I'm reposting the following article by Jeff Gates which originally appeared in Adbusters magazine. As indicated in the footnote, Jeff served as counsel to the U.S. Senate Committee on Finance from 1980 - 1987, and now heads the Shared Capitalism Institute (whose link I've added to my favorites on the right), which is spearheading public educational awareness of what I have (rather dramatically) labeled the Corporatocracy, but which he refers to as simply enough as "consensus economics". Well researched and concisely written, he helps to elucidate how the unsustainable and destructive economic forces driving Western society can be, at one and the same time, both intentionally-directed and yet outside of anyone's control.
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The One Percenters
The consensus model of economics doesn’t work for the overwhelming majority of us. The stunning consistency of its results confirms it was meant not to work. Once that realization dawns, long overdue reforms will come quickly. Until then, learn to separate beguiling economic theory from real world facts by applying an acronym from systems theory: POSIWID – “the Purpose Of a System Is What It Does”. Taking America as a starting point, how has the consensus treated its wealthiest one percent? What has it done?
In 1982, when Forbes first published its annual list of the 400 richest Americans, you needed a personal net worth of $91 million to be included. By 2000, the figure was $725 million.
That same year, the tiny group of Americans who occupy the top income bracket – the one percenters – claimed as much income as the 110 million lowest-paid Americans combined. They pocketed more than one dollar in every five of national income, their largest share since 1929, the beginning of the Great Depression.
Much has been made of the ‘bull market’ investors enjoyed from 1983 to 1998, but a look at who really benefited is revealing; over half of nationwide capital gains flowed to the one percenters.
So, using POSIWID, we can see what the consensus model does. A system that concentrates wealth is certain to fuel a fiscal meltdown, especially in nations with large retiree populations. It will also undermine markets. Markets respond to people with money. Concentrate income and you destroy free market democracies. That is what the consensus model does, right now, all over the world.
So what exactly are its effects globally? Well, currently the world’s one percenters have an income equaling that of the poorest 57 percent. In the four years up to 1999, the world’s 200 wealthiest people doubled their net worth, to $1,000 billion. Just 15 families own 61.7 percent of Indonesia’s stock market value; wealth is almost as concentrated in the Philippines and Thailand.
The gap between rich and poor is rapidly becoming a chasm. In 1960, the income gap between the fifth of the world living in the richest countries and the fifth in the poorest countries was 30:1. By 1998, it had ballooned to 74:1.
People don’t hate our values, they hate our hypocrisy. They hate the glaring mismatch between the values we espouse and the policies we support. Judged by what the consensus does – everywhere it operates – its purpose is unmistakably neither workable markets nor robust democracies. A system that consistently creates unworkable patterns of wealth and income is not a paradigm, it’s an ideology designed for domination.
POSIWID forces us to confront a painful reality: the consensus relies on authority and theory to justify the unjustifiable. If its purpose is to persuade people not to trust their policymakers, it’s been a stunning success. Yet cynicism and disengagement are certain to make matters worse. So what can we do until the model is reformed?
Do what comes naturally. Where the consensus crashes, communities naturally turn to local ownership and local currencies. The financial tools for broad-based ownership have long been available. Insist on them. More than 5,000 ‘complementary currencies’ are now in use worldwide, up from 100 in 1990. Adapt them. The US alone had more than 5,000 community currencies during the 1930’s. By matching local capacities to local needs, they reduce the need for the consensus (national) currency. Often this enhanced exchange capacity converts underemployed time and talent into lower fiscal costs for local services such as health care, elder care, child care and environmental cleanup.
With the demand for sensible alternatives on the rise, many organizations are busily compiling information. An internet search for ‘complementary currencies’, ‘time dollars’ and ‘local exchange trading systems’ reveals an abundance of resources, restoring hope that local adaptation can help counter the perilous dominance of today’s long-dysfunctional consensus.
Former counsel to the US Senate Committee on Finance, Jeff Gates is author of The Ownership Solution (1998) and Democracy at Risk (2000).
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Two more articles by Jeff Gates I found referenced on the internet are We the Unreasonable and Transgenerational Financial Terrorism. I considered copying poignant sections from them, but I found nearly every paragraph provocative and well-researched, so I'll just paste the links.
