A violent response to Michael Kinsley’s ’Creative Capitalism’

An effective and practical remedy to the Crisis (in its last chapter), supported with common sense:
1) True Capitalism, but not the Free Markets, had died a few years before the fall of Communism around 1989.
2) No one has yet pointed out the true convincing cause of the current crisis.
3) Most big charitable foundations including Bill & Melinda Gates’ Foundation, have fraudulent effects or turn into swindlers without the knowledge of their major or minor actors.
4) Cause of the Crisis: The irrationality in Math, Physics, Economics, Finance and Faith is governed by the same principle and is caused by the excessive ’expert knowledge’ in each field.
5) One out of 100 active US adults is likely to attempt suicide in 2009 20% above the 2008 figures. This is an indicator of the direction of human progress unless...
6) Any explanation that cannot be simplified for conveying to a below 15, such mechanism of Macro-Economics, Science, Politics, Business, is most likely a con. How about explaining the current economic crisis to above 15?
7) Exploitation of man and machine is the only way towards progress. Any under-exploitation is a waste of wealth and pleasure that must accompany progress.
8) If the cost of guarding a tree from fruit thieves, birds, is higher than the value of the fruits it gives, the tree is no longer worthwhile to maintain. Today the Capitalistic world is that kind of a tree and the only straight forward wise solution is: True and Natural capitalism!
9) Is there a concrete and swift way to solve the current crisis to reduce the threat of the unknown outcome?

The Kite and The Kingdom

Getting Crisis under Control!By Lo Kram

iUniverse, Inc.

Copyright © 2009 Lo Kram
All right reserved.
ISBN: 978-1-4401-3119-6

Contents

Foreword............................................................xiiiPreface.............................................................xvSection I - Great Expectations......................................1Chapter 1 The Climate...............................................3Chapter 2 The Prayer................................................9Chapter 3 The Song..................................................12Chapter 4 The Cake..................................................17Chapter 5 The Goose who laid Golden Eggs............................21Chapter 6 Outside The Box!..........................................26Chapter 7 The Carpenter.............................................28Chapter 8 The Kite..................................................35Chapter 9 The Fountain..............................................45Chapter 10 The Dream................................................50Chapter 11 The Magic................................................54Chapter 12 The Wise Man.............................................59Chapter 13 Man's Exploitation By Man................................71Chapter 14 The Core (The Unions)....................................76Chapter 15 The Other Force..........................................82Chapter 16 Surplus Without Joy......................................89Chapter 17 The Letter...............................................92Chapter 18 Great Expectations.......................................110Section II - You and I (In Paradise)................................115Preface.............................................................117Chapter 1 The Millennium Dome.......................................121Chapter 2 The Web...................................................127Chapter 3 The Children..............................................138Chapter 4 Infinity to Zero..........................................159Chapter 5 The Midas Touch...........................................173Chapter 6 The Densest Medium in the Universe........................186Chapter 7 The Invisible Computer....................................200Chapter 8 Merry-go-round............................................214Chapter 9 The Missing Mass..........................................227Chapter 10 The Formula..............................................239Chapter 11 The Joker................................................251Chapter 12 Sea-Shells...............................................267Chapter-13 Don't Panic..............................................290Section III - Pure Silke (The Spider Woman).........................295Section IV - One Thousand Billionth of a Second.....................313Section V - Gaining Control (Whipped Crime).........................317Chapter 1 Crisis & Capitalism.......................................319Chapter 2 Legal crime...............................................321Chapter 3 Screwing Capitalism.......................................323Chapter 4 Death of Capitalism.......................................332Chapter 5 Losing Control............................................352Chapter 6 Organized Crime...........................................371Chapter 7 World War III.............................................389Chapter 8 The Fraud.................................................390Chapter 9 The Urgent Secret.........................................402Emilogue 1..........................................................439Epilogue............................................................455Glossary:...........................................................456Reference/Additional reading:.......................................461

Chapter One

The Climate

That Friday in autumn, as they were finishing their dinner, the son: "Mike was saying that his Dad is a freakin' greedy capitalist, exploiter of people to make profits for the shareholders and is workaholic too. Mike felt depressed and ashamed of his father."

I was wondering if exactly the same might be applicable to you too.

Dad: Yes. Thanks for being frank about it. This gives me the opportunity to sincerely share with you as to what goes in my mind. My answer is however not as short as your question. Join me tomorrow as I play golf, we can speak about it in depth.

Just the fact that you are asking me this question shows that you understand these socio-economic terms and ready to hear my response. If you let me know what more do you know of other socioeconomic aspects, I won't bore you with the explanation of these concepts.

Son: No, I hardly know anything about these and please do elaborate on these concepts assuming I don't know a thing. Just today, the headlines said autumn will be hot....

Son: Dad, John and I will be going to Paris for summer school this year. How's the climate in France?

Dad: Paris is not different from London in its unpredictability of weather. In the month of June, there can be days cold enough for you to need a warm jacket. July and August can be as warm as you have seen in London. As regards ...

Son: No, no; not the weather. How is the social climate in France? I was reading recently that the French unions of different industries are planning strikes and demonstrations over the coming months. From a social point of view, they are all announcing some of the hottest weeks of the year, with a growing number of demonstrations and manifestations in all the professions: Transport, Nurses, Doctors, Farmers, Teachers and Students ...

Dad: Yes, France has been facing a very high level of unemployment for quite a few years now. At the same time they still have well organised unions who won't allow any social benefits already granted, to be taken away. Basically, the buying power in the developed world already mediocre is continuously falling. Those developed countries who have maintained the social benefits achieved during the growth years of the last several decades, are experiencing high unemployment and the situation seems to be worsening. A high percentage of unemployment requires those in the jobs to pay high social charges. The enterprises are unable to create stable employment due to high taxes and social costs per employee and there seems to be no exit from such a vicious circle.

Other developed countries who liberalised employment regulations have a low unemployment rate but a significant part of the workforce is employed in short term assignments at salaries which offer a considerably lower buying power compared to the last decades. One observes that these countries have succeeded in reducing the unemployment by creating a "third world" within their own territories called the 4th world!

Son: Is that what they call the two tier economy?

Dad: Yes, in fact, the two tier economy comes from the quick fix solutions that the leaders are forced to apply. It is interesting to note that these solutions, quite different from one country to another, are not based on real growth or progress and are becoming a cause of the problem.

The UK, though a part of the European Union, decided to follow the US model of weakening the labour unions and encouraging the manufacturing industry through tax and investment incentives to foreign corporations. In absence of real competitiveness on the world market, what appeared handy to give up was the social progress made generally in Europe since the World War II. Having reduced the social charges paid by the employer on one hand with no legal minimum wage and swift government incentives for foreign investments, the U.K., in the 90s is becoming the ideal European factory for any US or Far East corporation trying to expand in Europe. This creates employment and today, the U.K. can boast of the lowest real unemployment rate in Europe. However, the very low salaries of the workers with little social or job security, has created a population that lives below the European average standard of living if not below the wages needed to make both ends meet. Being a quick fix solution, it is also a permanently damaging approach. The creation of the factory jobs, mostly unskilled themselves, have created a larger labour population. The phenomenon has lowered the interest in Scientific and Engineering studies which in turn has brought the quality of education demanded and offered to an alarmingly low level. Such damage takes several generations as well as heavy government spending to correct. It is this single phenomenon alone which is the counterpart for a lower unemployment rate in the U.K., now attractive for foreign corporations for low value add industry and because of lower budget deficits than most European countries.

Son: Then, you mean France is following a better policy?

Dad: No; not at all. France is on the other extreme with the highest level of social benefits for the workers but with the highest level of unemployment as well. The budget deficit is high and in spite of its logistically central position, it is the least attractive European manufacturing site for a foreign company. Absence or lack of international manufacturing capacity has resulted in practically no real industrial base, no productive jobs and no practical training for the jobs of tomorrow. As in Germany and in many other European countries, a totally internal cycle of unneeded services has been created through non-profit foundations or government bodies to achieve artificially lower unemployment figures. Adults teaching and being trained for 'fictional' future jobs or assignments are not counted as unemployed. In reality, the alarming threshold of 12% unemployment has been by far surpassed to an explosive level which cannot be treated through any quick-fix remedy.

Son: What you are saying is that the whole developed world is incontestably in a sad state of affaires, whether that be obvious or not. On top of that, knowing well

That the 20th century modernisation is damaging the environment in several ways

That family values and warmth are disappearing

That life is more and more uncertain and stressful

That there is an alarming increase in suicide and crimes,

My friends and I are wondering what this so-called human progress has actually achieved and where it's going to lead us.

By the way I must leave now. I spent the Christmas at Mom's place, so next week-end I'll be coming again.

Dad: Well, next Saturday, I have to pick-up your step sister at the hospital after her first treatment for AIDS. On Sunday, I will repair the window glass that was smashed by the burglars who broke into this house last week. I also need to sit down to prepare the insurance claim.

Son: OK then I'll stay at the boarding next weekend. Mom is seeing her psychiatrist next Saturday and working on Sunday.

Notes: Is it the economic situation which is behind the financial, political, social or sexual crimes that we hear more and more often?

Could it be this economic situation which is behind the rise of hatred, racism or ethnic troubles? Even at the initial celebrations of the union of two Germanys at the end of 1991, several persons were killed during the clashes with Neo-Nazis. The situation in France is tense where certain Islamist groups threaten with frequent explosions in public places. The U.K. has not succeeded either in achieving peace with Northern Ireland.

A divided opinion on the utility of European Union and its monetary union adds to the problems of uncertainty and insecurity that we face in the today's world.

One wonders if the masses have been too well behaved or not combative enough to reach such a general crisis. A situation where the fever is so high that the workers can only demand, without proposing any real solution, wage increases and the continuation of production in the factories - Factories which have been either completely overtaken in competitiveness or have been manufacturing products which have no market anymore.

The social grumbling and its means of expression will rise and fall according to the negotiations with the managements or the State or according to the combativeness and the ties within the Unions or according to the temporary crisis of the moment. But the real solution to all this lies neither in the demonstrations nor in getting an upper hand by one or the other during the negotiations. The climate that prevails in many parts of the world is similar to that of the economic crises of 1929. It's only a real worldwide economic recovery that can stop bigger catastrophes.

Chapter Two

The Prayer

Son: Dad, when do you think the buying power will increase and there will be a low unemployment rate?

Dad: That's called recovery and God knows when that will happen.

Son: Is it the government who is responsible for the recovery?

Dad: Well that's what most people tend to assume and the governments believe it. The government can play an important role in helping the economy by adjustments in taxes or interest rates or large government projects. That is however, not its principal role. Other actors of the economy like the Entrepreneurs and Companies' managers, the workers and the consumers influence the economy more directly.

You often hear the Heads of State saying "We are now sure that the Economy has entered the period of recovery and its first signs indicate that the recovery is going to last."

The political leaders and often the heads of the companies seem either to ignore the reality or to 'pray' or wish for better days blaming a foreign country or the Market conditions.

The Prime Minister assured: "There is no social crisis" It would be going too far to think that these political personalities are not sincere in their declarations. It is however likely that this be based mainly on the fact that the political leaders take their desires for reality and that the myopia of power distorts completely their view. Or are they trying to rise public moral hoping it would trigger the Economy?

The experts in the field - the CEOs of multinational corporations like IBM, Peugeot, Hoechst; answerable to their shareholders are more lucid. They have created and preserved several hundreds of thousands of jobs. They have also offered useful products of quality to the industry and to the consumer while allowing substantial dividends (profits) to the investors. These executives who work long hours, to save the corporations have often behind them, the necessary training and experience.

The automobile plant being paralysed by the strike, the management warns that such action compromises the future of the company. If necessary, police will be called in to maintain law and order. The management assures however, that there will be no layoffs if there is an economic recovery. In absence of recovery of course, it will be necessary to cancel several thousands of jobs to save the company and to preserve jobs of those who will still remain, to ensure the profitability to the shareholders. Otherwise, of course, the plant will be shut down and the customer goodwill could be sold to recover a part of the investments.

"It is not only in our Company; all our competitors in the sector are in difficulty. The experts were mistaken in their forecasts of recovery ..."

In this manner, we see today, the CEOs of multinationals, just like the political leaders, praying that the recovery 'happens' as if it was in God's hands.

Son: I was reading about the caricature of the today's "successful executive" has been shown in Douglas Labier's "Modern Madness". According to Mr Labier, one group of fast track executives are driven by masochistic or sadistic needs. The other large group, "the working wounded" were fed on the dreams of the 1960s which promised personal fulfilment in addition to success at work. Such people are struggling unsuccessfully to achieve a balance between their jobs and their lives. The real problem is that there is no vision of what adult life should be - and even worse, the lack of apprehension of what they stand for in their professions. In many cases the corporate power distorts the perceptions of these leaders and disastrous consequences follow for the Company and for the global economy.

It has become almost impossible to read between the lines when I read the newspapers - may it be the economic policy, the financial, the industrial or the foreign policy. So in addition to the real problems of substance, we also have problems of presentation in our day-to-day life.

Dad: If the fundamental problems of content were tackled properly; there would rarely be problems of communication or presentation.

I'll drop you near your campus; it's on my way.

Chapter Three

The Song

Son: Dad, is the economic growth measured in terms of GNP a major indicator of human progress? What's GNP?

Dad: GNP, the Gross National Product is the worth of all products and services produced in a country. In other words it is the total income of all the people in the country.

Son: How can then one compare the GNPs of various countries with different inflation rates and fluctuating interest rates? Also, what happens when production involving large investments is to be depreciated over years? Is a higher GNP supposed to make people happier?

Dad: You seem to have a great many questions!

I don't know all that technical stuff. All you need to know is that GNP is a good old method of measuring economic progress. It was understood that improved economic conditions (i.e. a higher GNP) would obviously be accompanied by a better way of life, improved health and happiness of a society.

Son: The G7 countries are based on the GNP ranking only, aren't they? Are you saying that if I painted Erika's portrait for her for a billion dollars and then she sings a song for me for which I pay her a billion dollars, the GNP would have increased by 2 billion dollars improving the economic conditions and achieving human progress?

Dad: Yes, yes and yes! As long as you remember that a Sales tax or a Value Added tax as well as income tax will have to be paid on each transaction. More to the point: It would either mean that the pleasure offered by your painting and by her song were worth that much for each of you or the buying power of the dollar is so low that, it was justified to pay that price. Whether that enters or not in to the inflation basket, it is a case of inflation. It will, in that case, not influence the official inflation rate but will become a part of the hidden inflation rate every time you do a similar transaction.

Your example shows that if there was a real shortage of good artists (singers and painters), the theoretical cost of achieving those talents and making these pleasures available to the consumer will not enter into the calculations of inflation rate. This would wrongly let the GNP figures appear higher and the loss of progress earlier made due to the lack of skills will not be realised. So strictly speaking, an undistorted value of GNP, that took into account, the real inflation rate, would represent human progress and not just economic progress.

Another example of hidden inflation in the industry is the substitution of wood or metal by new materials like plastics. The real worth of the new product for the consumer can be lower due to lower durability or being less agreeable to handle. The cost of recycling the pollutants and waste can be higher and will appear as taxes rather than an inflation factor for that product. To such losses one could add the loss of know-how and equipment to build the previous product and the exorbitant price that would have to be paid for that old product if someone wanted it. A car of the 70s would cost twice to build today even in real dollars due to the materials used and the know-how required. This in other words is again the weakening of the buying power not taken into account for calculating the GNP.

This is true also for some services such as banking or income tax where the administrative productivity has been artificially obtained - letting the consumer carry out certain operations. He, in turn, ends up needing paid services of an expert and/or buying a guide and spending a lot of his personal time on such operations originally carried out by the administration.

(Continues...)

Excerpted from The Kite and The Kingdomby Lo Kram Copyright © 2009 by Lo Kram. Excerpted by permission.
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