The hideout was the largest seizure of drug money in Panama’s history – Copyright Afghan Taliban/AFP/File STR
You wouldn’t think capitalism would be a hot topic these days, but surprisingly, it is. Existing capital structures have failed miserably in many ways over the past few decades, and the pandemic has seared the message onto the world.
An already unbalanced and unfocused situation has become so much worse. Wealth is ridiculous. So few people are truly wealthy, and many cannot afford the basics. Even millionaires can be wiped out by a medical bill. Education is incredibly expensive, which makes obtaining essential skills so difficult.
Credit is totally out of control. China’s Evergrande debt mountain is a case in point, threatening to do real damage to the credit market. It’s not the only one either. There are many publicly traded companies that would be fully leveraged. That’s about as unhealthy as it sounds. People have bought and own all this debt. Debts can devalue to zero.
In the past, credit was a huge engine of economic progress. It is now a gigantic, formless and unquantifiable monster. This is a huge debt, much of which is questionably recoverable. Depreciations are more or less routine. This money came and went, and was lost to both debtors and creditors.
These are just a few of the ways capitalism now regularly creates more problems than it can solve:
- The great global price gouge systematically cleans people up. Personal capital can and usually does erode quickly.
- Affordability is non-existent for everything from rent to education to child care to something as basic as buying a home.
- Financial security is just a legend of the past for the last two generations. Their job will be a stop/start/contract job. It won’t and can’t be the 40-year-old paying off a mortgage scenario. They simply won’t be able to get loans, even if they can claim that they can afford the insane housing prices.
- The “distribution of wealth” is a bad joke. How can you still think that wealth is “distributed”? It’s not. Real wealth has shifted to the upper brackets and will likely remain there.
- More common is “wealth dilution”, in which wealth gradually decreases as estate capital is divided into smaller and smaller amounts. Very few families can stay rich for more than a few generations at best.
- The wealthy regularly avoid tax and put the costs on the lower brackets. This is real capitalism at work; for himself and no one else.
- “Get a job” no longer works in terms of creating personal capital. Unless you have a very solid salary, you basically have a subsistence income. You can work from 17 to 70 and be as broke as when you started. The big resignation is if nothing else realistic in that sense.
- In the future, employment as it is today will not even exist. It’s more likely, ironically enough, that you’re working from home on multiple jobs. The good news is that multiple income streams work and you don’t have to worry about working for a crazy employer when you have other options. The bad news is that this way of making money is like being a freelancer – Feast or famine, more than likely famine. It’s very delicate.
- Black money is now a massive and nasty player in the global economy. The illegal money is now probably worth trillions. This money is dangerous, fuels speculation, drives ups in things like the stock market and Bitcoin, and causes damage through market manipulation. This type of capitalism is entirely destructive and totally irresponsible.
- Real estate appraisals are typical traditional assets. Few people will look at a real estate appraisal without questioning it. This unspeakably large market absorbs capital, real and fictional, generating much financial fiction as “capital”. Not encouraging, is it?
Doesn’t evolve at all
None of these issues are seriously discussed anywhere on Earth. The daily disasters of capitalism continue to follow one another. Like a train without a driver, the inertia of capital movements simply continues to go in all directions.
The obvious future sinking of capitalism is therefore not even a subject. It could be like Russia after the fall of the Soviet Union. worthless assets; ripped off to pay for food or bills. A real kleptocracy, even worse than the current version, is more than likely.
The fact is that the capitalist dinosaurs are doing well. They like it like that. Asteroid? What asteroid? You mean the one that will destroy assets like french fries that have to hit some time in the next ten to twenty years? No problem.
This is the mindset that will destroy the world in ten years. The big stupid system that couldn’t even manage itself will fall under the weight of its own suicidal imbalances. The current form of capitalism is not even good accounting, much less an “ideology”.
Healthier survival options exist
The bottom line here is that the unaffordability pandemic will hit the fan sooner or later, probably sooner. Hardly anyone can handle the core costs even now.
The survival of fundamental capital requires:
Services: Share the costs. Public ownership is NOT socialism. It’s common sense. If you split the bill at the restaurant, does that make you a communist? Barely. Education, housing and health MUST be accessible and easily affordable. After all, your taxes paid for it in the first place. Why pay twice or three times?
Equity: A recent study by the Australian Bureau of Statistics showed that homeowners are seven times more economically productive than non-homeowners. So why is the entire capital system so determined to make home ownership impossible?
Taxes: There’s an old chestnut that’s been floating around the world for decades: “tax loopholes.” There is nothing like that. Either something is taxable or it is not. Taxes should be fair, but there should be no question of not collecting them.
(In fact, you could abolish taxation entirely with a proper non-tax revenue system. You could have a self-financing government. … But that would involve the ability to understand big words and focus on something for more than 5 minutes when a meeting, isn’t it? What a pity.)
Financial Security: No evidence of all evidence, and the most obvious of all. People don’t care about “capitalism”. They care about having enough money. They don’t want to worry about every penny that happens to them accidentally. Fix that, and you fix a huge source of stress for the world. Universal basic income can do that.
People could afford to be people, not just paranoid bill-paying machines. They could have lives, not just cost bases. They could be working at things they are good at, not just “a job” they usually come to despise.
So… Want to evolve? Because you know what happens to things that aren’t.