic engineers or start a new career? If so, how will it be financed? Can they learn enough to compete in a world they hardly comprehend?

All this is easy enough to say unless, like many of the former Boeing employees, you are in the twilight of your life and your educational skills are over 30 years old. This Boeing situation is a micro-chasm of what our world is facing.

While I love the advances in technology and robotics as well as applaud the innovation and creativity, the deeper questions very much concern me. What do the millennials do? What education skillset and level is required over a lifetime for this new world they will live in? How does the generation of my granddaughters prepare for a fully inter-connected future, such as we glimpsed at CES 2016, that can barely be imagined today?

Clearly, the younger generation needs a new paradigm. I believe one real solution is to turn over the reins of power (politically and economically) to them and let them make their decisions about a future which belongs to them anyway.

Sincerely, H. Court Young
Author, publisher, speaker and geologist
Promoting awareness through the written word
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Friday, January 1, 2016

People as a Commodity

As the new year, 2016, looms in our lives, we all wonder what will it bring? Clearly, there are some exceptionally interesting and beneficial trends in technology, including robotics and space innovation. However, there are also some very disturbing trends. A few are noted below.

“Jail time for the CEO of a peanut butter manufacturer, Volkswagen’s lies about diesel emissions and a 4100 percent increase in the cost of a drug for cancer patients,” was noted in a recent article entitled “The Price of Greed,” by Sandy Smith in the October 2015 issue of EHSToday magazine.

She continues:

“… makes me wonder how far some executives are willing to go.”

Sandy also notes the following:

“Facebook friends have been reposting several recent news stories, primarily the ones about Volkswagen lying about emissions from its diesel models, the former CEO of the Peanut Corp. of America distributing a product he knew was tainted with salmonella and a hedge fund manager whose company purchased Turing Pharmaceuticals in August raising the price of a medication used to treat cancer and AIDS patients from $18 to $750 per pill.”

Her response, which she notes is in contrast to her liberal friends who tended to blame capitalism, was:

“Don’t blame capitalism for this! Blame Greed.”

I understand where she is coming from, but I respectfully completely disagree. Capitalism is the real problem, but not as her liberal friends believe. Before I explain, first we need to define our terms. The definition of capitalism is:

“Capitalism is an economic system. In it the government plays a secondary role. People and companies make most of the decisions, and own most of the property. Goods are usually made by companies and sold for profit. The means of production are largely or entirely privately owned (by individuals or companies) and operated for profit.^[1]^[2]^”- Source: https://simple.wikipedia.org/wiki/Capitalism

Ludwick von Mises of the Mises Institute discussed capitalism in his book History of Capitalism:

“The inherent mark of capitalism is that it is mass production for mass consumption directed by the most energetic and far-sighted individuals, unflaggingly aiming at improvement. Its driving force is the profit motive, the instrumentality of which forces the businessman constantly to provide the consumers with more, better, and cheaper amenities. An excess of profits over losses can appear only in a progressing economy and only to the extent to which the masses' standard of living improves. Thus capitalism is the system under which the keenest and most agile minds are driven to promote to the best of their abilities the welfare of the laggard many.”. SOURCE - https://mises.org/library/history-capitalism

While I agree with both of these definitions of capitalism, there appears to be something very wrong with the “capitalism” in today’s world. Two questions show this change is for the worse.

How can the capitalism of von Mises be working with the top 1% acquiring and owning more than 50% of the global resources and wealth in the world today in a few short years? According to von Mises, as population expands, the middle class grows under a pure capitalistic system. For example, the expansion of the middle class, from the lower class, may have been true for the last 210 years of the United States but the last 40 years changed this model. Since the decline in power of my Dad’s generation (greatest generation), and the rise of the “Baby Boomer” generation, something seems to have changed this model. What happened?

During the years of the rise of the “baby boomers”, there was an exponential explosion in the growth in technology. This in itself heralded an incredible shift in life style. Relationships began to shift from “people to people” to “people to machines.” As much as I love technology and the benefits derived from it, there is very much a “down side” to it.

But, there was something else as well. Basic attitudes as to where the individual fits into society shifted. People started to see themselves as dependent on technology, not on relationships with other people.

Take for example the saga of Volkswagen.

“Volkswagen lying about emissions from its diesel models … Volkswagen mow acknowledges that as many as 11 million vehicles (many of them sold in Europe) contained software that allowed vehicles sold in the United States to circumvent U. S. Clean Air Standard requirements. These diesel cars were sold to consumers as a ‘cleaner’ alternative to Volkswagen’s regular cars. The company faces penalties in the United States alone of up to $18 billion, class-action lawsuits from outraged customers and dealers and scrutiny from other countries where it sells vehicles.”

Two comments in the Price of Greed article help us define this shift which is taking place globally.

“VW North American CEO Michael Horn at a launch event Sept. 21 in New York for the 2015 Passat told the audience: ‘We have totally screwed up,’ adding that the company’s actions did not line up with its core values.”

“When 11 million cars are emitting nitrogen oxide at a rate 40 times what’s allowed because software installed in the cars detects when testing is being conducted and prompts the car to compensate for it, that’s not a screw up. That’s systemic corporate failure to be honest and obey the law, and Volkswagen’s top leaders are responsible. The fish, as they say, rots from the head.”

Clearly, the owners of VW were willing and able to sacrifice the relationship with their customers, for the sole quest of increased sales (and profits). This action benefited nobody except the VW bottom line and, in fact, created distrust between the company and customers and potential customers. They , the owners, with one decision, effectively changed the relationship of trust between the company and customer to a relationship of “I want your dollars, regardless of the consequences to you.”

Another example, in the high flying technology sector, is shown by the following comment in an article entitled “Apple Partners Speak Out On Channel Conflict’” by Steven Burke, CRN – October 2015.

“As far as Apple’s investment in the enterprise channel, 37 percent of partners rated Apple as poor or fair. ‘Apple feels in their heart they don’t need resellers,’ said the SP500 CEO. ‘Instead of embracing the channel to help them grow the enterprise business and raise the customer satisfaction bar, they are only interested in moving product as fast and as cheap as they can, making as much money as they can by not having to pay a third-party solution provider.”

Traditionally, mega corporations have used smaller local and regional “partners” (companies and individuals) to help sell products and provide complementary solutions and services to customers. This has been a great way to help customers and provide needed jobs inside the industry. Microsoft is famous for this model through its “partners program.” This last comment about Apple Computer’s reseller channel by one of its channel partners really goes to the core of this global shift. It is apparently all about “profit” not about building relationships between seller and buyer.

In the October 2105 issue of Institutional Investor magazine, an article entitled Water Pressure by Katie Gilbert notes:

“Steven Heim, director of environmental, social and governance research and shareholder engagement at Boston Common Asset Management, had been talking since 2005 to portfolio companies involved in fracking.

“In the beginning the whole industry approach was ‘More is better’: more chemicals, more water, more pressure, more fracking stages,” recalls Heim, whose Boston-headquartered firm manages $2.2 billion. ‘Now, with oil prices down, they really have to think, ‘Do we need to put in a new well every 250 feet? Do we have to use all these chemicals? And water is expensive!”

In the same Institutional Investor article, the following shows a total disregard for regional concerns, if not worse.

“The first report [CERES, 2014 water scarcity report] found that between January 2011 and May 2013 fracking operations in the U.S. used 97 billion gallons of water and 55 percent of the wells they drew from were in areas suffering from drought.”

Note that with respect to the fracking industry, it seems that only the recent radical drop in oil prices seems to have brought that industry to some semblance of rational thinking. In my opinion, this new thinking is merely a survival mechanism, not real caring for anything beyond staying in business.

I project this will happen to Apple as well. As sales drop, the company’s quest for third-party sales and help with the enterprise will increase dramatically.

Volkswagen will try to impress customers and potential customers and dealers that it is much more “transparent and forthcoming” with respect to its automobiles. It will vow to be a “model” mega-corporation and put its customers first.

However, once the trust (relationship) is lost, it becomes very difficult to get it back. This can be seen in my bog entitled “Lenovo, Cyberattacks and the Global Economy,” (March 2, 2015).

This “more than just greed” phenomenon can be seen dramatically during the years 2008 to 2015. One good example is the “mega-banks.” The more they were bailed out using “global” tax-payer’s dollars, the larger and more speculative they became. In essence, they treated the fiat currencies as commodities and their depositor’s as “cash cows” (the same thing). This same philosophy can be seen in the fracking companies call for “more” (chemicals, water and wells) solely for the the pursuit of “profit.” It is also the same concept which prompt the tactics of Apple and Volkswagen. It can be seen in the many daily articles about the mega-pharmaceutical companies and “exorbitant” drug prices.

In my opinion, the reason this goes beyond just greed, which is bad enough, is that these mega global companies, via their top management, believe that as long as they are making profits, their world is fine. This is in total disregard to how the “middle and lower’ classes are doing, or how their policies are impacting the global society in general. What they fail to realize is that they would prosper much more and have a far more stable business world with a strong and growing middle and lower class (true von Mises capitalism).

What is driving this trend toward “commoditizing” people and currencies? According to an Internet Retailer magazine entitled A Luxe Life on the Web by John Frank, November 2015:

“Online luxury sales globally increased 20% in 2013 compared to overall luxury sales rising only 2% that year, according to a 2014 McKinsey & Co. report. Today, online sales represent 6% of the luxury market and that percentage is expected to climb to 18% by 2025, says Nathalie Remy, a partner in McKinsey’s Paris office. Further, 44% of luxury goods buyers research online before buying, according to McKinsey research.”

Another good example is noted in the same Internet Retailer magazine., “twenty-three of China’s population is middle class or more affluent”. These people (consumers) in China are viewed as “cash-cows” for the top 1% around the world to increase their power and wealth.

How is this mind shift actually being accomplished? Clearly, as an increasing number of people have access to online goods and services via smart phones, tablets and computers, on a global basis, they naturally want to take part in the “consumer” revolution. This is an incredible opportunity for those controlling the largest purveyors of goods and services globally, for example Amazon. There is effectively very little relationship between Amazon and its customers. The model generally seems to be “send me money, and I will send you goods.”

I will point out that in the name of disclosure I sell my e-books and hardcover books on Amazon. Also, Amazon has kept some semblance of its (buyer – seller) relationship with with a reasonable “return policy.”

Still the problem is a new form of “capitalism” has replaced von Mises capitalism. If “just greed by a few” was the problem, then there would still be a growing economy and broad based stable business climate globally. The result von Mises predicted of, “An excess of profits over losses can appear only in a progressing economy and only to the extent to which the masses' standard of living improves”, would be reflected in the period of 2008 to 2015. But, this clearly is not reflected in the global economy today.

The top global companies, governments and their owners (the top 1%) have effectively created a system in which the middle and lower classes of the global society are the source of capital to fund the global excesses of the top 1%. While this has always been the case to one degree or another, the von Mises model has, in the past, still prevailed and a far more stable business climate is the result.

However, the problem today is at an extreme. When people become only a source of backing for fiat currency or a source of endless consumerism (i.e. treated as commodities), this eclipses “pure greed.” This is the reason for the change from the capitalism as defined by von Mises to what we have today, as well as the significant global decline over the last 9 years.

As stated previously (and it is worth repeating), it should be noted and is very evident that the top 1% gained ground in the “wealth and power race.” Correspondingly, the standard of living of the middle and lower class dramatically decreased between 2008 and 2015, especially in advanced countries. As we have seen, that is totally contrary to von Mises prediction of true capitalism. Clearly, something has drastically changed.

Capitalism as defined and practiced by von Mises is probably the best economic system known to man. It fosters a true one buyer, one seller relationship between two people and is very powerful. But, in reality, this kind of capitalism is more about relationships (attitudes) between the seller and the buyer. It has very little to do with “increasing sales just to increase the power and wealth of a few.” The bottom line does not necessarily enter into the transaction in a real way. The middle and lower classes, as well as the top 1%, cannot help but expand and flourish under such a system.

As we go forward into 2016, I hope and pray that the current attitude of “people as a commodity” changes radically. Only in societies where all people regardless of religious, social or economic status, are treated as people, with basic respect, honor and trust, can that society, and the resulting government/business structure, grow and flourish. We need to get back to the trust, honor and respect between people in our individual lives, economic dealings and businesses. Only then will people stop being commodities in an “out of control” global economic and political system.

That being said, I wish all of those reading this blog much love and the very best in this New Year – 2016.

Sincerely,