by Gary Griffin
Knowledge as a commodity must be based on the truth, and not simply a belief. It must be more than an idea or an ideal. If it’s not based on truth, then price for the knowledge commodity could be based on a lie. An exchange of the knowledge commodity that is false lacks integrity in the medium of exchange, and it can never survive the test of supporting the economic growth of the American population of the twenty-first century. A knowledge-based economy must be based in truth as an absolute standard, not as a relative standard. It must have a fixed standard of measurement. What is this standard? Who establishes this standard? How do we export it? How do we control it and protect it from would-be thieves?151
The only way Americans can return to the productivity levels that will support the consumption levels of the country is through hyperproductivity, and this is possible only by taking advantage of globalization and the benefits it affords us. The population must be able to literally work twenty-four hours a day. How is this possible? What about sleep?
Life and living is more than about just work. Granted, it is. Over the next few years, it will seem that America has returned to its former greatness. This is a false sense of security, as we will be in the eye of the hurricane. It will seem calm, but then the category-five storm will reach landfall as we encounter the backside of the storm. What does this mean?
Productivity in America will drop to an all time low. We will not be in a great depression; we will be in a mega depression. It will be the perfect storm. Why? The reason this storm will be so bad is because of the steps taken by President Bush, and now President Obama, to stave off a depression. In other words, their actions, the policies put into place, and the infusion of cash into the financial system will actually cause the very problem they have been and are trying to prevent. I hope I wrong, but I’ve looked at all the numbers, and I know that I am not. It all goes back to my previous arguments that the major structures of American society don’t align with the macro-level trends of an information society and a knowledge-based economy.
The same problems our government has been trying to fix by infusing enormous amounts of money into our financial system will cause the mega depression of the next decade. It will linger for years. The main reason for this is tied to economics, money, and productivity. For an economic system to be truly healthy, its lifeblood, or medium of exchange (money) must be anchored by something of value. Printing up money out of thin air with nothing of value being produced to anchor it is like pouring gasoline on a fire to put it out. It just doesn’t work.
So while the Federal Reserve and our government is busy dumping trillions of dollars of cash into the financial system, it is at the same time devaluing or driving the value down of each and every dollar. What this means to every worker is that your work, your productivity, is worth less and less as represented by the medium of exchange or the American dollar. This further depresses the production system because the dollar cannot sidestep the law of supply and demand.
It’s hard to believe, but economic theorists with economic theories that are bankrupt drive our economic policies. Don’t believe it? Look around. Some of these theories may have had some significance at a particular point in our history, but now they are outdated, empty, without merit, and bankrupt. America is now around twelve trillion dollars in debt. Does that seem like the theories are working? Most of the national debt we are now faced with has come about in the years of the twenty-first century. By 2020, it is quite conceivable that the national debt will rise to somewhere between thirty-five and fifty trillion dollars.152 When you consider the reduction in the workforce based on the number of baby boomers set to retire in this time period, it is a mathematical impossibility that our future generations can work and produce enough goods and services (value) to pay for the debt. Desire at that point has absolutely nothing to do with it. The numbers don’t compute. This generation (primarily baby boomers) in power now has literally sold their grandchildren, and the rest of the country, into a life of servitude to other countries and foreign powers. We will be slaves in our own country; the land that our forefathers set free will be the one where our children now beg for bread. Speaking on behalf of my generation and my children, please stop—just stop. Won’t you please leave something for future generations of Americans?
Capitalism is a system of production. This system is driven by economics and economic theories that are based on theories and models that no longer apply. As I described in chapter 3, we are no longer in the age of industrialism. We need a system of taxation based on consumption. Why is this necessary? Shifting economic models from one based on finite resources of industrialization used in the production process such as coal, oil, gas, etc. to the infinite resources of the human mind would alleviate the current economic growth dilemma. This is connected to production, consumption, style of living, standard of living, and the three macro-level trends currently found in the twenty-first century. This also supports a knowledge-based economy that can achieve virtually unlimited growth.
The United States will never be defeated militarily. With two oceans surrounding us, a population that is armed as well as most militaries in other countries, and an arsenal of nuclear weapons unmatched by any other nation in the world, it‘s unlikely that anyone on the world would even try. This would be a foolish move. However, economically, it’s a different story.
The United States is dangerously close to failing, probably closer than even most leaders realize much less the population. When we were attacked on September 11th, I cried along with everyone else as I watched the planes smash into the buildings on TV. Now that I’ve had the time to overcome the emotional trauma of the event, I can better make an assessment of the significance of the event. Whatever else may be said of the mastermind of the attack, his strategy was nothing less than brilliant. He didn’t attack this country militarily. He attacked two of the foundational pillars that lie at the heart of its power—the economic and political pillars. Look at how divided we are now in this country over the war in Iraq. Consider the economic catastrophe that has befallen us at the end of 2008. A house divided will fall. An economic system that’s defunct will falter. We’re there! I don’t mean to preach doom and gloom. The glass is half full and an optimistic outlook is always the better approach, but we would be remiss to simply ignore the realities of our current situation in America. We’re rapidly approaching a critical time for the country. The risks we’re facing are many.
RISKS FOR THE TWENTY-FIRST CENTURY U.S. ECONOMY
Wall Street Banks brought on the current financial crisis in the United States that began in the late 2008 with subprime lending and that is the result of both greed and bad decisions where no one wants to take responsibility and be held accountable. This event, while impossible to predict its outcome with accuracy, could’ve turned out quite differently with social policies that were more conservative in their application that strictly adhered to the rights of individuals while restraining the government intervention to the role outlined by the Constitution.
This crisis represents the worst social policies within the last 100 years. It is an example of laizze-faire economics and the welfare state all rolled into one. People buy homes they can’t afford. Bankers make bad loans without strict review. These loans get repackaged and sold as mortgage-backed paper assets for enormous profits in the open market. Both of these assume a future that is uncertain and uncontrollable—therein is the fatal flaw. Downturns in the business cycle put people out of work. Without a job, you can’t pay a mortgage, regardless of the interest rate. Adjustable rate mortgages where people assume rates won’t go up, or that if they do, that they can refinance at a later date make the same grievous error in decisions—that no one loses their job. The whole thing is a house of cards just waiting for the right wind to blow it over. Well, the wind came. The house fell down. Bad policies, corporate greed, and inaccurate mathematical models with wrong assumptions are all to blame for this financial catastrophe. Republicans and Democrats, lenders and ho
mebuyers, all are responsible, and all must be held accountable.
As weak as the America dollar is right now along with our twelve trillion in debt, it really wouldn’t be difficult to throw the knockout punch right now. Here’s how simple it is. The Euro has an exchange rate that is roughly double that of the U.S. dollar as shown below in figure 7. The power of the Euro comes from linking together twenty-seven countries. The current efforts at implementing the Lisbon Strategy also contribute to the strength of the Euro.153 With over 500 million citizens, the European Union combined generates an estimated 30 percent share (US$ 18.4 trillion in 2008) of the nominal gross world product and about 22 percent (US$15.2 trillion in 2008) of the PPP gross world product. The EU has developed a single market through a standardized system of laws that apply in all member states, ensuring the free movement of people, goods, services, and capital
If the European Union could ever unite behind a dynamic leader with a vision to completely implement the Lisbon Strategy, they would catapult so far ahead of the United States that we would never catch up. It wouldn’t take much convincing to get the E.U. behind the idea of decoupling the Euro from the American dollar and making it the world standard currency.154 This would be the first knockout punch. If OPEC set the price of oil based on the Euro instead of the American dollar, then that would be the second knockout punch.155 We would be down for the final count. If $4.00 a gallon is unbearable, try $10.00 or $12.00. This would drive up the price of everything. When you consider the vast distances driven each workday by millions of Americans as they commute from the suburbs, then the cost becomes prohibitive to all but a few. Suddenly $100 dollars in groceries won’t feed a family of four for even a day. Between the inflationary effects of higher price gasoline and the debased currency, these conditions are not only possible, they are probable. America, look out. It will be a challenge just to survive. This might seem impossible, but so did 9/11. It’s not as farfetched as our leaders would have us believe. Denying the risk won’t make them go away. Wishful thinking can’t fix these problems.
Figure 7: Comparison of U.S. Dollar to E.U. Euro
Middle class America is the force that keeps America moving. It is there in the middle class that all of the work gets done. If you take the middle class out of America, then you take the backbone out of the country. This country can’t survive without a growing, thriving middle class.
The middle class is a wide, diverse group of people. It consists of the lawyer, the doctor, and the college professor. It’s also the truck driver and the local restaurant owner. It’s the beautician, the plumber, and the electrician. Why is this important? If the middle class all agreed to not go to work for one day, America would stop. If they didn’t go to work for a week, then the world would stand still. That’s the power of the middle class. Very few middle class Americans even recognize that this power exists.
Wealth in the form of capital (money) is also a source of power. When we look at the distribution of wealth in the United States, we see that power is concentrated in the hands of a few. Over the past few decades, wealth has become concentrated to an even greater degree in the hands of a few people. Contrary to Reaganomics and supply-side economics pundits, wealth doesn’t automatically trickle down to the masses. When there is great upheaval in an economy as we see today with uncertainty on every corner, rich people get scared too just like poor people. The reason may be different, but the reaction is the same. The consequence of the fear is to not spend more, invest more, and release more of their money so that the rest of us can get a small piece—a trickle. The opposite happens. The water is completely turned off. As wealth is now only in the hands of a few, when they don’t spend, the rest suffer. Capital in a capitalistic system when withheld is the same as withholding water from crops in the field. Sooner or later, they will wither and die without water.
If you can, try to imagine two opposing political ideologies whose strategy is to divide the middle class down the center. When this line moves to the left, Republicans win control. When the line moves to the right, Democrats win. That is to say, the party who can articulate an ideology that appeals to more people in the middle class will always be the party in control. What a perfect strategy! They divide the power of the middle class by pretending to represent different interests. It’s a magician’s trick. If middle-class America ever woke up and recognized how career politicians and the two political parties have manipulated them, then there would be a revolt the next day. Don’t misunderstand my point here. A revolution by force is unnecessary; the middle class simply needs to recognize what is going on and unite to form a new political party that represents its interests. Members of the middle class need to demand their rights and take back what is rightfully theirs—life, liberty, and the pursuit of happiness.
The U.S. Constitution guarantees these rights. Unfortunately, special interests have eroded them. By allowing this, liberty in America is restricted because choices are eliminated. Unfortunately, freedom of choice is what makes liberty possible, and without that ability our style of living becomes endangered. As I described in chapter 3, the choices people make are what defines a specific style of living. In an information society with a knowledge-based economy, the restriction of those choices has a direct influence on standard of living.
As the new owners of the means of production in a knowledge-based economy, it is now the middle class that rules. We simply have to take back the power that has been stolen away from us. I must insist that the people be set free again. Let freedom ring throughout America once again, and prosperity will follow; not only prosperity for today, but prosperity for all future generations of Americans. With such prosperity, America can once again lead the world.
Power tends to corrupt, and absolute power corrupts absolutely.
Lord Acton
A CHANGE IN COURSE AND DIRECTION
Political parties, and by extension the U.S. government, are in the business of concentrating and centralizing their power. The more power is concentrated, the less power individuals have. They lose their liberty in every sense of the word. A government cannot function when the people of a nation depend on that government to meet all of their needs. In this sense, the relationship is not one of government and citizen; it becomes one of parent and child. A paternalistic government, where everyone is dependent on the government, can never be sustained.156 Every citizen must become independent and earn his or her own way. Social policies that promote independence of this nation and all of its citizens must be the order of the day.
The reality of the situation we are faced with in the twenty-first century seems to elude almost everyone in America, especially our political leaders. Eventually, the U.S. government will be forced to realize that it cannot support an entire population that is dependent on the government to meet every need. To create value, the population, and that includes everyone, must produce on some level. They must produce something of value. When the people don’t work, nothing is produced. When nothing is produced, there is no value. With no value, the monetary system is nothing more than pieces of paper. Total dependency cannot be sustained. This type of dependency will crash the system, and we’re almost at that point now. This is the logical conclusion of the welfare state. As I demonstrated in chapter 8, the power of ten can be a negative force that drags the entire nation toward poverty. If everyone is entitled, and everyone is waiting for the government to provide all their needs, then eventually, somewhere, some way, somehow, someone must provide it for them. Since the government produces nothing, it only consumes, sooner or later, the government must demand that someone produce something. Finally, the paternalistic relationship must be turned into a master-slave/serf relationship. The leviathan must eat too, and with no one producing, the monster only gets hungrier.157
Government cannot be the solution to all our problems. It is too bureaucratic, too centralized, and too corrupt. We as citizens must be the bearers of our own problems. We must solve them on our own. The real power of
change lies in the hands of each individual citizen and the choices he/she makes. In order to do so, government must return the power to the people. Power cannot be centralized, and the people cannot be denied the power that can only come from true liberty. For this to be denied is to deny the citizens of this country their inalienable rights of life, liberty, and the pursuit of happiness.
Power in the form of wealth is now concentrated in the hands of a few people. We’re not talking about a personal wealth of a 1 million dollars or even 10 million dollars. This wealth is defined by trillions of dollars. Millions or even thousands of people don’t control this wealth; it is controlled by a very small group of people that are probably no more than 200 people. As such, they use this power to influence politicians and social policies to their advantage. This is how corrupt our government has become. Power is abused at every turn. The government can no longer be trusted to do the right thing and work on behalf of the best interests of the people. It now works on behalf of the few. Power corrupts. Absolute power corrupts absolutely.158
This type of corruption leaves the people without a voice. While those in government should be busy implementing social policies that are in the best interests of the nation, they’re busy implementing policies that protect special interests in the form of advocacy groups who use various forms of advocacy to influence public opinion and/or policy. These special interests continue to play an important part in the development of political and social systems. Unfortunately, it is all too often to the benefit of a few. Groups vary considerably in size, influence, and motive; some have wide-ranging, long-term social purposes, and others are focused and arise as a response to an immediate issue or concern. Motives for action may be based on a shared political, faith, moral, or commercial position. Groups use varied methods to try to achieve their aims including lobbying, media campaigns, publicity stunts, polls, and research and policy briefings. Some groups are supported by powerful business or political interests and exert considerable influence on the political process, others have few such resources.